Rate: 4.25% During Construction, Five-year Treasury + 3.25% During Term
Term: 5 Years
Amortization: 25 Year
Prepayment: Term Period: 3%,2%,1%,0%
George Smith Partners successfully placed a $3,000,000 bridge to permanent loan to fund the purchase, tenant improvements, leasing commissions and carry (real estate taxes, insurance, and debt service) for a vacant 50,000 SF single-story warehouse. The deal presented a couple challenges; the Sponsor had credit issues and the building was 100% vacant. The strong sponsorship experience, low vacancy in the market and the building’s high-level of quality ameliorated these issues. Lastly, the transaction had to be completed within the tight time constraints of a 1031 exchange.
$4,700,000 Refinance with Cash-Out for Single-Tenant Manufacturing Industrial; El Cajon, CA
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.
Term: 7 Years
- Advisors: John Choi