Rate: 3.6%
Term: 5 Years
Amortization: 25 years
LTV: 60%
Prepayment Penalty: Yield Maintenance
Origination Fee: Par; No Third-Party Costs
DCR: 1.4

Transaction Description
George Smith Partners secured $11,600,000 of refinance loan proceeds with a national balance sheet lender for 74,911 square feet of office space in the San Gabriel Valley, approximately 25 miles east of downtown Los Angeles. Acquired by our Sponsor two years ago, several capital providers questioned the spike in value without the benefit of a significant capital upgrade program. The property had several vacant suites at the time of the Sponsor’s purchase. At the time of the refinance, over 80% of the leases were rolling within 5 years. GSP demonstrated that the Sponsor had added several new leases since acquisition, including an urgent care center and a retail bank branch. Our Sponsor successfully signed the new leases at market rents while re-signing existing tenants at higher rental rates. Rollover risk was reduced by the low leverage loan request and the sponsor’s excellent tenant retention record. Ownership is structured as Tenants In Common (TIC). Our capital provider accepted the TIC borrower structure and only underwrote individuals with ownership over 20%. Fixed at 3.6% for five years, the loan was sized to 60% of value and will amortize over 25 years. Prepayment is yield maintenance. There was no origination fee and the portfolio lender paid for all third party reports including title and escrow.

Advisors

Matthew Kirisits Director

Terms: Confidential

Transaction Description
George Smith Partners secured $1,100,000 in joint venture equity for the acquisition and redevelopment of a 14-unit apartment building in Long Beach, CA. The limited partner equity placement was the first transaction in an ongoing programmatic structure between the Sponsor and the GSP sourced equity provider.

Challenges
The challenge was the amount of property level equity investment for each prospective deal was smaller than most investor’s minimum dollar requirement per deal. In addition, the Sponsor did not have a live deal at the time that GSP was engaged on this financing assignment.

Solution
GSP leveraged their industry expertise and extensive equity relationships to market the request effectively and secure the right capital for this transaction. In order to garner the interest of equity providers without having a live deal in hand, GSP conveyed the Sponsor’s robust market experience and track record. By showcasing the Sponsor’s growth plan and active pipeline, equity providers became comfortable with discussing potential long term equity relationships. Ultimately, GSP secured an equity provider who understood the strength of the Sponsorship group and believed in their ability to execute the proposed business plan. While negotiating a programmatic structure with the equity provider, the Sponsor went under contract for the stated 14-unit apartment building and subsequently closed on the deal utilizing the equity capital provided by the GSP sourced investor.