Dealmaker: George Smith Partners Secures $159M for California Multifamily

George Smith Partners, Los Angeles, arranged $158.8 million in financing for Colony Townhomes, a 752-unit multifamily property in Santa Clarita, Calif.

Borrower G.H. Palmer, Beverly Hills, Calif., refinanced the property’s HUD loan, which had 23 years remaining and pre-payment penalties in place.

“We determined that the interest rate savings for a new 10-year loan would offset the early pre-payment costs of the existing loan, while also providing the opportunity to cash out a significant amount of appreciated equity,” said George Smith Partners Principal and Co-Founder Gary Tenzer.

Tenzer said recent fluctuations in the 10-year Treasury spurred additional urgency to the transaction. “We knew there was an immediate need to lock the rate as soon as the decision to refinance was confirmed. We secured the fully committed loan and locking the rate within 14 days of the sponsor’s application.”

GSP secured the 10-year interest-only, non-recourse loan at a 4.29 percent fixed rate. The loan represented 65 percent of value.

“While an early refinance does not make sense in every situation, a borrower with existing debt at a higher rate than current interest rates and a relatively short prepayment penalty window can benefit tremendously and in fact save money by prepaying their loan early and securing fixed-rate financing now,” Tenzer said. He predicted interest rates to rise 50 to 75 basis points over the next 12 to 24 months.

The property, Colony Townhomes at 17621 Pauline Court in Santa Clarita includes two- and three-bedroom units with garages near Westfield Valencia Town Center and Metrolink commuter rail.