Rate: 4.25%
Term: 5 Years
Interest Only: 1 Year
Amortization: 25 Years thereafter
Loan-to-Cost: 70%
Lender Fee: .25%
Prepayment Penalty: 4,3,2,1, Open
Debt Coverage: 1.20 Based on IO Debt Service

Transaction Description: George Smith Partners successfully secured the 70% of cost acquisition of a 39,000 square foot on-campus medical office building in Gardena, California. Initially master leased to the adjacent hospital, the master lease expired a year prior to this acquisition. Allowing for the first year of interest only, the bridge to perm loan is fixed for five years at 4.25% and will amortize over 25 years for the balance of the term. This loan was sized to a 1.20 debt coverage ratio on the interest only debt service payment against the actual cash flow at the time of funding. Prepayment steps-down from 4% and is open without prepayment for the final year. This structure includes a one-time future earn-out of $627,000 should the subject obtain 90% occupancy within the first year.

Challenges: Most of the tenants were on month-to-month or had no lease in place; seller historical operating history was incomplete. Physical occupancy was only 79% at application and those tenants with leases presented significant turnover during the first few years of the loan. Minimal in-place cash flow at funding challenged loan proceeds. Our Sponsor did not have any experience owning or operating medical office real estate.

Solutions: Estoppels were secured for underwriting to back-fill incomplete P&L statements. Two lease extensions were negotiated and executed with current tenants to minimize the rollover exposure. By sourcing a capital provider whose DCR requirement was based on interest only payments, we were able to maximize loan dollars while meeting their underwriting guidelines in spite of the property’s low, in-place NOI. Market strength and hospital campus location supplemented the Borrowers’ financial strength. A 3rd party property management company was engaged for day-to-day operations.

Rate: 12.0% (6.5% current/5.5% accrued)
Lender Fee: 1.5%
Term: 12 Months
Loan-to-Cost: 90.0%

Transaction Description: George Smith Partners secured the senior debt to acquire a 34,263 square foot two-tenant cash-flowing retail asset in Van Nuys, California. In addition to the leased improvements, this parcel provides ample off-street parking. Our Sponsor will re-entitle the site for 120 residential rental units plus ground floor retail. GSP secured a 90% loan-to-cost commitment at 12.0%, 6.5% paid current with 5.5% accrued for the 12 month term.

Challenges: In order to provide for sufficient cash to support the re-entitlement process, our Sponsor requested maximum proceeds. The majority of capital providers top out at 60% of cost until the new entitlements are secured. This re-entitlement process anticipates securing a 3:1 FAR zoning variance.

Solutions: George Smith Partners identified a lender that understood the Sponsor’s experience and ability to execute a re-entitlement plan. In-place cash flow was substantiated with negotiated tenant estoppels and found to be substantially below market, supporting higher loan proceeds and allowing for a fallback should there be a delay in the business plan. A 4.0% reserve of is held by the lender pending obtaining the 3:1 FAR zoning variance.

Rate: 3.75%
Term: 5 Years Fixed
LTV: 75%
Amortization: 30 Years
Debt Coverage Ratio: 1.15
Recourse

Transaction Description: George Smith Partners successfully placed the cash-out refinance a 43 unit and 8 unit multifamily Los Angeles portfolio. These two loans replaced a bridge facility placed by GSP last year. Our Sponsor was reimbursed for funds invested in this project repositioning and replaced a 5.0% bridge loan. By doing this 2-step process to bring the assets to stabilization, it allowed the Sponsor to obtain much higher leverage than placing permanent debt on the project day one. Fixed at 3.75% for five years, the loan was sized to 75% of current value and sized to a 1.15% debt coverage ratio.