Office

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    $4,500,000 Cash-Out Refinance of Medical/Office Building

    May 16, 2018

    George Smith Partners secured a $4,500,000 cash-out refinance loan for a 43,435 square foot medical/office property in Los Angeles. Within the past year, the Borrowers had successfully secured a number of new leases, considerably improving cash flow. GSP sourced a lender to pay off the in-place loan and provide a partial return of equity. Although the property has several anchor tenants under long term leases, multiple tenants continue to operate under month-to-month leases. GSP demonstrated that these tenants had remained in place for several years and maintain a close relationship with the Sponsors. Because of this relationship, our capital provider included cash flow from month-to-month and short-term tenants in their underwritten cash flow. The loan closed 50 days from application.

    Rate: Prime + 0.25%
    Term: 5 years
    Amortization: 25 years
    LTV: 65%
    Prepayment Penalty: None
    DCR: 1.25 at stabilization

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    $41,000,000 Bridge Loan – High-Leverage Acquisition Financing for a 71k SF Office Complex in Northern California

    April 25, 2018

    Challenge: The Sponsor required a highly leveraged structure to assure accretive equity returns. The 71,000 SF office building, while located in one of the best office markets in the country was being acquired as the largest asset in the sponsor’s portfolio from an institutional seller. Additionally, from the time escrow opened the financing was required to close in 60-days or less.

    Solution: George Smith Partners successfully closed a bridge financing facility by canvassing the market for the appropriate lender who not only understood the market, but also recognized the strength of the asset within that market. This allowed us to push towards 85% leverage. From the time we started the capital marketing effort, we were in application in approximately 3-weeks and closed within the short escrow period. This assured a smooth acquisition for our client with a very sophisticated seller.

    Rate: Libor + 5.62%
    LTV: 85% As-Is
    Term: 24 Months
    Amortization: Interest Only
    Recourse: None
    Lender Fee: 1%

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    $13,370,000 Cash-Out Permanent Financing For a Two-Tenant Research & Development Office Building in Salt Lake City, Utah

    April 11, 2018

    George Smith Partners secured $13,370,000 in cash-out permanent refinancing for a Class A 108,958 SF two-tenant office building in Salt Lake City, Utah. The purpose of the cash-out refinance is to pay off a maturing loan. With strong sponsorship and an experienced real estate investor, GSP identified a lender who was able to get comfortable with 75% loan to value. The loan was funded prior to receiving SNDA, and there was no holdback or reserves. Fixed for 10 years at 4.625%, the loan amortizes over 25 years with no prepayment penalty.

    Rate: 4.625%
    Term: 10 year fixed rate loan
    Amortization: 25 years
    LTV: 75%
    Prepayment: No prepayment penalty
    Guarantee: Recourse
    Lender Fee: Par
    Rate Lock: Free rate lock at signing of LOI for 90 days

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    $18,032,000 Non-Recourse Acquisition/Bridge Loan Secured by Orange County Office Portfolio

    April 11, 2018

    George Smith Partners successfully arranged non-recourse, floating-rate bridge debt on an 85%+ occupied but under performing portfolio of multi-tenant office properties located in Orange County. The portfolio includes four newly acquired office properties and the retiring of a loan encumbering a fifth office property owned by the client. Proceeds of the loan will be used to reposition all of the properties through the implementation of a strategic renovation and leasing program. In addition, the terms of the loan provide the partnership with the autonomy to execute its value-add strategy as well as the flexibility to distribute operating cash flow along with net sales proceeds resulting from the sale of properties thereby maximizing the portfolio-level returns.

    Rate: 3.75% + 1-Month LIBOR
    Term: 3 Years + 2, 1-Year Extension Options
    Amortization: Interest-Only During Initial Term, 30-Year Amortization Schedule During Extension Period
    LTC/LTV: 66% of cost/53% as-stabilized value
    Prepayment: 15-month spread maintenance
    Guarantee: Non-Recourse

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    $16,900,000 Bridge Financing to Acquire & Renovate a 50,000 sf, 7-Story Office Building in Downtown Los Angeles

    April 4, 2018

    George Smith Partners secured $16,900,000 in bridge financing to acquire and renovate a 7-story office building (first floor retail) in the Jewelry District and historic core of Downtown Los Angeles. The property was originally built in 1913 with open floor plates and is perfectly designed for a conversion to creative office. Even though the project is well-located in the path of DTLA development, some challenges included a lack of both Sponsor experience and credit tenant preleasing. Moreover, being a purchase transaction added additional pressure to close without delays. GSP sourced a Capital Provider to get comfortable with the Sponsor’s team, business plan execution ability, and guarantor of the main leaseholder. While the original financing request estimated a 35% prelease, the Sponsor was able to obtain 60% preleasing by loan funding.

