Financings

Recent Financings

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    $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.

    Term: 24 Months + Two 12 mo. Extensions
    Rate: Confidential
    Amortization: Interest Only
    LTC: 74%
    Guaranty: Non-Recourse

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    $11,355,000 Acquisition Loan for Single Tenant Office in Prime Downtown Location

    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.

    Term: 3 Years with one, 5-year extension
    Rate: Floating at 2.75% over 1-month LIBOR
    Amortization: 25 years
    Prepayment Penalty: 1% for the first 24 months, open thereafter
    LTC: 70%
    Origination Fee: 1.0%
    Guaranty: Recourse

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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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    $16,250,000 Ground-Up Construction Loan Fixed for Seven Years at 4.0%

    June 14, 2017

    George Smith Partners facilitated the seven-year fixed-rate construction loan for the ground-up development of 60 Los Angeles “For Rent” housing units.  As part of this capitalization, GSP placed the land acquisition debt in 2015.  Sized to 75% of actual development costs, this institutional capital provider will fund all draw requests at the 4.0% rate that was locked at application.  Interest is paid as drawn; there is no negative arbitrage.  The ten-year term negates the need to process a mini-perm upon Certificate of Occupancy and removes future interest rate risk.  The recourse loan is fixed for seven years at 4.0% and floats at 275 over LIBOR for the remainder of the ten-year term.  Prepayment steps down; 2,2,1,1 open.

    Rate: 4.0% fixed
    Term: Ten Years Fixed for Seven Years
    Amortization: IO During Construction; 27.5 Years thereafter
    Loan to Cost: 75%
    Prepayment: 2,2,1,1
    Loan Fee: 1.0%
    Guaranty: 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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    $10,500,000 Jacksonville Multifamily Acquisition Permanent Loan to 75% of Value

    June 7, 2017

    George Smith Partners secured $10,500,000 non-recourse acquisition permanent financing to purchase a 216-unit, 1970s vintage multifamily property in Jacksonville, FL.  The six building property sits on a 12-acre site and is well located near the Oakleaf Town Center.  Amenities include swimming pool, fitness center, and a playground.  The sponsor acquired the property to take advantage of an opportunity to upgrade units and increase rents. Proceeds included $402,000 for interior unit improvements, exterior improvements, and exterior deferred maintenance. GSP sourced a Capital Provider who underwrote pro forma expenses by recognizing the incoming property management company’s track record for efficiently managing similar properties in the market.

    Rate: 4.74%
    Amortization: 3 Years Interest Only: 30 Year Amortization thereafter
    LTV: 75%
    Term: 12 Years
    Prepayment Penalty: Yield Maintenance for 11 Years 6 Months
    Guaranty: Non-Recourse
    Lender Fee: Par

     

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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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    $7,100,000 Multifamily Acquisition Loan; 4.02% Fixed

    May 31, 2017

    Transaction Description:
    George Smith Partners secured $7,100,000 for the purchase of a stabilized 58 unit Los Angeles apartment building. Fixed at 4.02% for seven years, the loan self-liquidates and will float at 6 month LIBOR plus 2.35% for the remaining 23 years of the term. Prepayment steps down from 5% and has no prepayment penalty the final two years of the seven year fixed period.

    Challenge:
    Our subject property had been operated with unusually high expenses. These expenses included an exorbitant security contract and an onsite manager that received an above-market salary in addition to free rent. The seller had also not taken advantage of income opportunities such as utility reimbursements. Underwriters were cash flow constrained, limiting proceeds needed for the acquisition.

    Solution:
    GSP emphasized the Sponsor’s strong track record of acquiring and improving multifamily properties in this market. In discussions with capital providers, GSP provided supporting comparable data to demonstrate above market operating expenses and specific non-recurring expenses that would not be incurred on a go-forward basis. GSP identified a regional bank that agreed to underwrite to a 1.15 debt coverage ratio based on our Sponsors’ operating budget. The loan closed in 60 days with no change to the original terms.

    Rate: 4.02% Fixed for 7 years; 6 Month LIBOR + 2.35% thereafter
    Term: 30 years
    Amortization: 30 Years thereafter
    Prepayment Penalty: 5, 4, 3, 2, 1
    LTV: 65%
    DCR: 1.15
    Origination Fees: Par

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    $14,048,000 Cash-Out Bridge Loan for Six Mid-Construction Luxury Waterfront SFRs in Florida

    May 31, 2017

    Transaction Description:
    George Smith Partners secured a total of $14,048,000 cash-out bridge financing for six mid-construction luxury waterfront single family residences in Naples, Florida. The sponsor self-funded the developments to date and sought to use the proceeds to finish construction and recapitalize for other projects.

