Rate: Prime + 0.50%
Term: 3 Years
Amortization: Interest Only
Loan to Value: 68.7% LTC
Lender Fee: 0.50%
Guarantee: One fund-level guarantee and two individual guarantees.
George Smith Partners arranged a $2,795,000 ($267/Building SF) bridge loan to finance the acquisition and re-positioning of a 48% occupied, 10,480 sf strip retail center in Norwalk, CA. The proceeds will be used to acquire the asset and to sub-divide and re-tenant a 6,500 sf, vacant, former automotive space.
The Existing Tenant is paying a rental rate that the capital markets perceived to be at market but below the sponsor’s pro-forma rental rates for the vacant spaces. Furthermore, the Appraiser also concluded a market rate at the lower end of the spectrum. This resulted in a lower appraised value and stabilized cash-flow. The Sponsor had a signed LOI at their pro-forma rental rate in hand, but would not be converted into a signed lease until near the escrow closing date.
George Smith Partners was able to identify operating expenses in the appraisal that could be adjusted down resulting in a higher net operating income and value. GSP was also able to convince the Lender to raise their LTC constraint given the Sponsorship’s track record of successful retail projects. The final result was a loan amount reflective of the Lender’s term sheet.
December 5, 2018
George Smith Partners secured $8,700,000 of non-recourse, bridge acquisition financing for a 45,000 square foot retail center located in Richardson, TX. The Center, which was built in 1985, has a diverse mix of regional tenants and sits on the corner of two of the main thoroughfares in the area.
The Sponsor purchased the Property with the intent to add value through two approaches: (1) increasing rents for tenants that are rolling and paying below-market rates, and (2) constructing an additional 12,000 square feet on undeveloped land within the parcel. There were complications with parcelizing the existing building and the land, which meant that a single lender needed to fund the entire project. The large renovation and construction budget also resulted in only 41% of the total loan being funded at closing.
George Smith Partners identified a lender that could structure the financing to have two holdback reserves, one for the CapEx and TI/LC’s for the existing space and the other dedicated to funding the construction of the new building. The separate reserves allow the Sponsor to pursue both value-add opportunities simultaneously, which drastically reduces the project timeline and maximizes the Sponsor’s IRR. Our capital source was able to get comfortable with the construction component by requiring 75% of the space to be pre-leased prior to funding.
$11,845,000 Non-Recourse Acquisition and Reposition Financing up to 75% of Cost on a Non-Cash Flowing Retail Property in Los Angeles
April 19, 2017
George Smith Partners arranged an $11,845,000 first mortgage on a value-add retail property with no cash flow located along the main retail corridor of one of the hippest neighborhoods in Los Angeles. The national balance sheet lender provided a non-recourse loan to up to 75% of total project cost including 100% of future capital expenditure funds to gut renovate the asset and convert the property to high-end retail plus an addition of four apartment units. Due to the lack of cash flow, the lender structured a 20-month interest and carry reserve to cover debt service during the reposition period. Over 50% to total loan proceeds are allocated for future funding. Interest is not charged on funds until drawn.
Rate: 30-Day LIBOR + 6.00%
Term: Three years plus two 12-month extensions
Amortization: 24 months interest only; 25-year amortization thereafter
Max Loan to Cost: 75%
Prepayment: 15-month lockout; open thereafter subject to 1.00% exit fee
Lender Fee: 1.00%
December 13, 2016
George Smith Partners arranged the $3,400,000 acquisition bridge loan for a two-tenant retail property in a small, tertiary Colorado town. Current tenants, Hobby Lobby and Tractor Supply Company, have below-market leases that expire in 2 and 4 years, respectively. The non-recourse loan has a 3-year term with two, 1-year extensions, providing Sponsor with ample time to either extend the current tenants or to re-tenant the space at market rents. Lender got comfortable with short-term leases by underwriting a TI/LC reserve to be released in the event of a new lease. Our Capital Provider funded the loan in 30 days from application to close, in order to accommodate the Sponsor’s purchase timeline. Sized to 65% of purchase price, loan floats 575 over LIBOR.