Financings

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    $5,400,000 Land Acquisition and Predevelopment Financing Facility for a To-Be-Built, 150 Bed Co-Living Community; Highland Park, CA

    February 19, 2020

    Transaction Description:

    George Smith Partners arranged a $5,400,000 financing facility for the acquisition of a 29,930 square foot vacant parking lot in the trendy Highland Park submarket of Los Angeles, CA. In addition to purchase financing, the financing facility offers good news money for predevelopment costs related to the Sponsors planned 150-unit co-living community on the site, which will be a by-right development and will take advantage of TOC Tier 1 incentives.

    Co-living has emerged as a remedy to address the acute shortage of affordable housing across the country by offering tenants fully furnished, highly amenitized units with the cost of utilities, common area maintenance, and other traditional living spaces bundled into the rent. The Property is within a 5-minute walk from Highland Park’s main amenity-rich thoroughfares lined with shopping and dining destinations.

    By focusing attention on land lenders who are active in the local area, GSP identified a capital provider who is familiar with the local market and also understands the importance that the co-living space will serve in the greater rental market going forward. The loan was uniquely structured to disburse approximately the balance of the down payment in addition to sponsor equity at closing, with the remaining proceeds to be reserved in a holdback feature that will cover the predevelopment soft costs in order to bring the Project to permit-ready status. The interest-only predevelopment land loan was priced at 8.50%, with a 15-month term and one 6-month extension option. The loan closed in less than 30 days from application.

    Rate: 8.50%
    Term: 15 Months with One 6-Month Extension
    Amortization: Interest Only
    LTC: 70% (including predevelopment costs to take the project to RTI)
    Guaranty: Recourse

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    Full Term Interest-Only Non-Recourse Permanent Financing on a Newly Redeveloped Multi-Tenant Retail Property; Utah

    February 12, 2020

    Transaction Description:

    GSP successfully placed $4,000,000 of non-recourse, ten-year fixed-rate first mortgage debt collateralized by a 48,000 square foot retail box newly demised into four tenant suites. The improvements are 100% leased to two gym users, a restaurant, and an auto parts store. GSP sourced a lender comfortable with providing a full-term Interest-Only loan on the collateral despite both gym tenants, which represent 64% of income and 62% of building square footage in the aggregate, having newly signed leases and therefore no sales history at the Property. Additionally, GSP worked with the Lender to close the loan prior to the smaller gym tenant (11% of income and 14% of building square footage) completing its buildout and opening for business. Loan proceeds were subject to an 8.75% debt yield and the Interest-Only loan has a fixed coupon of 3.94% for the ten-year term.

    Rate: 3.94% Fixed
    Term: 10 Years
    Amortization: Interest-Only
    Loan to Value: 62.5%
    Prepayment: Yield Maintenance
    Lender Fee: None

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    $10,900,000 Cash-Out, Acquisition, Reposition on a 50-Unit Multifamily Property; Los Angeles, CA

    February 12, 2020

    Transaction Description:

    George Smith Partners placed a $10,900,000 non-recourse loan for the refinance of an underperforming stabilized 50-unit multifamily community in Los Angeles. The Sponsor recently acquired the asset at approximately 50% below market from an affiliate party and GSP was able to facilitate approximately $3,000,000in cash out proceeds at closing. A portion of the loan proceeds will be used to renovate units as they become vacant in order to achieve current market rents. GSP identified a non-institutional lender who was comfortable with the cash out proceeds and who understood the history and dynamics of this non-arms-length acquisition. The non-recourse loan is fixed for 1.5 years with a 7.99% interest rate and 4.99% pay rate.

