$18,600,000 Bridge Financing for Purchase of 112 Unit Multifamily Property; 80% LTC; LIBOR+2.55%; 4+1 Term; Seattle, WA

Rate: Floating at 1 Month LIBOR + 2.55%
Term: 4+1
Amortization: Interest Only
Fees: 1% in/0% out
Prepayment Penalty: 24 months minimum interest
LTC: 80%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured $18,600,000 in proceeds for the purchase of a 112-unit multifamily property located in the Seattle metro area. The fully funded loan represents 80% of the project capitalization. The loan provides $15,400,000 at close, with an additional $3,200,000 in future funding for capital expenditures. When discussing the transaction with bridge lenders, GSP found that most capital sources offered a 3+1+1 term with in/out fees of 1%/0.5%. The selected lender provided a unique program featuring a 4+1 term, 1% origination fee, and 0% exit fee. Instead of using boilerplate loan docs, the lender began with pre-negotiated docs from a previous transaction with a similar borrower. This helped to greatly reduce legal fees for the Sponsor. Although the going-in debt yield was about 3%, the Lender did not stipulate a minimum at closing. Rather, GSP structured an Interest Reserve since it was below a 1.0 DCR going in. While all lenders required a cash management account, the selected lender did not have a debt coverage ratio test until the 25th month after closing. The loan closed in just 40 days from the signed application.

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