Financings

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    $11,760,000 Construction Financing to Develop a 14 Unit Small Lot Subdivision Project in the Silver Lake Submarket; Los Angeles, CA

    September 11, 2019

    Transaction Description:

    George Smith Partners placed $11,760,000 in ground up construction financing to develop a 14 unit small lot subdivision project in the trendy Silver Lake submarket of Los Angeles, CA. The Project is extremely well located within Silver Lake and is walking distance to Sunset Junction. The per unit exit price is projected to represent a 30%+ discount to the cost of single family residences with similar footprints, offering an affordable alternative in an attractive and supply constrained market. Challenges included a sponsor seeking full leverage but requiring an extremely low interest rate, and many lenders refusing to offer competitive bids (or any bids at all) given the Project’s for-sale exit to homeowners.

    GSP secured a capital provider that was comfortable with the Property’s central, urban location and the favorable per unit cost basis relative to both single family homes and the limited number of local competing condominium projects. The loan represents 72.5% of total cost and carries an interest rate of One Month Libor + 2.75%, which is near institutional level pricing for a middle market sponsor. The loan term is 24 months with two six month extensions. It allows for partial release of individual units without a prepayment penalty or exit fee, allowing the Sponsor to sell units at its discretion.

    Rate: Floating at 1 Month LIBOR + 2.75%
    Term: 2 Years with Two (6) Month Extensions
    Amortization: Interest Only
    LTC: 72.5%
    Fees: 1%
    Prepayment Penalty: None
    Guaranty: Recourse

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    5 Day Close on 84% Loan to Purchase Price for Multifamily Asset; West Hollywood, CA

    September 3, 2019

    Transaction Description:

    George Smith Partners arranged a quick close acquisition bridge loan for an 8-unit property in West Hollywood. The Sponsor approached GSP with a need for 80%+ leverage, which can be tricky with low cap rates and rent control. GSP utilized their experience to arrange a first and second capital provider on the loan. We ensured that the Sponsor would receive his required leverage and guaranteed that he could close on the Property quickly. With this structure the owner can increase rents and stabilize the cashflow. This will allow him in the future to place a much larger permanent loan on the Property at a lower interest rate. Sized to 84% of purchase with no hold back requirement for interest reserve or capital expenditures, the loan carries a 12-month term, interest only payments at 8.5% and no prepayment penalty.

    Rate: 8.5%
    Term: 12 Months
    Amortization: Interest only
    LTV: 84%
    Prepayment: None
    Guaranty: Non-Recourse
    Lender Fee: 1%

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    $11,450,000 in Permanent Financing for a 56 Hangar Private Airport; Torrance, CA

    September 3, 2019

    Transaction Description:

    George Smith Partners secured $11,450,000 of life-company debt to refinance an existing senior loan for a regional private airport facility in Southern California. The Property is a 133,490 square foot, 10 building, 56 hangar private airport facility on a ground lease to the City of Torrance. The remaining term of the ground lease is only 23 years, which created limitations for the amortization of the senior loan. GSP worked with a lender that allowed for an amortization that equaled 80% of the remaining years of the ground lease. Loan proceeds repaid the existing senior loan, covered closing costs, and provided a return of equity to the Sponsor. The financing is an 18 year term loan that maximizes cash flow for the Sponsor. The recourse fixed-rate loan is priced at 4.75%.

    Rate: 4.75% Fixed
    Term: 18 years (fixed for the first 5 years, then rate adjusts)
    Amortization: 18 Years
    Loan-to-Value: 75%
    Guaranty: Recourse
    Prepayment: Yield Maintenance

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    $5,625,000 (75% LTV) for Acquisition of Development Site for 157 To-Be-Built Units; Koreatown/Los Angeles, CA

    August 28, 2019

    Transaction Description:

    George Smith Partners secured $5,625,000 of combined senior and mezzanine financing for the acquisition of a mixed-use property located in Koreatown in Los Angeles. The Property is located on a desirable corner and currently has 6 apartments over approximately 10,000 square feet of retail. The Sponsor acquired the Property with the intention of constructing a 157-unit apartment tower on the site. The Project is already entitled for multifamily and will receive a density bonus due to its Tier 4 TOC status. Final plans and permits will be completed over the next 9-12 months prior to groundbreaking.

    The senior and mezzanine lenders provided proceeds that were sized to 75% of purchase price. The interest rate was 8.39% and the total financing had a blended origination fee of 1.35%. The 18-month, non-recourse loans are co-terminus and will provide the Sponsor ample time to ready themselves for the construction. Both loans closed in under 30 days from application.

