Industrial

  • Expand

    Non-Recourse $1,325,000 Acquisition Financing of Industrial Building to 70% of Purchase

    February 1, 2017

    Transaction Description:
    George Smith Partners successfully secured $1,325,000 in financing for the purchase of a 9,500 square foot industrial/warehouse building in Los Angeles. The proceeds were structured as $1,125,000 for a first trust deed at a rate of 7.9% and $200,000 for a second trust deed at a rate of 12.99%. The combined proceeds represented 70% of the acquisition price. A number of challenges were encountered in securing financing for the property. First, our Sponsor had to secure financing within 1 week. Second, the subject property was leased to a tenant who was occupying the entire 9,500 square foot property, even though the lease agreement stipulated only 5,000 square foot of space was available to them. While GSP was marketing the deal, legal proceedings were underway to compel the tenant to comply with his lease. Finally, there was lease-up risk since it was unclear when the buyer would be able to lease the remaining space to a new tenant. The selected lenders had an intercreditor agreement and were able to offer a quick close with minimal documentation. The lenders required only a property walkthrough in contrast to a full appraisal. GSP provided rent comps that supported the Sponsor’s business plan for the property, as well as market data that showed vacancy of less than 1% for industrial product in the market. As a result, our lenders were able to underwrite to the in-place income of the property, and were comfortable with the value regardless of the outcome of the pending litigation with the tenant.

    Rate: 7.9% on the 1st TD, 12.99% on the 2nd TD
    LTV: 70% overall
    Term: 2 years
    Amortization: Interest Only
    Non-Recourse
    Prepayment Penalty: None
    Origination Fees: 2%

  • Expand

    $6,500,000 Senior and Stand-By Line of Credit for an Inland Empire Container Depot

    November 9, 2016

    George Smith Partners placed a $5,000,000 senior trust deed on an existing net-leased container depot in the Inland Empire of Southern California. This location is ideal given the accessibility to the Ports of Long Beach, Northern and Eastern Interstates and within two miles of an industrial railhead. With only 2,000 square feet of improvement on an 11 acre parcel, many capital providers viewed this as a land loan despite the arms-length net lease to a global logistics operator. Our Lender also structured a $1,500,000 line of credit to cover expansion costs of an adjacent parcel to be leased to the same logistics operator. Both facilities carry five-year terms although the senior note is fixed at 4.23% and amortizes over 15 years whereas the Credit Line is priced at Prime + 0.75% and is interest only. The combined debt service underwrote to better than a 1.50 dcr on actual cash flow at close.

    Term: 5 Years
    Amortization: 1st TD: 15 Years, Credit Line: IO
    DCR: +1.50
    Recourse
    Loan Fee: ½ point

  • Expand

    $8,400,000 Non-Recourse Cash-Out Refinance Single-Tenant Owner-User Industrial Building

    September 28, 2016

    Transaction Description:
    George Smith Partners placed the $8,400,000 cash-out refinance of a 105,752 square foot owner-user warehouse & distribution industrial building in Valencia, California. The single tenant is a non-credit owner-user who will utilize a portion of the loan proceeds for reinvestment into a building and operations expansion. Fixed for ten years at 4.69%, the non-recourse loan amortizes over 30 years.

    Challenge:
    Our Sponsor requested a non-recourse cash-out execution for a non-credit single tenant; not an ideal structure in today’s capital market lending environment. The physical improvements included a recently added 10,000 square foot building that lacked permits and a certificate of occupancy. Underwritten value was required from this unpermitted addition in order to maintain loan proceeds.

    Solution:
    George Smith Partners identified an institutional capital source that underwrote the transaction as an investor property and not as an on-going business concern. The pocket to pocket lease was supported by the strong industrial market location and supplemented with a list of multiple tenants interested in assuming occupancy should the Subject become available for lease. George Smith Partners worked with the lender to structure around the permitting issue by posting a small “permitting” reserve and allocating six months post-closing to obtain the Certificate of Occupancy for the addition. All additional square footage was used in underwriting, resulting in a higher underwritten value and allowing for a $2,000,000 cash-out through this refinance.

