Missouri

George Smith Partners successfully placed senior debt to refinance a standalone Walgreens in the tertiary market of St. Joseph, Missouri. The 14,550 square foot structure is one of three Walgreens serving St. Joseph, a city of 76,000 residents; 55 miles north of Kansas City. This refinance included a recapitalization of the current interest-only loan although required a minimal (1.2%) cash contribution from the Sponsor. Fixed at 4.56% for 10 years, the non-recourse loan was sized to 65% of appraised value and amortized over 25 years. Challenge: The Sponsor purchased the property in 2005 with 10 year full-term interest-only financing, and therefore enjoyed strong cash flow during that time but did not amortize the loan. This location was experiencing declining store sales due to competing Walgreens in the St. Joseph area. Walgreens corporate had announced that they were closing 200 stores in the United States during the marketing process. Solution: GSP reached out to Walgreens, and learned that a new management team had recently been installed and was actively turning around the store’s performance. Jonathan Lee coordinated a lender visit to the Property with Walgreens’ management that ultimately led to a favorable outcome in loan committee. The Sponsor was able to secure 10 year non-recourse financing, amortized over 25 years without a significant Sponsor contribution to mitigate the prior interest only loan.