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Los Angeles Construction Loans: Highly Leveraged $12,770,000 Ground Up Koreatown Condo Construction Financing

Los Angeles Construction Loans

Rate: 10.25% Interest Only
Term: 24 Month Construction Loan
LTC: 85%
Guarantee: Non-recourse

Transaction Description: GSP arranged ground-up construction financing for a 29-unit for-sale condominium development in the Koreatown sub-market of Los Angeles. The client was a local general contractor who partnered with an owner who contributed the land. The goal was to obtain highly leveraged, non-recourse construction financing and provide no additional equity. The Sponsor tried to access bank financing on their own before coming to GSP.

Challenge: Non-recourse construction financing is very difficult, especially for first time developers. Lenders view ground-up condo construction as one of the most risky types of financing. In addition, the Koreatown market has seen lots of multifamily developments, but there has been little recent condo construction in this market since the last real estate cycle. Also, the insurance and other last minute expenses increased the overall project cost by $500,000.

Solution: Using it relationships, GSP was able to identify a non-recourse construction lender who would provide highly leveraged construction financing. Because the ownership did not want to bring in new capital, it was also critical for the project to be correctly underwritten and achieve certain loan to cost and loan to value targets. When it was discovered that additional insurance would be needed to protect the contractor and the long-term welfare of the project, the lender agreed to increase the loan by $500,000 a few days before closing to provide capital for unexpected costs. This allowed us to close the loan and start construction.


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    Transaction Description:

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  • $42,200,000 Mid-Construction to Bridge Refinance of 133-Key Extended Stay Hotel; Nashville, TN

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    Transaction Description:

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  • Bridge Financing for a 15-Unit Multifamily Property; West Los Angeles

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    Transaction Description:

    George Smith Partners has successfully renegotiated the construction debt on a $10,000,000 construction loan on a 15-Unit multifamily property in West Los Angeles.


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    Transaction Description:

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  • $85,800,000 Senior Construction-to-Perm Financing for a 372-Unit Multifamily Project; Sacramento, CA

    May 16, 2023

    Transaction Description:

    George Smith Partners successfully arranged $85,800,000 in construction financing for a 10-building, 372-unit multifamily development in Sacramento, CA. The project is located in an opportunity zone of Sacramento and is phase A of a 2,200-unit, transit-oriented development. Breaking ground in Q2 2023, this phase of the development will consist of studios, one, two, and three-bedroom apartments with best-in-class amenities, including a pool, fitness center, playground, and clubhouse.

    The Sponsor engaged GSP pre-pandemic. A previous developer had acquired the land in the early 2000s and after completing 95% of the site’s infrastructure, subsequently filed for bankruptcy protection in 2017. The site was given back to the lender in early 2019 and was awarded to the Sponsor by the urging of the City of Sacramento because of their local reputation related to successful projects in the downtown sub-market. Our Sponsor originally intended to begin construction in early 2020 but decided to pivot layout designs to match the new needs of its renters due to the pandemic.

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    Term: 15 Years
    Amortization: Interest Only for First 4 Years, then 30 Year Amortization
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    LTV: 55%
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