Retail

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    $13,500,000 Non-Recourse Bridge-to-Bridge Loan with a Cannabis User at 6.90%; Echo Park, CA

    June 17, 2020

    Transaction Description:

    George Smith Partners arranged $13,500,000 in quick-close, cash out, bridge-to-bridge financing for a multi-tenant retail center in Echo Park, California. The Sponsor approached GSP with intentions of taking out their existing lender due to an issue with lease approval for a cannabis tenant. In order to purchase an out-parcel on the Property, the cannabis user needed a lease in place so it could obtain a license from the local jurisdiction. If approvals were not granted, the Sponsor would have the ability to break the lease. GSP identified a non-bank lender who was comfortable approving a lease on a space which may never be occupied. The Lender’s flexible prepayment structure allowed the Sponsor to execute their business plan as the cannabis tenant planned to acquire an out-parcel on the Property after receiving approvals from the City. The first trust deed was sized to 60% of value with no hold back requirement for interest reserve or capital expenditures. The non-recourse, interest only loan does not carry any prepayment penalties. The Sponsor plans to take out the loan within 12 months with long-term fixed rate debt.

    Rate: 6.90%
    Term: 12-month term with one 12-month extension option
    LTV: 60%
    Guaranty: Non-recourse

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    $6,790,000 Permanent Cash Out Financings for Walgreens and Jack in the Box; Murrieta, CA

    June 10, 2020

    Transaction Description:

    George Smith Partners arranged two loans totaling $6,790,000 in permanent financing with over $1,500,000 cash out for a freestanding Walgreens and Jack in the Box located in Antelope Square Shopping Center in Murrieta, California. Both loans are fixed for 5 years at 2.87%, which is one of the lowest fixed rate financings ever closed by GSP. Just as GSP went into application the impacts of Covid-19 resulted in Jack in the Box ceasing rent payments and many capital providers putting a pause on new deals. GSP was able to negotiate a high leverage, cash out refinance with no warm body for carve-outs. The Sponsor also agreed to hold back principal and interest reserves on the Jack in the Box.

    Rate: 2.87% Fixed
    Term: 5 Years
    Amortization: 30 Years
    Combined LTV: 65%
    Prepayment: 3,2,2,1,0
    Guaranty: Carve-outs to entity, no warm body

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    $18,000,000 Non-Recourse Financing for the Recapitalization of a Six Property Retail Portfolio; San Francisco and Los Angeles, CA

    May 13, 2020

    Transaction Description:

    George Smith Partners successfully arranged $18,000,000 in non-recourse financing for a six-property portfolio that includes trophy street-front retail in urban infill locations within the primary submarkets of San Francisco and Los Angeles. The mix of tenants include national investment-grade companies, and quality national, regional and local companies. The assets are strategically located in submarkets with high barriers to entry, strong demand drivers, and quality demographics.

    GSP’s extensive lender relationships allowed for a competitive marketing process to create the desired structure to meet the Sponsors current and future growth objectives. GSP created a flexible structure that allowed the Sponsor to acquire new properties to meet their growth objectives. The Capital Partner structured the financing at a 65% loan to value on a non-recourse basis across the assets, with favorable release and acquisition provisions. Exact terms are confidential. The three-year initial loan term is interest only and priced at 280 bps over Libor with two, one-year extension options.

    Rate: 30-Day LIBOR + 2.80%
    Term: Three years plus two 12-month extensions
    Amortization: 36 months interest only
    Max Loan to Value: 65%
    Prepayment: 18-month minimum interest period
    Guaranty: Non-recourse
    Lender Fee: 1.00%

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    $19,100,000 Construction Financing to 92.5% LTC on a 111-Unit, Class-A Apartment Community; St. Louis City, Missouri

    April 8, 2020

    Transaction Description:

    George Smith Partners successfully placed $19,100,000 in construction financing, which funded 92.5% of the total project cost for the construction of a 111-unit second phase of a larger mixed-use multifamily and retail project located in the trendy St. Louis City neighborhood of The Grove. The financing structure included a senior loan to 85% LTC and a preferred equity investment with last-dollar exposure to 92.5% of total project cost. The preferred equity investment is non-recourse and the senior loan provides for only a 50% repayment guarantee that burns down to 25% upon certificate of occupancy. Additionally, the Lender and preferred equity investor gave credit for a lift in land value above the Borrower’s actual cost due to the Sponsor having owned the land since 2016 and it being the second phase of a larger project. GSP leveraged its expertise of the St. Louis market, long-standing lender relationships, and capital markets creativity to achieve the Sponsors goals of minimizing cash equity invested into the project due to how much value is being created in this phase of the project.

