Don't Miss a Fact,
Sign Up for FINfacts!

FINfacts is a weekly newsletter highlighting recent financings and economic insights.

Subscribe Here

$81,500,000 Non-Recourse Bridge Loan for a 19-Story Multifamily Tower; Phoenix, AZ

All terms confidential

Transaction Description:

George Smith Partners successfully arranged $81,500,000 in non-recourse bridge financing for a 312-unit, 19-story luxury high-rise apartment tower in Phoenix, AZ. The Property is in the heart of Phoenix’s historic Roosevelt Row Arts District and features restaurants and retail on the ground floor, 7 levels of parking, a state-of-the-art fitness center and a rooftop pool overlooking the Phoenix skyline.

The financing was closed prior to the City issuing a final Certificate of Occupancy on the Property. Proceeds from the initial funding will be used to replace the senior construction debt and to finance the remaining construction. A future funding will retire the existing mezzanine construction debt as well as return cash equity to the Developer’s investor group.

GSP sourced and negotiated with a capital provider who became comfortable with the market, lack of project completion, and lease up risk at a high leverage point. Furthermore, the new Lender was very agreeable to the existing mezzanine lender’s requested intercreditor terms. By retiring the higher priced construction debt, the new bridge loan provides the Developer with additional term, substantial savings on interest, and exit flexibility during project lease-up.

Advisors

Related Financings

  • $39,500,000 Non-Recourse Bridge Financing for a 148-Unit Multifamily Acquisition, Mid-Conversion from Office to Multifamily; Santa Ana, CA

    January 6, 2021

    Transaction Description:

    George Smith Partners arranged $39,500,000 in non-recourse financing for the acquisition of a vacant 10-story office building, currently mid-conversion to a 148-unit, Class-A multifamily building. The Property is the only high-rise apartment building in Downtown Santa Ana. The financing allows the Sponsor to complete the conversion, stabilize the Property, and refinance into long-term permanent debt. While the apartment market is very strong in Downtown Santa Ana, there are no other high-rise apartment buildings and no direct comparable properties. Not only did the Lender have to get comfortable with the construction completion, they also had to get comfortable with a new product type in this market.

    GSP identified a local lender that not only understood the market and demand for multifamily but was comfortable with the Sponsor’s ability to step-in and complete the conversion.

    Rate: LIBOR + 7.00%
    Term: 18 Months
    LTV: 77%
    LTC: 74%
    Amortization: Full Term Interest Only
    Prepayment: 10-month Make-Whole
    Guaranty: Non-Recourse

  • $15,500,000 Non-Recourse Bridge Financing for a Mid-Construction 3-Property Multifamily Portfolio; Los Angeles, CA

    December 16, 2020

    Transaction Description:

    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.

    Rate: 4.90% Fixed
    Term: 12 Month
    Amortization: Interest Only
    LTC: 70%
    Guaranty: Non-Recourse
    Lender Fees: 1.00%
    Prepayment: Open

  • $4,700,000 Non-Recourse, Bridge Financing for Mid-Construction Apartment Project; Pico-Robertson Area of Los Angeles, CA

    November 18, 2020

    Transaction Description:

    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.

    Rate: 5.90% Interest Only
    Term: 1 + 1
    LTC: 80%
    Guaranty: Non-Recourse

  • $62,750,000 Non-Recourse, Bridge Financing for a New 253-Unit, Class A, Mixed-Use Development; Longmont, CO

    July 22, 2020

    Transaction Description:

    George Smith Partners arranged $62,750,000 in non-recourse, bridge financing on a new construction, mixed-use property with 253 apartment units above 10,000 SF of retail in Longmont, CO—approximately 20 minutes northeast of Boulder. Despite delivering in the early stages of a global pandemic and statewide stay-at-home order, the building has maintained relatively robust lease-up velocity through unconventional marketing methods such as virtual touring. Amid such unprecedented market uncertainty, GSP successfully engaged a newly established debt fund to facilitate a cash-neutral, non-recourse refinance of the project’s maturing high-leverage construction debt, which could not be extended. The 75% loan-to-value bridge facility is priced at L+500 with a 36-month term and two 12-month extension options.

    Rate: L+500 (1.00% LIBOR Floor)
    Term: 3+1+1
    LTV: 75%
    Guaranty: Non-Recourse

  • $15,250,000 Non-Recourse, Cash-Out Bridge Financing for a 200-Unit Multifamily Property in a Tertiary Market; 80% LTC at 375 over 1-Month Libor; Rexburg, ID

    February 26, 2020

    Transaction Description:

    George Smith Partners arranged $15,250,000 in non-recourse, cash-out bridge financing for a 200-unit multifamily property in Rexburg, Idaho. While home to BYU-Idaho (with a student population of 25,000), Rexburg is a small town with a non-student, resident population of only 20,000. The Sponsor approached GSP looking to refinance out a recourse construction loan from a local bank and also return capital to investors, while providing the Property time to season prior to selling or refinancing.

    By emphasizing the demand driven by BYU-Idaho’s presence, the strong sponsorship with a long history of development and investment in the local market, and the Property’s robust in-place cash flow, GSP ultimately sourced a prominent debt fund capital provider that was comfortable assuming tertiary market risk. The 80% loan to cost, non-recourse execution included a sizeable cash-out, given that the in-place construction loan was sized to 65% loan to cost. The loan floats at a spread of 375 over the 1 Month Libor (5.4% all-in today) and is interest only.

    Rate: 1 Month LIBOR + 375
    Term: 2 Years + 1 Year Extension
    LTC: 80%
    Amortization: Interest Only
    Guaranty: Non-Recourse

  • $5,700,000 Non-Recourse Acquisition Bridge Financing for a 2-Property Multifamily Portfolio; 80% LTC and 7.5% Debt Yield; Gardena, CA

    February 5, 2020

    Transaction Description:

    George Smith Partners arranged $5,700,000 in non-recourse acquisition bridge financing for a two-property value-added multifamily portfolio in Gardena, CA. The two 1960’s vintage properties had significant deferred maintenance and below market rents. The Sponsor’s business plan was to reposition the Property and release the units at market rents. Maximum proceeds, despite a tight debt yield, and non-recourse were priorities.

    George Smith Partners sourced a lender familiar with the market and willing to size the loan to a 7.5% debt yield, which resulted in 80%LTC. The loan, which offers an attractive parri-passu funding structure, includes future funding for a full gut renovation of unit interiors and an exterior upgrade. The three-year bridge loan is interest only and carries a fixed interest rate of 6.90%. Interest is not charged on the holdback until funds are drawn. The lender fee was limited to a 1.00% origination fee with no exit fee. The Lender did not charge a legal fee and closed the transaction in 30 days from term sheet execution.

    Rate: 6.90%
    Term: 3 Years
    Amortization: Interest only
    LTC: 80%, including future funding
    Guarantee: Non-Recourse
    Lender Fee: 1% in / no exit fee
    Prepayment Penalty: 12-month interest guarantee