Rate: One-Month LIBOR + 2.35%
Term: Five Years
Amortization: Four Years I/O; 35-Year Amortization Thereafter
Lender Fee: 1.00%
Prepayment: 18-Months Spread Maintenance
George Smith Partners secured a $124,250,000 permanent loan to refinance out an existing construction loan on a 560,000 square foot, class-A, mixed-use office and retail property in a Midwest market. The non-recourse loan provided the borrower significant cash out at close in addition to funding 100% of future tenant improvement and leasing commission costs associated with stabilizing the property. It also repaid the existing construction loan and covered closing costs. The existing property is 93% leased, but only 80% occupied, to a mix of credit and non-credit tenants including a boutique cinema. The five-year, floating-rate loan priced at 2.35% over One-Month LIBOR and offered four years of interest only payments with 35-year amortization during the fifth year of the loan term. Other benefits of this loan structure include:
• flexible prepayment
• five-year initial term vs. typical 3+1+1 loan term structures that would have required specific performance hurdles and extension fees
• no forced funding date for the future funding component
• no syndication risk as the portfolio lender (a bank) is holding the entire loan on balance sheet
• generous interest rate hedging requirement of purchasing LIBOR caps for two-year terms to reduce hedging costs
Senior Vice President
Senior Vice President
Senior Vice President
$11,650,000 (72% Loan-to-Value) Non-Recourse, Cash-Out Refinance of a Grocery Shadow-Anchored Salt Lake City Retail Center
January 15, 2019
GSP successfully sourced $11,650,000 of non-recourse, cash-out, permanent first mortgage debt sized to 72% loan-to-value to refinance out a maturing bridge loan on a 62,500 square foot, grocery shadow-anchored Salt Lake City multi-tenant retail property. The borrower recently completed its re-tenanting business plan that upgraded the tenant base and stabilized the 1960s vintage retail property at nearly 100% occupancy. Although many lenders are increasingly becoming more conservative regarding leverage and interest only terms on retail properties, GSP sourced a lender that relied on the borrower’s substantial real estate experience, strong submarket performance, and a diverse tenant mix to provide a full-leverage, non-recourse loan that repatriated substantial equity to the borrower and included three years of interest only payments followed by 30-year amortization.
October 17, 2018
George Smith Partners successfully arranged the refinance of a 14 building, 120-unit multifamily asset located in the Arden-Arcade neighborhood of Sacramento, CA. GSP worked with a life company with a strong appetite for multifamily lending and ultimately structured a loan in which the Sponsor pulled out $10,000,000 of cash. The non-recourse loan has a fixed rate of 4.24% and refinanced an existing agency loan. Some of the unique features of this loan included: rate lock at application, assumption rights in the event of a sale and future loan advances/top-offs upon increase in NOI.
August 1, 2018
George Smith Partners secured $9,150,000 for the non-recourse cash-out refinance of a newly built 25-unit multifamily building located in Los Angeles. The building is situated in one of the most sought after areas in Los Angeles and is in close proximity to popular restaurants, bars and entertainment in nearby Culver City. The construction take-out permanent loan is fixed at 5.04% for ten years with full term interest-only and has a yield maintenance prepayment penalty structure.
The building was in lease up when the financing process started. Thus, the owner did not have any seasoning on the newly leased units nor any historical operating expenses.
GSP identified a capital source who was willing to provide proceeds at over 90% of cost and understood the strength of the asset in addition to the experience of the Developer. Based on these strengths, the Lender was able to underwrite to in-place income without seasoning, proforma operating expenses, and a 7.35% debt yield, which maximized loan proceeds. The Lender was able to fund once the property achieved 80% physical occupancy. The Sponsor locked a full term interest-only structure, which is advantageous to the property’s cash flow as the new leases continue to season.
Rate: 5.04% Fixed for 10 years
Term: 10 years
Amortization: Interest Only
Prepayment Penalty: Yield Maintenance
DCR: 1.35x on an IO basis
Origination Fees: Par
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.
March 7, 2018
George Smith Partners secured $11,500,000 for the cash out refinance of two stabilized multifamily buildings in West Hollywood containing a total of 61 units. Constructed in the mid-1920s and late 1950s these buildings are situated on some of the most sought after streets in West Hollywood and in close proximity to popular restaurants, bars and entertainment. Fixed at 3.95% for seven years, the non-recourse loans float at 6 month LIBOR + 2.25% for the remaining 23-year term. The non-recourse loans are fully amortizing and have a 5,5,4,4,3,2,1 step-down prepayment penalty.
Many of the buildings have long term residents who have lived at the properties for over a decade. The long term residency leaves the owner with dozens of units with uncaptured market rents, ultimately affecting the amount of loan proceeds.
GSP worked with a Lender who understood the strength of these assets and was able to underwrite to a 1.15x DCR at the actual note rate. Our Capital Provider was amenable to increasing loan proceeds after rate lock based on the results of the appraisal which came in more favorable than the initial proforma. Both properties also had a handful of recent move-ins which gave the Lender comfort in the future upside of the properties as units continue to turn.
January 10, 2018
George Smith Partners successfully arranged the $11,800,000 non-recourse cash-out refinance secured by a 49,942 square foot multi-tenant retail center in Tarzana, California. GSP identified a capital provider who was comfortable with the return of equity given the Sponsor’s team and experience. Sized to 55% of appraised value, 8.75% Debt Yield, and a 1.65x Proforma DSCR. The 10-year interest only note is fixed at 2.25% over the LIBOR 10 Year SWAP rate (4.62% at closing).