November 16, 2022
George Smith Partners successfully placed two simultaneous loans to acquire a five-building office campus in Laguna Hills, California. The 84% occupied Property sits on a 16-acre site adjacent to a reservoir and contains ample parking (4:1000 square feet). The Properties were built in the late 1980s and completely renovated in 2016-2018. GSP structured the financings to fit the Sponsor’s business plan which involved separating the collateral into a two-building bridge loan and a three-building CMBS loan. These loans allow the Sponsor to place long-term, fixed-rate debt on the stable assets while keeping shorter-term debt on the more transitional buildings.
Loan 1 (3 Buildings): $24,800,000 of non-recourse, seven-year fixed rate first mortgage CMBS debt for the acquisition of three of the office buildings (total 158,000 square feet) which are 84% leased. GSP sourced a lender able to provide seven-year, non-recourse financing and the ability to close with a complicated DST (Delaware Statutory Trust) equity structure in a tight timeframe. The loan was sized to a 9.00% debt yield, 59% LTV, or 1.60x debt service coverage ratio on the 5.93% fixed rate coupon. The Sponsor bought down the interest rate.
Loan 2 (2 buildings) $14,600,000 of non-recourse, 75% LTV, bridge financing for the acquisition of the remaining two office buildings (total 66,000 square feet), which are 79% leased with upcoming tenant rollover. GSP identified a Lender that could provide 75% leverage and a flexible 24-month loan term with three 12-month extensions. The loan is priced at 5.95% + 1 Month Term SOFR and is non-recourse. GSP was able to identify a lending source that not only understood the market and demand for office space in the market.
Unique Structure – Two Simultaneous Loan Closings on the Divided Collateral
Loan Amount: $24,800,000
Term: 7 Years
Amortization: Full-Term Interest Only
Debt Yield: 9.0%
Loan Amount: $14,600,000
Term: 24 Months, plus Three 12-month Extension Options
Amortization: Interest Only
Prepayment: 12 Months Minimum Interest
September 14, 2022
George Smith Partners secured a $15,400,000 loan commitment for the refinance of a 381,754 square-foot, “Curacao” office and retail building located on the Olympic Boulevard business corridor: one-half mile west of L.A. Live and The Staples Center. To reduce excess proceeds from the refinance, the Sponsor elected to reduce the proceeds to fund only $14,700,000 of the committed amount.
The building had been previously encumbered by a 10-year CMBS loan arranged by GSP. During the past year’s volatile interest rate environment, GSP worked closely with the Sponsor and Lender to provide a loan commitment with a five-month forward rate lock. The goal was to eliminate the Sponsor’s rate risk and enable the pre-payment of the CMBS loan, without paying defeasance, in the “open window” four months prior to its maturity. The 7-year loan was forward rate locked at a 5.04% fixed rate. Without the forward rate lock, the pricing would have been 75 – 100 bps higher.
Several challenges were encountered when discussing the transaction with capital providers. While the property was over 93% occupied, 43% of the space was occupied by both office and retail affiliates of the Sponsor. The retail comprised 23% of the building’s gross leasable area and its location on the ground floor and basement levels made it a challenge for some capital providers concerned about owner/user and retail tenant concentration. However, by highlighting the long-term ownership, unique business strategy, and strong sponsorship, GSP was able to source a lender that was both comfortable and eager to be a part of the refinancing.
September 8, 2022
George Smith Partners arranged $3,600,000 in bridge financing of a 30,000 SF office/industrial Property located in Downtown Los Angeles. When the Sponsor engaged GSP, the Sponsor was in the midst of repositioning the Asset from a multi-tenant investment property into a full owner-user use. Because the previous lender did not allow for the reposition, GSP quickly arranged a multi-phase refinance process.
The first phase was to take out the existing Lender by securing a $3,600,000 non-recourse bridge loan in just 7 days to avoid a technical default with the previous lender. This bridge loan was secured at 6.50% interest only on a two-year term, and a 1.00% origination fee. In today’s market, bridge loans of this nature usually start at 8.00% -10.00% interest rates with more expensive origination fees, but GSP was able to leverage its relationships to secure a more affordable option for their client. The loan has no prepayment penalty or exit fee.
The second phase of this financing that is set to close in 60-90 days will be a long-term SBA loan which will net the Borrower over $5,000,000 of cash-out at a below market rate with 3 years of interest only on a 10 year term. GSP was able to handle the Borrower’s financing needs smoothly and quickly, allowing the Borrower to focus on expanding their business and take over their asset as an owner-user.
