Acquisition Bridge Loan for a 12-Unit Multifamily Community; San Diego, CA

Transaction Description:

George Smith Partners secured a $3,060,000 loan for the acquisition of a 114-unit multifamily property located in Oklahoma City, OK. To meet the sellers 60-day closing requirement, GSP used its relationship with a lender we had closed multiple loans with. This lender recently closed a similar loan in this market which allowed them to feel comfortable with the market characteristics. Although the Property is currently over 90% leased, rents were below market because the Seller self-managed and the Property needs exterior and interior improvements. The Sponsor wanted to lock in a low rate to allow for more cash flow to be used towards their value-add strategy. This was cheaper and more efficient than a traditional bridge loan. During the close of this loan, GSP was simultaneously helping the Sponsor purchase the Property directly next door. The long-term business plan is to combine both properties to become one property within 2 years. The loan represents 70% of the purchase price and was structured as a fixed rate 5-year term, with the first-year interest-only. The interest-only period allows for more property cash flow to be used towards building improvements. Additional flexibility is also provided with a prepayment equal to 3-1-0-0-0. The prepayment flexibility will allow the Sponsor to cash-out refinance once they have implemented their value-add strategy.

Transaction Description:

George Smith Partners successfully brokered both the sale and acquisition financing for an extended stay hotel conversion located in the Mountain States region. The Seller, initially intending to undertake the Project, engaged GSP to source bridge financing for the 126-apartment conversion. Most of the conversion will be cosmetic changing the feel from hotel to residential. The hotel had been closed due to COVID, but the Sponsor needed to cancel the Management Agreement with the Operator and vacate the hotel. Because the hotel was in foreclosure, the Seller put the asset in bankruptcy before the trustee sale. This complicated the transaction and resulted in closing the deal two weeks from court approval.

GSP found a buyer with experience in hotel conversions who understood the Property’s value proposition and the bankruptcy process. With limited time, GSP represented the Sponsor in sourcing $10,000,000 of 3-month Gap financing for the purchase while concurrently working on inexpensive bridge financing. No appraisal was required for the Gap loan. This was an extremely complicated financing with exceptionally short time constraints. GSP was able to serve the needs of both Buyer and Seller and successfully secure financing.

Transaction Description:

George Smith Partners identified a national balance sheet lender with an intimate knowledge of the Hayward submarket and arranged $8,400,000 in acquisition and bridge financing for the purchase and reposition of a currently 50% occupied, 1960’s-built apartment complex located in Hayward, CA. The Sponsor placed the portfolio under contract during the COVID-19 pandemic.

The loan includes $1,350,000 of future funding for extensive renovations of unit interiors and exterior upgrades, including an earthquake retrofit. Interest is not charged on the holdback until funds are drawn. This Capital Provider also structured and capitalized an interest reserve to cover the shortfall of cash flow during repositions. Sized to 76% of the total capitalization, the three-year bridge loan is interest only for 36 months and carries a floating rate of LIBOR + 4.25% and include two extension options for up to a term of five-years.

Transaction Description:

George Smith Partners structured $1,590,000 of acquisition bridge financing for a 6-unit multifamily building in a well-located area of the Koreatown section of Los Angeles. The existing building is almost 100 years old and underutilizes the potential density that the site allows for. The Sponsor plans to entitle the site for a larger multifamily development down the line. A 12-month term will give them ample time to prepare to be shovel ready. GSP was able to secure a high leverage execution between a senior lender and a mezzanine lender that provided 79.5% LTV based on purchase price. The blended rate of the total debt stack is 8.84% and is interest only. While the senior loan is non-recourse, the mezzanine lender does require recourse on their portion.

Transaction Description:

George Smith Partners arranged $8,400,000 in acquisition and bridge financing for the purchase and reposition of a currently 50% occupied, 1960’s-built apartment complex located in Hayward, CA. Our Sponsor placed the portfolio under contract during the COVID-19 pandemic. The financing includes $1,350,000 of future funding for extensive renovations of unit interiors and exterior upgrades, including an earthquake retrofit. Interest is not charged on the holdback until funds are drawn.

GSP identified a national balance sheet lender with an intimate knowledge of the Hayward submarket. They structured and capitalized an interest reserve to cover the shortfall of cash flow during repositions. Sized to 76% of the total capitalization, the three-year bridge loan is interest only for 36 months and carries a floating rate of LIBOR + 4.25% and include two extension options for up to a term of five-years.

Transaction Description:

The Sponsor had the opportunity to purchase a well-located property in Koreatown well below the market value because of the sponsor ability to close quickly with the 80% LTC quick-close loan. With the global pandemic, the property had 2 vacancies and a few non-paying residents. Because of the quick timing and the short-term distress in the cashflow, the Property would not qualify for bank or agency financing at this time. The sales broker and the Sponsor approached George Smith Partners for highly leveraged, quick purchase financing. GSP arranged a $2,695,000 non-recourse acquisition loan for the 16-unit apartment project. Despite marketing this deal during the global pandemic with vacancies and unpaying tenants, GSP successfully structured a first trust deed from a debt fund as well as a preferred equity B piece with a different investor to almost 80% of the purchase price. The non-recourse facility was priced at an interest-only fixed rate with a blended rate of 7.97% with a 12-month term plus a 6-month extension option. Thanks to our long-standing relationship with this debt fund and preferred equity investor, GSP was able to close this transaction in less than 10 days from signing the term sheet.