Financings

Recent Financings

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    $5,300,000 Acquisition Financing for Creative Office Value-Add in Seattle

    March 13, 2019

    Transaction Description:
    George Smith Partners successfully arranged financing for a 25,000 sq ft office property in the Georgetown neighborhood of Seattle. The Sponsor purchased the Property to capitalize on the success of the adjacent property, the Seattle Design Center, which is showroom space for design-related tenants.

    Challenges:
    While the Sponsor intends to add value through improving the physical appearance of the building and lease it to creative or design-related tenants, the building had existing tenants at below market rent with lease expirations through 2021. Many lenders were not comfortable with the Sponsors ability to negotiate with the existing tenants to vacate. Lenders were also concerned with the depth of tenants in this submarket as it is in the midst of gentrification.

    Solutions:
    George Smith Partners located a lender that was comfortable with the Sponsors track record in the submarket and with the value-add business plan. The Lender was able to provide a short-term, fixed rate loan that provided reserves for the capital improvements to the façade and tenant improvements for the interior units.

    Rate: 6.25% fixed
    Term: 36 Months
    Amortization: Interest Only for the first 24 months, then 30 year amortization
    Prepayment Penalty: 5,4,3,2,1,0
    LTC: 75%
    LTV: 70%

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    $5,900,000 Cash-Out Financing for Office Building with Short Term Lease, Pasadena, CA

    March 13, 2019

    Transaction Description:

    George Smith Partners arranged $5,900,000 of cash-out refinancing for a 21,220 SF office property occupied by a non-profit tenant in Pasadena, CA. The Property is 100% leased to a non-profit tenant with 4.5 years of remaining on the lease term. The challenge was finding a 5 year loan term option despite the short term nature of the lease.

    GSP was able to exceed the Sponsors expectation with respect to cash-out proceeds which were based on 70% “as is” LTV. The 5-year floating-rate execution is partial-recourse and amortizes over 25 years with a partial cash flow sweep while still providing net cash flow to the Borrower. The floating rate was 370 bps over the 30 day Libor.

    Rate: 6.20%
    Term: 3 year term with two 1-year extension options and 33 bps extension fee contingent upon min 1.20 DSCR, max LTV of 65%
    Amortization: 25 years
    Loan to Value: 70% max LTV “as is”, 65% LTV at each extension
    Yield Maintenance: 24 months
    Guaranty: Partial-Recourse, 25% of the loan amount

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    $4,250,000 in Permanent Financing for a Four Property Assemblage in Glendale, CA

    March 6, 2019

    Transaction Description:

    George Smith Partners arranged $4,250,000 of permanent financing for a four-property mixed use located in Glendale, CA. The portfolio totals 25,000 square feet and is 100% leased to a variety of technology-based tenants. The non-recourse financing accomplished the Sponsor’s business plan to refinance an existing loan on three of the properties while adding another parcel to the collateral. The properties are nearly contiguous within a two block area. GSP arranged the original bridge and then perm financing on the original properties in 2013-2015. The existing lender waived prepayment for the existing loan in order to underwrite the new financing. The 10-year permanent loan is sized to 60% LTV and has a stepdown prepayment structure. It includes three years of interest only followed by a 30-year amortization and carries a fixed rate of 5.15% over the life of the loan.

    Rate: 5.15% Fixed
    Term: 10 Years
    Interest Only: 3 Years
    Amortization: 30 Years
    Prepayment Penalty: Stepdown, 10-1%
    LTV: 60%
    DCR: 1.30x

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    $7,600,000 in Non-Recourse Permanent Financing for a Single Tenant Medical Office Property with 100% Lease Roll During the Loan Term

    March 6, 2019

    Transaction Description:

    George Smith Partners secured $7,600,000 in non-recourse permanent acquisition financing for a 38,000 square foot medical office property in Lowell, Massachusetts. The Property was 100% leased to a single tenant with strong credit but with only five years of remaining lease term. Despite the limited lease term, the Sponsor sought long term permanent financing that exceeded the lease term, which is difficult to obtain.

    After an extensive marketing effort, George Smith Partners sourced a national lender with a favorable view of medical office properties and a history of providing permanent financing on properties with significant near term lease roll. Sized to 65% of value, the 10-year fixed-rate execution is non-recourse and amortizes over 30 years. The interest rate was fixed at 5.12% at closing or 242 basis points over the 10 Year Swap Rate.

    Rate: 5.12% Fixed (Spread of 242 basis points over 10 Year Swaps)
    Term: 10 Years
    Amortization: 30 Years
    LTV: 65%
    Prepayment: Defeasance
    Guarantee: Non-Recourse

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    $8,500,000 Cash Out Multifamily Refinance that Closed in 5 Days; Los Angeles, CA

    February 27, 2019

    Transaction Description:

    GSP placed a 65% LTV refinance of an 87 unit multifamily property in Los Angeles. The Sponsor needed to pull cash out within 5 days to purchase a new opportunity. The Property had just been renovated to add retail space which has yet to be leased. GSP quickly identified a relationship capital provider who was comfortable with the Property and could close within 5 days on a sizable multifamily property with vacant retail. This type of transaction would usually also have a higher interest rate, but because of GSP’s relationship we were able to lock in 6.9% for 1 year.

