Retail

Transaction Description:

George Smith Partners successfully arranged $9,327,000 in acquisition financing for the purchase of three prime retail properties adjacent to top colleges across different states. The properties are all performing very well but do not have credit tenants. Overcoming the reluctance of regional banks to cross-collateralize and the high rates offered by many lenders, we sourced a national bank that could loan on all three properties. The lender provided a seven-year fixed rate term and 4 years of Interest Only payments. The strategic placement of these properties in prime locations is expected to drive significant value appreciation. By structuring the loans with low leverage, we allowed the Sponsor to complete a 1031 exchange. The cross-collateralized loan with release provisions allowed the seamless acquisition of the assets.

Transaction Description:

George Smith Partners secured $14,100,000 in permanent financing for the acquisition of a 5,666 square-foot luxury, high-street retail property located at 909 N. Michigan Avenue, in the heart of Chicago’s Magnificent Mile Shopping District. The three luxury retail tenants include Bulgari, Omega Watches, and Chicago’s own Burdeen’s Jewelry. The Sponsor purchased the retail parcel from the owner of the Westin Michigan Avenue Chicago for $27,300,000, approximately $4,818 per square foot.

During the closing process, the capital markets experienced considerable volatility with the fallout from Silicon Valley Bank and First Republic Bank causing a seismic shift to the debt markets prior to funding of the loan. George Smith Partners was able to hold proceeds on the loan and closed the 5-year fixed rate note with full-term interest only by leveraging our lender relationships and augmenting with appropriate structure.

Transaction Description:

GSP utilized a quick close bridge fund to provide 3 separate loans:
$7,150,000 Distressed Multifamily Purchase – 80% LTC in Los Angeles
$2,200,000 Mixed-Use, Retail-Residential – 65%LTV in Los Angeles/Venice
$2,580,000 Restaurant/Retail – 65% LTV in Pasadena

George Smith Partners successfully arranged three bridge financings in Southern California. In today’s turbulent market, private quick close options are sometimes necessary. The ability to act quickly often allows our clients to become the chosen Buyer- purchasing these Properties at a large discount or solve a tenant/occupancy issue before a permanent refinance.

GSP worked with a local REIT to develop a program that includes a first and second private mortgage of up to 85% of acquisition price. With the fund and GSP, the loans are underwritten to the future value, to allow the client to implement their strategy. When used for purchasing a property, the loans are designed to provide the same surety of close as an all-cash buyer, with no appraisal needed and the ability to close as fast as 5 business days. The loans are non-recourse and have no prepayment penalty.

These loans are cheaper and easier than equity partners and allow the Sponsor to take advantage of opportunities using less cash.

Transaction Description:

George Smith Partners arranged $4,150,000 in fixed-rate acquisition financing for a 100% occupied, 12,558 square foot, 4-tenant, Starbucks-anchored retail center in South Carolina. Located just across the border from North Carolina in suburban Charlotte. The contemporarily designed, 2019-built center is well located with a high traffic count, solid demographics, and includes daily needs that tenants appropriate to its suburban location. Starbucks occupies the end cap and other tenants include an investment-grade urgent care facility, a wine and food bar, and a nail salon. GSP sourced a lender that would provide a 10-year term, with a 5-year fixed rate, and no prepayment penalty, in order to give the sponsor maximum flexibility.

Transaction Description:

George Smith Partners arranged $3,669,250 in fixed-rate financing to refinance a single-tenant NNN Rite-Aid located in Mechanicsburg, Pennsylvania. GSP sourced a lender that would provide 10-year, fixed-rate debt with no prepayment penalty in order to give the sponsor maximum flexibility. The financing is fixed at 4.98% amortizing over a 30-year period. Rite Aid signed a 26-year lease that expires at the end of the loan term. The tenant’s lease includes four 5-year options at fixed rents.

Transaction Description:

George Smith Partners successfully placed $38,500,000 of floating-rate debt for the cash-out refinancing of a 372,000 square foot grocery-anchored retail center located in Utah. Fully leased and anchored by tenants like Super Target, Best Buy, and PetSmart, the Property boasts a dominant submarket position owing to its diverse assortment of community-oriented tenants and main-and-main location. Additionally, the Sponsor had expertly navigated the difficult market conditions caused by the Covid-19 pandemic, notably through subdividing and re-leasing 45,000 SF of space to credit-rated tenants at a rent 70% higher than the previous occupant, which had vacated due to bankruptcy. Loan proceeds were used to pay off existing debt, fund tenant improvements, and leasing commissions, and repatriate Sponsor equity.

Most non-CMBS lenders contacted had sought a full repayment guaranty because of the retail asset class. However, GSP successfully sourced a flexible lender willing to structure recourse with a 25% springing repayment guaranty, which would only come into effect only if an anchor tenant terminated their lease or ceased operations. Furthermore, the Property’s strong sponsorship and well-executed business plan effectively aided GSP to source debt with an extremely competitive rate and significant cash-out at close.

