Retail

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    $4,550,000 Refinance/Discounted Payoff for a Multi-Tenant Shadow Anchored Retail Center

    October 11, 2017

    George Smith Partners secured a $4,550,000 bridge loan to refinance a 2007 constructed, distressed 25,000 square foot shadow anchored shopping center in the Inland Empire. The CMBS note was purchased at a discount during the recession and the note buyer agreed to a discounted payoff with the borrower. The largest tenant vacated prior to loan maturity which added another level of complexity to the transaction. George Smith Partners sourced a Lender experienced with this location, comfortable with Sponsor’s financial strength, track record and guarantee. Our Sponsor was not required to invest additional cash into the transaction.  The new loan included an interest reserve as well as funds for leasing commissions, tenant improvements and no prepayment penalty.

    Rate: Confidential
    Term: 12 months plus extensions
    Amortization: Interest Only
    LTV: 75%
    Guarantee: Recourse
    Origination Fee: 1.00%

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    $9,730,000 Shadow Anchored Retail Acquisition Financing

    September 27, 2017

    Transaction Description:
    George Smith Partners secured $9,730,000 acquisition financing for a 56,747 square foot shadow anchored retail center that was 70% occupied at the close of escrow. Shadow anchored by Home Depot and Fry’s Food & Drug, the 14-tenant shopping center is located in a Southwestern MSA. Fixed at 4.2% for ten years, the loan amortizes over 25 years and does not carry a prepayment penalty.

    Challenges:
    During due diligence, a tenant representing 27% of the net rentable area terminated their lease bringing occupancy to 70%. Our Sponsors required a permanent loan execution and would not consider a bridge to perm option.

    Solutions:
    GSP identified a lending source who was knowledgeable about the strength of this sub-market and comfortable with 30% vacancy. They identified the upside potential and rental opportunities in the local market. Our Sponsor’s considerable investment track record and financial strength further solidified the loan strength and allowed for a permanent loan instead of a bridge loan.

    Rate: 4.2%
    Term: 10 year fixed rate loan
    Amortization: 25 years
    LTV: 69%
    Prepayment: None
    Guarantee: Recourse

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    80% Loan-to-Value, $11,250,000 Refinance of a 44% Occupied Retail Center Shadow Anchored by an Independent Grocery Chain

    August 16, 2017

    Transaction Description:
    GSP successfully placed $11,250,000 in non-recourse, floating-rate bridge debt on a 44% occupied, but 97% leased, 1960’s vintage Salt Lake City metro multi-tenant retail property. Although the property was only 44% physically occupied at loan application as a result of a planned re-tenanting program, the borrower recently executed two leases with large-format retailers that will bring occupancy to 97%. GSP identified a lender comfortable with the story behind the property’s 1) low physical occupancy at time of application, 2) grocery shadow anchor, 3) temporary tenants paying below-market rent during transition period, and 4) lack of supporting sale comps for the market. The short-term bridge loan was sized to 80% of as-is value, 75% of stable value, and included future funding to cover 100% of lease-up costs with interest not paid on unfunded proceeds until drawn.

    Rate: 30-Day LIBOR + 4.75%
    Term: 24-month initial term plus two 12-month extension options
    Amort: Interest only (initial term)
    LTV: 80% as-is, 75% as-stable
    Prepayment: 15-month spread maintenance
    Lender Fee: 1%
    Guaranty: Non-Recourse

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    $17,300,000 Rite Aid Portfolio Refinance

    July 26, 2017

    George Smith Partners placed the rate and term refinance of four stand-alone Rite Aid Drug Stores.  The loans are structured as four separate un-crossed loans to maintain reposition flexibility.  At the time of loan commitment, the Walgreens/Rite Aid merger was still under consideration by the FTC and it was unknown if Walgreens would close any of the subject units.  Our Sponsor wanted to maintain options and not to allow one store closure to negatively affect the remaining portfolio.  Store sales were not available.  Each lease has approximately 9.5 years remaining on the initial term.  The balance sheet loan is coterminous with the lease term and does not carry the traditional two-year lease hang-out.  No reserve structure is required prior to the tenant notice date, six months before the lease and subsequent loan expiration.  Fixed at 4.52% for five years, the rate will float over LIBOR for the remaining loan term and amortizes over 30 years.  Prepayment steps down allowing for additional reposition flexibly if needed.

