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$3,680,000 Permanent Financing for a Single-Tenant Co-Op Grocery Store
September 5, 2014
9 – 3 – 2014
Transaction Description: JJay Brooks secured a permanent loan for a non-credit single tenant grocer in a tertiary Northern California market. This financing provided a consolidation of the existing 1st Trust Deed and a higher yielding 2nd. As a build-to-suit, the lease rate was established as a return on cost. That and its’ tertiary location complicated the appraisal comparative process. Mr. Brooks identified a capital provider who was comfortable with the sales history and structured a tighter amortization period to minimize event risk. The 7 year term loan was sized to 65% LTV and is fixed at 4.90%, amortized over 15 years. This portfolio lender offered a step-down prepayment with the final two years open without penalty. Rate: 4.90% Term: 7 Years Amort: 15 Years LTV: 65% Prepayment: 5,4,3,2,1,0,0, Recourse Advisor: JJay Brooks -
$2,715,000 98% Loan to Acquisition Price
July 16, 2014
7 – 16 – 2014
Transaction Description: Raffi Sarkissian placed the acquisition loan of a 23,300 square foot industrial distribution center in a suburban Ventura County market. Sized to 90% of value, the 3rd party appraisal allowed for additional improvements to be funded through the loan that represented 98% of the initial purchase price. Comprised of a 1st and 2nd Trust Deed, the blended coupon of 4.9% is fixed for 20 years and carries a 10 year step-down prepayment to 1% in years 5 through 10. Rate: 4.9% Blended LTV: 90% Prepayment: Step-down for 10 Years Recourse Advisors: Raffi Sarkissian, Tylene Turner -
$4,000,000 Acquisition for Single Tenant Tractor Supply
July 10, 2014
2 – 9 – 2014
Transaction Description: George Smith Partners arranged acquisition financing for a single tenant Tractor Supply located in a tertiary northern California market. The property was acquired as one of three properties purchased by a borrower in a 1031 exchange. Although the subject is 100% leased to a national credit tenant, lenders were concerned about the “dark value” given the lease term is inside the 10 year loan termination date and the thin commercial market. 65% leverage was required in order for the Borrower to complete his acquisition of the other two properties in this exchange. The capital provider recently funded a similar transaction for a Tractor Supply and was comfortable with the probability that Tractor Supply will renew at lease expiration. The non-recourse, 5.20% fixed rate loan is amortized over 25 years. Rate: 5.20% Term: 10 Years Amort: 25 Years LTV: 65% Prepayment: Defeasance Non-recourse Lender Fee: Par Advisors: Stephen Stein, Teddy Stutz -
Cash-Out Refinance: Single Tenant Retail
May 29, 2014
5 – 28 – 14
Transaction Description: George Smith Partners arranged the cash-out refinance of a single-tenant property located in the southwestern United States, occupied by a Canadian mattress company. The Borrower purchased the property all-cash at the end of 2013 and sought to recapitalize his liquidity to acquire additional investment properties. Without a US parent company, many capital providers were hesitant on quoting this opportunity. GSP identified a local portfolio lender comfortable with the corporate lease guarantor and underwrote the location and long-term value of the property. The 10-year term is fixed for five years at 4.50% and does not carry a pre-payment penalty.
