Transaction Overview
George Smith Partners secured a $4,050,000 acquisition loan for 3 contiguous multifamily buildings located in Toluca Lake (Los Angeles), CA. While there are currently 11 units on the 3 parcels, the Sponsor is in the process of designing a 57 unit multifamily project. This development is allowed “by right” but must go thru planning commission for final approvals and will utilize the density bonus regulations. The proposed building will feature a mix of 1 and 2-bedroom units and will provide more rental housing for the local community. The final project will have an affordable component, boosting the supply of units for designated for low income tenants. The Project is walking distance to the Universal City metro rail stop. Nearby employers include Universal Studios, CBS, and Warner Brothers.
The non-recourse financing was sized to 85% of purchase price at an interest rate of 9.50% for 18 months for a 1.5% lender fee. The high leverage loan allowed the Sponsor to minimize their initial equity investment into the deal. The Sponsor plans to replace this loan with construction financing once the Project is ready to break ground. This Lender has the ability to convert some or all of their acquisition loan to a mezzanine position up to 85% of total construction cost behind the future construction loan.
