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

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

Subscribe Here

$9,800,000 Construction Financing for a 36-Unit Ground up Multifamily Property in a Southwestern State

Rate: 11.5% fixed rate, full term interest only

Term: 18 months with three (3) three (3)-month extension options

LTC: 70%

Guaranty: Non-Recourse

Transaction Description:

George Smith Partners successfully arranged a non-recourse, stretch senior, construction loan of $9,800,000 for the ground up construction of a 36-unit mixed-used development in the submarket of a Southwestern State. GSP, through their expertise in multifamily development financing and strong relationships with a wide range of lenders, was able to negotiate favorable terms for their client including pari passu funding. The loan was priced at an 11.5% fixed rate with three, three-month extension options.

Building upon the Sponsor’s local market knowledge, the GSP team effectively packaged and supported the client’s 70% LTC financing request for the project’s duration. Upon completion, the project is poised to become a standout addition to the city’s Art’s District.


Related Financings

  • $3,600,000 Acquisition Financing for 16-Unit Multifamily; West Hollywood, CA

    May 4, 2022

    Transaction Description

    George Smith Partners arranged $3,600,000 in acquisition financing for a 16-unit multifamily property in West Hollywood, CA. The Property came with five vacant units that were previously leased at well below market rents. The Sponsor, a repeat client, planned to renovate the vacant unit interiors and increase rents accordingly. GSP leveraged its network of relationships to source short-term, non-recourse, fixed rate financing with interest only payments with an early rate lock. However, the delayed appraisal report uncovered two units that were not legally permitted, which the lender excluded in its underwriting. GSP worked with the Lender, Appraiser and Sponsor on creative solutions to get as close to the original loan terms as possible. These negotiations required several extensions on the closing. Also, the rate lock eventually expired. Ultimately, GSP was able to get a $3,600,000 loan amount thanks in part to additional analysis and data provided to the Lender. GSP also leveraged its relationship with the Lender to secure a 4.25% fixed rate. While this was higher than the original locked rate, it was well below the current market rate.

    Rate: 4.25% Fixed
    Term: 2 Years, with 1-Year Extension Option
    LTV: 55%
    Amortization: Interest-Only
    Prepayment: 1%, 0%
    Guaranty: Non-Recourse

  • $47,000,000 Senior Construction Loan for a Mixed-Use Development; Azusa, CA

    April 11, 2022

    Transaction Description:

    George Smith Partners placed a $47,000,000 senior construction loan for the ground-up development of a mixed-use project in Azusa, CA. When complete, the 5-story project will consist of 127 apartment units and approximately 10,000 SF of 1st-floor commercial/retail/restaurant space. The Project is an integral component in the ongoing expansion of the City of Azusa’s Downtown district and is immediately adjacent to the Gold Line Station, which runs from Azusa Pacific University & Citrus College west to Downtown Los Angeles. This is the Sponsor’s second project in Azusa.

    A lack of comparable projects within the submarket posed a challenge. GSP emphasized the supporting employment centers inside a ten-mile radius, including the two colleges and eighteen medical facilities. In addition, a detailed breakdown of the San Gabriel Valley (SGV) submarket helped showcase the presence of a proportionally higher share of younger households than statewide. Data depicting home values that had grown out of reach for those living in a three-mile radius helped the case for a rental project. Further support was provided by the SGV submarket experiencing minor economic impact during the last two years and during Covid.

    GSP executed a full-time marketing campaign and identified the most economically beneficial capital stack scenario for the sponsorship with a stepdown in rate at Temporary Certificate of Occupancy (TCO).

    Rate: Floating rate (SOFR-based) with rate stepdown at TCO
    Term: 36 Months + Two, 12-month Extensions
    Stabilized Loan-To-Value: 70%
    Loan-To-Cost: 85%
    Guaranty: Non-Recourse

  • Highly Leveraged, Quick Close Acquisition of $2,335,000 for 10-Unit Multifamily Property; West Adams – Los Angeles, CA

