Transaction Overview
George Smith Partners arranged a $4,200,000 quick-close cash-out refinance on two coastal Orange County single family residences. The deal posed numerous challenges. First, the sponsor, who had closed all cash, approached GSP with an extremely tight closing time frame due to the need to redeploy refinance proceeds into a pending acquisition. Second, the sponsor would not agree to a holdback for renovation proceeds as he did not want to deal with the administratively burdensome draw request process. Third, as most of the LLC members were not willing to sign recourse on the loan, the sponsor could only offer a guarantor that owned a 5% interest in the borrowing entity. To solve these challenges, GSP identified a non-bank lender with a long history of providing quick-close bridge execution and was familiar with the location. Sized to 84% of purchase and 80% of cost with no hold back requirement for interest reserve or capital expenditures, the loan carries a 6-month term, interest only payments at a 7.50% fixed rate and no prepayment penalty. The loan also includes two 3 month extensions.
