$4,200,000 Cash-Out Refinance for Predevelopment Land Financing on a To-Be-Built 90-Unit Multifamily Project; West Oakland, CA

Rate: 8.99%
Term: 12 months with two 3-month extensions
Amortization: Interest only
LTV: 65%
Prepayment Penalty: None
Lender Fee: 0.5% in / 1% out
Guarantee: Recourse

Transaction Description:

George Smith Partners arranged a $4,200,000 cash-out refinance for predevelopment land financing on a to-be-built 90-unit multifamily property in West Oakland, CA. The Property consists of a 1.5-acre parcel and 35,000 square feet of raw industrial space built in the 1950s that will be demolished at the start of construction. The Property recently obtained entitlements for a 90-unit multifamily development, but the Sponsor required significant capital and about 12 months to complete construction drawings. The Sponsor was seeking a refinance and approached GSP with 30 days of term remaining on their existing land loan. The existing land Lender would not release the good news money earmarked for a successful entitlement that would have been used to fund construction drawings. They were also seeking to charge an extension fee that was significantly above market.

In a very short timeframe, GSP sourced a land lender comfortable with refinancing the existing land loan and providing cash-out to help fund construction drawings. Sized to 65% LTV, including a considerable land step-up for entitlement, the financing is interest only and carries a 12-month term with two 3-month extensions. There is no prepayment penalty, and the Lender origination fee was only 0.5%. The new loan closed in less than 30 days from term sheet execution avoiding a maturity default on the existing loan and enabling the Sponsor to fund construction drawings.

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