$3,500,000 Refinance of a 3-Tenant Industrial Property; Pasadena, CA

Rate: 3.45% Fixed
Term: 5 Years
Amortization: 25 Years
LTV: 44%
Guaranty: Recourse

Transaction Description:

George Smith Partners successfully secured a $3,500,000 permanent refinance of a 3-tenant, 29,000 square foot industrial property in Pasadena, CA. The Sponsor wished to refinance into a lower interest, fixed rate loan as quickly as possible due to the conversion of the existing loan from a fixed rate to a variable rate. GSP obtained a significantly lower rate thanks to the Lender not having a rate floor. This greatly benefited the Borrower in the fluctuating Treasuries environment. In addition, GSP’s strong relationship with the Lender and reliable execution enabled a smooth and timely closing process.

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    $5,000,000 Refinance of a Multi-Tenant Automotive Service Retail Center; Valencia, CA

    January 15, 2020

    Transaction Description:

    George Smith Partners successfully secured a $5,000,000 permanent refinance of a three-building, 8-unit, 20,000 square foot automotive service retail center on a 2-acre parcel in Valencia, CA. The Sponsor had purchased the Property in an all cash transaction in 2019 via 1031 Exchange and wished to recapitalize with a long-term fixed rate loan. GSP leveraged its expertise and strong relationship with a capital provider to execute a low fixed-rate, 30-year fully amortized, partial-recourse, permanent loan. Most importantly, there were no-post closing covenants, including occupancy, which was especially attractive to the Sponsor due to the shorter terms and automotive/specialty related tenancy. GSP was able to get the Capital Provider comfortable with the asset due to its strategic location in the heart of the auto-dealerships corridor, which makes this location quite attractive to businesses in the auto service space.

    Rate: 3.80% Fixed; Adjusts every 5th year
    Term: 30 Years
    Amortization: 30 Years
    LTV: 56%
    Recourse: Partial

  • Expand

    $3,000,000 Permanent Financing for a Ground Lease Single-Tenant Office Building; Irvine, CA

    December 18, 2019

    Transaction Description:

    George Smith Partners successfully arranged $3,000,000 in a cash-out permanent refinance secured by the sandwich leasehold interest in a single-tenant leased office building in Irvine, California. The Subject Property is in the heart of Orange County’s business district and next to the Irvine Business Complex and John Wayne Airport. The neighborhood is in a mature stage with limited amount of vacant land available for new development. The Property consists of three multi-story buildings having 69,474 SF net rentable space.

    The Subject Property is encumbered by a ground lease. The leasehold interest, ground lease, and tenant improvement lease all expire in five years, with no extension options. The non-investment grade tenant has a six year lease remaining and they are not required to provide business financials.

    GSP identified a capital provider able to structure a five year fully amortizing loan. The Sponsor’s considerable real estate track record and financial strength further encouraged the Lender to provide a low interest rate. The recourse loan is fixed at 3.00% with a 5-year term and will be fully amortized in five years.

    Rate: 3.00% fixed
    Term: 5 years
    Amortization: 5 years
    Loan to Value: 44%
    Global DSCR: 1.25X
    Prepayment: 3%, 2%, 1%
    Guaranty: Recourse
    Lender Fee: Par

  • Expand

    $4,100,000 Non-Recourse Cash-Out Refinance, 14-Unit Multifamily Property; West Los Angeles, CA

    October 23, 2019

    Transaction Description:

    George Smith Partners successfully secured a $4,100,000 non-recourse permanent refinance of a 14-unit, multifamily property in West Los Angeles. Loan proceeds were used to pay off the existing variable, higher interest rate bridge loan into a lower interest, fixed rate loan. There was significant cash-out to the Sponsor, who had recently completed an extensive reposition and upgrade of the Property. Due to the Sponsor’s business plan, flexibility and interest only were paramount. As such, GSP worked with the Lender to structure a 5-year fixed rate term with 3 years interest only and a step-down prepayment structure of 3%, 2%, 1%. This structure allows the Sponsor to maximize current cash flow while providing the flexibility of a step-down structure that burns off when the loan begins to amortize.

