Transaction Overview
George Smith Partners successfully secured $34,000,000 in non-recourse, construction take-out, permanent financing at 3.65% fixed for 10 years for a newly built three-story, mixed-use, 30-unit, high-end building in Santa Monica, CA.
Challenges:
The Sponsor’s existing construction loan was set to mature, and the Property had not yet received a temporary certificate of occupancy. In addition, the borrowing entity was headquartered in a foreign country with extensive development experience abroad, but this was their first project in the U.S. Furthermore, only one of the three retail spaces had been leased and pre-leasing activity on the apartment units had not yet commenced.
Solutions:
GSP focused on the superior location, high-quality residential units and strength of the sole retail tenant, Trader Joe’s, to ensure maximum interest among financing sources. Ultimately, GSP leveraged its expertise and strong relationship with a Life Insurance Company to execute a structured, non-recourse, low-rate, permanent loan – prior to Certificate of Occupancy issuance. This early financing also saved the Sponsor from having to secure a bridge loan. Furthermore, GSP also negotiated a top-off to the loan based on the Property achieving certain milestones, thus enabling the Sponsor to access additional capital in the future.
