Transaction Overview
George Smith Partners secured $46,000,000 for the refinance of two multifamily properties located in Houston, Texas. Despite the properties being a few months away from stabilization, we secured a 3-year permanent loan instead of a higher-cost bridge loan to pull cash out to the Sponsor at a cheaper rate. We were able to negotiate a favorable prepayment penalty so the Sponsor could pull more capital out in 18 months.
The Sponsor’s original bridge loan that was completed in 2019 was priced at LIBOR + 4.75%, so with rates increasing, their all-in rate was over 9%. The Sponsor had completed 80% of the unit improvements and 100% of the exterior upgrades, but because of COVID, they are about 20% below the target NOI.
GSP utilized its relationships and experience to structure a loan that would be affordable, and most importantly fixed-rate in this increasing rate environment. Overall, the Sponsor was extremely happy with the refinance which allowed them both a fixed low rate and flexibility for the future.
