$9,650,000 Purchase of 95-Unit Seattle Multifamily Property; Sized to 1.15 DCR on an Actual Mortgage Constant; 68% LTV

Rate: 4.5% fixed for 5 years, then floating at 6M LIBOR + 3.25%
Term: 15 years
Amortization: 3 years Interest Only followed by 30 year amortization
Prepayment Penalty: 3,2,1,0
LTV: 68%
DCR: 1.15x
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured $9,650,000 in proceeds for the purchase of a 95-unit multifamily property located near Seattle. Proceeds were maximized by using a 1.15x Debt Coverage Ratio on the actual mortgage constant. The Seller’s historical P&Ls included many corporate and non-recurring expenses. GSP was able to separate out these expenses using the Seller’s general ledgers. Additionally, our team demonstrated the Sponsor’s successful track record bringing operating expenses in line with typical multifamily properties. As a result, the selected Lender was able to underwrite to a normalized expense ratio and provide 68% LTV on the purchase. Fixed at 4.50% for five years, the first three years are interest only before rolling into a 30 year amortization schedule for the 15 year term loan. The loan closed in about 45 days.

Advisors

Related Financings

  • Expand

    $6,350,000 Cash Out Refinance of 28 Units in Los Angeles; Maximum Credit for Unit Renovations

    April 17, 2019

    Transaction Description:

    GSP secured $6,350,000 in proceeds for the refinance of two properties comprising 28 units in Los Angeles. Since acquisition, the Borrowers made significant upgrades to the Property, including renovating 12 units at a cost of nearly $30,000 per unit. These units were re-leased at market rate, resulting in a considerable increase in income. The selected Lender was able to give the Borrower maximum credit for the higher income without using a loan-to-cost constraint. Additionally, two of the renovated units were leased just a week before close. The Lender was able to use the additional income based on the signed leases, without requiring any seasoning. Fixed at 4.4% for 7 years, the loan provides three years of interest only payments before rolling into a 30 year amortization schedule. Proceeds were maximized by using a 1.15x Debt Coverage Ratio on the actual mortgage constant.

    Rate: 4.4% fixed for 7 years, then floating at 6M LIBOR + 2.25%
    Term: 30 years
    Amortization: 3 years Interest Only followed by 30 year amortization
    Prepayment Penalty: 3,2,1,0
    LTV: 65%
    DCR: 1.15x
    Guaranty: Non-Recourse

  • Expand

    $42,000,000 Construction Loan for a 252-Unit Mixed-Use Multifamily Project in Downtown Salt Lake City, Utah

    April 3, 2019

    Transaction Description:

    George Smith Partners arranged a $42,000,000 senior construction loan for the ground-up development of a 252-unit mixed-use luxury apartment community in the Marmalade District of Downtown Salt Lake City, Utah. The mixed-use project will include ground floor retail and features Class A apartments with modern design.

    GSP was able to identify several competitive lenders that recognized the Sponsor’s ability to execute large-scale multifamily projects, based on the successful delivery of a similar project they built in the MSA. GSP was able to leverage various lenders in order to help procure the most competitive terms available with a three-year term and two, one-year extension options.

    Terms: Confidential

  • Expand

    80% LTC Financing at 7.99% Fixed for the Reposition of a 100% Vacant Apartment Building in Los Angeles

    March 27, 2019

    Transaction Description:

    GSP arranged the non-recourse first mortgage from a regional balance sheet lender. Due to the Sponsors and Sellers requirement for a quick close, the Lender was able to close and fund the loan in under three weeks. The Property was acquired 100% vacant at loan closing. The loan is structured as an initial 80% advance based on the purchase price and past tenant buyouts, with a further 80% ($280,000) to be future funded for the reposition and lease-up of the Property. Interest is not paid on the future funding until drawn. Furthermore, there is no lockout period providing the Sponsor with unlimited flexibility to refinance or sell the Property without a burdensome prepayment penalty.

    Rate: 7.99%
    Term: 15 month initial term
    Amortization: Interest Only
    Max Loan to Cost: 80%
    Prepayment: None
    Lender Fee: 1.5%
    Exit Fee: 0.5%
    Guaranty: Non-Recourse

  • Expand

    $6,350,000 Cash Out Refinance of 28 Units in Los Angeles; Maximum Credit for Unit Renovations

    March 27, 2019

    Transaction Description:

    George Smith Partners secured $6,350,000 in proceeds for the refinance of two properties comprising 28 units in Los Angeles. Since acquisition, the Borrowers made significant upgrades to the Property including renovating 12 units at a cost of nearly $30,000 per unit. These units were re-leased at market rate, resulting in a considerable increase in income. The selected lender was able to give the Borrower maximum credit for the higher income without using a loan-to-cost constraint. Additionally, two of the renovated units were leased just a week before close. The Lender was able to use the additional income based on the signed leases, without requiring any seasoning. Fixed at 4.4% for 7 years, the loan provides three years of interest only payments before rolling into a 30 year amortization schedule. Proceeds were maximized by using a 1.15x Debt Coverage Ratio on the actual mortgage constant.

    Rate: 4.4% fixed for 7 years, then floating at 6M LIBOR + 2.25%
    Term: 30 years
    Amortization: 3 years Interest Only followed by 30 year amortization
    Prepayment Penalty: 3,2,1,0
    LTV: 65%
    DCR: 1.15x
    Guaranty: Non-Recourse

  • Expand

    $22,367,000 Cash-Out Refinance of 200 Secondary Market Rental Units, CA

    March 20, 2019

    Transaction Description:

    GSP placed the $22,367,000 non-recourse cash-out permanent loan for 200 stabilized units in a secondary California market. This represented a substantial return on equity. Loan proceeds were increased post application as the supportable underwritten net cash flow improved during the due diligence process. Occupancy constantly operated at 98% with future increases forecasted at unit turn. Fixed for seven years at 4.73%, the non-recourse loan is interest-only for two years prior to amortizing over 30 years for the balance of the term.

    Rate: 4.73% Fixed
    Term: 7 Years
    Amortization: Two Years Interest Only; 30 Years Thereafter
    Loan-to-Value: 60%
    DCR: 1.35
    Recourse: Carve-Outs Only
    Prepayment: Loss of Yield
    Loan Fee: 0.50%

  • Expand

    $12,000,000 High leveraged Permanent Multifamily Financing in Tulsa, OK

    February 20, 2019

    Transaction Description:
    George Smith Partners successfully arranged the permanent financing for a class C, 350-unit apartment complex located in Tulsa, Oklahoma. The Sponsor sought a permanent loan to refinance the Property after spending a million in upgrades. The Sponsor’s goal was to lock in a long-term, low interest rate in a rising interest rate environment as the building was close to reaching stabilized occupancy.

    Challenges:
    The Sponsor had turned around a rough non-performing property and was in the process of completing the lease-up. In addition, the Sponsor’s syndication structure made financing more complicated because of the small shares of ownership.

    Solution:
    GSP was able to prove to the Lender the Sponsor’s successful track record with similar properties, highlight the Property’s growing position in the market and the strong rent growth. Because GSP has completed so many other deals with syndicators, we were able to structure the loan so that both the Sponsor and Lender were comfortable.

    Rate: 4.5% Fixed
    Term: 7 Years
    Amortization: 30-Year Amortization
    LTV: 75%
    Guarantee: Recourse
    Prepayment Penalty: None

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

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

Subscribe Here