Financings

Recent Financings

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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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    75% Loan-to-Value Non-Recourse Permanent Financing for a Neighborhood Retail Center in a Tertiary Southwest Market

    May 16, 2018

    GSP successfully placed $9,867,000 of non-recourse, ten-year fixed rate first mortgage debt for the acquisition of an approximately 100,000 square foot, 1980’s vintage, 97% occupied multi-tenant retail property anchored by a national discount retailer and national drugstore. The anchor leases expire in 2019 and 2020, respectively, and almost 80% of leases at the property roll during the first five years of the loan term. GSP sourced a lender able to achieve 75% leverage non-recourse financing despite the tertiary location, and the loan is structured with an upfront holdback of $275,000 allocated for tenant improvement and leasing commission costs to mitigate near-term tenant rollover.

    The 75% leverage non-recourse loan was sized to the greater of an 8.5% debt yield or 1.30x debt service coverage ratio on the 4.91% fixed rate coupon. The 10-year term has one year of Interest Only payments and a 30-year amortization schedule thereafter.

    Rate: 4.91%, Fixed
    Term: 10 years
    Amortization: 1 Year Interest Only; 30 Year Amortization thereafter
    LTV: 75%
    Prepayment: Yield Maintenance
    Lender Fee: None

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    7 Day Quick Close Acquisition Bridge Loan for 3 Unit Property in South Los Angeles

    May 9, 2018

    George Smith Partners arranged a quick close acquisition bridge loan for an REO triplex in South Los Angeles. The sponsor approached GSP with an extremely tight closing timeframe of 7 days and a property that had just recently been foreclosed on and had significant deferred maintenance. The sponsor valued certainty of execution above all else, so he could close on the property in short order. GSP identified a non-bank private individual willing to make the loan with no origination fee. Sized to 80% of purchase with no holdback requirement for interest reserve or capital expenditures, the loan carries a 12 month term, interest only payments at a 9.5% rate and a 3 month prepayment penalty.

    Rate: 9.5% Fixed
    Term: 12 Months
    Amortization: Interest Only
    LTV: 80% of Purchase / 65% of Stabilized Value
    Guarantee: Recourse
    Prepayment Penalty: Three Months
    Lender Fee: None

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    80% Loan to Cost Bridge Loan for New/Vacant Skilled Nursing Facility in Pacific Southwest

    May 9, 2018

    Transaction Description:
    George Smith Partners arranged the $6,500,000 in bridge financing for a Skilled Nursing Facility in the Pacific Southwest. The bridge loan took out a construction loan GSP had previously placed on the same project and was necessary to provide capital to the sponsor. The sponsor needed capital to begin operations of the facility as well as to secure the required approvals to house Medicare patients. Fixed for 10 years at 6.75%, the bridge loan represented 80% of the property’s cost and is recourse. The loan amortizes over 30 years and holds a 5,4,3,2,1 prepayment penalty.

    Challenges:
    The building had no existing cash flow, and conventional lenders could not get comfortable with the unique use of the property. Additionally, while the sponsor was very experienced as an operator of Skilled Nursing Facilities, this was his first development project. Furthermore, the only way the sponsor could finish the project, start operations, and secure the necessary approvals was if this bridge loan provided all of the required capital to do so. Every aspect of building and opening the facility was not only incredibly capital intensive, but also required government approval.

    Solution:
    With an expertise in financing Senior Housing, George Smith Partners understood the importance of proving the strength of the operator of the Skilled Nursing Facility and carefully demonstrated this particular operator’s track record and abilities to interested lenders. GSP ultimately identified a community development lender that we have a very strong relationship with, who was comfortable with the niche use of the property. By proving the stabilized value of the property to the lender, GSP was able to push leverage to provide the sponsor the necessary capital for finishing construction, for starting operations, and for gaining the necessary approvals.

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

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    $1,295,000 Cash-Out Permanent Financing for a 73% Occupied Multi-Tenant Shopping Center

    May 2, 2018

    George Smith Partners successfully arranged $1,295,000 in cash-out permanent refinance secured by a 10,047 SF, 10-tenant shopping center.

    The property is currently 73% occupied with short term leases, and tenants are non-credit local businesses. GSP identified a capital provider that provided a free rate lock at signing of the LOI for 90 days, was comfortable with the local retail market, and the possibility for potential tenants to execute new leases. Fixed for 3 years at 4.5%, the loan amortizes over 25 years with no prepayment penalty.

