$1,200,000 Permanent Refinance on Multi-Tenant Industrial Building for Sponsor with Discharged Bankruptcy; Sun Valley, CA

Transaction Description:

George Smith Partners arranged $4,800,000 in financing for the acquisition of a six-building, fully occupied industrial park in Pflugerville, Texas. The Sponsor, a repeat client, was selling another property in which the existing financing had a prepayment penalty. GSP leveraged its strong relationship with the lender of the Property being sold to successfully negotiate a reduction of the prepayment penalty by providing this Lender the opportunity to finance the purchase of the industrial park. The Lender offered a permanent, recourse loan at 3.68% fixed for the first five years based on the original property’s existing loan from 2019. The new loan term is ten years with a 30-year amortization.

Transaction Description:

George Smith Partners secured $3,500,000 in non-recourse debt to refinance a Southern California industrial business park. The Property is a 40,000 square foot, 100% occupied, industrial/flex building, majority occupied by automotive tenants. The financing takes out the existing debt, distributes capital for a significant roof repair, and redistributes equity to the Sponsor. The loan was underwritten to 60% LTV. The 10-year full term interest structure maximizes cash flow for the Sponsor. The fixed-rate loan priced at 1.80% over the 10-year SWAP.

Transaction Description:

George Smith Partners successfully placed a $3,000,000 bridge to permanent loan to fund the purchase, tenant improvements, leasing commissions and carry (real estate taxes, insurance, and debt service) for a vacant 50,000 SF single-story warehouse. The deal presented a couple challenges; the Sponsor had credit issues and the building was 100% vacant. The strong sponsorship experience, low vacancy in the market and the building’s high-level of quality ameliorated these issues. Lastly, the transaction had to be completed within the tight time constraints of a 1031 exchange.

Transaction Description:
George Smith Partners placed a $4,700,000 refinance loan with cash-out for a single-tenant industrial property in El Cajon, San Diego County. This highly specialized facility is one of only two locations in the US that is approved to manufacture key components and assemblies for military and commercial aircraft currently in service.

The Sponsor acquired the Property in 2018 with a bridge acquisition loan. In March 2020, GSP was engaged to refinance the maturing bridge loan with permanent financing including cash-out proceeds. However, the California “stay-at-home” order was issued soon thereafter resulting in a challenging lending market for the Property.

GSP helped the lenders become comfortable by focusing on the low leverage, the strength of the Sponsor and the Tenant, and the fact that the Property continued to operate at full capacity without interruption due to be a critical Department of Defense supplier. In addition, the Tenant recently exercised its third extension option to the existing lease with an increased cash flow closer to market rents, thereby continuing its long-term commitment to the Facility.

While holdback reserves are increasingly common in the current environment, GSP negotiated to have reserve payments deferred until the fourth year of the loan and on a monthly schedule instead of the typical lump sum holdback at closing.

George Smith Partners secured $4,950,000 of permanent financing for two industrial buildings (one single tenant, one two tenants) located in Castaic, California. The 30-foot clear height buildings are located side-by-side and collectively total 57,825 square feet. One of the properties was constructed in 2011, while the other was built in 2016. The buildings are both 100% occupied but all of the tenants have lease terms that expire within the next four years. GSP was able to identify a capital source that would provide a non-recourse, long-term fixed rate loan. The borrower wanted to maximize cash flow which was achieved by taking minimal ongoing reserves, securing a 30-year amortization, and negotiating four years of interest only. The 10-year loan was priced at 5.17% at 65% LTV and offers a stepdown prepayment structure.