Bridge

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    $2,250,000 Bridge Loan for Spec Luxury Waterfront Single Family Residence in Florida

    March 8, 2017

    Transaction Description:
    George Smith Partners secured a $2,250,000 bridge loan for the 70% completed spec luxury waterfront single family residence in Naples, Florida. The sponsors self-funded the development and sought to use the proceeds to recapitalize for other projects.

    Challenge:
    The Sponsor requested maximum cash-out proceeds that dissuaded many capital providers from considering the request given the luxury home’s vulnerability in a market downturn and overall development risk. Most lenders were not comfortable going over 60% loan to cost.

    Solution:
    GSP identified a private capital source who was comfortable with the incomplete project and understood the upside potential at completion. Our Sponsor’s considerable development track record and financial strength further encouraged the capital provider not to shy away from the high dollars per square foot. Sized to 75% of total cost and 53% of as-complete value, the 12-month loan is interest only with no prepayment penalty or yield maintenance.

    Rate: 11%
    LTC: 70%
    Term: 12 Months + Two 3 Month Extension
    Amortization: Interest Only
    Recourse
    Prepayment Penalty: None

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    $7,150,000 Acquisition Bridge Loan for 29-unit Multifamily Property in Pasadena, California

    March 1, 2017

    Transaction Description:
    George Smith Partners secured $7,150,000 for the purchase of a 29-unit multifamily property in Pasadena, California. Sized to 65% of purchase, the 5-year loan was priced at a floating rate of Prime plus 0.50%, with a floor rate of 4.25%. The loan has 2 years of interest only payments with a 30-year amortization schedule following thereafter. GSP closed the loan less than 30 days after the application was filed.

    Challenge:
    The Sponsor acquired the property as part of a 1031 exchange and had 40 days to meet the exchange window. Despite the short timeline, the borrower wanted to secure bank pricing and was reluctant to consider non-bank lenders. In addition, the property was operating with units at below-market rents, despite the building’s location in a non-rent controlled area. Thus, in-place cash flow was not enough sufficient to satisfy traditional underwriting criteria for many potential bank lenders.

    Solution:
    GSP sourced a bank that provided proceeds of 65% of purchase price. The selected lender was known to have certainty of execution and a quick close process. Our team was able to provide both rent and sales comps showing the huge amount of income upside in the property and demonstrating how the seller had not efficiently captured the value of the asset. The lender was able to overcome the low going-in DCR by requiring a payment reserve of $400,000, which will be released once the property’s DCR reaches 1.25. GSP also emphasized the sponsor’s recent success in increasing income and NOI at another multifamily property in a nearby market. By creating a sense of urgency among all parties, GSP was able to complete the transaction within the buyer’s short timeframe and close the deal just a few days before the expiration of the 1031 exchange.

    Rate: Prime + 0.50%; 4.25% Floor
    LTV: 65% of Purchase Price
    Term: 5 Years
    Amortization: 2 Years Interest Only Followed by 30 Year Amortization
    Recourse
    Prepayment Penalty: None

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    $2,700,000 Cash-Out Refinance Bridge Loan for an Unflagged Boutique Hotel

    February 15, 2017

    George Smith Partners arranged a $2,700,000 cash-out refinance bridge loan on an unflagged boutique hotel in Sacramento, California. The Borrower approached GSP seeking a financing solution from a lender that could close quickly, provide capital to renovate, and bridge until stabilization. GSP identified a lender who was comfortable lending on an unflagged hotel in the middle of renovations and located in a secondary market. During due diligence, an unpaid occupancy tax from the prior owner was discovered. With the prior ownership unable to pay the tax, the county placed a lien against the property, even though it was under new ownership with no relation to the prior owners. This created a setback for closing, as title could not be cleared until the tax, interest, and fees were paid in full. The borrower weighed the cost of litigating to fight the liens, but chose to pay off the liens which allowed the lender to close on time.  Sized to 50% of cost, the interest only loan has an 18 month term to allow for full stabilization of the property and has no prepayment penalty. The loan is priced at 7.90% for the first twelve months and 8.30% thereafter, for the remainder of the term.

