Healthcare

GSP arranged financing for a mixed-use, stabilized retail and office property in a prime Santa Barbara location. The garden-style property has a mix of retail, office, and medical office uses. The Sponsor requested maximum loan proceeds for alternative uses. The 70% LTV, non-recourse loan is fixed for 10 years, amortized over 30 years. Challenge: Although the Sponsor owned the subject property for over 20 years, most lenders were uncomfortable with the short term leases, ranging from 1 to 3 years. The aggressive loan amount underwrote to an 8.8% debt yield, below what many lenders will accept for commercial real estate. Solution: GSP demonstrated that historical occupancy exceeded 90% over the last 10 years, allowing lenders to gain comfort with the short lease terms. The local market strength and high Santa Barbara barriers-to-entry added additional comfort to justify the lower debt yield.