Rate: 4.50% Fixed for 5 Years Term: 10 Years Amort: 25 Years Prepayment: None Recourse Advisors: Stephen Stein, Teddy Stutz -
$3,250,000 Cash-Out Owner/User Refinance in West Los Angeles
April 24, 2014
4 – 23 – 14 Transaction Description: Shahin Yazdi successfully placed a 100% cash-out refinance loan on an owner-user property that was previously Free & Clear. The two operating companies occupying the property were reporting a negative cash flow. The 10 Year term is fixed for 5 Years at 4.75% before floating over Prime. Challenge: Owner-User loans require the operating companies show a profit. In this case, the owner of the property owned both businesses that are in occupancy and both reported huge losses. One 50% owner refused any level of guarantee. The remaining guarantor received the majority of his income from a gentleman’s club he owns and operates. Solution: The capital provider relied on the financial strength of the remaining guarantor (specifically his liquidity) and the quality and strong location of the collateral in order to obtain comfort in securing the moderate leveraged debt Rate: 4.75% Fixed for 5 Years; Prime+0.5% Term: 10 Years Amort: 25 Years LTV: 65% Recourse Advisor:Shahin Yazdi -
Single Tenant-Net Leased Cash-Out Refis
April 17, 2014
4 – 16 – 14 Transaction Description: George Smith Partners arranged the cash-out refinance of two single-tenant properties located in Colorado and North Carolina. Although both are occupied by the same national auto parts supply company, the two loans for the same Borrower stand alone and are not crossed. The North Carolina asset was recently purchased with only a few years remaining on the lease. Our Sponsor was successful in negotiating a new long-term lease with the tenant prior to funding. GSP identified an institutional portfolio lender that is executing similar business plans and gave credit for the immediate increase in the capitalized value in allowing for the return of equity. Rate: 3.90% Term: 5 Years Amort: 25 Years Prepayment: 3,2,1,0,0 Recourse Advisors: Stephen Stein, Teddy Stutz -
$1,620,000 Acquisition Financing for a Single-Tenant Auto Related Property
April 10, 2014
4 – 9 – 14 Transaction Description: George Smith Partners successfully placed the 65% loan to purchase (67% loan to value due to a low appraisal) acquisition financing of a Pep-Boys auto repair store in New York State. The borrower acquired the property as the replacement property in a 1031 tax deferred exchange. The 20 year amortized term is fixed for 5 years at 5.0% prior to being recast for the second 5 year term at then prevailing rates. A step-down prepayment was structured to provide for future flexibility. Challenge: With only 9 years remaining on the initial lease term, institutional lenders are leery of event risk on single tenant properties. The auto-bays added a specialty-use component to the collateral should the tenant not renew one year prior to the loan termination date. An environmental concern was also raised by a number of portfolio lenders polled. All borrower contingencies were removed to secure control of the property in what was a very competitive bid process. Certainty of close as applied for and timely execution was paramount to avoid severe tax consequences. The appraisal came in less than the purchase price, thus jeopardizing loan proceeds. Solution: Mr. Stein quickly identified a local lender officed minutes from the property who immediately inspected and reviewed the property information. Their “in the market knowledge” gave a comfort that this location would quickly release to an identical user should Pep Boys vacate. A clean Phase I report mitigated all environmental concerns. A full credit committee commitment was issued within 24 hours of loan submission conditioned only upon 3rd party reports. Despite the low valuation, GSP worked with the lender to quantify lender risks for this cash-in execution and established a comfort level to extend their LTV constraint by an additional 2 percentage points. Rate: 5.0% Fixed for 5 Years Term: 10 Years Amort: 20 Years LTV: 67% LTC: 65% Prepayment: 5,4,3,2,1 open Recourse Advisors: Stephen Stein, Teddy Stutz -
$4,500,000 Non-Recourse Acquisition Quick Close Charter School
April 3, 2014
4 – 2 – 2014 Transaction Description: GSP successfully placed the $4,500,000 non-recourse acquisition loan for the purchase of a 41,000 square feet commercial office building located in Oakland, California. The property is currently being utilized and serves as the main campus for a local Charter School. Our Sponsor manages the school which has 650 students ranging from kindergarten to eighth grade. The school lease to the prior real estate owner was about to expire and the financing sourced by George Smith Partners allowed the tenant to take advantage and exercise their option to acquire the property. A second trust deed was recorded at closing bringing the total debt allocation to 73% of cost. The interest only, non-recourse loan closed in three weeks from application to funding. Challenge: The Borrower had been under contract to acquire the property for over 4 months and received several loan rejections as most lenders are not comfortable financing charter schools. Pending litigation threatened the future of the charter and thus the viability to service the debt. Timing became critical as the Seller received other higher bids. A portion of the buyers’ capital was in the form of a recorded second trust deed, typically a prohibition in the debt markets due to “cram-down” should the asset get moved into bankruptcy. Solution: GSP identified a reliable private equity capital provider who understood the pending lawsuit and is comfortable with the Sponsors’ business plan and the ultimate exit strategy. A higher than anticipated valuation (as confirmed by the sellers’ additional bids) added more comfort to the senior lender; ie allowing a recorded second trust deed, etc. The entire financing process took three weeks to fund and maintain the escrow. Rate: 10% Term: 1 Year Amort: Interest Only LTC: 60% Non-recourse Advisors: Gilda Rivera, Salar Royaei -
