Rate: 4.25% Fixed
Term: 2 Years, with 1-Year Extension Option
Prepayment: 1%, 0%
George Smith Partners arranged $3,600,000 in acquisition financing for a 16-unit multifamily property in West Hollywood, CA. The Property came with five vacant units that were previously leased at well below market rents. The Sponsor, a repeat client, planned to renovate the vacant unit interiors and increase rents accordingly. GSP leveraged its network of relationships to source short-term, non-recourse, fixed rate financing with interest only payments with an early rate lock. However, the delayed appraisal report uncovered two units that were not legally permitted, which the lender excluded in its underwriting. GSP worked with the Lender, Appraiser and Sponsor on creative solutions to get as close to the original loan terms as possible. These negotiations required several extensions on the closing. Also, the rate lock eventually expired. Ultimately, GSP was able to get a $3,600,000 loan amount thanks in part to additional analysis and data provided to the Lender. GSP also leveraged its relationship with the Lender to secure a 4.25% fixed rate. While this was higher than the original locked rate, it was well below the current market rate.
Highly Leveraged, Quick Close Acquisition of $2,335,000 for 10-Unit Multifamily Property; West Adams – Los Angeles, CA
March 30, 2022
The Sponsor approached George Smith Partners for highly leveraged (80% Loan-to-Purchase), quick purchase financing. GSP secured this financing which allowed the Sponsor to purchase the 10-unit multi-family property well below the market value. Although the Property is currently 100% occupied, rents were below market because the Seller self-managed and the Property needs exterior and interior improvements. GSP arranged a $2,335,000 in non-recourse financing for the acquisition. The loan was structured with a first trust deed from a debt fund as well as a preferred equity B piece. There’s additional flexibility for the Sponsor because there is no prepayment penalty. This loan structure allows the Sponsor to implement their business plan of renovating units, increasing rents, and refinancing into a permanent loan within a few months. The non-recourse facility was priced at an interest-only fixed rate with a blended rate of 8.05% with a 12-month term plus a 6-month extension. Thanks to GSP’s long-standing relationship with this debt fund and preferred equity investor, we were able to close this transaction in less than 10 days from signing the term sheet.
Blended Rate: 8.05%
Term: 12-months plus a one 6-month extension
Prepayment Penalty: None