Southern California

GSP successfully placed a $13,000,000 commitment to be funded in two tranches; 1) the refinance of an existing first mortgage that was ballooning and 2) provide funds for a Net Zero energy conversion program on a 140,000 industrial building located in Southern California. The first $6,800,000 tranche is priced at 4.95% fixed for the 16 year term. The loan is interest only in year 1 and then is fully amortized over the remaining 15 years. The second $6,200,000 tranche will be used to fund the Net Zero (“NZ”) construction once costs are finalized. \[Net Zero is an energy generation/conservation program designed to generate as much energy as is used by the subject property\]. Priced at 10 Year SWAPs plus 2.30% the rate will be set upon the bank’s acceptance of plans and budget. The second tranche is co-terminus with the first and is fully amortized over 16 years. The combined LTV is 70%. Challenge: The building had debt maturing in 6 weeks from when GSP was engaged. The financing had to both retire the existing debt and provide funds for the NZ construction, even though the scope and costs of the NZ project were not yet determined. Solution: GSP identified a commercial bank willing to bifurcate the loan into two tranches; funding the first tranche on the existing building and essentially agreeing to a construction loan before the costs and scope of the NZ project were known.