Construction Loans: $33,000,000 (80% LTC) Construction Financing for Mixed-Use Project with Micro Units

Rate: LIBOR + 8.75%
Term: 18 Months with Three, 6-Month Extensions
Amortization: Interest Only
LTC: 80%
LTV: Sized to 70% of As-Complete Value
Guarantee: Non-Recourse

George Smith Partners arranged $33,000,000 of construction financing for a mixed-use project located in the Southwest. The project is set to include 165 micro-unit apartments, 20,000 square feet of retail, and 43,000 square feet of office space. The apartments comprise a majority of the income, but it was very hard to obtain quality comps given the lack of micro-unit inventory in the market. GSP identified a lender that was able to get comfortable with the micro-unit concept even with a lack of comparable properties. The Lender was also comfortable giving the Sponsor credit for an increase in the value of the land since acquisition, eliminating the need for any new cash at closing. The non-recourse loan is sized to 80% of total cost (including the appreciation in the land) and is priced at LIBOR + 8.75%. The financing carries an 18-month term with three, 6-month extensions.

Advisors

Related Financings

  • Expand

    The Orchard: $55,000,000 Non-Recourse Ground-Up Mixed Use Construction to 80% of Cost; Azusa, CA

    January 29, 2020

    Transaction Description:

    George Smith Partners placed the ground-up development financing for a 163 unit/31,700 square foot mixed use development in Azusa, California. The Transit Oriented Development was previously owned by the City of Azusa and awarded to the Developer via an RFP in 2016 and will include restaurants and a 3,500 square foot Laemmle art house Theater. The Orchard will be the latest project along Metro’s Gold Line which serves the San Gabriel Valley and connects the Valley to Downtown Los Angeles via a 42-minute commute through Pasadena, offering residents a lower cost of housing with ease of transit to employment centers. The Orchard will be a low-cost alternative to commuters considering similar TOD sites in Sierra Madre and Pasadena, amplifying housing options for the healthcare professionals at City of Hope and Kaiser, and providing relief to pent up student housing demand at Azusa Pacific University and Citrus College.

    Sized to 80% of total cost, which included an increase in land and covered imputed equity once permits were ready-to-issue (RTI). Priced at LIBOR + 7.125%, the non-recourse construction loan limits all carve-outs and a capped completion guarantees to an entity. There are no “warm-body” signatures on any component of the financing. The three-year term allows for two additional nine-month options. Prepayment is limited to a minimum interest payment calculation and a 1-point exit fee.

    Rate: LIBOR + 7.125%
    Term: 36 months + 2 nine-month options
    Fees: 1 in/1 out
    Recourse: No warm bodies; capped at entity level.
    Prepayment: Minimum interest based on lender calculation

  • Expand

    $460,000,000 Non-Recourse Senior Construction Financing for the Ground Up Development of Block 216, a 35-Story Mixed-Use High-Rise Anchored by a 251-Key Ritz Carlton Hotel; Portland, OR

    July 24, 2019

    Transaction Description:

    George Smith Partners structured and placed a $460,000,000 non-recourse senior construction loan for the ground up development of Block 216, a landmark 1.1 million square-foot ground-up high-rise development in the heart of Portland, Oregon’s central business district. The 35-story luxury high-rise will be anchored by a 251-key five-star Ritz-Carlton hotel, the first five-star hotel in Portland. The development also features Ritz-Carlton branded residences, 140,000 square feet of Class A office space, and 7,800 square feet of ground floor retail, which will open up to a pedestrian “festival street.” Located at the intersection of the Central Business and Pearl Districts, Block 216 spans a full city block. This is extremely rare in Portland. Upon completion in 2023 Block 216, will be the fourth tallest high rise in Portland and the largest tower in Portland based on square footage.

    Challenges:

    Block 216 represents the first luxury, five star hotel and branded residential project in Oregon. It is also the first project with amenities common to luxury properties but absent in Portland thus far. This ground up development is also a true mixed used project with four different uses (hotel, residential, office and retail) in a single building.

    Solutions:

    GSP focused on Portland’s incredibly strong underlying fundamentals, including: its population of 2.5 million; its unemployment rate 50 basis points lower than the national average; its 1,200 tech companies (hence the name “Silicon Forest”); the impressive number of blue chip companies with presences in the market; and, the considerable number of institutional investors active in the market. GSP also stressed the Project’s unparalleled location and walkability to every major amenity in Downtown Portland as well as the 30 new conferences booked at the Portland Convention Center as a significant demand driver for five star accommodations.

    GSP executed significant and high profile marketing to ensure the Project was appropriately received in the capital markets. These efforts resulted in a highly structured, non-recourse execution in less than six months from engagement.

     

    All terms confidential

Don't Miss a Fact,
Sign Up for FINfacts!

FINfacts is a weekly newsletter highlighting recent financings and economic insights.

Subscribe Here