| Transaction of the Week |  | |  | | Transaction Description: | | $6,709,500 to 90% of Cost Recapitalization Shahin Yazdi placed the recapitalization of a note purchase once the note holder finalized the Deed in Lieu, 7 days following the note acquisition. The new $6,709,500 1st Trust Deed recapitalized the all-cash note purchase to 90% of the note purchase price on a 747 unit Columbus, Ohio apartment complex. The 10 Year loan is priced at SWAPs + 230, amortized over 30 Years following five years of Interest Only and carries a yield maintenance prepayment penalty. The lender will allow future mezzanine debt to a 1.80 DCR upon asset sale w/loan assumption. |
Challenge: Despite the subject property's attractive metrics, institutional lenders typically require a meaningful cash-down from the Borrower on recent purchases. The Borrower required maximum leverage to recapitalize his cash investment. The City filed an Emergency Order to replace 200 decks during the lenders' due diligence process - viewed as a health-safety risk. Upon learning of the deck replacement order, the lender imposed a cash management system (aka hard lock box) that was unacceptable to the Borrower. |
Solution: GSP promoted the assets' strong cash flow and Borrowers' strength to obtain the high loan to cost application. The sub-$10,000 loan per unit also facilitated the loan proceeds. A cash reserve deposit was funded by the Borrower at close in addition to recourse provided to 25% of the loan amount to mitigate the deck replacement order. The reserve funds will be released and recourse will burn off to carve-outs upon inspection and sign-off from the City on the deck replacements. | | | Rate: 4.17% Fixed: SWAPs+2.30% | | Term: 10 Years | | Amort: 30 Years after 5 Years of IO | | LTV: 75% | | LTC: 90% of Note Purchase | | DCR: 2.00 | | Prepayment: Yield Maintenance | | Non-recourse | | Lender Fee: Par | | Broker: Shahin Yazdi | | | |  | | | | Exceptionally Liquid Community Bank Expanding their Presence GSP has identified a Los Angeles based community bank opening their balance sheet to investor and owner/user developers. This recourse lender will fund anywhere in California or the lower 48 for California based borrowers. Bridge, Permanent and Construction financing is available up to $7,500,000 per borrower to 75% LTV for multifamily & owner/user and 70% for commercial assets. Pricing varies widely depending on loan type, term and borrower strength. 10-Year fixed rate funds are available for stabilized assets with a step-down prepayment, open after the 5th year. A depository relationship is requested but not a requirement to execute. | | | | Hot Money | Portfolio Bridge/Construction/DPO Lender Expanding West Coast Presence. GSP met with an East Coast Bank opening their Los Angeles based originations office, offering traditional debt financing for less than traditional structures. Typically non-recourse, this bank will fund value-add reposition transactions to 65% of cost at below break-even coverage. Ground-up construction requests are also being underwritten for the primary four core product types. While unable to compete with money center banks on rate, this portfolio lender "thrives on unique deal structures" and will fund more complex facilities/requests. Their current focus is on note purchases; both arms-length pools or individual Borrower DPOs. Requests range from $10,000,000 to $100,000,000 and priced at LIBOR+500/600. The purchase of a cap or collar is not required. | | | 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. | | | In The Press | Managing Member David Rifkind was recently quoted on the benefits of office ownership in the August issue of Real Estate Forum magazine. You can review is opinions on buy-versus-lease and interest rate advantages on-line here. | |
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