$5,016,000 Mix-Use Refinance Mini-Perm

Transaction Description:  George Smith Partners arranged the no-cash-out refinance of a 91,405 square-foot mixed-use multi-tenant office, retail, and self-storage property located in Van Nuys, California. Proceeds were used to retire the current debt that ballooned. The five-year term was sized to 72% LTV and is fixed at 5.0%; amortized over 25 years. There is no prepayment penalty.

Challenge: The property had questionable proforma revenue resulting from short-term leases with weak tenants. Below market rents impacted the property valuation and debt coverage covenant. Office vacancy was high with no new leasing prospects at the time of funding. The existing loan had come due last year and was extended once with no further extensions possible. The multiple mixed-use combination made it difficult for the appraiser to properly value the property.

Solution: GSP identified a portfolio lender who understood the mixed-use configuration. Loan proceeds were maintained by reinforcing the desirability of the location and future value once cosmetic upgrades are completed and retail rents are rolled to market. A 1.20 debt coverage constraint was negotiated in our term sheet. The appraiser documented that the product mix was a benefit in that it created a unique and positive synergy compared to other properties in the area while diversifying income risk from any singular market segment.