Retail

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    $7,000,000 Non-Recourse Financing for a Single Tenant Investment Grade Retail Property in Suburban Northern California

    February 22, 2017

    Transaction Description:

    George Smith Partners successfully placed ten year fixed rate financing on a single tenant retail property located in Northern California. The building is occupied by a national drug store tenant on a 75 year lease with a 2032 termination option. The tenant signed a fixed rate lease at the top of the market in 2007 but reported year over year sales decline since 2012 due to increased competition in the trade area. These two factors resulted in a high occupancy cost. GSP identified a national lender able to underwrite the tenant’s full rent because of the lease’s long-term investment grade characteristics, despite the high current occupancy cost. Additionally, GSP highlighted the recent closure of another drug store in the trade area that will increase the tenant’s market share going forward and increase sales. The loan structure includes five years of Interest Only payments to maximize Sponsor cash flow, then converts to a 30-year amortization schedule. The 67% leverage loan has a fixed rate coupon of 4.87% for the 10-year term.

    Rate: 4.87% Fixed
    Term: 10 Years
    Amortization: 5 Years Interest only; 30 Year amortization thereafter
    LTV: 67%
    Guaranty: Non-Recourse
    Lender Fee: None

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    $4,950,000 Refinance of Retail Center Interest Only @ Low 4%

    February 22, 2017

    Transaction Description:

    George Smith Partners secured $4,950,000 for the refinance of a 20,020 square foot retail strip center located in Los Angeles, California. The Sponsor requested a rate and term refinance and was not interested in maximizing leverage. Accordingly, GSP was able to source a Lender known to compete aggressively on rate for lower leverage deals. Additionally, the property had two units located in a high-visibility corner pad, while the remaining units were inline strip space. The corner pad was leased at rates considerably higher than the inline space. Although it was challenging for the Lender and appraiser to support the higher rents of the corner pad, GSP provided extensive rent comparable data for freestanding pads in the submarket. Underwritten cash flow and property value were well supported and the Lender maintained originally quoted proceeds. Loan is fixed at 4.28% for 5 years, then floats at 6 month LIBOR plus 2.35%.

    Term: 10 years
    Rate: Fixed for 5 years at 4.28%, followed by floating at 6 month LIBOR plus 2.35%
    Amortization: 30 years
    Prepayment Penalty: 5,4,3,2,1
    LTV: 65% maximum
    DCR: 1.45
    Origination Fees: Par

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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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    $5,375,000 Acquisition Financing for Los Angeles In-Line Retail

    November 30, 2016

    Transaction Description:
    George Smith Partners successfully secured the $5,375,000 acquisition loan for the purchase of a Los Angeles in-line retail center. Sized to 65% of the purchase price, the loan is fixed for 5 years at 4.15% before floating at 2.5% over the 5 year CMT for the remaining 10 years of the term. Underwritten for a 25 year amortization schedule, there is no prepayment penalty for the 49,235 square foot collateral.

    Challenge:
    Physical occupancy was 75% at funding. Institutional permanent debt providers traditionally require 80% occupancy or more by close. The MAI appraisal needed to use a 5% vacancy factor in order to support the value and maintain loan proceeds and terms.

    Solution:
    GSP obtained historical data which proved the property consistently operated at over 90% occupancy for prior five years. Our Sponsor’s extensive experience leasing and stabilizing retail properties allowed us to gain a Policy Exception that generated competitive pricing and leverage. Market data supported the higher occupancy and allowed the MAI appraiser to underwrite to historical and market standards rather than the current “snap shot” occupancy.

    Rate: 4.15% Fixed for 5 years; resets at 5 year CMT + 2.5%
    Term: 15 years
    Amortization: 25 Years
    Prepayment Penalty: None
    LTV: 65%
    Lender Fee: $2,000
    Recourse

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    $10,700,000 Los Angeles Multifamily Construction Financing to 77% of Cost

    November 15, 2016

    George Smith Partners successfully placed the ground-up construction debt of 49 Class-A apartment rental units in the San Fernando Valley, Los Angeles. Sized to 77% of actual costs, this construction loan will also fund the development of 1,300 square feet of ground-floor retail for residents and the local community. Despite ample development experience in this market, most lenders were unwilling to reach beyond 70% of cost. A strong lender relationship, cobbled with supportive market data and a meaningful repayment guarantee, allowed us to secure 77% of actual cost while maintaining an institutional rate without the use of sub-debt. Priced at LIBOR + 2.95%, the two year term is floored at 3.25%.

