$44,500,000 Heavy Bridge Construction Financing to Add Several Uses to an Existing Office and Warehouse; Secondary Market; San Luis Obispo, CA
April 19, 2021
George Smith Partners arranged $44,500,000 for heavy bridge financing in San Louis Obispo, CA to recapitalize and fund construction for additional uses on an existing asset. The completed Project will include five uses including multifamily, warehouse, office, self-storage, and a brewery. This is among the largest private projects actively in development in the local market.
The Sponsor has been very creative in obtaining the highest and best use for the asset in a supply constrained market. Despite challenges facing construction projects in today’s volatile commodity market, GSP was able to secure a capital provider to structure high leverage supported by the strong market and underwriting.
April 24, 2019
George Smith Partners is working with a national lender offering preferred equity programs for all property types ranging from $15,000,000 to $50,000,000 in primary and secondary markets. With the ability to advance 90% of purchase price for Mezzanine and Preferred Equity, pricing starts at LIBOR + 600 with floating rates up to five years. The lender offers a flexible prepayment structure and future funding.
April 10, 2019
George Smith Partners is working with a national capital provider funding non-recourse bridge and mezzanine debt to 85% of value. The Lender offers flexible loan structures with interest only terms up to 6 years (inclusive of extension options) for transactions from $10,000,000 to $75,000,000. Floating rate pricing starts at LIBOR + 275. The Lender has a strong appetite for Multifamily, Office, Industrial, Retail and Hospitality properties located in primary, secondary and tertiary markets.
September 25, 2018
Shannon Bradley celebrates her 26 year anniversary at GSP. Shannon has so many great memories it is hard to pin point one in particular. GSP is like home to Shannon having worked for the firm for over half of her life. Shannon says, “George would be proud to know that the same sense of family he brought to the firm still exists today”.
July 13, 2018
PCBC 2018 wrapped in San Francisco Friday before the July 4th week. Overall sentiment from homebuilders was bullish, while multi-family operators saw market headwinds and existential threats. Some topic overviews and takeaways included 1) economic and market outlook 2) the components of equity today 3) rent control. On the economic front, developers across the board witnessed price appreciation but slower growth on the wage side, which is starting to cap home prices and limit rents. Prices have reached peak affordability in most major MSA’s. Millennials are starting to buy small condos, to the extent they are available, as a hedge against rising rents. Interestingly land development is outpacing all investments right now, and has become the most desired asset class for several funds. From the equity fund perspective, fundraising in the United States is at an all-time high. Available capital for investment, including non-real estate classes, has exceeded $2 Trillion domestically. What real estate fund managers are receiving money to deploy? Those that have an above average track records and favorable fund terms. Number one concern of those fund managers is valuations and deal flow. More is being returned to LP’s because of record levels of available cash but deal flow remains low. Of the equity groups who are actively deploying LP capital, market perception is mixed. According to a recent Prequin survey, 50% of equity fund managers think real estate is at its peak. The main driver of fear is no longer a global recession, but the rise in interest rates and the US domestic political environment. Return expectations have also fallen. Where expectations were a 20% IRR in 2015, today 17% is becoming the new norm. LP Groups are actively seeking Sponsors who have focus and control over subs. Focus should be on one project or a single thesis. If an opportunity doesn’t fit a particular equity group, don’t ask about second and third deal in your pipeline. Sponsors who do this appear not focused and passionate about success. On the flip side, if a first project is a success then some LP’s are funding zero co-invest with a promote for repeat clients. Because labor is not showing up on jobs and thereby delaying projects, LP equity is looking for local expertise and influence over sub-contractors. Delays from labor not showing up on site push down yields, and Sponsors who can mitigate that risk are placed in a premium level. Lastly, new rent control legislation cast a looming shadow over the conference for developers. The California initiatives to repeal CostaHawkins was viewed as an existential threat to the multi-family real estate industry in California, more than mortgage rates, labor costs and entitlement challenges. If successful it will allow rent caps on property in perpetuity which will cap upside for new developments. It is possible the to be named measure went too far as it also puts single family homes under this new ordinance as well. The Achilles Heel could be forcing Mom and Pop owners of a single family home to cap their upside. On July 2, 2018 the ballot initiative gets a name/number and will be on ballot this Fall. Some final random musings: Driverless vehicles are rapidly changing parking for projects, but driverless trucks could displace 6 million workers by 2024. According to a survey completed by 278,000 renters in 44 states, the most important amenities tenants want in their units are: #1 in-unit washer/dryer, #2 dishwasher, #3 cell phone reception. When is the recession going to hit?!?!?! Happy to report that for the third straight year, the PCBC economist stated a recession isn’t expected for another 36 months.
