Rate: P+4.0% w/10% Floor
Term: 12 months
Recourse: Carve-Outs Only
Fees: 1.0%
Prepayment: Six-month minimum yield; no exit fee: P+4.0% w/10% Floor
Transaction Description:
George Smith Partners placed a cash-out $8,250,000 non-recourse loan for the partnership recapitalization of an entitled parcel in Van Nuys which is located in the San Fernando Valley of Los Angeles, CA. The Sponsor has been working through the permitting process for residential development. GSP identified a non-institutional lender who underwrote the business plan assuming a sale to a related entity upon ready-to-issue (RTI) permits. Their exit will come in the form of the pre-arraigned Joint Venture funding and a to-be-identified construction lender. Excess proceeds were utilized to buy-out an LP investor and recapitalize the Borrower and carry costs through to RTI. The non-recourse loan will float for the 12-month term at Prime + 4.0%. There was no appraisal, or Phase I report required for funding.
Advisors
Related Financings
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$4,200,000 Cash-Out Refinance for Predevelopment Land Financing on a To-Be-Built 90-Unit Multifamily Project; West Oakland, CA
January 29, 2020
Transaction Description:
George Smith Partners arranged a $4,200,000 cash-out refinance for predevelopment land financing on a to-be-built 90-unit multifamily property in West Oakland, CA. The Property consists of a 1.5-acre parcel and 35,000 square feet of raw industrial space built in the 1950s that will be demolished at the start of construction. The Property recently obtained entitlements for a 90-unit multifamily development, but the Sponsor required significant capital and about 12 months to complete construction drawings. The Sponsor was seeking a refinance and approached GSP with 30 days of term remaining on their existing land loan. The existing land Lender would not release the good news money earmarked for a successful entitlement that would have been used to fund construction drawings. They were also seeking to charge an extension fee that was significantly above market.
In a very short timeframe, GSP sourced a land lender comfortable with refinancing the existing land loan and providing cash-out to help fund construction drawings. Sized to 65% LTV, including a considerable land step-up for entitlement, the financing is interest only and carries a 12-month term with two 3-month extensions. There is no prepayment penalty, and the Lender origination fee was only 0.5%. The new loan closed in less than 30 days from term sheet execution avoiding a maturity default on the existing loan and enabling the Sponsor to fund construction drawings.
Rate: 8.99%
Term: 12 months with two 3-month extensions
Amortization: Interest only
LTV: 65%
Prepayment Penalty: None
Lender Fee: 0.5% in / 1% out
Guarantee: Recourse -
$3,500,000 Cash-Out Financing for Land on Melrose Ave and La Brea Blvd; Los Angeles, CA
August 7, 2019
Transaction Description:
George Smith Partners secured financing for a $3,500,000 loan on a former gas station at the corner of Melrose and LaBrea. The challenge was finding a bridge lender willing to lend on vacant land entitlement by-right for multi-family residential that will not commence construction for at least 18 months while also providing $500,000,000 in cash-out proceeds.
GSP was able to exceed the Sponsors expectation with respect to cash-out proceeds basing the loan on an updated appraisal which recognizes the site’s receipt of a Transit Oriented Communities (TOC)Tier 2 “up zoning” which occurred in 2017 after the land was acquired by the Sponsor and doubled the number of units that can be developed on the site. The 2 Year floating rate execution is a full recourse loan with a rate of L + 460 (7% floor) cash-out proceeds and a holdback for interest carry during the term of the loan.
Rate: LIBOR + 460 with 7% Floor
Term: 2 Years
LTV: 50%
Amortization: Interest Only
Yield Maintenance: None
Guaranty: Full Recourse
