Rate: Floating One-Month LIBOR + 4.25% (6.00% all-in coupon) for 24 months
Term: Two years
Amortization: Interest only
Prepayment Penalty: Nine months minimum interest
George Smith Partners secured a $4,480,000 non-recourse, 80% LTV, quick-close refinance of a 148-unit workforce multifamily property in suburban Cincinnati, Ohio for out of state borrowers. The loan was structured, approved, and funded within a three-week period. The financing resolved an impending loan maturity for the Sponsor while providing flexibility to roll into a permanent take-out loan after seasoning the Property’s cash flow with minimal friction cost. The balance sheet facility was underwritten to 80% of value at a floating rate of the 1-Month LIBOR plus a spread of 4.25% for an all-in coupon of 6.00%.
Senior Vice President
Senior Vice President
May 13, 2020
George Smith Partners secured $1,400,000 to refinance a stabilized multifamily building in Silver Lake, CA. The Property, which was built by the Sponsor in 1991, is 100% occupied. The Sponsor has owned and managed the building for over 25 years, but this is currently the only asset in his portfolio. Refinancing provided the ability to achieve a lower interest rate and return equity to increase his liquidity position. The non-recourse financing carries a fixed interest rate of 4.05% for 5 years.
The Sponsor’s lack of real estate experience and non-third-party property management deterred some capital providers from offering non-recourse financing. The Sponsor also had limited pre-closing liquidity which made it difficult to qualify for the most attractive rates. Lastly, the eventual lender required a 6-month interest reserve due to recent uncertainty surrounding the multifamily market.
Even though the Sponsor has limited real estate exposure, GSP was able to highlight the strong historical occupancy that the Sponsor has been able to maintain while self-managing the subject property for over two decades. GSP identified a lender that only required liquidity equal to 5% of the loan amount to qualify for their non-recourse program. The interest reserve was structured as pre-paid interest that goes directly to pay the first six months of principal and interest payments. This avoids having a held-back reserve that would only release upon hitting certain covenants in the future.
Rate: 4.05% Fixed
Term: 5 Years
Amortization: 30 Years
Prepayment: 1.75% for Years 1-3, 1.00% for Years 4-5
Loan Fee: Par
- Advisors: Patrick O’Donnell
December 4, 2019
George Smith Partners secured a $5,230,000 non-recourse refinance for a 40-unit multifamily property in Los Angeles. The loan is fixed at a rate of 3.85% for five years and provides two years of interest only payments. Over the past three years, the Sponsors renovated 28 of the 40 units at a very high investment of $28,000 per unit. GSP sourced a bank lender that gave the Borrowers maximum credit for the higher income that resulted from leasing the newly renovated units. The Lender did not require seasoning on the new leases. The Lender did not have a floor on the rate at a time when many banks are applying floors to keep their rates above a certain threshold. The rate was competitive with Agency financing during a period when Freddie Mac was temporarily slowing down new loan originations. The Sponsors were operating the Property very efficiently with below-market expenses, and the third-party appraiser marked those expenses up to market. This resulted in a capitalized property value that did not meet the lender’s 65% LTV constraint. The Lender accommodated the Borrower by raising the LTV threshold so that loan proceeds and the rate would not be affected. The Lender was able to rate lock at application and was ready to close in about 50 days.
Rate: Fixed at 3.85% for 5 years then floats at 6 Month LIBOR + 2.35%
Term: 30 years
Amortization: 30 years
Prepayment Penalty: 3,2,1,0
Interest Only: 2 Years
October 23, 2019
George Smith Partners successfully secured a $4,100,000 non-recourse permanent refinance of a 14-unit, multifamily property in West Los Angeles. Loan proceeds were used to pay off the existing variable, higher interest rate bridge loan into a lower interest, fixed rate loan. There was significant cash-out to the Sponsor, who had recently completed an extensive reposition and upgrade of the Property. Due to the Sponsor’s business plan, flexibility and interest only were paramount. As such, GSP worked with the Lender to structure a 5-year fixed rate term with 3 years interest only and a step-down prepayment structure of 3%, 2%, 1%. This structure allows the Sponsor to maximize current cash flow while providing the flexibility of a step-down structure that burns off when the loan begins to amortize.
Term: 30 years; 5 years fixed then converts to floating rate at Libor + 2.25%
Amortization: 3 Years Interest Only then 30 year amortization
Minimum DSCR: 1.20x
Prepayment: Stepdown, 3%, 2%, 1%, open
$25,500,000 Bridge Loan for VACANT Newly Constructed 65 Unit Multifamily Property; 100% LTC; Fixed at 4.95%; Los Angeles, CA
September 11, 2019
George Smith Partners secured $25,500,000 in proceeds for the refinance of a construction loan on a newly constructed 65-unit multifamily property located in Los Angeles. The loan represents 100% of project capitalization and is fixed at 4.95%. The Property had recently received Certificate of Occupancy, but was still completely vacant at close. The bridge loan is intended to give the Sponsor time to lease up the property to stabilization. The fixed rate is unusual for a bridge loan; most capital providers offered floating rate financing and required the purchase of a cap.
Because the Property was still vacant, the Sponsor’s proforma rents were not yet proven out by signed leases. This was a challenge because the rents are several hundred dollars higher than those of typical multifamily properties in the submarket. GSP was able to overcome this challenge by pointing out that the brand new units at the Subject Property were considerably larger than those in the comp set. This provided support for the premium rents. Another hurdle was the 90% loan-to-cost constraint imposed by most capital providers. The selected lender allowed for 100% of cost, subject to a 7.0% debt yield on the stabilized cash flow.
Rate: Fixed at 4.95%
Term: 12 months with one 6 month extension option
Amortization: Interest Only
Prepayment Penalty: None (no required minimum interest)
Stabilized DY: 7.0%
Fees: 1% in/0% out
Guaranty: Non-Recourse: None (no required minimum interest)
July 17, 2019
George Smith Partners secured a $9,300,000 Non-Recourse refinance loan for a 35 unit multifamily property in Los Angeles. The loan provides 65% leverage and is fixed at a rate of 4.04% for seven years. Over the past 3 years, the Sponsors renovated 27 of the 35 units with a heavy lift that neared $50K per unit. GSP sourced a lender that gave the Borrowers maximum credit for the higher income that resulted from leasing the newly renovated units. The Lender did not require seasoning on the new leases. In order to maximize underwritten cash flow, GSP provided data that demonstrated the very low vacancy percentage in the submarket. This allowed the Lender to use a slightly lower vacancy factor than that of a typical apartment transaction. Additionally, the Lender used market rate expenses despite some variation in the historical P&Ls. The Lender was able to rate lock at application and close in about 55 days.
October 17, 2018
George Smith Partners successfully arranged the refinance of a 14 building, 120-unit multifamily asset located in the Arden-Arcade neighborhood of Sacramento, CA. GSP worked with a life company with a strong appetite for multifamily lending and ultimately structured a loan in which the Sponsor pulled out $10,000,000 of cash. The non-recourse loan has a fixed rate of 4.24% and refinanced an existing agency loan. Some of the unique features of this loan included: rate lock at application, assumption rights in the event of a sale and future loan advances/top-offs upon increase in NOI.