Financings

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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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    $4,000,000 Cash-Out Equity Capitalization Bridge Loan; Beverly Hills, CA

    January 8, 2020

    Transaction Description:

    George Smith Partners arranged cash-out financing for developers of a high-end luxury home in Beverly Hills to pull out trapped equity and prepare for a future construction loan. The long-term goal was to obtain highly leveraged, non-recourse construction financing that will utilize the equity from this transaction. The first step was to capitalize the Property. The Property had a $4,400,000 as-is value and a $19,000,000 as-completed value. GSP obtained a $4,000,000, 90% LTC that will provide the ownership with equity capital.

    In today’s market, it is challenging to find capital providers willing to provide high leveraged, cash-out financing for land. Using our relationships, GSP was able to identify a non-recourse lender who would provide highly leveraged, cash-out financing to 90% LTC. By completing the first stage of financing the ownership will have the needed capital for a larger future construction loan.

    Rate: 8.0%
    Term: 1 Year
    LTC: 90%
    Amortization: Interest Only
    Guaranty: Non-Recourse
    Prepayment: None

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    $3,000,000 Permanent Financing for a Ground Lease Single-Tenant Office Building; Irvine, CA

    December 18, 2019

    Transaction Description:

    George Smith Partners successfully arranged $3,000,000 in a cash-out permanent refinance secured by the sandwich leasehold interest in a single-tenant leased office building in Irvine, California. The Subject Property is in the heart of Orange County’s business district and next to the Irvine Business Complex and John Wayne Airport. The neighborhood is in a mature stage with limited amount of vacant land available for new development. The Property consists of three multi-story buildings having 69,474 SF net rentable space.

    The Subject Property is encumbered by a ground lease. The leasehold interest, ground lease, and tenant improvement lease all expire in five years, with no extension options. The non-investment grade tenant has a six year lease remaining and they are not required to provide business financials.

    GSP identified a capital provider able to structure a five year fully amortizing loan. The Sponsor’s considerable real estate track record and financial strength further encouraged the Lender to provide a low interest rate. The recourse loan is fixed at 3.00% with a 5-year term and will be fully amortized in five years.

    Rate: 3.00% fixed
    Term: 5 years
    Amortization: 5 years
    Loan to Value: 44%
    Global DSCR: 1.25X
    Prepayment: 3%, 2%, 1%
    Guaranty: Recourse
    Lender Fee: Par

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    $11,895,000 Cash-Out Office Refinance; Orange County, CA

    December 18, 2019

    Transaction Description:

    George Smith Partners placed an $11,895,000 cash-out refinance of a 100% owner/user corporate office and assemblage facility in Orange County, California. Excess proceeds were used to address a loan maturity for other unrelated real estate. The other assets are not stabilized but located in primary in-fill Los Angeles markets. Although proceeds were allocated to other real assets our Capital Provider only collateralized the Subject Property. Our Capital Provider sized this request to 65% of appraised value and fixed the rate at 3.88% for 5 years. It was extremely important for our Sponsor to have permanent financing that carries a step-down pre-payment penalty from 5%.

    Rate: 3.88%
    Term: 5 Years
    Amortization: 30 Years
    LTV: 65%
    DCR: 1.20
    Fees: .50 points
    Recourse: Corporate & warm-body
    Prepayment: 5,4,3,2,1

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    Acquisition Permanent Financing for a Multifamily Property, Sized to 75% LTV and a 1.15x DCR; West Adams, Los Angeles, CA

    December 11, 2019

    Transaction Description:

    George Smith Partners arranged permanent acquisition financing for a multifamily property in the West Adams submarket of Los Angeles, California. The 1960’s vintage property had significant deferred maintenance and below market rents, but the Sponsor required permanent financing from a portfolio lender in order to take advantage of today’s low interest rates. GSP sourced a regional bank that was willing to fund 75% of the purchase price with no holdback based on underwriting the in-place cash flow to a 1.15x DCR. The loan carried a five-year fixed rate of 4.00%, a ten-year term and an attractive 3-2-1 prepayment penalty. No deposits were required.

