TODAY’S DEALS: George Smith Partners Secures $70M Cash-Out Refinance for Downtown LA Property

George Smith Partners provided financing for the takeout of a maturing construction debt; and Edgewood Capital supplies $2.15M for acquisition of non-performing loan.

Pierro II Apts.Los Angeles– Commercial real estate investment banking firm George Smith Partners has successfully arranged $70 million in financing for the cash-out refinance of Piero II Apartments, a 335-unit luxury multifamily community located in downtown Los Angeles, according to George Smith Partners’ Principal and Managing Director Gary M. Tenzer. The property owner, an institutional quality developer, engaged George Smith Partners to secure financing in order to pay off the property’s maturing $65 million construction debt.

“This transaction was unique because of the specific financing being sought by the client,” explained Tenzer, who noted that George Smith Partners’ client was seeking interest-only financing with a floating rate, without recourse or requirements for any interest rate derivatives.

“While floating rate loans usually carry lower interest rates than fixed and are generally available in the current market most borrowers are apprehensive to take on a loan without a fixed interest rate due to the risk of future payment increases.” he explained.

Tenzer continued, “Because the owner’s current portfolio is comprised of quality, fixed-rate financing, our client was well-positioned to take on the uncapped floating rate risk and ultimately achieve the best possible interest rate.”

George Smith Partners secured a non-recourse loan for its client through an off-shore commercial bank, that closed at a rate of LIBOR+155, approximately 1.72 percent, with a 5-year, interest-only term.

The loan was used to pay off the existing construction debt for Piero II Apartments, a Class A multifamily community located in downtown Los Angeles.  Construction was completed in Fall 2011, and the property is currently over 95 percent occupied, according to Tenzer.

“This property benefits from a growing demand for multifamily rental housing in the flourishing downtown market,” Tenzer explained.  “Businesses are now gravitating to this iconic part of Los Angeles, resulting in an increased need for rental housing.”

According to Tenzer, securing a large loan to pay off construction debt can often be a challenge for borrowers. “In this case, however, the steady rental demand, coupled with the security in the borrower’s owner history allowed our firm to achieve a highly competitive rate for our client, while meeting each of the loan requirements,” Tenzer said.

Piero II is located at 609 St. Paul Avenue in the City of Los Angeles. The property is comprised of 335 units featuring studio, one- and two-bedroom floor plans. The community was built with an Italian-inspired design and is located directly across the street from a sister property, Piero Apartments. The two properties are connected by a pedestrian bridge over St. Paul Street.

Apartments in the community feature panoramic skyline and city views, as well as luxury finishes including stainless steel appliances, nine-foot ceilings, full-size washer and dryers, walk-in closets, Italian marble vanities and individual balconies or patios. The property also features community amenities such as a spa, theater, library, gym, fire pit and communal barbecues.


Edgewood Capital supplies $2.15M for acquisition of non-performing loan

New York‑Edgewood Capital recently funded $2.15 million for the acquisition of a $5.0 million non-performing loan at a discount to UPB.

The loan is secured by an eight-story, 15-unit condominium building located in the Williamsburg section of Brooklyn, New York. The borrower ran into financial difficulties during the construction phase and defaulted on his note.

At closing, Edgewood entered into a forebearance agreement with the borrower that allowed him to avoid foreclosure. Edgewood’s loan will provide the borrower with time to seek take-out financing to complete the construction of the property and sell out the condominium units.


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