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.

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 Managing Director & Principal / GSP Co-Founder

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.