    Loans: Four Stand-Alone Uncrossed Loans
    Rate: 4.52% Fixed for Five Years
    Term: 9.5 Years
    Amortization: 30 Years
    LTV: 50%
    Lender Fee: ½ point
    Prepayment: 5,4,3,2,1, open
    TI/LC Reserves: None

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    5 Day Close $3,000,000 Non-Recourse Bridge Loan on Fire Damaged Downtown LA Retail Property

    July 12, 2017

    Transaction Description
    George Smith Partners secured a $3,000,000 non-recourse bridge loan to demolish and begin the redevelopment of a fire damaged retail building on a prime corner in Downtown Los Angeles. After the fire, the sponsor decided to demolish and rezone the property. The long term plan is to redevelop the property into a mixed use building with ground floor retail, office, and condos. GSP used its experience and relationships to identify a private money lender who could understand the greater value of the project and was able to demonstrate both the inherent value of the property due to its extraordinary location as well as the future value of the project as completed. The lender was able to close in 5 days. The interest only loan is priced at 7.99% and represents 55% of the property’s current value. The loan has a 1-year term with a 1-year extension option and no prepayment penalty.

    Rate: 7.99%
    Term: 1 Year with a 1 Year Extension
    Amortization: Interest Only
    Guaranty: Non-Recourse
    Prepayment Penalty: None
    LTV: 55%

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    $5,275,000 Non-Recourse, Non-CMBS Permanent Loan Fixed for Seven Years

    June 14, 2017

    George Smith Partners successfully arranged a $5,275,000 non-recourse, 7-year fixed rate, non-CMBS loan for a non-anchored retail center in Imperial Beach, CA.  While the property is 100% occupied in a coastal California location, the Sponsor needed a non-recourse loan with a flexible prepayment penalty on a long-term fixed rate basis which is extremely hard to locate outside of CMBS. Life insurance companies were not able to get comfortable with the collateral since the largest tenant was a is a non-credit gym and there is significant near-term lease roll. Other bank lenders would not provide full credit for the significant cell tower income which limited their loan proceeds. GSP was able to identify a typically recourse lender that was willing to provide a non-recourse loan on this property and was able to underwrite the full cell tower income.

    Rate: 4.65%
    Term: 10-year term fixed for 7 years
    Loan to Value: 50%
    Prepayment Penalty: 5%, 4%, 3%, 2%, 1%
    Loan Fee: Par
    Guaranty: Non-Recourse

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    $3,700,000 Refinance for “Single Tenant” Subleased Retail Property in Mid-Atlantic Secondary Location

    June 7, 2017

    George Smith Partners arranged a $3,700,000 loan for a non-credit tenant that subleases a significant portion of the space.  The tenant is a middle market grocery chain recently acquired by a hedge fund.   The formerly public company is now private with no financials available.  The 31,000 square foot grocery store tenant subleases 8,000 square feet to an office supply store.  The challenge was finding a lender that could be comfortable with 8 years left on the lease (and the co-terminus sublease) in a secondary location with no continuing sales available.  GSP sourced a lender with local expertise that got comfortable with the historic sales that were reported prior to the tenant’s acquisition.   The short amortization and recourse were also risk mitigates.

    Rate: 4.25% Fixed
    Term: 5 years
    Amortization: 15 years
    Guaranty: Full Recourse
    Lender Fee: 0.30%

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    $11,500,000 Non-Recourse Refinance of a Recently Stabilized Los Angeles County Shopping Center Anchored by a National Discount Retailer and Shadow Anchored by a Regional Grocer

    June 7, 2017

    George Smith Partners successfully placed $11,500,000 of non-recourse, ten-year fixed rate first mortgage debt for the refinance of a 60,000 square foot multi-tenant retail property anchored by an investment grade rated discount retailer and shadow anchored by a successful regional ethnic grocer.  The property was 99% leased at loan closing, but only 79% occupied as three new tenants were in a four month build out and free rent period.  GSP worked with the lender to avoid a capitalized hold back of over $2,000,000 as the new tenants’ income was included in the underwritten income, but was not being collected yet. Instead GSP negotiated a structured a nominal six month rent and expense reserve held back at closing and released pro rata to Sponsor as the new tenants open for business.

    The lender became comfortable with this structure due to a combination of positive factors including a having a highly experienced sponsor, strong shadow anchor sales, below market rent for the anchor tenant with fixed low renewal rates, and a rent roll with over 50% investment grade rated tenancy.  The 4.59% fixed coupon loan is sized to an 8.0% debt yield and 1.25x debt coverage ratio and the 10-year term is interest only for the first five years, with a 30-year amortization schedule thereafter.

    Rate: 4.59%, Fixed
    Term: 10 years
    Amortization: 5 Years Interest Only; 30 Year Amortization thereafter
    Prepayment: Defeasance
    Guaranty: Non-Recourse
    Lender Fee: None

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    $11,700,000 Non-Recourse Acquisition Financing on a San Diego County Shopping Center with Near-Term Anchor Roll

    May 10, 2017

    GSP successfully placed $11,700,000 of non-recourse, ten-year fixed rate first mortgage debt for the acquisition of a 75,000 square foot Southern California multi-tenant retail property anchored by a regional Hispanic grocer and national discount retailer.  The 1970’s vintage property is 100% occupied and the two 25,000 square foot anchor tenants who comprise 67% of total collateral square footage.  The national discount retailer pays below market rent and its lease expires in 2018 with no renewal options, providing significant potential upside for equity and cash flow risk for debt.  GSP highlighted strong anchor sales and an experienced sponsor with extensive retail tenant relationships in order to get the lender comfortable sizing to a 7.7% debt yield.  The non-recourse loan has a 4.52% fixed coupon and the 10-year term is interest only for the first five years, with a 30-year amortization schedule thereafter.

