Rate: 5.39% Fixed
Term: 10 Years
Amortization: Full Term Interest Only
Prepayment Penalty: Defeasance
Lender Fee: None
George Smith Partners successfully placed $8,500,000 in permanent financing for the refinance of a 270,000 square foot Class B office building located in the heart of Downtown St. Louis, Missouri. The Building has a unique combination of national and local office tenants, as well as storage and data center space. The Property previously had an expensive floating rate bridge loan and the Borrower engaged GSP to find cheaper long term fixed rate debt. GSP ultimately sourced a 10 year non-recourse loan with a fixed rate of 5.39%. The loan is interest only for 10 years.
Numerous lenders where not interested in the Property because they were not comfortable with the St. Louis office market which has a soft market occupancy. Additionally, while the Building has strong cash flow, it appeared to have a weak occupancy, which caused lenders to view the Property as unstabilized. As a result, many lenders were not comfortable placing long term fixed rate debt on it. Additionally, many of the smaller tenants in the building were on month to month leases, so most lenders would not give credit to that income. Finally, the seemingly volatile historical occupancy of the Property was concerning to lenders.
It became evident a large amount of the building’s “vacant” space was actually unusable space. Due to tenant changes over the years, floor space that was previously leasable had become common area space that is now unleasable. As a result, the Property’s occupancy was significantly higher than what it originally appeared. GSP calculated about 20% of the square footage previously counted in the square footage was actually unusable space/common area space. GSP was able to prove to both lenders and appraisers the building was stabilized, it’s cash flow was strong, and its true occupancy was in line with the local market. GSP also demonstrated it was irrelevant to look at any issues with historical occupancy in the Project. Once the current Sponsorship took control of the building, they immediately improved all aspects of the Property. In addition to investing significant capital to improve the Property, they also immediately increased the occupancy, cash flow, and overall quality of the Property.
September 14, 2022
George Smith Partners secured a $15,400,000 loan commitment for the refinance of a 381,754 square-foot, “Curacao” office and retail building located on the Olympic Boulevard business corridor: one-half mile west of L.A. Live and The Staples Center. To reduce excess proceeds from the refinance, the Sponsor elected to reduce the proceeds to fund only $14,700,000 of the committed amount.
The building had been previously encumbered by a 10-year CMBS loan arranged by GSP. During the past year’s volatile interest rate environment, GSP worked closely with the Sponsor and Lender to provide a loan commitment with a five-month forward rate lock. The goal was to eliminate the Sponsor’s rate risk and enable the pre-payment of the CMBS loan, without paying defeasance, in the “open window” four months prior to its maturity. The 7-year loan was forward rate locked at a 5.04% fixed rate. Without the forward rate lock, the pricing would have been 75 – 100 bps higher.
Several challenges were encountered when discussing the transaction with capital providers. While the property was over 93% occupied, 43% of the space was occupied by both office and retail affiliates of the Sponsor. The retail comprised 23% of the building’s gross leasable area and its location on the ground floor and basement levels made it a challenge for some capital providers concerned about owner/user and retail tenant concentration. However, by highlighting the long-term ownership, unique business strategy, and strong sponsorship, GSP was able to source a lender that was both comfortable and eager to be a part of the refinancing.
June 1, 2022
George Smith Partners successfully placed the non-recourse rate and term refinance of a 112,000 square-foot, mixed-use office and fitness anchored retail center facing loan maturity. Although several tenants were mandated to close by State Regulators during COVID, Center occupancy was not significantly impacted. The sit-down restaurant remained open and adapted operations for take-out only. The restaurant has since expanded, leasing an additional suite, and now permanently offers take-out beyond their traditional dining room facilities.
The maturing loan, SWAPed at inception, has 90 days remaining on their existing SWAP contract. GSP successfully negotiated that contract through the first three months of the new loan, saving the Sponsor over $30,000 in SWAP breakage costs. Priced at SOFR plus 225, the replacement debt is a three-year term with two, 1-year options to extend, and amortized over 30 years. A SOFR cap will be purchased effective upon the existing SWAP expiration, offering a hedge to higher future interest rates. The cap will only be for the initial first two years of the loan and then extended annually to maintain a lower cap cost.
Rate: SOFR + 2.25%
Term: 3 Years + Two, 1 Year Options
Amortization: 30 Years
Fee: 50 Basis Points
Prepayment: 2, 1, 0%
Hedge Protection: Cap Purchase
- Advisors: David Stepanchak
$9,000,000 for the Refinancing of a 7,100 SF Office; Southern California & 28,500 SF Industrial Facility; Colorado
January 5, 2022
George Smith Partners successfully secured $9,000,000 for the refinancing of two single-tenant assets in Southern California and Colorado. The Southern California industrial property had challenges due to the high dollar per square foot. The Colorado asset had challenges due to the tertiary location. In addition, the tenant for both properties had credit issues.
Despite the risks associated, GSP was able to successfully navigate these hurdles. This execution is fixed at 4.25% for 5 years and was sized to 75%.
July 7, 2021
George Smith Partners arranged $5,350,000 in cash-out permanent financing for an owner-user office building located in Downtown Riverside, CA. The Sponsor approached GSP to help assist with the refinance of the Property to help relocate their company headquarters from the east coast. The Sponsor was on a strict deadline with their existing lender, only having 60 days to refinance before the current loan maturity. At the time of the refinance process, the Sponsor was close to completing exterior and interior renovations, including common area upgrades. GSP had to quickly identity a lender who could deliver certainty of execution on short notice, while delivering competitive terms. GSP was able to provide the Sponsor with a 25-year term, and the first 5 years being fixed at a low rate of 4%. The first 12 months are interest only, before converting to 25-year amortization thereafter. There is additional flexibility within the loan structure because there is no prepayment penalty. The cash-out loan allows the Sponsor to use more equity towards continuing to grow their business. Thanks to our long-standing relationship with the Lender, GSP was able to meet the Sponsors deadline and close this transaction within 60 days.
March 10, 2021
George Smith Partners placed the rate and term refinance of a net-leased single tenant office building located in a tertiary Illinois market. Constructed in 1999, the 88,000 square foot asset is used as a training facility and call center leased to an investment grade tenant. Although this Tenant has been in occupancy for over 20 years, only four years remain on their current lease term. Despite the pending lease event risk, there are no holdbacks or cash flow sweeps. The tenant recently completed a $5,000,000 cosmetic upgrade and continued to operate in a reduced capacity throughout COVID. Value and DCR constraints were not a concern as our Sponsor was not seeking a return of equity and only sought to replace the pending loan maturity debt. The 10-year term is fixed at 3.625% and amortizes over 25 years. This generated a much lower mortgage constant that substantially improves net cash flow after debt service.
Rate: 3.625% fixed
Term: 10 Years
Amortization: 25 Years
Loan Fee: 1 Point
Prepayment Penalty: None
Recourse: Repayment Guarantee
- Advisors: David Stepanchak
January 6, 2021
George Smith Partners successfully arranged a $4,400,000 refinance of two flex buildings, totaling 68,169 SF, in Jacksonville, FL. This was a permanent, recourse loan at 3.75%, fixed for the first 10 years with a rate reset at every 10 years thereafter. This is a fully amortizing 25-year loan. The two buildings are adjacent to each other and offer a mix of flex, office and retail space. Both buildings are currently 100% occupied with minimal impact of COVID-19 on its tenants. The Sponsor, a repeat client, acquired the Property just a month prior and engaged GSP to capitalize on the low interest rate environment.
Rate: 3.75% Fixed; Adjusts every 10th year
Term: 25 Years
Amortization: 25 Years
- Advisors: John Choi