$10,000,000 Non-Recourse Quick Close Cash-Out Refinance in Orange County, CA

Rate: 7.82%
Term: 12 Months
Amortization: Interest Only
Fees: 1.25 points
Recourse: Carve-Outs
Prepayment: None

George Smith Partners placed a $10,000,000 cash-out refinance of a 100% owner/user corporate office and assemblage facility in Orange County, California. Excess proceeds were used to address a loan maturity for other unrelated real estate. Those other assets are un-stabilized but located in primary in-fill Los Angeles markets. Although proceeds were allocated to other real assets our Capital Provider only collateralized the subject Property. Their exit will occur post-reposition of the other assets and the portfolio will be recapitalized with traditional institutional debt. An MAI was not required; thus the loan was sized to 60% of estimated value. Fixed at 7.82% for 12 months, this non-recourse bridge loan does not carry a pre-payment penalty. Closing was executed within 10 days of solicitation of this loan request.

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    10 Year Interest Only $8,500,000 Refinance of Large Class B Office Building in St. Louis

    September 12, 2018

    Transaction Description:

    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.

    Challenge:

    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.

    Solution:

    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.

    Rate: 5.39% Fixed
    Term: 10 Years
    Amortization: Full Term Interest Only
    Guarantee: Non-Recourse
    Prepayment Penalty: Defeasance
    LTV: 60%
    Lender Fee: None

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    $4,500,000 Cash-Out Refinance of Medical/Office Building

    May 30, 2018

    George Smith Partners secured a $4,500,000 cash-out refinance loan for a 43,435 square foot medical/office property in Los Angeles. Within the past year the Borrowers had successfully secured a number of new leases which considerably improved the cash flow. GSP sourced a lender to pay off the in-place loan and provide a partial return of equity. Although the property has several anchor tenants under long term leases, multiple tenants continue to operate under month-to-month leases. GSP demonstrated that these tenants had remained in place for several years and maintain a close relationship with the Sponsors. Because of this relationship, our capital provider included cash flow from month-to-month and short-term tenants in their underwritten cash flow. The loan closed 50 days from application.

    Rate: Prime + 0.25%
    Term: 5 years
    Amortization: 25 years
    LTV: 65%
    Prepayment: None
    DCR: 1.25 at stabilization

  • Expand

    $4,500,000 Cash-Out Refinance of Medical/Office Building

    May 16, 2018

    George Smith Partners secured a $4,500,000 cash-out refinance loan for a 43,435 square foot medical/office property in Los Angeles. Within the past year, the Borrowers had successfully secured a number of new leases, considerably improving cash flow. GSP sourced a lender to pay off the in-place loan and provide a partial return of equity. Although the property has several anchor tenants under long term leases, multiple tenants continue to operate under month-to-month leases. GSP demonstrated that these tenants had remained in place for several years and maintain a close relationship with the Sponsors. Because of this relationship, our capital provider included cash flow from month-to-month and short-term tenants in their underwritten cash flow. The loan closed 50 days from application.

    Rate: Prime + 0.25%
    Term: 5 years
    Amortization: 25 years
    LTV: 65%
    Prepayment Penalty: None
    DCR: 1.25 at stabilization

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    $1,950,000 Refinance for Prime Los Angeles Owner/User Office; 75% LTV

    December 13, 2017

    George Smith Partners secured $1,950,000 for the refinance of an office building in the San Fernando Valley. The owners had purchased the property all cash six months prior and were seeking to recapture a portion of their equity. The ownership structure involved 4 businesses, 5 Trusts, and 7 individuals, all of whom had to go through the documentation process. Although the bank required full recourse from all of the Trusts, they were willing to waive repayment guarantees to some of the individuals behind the Trusts. Fixed for 20 years at 4.43%, the recourse loan was sized to 75% of the total capitalization. Amortization commences on a 20-year schedule and has a 5-year stepdown prepayment penalty.

    Rate: Fixed at 4.43%
    Term: 20 years
    Amortization: 20 years
    Prepayment Penalty: 5,4,3,2,1
    LTV: 75% of value
    Guarantee: Recourse

  • Expand

    $8,800,000 Non-Recourse Refinance for Baton Rouge Office Buildings

    November 29, 2017

    George Smith Partners arranged $8,800,000 for the refinance of two multi-tenant office buildings located in Baton Rouge, Louisiana. GSP identified a capital provider that would accommodate the existing credit challenges of the borrower. Initially the financing included a third property that added lease roll mitigation. When the third property was dropped, the loan was extended to a 30-year amortization and a reserve trigger was created to deal with potential roll-over risk from numerous month-to-month leases and leases with termination rights.

    Rate: 5.1% Fixed
    Term: 10-year Term
    Amortization: 30 years
    LTV: 70%
    Guarantee: Non-Recourse

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    $9,050,000 San Gabriel Valley Medical Office @ 3.51% Fixed for Five Years; No Third Party Costs

    June 27, 2017

    Transaction Description
    George Smith Partners secured $9,050,000 of refinance loan proceeds with a national balance sheet lender for a 47,000 square foot medical office building in the San Gabriel Valley, approximately 25 miles east of downtown Los Angeles. Fixed at 3.51% for five years and sized to 60% of value, the loan will amortize over 25 years and carries a yield maintenance prepayment penalty. There was no origination fee and the portfolio lender paid for all third party reports.

    Challenge
    The property is owned under a Tenants-In-Common (TIC) structure, precluding most capital providers from funding the non-single purpose borrower. The TIC ownership also created a need for extensive documentation on all investors. Our secondary market location and nearest hospital located eight miles from the subject added additional drag on the refinance request.

    Solution
    Our balance sheet capital provider accepted the TIC structure subject to underwriter all individuals with ownership over 20%. Historical financial data documented the remarkable stability of cash flow with medical office tenants despite not being adjacent to a hospital. GSP surveyed the market and demonstrated that although the property was not located near a hospital, it offered medical providers and services that were unique to the area. This resulted in high patient volume and long-term tenants.

    Rate: 3.51%
    Term: 5 Years
    Amortization: 25 years
    LTV: 60%
    Prepayment Penalty: Yield Maintenance
    Origination Fee: Par; No Third-Party Costs
    DCR: 1.40

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