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

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

Subscribe Here

$5,300,000 Office Cash-Out Refinance; San Fernando Valley, CA

Rate: 3.0%
Term: 10 Years
Amortization: 25 Years
LTV: 75%
DCR: 1.25
Prepayment: 5,4,3,2,1 open

Transaction Description:

Classified as an owner-user, this multi-tenant office building was being transitioned during due diligence as a new ground floor tenant leased a third of the net rentable but had not taken occupancy due to COVID restrictions. The delayed funding worked to our Sponsor’s benefit as it allowed GSP to restructure the loan for additional net proceeds while reducing the Sponsor’s current SBA pre-payment penalty. All additional proceeds were used to consolidate business lines and other unrecorded debt at a substantially lower interest rate. An early rate lock feature permitted the Sponsor to take advantage of lower indexes prior to the rate bump. This non-SBA execution is fixed for ten years at 3.00% and was sized to 75% LTV and a 1.25 DCR. The loan is open to prepayment without penalty after the 5th year.

Advisors

Related Financings

  • $11,825,000 Cash-Out, Non-Recourse, Permanent Financing with a 3.35% Coupon for a 20-Year Term on an Office Property; Fayetteville, Arkansas

    May 12, 2021

    Transaction Description:

    George Smith Partners successfully placed $11,825,000 ($200/SF) in non-recourse financing that provided substantial cash-out to the Borrower with a 3.35% fixed-rate coupon for a 20-year loan term on a University-affiliated research and technology office building during the COVID-19 pandemic. The loan was creatively structured as a credit tenant lease financing due to the University’s backstopping the Property’s cash flow through a master lease. GSP worked with the Borrower, Lender, and University to amend the master lease so that it satisfied the needs of all three parties to facilitate both the refinancing as well as successful donation of the building to the University’s technology foundation, which occurred concurrently with the close of this financing.

    Rate: 3.35% (fixed) for twenty years
    Term: 20 years
    Amortization: 20-year amortization
    LTV: 68%
    DSCR: 1.05x
    Lender Fee: Par
    Prepayment: Yield Maintenance
    Guaranty: Non-Recourse

  • Cash-Out Bridge Loan for Medical Office Building, Laguna Niguel, CA

    November 25, 2020

    Transaction Description:

    George Smith Partners secured a senior bridge loan for a 21,303 square foot office building in Laguna Niguel, CA. The Subject Property was unencumbered; hence the entire loan was comprised of cash-out proceeds which the Borrower is utilizing for a separate project they are developing. The loan represents approximately 60% of the original purchase price and was structured with a 1-year initial term with interest only payments. The loan allows for open prepayment and carries two 6-month extension options.

    The loan was collateralized by a recently renovated 21,303 square foot office building. The building had recently upgraded the facade, landscaping, parking lot, entrance, lobby, bathrooms, HVAC and other interior finishes. A new roof and solar system had also been installed. The building was 47% occupied at loan funding. The first-floor single tenant had vacated at lease expiration several months prior leaving limited debt service coverage and unusually high vacancy compounded by other COVID related issues.

    GSP selected a lender that was able to move incredibly quick to accommodate the Borrower’s development timeline. The Lender’s credit department approved the loan one-week post submission and did not require an appraisal to close. The Lender underwrote to the stabilized asset value, closed with no debt service reserve and no personal recourse.

    Rate: 5.90%
    Term: 12 months
    Amortization: Interest Only
    Loan Fee: 1.0%
    Prepayment: Open
    Options: Two 6-Month Extensions; 0.50% Fee
    Personal Guaranty: None

  • $3,000,000 Permanent Financing for a Ground Lease Single-Tenant Office Building; Irvine, CA

    December 18, 2019

    Transaction Description:

    George Smith Partners successfully arranged $3,000,000 in a cash-out permanent refinance secured by the sandwich leasehold interest in a single-tenant leased office building in Irvine, California. The Subject Property is in the heart of Orange County’s business district and next to the Irvine Business Complex and John Wayne Airport. The neighborhood is in a mature stage with limited amount of vacant land available for new development. The Property consists of three multi-story buildings having 69,474 SF net rentable space.