Transaction Description:

George Smith Partners successfully placed $38,500,000 of floating-rate debt for the cash-out refinancing of a 372,000-square-foot grocery-anchored retail center located in Utah. Fully leased and anchored by tenants like Super Target, Best Buy, and PetSmart, the property boasts a dominant submarket position owing to its diverse assortment of community-oriented tenants and main-and-main location. Additionally, the Sponsor had expertly navigated the difficult market conditions caused by the Covid-19 pandemic, notably through subdividing and re-leasing 45,000 SF of space to credit-rated tenants at a rent 70% higher than the previous occupant, which had vacated due to bankruptcy. Loan proceeds were used to pay off existing debt, fund tenant improvements and leasing commissions, and repatriate Sponsor equity.

Most non-CMBS lenders contacted had sought a full repayment guaranty because of the retail asset class. However, GSP successfully sourced a flexible lender willing to structure recourse with a 25% springing repayment guaranty, which would only come into effect only if an anchor tenant terminated their lease or ceased operations. Furthermore, the Property’s strong sponsorship and well-executed business plan effectively aided GSP to source debt with an extremely competitive rate and significant cash-out at close.

Transaction Description:

George Smith Partners successfully placed $27,020,000 (83.5% LTC) of construction financing for the development of a 95%-preleased, grocery-anchored retail center in the Inland Empire. Pre-leased with credit tenants like Sprouts, Burlington, and Five Below, the remaining tenant mix included a diverse assortment of community-oriented tenants with strong overall synergy. With loan proceeds funding the acquisition of the 15-acre site, the Sponsor planned to develop ¾ of the site as the aforementioned retail development, holding on to 4-acres as a second phase. Furthermore, the Sponsor planned to sell a pad site to a future tenant at close of the land.

Although capital providers continued to be hesitant in financing retail construction, GSP was able to source competitive financing through the development’s strong sponsorship and significant preleasing. Most importantly, GSP found a lender comfortable with the sponsor’s proposed equity structure, which involved a minimal initial cash contribution followed by additional equity contributions from pad and land sales.

Transaction Description:

George Smith Partners successfully advised on the refinance of two parcels containing a vacant commercial retail building and 90% leased mixed-use residential/retail building in Los Angeles, CA. The senior loan proceeds totaled $9,800,000 of non-recourse financing, approximately 58% LTV. After the COVID-19 pandemic largely stopped retail leasing, the Sponsor responded to changing market dynamics by altering business plans to re-entitle the vacant retail parcel to multifamily. Negotiating an LOI for the sale of the mixed-use residential building, the Sponsor required a bridge loan to pay off the existing bridge debt and carry both parcels until the completion of entitlements and eventual sale.

GSP had to strategically market the opportunity given a weak, Covid-related retail leasing market and relatively complicated business plan. With deliberate advising of GSP, the Sponsor was able to achieve fixed, non-recourse financing despite a fully vacant building.

Transaction Description:

George Smith Partners successfully advised on the placement of an $18,000,000 bridge loan to finance a fee simple retail center in an affluent Northern California suburb. GSP was able to procure a lender in a turbulent market that was willing to provide significant cash out on an excellently located retail property. The 100,000+ SF fitness anchored neighborhood center was 52% occupied at the time of closing and will reach 90% once the fitness tenant opens for business.

Although the property performed well during COVID, GSP had to strategically market the opportunity considering the recent loss of the previous anchor tenant that has been replaced by the fitness tenant. Due to the extremely strong sponsorship, the Sponsor received 100% of the floor funding as cash out (the property was free and clear of debt) with additional TI/LC holdbacks for the fitness tenant. As retail experiences a strong recovery, this execution serves as a prime example for retail investors to enter a shorter-term loan during a rising rate environment and avoid committing to decade-high rates.

Transaction Description:

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.

Transaction Description:

George Smith Partners successfully placed a $3,245,000 bridge loan fixed at 5.00% for two years. The loan will have an initial funding of $2,400,000 with the remainder distributed in 6 months’ time to accommodate funding structures for the Borrower’s needs. The Collateral is two adjacent commercial properties located in Hollywood, CA. One building is completely vacant and the other is a dated laundromat. The proceeds will cover renovation and leasing costs allowing the vacant building to stabilize, then provide additional proceeds to re-tenant the laundromat once the other building is cash flowing. The initial term sheet was structured at Prime plus a spread of 0.50%. When interest rates spiked during the closing process, GSP negotiated a fixed rate of 5.00%. GSP sourced a lender able to provide cash-out financing, limited recourse that burns off at full stabilization and fix their interest rate for the life of the loan.