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$50,250,000 Acquisition Bridge Financing for a Multifamily Portfolio; Houston, Texas

Rate: 30 Day Term SOFR + 4.50%
Term: 24 Months, with two 1 Year Options
Amortization: Interest Only
LTC: 73%/ 80% Loan to Purchase Price
Guaranty: Non-Recourse
Prepayment Penalty: 12 Month

Transaction Description:

George Smith Partners secured $50,250,000 for an acquisition bridge loan for a two property multifamily portfolio in Houston, Texas. To meet the seller’s 38-day closing requirement, GSP used experience and relationships to quickly identify and close this financing within the required timeline. GSP was able to execute the Sponsor’s business plan and secure a high leveraged bridge loan at 30-day Term SOFR + 4.50%. The loan was cross collateralized with both properties, which totaled 736 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.

Challenge: There were multiple challenges regarding timing, leverage, crime, and property specific issues. In addition, the overall bridge debt and CLO markets have had major disruption. GSP aided a local family office, an international fund, and a strong local operating partner who teamed up to purchase this asset as part of a 1031 exchange that GSP financed 16 months prior. In addition, several lenders were over allocated in the Houston market and could not handle the size of this portfolio.

Solution: GSP focused on the top lenders that we had closed within the past because of importance of closing with the 1031 exchange. Due to our great relationships, GSP was 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 2 years interest-only.

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