$20,950,000 Cash-Out Refinance for Three Multifamily Properties; Los Angeles, CA

Transaction Description:

George Smith Partners placed a $11,350,000 loan for the refinance of a 60-unit historic multifamily property in Downtown Los Angeles. The loan request was started in Q4 of 2022 when many banks had stopped lending after reaching their full allocation for the year. As a result, GSP engaged in an extensive marketing process that included over 30 lenders. A California-based credit union was sourced that quoted a rate of 5.62%. The lender used a 1.20x DCR and underwrote to the start rate of the loan. This resulted in proceeds of $1.0MM more than several other lenders. During the closing process, the 3-year Treasury temporarily dropped, and the lender re-quoted the rate at 5.34%.

Transaction Description:

George Smith Partners secured $46,000,000 for the refinance of two multifamily properties located in Houston, Texas. Despite the properties being a few months away from stabilization, we secured a 3-year permanent loan instead of a higher-cost bridge loan to pull cash out to the Sponsor at a cheaper rate. We were able to negotiate a favorable prepayment penalty so the Sponsor could pull more capital out in 18 months.

The Sponsor’s original bridge loan that was completed in 2019 was priced at LIBOR + 4.75%, so with rates increasing, their all-in rate was over 9%. The Sponsor had completed 80% of the unit improvements and 100% of the exterior upgrades, but because of COVID, they are about 20% below the target NOI.

GSP utilized its relationships and experience to structure a loan that would be affordable, and most importantly fixed-rate in this increasing rate environment. Overall, the Sponsor was extremely happy with the refinance which allowed them both a fixed low rate and flexibility for the future.

Transaction Description:

George Smith Partners arranged $3,830,000 in permanent financing on a newly stabilized 11-unit multifamily property located in Austin, TX. The loan is fixed at a rate of 6.00% for 10 years and a 3-3-3-2-1 prepayment structure. Although some lenders were hesitant to provide competitive permanent financing terms on a former condo multifamily property with less than a year of operating history, GSP was able to source competitive financing ahead of the rising interest rate environment with flexible prepayment. Thanks to our long-standing relationship with this repeat lending relationship, GSP was able to meet the Sponsor’s deadline and close this transaction within 43 days from signing the term sheet.

Transaction Description:

George Smith Partners secured $35,000,000 in proceeds for the permanent refinance of a newly built 161-unit multifamily property in downtown Boise, ID. The Property has been achieving strong leasing velocity but was only 30% occupied when GSP began discussing the transaction with capital sources. Although the original loan request was structured with a forward rate lock and a future funding holdback, GSP was able to source a lender that funded the full proceeds at close.

Some notable challenges were encountered when marketing the deal. Most perm lenders declined to bid because the Property was still in lease-up. Several other lenders would not loan in Boise, although there has been an uptick in institutional capital shifting their focus to Boise. Additional quotes were in the range of $30,000,000-$32,000,000 with a holdback, which was short of the Borrower’s desired leverage.

GSP was able to source a lender that provided superior proceeds, rate, and structure. The Lender held the rate of 4.40% despite large fluctuations in rates while the loan was in application, with no rate lock deposit. The loan has no prepay, which will allow the Borrower to refinance as rents continue to season. The fully funded proceeds provided a considerable amount of cash out to the Borrower over their initial construction loan.

Transaction Description:

George Smith Partners successfully arranged $3,100,000 for the cash-out refinance of a recently renovated 10-unit property in the Pacific Beach area of San Diego, CA. GSP was able to find a lender to quote the permanent loan despite the fact that the Property was not yet leased/stabilized. Furthermore, GSP was able to get the Lender to rate lock the low fixed rate for 90 days. The minimum cash required on the property is 10% and the minimum required occupancy at closing is 90%. The loan went under application on April 6, 2022, and closed within 90 days. The financing took longer than expected because of the Lender underwriting and a title issue at the last minute with a mechanics lien. However, due to GSP’s strong relationship with the Lender, we convinced them to honor and extend the rate lock.

Transaction Description:

George Smith Partners secured $6,850,000 for the refinance of a stabilized 58-unit Los Angeles apartment building. The loan is fixed at 4.15% for five years and has full-term interest-only payments. The Lender offered a 60-day rate lock, which provided a great benefit to the Borrower because interest rates increased while the loan was in application. A fast-paced closing process was required to keep the rate locked at 4.15%. GSP ensured that all stakeholders adhered to the timeline and that the loan successfully closed on the required date. There were no changes to the term sheet.