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

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

Subscribe Here

$38,500,000 Bridge Financing for a Two-Property Multifamily Portfolio; Sanford, FL

Rate: One Month CME Term SOFR + 3.60% (0.25% Floor Rate)
Term: 3 Years, Two 12-Month Extensions
Amortization: Full Term Interest-Only
LTV: 80% (As-Is LTV)
LTC: 79%
Prepayment: 15 Months Minimum Interest Period
Loan Fee: 1% Origination Fee, 0.25% Exit Fee
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners successfully placed a $38,500,000 bridge loan for the acquisition and renovation of two multifamily properties located in Sanford, Florida. The two Properties total 260 units and are located across the street from one another. GSP sourced a lender that was able to maximize proceeds at a low rate by crossing the properties with release provisions. The two properties were allocated at different loan amounts for their release provisions. One property is a 1970’s vintage single-story, 120-unit, apartment complex that had an initial loan of $14,150,000. The other property is a 1990’s vintage, two-story, 140-unit, garden-style apartment complex that was allocated at an initial loan amount of $20,800,000. The loan was sized to 79% LTC and includes the portfolio’s capital improvement and renovation budget. The Sponsor intends on renovating approximately 75% of the units within the 3-year loan term.

Advisors

Related Financings

  • $190,000,000 Acquisition Financing for 7 Multifamily Properties Totaling over 1600 Units

    July 26, 2023

    Transaction Description:  

    George Smith Partners arranged 7 different loans over a 6-month period for a longtime sponsor. The Properties were acquired from multiple sellers. The loans are individual non-recourse loans (no cross-collateralization).

    All Terms Confidential

  • Acquisition Financing for a 10-Acre Entitled Multifamily Site; Western State

    March 29, 2023

    Transaction Description:

    George Smith Partners secured an acquisition bridge loan for the acquisition of 10 acres in Laveen, AZ that will be developed with a Humphrey’s designed, 250-unit resort-style multifamily community. The $4,500,000 loan funded 100% of the purchase price plus an interest reserve. The site was put under contract in October 2020 “unentitled” but part of a 35-acre master plan community that includes a 16-bed hospital facility, Big O’ tires, and land for future senior housing development and restaurants. The 35-acre site has a “main and main” location in Laveen which has seen tremendous growth since the opening of Loop 202, a new freeway that connects Laveen and other South Phoenix communities with Interstate 10. The Sponsor fully entitled the site during escrow which included the annexation of 6 of the 10 acres from County to City property.

    GSP also advised on the acquisition and procured over $2,000,000 of Co-GP equity to complete predevelopment of the site. GSP was able to find a non-recourse senior lender for the land acquisition that gave 100% value to approximately $2,500,000 of imputed equity. The Sponsor, a Phoenix-based development firm with over 60 years of development experience, will complete its value-engineering during the term of the land loan while GSP procures construction financing.

    Rate: 11.75% Fixed
    Term: 12 + 6 Month Extension
    Origination Fee: 1.5%
    Prepayment: Allowed with 6-Months Minimum Interest
    Amortization: Interest Only
    Guaranty: Non-Recourse

  • $25,000,000 Bridge Financing for 200-Unit Multifamily Acquisition; Irving, Texas

    December 7, 2022

    Transaction Description:

    George Smith Partners successfully placed a $25,000,000 bridge loan for the acquisition and renovation of a 200-unit, 1970 vintage apartment community in Irving, Texas. GSP sourced a Lender that was able to maximize proceeds while providing future capital expenditure funding for the sponsor. The loan was sized to 74.1% of As-Is Value and includes future fundings for 100% of the capital improvements and unit renovations. The Sponsor plans on renovating approximately 75% of the units within the initial 3-year loan term.

    The lender prices over 30-Day Average SOFR, as opposed to the more common 30-Day Term SOFR. The average SOFR is based on the preceding 30 days rather than the upcoming 30 days and is 60 bps lower in today’s rising rate environment.

