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$16,600,000 Permanent Financing Loan for a Historic Office and Retail Building in Downtown Pasadena

Transaction Description: 

George Smith Partners successfully arranged a 5-year, non-recourse, interest only loan for a 91% occupied, multi-tenant office building in the Pasadena Playhouse District. While the building was originally built as traditional office, the basement has been converted to a 2-story gym with a pool, and two of the upper floors contained a cooking school which is now being used as a commissary to manufacture food for distribution. The special-use nature of the space provided a challenge in today’s market. GSP worked with a lender to validate the financial strengths of the tenants and their need to be in this building. While most office building refinances require new cash to be invested at closing, GSP was able to negotiate a small amount of cash-out that the Sponsor is allowed to use for any future leasing requirements. This is the third time that GSP has financed the building, for two separate owners. 



Related Financings

  • $3,650,000 Permanent Financing for Office & Retail Property; Santa Barbara, CA

    July 5, 2023

    Transaction Description:

    George Smith Partners successfully closed a refinance of a mixed-use office and retail property in Santa Barbara with a life insurance company. Despite the current market hesitation towards office properties, GSP was able to secure 10-year, fixed-rate financing given the lower leverage. GSP identified a Lender that was comfortable with the office component due to the 30+ small office users and no significant rollover risk. The largest tenants are a restaurant and movie theater which have been in occupancy for over 20 years.

    Rate: 5.93%
    Term: 10 Years
    Amortization: 25 Years
    LTV: 24%
    Prepayment: Yield Maintenance
    Fee: None
    Guaranty: Non-Recourse

  • $4,500,000 Owner User Office/Industrial Refinance; Los Angeles, CA

    June 28, 2023

    Transaction Description:

    George Smith Partners successfully secured $4,500,000 to refinance a mixed-use office and industrial property in Los Angeles, CA. Our Sponsor had contacted one of his relationship banks to refinance his headquarters building. With the current crisis in lending, they were not able to provide a satisfactory refinance. The Sponsor then engaged GSP to secure financing. In reviewing the Sponsor’s financials, GSP identified significant growth and was able to secure a much larger cash-out refinance of the sponsor’s facility.

    Using our relationships and experience, GSP identified an international bank that was able to provide a more aggressive rate and larger proceeds than the other lenders in the market. In 35 days, GSP was able to close this cash-out refinance at a fixed rate of 5.61% for 5 years, with 12 months of interest-only payments.

    Rate: 5.61% Fixed
    Term: 5 Years
    Amortization: 25 Years
    Interest Only: 12 Months

  • $9,000,000 Bridge Financing for 100,000 SF Single Tenant Office; Inland Empire, CA

    March 2, 2023

    Transaction Description:

    George Smith Partners arranged $9,000,000 in bridge financing to refinance a single-tenant office property in the Inland Empire. The Property has been nearly 100% leased to a county entity for 20 years, with lease renewals every 5-7 years. The Sponsor is leaving the unused space vacant in order to attract a single-tenant government lease buyer. GSP had arranged CMBS financing on the property in 2012 that came due in late 2022. Due to the timing in getting a new lease executed, the Sponsor asked for and received a short extension from the lender/servicer. GSP sourced a bridge lender that was poised to fund upon execution of the lease and estoppel. The loan paid off the existing loan and provided funds for tenant improvements mandated in the lease extension. It also gives the Sponsor maximum flexibility to sell or refinance over the next 2 years.

    Rate: 10.50% Fixed for Year 1, then Floating over SOFR for Year 2
    LTV: 65%
    Term: 10 Years
    Amortization: Interest Only
    Yield Maintenance: 6 Months Minimum Interest, then Open
    Origination Fee: 1%
    Prepayment: Open
    Guaranty: Non-Recourse

  • $15,000,000 SBA Acquisition Financing for an Office Property; Beverly Hills, CA

    February 21, 2023

    Transaction Description:

    George Smith Partners arranged $15,000,000 in SBA owner-user acquisition financing for a multi-tenant office property located in Beverly Hills, CA. The Sponsor approached GSP for assistance in acquiring the building they had been occupying as a tenant for many years past. Instead of losing cash to rent, they decided to invest in ownership. The Sponsor had tried securing both conventional owner-user and SBA financing on their own before reaching out to GSP but was unsuccessful. This was primarily due to the state of the market with lenders having a pessimistic outlook on office, and the SBA eligibility requirements becoming increasingly more difficult to meet since the COVID pandemic.

    Upon getting the assignment, GSP quickly put together a concise and marketable package that would present well to both conventional lenders and the SBA. GSP used their expertise to source attractive terms for the Sponsor and structured a total loan facility equal to 88% of the purchase price, at a sub-5% blended rate.