    March 30, 2022

    Transaction Description

    The Sponsor approached George Smith Partners for highly leveraged (80% Loan-to-Purchase), quick purchase financing. GSP secured this financing which allowed the Sponsor to purchase the 10-unit multi-family property well below the market value. Although the Property is currently 100% occupied, rents were below market because the Seller self-managed and the Property needs exterior and interior improvements. GSP arranged a $2,335,000 in non-recourse financing for the acquisition. The loan was structured with a first trust deed from a debt fund as well as a preferred equity B piece. There’s additional flexibility for the Sponsor because there is no prepayment penalty. This loan structure allows the Sponsor to implement their business plan of renovating units, increasing rents, and refinancing into a permanent loan within a few months. The non-recourse facility was priced at an interest-only fixed rate with a blended rate of 8.05% with a 12-month term plus a 6-month extension. Thanks to GSP’s long-standing relationship with this debt fund and preferred equity investor, we were able to close this transaction in less than 10 days from signing the term sheet.

    Blended Rate: 8.05%
    Term: 12-months plus a one 6-month extension
    Loan-to-purchase: 80%
    Prepayment Penalty: None

  • $59,900,000 Non-Recourse Construction Loan, 180-Unit Apartment Building; Los Angeles, CA

    February 23, 2022

    Transaction Description:

    George Smith Partners successfully arranged $59,900,000 in construction financing for a 180-unit apartment building in an infill Los Angeles location. The Sponsors are capitalizing on the San Fernando Valley’s 3% vacancy rate and very little brand-new apartment construction. While the Sponsors have significant experience in entitlements and apartment operations, this is their first ground-up development Project. The Sponsors were seeking maximum leverage on a non-recourse basis. The Subject Property is across the street from an apartment project that came online while processing the loan. The rents being achieved were above the Sponsors proforma rents which allowed the Lender to underwrite higher rents and increase loan proceeds during the loan processing. The additional loan proceeds were able to cover the escalating construction costs and increase the leverage to 80% of total project cost.

    Rate: 6.95% + SOFR
    LTC: 81%
    Term: 36 Months
    Guaranty: Non-Recourse

  • $25,200,000 Construction Financing for a Mixed-Use, Luxury Multifamily Development; Downtown Culver City, Los Angeles

    February 16, 2022

    Transaction Description:

    George Smith Partners successfully arranged $25,200,000 in senior construction financing for a 54-unit ground-up luxury apartment community featuring 3,000 SF of ground floor retail space in the heart of Downtown Culver City. The Sponsorship Team acquired the Property in 2018, which is now fully entitled and ready to break ground. The Project is expected to deliver in Q4 of 2023.

    As a central and upcoming submarket of Los Angeles, Culver City is peppered with tech startups and major employers from Amazon to Apple, flourishing as an employment hub with over 250,000 high-paying jobs and approximately 8,000 employees within a mile from the Subject site. The best-in-class Sponsorship team has extensive local industry knowledge and recognized the Property’s underlying value, bolstered by the submarket’s immense growth and capital inflow, as well as the area’s historical roots in the movie and entertainment industry. GSP was able to identify a lender who offered highly competitive terms, given the Project’s significant demand and the value of multifamily housing in an ultra-high growth submarket.

    All Terms Confidential

  • $29,250,000 Senior Construction Financing for a Mixed-Use Development; Bellflower, CA

    February 16, 2022

    Transaction Description:

    George Smith Partners placed a $29,250,000 senior construction loan for a ground-up development of a mixed-use project in Bellflower, CA. When complete, the 5-story Project will consist of 91 apartment units and approximately 14,550 SF of 1st-floor commercial/retail/restaurant space. The Subject is located at the northern boundary of the Downtown Bellflower District and is an integral component of the city’s TOD Specific Plan. When complete, residents will be able to access LAX, the South Bay, and DTLA via the Blue and Green Metro lines.

    As the marquee development for the Bellflower TOD Specific Plan, few comparable projects were available in proximity to the Project site. GSP focused interested lenders on the supporting employment centers within a twenty-minute driving distance, including seven medical centers inside of a 5-mile radius. Additionally, while few Class-A style multifamily properties currently exist near the site, GSP used submarket data to show that demographic trends within the immediate area support the need for new product. GSP executed a broad and in-depth marketing campaign to help capital markets understand the opportunity.

    Rate: Prime + 0.75%; Floor 4.375%
    Term: 24 Months + three, 6-Month Extension
    Stabilized Loan-To-Value: 65%
    LTC: 72%