San Diego

GSP successfully placed the $20,500,000 on-book acquisition loan for a 250,000 square foot vacant office and warehouse R&D building with 100% vacancy and no pre-leasing. $10,000,000 of the 65% leverage financing was funded at acquisition, with the remaining $10,500,000 to be future funded for property improvements, carry costs, and tenant allowances. Interest will not be paid on the future funding until disbursement. The floating interest rate is reduced by 50 bps to LIBOR + 2.50% upon property lease-up and stabilization. The 3 year term is open to pre-payment after the 12th month with recourse limited to the top 25% of a capitalized entity. Challenge: Sponsor required a flexible financing structure allowing for a fluid business plan in order to execute either a single tenant or multitenant leasing scenario, based on future market demand. Solution: GSP identified a capital provider able to release funds incrementally to allow Sponsor optionality with the business plan and avoid paying interest on unused funds. In addition to the $10,000,000 initial funding, loan dollars were immediately available at closing for capital improvements, to be funded 50/50 with equity. Lender also funds a percentage of property operating and carry costs going forward. Tenant improvements and leasing commission dollars will be funded upon identification of tenant(s) on a 72/28 basis by the Lender and Borrower, respectively. The loan does not have a re-margin provision until Month 24, allowing Sponsor 24 months to execute the business plan without facing a potential capital call.