Term: 24 Months with Two 6-Month Extension Options
Amortization: Full Term IO
LTV: 35%
Rate: 4.5% Fixed
Origination Fee: 100 bps
Extension Fee: 50 bps
Prepayment: No Prepayment Penalty
Guarantee: Non-Recourse
George Smith Partners secured a land loan for the acquisition of a 0.35 AC, 15,000 SF student housing property adjacent to San Diego State University. The proceeds represent 35% of the purchase price of the Property. The loan carries a 24-month term with two, 6-month extensions available. The loan is fixed at a rate of 4.5% annually and payments are made on an interest only basis for the entirety of the loan period.
The Sponsor identified the parcel inclusive of an existing 15,000 SF 66-bed student housing property as a potential redevelopment opportunity due to the vintage of the existing structure and the permitted use through the current zoning. Following the acquisition of the property, the Sponsor intends to demolish the existing building and construct a state-of-the-art 226-bed student housing facility. The approval for the Project is ministerial and by-right, which requires no environmental review or public hearings and is exempt from CEQA. The Sponsor intends to seek a building permit for the by-right development of upon successfully obtaining the appropriate approvals within an anticipated 3-to-4-month timeframe post acquisition.
Due to strategic advising of GSP, the extremely low leverage of the acquisition loan, and the deep track record of the Sponsorship, the client was able to obtain a non-recourse loan with a very attractive rate. GSP emphasized the massive undersupply of housing at the university along with the lack of entitlement risk in order to attract the best financing possible. GSP was also able to obtain a loan with zero prepayment penalty and no exit fee, allowing the Sponsor flexibility to complete the business plan.
Related Financings
- No related financings.
