All terms Confidential

Transaction Description:

George Smith Partners arranged $23,750,000 in bridge financing for the refinance of a 229-key, full-service hotel located in Downtown Minneapolis, Minnesota. The Hilton branded hotel is proximal to major demand drivers and includes a partnership with a Fortune 500 company, with headquarters across the street from the asset. The Property, built in 1986, underwent a PIP in 2017. The bridge facility allowed the Sponsor to pay off existing debt, which had an approaching maturity date in addition to completing the ramp-up period, forecasted to finish in 2020.

GSP conducted a full marketing process and was able to leverage market interest to secure the most competitive terms available by focusing attention on the superior location as well as the Sponsor’s familiarity and confidence in the market. The Sponsor developed, owns, and operates a 290-key hotel less than a mile for the Subject Property. The selected Capital Provider structured around the current market softness, recognizing the strength of the Sponsor and their ability to successfully operate hospitality properties.

Advisors

Evan Kinne Managing Director, GSP; CEO, AXCS Capital

Rate: 4 loans with rates between 3.21% and 3.40%
Term: 7 years fixed
Amortization: Full-Term Interest Only
LTV: 55%
DCR: 1.40x
Prepayment Penalty: Yield Maintenance
Lender fee: 0% origination fee and all third-party costs waived
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners placed the $10,800,000 refinance of four stabilized Los Angeles multifamily properties totaling 86 units. The interest rates varied between 3.21% and 3.40%, depending on the affordability of the units at each property. The loans have full-term interest only payments.

The Sponsor completed renovation budgets which were used to separate out capital expenditures from recurring R&M expenses. This adjustment helped to provide support for the Lender’s underwritten cash flow and property values. Two of the Properties moved into a lower LTV tier which resulted in an interest rate reduction post-application. One of the four Properties recently achieved stabilization, which meant the Property only had one month of operating history. GSP emphasized the strength of the Sponsor and the LA market and the Lender was able to use a “T-1” income statement. The Lender waived all charges for closing costs and third-party reports, which typically cost more than $5,000 per transaction. This resulted in savings of more than $20,000 across the whole portfolio. The Property Condition Reports showed some minor deferred maintenance items, but the Lender allowed most of them to be resolved post-closing.

Advisors

Matthew Kirisits Director

Rate: 4.16% Fixed
Term: 7/25; 9 months IO
LTV: 46.3%

Transaction Description:
George Smith Partners secured a $2,400,000 recourse loan for the refinancing of a multi-tenant retail center, “The Olivewood Shopping Center” in Murrieta, CA. The Sponsor purchased six parcels totaling four acres in 2010. The construction of five retail buildings was completed in 2013 and the Sponsor sold three buildings prior to the financing. One remaining building is 100% leased to four retail tenants; the other building and adjacent lot have been ground leased to a carwash tenant. There was no debt on the Property and loan proceeds were used to buy out the ownership interest of the other partners.

Challenges:
Over half of the income for the Property was attributed to a carwash ground lease which is a special purpose use that some lenders are uncomfortable financing. While the ground lease was signed at loan closing, the rent would not commence until mid-2020. Also, in place rents did not support the full loan request.

Solution:
A portion of the loan was funded at closing and sized to in-place rents with a future funding occurring when the carwash takes occupancy and begins paying rent. The Sponsor will not pay interest on the future funded portion of the loan until it is disbursed.

Advisors

Scott Meredith Managing Director & Principal