$3,450,000 in Permanent Financing for an Industrial/Flex Center; Southern California

Transaction Description:

George Smith Partners successfully closed a refinance of a single-tenant industrial building in Downtown Los Angeles with a life insurance company. Given the strong market and property type, GSP arranged very attractive financing that required no on-going reserves of any kind. This was important as the Sponsor did not want the lender to reserve for the lease roll which occurs the same year as the loan maturity. The lender also locked their interest rate at application signing which saved the Sponsor over 65 basis points as rates climbed significantly during processing and closing of the loan.

Transaction Description:

George Smith Partners successfully secured $4,500,000 to refinance a mixed-use office and industrial property in Los Angeles, CA. Our Sponsor had contacted one of his relationship banks to refinance his headquarters building. With the current crisis in lending, they were not able to provide a satisfactory refinance. The Sponsor then engaged GSP to secure financing. In reviewing the Sponsor’s financials, GSP identified significant growth and was able to secure a much larger cash-out refinance of the sponsor’s facility.

Using our relationships and experience, GSP identified an international bank that was able to provide a more aggressive rate and larger proceeds than the other lenders in the market. In 35 days, GSP was able to close this cash-out refinance at a fixed rate of 5.61% for 5 years, with 12 months of interest-only payments.

Transaction Description:

George Smith Partners successfully secured $9,000,000 for the refinancing of two single-tenant assets in Southern California and Colorado. The Southern California industrial property had challenges due to the high dollar per square foot. The Colorado asset had challenges due to the tertiary location. In addition, the tenant for both properties had credit issues.
Despite the risks associated, GSP was able to successfully navigate these hurdles. This execution is fixed at 4.25% for 5 years and was sized to 75%.

Transaction Description:

George Smith Partners arranged $61,392,000 in first mortgage debt for the refinance of a mixed-use office, industrial and lab campus in the Tri-State area (New York, New Jersey, Connecticut). The corporate user developed the campus in phases between 1906 and 2008, and the improvements consist of over two million square feet of laboratory, pharmaceutical manufacturing, office and support buildings including a central utility plant. The user still owns some buildings, and leases others on the campus. The Sponsor purchased the asset in 2015 with a long-term redevelopment goal to create a life sciences destination that will build on the existing laboratory, manufacturing, and office uses. The Property will ultimately feature shopping, dining, meeting and educational experiences as part of a cohesive “work/live/play” community.

GSP sourced a loan from a capital provider that was able to underwrite in-place income with flexibility for an ever-evolving business plan. The three-year, interest only initial loan term is structured as an initial advance of $42,940,000 with the remaining $18,452,000 future funded for approved capital expenditures and tenant improvements/leasing commissions for to-be-leased space. No interest is due on funds until drawn. The loan is open for prepayment at any time subject to a 24-month minimum interest payment.

Transaction Description:
George Smith Partners successfully placed the $1,500,000 refinance of a 22,250 SF single-tenant industrial building in Los Angeles, California. The Property is well located near USC, minutes from the LA garment district and Downtown LA.

Challenges:
The single tenant is a non-credit private label garment manufacturer and the lease is short term expiring in approximately one year. The Property was built in the 1950s, and the contract rent is below market due to functional deficiencies such as clear height and parking spaces as compared to neighboring inventory. Based on the current rent, the Property doesn’t cash flow in the Lender’s credit review.

Solution:
GSP utilized its extensive market expertise and strong lender relationships to identify a capital provider willing to provide a 10-year fixed loan without TI Holdbacks or a Leasing Commission reserve. The Lender allowed an early rate lock at application, insulating the Borrower from rising interest rates. Priced at 5.15% for the 10-year term, the fixed loan was sized to 54% of value, with a 25-year amortization.

Transaction Description:

George Smith Partners placed non-recourse financing to take-out an existing construction loan on a 59,375 square foot multi-tenant flex industrial building located in an Austin suburb.  In addition to paying off the recourse construction loan, the Sponsor received a notable return of equity.  Located adjacent to a residential housing PUD, the commercial real estate is subject to the Homeowners Association’s CC&Rs.  Fixed at 5.44% for ten years, prepayment steps-down from 10%.  Amortization commences after the first year of interest only and is spread over 30 years.

Challenges:

During due diligence, it was determined the CC&Rs were not securitizable without a material modification precluding the HOA from inhibiting specific tenant uses on the subject property.  Our bank ordered MAI appraisal value was below expectations.  One tenant representing 12% of the net rentable went into monetary default and vacated the premises but did not turn the space back to management.

Solutions:

GSP identified a portfolio lender who became comfortable with the use subject to receiving an estoppel from the HOA.  Although the potential remains for future changes/impediments from the HOA board, the lender obtained a high level of comfort that the current uses were grandfathered in and the HOA would not play an active role in their neighbor’s operations.  The Sponsor, Lender and GSP provided additional sale comparables to support a higher value.  The lender agreed to raise their LTV constraint by 3 percentage points to maintain proceeds.  A tenant Improvement & lease commission reserve was funded at close to be reallocated for releasing the dark space.