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$2,320,000 Preferred Equity Investment to 90% LTC for a 240-Unit Workforce Housing Project; Tertiary Wisconsin Market with Strong Fundamentals

Rate: 15.00%
Term: 36 months
Amortization: I/O
Prepayment: Open in whole or in part at any time with a three-year minimum yield
Guaranty: None
Fee: 2% origination fee

Transaction Description:

George Smith Partners successfully placed $2,320,000 in preferred equity with a last dollar exposure of 90% loan to cost. The preferred equity investment was made midway through construction of the 240-unit workforce housing project and is subordinate to a senior construction loan and institutional preferred equity investor. After sourcing the senior construction lender, the Sponsor engaged GSP to leverage its diverse lender/investor relationships to source an equity investment to offset the Sponsor’s common equity requirement. GSP was successful in sourcing the equity and structured the investment as preferred equity to maximize common equity returns. Not only was the development project already mid-construction, but it was also made during the peak of the COVID-19 pandemic. GSP sourced the equity by focusing on sponsorship quality and how the Project was tailored to take advantage of the local market’s strong fundamentals, such as an insatiable demand for workforce housing driven by numerous manufacturers being located in the area including Kohler, Sargento, and Johnsonville, among others.

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