Rate: Fixed for 3 Years at 7.325%, then Floating
Term: 5 Years
Amortization: 1 Year Interest Only followed by 25-Year Amortization
Prepay: 3, 2, 1, 0%
DCR: 1.25x at Stabilization
George Smith Partners secured a $4,760,000 acquisition loan for a vacant 12,300 square foot retail property in Los Angeles, CA. The Lender provided proceeds of 70% of the acquisition price at a rate of 7.325%, fixed for the first three years. The loan was closed with a regional bank.
The Property was delivered as a vacant shell. The buyer intends to lease it to restaurant and retail tenants. Given the current market volatility, most of the other quotes were from private money lenders at much higher rates. To support the purchase price and future valuation, an extensive set of sales and lease comps were provided to the lender and the appraiser. The Borrower’s track record of success with similar properties demonstrated their ability to execute their business plan.
September 29, 2021
George Smith Partners secured $4,030,000 of bridge financing for the acquisition of retail shop space in Tempe, AZ. The collateral encompassed approximately 30,000 sf of in-line retail space and an outparcel pad within a larger anchored retail center. At purchase, the collateral was only 44% occupied. The Sponsors believe that a new leasing strategy will be able to drive tenants to the Center. The Property is located on one of the corners of a major intersection that sees over 65,000 cars per day and is less than two miles from Arizona State University, one of the largest universities in the country. The capital provider structured the financing to have a holdback for future property improvements, leasing costs, and interest payments. Priced at 30-Day LIBOR + 7.00%, the non-recourse loan was sized to 68% of total cost and carries a two-year term with extensions. The Lender was also able to include partial releases if only a portion of the collateral is sold.
Rate: L + 7.00% (0.25% LIBOR Floor)
Term: 2 Years with Two 6-Month Extensions
Loan-to-Cost: 68% LTC
Amortization: Interest Only During Initial Term
Guaranty: Non-Recourse with Standard Carveouts
August 4, 2021
George Smith Partners successfully secured $25,500,000 in non-recourse bridge financing for a destination dining and retail center nestled in the heart of Los Angeles’ Koreatown. The 42,000 square foot property is one of Koreatown’s most trafficked retail centers and maintained stable collections throughout 2020. The recapitalization retired the existing debt and provided future funding for capital expenditures, tenant improvements and leasing expenses with no new equity required from the Sponsor.
The Los Angeles-based sponsorship team acquired the Property in 2016, identifying the asset as a generational heirloom and a unique opportunity to create substantial value. Despite market volatility and COVID-19 related challenges in the retail sector, GSP was able to identify a lender with local knowledge and expertise that understood the importance of this asset within the context of the neighborhood, and the long-term viability of the business model.
All Terms Confidential
June 23, 2021
George Smith Partners successfully arranged bridge acquisition financing for a 6-unit retail property in Los Angeles, California. The Subject Property took a major hit with rent collections during the Covid-19 pandemic and was operating below market conditions. GSP identified a capital provider who was able to offer an aggressive rate and terms, required no holdbacks of any sort, required no deposits to be held at their branch and provided an open prepayment penalty structure that allowed the Sponsor flexibility once the Subject Property is stabilized and seasoned.
Term: 7 years
Amortization: 25 years
Prepayment Penalty: None
Minimum Interest Payments: None
Guaranty: Full recourse
Banking Relationship/Deposits Required: None
June 17, 2020
George Smith Partners arranged $13,500,000 in quick-close, cash out, bridge-to-bridge financing for a multi-tenant retail center in Echo Park, California. The Sponsor approached GSP with intentions of taking out their existing lender due to an issue with lease approval for a cannabis tenant. In order to purchase an out-parcel on the Property, the cannabis user needed a lease in place so it could obtain a license from the local jurisdiction. If approvals were not granted, the Sponsor would have the ability to break the lease. GSP identified a non-bank lender who was comfortable approving a lease on a space which may never be occupied. The Lender’s flexible prepayment structure allowed the Sponsor to execute their business plan as the cannabis tenant planned to acquire an out-parcel on the Property after receiving approvals from the City. The first trust deed was sized to 60% of value with no hold back requirement for interest reserve or capital expenditures. The non-recourse, interest only loan does not carry any prepayment penalties. The Sponsor plans to take out the loan within 12 months with long-term fixed rate debt.
Term: 12-month term with one 12-month extension option
October 23, 2019
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.
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.
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
Multi-State Bridge Loans: $172,300,000 National Portfolio Non-Recourse Bridge Financing; 36 Properties in 17 States
November 6, 2014
Transaction Description: JJay Brooks successfully arranged $172,300,000 of bridge financing for a portfolio of 36 properties spanning 17 states (from Louisiana to Alaska) that had been mired in complex litigation for several years. Assets included regional malls, office buildings, industrial properties and mobile home parks located in secondary and tertiary markets. Although the initial debt was being serviced, the litigation resulted by a loan maturity default during the recession when the capital markets where devastated and the existing lender would not negotiate an extension. Settlement of the litigation required certainty of close with a “drop-dead date” that would have resulted in significant borrower losses had the financing not closed. The final debt structure involved two unrelated lenders with multiple layers of senior and mezzanine debt, structured over five loans. Prepayment and yield maintenance flexibility was a critical component of the structure that allows the borrower to extract properties from the financing in the coming years. Generally speaking, the loans were priced with either a floating (with an interest rate cap) or fixed interest rate with six months to 24-months of yield maintenance. Leverage varied depending on the stability of the asset and the term was structured to provide adequate time to liquidate several assets and identify permanent debt for others. Challenge: Numerous property specific complexities such as ground leases, environmental issues and major capital and tenant improvement projects required underwriting and loan structuring. The stigma associated with properties (and borrowers) involved with litigation associated with a default disqualifies many lenders from considering the financing described. The portfolio size, location and varied property types also create additional complexity and challenges. Certainty of close was mandatory. Solution: GSP identified the lending platforms and professionals that could underwrite, appropriately price and structure the cash flows. The solutions required to solve all the challenges are too long to list although the financing required the cooperation and collaboration of an incredibly talented group of professionals on both the lender side and the borrower side of the financing. All parties came together to solve problems and pull from a depth of knowledge. Rate: Various Non-recourse Advisor: JJay Brooks