    Rate: 7.99% with 4.99% pay rate
    Term: 18 months
    LTV: 70%
    Recourse: Carve-Outs Only
    Fees: 1.0%
    Prepayment: None; no exit fee

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    Non-Recourse Cash-Out Refinance for a Multifamily Property; Fixed at 3.60% For 5 Years; Los Angeles, CA

    February 5, 2020

    Transaction Description:

    George Smith Partners secured a Non-Recourse refinance loan for a 5-unit multifamily property plus one 5-bedroom single family residence in Los Angeles. The loan is fixed at a rate of 3.60% for five years. The Sponsors purchased the Property just over a year ago. Since acquisition, they completely rebuilt the single-family home and renovated one of the apartment units. A lease was signed for the single-family home at nearly $10,000 per month. This comprised more than half of the monthly income at the Property. While discussing the transaction with capital providers, GSP found that several of them declined the deal due to the high concentration of income in one unit. Another lender marked down the rental income of the 5-bedroom unit to a lower monthly rate. This resulted in proceeds that were much lower than GSP’s request.

    The selected lender was comfortable with the unit mix at the Property and included the full amount of income from the signed leases. An appraisal provided support for the high rental rate of the 5-bedroom home, which was supported by comps in the submarket. Although loan proceeds were almost as much as the Borrower’s cost to purchase the Property, the Lender gave credit for the considerable capital expenditures that the Borrower had invested in renovations. As a result, proceeds were not limited by a LTC constraint. The Lender was able to provide a rate lock at application.

    Rate: Fixed at 3.60% for 5 years then floats at 6 Month LIBOR + 2.25%
    Term: 30 years
    Amortization: 30 years
    Prepay: 3,2,1,0
    LTV: 65%
    DCR: 1.15
    Guaranty: Non-Recourse

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    $5,700,000 Non-Recourse Acquisition Bridge Financing for a 2-Property Multifamily Portfolio; 80% LTC and 7.5% Debt Yield; Gardena, CA

    February 5, 2020

    Transaction Description:

    George Smith Partners arranged $5,700,000 in non-recourse acquisition bridge financing for a two-property value-added multifamily portfolio in Gardena, CA. The two 1960’s vintage properties had significant deferred maintenance and below market rents. The Sponsor’s business plan was to reposition the Property and release the units at market rents. Maximum proceeds, despite a tight debt yield, and non-recourse were priorities.

    George Smith Partners sourced a lender familiar with the market and willing to size the loan to a 7.5% debt yield, which resulted in 80%LTC. The loan, which offers an attractive parri-passu funding structure, includes future funding for a full gut renovation of unit interiors and an exterior upgrade. The three-year bridge loan is interest only and carries a fixed interest rate of 6.90%. Interest is not charged on the holdback until funds are drawn. The lender fee was limited to a 1.00% origination fee with no exit fee. The Lender did not charge a legal fee and closed the transaction in 30 days from term sheet execution.

    Rate: 6.90%
    Term: 3 Years
    Amortization: Interest only
    LTC: 80%, including future funding
    Guarantee: Non-Recourse
    Lender Fee: 1% in / no exit fee
    Prepayment Penalty: 12-month interest guarantee

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    $4,200,000 Cash-Out Refinance for Predevelopment Land Financing on a To-Be-Built 90-Unit Multifamily Project; West Oakland, CA

    January 29, 2020

    Transaction Description:

    George Smith Partners arranged a $4,200,000 cash-out refinance for predevelopment land financing on a to-be-built 90-unit multifamily property in West Oakland, CA. The Property consists of a 1.5-acre parcel and 35,000 square feet of raw industrial space built in the 1950s that will be demolished at the start of construction. The Property recently obtained entitlements for a 90-unit multifamily development, but the Sponsor required significant capital and about 12 months to complete construction drawings. The Sponsor was seeking a refinance and approached GSP with 30 days of term remaining on their existing land loan. The existing land Lender would not release the good news money earmarked for a successful entitlement that would have been used to fund construction drawings. They were also seeking to charge an extension fee that was significantly above market.

    In a very short timeframe, GSP sourced a land lender comfortable with refinancing the existing land loan and providing cash-out to help fund construction drawings. Sized to 65% LTV, including a considerable land step-up for entitlement, the financing is interest only and carries a 12-month term with two 3-month extensions. There is no prepayment penalty, and the Lender origination fee was only 0.5%. The new loan closed in less than 30 days from term sheet execution avoiding a maturity default on the existing loan and enabling the Sponsor to fund construction drawings.

