Rate: One-Month LIBOR + 2.35%
Term: Five Years
Amortization: Four Years I/O; 35-Year Amortization Thereafter
Lender Fee: 1.00%
Prepayment: 18-Months Spread Maintenance
George Smith Partners secured a $124,250,000 permanent loan to refinance out an existing construction loan on a 560,000 square foot, class-A, mixed-use office and retail property in a Midwest market. The non-recourse loan provided the borrower significant cash out at close in addition to funding 100% of future tenant improvement and leasing commission costs associated with stabilizing the property. It also repaid the existing construction loan and covered closing costs. The existing property is 93% leased, but only 80% occupied, to a mix of credit and non-credit tenants including a boutique cinema. The five-year, floating-rate loan priced at 2.35% over One-Month LIBOR and offered four years of interest only payments with 35-year amortization during the fifth year of the loan term. Other benefits of this loan structure include:
• flexible prepayment
• five-year initial term vs. typical 3+1+1 loan term structures that would have required specific performance hurdles and extension fees
• no forced funding date for the future funding component
• no syndication risk as the portfolio lender (a bank) is holding the entire loan on balance sheet
• generous interest rate hedging requirement of purchasing LIBOR caps for two-year terms to reduce hedging costs
Senior Vice President
Senior Vice President
November 6, 2019
George Smith Partners secured $9,050,000 for the non-recourse, cash-out refinance of two unanchored, multi-tenant retail centers in Columbus, Ohio. The two properties were cross-collateralized allowing the Borrower to benefit from securing a higher leverage loan. The permanent loan is fixed at 4.25% for ten years with 12 months of interest only and a defeasance prepayment penalty structure.
One of the retail centers had a tenant whose parent company was in bankruptcy proceedings and vacated their space during our loan process. The other retail center, which is newly developed, was in the process of lease up and had a few tenants not yet in occupancy prior to loan closing. The market had very few comparables to support our underwritten value of the Subject Property.
GSP identified a capital source that understood the strength of the asset, location and the experience of the Sponsor. Based on these strengths and additional market support provided, the Lender was able to offer a cross-collateralized structure, which maximized proceeds at 73% LTV with 12 months of interest only payments. The Capital Provider was also able to fund the loan with a few tenants not in occupancy. This allowed the Sponsor to take advantage of today’s low interest rate environment and eliminate interest rate risk.
$11,650,000 (72% Loan-to-Value) Non-Recourse, Cash-Out Refinance of a Grocery Shadow-Anchored Salt Lake City Retail Center
January 15, 2019
GSP successfully sourced $11,650,000 of non-recourse, cash-out, permanent first mortgage debt sized to 72% loan-to-value to refinance out a maturing bridge loan on a 62,500 square foot, grocery shadow-anchored Salt Lake City multi-tenant retail property. The borrower recently completed its re-tenanting business plan that upgraded the tenant base and stabilized the 1960s vintage retail property at nearly 100% occupancy. Although many lenders are increasingly becoming more conservative regarding leverage and interest only terms on retail properties, GSP sourced a lender that relied on the borrower’s substantial real estate experience, strong submarket performance, and a diverse tenant mix to provide a full-leverage, non-recourse loan that repatriated substantial equity to the borrower and included three years of interest only payments followed by 30-year amortization.
January 10, 2018
George Smith Partners successfully arranged the $11,800,000 non-recourse cash-out refinance secured by a 49,942 square foot multi-tenant retail center in Tarzana, California. GSP identified a capital provider who was comfortable with the return of equity given the Sponsor’s team and experience. Sized to 55% of appraised value, 8.75% Debt Yield, and a 1.65x Proforma DSCR. The 10-year interest only note is fixed at 2.25% over the LIBOR 10 Year SWAP rate (4.62% at closing).