October 16, 2019
George Smith Partners secured $7,800,000 for the cash-out, refinance of a newly renovated, class B, 246-unit multifamily building located in Indianapolis. The structure allowed the Sponsor to pull out over $2,000,000 in cash and leave in place an affordable grant loan that was awarded to the Property for maintaining a certain number of affordable units.
The Sponsor is a regional multifamily owner who has a strong relationship with an international bank. The in-place loan was originated by the Sponsor’s relationship bank. There were only three months of results after renovations. Due to the lack of results, the current Lender’s proposed offer to refinance the Property did not give the Sponsor credit for the upgrades and increased rents. It also would have required the payoff of an attractive loan from the City.
GSP identified a national balance sheet lender that understood the strength of the asset, improvements and experience of the Sponsor. Using our vast experience in understanding this type of asset and proving out the large future increases in cash flow, GSP was able to secure financing that was far superior and allowed for cash-out to the Sponsor. The financing also allowed for the affordable grant loan to remain in place. GSP was able to negotiate no lender fees or prepayment. The loan GSP secured allowed for higher proceeds, cash out, longer term, and an overall lower cost.
Low Debt Yield, 3.77% Coupon Permanent Financing for the Acquisition of a Recently Developed Grocery-Anchored Retail Center; FL
September 25, 2019
George Smith Partners successfully placed $14,690,000 in non-recourse, ten-year fixed rate first mortgage debt for the acquisition of an approximately 54,000 square foot, 96% occupied, recently developed retail center in Western Florida. An investment-grade grocery anchor on a newly signed long-term lease comprises approximately 75% of the collateral. The anchor has no sales history at the Property and is not required to report sales going forward. GSP sourced a lender to provide full term non-recourse Interest-Only financing subject to a low 7.35% debt yield. The 65% leverage loan has a 3.77% fixed coupon over the ten-year term.
75% Leverage, 3.75% Coupon Non-Recourse Permanent Financing for a Neighborhood Retail Center; Western United States
September 18, 2019
George Smith Partners successfully placed a $5,740,000 non-recourse, ten-year fixed rate loan on an 89% leased, multi-tenant retail property, shadow-anchored by Savers and Big Lots. GSP worked with the Sponsor to overcome several environmental issues with the Property. GSP sourced a lender able to achieve 75% leverage, non-recourse financing and structure around the environmental issues. The loan was sized to the greater of an 9.75% debt yield or 1.40x debt service coverage ratio on the 3.75% fixed rate coupon.
July 24, 2019
George Smith Partners secured $3,744,000 of permanent financing for the acquisition of 3 single-tenant Starbucks. The drive-thru locations all have new leases with at least 8 years of term left and tenant options to extend. Each property is located in a different state across the middle of the country (Texas, Louisiana, Illinois). The Sponsor wanted to have a single capital source finance all three properties for ease of closing and ongoing servicing. GSP was able to find a lender that could accommodate the variety of locations and provide the same terms for each acquisition. All of the loans are fixed at 4.75% for 5 years and have a 30-year amortization schedule. Loan amounts were sized to a 1.25x DSCR, which resulted in an average LTV of 62%. The recourse financings do not have any prepayment penalties and can be refinanced at any time.
$3,900,000 Cash-Out Permanent Financing with Full Term Interest-Only After Exchange; Los Angeles, CA
July 2, 2019
George Smith Partners financed the purchase of a mixed-use retail/office building in Los Angeles, California, last year, using a 1031 exchange. GSP used our vast experience with tax differed exchanges to arrange a cash-out financing with a seven-year fixed rate and is full term interest-only. The cash- out was used to purchase a new property and the Sponsor was able to reinvest their entire exchange in the purchase to differ any taxable gain. The new refinance allowed the Sponsor to pull cash out from the property tax free and use that cash to grow his real estate portfolio. While the cap rate at purchase was very low, the Property’s value will continue to increase due to its location in a great Los Angeles neighborhood. In a traditional loan, the Borrower would be limited on the loan size and cash flow but structuring the full term interest-only loan allowed the Sponsor to achieve positive cashflow and acquire the new asset without issue.
