$7,167,000 Non-Recourse Cash-Out Refinance For Mixed Use Property; Los Angeles, CA

Rate: Fixed at 3.5% for 5 years then floats at 6 Month LIBOR + 3.25%
Term: 20 years
Amortization: 30 years
Prepay: 5,4,3,2,1
LTV: 65%
DCR: 1.2
Interest Only: 3 Years
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured $7,167,000 in non-recourse financing for a mixed use property with 46 residential units and 5,350 sf of ground floor retail space. The financing provides 65% leverage and is fixed at a rate of 3.50% for five years with three years of interest-only payments. Several challenges were encountered when discussing the transaction with capital providers. Since the Property is mixed use, extensive market comparable data was required to prove out the value of both the residential and retail portions. A different cap rate was applied to each component of the Property before summing the individual values. This process demonstrated that the Lender’s underwritten value was well supported. One of the retail spaces is occupied by a nightclub and several lenders declined the deal because of the high turnover rate with this type of tenant. GSP showed that the nightclub was in place for over 10 years and remains very popular to this day. Despite rates rising during the diligence process, the Lender held the rate even without a formal rate lock.

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