    Rate: 8.99%
    Term: 12 months with two 3-month extensions
    Amortization: Interest only
    LTV: 65%
    Prepayment Penalty: None
    Lender Fee: 0.5% in / 1% out
    Guarantee: Recourse

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    $11,000,000 Permanent Financing Fixed at 3.875% for Single Tenant Medical Office; Chula Vista, CA

    January 29, 2020

    Transaction Description:

    George Smith Partners secured $11,000,000 of permanent financing for the refinance of a single-tenant medical office building located in Chula Vista, CA. The Sponsor purchased the 23,000 square foot building completely vacant in 2018. Shortly after acquisition, they secured a lease with a local medical user for the entire space. The transition of use from traditional retail to medical office required a large capital improvement budget that the Sponsor wanted to recoup through permanent loan proceeds.

    The refinance allowed the Sponsor to fully recapitalize their initial equity investment after completing their business plan. The strength of the Tenant in the market, long-term lease (15 years), and a healthy rental rate all contributed in getting the capital provider comfortable with providing funds in excess of costs.

    The 10-year financing carries a fixed interest rate of 3.875% for the entire term and amortizes over 30 years. The financing, sized to 70% LTV, provides two years of interest only payments and is open to prepayment at any time without penalty. The three general partners in the deal are providing recourse which is split evenly between each of them.

    Rate: 3.875% Fixed
    Term: 10 years
    Amortization: 30 Years
    Loan-to-Value: 70%
    Guarantee: Full Recourse
    Prepayment: Open to prepayment at any time
    Lender Fee: 1.0% Origination Fee

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    $4,480,000 Non-Recourse, 80% LTV, Quick-Close Refinance of a 148-Unit Multifamily Asset; Cincinnati, OH

    January 21, 2020

    Transaction Description:

    George Smith Partners secured a $4,480,000 non-recourse, 80% LTV, quick-close refinance of a 148-unit workforce multifamily property in suburban Cincinnati, Ohio for out of state borrowers. The loan was structured, approved, and funded within a three-week period. The financing resolved an impending loan maturity for the Sponsor while providing flexibility to roll into a permanent take-out loan after seasoning the Property’s cash flow with minimal friction cost. The balance sheet facility was underwritten to 80% of value at a floating rate of the 1-Month LIBOR plus a spread of 4.25% for an all-in coupon of 6.00%.

    Rate: Floating One-Month LIBOR + 4.25% (6.00% all-in coupon) for 24 months
    Term: Two years
    Amortization: Interest only
    Prepayment Penalty: Nine months minimum interest
    LTV: 80%
    Guaranty: Non-Recourse

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    $10,500,000 Acquisition Bridge Loan For 71-Unit, Multifamily Property; Floating at LIBOR + 2.75%; Seattle, WA

    January 21, 2020

    Transaction Description:

    George Smith Partners secured a $10,500,000 acquisition bridge loan for a 71-unit multifamily property in the greater Seattle area. The loan provides 75% LTC and floats at a rate of LIBOR + 2.75% for a 3-year term. Proceeds are structured as $8,462,000 in initial funding plus holdbacks for interest reserve and capital expenditures.

    When speaking with capital providers, GSP encountered several challenges. The Property is in a submarket about 10 miles south of Downtown Seattle that has yet to experience significant redevelopment. The Seller made limited investments in the Property upkeep in recent years resulting in a significant amount of deferred maintenance. Because of this, the Property showed poorly on-site tours with prospective lenders.

    The selected lender was comfortable with the strength of the Sponsorship and was able to provide 75% LTC at a competitive interest rate. Although LIBOR was about 1.75% on the day of close, GSP negotiated a LIBOR floor of 1.25%. This could be very advantageous for the borrower since the forward LIBOR curve is downward sloping. In order to prove out the proforma market rents, GSP provided examples of several other properties the Sponsor had successfully completed in the area. The Sponsor also provided a very detailed exterior renovation budget that will enhance the appearance and amenities of the Property. The Lender also had true springing cash management. This means that the Borrower did not have to open an account at close and retains full control over the cash flow. The Lender allowed pre-negotiated loan docs that the Borrower had used for a similar transaction. The loan closed in about 45 days even with the end of year holidays.

