$58,000,000 Life Co. & Preferred Equity Non-Recourse Construction Financing; Culver City Adjacent, CA
April 28, 2021
George Smith Partners successfully closed $58,000,000 in non-recourse construction financing for a seven-story, mixed use development across from Sony Pictures Studios and adjacent to Culver City, CA. The Project features 139 apartment units over 1,969 SF of ground floor retail. The Sponsor received a density bonus thanks to TOC incentives, in exchange for allocating 14 affordable units.
While this is the second U.S. project – the first was also financed by GSP – for a successful international developer, the pool of capital providers was significantly reduced due to the borrowing entity being headquartered in a foreign country. Presenting this deal during the height of the COVID-19 pandemic also presented significant challenges. GSP leveraged its structured financing expertise, lender relationships, strength of the Project and the Culver City market to negotiate the most desirable terms for the Sponsor.
The financings are comprised of $42,000,000 in senior construction debt from a Life Co. lender and $16,000,000 in preferred equity and includes a substantial amount in recap funds to the Sponsor at closing. The term is five years, with interest only payments and no prepayment penalty upon Certificate of Occupancy. The senior note is LIBOR + 390 and the preferred equity investment’s interest will be fully accrued during the entire term, thereby reducing the amount of interest reserve and the Sponsor’s initial cash equity contribution.
$45,600,000 Non-Recourse Bridge Financing for Recapitalization of Lido Marina Village in Newport Beach, CA
April 21, 2021
George Smith Partners structured and arranged $45,600,000 in bridge financing for the recapitalization of the Lido Marina Village, a 116,000 sf multi-block, waterfront boutique retail and office property on Balboa Peninsula in Newport Beach. Lido Marina Village features retail, restaurant, and office space in 14 separate structures including prime waterfront retail and restaurant spaces featuring spectacular harbor views, along with 47 boat slips, creating an iconic Newport Beach destination. Some highlighted restaurants include Orange County’s only Nobu and Malibu Farm locations. Retail tenants include first-to-market “laid back luxe” retailers such as Elysse Walker, LoveShackFancy, Serena & Lily, the RealReal, and Jenni Kayne. The Property stretches from the waterfront, across a public street and walkway to the Via Lido street-front retail. It also includes a 372-space parking structure and 91 on-grade parking spaces. The Project is located on 17 legal parcels totaling 3.5 acres, with 4 parcels held as leasehold interests. Since the acquisition in 2013, the Sponsor successfully rebranded Lido Marketplace as a super high-quality boutique and restaurant destination, featuring a “who’s who” of tenants. Even during the pandemic, Lido Marina Village occupancy stayed high, and the Sponsor signed new leases at “high street” rents. The Property has been thriving in part due to their shoppers feeling comfortable in the open air, pedestrian friendly and waterfront environment.
$14,000,000 3-Years Interest Only Permanent Financing for 150,000 SF Shopping Center with Non-Credit Grocer; Tertiary Market, Northern California
April 14, 2021
George Smith Partners successfully placed $14,000,000 in permanent financing on a Northern California non-credit grocery anchored center amidst the COVID-19 pandemic. Capital markets were wary of financing retail in general but were specifically concerned with tertiary markets and the recent bankruptcy of Chuck E. Cheese. Although tenant sales information was not required to be reported, they were anecdotally strong for the diverse arrangement of large tenants including Chuck E. Cheese. They affirmed their lease, even as COVID-19 was at its peak. Two tenants were closed due to the California directives and mandates. Capital providers were uncertain of what the post-pandemic environment would look like and how retail centers would be impacted in the long run.
GSP was able to ensure competitive pricing and proceeds based on having a best-in-class sponsor and strong and diverse anchors. Although interest rates climbed over 60 basis points during the diligence, the Capital Provider did not change loan proceeds.
Term: 10 Years
Amortization: 3 Years Interest Only, then a 30-year amortization
Prepay: Yield Maintenance calculated until last 6 Months which are open with no penalty
Guaranty: Non-recourse except for “bad acts” and environmental
$60,200,000 Ground-Up Construction Financing, 85% LTC, 6.65% Blended Coupon on a 307-Unit, Class-A Apartment Community; St. Louis City, MO
February 17, 2021
George Smith Partners successfully placed $60,200,000 in high-leverage construction financing, which funded 85% of total project cost for the construction of a 307-unit mixed-use multifamily and retail project located in the trendy St. Louis City neighborhood of The Grove. GSP leveraged its lender relationships, capitalization structuring acumen, local market expertise, and strong project fundamentals to arrange the most accretive financing structure available in the market during the peak of the COVID-19 pandemic. The capitalization included a senior loan to 60% loan-to-cost and a preferred equity investment with last-dollar exposure to 85% of total project cost. The preferred equity investment is non-recourse and the senior loan required only a top-end 25% repayment guarantee. Additionally, the Lender and preferred equity investor gave credit for a lift in land value above the Borrower’s actual cost due to the Borrower having created substantial value through entitlements and development incentives.