    Rate: 4.20%
    Term: 30 years; 5 years fixed then converts to floating rate at Libor + 2.25%
    Amortization: 3 Years Interest Only then 30 year amortization
    LTV: 65%
    Minimum DSCR: 1.20x
    Guaranty: Non-Recourse
    Prepayment: Stepdown, 3%, 2%, 1%, open

  • Expand

    $7,800,000 in Permanent Financing for a 247-Unit Apartment Multifamily Project; Indianapolis, IN

    October 16, 2019

    Transaction Description:

    George Smith Partners secured $7,800,000 for the cash-out, refinance of a newly renovated, class B, 246-unit multifamily building located in Indianapolis. The structure allowed the Sponsor to pull out over $2,000,000 in cash and leave in place an affordable grant loan that was awarded to the Property for maintaining a certain number of affordable units.

    The Sponsor is a regional multifamily owner who has a strong relationship with an international bank. The in-place loan was originated by the Sponsor’s relationship bank. There were only three months of results after renovations. Due to the lack of results, the current Lender’s proposed offer to refinance the Property did not give the Sponsor credit for the upgrades and increased rents. It also would have required the payoff of an attractive loan from the City.

    GSP identified a national balance sheet lender that understood the strength of the asset, improvements and experience of the Sponsor. Using our vast experience in understanding this type of asset and proving out the large future increases in cash flow, GSP was able to secure financing that was far superior and allowed for cash-out to the Sponsor. The financing also allowed for the affordable grant loan to remain in place. GSP was able to negotiate no lender fees or prepayment. The loan GSP secured allowed for higher proceeds, cash out, longer term, and an overall lower cost.

    Rate: 4.40%
    Term: 7 Years Fixed / 30 year Term
    Amortization: 30 Years
    LTV: 75.0%
    Guaranty: Recourse
    Prepayment: None
    Lender Origination: None

  • Expand

    $22,367,000 Cash-Out Refinance of 200 Secondary Market Rental Units, CA

    March 20, 2019

    Transaction Description:

    GSP placed the $22,367,000 non-recourse cash-out permanent loan for 200 stabilized units in a secondary California market. This represented a substantial return on equity. Loan proceeds were increased post application as the supportable underwritten net cash flow improved during the due diligence process. Occupancy constantly operated at 98% with future increases forecasted at unit turn. Fixed for seven years at 4.73%, the non-recourse loan is interest-only for two years prior to amortizing over 30 years for the balance of the term.

    Rate: 4.73% Fixed
    Term: 7 Years
    Amortization: Two Years Interest Only; 30 Years Thereafter
    Loan-to-Value: 60%
    DCR: 1.35
    Recourse: Carve-Outs Only
    Prepayment: Loss of Yield
    Loan Fee: 0.50%

  • Expand

    Refinance of Prime Los Angeles Retail Shopping Center; Fixed at 4.715% for 10 Years

    September 4, 2018

    George Smith Partners secured a 10 year permanent refinance loan for a 17,054 SF retail strip mall shopping center located in a prime neighborhood in Los Angeles. The Property has prominent signage and easy access from a highly trafficked intersection. Several of the tenants have been in place for over 20 years and have a loyal and repeat customer base.

    The Borrower sought a low leverage rate and term refinance but required a flexible prepayment penalty in case he decided to redevelop the Property. The Property also has an onsite dry cleaner that does not use a green cleaning process. The presence of the dry cleaner mandated a Phase II report that would require drilling. In addition, the Property has several tenants that operate under short term leases.

    Instead of a Phase II report, the selected Lender estimated a Maximum Expected Loss if environmental remediation were required. The MEL was deducted from the appraised value of the Property. Since the loan still met the Lender’s LTV constraint, no further environmental testing was required. The Lender’s concern about short term leases was addressed by demonstrating that the Tenants had been located in the Property for many years. Overall, the Property had very little turnover due to the Owner’s skillful management. As a result, the Lender was comfortable with the consistency of cash flow at the Property.

    Rate: Fixed for 10 years at 4.715%, followed by floating at 6 month LIBOR plus 2.25%
    Term: 25 years
    Amortization: 25 years
    Prepayment Penalty: 5,4,4,3,2,1
    LTV: 45% maximum
    DCR: 1.5
    Origination Fees: Par

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