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Retail

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    Cash-Out 2.94%, $12,025,000 Non-Recourse Permanent Refinance on a 100% Leased Discount-Grocer Anchored Shopping Center; Western States

    August 4, 2021

    Transaction Description:

    George Smith Partners successfully placed $12,025,000 in non-recourse, cash-out permanent refinancing for a 101,096 square foot discount-grocer anchored retail shopping center in a transitory Pacific Southwest MSA. The tenant mix includes several national credit tenants along with local and regional stores, all of which remained in-place during COVID-19. GSP was able to identify a lender who understood the complexities of retail in a post COVID environment. The non-recourse permanent loan was sized to 65% of value, included 10-years of interest only payments at a fixed rate of 2.94% for 10 years. Lender fee is at par.

    Rate: 2.94%, Fixed
    Term: 10 years
    Amortization: Full-Term Interest Only
    LTV: 65%
    Lender Fee: Par
    Prepayment: Defeasance
    Guaranty: Non-recourse

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    $25,500,000 Bridge Financing for a 42k SF Landmark Retail Asset; Koreatown, Los Angeles

    August 4, 2021

    Transaction Description:

    George Smith Partners successfully secured $25,500,000 in non-recourse bridge financing for a destination dining and retail center nestled in the heart of Los Angeles’ Koreatown. The 42,000 square foot property is one of Koreatown’s most trafficked retail centers and maintained stable collections throughout 2020. The recapitalization retired the existing debt and provided future funding for capital expenditures, tenant improvements and leasing expenses with no new equity required from the Sponsor.

    The Los Angeles-based sponsorship team acquired the Property in 2016, identifying the asset as a generational heirloom and a unique opportunity to create substantial value. Despite market volatility and COVID-19 related challenges in the retail sector, GSP was able to identify a lender with local knowledge and expertise that understood the importance of this asset within the context of the neighborhood, and the long-term viability of the business model.

     

    All Terms Confidential

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    $2,400,000 Cash-Out Refinance for a Neighborhood Strip Retail Center; North Hollywood, CA

    July 28, 2021

    Transaction Description:

    George Smith Partners successfully arranged $2,400,000 of cash-out on a free and clear neighborhood retail center with an automotive related tenancy in North Hollywood, CA. The subject Property was inherited by a family member and part of the cash out proceeds were used to pay estate taxes with the remaining funds going to the Sponsor and building up a reserve account. GSP went to a variety of lenders and identified a capital provider who was comfortable with the tenant mix, cash-out component, and Sponsor’s real estate experience.

    Rate: 3.875% fixed for 5 years
    Term: 7 years
    Prepayment Penalty: 3,3,3,2,1
    Guaranty: Recourse

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    $10,465,000 Non-Recourse Acquisition Permanent Financing on a 100% Leased Non-Credit-Grocer Anchored Shopping Center; 65% LTPP, 10-years I/O, 3.04% Fixed Rate; Pacific Southwest

    July 21, 2021

    Transaction Description:

    George Smith Partners successfully placed $10,465,000 in non-recourse acquisition permanent financing for a 77,267 square foot, non-credit-grocer anchored retail shopping center in a transitory Pacific Southwest MSA. The tenant mix includes several national credit tenants along with local and regional stores (including the grocer anchor), all of which remained in-place during COVID-19. GSP was able to identify a lender who understood the complexities of retail in a post COVID environment. The non-recourse permanent loan was sized to 65% of purchase price, included 10years of interest-only payments at a fixed rate of 3.04% for 10 years. Lender fee is at par.

    Rate: 3.04%, Fixed
    Term: 10 years
    Amortization: Full-Term Interest Only
    LTV: 65%
    Lender Fee: Par
    Prepayment: Defeasance
    Guaranty: Non-recourse

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    $30,000,000 10-Year Interest-Only, Permanent Financing for 230,000 SF Grocery Anchored Shopping Center; Southern California

    July 21, 2021

    Transaction Description:

    George Smith Partners successfully placed $30,000,000 in permanent fixed-rate financing for a 230,000 SF infill Southern California retail center amidst the COVID-19 pandemic. As a market-leading retail center near local economic and transit hubs, the Property’s mix of need-based and experiential tenants proved resilient. Capital providers continue to be hesitant in financing retail but were specifically concerned with California’s mandates that impacted the operation of non-essential businesses. As non-essential businesses and experiential tenants comprise a significant portion of tenancy, this posed significant challenges. These included the temporary closure of a movie theatre with less than one year of primary lease term remaining and a fitness center that vacated during the pandemic.

    George Smith Partners secured 10 years of permanent financing with full-term interest-only in a financial environment that continues to be cautious towards retail. GSP negotiated competitive pricing at the desired level of proceeds and guided the deal to a successful closing.

