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Retail

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    $38,500,000 Cash-Out Refinance of 98% Leased Grocery-Anchored Retail Center; Utah

    January 5, 2023

    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.

    Term: 5 Years, 1-year I/O
    Rate: SOFR + 2.46%
    LTV: 65%
    Fee: 1%

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    $27,020,000 Construction Financing for a 95% Preleased, Grocery-Anchored Retail Center; Inland Empire, CA

    November 30, 2022

    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.

    Loan Term: 36 Months
    Interest Rate: SOFR + 3.45%
    Guaranty: Non-Recourse

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    $9,800,000 Refinance for Mixed-Use Building and Vacant Retail Building; Echo Park, CA

    November 2, 2022

    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.

    Term: 12 Months
    Rate: 7.75% Fixed
    Prepayment: None
    Guaranty: Non-Recourse

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    $18,000,000 Bridge Financing for 100,686 SF Fitness Anchored Retail Center; Northern CA

    September 28, 2022

    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.

    Term: 36 months
    Amortization: Full Term IO
    LTV: 55%
    TILC Holdback: $4,210,300
    Rate: SOFR + 220

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    $14,700,000 Refinance of 380,000 SF Office-Retail Property; Los Angeles, CA

    September 14, 2022

    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.

    Rate: 5.4% Fixed
    Term: 7 Years
    Interest-Only: 7 Years
    Amortization: 25 Years
    Prepayment Penalty: 4, 3, 2, 1, 1, 1, 0%
    LTV: 21%
    DCR: 1.20x
    Guaranty: Recourse

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    Bridge Financing for Two Retail Properties; Hollywood, CA

    August 31, 2022

    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.

    Rate: 5.00% Fixed
    Term: 2 Years
    Amortization: Interest Only
    LTV: 55%
    Prepayment: Open
    Guaranty: 50% – Burns off at DCR Hurdle
    Lender Fee: 0.50%

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    Refinance for a 2,738 SF Retail Building; Echo Park, CA

    August 17, 2022

    Transaction Description:

    George Smith Partners successfully advised on the refinance of a 2,738 SF high-street retail building located in Los Angeles, CA. The senior loan proceeds totaled $2,500,000 of non-recourse financing, which is approximately 70% loan-to-value. Due to the strategic advising of GSP, the Sponsor was able to obtain a fixed rate loan despite the building being 100% vacant.

    The Sponsor achieved a fully executed lease from a cannabis use tenant however, the prior mortgage did not permit cannabis use. GSP identified a cannabis-friendly lender that could close in accordance with the Sponsor’s business plan. Additionally, the Property was encumbered by a loan that included neighboring parcels as collateral. The new loan allowed the Sponsor to release the property from the prior mortgage and capitalize on the newly signed lease.

    Rate: 7.75%
    Term: 6 Months
    LTV: 70%

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    $22,900,000 Bridge Loan for the Refinance of a 35,000 SF Mixed-Use Office/Retail Property; Beverly Hills, CA

    August 3, 2022

    Transaction Description:

    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
    LTV: 60%
    Guaranty: Non-Recourse

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    $11,200,000 Perm Financing for Unanchored Retail; Tucson, AZ

    July 27, 2022

    Transaction Description:

    George Smith Partners successfully closed a loan at 60% Loan-to-Value for the acquisition of a neighborhood shopping center in an A+ location in Tucson. The Sponsor was seeking non-recourse financing at the lowest rate. While the Sponsor was purchasing the Property as a long-term hold, the Property had 50% of the tenants rolling within 2 years of acquisition. GSP was able to find a lender that was comfortable with this roll given the strong performance during COVID, leading to a higher chance of lease renewal. While processing the loan, GSP advised the Sponsor to lock the SOFR index prior to the CPE announcement, saving them from a 30-basis point increase to the all-in rate.

    Rate: 5.0%
    Term: 10 Years
    Amortization: 10 Years of Interest-Only
    LTV: 60%
    Prepayment: Defeasance
    Fee: None
    Guaranty: Non-Recourse

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    $10,000,000 Permanent Financing for Two Mixed Use Properties; Hollywood, CA

    July 13, 2022

    Transaction Description:

    George Smith Partners successfully placed a $10,000,000 loan with a 5-year fixed interest rate for two mixed-use properties located in Hollywood, CA. The ground floor retail for both properties has short-term roll and is in need of renovation. The financing provides significant cash-out, which the Sponsor will use to improve the Properties and to re-tenant the buildings with new, long-term, market rate leases. GSP sourced a lender that was able to provide cash-out financing, limited recourse that burns off at full stabilization and lock the rate at application – critical in this current volatile interest rate environment.

    Rate: 5.25% Fixed
    Term: 5 Years
    Amortization: 3 Years IO, 27 Year Amortization Thereafter
    LTV: 65%
    Prepayment: 5, 4, 3, 1, 1%
    Guaranty: 25%, Burning Off at Full Stabilization
    Lender Fee: None

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    $6,100,000 Perm Financing for an Unanchored Retail Property; Bakersfield, CA

    June 22, 2022

    Transaction Description:

    George Smith Partners successfully closed a loan at 60% loan-to-value for an 84% occupied, newly built, and stabilized retail center in Bakersfield, CA. GSP located a lender that was able to lock the rate of 4.125% at application to avoid the rate volatility in the market. Many lenders were not comfortable quoting the deal because of the lack of operating history. GSP was able to locate a lender that was comfortable with the lack of history, with a 6-month debt service reserve held back at closing, to ensure that the tenants continue to pay rent. The reserve is released after 6 months of full rent collection.

    Rate: 4.13%
    Term: 7 years
    LTV: 70%
    Amortization: 1 Year IO, then 25 Year Amortization
    Prepayment: None
    Fee: None
    Guaranty: Full Recourse

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    $4,875,000 Acquisition Financing for an 88% Occupied Neighborhood Strip Center; Ventura County, CA

    May 4, 2022

    Transaction Description:

    George Smith Partners successfully arranged $4,875,000 in acquisition financing for a non-grocery anchored retail shopping center in Ventura County. The Subject Property took a minor hit with rent collections during the Covid-19 pandemic and had many month-to-month tenants. GSP was able to illustrate to the Capital Provider how the Subject Property has rebounded nicely since then and has only been increasing in cash flow. GSP identified a Capital Provider who was comfortable with the mom-and-pop tenants, required no holdbacks of any sort for the vacant units, required no deposits to be held at their branch and provided a flexible prepayment penalty structure.

    Rate: 4.00%
    Term: 5 years fixed
    Amortization: 30 years
    LTV: 65%
    Prepayment Penalty: 5/4/3/0/0
    Banking Relationship/Deposits Required: None
    Guaranty: Recourse