    Rate: Floating at LIBOR + 2.75%
    LIBOR Floor: 1.25%
    Term: 3+1+1
    Amortization: Interest Only
    Debt Yield In/Out: 5.5%/7.5%
    LTC: 75%
    Fee In/Out: 1%/0%
    Cash Management: Springing
    Guaranty: Non-Recourse

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    $3,500,000 in Permanent Financing at 3.28% for Southern California Shopping Center: Oxnard, CA

    January 15, 2020

    Transaction Description:

    George Smith Partners secured a $3,500,000 of non-recourse bank loan to refinance a 21,000 SF shopping center shadow-anchored by a Lowe’s (NAP). The 100% occupied center consists of 4 buildings, 7 tenants, and is located in Oxnard. Tenants are a strong mix of national and regional tenants and includes one longtime local business. GSP worked with a lender that structured the loan term to be coterminous with the loan term of the Lowe’s. This allows the sponsor to have maximum optionality at loan maturity. The new financing lowered the interest rate from 5.10% to 3.28%. The fixed-rate loan was rate locked shortly after application, allowing plenty of time to collect SNDAs and Estoppels. The loan allows sponsor to pay down the balance by 5% in any given year without penalty and features a step-down prepayment.

    Rate: 3.28% Fixed
    Term: 8 years
    Amortization: 30 Years
    Loan-to-Value: 32%
    Guarantee: Non-Recourse
    Prepayment: Stepdown Prepayment (5%, 5%, 4%, 4%, 3%, 2%, 1%, 1%)

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    $5,000,000 Refinance of a Multi-Tenant Automotive Service Retail Center; Valencia, CA

    January 15, 2020

    Transaction Description:

    George Smith Partners successfully secured a $5,000,000 permanent refinance of a three-building, 8-unit, 20,000 square foot automotive service retail center on a 2-acre parcel in Valencia, CA. The Sponsor had purchased the Property in an all cash transaction in 2019 via 1031 Exchange and wished to recapitalize with a long-term fixed rate loan. GSP leveraged its expertise and strong relationship with a capital provider to execute a low fixed-rate, 30-year fully amortized, partial-recourse, permanent loan. Most importantly, there were no-post closing covenants, including occupancy, which was especially attractive to the Sponsor due to the shorter terms and automotive/specialty related tenancy. GSP was able to get the Capital Provider comfortable with the asset due to its strategic location in the heart of the auto-dealerships corridor, which makes this location quite attractive to businesses in the auto service space.

    Rate: 3.80% Fixed; Adjusts every 5th year
    Term: 30 Years
    Amortization: 30 Years
    LTV: 56%
    Recourse: Partial

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    80% Loan to Cost, Non-Recourse Acquisition Bridge Financing for a 20 Unit Multifamily Property in South Los Angeles; Closed in 30 Days with No Lender Legal

    January 8, 2020

    George Smith Partners arranged $2,300,000 in non-recourse acquisition bridge financing for a value-add multifamily property in the South Los Angeles. The 20 unit, 1920’s vintage property had significant deferred maintenance and below market rents. The Sponsor’s business plan was to reposition the property, buyout tenants and release the units at market rents. The transaction carried a very short 30 day closing time frame.

    Sized to 80% of total project cost, the loan includes future funding for tenant buyouts, a full gut renovation of unit interiors and an exterior upgrade. The three year bridge loan is interest only and carries a fixed interest rate of 7.25%. Interest is not charged on the hold-back until funds are drawn. The lender fee was limited to a 1% origination fee with no exit fee. The lender did not charge a legal fee and closed the transaction in 30 days from term sheet execution.

    Rate: 7.25%
    Term: 3 Years
    Amortization: Interest only
    LTC: 80%, including future funding
    Guaranty: Non Recourse
    Lender Fee: 1% in / no exit fee
    Prepayment Penalty: 12 month interest guarantee

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