    Additionally, GSP managed to lock the senior portion of the loan despite the volatile interest rate market and quickly worked toward SBA approval to lock the rate on the SBA portion before the next month’s rate hike.

    Securing high leverage and keeping the Sponsor’s equity investment low was crucial to ensure the Sponsor could keep the majority of their liquidity in hand for their operations and potential property renovations. Thanks to GSP, the Sponsor successfully purchased the building with financing terms that exceeded their expectations.

    Senior Loan: $10,000,000
    SBA: $5,000,000
    Rate: Senior Loan: 4.92%
    SBA: 4.87%
    Term: 25 Years
    LTPP: 88%
    Prepayment: 5-5-4-4-3-3-2-2-1-1

  • $39,400,000 Acquisition Financing for Five-Building Suburban Office Campus; Southern California

    November 16, 2022

    Transaction Description:

    George Smith Partners successfully placed two simultaneous loans to acquire a five-building office campus in Laguna Hills, California. The 84% occupied Property sits on a 16-acre site adjacent to a reservoir and contains ample parking (4:1000 square feet). The Properties were built in the late 1980s and completely renovated in 2016-2018. GSP structured the financings to fit the Sponsor’s business plan which involved separating the collateral into a two-building bridge loan and a three-building CMBS loan. These loans allow the Sponsor to place long-term, fixed-rate debt on the stable assets while keeping shorter-term debt on the more transitional buildings.

    Loan 1 (3 Buildings): $24,800,000 of non-recourse, seven-year fixed rate first mortgage CMBS debt for the acquisition of three of the office buildings (total 158,000 square feet) which are 84% leased. GSP sourced a lender able to provide seven-year, non-recourse financing and the ability to close with a complicated DST (Delaware Statutory Trust) equity structure in a tight timeframe. The loan was sized to a 9.00% debt yield, 59% LTV, or 1.60x debt service coverage ratio on the 5.93% fixed rate coupon. The Sponsor bought down the interest rate.

    Loan 2 (2 buildings) $14,600,000 of non-recourse, 75% LTV, bridge financing for the acquisition of the remaining two office buildings (total 66,000 square feet), which are 79% leased with upcoming tenant rollover. GSP identified a Lender that could provide 75% leverage and a flexible 24-month loan term with three 12-month extensions. The loan is priced at 5.95% + 1 Month Term SOFR and is non-recourse. GSP was able to identify a lending source that not only understood the market and demand for office space in the market.

    Unique Structure – Two Simultaneous Loan Closings on the Divided Collateral

    Loan Amount: $24,800,000
    Term: 7 Years
    Amortization: Full-Term Interest Only
    LTV: 59%
    DSCR: 1.60x
    Debt Yield: 9.0%
    Prepayment: Defeasance

    Loan Amount: $14,600,000
    Term: 24 Months, plus Three 12-month Extension Options
    Amortization: Interest Only
    LTV: 75%
    Prepayment: 12 Months Minimum Interest

  • $14,700,000 Refinance of 380,000 SF Office-Retail Property; Los Angeles, CA

    September 14, 2022

    Transaction Description:

    George Smith Partners secured a $15,400,000 loan commitment for the refinance of a 381,754 square-foot, “Curacao” office and retail building located on the Olympic Boulevard business corridor: one-half mile west of L.A. Live and The Staples Center. To reduce excess proceeds from the refinance, the Sponsor elected to reduce the proceeds to fund only $14,700,000 of the committed amount.

    The building had been previously encumbered by a 10-year CMBS loan arranged by GSP. During the past year’s volatile interest rate environment, GSP worked closely with the Sponsor and Lender to provide a loan commitment with a five-month forward rate lock. The goal was to eliminate the Sponsor’s rate risk and enable the pre-payment of the CMBS loan, without paying defeasance, in the “open window” four months prior to its maturity. The 7-year loan was forward rate locked at a 5.04% fixed rate. Without the forward rate lock, the pricing would have been 75 – 100 bps higher.

    Several challenges were encountered when discussing the transaction with capital providers. While the property was over 93% occupied, 43% of the space was occupied by both office and retail affiliates of the Sponsor. The retail comprised 23% of the building’s gross leasable area and its location on the ground floor and basement levels made it a challenge for some capital providers concerned about owner/user and retail tenant concentration. However, by highlighting the long-term ownership, unique business strategy, and strong sponsorship, GSP was able to source a lender that was both comfortable and eager to be a part of the refinancing.

    Rate: 5.4% Fixed
    Term: 7 Years
    Interest-Only: 7 Years
    Amortization: 25 Years
    Prepayment Penalty: 4, 3, 2, 1, 1, 1, 0%
    LTV: 21%
    DCR: 1.20x
    Guaranty: Recourse