Los Angeles: $22,300,000 Ground-Up Development; 51 Rental Units over Retail @ 89% of Cost

George Smith Partners placed the ground-up development debt for a Koreatown (Los Angeles City District) parcel for 51 rental units over 3,350 square feet of ground-floor retail. Structured as an A/B execution, the senior lender was willing to advance up-to 75% of cost subject to a 65% valuation upon stabilization. The senior loan was trimmed to allow for the layering of a $5,000,000 mezzanine tranche. A partial deferral of the development fee rounded out the capitalization. As added security, the bank underwrote the secondary capital provider and executed a recognition acknowledgement with the junior lender. Bank priced debt at LIBOR plus 375 and a half point for the 36 month term. Subordinate debt will charge 12.25% annually on their tranche but will not participate in any upside. The junior debt only requires a carve-out guarantee while the senior note is a full repayment guarantee along with a completion guarantee.