Transaction Overview
George Smith Partners arranged the 45% LTV, $1,450,000 non-recourse refinance of an 11,704 square foot Santa Barbara office building. The rate & term loan (no cash out) is fixed for six years at 4.50% before floating at 2.90% over the 6 Month LIBOR index. The total term of the loan is 10 years, amortized over 25 years.
Challenge_:_ Through various entities, the owner effectively occupied 68% of the total GLA, presenting an owner/user scenario. The complex ownership structure and tenant’s sporadic revenue model made traditional owner-user financing very difficult to obtain. The sponsor required non-recourse debt, typically unavailable for owner-user transactions.
Solution: George Smith Partners identified a capital provider who was able to overcome the challenge of financing an owner-user transaction with investment property underwriting. GSP highlighted the financial strength of the sponsorship and their commercial real estate experience. This added comfort to the lender’s credit committee, who agreed to limit individual recourse to standard non-recourse carve-outs.
