Transaction Overview
GSP placed the cash out refinance of a 100,000 square foot creative office portfolio in Southern California. The property consists of 4 buildings and is currently 100% occupied by creative office tenants who occupy spaces ranging from 400 square feet to 24,000 square feet. The non-recourse loan was underwritten to an 8.0% debt yield, fixed for 10 years at 4.49% with a 30 year amortization schedule.
Challenge: There is significant tenant roll within the next six months and 70% of the space rolls by the 4th year. One tenant leases 15% of the net rentable but occupies indirectly through special service agreements. The property requires long term parking leases with affiliated properties in order to meet zoning requirements.
Solution: GSP structured a $500,000 TI/LC & CapEx reserve funded at close to address potential short-term tenant roll. Of those funds, $125,000 is immediately available for Capital Improvements. GSP prepared detailed analysis of the parking and tenant business plans that mapped out the availability versus need/usage of the parking component.
