California

George Smith Partners successfully arraigned $12,500,000 of non-recourse debt for the refinance of a newly constructed single-tenant office building in Bakersfield, California. The single-tenant, three-story building is part of a larger development that will eventually become a corporate campus. Initially underwritten to a 65% loan-to-value constraint in order to qualify for non-recourse; the appraised value came in lower than anticipated. George Smith Partners was able to negotiate a modification to the LOI in order to secure the non-recourse aspect of the loan without cutting proceeds. Fixed at 4.24% for 10 years, the loan sized at a 68% LTV and is amortized over 30 years. The lender’s fee was 0.5%. Challenge: The single tenant in the office is an energy company, which caused some concern given the recent volatility in the energy sector. Solution: GSP was able to highlight the long history that the tenant has in the area. Low vacancy rates in the submarket helped ease the lender’s concerns.