Transaction Overview
George Smith Partners secured a first trust deed on an unencumbered 14-unit Los Angeles multifamily property. The loan is fixed at a rate of 3.5% for seven years and has five years of Interest Only payments. The Sponsor acquired the Property in an all-cash transaction 12 months ago and completed a full gut renovation. Unit interiors were updated to a high level of finish with an investment of $27,600/per unit, and the Property was leased up to 100% occupancy. The loan was placed into application with a California based bank about one week before the stay-at-home order was implemented. Despite the resulting economic uncertainty, the Sponsor was able to maintain collections close to 100%. As a result, the Capital Provider made one small change to the original term sheet, adding a twelve-month payment reserve. The payment reserve is based off Interest Only payments and it will be used to make the interest payment on the loan. In order to cover this reserve, the Capital Provider was able to increase loan proceeds from the amount in the original application. As a result, our Sponsor received the same amount of cash out that was originally applied for.
