| Transaction of the Week |  | |  | | Transaction Description: | | $4,270,000 Cash-Out Refinance of a 122 Unit SRO Apartment Bryan Shaffer successfully placed the $4,270,000 refinance of a stabilized 122 Unit Single Resident Occupant (SRO) apartment building in the Central Business District of Los Angeles. The new financing allowed for a return of equity to the borrower. The 10-year term loan was priced at 5.50% fixed with a 30-year amortization schedule and a step-down prepayment penalty. |
Challenge: Prior to engaging George Smith Partners, the borrower attempted to finance this asset with multiple capital providers, but was unsuccessful due to its SRO use. SROs are essentially studio apartments with a sink and kitchenette, but provide residents with shared bath and kitchen privileges. The lack of unit kitchens and full baths, along with past operating issues with Hotel SROs, makes them challenging to finance. The borrower also required a return of capital given his length of ownership, management, and continued maintenance of the asset. |
Solution: GSP used its extensive market expertise and lender relationships to identify a Southern California based lender with an affordable multi-family housing mission and unique loan programs that would allow the stabilized project to receive long-term, market rate financing. With our in-depth understanding of this product type and the downtown market, we utilized an existing appraisal to obtain a 70% LTV. This covenant provided for the requested return of capital to the borrower. | | | Rate: 5.50% | | Term: 10 Years | | Amort: 30 Years | | LTV: 70% | | Prepayment: 3, 2, 1, open | | Recourse | | Lender Fee: 1.0% | | Broker: Bryan Shaffer | | | |  | | | | Regional Bank Lending Up to 80% LTV in Southern California A Southern California Regional Bank is funding multifamily debt to 80% LTV. Retail, office, industrial, and special use properties are leveraged to 70% - 75% of value. This Lender will consider underperforming assets with a below break-even debt coverage for an experienced operator. Pricing starts at P+1% with a 5.25% floor; fixed-rate financing is currently unavailable. Typical structures contain a 5-year term and a 25-year amortization schedule. Loans above $15,000,000 will be considered on a situational basis. | | | | Hot Money | Net-Leased Single-Tenant Financing from $750,000 GSP is working with a Southern California based bank currently funding stabilized net-leased assets nationwide. Strong franchisees will be considered although pads leased to corporate operators located in anchored retail centers are preferred. Available financing ranges from $750,000 to $3,000,000. Pricing is fixed in the low 5s for the first 5 years, then rolls to a floating rate for the remaining 5 year term. Full recourse programs are available to 65% LTV, with non-recourse interest-only options to 50% LTV. Flexible prepayment penalty structures are available and non-traditional uses (self-storage) will be considered by exception. | | | If you have an inquiry regarding George Smith Partners' commercial real estate financing, please contact your GSP representative or Todd August, Chief Operating Officer, at (310) 867-2995 or TAugust@GSPartners.com. | | | Speakers Corner | Managing Director Steve Bram will be a featured panelist at the January 11th Commercial Real Estate Women's (CREW) Conference to be held at the Los Angeles Biltmore Hotel. Mr. Bram will be joined on the panel to discuss Commercial Real Estate Lending in 2012 by several national capital providers, appraisers and attorneys. This luncheon is open to the public and offers a discount for early registration. For more information and to register, please click here. | | | Respond to GSP's Latest LinkedIn Poll | CRE mortgage maturities are at historic levels. It is estimated that over $1.3T of commercial mortgages will mature during the next five years. How will the maturities wave impact business in 2012. Give us your opinion here. | | | Pascale's Perspective | The 2011 Markets: As 2011 draws to a close, the focus remains on governments and other public sector entities (such as the ECB, US Fed, IMF, etc). Investors worldwide focused on the European Central Bank's opening of a new credit facility for European banks to (hopefully) purchase sovereign debt. The huge demand (over $600 billion Euro, over twice the anticipated amount) has investors both encouraged and worried, naturally. Meanwhile, back here, Congressional dysfunction over the payroll tax may derail the fragile recovery. 2012 will likely see a continuation of these trends until some type of equilibrium is achieved OR this is the "new normal" …Stay Tuned… David R. Pascale, Jr | |
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