Transaction Overview
GSP Successfully arranged the 75% of purchase loan for a 20-unit apartment building in Ventura, California. The $1,885,000 loan is fixed for 7 years at 4.12% prior to rolling to LIBOR+225 for the remaining term. There is no balloon risk as the loan has a 30-year term, and 30 year amortization.
Challenge: The Borrower requested maximum proceeds but would not personally guarantee the new loan. Ventura County is viewed as a secondary B-market by many capital providers. There were no direct sale comparables in this market segment, creating a challenge to support the purchase price on a per door or capitalization basis. This is the only multifamily asset in the Borrowers’ investment portfolio. Indexes were in flux during the issuance of the term sheet, jeopardizing the purchase if the all-in coupon moved against us during due diligence.
Solution: GSP utilized its extensive lender relationships to identify a portfolio lender who is active in and familiar with this market and borrower profile. GSP’s market comparable search identified similar assets to support the purchase price. The Lender agreed to a non-recourse, 75% LTC based on the borrowers’ over-all commercial experience and financial capacity. The Lender locked rate at application, removing all interest rate risk and allowing the transaction to be underwritten on a fixed constant.