    Rate: 10-Year Swap Rate + 185 bps; 3.31% Fixed
    Term: 10 Years
    Amortization: 30 Year, 10-Year Interest-Only
    LTV: 65%
    Prepayment: Defeasance
    Guaranty: Non-recourse except for “bad acts” and environmental

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    $35,000,000 Cash-Out Refinance Anchored Retail with Fitness; Southern California

    June 30, 2021

    Transaction Description:

    George Smith Partners originated a non-recourse cash-out refinance of a Southern California retail center co-anchored by a shuttered fitness center. This location was a top performer in the national chain prior to being mandated to close due to Covid restrictions. Although the fitness center is now opened and operating to partial capacity, the application and due diligence were completed while still dark, as was an adjacent restaurant. The application did not call for holdbacks or reserves for funding as most of the remaining collateral was operational and cash flowing. Sized to 55% of appraised pre-Covid value, the five-year, non-recourse loan was priced at 3.25% on an interest only basis. Debt Coverage Ratio was underwritten on actual collections rather than leased income. A small tenant improvement allowance was reserved at close to address future leasing activity. There is no TI/LC reserve taken from the monthly debt service.

    Rate: 3.25% Fixed
    Term: Five Years
    Amortization: Interest Only
    Loan to Value: 55%
    Debt Coverage Ratio: 1.35 assuming 30 Year Amortization
    Origination Fee: Par
    Prepayment: Defeasance

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    Retail Acquisition Financing with Less Than 100% Collection Rate; Los Angeles, CA

    June 23, 2021

    Transaction Description:

    George Smith Partners successfully arranged bridge acquisition financing for a 6-unit retail property in Los Angeles, California. The Subject Property took a major hit with rent collections during the Covid-19 pandemic and was operating below market conditions. GSP identified a capital provider who was able to offer an aggressive rate and terms, required no holdbacks of any sort, required no deposits to be held at their branch and provided an open prepayment penalty structure that allowed the Sponsor flexibility once the Subject Property is stabilized and seasoned.

    Rate: 3.75%
    Term: 7 years
    Amortization: 25 years
    LTV: 50%
    Prepayment Penalty: None
    Minimum Interest Payments: None
    Guaranty: Full recourse
    Banking Relationship/Deposits Required: None

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    $5,220,000 Refinance for Retail Center; Fixed at 3.50%; Bank Financing Closed During Covid-19 Pandemic; Los Angeles, CA

    May 19, 2021

    Transaction Description:

    George Smith Partners secured a $5,220,000 refinance loan for a five-tenant retail center located on a major commercial avenue in Los Angeles. The loan is fixed at a rate of 3.50% for 5 years and does not require any holdbacks. The transaction went into application and was closed during the COVID-19 pandemic.

    Retail property values have been under scrutiny over the past year and declined in some markets. To substantiate property value, GSP emphasized the Property’s infill location and credit tenants. All 5 of the tenants were considered essential businesses and remained open. The Borrower provided three months of collections data to show that the tenants were consistently paying rent. During the site inspection, significant foot traffic was observed. These factors helped support the appraised value and maintain the proceeds in the loan application.

    Rate: 3.50% fixed
    Term: 5 yrs
    Reserve: None
    Amortization: 30 years
    Prepayment Penalty: 3,2,1,1,1
    LTV: 65%
    DCR: 1.25x

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    $56,500,000 Construction Financing for a Coastal Infill Mixed-Use Asset; Solana Beach, CA

    May 19, 2021

    Transaction Description:

    George Smith Partners arranged $56,500,000 in construction financing for the development of a mixed-use coastal infill project in Solana Beach, CA. The mixed-use development features 55,000 square feet of office space, 9,000 square feet of retail and 25 apartment units.

    Located just one block from the beach and the Cedros Avenue Design District, the two-story development focused on sustainability will be the largest mixed-use project along Highway 101 in the past three decades. The dearth of comparable projects, especially ones with large office floorplates, presented a unique opportunity.
    Amidst a time of market volatility and economic uncertainty, GSP was able to identify capital who not only understood the value of all three components and the subsequent demand but also the ability of the Sponsor to execute on the intended business plan.

    All Terms Confidential

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    $58,000,000 Life Co. & Preferred Equity Non-Recourse Construction Financing; Culver City Adjacent, CA

    April 28, 2021

    Transaction Description:

    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.

    Rate: L + 390 (senior)
    Term: 5 Years
    Amortization: Interest Only
    Prepayment: None upon Certificate of Occupancy
    Guaranty: Non-Recourse; Completion Guarantee with Standard Carveouts to an Entity

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    $45,600,000 Non-Recourse Bridge Financing for Recapitalization of Lido Marina Village in Newport Beach, CA

    April 21, 2021

    Transaction Description:

    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.

    Rate: Confidential
    Term: 2 years with two 1-year extensions
    Amortization: Interest Only
    Guaranty: Non-Recourse

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    $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

    Transaction Description:

    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.

    Rate: 3.45%
    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