Transaction Overview
GSP successfully placed a $12,000,000 non-recourse bridge loan for the acquisition of a 108,000 square foot grocery anchored community retail center located in North San Diego County, California. The 80% loan to cost bridge loan consisted of an initial funding of $10,400,000 (82% loan to “as-is” value) and a future funding of $1,600,000 to fund 100% of budgeted tenant improvements, leasing commissions, and capital improvements.
Challenge: Approximately 25% of the collateral is leased to a under-performing local tenant with significant contractual rent bumps. Sponsor saw an opportunity for future cash flow upside given interest in the space by investment grade retailers as replacement tenants, however many lenders didn’t like the uncertainty of the current cash flow. The loan had to be structured to provide the funds to re-tenant this space in the event that the local tenant vacates, despite the fact that the current lease goes through 2017.
Solution: GSP identified a lender willing to provide maximum leverage on the acquisition and future fund both immediate CapEx to increase the property’s “curb appeal” and tenant improvements and leasing commissions if/when the local tenant vacates. This portfolio lender placed emphasis on the strong real estate fundamentals and the Sponsor’s management expertise and retail relationships in order to support the value creation strategy and allow for high leverage non-recourse debt.
