Transaction Overview
George Smith Partners arranged the $4,700,000 non-recourse first mortgage for the acquisition and reposition of a value-add multifamily asset located within a rent controlled market of Los Angeles. The national balance sheet lender provided a non-recourse loan up to 75% of total project cost which includes $1,925,000 of capital expenditures for property improvements and 100% of the tenant buy-out expenses. Interest on future proceeds is not incurred until funds are drawn. A short spread maintenance schedule provides maximum flexibility to allow the Borrower to quickly execute its value-add strategy, prior to taking out financing with permanent debt or a sale. Cash flow is maximized as the loan is interest only during the initial three-year term and priced at 4.15% over 30-Day LIBOR. Due to low going-in cash flow, the Lender structured an interest reserve to cover debt service during the reposition period.
