Land Financing for the Redevelopment of SDSU Student Housing Property; San Diego, CA
December 15, 2022
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.
Term: 24 Months with Two 6-Month Extension Options
Amortization: Full Term IO
Rate: 4.5% Fixed
Origination Fee: 100 bps
Extension Fee: 50 bps
Prepayment: No Prepayment Penalty
Construction Multifamily Takeout Financing; Los Angeles, CA
December 15, 2022
George Smith Partners arranged permanent financing for the refinance of a stabilized 12-unit multifamily property in Los Angeles, California. The Sponsor finished construction on the Property in the middle of the current rate hike cycle. GSP identified a Capital Provider who allowed an early rate lock before Certificate of Occupancy was issued. The Lender allowed the borrower to go into application with very little lease up, but with the understanding that the property would be stabilized by closing. Although the closing took slightly longer than the 60 day term of the rate lock, the Lender held the rate for no additional charge. The bank did not require deposits to be held at their branch except for the subject property’s operating account.
Term: 5 Years Fixed
Amortization: N/A, Interest Only for all 5 Years
Prepayment Penalty: Stepdown; 3/3/2/1/1
Deposits Required: None
- Advisors: Matthew Kirisits
Permanent Financing for Acquisition of 12-Unit Multifamily Property; Los Angeles, CA
October 26, 2022
George Smith Partners arranged $2,250,000 in permanent financing for the acquisition of a stabilized 12-unit multifamily property in Los Angeles, California. The Sponsor acquired the Property as interest rates were soaring and as the environment was changing drastically with the Fed raising rates. GSP identified a Capital Provider who allowed an early rate lock, required no holdbacks of any kind, no deposits to be held at their branch, and provided an extremely flexible prepayment penalty structure. This allows the Sponsor plenty of options during the next 5 years at an aggressive rate.
Term: 5 Years Fixed
Amortization: 30 Years
Prepayment Penalty: None
Reserve Account: None
Deposits Required: None
$14,400,000 Land Acquisition Financing Arrangement for a Future Build-for-Rent Project; Austin, TX
September 14, 2022
George Smith Partners arranged $14,400,000 of non-recourse land acquisition financing in Austin, TX. The land will eventually be home to 368 Build-for-Rent homes. GSP was able to negotiate accretive terms for the Sponsor and their Limited Partner within a two-month timeframe from marketing to closing. Once the project becomes stabilized, it will enrich the surrounding Austin area.
Spread: 1.25% (Floor of 6.00%)
Term: 12 Months
Extension: One 6-Month
- Advisors: Ed Steffelin Evan Kinne Jordan Lipton
Bridge Financing for Office/Industrial Asset; Los Angeles, CA
September 8, 2022
George Smith Partners arranged $3,600,000 in bridge financing of a 30,000 SF office/industrial Property located in Downtown Los Angeles. When the Sponsor engaged GSP, the Sponsor was in the midst of repositioning the Asset from a multi-tenant investment property into a full owner-user use. Because the previous lender did not allow for the reposition, GSP quickly arranged a multi-phase refinance process.
The first phase was to take out the existing Lender by securing a $3,600,000 non-recourse bridge loan in just 7 days to avoid a technical default with the previous lender. This bridge loan was secured at 6.50% interest only on a two-year term, and a 1.00% origination fee. In today’s market, bridge loans of this nature usually start at 8.00% -10.00% interest rates with more expensive origination fees, but GSP was able to leverage its relationships to secure a more affordable option for their client. The loan has no prepayment penalty or exit fee.
The second phase of this financing that is set to close in 60-90 days will be a long-term SBA loan which will net the Borrower over $5,000,000 of cash-out at a below market rate with 3 years of interest only on a 10 year term. GSP was able to handle the Borrower’s financing needs smoothly and quickly, allowing the Borrower to focus on expanding their business and take over their asset as an owner-user.
Rate: 6.50% Fixed, Interest Only
Term: 24 Months
Prepayment: No Prepayment
Closing Timeline: 7 Calendar Days
- Advisors: Bryan Shaffer Ruben Bohbot
Bridge Financing for Two Retail Properties; Hollywood, CA
August 31, 2022
George Smith Partners successfully placed a $3,245,000 bridge loan fixed at 5.00% for two years. The loan will have an initial funding of $2,400,000 with the remainder distributed in 6 months’ time to accommodate funding structures for the Borrower’s needs. The Collateral is two adjacent commercial properties located in Hollywood, CA. One building is completely vacant and the other is a dated laundromat. The proceeds will cover renovation and leasing costs allowing the vacant building to stabilize, then provide additional proceeds to re-tenant the laundromat once the other building is cash flowing. The initial term sheet was structured at Prime plus a spread of 0.50%. When interest rates spiked during the closing process, GSP negotiated a fixed rate of 5.00%. GSP sourced a lender able to provide cash-out financing, limited recourse that burns off at full stabilization and fix their interest rate for the life of the loan.
Rate: 5.00% Fixed
Term: 2 Years
Amortization: Interest Only
Guaranty: 50% – Burns off at DCR Hurdle
Lender Fee: 0.50%
Refinance for a 2,738 SF Retail Building; Echo Park, CA
August 17, 2022
George Smith Partners successfully advised on the refinance of a 2,738 SF high-street retail building located in Los Angeles, CA. The senior loan proceeds totaled $2,500,000 of non-recourse financing, which is approximately 70% loan-to-value. Due to the strategic advising of GSP, the Sponsor was able to obtain a fixed rate loan despite the building being 100% vacant.
