$17,600,000 Bridge Financing for a Portfolio in Los Angeles, CA

Rate: 10%
Term: 12 months + 6 month extensions
Amortization: I/O
LTC: 100%
Guaranty: Full Recourse
Prepayment: 6 months minimum interest on DTLA and San Fernando. Open prepay on South LA
Lender Fee: 3 points

Transaction Description:
George Smith Partners secured a $17,600,000 bridge loan for the acquisition and renovation of three separate commercial and retail buildings in the Los Angeles area. The first building is located in DTLA. Proceeds from the financing will be used for the purchase and adaptive reuse of this 43,000 SF mixed-use building. The second and third buildings are located in the San Fernando Valley and South LA, respectively. Proceeds from the financing will be used for major remodels on both buildings. The building in the San Fernando Valley will undergo a full repositioning of a flower shop into a new state-of-the-art, standalone coin-laundromat. The South LA mixed use asset is 75% complete. It is comprised of a two-story commercial building containing a 9,000 sf laundromat on the ground level with two residential units on the second floor. The entire Property was taken down to the studs, and a portion of this financing will cover the remaining cost of completion.

Challenges:
Despite the strength and experience of the Sponsor, we faced four major issues in obtaining financing for our Sponsor. The first challenge was unresolved past title issues. The second challenge we were up against were maturing interim loans. Next, due to the high volume of projects in the City of LA, power connection to one of our sites was delayed. Lastly, the initial financing request was for 85% LTC. After GSP’s full analysis, we discovered that the financing needed to payoff existing liens and provide the working capital needed for a successful execution was closer to 100% LTC.

Solutions:
GSP worked with a private balance sheet lender that provided a tailored bridge loan for the full capital stack. The initial term is for 12 months plus extensions. Because of GSP’s past experiences with this lender, we were confident in their ability to navigate such a complicated structure and their certainty of execution.

Advisors

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  • Expand

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