Rate: Prime plus ½
Term: 5 Years
Amortization: Interest only for the first six months than fully amortized
Recourse: Full Recourse
Prepayment Penalty: None
George Smith Partners arranged bridge financing for the acquisition of an 8-unit multifamily property in Mar Vista, California. The Property was operating at below-market rents and the Sponsor’s business plan included increasing rents to market rates, renovating the Property’s exterior and interior build, and a complete rehab to a detached home in the back of the Property. At time of loan application, the Subject Property was operating at a 75% occupancy rate, but by the time the appraiser went out to inspect the building the occupancy level dropped to 62% with no notice given. GSP worked closely with the Lender and the Appraiser to get them confident with the Sponsor’s ability to rehab the vacant units quickly and lease them up within the first 6 months of the loan.
$3,700,000 Highly Leveraged, Quick Close Acquisition Capital for 97-Unit, Multifamily Property; Oklahoma City, OK
September 22, 2021
George Smith Partners secured $3,700,000 for an acquisition of a multifamily property in Oklahoma City, OK. The Sponsor had the opportunity to purchase a well-located, value-add property in Oklahoma City. By utilizing a quick close loan, the Sponsor was able to negotiate a below market price. The Sponsor approached GSP to help arrange a loan that needed to close on a strict timeline of only one week. Because of the quick timing and the short-term distress in the cash flow, the Property would not qualify for bank or agency financing. The Property rents were below market because the Seller self-managed and the Property needs exterior and interior improvements. The loan was structured with a CapEx holdback to allow the Sponsor to implement their value-add strategy. The non-recourse facility represents 75% of total cost and was priced at an interest-only fixed rate of 7.25% with a 12-month term plus two 6-month extension options. The interest-only loan allows for more property cash flow to be used towards improving the Property. Thanks to GSP’s long-standing relationship with this debt fund, we were able to close this transaction in less than 7 days from signing the term sheet.
35 Day Close, 70% Acquisition Financing of 4-Unit Multifamily Property; Beverly Grove area of Los Angeles, CA
August 11, 2021
George Smith Partners arranged $1,495,000 in permanent financing for the acquisition of a stabilized 4-unit multifamily property located in the Beverly Grove area of Los Angeles, CA. GSP was simultaneously helping the Sponsor close on a few multifamily refinances within their portfolio to pull cash out and use as equity for the acquisition of this Property. Although the occupancy at purchase was 100%, rents were below market because the Seller self-managed the Property and there was a need for exterior and interior improvements. The Sponsor wanted to lock in a low rate to allow for more cash flow to be used towards their value-add strategy. The loan represents 70% of the purchase price and was structured as a floating rate 5-year term, with 12 months interest-only. The interest-only period allows for more property cash flow to be used towards building improvements. The loan has no prepayment penalty, allowing for additional flexibility. Despite being on a strict closing deadline, GSP was able to identify a bank lender who could close within 35 days.
$6,669,200 Acquisition Financing for 76-Unit Multifamily Portfolio, 3.30% For 5 Years,3 Years Interest Only; Portland, OR
August 11, 2021
George Smith Partners secured $6,669,200 in proceeds for the acquisition of two properties comprising 76 units in Portland, OR. The loans are fixed at a rate of 3.30% for 5 years, with 3 years of interest-only payments. The loans are non-recourse and have no payment reserves.
Several challenges were encountered when discussing the transaction with capital providers. Most multifamily loans in Portland are closed through Fannie Mae and Freddie Mac, but these lenders quoted a high rate due to the small size of the market. As a result, GSP had to focus on non-recourse bank lenders, of which there are only a small number active in the market. GSP was able to find a bank with a strong local presence that provided the highest leverage option at a very competitive rate. The pricing was equal to that of multifamily loans in Southern California. The acquisition loan closed in about 60 days.
$7,850,000 Acquisition Loan for 48 Unit Multifamily Property; Fixed at 3.30% for 7 Years; Hollywood, CA
June 9, 2021
George Smith Partners successfully secured $7,850,000 in proceeds for the acquisition of a 48-unit multifamily property in Hollywood. The loan is fixed at a rate of 3.30% for 7 years and has 5 years of interest only payments. The Property’s location, a few feet from a fault line, raised a concern that earthquake insurance might be required. GSP conducted a comprehensive search of city records and engaged a seismic report to demonstrate that sufficient retrofit work had already been completed. As a result, the Lender waived the additional insurance. Several lenders required a reserve account of 6-12 months of P&I payments, but the selected lender had no holdbacks or reserves. The loan closed with no changes to the original application.
May 19, 2021
George Smith Partners identified a national balance sheet lender with an intimate knowledge of the Hayward submarket and arranged $8,400,000 in acquisition and bridge financing for the purchase and reposition of a currently 50% occupied, 1960’s-built apartment complex located in Hayward, CA. The Sponsor placed the portfolio under contract during the COVID-19 pandemic.
The loan includes $1,350,000 of future funding for extensive renovations of unit interiors and exterior upgrades, including an earthquake retrofit. Interest is not charged on the holdback until funds are drawn. This Capital Provider also structured and capitalized an interest reserve to cover the shortfall of cash flow during repositions. Sized to 76% of the total capitalization, the three-year bridge loan is interest only for 36 months and carries a floating rate of LIBOR + 4.25% and include two extension options for up to a term of five-years.
May 5, 2021
George Smith Partners structured $1,590,000 of acquisition bridge financing for a 6-unit multifamily building in a well-located area of the Koreatown section of Los Angeles. The existing building is almost 100 years old and underutilizes the potential density that the site allows for. The Sponsor plans to entitle the site for a larger multifamily development down the line. A 12-month term will give them ample time to prepare to be shovel ready. GSP was able to secure a high leverage execution between a senior lender and a mezzanine lender that provided 79.5% LTV based on purchase price. The blended rate of the total debt stack is 8.84% and is interest only. While the senior loan is non-recourse, the mezzanine lender does require recourse on their portion.