Rate: LIBOR + 3.40%
Term: 36 Months, Two 1-year Extensions
LTC: 70%
Guaranty: Non-Recourse except for standard carve outs, bad acts, and environmental. Completion guaranty
Fee: 1.0% Origination
Transaction Description:
George Smith Partners successfully placed a non-recourse $40,000,000 bridge loan to fund the acquisition and repositioning of a 330-bed student housing project in Orange County, California during the COVID-19 pandemic. Directly adjacent to a non-power five campus, the University’s decision to not hold in-person classes due to COVID-19 severely impacted the Property’s occupancy levels at the time of acquisition. Additionally, the Project was undergoing renovations when the pandemic struck.
GSP leveraged its diverse lender relationships to attain 70% of project cost, including an extensive CapEx budget to be used for existing unit renovations and the construction of additional residential density. GSP ensured no negative arbitrage by structuring a draw schedule accretive to the Sponsor’s business plan. Despite the economic uncertainty during the transaction, GSP worked with the Lender to maximize proceeds while addressing Lender concerns of potential COVID related shortfalls.
Related Financings
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$7,800,000 Bridge Loan for Acquisition and Heavy Value-Add Repositioning for Student Housing; Los Angeles, CA
June 30, 2021
Transaction Description:
George Smith Partners successfully placed a $7,800,000 loan for the acquisition and repositioning of a student housing property serving a major Southern California university. George Smith Partners went to a variety of lenders and identified a non-recourse capital provider who believed in the deep value-add business plan, with 23% of loan proceeds funding CapEx.George Smith Partners structured the loan at 70% of total project cost. The funding covers the acquisition, CapEx, construction costs, and the interest reserve.
Rate: 30-day LIBOR + 345 basis point spread, 4.45% rate floor
Term: 36 months, two 12-month extension options
Leverage: 70% LTC
Amortization: Full term interest only
Recourse: Non-recourse with standard carve outs
Fee: 1.5% Origination Fee, 0.5% Exit Fee
