FINfacts™ XXIV – No. 295 | November 23, 2021

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.09%
6 Month LIBOR 0.24%
5 Yr Swap 1.46%
10 Yr Swap 1.73%
5 Yr US Treasury 1.34%
10 Yr US Treasury 1.68%
30 Yr US Treasury 2.01%

INTRODUCTION

With appreciation for your business and your loyalty throughout the year.

Best wishes for a Happy Thanksgiving!

The George Smith Partners Team


RECENT TRANSACTIONS
$39,000,000 Construction Debt and Advised on $20,000,000 LP Equity for Seven-Story, 137-Unit Mixed-Use Development; Midtown Sacramento, CA

Rate: Daily Simple SOFR + 270 (2.79%)
Guaranty: Non-recourse
Amortization: Interest Only
LTV: 65%

Transaction Description:

George Smith Partners successfully placed $39,000,000 in construction debt and advised on $20,000,000 Limited Partner equity for the ground up construction of 137-unit mixed-use development with ground floor retail in Midtown Sacramento, CA. The Project is the second asset that GSP has structured both debt and equity for a sequence of planned multifamily developments. Pricing for the non-recourse construction loan tightened from the first transaction six months ago.

The site will be developed into a seven-story building consisting of six levels of rental units, parking, and ground floor retail. Situated in Midtown, Sacramento’s trendiest neighborhood, the Property is walking distance to restaurants, shops and is conveniently positioned near the rail station and a local highway. The area has increasingly attracted significant public and private investment due to its proximity to employment hubs and lifestyle amenities.

The capital markets were weary of ongoing supply chain and increasing construction costs. GSP worked with the Lender and equity investor to structure contingency levels that were acceptable to both. The Sponsor was provided with competitive, non-recourse construction loan and an investor that could grow with their future development needs.

Advisors

Gary E. Mozer
Principal/Co-Founder
Portrait Robert Horton
Senior Vice President
Portrait Dorian Aftalion
Vice President
Tommy Adelson
Vice President
Benjamin Shofet
Analyst

$13,469,000 Refinance of 61-Unit “Broken Condo”, 6.5% Debt Yield, 7 Years Interest-Only; Oceanside, CA

Rate: 3.52% Fixed
Term: 7 Years
Interest-Only: 7 Years
LTV: 60%
Debt Yield: 6.5%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners secured a $13,469,000 first mortgage for a 61-unit multifamily “broken-condominium” located in Oceanside, CA. The 61 garden style apartment units are a part of a larger 72-unit project which was originally built in 1972 and was mapped for condominiums in the mid-2000’s. Each of the 72 units were then upgraded and listed for sale to individual buyers in 2006. The original developer sold 11 units, the last of which closed escrow in early 2008.

Due to housing market conditions, the remaining 61 units were converted back to for-rent apartments and purchased by the current Sponsor in 2008 (after extensive renovation in 2006). Since the acquisition, the Sponsor has kept occupancy rates at or above market levels (currently 100% occupied) and has maintained the Property with necessary capital improvements over the years. With strong property management, the Sponsor has been able to keep tenant turnover at a minimum and as a result stabilized the Property cash flows. The non-recourse financing is fixed at a 3.52%, full term interest-only, 7-year term. The 60% LTV financing provided a return of all initial equity invested.

Advisors

Gary M. Tenzer
Principal/Co-Founder
Dasha Savchenko
Analyst

3.15% Fixed Rate, Interest-Only Cash-Out Refinance for Owner-User Office Building; Beverly Hills, CA

Rate: 3.15% Fixed
Loan Amount: $6,650,000
Term: 10 Years
Prepayment: 5-4-3-2-1

Transaction Description:

George Smith Partners arranged $6,650,000 in owner-user financing for a multi-tenant, 50% owner-user office property located in Beverly Hills, CA. The Sponsor approached GSP to help assist with taking equity out of the Property to reinvest in their company. The Sponsor requested a low interest rate and $2,500,000 cash out. The multi-tenant component, along with a decreased appetite for office lending due to “Work-from-Home”, made it difficult for capital sources to get comfortable with the cash-out and interest-only request. GSP had to identify a capital source that could provide competitive terms, and a certainty of execution. Being in the market daily, GSP was able to successfully structure a first trust deed from a conventional lender and provided the Sponsor with a below-market interest rate of 3.15% fixed, and interest-only payments for the first 5 years of the 10-year term. Thanks to the low-rate and interest-only component, the Sponsor was able lower their debt service from their previous loan, while simultaneously securing over $2.,500,000 in cash-out.

Advisors

Bryan Shaffer
Principal/Managing Director
Ruben Bohbot
Vice President
Michael Smilove
Assistant Vice President

SPEAKERS CORNER

We are excited to be in-person at the IMN Single Family Rental Forum (West) November 30 – December 2nd in Scottsdale, Arizona.

Zack Streit will be participating on the panel, “Financing The BFR Lifecycle, Land, Pre-Development & Construction Financing at 9:10 am on Wednesday, December 1st. Malcolm Davies will be participating on the panel, “Evaluating The Private Equity Single Family Rental Niche: What Is In Your Buy Box for the BTR, Fix & Flip” on Thursday, December 2nd at 8:30 am.

More information about the conference can be found here: https://www.imn.org/real-estate/conference/Single-Family-Rental-West/

 


Picture
HOT MONEY
Participating Construction Program, 90% – 100% LTC

George Smith Partners is working with a capital provider offering $10,000,000 – $50,000,000 for both existing cash flowing and ground up construction properties nationwide. Rates are 4% and the lender offers a participation in net cash flow (if any) and profit at exit. Recourse is available through construction burning down to 50% at CofO, and then non-recourse when a 1.0x dscr is hit on an interest-only basis.

More Hot Money ›

WWW.GSPARTNERS.COM

Constellation Place
10250 Constellation Blvd., Ste. 2700
Los Angeles, CA 90067
Office 310.557.8336
Fax 310.557.1276
Email finfacts@finfacts.net
© 1999 - 2021 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
Hi, just a reminder that you're receiving this email because you have expressed an interest in George Smith Partners. Don't forget to add finfacts@finfacts.net to your address book so we'll be sure to land in your inbox!