Rate: 1-Month SOFR + 3.50%
Term: 15 Years
Amortization: Interest Only for First 4 Years, then 30 Year Amortization
LTC: 61%
LTV: 55%
Guaranty: Full Recourse with Burn-Off to 20% at CofO

Transaction Description:

George Smith Partners successfully arranged $85,800,000 in construction financing for a 10-building, 372-unit multifamily development in Sacramento, CA. The project is located in an opportunity zone of Sacramento and is phase A of a 2,200-unit, transit-oriented development. Breaking ground in Q2 2023, this phase of the development will consist of studios, one, two, and three-bedroom apartments with best-in-class amenities, including a pool, fitness center, playground, and clubhouse.

The Sponsor engaged GSP pre-pandemic. A previous developer had acquired the land in the early 2000s and after completing 95% of the site’s infrastructure, subsequently filed for bankruptcy protection in 2017. The site was given back to the lender in early 2019 and was awarded to the Sponsor by the urging of the City of Sacramento because of their local reputation related to successful projects in the downtown sub-market. Our Sponsor originally intended to begin construction in early 2020 but decided to pivot layout designs to match the new needs of its renters due to the pandemic.

After an extensive capital marketing process, GSP was able to secure financing to the Sponsor’s parameters with the upside of not having a rate cap requirement. The financing structure is also unique in that it transitions from an interest-only period to a traditional permanent fully amortizing financing automatically after month 48. Early prepayment is available even during the construction period and then steps down until a fully open prepay year 4 after CofO.