    Rate: 6.9%
    Term: 12 Months
    Amortization: Interest Only
    LTV: 65%
    Prepayment: None
    Guarantee: Non-recourse
    Lender Fee: 1%

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    $9,390,000 Cash Out Refinance for a Portfolio of Multifamily Units in Los Angeles; Sized to 1.2 DCR on an Actual Mortgage Constant

    February 27, 2019

    Transaction Description:

    The YazLee Group secured $9,390,000 in proceeds for the cash out refinance of two multifamily properties totaling 80 units in Los Angeles. The loans are fixed for a 5 year term and offer 2 years of Interest Only payments. Since acquisition, the Borrower has renovated 46 out of 80 units, released them at higher rents, and added RUBS and laundry income. The selected lender was able to give the Borrower maximum credit for improving net operating income. The Lender was also able to underwrite vacant units at market rent. Although one of the properties required flood insurance, the excess premium had little effect on loan proceeds. The Properties are of masonry construction, but a property condition report confirmed that no earthquake insurance was required. The Lender was able to meet the Borrower’s goal of closing by year end.

    Proceeds: $9,390,000
    Rate: 4.46% fixed for 5 years, then floating at 6M LIBOR + 3.25%
    Term: 20 years
    Amortization: 2 years Interest Only followed by 30 year amortization
    Prepayment Penalty: 5,4,3,2,1,0
    LTV: 65%
    DCR: 1.2x

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    $29,000,000 for the Acquisition of the Aetna Springs Resort in Napa County

    February 27, 2019

    Transaction Description:
    George Smith Partners secured $29,000,000 for the acquisition of the Aetna Springs Resort, a rare historic site in Napa County, CA. The Aetna Springs Resort dates back to the 1870’s and is the last available parcel entitled for resort development in the Napa Valley area. Upon completion, the Property will be expanded to include 88 luxury suites, 16 adjacent estate lots averaging 50-acres each, and a permitted winery.

    Challenges:
    While investors were intrigued by the location of the Resort, the 3,100 acres of land included 2,390 acres of land that was not adjacent to the Resort. Many investors shied away from the deal given the complexity of the collateral. Other investors were more conservative towards land loans given our point in the cycle.

    Solutions:
    George Smith Partners located an investor who understood Napa hospitality and understood the value in a new resort. They also took the time to understand the land/vineyard component of the collateral and were able to provide a structure that gave the Sponsor time to sell the non-adjacent collateral in an effort to maintain focus on the resort component.

    All Terms Confidential

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    $5,550,000 Non-Recourse Acquisition Loan at 5.15% Fixed for Ten Years, 3 Years Interest Only

    February 20, 2019

    Transaction Description:
    George Smith Partners secured $5,550,000 for the acquisition of a 129,861 square foot multi-tenant industrial/office building located in a suburb of Atlanta. Constructed in 1998, the building was completely renovated in 2017. The space was divided into three and re-tenanted with local companies. Fixed at 5.15% for ten years, the non-recourse loan has 3 years of interest only payments, followed by a 30-year amortization.

    Challenges:
    Prior to the renovation, the building was occupied by a single tenant. The tenant vacated while the Property was under renovation, resulting in a gap in the historical P&Ls. The newly renovated property had less than one year of cash flow seasoning and three recently signed leases. Although the new NNN leases are for 10 year terms, they contain termination options. The Buyer requested to have only the borrowing entity sign as the carve out guarantor on the non-recourse Guaranty.

    Solution:
    GSP worked with a Lender that understood the strength of the asset and the submarket. The limited occupancy history was addressed by emphasizing the strength of the newly signed Tenants and the appraisal provided further support for the stability of future cash flow. As a result, the Lender was able to utilize the short operating history and approve an entity to sign on the carve out, without the requirement for a warm body guarantee.

    Rate: 5.15% Fixed
    Term: 10 Years
    Amortization: 30 Years
    Interest Only: 3 Years
    Prepayment Penalty: Defeasance
    LTV: 55%
    DCR: 1.30x
    Origination Fees: Par

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    $12,000,000 High leveraged Permanent Multifamily Financing in Tulsa, OK

    February 20, 2019

    Transaction Description:
    George Smith Partners successfully arranged the permanent financing for a class C, 350-unit apartment complex located in Tulsa, Oklahoma. The Sponsor sought a permanent loan to refinance the Property after spending a million in upgrades. The Sponsor’s goal was to lock in a long-term, low interest rate in a rising interest rate environment as the building was close to reaching stabilized occupancy.