    Rate: 4.5%
    Term: 3 year fixed rate loan
    Amortization: 25 years
    Loan to Value: 70%
    DSCR: 1.25X
    Guarantee: Recourse
    Prepayment Penalty: None
    Lender Fee: Par
    TI/LC Reserves: No upfront TI/LC holdbacks and on-going reserves

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    $38,750,000 Acquisition Loan for Retail Parcels in Prime Southern California Location

    May 2, 2018

    George Smith Partners secured $38,750,000 of acquisition financing for the purchase of a retail assemblage in West Hollywood, CA. The Assemblage is currently 100% occupied on month-to-month leases and provides sufficient cash flow to cover all operating and debt service costs. The Sponsor purchased the property with plans to entitle for a mixed-use project which would include condos and a hotel. The lender was able to get comfortable with the entitlement risk due to the Sponsor’s strong track record in the market, the irreplaceable location, and the ability to generate significant additional revenue through already approved billboards. The recourse loan was sized to 62% of as-is LTV, 70% LTC, and is priced at LIBOR + 3.75%. The financing has a 3-year term with a 1-year extension and a stepdown prepayment.

    Rate: LIBOR + 3.75%
    Term: 36 months with a 12 month extension
    Amortization: Interest Only
    LTC: 70%
    LTV: 62% of as-is value
    Guarantee: Recourse
    Prepayment Penalty: 1.0% for first 12 months, 0.5% for next 12 months, open thereafter

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    $2,300,000 Cash-Out Refinance at 3.87% Fixed for Seven Years, Non-Recourse

    April 25, 2018

    George Smith Partners secured $2,300,000 for the cash-out refinance of a 23-unit stabilized multifamily property in Cypress, CA. Constructed in 1988 the property is located in close proximity to Cypress College. Fixed at 3.87% for seven years, the non-recourse loan floats at 6-month LIBOR + 2.35% for the remaining 23-year term. The non-recourse loan is fully amortizing and has a 5,4,3,2,1 step down prepayment penalty.

    Rate: 3.87% Fixed for 7 years; 6 Month LIBOR + 2.35% thereafter
    Term: 30 years
    Amortization: 30 Years
    Prepayment Penalty: 5,4,3,2,1
    LTV: 50%
    DCR: 1.15
    Guarantee: Non-Recourse
    Origination Fees: Par

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    $5,750,000 90% LTC Acquisition Bridge Financing for Mixed-Use Development in Burbank, CA

    April 25, 2018

    Transaction Description:
    George Smith Partners arranged $5,750,000 in bridge financing for the acquisition of a retail building and the refinance of five contiguous office and retail buildings. Together these buildings form half a city block in Burbank, CA. The loan not only allowed for the consolidation of properties, but also provided predevelopment and entitlement capital for the future redevelopment of the city block into a large mixed-use development. Because of the future plans, the Sponsor was charging below market rents and a low cash-flow to value. The 10 year 90%/70% LTC/LTV loan has a fixed interest rate of 4.25% for the first 36 months of the term. Subsequently, the loan transitions to a 1-year ARM set at 2.75% over the 3-year treasury benchmark through maturation. The recourse loan has no prepayment penalty.

    Challenges:
    The Sponsor required the highest proceeds possible in order to complete the acquisition of the retail building and have enough capital for predevelopment and entitlement expenses for the future mixed-use development. However, the current in-place cash-flow on the five contiguous office and retail buildings severely limited the proceeds most lenders could become comfortable with providing. Additionally, with the impending redevelopment, the Sponsor wanted a loan with no prepayment penalty. Finally, the Sponsor had a tight window to close on the acquisition of the retail building.

    Solution:
    George Smith Partners understood based on the in-place cash flow of the five contiguous office and retail buildings, most lenders could not get to the desired proceeds required by the borrower. GSP ultimately utilized its relationships to identify an unconventional lender who used the actual rate rather than an underwriting rate when working through their internal underwriting constraints. As a result, this lender became comfortable with the proceeds number required by the Sponsor. GSP was able to structure the loan to have no prepayment penalty and close the loan timely for the impending acquisition.