    Rate: 7.90% Months 1-12 | 8.30% Months 13-18
    LTC: 50%
    Term: 18 months
    Amortization: Interest Only
    Non-Recourse
    Prepayment Penalty: None

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    Non-Recourse $73,000,000 Bridge Loan above 80% of Cost for Creative Office Building in Seattle

    February 1, 2017

    Transaction Description:
    George Smith Partners successfully arranged $73,000,000 in non-recourse, bridge financing for the conversion, renovation, and stabilization of the Seattle Design Center. The design center, comprised of two buildings in the Georgetown submarket of Seattle, Washington, historically served as a well-known destination for high-end home furnishings and design services. After acquiring the property in 2014, the Sponsor renovated the first 157,000 square-foot building. Upon completion, the Sponsor continued to operate the asset as the Seattle Design Center and consolidated the showroom/design tenants from the second building into the newly renovated building. Once the second building was vacated, the Sponsor began repositioning the 280,000 square-foot building from showroom space into creative office space. Upon completion, the building will have expansive 60,000 square-foot floorplates, exposed ceilings and concrete floors, glass walls for natural light, unobstructed views of downtown Seattle and Mt. Rainier, and full-service amenities, including an upscale fitness center and conference center. Pre-leased to 45% occupancy, Sponsor needed additional proceeds to complete the project. GSP identified a Lender who recognized the value of the project, supported by low supply and increasing market demand for creative office from tenants in the technology sector. Sized to 80%+ of total project costs, the $73,000,000 non-recourse loan was priced at LIBOR + 6.75% for a 24-month term with one, 12-month extension option. $49,000,000 of total proceeds was funded at closing with an additional $24,000,000 future funding allocated toward completion of the renovation, construction, tenant improvements and leasing commissions.

    Rate: LIBOR + 6.75%
    LTC: 80%+
    Term: 2 Years + 1 Year
    Amortization: Interest Only
    Non-Recourse
    Prepayment Penalty: 18 months spread maintenance

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    $1,527,000 Cash-Out Refinance Bridge Loan for a Multi-Tenant Retail Property in a Tertiary Market

    January 11, 2017

    Transaction Description

    George Smith Partners arranged a $1,527,000 cash-out refinance bridge loan on a 35% occupied, shadow-anchored, multi-tenant retail property in Castaic, California. The Sponsor recently purchased the property for $2,000,000 all-cash at a trustee auction and sought a bridge loan to provide funds to stabilize the property as well as cash-out. Sized to 71% of as-is value and 65% of as-stabilized value, the two year bridge loan is interest only and floating at Prime + 1 with no prepayment penalty. Interest is not charged on the holdback until funds are drawn. The subject property is located in a tertiary market without an anchor tenant and very low occupancy which prevented many lenders from entertaining a cash out request. GSP identified a lender that understood the sponsor was experienced enough to reposition the asset. A $527,000 “good news” budget was allocated for tenant improvements and leasing commissions to complete the reposition upon successful signing of new leases. GSP underscored that the property was shadow anchored by a Walgreens and highlighted that the sponsor would still have significant equity in the property remaining even after the cash out at initial funding. This ultimately allowed the lender to get comfortable with significant cash out and even fund an interest reserve during the life of the loan

    Rate: Prime + 1 %
    LTV: 71% As-Is / 65% As-Stabilized
    Term: 2 Years
    Amortization: Interest Only
    Recourse
    Prepayment Penalty: None
    Lender Fee: 0.5%

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    $34,400,000 Non-Recourse Mixed-Use Retail and Office Refinance of a Leasehold Interest

