Rate: P+0.75% with a floor of 4.50%
Term: 5 years
Amortization: 3 years IO, 30 years amortization thereafter
LTC: 66%
Prepayment Penalty: None
Guaranty: Recourse
Lender Fee: 0.50%
Transaction Description: George Smith Partners arranged the acquisition and renovation debt for a Koreatown 50-unit multifamily asset. Fully occupied at funding, our Sponsors confirmed that existing rents are sustainably underperforming the market and will initiate a plan to renovate units and re-stabilize the subject. The cash flow in place (4.8% debt yield) constrained a majority of the capital markets to 50% of purchase. Mr. Yazdi identified a regional capital provider who underwrote proforma rents at market and structured three years of interest only before rolling into a 30 year amortization schedule. A small reserve of $230,000 is held until a 1.25 DCR is obtained. Proceeds for the renovation are exclusively Sponsor controlled and discretionary. This acquisition funded 40 days from application. Floating at Prime plus 0.75%, the loan carries a 4.50% floor. There is no prepayment penalty or exit fee.
Related Financings
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$3,000,000 Bridge to Permanent 5-year Loan for a Vacant Single Story 50,000 SF Warehouse; Western States
August 4, 2021
Transaction Description:
George Smith Partners successfully placed a $3,000,000 bridge to permanent loan to fund the purchase, tenant improvements, leasing commissions and carry (real estate taxes, insurance, and debt service) for a vacant 50,000 SF single-story warehouse. The deal presented a couple challenges; the Sponsor had credit issues and the building was 100% vacant. The strong sponsorship experience, low vacancy in the market and the building’s high-level of quality ameliorated these issues. Lastly, the transaction had to be completed within the tight time constraints of a 1031 exchange.
Rate: 4.25% During Construction, Five-year Treasury + 3.25% During Term
Term: 5 Years
Amortization: 25 Year
Prepayment: Term Period: 3%,2%,1%,0% -
$8,152,500 Conversion to Co-Living, 68% LTC, Heavy-Lift Bridge-to Perm Loan; San Francisco, CA
November 11, 2020
Transaction Description:
George Smith Partners placed the $8,152,500 bridge-to-mini perm loan for the conversion of an existing 12-unit multi-family community into a 17-unit 44-bed co-living community. The 68% LTC bridge loan converts to a 5-year mini-perm loan fixed at CMT + 2.5% with a 3.75% floor.Challenge/Solution:
The Project came to GSP half-way through construction and was being funded by a lender that had filed bankruptcy with proceeds that were insufficient to complete the new business plan. GSP put the loan under application pre-COVID with a new business plan that included (as a condition in closing) approvals for a 4th floor penthouse/useable roof top level. While in application, the construction and the penthouse level approval process came to a halt due to COVID causing stress on both the existing loan (nearing maturity) as well as the new loan underwriting. The challenges associated with co-living as a new asset class resulted in additional scrutinization from the new lender as well as the appraisal which had a negative impact on value. GSP was able to resolve the valuation issues by successfully arguing the merits of the Project as well as successfully negotiating a waiver of the exit fee on the previous loan which resulted in zero impact to the loan proceeds and the Borrower’s out of pocket cash required at closing.Construction Loan:
Rate: Prime plus 1% with 5% floor
Term: 18 Months
LTC: 68%
LTV: 65%Mini-perm Loan:
Rate: CMT + 2.25% with 3.75% floor
Term: 5 Years
Amortization: 30 years
Prepayment: 5, 4, 3, 2, 1 open -
$4,700,000 Refinance with Cash-Out for Single-Tenant Manufacturing Industrial; El Cajon, CA
November 4, 2020
Transaction Description:
George Smith Partners placed a $4,700,000 refinance loan with cash-out for a single-tenant industrial property in El Cajon, San Diego County. This highly specialized facility is one of only two locations in the US that is approved to manufacture key components and assemblies for military and commercial aircraft currently in service.The Sponsor acquired the Property in 2018 with a bridge acquisition loan. In March 2020, GSP was engaged to refinance the maturing bridge loan with permanent financing including cash-out proceeds. However, the California “stay-at-home” order was issued soon thereafter resulting in a challenging lending market for the Property.
