Transaction Overview
George Smith Partners secured $11,600,000 of refinance loan proceeds with a national balance sheet lender for 74,911 square feet of office space in the San Gabriel Valley, approximately 25 miles east of downtown Los Angeles. Acquired by our Sponsor two years ago, several capital providers questioned the spike in value without the benefit of a significant capital upgrade program. The property had several vacant suites at the time of the Sponsor’s purchase. At the time of the refinance, over 80% of the leases were rolling within 5 years. GSP demonstrated that the Sponsor had added several new leases since acquisition, including an urgent care center and a retail bank branch. Our Sponsor successfully signed the new leases at market rents while re-signing existing tenants at higher rental rates. Rollover risk was reduced by the low leverage loan request and the sponsor’s excellent tenant retention record. Ownership is structured as Tenants In Common (TIC). Our capital provider accepted the TIC borrower structure and only underwrote individuals with ownership over 20%. Fixed at 3.6% for five years, the loan was sized to 60% of value and will amortize over 25 years. Prepayment is yield maintenance. There was no origination fee and the portfolio lender paid for all third party reports including title and escrow.
