$38,600,000 Limited Recourse, Cash Neutral Mid-Construction Financing for a 122-Unit Multifamily; Santa Rosa Beach, FL

Transaction Description:

George Smith Partners placed a $47,000,000 senior construction loan for the ground-up development of a mixed-use project in Azusa, CA. When complete, the 5-story project will consist of 127 apartment units and approximately 10,000 SF of 1st-floor commercial/retail/restaurant space. The Project is an integral component in the ongoing expansion of the City of Azusa’s Downtown district and is immediately adjacent to the Gold Line Station, which runs from Azusa Pacific University & Citrus College west to Downtown Los Angeles. This is the Sponsor’s second project in Azusa.

A lack of comparable projects within the submarket posed a challenge. GSP emphasized the supporting employment centers inside a ten-mile radius, including the two colleges and eighteen medical facilities. In addition, a detailed breakdown of the San Gabriel Valley (SGV) submarket helped showcase the presence of a proportionally higher share of younger households than statewide. Data depicting home values that had grown out of reach for those living in a three-mile radius helped the case for a rental project. Further support was provided by the SGV submarket experiencing minor economic impact during the last two years and during Covid.

GSP executed a full-time marketing campaign and identified the most economically beneficial capital stack scenario for the sponsorship with a stepdown in rate at Temporary Certificate of Occupancy (TCO).

Transaction Description:

George Smith Partners successfully arranged $59,900,000 in construction financing for a 180-unit apartment building in an infill Los Angeles location. The Sponsors are capitalizing on the San Fernando Valley’s 3% vacancy rate and very little brand-new apartment construction. While the Sponsors have significant experience in entitlements and apartment operations, this is their first ground-up development Project. The Sponsors were seeking maximum leverage on a non-recourse basis. The Subject Property is across the street from an apartment project that came online while processing the loan. The rents being achieved were above the Sponsors proforma rents which allowed the Lender to underwrite higher rents and increase loan proceeds during the loan processing. The additional loan proceeds were able to cover the escalating construction costs and increase the leverage to 80% of total project cost.

Transaction Description:

George Smith Partners successfully arranged $25,200,000 in senior construction financing for a 54-unit ground-up luxury apartment community featuring 3,000 SF of ground floor retail space in the heart of Downtown Culver City. The Sponsorship Team acquired the Property in 2018, which is now fully entitled and ready to break ground. The Project is expected to deliver in Q4 of 2023.

As a central and upcoming submarket of Los Angeles, Culver City is peppered with tech startups and major employers from Amazon to Apple, flourishing as an employment hub with over 250,000 high-paying jobs and approximately 8,000 employees within a mile from the Subject site. The best-in-class Sponsorship team has extensive local industry knowledge and recognized the Property’s underlying value, bolstered by the submarket’s immense growth and capital inflow, as well as the area’s historical roots in the movie and entertainment industry. GSP was able to identify a lender who offered highly competitive terms, given the Project’s significant demand and the value of multifamily housing in an ultra-high growth submarket.

Transaction Description:

George Smith Partners secured a $21,250,000 construction-to-bridge loan for a new 52-unit high-end multifamily community located in West Los Angeles on a busy prominent corner. The recourse loan will fund construction and transition into a perm loan with a total term of 10 years. The all-in-one loan represents 60% loan to stabilized value and 70% loan to cost and is structured with a 3-year (+ 6-month extension) interest-only period. The loan allows for open prepayment after year 4 without penalty. Prior to, the prepayment penalty is 2% in years 1 and 2 and 1% for years 3 and 4.

The site is comprised of 5 legal parcels assembled by the Borrower beginning in 2011 through 2015. The proposed Project will consist of 51 residential units and one ground floor retail unit in a Type III, 5-story building with two levels of subterranean parking for 72 cars utilizing a state-of-the-art automated parking system. The proposed unit mix includes studio, 1, 2 and penthouse units as well as 5 live/work units and 4 affordable rent restricted units. Penthouse units include unique/large, covered terraces as well as roof top decks with expansive skyline views.

GSP was able to secure a lender that underwrote to the proforma stabilized NOI despite the challenges faced during the pandemic especially with higher-end product.

Transaction Description:

George Smith Partners secured $4,600,000 of senior construction financing for the development of a 19-unit ground-up multifamily building in Los Angeles, California. The construction loan floats at a rate of Prime + 1%. The 75% loan-to-cost construction loan also comes with the option to convert to a 5-year mini-perm loan upon completion based on the 5-year Treasury plus a margin of 2.25%, with a 3.50% floor, eliminating any future financial risks. GSP sourced a lender that was able to move efficiently and most importantly accommodate the Borrower’s development timeline and experience.

Transaction Description:

George Smith Partners secured $129,000,000 in construction financing for a 280-unit mixed-use multifamily development featuring 25,000 SF of ground-floor retail/office space and best-in-class amenities. Located in the heart of the Cornfield-Arroyo Seco Specific Plan (CASP) area, the Property is adjacent to the high-traffic Los Angeles State Historic Park, USC+LAC Medical Center; the Project site is within a 5-minute walk from more than 34 upcoming bars, restaurants (Momofuku by David Chang), cafes and entertainment venues. The financing provided funding for future capital expenditures and related construction costs.

The top-tier Sponsorship group focused on minimizing their equity contribution through a high leverage debt facility to execute their business plan. GSP was able to identify non-recourse capital with strong local knowledge and confidence in the long-term fundamentals of the high-growth submarket. These efforts were aided by the site’s development potential, given the prime location and thousands of surrounding demand drivers.