Transaction Overview
George Smith Partners successfully placed $16,350,000 in non-recourse bridge debt to renovate and expand a 1970’s vintage Orange County community retail center. The 37,000 square feet of existing improvements will be expanded by over a third to 51,000 square feet. Approximately $6,000,000 of loan proceeds will be used to construct retail space for an investment-grade big box tenant that will account for 65% of the property’s stabilized income. An additional $1,000,000 will be funded for existing tenant improvements and common area renovations. The non-recourse loan is structured with a $2,000,000 construction overage reserve in lieu of a completion guaranty; there is no warm-body repayment or completion guarantee. Sized to 85% of as-is value and 75% of as-stable value, credit was given to the new lease with an anticipated 2017 tenant delivery date. A debt service reserve was also funded to cover the shortfall in interest payments until the tenant begins paying rent.
