Rate: 8.6%
Term: 6 Months+One – 6 Month Option
Amort: Interest Only
Prepayment: None
Non-recourse
Transaction Description: Poor management and the economic downturn led an iconic San Diego Bar and Restaurant into bankruptcy. The bankruptcy court would only consider quick close, all cash offers to liquidate the real estate. The existing lender was also trying to obtain relief from stay and foreclose. For the project to be successful, an experienced restaurateur with vast market experience and access to immediate cash would be required to take this out of bankruptcy to stabilization. With ample experience working through bankruptcy courts, Mr. Shaffer assisted his client with the bankruptcy laws and developed a capital solution that enabled a quick close, 6 month, acquisition loan that funded in 10 days of the judge’s order. The bridge loan provided 70% of the purchase price at an 8.6% interest only rate.
Challenge: In addition to the timing as mandated by the bankruptcy court, there was no in-place cash flow, significant deferred maintenance and code issues for this special purpose single tenant asset. Certainty of execution was required for this non-operating restaurant in order to preserve the Borrowers’ cash deposit.
Solution: Understanding the challenges of the bankruptcy, GSP quickly demonstrated the intrinsic value of the land as well as the experience and skills of the Sponsors. The primary focus was placed on the sales value of the asset and not the potential cash flow. Our Sponsor had recently achieved a 500% return on a prior transaction in this market for an asset acquired out of bankruptcy.
Related Financings
- No related financings.