    Rate: 4.10% + 30-Day Average SOFR (4.88% floor rate)
    Term: 3 Years, Two 12-Month Extensions
    Amortization: Interest-Only (30 Year amortization during the extensions)
    LTV: 74.1% As-Is
    Prepayment: 18 Months Minimum Interest Period
    Loan Fee: 1% Origination Fee, 0.50% Exit Fee
    Guaranty: Non-Recourse

  • Permanent Financing for Acquisition of 12-Unit Multifamily Property; Los Angeles, CA

    October 26, 2022

    Transaction Description:

    George Smith Partners arranged $2,250,000 in permanent financing for the acquisition of a stabilized 12-unit multifamily property in Los Angeles, California. The Sponsor acquired the Property as interest rates were soaring and as the environment was changing drastically with the Fed raising rates. GSP identified a Capital Provider who allowed an early rate lock, required no holdbacks of any kind, no deposits to be held at their branch, and provided an extremely flexible prepayment penalty structure. This allows the Sponsor plenty of options during the next 5 years at an aggressive rate.

    Rate: 4.34%
    Term: 5 Years Fixed
    Amortization: 30 Years
    Prepayment Penalty: None
    Reserve Account: None
    Deposits Required: None

  • $65,410,000 Acquisition Bridge Financing for a 232-Unit Multifamily Property; San Bernardino, CA

    July 6, 2022

    Transaction Description:

    George Smith Partners secured $65,410,000 in proceeds for the acquisition of a 232-unit multifamily property in San Bernardino County. The bridge loan is structured as $63,020,000 at close and $2,390,000 in future funding. The fully-funded proceeds represent 75% LTC. The loan floats at a rate of 30-Day SOFR + 3.20% with a 0.35% floor on SOFR.

    GSP discussed the transaction with over 40 different capital providers and received a wide range of feedback. Many lenders declined due to the Property being constructed in the 1970s. Other lenders provided quotes but were limited to a maximum of 70% LTC ($60,800,000). Several quotes had pricing of SOFR + 4.0%.

    GSP was able to source a lender that provided 75% LTC with pricing of SOFR + 3.20%, which is well below market. The Lender underwrote to an exit debt yield of only 6.0%, resulting in maximum proceeds. There was no required interest reserve or any type of cash management during the initial loan term. The spread of 3.20% over SOFR was maintained despite many other lenders widening their spreads while the loan was in app. The loan closed with no changes to the original term sheet.

    Another challenge facing floating rate bridge loans is the requirement to purchase a cap. Until several months ago, the cost of a cap was negligible. However, the expense has become exorbitant due to the current volatility in interest rates. GSP was able to lower the up-front cap cost by reducing the period of the cap from 3 years down to 2 and increasing the rate at which the cap is triggered (strike price).

    Rate: Floating at SOFR + 3.20% with a 0.35% SOFR Floor
    Term: 3 Years, Two 12-Month Extensions
    LTV: 77% Initial / 65% Stabilized
    LTC: 75%
    Debt Yield: 4.5% In / 6.0% Out
    Guaranty: Non-Recourse

  • Acquisition Loan for a 15-Unit Multifamily Property; 3.54% Fixed; 72% LTV; Houston, Texas

    May 25, 2022

    Transaction Description:

    George Smith Partners secured permanent financing for a 15-unit multifamily property located in Houston, Texas. The financing is fixed at 3.54% for 5 years. The deal went into application right before the Federal Reserve increased rates and before we experienced a run-up in treasuries. GSP’s good standing with the Lender ensured the original terms were honored until closing, notwithstanding the loan extension that took place and the rapid increase in the interest rate environment. The financing does not require any deposit relationship with the bank or any funds to be held back for reserves. The Lender’s processing/application fee was $2,000 and they had no origination fee.

    Rate: 3.54%, Fixed for 5 Years
    Term: 30 Years
    Amortization: 30 Years
    LTV: 72%
    Prepayment: 4, 3, 2, 1%
    Depository Relationship: None Required