FINfacts™ XXIV – No. 355 | February 8, 2023

Prime Rate 7.75%
1 Month LIBOR 4.58%
6 Month LIBOR 5.13%
5 Yr SOFR Swap 3.60%
10 Yr SOFR Swap 3.37%
5 Yr US Treasury 3.82%
10 Yr US Treasury 3.67%
30 Yr US Treasury 3.73%

$46,000,000 Refinance for 519-Units across Two Multifamily Properties; Houston, TX

Rate: 5.28% Fixed
Term: 3 Years
Amortization: 24 Months I/O
Prepayment: 3, 2, 1%

Transaction Description:

George Smith Partners secured $46,000,000 for the refinance of two multifamily properties located in Houston, Texas. Despite the properties being a few months away from stabilization, we secured a 3-year permanent loan instead of a higher-cost bridge loan to pull cash out to the Sponsor at a cheaper rate. We were able to negotiate a favorable prepayment penalty so the Sponsor could pull more capital out in 18 months.

The Sponsor’s original bridge loan that was completed in 2019 was priced at LIBOR + 4.75%, so with rates increasing, their all-in rate was over 9%. The Sponsor had completed 80% of the unit improvements and 100% of the exterior upgrades, but because of COVID, they are about 20% below the target NOI.

GSP utilized its relationships and experience to structure a loan that would be affordable, and most importantly fixed-rate in this increasing rate environment. Overall, the Sponsor was extremely happy with the refinance which allowed them both a fixed low rate and flexibility for the future.

Land Financing for Entitled Land; Los Angeles, CA

Rate: 7.75% Fixed
LTV: 50%
Term: 18 Months + Two 6-month Extension Options
Origination Fee: 0.75%
Prepayment Fee: None
Guaranty: Recourse

Transaction Description:

George Smith Partners secured a $5,100,000 land loan entitled for a 69-unit multifamily building slated to begin ground-up construction in late 2024. The borrower purchased the original parcel 17 years prior as a fully occupied 32-unit property; since then, the building has been vacated and demolished. To achieve full-term proceeds, the appraisal needed a land value above the original PSA, including the previous building collateral. GSP utilized a broad comp set of per-acre comps, leaning on footprint analysis instead of per-unit. Additionally, the lender’s due diligence concluded there was value creation through both the fully approved entitlements and the fact the Sponsor was able to achieve a condo tract map, giving them optionality for apartments or for-sale units.

Preferred Equity for Build-to-Rent Projects up to $40,000,000

George Smith Partners is currently working with a capital partner focused on Build-to-Rent (BTR) projects. They are actively seeking to issue Preferred Equity on ground-up construction projects up to 85% LTC with check sizes ranging from as little as $5,000,000 to over $40,000,000 per transaction. Geographical focus on primary and secondary US growth markets and qualifying assets include all flavors of build-to-rent, single-family for rent, townhomes, cottages, duplexes, and other residential products. Please reach out to us if you would like to find out more. 

More Hot Money ›

CRE Capital Markets Improving

Last week, Fed Chairman Powell acknowledged for the first time that rate hikes were having the desired effect of slowing inflation. The market believes that 1 or 2 more 25 basis point rate hikes are coming, and the Fed may pivot by the end of the year (although Powell has done everything to discourage that view). In the commercial real estate capital markets, we have observed that many lenders that were out of the market in Q4 2022 have resumed quoting new transactions. Lenders are now seeing an endpoint to the Fed rate hike cycle, which allows them to dial in on cap rates and property values. This is good news for commercial real estate as more competitive financing is available. Additionally, some recent data suggests that the Fed may successfully engineer a soft landing or that a recession will be short and mild. The biggest contrarian data point is simply employment. January’s jobs report showed payrolls increased by 517,000 and the unemployment rate is 3.4%, a 50-year low. Interest rates have dropped considerably, and the yield curve has flattened (though it is still inverted). CRE transactional activity is picking back up as the process of price discovery continues.

By Matt Kirisits, Vice President at George Smith Partners


If you have an inquiry regarding George Smith Partners’ commercial real estate financing, please contact your GSP representative or Jessica Mania, at (310) 867-2974 or


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