Terms Confidential

Transaction Description:

George Smith Partners successfully advised on $18,600,000 in construction financing for a 109-unit build-to-rent and Opportunity Zone transaction in Phoenix, AZ. This follows on the successful $7,100,000 JV equity financing GSP advised on. This single family for rent community will offer one, two and three-bedroom detached homes with upscale furnishings and private yards for most units. The Sponsor has five more transactions under contract. This was the first transaction for our Sponsor who is optimistic about the popularity and emerging trend of the build-to-rent niche.

Advisors

Ed Steffelin Managing Director, GSP; President, AXCS Investments

Evan Kinne Managing Director, GSP; CEO, AXCS Capital

Jordan Lipton Vice President

Rate: 3.30% fixed for 5 years
Term: 30 years
Amortization: 3 years interest-only followed by 30-year amortization
Prepayment Penalty: 3,1,0
LTV: 65%
DCR: 1.20x
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured $6,669,200 in proceeds for the acquisition of two properties comprising 76 units in Portland, OR. The loans are fixed at a rate of 3.30% for 5 years, with 3 years of interest-only payments. The loans are non-recourse and have no payment reserves.

Several challenges were encountered when discussing the transaction with capital providers. Most multifamily loans in Portland are closed through Fannie Mae and Freddie Mac, but these lenders quoted a high rate due to the small size of the market. As a result, GSP had to focus on non-recourse bank lenders, of which there are only a small number active in the market. GSP was able to find a bank with a strong local presence that provided the highest leverage option at a very competitive rate. The pricing was equal to that of multifamily loans in Southern California. The acquisition loan closed in about 60 days.

Advisors

Matthew Kirisits Director

Rate: Prime + 0.25% w/ floor of 3.50%
Term: 5 Year, First 12 Months I/O
LTV: 70%
DCR: 1.20
Prepayment: No Prepayment

Transaction Description:

George Smith Partners arranged $1,495,000 in permanent financing for the acquisition of a stabilized 4-unit multifamily property located in the Beverly Grove area of Los Angeles, CA. GSP was simultaneously helping the Sponsor close on a few multifamily refinances within their portfolio to pull cash out and use as equity for the acquisition of this Property. Although the occupancy at purchase was 100%, rents were below market because the Seller self-managed the Property and there was a need for exterior and interior improvements. The Sponsor wanted to lock in a low rate to allow for more cash flow to be used towards their value-add strategy. The loan represents 70% of the purchase price and was structured as a floating rate 5-year term, with 12 months interest-only. The interest-only period allows for more property cash flow to be used towards building improvements. The loan has no prepayment penalty, allowing for additional flexibility. Despite being on a strict closing deadline, GSP was able to identify a bank lender who could close within 35 days.