Transaction Overview
George Smith Partners secured $11,000,000 of permanent financing for the refinance of a single-tenant medical office building located in Chula Vista, CA. The Sponsor purchased the 23,000 square foot building completely vacant in 2018. Shortly after acquisition, they secured a lease with a local medical user for the entire space. The transition of use from traditional retail to medical office required a large capital improvement budget that the Sponsor wanted to recoup through permanent loan proceeds.
The refinance allowed the Sponsor to fully recapitalize their initial equity investment after completing their business plan. The strength of the Tenant in the market, long-term lease (15 years), and a healthy rental rate all contributed in getting the capital provider comfortable with providing funds in excess of costs.
The 10-year financing carries a fixed interest rate of 3.875% for the entire term and amortizes over 30 years. The financing, sized to 70% LTV, provides two years of interest only payments and is open to prepayment at any time without penalty. The three general partners in the deal are providing recourse which is split evenly between each of them.
