Acquisition Bridge Loan for a Value Added 10 Unit Multifamily Property in Inglewood, CA

George Smith Partners arranged acquisition bridge financing for a 10 unit value-add multifamily property in Inglewood, California. Despite the property’s location in Inglewood’s gentrifying northwest corridor, the lender’s appraisal value and cash flow underwriting came in below the sponsor’s proforma, which would have resulted in lower loan proceeds that could have jeopardized the transaction. To assist the lender in getting comfortable with the sponsor’s requested loan amount, George Smith Partners provided market rent and sales comparables supporting the requested loan proceeds and leveraged it’s strong relationship with the lender to ultimately get proceeds up to an acceptable level.

Sized to 65% 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% (5.25% today) with no prepayment penalty. Interest is not charged on the holdback until funds, 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 a low 0.5.