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$80,000,000 Non-Recourse Refinance of a Class-A Trophy Asset Office Building in California

Rate: SWAPS+2.19%
Term: 10 Years Fixed
Amortization: Interest Only
LTV: 32%
Guaranty: Non-Recourse

Transaction Description:
George Smith Partners successfully arranged $80,000,000 in permanent refinancing for a Class A, high-rise, trophy asset office building in a primary market in California. Sized to 32% of appraised value and a 1.78 DCR, the 10 year interest only loan is priced at 2.19% over the 10 year SWAP Rate. The building was situated on an unsubordinated ground lease, which presented challenges. While the property was widely recognized as a trophy asset in the market, the building had low occupancy and above market rents. GSP sourced a capital provider who underwrote the property with an emphasis on gross potential rent as evidenced by Sponsor’s confidence and willingness for occupancy growth with more aggressive pricing of rents. This allowed the lender to get comfortable with the low occupancy along with strong debt coverage on in place cash flow.


Related Financings

  • $5,350,000 Cash-Out Refinance for Owner-User Office Property; Downtown Riverside, CA

    July 7, 2021

    Transaction Description:

    George Smith Partners arranged $5,350,000 in cash-out permanent financing for an owner-user office building located in Downtown Riverside, CA. The Sponsor approached GSP to help assist with the refinance of the Property to help relocate their company headquarters from the east coast. The Sponsor was on a strict deadline with their existing lender, only having 60 days to refinance before the current loan maturity. At the time of the refinance process, the Sponsor was close to completing exterior and interior renovations, including common area upgrades. GSP had to quickly identity a lender who could deliver certainty of execution on short notice, while delivering competitive terms. GSP was able to provide the Sponsor with a 25-year term, and the first 5 years being fixed at a low rate of 4%. The first 12 months are interest only, before converting to 25-year amortization thereafter. There is additional flexibility within the loan structure because there is no prepayment penalty. The cash-out loan allows the Sponsor to use more equity towards continuing to grow their business. Thanks to our long-standing relationship with the Lender, GSP was able to meet the Sponsors deadline and close this transaction within 60 days.

    Rate: 4% fixed for 5 Years
    Term: 25 Years, First 12 Months Interest Only
    Min DSCR: 1.25x
    Prepayment: No prepayment penalty

  • $10,200,000 Refinance of a Multi-Tenant 100% Occupied Office Building; San Diego, CA

    July 10, 2019

    Transaction Description:
    George Smith Partners successfully arranged a $10,200,000 refinance of a 69,552 square foot, multi-tenant office building in San Diego. The permanent recourse financing is fixed at 3.68% for the first five years with a rate reset for the remaining five years. The loan amortizes for 25 years with a declining step down prepay penalty.

    There is rollover risk of approximately 53% of the square footage from the largest tenant, with their lease expiring in three years. Because of this, other lenders proposed limited loan terms of five years or less or simply declined the financing request. Lender’s willing to finance required reserves to mitigate the rollover risk which was unappealing to our Sponsor.

    George Smith Partners worked with a new banking relationship who was able to get comfortable with the rollover risk given the conservative 56% loan to value request. The strength of the Sponsor and longevity of ownership helped the Lender meet the Sponsor’s financing requests.

    Rate: 3.68%
    Term: 10 Years
    LTV: 56%
    Guaranty: Recourse