Shaffer GSP completes $4,200,000 refinance and reposition loan for 196 unit apartment retail
| Description: Bryan Shaffer successfully placed the $4,200,000 refinance of a 196 Unit Single Resident Occupant (SRO) apartment in the CBD of Los Angeles. The subject property offers ground floor street-front retail as part of the collateral. Built in 1900, the former hotel was acquired in late 2010 with institutional and private debt. The new owner is completely rehabilitating the project, initiating the redevelopment with investor cash equity. The project was vacant and undergoing major construction at close of escrow, requiring additional capital to complete the renovation of the living units. The 10-year year term loan was priced at 6.25% fixed with 30 year amortization and a step-down pre-payment penalty. |
| Challenge: Most SROs are essentially studio apartments with a sink and kitchenette, providing residents with shared bath and kitchen privileges. Lenders are not comfortable financing SROs due to their lack of bathrooms in each unit. The 100% vacancy and major construction program added to the challenges. This high-profile property carried a troubled past. Title was impaired by the Rent Escrow Account Program (REAP) due to the prior owners’ neglect in providing for safe living conditions. It was critical to the sponsor that rehab construction was not delayed by the financing process. |
| 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 un-stabilized project to receive long term market rate financing. The borrowers’ business plan and capital contribution to date made the lender comfortable to fund through the REAP encumbrance. GSP closely managed the application, due diligence, and closing process to ensure the loan closed on time. This constant attention contributed to the borrower receiving an additional 10% in loan proceeds at closing. |
| Rate: 6.25% |
| Term: 10 Years |
| Amort: 30 Years |
| Prepayment: 3%, 2%, 1% open |
| Recourse |
| Lender Fee: 1.5% |
| Broker: Bryan Shaffer |
http://gspartners.com/2011/11/07/4200000-refinance-and-reposition-loan-of-a-196-unit-apartment-w-retail/
