Rate: 1.47% spread over 10 YT
Term: 192 months (16 Years)
Amortization: 2 Years Interest Only; 30-Year Amortization Thereafter
Prepayment Penalty: Yield Maintenance
George Smith Partners successfully arranged the permanent financing for a newly constructed luxury 154-unit apartment complex located in Downtown Ventura, one mile from the Pacific Ocean. The Sponsor sought a permanent loan to refinance the construction loan. The Sponsor’s goal was to lock in a long-term, low interest rate in a rising interest rate environment prior to the building reaching stabilized occupancy.
There was significant lease up risk for the permanent lender, as the Property had not yet stabilized with less than a month of operating history at the time of loan underwriting.
GSP was able to make the Lender comfortable by highlighting the Sponsor’s successful track record, the Property’s strong position in the market with few comparables available, the Property’s excellent location, and the prospects for strong rent growth. GSP secured an early rate lock at a low 1.47% spread over the 10 Year Treasury for a 16 year fixed rate loan term. Sized to 60% of value, the non-recourse financing includes 2 years of interest only payments, which enhances the cash flow during the early years of the loan. The loan closed in 30 days.
July 28, 2021
George Smith Partners arranged $2,600,000 in permanent financing (70% LTV) for the refinance of a 16-unit multifamily property located in Los Angeles, CA. The Sponsor engaged GSP to assist them with the replacement of their existing, expensive, highly leveraged, quick close bridge lender that GSP had arranged in April for the acquisition of this Property. The Sponsor’s plan for this value-add Property was to raise the value through strategic property enhancements that will increase rental revenue. GSP was able to provide the Sponsor with a 5-year floating rate with a floor of 3.85%. The loan structure allows the Sponsor to refinance out of an expensive loan and start to recoup additional cash flow to use for interior and exterior renovations. There is no prepayment with this replacement capital allowing the Sponsor to recapitalize once his business plan is realized. The prepayment flexibility will allow the Sponsor to cash-out refinance once they have implemented their value-add strategy. The renovation plan will improve the Property appearance and support the overall business plan of increasing market rents and value. Due to GSP’ strong-standing relationship with this Lender, this transaction closed within 35 days from signing the term sheet and met the Sponsor’s deadline.
$17,820,000 Cash Out Financing Fixed at 3.30% Interest-Only for Stabilized Multifamily Property; Phoenix, AZ
July 28, 2021
George Smith Partners secured $17,820,000 of permanent financing for the refinance of a 164-unit multifamily complex located in Mesa, AZ. The Property, which was originally built in 1979, recently completed a renovation project that included updating unit interiors and exterior amenities. The unit mix is comprised of 1-bedrooms (49%) and 2-bedrooms (51%). Amenities include a pool, an open pet area, and an on-site laundry facility. GSP was able to a secure a 7-year fixed rate of 3.30%. The financing is interest-only for the entire term and non-recourse to the Sponsor. Refinancing provided the Sponsor with a much lower rate and a significant return of equity. The loan is sized to 60% LTV and a 1.35x DCR.
June 30, 2021
George Smith Partners arranged cash-out permanent financing (65% LTV) for the refinance of a 4-unit multifamily property located in West Hollywood, CA. The Sponsor had purchased and renovated the Property all cash. Building improvements included complete gutting of the units and exterior renovations. The recent improvements allowed the Sponsor to quickly lease-up the Property at market rents, thus increasing the value of the Property. Because the Sponsor had purchased the building and paid for most of the capital expenditures more than 12 months prior to the loan request, this was considered a 100% cash-out financing. This combined with the low unit count made securing a conventional lender challenging. GSP was able to leverage its resources and provided the Sponsor with a 5-year term at a low rate of 3.50%. GSP was able to structure the loan with 12 months of interest only payments, before converting to 30-year amortization thereafter. The prepayment structure is 5-4-3-2-1, giving the Sponsor additional flexibility in the coming years. The Sponsor had a short closing timeline to pull his equity out of this deal to purchase another property already in escrow. GSP worked closely with the Lender and closed the transaction in just 35 days. The Sponsor is using the cash-out proceeds to continue their business plan of purchasing and renovating additional properties.
$14,250,000 ($229,839/unit) Cash-Out Permanent Financing for a 62-unit, Two-Property Multifamily Portfolio; Los Angeles, CA
May 5, 2021
George Smith Partners successfully placed $14,250,000 ($229,839/unit) in a cash-out, uncrossed (two loans) refinance of two multifamily properties totaling 62 units in Los Angeles, during the COVID-19 pandemic. The loan is fixed at rate of 3.350% for the first 7 years, then converts to a floating rate. Despite the economic uncertainty during the transaction, GSP leveraged the firm’s collective production and relationship with the Lender to close the loans with loan terms as originally structured. GSP worked the lender to diligently ensure a quick closing and to maximize proceeds while addressing COVID related concerns. Both properties had undergone extensive renovations and upgrades since the acquisition in 2018 and have maintained over 95% occupancy throughout 2020 despite the pandemic.
April 7, 2021
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.
March 24, 2021
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.