$4,200,000 Distressed Note Acquisition

Transaction Description: GSP arranged hypothecated debt financing for the acquisition of a distressed senior note. The 1st Trust Deed for the 60-unit multifamily property was being serviced, but had matured. As a part of a broader balance sheet clean-up effort, the bank intended to sell off the 1st Trust Deed. Due to deferred maintenance and temporary management problems, the note was acquired at an approximate 25% discount to face value. The underlying collateral promises significant upside with tighter controls and a light renovation.

Challenge: The Purchase and Sale required an 18-day close with deposits hard day one. Certainty of execution and expedience was paramount. High leverage, non-recourse debt was required. The property owner filed a personal bankruptcy that entwined the underlying collateral of the note.

Solution: GSP called on a close relationship with a dependable and sophisticated private lender with expertise in bankruptcy and note acquisitions in order to assure a smooth closing. GSP worked with four separate legal teams to perform due-diligence, negotiate documents, monitor the bankruptcy process, and close the purchase. The note buyer anticipates collapsing their position to assume control of the fee, stabilize the asset, and refinance with institutional debt within one year.