Rate: LIBOR + 3.75%
Term: 36 months with a 12 month extension
Amortization: Interest Only
LTV: 62% of as-is value
Prepayment Penalty: 1.0% for first 12 months, 0.5% for next 12 months, open thereafter
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.
Senior Vice President
$10,200,000 Acquisition Financing for Two Single-Tenant, NNN Retail Properties Albuquerque & Silver City, NM
December 19, 2018
George Smith Partners successfully placed $10,200,000 of acquisition financing ($5,100,000 each) for the purchase of two single-tenant, NNN-lease Albertsons in Albuquerque (52% LTV) and Silver City (65% LTV). The Albuquerque store measures 65,413 square feet, 7.48 acres, and the Silver City store measures 39,385 square feet, 4.81 acres. Albertsons currently has 12+ years remaining on each of the leases. The Sponsor is structured as a TIC and identified these properties in a 1031 exchange.
To mitigate rising interest rate risk, the Lender locked the rate at application, two months prior to closing. The 7-year loans are amortized over 25 years, include step-down prepayment penalties, and have a fixed interest rate of 5.19%.
December 5, 2018
George Smith Partners secured $8,700,000 of non-recourse, bridge acquisition financing for a 45,000 square foot retail center located in Richardson, TX. The Center, which was built in 1985, has a diverse mix of regional tenants and sits on the corner of two of the main thoroughfares in the area.
The Sponsor purchased the Property with the intent to add value through two approaches: (1) increasing rents for tenants that are rolling and paying below-market rates, and (2) constructing an additional 12,000 square feet on undeveloped land within the parcel. There were complications with parcelizing the existing building and the land, which meant that a single lender needed to fund the entire project. The large renovation and construction budget also resulted in only 41% of the total loan being funded at closing.
George Smith Partners identified a lender that could structure the financing to have two holdback reserves, one for the CapEx and TI/LC’s for the existing space and the other dedicated to funding the construction of the new building. The separate reserves allow the Sponsor to pursue both value-add opportunities simultaneously, which drastically reduces the project timeline and maximizes the Sponsor’s IRR. Our capital source was able to get comfortable with the construction component by requiring 75% of the space to be pre-leased prior to funding.
April 25, 2018
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.
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.
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
October 25, 2017
George Smith Partners successfully arranged $3,500,000 acquisition financing of a single tenant triple net asset located near Austin, Texas. The in-place retailer is a well-known regional auto body repair shop who recently signed a lease and occupied the space. It was crucial to identify a lender who could be aggressive for a Sponsor with limited net worth and liquidity. Fixed for 10 years at 4.50%, the recourse loan was sized to 75% of the total capitalization with no prepayment penalty. Previously financed by a 100% loan to cost construction loan, the subject property had recently been completed and occupied. GSP worked closely with the investment sales broker to assist in supporting the asset value to our niche lender.
September 27, 2017
George Smith Partners secured $9,730,000 acquisition financing for a 56,747 square foot shadow anchored retail center that was 70% occupied at the close of escrow. Shadow anchored by Home Depot and Fry’s Food & Drug, the 14-tenant shopping center is located in a Southwestern MSA. Fixed at 4.2% for ten years, the loan amortizes over 25 years and does not carry a prepayment penalty.
During due diligence, a tenant representing 27% of the net rentable area terminated their lease bringing occupancy to 70%. Our Sponsors required a permanent loan execution and would not consider a bridge to perm option.
GSP identified a lending source who was knowledgeable about the strength of this sub-market and comfortable with 30% vacancy. They identified the upside potential and rental opportunities in the local market. Our Sponsor’s considerable investment track record and financial strength further solidified the loan strength and allowed for a permanent loan instead of a bridge loan.
Term: 10 year fixed rate loan
Amortization: 25 years
- Advisors: Gilda Rivera
$11,845,000 Non-Recourse Acquisition and Reposition Financing up to 75% of Cost on a Non-Cash Flowing Retail Property in Los Angeles
April 19, 2017
George Smith Partners arranged an $11,845,000 first mortgage on a value-add retail property with no cash flow located along the main retail corridor of one of the hippest neighborhoods in Los Angeles. The national balance sheet lender provided a non-recourse loan to up to 75% of total project cost including 100% of future capital expenditure funds to gut renovate the asset and convert the property to high-end retail plus an addition of four apartment units. Due to the lack of cash flow, the lender structured a 20-month interest and carry reserve to cover debt service during the reposition period. Over 50% to total loan proceeds are allocated for future funding. Interest is not charged on funds until drawn.
Rate: 30-Day LIBOR + 6.00%
Term: Three years plus two 12-month extensions
Amortization: 24 months interest only; 25-year amortization thereafter
Max Loan to Cost: 75%
Prepayment: 15-month lockout; open thereafter subject to 1.00% exit fee
Lender Fee: 1.00%