California

George Smith Partners successfully placed senior debt to acquire two parcels in Hollywood, California. The Property is currently improved with a small retail structure and a multifamily duplex, but was delivered vacant at close of escrow. The Sponsor will re-entitle the parcels for 33 residential rental units, with 1,000 square feet of ground floor retail. Sized to 75% of the purchase price, the 12 month loan is priced at 9.0% with 7.5% paid current and 1.5% accrued until paid. Challenge: Most capital providers top off at 60% of actual purchase price and shy away from transactions that involve entitlement risk. A zoning variance will be required to achieve a 3:1 FAR to secure the intended 33 units. Solution: George Smith Partners identified a lender that underwrote he Sponsors’ experience and ability to execute an entitlement plan. A future funding was structured that releases proceeds upon obtaining the 3:1 FAR zoning variance.