Financings

Transaction Description

George Smith Partners successfully placed a revolving loan with a maximum line of credit of $6,900,000 (80% LTC) and total projected debt proceeds of $13,300,000 for the construction of 66 single family homes for rent in Montgomery, Texas. The loan is a floating rate of LIBOR plus 800 bps with a floor of 25bps and has an 18-month term with two, 3-month extension options. The Sponsors found a partner to acquire the homes at Certificate of Occupancy with a portion of the deposit on the sale to be released to the Sponsors as additional equity to help acquire the land. GSP leveraged its extensive expertise in the single-family rental sector to source revolving debt options that minimized the equity upfront and allowed the Sponsors to take down the entire Project without the need for an equity investor. This is one of the first of many built-for-rent transactions for the local Houston sponsors who have a strong track record in homebuilding.

Transaction Description:

George Smith Partners arranged $4,400,000 in permanent financing for the acquisition of a stabilized 19-unit multifamily property located in Los Angeles, CA. GSP was simultaneously helping the Sponsor close on a few multifamily refinances within their portfolio to pull cash out and use as equity for the Subject property. Although the Property is currently 100% occupied, rents were below market because the Seller self-managed and the Property needs exterior and interior improvements. The Sponsor wanted to lock in a low rate to allow for additional cashflow to be used towards building upgrades. Despite being on a strict closing deadline, GSP was able to identify a bank lender who could close within 45 days. The loan represents 70% of the purchase price and was structured with the first 5 years being fixed at 3.15%, while resetting every 5 years for the rest of the 30-year term. The loan structure also allows for flexible prepayment with the first 3 years being equal to 1.75% and 1% thereafter. The prepayment flexibility will allow the Sponsor to cash-out refinance once they have implemented their value-add strategy. The renovation plan will improve the Property appearance and support the overall business plan of increasing market rents and value. The new capital allows the Sponsor to expand their multi-family portfolio.

Transaction Description:

George Smith Partners successfully arranged $6,200,000 in non-recourse construction financing for a 100% preleased, 27,300 SF grocery-anchored shopping center in Southern California. Positioned in a strong retail corridor with high traffic counts, the Sponsor assembled a stellar mix of tenants, two of which were on ground-leases, and the other two requiring build-to-suits. With highly experienced Sponsorship, the Project was significantly de-risked with signed leases and approvals for a tentative parcel map. As a result, GSP was able to source competitive financing with exceptionally high leverage that co-align with the Sponsor’s investment plan and market outlook.

Transaction Description:

George Smith Partners successfully arranged $3,000,000 in acquisition financing for a 20,000 SF office/retail single story building in Sacramento. The Seller will occupy the Property paying no rent but will cover the operating expenses until the client provides 90 days’ notice to vacate. Centrally located in Midtown Sacramento, the Sponsor purchased the property for its land value, as they will entitle and assemble adjacent properties to be developed into a new ground-up multifamily project. Requiring a three-week closing timeline over the holiday season, George Smith Partners successfully sourced financing within the tight schedule.

Transaction Description:

George Smith Partners arranged $3,870,000 in cash-out permanent financing for the refinance of a 44-unit multifamily property located in Los Angeles, CA. GSP was able to time the refinance of the more expensive lender and lock the rate before the interest rate market started to move upwards. 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 10-year term, and the first 7 years being fixed at an incredibly low rate. The flexible prepayment structure is equal to 2% for the first 2 years, 1% for years 3 and 4, 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.

Transaction Description:

George Smith Partners successfully placed $6,800,000 in land financing for a 5-acre site to be developed into 42 single family detached homes in Los Angeles, CA. The Project had already received most entitlements for the infill, hilltop site located in an up-and-coming neighborhood. Furthermore, the Sponsor needed to pay off multiple loan balances and receive additional funding to complete engineering to receive a final map.
Backed by experienced Sponsorship with extremely well-located collateral, GSP sourced financing that funded at approval of tentative map with highly favorable leverage and a closing timeline of less than three weeks.

