Dealmaker: George Smith Partners Secures $267M for Multifamily Portfolio

George Smith Partners, Los Angeles, secured $266.7 million to allow G.H. Palmer to refinance a four-property multifamily portfolio in Los Angeles.

Company Co-Founder and Principal Gary Tenzer arranged the financing.

The portfolio included Skyline Terrace Apartments and Pasadena Park Place in Los Angeles and River Ranch Townhomes and Apartments and The Terrace in Santa Clarita.

Tenzer said his client chose to defease existing loans to refinance at today’s rates in anticipation of rate increase in the near future. “While nobody likes prepayment penalties, oftentimes it behooves the borrower to absorb the prepay cost to liberate trapped equity and lock in lower rates going forward,” he said.

Tenzer said George Smith Partners showed potential lenders the owner’s ability to “dramatically” improve the property’s net operating income through green energy updates. Doing so enabled the firm to secure lower interest rates for its client.

“Based on our client’s investment in implementing energy- and water-saving technology in all four properties, there will be anticipated operating expense reduction of 35 percent in energy costs and 28 percent in water costs,” Tenzer said. “We were able to utilize the positive cash flow these savings create to negotiate with the lender to achieve an 18 basis point rate reduction on the loans and a five percent increase in proceeds.”

The seven-year fixed-rate interest-only refinancing priced at 3.54 percent with a 65 percent loan-to-value.