Rate: 6.65% (blended coupon)
Term: Three-year initial term plus two, 12-month extension options
Amortization: Interest only
Prepayment: 2%, 1%, open
Guaranty: 25% repayment guarantee on senior loan only; does not apply to the non-recourse preferred equity investment
Lender Fee: 0.82% blended
$11,200,000 Non-Recourse, Cash-Out Bridge Refinance for Two-Story Retail in Koreatown; Los Angeles, CA
January 27, 2021
George Smith Partners secured a $11,200,000 non-recourse bridge refinance with cash-out for a two-story retail plaza in the heart of Koreatown in Los Angeles, CA. Located next to a Metro D (Purple) Line subway station along a very busy stretch of Wilshire Boulevard, the Property is anchored by 7-Eleven and Carl’s Jr. and features a fast-casual food hall on the second floor. However, the food hall has been closed due to COVID.
The Sponsor, a prolific developer and property owner, recently announced plans to replace the plaza with a 17-story, mixed-use apartment tower that includes affordable units and some commercial space. GSP was engaged to source a bridge solution to pay off the existing maturing loan and provide prepayment flexibility once the Project’s entitlements and permits are secured.
GSP focused on the strength of the Sponsor, the bustling and densely populated Koreatown market, home to several large and small-scale projects currently planned or under construction and the Purple Line Extension project which will provide a dependable, high-speed alternative for travel between downtown Los Angeles, Miracle Mile, Beverly Hills and Westwood. The financing closed within 11 days of the term sheet being signed.
January 6, 2021
George Smith Partners successfully arranged a $4,400,000 refinance of two flex buildings, totaling 68,169 SF, in Jacksonville, FL. This was a permanent, recourse loan at 3.75%, fixed for the first 10 years with a rate reset at every 10 years thereafter. This is a fully amortizing 25-year loan. The two buildings are adjacent to each other and offer a mix of flex, office and retail space. Both buildings are currently 100% occupied with minimal impact of COVID-19 on its tenants. The Sponsor, a repeat client, acquired the Property just a month prior and engaged GSP to capitalize on the low interest rate environment.
December 16, 2020
George Smith Partners successfully arranged $7,600,000 in permanent financing for a non-traditional anchored shopping center in Northern California. The Big Lots and Dollar Tree anchors had short terms remaining on their primary leases and they both had exceptional health ratios (occupancy cost/total sales). The other two non-credit anchors are doing well. During the Covid-19 pandemic, our Sponsor lost a restaurant tenant and provided rent relief for some of the other tenants. Today, all the tenants are currently paying their rents in full.
December 9, 2020
George Smith Partners placed the non-recourse cash-out refinance of a stand-alone CVS in a Dallas suburb. Our Capital Provider underwrote to a 1.15 DCR without any deductions (vacancy, capex) for the net-leased asset to an investment grade tenant. There were no impounds or tenant improvement reserves taken as the tenant pays all expenses directly on their 20-year lease. Amortized over 25 years, the seven-year term was locked at 3.75% without the requirement of a repayment guaranty.
$14,050,000 Acquisition and Reposition Financing, 89% LTC (4.90% blended coupon) on a 79-Unit, Mixed-Use Apartment and Retail Project; St. Louis City, Missouri
December 2, 2020
George Smith Partners successfully placed $14,050,000 in construction financing, which funded 89% of total project cost, for the acquisition and reposition of a 79-unit, mixed-use property in a desirable and historic St. Louis City neighborhood. GSP was engaged by the Borrower when its original lender, a national REIT, was forced to re-trade the Borrower on loan terms due to the COVID-19 pandemic. Upon being engaged, GSP was able to source the replacement debt and equity in time to close the transaction without a material delay. The financing structure included a senior loan to 81% loan-to-cost and a preferred equity investment with last-dollar exposure to 89% of total project cost with a 4.90% blended cost of capital. GSP leveraged its expertise of the St. Louis market, long-standing lender relationships, and capital markets creativity to achieve the Borrower’s goals of minimizing cash equity invested into the Project so that it can keep a substantial cash reserve to pursue additional projects which are expected to present themselves during the COVID-19 pandemic.
Term: 36-months with one, 12-month extension option
Amortization: 24-months interest only, 25-year amortization thereafter
Guaranty: Full repayment guarantee (on senior loan only; does not apply to the non-recourse preferred equity investment)
Lender Fee: 50bps
October 21, 2020
George Smith Partners successfully placed permanent financing on two Tractor Supply stores in the Southeast. Due to the COVID-19 pandemic, banks required top end recourse and life insurance companies offered lower leverage with a 25-year amortization. GSP secured a capital provider that offered 10 years interest only with nominal reserves. They appreciated the strong tenant financials and sales at each location despite prevailing local economic conditions. On the day of closing, the Capital Provider tightened the spread 7 basis points because the market tightened.
June 17, 2020
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.
June 10, 2020
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.
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