Financings

Recent Financings

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    $4,200,000 Loan for Unentitled Land, 5.9% Interest Rate; Pasadena, CA

    October 21, 2020

    Transaction Description:
    GSP secured a $4,200,000 bridge loan for unentitled land in Pasadena, CA. The site is proposed to be developed into 59 luxury townhomes. The loan is fixed at 5.9% for a 12-month term with two 6-month extensions. The proceeds represent 45% of the total cost to purchase the land and entitle it.

    Challenges:
    The Sponsor acquired the Property in 2015 and has been working with the City to receive entitlements to develop the townhome plot since property acquisition. The land remains unentitled; however, the Sponsor expects to receive Ready-to-Issue (RTI) in 6 months which would provide significant value appreciation. The Sponsor had a loan coming due on the Property and needed to refinance. Given the economic situation due to the COVID-19 pandemic, many lenders were hesitant on providing financing.

    Solutions:
    GSP demonstrated that the location of the Property and market are very strong, and the specific neighborhood is undergoing a revamp. The Sponsor is an experienced Los Angeles developer who is familiar with the entitlement process and the Property is less than six months away from receiving RTI.

    Rate: Fixed at 5.90%
    Term: 12 months, 2,6 month extension options
    Amortization: Full Term Interest Only
    LTC: 45%
    Guaranty: Non-Recourse

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    $3,000,000 Line of Credit for Multi-Phase, Mixed-Use Development; Moreno Valley, CA

    October 14, 2020

    Transaction Description:

    George Smith Partners placed a $3,000,000 line of credit collateralized by two parcels of land totaling 10 gross acres out of a three-phase, mixed-use, master planned community in Moreno Valley, California. The master development is on 19 gross acres and consists of 237 apartments and duplexes and a 22,000 square-foot office and retail center. The funds will go towards phase two horizontal work as well as utilities work for the shared road between phases one and two. This was a City mandate in order to issue a certificate of occupancy for phase one, comprised of 125 units and expected delivery by end of the year.

    Development around Moreno Valley has been slow until recently and while COVID-19 did not materially impact the multifamily market in the area, many lenders were hesitant to lend there. The Sponsor is a major developer and real estate owner throughout Riverside County. GSP recently sourced refinance proceeds on other assets for the Sponsor and was able to utilize this relationship to get the same lender comfortable in providing the line of credit. GSP focused on the market demand, Sponsor’s credentials and potential repeat business for the Lender. The Sponsor was pleased with the line of credit facility as it will incur interest only when funds are drawn. The alternative land loan options would have been significantly more expensive and very difficult to achieve.

    Rate: Prime + 0.5% (3.75%)
    Term: 12 Months
    LTV: 43% (as-is land value)
    Prepayment: None
    Guaranty: Carve-outs to entity, no warm body

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    $4,690,000 Construction Mini Perm Loan for Medical Office, 3.75% Interest Rate; Oxnard, CA

    September 30, 2020

    Transaction Description:
    George Smith Partners secured a $4,690,000 construction loan with a 2-year term that converts to a 5-year permanent loan upon completion of construction for a total term of 7 years. The loan is for a medical office building in Oxnard, CA. The construction loan floats at Prime plus .5% with a floor rate of 3.75% and the mini perm is expected to have a fixed interest rate of 3.65%. The mini-perm carries a step down prepayment, but there is no prepay during the construction term, allowing the borrowers to secure more advantageous capital depending on the capital markets.

    Challenges:
    The Sponsorship sought long term construction-to-fixed capital shortly after the government-mandated shelter in place which caused significant disruption to the CRE capital markets. GSP needed to secure a high leverage loan to complete the ongoing construction of the Project which had commenced in 2019. With active construction on the Project, GSP needed to secure a lender capable of understanding various lien priorities, a historic building designation that changed construction plans and timelines, vandalism, and a change of general contractors all during the COVID-19 pandemic.

    Solutions:
    GSP was able to demonstrate the necessity of new medical offices during the height of the shutdown to generate a competitive lending environment, and to secure the 70% LTV construction loan. To reduce valuation risk, GSP negotiated that the existing appraisal performed pre-COVID would be utilized by the selected lender. To obtain maximum proceeds, GSP also worked with the Lender to collateralize adjacent unentitled land owned by the Sponsorship. The vandalism and the historic designation caused delay. However, GSP showed that the change in the GC was a strategic move that would allow for the completion of the construction and the ability of the sponsorship to obtain C of O in early 2021. This will allow the Sponsorship to hold the completely modernized Medical Office building with a fixed low rate through 2027.

    Rate: Prime + 50 bps with a 3.75% floor for Construction, converting to 2.25% over 5-year treasury with a floor of 3.65% for mini-perm
    Term: 2+5 year mini-perm
    Amortization: IO then 30 years
    LTV: 70%

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    $1,500,000 Non-Recourse Rate & Term Office Refinance; Southern California

    September 16, 2020

    Transaction Description:

    George Smith Partners placed the non-recourse refinance of a Southern California single-tenant office and instruction center owned and operated by a 501c3 approved charity. This office is configured for classroom training, instruction and traditional administrative office use. Deemed an essential business, operations were never delayed as a result of the COVID-19 pandemic. Due to the ownership structure, there is no recourse or carve-out guarantees beyond the charity entity. The cash neutral loan financed all closing costs and reduced the Borrowers’ mortgage constant by 190 basis points for significantly improved cash flow.

