George Smith Partners secured non-recourse financing for a 16-unit apartment building in the Pico-Robertson area of Los Angeles. The Sponsor requested a sub-4.0% rate while seeking to maximize loan proceeds. Despite being sized to 65% of current value, GSP secured a three-year Interest Only period which significantly increased cash flow. Fixed for seven years at 3.65% before floating over the 6 month LIBOR, the loan will self-amortize over the 30 year term. A step-down prepayment penalty from 4% for the first 4 years allows for future flexibility should the Sponsor choose to sell or recapture equity. The full coupon was rate locked two months before closing at no additional cost.
