$7,600,000 Bridge Loan on 50% Occupied Class C Multifamily

George Smith Partners secured $7,600,000 non-recourse bridge financing for a 50% occupied class C multifamily property in a secondary market located in the Southwest.   Proceeds included $2,127,000 for renovation on dilapidated units and capital expenditures as well as an interest reserve.  The sponsor acquired the property with no reliable operating history utilizing a seller carry back note.  Many of the tenants were late on their rent at the time of acquisition.  The sponsor systematically put in place stricter underwriting for tenant qualification and value engineered a renovation budget.  Most lenders were unable to understand the business plan, despite the sub-market being at 94% occupancy and the sponsor’s recent rentals already hitting pro forma with very light unit turn expenses.  GSP identified a lender with extensive knowledge of multifamily re-positioning and became comfortable with the pro forma cash flow and stabilized value.  In addition, the lender has capacity to offer a fixed rate permanent loan at stabilization to mitigate refinance risk.