Rate: 4.40% Fixed for 7 Years
Interest Only: 3 Years
Term: 7 Years with Optional 7 Year Extension
Amortization: 3 Years Interest Only followed by 27 Year Amortization
Prepayment Penalty: No Prepay
George Smith Partners secured $35,000,000 in proceeds for the permanent refinance of a newly built 161-unit multifamily property in downtown Boise, ID. The Property has been achieving strong leasing velocity but was only 30% occupied when GSP began discussing the transaction with capital sources. Although the original loan request was structured with a forward rate lock and a future funding holdback, GSP was able to source a lender that funded the full proceeds at close.
Some notable challenges were encountered when marketing the deal. Most perm lenders declined to bid because the Property was still in lease-up. Several other lenders would not loan in Boise, although there has been an uptick in institutional capital shifting their focus to Boise. Additional quotes were in the range of $30,000,000-$32,000,000 with a holdback, which was short of the Borrower’s desired leverage.
GSP was able to source a lender that provided superior proceeds, rate, and structure. The Lender held the rate of 4.40% despite large fluctuations in rates while the loan was in application, with no rate lock deposit. The loan has no prepay, which will allow the Borrower to refinance as rents continue to season. The fully funded proceeds provided a considerable amount of cash out to the Borrower over their initial construction loan.
September 13, 2023
George Smith Partners has successfully facilitated a recent cash-out refinance of $4,000,000 for our Sponsor’s multifamily portfolio. This financial arrangement was designed to suit two distinct multifamily properties nestled within the city of Charleston, South Carolina.
The team collaborated with a local bank that demonstrated a keen understanding of these multifamily properties. The negotiations resulted in an arrangement where the lending institution allowed 70% of the appraised value of the Properties for a cash-out refinance. This mutually beneficial agreement showcased the confidence both parties had in the assets’ value and future prospects. The Lender showcased their capacity to offer flexible fixed-rate financing, granting the choice to adjust the fixed rate to market conditions in favor of the borrower throughout the loan’s duration without incurring any expenses.
The Sponsor, represented by the GSP team, was relatively new to the Charleston market and operated from a non-local base, which presented a significant hurdle in the current real estate landscape. The properties were purchased outright with cash in late 2022 and mid-2023.
May 31, 2023
George Smith Partners successfully secured a cash neutral permanent refinance loan for a 12-unit multifamily property in Los Angeles. Due to current market conditions, in which many regional banks are not lending, GSP had to expand its list of capital sources. A national bank was found that provided enough proceeds to pay off the in-place loan plus fees. The loan has 5 years of Interest Only payments on a 7 year fixed rate term. The lender provided non-recourse financing without charging any rate premium compared to a recourse loan. The loan closed in 26 days from application, which may be a record for a bank loan.
May 31, 2023
George Smith Partners secured a bridge loan to finance the takeout of a construction loan on a 17-unit/44-bed Co-Living Community located in the Sunset District of San Francisco. George Smith Partners put the construction loan in place in early 2020 and worked with the construction lender to accommodate delays in the renovation/reposition caused by the Pandemic. The Property represents a former 12-unit apartment community that was repositioned into a Co-Living Community through the addition of 5 rental units in the former ground floor parking garage, as well as the addition of a partial 4th floor on the rooftop of the building. The Borrower went under application in February with closing contingent upon receipt of a Certificate of Completion. GSP was able to leverage its relationship with both Lenders to extend maturity as well as the rate lock in a rising interest rate environment. GSP was also able to negotiate approximately $200,000 in cash to Borrower at close to be used toward FF&E. The property, known as “The Irv,” will be managed by Common. Unlike most co-living products in the market, each unit offers a common area living room, state of the art kitchen, and a bathroom to bedroom ratio of 77% with most units offering en-suite bathrooms. Communal areas include a central courtyard with a BBQ grill and firepit/seating area, a rear yard with secured bike parking, 400 SF roof deck with ocean views, and a surfboard and wet suit wash and storage area.
Rate: 7.5% Fixed (Prime+0%)
Term: 2 Year Bridge + 3 Year Term Option with ability to convert to Term Loan after 1 year based on T3 sufficient to meet 1.25 DSCR based on 6.25% rate, and 30-year amortization.
Origination Fee: 0.25%
Amortization: Interest Only During Bridge Loan
- Advisors: Alina Mardesich
March 7, 2023
George Smith Partners placed a $11,350,000 loan for the refinance of a 60-unit historic multifamily property in Downtown Los Angeles. The loan request was started in Q4 of 2022 when many banks had stopped lending after reaching their full allocation for the year. As a result, GSP engaged in an extensive marketing process that included over 30 lenders. A California-based credit union was sourced that quoted a rate of 5.62%. The lender used a 1.20x DCR and underwrote to the start rate of the loan. This resulted in proceeds of $1.0MM more than several other lenders. During the closing process, the 3-year Treasury temporarily dropped, and the lender re-quoted the rate at 5.34%.
Loan Fee: Par
Term: 3+5+7 (Fixed Rate Resetting at Each Interval)
Amortization: 2 Years Interest Only
Prepay: 3, 2, 0%
- Advisors: Matthew Kirisits
February 8, 2023
George Smith Partners secured $46,000,000 for the refinance of two multifamily properties located in Houston, Texas. Despite the properties being a few months away from stabilization, we secured a 3-year permanent loan instead of a higher-cost bridge loan to pull cash out to the Sponsor at a cheaper rate. We were able to negotiate a favorable prepayment penalty so the Sponsor could pull more capital out in 18 months.
The Sponsor’s original bridge loan that was completed in 2019 was priced at LIBOR + 4.75%, so with rates increasing, their all-in rate was over 9%. The Sponsor had completed 80% of the unit improvements and 100% of the exterior upgrades, but because of COVID, they are about 20% below the target NOI.
GSP utilized its relationships and experience to structure a loan that would be affordable, and most importantly fixed-rate in this increasing rate environment. Overall, the Sponsor was extremely happy with the refinance which allowed them both a fixed low rate and flexibility for the future.
Rate: 5.28% Fixed
Term: 3 Years
Amortization: 24 Months I/O
Prepayment: 3, 2, 1%
January 5, 2023
George Smith Partners arranged $3,830,000 in permanent financing on a newly stabilized 11-unit multifamily property located in Austin, TX. The loan is fixed at a rate of 6.00% for 10 years and a 3-3-3-2-1 prepayment structure. Although some lenders were hesitant to provide competitive permanent financing terms on a former condo multifamily property with less than a year of operating history, GSP was able to source competitive financing ahead of the rising interest rate environment with flexible prepayment. Thanks to our long-standing relationship with this repeat lending relationship, GSP was able to meet the Sponsor’s deadline and close this transaction within 43 days from signing the term sheet.
Term: 10 Years
Prepayment: 5, 4, 3, 2, 1%
- Advisors: Matthew Kirisits