$32,700,000 (85% Loan-to-Value) Non-Recourse Financing for the Acquisition of a 33-Property Single Tenant Dollar General Portfolio

Rate: 5.74%, Fixed
Term: 10 years
Amortization: 3 Years Interest Only; 30 Year Amortization thereafter
Loan to Value: 85%
Prepayment: Defeasance
Lender Fee: None

Transaction Description:

GSP successfully placed $32,700,000 of non-recourse, ten-year, fixed-rate debt for the acquisition of 33 newly-constructed freestanding retail buildings 100% leased to Dollar General. The individual assets have 15-year lease terms and are located primarily in the Upper Midwest and Southern United States. GSP executed the financing concurrent with construction completion and sourced a lender who, due to Dollar General’s investment grade credit rating (S&P: BBB) and the geographic diversity of the assets, was able to achieve 85% leverage financing (including a mezzanine debt component) on the portfolio at a 5.74% blended fixed coupon plus three years of Interest Only payments on the ten year loan term, despite an absence of sales history and concurrent tenant lease terms expiring five years after loan maturity. This structure minimized the equity required to close the transaction and provides additional cash flow to the Sponsor during the first three years of the loan term. The loan structure also provides the Sponsor flexibility to release properties from the loan collateral in the event of sale after year three of the loan term, and allows the Sponsor to release up to 30% of the individual assets from the mortgage collateral and substitute like kind properties through year nine of the term.

Advisors

Related Financings

  • Expand

    $4,517,000 Acquisition of a Multi-Tenant Retail Center, Villa Park, IL; Non-Recourse

    April 1, 2020

    Transaction Description:

    George Smith Partners secured $4,517,000 for the acquisition of a multi-tenant, retail center in Villa Park, Illinois. The non-recourse permanent loan is fixed at 3.75% for ten years with full-term interest only and a defeasance prepayment penalty structure.

    One of the tenants was a newly opened gym franchise with no historical sales information for this center. Also, during the loan process, the Seller was finalizing a subdivision of the parking lot which required multiple levels of municipality approvals.

    GSP identified a capital source who understood the strength of the asset, the experience of the Sponsor and its desirable suburb location, which is 20 miles outside of Downtown Chicago. The Capital Provider worked through the timing of the issuance of the subdivision approval and was able to close as soon as the approval was finalized. The efficiency of our Capital Provider allowed the Sponsor to be able to rate lock and close as soon as the approval was stamped, taking advantage of the low interest rate environment.

    Rate: 3.75% Fixed for 10 years
    Term: 10 years
    Amortization: 30 years
    Prepayment Penalty: Defeasance
    DCR: 1.30x
    Interest Only: 10 years
    Guaranty: Non-Recourse
    Origination Fees: Par

  • Expand

    $10,900,000 Cash-Out, Acquisition, Reposition on a 50-Unit Multifamily Property; Los Angeles, CA

    February 12, 2020

    Transaction Description:

    George Smith Partners placed a $10,900,000 non-recourse loan for the refinance of an underperforming stabilized 50-unit multifamily community in Los Angeles. The Sponsor recently acquired the asset at approximately 50% below market from an affiliate party and GSP was able to facilitate approximately $3,000,000in cash out proceeds at closing. A portion of the loan proceeds will be used to renovate units as they become vacant in order to achieve current market rents. GSP identified a non-institutional lender who was comfortable with the cash out proceeds and who understood the history and dynamics of this non-arms-length acquisition. The non-recourse loan is fixed for 1.5 years with a 7.99% interest rate and 4.99% pay rate.

    Rate: 7.99% with 4.99% pay rate
    Term: 18 months
    LTV: 70%
    Recourse: Carve-Outs Only
    Fees: 1.0%
    Prepayment: None; no exit fee

  • Expand

    $25,500,000 Non-Recourse Bridge Financing for an Acquisition of an Office Building; Phoenix, AZ

    December 18, 2019

    Transaction Description:

    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)
    LTC: 65%
    Amortization: Interest Only
    Guaranty: Non-Recourse

  • Expand

    $2,800,000 Land Acquisition Financing for a Self-Storage Project; Santa Clarita Valley, CA

    December 4, 2019

    Transaction Description:

    George Smith Partners successfully arranged a $2,800,000 non-recourse, short term acquisition loan for a 4.21-acre parcel near Stevenson Ranch in the Santa Clarita Valley of California. The Sponsor needed financing in a very short timeframe. GSP was able to source a private lender who closed in three business days. The loan offers 60 days of bridge term while the Borrower seeks a construction-to-permanent solution for a fully entitled, six-building, 966-unit, climate controlled, Class-A self-storage facility expected to complete construction in late 2020. The loan is non-recourse and the Lender did not require an appraisal or other third-party reports, thanks to the low leverage and strength of the Sponsor.

    Rate: 7.90% Fixed
    Term: 60 Days
    Amortization: Interest Only
    Loan To Value: 36%
    Prepayment: None
    Guaranty: Non-Recourse

  • Expand

    High Leverage Custom Program for Quick Close Bridge Financing of Multi-Family Buildings; Los Angeles, CA

    November 6, 2019

    Transaction Description:

    George Smith Partners arranged acquisition bridge financing for a value-add, multi-family property in Los Angeles, California. One of our more experienced multi-family owner/operators has become experienced in sourcing opportunities to quickly close on troubled multi-family properties. His ability to act quickly often allows him to become the chosen Buyer, purchasing these Properties at a large discount.

    GSP worked with a local REIT to develop a program that includes a first and second mortgage of up to 85% of acquisition price. The loan is designed to provide the same surety of close as an all-cash buyer, with no appraisal needed and the ability to close as fast as 5 business days. The loan is non-recourse and has no prepayment penalty.

    These loans are cheaper and easier than equity partners and allow the Sponsor to take advantage of smaller opportunities using very little cash. With less than $400,000 of equity, the Sponsor was able to purchase a $2,015,000 building. At close the Subject Property was worth close to $2,500,000, allowing the Sponsor to quickly flip the Property. This is the third time GSP has used this custom created loan program to procure financing for our client.

    Blended Rate: 8.00%
    Loan to Purchase Price: Up to 85% (83% on this transaction)
    Term: 12 Months
    Guaranty: Non-Recourse

  • Expand

    Low Debt Yield, 3.77% Coupon Permanent Financing for the Acquisition of a Recently Developed Grocery-Anchored Retail Center; FL

    September 25, 2019

    George Smith Partners successfully placed $14,690,000 in non-recourse, ten-year fixed rate first mortgage debt for the acquisition of an approximately 54,000 square foot, 96% occupied, recently developed retail center in Western Florida. An investment-grade grocery anchor on a newly signed long-term lease comprises approximately 75% of the collateral. The anchor has no sales history at the Property and is not required to report sales going forward. GSP sourced a lender to provide full term non-recourse Interest-Only financing subject to a low 7.35% debt yield. The 65% leverage loan has a 3.77% fixed coupon over the ten-year term.

    Rate: 3.77%, Fixed
    Term: 10 years
    Amortization: Full Term Interest-Only
    Loan to Value: 65%
    Prepayment: Defeasance
    Lender Fee: None

Don't Miss a Fact,
Sign Up for FINfacts!

FINfacts is a weekly newsletter highlighting recent financings and economic insights.

Subscribe Here