Term: 18 Months with Two 6-Month Extensions
Prepayment: 6 Months Minimum Interest
George Smith Partners arranged a $34,000,000 bridge loan for a newly constructed, “Class A,” Multi-Tenant Industrial Complex in Mesa, AZ. The purpose of the loan is to replace the maturing construction loan with a lower cost bridge financing and to provide an additional one-and-a-half-year runway to complete the Sponsors’ business plan. The 173,000 SF property is currently 66% leased.
The new bridge loan term of eighteen months provides the flexibility to either lease up and exit quickly with a six-month minimum interest requirement or play the field for an extended period.
July 21, 2021
George Smith Partners successfully arranged a bridge acquisition financing for a single-tenant industrial building in Gardena, CA. The Property is 9,300 SF on an approximate 18,731 SF parcel. The previous owner occupied the space, and the building is now vacant. There was an existing environmental issue that limited the pool of interested capital providers. However, GSP leveraged its market expertise and relationships to identify a lender comfortable with the Property and Sponsor, who is a repeat client. GSP secured a 12-month, non-recourse bridge loan at 7.90% fixed with interest-only payments and no prepayment penalty. This will provide the Sponsor time to resolve the environmental issue, lease the Property and season it for permanent financing. The financing closed within 12 days of term sheet issuance.
Rate: 7.90% Fixed
Term: 12 months, with Extension Options
Amortization: Interest Only
March 24, 2021
George Smith Partners secured $5,376,000 of bridge financing for the refinance of a two-tenant industrial building in Fairfield, CA. The Property is favorably located within a mile of three major freeways and is only a 45-minute drive to both San Francisco and Sacramento. The building is currently 100% occupied, but there were cash-out proceeds required to reposition the Property to make it more attractive to potential buyers. The 26,000 SF building also has 95,000 SF of improved yard space adjacent, which is a major draw for the current tenants. GSP was able to secure a lender that could get comfortable with a majority of the income being derived from the yard space. The financing was comprised of a senior and a mezzanine loan. The blended terms provided a 60% LTC priced at 7.43% with a 1.20% origination fee. The 12-month terms provide the Sponsor the ability to execute his business plan.
$44,000,000 Non-participating Bridge Financing for Industrial Acquisition and Reposition, 95% LTC, West Coast
November 25, 2020
George Smith Partners successfully arranged $44,000,000 in non-recourse, non-participating bridge financing at 95% of cost for the lease-up and repositioning of a 5-property, 650,000 SF, industrial complex located on the West Coast. The Sponsor purchased the complex vacant and the seller carried the first mortgage for 4 months. From the open of escrow with the Seller, to the closing of this loan, there was over 82% of the available space leased making up 77% of rent with letters of intent for the remainder of the space. Although this was during the COVID-19 pandemic, and there was considerable deferred maintenance and capital expenditure required to get the properties rent ready, the space leased quickly due to the Sponsor expertise and relationships and a strong submarket.
The loan provides funds for the deferred maintenance, the capital expenditures, the tenant improvements, leasing commission and carry until the tenants are in and paying rent. Additionally, there is an earn-out of $2,000,000 after the 18th month as the asset has other potential value-add attributes.
Rate: LIBOR + 3.95% with a floor on LIBOR of 50 basis points
Term: 3 years interest only
Amortization: Two 1-year extensions with 30-year amortization
Guaranty: Recourse, Completion of deferred maintenance and Cap-Ex, “bad” acts and environmental
Lender Fees: 1% origination and 0.25% exit fee
- Advisors: Robert Horton
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
May 6, 2020
George Smith Partners, on behalf of Stos Partners , arranged $19,775,000 in bridge financing for the acquisition of a specialty flex industrial asset located in Temecula, CA. The Sponsor was able to negotiate a long-term lease renewal for the primary credit tenant, whose term was nearly expired, creating significant value in the process.
The recently purchased industrial building maintains a mix of specialized uses, as well as an additional near-term vacancy for a smaller flex space, posing both an opportunity and a challenge within the markets. The specialized and varied uses of the building, including laboratory rooms, light manufacturing areas and office/distribution space, required costly buildouts with tenant improvement dollars as the primary tenant expanded into additional space, requiring additional structure. Despite strong market fundamentals, the disruption with the COVID-19 pandemic changed the economy overnight. However, the financials and credit profile of this project only grew stronger and more viable with time.
George Smith Partners was able to identify a capital source that understood both the quality of the asset and the ability of the Sponsor to execute on the intended business plan. Amidst a time of great market volatility and economic uncertainty, the Capital Provider held their original pre-COVID structure and terms.
Amortization: Interest Only