$19,250,000 Cash-Out Refinance of a 150,000 sf Anchored Retail Center

Transaction Description:  GSP successfully arranged the $19,250,000 cash-out refinance of an existing bridge loan, secured by a stabilized 150,000 sf market/drug center in North Los Angeles County. The borrower required a non-recourse financing structure that provided a return of equity while releasing an adjacent parcel Free & Clear from the current lender.

Challenge: Despite the return of the Capital Markets, non-recourse cash-out retail financing is still not widely embraced. A number of leases are month-to-month that further complicated the underwriting. Multiple issues also arose during the due diligence period that included tenants in transition, legacy environmental issues (several), and parking & zoning ambiguities with the City.

Solution: GSP surveyed the permanent debt market including Life Insurance Companies, Banks and Wall Street Conduits to identify a lender willing to understand the unique characteristics of this asset. GSP worked with all parties to support the investment thesis: Fortress neighborhood retail with barriers to entry and significantly under-market rents. This loan offers a fully funded lease up and rehab reserve, which supports the borrowers’ investment objective. As the adjoining parcel does not contribute to the net cash flow, the new lender released it from their collateral.v