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Financings

  • Refinance Loan for Multi-Tenant Office Property; Fixed at 3.80%; Non-Recourse; West Hollywood, CA

    February 24, 2021

    Transaction Description:

    George Smith Partners secured a refinance loan for a three-story office building located on the Sunset Strip in West Hollywood. The loan is fixed at 3.8% and has a stepdown prepay that becomes 0% after 3 years.

    The Sponsor is holding the Property for redevelopment and required a flexible loan with a low interest rate. The Property receives more than half of its income from a cell tower site and a rooftop billboard. Most lenders would not include this income because the leases have cancellation clauses, but the selected Lender agreed to include it. They also provided a prepayment structure that aligns with the timing of the Sponsor’s business plan. As a result, the loan can be paid off with no prepayment penalty once entitlements are secured for the redevelopment project.

    Rate: 3.80% fixed
    Term: 5 yrs
    Reserve: No payment reserve
    Amortization: 30 years
    Prepayment Penalty: 3,2,1
    LTV: 40%
    Guarantee: Non-Recourse
    DCR: 1.30x

  • $5,800,000 Single Tenant Office with Early Termination Option; Milwaukee, WI

    February 24, 2021

    Transaction Description:

    George Smith Partners placed the cash-in refinance of a net-leased single tenant office building located in a secondary Milwaukee metro-market. Although currently leased to one user, the asset is easily divisible should the tenant choose to exercise their early termination clause in 18 months. Our Portfolio Capital Provider mitigated this event risk in two ways. First, by underwriting the need of the current tenant to operate from this specific single tenant building and second, our Sponsors’ 15% additional capital contribution at close. A personal repayment guarantee was used in place of all escrows, reserves, cash flow sweeps and hold-backs. The tenant continued to operate from this location in a reduced capacity throughout Covid. The 10-year term is fixed at 3.625% and amortizes over 25 years. The net-lease was underwritten to preclude any tax or insurance impounds while this tenant is in occupancy.

    Rate: 3.625% fixed
    Term: 10 Years
    Amortization: 25 Years
    LTV: 70%
    DCR: 1.20
    Loan Fee: 1 Point
    Reserves: None
    Impounds: None
    Prepayment Penalty: None
    Recourse: Repayment Guarantee

  • $3,825,000 Cash-Out Permanent Financing for 30-Unit, Multifamily Property; Los Angeles, CA

    February 17, 2021

    Transaction Description:

    George Smith Partners arranged $3,825,000 in cash-out permanent financing (70% LTV) for the refinance of a 30-unit multifamily property located in Los Angeles, CA. The Sponsor used GSP with intentions of taking out their existing expensive lender. The Sponsor recently completed exterior and interior renovations including common area upgrades. The recent improvements allowed the Sponsor to increase rents thus increasing the value of the Property. GSP was able to provide the Sponsor with a 30-year term with the first 5 years being fixed at a very low rate. The rate will then reset every 5 years for the remainder of the term. Rather than most loans having a balloon payment in 5,7 or 10 years, this loan structure allows for flexibility because the loan matures in 30 years. The flexible prepayment structure is equal to 1.75% for the first 3 years, 1% for years 4 and 5, and 0% thereafter. The loan structure allows the Sponsor to refinance out of an expensive loan with a fixed rate of 3.15%, while also receiving cash out. The Sponsor is using cash-out proceeds to continue their business plan of purchasing and renovating additional properties.

    Rate: 3.15% (Fixed for 5 Years)
    Term: 30 Years
    LTV: 70%
    DCR: 1.20

  • 2.97% Fixed Rate for 75% LTV Refinance of Apartment Complex; Oregon City, OR

    February 17, 2021

    Transaction Description:

    George Smith Partners successfully obtained $6,487,000 of permanent debt for the refinance of a 43-unit apartment complex in Oregon City, OR. The unique property has a very low density for the area, appealing to residents who are looking for a less condensed living environment. The financing was secured after the Sponsor’s acquisition and renovation plan was implemented. The senior loan was able to provide the Sponsor with cash out above the original basis to return to investors. The 10-year loan is fixed at 2.97%. The financing, which is sized to 75% of appraised value, is non-recourse and carries 5 years of interest only.

    Rate: 2.97% Fixed
    Term: 10 Years
    Amortization: 30 Years
    Interest Only: 5 Years
    LTV: 75%
    Guaranty: Non-Recourse

  • $2,320,000 Preferred Equity Investment to 90% LTC for a 240-Unit Workforce Housing Project; Tertiary Wisconsin Market with Strong Fundamentals

    February 10, 2021

    Transaction Description:

    George Smith Partners successfully placed $2,320,000 in preferred equity with a last dollar exposure of 90% loan to cost. The preferred equity investment was made midway through construction of the 240-unit workforce housing project and is subordinate to a senior construction loan and institutional preferred equity investor. After sourcing the senior construction lender, the Sponsor engaged GSP to leverage its diverse lender/investor relationships to source an equity investment to offset the Sponsor’s common equity requirement. GSP was successful in sourcing the equity and structured the investment as preferred equity to maximize common equity returns. Not only was the development project already mid-construction, but it was also made during the peak of the COVID-19 pandemic. GSP sourced the equity by focusing on sponsorship quality and how the Project was tailored to take advantage of the local market’s strong fundamentals, such as an insatiable demand for workforce housing driven by numerous manufacturers being located in the area including Kohler, Sargento, and Johnsonville, among others.

