Rate: L + 5.05% (5.10% floor)
Term: 3+1+1
Amortization: 24-months I/O, 25-year amortization thereafter
LTV: 76% As-stable loan-to-value
Lender Fee: 1% in / 1% out (waived if CMBS exit through Lender)
Prepayment: 18-months minimum interest with pre-negotiated release provisions for each property and with open prepayment on certain assets identified prior to close
Guaranty: Non-recourse
Transaction Description:
George Smith Partners successfully placed $42,400,000 in non-recourse bridge debt financing, which funded 80% of total project costs for the acquisition and value-add business plan of an off-market, 26-property retail portfolio spread across 19 midwestern and southern states. Although financing retail value-add business plans during COVID is challenging, the portfolio is comprised of a diversified rent roll including 20% of gross potential rent derived from investment-grade tenants. Furthermore, each asset within the portfolio is shadow anchored by strong performing corporate owned Walmart grocery shopping centers.
GSP leveraged its lender relationships and capital markets expertise to source a lender who understood the business plan and product type, who was willing to invest the time and effort to underwrite a large retail portfolio spread throughout 19 different states, and in markets with average populations below 30,000; during COVID.
Related Financings
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$13,155,000 Non-Recourse Cash-Out Refinancing of a Retail Shopping Center; Orange County, CA
October 23, 2019
Transaction Description:
George Smith Partners successfully arranged $13,155,000 in non-recourse bridge financing for a 20,000 sf shopping center in Orange County, CA. The Sponsor has invested over $10,000,000 in renovating the Property and it now it is currently 91% occupied.Challenge:
The Subject Shopping Center has undergone significant reposition in tenant makeup and revenue. As of the date of funding the Center was 91% leased, but several of the tenants were in the process of building out their TIs and had not moved into the Property. Banks, insurance companies, CMBS lenders and credit unions requested more seasoning from our Sponsor. Debt funds and hard money lenders did not want to provide enough proceeds. The financing was too early for a perm lender who would want to see the seasoned cash-flow, and too late for most bridge lenders who would want to fund the actual construction and renovation without releasing cash out to the Sponsor.Solution:
The Sponsor had many goals which included the reposition of the center, the sale of the center, and financing that allowed the Sponsor to pull cash out to sustain him during the sale process allowing him to receive back some of the value added to the Property. GSP was able to provide a solution for the Sponsor with a Midwest-based debt fund that allowed cash out for working capital of over $3,000,000 in less than 15 days. With GSP’s help, the Lender understood the ultimate value of the Property, was able to get comfortable with the large cash-out and give the Sponsor what they needed to complete the final stages of their plan and sell the Property.Rate: 8.9% fixed
Term: 2 Years
Amortization: Interest Only
LTV: 80% / LTC: 90%
Prepayment: None – 6 month minimum
Guaranty: Non-Recourse