    Rate: 2.77% Fixed
    Term: Seven Years
    Amortization: 30 Years
    LTV: 60%
    Recourse: Entity Level Only inclusive of Carve-Outs
    Loan Fee: 25 Basis Points

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    $11,700,000 Construction Loan on Logistics Yard; Southern California

    September 16, 2020

    Transactions Description:

    George Smith Partners placed a $11,700,000 construction loan to build a logistics yard that includes trailer parking, auto parking and a maintenance facility. The fenced and secured facility is being built on a speculative basis although there is unmet demand.
    The marketing of the asset during the COVID-19 pandemic was difficult given bank resources first went to asset management and then PPP. The lenders in the market wanted “easy” deals such as low leverage multifamily, build to suits and infill industrial. The Sponsor’s expertise, market knowledge and demand for the product created a competitive lending environment. After talking to over 50 capital providers we had three compete for the loan. Structure, pricing, certainty of execution and speed to close narrowed the lender choice. The chosen Capital Provider went to full credit committee before issuing the application given the specialty nature of the asset. The credit committee also approved all terms negotiated/changed in the application before the process began. This gave us confidence that the chosen Capital Provider would execute on the original terms in the application while other Capital Providers have altered terms during the COVID-19 pandemic.

    Rate: Confidential
    Term: 24 months with options
    LTC: 60%
    Lender Fee: 1.00%

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    $20,000,000 Non-Recourse 10-year loan on Specialty Storage

    August 19, 2020

    Transaction Description:

    George Smith Partners placed a $20,000,000 refinance for a 30-year-old specialty storage facility in California. The high security, temperature and humidity-controlled facility is used for specialty uses, and other high value items. The COVID-19 pandemic made the Sponsor’s request more challenging as it consisted of non-recourse financing for a specialty asset. George Smith Partners reached out to several dozen Capital Providers to find a relationship lender that would meet the Sponsor’s needs. The Property has performed well historically and continues to perform very well during the COVID-19 pandemic.

    Rate: 3.54%
    Term: 10 Years
    Amortization: 5 years interest Only
    LTV: 65%
    DSCR: 1.25%
    Loan Fee: Par

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    $4,850,000 Non-Recourse Bridge Loan for a 27,343 SF Development Site; Los Angeles, CA

    August 12, 2020

    Transaction Description:

    George Smith Partners arranged $4,850,000 in non-recourse bridge debt to refinance the existing loan on a 27,343-square-foot development lot in the Chinatown district of Los Angeles, CA. The Sponsor acquired the site two years ago and has since secured entitlements for its proposed mixed-use development. Demolition of a vacant retail center is needed to conduct ground testing and ready the Project for vertical construction. The current Lender, however, would not allow the demolition.

    GSP targeted a capital provider that was comfortable with the proposed project, foreign sponsorship, and current land value. The existing loan, which had also been sourced by GSP, was facing near-term maturity when GSP successfully engaged a lender that could execute within a tight timeframe. The non-recourse facility is sized to 24.5% LTV and fixed at 5.9% on an interest-only basis with an initial term of 12 months.

    Rate: 5.9%
    Term: 12 Months
    LTV: 24.5%
    Amortization: Interest-Only
    Guarantee: Non-Recourse

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    $2,800,000 Two Week Close Bridge Deal; Los Angeles, CA

    June 17, 2020

    Transaction Description:

    George Smith Partners demonstrated our ability to provide full-service financing for a repeat client who is a prolific developer in the Los Angeles area. The quick close $2,800,000 financing was a bridge loan which took out a senior construction loan that was placed by GSP in 2018. The 12-month loan will allow for the Developer to execute on their business plan to market and sell the remaining homes in the Small Lot SFR development. The Project is in the heart of Los Angeles minutes from major job centers and consists of 11 high end fully constructed homes. The development opportunity was purchased in 2015 and the construction was completed in middle of 2019. GSP provided our expertise throughout the entire process, working with our client throughout the acquisition, entitlement, construction, and the for-sale process.

    Rate: 7.9%
    Term: 12 months Interest Only

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    $6,790,000 Permanent Cash Out Financings for Walgreens and Jack in the Box; Murrieta, CA

    June 10, 2020

    Transaction Description:

    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.

    Rate: 2.87% Fixed
    Term: 5 Years
    Amortization: 30 Years
    Combined LTV: 65%
    Prepayment: 3,2,2,1,0
    Guaranty: Carve-outs to entity, no warm body

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    $28,500,000 Land Loan for a Mixed-Use Multifamily Development Site

    June 10, 2020

    Transaction Description:

    George Smith Partners arranged a $28,500,000 non-recourse bridge loan for the land acquisition and predevelopment of a large TOD site with the potential to accommodate more than 900 units. The financing facility was secured on behalf of best-in-class sponsor LaTerra Development, relating to its planned mixed-use multifamily development project. In the midst of unprecedented market uncertainty, GSP leveraged its network to identify land lenders who were still active in today’s environment and could provide certainty of execution. No appraisal was required for funding.

    All Terms Confidential

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    $6,790,000 Permanent Cash Out Financings for Walgreens and Jack in the Box; Murrieta, CA

    June 3, 2020

    Transaction Description:

    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.

    Rate: 2.87% Fixed
    Term: 5 Years
    Amortization: 30 Years
    Combined LTV: 65%
    Prepayment: 3,2,2,1,0
    Guaranty: Carve-outs to entity, no warm body

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    $13,500,000 Non-Recourse Bridge-to-Bridge Loan with a Cannabis User at 6.90%; Echo Park, CA

    June 3, 2020

    Transaction Description:

    George Smith Partners arranged $13,500,000 in quick-close, cash out, bridge-to-bridge financing for a multitenant 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 outparcel 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 outparcel 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.

    Rate: 6.90%
    Term: 12-month term with one 12-month extension option
    LTV: 60%
    Guaranty: Non-recourse

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