    Rate: 15.00%
    Term: 36 months
    Amortization: I/O
    Prepayment: Open in whole or in part at any time with a three-year minimum yield
    Guaranty: None
    Fee: 2% origination fee

  • $16,500,000 Non-Recourse, Pre-Development Bridge Financing for Five-Property Co-Living Land Portfolio; Los Angeles, CA

    February 10, 2021

    Transaction Description:

    George Smith Partners secured $16,500,000 in bridge financing for a five-parcel land portfolio located in Los Angeles, CA. The five individual parcels are entitled (one in process of entitlements) for co-living developments totaling 211 units and 879 beds. The non-recourse loan refinanced existing debt, while providing for permitting and carry costs prior to development, with four assets slated to break ground in early 2021, and the fifth in late 2022. The loan is sized at approximately 50% LTC on a 6.90% fixed rate, non-recourse, with a 12-month term. The loan did not require an interest reserve.

    Given COVID related permitting delays and perceived impacts to the co-living product type brought by the pandemic, GSP was able to identify a lender that understood the stability of the submarkets for future development and the resilience and growth of co-living over the next several years. The infill development sites, and high-density entitlements provide strong value to the collateral base for this financing. The loan closed within five weeks of term sheet execution (including the holiday and New Year’s break).

    Rate: 6.90%
    Term: 12 months with one 12-month extension
    Amortization: Interest Only
    LTC: 50%
    Guaranty: Non-Recourse
    Lender Fees: 1.00%
    Prepayment: Open

  • 90% LTV Acquisition Financing for 6-Unit Building; Beverly Grove Area of Los Angeles, CA

    February 3, 2021

    Transaction Description:

    George Smith Partners secured $2,475,000 (90% Loan to Purchase Price) of senior and mezzanine financing for the acquisition of a 6-unit multifamily building in the Beverly Grove area of Los Angeles. The loans both have a 12-month term and are open to prepay at any time. The Sponsor plans to use the term to entitle the building for a potential future development. The non-recourse financing allowed for the Sponsor to contribute a minimal amount of equity into the purchase of the Property. The blended rate came out to 7.93% across the entire capital stack.

    Blended Rate: 7.93%
    Term: 12 Months
    Amortization: Interest Only
    LTV: 90%
    Blended Loan Fee: 1.67%
    Prepayment Penalty: None
    Guaranty: Non-Recourse

  • $7,986,000 First Mortgage, 65% LTV, 2.9%, 10 Yr., Full Term I/O; West Los Angeles, CA

    February 3, 2021

    Transaction Description:

    George Smith Partners secured a $7,986,000 first mortgage at 65% LTV for a 23-unit multifamily property in West Los Angeles, CA. The loan is non-recourse and supplies significant cash-out proceeds, a low 2.9% 10-year fixed rate, and full-term interest-only payments. The financing replaced a bridge loan that was put in place to acquire the Property and complete significant upgrades including unit renovations, common area and exterior improvements, and conversion to solar power.

    GSP started working on the refinancing in the Spring of 2020 at the height of the COVID-19 quarantine, while the property was still being renovated and released. GSP was able to persuade the Lender to underwrite income on a trailing one month basis rather than a trailing six month basis. This allowed the underwriter to include the higher income from the newly leased units. The loan application process began when the property was approximately 75% leased. The lender agreed to a forward rate lock at 85% occupancy and closed when the building reached 95% occupancy.

    Rate: 2.9% Fixed
    Term: 10 Years, Interest Only
    LTV: 65%
    Prepayment: Yield Maintenance
    Lender Fee: .5%

  • GSP Structured Highly Leveraged, Quick Close Acquisition Capital of $2,695,000 for 16-Unit, Multifamily Property; Koreatown area of Los Angeles, CA

    January 27, 2021

    Transaction Description:

    The Sponsor had the opportunity to purchase a well-located property in Koreatown well below the market value because of the sponsor ability to close quickly with the 80% LTC quick-close loan. With the global pandemic, the property had 2 vacancies and a few non-paying residents. Because of the quick timing and the short-term distress in the cashflow, the Property would not qualify for bank or agency financing at this time. The sales broker and the Sponsor approached George Smith Partners for highly leveraged, quick purchase financing. GSP arranged a $2,695,000 non-recourse acquisition loan for the 16-unit apartment project. Despite marketing this deal during the global pandemic with vacancies and unpaying tenants, GSP successfully structured a first trust deed from a debt fund as well as a preferred equity B piece with a different investor to almost 80% of the purchase price. The non-recourse facility was priced at an interest-only fixed rate with a blended rate of 7.97% with a 12-month term plus a 6-month extension option. Thanks to our long-standing relationship with this debt fund and preferred equity investor, GSP was able to close this transaction in less than 10 days from signing the term sheet.