    Rate: Confidential
    Term: Twenty-four-month initial term with one, 12-month extension option
    Amortization: Interest only
    LTC: 92.5%
    Prepayment: Nine-months minimum interest
    Guaranty: 50% repayment guarantee that burns down to 25% repayment guarantee upon certificate of occupancy (on senior loan only; does not apply to the non-recourse preferred equity investment)

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    $4,517,000 Acquisition of a Multi-Tenant Retail Center, Villa Park, IL; Non-Recourse

    April 1, 2020

    Transaction Description:

    George Smith Partners secured $4,517,000 for the acquisition of a multi-tenant, retail center in Villa Park, Illinois. The non-recourse permanent loan is fixed at 3.75% for ten years with full-term interest only and a defeasance prepayment penalty structure.

    One of the tenants was a newly opened gym franchise with no historical sales information for this center. Also, during the loan process, the Seller was finalizing a subdivision of the parking lot which required multiple levels of municipality approvals.

    GSP identified a capital source who understood the strength of the asset, the experience of the Sponsor and its desirable suburb location, which is 20 miles outside of Downtown Chicago. The Capital Provider worked through the timing of the issuance of the subdivision approval and was able to close as soon as the approval was finalized. The efficiency of our Capital Provider allowed the Sponsor to be able to rate lock and close as soon as the approval was stamped, taking advantage of the low interest rate environment.

    Rate: 3.75% Fixed for 10 years
    Term: 10 years
    Amortization: 30 years
    Prepayment Penalty: Defeasance
    DCR: 1.30x
    Interest Only: 10 years
    Guaranty: Non-Recourse
    Origination Fees: Par

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    $4,300,000 Non-Recourse Permanent Financing for a Trophy Property in West Hollywood, CA

    March 11, 2020

    Transaction Description:

    George Smith Partners placed $4,300,000 in non-recourse permanent financing for a trophy property in West Hollywood, CA. Bank execution, a non-recourse structure and a sub 4% all-in coupon were all requirements, which eliminated most lenders. However, GSP sourced a bank lender willing to offer a non-recourse structure and a 3.92% fixed interest rate. The 5 year loan carries a step-down prepayment penalty and amortizes over 30 years.

    Rate: 3.92% Fixed
    Term: 5 Years
    Amortization: 30 Years
    LTV: 50%
    Prepayment Penalty: Stepdown
    Guaranty: Non Recourse

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    Full Term Interest-Only Non-Recourse Permanent Financing on a Newly Redeveloped Multi-Tenant Retail Property; Utah

    February 12, 2020

    Transaction Description:

    GSP successfully placed $4,000,000 of non-recourse, ten-year fixed-rate first mortgage debt collateralized by a 48,000 square foot retail box newly demised into four tenant suites. The improvements are 100% leased to two gym users, a restaurant, and an auto parts store. GSP sourced a lender comfortable with providing a full-term Interest-Only loan on the collateral despite both gym tenants, which represent 64% of income and 62% of building square footage in the aggregate, having newly signed leases and therefore no sales history at the Property. Additionally, GSP worked with the Lender to close the loan prior to the smaller gym tenant (11% of income and 14% of building square footage) completing its buildout and opening for business. Loan proceeds were subject to an 8.75% debt yield and the Interest-Only loan has a fixed coupon of 3.94% for the ten-year term.

    Rate: 3.94% Fixed
    Term: 10 Years
    Amortization: Interest-Only
    Loan to Value: 62.5%
    Prepayment: Yield Maintenance
    Lender Fee: None

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    $3,500,000 in Permanent Financing at 3.28% for Southern California Shopping Center: Oxnard, CA

    January 15, 2020

    Transaction Description:

    George Smith Partners secured a $3,500,000 of non-recourse bank loan to refinance a 21,000 SF shopping center shadow-anchored by a Lowe’s (NAP). The 100% occupied center consists of 4 buildings, 7 tenants, and is located in Oxnard. Tenants are a strong mix of national and regional tenants and includes one longtime local business. GSP worked with a lender that structured the loan term to be coterminous with the loan term of the Lowe’s. This allows the sponsor to have maximum optionality at loan maturity. The new financing lowered the interest rate from 5.10% to 3.28%. The fixed-rate loan was rate locked shortly after application, allowing plenty of time to collect SNDAs and Estoppels. The loan allows sponsor to pay down the balance by 5% in any given year without penalty and features a step-down prepayment.

    Rate: 3.28% Fixed
    Term: 8 years
    Amortization: 30 Years
    Loan-to-Value: 32%
    Guarantee: Non-Recourse
    Prepayment: Stepdown Prepayment (5%, 5%, 4%, 4%, 3%, 2%, 1%, 1%)

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    $5,000,000 Refinance of a Multi-Tenant Automotive Service Retail Center; Valencia, CA

    January 15, 2020

    Transaction Description:

    George Smith Partners successfully secured a $5,000,000 permanent refinance of a three-building, 8-unit, 20,000 square foot automotive service retail center on a 2-acre parcel in Valencia, CA. The Sponsor had purchased the Property in an all cash transaction in 2019 via 1031 Exchange and wished to recapitalize with a long-term fixed rate loan. GSP leveraged its expertise and strong relationship with a capital provider to execute a low fixed-rate, 30-year fully amortized, partial-recourse, permanent loan. Most importantly, there were no-post closing covenants, including occupancy, which was especially attractive to the Sponsor due to the shorter terms and automotive/specialty related tenancy. GSP was able to get the Capital Provider comfortable with the asset due to its strategic location in the heart of the auto-dealerships corridor, which makes this location quite attractive to businesses in the auto service space.

