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Retail

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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

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    $6,200,000 Non-Recourse Construction Loan for 27,300 SF, 100% Pre-leased Shopping Center; Moreno Valley, CA

    March 22, 2022

    Transaction Description:

    George Smith Partners successfully arranged $6,200,000 in non-recourse construction financing for a 100% preleased, 27,300 SF grocery-anchored shopping center in Southern California. Positioned in a strong retail corridor with high traffic counts, the Sponsor assembled a stellar mix of tenants, two of which were on ground-leases, and the other two requiring build-to-suits. With highly experienced Sponsorship, the Project was significantly de-risked with signed leases and approvals for a tentative parcel map. As a result, GSP was able to source competitive financing with exceptionally high leverage that co-align with the Sponsor’s investment plan and market outlook.

    Rate: 8.00%
    Term: 18 months + two 6-month options
    LTC: 90%
    Guaranty: Non-Recourse

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    $3,000,000 Non-Recourse Acquisition Loan for 20,000 SF Office/Retail Building; Sacramento, CA

    March 16, 2022

    Transaction Description:

    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.

    Rate: 6.40%
    Term: 18 months
    LTC: 60%
    Guaranty: Non-Recourse

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    $29,250,000 Senior Construction Financing for a Mixed-Use Development; Bellflower, CA

    February 16, 2022

    Transaction Description:

    George Smith Partners placed a $29,250,000 senior construction loan for a ground-up development of a mixed-use project in Bellflower, CA. When complete, the 5-story Project will consist of 91 apartment units and approximately 14,550 SF of 1st-floor commercial/retail/restaurant space. The Subject is located at the northern boundary of the Downtown Bellflower District and is an integral component of the city’s TOD Specific Plan. When complete, residents will be able to access LAX, the South Bay, and DTLA via the Blue and Green Metro lines.

    As the marquee development for the Bellflower TOD Specific Plan, few comparable projects were available in proximity to the Project site. GSP focused interested lenders on the supporting employment centers within a twenty-minute driving distance, including seven medical centers inside of a 5-mile radius. Additionally, while few Class-A style multifamily properties currently exist near the site, GSP used submarket data to show that demographic trends within the immediate area support the need for new product. GSP executed a broad and in-depth marketing campaign to help capital markets understand the opportunity.

    Rate: Prime + 0.75%; Floor 4.375%
    Term: 24 Months + three, 6-Month Extension
    Stabilized Loan-To-Value: 65%
    LTC: 72%

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    $27,000,000 Non-Recourse Financing with Cash Out for 360,000 SF Retail Center; Colorado Springs, CO

    December 15, 2021

    Transaction Description:

    George Smith Partners has secured $27,000,000 in non-recourse debt financing for a 360,000 SF retail center in Colorado Springs, CO. The Property features many popular national retail and restaurant chains and is shadow anchored by Lowe’s Home Improvement. Due to some pandemic related tenant credit issues the Property faced 68% occupancy levels for a brief period. However, through strategic releasing efforts, the Property has since been released to strong new tenants for over 90% of the net leasable area.

    The loan was structured to provide fresh reserves for the Sponsor to pay remaining tenant improvement and leasing commissions for the newly tenanted spaces as well as to refinance the existing bridge loan, which had reached maturity. In addition, the Lender provided the Sponsor with additional cash-out proceeds to pay down debts on other Sponsor-owned properties.

    Challenges:

    The Sponsor originally requested long-term fixed rate debt with maximum cash out. However, due to the near-term maturity of the existing bridge loan and the non-stabilized NOI, another bridge loan was needed to allow the NOI to season for another year, prior to arranging permanent financing.

    Solutions:

    The GSP team was able to solve for these challenges by highlighting the increased leasing activity since the pandemic as well as the Sponsor’s forty-year history and familiarity with the Property. GSP identified a new bridge lender comfortable with the Property’s dominant position in the market, the recent leasing activity and future leasing potential. GSP worked creatively and strategically with the Lender to structure an 18-month loan with two extension options. This will allow the new tenants to take occupancy. In addition, the NOI will be able tore-stabilize which will position the Property to achieve permanent financing as an exit strategy to repay the new bridge loan.

    Rate: 9.0% Fixed, Interest Only for 6 Months
    Term: 18 Months, with two 6-Month Extension Options
    LTV: 65% (Plus CAPEX)
    Origination: 1.75%
    Guaranty: Non-Recourse