Transaction Overview
George Smith Partners secured a $4,500,000 private money bridge loan to enable the renovation and buildout of a vacant 30-unit apartment building in the downtown neighborhood of Los Angeles, CA. The building was already in the process of being renovated, but the sponsors needed an additional $1,400,000 to finish renovations of the property. The non-recourse interest-only loan holds a fixed rate of 7.90%
Challenges: The apartment building had significant structural damage and had become a red tagged building by the City. Subsequently, the building had been placed in REAP (Rent Escrow Account Program). Additionally, renovations were only 65% finished, but the project needed another $1,400,000 for completion as all funds from the prior project financing had been spent. The building had been sitting vacant with zero cash flow for several years.
Solution: GSP used its experience and relationships to identify a private local lender who could understand the stabilized/sale value of the project and not be turned away by the lack of in place cash flow. This lender was very comfortable with the Downtown Los Angeles market and was the most aggressive with proceeds. Because of the lender’s comfort with the stabilized/sale value, the local market, and the sponsor’s basis in the property, the lender satisfied all requested terms and closed in 5 days.
