$4,200,000 Acquisition and Reposition Financing Including $1.4MM of Future-Funding on a Multifamily Property in Long Beach, California

Rate: 30-Day LIBOR + 3.55%
Term: 36 months plus two 12-month extensions
Amortization: 36 months interest only
Loan to Cost: 65%
Prepayment: 12-month spread maintenance; open thereafter
Guarantee: Non-recourse
Lender Fee: 1.00%

Transaction Description:

George Smith Partners arranged a $4,200,000 first mortgage for the acquisition of a value-add multifamily asset located within one of Long Beach’s trendiest neighborhoods. The national balance sheet lender provided a non-recourse loan to 65% of total project cost which includes $1,400,000 to 100% of capital expenditures for property improvements. Interest on future proceeds is not incurred until funds are drawn. A short spread maintenance schedule provides maximum flexibility to allow the Borrower to quickly execute its value-add strategy, prior to taking out financing with permanent debt or a sale. Cash flow is maximized as the loan is interest only during the initial three-year term and priced at 3.55% over 30-Day LIBOR. Due to low going-in cash flow, the Lender structured an interest reserve to cover debt service during the reposition period.

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