Rate: WSJ Prime + 0.50%
Term: 3 years
Amortization: 25 years
LTV: 65%
DCR: 1.25
Prepayment Penalty: None
Lender Fee: 0.25%
Recourse
George Smith Partners arranged $16,800,000 for the rate & term refinance of a 91,000 square foot retail center anchored by a national movie theater. Located in the Inland Empire submarket of Los Angeles, this tertiary market location added a level of complexity for this special use retail asset. Our Sponsor sought to reduce monthly debt service yet maintain prepayment flexibility. The movie theatre operator is a privately held company and provided limited financial information for underwriting, but GSP sourced a regional lender experienced with this location and comfortable with Sponsor’s financial strength, track record and guarantee. Floating at 0.50% over WSJ Prime, the three year debt is sized to 65% of value with a 25-year amortization schedule and does not carry a prepayment penalty.
Related Financings
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$7,500,000 Cash-Out Refinance Senior and Stand-By Line of Credit
April 19, 2017
Transaction Description
George Smith Partners placed a $7,500,000 refinance of two special use, unanchored multi-tenant retail properties located in the City of Industry. A sizable return on equity (142% of total capitalization) was permitted due to our Sponsors’ 20 year ownership and management history of the asset. This transaction was structured as senior debt funded at $4,300,000 and a $3,200,000 crossed-collateralized stand-by line of credit. Both vehicles were funded by the same capital source. Due to the special-use tenant mix, the senior debt was sized to 60% LTV and priced at Prime plus 1% fixed for five years and amortized over 25 years, while the credit line will float at Prime plus 1.5% for two years. Interest is only paid on funds drawn. There is no prepayment penalty for either tranche.Challenges
Special use tenancy at both properties is subject to a CC&R review by the local municipality at the end of 2017. One tenant who occupies 20% of the net rentable square feet went dark and vacated the property during the due diligence process.Solutions
GSP identified a regional lender that understood the market and was eager to build a relationship with our Sponsor, who has impressive real estate holdings, a long track record of execution and significant financial strength. By demonstrating that market rents and occupancy levels still allowed for significant debt service coverage, GSP was able to assist the lender in gaining comfort with the properties’ specialty-use and uncertain occupancy future.Rate: Senior Loan – Prime + 1%; Line of Credit – Prime + 1.5%
Term: Senior Loan – 5 Years; Line of Credit – 2 Years + Extensions
Amortization: Senior Loan – 25 Years; Line of Credit – Interest Only
LTV: 60%
DCR: Senior Loan – 1.25x; Line of Credit – 1.5x
Recourse
Lender Fee: 0.75% -
$53,400,000 Non-Recourse Bridge Financing for the Renovation of a Retail Property w/Operating Marina
July 24, 2014
Transaction Description: GSP structured and arranged the 73% Loan to Cost non-recourse bridge loan for the renovation of a boutique retail property and its adjoining marina. The project includes a 47-boat slip marina and a 372-space parking structure in addition to 91 on-grade parking spaces. The 123,000 square foot mixed use water front property consists of first and second story office and retail spaces in 14 separate structures with connected marina including 47 boat slips. The Sponsor plans to renovate the buildings and re-tenant the property to create an exciting retail environment that will comprise a mix of retail, restaurant, entertainment and other uses that will reach both the local customer demographic as well as draw regionally, utilizing the waterfront location. Of the 17 legal parcels, 13 parcels are owned in fee and 4 parcels located along the marina front are held as lease-hold interests. The 73% of cost non-recourse loan is priced at LIBOR+7.50% but offers a 50 basis point spread reduction as new leasing hurtles are met. The Borrower has 36 months until the initial maturity date with options to extend the loan for an additional 12 months.
- Rate: L+7.5% w/7.85% Floor
- Term: 3 Years + Two (1) Year Exts
- Amort: Interest Only
- LTC: 73%
- Non-Recourse
- Advisors: Steve Bram David R. Pascale, Jr.
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$93,500,000 Ground-Up Non-Recourse Retail Construction Financing to 70% of Total Cost
June 25, 2014
Transaction Description: GSP successfully placed a two-tranched combined loan of $93,500,000; consisting of a $56,500,000 Senior Loan and a $37,000,000 Mezz loan from two lenders, for the development of a 191,000 square foot retail center in Huntington Beach, California. Set to open in summer 2015, the project will be a unique retail center, situated on a spectacular site overlooking the iconic Huntington Beach Pier and Pacific Ocean. Pacific City’s architecture features a 2-story open design providing virtually all of the tenant spaces with ocean views. Tenancy will include a mix of national retailers representing iconic California lifestyle brands, several name restaurants, and an Equinox fitness center. The center will also include a marketplace called Lot 579 featuring a mix of distinctive local and regional food artisans in a farmer’s market style setting, similar to the Ferry Building in San Francisco or the Chelsea Market in New York. The retail center will provide a perfect showcase for the retail tenants looking beyond the “mall mentality”. Because of the borrower’s strong experience with development and leasing and the property’s superior location, these lenders structured the financing as a non-recourse loan with minimal preleasing required.
