George Smith Partners' Gary Tenzer has leveraged another creative financing strategy on behalf of his client G.H. Palmer. This time, Tenzer, a co-founder and principal at GSP, secured a $233.6 million cash-out refinance for two multifamily properties in Downtown Los Angeles, Medici and Orsini I. Palmer secured a 10-year fixed rate loan at a lower 4.02% interest rate, but paid a pre-payment penalty to secure the lower rate early. While typically paying a pre-payment penalty is not recommended, the savings from the lower interest rate offset the cost of the pre-payment penalty a breakeven timeframe of two years. We sat down with Tenzer for an exclusive interview to find out more about these deals, why they are beneficial and if other borrowers are looking at similar strategies.

GlobeSt.com: This is the second similar creative refinance deal that you have secured for G.H. Palmer. What are the benefits of this creative strategy?

Gary Tenzer: If you can get lower rates, you want to refinance for a lower rate, but there was a defeasance that you have to pay. You have to balance it and look at the timing of the loan so that the defeasance is offset by the savings in interest. It is a moving target, and the interest rate is moving through the entire process. It is hard to time, but we timed it. In the meantime, the borrower was able to lock-in 10-year fixed rate debt on two very important properties in his portfolio and take long-term rate risk off the table.