Rate: Prime +1%, with a floor of 5%
Construction Term: 18 months + 6-month option to extend
Mini-perm Option: 5-year treasury + 2.25% with a 3.50% floor
George Smith Partners arranged $2,580,000 in construction financing for a ground up development project in Los Angeles, California. The construction loan floats at a rate of Prime + 1%. The 70% loan-to-cost construction loan also comes with the option to convert to a 5-year mini-perm loan upon completion based on the 5-year treasury plus a margin of 2.25%, with a 3.50% floor, eliminating any future financial risks. GSP sourced a lender during the COVID-19 pandemic that was able to move efficiently and most importantly accommodate the Borrower’s development timeline and experience.
January 13, 2021
George Smith Partners secured $8,750,000 in total financing comprised of a 60% LTV first mortgage and a 10% LTV second mortgage for a 35-unit multifamily property in San Jose, CA. The loans provided significant cash-out proceeds at a blended rate of 7.41%. Both loans have a 12-month term, interest-only payments and are open to prepayment without penalty. Recourse is limited to 50% of the second mortgage only. The Property has maintained full occupancy and rent collections despite the COVID-related impacts in the overall market. The Lender did not require reserves for potential COVID rental interruption. The Sponsor developed the Property in the 1980s and engaged GSP to provide a high leverage, quick-close financing solution. The financings closed within 8-days of the Lender’s issuance of term sheets.
$15,500,000 Non-Recourse Bridge Financing for a Mid-Construction 3-Property Multifamily Portfolio; Los Angeles, CA
December 16, 2020
George Smith Partners secured a $15,500,000 bridge loan for three newly constructed, pre-Certificate of Occupancy multifamily assets located in Los Angeles, CA. The non-recourse loan provided significant cash-out proceeds to the sponsor, refinanced outstanding construction debt and capitalized construction completion costs. The loan is sized at 70% LTC on a 4.90% fixed rate, non-recourse, 12-month term. The loan did not require an interest reserve or capitalized carrying costs.
The loan is secured by three new construction multifamily assets in the Koreatown and Eagle Rock submarkets of Los Angeles, totaling 57 units, in various stages of completion. All will be complete by Q1 2021, with lease up occurring throughout the balance of 2021. Given COVID related delays and slower-than-anticipated leasing velocity, GSP was able to identify a lender comfortable with the high quality, new construction product, and the long-term stability of these submarkets. The loan closed three weeks from term sheet execution.
$40,700,000 Non-Recourse Ground-Up Apartment Construction Financing to 85% LTC with a Blended Rate of 6.80%; San Diego, CA
December 9, 2020
George Smith Partners successfully placed the $40,700,000 construction financing, which funded up to 85% loan to project costs for the construction of a 170-unit apartment community located in a southern San Diego submarket. The financing structure included a senior construction loan up to 55% loan to cost and a mezzanine tranche up to 85% of total project costs. The non-recourse mezzanine tranche is structured on an accrual basis, further reducing the total economic impact of the mezzanine financing on the project. The full capital stack is non-recourse. Additionally, the capital partners gave credit for a lift in land value above the actual cost due to the Sponsors prior entitlement work and achieving approvals. While navigating these unprecedent times in the capital markets brought upon us by the COVID-19 Pandemic, GSP utilized our extensive experience, long-standing lender relationships, and capital markets creativity to achieve the Sponsors goals in order to break ground and deliver a much-needed product type in the market.
$29MM – Senior Construction Loan
Rate: L + 4.50% (4.95% floor)
Term: 36 months
$11.7MM – Mezzanine Loan
Rate: 11.25%, fully accrued (this is huge in bringing down the effective cost of capital down)
Term: 36-month (with 18 months min. interest)
December 2, 2020
George Smith Partners successfully arranged $18,880,000 in permanent financing for a 192-unit multifamily community. The loan is fixed for 15 years at 3.03% with interest-only payments for the entire term and significant cash-out proceeds. Despite the severe impacts of the COVID-19 pandemic throughout the spring and summer, the Property was able to remain above 95% occupancy with minimal declines in rent collections. GSP capitalized on the Property’s quality, market resiliency, strength of the Sponsor and low leverage to attract quality offers from several lenders.
$4,700,000 Non-Recourse, Bridge Financing for Mid-Construction Apartment Project; Pico-Robertson Area of Los Angeles, CA
November 18, 2020
George Smith Partners arranged $4,700,000 in non-recourse, bridge financing for an 85% complete, 13-unit apartment project in the Pico-Robertson area of Los Angeles, CA. Despite marketing this deal as a construction take-out loan for an 85% complete project during the global pandemic, GSP successfully engaged a debt fund to take out the existing construction loan with additional funds to complete construction. The non-recourse bridge facility was priced at an interest-only rate of 5.90% with a 12-month term plus a 12-month extension option. Thanks to GSP’s long-standing relationship with this debt fund, we were able to close this transaction in just 8 business days.
November 18, 2020
George Smith Partners placed a $6,275,000 bridge loan for the refinance of a Class-B 132-unit apartment community in San Antonio, TX. The loan is fixed at 6.45% for three years with full term interest-only payments. The term sheet was signed after the COVID-19 crisis and ensuing economic volatility. GSP identified a balance sheet lender with in-house loan servicing to work with the Sponsor throughout the reposition of the asset. The Property underwent a change in property management in the past few years and required some property maintenance in the reposition. GSP worked with the Client on the original acquisition bridge loan and had to re-evaluate the business plan once the market changed and occupancy dipped due to COVID-19.