Rate: WSJ PRIME + 0.375% (4.650% Floor Rate)
Term: 18 Months plus Two, 3-Month Extension Options
Amortization: Interest Only
LTC: 79%
Prepayment: Open Prepayment
Guaranty: Full Recourse
Lender Fee: 0.625%

Transaction Description:

George Smith Partners secured $16,500,000 of senior construction financing for the development of a 57-unit multifamily building in Toluca Lake, CA. The Sponsor purchased three contiguous lots with this development in mind. The combined land area of the lots allowed them to increase the density of the single-building Project.

The uncertainty brought on by the pandemic had lenders heavily scrutinizing projected rental rates at completion. GSP secured a capital source that understood the long-term growth that the submarket should experience post-pandemic. The strong financial position of the Sponsor, along with the lengthy track record of the general contractor, helped to push the leverage up to 79% LTC. The financing allows the Sponsor to provide the area with quality rental housing, which is sorely needed in the undersupplied submarket.

The recourse financing is priced at WSJ PRIME + 0.375% with a floor rate of 4.650%. The 18-month term is coupled with a 0.625% origination fee and is open to prepayment. There is also the ability to roll the construction loan into permanent financing at the option of the Sponsor. The rate cannot be locked until building stabilization but would be priced at 2.80% for a 5-year term at today’s rates.

Advisors

Steve Bram Managing Director & Principal / GSP Co-Founder

David R. Pascale, Jr. Senior Vice President

Allison Higgins Senior Vice President

Nick Rogers Vice President

Rate: 12.25%
Fee: 1% origination fee
Term: 36 months with two, 12-month extension options
Amortization: I/O
Prepayment: Open in whole or in part at any time with a two-year minimum yield
Guarantee: None

Transaction Description:

George Smith Partners successfully placed $7,500,000 in preferred equity with last dollar exposure of 83% loan-to-cost ($222,000/unit) for the ground-up construction of a 205-unit, class-A apartment project in an irreplaceable location within the Central West End submarket of Saint Louis, Missouri. The preferred equity investment priced at 12.25% was sourced during the COVID-19 pandemic through an east coast real estate investment management company. GSP worked with the Sponsor to tailor a capitalization that increased leverage to a reasonable level above the 70% loan-to-cost senior loan, reduced overall project costs through minimizing the preferred return current pay portion, mitigated sponsorship risk through negotiated performance hurdles, and was highly accretive to common equity returns. Although the preferred equity investment was made during height of COVID-19 safer-at-home orders, the investor’s concerns were mitigated through the institutional sponsor’s local experience, market, and submarket performance during the pandemic, and strong project fundamentals.

Rate: 3.25%
Term: 30 years term, fixed for first 5 years, resets every 5 years after for the term
LTV: 70%
DCR: 1.20
Prepayment: 1.75% for first 3 years, 1% thereafter

Transaction Description:

George Smith Partners arranged $1,036,000 in permanent financing for the acquisition of a stabilized 9-unit multifamily property located in Los Angeles, CA. Simultaneously, GSP was helping the Sponsor close on a few multifamily refinances within their portfolio to pull cash out and use as equity for the Subject Property. Although the Property is currently 100% occupied, rents were below market because the Seller self-managed and the Property needs exterior and interior improvements. The Sponsor wanted to lock-in a low rate to allow for additional cashflow to be used towards building upgrades. Despite being on a strict closing deadline, GSP was able to identify a bank lender who could close within 45 days. The loan represents 70% of the purchase price and was structured with the first 5 years being fixed at 3.25%, while resetting every 5 years for the rest of the 30-year term. The loan structure also allows for flexible prepayment with the first 3 years being equal to 1.75% and 1% thereafter.