California

GSP successfully placed the cash-out refinance ($10,000,000 cash out) of two twin, mid-rise, Class B- retail & office towers located adjacent to Downtown Los Angeles, California. The 348,561 sf buildings house an 80,000 sf department store and two stories of executive suite office space. The 10 Year non-recourse loan sized to a 9.1% Debt Yield and priced at SWAPs + 300, 4.70% at funding, amortized over 30 Years. Challenge: The Class B asset quality and location eliminated most portfolio lenders from consideration. Over 60% of the building is occupied by a non-credit tenant, whose lease expires six years into the loan term, presenting a substantial turnover risk for any capital provider. An 8,000+ sf tenant un-expectantly went dark weeks before closing. Solution: GSP mitigated the asset quality, location and roll-over risk by proving the in-place cash flow as below current market rates. The anchor tenant agreed to extend their lease beyond the loan term prior to funding; that in conjunction with their financial strength along with a long strong building operating history added comfort to the underwriter. GSP structured a $1,000,000 earn-out reserve accessible to the Borrower upon releasing the 8,000 sf ground floor retail space.