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$27,000,000 Non-Recourse Financing with Cash Out for 360,000 SF Retail Center; Colorado Springs, CO

Rate: 9.0% Fixed, Interest Only for 6 Months
Term: 18 Months, with two 6-Month Extension Options
LTV: 65% (Plus CAPEX)
Origination: 1.75%
Guaranty: Non-Recourse

Transaction Description:

George Smith Partners has secured $27,000,000 in non-recourse debt financing for a 360,000 SF retail center in Colorado Springs, CO. The Property features many popular national retail and restaurant chains and is shadow anchored by Lowe’s Home Improvement. Due to some pandemic related tenant credit issues the Property faced 68% occupancy levels for a brief period. However, through strategic releasing efforts, the Property has since been released to strong new tenants for over 90% of the net leasable area.

The loan was structured to provide fresh reserves for the Sponsor to pay remaining tenant improvement and leasing commissions for the newly tenanted spaces as well as to refinance the existing bridge loan, which had reached maturity. In addition, the Lender provided the Sponsor with additional cash-out proceeds to pay down debts on other Sponsor-owned properties.

Challenges:

The Sponsor originally requested long-term fixed rate debt with maximum cash out. However, due to the near-term maturity of the existing bridge loan and the non-stabilized NOI, another bridge loan was needed to allow the NOI to season for another year, prior to arranging permanent financing.

Solutions:

The GSP team was able to solve for these challenges by highlighting the increased leasing activity since the pandemic as well as the Sponsor’s forty-year history and familiarity with the Property. GSP identified a new bridge lender comfortable with the Property’s dominant position in the market, the recent leasing activity and future leasing potential. GSP worked creatively and strategically with the Lender to structure an 18-month loan with two extension options. This will allow the new tenants to take occupancy. In addition, the NOI will be able tore-stabilize which will position the Property to achieve permanent financing as an exit strategy to repay the new bridge loan.

Advisors

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