$4,850,000 Non-Recourse Bridge Loan for a 27,343 SF Development Site; Los Angeles, CA

Rate: 5.9%
Term: 12 Months
LTV: 24.5%
Amortization: Interest-Only
Guarantee: Non-Recourse

Transaction Description:

George Smith Partners arranged $4,850,000 in non-recourse bridge debt to refinance the existing loan on a 27,343-square-foot development lot in the Chinatown district of Los Angeles, CA. The Sponsor acquired the site two years ago and has since secured entitlements for its proposed mixed-use development. Demolition of a vacant retail center is needed to conduct ground testing and ready the Project for vertical construction. The current Lender, however, would not allow the demolition.

GSP targeted a capital provider that was comfortable with the proposed project, foreign sponsorship, and current land value. The existing loan, which had also been sourced by GSP, was facing near-term maturity when GSP successfully engaged a lender that could execute within a tight timeframe. The non-recourse facility is sized to 24.5% LTV and fixed at 5.9% on an interest-only basis with an initial term of 12 months.


Related Financings

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    $4,200,000 Loan for Unentitled Land, 5.9% Interest Rate; Pasadena, CA

    October 21, 2020

    Transaction Description:
    GSP secured a $4,200,000 bridge loan for unentitled land in Pasadena, CA. The site is proposed to be developed into 59 luxury townhomes. The loan is fixed at 5.9% for a 12-month term with two 6-month extensions. The proceeds represent 45% of the total cost to purchase the land and entitle it.

    The Sponsor acquired the Property in 2015 and has been working with the City to receive entitlements to develop the townhome plot since property acquisition. The land remains unentitled; however, the Sponsor expects to receive Ready-to-Issue (RTI) in 6 months which would provide significant value appreciation. The Sponsor had a loan coming due on the Property and needed to refinance. Given the economic situation due to the COVID-19 pandemic, many lenders were hesitant on providing financing.

    GSP demonstrated that the location of the Property and market are very strong, and the specific neighborhood is undergoing a revamp. The Sponsor is an experienced Los Angeles developer who is familiar with the entitlement process and the Property is less than six months away from receiving RTI.

    Rate: Fixed at 5.90%
    Term: 12 months, 2,6 month extension options
    Amortization: Full Term Interest Only
    LTC: 45%
    Guaranty: Non-Recourse

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    $28,500,000 Land Loan for a Mixed-Use Multifamily Development Site

    June 10, 2020

    Transaction Description:

    George Smith Partners arranged a $28,500,000 non-recourse bridge loan for the land acquisition and predevelopment of a large TOD site with the potential to accommodate more than 900 units. The financing facility was secured on behalf of best-in-class sponsor LaTerra Development, relating to its planned mixed-use multifamily development project. In the midst of unprecedented market uncertainty, GSP leveraged its network to identify land lenders who were still active in today’s environment and could provide certainty of execution. No appraisal was required for funding.

    All Terms Confidential

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    $4,200,000 Cash-Out Refinance for Predevelopment Land Financing on a To-Be-Built 90-Unit Multifamily Project; West Oakland, CA

    January 29, 2020

    Transaction Description:

    George Smith Partners arranged a $4,200,000 cash-out refinance for predevelopment land financing on a to-be-built 90-unit multifamily property in West Oakland, CA. The Property consists of a 1.5-acre parcel and 35,000 square feet of raw industrial space built in the 1950s that will be demolished at the start of construction. The Property recently obtained entitlements for a 90-unit multifamily development, but the Sponsor required significant capital and about 12 months to complete construction drawings. The Sponsor was seeking a refinance and approached GSP with 30 days of term remaining on their existing land loan. The existing land Lender would not release the good news money earmarked for a successful entitlement that would have been used to fund construction drawings. They were also seeking to charge an extension fee that was significantly above market.

    In a very short timeframe, GSP sourced a land lender comfortable with refinancing the existing land loan and providing cash-out to help fund construction drawings. Sized to 65% LTV, including a considerable land step-up for entitlement, the financing is interest only and carries a 12-month term with two 3-month extensions. There is no prepayment penalty, and the Lender origination fee was only 0.5%. The new loan closed in less than 30 days from term sheet execution avoiding a maturity default on the existing loan and enabling the Sponsor to fund construction drawings.

    Rate: 8.99%
    Term: 12 months with two 3-month extensions
    Amortization: Interest only
    LTV: 65%
    Prepayment Penalty: None
    Lender Fee: 0.5% in / 1% out
    Guarantee: Recourse

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    $8,250,000 Cash-Out Unentitled Land Loan Recap; Van Nuys, CA

    November 20, 2019

    Transaction Description:

    George Smith Partners placed a cash-out $8,250,000 non-recourse loan for the partnership recapitalization of an entitled parcel in Van Nuys which is located in the San Fernando Valley of Los Angeles, CA. The Sponsor has been working through the permitting process for residential development. GSP identified a non-institutional lender who underwrote the business plan assuming a sale to a related entity upon ready-to-issue (RTI) permits. Their exit will come in the form of the pre-arraigned Joint Venture funding and a to-be-identified construction lender. Excess proceeds were utilized to buy-out an LP investor and recapitalize the Borrower and carry costs through to RTI. The non-recourse loan will float for the 12-month term at Prime + 4.0%. There was no appraisal, or Phase I report required for funding.

    Rate: P+4.0% w/10% Floor
    Term: 12 months
    Recourse: Carve-Outs Only
    Fees: 1.0%
    Prepayment: Six-month minimum yield; no exit fee: P+4.0% w/10% Floor

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    $3,500,000 Cash-Out Financing for Land on Melrose Ave and La Brea Blvd; Los Angeles, CA

    August 7, 2019

    Transaction Description:

    George Smith Partners secured financing for a $3,500,000 loan on a former gas station at the corner of Melrose and LaBrea. The challenge was finding a bridge lender willing to lend on vacant land entitlement by-right for multi-family residential that will not commence construction for at least 18 months while also providing $500,000,000 in cash-out proceeds.

    GSP was able to exceed the Sponsors expectation with respect to cash-out proceeds basing the loan on an updated appraisal which recognizes the site’s receipt of a Transit Oriented Communities (TOC)Tier 2 “up zoning” which occurred in 2017 after the land was acquired by the Sponsor and doubled the number of units that can be developed on the site. The 2 Year floating rate execution is a full recourse loan with a rate of L + 460 (7% floor) cash-out proceeds and a holdback for interest carry during the term of the loan.

    Rate: LIBOR + 460 with 7% Floor
    Term: 2 Years
    LTV: 50%
    Amortization: Interest Only
    Yield Maintenance: None
    Guaranty: Full Recourse

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    $3,400,000 Covered Loan for New Hotel Development 80% LTC; Los Angeles, CA

    July 10, 2019

    George Smith Partners secured financing for a non-recourse $3,400,000 covered land loan for a hotel development in Los Angeles. There is currently an existing building on the Property which allowed GSP to structure a highly leveraged land loan. Usually land loans are limited to 50% of the purchase price, but GSP’s strong relationships and experience allowed for the value of the current improvements to achieve much higher leverage.

    Rate: 8.3%
    Term: 1 Year
    Amortization: Interest only
    LTV: 80% of Purchase Price
    Prepayment: None
    Guaranty: Non-Recourse
    Lender Fee: 1%

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