Rate: Libor + 3.95% (4.05% Coupon)
Term: 3 Years, with 2 – 1 Year Options
Amortization: Interest Only
Prepayment Penalty: 18 Month
Lender Fee: 1% in / ½% Exit
George Smith Partners secured $47,000,000 for an acquisition bridge loan for a two multifamily property portfolio in Houston, Texas. To meet the sellers 30-day closing requirement, GSP used its experience and relationships to quickly identify and close this 80% interest- only financing within the required timeline. GSP was able to execute the Sponsors business plan and secure a high leveraged bridge loan at L+ 3.95 (4.05% coupon). The loan was cross collateralized with both properties, which totaled 624 Units. The Properties were operating at a going-in 5% debt yield when we closed. This interest-only loan included 100% of the capital needed for rehab.
There were multiple challenges regarding timing, leverage, sponsorship experience and property specific issues. Some lenders were not able to quote the transaction in the short timeframe we had to market, identify, and close this transaction. GSP aided a local family office, an international fund and a strong local operating partner who teamed up to purchase this asset in their first effort together. In addition, several lenders were over allocated in the Houston market and could not handle the size of this portfolio.
GSP focused on the top three best lenders for this asset type. Due to our great relationships, we were able to quickly pick the best lender and expedite the application process. GSP assisted the Sponsorship team in developing a strong business plan. This included proving the benefits of the multiple sponsorship structure, as well as getting the Lender comfortable with the local partners to operate the properties. GSP understood the dynamics of each sponsorship team and helped the Lender upstand the strategy of operating the Properties as one asset. GSP knew by bundling the two properties together and creating a larger transaction that it would be more appealing to lenders. This would enable lenders to increase proceeds and decrease pricing as compared to financing two separate smaller transactions. GSP ultimately utilized one of our relationship lenders who was willing to invest the upfront time and place aggressive bridge financing, with appealing leverage, proceeds, and terms of 3 years interest-only.
$10,000,000 Acquisition Loan to Purchase Hotel for Multifamily Conversion; Mountain States
November 3, 2021
George Smith Partners successfully brokered both the sale and acquisition financing for an extended stay hotel conversion located in the Mountain States region. The Seller, initially intending to undertake the Project, engaged GSP to source bridge financing for the 126-apartment conversion. Most of the conversion will be cosmetic changing the feel from hotel to residential. The hotel had been closed due to COVID, but the Sponsor needed to cancel the Management Agreement with the Operator and vacate the hotel. Because the hotel was in foreclosure, the Seller put the asset in bankruptcy before the trustee sale. This complicated the transaction and resulted in closing the deal two weeks from court approval.
GSP found a buyer with experience in hotel conversions who understood the Property’s value proposition and the bankruptcy process. With limited time, GSP represented the Sponsor in sourcing $10,000,000 of 3-month Gap financing for the purchase while concurrently working on inexpensive bridge financing. No appraisal was required for the Gap loan. This was an extremely complicated financing with exceptionally short time constraints. GSP was able to serve the needs of both Buyer and Seller and successfully secure financing.
Term: 3 Months
LTV: 68% Loan to Purchase Price
- Advisors: Robert Horton
$4,030,000 Non-Recourse Bridge Acquisition Financing for 44% Occupied Retail Center; Tempe, AZ
September 29, 2021
George Smith Partners secured $4,030,000 of bridge financing for the acquisition of retail shop space in Tempe, AZ. The collateral encompassed approximately 30,000 sf of in-line retail space and an outparcel pad within a larger anchored retail center. At purchase, the collateral was only 44% occupied. The Sponsors believe that a new leasing strategy will be able to drive tenants to the Center. The Property is located on one of the corners of a major intersection that sees over 65,000 cars per day and is less than two miles from Arizona State University, one of the largest universities in the country. The capital provider structured the financing to have a holdback for future property improvements, leasing costs, and interest payments. Priced at 30-Day LIBOR + 7.00%, the non-recourse loan was sized to 68% of total cost and carries a two-year term with extensions. The Lender was also able to include partial releases if only a portion of the collateral is sold.
