$2,800,000 Owner User Business Real Estate Loan and Line of Credit for Industrial Property; Los Angeles, CA

SENIOR
Rate: 3.9% Fixed for 15 Years
Amortization: 15 years self-liquidating
Fee: 1/4% /25bp
Prepayment: 3-3-2-2-1 open
LTV: 75%
DCR: 1.20

REVOLVER
Rate: Prime -1% or 3.75%
Amortization: Interest Only
LTV: 80%

Transaction Description:

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.

Advisors

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    $15,000,000 Full Cash Out Permanent Financing for a Single-Tenant Industrial Warehouse; Los Angeles, CA

    March 6, 2019

    Transaction Description:
    George Smith Partners secured $15,000,000 of cash out refinancing of a single-tenant distribution warehouse in West Rancho Dominguez, an unincorporated portion of Los Angeles County. This was a permanent, non-recourse loan at 4.78% fixed for 5 years with 25 years amortization. The flexible prepay, which is non-typical of Life Co’s yield maintenance, was very appealing to the Borrower (locked for 12 months, 3-2-1, then open at par for the last 12 months).

    Challenges:
    Full cash out with $15,000,000 in proceeds for a foreign borrower who built this property in 2008 for less than $9,000,000. The existing single-tenant is a privately-owned entity that is “non-credit” with its lease rolling in less than 4 years without extensions. The in-place rent is currently 30% below market which limited other loan proposals between $9,000,000 and $11,500,000 in max proceeds.

    Solutions:
    George Smith Partners worked with an existing life insurance company lender relationship that was able to provide a structured permanent loan solution by underwriting to market rental rate rather than the in-place income. This made the loan metrics work for the Lender (8.6 Debt Yield & 1.26 DCR). These assumptions were in turn verified and confirmed by a national appraisal firm.
    The Asset is relatively new construction and considered a class-A property. Furthermore, the Los Angeles County industrial market is supply constrained which makes this asset category one of the most appealing in CRE today.

    Rate: 4.78%
    Term: 5 years fixed
    Amortization: 25 years
    Loan to Value: 60%
    Prepayment: 1-Yr Locked, 3-2-1, Last Year Open at Par
    Guarantee: Non-Recourse

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    $7,500,000 Cash-Out Refinance of Two Industrial Properties

    March 28, 2018

    George Smith Partners secured financing totaling $7,500,000 on two separate industrial properties in Los Angeles. The properties are occupied by a major domestic furniture manufacturer. The loans provided a return of equity to the borrower. The lender did not require an appraisal, but was able to use market comparables to substantiate the value of the properties. GSP provided extensive market data showing recent transactions of similar properties in order to further support the lender’s value. The lender was ready to close within two weeks of application.

    Rate: 7.9%
    Term: 12 months
    Amortization: Interest Only
    LTV: 50%
    Prepayment Penalty: None

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