    January 4, 2017

    George Smith Partners successfully placed the $34,400,000 non-recourse bridge loan, sized to 92% of total cost, for a 238,000 square foot retail shopping center and 67,000 square foot Southern California office building. This 1960s vintage property is well-located and sits on a 17 acre parcel with a traffic count of over 60,000 vehicles per day. Proceeds will be used to satisfy the existing term loan and a majority of the $17,400,000 in planned renovations, tenant improvements, leasing commissions, and other capital expenditures. Retail occupancy includes four value oriented chains, several local retailers, a future grocer and a national fitness/gym chain. The office building will be renovated to feature street level retail pre-leased to regional and national restaurant chains including Chipotle, Five Guys Burgers, and Ono Hawaiian BBQ. Office occupancy of the upper three floors will include a mixture of full floor tenants and local businesses. Several of the office tenants are currently leased month to month, but is supported by a strong occupancy history. Subject to several ground-leases executed in the 1950’s, all leases were recently restated and extended. Floating at 545 over 30 day LIBOR, the non-recourse loan provides for carve-outs executed at the entity level only with no warm body guarantor. The three-year term has one 12 month extension with interest paid current monthly; there is no interest reserve or amortization.

    Rate: LIBOR+5.45%
    Term: 3 Years + One-Year extension
    Amortization: Interest Only
    LTC: 92%
    Prepayment Penalty: 18 Month Minimum Interest
    Recourse: Non-Recourse; Carve-Outs to Entities
    Lender Fee: 1.00%

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    $3,400,000 Acquisition Bridge Loan of Retail Property in Tertiary Colorado Market – 30 Day Close

    December 13, 2016

    Transaction Description
    George Smith Partners arranged the $3,400,000 acquisition bridge loan for a two-tenant retail property in a small, tertiary Colorado town. Current tenants, Hobby Lobby and Tractor Supply Company, have below-market leases that expire in 2 and 4 years, respectively. The non-recourse loan has a 3-year term with two, 1-year extensions, providing Sponsor with ample time to either extend the current tenants or to re-tenant the space at market rents. Lender got comfortable with short-term leases by underwriting a TI/LC reserve to be released in the event of a new lease. Our Capital Provider funded the loan in 30 days from application to close, in order to accommodate the Sponsor’s purchase timeline. Sized to 65% of purchase price, loan floats 575 over LIBOR.

    Rate: L+575
    LTC: 65%
    Term: 3 Years; Two, 1-Year Extensions
    Amortization: Interest Only
    Non-Recourse
    Lender Fee: 1.0%

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    1,820,000 Los Angeles Multifamily Acquisition Bridge Loan to 70% of Cost

    December 7, 2016

    Transaction Description
    George Smith Partners secured the $1,820,000 acquisition bridge loan to purchase a 15-unit multifamily property in Los Angeles. Proceeds were constrained by a below market, in-place income. GSP sourced a Capital Provider who provided full proceeds and pricing that resulted in a below break-even going-in DCR of 0.8x. Lender required a 6-month interest reserve until property reached a DCR of 1.25. Sized to 70% of cost, the floating rate loan was priced at Prime +0.5%, adjusting daily for 2 years and is interest only for 2 years with no prepayment penalty.

    Rate: Prime + 0.5% w/4% Floor
    Term: 2 years
    Amortization: Interest Only
    Prepayment Penalty: None
    LTV: 70%
    Recourse

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    $19,500,000 Non-Recourse Bridge Financing of a 62,800 Square Foot Orange County Shopping Center

    September 28, 2016

    George Smith Partners successfully placed $19,500,000 in non-recourse bridge debt to refinance and reposition an 80% occupied, 1980’s vintage Orange County shadow-anchored community retail center. Approximately $3,700,000 of loan proceeds will be used to complete a façade upgrade and convert 15,000 square feet of inferior elbow retail space into a food court with outdoor seating. The loan is sized to 70% of as-is value and 65% of as-stable value. Reserved funds will cover 100% of capital upgrades and our Sponsor will not pay interest until drawn. Priced at LIBOR plus 5.25%, there is no floor for the three year interest-only non-recourse loan.

