Shaffer Completes $4,270,000 Cash-Out Refinance Loan of a 122 Unit SRO Apartment
| 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. |
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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. |
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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 |
