FINfacts™ XXIV – No. 291 | October 27, 2021

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.09%
6 Month LIBOR 0.18%
5 Yr Swap 1.26%
10 Yr Swap 1.57%
5 Yr US Treasury 1.14%
10 Yr US Treasury 1.54%
30 Yr US Treasury 1.96%

RECENT TRANSACTIONS
$21,700,000 Acquisition Bridge Loan for Multifamily Complex; Phoenix, AZ

Rate: 30-Day LIBOR + 3.20% (0.25% LIBOR Floor)
Term: 3 Years with Two 12-Month Extensions
Loan-to-Cost: 70% LTC
Origination Fee: 0.825%
Exit Fee: 1.00% (Waived if Refinanced with Same Lender)
Amortization: Interest-Only
Guaranty: Non-Recourse with Standard Carveouts

Transaction Description:

George Smith Partners secured $21,700,000 of bridge financing for the acquisition of a 136-unit multifamily complex in Phoenix, AZ. The Sponsor plans to increase the value of the asset with exterior improvements and interior upgrades as units turn organically. The Property is in the Uptown submarket of Phoenix, which is an up-and-coming area in the Valley that has seen tremendous rent growth in the last few years. Uniquely, there is a disproportionate amount of three-bedroom units compared to one- and two-bedroom units. There is a lack of three-bedroom inventory in the market that the Sponsor believes will help to increase demand at the Property. The non-recourse financing is priced at LIBOR+3.20% and is sized to 70% of total project cost. It carries a three-year initial term and has a yield maintenance period of 15 months.

Advisors

Steve Bram
Principal/Co-Founder
David R. Pascale, Jr.
Senior Vice President
Allison Higgins
Senior Vice President
Patrick O’Donnell
Vice President
Nick Rogers
Vice President

$11,300,000 Acquisition Bridge Loan for 76-Unit Multifamily Property, 70% LTC, 6.5% Stabilized Debt Yield; Salt Lake City, UT

Rate: Floating at LIBOR+3.15% with a 0.10% LIBOR floor
Term: 2+1+1+1
LTV: 71% in/67.5% stabilized
LTC: 70%
Debt Yield: 4.75% in/6.50% out
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured $11,300,000 in proceeds for the acquisition of a 76-unit multifamily property in a tertiary market outside of Salt Lake City, UT. The bridge loan is structured as $10,795,000 at close and $505,000 in future funding. The fully funded proceeds represent 70% LTC. The loan floats at a rate of LIBOR + 3.15% with a 0.10% floor on LIBOR.

GSP encountered several challenges when discussing the deal with capital providers. Some lenders quoted a spread as high as 3.65% over LIBOR. Other lenders quoted proceeds less than $10,000,000 because they require a 7.5% exit debt yield. Some lenders considered the market to be too small.

GSP was able to source a lender that provided very competitive pricing, an exit debt yield of only 6.50%, and an easy close process. The loan closed in about 60 days without any changes to the signed term sheet.

Advisors

Shahin Yazdi
Principal/Managing Director
Jonathan Lee
Principal/Managing Director
Matthew Kirisits
Vice President
Miles Musalman
Senior Vice President
Jarod King
Senior Vice President
Kyle Redmond
Assistant Vice President
Jessica Mania
Marketing and Business Development Associate

$5,500,000 1st Mortgage and $1,200,000 Pref Equity Placement for 26-unit Multifamily Value-Add Acquisition; San Diego, CA

Rate: 4% / 11.5%
Term: 24 months
Guaranty: Recourse
Leverage: 90% combined

Transaction Description:

George Smith Partners successfully placed high-leverage combined 1st and Pref Equity financing to 90% LTC for the acquisition of a 26-unit multifamily community in San Diego, CA. The 5-building 1940/1980’s Project will be repositioned and will require significant upgrades to all improvements more than $40,000/per unit. The Property is 100% occupied and the Borrower’s business plan includes “Cash for Keys” to remove all existing tenants, complete renovations and increase rents by an average of 100%. Stabilization is projected well within the 2-year term of the financing. The Project is part of a large portfolio of similar value-add multi-family repositions completed by the Sponsor in the San Diego area.

Advisors

Alina Mardesich
Senior Vice President

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HOT MONEY
JV Equity Construction, 100% LTC

George Smith Partners identified an equity provider seeking to invest in pre-leased, fully entitled retail and industrial construction projects nationwide. With equity contributions up to $5,000,000 and the ability to go up to 100% of cost, this equity provider has a hold period of 12-24 months.

More Hot Money ›

If you have an inquiry regarding George Smith Partners’ commercial real estate financing, please contact your GSP representative or Todd August, Chief Operating Officer at (310) 867-2995 or taugust@gspartners.com


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