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

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

Subscribe Here

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

Rate: 2.75% Fixed
Term: 10 years
Amortization: 5 Years Interest-Only, 25 Years Am Thereafter
Guarantee: Non-Recourse
Prepayment: Yield Maintenance Years 1-5, Stepdown Thereafter

Transaction Description:

George Smith Partners secured $3,450,000 for the refinance of an industrial/flex business park in Southern California. The Property is 66,600 square feet across 6 buildings with 31 tenants. GSP identified a lender that could lock the rate at 2.75% for more than 4 months to allow the prepayment penalty on the existing loan to burn-down. The Lender also agreed to increase the loan amount during due diligence to finance large near-term roof repairs. The loan has a 10-year term with five years of interest- only payments.

Advisors

Related Financings

  • $61,392,000 Refinance of a 207-Acre, Two Million Square Foot Pharmaceutical Campus in Tri-State Area

    April 15, 2020

    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.

    Term: Three years plus two 12-month extensions
    Amortization: Interest Only during Initial Term
    Max Loan to Stable Value: 60%
    Prepayment: 24 months minimum interest
    Lender Fee: 1%

  • Permanent Refinance for a Single Tenant Industrial Building in Los Angeles, CA

    January 30, 2019

    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.

    Rate: 5.15% fixed
    Term: 10 Years
    Amortization: 25 years
    Loan to Value: 54%
    DSCR: 1.25X
    Prepayment: Modified Yield Maintenance
    Guarantee: Recourse
    Lender Fee: 0.25%

  • $5,300,000 Cash-Out Non-Recourse Refinance of an Austin, Texas Flex-Industrial

    June 28, 2018

    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.

    Rate: 5.44% Fixed

    Term: 10 Years

    Amortization: 1 Year IO; 30 Years Thereafter

    Prepayment: Step-down from 10%

    Origination Fee: Par

    Recourse: Carve-Outs