Rate: 8.25%
Term: 2 Years + 12 Month Option
Amort: Interest Only
LTC: 85%
Recourse
Transaction Description: George Smith Partners successfully arranged the acquisition debt for the purchase of a Chevron Gas Station; ideally located to the fast growing, upscale Playa Vista area with easy access to the 405 freeway. The 11,000 square foot, 10 island/20 pump gasoline facility was constructed in 1995 and is environmentally clean. The facility also includes a mechanized car wash with cloth machinery, a large convenience store and a deli. Fixed for two years at 8.25%, the loan was sized to 85% of the acquisition price. There are no reserves or holdbacks from funding.
Advisors
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Steve Bram
Managing Director & Principal / GSP Co-Founder
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David R. Pascale, Jr.
Senior Vice President
Related Financings
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$1,430,000 Refinance of a Day Care Facility
September 20, 2014
9 – 17 – 2014
Transaction Description: GSP successfully placed the $1,430,000 refinance of a 13,754 square foot family owned Day Care Facility what was operating under a Chapter 11 bankruptcy. The Day Care Facility serves 140 students from kindergarten to 4th grade. Sized to 65% LTV, the 8.99% coupon is fixed for the 12 month term. Challenge: The Borrower was in default with debt service payments and was unable to refinance the asset due to contingencies with its business partner. Our Sponsor filed Chapter 11 bankruptcy in an attempt to negotiate a mutually beneficial resolution. Sufficient proceeds were needed to pay off the existing loan, buy out a shareholder and cover outstanding property taxes. Solution: GSP identified a capital provider who was comfortable with the on-going operating cash flow and agreed to fund the transaction out of bankruptcy. This proposal was ultimately approved by the court. Rate: 8.99% Fixed Term: 12 Months w/two-6 Month Ext Amort: Interest Only LTV: 65% Prepayment: 6 Months Yield Maintenance Recourse Advisor: Gilda Rivera -
$1,620,000 Acquisition Financing for a Single-Tenant Auto Related Property
April 10, 2014
4 – 9 – 14 Transaction Description: George Smith Partners successfully placed the 65% loan to purchase (67% loan to value due to a low appraisal) acquisition financing of a Pep-Boys auto repair store in New York State. The borrower acquired the property as the replacement property in a 1031 tax deferred exchange. The 20 year amortized term is fixed for 5 years at 5.0% prior to being recast for the second 5 year term at then prevailing rates. A step-down prepayment was structured to provide for future flexibility. Challenge: With only 9 years remaining on the initial lease term, institutional lenders are leery of event risk on single tenant properties. The auto-bays added a specialty-use component to the collateral should the tenant not renew one year prior to the loan termination date. An environmental concern was also raised by a number of portfolio lenders polled. All borrower contingencies were removed to secure control of the property in what was a very competitive bid process. Certainty of close as applied for and timely execution was paramount to avoid severe tax consequences. The appraisal came in less than the purchase price, thus jeopardizing loan proceeds. Solution: Mr. Stein quickly identified a local lender officed minutes from the property who immediately inspected and reviewed the property information. Their “in the market knowledge” gave a comfort that this location would quickly release to an identical user should Pep Boys vacate. A clean Phase I report mitigated all environmental concerns. A full credit committee commitment was issued within 24 hours of loan submission conditioned only upon 3rd party reports. Despite the low valuation, GSP worked with the lender to quantify lender risks for this cash-in execution and established a comfort level to extend their LTV constraint by an additional 2 percentage points. Rate: 5.0% Fixed for 5 Years Term: 10 Years Amort: 20 Years LTV: 67% LTC: 65% Prepayment: 5,4,3,2,1 open Recourse Advisors: Stephen Stein, Teddy Stutz -
$4,500,000 Non-Recourse Acquisition Quick Close Charter School
April 3, 2014
