Reno

George Smith Partners successfully placed the refinance and renovation loan on a vacant 170-unit Los Angeles high-rise apartment building. The renovation cost budget allows for $94,000 per unit in capital upgrades. The three year term is priced at LIBOR+275 without an interest rate floor. Challenge: The Sponsor, a highly liquid developer with a strong schedule of real estate, required competitive non-recourse debt. The extensive level of renovation and zero occupancy at funding classified this request as a construction loan by many capital providers. The Borrower would not accept the higher yields required by typical non-recourse opportunity funds and effectively sought money center bank rates – without a repayment guarantee. Solution: GSP identified a regional bank familiar with the in-fill location and strong Sponsor attributes. The bank ultimately agreed to waive the standard recourse requirement in exchange for a low loan to cost. The capital provider underwrote a sub-50% LTV upon asset stabilization.