$7,000,000 Non-Recourse Financing for a Single Tenant Investment Grade Retail Property in Suburban Northern California
February 22, 2017
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.
October 26, 2016
GSP arranged the acquisition loan for a 9,928 square foot office building in Whittier, California for a first time real estate owner. The acquisition allowed our Sponsor to grow her counseling firm rehabilitating injured workers returning to the work force. Prior to engaging GSP, the Borrower sought SBA financing but was declined due to credit issues. GSP identified a bank and CDC (SBA) who invested the time to fully qualify the credit concerns of the borrower prior to issuance of application. The flow of communication and supporting documents led to the approval from both bank and CDC. Sized to 90% of cost the blended Bank 1st Trust Deed and SBA 2nd Trust Deed netted a 3.85% coupon, fixed for 10 years. Amortization is also blended between 25 and 20 years respectively for this recourse loan.
September 28, 2016
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.
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.
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.
May 18, 2016
Transaction Description: George Smith Partners secured a $22,000,000 non-recourse acquisition loan for the purchase of the world-famous Fred Segal Building in West Hollywood, California. The Sponsor required a capital provider that could provide the highest certainty of execution for this acquisition given a non-US status and lack of American based assets and operating accounts. The small 28,000 square foot improvement calculates to a leveraged $786 per square foot loan on an asset with 84% of the gross rentable square footage rolling over the next three years.
George Smith Partners identified an Lender that understood the unique attributes of the property and did not shy away from the high dollars per square foot despite the lack of credit tenants. The Sponsors are accomplished retailers who understand the dynamic changes taking place in this retail real estate market and the future Flagship possibilities of this location. Floating in the LIBOR “200s”, there is no floor for this three year non-recourse interest only transaction.
May 4, 2016
Transaction Description: George Smith Partners arranged the $1,350,000 refinance of a single tenant Tractor Supply Company in Paris, Tennessee. A ten-year loan term was structured despite only four years remaining on the single tenant lease. Fixed at 4.35% for ten years, the loan amortizes over 25 years and was sized to 65% of current value. There is no prepayment penalty for this recourse loan.
May 14, 2015
Transaction Description: Bryan Shaffer and Jon Shapiro successfully placed the refinance of a partially occupied SRO property in the heart of Los Angeles. SROs are dorm style multifamily with some shared bathrooms and no kitchens inside individual units. Funds are allocated to complete the rehabilitation of the subject property and complete lease-up beyond the current break-even coverage. Fixed at 7.9%, the 12 month non-recourse loan does not carry a prepayment penalty or exit fee.
December 18, 2014
Transaction Description: George Smith Partners successfully arranged the acquisition debt for the purchase of a Chevron Gas Station; ideally located to the fast growing, upscale Playa Vista area with easy access to the 405 freeway. The 11,000 square foot, 10 island/20 pump gasoline facility was constructed in 1995 and is environmentally clean. The facility also includes a mechanized car wash with cloth machinery, a large convenience store and a deli. Fixed for two years at 8.25%, the loan was sized to 85% of the acquisition price. There are no reserves or holdbacks from funding.
October 15, 2014
Transaction Description: George Smith Partners successfully placed the refinance of a 204,123 square foot Class A single-tenant office building. The tenant is a Fortune 500 company utilizing this space as a regional headquarters. Fixed for 5 years at 5.76%, the $51,000,000 loan is non-recourse; sized to 85% LTV & a 7.8% debt yield. There is no amortization as the loan is interest only for the entire 5 year term. The transaction included a complicated restructure of a former Tenants-In-Common Ownership roll-up into a single purpose entity. This refinance allowed the owners to exit a maturity default and remove themselves from the special servicer.
October 15, 2014
Transaction Description: Raffi Sarkissian secured the acquisition debt of an owner/user office building that will allow his client to relocate and expand his current operations. The Borrower was working through a technical default issue that precluded him from securing traditional SBA financing and historical cash flow did not support a loan of this size. Mr. Sarkissian identified a bank that underwrote proforma cash flow given the demonstrated increase of purchase orders, and understood the need for the expanded facility to supplement the increase of sales. Fixed at 4.75% for 10 years, the loan provides for a step-down prepayment, open after the 5th year, and was sized to 90% of the contract sale price. Rate: 4.75% Term: 10 Years LTC: 90% Prepayment: 5,4,3,2,1 Open Recourse Advisor:Raffi Sarkissian
September 20, 2014
9 – 17 – 2014
Transaction Description: GSP successfully placed the $1,430,000 refinance of a 13,754 square foot family owned Day Care Facility what was operating under a Chapter 11 bankruptcy. The Day Care Facility serves 140 students from kindergarten to 4th grade. Sized to 65% LTV, the 8.99% coupon is fixed for the 12 month term. Challenge: The Borrower was in default with debt service payments and was unable to refinance the asset due to contingencies with its business partner. Our Sponsor filed Chapter 11 bankruptcy in an attempt to negotiate a mutually beneficial resolution. Sufficient proceeds were needed to pay off the existing loan, buy out a shareholder and cover outstanding property taxes. Solution: GSP identified a capital provider who was comfortable with the on-going operating cash flow and agreed to fund the transaction out of bankruptcy. This proposal was ultimately approved by the court. Rate: 8.99% Fixed Term: 12 Months w/two-6 Month Ext Amort: Interest Only LTV: 65% Prepayment: 6 Months Yield Maintenance Recourse Advisor: Gilda Rivera
September 5, 2014
9 – 3 – 2014
Transaction Description: JJay Brooks secured a permanent loan for a non-credit single tenant grocer in a tertiary Northern California market. This financing provided a consolidation of the existing 1st Trust Deed and a higher yielding 2nd. As a build-to-suit, the lease rate was established as a return on cost. That and its’ tertiary location complicated the appraisal comparative process. Mr. Brooks identified a capital provider who was comfortable with the sales history and structured a tighter amortization period to minimize event risk. The 7 year term loan was sized to 65% LTV and is fixed at 4.90%, amortized over 15 years. This portfolio lender offered a step-down prepayment with the final two years open without penalty. Rate: 4.90% Term: 7 Years Amort: 15 Years LTV: 65% Prepayment: 5,4,3,2,1,0,0, Recourse Advisor: JJay Brooks
July 16, 2014
7 – 16 – 2014
Transaction Description: Raffi Sarkissian placed the acquisition loan of a 23,300 square foot industrial distribution center in a suburban Ventura County market. Sized to 90% of value, the 3rd party appraisal allowed for additional improvements to be funded through the loan that represented 98% of the initial purchase price. Comprised of a 1st and 2nd Trust Deed, the blended coupon of 4.9% is fixed for 20 years and carries a 10 year step-down prepayment to 1% in years 5 through 10. Rate: 4.9% Blended LTV: 90% Prepayment: Step-down for 10 Years Recourse Advisors: Raffi Sarkissian, Tylene Turner