    Rate: 4.69%
    Term: 10 Years
    Amortization: 30 Years
    LTV: 60%
    Debt Yield: 8%
    Non-Recourse

  • Expand

    $3,000,000 Single-Tenant Industrial Floating @ 2.28%

    September 21, 2016

    George Smith Partners placed the $3,000,000 permanent refinance of a 40,000 square foot single-tenant industrial building in Gardena, California. Sized to 55% of value, the loan floats at LIBOR+1.75% for the 10 year term and is amortized over 30 years netting a substantial cash flow after debt service. Single tenant event risk was mitigated with the low loan to value and the vanilla use of this asset in a strong industrial market. Our Sponsor requested floating rate debt to take advantage of the low LIBOR index as well as maintain flexibility for future equity calls; either through sale or refinance.

    Rate: LIBOR+1.75%
    Term: 10 Years
    Amortization: 30 Years
    LTV: 55%
    Recourse

  • Expand

    $5,500,000 Cash-Out Multi-Tenant Industrial Business Park Non-Recourse Refinance

    September 14, 2016

    Transaction Description: George Smith Partners successfully placed the cash-out refinance of a multi-tenant industrial business park in Portland, Oregon. This non-recourse financing provided for a return of equity with no hold back to our Sponsor while allowing for an opportunity to earn a return on equity once the Borrower finalizes their business plan. At funding the property was 90% occupied in a 3% vacant market. Sized to 65% of current value and floating at LIBOR+4.75% (floored at 5.25%) interest only two years, there is no prepayment penalty or exit fee.

    Rate: LIBOR+4.75% w/5.25% Floor
    Term: 2 Years + Two 1-Year Extensions
    Amortization: Interest Only for Two Years; 20 Years on Extension Options
    LTV: 65%
    Prepayment: Open Prepayment
    Recourse: Non-Recourse
    Lender Fee: 1.00%

  • Expand

    $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%

  • Expand

    $16,000,000 Non-Recourse Acquisition Bridge Financing for an 85% Occupied, Three Property Multi-Tenant Industrial Portfolio

    May 31, 2016

    Transaction Description: GSP successfully structured and placed the non-recourse acquisition bridge loan for a three property multi-tenant industrial portfolio, totaling 305,000 square feet in the Western United States. At acquisition the portfolio was 85% occupied with a going in debt yield of sub-9.5%. $13,800,000 of the on-book financing was funded at closing with the remaining $2,200,000 is to be future funded for immediate property improvements, future upgrades which includes immediate funding for the Sponsors strategic spec-suite program, as well as future leasing costs. Interest will not be paid on future funding until disbursement. The properties are able to be released as long as the remaining collateral maintains a 1.35x debt service coverage ratio on outstanding loan balance. The interest rate floats at L+2.75% for a three year term on an interest only basis for the initial two years of the term, with one (1) two-year extension.

    Rate: L+2.75%
    Term: 3 years plus one 2-year extensions
    Amortization: Interest Only for initial 2-years
    LTC: 60%
    Prepayment: Open Prepayment
    Release Provisions: Structured release provisions
    Non-Recourse
    Lender Fee: 0.50%

  • Expand

    $22,800,000 Permanent Financing for a 2-Tenant Orange County Office/Industrial Asset

    May 25, 2016

    Transaction Description: George Smith Partners successfully placed a high leveraged, non-recourse $22,800,000 refinance for a mixed-use 225,000 square foot warehouse building with a significant office component. The Orange County, California property sits on a 12 acre parcel and was constructed in 1966 and subsequently renovated in 1985 and again in 2001. The 2001 renovation was structured to accommodate a government agency whose footprint occupies 60% of the gross improved square footage. Their build-out consists of 31% office (2-story), 19% air conditioned warehouse, and 50% conventional warehouse. Loan proceeds were allocated to cover additional tenant improvements and lease commissions as this agency recently extended for an additional 15 year term. The remaining square footage is leased to an industrial bakery who has occupied the property since 1989. Their lease rolls during this 10 year loan term. GSP sourced a capital provider who underwrote the tight market constraints and agreed to push proceeds below an 8.0% debt yield without layering on mezzanine debt. Fixed at 4.92% for 10 years, the non-recourse loan is interest-only for 2 years before rolling into a 30 year amortization schedule.

