$23,000,000 Cash-Out Refinance for Three Property Class C Texas Multifamily Portfolio

Transaction Description: George Smith Partners placed the cash-out 10-year permanent loan for a 3 asset multifamily Houston, Texas portfolio. The properties were built in the 1950’s to supply military housing for returning WWII veterans. All three properties were rehabbed in 2013 to remain well-maintained Class C properties. Fixed at 4.95% for 10 years, the recourse loan was sized to a 1.25 debt coverage ratio on a 30 year amortization schedule.

Challenge: Capital providers are always concerned about providing a return of equity for Class C assets. Markets known for oil production facing the possibility of higher unemployment are problematic.

Solution: Detailed underwriting of both the assets and sponsorship group solidified the stability of the cash flow and the Sponsors’ capacity to address down cycles. Oil has been underperforming for several months yet there has not been any change in rental collections. The personal repayment guarantee added further credibility to the underwriting package.