    Blended Rate: 8.39%
    LTPP: (Loan-to-Purchase Price): 75%
    Term: 18 Months
    Amortization: Interest Only
    Guaranty: Non-Recourse
    Blended Lender Fee: 1.35%
    Prepayment Penalty: None, open to prepay immediately

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    $6,500,000 7-Year Construction Loan 18-Unit Multifamily Project; 70% LTC; Prime + 0.75%; Culver City, CA

    August 28, 2019

    Transaction Description:

    George Smith Partners secured a $6,500,000 construction loan for the development of an 18-Unit Class A apartment building located in the greater Culver City submarket of Los Angeles. The interest only loan is priced at Prime + 0.75% for the full 18-month term and includes a 6-month extension option. The proceeds represent 70% of the total project cost. The transaction also includes a 5-year mini perm option priced at the 5 Yr. Treasury + 2.15% with a 30-year amortization schedule, which can be exercised upon stabilization of the Project.

    Challenges:

    Although the Sponsor had previous experience as a general contractor this was his first endeavor as a developer and guarantor. His experience with this Class A asset type was limited and a significant portion of his net worth was tied to a startup technology company with limited operating history. The Sponsor also had a strict deadline he needed to adhere to as his construction permits were reaching their expiration date. Additionally, the construction costs and Sponsor cash equity fluctuated throughout the application process, which complicated the reconciliation of the closing statement and final loan amount.

    Solutions:

    GSP demonstrated that the Sponsor had chosen a capable general contractor to oversee the Project and helped structure a contract that gave the Lender confidence that the development would be completed. With respect to net worth, GSP procured ample evidence supporting the financial growth and stability of the startup. GSP prepared all required closing documents in a timely manner and provided a material portion of the due diligence prior to entering application in order to execute the transaction before the expiration of the Sponsor’s permits. GSP kept a diligent record of costs and equity invested to date. The Lender gave credit for this prior equity and reduced the Sponsor’s required down payment at close.

    Rate: Prime + 0.75%
    Term: 18 Months + 1, 6 Month Extension
    Amortization: Interest Only
    LTC: 70%
    Guaranty: Recourse

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    $6,000,000 Non-Recourse Refinance with Significant Cash-Out for 97-Unit Multifamily Property; Bellflower, CA

    August 21, 2019

    Transaction Description:

    George Smith Partners successfully secured a $6,000,000 non-recourse permanent refinance of a 97-unit, 51,732 square foot multifamily property in Bellflower, CA. Loan proceeds were used to pay off the existing variable, higher interest rate loan into a lower interest, fixed rate loan. There was nearly $4,600,000 cash-out to the Sponsor, who had recently spent over $800,000 to complete full and partial remodeling of 62 units (64% of the total units). Thanks to GSP’s strong lender relationships, the Sponsor’s credentials and longevity of ownership, and extremely low leverage, GSP was able to source a lender that provided an additional $500,000 above the Sponsor’s initial funding ask, assumption rights in the event of a sale and no post-closing financial covenants for future successors.

    Rate: 3.96% Fixed
    Term: 15 Years
    LTV: 35%
    Guaranty: Non-Recourse

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    $10,200,000 Cash-Out Refinance of a Historic All-Brick Building; Los Angeles, CA

    August 21, 2019

    Transaction Description:

    George Smith Partners secured a $10,200,000 cash-out refinance of a 1920s-mixed-use brick building located in Los Angeles. In a growing movement to gentrify the area, this Property features both ground floor retail, and multifamily living. The cash-out refinance allowed our Sponsor to recapture the investment they made in upgrading and repositioning the Property. It is challenging for lenders to finance historic brick buildings and they have trouble getting their arms around mixed-use properties because of the potential risk they pose. GSP offered comfort to the Capital Provider by showing the significant improvements the Sponsor made to the Property, quantifying how retail will enhance the Property value as well as the benefits of being fully leased.

    Rate: 4.05% fixed for five years
    Term: 30 years
    Amortization: Interest only
    LTV: 75%
    Prepayment: 1.75% 1-3 years, 1.00% 3-5 years
    Guaranty: Non-Recourse
    Lender Fee: 1%

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    $3,700,000 Bridge Financing for a Recently Completed Mixed-Use Development Office & Retail; Temecula, CA

    August 14, 2019

    Transaction Description:

    George Smith Partners secured a $3,700,000 bridge loan to refinance an existing construction loan for a recently completed mixed-use development in Temecula, CA. The Property is a 14,939 square foot, 3-story office and retail commercial building located in the Old Town Temecula District. The spec development included the use of EB-5 equity in a tertiary market and required a lender who understood the Property’s unique location and ownership characteristics.

