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$3,870,000 Cash-Out Permanent Financing Loan for 44-Unit, Multifamily Property; Los Angeles, CA

Rate: 3.15% (Fixed for 7 Years)
Term: 30 Years
LTV: 60%
DCR: 1.20

Transaction Description:

George Smith Partners arranged $3,870,000 in cash-out permanent financing for the refinance of a 44-unit multifamily property located in Los Angeles, CA. GSP was able to time the refinance of the more expensive lender and lock the rate before the interest rate market started to move upwards. The recent improvements allowed the Sponsor to increase rents thus increasing the value of the Property. GSP was able to provide the Sponsor with a 10-year term, and the first 7 years being fixed at an incredibly low rate. The flexible prepayment structure is equal to 2% for the first 2 years, 1% for years 3 and 4, and 0% thereafter. The loan structure allows the Sponsor to refinance out of an expensive loan with a fixed rate of 3.15%, while also receiving cash out. The Sponsor is using cash-out proceeds to continue their business plan of purchasing and renovating additional properties.

Advisors

Related Financings

  • $15,100,000 Cash-Out Refinance of a 5-Property Multifamily Portfolio at 3.40% – 70% LTV; Los Angeles, CA

    April 11, 2022

    Transaction Description:

    George Smith Partners arranged $15,100,000 in permanent financing for the refinance of a 5-property multifamily portfolio located in Los Angeles, CA. Using GSP’s vast network of relationships, we were able to source and quickly lock fixed rate financing in a market that is seeing rising interest rates. The Sponsor also wanted to pull cash out of their existing multifamily portfolio to use as equity towards purchasing new properties. The Sponsor had recently completed exterior and interior renovations including common area upgrades to all five properties. The recent improvements allowed the Sponsor to increase rents thus increasing the value of the Property. GSP was able to provide the Sponsor with a 30-year term, with the first 5 years being fixed at a rate of 3.40%. The loan represents 70% loan to value with a minimum 1.20 DSCR. The flexible stepdown prepayment structure is equal to 5,4,3,2,1. The cash-out loan allows the Sponsor to use more equity towards growing their multifamily portfolio. Thanks to GSP’s long-standing relationship with this bank lender, we were able to meet the Sponsors deadline and close this transaction within 35 days from signing the term sheet.

    Rate: 3.40%
    Term: 30 years term, fixed for first 5 years
    LTV: 60%
    DCR: 1.20

  • $26,560,000 Permanent Financing for a 284-Unit Multifamily Asset; Rexburg, ID

    March 9, 2022

    Transaction Description:

    George Smith Partners secured $26,560,000 in permanent financing for a 284-unit multifamily project located less than a mile from Brigham Young University-Idaho (BYU-I), one of the country’s fastest growing universities and Idaho’s largest university, in Rexburg, Idaho. The apartment complex features novel, modern 2-bedroom apartment units with boutique amenities including a racquetball court, 24/7 state-of-the-art gym, outdoor grill and fire pit lounge area, dog park, and clubhouse with conference rooms. The community was developed in phases, so the refinance retired existing construction and bridge debt, provided significant cash-out to the Sponsor, and reduced their previous interest rates considerably.

    The Rexburg multifamily submarket is undergoing a colossal renaissance, seeing over $1B of new investments and a population growth of over 62% over the last decade. The Sponsor, a local developer with significant knowledge and experience within the Rexburg market, recognized the need for high quality product in a supply constrained market. GSP was able to leverage market interest to secure the most competitive terms available by focusing on the desirable location as well as the Sponsor’s track record and familiarity with the high-growth market. The loan carried a 35-year term priced at a 2.91% fixed-rate and 80% LTV.

    Rate: 2.91% Fixed-Rate
    Term: 35 Years
    LTV: 80%

  • Perm Debt – 1.20x DSCR & 3-Years Interest Only – Stabilized Multifamily, Los Angeles, CA

    April 7, 2021

    Transaction Description:

    George Smith Partners secured senior permanent financing for a stabilized multifamily property located in the Pico Robertson neighborhood of Los Angeles, CA. The non-recourse debt was utilized to complete the acquisition of the multifamily asset. The loan was structured with a 5-year term and interest only payments for the initial 3-years followed by a 30-year amortization schedule. The loan was collateralized by a Class B, three story, 16-Unit multifamily property. The Subject was 100% leased at closing but only 78% physically occupied.

    GSP selected a bank lender that was able to underwrite the income from three newly executed leases with no seasoning. The Lender funded the full proceeds with signed leases and rent checks although the tenants had yet to take possession. The Lender executed on excellent terms while closing on a firm acquisition deadline of 45 days. At application, the Lender offered an early rate lock to remove any pricing risk. GSP worked with the Lender to navigate the appraisal assumptions surrounding concessions and market rent stemming from various COVID risks while maximizing proceeds.

