Transaction Overview
GSP successfully arranged the $49,500,000 non-recourse, construction loan for a 65,000 square foot office, retail, and apartment project in Palo Alto, California. The subject is adjacent to Stanford University. The developer received the necessary zone change and entitlements in 2009 but construction was delayed during the market down-turn and the lack of construction financing.
Challenge: The Sponsor required high-leverage, non-recourse construction financing with no additional equity requirement.
Solution: GSP demonstrated the incredible strength and desirability of the Palo Alto office market, one of the tightest in the Country with less than a 5% vacancy and monthly office rents reaching $8.00 psf NNN. The lender understood the value of this location as well as the value of the new zoning obtained in 2009. The lender provided a 75% loan-to-cost, non-recourse financing structure with a 30-month term which utilized the existing cash and imputed equity in the project. The Sponsor only supplied a completion guarantee.
