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
Prepayment Penalty: 12 Month
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.
Cash Neutral Refinance for Multifamily Property; Los Angeles, CA
May 31, 2023
George Smith Partners successfully secured a cash neutral permanent refinance loan for a 12-unit multifamily property in Los Angeles. Due to current market conditions, in which many regional banks are not lending, GSP had to expand its list of capital sources. A national bank was found that provided enough proceeds to pay off the in-place loan plus fees. The loan has 5 years of Interest Only payments on a 7 year fixed rate term. The lender provided non-recourse financing without charging any rate premium compared to a recourse loan. The loan closed in 26 days from application, which may be a record for a bank loan.
Rate: Fixed at 5.71% for 7 Years
Interest Only: 5 Years
$8,700,000 Cash-Out Refinance for a 17-unit/44-Bed Co-Living Community; San Francisco, CA
May 31, 2023
George Smith Partners secured a bridge loan to finance the takeout of a construction loan on a 17-unit/44-bed Co-Living Community located in the Sunset District of San Francisco. George Smith Partners put the construction loan in place in early 2020 and worked with the construction lender to accommodate delays in the renovation/reposition caused by the Pandemic. The Property represents a former 12-unit apartment community that was repositioned into a Co-Living Community through the addition of 5 rental units in the former ground floor parking garage, as well as the addition of a partial 4th floor on the rooftop of the building. The Borrower went under application in February with closing contingent upon receipt of a Certificate of Completion. GSP was able to leverage its relationship with both Lenders to extend maturity as well as the rate lock in a rising interest rate environment. GSP was also able to negotiate approximately $200,000 in cash to Borrower at close to be used toward FF&E. The property, known as “The Irv,” will be managed by Common. Unlike most co-living products in the market, each unit offers a common area living room, state of the art kitchen, and a bathroom to bedroom ratio of 77% with most units offering en-suite bathrooms. Communal areas include a central courtyard with a BBQ grill and firepit/seating area, a rear yard with secured bike parking, 400 SF roof deck with ocean views, and a surfboard and wet suit wash and storage area.
Rate: 7.5% Fixed (Prime+0%)
Term: 2 Year Bridge + 3 Year Term Option with ability to convert to Term Loan after 1 year based on T3 sufficient to meet 1.25 DSCR based on 6.25% rate, and 30-year amortization.
Origination Fee: 0.25%
Amortization: Interest Only During Bridge Loan
- Advisors: Alina Mardesich
$9,327,000 Acquisition Financing for Retail Portfolio; Multistate
May 24, 2023
George Smith Partners successfully arranged $9,327,000 in acquisition financing for the purchase of three prime retail properties adjacent to top colleges across different states. The properties are all performing very well but do not have credit tenants. Overcoming the reluctance of regional banks to cross-collateralize and the high rates offered by many lenders, we sourced a national bank that could loan on all three properties. The lender provided a seven-year fixed rate term and 4 years of Interest Only payments. The strategic placement of these properties in prime locations is expected to drive significant value appreciation. By structuring the loans with low leverage, we allowed the Sponsor to complete a 1031 exchange. The cross-collateralized loan with release provisions allowed the seamless acquisition of the assets.
Rate: Fixed at 6.01% for 7 years
Interest Only: 4 Years
$85,800,000 Senior Construction-to-Perm Financing for a 372-Unit Multifamily Project; Sacramento, CA
May 16, 2023
George Smith Partners successfully arranged $85,800,000 in construction financing for a 10-building, 372-unit multifamily development in Sacramento, CA. The project is located in an opportunity zone of Sacramento and is phase A of a 2,200-unit, transit-oriented development. Breaking ground in Q2 2023, this phase of the development will consist of studios, one, two, and three-bedroom apartments with best-in-class amenities, including a pool, fitness center, playground, and clubhouse.
The Sponsor engaged GSP pre-pandemic. A previous developer had acquired the land in the early 2000s and after completing 95% of the site’s infrastructure, subsequently filed for bankruptcy protection in 2017. The site was given back to the lender in early 2019 and was awarded to the Sponsor by the urging of the City of Sacramento because of their local reputation related to successful projects in the downtown sub-market. Our Sponsor originally intended to begin construction in early 2020 but decided to pivot layout designs to match the new needs of its renters due to the pandemic.
After an extensive capital marketing process, GSP was able to secure financing to the Sponsor’s parameters with the upside of not having a rate cap requirement. The financing structure is also unique in that it transitions from an interest-only period to a traditional permanent fully amortizing financing automatically after month 48. Early prepayment is available even during the construction period and then steps down until a fully open prepay year 4 after CofO.
Rate: 1-Month SOFR + 3.50%
Term: 15 Years
Amortization: Interest Only for First 4 Years, then 30 Year Amortization
Guaranty: Full Recourse with Burn-Off to 20% at CofO
$8,000,000 Bridge Financing for 28-Unit Multifamily Refinance; La Mirada, CA
May 10, 2023
George Smith Partners successfully placed an $8,000,000 bridge loan for the refinance of a 28-unit, newly constructed apartment building in La Mirada, California. The bridge loan refinanced the construction loan at building stabilization. The loan amount provided a return of equity to the Sponsor and allowed the Sponsor time to decide whether to sell the property in the future or put a permanent loan on the property if long-term rates start to come down. GSP sourced a lender that was able to provide maximum cash-out and fix the interest rate for the duration of the loan term. The financing is open for prepayment at any point throughout the loan term with a minimum of 12 months interest paid.
Rate: 7.75% Fixed
Term: 2 Years, Two 6-Month Extensions
Prepayment: 12 Months Minimum Interest Period
Loan Fee: 1% Origination Fee, 0.50% Exit Fee
$33,800,000 Construction Loan for 83-Unit Multifamily Property with 50% Co-living Units; Los Angeles, CA
May 3, 2023
George Smith Partners secured $33,800,000 of senior construction financing for the development of an 83-unit ground-up multifamily building in an infill Los Angeles location. The 83 units will be comprised of 50% conventional units and 50% co-living units. While the property is in an A+ location, many lenders were uncomfortable with co-living in general. GSP was not only able to find a lender that was comfortable with the product type but was also able to get to almost 70% of total project cost. The lender also gave the borrower credit for the entitled value of the land as opposed to their acquisition cost from the year prior. The land equity contributed a significant portion of the total equity required.
The construction loan was priced at Prime + 0.75% and the loan term is 18 months plus one 6-month extension option.
Rate: Prime + 0.75%
Term: 24 Months with Two 6-Month Options to Extend
Stabilized LTV: 55%