Rate: 3.70% Fixed
LTC: 55% LTC
Amortization: 30 Year / 5 Year Fixed Term
Prepayment: Within first 3 years – 1.75%, after that 1%
George Smith Partners arranged $2,950,000 in permanent financing for a 12-unit multifamily property located in West Hollywood, California. In July of 2019 GSP arranged the acquisition financing for the Sponsor who now retained us to refinance the 85% bridge loan. Even with the current economic uncertainty, GSP was able to increase the loan size while dramatically decreasing the interest cost. GSP obtained a fixed rate of 3.70% for the first 5 years which allowed the Sponsor to recoup some of the capital invested in the rehab. This was particularly difficult to accomplish in light of the previous high leveraged loan.
With the COVID-19 global pandemic and uncertainty in the market, it was critical to select a capital provider who could provide certainty of execution. Borrowing costs are on the rise as lenders ratchet up their credit standards. With the current crisis, lenders were 100% focused on rent collections and overwhelmed with new financing requests as several other lenders pulled out of the market.
GSP selected a capital provider that we have a strong relationship with and have closed numerous financings with. We knew the loan officer would stay focused on the need to close on time and keep the agreed-upon rate and proceeds through the completion of the loan. Because GSP is in the debt market every day, we were able to ensure that the capital provider was truly closing deals and meeting deadlines. GSP’s experience working with appraisers, inspectors and title/escrow during the COVID-19 pandemic was critical to getting this transaction completed. It is now common during the COVID-19 pandemic that Capital Providers require a 12-month interest reserve. Due to our strong relationship with the selected Capital Provider, we were able to negotiate that those funds be applied to the first 12 months of the loan payments.
Assistant Vice President
April 7, 2021
George Smith Partners secured senior permanent financing for a stabilized multifamily property located in the Pico Robertson neighborhood of Los Angeles, CA. The non-recourse debt was utilized to complete the acquisition of the multifamily asset. The loan was structured with a 5-year term and interest only payments for the initial 3-years followed by a 30-year amortization schedule. The loan was collateralized by a Class B, three story, 16-Unit multifamily property. The Subject was 100% leased at closing but only 78% physically occupied.
GSP selected a bank lender that was able to underwrite the income from three newly executed leases with no seasoning. The Lender funded the full proceeds with signed leases and rent checks although the tenants had yet to take possession. The Lender executed on excellent terms while closing on a firm acquisition deadline of 45 days. At application, the Lender offered an early rate lock to remove any pricing risk. GSP worked with the Lender to navigate the appraisal assumptions surrounding concessions and market rent stemming from various COVID risks while maximizing proceeds.
March 24, 2021
George Smith Partners secured senior permanent financing for a stabilized multifamily property in Los Angeles, CA. The non-recourse debt totaling $12,300,000 was utilized to refinance existing debt and return equity to the Ownership. The loan was structured with a 10-year term and interest only payments for the full duration. The loan was collateralized by a Class-A 34-Unit multifamily building, the Subject was 94% leased at closing and located in a highly desirable West Los Angeles neighborhood.
GSP selected a lender that was able to refinance the Sponsor’s existing debt, cover prepayment penalties and return a significant amount of equity to the Borrower, while simultaneously locking in interest only payments for the next ten years at a very desirable rate. GSP worked with the Lender to minimize debt service reserves while addressing Lender concerns for potential COVID related shortfalls; cash-out proceeds were secured on the loan despite several COVID related delinquencies.
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.
$27,350,000 ($337,655/unit) Cash-Out Permanent Financing for an 81-Unit, Two-Property Multifamily Portfolio; Los Feliz and Burbank, CA
November 4, 2020
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.
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
May 27, 2020
George Smith Partners placed $16,300,000 in cash out refinancing for a recently stabilized for-rent SFR development. The financing includes seven years of interest only, which will maximize cash flow for an asset located in one of the fastest growing markets in the United States. The Project is a key asset for the Sponsorship group which operates over 2,500 units throughout the mountain states and securing a low rate, higher leverage, take-out loan was an essential part of the long-term strategy of the company. GSP utilized our relationships to close the transaction in three weeks from a signed application.
During the COVID-19 era we have seen significant changes to underwriting standards in comparison to 2019. These new requirements presented an underwriting challenge for the recently stabilized project as collections were increasing throughout 2020. GSP was able to demonstrate the Sponsors overall portfolio performance and three months stabilized occupancy to achieve maximum proceeds.