Term: 5 Years, 1-year I/O
Rate: SOFR + 2.46%
George Smith Partners successfully placed $38,500,000 of floating-rate debt for the cash-out refinancing of a 372,000-square-foot grocery-anchored retail center located in Utah. Fully leased and anchored by tenants like Super Target, Best Buy, and PetSmart, the property boasts a dominant submarket position owing to its diverse assortment of community-oriented tenants and main-and-main location. Additionally, the Sponsor had expertly navigated the difficult market conditions caused by the Covid-19 pandemic, notably through subdividing and re-leasing 45,000 SF of space to credit-rated tenants at a rent 70% higher than the previous occupant, which had vacated due to bankruptcy. Loan proceeds were used to pay off existing debt, fund tenant improvements and leasing commissions, and repatriate Sponsor equity.
Most non-CMBS lenders contacted had sought a full repayment guaranty because of the retail asset class. However, GSP successfully sourced a flexible lender willing to structure recourse with a 25% springing repayment guaranty, which would only come into effect only if an anchor tenant terminated their lease or ceased operations. Furthermore, the Property’s strong sponsorship and well-executed business plan effectively aided GSP to source debt with an extremely competitive rate and significant cash-out at close.
November 2, 2022
George Smith Partners successfully advised on the refinance of two parcels containing a vacant commercial retail building and 90% leased mixed-use residential/retail building in Los Angeles, CA. The senior loan proceeds totaled $9,800,000 of non-recourse financing, approximately 58% LTV. After the COVID-19 pandemic largely stopped retail leasing, the Sponsor responded to changing market dynamics by altering business plans to re-entitle the vacant retail parcel to multifamily. Negotiating an LOI for the sale of the mixed-use residential building, the Sponsor required a bridge loan to pay off the existing bridge debt and carry both parcels until the completion of entitlements and eventual sale.
GSP had to strategically market the opportunity given a weak, Covid-related retail leasing market and relatively complicated business plan. With deliberate advising of GSP, the Sponsor was able to achieve fixed, non-recourse financing despite a fully vacant building.
Term: 12 Months
Rate: 7.75% Fixed
September 14, 2022
George Smith Partners secured a $15,400,000 loan commitment for the refinance of a 381,754 square-foot, “Curacao” office and retail building located on the Olympic Boulevard business corridor: one-half mile west of L.A. Live and The Staples Center. To reduce excess proceeds from the refinance, the Sponsor elected to reduce the proceeds to fund only $14,700,000 of the committed amount.
The building had been previously encumbered by a 10-year CMBS loan arranged by GSP. During the past year’s volatile interest rate environment, GSP worked closely with the Sponsor and Lender to provide a loan commitment with a five-month forward rate lock. The goal was to eliminate the Sponsor’s rate risk and enable the pre-payment of the CMBS loan, without paying defeasance, in the “open window” four months prior to its maturity. The 7-year loan was forward rate locked at a 5.04% fixed rate. Without the forward rate lock, the pricing would have been 75 – 100 bps higher.
Several challenges were encountered when discussing the transaction with capital providers. While the property was over 93% occupied, 43% of the space was occupied by both office and retail affiliates of the Sponsor. The retail comprised 23% of the building’s gross leasable area and its location on the ground floor and basement levels made it a challenge for some capital providers concerned about owner/user and retail tenant concentration. However, by highlighting the long-term ownership, unique business strategy, and strong sponsorship, GSP was able to source a lender that was both comfortable and eager to be a part of the refinancing.
Cash-Out 2.94%, $12,025,000 Non-Recourse Permanent Refinance on a 100% Leased Discount-Grocer Anchored Shopping Center; Western States
August 4, 2021
George Smith Partners successfully placed $12,025,000 in non-recourse, cash-out permanent refinancing for a 101,096 square foot discount-grocer anchored retail shopping center in a transitory Pacific Southwest MSA. The tenant mix includes several national credit tenants along with local and regional stores, all of which remained in-place during COVID-19. GSP was able to identify a lender who understood the complexities of retail in a post COVID environment. The non-recourse permanent loan was sized to 65% of value, included 10-years of interest only payments at a fixed rate of 2.94% for 10 years. Lender fee is at par.
Rate: 2.94%, Fixed
Term: 10 years
Amortization: Full-Term Interest Only
Lender Fee: Par
- Advisors: David Stepanchak
June 30, 2021
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.
Rate: 3.25% Fixed
Term: Five Years
Amortization: Interest Only
Loan to Value: 55%
Debt Coverage Ratio: 1.35 assuming 30 Year Amortization
Origination Fee: Par
- Advisors: David Stepanchak
$5,220,000 Refinance for Retail Center; Fixed at 3.50%; Bank Financing Closed During Covid-19 Pandemic; Los Angeles, CA
May 19, 2021
George Smith Partners secured a $5,220,000 refinance loan for a five-tenant retail center located on a major commercial avenue in Los Angeles. The loan is fixed at a rate of 3.50% for 5 years and does not require any holdbacks. The transaction went into application and was closed during the COVID-19 pandemic.
Retail property values have been under scrutiny over the past year and declined in some markets. To substantiate property value, GSP emphasized the Property’s infill location and credit tenants. All 5 of the tenants were considered essential businesses and remained open. The Borrower provided three months of collections data to show that the tenants were consistently paying rent. During the site inspection, significant foot traffic was observed. These factors helped support the appraised value and maintain the proceeds in the loan application.
$11,200,000 Non-Recourse, Cash-Out Bridge Refinance for Two-Story Retail in Koreatown; Los Angeles, CA
January 27, 2021
George Smith Partners secured a $11,200,000 non-recourse bridge refinance with cash-out for a two-story retail plaza in the heart of Koreatown in Los Angeles, CA. Located next to a Metro D (Purple) Line subway station along a very busy stretch of Wilshire Boulevard, the Property is anchored by 7-Eleven and Carl’s Jr. and features a fast-casual food hall on the second floor. However, the food hall has been closed due to COVID.
The Sponsor, a prolific developer and property owner, recently announced plans to replace the plaza with a 17-story, mixed-use apartment tower that includes affordable units and some commercial space. GSP was engaged to source a bridge solution to pay off the existing maturing loan and provide prepayment flexibility once the Project’s entitlements and permits are secured.
GSP focused on the strength of the Sponsor, the bustling and densely populated Koreatown market, home to several large and small-scale projects currently planned or under construction and the Purple Line Extension project which will provide a dependable, high-speed alternative for travel between downtown Los Angeles, Miracle Mile, Beverly Hills and Westwood. The financing closed within 11 days of the term sheet being signed.
All Terms Confidential
- Advisors: John Choi