Single Tenant

Transaction Description:

George Smith advised on $27,000,000 of debt and equity financing for 163 purpose built, single family homes for rent in Humble, Texas. Bank debt of $16,700,000 was secured on a non-recourse basis. The homes will range from 1,200 sf to 1,500 sf and will each have a two car garage. Amenities are expected to include greenspaces, a neighborhood lodge, a fitness room, a children’s playroom, and a playground for both children and adults. Infrastructure development will commence immediately, and home construction is expected to commence in the second quarter of 2020. Initial occupancy is expected for late in the second quarter of 2020. The Property will include on-site leasing and management. The location of the Property is in close proximity to growing employment hubs including George Bush Intercontinental Airport, Generation Park, and the Port of Houston. The Community is situated in the award-winning Humble Independent School District and residents are zoned to the recently built Groves Elementary School and Westlake Middle School in The Groves master-planned community, as well as Summer Creek High School.

George Smith Partners secured a cash-out loan for the refinance of a single-tenant, special purpose property in Los Angeles leased to a preschool. The loan is fixed at 4.35% for 7 years and then floats at the 3 year CMT rate + 1.75%. Most lenders required a 25-year amortization for this specialty use property, but the selected lender was able to provide a 30-year amortization. The loan has no prepayment penalty and closed 45 days from application.

GSP successfully placed the cash-out, partial-recourse, refinance loan for a 100% leased single-tenant truck terminal industrial facility in Fontana, California. The financing allows the sponsor to retire its construction loan on the asset, lock in a low 4.43% fixed coupon for 10 years, and provide an immediate return of equity. GSP was able to identify a lender that was comfortable with structuring a 10-year loan term despite the tenant’s five-year lease term by underwriting the income associated with the tenant exercising its two five-year extension options. The interest rate is fixed at 4.43% for a ten-year term on an interest only basis for the initial two years then amortizes thereafter.

George Smith Partners secured a $3,800,000 permanent loan for the acquisition of a single tenant Tractor Supply Company located in Colorado. The 22,300 square foot building was constructed earlier this year and the tenant has a new 15-year lease. GSP was able to identify a capital source that does not require a reserve structure, which helped to increase the cash flow and bolster loan proceeds. Sized to 73.5% of purchase, the recourse loan carries a 4.84% fixed rate for a 10-year term and amortizes over 30 years. The transaction funded 45 days from application.

George Smith Partners arranged $5,100,000 of non-recourse, bridge financing to complete the conversion of a 26,000 square foot, 100% vacant, 1920’s vintage, industrial building into creative office space in a major Southwestern city. The property is well-located near a central business district and is 100% preleased to a single, non-credit-rated tenant. Although not investment-grade, GSP was able to source a Capital Provider comfortable with the tenant’s financial history and business operations. The sponsor acquired the property with cash and proceeds will be used to complete the conversion, taking advantage of the growing creative office market.

George Smith Partners arranged the acquisition financing for a single tenant office located in the downtown area of a top Southern California market. The tenant is a private technology company that has 2 years remaining on their lease term. Due to the short lease term, GSP structured in reserves for tenant improvements, leasing commissions, and interest payments in the event that the tenant decides to vacate. If the tenant signs a new lease, the reserves that were held back will be released to the Sponsor. The lender was able to get comfortable with funding the reserves since the tenant is currently paying below-market rents and the property should see an increase in value with higher implemented rents at lease expiration. The financing has a 3-year term and carries a 5-year extension option that can be executed once the tenancy has been finalized and certain financial metrics have been realized. The recourse loan has an initial funding of $8,990,000 and is sized to 70% of total cost, floating at a rate of 2.75% over the one month LIBOR.  The additional future funding for re-tenanting the building is not charged interest until drawn.

Transaction Description:

George Smith Partners arranged $5,000,000 for the acquisition of a newly constructed, 17,200 square foot single tenant build-to-suit Rite Aid. Our Sponsor was focused on minimizing monthly debt service costs plus maintaining prepayment flexibility. The proposed Rite Aid acquisition by Walgreens and the tertiary market location added levels of complexity to the transaction. After evaluating the firm’s extensive lending relationships, GSP sourced a regional lender experienced with this location and comfortable with Sponsor’s financial strength, track record, and personal guarantee. The loan is fixed at 4.75% for five years with a 30-year amortization schedule, sized to a 1.20x DSCR, and is open to prepayment at any time. The lender charged a nominal fixed $2,500 cost for loan processing and documentation.