    Rate: Libor + 505
    Term: 36 months
    Amortization: IO
    Loan-to-Cost: 69% LTC
    Guarantee: Non-Recourse

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    $8,250,000/ 80% Acquisition Loan for Large Church Office Campus

    March 21, 2018

    Transaction Description: George Smith Partners arranged an 80% acquisition financing for a large office building in Monterey Park, California. The sponsor for this transaction was a religious institution who was acquiring the property to serve as its main campus for community service and fundraising events. The religious institution previously operated its community service and fundraising events out of several smaller locations in Orange County, but needed to consolidate into one larger main campus. Fixed for 10 years at 6.75%, the acquisition loan represented 80% of the property’s value and is recourse to an entity. The loan amortizes over 30 years and has a 5,4,3,2,1 prepayment penalty.

    Challenges: Conventional lenders could not get comfortable with the transaction because of the niche religious use of the property. The owner-user element further complicated the deal. Many lenders also struggled because the large office building sat vacant for many years and there was no warm body guarantor. The religious institution also required a highly leveraged loan to complete the purchase of the office building.

    Solution: George Smith Partners understood the unique aspects of this transaction and ultimately identified a community development lender who was comfortable with both the religious use and the owner-user component of this deal. GSP also structured the transaction to be recourse to the entity, giving the lender further comfort with the deal. GSP was able to push leverage to 80% of the purchase price.

    Rate: 6.75%
    LTV: 80%
    Term: 10 years
    Amortization: 30 years
    Guarantee: Recourse to the entity
    Prepayment Penalty: 5,4,3,2,1

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    $3,700,000 3-Story Mixed-Use Retail & Office Construction Financing to 67% of Cost

    February 7, 2018

    George Smith Partners arranged $3,700,000 in construction financing to develop 15,860 square feet of retail and office in Old Town Temecula, California. The developer plans to lease the ground and second floor with retail tenants and reserve the 3rd floor for office tenants. The challenges of the financing included the use of EB-5 equity in a spec development within a tertiary market. Our Sponsor desired financing without pre-leasing requirements to take advantage of the demand for this dynamic location during construction. Significant market interest from prospective tenants proved the thesis to the capital provider on a speculative basis.

    Rate: WSJP+4.25%
    Term: 18-month term with Two 6-month extensions
    Amortization: IO
    LTC: 67% LTC
    Prepayment: 12-month minimum interest
    Guarantee: Recourse

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    $1,950,000 Refinance for Prime Los Angeles Owner/User Office; 75% LTV

    December 13, 2017

    George Smith Partners secured $1,950,000 for the refinance of an office building in the San Fernando Valley. The owners had purchased the property all cash six months prior and were seeking to recapture a portion of their equity. The ownership structure involved 4 businesses, 5 Trusts, and 7 individuals, all of whom had to go through the documentation process. Although the bank required full recourse from all of the Trusts, they were willing to waive repayment guarantees to some of the individuals behind the Trusts. Fixed for 20 years at 4.43%, the recourse loan was sized to 75% of the total capitalization. Amortization commences on a 20-year schedule and has a 5-year stepdown prepayment penalty.

    Rate: Fixed at 4.43%
    Term: 20 years
    Amortization: 20 years
    Prepayment Penalty: 5,4,3,2,1
    LTV: 75% of value
    Guarantee: Recourse

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    $8,800,000 Non-Recourse Refinance for Baton Rouge Office Buildings

    November 29, 2017

    George Smith Partners arranged $8,800,000 for the refinance of two multi-tenant office buildings located in Baton Rouge, Louisiana. GSP identified a capital provider that would accommodate the existing credit challenges of the borrower. Initially the financing included a third property that added lease roll mitigation. When the third property was dropped, the loan was extended to a 30-year amortization and a reserve trigger was created to deal with potential roll-over risk from numerous month-to-month leases and leases with termination rights.

