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$4,000,000 Ground-Up Construction Financing of a Nine-Unit For-Sale Condominium

Transaction Description:  George Smith Partners successfully placed the financing to construct a nine-unit luxury condominium project in a very desirable Studio City, California location. The Sponsor purchased the land, currently improved with a single family residence, in 2011 and began the entitlement process. Sized to 75% of actual cost, the 12-month term is priced at 11.5% plus a three point lender origination fee.
Challenge: Despite the Sponsor being an experienced developer with years of experience, litigation following the housing crisis in 2008 placing significant strain on the ability to source construction capital for “For-Sale” units. A city provision in the entitlements offered a very tight time-frame when construction could begin.
Solution: Market research supported the Borrowers’ business plan and exit sale prices. A private non-institutional capital source was identified for a quick-close and certainty of execution as applied for.
Rate: 11.5%
Term: 12 Months
Amort: Interest Only
LTC: 75%
Lender Fee: 3%
Advisors: David Rifkind, Jonathan Lee, Adam Candler



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    Transaction Description: GSP placed $6,279,000 of non-recourse financing to complete the construction of a 35,000 square foot medical office building space in Decatur, Georgia.  The client was not a seasoned real estate developer but savvy enough to identify an immediate opportunity in a burgeoning market. The building was only partially completed and required additional construction financing to bring the asset to Certificate of Occupancy. Multiple lenders were not comfortable due to the sponsor being a relatively unseasoned developer and stepping into a partially completed construction project with a new general contractor. The Borrower was unable to provide a repayment guarantee due to a recent bankruptcy, open tax liens and pending litigation. Sensitive to initial lender deposits, the Borrower had previously been under application to a private lender who lacked discretionary capital and utilized the deposit as a profit center, without providing services. GSP procured market rate comps and supporting documentation to confirm market strength and provided an unsolicited LOI for a sale of the subject prior to obtaining the CofO. Sponsor capacity was substantiated by his ability to bring the asset to its’ current level of completion, retain a new GC and pre-lease 100% of the 35,000 square feet to multiple tenants. GSP called on their relationship sources to identify discretionary capital motived by funding loans over collecting one-off fees. The one-year, non-recourse floating rate term is priced at 10.5% and does not require a prepayment penalty.
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  • $5,600,000 DPO and Construction Facility for New Mexico Residential Land Development

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    Transaction Description:  George Smith Partners placed a land acquisition and infrastructure construction loan secured by 165 acres of a master planned community in Albuquerque, New Mexico. The collateral allows for over 1,100 apartment units, almost 600 single family residences, plus some commercial development. The Sponsor will develop residential lots and sell them to national and regional homebuilders. Financing included an initial funding to repay the existing lender and other expenses plus a secondary facility to fund future construction of residential lots and infrastructure. The two year term was limited to 65% of current value but was 87% of the actual acquisition price. Financing also allows for a full interest reserve and funding of 65% of new construction costs going forward. Fixed at 12.5%, the loan carries a 30 day interest prepayment penalty.
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    Solution: GSP immediately commenced on a targeted marketing effort to well-suited financial partners and sourced a capital provider who was not only knowledgeable about the location and marketplace, but also comfortable with 1) the investor’s expertise consisting of 35 years of land development and homebuilding experience including more than 20 years in Albuquerque; 2) a land basis that was the lowest in the marketplace; 3) level of guarantee (full recourse); and 4) a business plan that included already executed homebuilder contracts for residential lot purchases. GSP vetted the risk exposure upfront with the new capital provider and worked to structure objective criteria to satisfy the Sponsor and Lender.
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