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George Smith Partners arranged $20,675,000 in post-closing financing collateralized by an 185K square foot infill flex/R&D industrial asset located in Los Angeles, CA. The recapitalization repatriated equity and provided future funding for the renovation of the Property.
The asset provides optionality for multiple upside scenarios such as sound stage and creative office use. The business plan is to renovate the Property and cater to growing demand from the many media, entertainment and technology tenants in the Los Angeles market.
Amidst a time of market volatility and economic uncertainty, George Smith Partners was able to identify a capital source that understood both the value of the asset and the ability of the Sponsor to execute on the intended business plan.
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$44,000,000 Non-participating Bridge Financing for Industrial Acquisition and Reposition, 95% LTC, West Coast
November 25, 2020
George Smith Partners successfully arranged $44,000,000 in non-recourse, non-participating bridge financing at 95% of cost for the lease-up and repositioning of a 5-property, 650,000 SF, industrial complex located on the West Coast. The Sponsor purchased the complex vacant and the seller carried the first mortgage for 4 months. From the open of escrow with the Seller, to the closing of this loan, there was over 82% of the available space leased making up 77% of rent with letters of intent for the remainder of the space. Although this was during the COVID-19 pandemic, and there was considerable deferred maintenance and capital expenditure required to get the properties rent ready, the space leased quickly due to the Sponsor expertise and relationships and a strong submarket.
The loan provides funds for the deferred maintenance, the capital expenditures, the tenant improvements, leasing commission and carry until the tenants are in and paying rent. Additionally, there is an earn-out of $2,000,000 after the 18th month as the asset has other potential value-add attributes.
Rate: LIBOR + 3.95% with a floor on LIBOR of 50 basis points
Term: 3 years interest only
Amortization: Two 1-year extensions with 30-year amortization
Guaranty: Recourse, Completion of deferred maintenance and Cap-Ex, “bad” acts and environmental
Lender Fees: 1% origination and 0.25% exit fee
November 4, 2020
George Smith Partners placed a $4,700,000 refinance loan with cash-out for a single-tenant industrial property in El Cajon, San Diego County. This highly specialized facility is one of only two locations in the US that is approved to manufacture key components and assemblies for military and commercial aircraft currently in service.
The Sponsor acquired the Property in 2018 with a bridge acquisition loan. In March 2020, GSP was engaged to refinance the maturing bridge loan with permanent financing including cash-out proceeds. However, the California “stay-at-home” order was issued soon thereafter resulting in a challenging lending market for the Property.
GSP helped the lenders become comfortable by focusing on the low leverage, the strength of the Sponsor and the Tenant, and the fact that the Property continued to operate at full capacity without interruption due to be a critical Department of Defense supplier. In addition, the Tenant recently exercised its third extension option to the existing lease with an increased cash flow closer to market rents, thereby continuing its long-term commitment to the Facility.
While holdback reserves are increasingly common in the current environment, GSP negotiated to have reserve payments deferred until the fourth year of the loan and on a monthly schedule instead of the typical lump sum holdback at closing.
May 6, 2020
George Smith Partners, on behalf of Stos Partners , arranged $19,775,000 in bridge financing for the acquisition of a specialty flex industrial asset located in Temecula, CA. The Sponsor was able to negotiate a long-term lease renewal for the primary credit tenant, whose term was nearly expired, creating significant value in the process.
The recently purchased industrial building maintains a mix of specialized uses, as well as an additional near-term vacancy for a smaller flex space, posing both an opportunity and a challenge within the markets. The specialized and varied uses of the building, including laboratory rooms, light manufacturing areas and office/distribution space, required costly buildouts with tenant improvement dollars as the primary tenant expanded into additional space, requiring additional structure. Despite strong market fundamentals, the disruption with the COVID-19 pandemic changed the economy overnight. However, the financials and credit profile of this project only grew stronger and more viable with time.
George Smith Partners was able to identify a capital source that understood both the quality of the asset and the ability of the Sponsor to execute on the intended business plan. Amidst a time of great market volatility and economic uncertainty, the Capital Provider held their original pre-COVID structure and terms.
$61,392,000 Refinance of a 207-Acre, Two Million Square Foot Pharmaceutical Campus in Tri-State Area
April 15, 2020
George Smith Partners arranged $61,392,000 in first mortgage debt for the refinance of a mixed-use office, industrial and lab campus in the Tri-State area (New York, New Jersey, Connecticut). The corporate user developed the campus in phases between 1906 and 2008, and the improvements consist of over two million square feet of laboratory, pharmaceutical manufacturing, office and support buildings including a central utility plant. The user still owns some buildings, and leases others on the campus. The Sponsor purchased the asset in 2015 with a long-term redevelopment goal to create a life sciences destination that will build on the existing laboratory, manufacturing, and office uses. The Property will ultimately feature shopping, dining, meeting and educational experiences as part of a cohesive “work/live/play” community.
GSP sourced a loan from a capital provider that was able to underwrite in-place income with flexibility for an ever-evolving business plan. The three-year, interest only initial loan term is structured as an initial advance of $42,940,000 with the remaining $18,452,000 future funded for approved capital expenditures and tenant improvements/leasing commissions for to-be-leased space. No interest is due on funds until drawn. The loan is open for prepayment at any time subject to a 24-month minimum interest payment.
Term: Three years plus two 12-month extensions
Amortization: Interest Only during Initial Term
Max Loan to Stable Value: 60%
Prepayment: 24 months minimum interest
Lender Fee: 1%
- Advisors: Gary E. Mozer
$2,800,000 Owner User Business Real Estate Loan and Line of Credit for Industrial Property; Los Angeles, CA
November 27, 2019
George Smith Partners placed a structured senior and collateralized line of credit revolver in a cash-out execution for a business in Los Angeles. The first loan was structured to be self-liquidating over 15 years with a fixed rate of 3.90%. The $1,000,000 second trust deed is a true revolver that can be used as a check-book and has no limitations on uses. The second loan is priced at 3.75% (Prime minus 1%). Funds may be drawn down, re-paid and re-drawn without additional bank approval. There is no non-utilization fee. As the credit line is collateralized, there is no mandatory “clean-up” for funds outstanding over 12 months.
$3,300,000 Owner/User Warehouse Acquisition Financing; 75% LTV; Fixed at 3.36% for 10 Years; San Fernando Valley, CA
October 23, 2019
George Smith Partners secured $3,300,000 in proceeds for the purchase of a 19,680 sf warehouse located in the San Fernando Valley. The loan is fixed at 3.36% for 10 years. The Sponsor owns the adjacent property and intends to expand their business into additional warehouse space. Before discussing the deal with lenders, GSP fully underwrote the underlying business and demonstrated its substantial and recurring cash flow. As a result, many lenders were interested in the transaction at 75% LTV, which was above-market leverage for a non-SBA execution. The Borrower was able to select the loan with the best rate and structure. Additionally, the Lender provided an option to pre-pay 20% of the principal balance each year with no penalty.