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Related Financings
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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 -
$4,000,000 Permanent Recapitalization Financing For 76,175 SF Single-Tenant Indiana Office Building
July 19, 2012
7 – 18 – 12 Transaction Description: George Smith Partners arranged cash-out permanent financing for a fully occupied single-tenant office building in a tertiary market of Indiana. The cash-out is a partial recapitalization of a recently acquired property on an all-cash basis. The asset is leased to a “For-Profit” college with 3.5 years remaining on the initial lease term before options. The institutional quality of the borrower and the tenants’ long-term historical occupancy at this location proved instrumental to securing the loan. GSP obtained two key loan provisions that will serve the borrowers’ interest in both up-side and down-side scenarios – a loan term in excess of the lease term, and the ability to pre-pay without penalty. The borrower required full proceeds up-front without holdbacks. GSP structured a Letter of Credit that burns off upon lease extension/renewal. This debt structure mitigates borrower risks while providing for a 25% cash on cash return. Rate: 5.375% Term: 5 Years Amort: 25 Years LTV: 75% Prepayment: None Non-recourse Credit Enhancement: Letter of Credit Brokers: Steven Orchard, Loren Bedolla -
$1,550,000 Cash-Out Refinance of a Special Purpose, Single Tenant Building to 65% LTV
June 7, 2012
6 – 7 – 12
Transaction Description: Shahin Yazdi successfully placed the 65% LTV cash-out refinance of a Kindercare Daycare facility in Southern California. The special use tenant is privately held; no store sales information was available for underwriting. Challenge: Lenders view the pre-school as a special purpose asset, a product type that attracts limited lender interest. The cash-out requirement further complicated the transaction, as did the shortness of the remaining 6-year lease term. Solution: The subject property’s exceptional location allowed the lender to become comfortable with the special purpose use, leverage, and return of borrower equity. The tenant had been at this location since 1985, in addition to signing a new lease in 2003. The Lender did not require a TI/LC reserve account, and offered the Borrower a 3-year loan extension once the tenant renews their lease. Rate: 4.60% Term: 7 Years + One, 3-Year Extension Amort: 25 Years LTV: 65% Recourse Broker: Shahin Yazdi -
Refinance of a Church-Owned Property
November 7, 2011
11/02/11
Description: George Smith Partners successfully placed the refinance of a church-owned property in West Los Angeles. The self-liquidating loan is fixed for 15 years, amortized over 15 years. Challenge: Title was held in the name of the church after it had been gifted to the church via a grant deed. Banks were not comfortable funding a loan without a warm body repayment guarantor. Religious institutions are not required to file in the same manner as a commercial enterprise, thus church operational records were limited in scope and detail. Solution: GSP quickly identified and structured a loan with a local commercial bank that had recently provided debt to other churches and was familiar with their reporting requirements. This capital provider acknowledged the non-profit Borrower and did not require a warm body guarantor. The Borrower received a competitively priced long-term fixed rate loan without any refinance exposure. Rate: 5.0% Term: 15 Years Amort: 15 Years LTV: 55% Prepayment: 0.5% for 5 Years Lender Fee: 0.5% Recourse: Entity Level Only Brokers: Marc Shillinger,Andrew Hornblower -
$38,000,000 12-Month Forward Take-Out Commitment for a 50,000 sf Santa Monica Medical Facility
April 13, 2011
4 – 6 – 2011 Transaction Description: GSP obtained a 12-month forward commitment to provide a take-out for the construction debt on a partially-constructed three-story 50,000 sf outpatient surgery facility. The center is pre-leased to an investment-grade tenant. The facility, to be complete in December 2011, features special improvements for imaging and radiation services, a robotic six-floor subterranean parking garage, and LEED Gold certification. Challenge: Due to inflation concerns, the borrower wanted to lock-in today’s long-term rates – 12 months prior to completing construction. Until recently, forward take-out commitments were constrained to six-months and rate-lock premiums were prohibitive. The building is valued at more than $1,200/sf. Solution: GSP solicited conduits, bond issuers, and portfolio lenders (life companies & pension funds) to identify a lender willing to lock rate today for a 12 month forward funding. GSP highlighted the quality of the real estate & borrower, and built a strong case to support the property’s high valuation. The Sponsor selected a life company loan at a competitive rate, locked at application in February 2011, with a forward premium of 4 bps per month. The lender was distinguished by their understanding of the location & tenant, their willingness to commit 12 months before funding, and the trusted relationship they developed with GSP and the client. Rate: 5.67% fixed Term: 12 Month Forward + 10 Years Amort: 30 Years Prepayment: Modified Yield Maintenance Non-recourse Lender Fee: Par Brokers: Steve Orchard, Gary E. Mozer, J. Jay Brooks
