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$46,000,000 Non-Recourse Acquisition & Renovation Financing a 4-Property Apartment Portfolio in the DFW Metroplex

Rate: L+350-400 (Property-Dependent)
Term: 3 Years + Two, 1-Year Extensions
Amortization: Interest Only
LTC: 80% LTC
Prepayment: 18 Months Yield Maintenance
Guarantee: Non-Recourse

Transaction Description:
George Smith Partners successfully arranged $46,000,000 of non-recourse, bridge financing to acquire and renovate a 4-property multifamily portfolio, consisting of 692-units, in the Dallas-Fort Worth Metroplex. Although the Properties were well occupied (97%), rents were below market because the Seller self-managed and the Property lacked recent common area renovations. The units were well maintained but dated and will benefit from Sponsors renovation plan.

Challenges:
This financing was unique because it had four different multifamily properties within one single portfolio. While there were efficiencies in working with one lender, each property was evaluated on its own merits and diligence had to be collected accordingly. We marketed the attributes of each Property and the sub-markets. Two of the properties are located in Irving, one in Grand Prairie and one near Fort Worth. Each market has different economic demand drivers (example: Irving is home to several major corporate headquarters including Exxon and McKeeson). Moreover, the Lender required an minimum capital investment of $6000 per unit (slightly higher than the Sponsor’s original budget) and GSP worked with the Lender to coordinate the information for securitization. There was a timing aspect in order to securitize the portfolio properly.

Solutions:
George Smith Partners worked with the Sponsor to increase their renovation budget and worked with the Lender to increase leverage accordingly. This retained the Sponsors original equity participation and should result in better returns. We closed the four loans nearly simultaneously (3 loans closed on a single day).

Advisors

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