$4,900,000 Acquisition/Pre-Development Financing – 90% of Cost

Transaction Description: George Smith Partners secured the senior debt to acquire a 34,263 square foot two-tenant cash-flowing retail asset in Van Nuys, California. In addition to the leased improvements, this parcel provides ample off-street parking. Our Sponsor will re-entitle the site for 120 residential rental units plus ground floor retail. GSP secured a 90% loan-to-cost commitment at 12.0%, 6.5% paid current with 5.5% accrued for the 12 month term.

Challenges: In order to provide for sufficient cash to support the re-entitlement process, our Sponsor requested maximum proceeds. The majority of capital providers top out at 60% of cost until the new entitlements are secured. This re-entitlement process anticipates securing a 3:1 FAR zoning variance.

Solutions: George Smith Partners identified a lender that understood the Sponsor’s experience and ability to execute a re-entitlement plan. In-place cash flow was substantiated with negotiated tenant estoppels and found to be substantially below market, supporting higher loan proceeds and allowing for a fallback should there be a delay in the business plan. A 4.0% reserve of is held by the lender pending obtaining the 3:1 FAR zoning variance.