    Rate: LIBOR + 5.25%; 5.75% at closing
    Term: Three-years plus one (1) year ext
    Amortization: Interest only
    LTV: 70% As-Is, 65% As-Stable
    Prepayment: 18-month spread maintenance
    Non-Recourse
    Lender Fee: 1.0%

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    $33,000,000 Non-Recourse Acquisition Bridge Financing for an 82% Occupied Multi-Tenant Industrial Business Park

    August 17, 2016

    George Smith Partners successfully structured and placed the non-recourse acquisition bridge loan for a 27 building multi-tenant industrial business park, totaling 475,000 square feet with over 231 tenants in the Pacific Northwest. At acquisition the property was 82% occupied with a going in debt yield of approximately 9.5%. $24,530,000 of the on-book financing was funded at closing with $7,220,000 to be future funded for immediate property improvements, future upgrades which includes funding for the Sponsors’ strategic spec-suite program, as well as future leasing costs. Upon achieving a predetermined net operating income, the lender will advance an additional $1,250,000 earn-out. Interest will not be paid on future funding until disbursement. Floating at L+2.75% for a three year term; the first two years are interest only. There is one (1) two-year extension.

    Rate: LIBOR+2.75%
    Term: 3 Years plus one 2-Year extension
    Amortization: Interest Only for initial 2-Years
    LTC: 65%
    Prepayment Penalty: None
    Release Provisions: Structured release provisions
    Recourse: Non-Recourse
    Lender Fee: 0.50%

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    $25,200,000 in Acquisition Bridge Financing for a 144 Unit Dallas Multifamily Property

    August 3, 2016

    George Smith Partners successfully structured the 70% loan-to-cost non-recourse acquisition bridge financing on a significantly under-managed 2000 vintage mid-rise multifamily property in Dallas, Texas. The under-managed property was trailing market rents by 20% at acquisition resulting in a debt yield below 6% on in-place income. The Sponsor’s business plan is to recapture the loss to lease, implement a capital improvement plan including washer/dryer installation to enhance unit interiors, and upgrade the lobby, common areas, amenities and exterior to meet the market’s discerning taste. Floating at 375 over LIBOR, this non-recourse loan is Interest-Only for five years (including options) and was sized to 70% of total cost. A portion of the loan proceeds will be used to finance the interior and exterior upgrades, with interest not paid until funds are drawn.

    Rate: LIBOR + 3.75%
    Term: Two Years initial term with (3) One-Year Exts. There are no performance tests to exercise options.
    LTC: 70%
    Lender Fee: 1.00%
    Exit Fee: None
    Non-Recourse
    Amortization: Interest Only

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    $40,200,000 Non-Recourse Acquisition Bridge Financing; Five Building Multi-Tenant Industrial/Office Park

    July 26, 2016

    George Smith Partners successfully structured and placed the non-recourse acquisition bridge loan for a five building multi-tenant industrial/office park, totaling 536,000 square feet in the Western United States. While the property was 100% occupied at funding, a tenant occupying 15% of the gross rentable square footage will vacate within six months of the purchase. $37,800,000 of the on-book financing was funded at closing with the remaining $2,400,000 to be future funded for re-tenanting as well as upgrading the exteriors and common areas. Interest will not be paid on future funding until disbursement. George Smith Partners was able to structure release provisions for the various parcels. The interest rate floats at L+2.85% for a three year term and is interest only for the initial two years of the term. There are two (2) one-year extensions.

    Rate: LIBOR+2.85%
    Term: 3 years + Two 1-Year Extensions
    Amortization: Interest Only for 2-years
    LTC: 65%
    Prepayment: Step Down Prepayment, No Fee after Month 18.
    Release Provisions: Structured release provisions
    Non-Recourse
    Lender Fee: 0.75%