Transaction Overview
George Smith Partners placed the refinance of a single tenant office building leased to the County of Los Angeles. The current lease had four years remaining on the term prior to lease-options. The current loan was sweeping most available cash flow to pay down principal. The Borrower requested a term loan that would allow cash flow after debt service.
Challenge: The single-tenant nature of the asset and shortness of the remaining term ruled out CMBS and LifeCo term options. The size of the loan request precluded most local and regional banks from reviewing the request. The Borrower had also requested a fixed rate term beyond five years, outside of what most banks will offer.
Solution: GSP identified a local portfolio lender who understood this agency’s requirement to be physically located in this market. The agency was well established, having a long history at this location. GSP conducted a broad market search for similar assets and could not identify a similar building within this trade area – providing the lender with comfort that the tenants’ future options were few. The lender concluded the risk of non-renewal was very low.