    Rate: 4.00%
    Term: 10-Year Term; 5-Year Fixed
    LTV: 75%
    DCR: 1.15x
    Amortization: 30-Year
    Prepayment Penalty: 3-2-1
    Lender Fee: 0.25%

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    $3,700,000 Non-Recourse Refinance, Mixed-Use Retail and Office Property; Mission Viejo, CA

    December 11, 2019

    Transaction Description:

    George Smith Partners secured a $3,700,000 non-recourse refinance for a 14,454 SF mixed-use property in Mission Viejo. The loan is fixed at a rate of 4.10% for seven years. Over the past year, the Property had some leases roll. The Sponsor spent a significant amount of time and effort in order to ensure the new tenant profile was comprised of ecommerce-proof businesses. Although the Property was 100% occupied once GSP commenced the marketing process, the historical vacancy caused some concern with lenders. GSP discussed the strength of the market, asset, and Sponsor in order to mitigate those concerns. In doing so, GSP was able to create a robust market for the Sponsor and source a Capital Provider that understood the value of the Property. The Lender was able to rate lock at application and was ready to close in less than 60 days.

    Rate: Fixed at 4.10% for 7 Years then Floats at Treasury + 2.55%
    Term: 10 years
    Amortization: 30 years
    LTV: 55%
    Guaranty: Non-Recourse

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    $2,800,000 Land Acquisition Financing for a Self-Storage Project; Santa Clarita Valley, CA

    December 4, 2019

    Transaction Description:

    George Smith Partners successfully arranged a $2,800,000 non-recourse, short term acquisition loan for a 4.21-acre parcel near Stevenson Ranch in the Santa Clarita Valley of California. The Sponsor needed financing in a very short timeframe. GSP was able to source a private lender who closed in three business days. The loan offers 60 days of bridge term while the Borrower seeks a construction-to-permanent solution for a fully entitled, six-building, 966-unit, climate controlled, Class-A self-storage facility expected to complete construction in late 2020. The loan is non-recourse and the Lender did not require an appraisal or other third-party reports, thanks to the low leverage and strength of the Sponsor.

    Rate: 7.90% Fixed
    Term: 60 Days
    Amortization: Interest Only
    Loan To Value: 36%
    Prepayment: None
    Guaranty: Non-Recourse

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    $5,230,000 Non-Recourse, Multifamily, Cash-Out Refinance; Los Angeles, CA

    December 4, 2019

    Transaction Description:

    George Smith Partners secured a $5,230,000 non-recourse refinance for a 40-unit multifamily property in Los Angeles. The loan is fixed at a rate of 3.85% for five years and provides two years of interest only payments. Over the past three years, the Sponsors renovated 28 of the 40 units at a very high investment of $28,000 per unit. GSP sourced a bank lender that gave the Borrowers maximum credit for the higher income that resulted from leasing the newly renovated units. The Lender did not require seasoning on the new leases. The Lender did not have a floor on the rate at a time when many banks are applying floors to keep their rates above a certain threshold. The rate was competitive with Agency financing during a period when Freddie Mac was temporarily slowing down new loan originations. The Sponsors were operating the Property very efficiently with below-market expenses, and the third-party appraiser marked those expenses up to market. This resulted in a capitalized property value that did not meet the lender’s 65% LTV constraint. The Lender accommodated the Borrower by raising the LTV threshold so that loan proceeds and the rate would not be affected. The Lender was able to rate lock at application and was ready to close in about 50 days.

    Rate: Fixed at 3.85% for 5 years then floats at 6 Month LIBOR + 2.35%
    Term: 30 years
    Amortization: 30 years
    Prepayment Penalty: 3,2,1,0
    LTV: 65%
    DCR: 1.15
    Interest Only: 2 Years
    Guaranty: Non-Recourse

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    $2,800,000 Owner User Business Real Estate Loan and Line of Credit for Industrial Property; Los Angeles, CA

    November 27, 2019

    Transaction Description:

    George Smith Partners placed a structured senior and collateralized line of credit revolver in a cash-out execution for a business in Los Angeles. The first loan was structured to be self-liquidating over 15 years with a fixed rate of 3.90%. The $1,000,000 second trust deed is a true revolver that can be used as a check-book and has no limitations on uses. The second loan is priced at 3.75% (Prime minus 1%). Funds may be drawn down, re-paid and re-drawn without additional bank approval. There is no non-utilization fee. As the credit line is collateralized, there is no mandatory “clean-up” for funds outstanding over 12 months.

