California

George Smith Partners successfully placed the acquisition financing for a 28,545 square foot unanchored multi-tenant retail center in Palmdale, California. The property is well located in an established retail corridor with a high occupancy history. Sized to 73% of cost, the 10-year term is fixed at 4.625% for 5 years before rolling to a LIBOR based floater. There is no prepayment during the term of the loan. Challenge: Palmdale has been one of the last markets to recover from the economic downturn. Retail leasing in this market is challenging with average vacancy above 20% for most centers. Several capital providers offered 50% of purchase or less. The initial appraiser under-valued the property due to poor selection of comparable properties and unsupported assumptions. Solution: GSP identified a community bank that had recently originated a similar loan in Palmdale and accepted GSPs analysis of the strength of this location, its’ long history of +90% occupancy and expertise of the borrower. The lender agreed with GSP’s assertion that the appraisers’ assumptions were unsupported and ordered a fresh appraisal. GSP demonstrated the viability of the local sub-market and positive attributes of this asset that supported this arms-length sale price. Sponsor competency and fresh cash equity to close cemented the lenders’ commitment to fund as applied for.