$9,500,000 Acquisition/DPO for Multifamily in Northern California

Transaction Description: The Sponsor required an acquisition loan to finance the discounted pay-off (DPO) of a 96-unit apartment complex in Northern California. While the property historically operated at above 95% occupancy, cash flow suffered due to a condo conversion play that stalled in mid-2010.

Challenge: The in-place NOI did not justify the required loan proceeds. Additionally, the prior operator was a condo converter and not experienced in managing rental units. Lastly, the DPO had to close by a fixed date.

Solution: Based on GSP’s counsel, the limited partner, an experienced multifamily owner and operator, replaced the prior operator and brought in an experienced management company to run the property. GSP then analyzed the historical operating expenses to cull-out non-recurring and capital expenditures that were attributable to the prior operator’s focus on condo sales instead of traditional multi-family operations. Given the hard close date required by the lender, GSP recommended a regional bank with proven execution ability. GSP then worked with the lender to explain all the historical variances and closed the transaction on-time and as-applied for.