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$20,000,000 3-Year Revolving Credit Facility for 88 Co-Op Units in Midtown Manhattan, New York

Rate: L+525 with a LIBOR floor of 2.25%
Term: 24+6+6 with 50bp extension fee on outstanding principal balance
DY Requirements/Prepay Penalty: None
Minimum Interest/Yield Maintenance: None
LTV: None specified but between 45% – 50% is starting LTV
Unused Line Fee: between 0.10% and 0.5% depending on line usage amortized over 24 months
Reserve: 6-months of Interest and Maintenance Fees

Transaction Description:

George Smith Partners secured a $20,000,000 revolving credit facility on 88 co-op units in Manhattan. The 88 co-op units are part of a 495-unit “family legacy” property that includes 72 rent stabilized units that have been owned and operated by the Sponsor since the 1990s. The Sponsor has never forced a tenant “buy out” during their ownership history. The 3-year credit facility is based on an ‘as-is’ LTV of 50%, full recourse, interest-only at L+525 with a LIBOR floor of 2.25%, no minimum interest and no prepayment penalty. The value of the underlying collateral ‘as-vacant’ is in excess of $100,000,000 due to the strong demand in this section of Midtown Manhattan. The historical negative combined average NOI from the Project, due to the 72 rent stabilized units, resulted in an ‘as-is’ value of ~$40,000,000. The average NOI for the rent stabilized units at closing was negative $484 per unit/per month while the NOI for Market Rate Units was positive $2,600 per unit/per month.


The non-traditional security for the loan (shares in a corporation and interest in proprietary leases) combined with the historical negative cash flow were non-starters for most lenders. The operating metrics i.e., debt yield and debt service coverage ratio did not meet typical lender requirements. GSP identified a lender that understood the value of the underlying collateral, was comfortable with the historic rate of turnover and was comfortable with the natural rate of attrition. The Lender was able to underwrite the upward-trending in-place income at a starting debt yield of < 2% while making the entirety of the credit facility available to the Sponsor.


Related Financings

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    September 22, 2021

    Transaction Description:

    George Smith Partners secured $3,700,000 for an acquisition of a multifamily property in Oklahoma City, OK. The Sponsor had the opportunity to purchase a well-located, value-add property in Oklahoma City. By utilizing a quick close loan, the Sponsor was able to negotiate a below market price. The Sponsor approached GSP to help arrange a loan that needed to close on a strict timeline of only one week. Because of the quick timing and the short-term distress in the cash flow, the Property would not qualify for bank or agency financing. The Property rents were below market because the Seller self-managed and the Property needs exterior and interior improvements. The loan was structured with a CapEx holdback to allow the Sponsor to implement their value-add strategy. The non-recourse facility represents 75% of total cost and was priced at an interest-only fixed rate of 7.25% with a 12-month term plus two 6-month extension options. The interest-only loan allows for more property cash flow to be used towards improving the Property. Thanks to GSP’s long-standing relationship with this debt fund, we were able to close this transaction in less than 7 days from signing the term sheet.

    Rate: 7.25%
    Amortization: Interest-Only
    Term: 1 Year + Two 6-Month extensions
    LTC: 75%

  • $37,500,000 Non-Recourse, Stretch Senior Construction Loan for a Mixed-Use OpZone Development; Western States

    September 22, 2021

    Transaction Description:

    George Smith Partners placed a $37,500,000 non-recourse, stretch senior construction loan for a 7-story ground-up development of a mixed-use OpZone Project. When complete, the Project will consist of 151 apartment units (including 14 Live/Work Lofts), approximately 15,000 sf of restaurant space, 10,000 sf of retail, and 12,000 sf of office space. The average apartment size is 730 sf, and most units will have private balconies with unobstructed views of the desert and city.

    As the Project is a first of its kind in the surrounding area, finding appropriate comparable projects that would speak to the strength of this market proved to be a challenge. GSP focused on the Project as a marquee development and detailed the new employment opportunities from Google, and a hospital expansion, sports training facility, along with the emerging renaissance happening within the downtown area. GSP was able to demonstrate the immense intrinsic value from the ongoing renovation of the City Hall Plaza and Events Center — a 500-seat canopied amphitheater and 60,000 sf of programmable deck area for hosting community events — that sits directly across from the Project. GSP also worked through the Sponsor’s GMP budget with the Lender during a period of escalating cost, showcasing the strength of the Sponsor group in their local market. In turn, this created a comfort level needed by the Lender with regards to the commercial space of the Project.

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    Loan-To-Cost: 75%
    Stabilized Loan-To-Value: 70%
    Term: 24 Months + 6 Month Extension
    Amortization: Interest-Only
    Guaranty: Non-Recourse

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    September 15, 2021

    Transaction Description:

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    The Sponsor projects completion of the project in late 2023. Due to the supply constrained market for the condo units, they expect the project to be completely sold out shortly thereafter.

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    Transaction Description:

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    Transaction Description:

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