Transaction Overview
GSP arranged the $10,000,000 first mortgage on a 1990’s vintage, 64-unit multifamily value add property. The National Balance Sheet Lender provided a non-recourse loan at 80% of total project cost including 100% of future CapEx funds totaling $15,000 per unit. Furthermore, the Lender sized the stabilized proceeds to a 7.35% As-Stabilized Debt Yield. Interest expense is not incurred on CapEx funds until drawn, and sponsor cash flow is maximized as the loan is interest only during the initial three-year term. The 30-Day LIBOR plus 3.50% coupon requires interest rate risk protection and in order to minimize associated sponsor cost the lender structured the interest rate cap with a two year duration at closing plus an obligation to renew for the third year of the initial term. Due to low going in cash flow, the Lender structured an interest reserve to cover debt service during the peak reposition period.