GSP helped the lenders become comfortable by focusing on the low leverage, the strength of the Sponsor and the Tenant, and the fact that the Property continued to operate at full capacity without interruption due to be a critical Department of Defense supplier. In addition, the Tenant recently exercised its third extension option to the existing lease with an increased cash flow closer to market rents, thereby continuing its long-term commitment to the Facility.
While holdback reserves are increasingly common in the current environment, GSP negotiated to have reserve payments deferred until the fourth year of the loan and on a monthly schedule instead of the typical lump sum holdback at closing.
Rate: 4.65%
Term: 7 Years
LTV: 51%
DSCR: 1.30x
Prepayment: None -
$8,000,000 Assisted-Living Acquisition & Reposition Loan
April 10, 2014
4 – 9 – 14 Transaction Description: Shahin Yazdi successfully placed the 65% loan to cost for the acquisition and reposition of an un-stabilized assisted living facility. With occupancy at 70%, this West Coast asset operated below break-even coverage, requiring an interest reserve to cover the debt service short. The loan has a 10 Year term and is fixed for the first two years at 6.25% before floating at 2.25% over Prime. The Borrower may elect to choose a fixed option of the 5 year CMT + 4.25% in place of the Prime floater after the second year. Challenge: Physical occupancy was 70% at application with a 68% economic T-12 (trailing-12 month cash flow). Net income covered operating costs but was significantly below break-even at close. The Borrower required a limited recourse guarantee with a burn-down upon stabilization. Solution: Borrower experience with assisted living facilities was highlighted with a business plan from a sponsor who has repositioned similar products in the past. Market occupancy was considerably higher than historical operations. An interest reserve was structured to obtain a 1.0 dcr until stabilization. Market occupancy and Sponsor experienced gave comfort to the credit officer, allowing for a limited repayment guarantee (top 50%) to burn-down as various cash flow hurtles are obtained on a T-6 basis. Rate: 6.25% Term: 10 Years Amort: 2 Years IO then 23 Years LTC: 65% Prepayment: 3,3,3,2,1 open Recourse: Limited to top 50% burning off at stabilization. Advisor: Shahin Yazdi -
$2,800,000 Bridge Loan on a 71% Occupied Southern California Mixed-Use Asset
October 24, 2013
10 – 23 – 13 Transaction Description: Shahin Yazdi placed the 70% of purchase debt for a distressed Office and Industrial property in Southern California. The five year term is priced at Prime plus 50 basis-points with a 4.25% floor, interest only for the first 18 months. The loan will then amortize over 25 years negating the need for take-out financing upon stabilization. Challenge: The property was 71% occupied at close and maintained a 61% historical economic occupancy. The Borrower has limited commercial real estate experience. This acquisition had a short escrow period with numerous hurdles to overcome. Solution: Upside potential and pro-forma garnered significant interest from the capital markets. As a prior REO, the asset was distressed over mis-mismanagement. A well-established 3rd party property management company was retained to handle daily operations and leasing. All third party reports were rushed and provided the lender with all due diligence materials presented within 72 hours of their request. Rate: Prime + 0.5% w/4.25% Floor Term: 5 Years Amort: IO for 18 Months then 25 Years LTC: 70% DCR: 1.15 Prepayment: None Recourse Advisor: Shahin Yazdi -
Acquisition Loan for Two Vacant Mid-West Retail Assets
October 10, 2013
10 – 9 – 13 Transaction Description: Shahin Yazdi placed the 60% of purchase debt for two – 24,000 square foot vacant retail properties that were newly constructed, but empty shells, requiring tenant improvements for leasing. No interest reserve or TI reserves were required for funding. While vacant properties are difficult to finance, the borrower’s strength and market experience with this asset type, as well as the asset quality and superior location provided comfort to the lender for this execution. The Prime based floating rate loan is floored at 4.75% and does not require a pre-payment penalty. Rate: 4.75% Term: 5 Years Amort: IO for 18 months then 20 Year Amort LTC: 60% Prepayment: None Recourse Advisor: Shahin Yazdi