    Rate: 5.1% Fixed
    Term: 10-year Term
    Amortization: 30 years
    LTV: 70%
    Guarantee: Non-Recourse

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    $11,600,000 For San Gabriel Valley Office @ 3.6% Fixed for Five Years; No Third Party Costs

    August 29, 2017

    Transaction Description
    George Smith Partners secured $11,600,000 of refinance loan proceeds with a national balance sheet lender for 74,911 square feet of office space in the San Gabriel Valley, approximately 25 miles east of downtown Los Angeles. Acquired by our Sponsor two years ago, several capital providers questioned the spike in value without the benefit of a significant capital upgrade program. The property had several vacant suites at the time of the Sponsor’s purchase. At the time of the refinance, over 80% of the leases were rolling within 5 years. GSP demonstrated that the Sponsor had added several new leases since acquisition, including an urgent care center and a retail bank branch. Our Sponsor successfully signed the new leases at market rents while re-signing existing tenants at higher rental rates. Rollover risk was reduced by the low leverage loan request and the sponsor’s excellent tenant retention record. Ownership is structured as Tenants In Common (TIC). Our capital provider accepted the TIC borrower structure and only underwrote individuals with ownership over 20%. Fixed at 3.6% for five years, the loan was sized to 60% of value and will amortize over 25 years. Prepayment is yield maintenance. There was no origination fee and the portfolio lender paid for all third party reports including title and escrow.

    Rate: 3.6%
    Term: 5 Years
    Amortization: 25 years
    LTV: 60%
    Prepayment Penalty: Yield Maintenance
    Origination Fee: Par; No Third-Party Costs
    DCR: 1.4

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    $9,050,000 San Gabriel Valley Medical Office @ 3.51% Fixed for Five Years; No Third Party Costs

    June 27, 2017

    Transaction Description
    George Smith Partners secured $9,050,000 of refinance loan proceeds with a national balance sheet lender for a 47,000 square foot medical office building in the San Gabriel Valley, approximately 25 miles east of downtown Los Angeles. Fixed at 3.51% for five years and sized to 60% of value, the loan will amortize over 25 years and carries a yield maintenance prepayment penalty. There was no origination fee and the portfolio lender paid for all third party reports.

    Challenge
    The property is owned under a Tenants-In-Common (TIC) structure, precluding most capital providers from funding the non-single purpose borrower. The TIC ownership also created a need for extensive documentation on all investors. Our secondary market location and nearest hospital located eight miles from the subject added additional drag on the refinance request.

    Solution
    Our balance sheet capital provider accepted the TIC structure subject to underwriter all individuals with ownership over 20%. Historical financial data documented the remarkable stability of cash flow with medical office tenants despite not being adjacent to a hospital. GSP surveyed the market and demonstrated that although the property was not located near a hospital, it offered medical providers and services that were unique to the area. This resulted in high patient volume and long-term tenants.

    Rate: 3.51%
    Term: 5 Years
    Amortization: 25 years
    LTV: 60%
    Prepayment Penalty: Yield Maintenance
    Origination Fee: Par; No Third-Party Costs
    DCR: 1.40

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    $5,100,000 Non-Recourse Bridge to Reposition an Industrial Building to Creative Office for a Single, Non-Credit Tenant

    June 21, 2017

    George Smith Partners arranged $5,100,000 of non-recourse, bridge financing to complete the conversion of a 26,000 square foot, 100% vacant, 1920’s vintage, industrial building into creative office space in a major Southwestern city. The property is well-located near a central business district and is 100% preleased to a single, non-credit-rated tenant. Although not investment-grade, GSP was able to source a Capital Provider comfortable with the tenant’s financial history and business operations. The sponsor acquired the property with cash and proceeds will be used to complete the conversion, taking advantage of the growing creative office market.

    Term: 24 Months + Two 12 mo. Extensions
    Rate: Confidential
    Amortization: Interest Only
    LTC: 74%
    Guaranty: Non-Recourse