Transaction Overview
George Smith Partners successfully placed the non-recourse cash-out refinance of a 156-unit apartment property in Brunswick Georgia. The loan is fixed for 10 years at 4.61%, amortized over 30 years.
Challenge: The subject property is located in a municipality of 15,000, much smaller than most lenders’ minimum population guidelines. Most capital providers are not comfortable with borrowers requesting a significant return of equity to 75% leverage. The property is located in a national flood zone, just several feet above sea level. This dramatically increased insurance requirements with the majority of lenders. This is the only investment property the California Borrower owns; he has no other interests in this Georgia market.
Solution:GSP demonstrated the strong historical cash flows, 10-year historical operating success, and healthy demand demographics for the small city of Brunswick. While the sponsor agreed to increase the property’s hazard insurance coverage, the lender waived the requirement of excess flood coverage for loss of rents, significantly reducing the cost of coverage. GSP highlighted the sponsor’s track record with past real estate investments and his personal financial strength to mitigate concerns about his ability to manage the asset three time zones away.
