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$7,600,000 Permanent Financing on a 120,000 sf Shopping Center; Northern California

Rate: 3.73% Fixed
Term: 10 years
Guaranty: Non-recourse except for Bad Act or Environmental
Lender Fee: Par

Transaction Description:

George Smith Partners successfully arranged $7,600,000 in permanent financing for a non-traditional anchored shopping center in Northern California. The Big Lots and Dollar Tree anchors had short terms remaining on their primary leases and they both had exceptional health ratios (occupancy cost/total sales). The other two non-credit anchors are doing well. During the Covid-19 pandemic, our Sponsor lost a restaurant tenant and provided rent relief for some of the other tenants. Today, all the tenants are currently paying their rents in full.

Advisors

Related Financings

  • $14,000,000 3-Years Interest Only Permanent Financing for 150,000 SF Shopping Center with Non-Credit Grocer; Tertiary Market, Northern California

    April 14, 2021

    Transaction Description:

    George Smith Partners successfully placed $14,000,000 in permanent financing on a Northern California non-credit grocery anchored center amidst the COVID-19 pandemic. Capital markets were wary of financing retail in general but were specifically concerned with tertiary markets and the recent bankruptcy of Chuck E. Cheese. Although tenant sales information was not required to be reported, they were anecdotally strong for the diverse arrangement of large tenants including Chuck E. Cheese. They affirmed their lease, even as COVID-19 was at its peak. Two tenants were closed due to the California directives and mandates. Capital providers were uncertain of what the post-pandemic environment would look like and how retail centers would be impacted in the long run.

    GSP was able to ensure competitive pricing and proceeds based on having a best-in-class sponsor and strong and diverse anchors. Although interest rates climbed over 60 basis points during the diligence, the Capital Provider did not change loan proceeds.

    Rate: 3.45%
    Term: 10 Years
    Amortization: 3 Years Interest Only, then a 30-year amortization
    Prepay: Yield Maintenance calculated until last 6 Months which are open with no penalty
    Guaranty: Non-recourse except for “bad acts” and environmental

  • $6,790,000 Permanent Cash Out Financings for Walgreens and Jack in the Box; Murrieta, CA

    June 10, 2020

    Transaction Description:

    George Smith Partners arranged two loans totaling $6,790,000 in permanent financing with over $1,500,000 cash out for a freestanding Walgreens and Jack in the Box located in Antelope Square Shopping Center in Murrieta, California. Both loans are fixed for 5 years at 2.87%, which is one of the lowest fixed rate financings ever closed by GSP. Just as GSP went into application the impacts of Covid-19 resulted in Jack in the Box ceasing rent payments and many capital providers putting a pause on new deals. GSP was able to negotiate a high leverage, cash out refinance with no warm body for carve-outs. The Sponsor also agreed to hold back principal and interest reserves on the Jack in the Box.

    Rate: 2.87% Fixed
    Term: 5 Years
    Amortization: 30 Years
    Combined LTV: 65%
    Prepayment: 3,2,2,1,0
    Guaranty: Carve-outs to entity, no warm body

  • 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

  • 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

  • $55,000,000 of Permanent Financing for 218,000 SF, Grocery-Anchored Center; Ventura, CA

    July 31, 2019

    Overview:

    George Smith Partners arranged $55,000,000 of long-term debt for a grocery-anchored mixed-use center located in Ventura, CA. The 218,000 square foot property is currently 97.5% occupied and is anchored by Ralphs, CVS, and LA Fitness. Proceeds were used to refinance the existing debt which was comprised of both senior and mezzanine debt and gave the Sponsor ample reserves for capital expenditures and future leasing costs. The non-recourse financing was sized to 65% of value and has a fixed rate of 3.87% for the life of the loan. GSP was also able to negotiate interest only for the entirety of the 10-year term.

    Challenges:

    While a majority of the center is retail, the collateral also includes second-floor office space. There were concerns about the leasability of the office suites and depth of the market in regard to future tenants. A portion of the Property is subject to a ground lease with a utility company. The ground lease expires in 13 years, 2032. It encompasses part of the parking lot which had the potential to affect our parking ratio in the event the Sponsor forfeited the collateral. In addition, our full-term interest only was subject to a 65% loan-to-value stipulation.

    Solutions:

    Apprehension over the desirability of the office space was mitigated by showing that the average tenancy of the current office users at the center is over 10 years. This helped to convince the Lender that there was little chance of multiple tenants vacating in succession. While the ground lease expires in 2032, GSP highlighted the fact that the ground lessor is a utility company that should be amenable to future extensions. In discussing with zoning experts, the parking ratio without that portion of the center was determined to be sufficient. By leaning on the Sponsor’s long history with the asset and best-in-class property management, GSP was able to support a value that came in under the 65% LTV threshold, which maintained the interest only component of the financing for the full 10-year term.

    Rate: 3.87% Fixed for Entire Term
    Term: 10 Years
    Amortization: Full-Term Interest Only
    LTV: 65%
    Guarantee: Non-Recourse
    Lender Fee: Par
    Prepayment: Defeasance