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10 Year Interest Only Loan $6,283,000 Acquisition of Shopping Center outside of Salt Lake City

Rate: 4.85% Fixed
Term: 10 Years
Amortization: Full Term Interest Only
Guarantee: Non-Recourse
Prepayment Penalty: Defeasance
LTV: 60%
Lender Fee: None

Transaction Description:
George Smith Partners successfully placed $6,283,000 in permanent financing for the acquisition of an 83,000 square foot shopping center located outside of Salt Lake City, Utah. The shopping center had unique tenancy that included both national and local tenants, as well as a call center as the anchor tenant. It was crucial for GSP to find a loan with a low interest rate and an interest only component in order to achieve the required return thresholds of the Borrower. GSP ultimately sourced a 10 year non-recourse loan with a fixed rate of 4.85%. The loan is interest only for 10 years.

Challenge:
Numerous lenders where not interested in the Property because of the nature of retail real estate today. Additionally, there had been severe prior environmental issues at the Property as a result of an onsite dry cleaner. Finally, the call center anchor tenant became very problematic for lenders. It was an abnormal use and anchor for a retail property. More importantly, the call center tenant, which made up approximately 33% of the Property’s gross income, could give 6 months notice to terminate their lease and vacate the space at any time. As a result, many lenders could not use the anchor tenant’s cash flow when underwriting the Deal. Because this was an acquisition it was important to close in a timely manner.

Solution:
George Smith Partners leveraged their strong lender relationships to identify several groups who were still active and making competitive loans on retail properties. GSP provided data to the Lender explaining why the call center anchor tenant would not vacate the space. Finally, GSP worked with the Lender and Borrower to add additional structure to the loan, which further mitigated any risk with the call center anchor tenant.

Related Financings

  • No related financings.