    TERMS CONFIDENTIAL

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    75% Loan-to-Value Non-Recourse Financing for a Newly Redeveloped Two-Tenant Retail Property; Utah

    August 14, 2019

    Transaction Description:

    George Smith Partners successfully placed $6,750,000 of non-recourse, ten-year fixed-rate first mortgage debt collateralized by a 3.36-acre parcel partially encumbered by a ground lease and improved with a 43,500 square foot retail box formerly occupied by a grocery store. The improvements are newly demised into two spaces 100% leased to a national crafts retailer and regional clothing store, and the collateral also includes two small pads ground leased to a local coffee shop and ice cream parlor. GSP sourced a lender comfortable with providing a 75% leverage permanent loan despite the absence of tenant sales history. Additionally, the Sponsor executed the ice cream parlor ground lease during financing diligence, and GSP worked with the Lender to increase loan proceeds (subject to a lender holdback until tenant opens for business) commensurate with the income attributable to this new lease even though the tenant had not yet built its premises at the time of loan closing.

    Rate: 4.60% Fixed; coupon reflects 10-year Swap index as of December 2018
    Term: 10 Years
    Amortization: 30 Years
    Loan to Value: 75%
    Prepayment: Yield Maintenance
    Lender Fee: None

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    $3,500,000 Cash-Out Financing for Land on Melrose Ave and La Brea Blvd; Los Angeles, CA

    August 7, 2019

    Transaction Description:

    George Smith Partners secured financing for a $3,500,000 loan on a former gas station at the corner of Melrose and LaBrea. The challenge was finding a bridge lender willing to lend on vacant land entitlement by-right for multi-family residential that will not commence construction for at least 18 months while also providing $500,000,000 in cash-out proceeds.

    GSP was able to exceed the Sponsors expectation with respect to cash-out proceeds basing the loan on an updated appraisal which recognizes the site’s receipt of a Transit Oriented Communities (TOC)Tier 2 “up zoning” which occurred in 2017 after the land was acquired by the Sponsor and doubled the number of units that can be developed on the site. The 2 Year floating rate execution is a full recourse loan with a rate of L + 460 (7% floor) cash-out proceeds and a holdback for interest carry during the term of the loan.

    Rate: LIBOR + 460 with 7% Floor
    Term: 2 Years
    LTV: 50%
    Amortization: Interest Only
    Yield Maintenance: None
    Guaranty: Full Recourse

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    $15,050,000 CMBS Non-Recourse Permanent Financing for the Acquisition of a 130-Key Marriott Branded Select-Service Hotel; Corona, CA

    August 7, 2019

    Transaction Description:

    George Smith Partners successfully arranged $15,050,000 in non-recourse permanent financing secured by a 130-room Marriott branded select-service hotel in Corona, CA. The hotel is located at the gateway of the Inland Empire, close to the freeways. The loan is sized to 72% LTV fixed for 10 years at 4.79% with 30 year amortization.

    The Sponsor acquired this hotel as an expansion of their current hospitality portfolios. They were looking for high leverage financing to minimize the cash down payment required at closing.

    GSP sourced a lender willing to provide higher LTV than most other hotel lenders on a non-recourse basis which minimized the Sponsor’s cash equity contribution at closing. The Lender understood the potential of the Inland Empire lodging market and was able to navigate through the complexities of the transaction and loan process. GSP facilitated and expedited the closing in order to meet the deadline of the purchase contract. Additionally, GSP pre-negotiated with the Lender to waive their $7,500 application fee and capped their legal fees at $35,000.

    Rate: 10 year Swap + 2.78%
    Term: 10 year fixed rate loan
    Amortization: 30 years
    LTV: 72%
    Debt Yield: 10.9%
    Debt Coverage Ratio: 1.70x
    Prepayment: Defeasance
    Guaranty: Non-Recourse
    Lender Fee: Par

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    $3,500,000 Pre-Development Non-Recourse Bridge Loan; San Fernando, CA

    July 31, 2019

    Transaction Description:

    George Smith Partners placed the cash-out non-recourse refinance of an improved San Fernando Valley lot that had been vacated while the Developer moves forward on an up-zone re-entitlement. Our Sponsor will double the available units on this over-sized lot bringing needed housing to this dense in-fill tract. Proceeds beyond the existing payoff will be used to cover soft costs and will be invested back into the site development. The exit will be via a ground-up construction loan to be funded late 2019. Closing occurred within two weeks from executed application to funding. No appraisal was required for funding. Fixed at 7.50%, the non-recourse loan does not carry a prepayment penalty.

    Rate: 7.50%
    Term: 12 months
    Amortization: Interest Only
    Loan Fees: 1.0%
    Guaranty: Non-Recourse
    Prepayment Penalty: None

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