Transaction Description:
George Smith Partners secured $1,420,000 in acquisition financing for a single tenant building in Atwater, California. The tenant is a national bank with a strong credit rating and has seven years remaining on the lease with extension options available. The Sponsor wanted to put long term fixed-rate financing on the property. GSP was able to identify a capital source that would provide a 10-year term, even though the tenant rolls within that period. The interest rate is fixed at 4.375% for the first 6 years of the loan. The rate then resets and is fixed again for the last 4 years, with a maximum increase of 50 basis points above the original rate (4.875%). This ensures that the Sponsor has a fixed rate throughout the entirety of the 10-year term, and eliminates interest rate risk. Loan proceeds were constrained by a 1.25x DSCR on a 25 year amortization.

Transaction Description:

George Smith Partners successfully placed ten year fixed rate financing on a single tenant retail property located in Northern California. The building is occupied by a national drug store tenant on a 75 year lease with a 2032 termination option. The tenant signed a fixed rate lease at the top of the market in 2007 but reported year over year sales decline since 2012 due to increased competition in the trade area. These two factors resulted in a high occupancy cost. GSP identified a national lender able to underwrite the tenant’s full rent because of the lease’s long-term investment grade characteristics, despite the high current occupancy cost. Additionally, GSP highlighted the recent closure of another drug store in the trade area that will increase the tenant’s market share going forward and increase sales. The loan structure includes five years of Interest Only payments to maximize Sponsor cash flow, then converts to a 30-year amortization schedule. The 67% leverage loan has a fixed rate coupon of 4.87% for the 10-year term.

GSP arranged the acquisition loan for a 9,928 square foot office building in Whittier, California for a first time real estate owner. The acquisition allowed our Sponsor to grow her counseling firm rehabilitating injured workers returning to the work force. Prior to engaging GSP, the Borrower sought SBA financing but was declined due to credit issues. GSP identified a bank and CDC (SBA) who invested the time to fully qualify the credit concerns of the borrower prior to issuance of application. The flow of communication and supporting documents led to the approval from both bank and CDC. Sized to 90% of cost the blended Bank 1st Trust Deed and SBA 2nd Trust Deed netted a 3.85% coupon, fixed for 10 years. Amortization is also blended between 25 and 20 years respectively for this recourse loan.

Transaction Description:
George Smith Partners placed the $8,400,000 cash-out refinance of a 105,752 square foot owner-user warehouse & distribution industrial building in Valencia, California. The single tenant is a non-credit owner-user who will utilize a portion of the loan proceeds for reinvestment into a building and operations expansion. Fixed for ten years at 4.69%, the non-recourse loan amortizes over 30 years.

Challenge:
Our Sponsor requested a non-recourse cash-out execution for a non-credit single tenant; not an ideal structure in today’s capital market lending environment. The physical improvements included a recently added 10,000 square foot building that lacked permits and a certificate of occupancy. Underwritten value was required from this unpermitted addition in order to maintain loan proceeds.

Solution:
George Smith Partners identified an institutional capital source that underwrote the transaction as an investor property and not as an on-going business concern. The pocket to pocket lease was supported by the strong industrial market location and supplemented with a list of multiple tenants interested in assuming occupancy should the Subject become available for lease. George Smith Partners worked with the lender to structure around the permitting issue by posting a small “permitting” reserve and allocating six months post-closing to obtain the Certificate of Occupancy for the addition. All additional square footage was used in underwriting, resulting in a higher underwritten value and allowing for a $2,000,000 cash-out through this refinance.

Transaction Description: George Smith Partners secured a $22,000,000 non-recourse acquisition loan for the purchase of the world-famous Fred Segal Building in West Hollywood, California. The Sponsor required a capital provider that could provide the highest certainty of execution for this acquisition given a non-US status and lack of American based assets and operating accounts. The small 28,000 square foot improvement calculates to a leveraged $786 per square foot loan on an asset with 84% of the gross rentable square footage rolling over the next three years.

George Smith Partners identified an Lender that understood the unique attributes of the property and did not shy away from the high dollars per square foot despite the lack of credit tenants. The Sponsors are accomplished retailers who understand the dynamic changes taking place in this retail real estate market and the future Flagship possibilities of this location. Floating in the LIBOR “200s”, there is no floor for this three year non-recourse interest only transaction.