- Non-recourse
Transaction Description: Financing closed from start to finish in 10 days. This underperforming retail asset was operating at breakeven cash flow, but carries an incredible potential for redevelopment. Although the Borrower held expressions of interest from numerous potential tenants, no leases were negotiated or executed by funding. The financing allowed the sponsorship to acquire the property from a bank within a compressed timeframe, and included an additional capital funding + interest reserve to support the loan during lease-up through the redevelopment and entitlement process.
Challenge: The Borrower committed significant non-refundable deposits to the seller, mandating the certainty of close. This acquisition required a quick close as the new owners’ business plan included multiple reposition/redevelopment scenarios with both demand and entitlement risk. No “warm-body” repayment guarantee was available for the new financing.
Solution: GSP relied heavily on its relationship with the Lender and access to the primary decision makers. This produced a loan with a mechanism that incentivized the Sponsor to successfully execute the business plan and compensate the Lender for the perceived market risks. The Lender understood the “story”, and quickly evaluated the in-depth market information provided by the Borrower. The Lender and Sponsor worked in good faith without formalized business terms in order to expedite and close the acquisition by the Seller’s drop-dead date. Sponsorship expertise in this market was crucial in securing the non-recourse debt.
