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$5,575,000 Acquisition Loan for 38-Unit Los Angeles Multifamily Property; Los Angeles, CA

Rate: 3.60% Fixed
Term: 7 Years
Amortization: 3 Years Interest Only
Loan-to-Value: 60%
DSCR: 1.20x
Prepayment: 3,2,1
Loan Fee: Par

Transaction Description:

George Smith Partners placed a $5,575,000 acquisition loan for the purchase of a 38-unit multifamily unit located in the Los Angeles MSA. The loan has a rate of 3.6% for a 7-year term and includes three years of Interest Only payments. The term sheet was signed shortly before the COVID-19 crisis and ensuing economic volatility. Despite these conditions, the original rate and leverage was kept intact.

The Property has several vacant units which represented an opportunity for our Sponsor to add value. The Capital Provider was able to underwrite the income on these units to post-renovation market rents. Market comparable data was used to support the buyer’s conservative rent assumptions. Additionally, the Capital Provider used a market vacancy factor and proposed to withhold 12 months of Principal and Interest reserves at loan closing. GSP pointed out that the loan had IO payments during the first 3 years. After discussion, the reserve was changed to 12 months of interest payments only. The loan closed in less than 60 days.

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