Bryan Shaffer secured the cash-out refinanced of a 200 unit multifamily property in Texas. The loan provides for additional capital to complete an improvement program and also allows for a supplemental equity return to the remaining Sponsor as he enhances the project value. The two-year term was sized to 75% of current value with future funding limited to 75% of the improved value. Priced at 5.5% over LIBOR, the non-recourse loan does not carry a prepayment penalty.
Challenge: Class C assets are always a challenge, but the need for high leverage and the return of capital to buy out a partner added to the complexity.
Solution: GSP worked with an institutional bridge lender to structure a highly leveraged “as-is” product and would facilitate the earn-out as an incentive to further improve the net asset value. A detailed market study confirmed the anticipated upside in the market for this reposition business plan.
