$35,000,000 Cash-Out Refinance Anchored Retail with Fitness; Southern California

Transaction Description:

George Smith Partners originated a non-recourse cash-out refinance of a Southern California retail center co-anchored by a shuttered fitness center. This location was a top performer in the national chain prior to being mandated to close due to Covid restrictions. Although the fitness center is now opened and operating to partial capacity, the application and due diligence were completed while still dark, as was an adjacent restaurant. The application did not call for holdbacks or reserves for funding as most of the remaining collateral was operational and cash flowing. Sized to 55% of appraised pre-Covid value, the five-year, non-recourse loan was priced at 3.25% on an interest only basis. Debt Coverage Ratio was underwritten on actual collections rather than leased income. A small tenant improvement allowance was reserved at close to address future leasing activity. There is no TI/LC reserve taken from the monthly debt service.