Rate: 3.625% Fixed
Term: 3 Years
Guaranty: Full Recourse
George Smith Partners successfully arranged a take-out loan of $9,542,000 for a recently renovated, two-story, flex property just south of downtown Los Angeles. The total collateral consists of a 40,417 SF building and three separate surface parking lots totaling 86 spaces. The Sponsor, a repeat client, acquired the Property two years ago as part of a three-property portfolio that GSP arranged the financing for. Those proceeds were used to complete an adaptive reuse of this former industrial building into creative office and warehouse. The Sponsor moved its headquarters to this location and occupies over half of the space. The remaining units for lease attract tenants priced out of the more expensive downtown LA and Culver City areas.
There were significant challenges during the construction period, including a total loss fire on one of the properties within the acquired portfolio, the impact of COVID-19 on the Sponsor’s businesses and a maturing loan with the acquisition lender. GSP leveraged its strong relationships and financing expertise to work out extension and repayment solutions with the existing lender while identifying a new capital source to provide favorable terms for owner-user financing. The loan amount turned out to be well above the acquisition price and renovation costs.
Assistant Vice President
April 14, 2021
George Smith Partners arranged $2,450,000 in SBA Owner-User Acquisition (90% Loan-to-Purchase Price) financing for an office/industrial flex property located in North Hollywood, CA. The Sponsor approached GSP to assist with the acquisition of the Property to relocate their company headquarters. The Sponsor required a flexible loan with high leverage and a low interest rate. The Sponsor had already entered escrow at the time of approaching GSP and was on a strict timeline with only 60 days to close. GSP quickly and successfully structured a first trust deed from a bank as well as an SBA B-piece to secure 90% of the purchase price. GSP was able to provide the Sponsor with a 25-year term, with the first 10 years fixed at a blended rate of 3.80%. The flexible prepayment structure is equal to 5-5-4-4-3-3-2-2-1-1. The high leverage loan allows the Sponsor to use equity towards the continued growth of their business. Thanks to our long-standing relationship with the SBA Certified Development Company (CDC), GSP was able to meet the Sponsor’s deadline and close this transaction in under 60 days.
$44,500,000 Heavy Bridge Construction Financing to Add Several Uses to an Existing Office and Warehouse; Secondary Market; San Luis Obispo, CA
April 14, 2021
George Smith Partners arranged $44,500,000 for heavy bridge financing in San Louis Obispo, CA to recapitalize and fund construction for additional uses on an existing asset. The completed Project will include five uses including multifamily, warehouse, office, self-storage, and a brewery. This is among the largest private projects actively in development in the local market.
The Sponsor has been very creative in obtaining the highest and best use for the asset in a supply constrained market. Despite challenges facing construction projects in today’s volatile commodity market, GSP was able to secure a capital provider to structure high leverage supported by the strong market and underwriting.
$61,392,000 Refinance of a 207-Acre, Two Million Square Foot Pharmaceutical Campus in Tri-State Area
April 15, 2020
George Smith Partners arranged $61,392,000 in first mortgage debt for the refinance of a mixed-use office, industrial and lab campus in the Tri-State area (New York, New Jersey, Connecticut). The corporate user developed the campus in phases between 1906 and 2008, and the improvements consist of over two million square feet of laboratory, pharmaceutical manufacturing, office and support buildings including a central utility plant. The user still owns some buildings, and leases others on the campus. The Sponsor purchased the asset in 2015 with a long-term redevelopment goal to create a life sciences destination that will build on the existing laboratory, manufacturing, and office uses. The Property will ultimately feature shopping, dining, meeting and educational experiences as part of a cohesive “work/live/play” community.
GSP sourced a loan from a capital provider that was able to underwrite in-place income with flexibility for an ever-evolving business plan. The three-year, interest only initial loan term is structured as an initial advance of $42,940,000 with the remaining $18,452,000 future funded for approved capital expenditures and tenant improvements/leasing commissions for to-be-leased space. No interest is due on funds until drawn. The loan is open for prepayment at any time subject to a 24-month minimum interest payment.
Term: Three years plus two 12-month extensions
Amortization: Interest Only during Initial Term
Max Loan to Stable Value: 60%
Prepayment: 24 months minimum interest
Lender Fee: 1%
- Advisors: Gary E. Mozer
May 25, 2016
Transaction Description: George Smith Partners successfully placed a high leveraged, non-recourse $22,800,000 refinance for a mixed-use 225,000 square foot warehouse building with a significant office component. The Orange County, California property sits on a 12 acre parcel and was constructed in 1966 and subsequently renovated in 1985 and again in 2001. The 2001 renovation was structured to accommodate a government agency whose footprint occupies 60% of the gross improved square footage. Their build-out consists of 31% office (2-story), 19% air conditioned warehouse, and 50% conventional warehouse. Loan proceeds were allocated to cover additional tenant improvements and lease commissions as this agency recently extended for an additional 15 year term. The remaining square footage is leased to an industrial bakery who has occupied the property since 1989. Their lease rolls during this 10 year loan term. GSP sourced a capital provider who underwrote the tight market constraints and agreed to push proceeds below an 8.0% debt yield without layering on mezzanine debt. Fixed at 4.92% for 10 years, the non-recourse loan is interest-only for 2 years before rolling into a 30 year amortization schedule.
July 17, 2015
Transaction Description: George Smith Partners arranged the refinance and Net-Zero Energy (NZE) renovation financing of a 141,770 square foot industrial/office building in Commerce, California. Totaling 75% of as-completed value, the structured financing consisted of a $4,750,000 first trust deed, a $10,250,000 second trust deed and an unsecured loan of $500,000. The three loans carry a fixed blended rate of 4.62% and self-liquidates over 12 years.
Challenge: The Sponsor initially reached out to GSP with only three weeks before a maturity default on their existing debt. They also requested funds to convert the entire facility to Net Zero Energy, but had not finalized plans or a budget. GSP identified a lender willing to refinance the first trust deed on a short timeline and also commit to funding the projected NZE budget. The lender’s only condition for the rapid closing was that the roof and parking lot be replaced within one year. When the scope of the NZE project and budget ballooned far beyond initial projections, the Sponsor elected to delay the roof and parking lot replacement while researching an alternative financing through New Market Tax Credit and PACE bonds for the expanded project’s scope. After a lengthy delay and once again approaching technical default on the new first trust deed, the Sponsor reached out to GSP to restructure the capital stack.
Solution: GSP successfully negotiated an extension on the technical default and structured new secured capital stack plus an unsecured note to provide the funds necessary to complete the NZE renovation.
Term: 12 Years
Amort: 12 Years
- Advisors: Gary M. Tenzer
January 15, 2015
Transaction Description: J. Jay Brooks successfully arranged the $45,600,000 refinance of a 2.1 million square foot industrial/office property in Northern California. The asset is a beautifully redeveloped military base and the financing was coordinated to allow the borrower to acquire the fee interest in the land. Cash flow was recovering from a downward trend caused by the recession, however diversified sustainable income from a variety of business types – from very small to very large – gave the Sponsor the flexibility to provide space as the local market demanded. Fixed for 10 years at 4.33%, the non–recourse loan is interest only throughout the term. There are no reserves beyond tax and insurance impounds.
Term: 10 Years
Amort: Interest Only