Rate: 4.57% fixed
Term: 10 years
Amortization: 25 years
Loan to Cost: 91.1%
Lender Origination Fee: None
George Smith Partners arranged $8,740,000 of acquisition financing for an owner user retail property in Los Angeles. The Sponsor had been introduced to GSP after they received a loan cancellation from their direct bank. GSP jumped into the loan process right away and worked with the Sponsor, their CDC and the new Lender in order to ensure closing in a timely matter. The selected Lender that GSP brought in was able to give the Sponsor a much more aggressive interest rate than their direct lender had promised in their LOI. This ended up saving the Sponsor 67 bps on the interest rate and over $240,000 in interest during the first 10 years of the loan.
August 7, 2019
George Smith Partners arranged a $19,900,000 CMBS acquisition loan for the purchase of the Burbank Collection, a 39,000SF retail condominium located in Burbank, CA. The Burbank Collection houses well-known food concepts such as Yard House, Panera Bread, Pinkberry, and Boiling Crab along with Barney’s Beanery and Steak ‘N Shake. The Class-A ground floor retail space underlies 118 residential condominium units, is situated on a pedestrian promenade and is shadow-anchored by the AMC Burbank 16 movie theater, one of the highest grossing AMC theaters in the country.
GSP’s extensive lender relationships allowed for the marketing of this financing to many different banks and life insurance companies as well as CMBS lenders. The most challenging hurdle at the outset with each lender was to make them comfortable with the condominium structure. Prior to the signing of the lender’s loan application, GSP requested that the Lender’s legal counsel engage in a full review of condominium documents to ensure that the Lender would be comfortable with the intricacies of condominium ownership.
After the loan was in application the 10-Year Treasury and Swap indices dropped approximately 40 bps below the rate floor set in the loan application. GSP’s long-term relationship and track record with the Lender gave GSP the negotiating leverage to convince themto drop the rate floor. This effectively split the benefit of the rate decrease with our Sponsor.
GSP obtained maximum proceeds as the loan was sized to 76.5% of purchase price and 75% of value. The all-in interest rate was priced at 157 bps over 10 Yr Swaps and includes three years of interest-only payments.
$14,950,000 Non-Recourse Financing for the Acquisition of a 17-Property Single Tenant Dollar General Portfolio
June 5, 2019
GSP successfully placed $14,950,000 of non-recourse, 14-year (with an anticipated repayment date ten years from the initial closing) fixed-rate debt for the acquisition of 17 newly-constructed freestanding retail buildings 100% leased to Dollar General. The individual assets have 15-year lease terms and are located primarily in tertiary Upper Midwest states. GSP executed the financing concurrent with construction completion and sourced a lender able to provide 75% leverage financing at a 4.52% blended fixed coupon with five years of Interest Only payments, despite an absence of sales history and concurrent tenant lease terms expiring one year after loan maturity. The loan structure also provides the Sponsor flexibility to release properties from the loan collateral in the event of sale after year three of the loan term and allows the Sponsor to release up to 30% of the individual assets from the mortgage collateral and substitute like kind properties through year nine of the term.
$12,790,000 Non-Recourse Acquisition Bridge Financing to Reposition a 120,000 Square Foot Retail Center in Phoenix, Arizona
January 30, 2019
George Smith Partners secured $12,790,000 in non-recourse acquisition bridge financing for the heavy reposition of a 1980s vintage shopping center in the Paradise Valley submarket of Phoenix, Arizona. The value-added property had a vacating grocery anchor tenant, low occupancy rates and below market rents. The Sponsor’s business plan was to acquire the asset with a fitness tenant anchor in tow and then reposition and stabilize the remainder of the center.
Sized to 80% of total project cost, the loan includes a future funding facility to cover tenant improvements, leasing commissions and capital expenditures. The rate floats at 1 Month LIBOR plus 4.25% (approximately 6.75% today) and carries a two year term with two one year extension options. Interest is not charged on the holdback until funds are drawn. The Lender was able to accommodate several changes to the business plan throughout the application process. This included relocating several existing tenants within the center due to a conflict presented in existing tenant leases.
$10,200,000 Acquisition Financing for Two Single-Tenant, NNN Retail Properties Albuquerque & Silver City, NM
December 19, 2018
George Smith Partners successfully placed $10,200,000 of acquisition financing ($5,100,000 each) for the purchase of two single-tenant, NNN-lease Albertsons in Albuquerque (52% LTV) and Silver City (65% LTV). The Albuquerque store measures 65,413 square feet, 7.48 acres, and the Silver City store measures 39,385 square feet, 4.81 acres. Albertsons currently has 12+ years remaining on each of the leases. The Sponsor is structured as a TIC and identified these properties in a 1031 exchange.
To mitigate rising interest rate risk, the Lender locked the rate at application, two months prior to closing. The 7-year loans are amortized over 25 years, include step-down prepayment penalties, and have a fixed interest rate of 5.19%.
December 5, 2018
George Smith Partners secured $8,700,000 of non-recourse, bridge acquisition financing for a 45,000 square foot retail center located in Richardson, TX. The Center, which was built in 1985, has a diverse mix of regional tenants and sits on the corner of two of the main thoroughfares in the area.
The Sponsor purchased the Property with the intent to add value through two approaches: (1) increasing rents for tenants that are rolling and paying below-market rates, and (2) constructing an additional 12,000 square feet on undeveloped land within the parcel. There were complications with parcelizing the existing building and the land, which meant that a single lender needed to fund the entire project. The large renovation and construction budget also resulted in only 41% of the total loan being funded at closing.
George Smith Partners identified a lender that could structure the financing to have two holdback reserves, one for the CapEx and TI/LC’s for the existing space and the other dedicated to funding the construction of the new building. The separate reserves allow the Sponsor to pursue both value-add opportunities simultaneously, which drastically reduces the project timeline and maximizes the Sponsor’s IRR. Our capital source was able to get comfortable with the construction component by requiring 75% of the space to be pre-leased prior to funding.
November 7, 2018
George Smith Partners arranged a $2,795,000 ($267/Building SF) bridge loan to finance the acquisition and re-positioning of a 48% occupied, 10,480 sf strip retail center in Norwalk, CA. The proceeds will be used to acquire the asset and to sub-divide and re-tenant a 6,500 sf, vacant, former automotive space.
The Existing Tenant is paying a rental rate that the capital markets perceived to be at market but below the sponsor’s pro-forma rental rates for the vacant spaces. Furthermore, the Appraiser also concluded a market rate at the lower end of the spectrum. This resulted in a lower appraised value and stabilized cash-flow. The Sponsor had a signed LOI at their pro-forma rental rate in hand, but would not be converted into a signed lease until near the escrow closing date.
George Smith Partners was able to identify operating expenses in the appraisal that could be adjusted down resulting in a higher net operating income and value. GSP was also able to convince the Lender to raise their LTC constraint given the Sponsorship’s track record of successful retail projects. The final result was a loan amount reflective of the Lender’s term sheet.
Rate: Prime + 0.50%
Term: 3 Years
Amortization: Interest Only
Loan to Value: 68.7% LTC
Lender Fee: 0.50%
Guarantee: One fund-level guarantee and two individual guarantees.
- Advisors: Scott Meredith