George Smith Arranges $92M in Debt, Equity Construction Loan Take-Out

George Smith Partners arranges $92 million for an L.A. community; A JV between Praedium and StarPoint acquires a 558-unit community for $79 million; and IPA brokers the sale of a 220-unit community in Southern California.

Orsini II Apartments

Los Angeles — George Smith Partners arranged a $92 million refinance of a maturing construction loan on Orsini II Apartments, a 566-unit apartment complex, located in downtown Los Angeles.

The loan was advanced on behalf of asset owner GH Palmer, says Principal and Managing Director Gary M. Tenzer. Tenzer was assisted by George Smith Partners Vice President Nick Silbergeld.

The $92 million refinance includes $79 million in senior debt financing and $13 million in preferred equity.

“This was a complex structured transaction in which the borrower considered many financing options, including both floating- and fixed-rate loans,” explains Tenzer. “Our team put together an extensive analysis to compare the potential financing options for the borrower. The borrower used this data to select our recommended financing plan, which included a combination of senior debt and preferred equity financing. The GSP team maintained constant communication throughout the process and facilitated negotiations between the senior and subordinate lender, ultimately securing this simultaneous funding.”

The $79 million non-recourse senior debt financing closed with an interest-only rate of 3.75 percent for five years. The $13 million in preferred equity was provided by a REIT and was secured with an interest rate of 10 percent, with a pay rate of 8 percent for five years.

Orsini II apartments are located at 550 North Figueroa Street in Los Angeles. The 566-unit institutional quality apartment community features studio, one- and two-bedroom floor plans that offer nine-foot ceilings, gourmet kitchens, in-unit washers and dryers, and walk-in closets.

Praedium, StarPoint JV acquires 558-unit community in California

Redlands, Calif.—A joint venture between The Praedium Group and StarPoint Properties has acquired Parkview Terrace Apartments, a 558-unit community located in Redlands, Calif. The purchase price was $79 million. The sale is being billed as the largest multifamily deal in the Inland Empire for 2011 so far.

“This asset is an attractive investment opportunity in one of the strongest markets within the Inland Empire residential market,” says Robert Murray, managing director at Praedium. “Its location combined with the opportunity to enhance the amenities makes it a desirable asset for our investors.”

The property consists of 43 garden-style buildings that were built in 1987. The 558-units are currently 97 percent leased. Community amenities include three swimming pools, beach volleyball, basketball and tennis courts, a gym, business center, and a clubhouse. The new owners plan to renovate both the common areas and amenities with the addition of a movie theater, golf driving range and putting green, and built-in barbeques and seating in the pool area.

IPA sells 220-unit community in Southern California

Pomona, Calif.—Institution Property Advisors has brokered the sale of Pine Club Apartments, a 220-unit property located in Pomona, Calif. Greg Harris, executive vice president of investments, and Kevin Green, IPA associate director, represented the sellers, MHE Real Estate and Sussex Capital Group. The pair also represented the buyer, a private investor. The sales price was not disclosed.

“This was an off-market transaction,” says Harris. “The property was acquired as a value-add opportunity with upside via a renovation plan and aggressive management.”

Pine Club Apartments was constructed in 1971 and is located on 7.7 acres at 2261 Valley Blvd. The property consists of 28 studio units, 152 one-bedroom units and 40 two-bedroom units.
Community amenities include a swimming pool, business center, fitness center and clubhouse.