    Rate: 3.80% Fixed; Adjusts every 5th year
    Term: 30 Years
    Amortization: 30 Years
    LTV: 56%
    Recourse: Partial

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    $51,750,000 Senior Construction Financing & $16,200,000 Mezzanine Debt Placement for the Development of a Grocery Anchored Shopping Center; Kona, Hawaii

    January 15, 2020

    Transaction Description:

    George Smith Partners advised on the placement of $51,750,000 and $16,200,000 Senior Debt and Mezzanine debt respectively for the ground-up development of an institutional quality 204,275 SF outdoor shopping center that will be located along Kuakini Highway, one of the island’s most trafficked thoroughfares. The Property, which sits on a rare fee-simple 20-acre site, will provide patrons with easy access to both Henry Street and Palani Road and over 700 parking spaces (representing a parking ratio of 4:1,000 SF).

    Challenges:

    Although the Sponsors who partnered with a major life company, had extensive prior career experience in the field of commercial real estate development, the Project represented the Sponsor’s largest development to date. The development of the Project had already commenced adding another layer of complexity to the transaction.

    Solutions:

    GSP focused on the lack of new retail development on Kona and specifically the anchor tenant’s commitment to relocate their store from an adjacent shopping center (less than 0.50 miles). In addition, GSP was able to convey to capital sources the immense value of the fee simple ownership of the site – a rare occurrence in Hawaii where most land is leased from the State. Ultimately GSP was able to identify two lenders who not only understood the value of the fee simple ownership of the site but also understood the lack of new retail space and the subsequent demand.

    All Terms Confidential

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    $7,200,000 Interest Only Refinance for a Retail Center; Fixed at 3.65% for 10 Years; Vista, CA

    November 13, 2019

    Transaction Description:

    George Smith Partners secured $7,200,000 to refinance a 15-tenant retail center in Vista, CA. The Property, which was purchased by the Sponsor in 2016, was 30% occupied at acquisition. The Sponsor spent the last 3 years repositioning the center and leasing the vacant space to a diverse tenant mix of local businesses. The center is now 100% occupied and is anchored by a local grocer and a national bank. With the original business plan completed, there was a question of whether to sell or hold the asset.

    GSP arranged 10-years of permanent financing that allowed the Sponsor to return a sizable portion of the initial equity investment back to investors. The loan is also interest-only for the entirety of the term, maximizing ongoing cash flow. Sized to 62.5% LTV, the non-recourse financing carries a fixed interest rate of 3.65%. The multiple benefits that the loan provides allowed the Sponsor to forgo the option of a sale.

    Rate: 3.65%, Fixed
    Term: 10 Years
    Amortization: Full Term Interest-Only
    Loan to Value: 62.5%
    Prepayment: Defeasance
    Lender Fee: None
    Guaranty: Non-Recourse

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    $9,050,000 Non-Recourse Cash-Out Refinance for Two Retail Centers; Columbus, OH

    November 6, 2019

    Transaction Description:
    George Smith Partners secured $9,050,000 for the non-recourse, cash-out refinance of two unanchored, multi-tenant retail centers in Columbus, Ohio. The two properties were cross-collateralized allowing the Borrower to benefit from securing a higher leverage loan. The permanent loan is fixed at 4.25% for ten years with 12 months of interest only and a defeasance prepayment penalty structure.

    Challenges:
    One of the retail centers had a tenant whose parent company was in bankruptcy proceedings and vacated their space during our loan process. The other retail center, which is newly developed, was in the process of lease up and had a few tenants not yet in occupancy prior to loan closing. The market had very few comparables to support our underwritten value of the Subject Property.

    Solution:
    GSP identified a capital source that understood the strength of the asset, location and the experience of the Sponsor. Based on these strengths and additional market support provided, the Lender was able to offer a cross-collateralized structure, which maximized proceeds at 73% LTV with 12 months of interest only payments. The Capital Provider was also able to fund the loan with a few tenants not in occupancy. This allowed the Sponsor to take advantage of today’s low interest rate environment and eliminate interest rate risk.

    Rate: 4.25% Fixed for 10 years
    Term: 10 years
    Amortization: 30 years
    Prepayment Penalty: Defeasance
    DCR: 1.30x
    Interest Only: 12-months
    Guarantee: Non-Recourse
    Origination Fees: Par

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