Rate: 3.50% Fixed for 5 years; 6 Month LIBOR + 2.50% thereafter
Term: 15 years
Amortization: 3 years IO; 30 Years thereafter
Prepayment Penalty: 3,2,1
LTV: 65%
DCR: 1.15
Origination Fees: Par

Transaction Description:
George Smith Partners secured $12,700,000 for the cash out refinance of a stabilized 60-unit historic mixed use property located in Downtown Los Angeles. Fixed for five years at 3.50%, the loan floats at 6 month LIBOR + 2.50% for the remaining 10-year term. There are three years of interest only payments and a 3,2,1 step down prepayment penalty. From the time due diligence was commenced, closing occurred in 40 days with no change to the original terms of the application.

Challenges:
Upon purchasing the property a decade ago, our Sponsors established a bifurcated organizational structure that allowed them to take advantage of a historical tax credit program. Although that benefit was exhausted, the complicated structure remained in place. The subject qualified for an ongoing property tax benefit under the Mills Act but required annual renewal. Most Capital Providers assumed a default rate position using Proposition 13 metrics that stressed the actual net cash flow. The large amount of multifamily units currently under construction in Downtown Los Angeles was also a concern for all underwriters.

Solution:
GSP identified a capital source that was comfortable with the numerous complexities and layers of the ownership structure. NOI was stressed with higher than actual property taxes although our Capital Provider agreed to underwrite down to a 1.15 DCR to allow for additional loan proceeds on their stressed cash flow. Presenting the property as workforce housing and not as the more expensive luxury housing currently coming on-line and under development, offers a competitive advantage over the newer product with higher finishes. The subject’s lower price point allows the property to operate in a separate, less competitive class than newer, more expensive construction.

Advisors

Matthew Kirisits Director

Rate: 5.1% Fixed
Term: 10-year Term
Amortization: 30 years
LTV: 70%
Guarantee: Non-Recourse

George Smith Partners arranged $8,800,000 for the refinance of two multi-tenant office buildings located in Baton Rouge, Louisiana. GSP identified a capital provider that would accommodate the existing credit challenges of the borrower. Initially the financing included a third property that added lease roll mitigation. When the third property was dropped, the loan was extended to a 30-year amortization and a reserve trigger was created to deal with potential roll-over risk from numerous month-to-month leases and leases with termination rights.

Rate: 3.97%
Term: 10 Year Fixed
Amortization: 30 Years
LTV: 57%
Prepayment: Step down
Guarantee: Non-Recourse

George Smith Partners secured a $3,500,000 permanent loan to refinance a 39‐unit garden style apartment complex located in eastern San Diego County, California. GSP sourced a capital provider that offered a flexible prepayment structure at a low rate. George Smith Partners worked with title to arrange a bond to protect our Sponsor when a non-reconveyed deed from 1989 appeared during due diligence. During the process of recording the bond and releasing the existing deed, funding was delayed and rates increased. Due to the strong relationship George Smith Partners has with the lender, they agreed to hold the 3.97% rate fixed for 10 years.

Advisors

Scott Meredith Managing Director & Principal