Colorado

George Smith Partners placed the acquisition debt of a 168 Unit Class C multifamily apartment building in Colorado Springs. $1,500,000 of the capitalization is slated for capital upgrades averaging $9,200 per unit. Priced at L+5.50%, proceeds were sized to 78% of total cost on a non-recourse basis, interest only for two years prior to options. Challenge: Colorado Springs is not considered a core MSA. The sub-$10,000,000 loan request added to the challenge as most debt funds are flush with cash yet don’t carry sufficient staffing to underwrite smaller transactions. Historical cash flow information was spotty and the buyer required 78% leverage combined with a certainty of execution to accommodate his 1031 exchange. Solution: GSP identified a DUS underwriter specializing in smaller executions on a national basis. This funder utilized their balance sheet for an on-book funding to control the due diligence process and provide assurance that the transaction would close as applied for. High leverage proceeds were secured by underwriting an 80% of profroma value once stabilized as confirmed by market studies and a third-party bank ordered appraisal. As part of a loan feeder program, the underwriter will waive the 1 point exit fee should they provide the take-out financing.