- Rate: Floating over LIBOR for Senior: Fixed for Mezz
- Term: 3 Years + Extensions
- Amort: Interest Only
- Recourse: Completion Guarantee only.Preleasing: 30% for Senior, None for Mezz.
- Advisors: Steve Bram David R. Pascale, Jr.
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$1,620,000 Acquisition Financing for a Single-Tenant Auto Related Property
April 10, 2014
4 – 9 – 14 Transaction Description: George Smith Partners successfully placed the 65% loan to purchase (67% loan to value due to a low appraisal) acquisition financing of a Pep-Boys auto repair store in New York State. The borrower acquired the property as the replacement property in a 1031 tax deferred exchange. The 20 year amortized term is fixed for 5 years at 5.0% prior to being recast for the second 5 year term at then prevailing rates. A step-down prepayment was structured to provide for future flexibility. Challenge: With only 9 years remaining on the initial lease term, institutional lenders are leery of event risk on single tenant properties. The auto-bays added a specialty-use component to the collateral should the tenant not renew one year prior to the loan termination date. An environmental concern was also raised by a number of portfolio lenders polled. All borrower contingencies were removed to secure control of the property in what was a very competitive bid process. Certainty of close as applied for and timely execution was paramount to avoid severe tax consequences. The appraisal came in less than the purchase price, thus jeopardizing loan proceeds. Solution: Mr. Stein quickly identified a local lender officed minutes from the property who immediately inspected and reviewed the property information. Their “in the market knowledge” gave a comfort that this location would quickly release to an identical user should Pep Boys vacate. A clean Phase I report mitigated all environmental concerns. A full credit committee commitment was issued within 24 hours of loan submission conditioned only upon 3rd party reports. Despite the low valuation, GSP worked with the lender to quantify lender risks for this cash-in execution and established a comfort level to extend their LTV constraint by an additional 2 percentage points. Rate: 5.0% Fixed for 5 Years Term: 10 Years Amort: 20 Years LTV: 67% LTC: 65% Prepayment: 5,4,3,2,1 open Recourse Advisors: Stephen Stein, Teddy Stutz -
$4,400,000 Refinance of a Special Use Retail Center
October 10, 2013
10 – 9 – 13 Transaction Description: Ameet Chagan placed the $4,400,000 refinance of a 22,480 square foot neighborhood retail center in Southern California. The rate was locked at application fixed for 7 years at 4.625% on a 25 year amortization. The mixed-use tenancy included a church as well as more traditional in-line tenants. Challenge: The subject property’s largest tenant is a church on a month-to-month lease. Property owner lacked sufficient liquidity and net worth for most institutional capital providers. The Sponsor was rate sensitive and required a portfolio lender with flexibility in servicing the loan. Solution: GSP identified a portfolio lender that understood the subject property’s market and potential reposition of the church space to retail use if the lease does not renew. GSP highlighted the superior historical cash flow of the asset and underscored the guarantor as a second generation owner; representing 30 years of sponsorship. By identifying a lending source whose rate is not directly tied to the U.S. Treasury, the borrower was unaffected by the rapid spike in Treasury rates just prior to application. Rate: 4.625% Term: 7 Years Amort: 25 Years LTV: 65% Prepayment: 5, 3, 1 Recourse Lender Fee: 0.5% Advisor: Ameet Chagan -
$5,600,000 Bridge Loan for a 45% Occupied Two-Story Food Court
August 22, 2013
8 – 21 – 13 Transaction Description: George Smith Partners successfully placed the $5,600,000 bridge loan for a two-story retail building that is essentially a Koreatown food court. The committed loan represented 84% of the “As Is” value. Capital has been allocated for the renovation of a ground floor restaurant and refurbishment of the outdated second floor food court that is currently vacant. With a three year term, the interest only bridge loan is priced at 4.50%. Challenge: The Borrower needed to maximize loan proceeds for this distressed asset. There is significant street level competition in the area with more modern facilities. Parking is very limited, not subsidized and expensive for fast food clientele. Solution: GSP identified the correct capital provider who realizes the tremendous opportunity to transition the food court into a modern, hip and aesthetically pleasing dining environment. GSP worked with the lender to structure reserves for releasing the funds at various project stages. Our due diligence confirmed a very high foot-traffic count as customers will be predominantly pedestrian or utilize the convenient mass transit in the area. Some people do walk in LA. Rate: Prime+1.25% Term: 3 Years Amort: Interest Only LTV: 84% Prepayment: 9 Month lock then Open Recourse Lender Fee: 0.50% Advisors: Gilda Rivera, Salar Royaei
