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$40,000,000 Non-Recourse Bridge Financing for a 330-Bed, Student Housing Property; Orange County, CA

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.

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