George Smith Partners successfully arranged the cash-out refinance of a four-property, 24-unit apartment portfolio in West Los Angeles. The loans are fixed at 4.10% for 7 years, before adjusting to 2.25% over the 6 month LIBOR index for the remaining 23 year term. There is no balloon although the loan opens to prepayment without penalty after the 7th year.
Challenge: The properties had recently undergone an intra-family transfer due to the death of the prior owner. This transition resulted in a simultaneous change in property management that complicated the process of obtaining clear historical operating information. The majority of the new capitalization was a return of as well as a return on equity. The Borrowers required a 30 year loan term without a balloon date.
Solution_:_ GSP highlighted the financial strength of the Sponsors and the in-fill locations of the subject properties as compensating factors for the lack of clear operating history and large cash-out component to this transaction. GSP identified a portfolio capital provider offering a 30-year loan term.
