75% Loan-to-Value Non-Recourse Financing for a Newly Redeveloped Two-Tenant Retail Property; Utah

Rate: 4.60% Fixed; coupon reflects 10-year Swap index as of December 2018
Term: 10 Years
Amortization: 30 Years
Loan to Value: 75%
Prepayment: Yield Maintenance
Lender Fee: None

Transaction Description:

George Smith Partners successfully placed $6,750,000 of non-recourse, ten-year fixed-rate first mortgage debt collateralized by a 3.36-acre parcel partially encumbered by a ground lease and improved with a 43,500 square foot retail box formerly occupied by a grocery store. The improvements are newly demised into two spaces 100% leased to a national crafts retailer and regional clothing store, and the collateral also includes two small pads ground leased to a local coffee shop and ice cream parlor. GSP sourced a lender comfortable with providing a 75% leverage permanent loan despite the absence of tenant sales history. Additionally, the Sponsor executed the ice cream parlor ground lease during financing diligence, and GSP worked with the Lender to increase loan proceeds (subject to a lender holdback until tenant opens for business) commensurate with the income attributable to this new lease even though the tenant had not yet built its premises at the time of loan closing.

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Related Financings

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    $3,500,000 in Permanent Financing at 3.28% for Southern California Shopping Center: Oxnard, CA

    January 15, 2020

    Transaction Description:

    George Smith Partners secured a $3,500,000 of non-recourse bank loan to refinance a 21,000 SF shopping center shadow-anchored by a Lowe’s (NAP). The 100% occupied center consists of 4 buildings, 7 tenants, and is located in Oxnard. Tenants are a strong mix of national and regional tenants and includes one longtime local business. GSP worked with a lender that structured the loan term to be coterminous with the loan term of the Lowe’s. This allows the sponsor to have maximum optionality at loan maturity. The new financing lowered the interest rate from 5.10% to 3.28%. The fixed-rate loan was rate locked shortly after application, allowing plenty of time to collect SNDAs and Estoppels. The loan allows sponsor to pay down the balance by 5% in any given year without penalty and features a step-down prepayment.

    Rate: 3.28% Fixed
    Term: 8 years
    Amortization: 30 Years
    Loan-to-Value: 32%
    Guarantee: Non-Recourse
    Prepayment: Stepdown Prepayment (5%, 5%, 4%, 4%, 3%, 2%, 1%, 1%)

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    $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.

    Challenges:
    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.

    Solution:
    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

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    $13,155,000 Non-Recourse Cash-Out Refinancing of a Retail Shopping Center; Orange County, CA

    October 23, 2019

    Transaction Description:
    George Smith Partners successfully arranged $13,155,000 in non-recourse bridge financing for a 20,000 sf shopping center in Orange County, CA. The Sponsor has invested over $10,000,000 in renovating the Property and it now it is currently 91% occupied.

    Challenge:
    The Subject Shopping Center has undergone significant reposition in tenant makeup and revenue. As of the date of funding the Center was 91% leased, but several of the tenants were in the process of building out their TIs and had not moved into the Property. Banks, insurance companies, CMBS lenders and credit unions requested more seasoning from our Sponsor. Debt funds and hard money lenders did not want to provide enough proceeds. The financing was too early for a perm lender who would want to see the seasoned cash-flow, and too late for most bridge lenders who would want to fund the actual construction and renovation without releasing cash out to the Sponsor.

    Solution:
    The Sponsor had many goals which included the reposition of the center, the sale of the center, and financing that allowed the Sponsor to pull cash out to sustain him during the sale process allowing him to receive back some of the value added to the Property. GSP was able to provide a solution for the Sponsor with a Midwest-based debt fund that allowed cash out for working capital of over $3,000,000 in less than 15 days. With GSP’s help, the Lender understood the ultimate value of the Property, was able to get comfortable with the large cash-out and give the Sponsor what they needed to complete the final stages of their plan and sell the Property.

    Rate: 8.9% fixed
    Term: 2 Years
    Amortization: Interest Only
    LTV: 80% / LTC: 90%
    Prepayment: None – 6 month minimum
    Guaranty: Non-Recourse

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    Low Debt Yield, 3.77% Coupon Permanent Financing for the Acquisition of a Recently Developed Grocery-Anchored Retail Center; FL

    September 25, 2019

    George Smith Partners successfully placed $14,690,000 in non-recourse, ten-year fixed rate first mortgage debt for the acquisition of an approximately 54,000 square foot, 96% occupied, recently developed retail center in Western Florida. An investment-grade grocery anchor on a newly signed long-term lease comprises approximately 75% of the collateral. The anchor has no sales history at the Property and is not required to report sales going forward. GSP sourced a lender to provide full term non-recourse Interest-Only financing subject to a low 7.35% debt yield. The 65% leverage loan has a 3.77% fixed coupon over the ten-year term.

    Rate: 3.77%, Fixed
    Term: 10 years
    Amortization: Full Term Interest-Only
    Loan to Value: 65%
    Prepayment: Defeasance
    Lender Fee: None

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    75% Leverage, 3.75% Coupon Non-Recourse Permanent Financing for a Neighborhood Retail Center; Western United States

    September 18, 2019

    Transaction Description:

    George Smith Partners successfully placed a $5,740,000 non-recourse, ten-year fixed rate loan on an 89% leased, multi-tenant retail property, shadow-anchored by Savers and Big Lots. GSP worked with the Sponsor to overcome several environmental issues with the Property. GSP sourced a lender able to achieve 75% leverage, non-recourse financing and structure around the environmental issues. The loan was sized to the greater of an 9.75% debt yield or 1.40x debt service coverage ratio on the 3.75% fixed rate coupon.

    Rate: 3.75%, Fixed
    Term: 10 years
    Amortization: 30 Year Amortization
    Loan to Value: 75%
    Prepayment: Defeasance
    Lender Fee: None

  • Expand

    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

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