Transaction Description:

Bridge Loans Los Angeles – George Smith Partners arranged acquisition bridge financing for a value-add multifamily property in south Los Angeles, California. The 17 unit, 1950’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 75% of total project cost, the loan includes 100% of future funding for 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% (5.50% today) with no prepayment penalty. Interest is not charged on the holdback until funds are drawn. Although the Property had sub 1.0x debt coverage (0.7x), an interest reserve was not required. The Lender also only required a recourse obligation from the general partner, who represented only 10% of the equity, even though there were limited partners representing over 25% of the equity. The Lender fee was negotiated down to 0.5%.

Rate: Prime + 0.5%
Term: 2 Years
Amortization: Interest Only
LTC / LTV: 75% / 65%, including 100% of future funding
Prepayment Penalty: None
Recourse: Full Recourse
Lender Fee: 0.5%