Term: 3 Years
LTV: 70% LTC, 65% Loan to Stable Value
George Smith Partners successfully placed $22,070,000 in bridge financing for a vacant, 34,000 SF office building in West Los Angeles. Considering the negative effects of COVID on the office leasing market, capital providers were hesitant in financing a vacant building. The Sponsor envisioned two potential business plans: leasing the building to a single user or a mixed-use scenario where the ground floor would be converted to restaurant/retail. Supported by a strong Sponsor and backed by collateral with a high parking ratio centrally located in Los Angeles’s premier office market, GSP found a lender willing to finance both scenarios. The loan held back funds for tenant improvements, leasing commissions and capital expenditures. This provided flexibility to cope with the uncertainties of the COVID-era office leasing market. With optionality and competitive pricing, GSP negotiated a flexible loan agreement at the desired level of proceeds. Although COVID has turned office into a difficult asset class to finance, GSP guided the deal to a successful closing.
Gary E. Mozer
Managing Director & Principal
Senior Vice President
November 25, 2020
George Smith Partners secured a senior bridge loan for a 21,303 square foot office building in Laguna Niguel, CA. The Subject Property was unencumbered; hence the entire loan was comprised of cash-out proceeds which the Borrower is utilizing for a separate project they are developing. The loan represents approximately 60% of the original purchase price and was structured with a 1-year initial term with interest only payments. The loan allows for open prepayment and carries two 6-month extension options.
The loan was collateralized by a recently renovated 21,303 square foot office building. The building had recently upgraded the facade, landscaping, parking lot, entrance, lobby, bathrooms, HVAC and other interior finishes. A new roof and solar system had also been installed. The building was 47% occupied at loan funding. The first-floor single tenant had vacated at lease expiration several months prior leaving limited debt service coverage and unusually high vacancy compounded by other COVID related issues.
GSP selected a lender that was able to move incredibly quick to accommodate the Borrower’s development timeline. The Lender’s credit department approved the loan one-week post submission and did not require an appraisal to close. The Lender underwrote to the stabilized asset value, closed with no debt service reserve and no personal recourse.
December 18, 2019
George Smith Partners arranged $25,500,000 in non-recourse bridge financing for the acquisition of a 230,000 square foot Class A office building located in the heart of Phoenix, Arizona’s Midtown District. Positioned on a heavily trafficked thoroughfare of a major professional corridor, the site benefits from its central location, proximity to Downtown Phoenix and abundance of local economic drivers. The Project, built in 1982, had been well-maintained but was running a below-market occupancy rate of 82% due to the recent expiration of a large tenant lease. This bridge facility allowed the Canadian-based Sponsor to purchase the asset and undergo a proposed renovation, bringing the design up to competitive market standards in order to successfully lease-up and stabilize the asset.
By focusing attention on sophisticated bridge lenders active in the local area, GSP identified a capital provider who understood the growth of the market. The selected Capital Provider structured around the Project’s current vacancy, recognizing the strength of the Sponsor and their ability to successfully execute on the intended business plan of value creation. The loan was structured with minimal cash management language and featured pari passu funding throughout the term. The interest only non-recourse bridge loan was priced at a spread of 350 basis points over the 30-Day LIBOR, with a three-year term and two 12-month extension options.
Rate: 30 Day LIBOR + 3.50%
Term: 36 Months with Two 12-Month Extensions (3+1+1)
Amortization: Interest Only
- Advisors: Evan Kinne