Transaction Description:

George Smith Partners arranged $9,425,000 in financing for the refinance of a stabilized 40-unit property located in Los Angeles, California. The loan is fixed at a rate of 3.25% for 10 years. The loan was a takeout of the acquisition loan that GSP closed five years earlier. Over the course of their ownership, the Sponsor performed a complete renovation of the property which included adding additional units. The loan provided a significant amount of cash out. It was closed with a regional bank and includes 10 years of Interest Only payments. Full term IO is rare for a bank loan and is more often found with CMBS loans, which have an expensive prepay structure. In this case, the bank’s declining prepay will allow the borrower flexibility to sell or refinance again depending on market conditions.

Transaction Description:

George Smith Partners sourced a $5,100,000 loan for the refinance of a stabilized 20-unit property in West Los Angeles. The loan provided 65% leverage and is fixed at a rate of 3.15% for 3 years. The Borrower had achieved their value-add business plan and was able to get significant cash out from the refinance. Net operating income was underwritten at the actual note rate, which resulted in higher proceeds compared to other lenders. The rate of 3.15% was very competitive for a loan that provided full proceeds of 65% LTV. The declining prepay will allow the Borrower flexibility to sell or refinance again depending on market conditions.

Transaction Description:

George Smith Partners secured three separate loans totaling $6,650,000 for the permanent financing of a portfolio of three properties/15 units in North Hollywood, CA. The Properties were acquired-entitled and developed by the Sponsor to include a combination of multifamily, single-family-detached with ADUs and JADUs. The Properties are located within proximity to each other and were in various stages of lease-up and stabilization at the time of the financing.

The recourse loan refinanced both equity and construction debt with perm financing with a total term of 10 years. The three separate loans represent 70% loan to stabilized value with a minimum 1.15:1.0 DSCR. The loan allows for open prepayment with yield maintenance.

The Sponsor’s business plan provides for much needed housing and increased density developed under the AB-68 Land Use Act for Accessory Dwelling Units passed by Governor Newsom and the State of California in October 2019. GSP was able to secure a lender that was comfortable with the collateral which required varying ownership structures including a land trust as required for JADUs.

Transaction Description:

George Smith Partners was engaged by the Sponsor to secure financing for six acres of raw land located in the Western States. The Sponsor plans on entitling the land to build out five, forty-unit multi-family buildings, with shared common areas in open air. The Sponsor also plans on building out a pad for a restaurant. Securing financing for unentitled raw land provided an exceptional challenge. Additionally, location, low loan amount, and lenders being more restricted due to COVID made it increasingly difficult to secure financing.

Thanks to GSP’s vast lender network and strong relationships, GSP was able to secure attractive financing for this Project. Despite the hurdles, GSP secured 55% LTC financing at 9.25% interest-only, with a 24-month term and a 12-month extension option. GSP’s ability to secure this financing in just 10 business days allowed the Sponsor to renegotiate the purchase price and get a hefty discount.
Today, most land lenders in the space are restricted to 40%-50% leverage. This high-leverage loan structure allows the Sponsor to start pre-development, including entitlements and pulling permits. The extension option gives flexibility to the Sponsor should they face delays in getting to entitlement due to COVID effects. There’s additional flexibility because there is no prepayment penalty. Thanks to our long-standing relationship with this debt fund, GSP was able to close this transaction in 14 days from receiving the request.

Transaction Description:

George Smith Partners sourced a $3,925,000 loan for the acquisition of a 21-unit property in West Los Angeles. The loan provided 65% leverage and is fixed at a rate of 3.15% for 3 years. The Lender gave the Borrower full credit for newly signed leases and was able to underwrite to the most recent month’s income. Net operating income was underwritten at the actual note rate, which resulted in higher proceeds compared to other lenders. The Property had some deferred maintenance, but the Lender was willing to have the borrowers complete it after closing. The 3-year declining prepay fit with the Borrower’s value-add business plan.

Transaction Description:

George Smith Partners arranged $4,800,000 in financing for the acquisition of a six-building, fully occupied industrial park in Pflugerville, Texas. The Sponsor, a repeat client, was selling another property in which the existing financing had a prepayment penalty. GSP leveraged its strong relationship with the lender of the Property being sold to successfully negotiate a reduction of the prepayment penalty by providing this Lender the opportunity to finance the purchase of the industrial park. The Lender offered a permanent, recourse loan at 3.68% fixed for the first five years based on the original property’s existing loan from 2019. The new loan term is ten years with a 30-year amortization.