Rate: 3.85% Fixed
Term: 5 Years
Amortization: 5 Years Interest-Only
LTV: 65%
DSCR: 1.20x
Prepayment: 3,1,0.5
Loan Fee: Par

Transaction Description:

George Smith Partners placed a $9,900,000 loan for the refinance of a 41-unit apartment portfolio in Los Angeles, CA. The loan is fixed at 3.85% for five years with full term interest-only payments. The term sheet was signed shortly before the COVID-19 crisis and ensuing economic volatility. Despite these conditions, the original rate and leverage were kept intact.

GSP previously sourced the acquisition bridge financing two years ago. Although the Sponsor successfully completed their value-add business plan, a number of unique challenges were encountered when closing the refinance. Shortly after the Borrower signed the term sheet, the Lender put their entire pipeline of loans on hold due to the COVID-19 pandemic. When they resumed processing the loan, they initially offered a substantial retrade. GSP was able to leverage our longstanding relationship with the Lender to maintain terms very close to the original application. The Lender also agreed to waive their loan processing fee and the cost of all third party reports. Some of the units at the Property were extremely large and the Sponsor had modified them to create a den space. As a result, a number of these renovated units were able to achieve higher rents, but it was difficult to find market comparable data. GSP obtained the necessary data and the
Lender was able to support their underwritten net cash flow.

The Lender reserved 12 months of interest only payments at loan closing, a standard condition in today’s market. However, the reserve will be used to make the loan payments and released after 6 months if certain financial conditions are met.

Advisors

Matthew Kirisits Director

Rate: 5.9%
Term: 12 Months
LTV: 24.5%
Amortization: Interest-Only
Guarantee: Non-Recourse

Transaction Description:

George Smith Partners arranged $4,850,000 in non-recourse bridge debt to refinance the existing loan on a 27,343-square-foot development lot in the Chinatown district of Los Angeles, CA. The Sponsor acquired the site two years ago and has since secured entitlements for its proposed mixed-use development. Demolition of a vacant retail center is needed to conduct ground testing and ready the Project for vertical construction. The current Lender, however, would not allow the demolition.

GSP targeted a capital provider that was comfortable with the proposed project, foreign sponsorship, and current land value. The existing loan, which had also been sourced by GSP, was facing near-term maturity when GSP successfully engaged a lender that could execute within a tight timeframe. The non-recourse facility is sized to 24.5% LTV and fixed at 5.9% on an interest-only basis with an initial term of 12 months.