    Rate: LIBOR + 2.95%
    Term: 24 Months
    Lender Fee: 0.75%
    LTC: 77.0%
    Recourse

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    $16,800,000 Refinance Movie Theater Anchored Retail Center in a Tertiary Market to 65% LTV

    November 2, 2016

    George Smith Partners arranged $16,800,000 for the rate & term refinance of a 91,000 square foot retail center anchored by a national movie theater. Located in the Inland Empire submarket of Los Angeles, this tertiary market location added a level of complexity for this special use retail asset. Our Sponsor sought to reduce monthly debt service yet maintain prepayment flexibility. The movie theatre operator is a privately held company and provided limited financial information for underwriting, but GSP sourced a regional lender experienced with this location and comfortable with Sponsor’s financial strength, track record and guarantee. Floating at 0.50% over WSJ Prime, the three year debt is sized to 65% of value with a 25-year amortization schedule and does not carry a prepayment penalty.

    Rate: WSJ Prime + 0.50%
    Term: 3 years
    Amortization: 25 years
    LTV: 65%
    DCR: 1.25
    Prepayment Penalty: None
    Lender Fee: 0.25%
    Recourse

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    $8,100,000 Non-Recourse Permanent Financing for Secondary Market Shadow Anchored Retail with Rollover Risk

    October 19, 2016

    Transaction Description: George Smith Partners successfully placed $8,100,000 in ten year fixed rate first mortgage financing on three big-box retail spaces occupied by national retailers in a secondary California Walmart shadow-anchored retail center. Constructed in 2015, all three tenants executed ten year lease terms, creating rollover event risk during the new loan term. George Smith Partners identified a national institutional lender able to provide a ten-year loan term despite not having historical sales. To mitigate the tenant rollover concentration at loan maturity, the transaction is structured with a cash flow sweep 12 months prior to two of the three tenants’ lease maturities. Sized to 68% of appraised value, the transaction includes five years of Interest Only payments prior to converting to a 30-year amortization schedule. This non-recourse loan carries a 4.54% fixed coupon.

    Rate: 4.54%
    Term: 10 Years
    Amortization: 5 Years Interest Only; 30 Years Thereafter
    LTV: 68%
    Guaranty: Non-Recourse
    Lender Fee: None

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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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    $9,600,000 Non-Recourse Acquisition Financing for a Two Tenant Non-Investment Grade Wisconsin Retail Property

    August 31, 2016

    George Smith Partners successfully placed $9,600,000 in permanent acquisition financing on a former Kmart building newly demised into two retail spaces and leased to a regional sporting goods store and national crafts store. The non-investment grade tenants recently signed 10 and 14 year leases and had no sales history at the property prior to close. George Smith Partners identified a national lender whose familiarity with the regional tenant and affluent suburban Milwaukee location allowed them to structure the transaction aggressively. The structure includes five years of Interest Only payments to maximize Sponsor cash flow and amortizes over 30 years for the balance of the 10 year term. A 12-month cash flow sweep prior to tenant lease expiration mitigates rollover risk at loan maturity without compromising on leverage or maintaining a significant ongoing reserve. The 70% leverage loan has a fixed rate coupon of 4.21% for the 10-year term.

    Rate: 4.21%
    Term: 10 Years
    Amortization: 5 Years Interest only; 30 Years Thereafter
    LTC: 70%
    Guaranty: Non-Recourse
    Lender Fee: None

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    $4,800,000 Recourse Bridge/Acquisition Financing for 50% Leased Shopping Center in Vista, California

    August 31, 2016

    George Smith Partners successfully arranged acquisition financing for a 50% leased shopping center in a 95% occupied retail market in Vista, California. The secondary market location was mitigated with our Sponsor’s resume and turn-around experience. His personal repayment guarantee allowed for aggressive pricing in the low 3% range. Sized to 63% of purchase and priced at LIBOR plus 275, the one-year term may roll into a 5, 7 or 10 year fixed-rate loan with an earn-out once stabilized.

    Rate: LIBOR + 2.75%
    Term: 12 months
    Amortization: Interest Only
    LTC: 63%
    Prepayment: 0.50% exit fee