    Rate: Fixed at 4.25% for 36 months; converting to an ARM for next 7 years at 2.75% over the 3-year treasury
    Term: 10 years
    Amortization: 30 Years
    Interest Only: 3 years
    Prepayment Penalty: 2,1
    LTC/LTV: 90% LTC/ 70% LTV
    Origination Fee: Par
    Guarantee: Recourse

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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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    Acquisition Bridge Loan for a Value Added 10 Unit Multifamily Property in Inglewood, CA

    April 18, 2018

    George Smith Partners arranged acquisition bridge financing for a 10 unit value-add multifamily property in Inglewood, California. Despite the property’s location in Inglewood’s gentrifying northwest corridor, the lender’s appraisal value and cash flow underwriting came in below the sponsor’s proforma, which would have resulted in lower loan proceeds that could have jeopardized the transaction. To assist the lender in getting comfortable with the sponsor’s requested loan amount, George Smith Partners provided market rent and sales comparables supporting the requested loan proceeds and leveraged it’s strong relationship with the lender to ultimately get proceeds up to an acceptable level.

    Sized to 65% of total project cost, the loan includes 100% of future funding for property renovation, which includes a full gut renovation of unit interiors and an exterior upgrade. The two year bridge loan is interest only and floats at Prime plus 0.5% (5.25% today) with no prepayment penalty. Interest is not charged on the holdback until funds, and the loan was structured with an interest reserve to mitigate the property’s weak cash flow during the renovation period. The lender fee was a low 0.5.

    Rate: Prime + 0.5% (5.25% today)
    LTC / LTV: 65% / 65%, including 100% of future funding and interest reserve
    Term: 2 Years
    Amortization: Interest Only
    Recourse: Full Recourse
    Prepayment Penalty: None
    Lender Fee: 0.5%

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    $85,200,000 Acquisition Financing of a Regional Retail Power Center in Suburban Utah

    April 18, 2018

    GSP arranged $85,200,000 in non-recourse acquisition funding for an approximately 60-acre, double grocer-anchored Utah power center 86% leased to over 60 national and local tenants.

    The 60% leverage loan on almost 700,000 square feet of retail space was 100% funded at acquisition and allows flexibility for the release of collateral during the term at the borrower’s option, subject to predetermined paydowns. This structure affords the sponsor the opportunity to pursue concurrent business plans of leasing the overall shopping center up to market occupancy while simultaneously selling off individual parcels to NNN lease investors subject to market demand.

    The non-recourse loan priced at one-month LIBOR plus 2.40% and required a LIBOR cap with a 3.50% strike price. The borrower elected to purchase a 24-month cap at closing, however the lender structured the cap term in 12-month increments to reduce the overall cap cost to borrower by shortening the cap’s duration. The loan features Interest Only payments for the three-year initial term in order to maximize cash flow available for distribution to investors. The loan is open for prepayment at any time subject to a 1% fee during the first 12 months, and is open for prepayment at par thereafter.

    Rate: 30-Day LIBOR + 2.40%
    Term: Three years plus two 12-month extensions
    Amortization: Interest Only during Initial Term
    Max Loan to Value: 60%
    Prepayment: 1% months 1-12; open thereafter
    Lender Fee: 0.75%

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    4,950,000 Non-Recourse, 10-Year Permanent Loan with Flexible Prepay

    April 11, 2018

    George Smith Partners secured $4,950,000 of permanent financing for two industrial buildings (one single tenant, one two tenants) located in Castaic, California. The 30-foot clear height buildings are located side-by-side and collectively total 57,825 square feet. One of the properties was constructed in 2011, while the other was built in 2016. The buildings are both 100% occupied but all of the tenants have lease terms that expire within the next four years. GSP was able to identify a capital source that would provide a non-recourse, long-term fixed rate loan. The borrower wanted to maximize cash flow which was achieved by taking minimal ongoing reserves, securing a 30-year amortization, and negotiating four years of interest only. The 10-year loan was priced at 5.17% at 65% LTV and offers a stepdown prepayment structure.

    Rate: 5.17% Fixed
    Term: 10 years
    Amortization: Interest Only for 4 Years then 30-Year Amortization Thereafter
    LTV: 65%
    Prepayment: Annual Stepdown from 10% to 1%
    Guarantee: Non-Recourse