Transaction Overview
George Smith Partners arranged the refinance and Net-Zero Energy (NZE) renovation financing of a 141,770 square foot industrial/office building in Commerce, California. Totaling 75% of as-completed value, the structured financing consisted of a $4,750,000 first trust deed, a $10,250,000 second trust deed and an unsecured loan of $500,000. The three loans carry a fixed blended rate of 4.62% and self-liquidates over 12 years.
Challenge: The Sponsor initially reached out to GSP with only three weeks before a maturity default on their existing debt. They also requested funds to convert the entire facility to Net Zero Energy, but had not finalized plans or a budget. GSP identified a lender willing to refinance the first trust deed on a short timeline and also commit to funding the projected NZE budget. The lender’s only condition for the rapid closing was that the roof and parking lot be replaced within one year. When the scope of the NZE project and budget ballooned far beyond initial projections, the Sponsor elected to delay the roof and parking lot replacement while researching an alternative financing through New Market Tax Credit and PACE bonds for the expanded project’s scope. After a lengthy delay and once again approaching technical default on the new first trust deed, the Sponsor reached out to GSP to restructure the capital stack.
Solution: GSP successfully negotiated an extension on the technical default and structured new secured capital stack plus an unsecured note to provide the funds necessary to complete the NZE renovation.
