Rate: 3.75% (fixed) for seven years
Term: 30 years
Amortization: Five years interest only; 30-year amortization thereafter
DSCR: Sized to a 1.15x DSCR with an initial funding sized to a 1.20x DSCR
Lender Fee: Par
Prepayment: 5,4,3,2,1% step-down prepayment
George Smith Partners successfully placed $27,350,000 ($337,655/unit) in a cash-out, uncrossed (two loans) refinance of two multifamily properties totaling 81 units in Los Angeles communities, Los Feliz and Burbank, during the COVID-19 pandemic. While in application with accretive terms in February 2020 prior to California’s “stay-at-home” order, the Lender subsequently paused all new loan originations, including its in-process pipeline, mid-way through this transaction. Despite the economic uncertainty during the transaction, as well as the Lender halting all in-process and new loan originations, GSP leveraged the Firm’s collective production and relationship with the Lender to close the loans during the COVID-19 pandemic with loan terms as originally structured. GSP worked diligently to ensure the final economic loan terms matched the agreed-upon LOI terms, including an additional advance to be funded after the eviction moratorium is lifted. Both properties had undergone extensive renovations and upgrades since acquisition and have maintained 95% occupancy throughout 2020 despite COVID-19 regulations in California allowing tenants to defer rent payments.
February 17, 2021
George Smith Partners arranged $3,825,000 in cash-out permanent financing (70% LTV) for the refinance of a 30-unit multifamily property located in Los Angeles, CA. The Sponsor used GSP with intentions of taking out their existing expensive lender. The Sponsor recently completed exterior and interior renovations including common area upgrades. The recent improvements allowed the Sponsor to increase rents thus increasing the value of the Property. GSP was able to provide the Sponsor with a 30-year term with the first 5 years being fixed at a very low rate. The rate will then reset every 5 years for the remainder of the term. Rather than most loans having a balloon payment in 5,7 or 10 years, this loan structure allows for flexibility because the loan matures in 30 years. The flexible prepayment structure is equal to 1.75% for the first 3 years, 1% for years 4 and 5, and 0% thereafter. The loan structure allows the Sponsor to refinance out of an expensive loan with a fixed rate of 3.15%, while also receiving cash out. The Sponsor is using cash-out proceeds to continue their business plan of purchasing and renovating additional properties.