Multifamily Refinancing: $4,500,000 Non-Recourse Cash-Out Refinance for a 3-Property Multifamily Portfolio in South Los Angeles and Inglewood

George Smith Partners arranged the cash-out refinance of a 3-property, 28-unit multifamily portfolio in South Los Angeles and Inglewood, California.  The Sponsor had purchased all three workforce housing properties in the past five years and had existing debt on each property that was not maturing.  The impetus for the refinance was to secure long term fixed rate financing to hedge against rising interest rates.  Maximum proceeds and maximum interest only were requirements.  The location of the properties, which are in growth corridors but have yet to gentrify, posed challenges for many lenders and the quotes were scarce.

GSP leveraged its strong relationships to identify a lender willing to quote the deal with maximum proceeds.  Initially, the Lender was only comfortable with one year of interest only.  However, GSP was ultimately able to secure 3 years of interest only for the entire portfolio by emphasizing the Sponsor’s strong track record and large operating portfolio.  Interest rates rose about 50 basis points in the 70 day period from application to closing, but the lender was willing to hold the application rate. Fixed for 5 years at 4.48%, the non-recourse loan is sized to 65% LTV and carries a flexible, step-down prepayment structure.