The Sponsor achieved a fully executed lease from a cannabis use tenant however, the prior mortgage did not permit cannabis use. GSP identified a cannabis-friendly lender that could close in accordance with the Sponsor’s business plan. Additionally, the Property was encumbered by a loan that included neighboring parcels as collateral. The new loan allowed the Sponsor to release the property from the prior mortgage and capitalize on the newly signed lease.
Term: 6 Months
$6,850,000 Multifamily, Cash-Out Refinance; Los Angeles, CA
August 10, 2022
George Smith Partners secured $6,850,000 for the refinance of a stabilized 58-unit Los Angeles apartment building. The loan is fixed at 4.15% for five years and has full-term interest-only payments. The Lender offered a 60-day rate lock, which provided a great benefit to the Borrower because interest rates increased while the loan was in application. A fast-paced closing process was required to keep the rate locked at 4.15%. GSP ensured that all stakeholders adhered to the timeline and that the loan successfully closed on the required date. There were no changes to the term sheet.
Rate: 4.15% Fixed for 5 years; 30-Day Average SOFR + 2.35% Thereafter
Term: 30 years
Prepayment Penalty: 3, 1, 1, 1%
Origination Fees: Par
- Advisors: Shahin Yazdi Jonathan Lee Matthew Kirisits
$9,907,500 Financing for Beneficial Treatment Center; San Francisco, CA
July 27, 2022
George Smith Partners successfully arranged a $9,907,500 loan for a very special project in San Francisco that provides huge benefits to the City and the Community. Utilizing our relationship with a community development lender, GSP was able to secure a 3.5% interest rate, 10 year loan, for a drug-free rehab facility in the South of Market (SoMa) area of San Francisco. The Facility aims to transform the lives of the surrounding community with help from the City. The Project was a vacant hotel with shared bathrooms, bordering some of the roughest areas of San Francisco. Most lenders passed on the project, but because of GSP’s experience with SRO properties, we were able to negotiate a below market rate for 10 years to enable the Project to move forward.
The loan allowed for the rehab and redevelopment of an old SRO (Single Room Occupancy) tourist hotel with shared baths into the updated 80 room facility, which included new private bathrooms in each unit. It is great to not only successfully close a difficult loan, but to see the way the Sponsor was able to transform lives and solve community challenges.
The Project will house people who are struggling with substance use from the streets to a safe place indoors. They can access clean bathrooms, showers, food, and a place to rest. Afterwards, the staff can help participants connect with medical care, mental health, substance use, and housing services. The Center was designed to improve safety for both participants and neighbors by creating a safe place for people experiencing a drug related crisis.
Amortization: 30 Year
Term: 10 Years
- Advisors: Bryan Shaffer Ruben Bohbot
$10,000,000 Permanent Financing for Two Mixed Use Properties; Hollywood, CA
July 13, 2022
George Smith Partners successfully placed a $10,000,000 loan with a 5-year fixed interest rate for two mixed-use properties located in Hollywood, CA. The ground floor retail for both properties has short-term roll and is in need of renovation. The financing provides significant cash-out, which the Sponsor will use to improve the Properties and to re-tenant the buildings with new, long-term, market rate leases. GSP sourced a lender that was able to provide cash-out financing, limited recourse that burns off at full stabilization and lock the rate at application – critical in this current volatile interest rate environment.
Rate: 5.25% Fixed
Term: 5 Years
Amortization: 3 Years IO, 27 Year Amortization Thereafter
Prepayment: 5, 4, 3, 1, 1%
Guaranty: 25%, Burning Off at Full Stabilization
Lender Fee: None
CO-GP Joint Venture for a 207-Unit Multifamily Ground-Up Construction Project; Denver, CO
July 6, 2022
George Smith Partners successfully advised our client to create a $2,520,000 Co-General Partner Joint Venture for a 207-unit multifamily ground-up, modular construction project in Denver, Colorado. The relationship created by GSP combines an investment team with a strong financial institutional backing with a sponsorship team of well-established development experts, into a general partnership team taking on a project in one of the fastest-growing markets in the country.
The Denver metropolitan area is expected to add roughly 216,700 new residents over the next five years, fueled by the expansions of the Denver International Airport and Fitzsimons Medical Campus. The Project is expected to fulfill an underserved workforce demographic by offering an affordable yet high-quality option. The Project will feature a rooftop deck with BBQ grills, outdoor games, playgrounds, sports courts, picnic areas, a dog run, gym, state-of-the-art security systems, bike parking, package storage, and a mail center with full-time onsite management and maintenance. The Project will be constructed modularly, thereby saving on costs and time. Modular projects can be developed in half the time as traditional construction, with approximately 60% – 90% of construction performed inside a factory while site work is simultaneously completed.
The investment was paired with a bridge loan to close on the land, complete the working drawings and complete all the pre-development work. The Project is estimated to break ground in Q1 of 2023. To close, GSP will assist in obtaining a construction loan and LP Equity.
- Advisors: Robert Horton
Perm Financing for a Multifamily Property; Houston, Texas
June 29, 2022
George Smith Partners secured permanent financing for an eight-unit multifamily property located in Houston, Texas. The loan is fixed at a rate of 4.00% and locked in for 7 years. The deal went into application during the Fed run-up in rates and the rate was never locked. However, due to GSP’s relationship with the Lender, we were able to hold the rate and term down substantially. The financing does not require any deposit relationship with the bank and did not require any funds to be held back for reserves. The Lender’s processing/application fee was $2,000 all in.
Rate: 4.00%, Fixed for 7 Years
Term: 30 Years
Amortization: 30 Years
Prepayment: 5, 4, 3, 2, 1%
Depository Relationship: None Required