George Smith Partners arranged acquisition bridge financing for a value-add multifamily property in the Mid-City neighborhood of Los Angeles, California, a gentrifying urban submarket. The 9 unit, 1960’s vintage property had significant deferred maintenance and below market rents. The Sponsor’s business plan was to reposition the property and release the units at market rents. Sized to 70% of total project cost, the loan includes 100% of future funding for property renovation, which includes a full gut renovation of unit interiors and an exterior upgrade. The two year bridge loan is interest only and floats at Prime plus 0.5% (5.00% today) with no prepayment penalty. Interest is not charged on the holdback until funds are drawn, and the loan was structured with an interest reserve to mitigate the property’s weak cash flow during the renovation period. The lender fee was negotiated down to 0.5%.

Rate: Prime + 0.5%
LTC / LTV: 70% / 65%, including 100% of future funding and interest reserve
Term: 2 Years
Amortization: Interest Only
Prepayment Penalty: None
Recourse: Full Recourse
Lender Fee: 0.5%