    Blended Rate: 7.97%
    Term: 12-month Bridge Loan plus a one 6-month extension
    Loan-to-purchase: 80%
    Prepayment Penalty: None

  • $11,200,000 Non-Recourse, Cash-Out Bridge Refinance for Two-Story Retail in Koreatown; Los Angeles, CA

    January 27, 2021

    Transaction Description:

    George Smith Partners secured a $11,200,000 non-recourse bridge refinance with cash-out for a two-story retail plaza in the heart of Koreatown in Los Angeles, CA. Located next to a Metro D (Purple) Line subway station along a very busy stretch of Wilshire Boulevard, the Property is anchored by 7-Eleven and Carl’s Jr. and features a fast-casual food hall on the second floor. However, the food hall has been closed due to COVID.

    The Sponsor, a prolific developer and property owner, recently announced plans to replace the plaza with a 17-story, mixed-use apartment tower that includes affordable units and some commercial space. GSP was engaged to source a bridge solution to pay off the existing maturing loan and provide prepayment flexibility once the Project’s entitlements and permits are secured.

    GSP focused on the strength of the Sponsor, the bustling and densely populated Koreatown market, home to several large and small-scale projects currently planned or under construction and the Purple Line Extension project which will provide a dependable, high-speed alternative for travel between downtown Los Angeles, Miracle Mile, Beverly Hills and Westwood. The financing closed within 11 days of the term sheet being signed.

    All Terms Confidential

  • Construction Debt – 79% LTC – 81 Multifamily Units, Los Angeles, CA

    January 20, 2021

    Transaction Description:

    George Smith Partners secured senior construction financing for a new multifamily development in the Lincoln Heights neighborhood of Los Angeles, CA. The $10.5M loan will be utilized to complete the 81-unit project. The loan represents approximately 79% of the project cost and was structured with an 18-Month initial term and interest only payments for the duration. The Project will be comprised entirely of studio units configured at 540 square feet; each unit will include one bathroom, a full kitchen, modern appliances, and a washer and dryer. Amenities for the project include a roof top deck, barbeque area, gym & recreational room, bicycle storage, secured parking, and access to a swimming pool.

    GSP secured a Lender that understood the future path of development and was comfortable with the emerging market; the current neighborhood is primarily industrial with limited residential product in proximity. The Lender accepted the Sponsor’s imputed equity from entitling the site; this increased leverage to 79% of cost while keeping pricing at a level accretive to the overall yield. The loan was structured with a shorter initial term to minimize upfront points and interest reserves. GSP worked with the Lender to resolve several budget issues that arose during diligence due to the rising price of lumber and concrete; proceeds were successfully increased by $250,000 to ensure the Project would be fully capitalized without additional equity.

    Rate: 5.00%
    Term: 18-Months; Two 6-Month Extensions
    Amortization: Interest Only
    Max LTC: 79%
    Max “As-Complete” LTV: 60%
    Min Stabilized DSCR: 1.15x
    Loan Fee: 0.75%; 0.25% per each extension
    Guaranty: Recourse

  • $10,895,000 Cash-Out Refinance of a 2-Property Multifamily Portfolio at 3.15%; Los Angeles, CA

    January 20, 2021

    Transaction Description:
    George Smith Partners was retained to refinance a 2-Property multifamily portfolio. Sensing buying opportunities in the multifamily market, the Sponsor wanted to pull cash out of their existing multifamily portfolio to use as equity to purchase new properties. GSP obtained a fixed rate of 3.15% for the first 5 years of the 30-year term.

    Challenge:
    With the global pandemic and uncertainty in the market, it was critical to select a capital provider who could successfully close and provide the cash out for the additional purchases. Any delays would have been very costly because of penalties in the purchase contract. In addition, most lenders were overwhelmed with year-end financing requests as several other lenders pulled out of the market and forbearance requests from their current borrowers. There were complex issues around appraisals and inspections that required GSP’s daily oversight.

    Solution:
    Because of GSP’s strong relationship with this capital provider, we were confident that the loan officer would stay focused, close on time and keep the agreed rate and proceeds. GSP is in the debt market every day which gave us the ability to ensure that the selected Capital Provider was closing deals and meeting deadlines. GSP’s experience working with appraisers, inspectors and title/escrow during the COVID period was critical to getting this transaction completed in a timely manner. The loan closed on time and the Sponsor was able to utilize the cash-out to purchase another project. As is common during the COVID crisis, the Capital Provider wanted a 12-month payment reserve. GSP was able to convince the Capital Provider to only require 6-months and allow the reserve to be applied to the first 6-months of payments.

    Rate: 3.15%
    Term: 30 years term, fixed for first 5 years, resets every 5 years after for the term.
    LTV: 70%
    DCR: 1.20