Rate: Prime + 0.5% (5.25% today)
Term: 5 Years
Amortization: 18 months interest only followed by 30-year amortization
Prepayment Penalty: None
George Smith Partners placed a $3,200,000 cash-out refinance on a multifamily property in the trendy Larchmont submarket of Los Angeles, CA. The Property was a recent acquisition and still undergoing renovations as part of a value-added strategy. Despite this, GSP was able to source a bank lender offering a mini-permanent loan structure that met the Sponsor’s request for cash-out proceeds to re-invest in new development deals. Although the loan included a 12-month interest reserve a holdback for the remaining construction budget was not required. The financing was sized to 70% LTV and carries a rate of Prime + 0.5% (5.25% today). The loan carries a 5-year term and is interest only the first 18 months followed by a 30-year amortization.
$17,820,000 Cash Out Financing Fixed at 3.30% Interest-Only for Stabilized Multifamily Property; Phoenix, AZ
July 28, 2021
George Smith Partners secured $17,820,000 of permanent financing for the refinance of a 164-unit multifamily complex located in Mesa, AZ. The Property, which was originally built in 1979, recently completed a renovation project that included updating unit interiors and exterior amenities. The unit mix is comprised of 1-bedrooms (49%) and 2-bedrooms (51%). Amenities include a pool, an open pet area, and an on-site laundry facility. GSP was able to a secure a 7-year fixed rate of 3.30%. The financing is interest-only for the entire term and non-recourse to the Sponsor. Refinancing provided the Sponsor with a much lower rate and a significant return of equity. The loan is sized to 60% LTV and a 1.35x DCR.
July 7, 2021
George Smith Partners secured a senior floating rate loan for a stabilized multifamily property in Kent, WA. The non-recourse debt totaling $12,200,000 was utilized to refinance existing acquisition bridge debt and return of a significant amount of equity to the Ownership. The loan was structured with a 7-year term and interest only payments for the entire duration. The loan was collateralized by a 95-unit multifamily building; the Subject was 97% leased at closing. The Sponsorship had recently renovated approximately 70 of the units with plans to complete the remaining 25 units over the next 18 months.
GSP selected a lender that offered an extremely attractive coupon. The variable rate provided the Sponsorship flexible prepay in the event of a future sale while supplying cash-out proceeds at funding. GSP negotiated a very minimal 2-year rate cap, and the Lender waived all Covid debt service reserves. The Property appraised for more than expected and GSP worked with the Lender to both increase the proceeds and reduce the spread.
$14,250,000 ($229,839/unit) Cash-Out Permanent Financing for a 62-unit, Two-Property Multifamily Portfolio; Los Angeles, CA
May 5, 2021
George Smith Partners successfully placed $14,250,000 ($229,839/unit) in a cash-out, uncrossed (two loans) refinance of two multifamily properties totaling 62 units in Los Angeles, during the COVID-19 pandemic. The loan is fixed at rate of 3.350% for the first 7 years, then converts to a floating rate. Despite the economic uncertainty during the transaction, GSP leveraged the firm’s collective production and relationship with the Lender to close the loans with loan terms as originally structured. GSP worked the lender to diligently ensure a quick closing and to maximize proceeds while addressing COVID related concerns. Both properties had undergone extensive renovations and upgrades since the acquisition in 2018 and have maintained over 95% occupancy throughout 2020 despite the pandemic.
$4,600,000 Cash Out Refinance of 38 Unit Multifamily Property; Fixed at 3.30% for 5 Years; Seattle, WA
March 17, 2021
George Smith Partners secured $4,600,000 in proceeds for the cash-out refinance of a 38-unit multifamily property located near Seattle, WA. The Borrower has completed a value-add business plan over the past two years. The Lender gave full credit for the newly signed leases and higher net operating income at the Property. Only one month of stabilized operating history was required to underwrite to the in-place income. Proceeds were maximized by applying the debt coverage ratio constraint to the actual note rate, rather than using a higher underwriting rate.
The previous loan was originated during a cyclical peak in interest rates and carried a note rate of 4.70%. The new refinance loan lowered the Borrower’s interest rate by 140 basis points while simultaneously providing a return of equity. Fixed at 3.30% for five years, the first three years are interest only before rolling into a 30-year amortization schedule.
Rate: 3.30% fixed for 5 years, then floating at 1-year CMT + 2.75%
Term: 10 years
Amortization: 3 years Interest Only followed by 30-year amortization
Prepayment Penalty: 3,2,1,1,1%
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.
January 20, 2021
George Smith Partners was retained to refinance a 2-Property multifamily portfolio. Sensing buying opportunities in the multifamily market, the Sponsor wanted to pull cash out of their existing multifamily portfolio to use as equity to purchase new properties. GSP obtained a fixed rate of 3.15% for the first 5 years of the 30-year term.
With the global pandemic and uncertainty in the market, it was critical to select a capital provider who could successfully close and provide the cash out for the additional purchases. Any delays would have been very costly because of penalties in the purchase contract. In addition, most lenders were overwhelmed with year-end financing requests as several other lenders pulled out of the market and forbearance requests from their current borrowers. There were complex issues around appraisals and inspections that required GSP’s daily oversight.
Because of GSP’s strong relationship with this capital provider, we were confident that the loan officer would stay focused, close on time and keep the agreed rate and proceeds. GSP is in the debt market every day which gave us the ability to ensure that the selected Capital Provider was closing deals and meeting deadlines. GSP’s experience working with appraisers, inspectors and title/escrow during the COVID period was critical to getting this transaction completed in a timely manner. The loan closed on time and the Sponsor was able to utilize the cash-out to purchase another project. As is common during the COVID crisis, the Capital Provider wanted a 12-month payment reserve. GSP was able to convince the Capital Provider to only require 6-months and allow the reserve to be applied to the first 6-months of payments.