Transaction Overview
George Smith Partners successfully placed the bridge financing to facilitate the acquisition of a 10-acre, mixed-use property \[130,000 SF industrial/40,000 SF retail\] in Northern California. The three building, 75% occupied property suffered from passive ownership with no professional management or leasing, yet maintained high occupancy prior to the recessions, a key indicator of its leasing potential.
Challenge: The property has an outstanding environmental issue requiring further remediation that was not resolved by closing. Multiple significant tenants have given notice to vacate, which will reduce occupancy to 40% by the end of the year. The Borrower also required an entity-level guarantor structure.
Solution: GSP drew on its extensive lending relationships to source a capital provider comfortable with the strong entity-level guarantor, the Sponsor’s expertise, and the property’s leasing potential. GSP highlighted the quality second generational space and a prime central location between two international airports and a major seaport. Though the Sponsor had not resolved the environmental issue prior to closing, GSP fully vetted the potential exposure with the lender upfront, and established a cost range estimate. GSP worked with the lender in structuring a reserve containing objective criteria for releasing the funds. This mitigated the environmental risk.