    SENIOR
    Rate: 3.9% Fixed for 15 Years
    Amortization: 15 years self-liquidating
    Fee: 1/4% /25bp
    Prepayment: 3-3-2-2-1 open
    LTV: 75%
    DCR: 1.20

    REVOLVER
    Rate: Prime -1% or 3.75%
    Amortization: Interest Only
    LTV: 80%

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    $7,167,000 Non-Recourse Cash-Out Refinance For Mixed Use Property; Los Angeles, CA

    November 27, 2019

    Transaction Description:

    George Smith Partners secured $7,167,000 in non-recourse financing for a mixed use property with 46 residential units and 5,350 sf of ground floor retail space. The financing provides 65% leverage and is fixed at a rate of 3.50% for five years with three years of interest-only payments. Several challenges were encountered when discussing the transaction with capital providers. Since the Property is mixed use, extensive market comparable data was required to prove out the value of both the residential and retail portions. A different cap rate was applied to each component of the Property before summing the individual values. This process demonstrated that the Lender’s underwritten value was well supported. One of the retail spaces is occupied by a nightclub and several lenders declined the deal because of the high turnover rate with this type of tenant. GSP showed that the nightclub was in place for over 10 years and remains very popular to this day. Despite rates rising during the diligence process, the Lender held the rate even without a formal rate lock.

    Rate: Fixed at 3.5% for 5 years then floats at 6 Month LIBOR + 3.25%
    Term: 20 years
    Amortization: 30 years
    Prepay: 5,4,3,2,1
    LTV: 65%
    DCR: 1.2
    Interest Only: 3 Years
    Guaranty: Non-Recourse

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    Cash-Out Refinance for 7-Unit Multifamily Property; North Hollywood, CA

    November 20, 2019

    Transaction Description:

    George Smith Partners successfully arranged a cash-out permanent refinance of a 7-unit multifamily property in North Hollywood, California. Loan proceeds were used to pay off the existing variable, higher interest rate loan and allow the Sponsor to obtain a lower interest, fixed rate loan. The equity also allowed the Sponsor to complete upgrades to the Property including roofing, flooring and various other deferred maintenance. GSP targeted a capital provider who is active in the multifamily segment and could maximize loan proceeds for the Sponsor in order to finish the Property upgrades.

    Rate: 4.30%
    Term: 7 Years Fixed, 30 Year Term
    LTV: 65%
    Amortization: 30 Years
    Prepayment Penalty: 3, 2, 2, 1, 1 with nothing after the 5th year
    Lender Fee: None

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    $8,250,000 Cash-Out Unentitled Land Loan Recap; Van Nuys, CA

    November 20, 2019

    Transaction Description:

    George Smith Partners placed a cash-out $8,250,000 non-recourse loan for the partnership recapitalization of an entitled parcel in Van Nuys which is located in the San Fernando Valley of Los Angeles, CA. The Sponsor has been working through the permitting process for residential development. GSP identified a non-institutional lender who underwrote the business plan assuming a sale to a related entity upon ready-to-issue (RTI) permits. Their exit will come in the form of the pre-arraigned Joint Venture funding and a to-be-identified construction lender. Excess proceeds were utilized to buy-out an LP investor and recapitalize the Borrower and carry costs through to RTI. The non-recourse loan will float for the 12-month term at Prime + 4.0%. There was no appraisal, or Phase I report required for funding.

    Rate: P+4.0% w/10% Floor
    Term: 12 months
    Recourse: Carve-Outs Only
    Fees: 1.0%
    Prepayment: Six-month minimum yield; no exit fee: P+4.0% w/10% Floor

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