$22,900,000 Bridge Loan for the Refinance of a 35,000 SF Mixed-Use Office/Retail Property; Beverly Hills, CA
August 3, 2022
George Smith Partners successfully advised on the placement of a $22,900,000 non-recourse bridge loan with cash out for the refinance of a 35,000 SF mixed use, office/retail building in the heart of Beverly Hills. Although boasting fully leased office spaces and an irreplaceable location in the famed Golden Triangle, the Property’s ground floor included some vacancy. Pandemic issues with return to office and street retail concerns were offset due to the Property’s incomparable location. At close, one lease was signed, another in negotiation, and numerous tenant tours were requested as the market recovered.
The Sponsor required a loan to not only pay off existing debt and return equity, given the long-term ownership, but also to fund leasing commissions and tenant improvements. With strong sponsorship and a jewel box asset, GSP was able to source a lender that was willing to structure financing to complete the Sponsor’s business plan, funding leasing costs as well as providing both cash out at closing and an income earn out once the street facing retail was leased.
Rate: 1-Month SOFR + 270
Term: 7 Years
Amortization: Interest-Only for the First 3 Years, Followed by 30-Year Amortization
June 1, 2022
George Smith Partners successfully placed the non-recourse rate and term refinance of a 112,000 square-foot, mixed-use office and fitness anchored retail center facing loan maturity. Although several tenants were mandated to close by State Regulators during COVID, Center occupancy was not significantly impacted. The sit-down restaurant remained open and adapted operations for take-out only. The restaurant has since expanded, leasing an additional suite, and now permanently offers take-out beyond their traditional dining room facilities.
The maturing loan, SWAPed at inception, has 90 days remaining on their existing SWAP contract. GSP successfully negotiated that contract through the first three months of the new loan, saving the Sponsor over $30,000 in SWAP breakage costs. Priced at SOFR plus 225, the replacement debt is a three-year term with two, 1-year options to extend, and amortized over 30 years. A SOFR cap will be purchased effective upon the existing SWAP expiration, offering a hedge to higher future interest rates. The cap will only be for the initial first two years of the loan and then extended annually to maintain a lower cap cost.
Rate: SOFR + 2.25%
Term: 3 Years + Two, 1 Year Options
Amortization: 30 Years
Fee: 50 Basis Points
Prepayment: 2, 1, 0%
Hedge Protection: Cap Purchase
- Advisors: David Stepanchak
May 25, 2022
George Smith Partners arranged a SBA 504 financing for a recently renovated single-tenant, creative office building in Glendale, CA. The Property will become the new headquarters for the Sponsor’s company. GSP leveraged its long-standing relationships with an institutional SBA lender and a leading Certified Development Company (CDC) to structure and close at 85% LTC. Though the appraisal value came in below the initial purchase price, GSP offered additional market analysis and local area expertise that helped the Sponsor negotiate a reduced price of nearly half a million dollars.
TD Rate: 4.978% Fixed for 10 Years
Term: 20 Years
Amortization: 25 Years
TD Term: 25 Years
Amortization: 25 Years
Combined LTC: 85%
- Advisors: John Choi
March 16, 2022
George Smith Partners successfully arranged $3,000,000 in acquisition financing for a 20,000 SF office/retail single story building in Sacramento. The Seller will occupy the Property paying no rent but will cover the operating expenses until the client provides 90 days’ notice to vacate. Centrally located in Midtown Sacramento, the Sponsor purchased the property for its land value, as they will entitle and assemble adjacent properties to be developed into a new ground-up multifamily project. Requiring a three-week closing timeline over the holiday season, George Smith Partners successfully sourced financing within the tight schedule.
Term: 18 months
- Advisors: Robert Horton
$9,000,000 for the Refinancing of a 7,100 SF Office; Southern California & 28,500 SF Industrial Facility; Colorado
January 5, 2022
George Smith Partners successfully secured $9,000,000 for the refinancing of two single-tenant assets in Southern California and Colorado. The Southern California industrial property had challenges due to the high dollar per square foot. The Colorado asset had challenges due to the tertiary location. In addition, the tenant for both properties had credit issues.
Despite the risks associated, GSP was able to successfully navigate these hurdles. This execution is fixed at 4.25% for 5 years and was sized to 75%.
