Don't Miss a Fact,
Sign Up for FINfacts!

FINfacts is a weekly newsletter highlighting recent financings and economic insights.

Subscribe Here

$5,220,000 Refinance for Retail Center; Fixed at 3.50%; Bank Financing Closed During Covid-19 Pandemic; Los Angeles, CA

Rate: 3.50% fixed
Term: 5 yrs
Reserve: None
Amortization: 30 years
Prepayment Penalty: 3,2,1,1,1
LTV: 65%
DCR: 1.25x

Transaction Description:

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.


Related Financings

  • $11,200,000 Non-Recourse, Cash-Out Bridge Refinance for Two-Story Retail in Koreatown; Los Angeles, CA

    January 27, 2021

    Transaction Description:

    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

  • $4,400,000 Permanent Refinance of Two Flex Buildings, Jacksonville, FL

    January 6, 2021

    Transaction Description:

    George Smith Partners successfully arranged a $4,400,000 refinance of two flex buildings, totaling 68,169 SF, in Jacksonville, FL. This was a permanent, recourse loan at 3.75%, fixed for the first 10 years with a rate reset at every 10 years thereafter. This is a fully amortizing 25-year loan. The two buildings are adjacent to each other and offer a mix of flex, office and retail space. Both buildings are currently 100% occupied with minimal impact of COVID-19 on its tenants. The Sponsor, a repeat client, acquired the Property just a month prior and engaged GSP to capitalize on the low interest rate environment.

    Rate: 3.75% Fixed; Adjusts every 10th year
    Term: 25 Years
    Amortization: 25 Years
    LTV: 66%
    Guaranty: Recourse

  • $5,000,000 Refinance of a Multi-Tenant Automotive Service Retail Center; Valencia, CA

    January 15, 2020

    Transaction Description:

    George Smith Partners successfully secured a $5,000,000 permanent refinance of a three-building, 8-unit, 20,000 square foot automotive service retail center on a 2-acre parcel in Valencia, CA. The Sponsor had purchased the Property in an all cash transaction in 2019 via 1031 Exchange and wished to recapitalize with a long-term fixed rate loan. GSP leveraged its expertise and strong relationship with a capital provider to execute a low fixed-rate, 30-year fully amortized, partial-recourse, permanent loan. Most importantly, there were no-post closing covenants, including occupancy, which was especially attractive to the Sponsor due to the shorter terms and automotive/specialty related tenancy. GSP was able to get the Capital Provider comfortable with the asset due to its strategic location in the heart of the auto-dealerships corridor, which makes this location quite attractive to businesses in the auto service space.

    Rate: 3.80% Fixed; Adjusts every 5th year
    Term: 30 Years
    Amortization: 30 Years
    LTV: 56%
    Recourse: Partial

  • $7,200,000 Interest Only Refinance for a Retail Center; Fixed at 3.65% for 10 Years; Vista, CA

    November 13, 2019

    Transaction Description:

    George Smith Partners secured $7,200,000 to refinance a 15-tenant retail center in Vista, CA. The Property, which was purchased by the Sponsor in 2016, was 30% occupied at acquisition. The Sponsor spent the last 3 years repositioning the center and leasing the vacant space to a diverse tenant mix of local businesses. The center is now 100% occupied and is anchored by a local grocer and a national bank. With the original business plan completed, there was a question of whether to sell or hold the asset.

    GSP arranged 10-years of permanent financing that allowed the Sponsor to return a sizable portion of the initial equity investment back to investors. The loan is also interest-only for the entirety of the term, maximizing ongoing cash flow. Sized to 62.5% LTV, the non-recourse financing carries a fixed interest rate of 3.65%. The multiple benefits that the loan provides allowed the Sponsor to forgo the option of a sale.

    Rate: 3.65%, Fixed
    Term: 10 Years
    Amortization: Full Term Interest-Only
    Loan to Value: 62.5%
    Prepayment: Defeasance
    Lender Fee: None
    Guaranty: Non-Recourse

  • $9,050,000 Non-Recourse Cash-Out Refinance for Two Retail Centers; Columbus, OH

    November 6, 2019

    Transaction Description:
    George Smith Partners secured $9,050,000 for the non-recourse, cash-out refinance of two unanchored, multi-tenant retail centers in Columbus, Ohio. The two properties were cross-collateralized allowing the Borrower to benefit from securing a higher leverage loan. The permanent loan is fixed at 4.25% for ten years with 12 months of interest only and a defeasance prepayment penalty structure.

    One of the retail centers had a tenant whose parent company was in bankruptcy proceedings and vacated their space during our loan process. The other retail center, which is newly developed, was in the process of lease up and had a few tenants not yet in occupancy prior to loan closing. The market had very few comparables to support our underwritten value of the Subject Property.

    GSP identified a capital source that understood the strength of the asset, location and the experience of the Sponsor. Based on these strengths and additional market support provided, the Lender was able to offer a cross-collateralized structure, which maximized proceeds at 73% LTV with 12 months of interest only payments. The Capital Provider was also able to fund the loan with a few tenants not in occupancy. This allowed the Sponsor to take advantage of today’s low interest rate environment and eliminate interest rate risk.

    Rate: 4.25% Fixed for 10 years
    Term: 10 years
    Amortization: 30 years
    Prepayment Penalty: Defeasance
    DCR: 1.30x
    Interest Only: 12-months
    Guarantee: Non-Recourse
    Origination Fees: Par

  • Non-Recourse Cash Out Refinance of Retail Strip Center in Los Angeles

    May 15, 2019

    George Smith Partners secured a non-recourse cash out refinance loan for a 12,695 SF retail strip center located in Los Angeles. The loan is fixed at a rate of 4.85% for 10 years and is sized to 65% LTV. The majority of the lenders that were surveyed used a 25 year amortization, but the selected lender was able to use a 30 year amortization. This resulted in a lower monthly payment and greater loan proceeds. The property has one vacancy comprising 11% of the space, which resulted in several lenders limiting their proceeds to the in-place loan amount. GSP pointed out that the space has only been vacant for a few months, and provided historical data showing that the center has consistent high occupancy and long-term tenants. As a result, the selected lender was comfortable providing a non-recourse, cash out refinance loan.

    Rate: Fixed for 10 years at 4.85%, followed by floating at 6 month LIBOR plus 2.5%
    Term: 30 years
    Amortization: 30 years
    Prepayment Penalty: 3,3,2,2,1,1,1
    LTV: 65% maximum
    DCR: 1.35x
    Origination Fees: Par
    Guaranty: Non-Recourse