Office

GSP successfully placed the 100% note acquisition financing for a single tenant owner/user distressed asset that was in bankruptcy. The prior senior note was retired and replaced with a new capital structure at close. The Borrower was placed in default by original lender and the deed of trust was sold through an auction company to a third party who forced the Borrower to file BK or lose his equity in the 1985 vintage West Covina office building. The two year term loan is priced at 9.99% and is Interest Only. Lender legal fees were capped at $6,500. Challenge: The originating institutional lender sold the note to a third party at the first indication of non-performance without consideration to the equity in their collateral. The third party had no intention of working out a repayment program and was pursuing judicial foreclosure to gain access to the asset. Without many options, the Sponsor proceeded to file bankruptcy to save his equity. The court did not look favorably at the distressed situation and chances of the bankruptcy standing were slim. Solution: Due to the type of asset, age and location, George Smith Partners secured financing to pay off both the first and second deed of trust and have the bankruptcy dismissed. Both the first and second lien holders were paid in full without any discount. Certainty of execution was vital since the court was ready to grant a release from stay if the lender could not fund on time.