Rate: 30-Day LIBOR + 2.40%
Term: Three years plus two 12-month extensions
Amortization: Interest Only during Initial Term
Max Loan to Value: 60%
Prepayment: 1% months 1-12; open thereafter
Lender Fee: 0.75%

GSP arranged $85,200,000 in non-recourse acquisition funding for an approximately 60-acre, double grocer-anchored Utah power center 86% leased to over 60 national and local tenants.

The 60% leverage loan on almost 700,000 square feet of retail space was 100% funded at acquisition and allows flexibility for the release of collateral during the term at the borrower’s option, subject to predetermined paydowns. This structure affords the sponsor the opportunity to pursue concurrent business plans of leasing the overall shopping center up to market occupancy while simultaneously selling off individual parcels to NNN lease investors subject to market demand.

The non-recourse loan priced at one-month LIBOR plus 2.40% and required a LIBOR cap with a 3.50% strike price. The borrower elected to purchase a 24-month cap at closing, however the lender structured the cap term in 12-month increments to reduce the overall cap cost to borrower by shortening the cap’s duration. The loan features Interest Only payments for the three-year initial term in order to maximize cash flow available for distribution to investors. The loan is open for prepayment at any time subject to a 1% fee during the first 12 months, and is open for prepayment at par thereafter.

Advisors

Nick Rogers Vice President

Rate: 7.76% Fixed – Blended
Term: 12 Months
Options: Two – 6-Month Options
Guarantee: Limited Recourse
Prepayment: Open after Six Months
Fee: 1.5% Combined

George Smith Partners placed 84.3% of purchase for the acquisition of a 23-unit Seattle multifamily built in 1915. This is inclusive of a 100% bank funded interest reserve. A six-month escrow allowed the seller to vacate units at lease-roll, netting a 48% occupancy at close. Our Sponsor, a foreign national, will vacate the remaining units while processing permits and execute a major rehabilitation of the property, including the addition of new rentable square footage. This rehab will be funded by a future construction loan and not this acquisition loan. To optimize pricing, two loans were structured in an A/B format where the A piece was funded by a regional bank and allowed the B piece to record a second Deed of Trust. The blended cost of capital calculates to 7.76% fixed for the initial 12-month term. Debt service is paid from a fully bank funded reserve account. A limited repayment guarantee was required from the Borrower. Closing executed two weeks from posting the application deposit, inclusive of a bank-ordered MAI appraisal and property condition inspection.

Advisors

Matthew Kirisits Director

Rate: Prime + 0.5% (5.25% today)
LTC / LTV: 65% / 65%, including 100% of future funding and interest reserve
Term: 2 Years
Amortization: Interest Only
Recourse: Full Recourse
Prepayment Penalty: None
Lender Fee: 0.5%

George Smith Partners arranged acquisition bridge financing for a 10 unit value-add multifamily property in Inglewood, California. Despite the property’s location in Inglewood’s gentrifying northwest corridor, the lender’s appraisal value and cash flow underwriting came in below the sponsor’s proforma, which would have resulted in lower loan proceeds that could have jeopardized the transaction. To assist the lender in getting comfortable with the sponsor’s requested loan amount, George Smith Partners provided market rent and sales comparables supporting the requested loan proceeds and leveraged it’s strong relationship with the lender to ultimately get proceeds up to an acceptable level.

Sized to 65% of total project cost, the loan includes 100% of future funding for property renovation, which includes a full gut renovation of unit interiors and an exterior upgrade. The two year bridge loan is interest only and floats at Prime plus 0.5% (5.25% today) with no prepayment penalty. Interest is not charged on the holdback until funds, and the loan was structured with an interest reserve to mitigate the property’s weak cash flow during the renovation period. The lender fee was a low 0.5.