$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.
June 21, 2017
George Smith Partners arranged the acquisition financing for a single tenant office located in the downtown area of a top Southern California market. The tenant is a private technology company that has 2 years remaining on their lease term. Due to the short lease term, GSP structured in reserves for tenant improvements, leasing commissions, and interest payments in the event that the tenant decides to vacate. If the tenant signs a new lease, the reserves that were held back will be released to the Sponsor. The lender was able to get comfortable with funding the reserves since the tenant is currently paying below-market rents and the property should see an increase in value with higher implemented rents at lease expiration. The financing has a 3-year term and carries a 5-year extension option that can be executed once the tenancy has been finalized and certain financial metrics have been realized. The recourse loan has an initial funding of $8,990,000 and is sized to 70% of total cost, floating at a rate of 2.75% over the one month LIBOR. The additional future funding for re-tenanting the building is not charged interest until drawn.
March 22, 2017
George Smith Partners arranged $5,000,000 for the acquisition of a newly constructed, 17,200 square foot single tenant build-to-suit Rite Aid. Our Sponsor was focused on minimizing monthly debt service costs plus maintaining prepayment flexibility. The proposed Rite Aid acquisition by Walgreens and the tertiary market location added levels of complexity to the transaction. After evaluating the firm’s extensive lending relationships, GSP sourced a regional lender experienced with this location and comfortable with Sponsor’s financial strength, track record, and personal guarantee. The loan is fixed at 4.75% for five years with a 30-year amortization schedule, sized to a 1.20x DSCR, and is open to prepayment at any time. The lender charged a nominal fixed $2,500 cost for loan processing and documentation.
Rate: 4.75% fixed
Term: 5 years
Amortization: 30 years
Prepayment Penalty: None
Lender Fee: 0.50%
- Advisors: Loren Bedolla
March 8, 2017
George Smith Partners secured $1,420,000 in acquisition financing for a single tenant building in Atwater, California. The tenant is a national bank with a strong credit rating and has seven years remaining on the lease with extension options available. The Sponsor wanted to put long term fixed-rate financing on the property. GSP was able to identify a capital source that would provide a 10-year term, even though the tenant rolls within that period. The interest rate is fixed at 4.375% for the first 6 years of the loan. The rate then resets and is fixed again for the last 4 years, with a maximum increase of 50 basis points above the original rate (4.875%). This ensures that the Sponsor has a fixed rate throughout the entirety of the 10-year term, and eliminates interest rate risk. Loan proceeds were constrained by a 1.25x DSCR on a 25 year amortization.
$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.