Transaction Overview
George Smith Partners successfully sourced the debt for the cash-out refinancing of three, HUD Contract properties in South Los Angeles. Each property is under its own HAP contract and, although the contracts are recently executed, many capital providers were uncomfortable as the HAP contracts pushed rental rates above conventional market rates. The resulting loan per unit was significantly high. Past performance and security of the government backed HAP contracts allowed the lender to underwrite the higher in-place rents. Sized to 75% of value, the 10-year variable rate loan floats at Prime + 0.25%. Terms included a 3.50% floor and 5.50% ceiling for the first 7 years of the loan. There is no prepayment penalty for the life of the loan.
