$3,400,000 Covered Loan for New Hotel Development 80% LTC; Los Angeles, CA

Rate: 8.3%
Term: 1 Year
Amortization: Interest only
LTV: 80% of Purchase Price
Prepayment: None
Guaranty: Non-Recourse
Lender Fee: 1%

George Smith Partners secured financing for a non-recourse $3,400,000 covered land loan for a hotel development in Los Angeles. There is currently an existing building on the Property which allowed GSP to structure a highly leveraged land loan. Usually land loans are limited to 50% of the purchase price, but GSP’s strong relationships and experience allowed for the value of the current improvements to achieve much higher leverage.

Advisors

Related Financings

  • Expand

    $9,300,000 Non-Recourse Cash Out Refinance For Los Angeles Multifamily Property

    July 17, 2019

    Transaction Description:

    George Smith Partners secured a $9,300,000 Non-Recourse refinance loan for a 35 unit multifamily property in Los Angeles. The loan provides 65% leverage and is fixed at a rate of 4.04% for seven years. Over the past 3 years, the Sponsors renovated 27 of the 35 units with a heavy lift that neared $50K per unit. GSP sourced a lender that gave the Borrowers maximum credit for the higher income that resulted from leasing the newly renovated units. The Lender did not require seasoning on the new leases. In order to maximize underwritten cash flow, GSP provided data that demonstrated the very low vacancy percentage in the submarket. This allowed the Lender to use a slightly lower vacancy factor than that of a typical apartment transaction. Additionally, the Lender used market rate expenses despite some variation in the historical P&Ls. The Lender was able to rate lock at application and close in about 55 days.

    Rate: Fixed at 4.04% for 7 years then floats at 6 Month LIBOR + 2.25%
    Term: 30 years
    Amortization: 30 years
    Prepay: 4,3,2,1,0
    LTV: 65%
    DCR: 1.15
    Guaranty: Non-Recourse

  • Expand

    $41,000,000 in Permanent Financing for 187,000 SF, Shopping Center in Lakewood, CA

    July 17, 2019

    Transaction Description:

    George Smith Partners secured $41,000,000 in non-recourse debt to refinance an existing senior and mezzanine loan for a regional Southern California shopping center. The Property is 187,000 square foot center; 100% occupied, with anchor tenants Hobby Lobby and Michaels. GSP worked with the lender to assuage B-Piece buyer concerns of the anchor tenant’s termination risk. Loan proceeds repaid the existing senior and mezzanine loans, covered closing costs, and provided a return of equity to the Sponsor. The financing is a 10 year full term interest only loan that maximizes cash flow for the Sponsor. The non-recourse fixed-rate loan priced at 1.57% over the 10-year Treasury that had a floor of 2.40% at application.

    Rate: 3.97% Fixed for Entire Term
    Term: 10 Years
    Amortization: Full-Term Interest Only
    Loan-to-Value: 65%
    Guarantee: Non-Recourse
    Lender Fee: Par
    Prepayment: Defeasance

  • Expand

    $67,250,000 of Non-Recourse High-Leverage Senior Construction Financing for the Ground Up Development of a 254-unit Multifamily Tower in Phoenix, AZ

    July 17, 2019

    Transaction Description:

    George Smith Partners arranged $67,250,000 in non-recourse senior construction financing for the ground-up development of a market rate 254-unit, 17 story, multifamily tower in Phoenix, Arizona. The Property is in the Roosevelt arts district of downtown Phoenix near the Valley Metro Rail, Arizona State University graduate schools of journalism and law, as well as the University of Arizona Cancer Center. The Property will feature amenities such as a roof top pool overlooking the downtown skyline and beyond. Sized to 80% of total project cost, the interest only loan will strike a desired balance of debt to equity for the local developer. The Borrower was sensitive to standard bank underwriting decision making and asset management structures. GSP sourced non-recourse construction financing from a non-bank lender with a streamlined and flexible decision-making structure. The capital provider and their asset management team will act more like a partner than a lender from closing through development and payoff.

    Terms Confidential

  • Expand

    $10,200,000 Refinance of a Multi-Tenant 100% Occupied Office Building; San Diego, CA

    July 10, 2019

    Transaction Description:
    George Smith Partners successfully arranged a $10,200,000 refinance of a 69,552 square foot, multi-tenant office building in San Diego. The permanent recourse financing is fixed at 3.68% for the first five years with a rate reset for the remaining five years. The loan amortizes for 25 years with a declining step down prepay penalty.

    Challenges:
    There is rollover risk of approximately 53% of the square footage from the largest tenant, with their lease expiring in three years. Because of this, other lenders proposed limited loan terms of five years or less or simply declined the financing request. Lender’s willing to finance required reserves to mitigate the rollover risk which was unappealing to our Sponsor.

    Solutions:
    George Smith Partners worked with a new banking relationship who was able to get comfortable with the rollover risk given the conservative 56% loan to value request. The strength of the Sponsor and longevity of ownership helped the Lender meet the Sponsor’s financing requests.

    Rate: 3.68%
    Term: 10 Years
    LTV: 56%
    Guaranty: Recourse

  • Expand

    $27,000,000 Non-Recourse Financing – 163 Single Family For Rent Portfolio; Humble, TX

    July 10, 2019

    Transaction Description:

    George Smith advised on $27,000,000 of debt and equity financing for 163 purpose built, single family homes for rent in Humble, Texas. Bank debt of $16,700,000 was secured on a non-recourse basis. The homes will range from 1,200 sf to 1,500 sf and will each have a two car garage. Amenities are expected to include greenspaces, a neighborhood lodge, a fitness room, a children’s playroom, and a playground for both children and adults. Infrastructure development will commence immediately, and home construction is expected to commence in the second quarter of 2020. Initial occupancy is expected for late in the second quarter of 2020. The Property will include on-site leasing and management. The location of the Property is in close proximity to growing employment hubs including George Bush Intercontinental Airport, Generation Park, and the Port of Houston. The Community is situated in the award-winning Humble Independent School District and residents are zoned to the recently built Groves Elementary School and Westlake Middle School in The Groves master-planned community, as well as Summer Creek High School.

    Rate: Prime + 0
    Term: 3 years
    Amortization: IO
    LTC: 65%
    LTV: 60%
    Guaranty: Non recourse
    Lender Fee: 1 point

  • Expand

    $3,900,000 Cash-Out Permanent Financing with Full Term Interest-Only After Exchange; Los Angeles, CA

    July 2, 2019

    Transaction Description:

    George Smith Partners financed the purchase of a mixed-use retail/office building in Los Angeles, California, last year, using a 1031 exchange. GSP used our vast experience with tax differed exchanges to arrange a cash-out financing with a seven-year fixed rate and is full term interest-only. The cash- out was used to purchase a new property and the Sponsor was able to reinvest their entire exchange in the purchase to differ any taxable gain. The new refinance allowed the Sponsor to pull cash out from the property tax free and use that cash to grow his real estate portfolio. While the cap rate at purchase was very low, the Property’s value will continue to increase due to its location in a great Los Angeles neighborhood. In a traditional loan, the Borrower would be limited on the loan size and cash flow but structuring the full term interest-only loan allowed the Sponsor to achieve positive cashflow and acquire the new asset without issue.

    Rate: 4.9%
    Term: Fixed for 7 Years
    Amortization: Full Term Interest only
    LTV: 70%
    Prepayment: 4,3,2,1
    Guaranty: Non-Recourse
    Lender Fee: None

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

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

Subscribe Here