4 – 2 – 2014 Transaction Description: GSP successfully placed the $4,500,000 non-recourse acquisition loan for the purchase of a 41,000 square feet commercial office building located in Oakland, California. The property is currently being utilized and serves as the main campus for a local Charter School. Our Sponsor manages the school which has 650 students ranging from kindergarten to eighth grade. The school lease to the prior real estate owner was about to expire and the financing sourced by George Smith Partners allowed the tenant to take advantage and exercise their option to acquire the property. A second trust deed was recorded at closing bringing the total debt allocation to 73% of cost. The interest only, non-recourse loan closed in three weeks from application to funding. Challenge: The Borrower had been under contract to acquire the property for over 4 months and received several loan rejections as most lenders are not comfortable financing charter schools. Pending litigation threatened the future of the charter and thus the viability to service the debt. Timing became critical as the Seller received other higher bids. A portion of the buyers’ capital was in the form of a recorded second trust deed, typically a prohibition in the debt markets due to “cram-down” should the asset get moved into bankruptcy. Solution: GSP identified a reliable private equity capital provider who understood the pending lawsuit and is comfortable with the Sponsors’ business plan and the ultimate exit strategy. A higher than anticipated valuation (as confirmed by the sellers’ additional bids) added more comfort to the senior lender; ie allowing a recorded second trust deed, etc. The entire financing process took three weeks to fund and maintain the escrow. Rate: 10% Term: 1 Year Amort: Interest Only LTC: 60% Non-recourse Advisors: Gilda Rivera, Salar Royaei -
$1,722,500 Acquisition Loan on a Single-Tenant/Special Use Investment Asset
July 25, 2013
7 – 24 – 13 Transaction Description: Shahin Yazdi placed the 65% of purchase debt for a single tenant restaurant in Pasadena, California. The purchaser is not an operator but an investor seeking to leverage their return with a low cost of fixed rate debt. The seven year term is fixed for five years a 4.50% and amortizes over 25 years. Proceeds were maximized to a 1.20 debt coverage ratio on actual leased income. Challenge: The borrower’s global debt to income cash flow fell below most lender guidelines. The tenant showed a loss from operations the last two years. Solution: GSP focused on borrower’s significant liquidity as well as the income generated from the subject property. The tenant provided a supportable projected income model that will return operations to profitability. Rate: 4.50% Fixed for 5 Years Term: 7 Years Amort: 25 Years LTV: 65% DCR: 1.20 Prepayment: 3,2,1, open Recourse Advisor: Shahin Yazdi -
Cash-Out Refinance of Single Tenant Restaurant
July 3, 2013
7 – 3 – 13 Transaction Description: GSP successfully placed the cash-out loan refinance of a local restaurant to 65% of value. The investment property is leased to a local operator who does not credit enhance the lease. The new loan retired existing debt, paid off unrelated and unsecured payables and provided a substantive cash cushion to the sponsor. Challenge: The single tenant is considered special use with only this one location. The Sponsor has historic credit issues with limited liquidity. Solution: The lender became comfortable with the tenant by demonstrating the long term stability and historical operations of the restaurant. The business has been at this location for 20+ years and sales have recently been on the rise. GSP structured all invoices paid through escrow. The Borrower initiated a depository relationship with the local capital provider. Rate: 4.75% Term: 10 Years Amort: 25 Years LTV: 65% DCR: 1.35 Prepayment: 5, 4, 3, 2, 1, open Recourse Lender Fee: 0.50% Advisor: Jason Gaffner -
$4,000,000 Permanent Recapitalization Financing For 76,175 SF Single-Tenant Indiana Office Building
July 19, 2012
7 – 18 – 12 Transaction Description: George Smith Partners arranged cash-out permanent financing for a fully occupied single-tenant office building in a tertiary market of Indiana. The cash-out is a partial recapitalization of a recently acquired property on an all-cash basis. The asset is leased to a “For-Profit” college with 3.5 years remaining on the initial lease term before options. The institutional quality of the borrower and the tenants’ long-term historical occupancy at this location proved instrumental to securing the loan. GSP obtained two key loan provisions that will serve the borrowers’ interest in both up-side and down-side scenarios – a loan term in excess of the lease term, and the ability to pre-pay without penalty. The borrower required full proceeds up-front without holdbacks. GSP structured a Letter of Credit that burns off upon lease extension/renewal. This debt structure mitigates borrower risks while providing for a 25% cash on cash return. Rate: 5.375% Term: 5 Years Amort: 25 Years LTV: 75% Prepayment: None Non-recourse Credit Enhancement: Letter of Credit Brokers: Steven Orchard, Loren Bedolla
