- Rate: 3.70% & 3.90% Fixed for 7 years; 6 Month LIBOR + 2.25% thereafter
- Term: 30 years
- Amortization: 30 Years
- Prepayment Penalty: 5,4,3,2,1
- LTV: 65%
- DCR: 1.15
- Guarantee: Non-Recourse
Transaction Description: George Smith Partners secured $35,470,000 for the cash out refinance of a stabilized multifamily portfolio containing 187 units in West Hollywood. Fixed at 3.70% & 3.90% for seven years, the 30 year fully amortizing non-recourse loans float at 6 month LIBOR + 2.25% for the remaining 23-year term and have a 5,4,3,2,1 step down prepayment penalty.
Challenges: Many of the buildings have long term residents who have lived at the properties for over a decade. The long term residency coupled with stringent West Hollywood rent control constraints leaves the owner with uncaptured market rents, which ultimately affects the amount of loan proceeds.
Solution: GSP sourced a lender who understood the strength of these assets and was able to underwrite to a 1.15x DCR at the actual note rate. The capital provider was amenable to increasing loan proceeds after rate lock and with a handful of recent move-ins, they became comfortable in the future upside of the portfolio as units continue to turn.