    Rate: 3.40%
    Term: 5 years
    Max LTV: 65%
    Min DCR: 1.20x
    Amortization: 3-Years Interest Only, 30-Year Schedule thereafter.
    Origination Fee: Par
    Prepayment: 3, 1, 1, 1
    Guaranty: Non-Recourse

  • Perm Debt – 10-Years Interest Only – Stabilized Multifamily; Los Angeles, CA

    March 24, 2021

    Transaction Description:

    George Smith Partners secured senior permanent financing for a stabilized multifamily property in Los Angeles, CA. The non-recourse debt totaling $12,300,000 was utilized to refinance existing debt and return equity to the Ownership. The loan was structured with a 10-year term and interest only payments for the full duration. The loan was collateralized by a Class-A 34-Unit multifamily building, the Subject was 94% leased at closing and located in a highly desirable West Los Angeles neighborhood.

    GSP selected a lender that was able to refinance the Sponsor’s existing debt, cover prepayment penalties and return a significant amount of equity to the Borrower, while simultaneously locking in interest only payments for the next ten years at a very desirable rate. GSP worked with the Lender to minimize debt service reserves while addressing Lender concerns for potential COVID related shortfalls; cash-out proceeds were secured on the loan despite several COVID related delinquencies.

    Rate: 3.43%
    Term: 10 years
    Max LTV: 65%
    Min DCR: 1.35x
    Amortization: None; 10-Years Interest Only
    Origination Fee: Par
    Prepayment: Yield Maintenance

  • $8,152,500 Conversion to Co-Living, 68% LTC, Heavy-Lift Bridge-to Perm Loan; San Francisco, CA

    November 11, 2020

    Transaction Description:
    George Smith Partners placed the $8,152,500 bridge-to-mini perm loan for the conversion of an existing 12-unit multi-family community into a 17-unit 44-bed co-living community. The 68% LTC bridge loan converts to a 5-year mini-perm loan fixed at CMT + 2.5% with a 3.75% floor.

    Challenge/Solution:
    The Project came to GSP half-way through construction and was being funded by a lender that had filed bankruptcy with proceeds that were insufficient to complete the new business plan. GSP put the loan under application pre-COVID with a new business plan that included (as a condition in closing) approvals for a 4th floor penthouse/useable roof top level. While in application, the construction and the penthouse level approval process came to a halt due to COVID causing stress on both the existing loan (nearing maturity) as well as the new loan underwriting. The challenges associated with co-living as a new asset class resulted in additional scrutinization from the new lender as well as the appraisal which had a negative impact on value. GSP was able to resolve the valuation issues by successfully arguing the merits of the Project as well as successfully negotiating a waiver of the exit fee on the previous loan which resulted in zero impact to the loan proceeds and the Borrower’s out of pocket cash required at closing.

    Construction Loan:

    Rate: Prime plus 1% with 5% floor
    Term: 18 Months
    LTC: 68%
    LTV: 65%

    Mini-perm Loan:

    Rate: CMT + 2.25% with 3.75% floor
    Term: 5 Years
    Amortization: 30 years
    Prepayment: 5, 4, 3, 2, 1 open

  • $12,933,000 Permanent Loan to Refinance Existing Construction Debt for a Recently Completed 21-Unit Multifamily Property; 65% LTV; 2.92% Fixed, 1.35 DSCR; Los Angeles, CA

    April 22, 2020

    Transaction Description:

    George Smith Partners secured $12,933,000 in proceeds for a recently stabilized 21-unit multifamily building located in the Pico Robertson neighborhood of Los Angeles, CA. The non-recourse, par, permanent Fannie Mae loan was utilized to refinance the existing bank construction debt in the amount of ~$9.45M and return equity to the ownership. The loan represented 88% of cost and carries a 10-year term with 10-years of interest only payments. The loan is secured by a Class A five-story mid-rise multifamily building comprised of four 2-bedroom units and seventeen 3-bedroom units. Amenities at the Subject Property include controlled access entry and parking, an elevator, rooftop deck, and private balconies. The loan was placed into application prior to major Covid-19 concerns thus no index floor was contemplated. GSP worked with the Lender to underwrite revenue to a trailing one month of actual collections carefully navigating the waiver process so as not to trigger new business which would have resulted in an index significantly wider than the actual 10-year Treasury rate. Lastly, a six-month reserve for principal, interest, taxes, insurance, and reserves was held back at closing in the event of a shortfall, enabling the Lender to fund during the global pandemic. The reserve will be released within one year if the Subject Property maintains the minimum 1.35x DSCR for the same period.

    Rate: 2.92% Fixed
    Term: 10 Years
    Amortization: 10 Years Interest Only
    LTV: 56%
    DSCR: 1.35x
    Recourse: Non-Recourse
    Prepayment: Yield Maintenance
    Loan Fee: Par