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.
Related Financings
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$97,000,000 Refinance for a 1,000+ Bed Student Housing Complex; Mountain States
November 30, 2023
Transaction Description:
George Smith Partners has arranged approximately $27,000,000 of Preferred Equity and $70,000,000 of Permanent Debt financing for the refinance of a 1,000+ bed student housing property. The purpose of the loan was to replace the maturing mezzanine debt and preferred equity.
GSP worked extensively with the client and their team to find the optimal structure to replace their existing lender, subordinate lender and preferred equity investors. The GSP team marketed three separate capitalizations including a ground-lease bifurcation, bridge debt, and preferred equity behind an agency loan with the goal of maximizing proceeds for the client.
Agency Financing
Rate: 6.78% Fixed
Term: 5 Years
Amortization: 30-year amort/No interest only
Defeasance: Standard 4.75-year defeasance period
DSCR Minimum: 1.30X
Max LTV: 55%
Preferred Equity
Preferred Return: 13%
Current Pay: 8%
Accrual: 5%
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Non-Recourse Bridge Loan for Acquisition of Vacant 10 Unit Multifamily Property | Fixed at 10.75% | No Prepay
November 22, 2023
Transaction Description:
George Smith Partners arranged a 12-month bridge loan for the acquisition of a vacant 10-unit multifamily property. The Sponsor expected that the property would lease up quickly, so they requested a short-term bridge loan with no prepay. GSP was able to source a lender that provided proceeds of 72% of the purchase price. The non-recourse loan is fixed at 10.75% and can be paid off at any time with no penalty. Once the property is stabilized, the Sponsor expects to refinance into a perm loan.
LTV: 72%
Rate: 10.75% Fixed
Term: 12 months with two 3-month extension options
Guarantee: Non-Recourse
Prepayment: None
Origination Fee: 1.50%
- Advisors: Matthew Kirisits Grant Pugatch
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$14,100,000 Horizontal Land Construction Financing for 98-Single Family Residential Lots; Homestead, Florida
November 15, 2023
Transaction Description:
George Smith Partners has secured $14,100,000 in funding in support of our Sponsor’s horizontal construction of 98-single-family lots in Homestead, FL. The allocated funds are intended to finance the essential infrastructure for the forthcoming single-family residential community. The lots will be sold in stages to a predetermined homebuilder. Our Sponsor has obtained a revolving loan of 60% LTC, which features a floating rate of Prime + 50, spanning a 24-month term.
Term: 2 Years with Extension Options
Rate: Prime + 50
LTC: 60%
Guaranty: Non-Recourse- Advisors: Justin Piasecki Thomas Butler
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Gap Equity – 6 Day Close
November 10, 2023
Transaction Description:
George Smith Partners was recently contacted by a client seeking $1,500,000 in gap financing to free up capital to use for another investment that they have lined up. Leveraging our extensive network of capital providers, the GSP team efficiently secured a quick-close preferred equity arrangement, ensuring a successful closing for our Sponsor within a remarkable 6-day timeframe.
In response to the current capital-constrained market conditions, GSP is proactively developing alternative financing solutions to help our clients address their financing needs across all aspects of the capital stack.
All Terms Confidential.
- Advisors: Justin Piasecki Thomas Butler
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$34,000,000 Bridge Loan for Multi-Tenant Industrial Building Complex; South Western State
November 3, 2023
Transaction Description:
George Smith Partners arranged a $34,000,000 bridge loan for a newly constructed, “Class A,” Multi-Tenant Industrial Complex in Mesa, AZ. The purpose of the loan is to replace the maturing construction loan with a lower cost bridge financing and to provide an additional one-and-a-half-year runway to complete the Sponsors’ business plan. The 173,000 SF property is currently 66% leased.
The new bridge loan term of eighteen months provides the flexibility to either lease up and exit quickly with a six-month minimum interest requirement or play the field for an extended period.
Term: 18 Months with Two 6-Month Extensions
Prepayment: 6 Months Minimum Interest
Guaranty: Non-Recourse- Advisors: Scott Meredith Nikola Kretschmann Grant Pugatch
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Infill Land Financing for Apartment Building; Los Angeles, CA
October 27, 2023
Transaction Description:
George Smith Partners secured 65% LTC financing on infill land in Los Angeles. The land currently has a vacant apartment building which will be demolished for future apartment construction. The financing provided liquidity for the Sponsor and is pre-payable at any time. GSP was able to identify a lending source that understood the market and demand for multifamily development in this location.
Rate: 8.90% Fixed
Term: 12 months with two 6-month extension options
Amortization: Interest Only
Origination Fee: 1.00%
Exit Fee: None
Prepayment: Open
Guaranty: Non-Recourse
