Transaction Overview
George Smith Partners successfully arranged a $1,750,000 refinance for a unique 296-unit self-storage facility consisting of 46,608 square feet in Georgetown, TX. This was a permanent recourse loan at 3.30%, fixed for the first 3 years with a rate reset every 3 years thereafter. The loan is fully amortizing over 20 years. The Property consists of large cargo shipping containers that have been welded together and are not permanently affixed to the ground. The units are both climate and non-climate controlled and are currently 94% occupied. The Property is also a leading provider for U-Haul rentals in this infill area of downtown Georgetown. The Sponsor, a repeat client, acquired the Property all cash in March 2020 and engaged GSP for a permanent financing solution.
Challenges:
The uniqueness of the improvements was challenging for lenders to get comfortable with and many declined the request. The interested lenders proposed to finance the improvements from an equipment loan standpoint versus real estate. This option was unappealing to the Borrower because an equipment loan would have limited the amortization to 12-years, thus leaving no cash flow.
Solutions:
GSP leveraged its expertise and strong relationship with a Life Insurance Company lender to execute a low fixed-rate, 20-year fully amortized permanent loan. GSP was able to get the Lender comfortable given the conservative 45% loan to value request, historical occupancy, cash flow and appraised value.
