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.
$3,700,000 Highly Leveraged, Quick Close Acquisition Capital for 97-Unit, Multifamily Property; Oklahoma City, OK
September 22, 2021
George Smith Partners secured $3,700,000 for an acquisition of a multifamily property in Oklahoma City, OK. The Sponsor had the opportunity to purchase a well-located, value-add property in Oklahoma City. By utilizing a quick close loan, the Sponsor was able to negotiate a below market price. The Sponsor approached GSP to help arrange a loan that needed to close on a strict timeline of only one week. Because of the quick timing and the short-term distress in the cash flow, the Property would not qualify for bank or agency financing. The Property rents were below market because the Seller self-managed and the Property needs exterior and interior improvements. The loan was structured with a CapEx holdback to allow the Sponsor to implement their value-add strategy. The non-recourse facility represents 75% of total cost and was priced at an interest-only fixed rate of 7.25% with a 12-month term plus two 6-month extension options. The interest-only loan allows for more property cash flow to be used towards improving the Property. Thanks to GSP’s long-standing relationship with this debt fund, we were able to close this transaction in less than 7 days from signing the term sheet.
$20,530,000 Non-Recourse Construction Financing for a 25-Unit Luxury Beachfront Condominium, For-Sale Development; Cocoa Beach, FL
September 8, 2021
George Smith Partners successfully arranged $20,530,000 in non-recourse senior construction financing for The Surf, a beachfront condominium project in Cocoa Beach, FL. The Project consists of 25 luxury residential units with sale prices ranging from $975,000 to $2,500,000, as well as 3 ground floor retail units. The Project is currently 75% pre-sold. Per Florida statutes, any buyer deposit amount over 10% of the purchase price may be used towards development costs, but a large portion of those deposits are not due from buyers until building top off. GSP was able to successfully secure a lender comfortable with crediting future deposits to decrease the Sponsor’s up-front equity requirement.
The Sponsor’s co-developer and GC tragically passed in early 2020, leading them to engage a new group. While the new GC had extensive experience in luxury housing development, they are relatively new to ground-up, multi-level condominium development. GSP leveraged its extensive lender network, strong pre-sales, and the Orlando-based Sponsor’s strong development track record in this submarket and product type to provide non-recourse construction financing.
The term is 24 months with interest-only payments and 6 months minimum interest. The senior note was sized to 64% LTC. GSP structured the loan, crediting future sales deposits towards the total equity requirement, thereby eliminating any additional out-of-pocket equity required at closing above the land acquisition and predevelopment costs already spent to date.
Rate: WSJ Prime +4.50%
Term: 24 Months + Two 2-Month Extensions
Loan to Cost: 64%
Prepayment: 6 Months Minimum Interest
Lender Fee: 1% In, 1% Out
- Advisors: Gilda Rivera
$17,820,000 Cash Out Financing Fixed at 3.30% Interest-Only for Stabilized Multifamily Property; Phoenix, AZ
July 28, 2021
George Smith Partners secured $17,820,000 of permanent financing for the refinance of a 164-unit multifamily complex located in Mesa, AZ. The Property, which was originally built in 1979, recently completed a renovation project that included updating unit interiors and exterior amenities. The unit mix is comprised of 1-bedrooms (49%) and 2-bedrooms (51%). Amenities include a pool, an open pet area, and an on-site laundry facility. GSP was able to a secure a 7-year fixed rate of 3.30%. The financing is interest-only for the entire term and non-recourse to the Sponsor. Refinancing provided the Sponsor with a much lower rate and a significant return of equity. The loan is sized to 60% LTV and a 1.35x DCR.
June 30, 2021
George Smith Partners arranged cash-out permanent financing (65% LTV) for the refinance of a 4-unit multifamily property located in West Hollywood, CA. The Sponsor had purchased and renovated the Property all cash. Building improvements included complete gutting of the units and exterior renovations. The recent improvements allowed the Sponsor to quickly lease-up the Property at market rents, thus increasing the value of the Property. Because the Sponsor had purchased the building and paid for most of the capital expenditures more than 12 months prior to the loan request, this was considered a 100% cash-out financing. This combined with the low unit count made securing a conventional lender challenging. GSP was able to leverage its resources and provided the Sponsor with a 5-year term at a low rate of 3.50%. GSP was able to structure the loan with 12 months of interest only payments, before converting to 30-year amortization thereafter. The prepayment structure is 5-4-3-2-1, giving the Sponsor additional flexibility in the coming years. The Sponsor had a short closing timeline to pull his equity out of this deal to purchase another property already in escrow. GSP worked closely with the Lender and closed the transaction in just 35 days. The Sponsor is using the cash-out proceeds to continue their business plan of purchasing and renovating additional properties.
June 16, 2021
George Smith Partners successfully arranged the cash-out refinance of a 200+ unit multifamily property. The loan is floating at a starting rate of 2.56% and allows the Sponsor to complete a value-add strategy to increase the NOI and refinance into a permanent loan at higher proceeds in 18-24 months.
While processing the loan, GSP worked with the Lender to understand the historical cash flow which was extremely choppy due to the inconsistent rent payments during the Covid-19 pandemic. The analysis resulted in a $3,000,000 increase to the loan amount and an additional year of interest only payments.
May 19, 2021
George Smith Partners identified a national balance sheet lender with an intimate knowledge of the Hayward submarket and arranged $8,400,000 in acquisition and bridge financing for the purchase and reposition of a currently 50% occupied, 1960’s-built apartment complex located in Hayward, CA. The Sponsor placed the portfolio under contract during the COVID-19 pandemic.
The loan includes $1,350,000 of future funding for extensive renovations of unit interiors and exterior upgrades, including an earthquake retrofit. Interest is not charged on the holdback until funds are drawn. This Capital Provider also structured and capitalized an interest reserve to cover the shortfall of cash flow during repositions. Sized to 76% of the total capitalization, the three-year bridge loan is interest only for 36 months and carries a floating rate of LIBOR + 4.25% and include two extension options for up to a term of five-years.