    Rate: 4.92%
    Term: 10 Years
    Amortization: 2 Years Interest Only; 30 Years Thereafter
    LTV: 75%
    Prepayment: Defeasance
    Non-Recourse
    Lender Fee: Par

  • Expand

    $26,750,000 Non-Recourse Acquisition Bridge Financing for an Off-Market, 74% Occupied, Four Property Multi-Tenant Industrial Portfolio

    April 27, 2016

    Transaction Description: George Smith Partners successfully structured and placed the non-recourse acquisition bridge loan for an off-market and significantly undermanaged four property multi-tenant industrial portfolio, totaling 445,000 square feet in the Western United States. At acquisition the portfolio was 74% occupied with a going in debt yield of sub 7.5%. $22,050,000 of the on-book financing was funded at closing. The remaining $4,700,000 is to be future funded for immediate property improvements, future upgrades including funds for the Sponsor’s strategic spec-suite program, as well as future good news leasing expenses. There are release provisions to allow individual buildings to be sold or refinanced. The interest rate floats at L+4.25% for a three year term on an interest only basis, with two (2) one year extensions. Our Sponsor purchased a two year cap at closing with a required renewal in the third year.

    Rate: L+4.25%
    Term: 3 years plus two 1-year extensions
    Amortization: Interest Only
    LTC: 67.5%
    Prepayment: Open Prepayment with 18 month interest make whole
    Release Provisions: Structured release provisions
    Non-Recourse
    Lender Fee: 1.00%

  • Expand

    $14,100,000 Cash-Out Re-Finance of an 83% Leased Multi-Tenant Industrial Business Park

    April 13, 2016

    Transaction Description: George Smith Partners successfully structured the cash-out non-recourse refinance of an 83% leased multi-tenant industrial business park. The Sponsor originally acquired the non-performing asset in 2014 and successfully executed their reposition plan; increasing physical occupancy and stabilizing cash flow. With the continued leasing velocity, the Borrower requested the opportunity to continue to capitalize on the remaining upside. This new financing structure provided an immediate return of equity while creating a floating rate debt stack with full flexibility and a limited reserve for tenant improvements and leasing commissions. Floating at LIBOR+3.50%, the three year term carries a 4.25% floor. There are two (2) one-year extensions, with no exit fee, and open to prepayment any time at par.

    Rate: L+3.50% w/4.25% Floor
    Term: 3 years plus two 1-year extensions
    Amortization: 25-years
    LTV: 65%
    Prepayment: Open
    Non-Recourse
    Lender Fee: 0.50%

  • Expand

    $2,000,000 Single-Tenant Industrial Cash-Out Refinance

    February 10, 2016

    Transaction Description: George Smith Partners successfully placed the $2,000,000 cash-out refinance of a single tenant industrial building in Pasadena, California. Occupied as an owner/user since 1998, our Sponsor was able to recoup $600,000 of his equity in addition to lowering his interest rate. Fixed at 4.0% for 7 years, the loan appraised to 28% of value and is amortized over a 20 year schedule.

    Challenge: Our Sponsor had ongoing litigation with the adjacent land owner over the addition of a fence. Lenders were concerned that the pending litigation could challenge title to the parcel and initially would not consider this request until this situation was resolved.

    Solution: GSP’s demonstrated that the value of the collateral would not be impacted should our Client not prevail in court. The favorable valuation (28% LTV) and heavy 20 year amortization provided additional comfort in securing new financing prior to this legal situation being resolved. This transaction funded prior to settlement without the requirement for additional collateral or reserves.

    Rate: 4.0% Fixed
    Term: 7 Years
    Amortization: 20 Years
    LTV: 28%
    Recourse

  • Expand

    Cash-Out on Flex Industrial w/Expiring Lease

    November 5, 2015

    Transaction Description: George Smith Partners successfully placed the 73% LTV refinance of a 17,000 square foot flex industrial building located in Bakersfield, California. Our Sponsor had recently acquired the asset utilizing seller carry-back financing to close in a timely manner. The subject property suffered from deferred maintenance and an easement encroachment/title issue relating to the previous owner. The current tenant lease was expiring and had not confirmed if they would vacate or roll. The new owner requested a capital fund to address the deferred maintenance issues and return a portion of his acquisition down payment. GSP identified a capital provider who became comfortable with our Sponsors’ business plan, financial strength and the market metrics. The lender also provided a waiver on loan proceeds based on actual value rather than the recent acquisition price. Fixed at 4.55% for five years, the recourse loan does not carry a pre-payment penalty.

    Rate: 4.55%
    Term: 5 Years
    Amort: 30 Years
    LTV: 73%
    Prepayment: None
    Recourse
    Lender Fee: Par