    Challenges:
    The Sponsor had turned around a rough non-performing property and was in the process of completing the lease-up. In addition, the Sponsor’s syndication structure made financing more complicated because of the small shares of ownership.

    Solution:
    GSP was able to prove to the Lender the Sponsor’s successful track record with similar properties, highlight the Property’s growing position in the market and the strong rent growth. Because GSP has completed so many other deals with syndicators, we were able to structure the loan so that both the Sponsor and Lender were comfortable.

    Rate: 4.5% Fixed
    Term: 7 Years
    Amortization: 30-Year Amortization
    LTV: 75%
    Guarantee: Recourse
    Prepayment Penalty: None

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    $8,025,000 Cash Out Refinance for a Portfolio of Multifamily Units in Los Angeles; Sized to 1.15 DCR on an Actual Mortgage Constant

    February 13, 2019

    Transaction Description:

    GSP secured $8,025,000 in proceeds for the cash out refinance of two adjacent multifamily properties totaling 59 units in Los Angeles. The loan is fixed for the first 7 years and offers 3 years of interest only payments. Due to market conditions at the time of application, the Borrower was able to fix the rate for a 7 year term while paying almost no premium compared to a 5 year term. Since acquisition, the Borrower has renovated and re-leased a significant number of units and added utility reimbursements. The selected Lender was able to give the Borrower maximum credit for the higher income at the Property. Final underwritten cash flow allowed for an increase in proceeds compared to the original term sheet. The loan closed in about 40 days despite the intervening holidays.

    Rate: 4.61% fixed for 7 years, then floating at 6M LIBOR + 2.75%
    Term: 15 years
    Amortization: 3 years Interest Only followed by 30 year amortization
    Prepayment Penalty: 5,4,3,2,1,0
    LTV: 65%
    DCR: 1.15x

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    $10,000,000 Medical Office Refinance with Low Rate – 15 Year fixed Financing – Santa Monica

    February 13, 2019

    Transaction Description:
    George Smith Partners successfully completed a $10,000,000 refinance of a single-tenant medical office with an NNN lease with 14 years remaining. GSP arranged this 15 year, fixed rate loan with a rate of 4.82%. The first 5 years are interest only and then the loan converts to a 30 year amortization. The loan also features a step-down prepayment instead of typical yield maintenance.

    Challenges:
    The first challenge dealt with the remaining lease term. It is customary for loan terms especially on non-recourse loans to be at least 2 years shorter than the lease term on single tenant buildings. In this case, 14 years remain on the single tenant lease and the Sponsor wanted a 15-year term.

    The second challenge was that the lease was to an entity that was a partnership between a local doctors group and an investment grade hospital without a guarantee from either group.

    Solutions:
    Because the building was well located in a high demand market, GSP did extensive market research and looked at the value from two different perspectives. First we looked at it from the perspective of the Tenant staying in the building and secondly we looked at it from the perspective of the Tenant moving at the end of the lease term. We proved it would be very hard and unlikely for the Tenant to relocate in Santa Monica. Using GSP’s relationships, market experience and medical office expertise, we were able to identify a lender who understood our view of the market and accepted it. The Lender was willing to do a 15 year fixed rate financing beyond the term of the lease. It was non-recourse to the Sponsor and had no guarantee from the Tenant.

    Rate: Fixed 4.82%
    Term: 15 Years
    Amortization: 30 years with interest only for five years
    LTV: Under 65%
    DCR: 1.25
    Guarantee: Non-Recourse
    Prepayment Penalty: Stepdown
    Lender Fee: None

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    $4,075,000 for Purchase of 38 Unit Seattle Multifamily Property; Sized to 1.2 DCR on an Actual Mortgage Constant

    February 6, 2019

    George Smith Partners secured $4,075,000 in proceeds for the purchase of a 38-unit multifamily property located near Seattle. Proceeds were maximized by using a 1.20x Debt Coverage Ratio on the actual mortgage constant. The loan has an open prepay after 2 years, an unusual feature for a non-bank loan. In order to maximize underwritten cash flow, the selected lender was able to separate out regular operating expenses from capital expenditures in the historical P&Ls. Final underwritten cash flow allowed for proceeds of about $300,000 higher than the original loan application. Although the Property has tuck under parking, the Lender was able to pre-screen the Property to eliminate the need for earthquake insurance. Fixed at 4.70% for 5 years, the first two years are interest only before rolling into a 30 year amortization schedule for the 20 year term loan.

    Rate: 4.70% fixed for 5 years, then floating at 6M LIBOR + 3.25%
    Term: 20 years
    Amortization: 2 years Interest Only followed by 30 year amortization
    Prepayment Penalty: 3,1,0
    LTV: 65%
    DCR: 1.20x
    Guarantee: Non-Recourse