August 1, 2018
GSP successfully placed $1,022,000 in non-recourse permanent debt to take out an existing recourse mini-permanent bank loan on a mixed-use multifamily and retail property located in the heart of St. Louis City, Missouri. The 70% leverage loan has a fixed coupon of 4.90% for the duration of the ten-year term. The financing provides significant cash-out to the Borrower and maximizes cash flow via three years of interest only payments prior to converting to 30-year amortization. GSP leveraged its lender relationships to achieve the most competitive loan terms for the Borrower which included structuring multiple pricing and loan-to-value exceptions.
July 11, 2018
George Smith Partners secured $2,849,250 in acquisition financing for a single-tenant Tractor Supply Company in Las Vegas, New Mexico. The Sponsor purchased the 19,000 square foot building for $3,800,000 at a very attractive cap rate for the product type. The tenant has 10 years remaining on their original lease with 10% rental increases every 5 years. GSP was able to mitigate the risk that the market presented by highlighting the Sponsor’s track record with similar assets. Sized to 75% of purchase price, the permanent loan is fixed for 7 years then floats for the last 3 years of the 10-year term.
June 20, 2018
George Smith Partners arranged permanent financing for a 6-unit multi-family property in Santa Monica, CA. Despite the property’s spectacular location, footsteps from Santa Monica College, the property was operating well below market rents. GSP identified a lender that was willing to rely solely on the Sponsors strong global cash flow, perfect credit history and experience managing and owning multi-family and commercial properties to size the loan down to a 1.01x DCR. Most conventional lenders require a minimum 1.15x DCR on their multi-family loans and could not reach the loan dollars needed for this transaction. Using its long standing relationship with the lender, George Smith Partners mitigated the below market rents by stressing the strength and experience of the Sponsor with a portfolio bank and obtained fixed-rate leverage at maximum loan proceeds.
Rate: 4.80% fixed for 5-years
Term: 30 Years
Amortization: 30 Years
Recourse: Full Recourse
Prepayment Penalty: 3/2/1
Lender Fee: Par
- Advisors: Reuven Risch
November 15, 2017
George Smith Partners arranged $17,882,000 for the refinance of a 332-unit garden-style apartment complex located in Albuquerque, New Mexico. GSP identified a capital provider that would accommodate the existing borrower structure, which was comprised of 7 TIC’s (Tenants-in-Common). Our Sponsor wanted to keep the existing organization structure in place due to potential tax implications that may have arisen with any changes. The Sponsor’s existing loan had a floating interest rate, which they wanted to convert to a fixed rate to eliminate any interest rate risk. Sized to 70% of value, the non-recourse loan is fixed at 4.23% with a 10-year term and a 30-year amortization schedule.
August 29, 2017
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.
August 23, 2017
George Smith Partners placed the non-recourse $16,400,000 rate and term refinance of a Southern California mixed use office and specialty retail center. Proceeds were used to retire the existing maturing loan and cover refinance costs. Actual in-place cash flow exceeded a 1.60 debt coverage ratio. Loan documents were drafted to allow for the transfer of ownership interests for estate planning purposes. Fixed for five years via a synthetic SWAP, the on-book loan allows for two – 1 year options; amortized over 30 years.
Anchored by a fitness center, store sales and membership information was not available. Approximately 30% of the net rentable office space was vacant and several tenants were also month-to-month.
Sized to 55% of value, our capital provider gained comfort of not having anchor store sales with physical inspections showing a strong client presence at this location. Our Sponsor demonstrated daily hands-on management addressing occupancy and maintaining good relations with existing office tenants. Three-quarters of the gross revenue is generated by the retail operations.
July 26, 2017
George Smith Partners placed the rate and term refinance of four stand-alone Rite Aid Drug Stores. The loans are structured as four separate un-crossed loans to maintain reposition flexibility. At the time of loan commitment, the Walgreens/Rite Aid merger was still under consideration by the FTC and it was unknown if Walgreens would close any of the subject units. Our Sponsor wanted to maintain options and not to allow one store closure to negatively affect the remaining portfolio. Store sales were not available. Each lease has approximately 9.5 years remaining on the initial term. The balance sheet loan is coterminous with the lease term and does not carry the traditional two-year lease hang-out. No reserve structure is required prior to the tenant notice date, six months before the lease and subsequent loan expiration. Fixed at 4.52% for five years, the rate will float over LIBOR for the remaining loan term and amortizes over 30 years. Prepayment steps down allowing for additional reposition flexibly if needed.
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