$5,355,000 Cash Out Perm Loan for a Troubled Asset

Transaction Description: GSP arranged the 10 year permanent loan for a newly constructed, mixed-use apartment & retail property in Los Angeles. The troubled asset was originally constructed as “For-Sale” condos in 2008, then converted to rental units upon certificate of occupancy. At construction completion, the FDIC seized the construction lender and transferred the note to a new bank.

Challenge: The new lender extended the balloon date with a short-term mini-perm, but placed the loan in Special Services adding pressure on the Sponsor to be paid off. The rentals, built to condo specs, commanded higher rents, above the baseline for residential units in the area. Over 20% of the property’s income is derived from retail space; spurring lenders to underwrite the leases at below contracted rates. The Sponsorship endured multiple liquidity hits and no longer met lender’s baseline underwriting.

Solution: GSP was able to use its market knowledge to increase the underwriter’s range for multifamily comps to confirm collections. GSP demonstrated the retail tenants’ dedication to this location and support their occupancy at better-than-market terms. As the subject was expertly constructed, fully occupied and managed with the utmost in “pride of ownership”, GSP was able to attract a lender who understood all of these challenges. The building appraised as underwritten and the former lender was paid in full.