April 23, 2018
March 26, 2018
About 30 years ago, as a well-known real estate finance expert, George Smith was asked by an at-torney to serve as an expert witness in a real estate litigation; this lead to several more assignments in the next few years. George didn’t enjoy doing expert work and asked his young associate and fu-ture co-founder of GSP, Gary Tenzer, to help him prepare for his testimony. Over time, George de-cided not to take any new assignments and turned them all over to Gary. Gary enjoys arranging financing for his clients; but, unlike George, he also enjoys the intellectual challenge and pressures of being an expert witness in complex commercial real estate related litiga-tion matters. Over the past 25 years, Gary Tenzer has developed a national reputation as an expert witness in real estate finance litigation.
Gary has served as an expert witness in over 300 litigation matters and testified in over 100 trials in both Federal and State courts, nationwide. He has worked as an expert with some of the most well-known law firms in the country and with some very major litigations including serving as the interest rate expert on behalf of General Growth Properties (“GGP”) in their multi-property bankruptcy in 2009, reportedly the largest real estate Chapter 11 in history. Other well-known litigation clients have included Carmel Partners, Hard Rock Hotels, Simon Property Company and financial institutions such as J. P. Morgan, US Bancorp and Wells Fargo Bank. In addition to bankruptcy testimony, Tenzer has testified on disputes between borrowers and lenders, buyers and sellers, principals and investors, financial feasibility as well as a myriad of other real estate transactional and finance issues.
In future editions of “Finfacts”, we will include some feature articles from Gary sharing his insights into real estate litigation, from a non-lawyer’s point of view.
For further information about Gary Tenzer’s expert witness practice and to review his Curriculum Vitae, click here.
November 1, 2017
Shahin Yazdi, Principal & Managing Director has been nominated by Real Estate Forum for, “Fifty under 40” 2017. Shahin is the youngest Principal and Managing Director in George Smith Partners’ 25-year history. In just 10 years with the firm, Yazdi has arranged more than $1 billion in financing for commercial real estate transactions throughout the United States. Click here to read the full article.
October 11, 2017
George Smith Partners identified a national capital provider funding fixed or LIBOR-based floating rate loans from $3,000,000 to $75,000,000, starting at 4.5%. This lender will finance Multifamily, Retail, Office, Industrial, Self-Storage, Mobile Home Parks, and Hospitality properties located in primary and secondary markets nationwide. 30 year amortization and terms up to 10 years on a non-recourse basis up to 85% LTV.
September 20, 2017
GSP is originating debt with a balance sheet lender specializing in heavy bridge loans from $20,000,000 to $100,000,0000 to 65% LTV. Recent tombstones include vacant buildings and a fractured condo. Ground-up construction financing is also available on a non-recourse basis to 60% of cost. Pref-equity may be layered on to 75% of total capitalization. All structures are priced from LIBOR + 425 and 1 point. There is no exit fee for the three year term.
September 13, 2017
George Smith Partners has announced two new additions to its team, Allison Weiss as Vice President/Director of Platform Development and Dana Light as the Vice President of Research/Marketing. Both Weiss and Light will work to increase the velocity of the firm’s ongoing growth and expansion, according to Principals and Co-Managing Directors Jonathan Lee and Shahin Yazdi. In her newly created role, Weiss will be responsible for recruitment and hiring on a national basis. In her new position, Light will focus on researching responsible lenders and lending programs for George Smith Partners. This work will support the firm in upholding its exemplary reputation, which was established by George Smith when he founded the company 25 years ago.
June 14, 2017
GSP is originating non-recourse, construction, bridge and quick-close financing opportunities from $5,000,000 to $25,000,000 to 85% LTC and 75% LTV. Acquisition and pre-development, transitional use, and adaptive reuse will also be considered. Pricing starts at LIBOR plus 800 with current pay and accrual structures. Loans can close in as little as two weeks. All product types including entitled land in coastal or infill areas will be considered. The lender is active in major markets west of Denver, CO.
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