    The Subject Property is encumbered by a ground lease. The leasehold interest, ground lease, and tenant improvement lease all expire in five years, with no extension options. The non-investment grade tenant has a six year lease remaining and they are not required to provide business financials.

    GSP identified a capital provider able to structure a five year fully amortizing loan. The Sponsor’s considerable real estate track record and financial strength further encouraged the Lender to provide a low interest rate. The recourse loan is fixed at 3.00% with a 5-year term and will be fully amortized in five years.

    Rate: 3.00% fixed
    Term: 5 years
    Amortization: 5 years
    Loan to Value: 44%
    Global DSCR: 1.25X
    Prepayment: 3%, 2%, 1%
    Guaranty: Recourse
    Lender Fee: Par

  • $11,895,000 Cash-Out Office Refinance; Orange County, CA

    December 18, 2019

    Transaction Description:

    George Smith Partners placed an $11,895,000 cash-out refinance of a 100% owner/user corporate office and assemblage facility in Orange County, California. Excess proceeds were used to address a loan maturity for other unrelated real estate. The other assets are not stabilized but located in primary in-fill Los Angeles markets. Although proceeds were allocated to other real assets our Capital Provider only collateralized the Subject Property. Our Capital Provider sized this request to 65% of appraised value and fixed the rate at 3.88% for 5 years. It was extremely important for our Sponsor to have permanent financing that carries a step-down pre-payment penalty from 5%.

    Rate: 3.88%
    Term: 5 Years
    Amortization: 30 Years
    LTV: 65%
    DCR: 1.20
    Fees: .50 points
    Recourse: Corporate & warm-body
    Prepayment: 5,4,3,2,1

  • $6,870,000 Cash Out Refinance of Medical/Office Building; Los Angeles, CA

    October 8, 2019

    Transaction Description:

    George Smith Partners secured a $6,870,000 cash-out refinance loan for a 43,435 square foot medical/office property in Los Angeles. The loan represented 70% of value and a 1.25x debt coverage ratio. Our team helped the Sponsor secure the previous loan about a year ago at a time when the Property had 20% vacancy. Due to the considerable upside potential, the Sponsor had deliberately chosen a loan with no prepay. Since then, they successfully signed several new leases and achieved 100% occupancy.

    In a survey of the market, GSP found that other lenders were limited by a higher stress rate, an above-market vacancy factor, or a lower LTV constraint. The selected Capital Provider had none of these constraints and was able to provide proceeds $300,000 higher than the rest of the market. The new Capital Provider was also able to provide the Sponsor full credit for the new leases without a seasoning requirement. The Capital Provider also included cash flow from month-to-month tenants and short-term tenants in their underwritten cash flow. As a result, the loan provided a considerable return of equity to the Sponsor. The loan was quoted at a rate of 5 year CMT + 2.55% with no floor. During application, the index rate declined by about 30 basis points. At loan approval, the rate was fixed at 3.98% for 5 years.

    Rate: 3.98%
    Term: 5 years
    Amortization: 30 years
    Prepayment: None
    LTV: 70%
    DCR: 1.25

  • $5,900,000 Cash-Out Financing for Office Building with Short Term Lease, Pasadena, CA

    March 13, 2019

    Transaction Description:

    George Smith Partners arranged $5,900,000 of cash-out refinancing for a 21,220 SF office property occupied by a non-profit tenant in Pasadena, CA. The Property is 100% leased to a non-profit tenant with 4.5 years of remaining on the lease term. The challenge was finding a 5 year loan term option despite the short term nature of the lease.

    GSP was able to exceed the Sponsors expectation with respect to cash-out proceeds which were based on 70% “as is” LTV. The 5-year floating-rate execution is partial-recourse and amortizes over 25 years with a partial cash flow sweep while still providing net cash flow to the Borrower. The floating rate was 370 bps over the 30 day Libor.

    Rate: 6.20%
    Term: 3 year term with two 1-year extension options and 33 bps extension fee contingent upon min 1.20 DSCR, max LTV of 65%
    Amortization: 25 years
    Loan to Value: 70% max LTV “as is”, 65% LTV at each extension
    Yield Maintenance: 24 months
    Guaranty: Partial-Recourse, 25% of the loan amount