    Challenge:
    Our sponsor requested maximum loan proceeds in order to pay off an existing bridge loan that was leveraged at an average of 50-60% LTC, finish the construction, and provide cash-out for other similar developments. Many lenders were not comfortable providing a bridge loan to refinance another bridge loan and reluctant to provide cash-out before the projects were complete. In addition, luxury home development was deemed risky due to its vulnerability in a market downturn.

    Solution:
    GSP identified a private capital source who was comfortable with the incomplete projects and understood the upside potential at completion. Our Sponsor’s considerable development track record and financial strength further encouraged the lender not to shy away from the challenges. Sized to an average of 70-75% of total cost and 45-55% of as-complete value, the 12-month loan is interest only with no prepayment penalty or yield maintenance.

    Rate: 10%
    Term: 12 Months + Two 3 Month Extension
    Amortization: Interest Only
    LTC: 70-75%
    Guaranty: Recourse
    Prepayment Penalty: None

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    $35,000,000: $25,200,000 “Non-Recourse” Credit Facility and $9,800,000 in JV Equity Financing for 97,440 SF Creative Office Conversion with Ground Floor Retail in Downtown Los Angeles

    May 31, 2017

    Transaction Description:
    George Smith Partners secured $35,000,000 in capital for the conversion of the Norton Building, located in the Fashion District of Downtown Los Angeles. The capital is going to be used to convert the existing mixed-use asset into creative office space with ground floor retail. The $35,000,000 was comprised of a $25,200,000 non-recourse credit facility, which was split into a $12,900,000 term loan fully funded at time of closing and a delayed draw term loan of up to $12,300,000 for tenant improvements and leasing commissions.  Additionally, the capital stack was topped off with $9,800,000 in joint venture equity financing which was also arranged by GSP.

    Challenge:
    The project was one of the first of its kind in the sub-market and GSP needed to ensure capital providers were comfortable with the demand for creative office tenants within this sub-market of Downtown Los Angeles.

    Solution:
    George Smith Partners was able to demonstrate the market demand for creative office space via recent leasing trends within the sub-market. Additionally, GSP leveraged off of preliminary negotiations the Sponsor had with potential tenants in order to demonstrate the demand for creative office space at this location.

    Debt Terms: Confidential

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    $5,400,000 Financing Closed in 5 Days for Fix and Flip Property in Hollywood Hills

    May 24, 2017

    George Smith Partners secured acquisition financing within 5 days of application for a Fix and Flip property located in Hollywood Hills, CA.  The loan is fixed for one year with additional extension options available as needed.  The sponsor received a special price as long as they were able to close in 5 days. GSP used its experience and relationships to identify a lender who could close in that time frame and provide 65% of purchase price. The sponsor acquired the property to renovate and lease out and the lender was able to quickly underwrite the business plan.

    Term: 1 Year
    Amortization: Interest Only
    Rate: 7.99%
    Loan To Value: 65% of purchase price
    Prepayment Penalty: None
    Origination Fee: 1%
    Guaranty: Non-Recourse

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    $4,080,000 Adaptive Re-Use Bridge Loan for the Conversion of a Former Chapel to a Bed & Breakfast

    May 24, 2017

    George Smith Partners successfully placed the $4,080,000 adaptive re-use bridge loan for the conversion of a former chapel to a 10 unit Bed & Breakfast (B&B) in Napa, CA. When the property was purchased in 2015, our sponsor, a local developer, saw that a B&B would be the highest and best use due to its prime location, being in the heart of downtown Napa. After a year of getting the property entitled and permitted, GSP was hired to fund the conversion.

    Challenge: Our sponsor initially requested a SBA loan due to its competitive rate and high leverage bridge and permanent debt. However, since the subject property was purchased with other parcels under one note, SBA took into account those other parcels in their occupancy calculation and the property became below SBA’s 51% “owner-occupied” threshold. In addition, the seller’s note used to purchase the property was ineligible for SBA refinance.

    Solution: In order to prime this transaction for a SBA take out, GSP used this bridge loan to (1) refinance the subject property with a loan that is separate from the other parcels, fulfilling the 51% “owner-occupied” threshold (2) replace the ineligible seller note, allowing SBA to refinance the debt, (3) complete the conversion and make the deal more compelling since there will be no construction risk for the SBA lender.  Sponsor anticipates to taking out this bridge loan after the 9 month construction period with an SBA permanent loan already arranged by GSP.

    Rate: 11%
    Term: 18 Months
    Amortization: Interest Only
    Loan To Cost: 65%
    Prepayment Penalty: 9 Months Minimum Interest
    Lender Fee: 2.25%
    Guaranty: Recourse