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$116,000,000 Non-Recourse Financing on a Four Asset Class A Suburban Office Portfolio in Non-Gateway Cities

Rate: 30-Day LIBOR + 2.60%
Term: Three years plus two 12-month extensions
Amortization: Interest Only during Initial Term
Max Loan to Value: 65%
Prepayment: 1% months 1-12; open thereafter

Transaction Description: George Smith Partners arranged $116,000,000 in non-recourse debt to refinance a suburban office portfolio in conjunction with an institutional equity recapitalization. George Smith Partners invested six months to optimize execution due to recent capital markets turmoil.

The first mortgage loan is cross-collateralized across the four properties in order to mitigate tenant rollover risk on the individual asset level, and features release provisions to allow flexibility in the event of a future sale of one or more of the assets. Proceeds are structured as an initial $109,000,000 loan, with up to $7,000,000 of additional funds available during the initial term for tenant improvement costs, leasing commissions, and free rent across the portfolio. The loan requires no additional reserves with interest is not paid on the $7,000,000 until drawn.

The first mortgage debt priced at one-month LIBOR plus 2.60% and required a LIBOR cap with a 3.00% strike price for the first two years of the term with a renewal for the third year, thereby reducing the overall cap cost to Borrower by shortening the cap’s duration.  The loan features Interest Only payments for the three-year initial term in order to maximize cash flow available for distribution to investors.


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