Rate: LIBOR + 400
Term: Two Years + 1 Six Month Option
LTC: 70%
LTV: 60%
Guaranty: Recourse

Transaction Description:

George Smith Partners placed a $4,900,000 construction loan for a shuttered assisted living facility to be converted to a 42 bed co-living facility targeted toward young working professionals. As rental housing prices continue their rise many developers are addressing affordability with smaller units that offer common living amenities to maintain lower costs. The co-living concept of a singular bed/unit is popular in New York, Seattle, San Francisco and has a strong foot-hold in the Hollywood market of Los Angeles. Located adjacent to Downtown Los Angeles, the Subject Property proved challenging to comp as it is not located in Hollywood and co-living is a new concept in this market. Partially or fully furnished bedroom units are supported by a central communal kitchen. Some units will share a bath. Utilities are provided, including heat, cable and WiFi allowing residents to move-in with simplicity and ease. Social connections are encouraged through property gatherings and a movie room. A business center will also be offered to residents. This is the first co-living development for this sponsorship team. Priced at L+400, the two-year term was constrained by 70% of capitalization and 60% of “As-Stabilized” value. There is a six month option to extend for an additional 50 basis points.

Advisors

Matthew Kirisits Director

Rate: 4.9%
Term: Fixed for 7 Years
Amortization: Full Term Interest only
LTV: 70%
Prepayment: 4,3,2,1
Guaranty: Non-Recourse
Lender Fee: None

Transaction Description:

George Smith Partners financed the purchase of a mixed-use retail/office building in Los Angeles, California, last year, using a 1031 exchange. GSP used our vast experience with tax differed exchanges to arrange a cash-out financing with a seven-year fixed rate and is full term interest-only. The cash- out was used to purchase a new property and the Sponsor was able to reinvest their entire exchange in the purchase to differ any taxable gain. The new refinance allowed the Sponsor to pull cash out from the property tax free and use that cash to grow his real estate portfolio. While the cap rate at purchase was very low, the Property’s value will continue to increase due to its location in a great Los Angeles neighborhood. In a traditional loan, the Borrower would be limited on the loan size and cash flow but structuring the full term interest-only loan allowed the Sponsor to achieve positive cashflow and acquire the new asset without issue.