Rate: L + 7.00% (0.25% LIBOR Floor)
Term: 2 Years with Two 6-Month Extensions
Loan-to-Cost: 68% LTC
Amortization: Interest Only During Initial Term
Guaranty: Non-Recourse with Standard Carveouts
Non-Recourse Bridge Acquisition Financing for Industrial Building; Gardena, CA
July 21, 2021
George Smith Partners successfully arranged a bridge acquisition financing for a single-tenant industrial building in Gardena, CA. The Property is 9,300 SF on an approximate 18,731 SF parcel. The previous owner occupied the space, and the building is now vacant. There was an existing environmental issue that limited the pool of interested capital providers. However, GSP leveraged its market expertise and relationships to identify a lender comfortable with the Property and Sponsor, who is a repeat client. GSP secured a 12-month, non-recourse bridge loan at 7.90% fixed with interest-only payments and no prepayment penalty. This will provide the Sponsor time to resolve the environmental issue, lease the Property and season it for permanent financing. The financing closed within 12 days of term sheet issuance.
Rate: 7.90% Fixed
Term: 12 months, with Extension Options
Amortization: Interest Only
- Advisors: John Choi
Retail Acquisition Financing with Less Than 100% Collection Rate; Los Angeles, CA
June 23, 2021
George Smith Partners successfully arranged bridge acquisition financing for a 6-unit retail property in Los Angeles, California. The Subject Property took a major hit with rent collections during the Covid-19 pandemic and was operating below market conditions. GSP identified a capital provider who was able to offer an aggressive rate and terms, required no holdbacks of any sort, required no deposits to be held at their branch and provided an open prepayment penalty structure that allowed the Sponsor flexibility once the Subject Property is stabilized and seasoned.
Term: 7 years
Amortization: 25 years
Prepayment Penalty: None
Minimum Interest Payments: None
Guaranty: Full recourse
Banking Relationship/Deposits Required: None
$8,400,000 Non-Recourse Acquisition/Bridge Loan for a 50% Occupied Apartment Building; Hayward, CA
May 19, 2021
George Smith Partners identified a national balance sheet lender with an intimate knowledge of the Hayward submarket and arranged $8,400,000 in acquisition and bridge financing for the purchase and reposition of a currently 50% occupied, 1960’s-built apartment complex located in Hayward, CA. The Sponsor placed the portfolio under contract during the COVID-19 pandemic.
The loan includes $1,350,000 of future funding for extensive renovations of unit interiors and exterior upgrades, including an earthquake retrofit. Interest is not charged on the holdback until funds are drawn. This Capital Provider also structured and capitalized an interest reserve to cover the shortfall of cash flow during repositions. Sized to 76% of the total capitalization, the three-year bridge loan is interest only for 36 months and carries a floating rate of LIBOR + 4.25% and include two extension options for up to a term of five-years.
Rate: LIBOR + 4.25%
Term: 3 Years, with two 1-year extensions
Amortization: Interest Only
Repayment: Carve-Outs Only
Prepayment: 18 months
Loan Fee: 1.0% in / 0.25% exit
- Advisors: David Stepanchak
79.5% LTV Acquisition Loan for 6-Unit Multifamily Property; Koreatown area of Los Angeles, CA
May 5, 2021
George Smith Partners structured $1,590,000 of acquisition bridge financing for a 6-unit multifamily building in a well-located area of the Koreatown section of Los Angeles. The existing building is almost 100 years old and underutilizes the potential density that the site allows for. The Sponsor plans to entitle the site for a larger multifamily development down the line. A 12-month term will give them ample time to prepare to be shovel ready. GSP was able to secure a high leverage execution between a senior lender and a mezzanine lender that provided 79.5% LTV based on purchase price. The blended rate of the total debt stack is 8.84% and is interest only. While the senior loan is non-recourse, the mezzanine lender does require recourse on their portion.
Blended Rate: 8.84%
Term: 12 Months
Prepayment Penalty: None
Guaranty: Non-Recourse to Senior Lender, Recourse to Mezzanine Lender