    Rate: 4.52%, Fixed
    Term: 10 years
    Amortization: 5 Years Interest Only; 30 Year Amortization thereafter
    Prepayment: Defeasance
    Lender Fee: Par
    Guaranty: Non-Recourse

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    $11,845,000 Non-Recourse Acquisition and Reposition Financing up to 75% of Cost on a Non-Cash Flowing Retail Property in Los Angeles

    April 19, 2017

    George Smith Partners arranged an $11,845,000 first mortgage on a value-add retail property with no cash flow located along the main retail corridor of one of the hippest neighborhoods in Los Angeles. The national balance sheet lender provided a non-recourse loan to up to 75% of total project cost including 100% of future capital expenditure funds to gut renovate the asset and convert the property to high-end retail plus an addition of four apartment units. Due to the lack of cash flow, the lender structured a 20-month interest and carry reserve to cover debt service during the reposition period. Over 50% to total loan proceeds are allocated for future funding. Interest is not charged on funds until drawn.

    Rate: 30-Day LIBOR + 6.00%
    Term: Three years plus two 12-month extensions
    Amortization: 24 months interest only; 25-year amortization thereafter
    Max Loan to Cost: 75%
    Prepayment: 15-month lockout; open thereafter subject to 1.00% exit fee
    Guaranty: Non-recourse
    Lender Fee: 1.00%

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    $7,500,000 Cash-Out Refinance Senior and Stand-By Line of Credit

    April 19, 2017

    Transaction Description
    George Smith Partners placed a $7,500,000 refinance of two special use, unanchored multi-tenant retail properties located in the City of Industry. A sizable return on equity (142% of total capitalization) was permitted due to our Sponsors’ 20 year ownership and management history of the asset. This transaction was structured as senior debt funded at $4,300,000 and a $3,200,000 crossed-collateralized stand-by line of credit. Both vehicles were funded by the same capital source. Due to the special-use tenant mix, the senior debt was sized to 60% LTV and priced at Prime plus 1% fixed for five years and amortized over 25 years, while the credit line will float at Prime plus 1.5% for two years. Interest is only paid on funds drawn. There is no prepayment penalty for either tranche.

    Challenges
    Special use tenancy at both properties is subject to a CC&R review by the local municipality at the end of 2017. One tenant who occupies 20% of the net rentable square feet went dark and vacated the property during the due diligence process.

    Solutions
    GSP identified a regional lender that understood the market and was eager to build a relationship with our Sponsor, who has impressive real estate holdings, a long track record of execution and significant financial strength. By demonstrating that market rents and occupancy levels still allowed for significant debt service coverage, GSP was able to assist the lender in gaining comfort with the properties’ specialty-use and uncertain occupancy future.

    Rate: Senior Loan – Prime + 1%; Line of Credit – Prime + 1.5%
    Term: Senior Loan – 5 Years; Line of Credit – 2 Years + Extensions
    Amortization: Senior Loan – 25 Years; Line of Credit – Interest Only
    LTV: 60%
    DCR: Senior Loan – 1.25x; Line of Credit – 1.5x
    Recourse
    Lender Fee: 0.75%

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    $8,200,000 Quick Close Financing at 90% Loan to Cost on Un-Anchored Strip Retail Center

    April 3, 2017

    Transaction Description:
    George Smith Partners secured a $8,200,000 private money bridge loan to enable the renovation and re-tenanting of an un-anchored retail shopping center in Orange County, CA. The loan included over $1,500,000 of cash out to the sponsor at closing as well as $600,000 for future tenant improvements and renovations.

    Challenges:
    The sponsors requested maximum cash-out proceeds that dissuaded many capital providers. Additionally, several tenants were in the process of significantly upgrading their spaces and had unfinished renovations in place. Finally, the project had unsettled legal issues with one of the major tenants.

    Solution:
    GSP used its experience and relationships to identify a lender who could understand the greater value of the project and was able to demonstrate both the inherent value of the property due to its extraordinary location as well as the future value of the project as completed. As a result, the lender became comfortable with the loan’s basis per square foot.

    Rate: LIBOR + 8% (Capped at 9%)
    Amortization: Interest Only
    LTC: 90% Loan to Cost / 75% Loan to Value
    Term: One Year Term With (2) – One Year Options