LTC: 80%
Term: 2 years

Transaction Description:

George Smith Partners arranged $68,750,000 in non-recourse, senior construction financing for the ground-up development of a 270-unit, 885-bed student housing complex in Merced, CA. The Project is uniquely positioned to serve the growing enrollment of both UC Merced and Merced City College and is the only planned private student housing project in Merced. The high leverage loan will provide 80% of total project cost and significant post-closing flexibility with a capital provider who will act more like a partner than a lender from closing thru development and payoff. Challenges to the transaction included: The Project is located near

University of California, Merced where enrollment is relatively low compared to other UCs. Many capital providers want to be near larger, more established universities. The Project is in a tertiary market. Many capital providers want to be in more densely populated, urban markets. Part of the equity included EB-5 investments. Many capital providers perceive this type of investor as less desirable compared to standard, limited partner investors.

Mitigating factors: While obtaining building permits is next to impossible due to its location at the border of the local city and county municipalities, the Sponsor has already obtained their building permits. There is a limited supply of student housing which is not expected to keep up with demand due to the school’s projected future enrollment. Lastly, the Sponsorship team is well positioned because of its experience and personnel to manage the Project through to completion and stabilization.

GSP was able to arrange a high leverage construction debt solution from a capital partner that understood why the Sponsor’s and Project’s strengths mitigated the challenges. Priced off LIBOR, the two-year loan was sized to 80% of total development costs. There is no repayment guarantee. A warm-body signature was required for the completion and carve-out guarantees.

Advisors

Scott Meredith Managing Director & Principal

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

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.

Advisors

Matthew Kirisits Director

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%

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.