Rate: SWAP + 3.00% (floor of 4.25%).
Term: 10 Years
- Advisors: Robert Horton
$19,570,000 Non-Recourse Acquisition Bridge Financing for a 163k SF Office Campus; Ventura, Los Angeles, CA
November 29, 2021
George Smith Partners successfully secured $19,570,000 in senior acquisition debt financing for a 4-building, garden style office campus located in Ventura. Situated on a rare 7.72-acre infill site, the Property consists of 162,717 net rentable square feet across the 4 buildings and is within walking distance to the high-traffic retail hubs, Mills Street, and the Pacific View Regional Mall. The financing capitalized the Property acquisition as well as a focused capital expenditure program aimed at increasing operational efficiencies and targeted deferred maintenance.
Despite COVID-19 related challenges in the office sector, the Property maintained 70% occupancy through its granular tenant base. While some lenders expressed concern with the going-in debt yield and market leasing dynamics, GSP broadly marketed the Project and was able to identify a lender who understood the underlying value of the asset, the Sponsor’s business plan, and Ventura’s fast-growing market. The interest-only financing was sized to 70% loan to cost, including 100% of future funding for capital expenditures, tenant improvements and leasing commissions. The loan carried a 3-year term and was priced at 1 Month Libor + 500 basis points with a 5.15% floor. Due to an excellent purchase price, the financing had a very tight closing timeframe, and the selected Lender was able to close in 30 days from term sheet execution.
Rate: L+500 (5.15% floor)
Term: 3 Years (Two 12-Month extensions)
Interest-Only: Full Term
3.15% Fixed Rate, Interest-Only Cash-Out Refinance for Owner-User Office Building; Beverly Hills, CA
November 23, 2021
George Smith Partners arranged $6,650,000 in owner-user financing for a multi-tenant, 50% owner-user office property located in Beverly Hills, CA. The Sponsor approached GSP to help assist with taking equity out of the Property to reinvest in their company. The Sponsor requested a low interest rate and $2,500,000 cash out. The multi-tenant component, along with a decreased appetite for office lending due to “Work-from-Home”, made it difficult for capital sources to get comfortable with the cash-out and interest-only request. GSP had to identify a capital source that could provide competitive terms, and a certainty of execution. Being in the market daily, GSP was able to successfully structure a first trust deed from a conventional lender and provided the Sponsor with a below-market interest rate of 3.15% fixed, and interest-only payments for the first 5 years of the 10-year term. Thanks to the low-rate and interest-only component, the Sponsor was able lower their debt service from their previous loan, while simultaneously securing over $2.,500,000 in cash-out.
November 17, 2021
George Smith Partners arranged $16,380,000 in permanent financing for a newly stabilized, 7-story office building in the historic core of Downtown Los Angeles. The Sponsor purchased the Property in 2017 and completed a massive renovation to completely modernize the structure, façade, and interiors. The Sponsor leased 85% of the building prior to completing the renovation, including the ground-floor retail suite which is leased to a very high-end restaurant group. Some of the tenants are marijuana-related-businesses (“MRB’s”), meaning they service companies associated with marijuana, which made the financing challenging. GSP identified a recourse bank that was comfortable with the tenants and structured a five-year loan with an earn-out for additional leasing. The financing is fixed at an interest rate of 3.75% for the entirety of the loan term and will amortize over a 30-year period.
November 10, 2021
George Smith Partners placed the refinance of a two-tenant flex-office building in the central business district of Santa Barbara. Currently 100% leased and occupied, there is a 100% roll within the next 20 months. Our Sponsor reduced his current coupon by over 50 bpts and locked in today’s historically low interest rates for five years rather than facing interest rate risk in two years when his current loan would have matured. Our Sponsor also benefited from a nominal return of equity. Despite the tenant roll, there are no holdbacks, reserves, escrows, or impounds. The interest rate was locked at application without the requirement of a deposit. Sized to 65% of appraised value, the ten-year term is fixed for five years before a fixed rate reset for the remaining five-year term. Amortized over 30 years, prepayment steps down from 3% and is open the remaining two years of each five-year term. All prepayment penalties are waived in the event of a sale.
Rate: 3.50% Fixed for Five Years
Term: Ten Years – 5+5
Amortization: 30 Years
Loan to Value: 65%
Lender Fee: Par
- Advisors: David Stepanchak