Don't Miss a Fact,
Sign Up for FINfacts!

FINfacts is a weekly newsletter highlighting recent financings and economic insights.

Subscribe Here

$15,400,000 Bridge Financing for Tarzana Medical Office in Tarzana, California

Rate: Prime + 0.25% 

LTV: 60% 

Term: 3 Years 

Origination Fee: 0.50% 

Exit Fee: None 

Guaranty: Recourse 

Transaction Details: 

 George Smith Partners successfully arranged bridge financing for the lease-up of a medical office building near the brand-new Providence Cedar-Sinai Tarzana Medical Center which opened at the end of 2023. The building was originally traditional office.  The Sponsor allowed leases to roll and spent $5mm on an extensive renovation and conversion to 100% medical office.  Once the renovation was complete, the Sponsor received significant tenant interest. Now that the building is almost fully leased, the subject loan will allow the Sponsor to complete the tenant improvements and stabilize the property.  The subject loan was competitively priced at P+0.25% and provides a mini-perm option once the property is stabilized. 


Related Financings

  • Cash-Out Bridge Loan for Medical Office Building, Laguna Niguel, CA

    November 25, 2020

    Transaction Description:

    George Smith Partners secured a senior bridge loan for a 21,303 square foot office building in Laguna Niguel, CA. The Subject Property was unencumbered; hence the entire loan was comprised of cash-out proceeds which the Borrower is utilizing for a separate project they are developing. The loan represents approximately 60% of the original purchase price and was structured with a 1-year initial term with interest only payments. The loan allows for open prepayment and carries two 6-month extension options.

    The loan was collateralized by a recently renovated 21,303 square foot office building. The building had recently upgraded the facade, landscaping, parking lot, entrance, lobby, bathrooms, HVAC and other interior finishes. A new roof and solar system had also been installed. The building was 47% occupied at loan funding. The first-floor single tenant had vacated at lease expiration several months prior leaving limited debt service coverage and unusually high vacancy compounded by other COVID related issues.

    GSP selected a lender that was able to move incredibly quick to accommodate the Borrower’s development timeline. The Lender’s credit department approved the loan one-week post submission and did not require an appraisal to close. The Lender underwrote to the stabilized asset value, closed with no debt service reserve and no personal recourse.

    Rate: 5.90%
    Term: 12 months
    Amortization: Interest Only
    Loan Fee: 1.0%
    Prepayment: Open
    Options: Two 6-Month Extensions; 0.50% Fee
    Personal Guaranty: None

  • $8,000,000 Bridge Loan for Riverside County Medical Office

    January 15, 2019

    Transaction Description:

    George Smith Partners placed an $8,000,000 bridge loan for the refinance of a 40% occupied medical office building in Riverside County. The loan floats at a rate of Prime + 1% with interest only payments. The initial term is 12 months and two 6-month extensions are available. Proceeds are structured as $5,800,000 in initial funding, with an additional $2,200,000 that can be drawn down as the property leases up.

    Challenges were encountered when discussing the transaction with lenders. Several years ago, the Borrowers financed their acquisition of the near-vacant property with a bridge loan. Although the Sponsor’s business plan was progressing well, some lenders were not willing to refinance a bridge loan with another bridge loan. Additionally, the Property is located in a secondary market in Riverside County, about an hour east of Los Angeles. Finally, an estoppel and SNDA was required from the largest tenant, but these documents took a long time to negotiate.

    George Smith Partners emphasized that the Sponsors had recently successfully negotiated a long-term lease with a well-known anchor tenant. They also invested $1.4MM in capital expenditures resulting in a total renovation of the property. Since signing the Anchor Tenant, the Borrowers have successfully negotiated long term NNN leases with several other smaller tenants. Although the Property is located in Riverside County, GSP emphasized the strong population growth, especially of retired individuals, in the submarket. This has resulted in increased demand for medical services in a market with limited supply of renovated medical office properties. As a result the selected lender became comfortable with the strength of the asset and the ability of the Sponsors to continue lease-up. The Lender also provided for 60 days after closing to obtain the estoppel and SNDA.

    Rate: Prime + 1% (6.25%)
    Term: 12 months with two 6 month extensions
    Amortization: Interest Only
    Prepayment: None

  • $32,000,000 Non-Recourse Bridge/Acquisition at 3.0%

    July 6, 2016

    George Smith Partners successfully structured and placed the non-recourse acquisition bridge loan for a medical office building adjacent to a Los Angeles hospital. Our Sponsor will complete a significant capital improvement plan and increase rents upon lease roll-over. The 95% physical occupancy at close supports this business plan as there is significant market demand yet very little supply. Sized to a 9.0% in-place debt yield, additional advances will be funded to maintain the 9.0% debt yield as NOI is increased. Future disbursements will fund capital to complete upgrades as well as pay for tenant improvements and leasing commissions. Interest is only paid as funds are disbursed for the first two years of the five year term. Priced at LIBOR plus 255, there is no prepayment penalty.

    Rate: L+2.55%
    Term: 5 years + One, 2-Year Extension
    Amortization: 2 Years Interest Only
    LTC: 60%
    Prepayment: None
    Lender Fee: 0.75%

  • $7,900,000 Bridge Financing for a 60% Occupied Georgia Medical Office Building

    August 20, 2015

    Transaction Description: George Smith Partners placed the bridge refinance for a newly constructed medical office building in Decatur, Georgia. The 33,685 square foot structure was developed for multi-tenant use. An interim bridge loan was required to finish outstanding tenant improvements, payoff property liens and bring the asset to stabilization for perm financing. In-place cash flow is not sufficient to service the debt; an interest reserve was funded to cover the short-fall. Sized to 72% of As-Is value, the recourse loan is fixed at 11%, Interest Only for 6 months and was funded within four weeks of application.

    Challenge: The existing loan had matured and borrower was in technical default, paying default interest rates. Certainty of execution and speed were compulsory as it was just weeks away from foreclosure. Tenant improvement costs exceeded budget, requiring additional proceeds to complete the build-out prior to occupancy.

    Solution: GSP identified a private capital source who took the time to understand and become comfortable with the Sponsor’s business plan and the property’s intrinsic value. Once the capital’s interest was confirmed, GSP vetted the transaction risk exposure and structured the loan criteria to avoid closing pitfalls, satisfying both Borrower and Lender. Funds were allocated to finish outstanding tenant improvements, payoff mechanics liens and provide for a viable refinance exit.

    Rate: 11%
    Term: 6 Months
    Amort: Interest Only
    LTV: 72%
    Prepayment: None