Rate: 5.75% Fixed
Term: 1 Year
Amortization: Interest Only
Extensions: Two 6-Month Options
Recourse: Non-recourse
Prepayment: Open

Transaction Description:

George Smith Partners secured a $23,500,000 bridge loan for a brand-new mixed-use project located in Santa Clarita, CA. The non-recourse loan will be utilized to refinance the Project’s construction debt and capitalize outstanding TI/LC’s. The loan represents 80% loan to value and is structured with a 1-year initial term with interest only payments. The loan allows for open prepayment and carries two 6-month extension options.

The loan is secured by a recently constructed mixed-use development comprised of 47 Class-A apartment units situated above 20,918 SF of street level retail. This transformative project is a focal point for the continued modernization of the City of Newhall. The Project’s design is indicative of the times where enhancements to public transit connects renters in search of larger amenity filled accommodations with the further suburban pockets of the greater LA Metro. The Subject is shadow anchored by the highly anticipated seven-screen Laemmle Theater and a newly built 372 stall public parking structure which serves the popular Downtown Newhall district.

The loan was placed with many COVID related shutdowns in effect. GSP was able to secure a lender that underwrote to the stabilized NOI, closed with no debt service reserve, no recourse, and funded while several retail tenants were completing their buildouts. GSP selected a lender than could move quickly. The Lender did not require an appraisal and funded within three weeks after issuing an application.

Advisors

Matthew Kirisits Director

Construction Loan:

Rate: Prime plus 1% with 5% floor
Term: 18 Months
LTC: 68%
LTV: 65%

Mini-perm Loan:

Rate: CMT + 2.25% with 3.75% floor
Term: 5 Years
Amortization: 30 years
Prepayment: 5, 4, 3, 2, 1 open

Transaction Description:
George Smith Partners placed the $8,152,500 bridge-to-mini perm loan for the conversion of an existing 12-unit multi-family community into a 17-unit 44-bed co-living community. The 68% LTC bridge loan converts to a 5-year mini-perm loan fixed at CMT + 2.5% with a 3.75% floor.

Challenge/Solution:
The Project came to GSP half-way through construction and was being funded by a lender that had filed bankruptcy with proceeds that were insufficient to complete the new business plan. GSP put the loan under application pre-COVID with a new business plan that included (as a condition in closing) approvals for a 4th floor penthouse/useable roof top level. While in application, the construction and the penthouse level approval process came to a halt due to COVID causing stress on both the existing loan (nearing maturity) as well as the new loan underwriting. The challenges associated with co-living as a new asset class resulted in additional scrutinization from the new lender as well as the appraisal which had a negative impact on value. GSP was able to resolve the valuation issues by successfully arguing the merits of the Project as well as successfully negotiating a waiver of the exit fee on the previous loan which resulted in zero impact to the loan proceeds and the Borrower’s out of pocket cash required at closing.