$1,910,000 Acquisition Financing to 90% of Purchase Price
April 3, 2014
4 – 2 – 2014 Transaction Description: George Smith Partners successfully placed the acquisition financing of a 4,570 square foot office/warehouse in Torrance, California. The Borrower was leasing an adjacent property but required more space. The purchaser took advantage of this program to relocate to space that would accommodate the company’s growth and provide for the transition from tenant to owner. Fixed for 7 years at a sub-5.0% coupon, the 90% of purchase price loan has a 20 year call date. Challenge: This area of Los Angeles’ South Bay is plagued with environmental contamination. Although specific environmental reports indicated there was no environmental exposure to the subject property, the phase one report was initially rejected. The seller required closing to occur on a date certain leaving a limited window of time to complete the transaction. A low appraisal put loan proceeds at risk of being reduced due to an LTV constraint. Solution: GSP identified a capital provider that had completed similar loan requests in the business park and worked diligently with the lender to provide the information necessary for the environmental report to be accepted. The lenders’ knowledge of the market allowed us to further expedite the process and meet the sellers’ timeline. The LTV constraint was modified to compensate for the appraisal and thus maintain the original loan amount. LTC: 90% Recourse Advisors: Stephen Stein,Teddy Stutz -
$4,700,000 Non-Recourse Permanent Financing for a Single Tenant Walgreen’s
February 27, 2014
2 – 26 – 14 Transaction Description: GSP successfully placed the no-cash-out refinance of an investment grade single tenant retail property built in 2002. The 13,376 square foot asset had 8 years remaining on the lease at the time of funding. The 15 year fixed rate loan has a step-down prepayment. The lender did not require an appraisal or Phase I report for funding. Closing costs including third party reports and legal fees were capped at $5,000. The rate was locked at application for 120 days without cost or additional rate lock deposit. Challenge: Most lenders are not comfortable with 8 years remaining for a single-tenant building. The Sponsor required a lender who would not structure a yield maintenance or defeasance for this non-recourse loan. Store sales were not available for this location. Certainty of execution was vital as the existing loan was maturing in less than 45 days. Solution: Due to the low leverage and the excellent location of the property, GSP was able to structure a non-recourse loan with a step down prepayment penalty from a portfolio lender. All lender concerns on lease event risk and lack of store sales were mitigated through the loan structure, credit quality of the tenant and financial strength and operating experience of the Sponsor even though there is no repayment guarantee. Rate: 4.60% Fixed for 15 Years Term: 15 Years Amort: 15 Years LTV: 55% Prepayment: 5,5,4,4,3,3,2 par Non-recourse Lender Fee: 0.15% Advisors: Gilda Rivera, Salar Royaei -
$2,000,000 Cash-Out Refinance for a Vernon Manufacturing Facility
February 20, 2014
2 – 19 – 2014 Transaction Description: GSP successfully arranged the cash-out refinance of an 80,000 square foot warehouse in Vernon, California. The Los Angeles based owner/user owns several separate buildings where they manufacture, assemble, and ship their product globally. The recent economic downturn netted losses posted to the company financials during the last several years and their bank was unwilling to extend additional credit. No warm-body was available to provide for a repayment guarantee. GSP identified a fund that was comfortable providing a return of equity based on the value of their real estate. Proceeds from the non-recourse loan will be used by the Company for expanding their operations lines as corporate sales have picked up throughout the United States. Rate: 8.99% Term: 12 Months+Two 6 Month Options Amort: IO LTV: 35% Prepayment: None Non-recourse Lender Fee: 1.5% Advisors: Jonathan Lee, Shine Cheng -
$2,320,000 Cash-Out Refinance of a Single Tenant with 3 Years Remaining on the Lease to a TIC Borrower
February 6, 2014
2 – 5 – 14 Transaction Description: Shahin Yazdi placed the debt on a single tenant property that was held in a TIC (Tenants in Common) ownership structure. The lease term has only had 3 years remaining. GSP documented existing rents were significantly below market, so much so that the portfolio lender agreed to waive all prepayment penalties should the tenant vacate prior to the loan term expiration, allowing the owner the opportunity to recapture trapped equity. Cash out proceeds were underwritten to 75% of value as capped by the below market in-place income. The potential future value to be realized three years from funding made the capital provider comfortable with the TIC ownership structure and aggressive non-recourse fixed rate of 4.10% for five years. There are no capital or leasing commission reserves required. Rate: 4.10% Term: 5 Years Amort: 30 Years LTV: 75% Non-recourse Lender Fee: Par Advisor: Shahin Yazdi
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