Saturday, February 22, 2014

GSP FinFacts- Shaffer Team

Transactions of the Week
Transaction Description:
$11,700,000 Bridge 80% Loan to Purchase for Value-Add Multifamily Portfolio in Odessa, Texas Bryan Shaffer placed the 80% LTV acquisition debt of a 3 property/172 Unit Multifamily portfolio in Odessa, Texas for a 30 day closing. An additional property/phase will close by year-end, bringing the total loan to $13,100,000 for the 201 units. The non-recourse loan is priced at LIBOR+5.75 with a 6.0% floor. There is no prepayment penalty after the 1st year lock-out.

Challenge: Although Odessa is a very fast growing market, it is one of the smaller MSAs in the country. Rents increased rapidly, so only a limited number of lenders felt comfortable with the market sustainability. The Borrower would not accept a hard money yield. All the properties are 30 years or older and require capital upgrades. Our Sponsor is experienced in multifamily but new to Odessa. The acquisition required a quick 30 day close, adding to the desire for a high leverage, low cost bridge loan.

Solution: GSP highlighted market potential based on strong employment and lack of product with temporary housing currently filling the void. Mr. Shaffer quickly identified a capital provider who was comfortable with this tertiary market and its’ recent growth. The loan carries a highly structured earn-out that fulfilled the Borrower request while providing a format comfortable to the lender that they are not over-extended. The detailed market study and business plan demonstrated a significant upside within one of the fastest growing, but untested markets in the nation. GSP worked with the lender to accept a recent bank ordered MAI already on file that enabled the lender to close on the purchase within the 30 seller mandate.
Rate: LIBOR + 5.75%
Term: 24 Months
Amort: Interest Only
LTV: 80%
Prepayment: Locked for 1 Year, then none
Lender Fee: 1% In/1% Out
Advisor:  Bryan Shaffer