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$7,500,000 Cash-Out Refinance Senior and Stand-By Line of Credit

Rate: Senior Loan – Prime + 1%; Line of Credit – Prime + 1.5%
Term: Senior Loan – 5 Years; Line of Credit – 2 Years + Extensions
Amortization: Senior Loan – 25 Years; Line of Credit – Interest Only
LTV: 60%
DCR: Senior Loan – 1.25x; Line of Credit – 1.5x
Lender Fee: 0.75%

Transaction Description
George Smith Partners placed a $7,500,000 refinance of two special use, unanchored multi-tenant retail properties located in the City of Industry. A sizable return on equity (142% of total capitalization) was permitted due to our Sponsors’ 20 year ownership and management history of the asset. This transaction was structured as senior debt funded at $4,300,000 and a $3,200,000 crossed-collateralized stand-by line of credit. Both vehicles were funded by the same capital source. Due to the special-use tenant mix, the senior debt was sized to 60% LTV and priced at Prime plus 1% fixed for five years and amortized over 25 years, while the credit line will float at Prime plus 1.5% for two years. Interest is only paid on funds drawn. There is no prepayment penalty for either tranche.

Special use tenancy at both properties is subject to a CC&R review by the local municipality at the end of 2017. One tenant who occupies 20% of the net rentable square feet went dark and vacated the property during the due diligence process.

GSP identified a regional lender that understood the market and was eager to build a relationship with our Sponsor, who has impressive real estate holdings, a long track record of execution and significant financial strength. By demonstrating that market rents and occupancy levels still allowed for significant debt service coverage, GSP was able to assist the lender in gaining comfort with the properties’ specialty-use and uncertain occupancy future.

Related Financings

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    April 10, 2014

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    Transaction Description:  George Smith Partners successfully placed the 65% loan to purchase (67% loan to value due to a low appraisal) acquisition financing of a Pep-Boys auto repair store in New York State. The borrower acquired the property as the replacement property in a 1031 tax deferred exchange. The 20 year amortized term is fixed for 5 years at 5.0% prior to being recast for the second 5 year term at then prevailing rates. A step-down prepayment was structured to provide for future flexibility.
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    Rate: 5.0% Fixed for 5 Years
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  • $4,400,000 Refinance of a Special Use Retail Center

    October 10, 2013

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    Transaction Description: Ameet Chagan placed the $4,400,000 refinance of a 22,480 square foot neighborhood retail center in Southern California. The rate was locked at application fixed for 7 years at 4.625% on a 25 year amortization. The mixed-use tenancy included a church as well as more traditional in-line tenants.
    Challenge: The subject property’s largest tenant is a church on a month-to-month lease. Property owner lacked sufficient liquidity and net worth for most institutional capital providers. The Sponsor was rate sensitive and required a portfolio lender with flexibility in servicing the loan.
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    Transaction Description:  GSP placed the cash-out refinance of a specialty retail center located on the south shore of Lake Tahoe, California. The 18,000 square foot property was acquired in 2002 and includes 300 feet of lake frontage, a man-made harbor and a 300 foot pier. The 10 Year loan is non-recourse and priced at 5.89%, amortized over 30 Years. Proceeds were tied to a 9.5% debt yield on this special use asset.
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