Transaction Overview
George Smith Partners successfully arranged the $4,000,000 acquisition debt of a 62-unit affordable SRO (Single Room Occupancy) property with two retail spaces in San Francisco. SRO units lack a full kitchen and has shared bathroom facilities. As a result of the unique use and shared bathroom units, financing this style of multifamily housing is extremely difficult for conventional lenders, even with very strong sponsorship and an incredible San Francisco location. In addition to challenges related to the asset type, this particular property had strict affordable covenants and complications related to the retail element.
GSP identified a community development lender who became comfortable with the asset type, affordable nature of the project and the future value of the property. The 15-year loan represented 80% of the stabilized value of the property and also provided funds for the rehab and renovation of the property. Fixed for 10 years at 5.75% and increasing to a 6.0% for the last 5 years, the recourse loan holds a 4,3,2,1 pre-payment penalty while amortizing over a 30-year schedule.
