Rate: LIBOR + 6.75%
Term: 2 Years + 1 Year
Amortization: Interest Only
Prepayment Penalty: 18 months spread maintenance
George Smith Partners successfully arranged $73,000,000 in non-recourse, bridge financing for the conversion, renovation, and stabilization of the Seattle Design Center. The design center, comprised of two buildings in the Georgetown submarket of Seattle, Washington, historically served as a well-known destination for high-end home furnishings and design services. After acquiring the property in 2014, the Sponsor renovated the first 157,000 square-foot building. Upon completion, the Sponsor continued to operate the asset as the Seattle Design Center and consolidated the showroom/design tenants from the second building into the newly renovated building. Once the second building was vacated, the Sponsor began repositioning the 280,000 square-foot building from showroom space into creative office space. Upon completion, the building will have expansive 60,000 square-foot floorplates, exposed ceilings and concrete floors, glass walls for natural light, unobstructed views of downtown Seattle and Mt. Rainier, and full-service amenities, including an upscale fitness center and conference center. Pre-leased to 45% occupancy, Sponsor needed additional proceeds to complete the project. GSP identified a Lender who recognized the value of the project, supported by low supply and increasing market demand for creative office from tenants in the technology sector. Sized to 80%+ of total project costs, the $73,000,000 non-recourse loan was priced at LIBOR + 6.75% for a 24-month term with one, 12-month extension option. $49,000,000 of total proceeds was funded at closing with an additional $24,000,000 future funding allocated toward completion of the renovation, construction, tenant improvements and leasing commissions.
Senior Vice President
Assistant Vice President
January 4, 2017
George Smith Partners successfully placed the $34,400,000 non-recourse bridge loan, sized to 92% of total cost, for a 238,000 square foot retail shopping center and 67,000 square foot Southern California office building. This 1960s vintage property is well-located and sits on a 17 acre parcel with a traffic count of over 60,000 vehicles per day. Proceeds will be used to satisfy the existing term loan and a majority of the $17,400,000 in planned renovations, tenant improvements, leasing commissions, and other capital expenditures. Retail occupancy includes four value oriented chains, several local retailers, a future grocer and a national fitness/gym chain. The office building will be renovated to feature street level retail pre-leased to regional and national restaurant chains including Chipotle, Five Guys Burgers, and Ono Hawaiian BBQ. Office occupancy of the upper three floors will include a mixture of full floor tenants and local businesses. Several of the office tenants are currently leased month to month, but is supported by a strong occupancy history. Subject to several ground-leases executed in the 1950’s, all leases were recently restated and extended. Floating at 545 over 30 day LIBOR, the non-recourse loan provides for carve-outs executed at the entity level only with no warm body guarantor. The three-year term has one 12 month extension with interest paid current monthly; there is no interest reserve or amortization.
June 29, 2016
Transaction Description: George Smith Partners secured an acquisition bridge loan for a vacant office building in Long Beach, California. Application to funding occurred in four business days. Our Sponsor’s business plan is to convert the vacant office building into a 6-unit multifamily rental. Permits to convert were expected to be in hand by the expiration of the escrow period but had not yet been secured, precluding the institutional lender from funding the acquisition. A quick-close loan was structured to close on the purchase and refinance once permits are issued. Fixed at 8.60% for 6 months, the loan was sized to 60% to acquisition price and was funded within four business days on the escrow’s due date. There is no prepayment penalty.
May 31, 2016
Transaction Description: George Smith Partners secured a $20,690,000 non-recourse bridge loan for the reposition and lease-up of superbly located, 58,894 square foot vacant office building in Hollywood, California. The renovation plan calls for extensive interior and exterior work to reposition this iconic asset from a traditional office use to Class-A creative space. Our sponsor is an experienced developer and required a capital partner who was able to provide flexible funding post close for this 100% vacant asset. GSP identified a national bridge lender with a local presence that underwrote the strong sub-market and Sponsor strength to become comfortable with the physical reposition and lease-up risk. Floating a LIBOR+465, the three year non-recourse loan was sized to 65% of total capitalization inclusive of capital upgrades and tenant improvements.
April 20, 2016
Transaction Description: George Smith Partners secured $30,000,000 for the recapitalization of a vacant 68k square foot office building and pre-development site entitled for future multifamily development. The two-year loan term allows for staged funding to cover tenant improvements, capex, and construction of a new parking garage. A release for the multifamily parcel was structured to allow for future construction debt. Priced at Prime plus 25 basis points, there is no interest rate floor.
August 20, 2015
Transaction Description: George Smith Partners arranged the acquisition financing for a brand new 78,000 square foot office building in the Platte River sub-market of Downtown Denver. The Sponsor had an executed lease for 65% of the building at closing, with an option to take the remainder of the space. Sized to 65% of total cost, the capitalization consists of a $25,700,000 purchase price and $10,300,000 TI/LCs including carry cost. Floating at LIBOR + 475, the non-recourse loan carries a 3 year term before options.
Challenge: Per the purchase contract, the newly constructed office building would be delivered as a warm shell, with an extensive TI build-out ($130/SF) still to be completed. With 14 months of no cash-flow and the TI build-out to be completed for a startup tenant, the financial market struggled to underwrite the business plan.
Solution: GSP documented the tenants’ impressive capitalization and national expansion plan. The Denver Office Market is prime for this tenants’ business model and the sub-market strength added to our underwriters’ comfort level.
$8,775,000 Acquisition and Bridge Financing on Four Central California Coast Retail & Office Buildings
June 11, 2015
Transaction Description: Shahin Yazdi successfully sourced the acquisition debt of four retail/office properties in Carmel, California, totaling 11 commercial units measuring 22,000 square feet. None of the occupants provide credit leases. One-third of the subject was vacant at close and at a 0.70 DCR, was unable to support operations or service debt. The asset was mismanaged to such an extent that there had been no reimbursable expenses collected over the prior 5 years. Several tenants were on month-to-month leases or leases set to expire before the end of this five-year loan term. The Borrower’s past operating and rehabilitation history allowed the lender to become comfortable with the business plan, and Mr. Yazdi structured a loan that suited both client and lender. Sized to 65% of the total project cost, the loan is variable for 5 years at WSJ Prime + 0.50% with a 4.50% floor and a lifetime cap of 7.50%. The loan is interest only for the first 2 years and amortizes thereafter on a 25 year amortization schedule. There is no prepayment penalty or cash management aspect. Property improvement and releasing funds are deposited into an account that is completely controlled by our Borrower, allowing them to reposition the property without any delays due to fund control restrictions. An 18 month interest reserve was posted by the Borrower in addition to his top-end 10% repayment guarantee.
Term: 5 Years
Amort: 2 Years IO then 25 Years Thereafter
- Advisors: Shahin Yazdi