High Leverage Land Development Financing for Build By-Right Land, for 92-UnitMultifamily ,75% LTC; Koreatown area of Los Angeles, CA

Transaction Description:

George Smith Partners successfully placed $6,000,000 (66% Loan to Purchase Price) in acquisition land financing for a 6.8-acre site to be developed into 120 units in the Denver Metropolitan area. An infill site originally zoned agricultural; the Sponsor invested significant time and capital to change the site’s use to residential. The ability to develop attainable housing is the driver for both the city and the developer, as the finalized project will provide much-needed affordable housing to the increasingly expensive Denver Metro. With preliminary entitlements achieved, the Sponsor is working through civil engineering to receive final entitlements and sell the fully-entitled site to a well-known build-to-rent developer.

GSP was able to source debt with favorable leverage, a fixed-rate, and most importantly, without the need for an appraisal.

Transaction Description:

George Smith Partners successfully placed $6,800,000 in land financing for a 5-acre site to be developed into 42 single family detached homes in Los Angeles, CA. The Project had already received most entitlements for the infill, hilltop site located in an up-and-coming neighborhood. Furthermore, the Sponsor needed to pay off multiple loan balances and receive additional funding to complete engineering to receive a final map.
Backed by experienced Sponsorship with extremely well-located collateral, GSP sourced financing that funded at approval of tentative map with highly favorable leverage and a closing timeline of less than three weeks.

Transaction Description:

George Smith Partners arranged $3,800,000 (73% LTC) in non-recourse, bridge financing for the acquisition of two parcels of industrial zoned land in Mesa, Arizona. The Sponsors will develop the land into four multi-tenant, speculative industrial buildings catering to small and mid-sized industrial tenants.

With two weeks remaining in the escrow period, and with the Sponsor’s wish to arrange a non-recourse, high leverage land loan, GSP sourced a lender who was comfortable with the value and was able to close in 8 days while giving credit to the lift of the land’s appreciation during the seller’s escrow period. The loan resulted in 73% loan to cost, which is much higher than standard market leverage. Furthermore, the Lender was willing to go even higher at 78% LTC, but the Sponsors ultimately did not end up needing that much leverage.

Transaction Description:

George Smith Partners arranged $5,340,000 in a pre-entitlement land development loan for a proposed 226-unit affordable housing project in California. The 60% loan to acquisition is priced at 4.50% over LIBOR (with a 5.50% floor) interest only. The Sponsor is addressing a major need for affordable housing in the state. GSP secured a unique capital source to arrange favorable and flexible capital that met with the Sponsor’s timeline. The interest-only land loan was priced at 5.50%, with an 18-month term and one 6-month extension option. There is additional flexibility with the loan structure having no prepayment penalty. Despite dealing with a strict closing deadline on the purchase, GSP was able to identify a lender who could execute on terms and close within the purchase agreement.

Transaction Description:

George Smith Partners arranged $5,880,000 in acquisition land financing for a 18,000 SF vacant lot to be developed into 82 workforce housing units located in the Koreatown area of Los Angeles, CA. The Sponsor is addressing the need for workforce housing in this area of Los Angeles. There is a gap between high housing prices/rent and employee household incomes. This is creating a shortage of affordable housing. The loan represents 75% of the purchase price and is structured with a holdback feature to cover the predevelopment soft costs to bring the Project to permit-ready status. The interest-only land loan was priced at 5.50%, with an 18-month term and one 6-month extension option. The extension option gives flexibility to the Sponsor should they be unable to pull permits within 18 months. There’s additional flexibility with the loan structure because there is no prepayment penalty. Amid market uncertainty, GSP was able to leverage their network to identify land lenders who could provide certainty of execution. Despite being on a strict closing deadline, GSP was able to identify a lender who could close within the required deadline.

Transaction Description:

George Smith Partners secured financing for twelve acres of raw land located in the Western U.S. Our Sponsor plans to get a variance for this land to build out five, forty-unit multi-family buildings, with shared open air common areas and a pad for a restaurant. This financing was especially challenging due to the land being unentitled, without water, the location, low loan amount, and lenders being more restricted due to COVID.

Due to GSP’s vast networks and strong relationships, we were able to secure attractive financing for this Project. GSP arranged a 55% loan to purchase at 9.25% interest only, with a 24-month term and 12-month extension option. GSP’s ability to secure this financing in just 10 business days allowed the Sponsor to renegotiate the purchase price and get a hefty discount.

Most land lenders are restricted to 40%-50% leverage. This high-leverage financing structure allows our Sponsor to start pre-development, including entitlements and pulling permits. The extension option gives flexibility to the Sponsor should they face delays in getting to entitlement due to COVID effects. There’s additional flexibility because there is no prepayment penalty. Per our long-standing relationship with the capital provider, we were able to close this transaction in 14 days from receiving the request.