Transaction Overview
George Smith Partners successfully arranged the $3,970,000 bridge loan for the repositioning of a creative office with ground floor retail in the Wilshire Business District of Los Angeles. The subject property is a historic, multi-story retail/office building built in the 1920’s with great “bones”. Our client purchased the property from a bank while nearly vacant and invested a considerable amount of capital tastefully repositioning it to attract creative use tenants. The property required significant lease up of the retail space. This new execution recapitalized the Sponsor prior to his reaching full stabilization. Loan terms and structures are confidential.
Challenge: Our client sought a return of equity from an asset that was not yet fully stabilized. The shorter lease structure of the creative office space created an underwriting challenge for many lenders. There are few sales comps in the market that mirrored the quality and superior location of this property.
Solution: GSP identified a lender that became comfortable with the sponsor’s track record, the market “story” and gave credit for the significant capital expended to date. GSP demonstrated the merits of the property and its place in a burgeoning arts and creative “corridor” along with the property’s proximity to public transportation. The efforts demonstrated the demand for small office space that provides flexible leases to small business would cater specifically to start-ups, consultants, and artists. The low rate, bank bridge financing featured a LIBOR rate with a very low coupon and provides ample time for our borrower to completely stabilize the building and maximize its value.
