Transaction Overview
George Smith Partners secured bridge financing for the acquisition and renovation of 90 condominium units to be operated as a multifamily rental property. Our Sponsor was involved with the initial assemblage of the units. The collateral is part of a 105-unit development that was built in the 1960’s in the Phoenix metro market. The 90 units are contiguous, almost all are 2 bedroom, one story casitas style units with 2 units per building. All units have exterior access in a well landscaped setting. The Sponsor was able to purchase the units for a below-market per unit value and is planning a major renovation for both the exterior of the Property and interior of the units. There is some deferred maintenance, including roofing and HVAC, that will be addressed during the rehab. The Lender structured the loan to provide 75% financing for the acquisition and included a significant holdback for the repairs. A major challenge to the financing was a lack of operating history. The units were being operated by several owners, some owning as little as 1 or 2 units. GSP and the Sponsor created a pro-forma operating budget that the Lender was able to accept due to the Sponsor’s extensive experience in the market. The total debt is sized to 75% loan-to-cost and has an interest rate that floats at 1-month LIBOR + 3.90% for the 2-year term.
