Transaction Overview
George Smith Partners secured $11,500,000 for the cash out refinance of two stabilized multifamily buildings in West Hollywood containing a total of 61 units. Constructed in the mid-1920s and late 1950s these buildings are situated on some of the most sought after streets in West Hollywood and in close proximity to popular restaurants, bars and entertainment. Fixed at 3.95% for seven years, the non-recourse loans float at 6 month LIBOR + 2.25% for the remaining 23-year term. The non-recourse loans are fully amortizing and have a 5,5,4,4,3,2,1 step-down prepayment penalty.
Challenges: Many of the buildings have long term residents who have lived at the properties for over a decade. The long term residency leaves the owner with dozens of units with uncaptured market rents, ultimately affecting the amount of loan proceeds.
Solution: GSP worked with a Lender who understood the strength of these assets and was able to underwrite to a 1.15x DCR at the actual note rate. Our Capital Provider was amenable to increasing loan proceeds after rate lock based on the results of the appraisal which came in more favorable than the initial proforma. Both properties also had a handful of recent move-ins which gave the Lender comfort in the future upside of the properties as units continue to turn.
