Dealmaker: George Smith Partners Arranges $14M for Multifamily
George Smith Partners, Los Angeles, arranged $13.8 million for two southern California multifamily properties.
The first loan for $6.1 million refinanced an 18-unit Hollywood property built in 1986. The second $7.7 million loan refinanced a 26-unit asset built in Culver City in 1991.
GSP Principal/Co-Founder Gary Tenzer said both properties have undergone significant renovations and upgrades within the past four years. Despite COVID-19 regulations allowing tenants to suspend rent payments, both properties have stayed fully leased throughout 2020, with all tenants continuing to pay rent
Both assets received 10-year fixed-rate loans with five years of interest-only payments that closed at 3.33 percent.
Although the properties had been previously financed with floating-rate debt after undergoing their renovation programs several years ago, GSP demonstrated to the sponsor that despite the requirement to pay a prepayment premium on its existing financing, this refinancing would:
–Reduce the current interest rate by approximately 135 basis points
–Increase the cash flow
–Eliminate floating-rate risk
–Provide significant net cash-out proceeds
–The prepayment expense would by offset by interest savings within approximately 18 months. The non-cross-collateralized loans are non-recourse and sized at 70 percent of appraised value.