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$84,000,000 Non-Recourse Bridge Financing for the Completion and Stabilization of a 270-unit, 885-bed Student Housing Project; Merced, CA

Rate: L+ 4.75% with 0.10% Floor
LTC: 80%
Loan-to-Stabilized Value: 75%
Term: 36 months with 2 twelve-month extensions
Lender Fee: 0.50% in/ 0% exit

Transaction Description:

George Smith Partners arranged $84,000,000 in non-recourse, bridge financing for the completion and stabilization of a 270-unit, 885-bed student housing complex in Merced, CA. The new loan, which replaced a higher cost construction loan, was consummated, and closed prior to the City issuing the final certificate of occupancy. This is the first completed student housing project in Merced and is uniquely positioned to serve the growing enrollment of both UC Merced and Merced City College. The Project faced significant challenges due to the global COVID pandemic which caused cost overruns and setbacks due to labor and material shortages. The 80% leverage loan will provide the capital required to complete the Project, lease up and season the Property, and allow the Sponsor to repatriate excess equity. Additionally, the development included the use of EB-5 equity which some capital providers are hesitant to work with. GSP worked with several reliable, patient, and open-minded lenders who understood the unique risks and opportunities in the market and ownership structure which resulted in a lower cost to the Sponsor.


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    June 30, 2021

    Transaction Description:

    George Smith Partners successfully placed a $7,800,000 loan for the acquisition and repositioning of a student housing property serving a major Southern California university. George Smith Partners went to a variety of lenders and identified a non-recourse capital provider who believed in the deep value-add business plan, with 23% of loan proceeds funding CapEx.George Smith Partners structured the loan at 70% of total project cost. The funding covers the acquisition, CapEx, construction costs, and the interest reserve.

    Rate: 30-day LIBOR + 345 basis point spread, 4.45% rate floor
    Term: 36 months, two 12-month extension options
    Leverage: 70% LTC
    Amortization: Full term interest only
    Recourse: Non-recourse with standard carve outs
    Fee: 1.5% Origination Fee, 0.5% Exit Fee

  • $40,000,000 Non-Recourse Bridge Financing for a 330-Bed, Student Housing Property; Orange County, CA

    May 26, 2021

    Transaction Description:

    George Smith Partners successfully placed a non-recourse $40,000,000 bridge loan to fund the acquisition and repositioning of a 330-bed student housing project in Orange County, California during the COVID-19 pandemic. Directly adjacent to a non-power five campus, the University’s decision to not hold in-person classes due to COVID-19 severely impacted the Property’s occupancy levels at the time of acquisition. Additionally, the Project was undergoing renovations when the pandemic struck.

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    Rate: LIBOR + 3.40%
    Term: 36 Months, Two 1-year Extensions
    LTC: 70%
    Guaranty: Non-Recourse except for standard carve outs, bad acts, and environmental. Completion guaranty
    Fee: 1.0% Origination