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$23,000,000 Construction Financing for 117-Unit Multifamily Construction; Lansing, MI

Terms Confidential

Transaction Description:

George Smith Partners successfully advised on $23,000,000 in senior debt construction financing for a 117-unit multifamily transaction in Lansing, MI. This is the second financing arranged by GSP for the Sponsor and follows on the successful $44,500,000 financing GSP advised on. GSP successfully navigated the markets to identify and close with a lender that was comfortable with PACE financing layered in the capital stack. This multifamily project will offer studios, one and two-bedroom units with modern furnishings.

Advisors

Related Financings

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    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.

    GSP executed a broad and in-depth marketing campaign to help capital markets understand the opportunity appropriately. These efforts resulted in a successful close with proceeds achieving the Sponsorship’s objective.

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

  • $33,000,000 Stretch – Senior Non-Recourse Construction Loan for Ground-Up Luxury Condominiums; Los Altos, CA

    September 15, 2021

    Transaction Description:

    George Smith Partners successfully advised on $33,000,000 in construction financing for a 27- unit luxury condominium project to be built in downtown Los Altos, CA. This high-end offering is the first larger scale project for the newly formed, but individually experienced sponsorship group. The Sponsor has significant historical ground-up experience and will self-perform as the General Contractor. GSP worked through several strategies with the Sponsor including preferred equity, mezzanine debt and an all in one, stretch-senior execution. Ultimately, GSP successfully obtained several highly reliable options for each strategy and the Sponsor selected an integrated full-service construction lender. GSP negotiated a land value contribution in excess of cost and as a result, the land lift allowed the Sponsor to invest less up-front equity than otherwise required to close the transaction.

    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.

    Rate: L + 8.25% w/ floor of 9.0%
    Term: 30 months
    LTC: 75%
    Prepayment Penalty: 9 months
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  • $20,530,000 Non-Recourse Construction Financing for a 25-Unit Luxury Beachfront Condominium, For-Sale Development; Cocoa Beach, FL

    September 8, 2021

    Transaction Description:

    George Smith Partners successfully arranged $20,530,000 in non-recourse senior construction financing for The Surf, a beachfront condominium project in Cocoa Beach, FL. The Project consists of 25 luxury residential units with sale prices ranging from $975,000 to $2,500,000, as well as 3 ground floor retail units. The Project is currently 75% pre-sold. Per Florida statutes, any buyer deposit amount over 10% of the purchase price may be used towards development costs, but a large portion of those deposits are not due from buyers until building top off. GSP was able to successfully secure a lender comfortable with crediting future deposits to decrease the Sponsor’s up-front equity requirement.

    The Sponsor’s co-developer and GC tragically passed in early 2020, leading them to engage a new group. While the new GC had extensive experience in luxury housing development, they are relatively new to ground-up, multi-level condominium development. GSP leveraged its extensive lender network, strong pre-sales, and the Orlando-based Sponsor’s strong development track record in this submarket and product type to provide non-recourse construction financing.

    The term is 24 months with interest-only payments and 6 months minimum interest. The senior note was sized to 64% LTC. GSP structured the loan, crediting future sales deposits towards the total equity requirement, thereby eliminating any additional out-of-pocket equity required at closing above the land acquisition and predevelopment costs already spent to date.

    Rate: WSJ Prime +4.50%
    Term: 24 Months + Two 2-Month Extensions
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    Loan to Cost: 64%
    Prepayment: 6 Months Minimum Interest
    Guaranty: Non-Recourse
    Lender Fee: 1% In, 1% Out

  • $38,600,000 Limited Recourse, Cash Neutral Mid-Construction Financing for a 122-Unit Multifamily; Santa Rosa Beach, FL

    July 14, 2021

    Transaction Description:

    George Smith Partners successfully arranged a $38,600,000 mid-construction refinance loan for a multifamily project in Santa Rosa Beach, Florida. The limited-recourse loan refinanced out the existing debt and provided additional proceeds to complete the development and flexibility to explore a condo sell out. The 122-unit Project will include state-of-the-art facilities, including a general store, a fully equipped restaurant, fitness center for guests, and a workspace. The Project is expected to receive certificate of occupancy by September 2021.
    GSP was retained when the Project was 70% complete with an expected certificate of occupancy by September 2021. Since the Project began in 2019, nearly all the land in the area had been purchased by developers at a higher basis and condos began to sell at higher than $500/psf. The Sponsors seized the opportunity to add additional equity, bringing the Project to condo-specifications and the ability to sell out at a higher valuation. GSP canvassed a broad range of lenders with long-standing relationships and fielded multiple proposals. GSP worked with the Sponsor to find a lender that reached a higher proceeds level and provided the flexibility to lease up the Property as multifamily, sell units as condos or a mix of the two.

    Term: 12-month term with 6-month extension option, extension fee @ 1.25%
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  • $58,000,000 Life Co. & Preferred Equity Non-Recourse Construction Financing; Culver City Adjacent, CA

    April 28, 2021

    Transaction Description:

    George Smith Partners successfully closed $58,000,000 in non-recourse construction financing for a seven-story, mixed use development across from Sony Pictures Studios and adjacent to Culver City, CA. The Project features 139 apartment units over 1,969 SF of ground floor retail. The Sponsor received a density bonus thanks to TOC incentives, in exchange for allocating 14 affordable units.

    While this is the second U.S. project – the first was also financed by GSP – for a successful international developer, the pool of capital providers was significantly reduced due to the borrowing entity being headquartered in a foreign country. Presenting this deal during the height of the COVID-19 pandemic also presented significant challenges. GSP leveraged its structured financing expertise, lender relationships, strength of the Project and the Culver City market to negotiate the most desirable terms for the Sponsor.

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  • $7,685,000 Senior Construction Financing for a Mid-Developed Construction Building; Los Angeles, CA

    March 31, 2021

    Transaction Description:

    George Smith Partners secured a $7,685,000 construction loan for the completion of a development project in Los Angeles, California. The construction project was being fully paid out of pocket and had just finished two levels of subterranean parking. At this point of completion, the Sponsors decided to finance the remaining project costs instead of coming out of pocket the rest of the way. Many lenders didn’t want to finance the Project due to the mid-construction risk and those that did wanted some sort of banking relationship/deposit to come with the Project. GSP secured a capital source that was comfortable with the mid-construction project and didn’t require the Sponsors to bring in any fresh equity nor did they require any banking deposits.

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