Western U.S.

George Smith Partners placed the $5,000,000 refinance of a 1079 unit self-storage facility located in the Pacific Southwest. George Smith Partners was engaged as the in-place debt opened to prepayment and our Sponsors sought to reduce their current 6.75% coupon while recapitalizing their partnership. Sized to 48% of appraised value, this financing returned over $500,000 of equity to the Sponsor. Funded as a Prime plus execution, the loan was synthetically fixed with a SWAP and locked at 4.35% for ten years, amortizing over 25 years. As a Prime based loan, there was no prepayment penalty although there is the potential for a SWAP breakage fee. Challenges: The self-storage property is in a sub-market that has been slow to recover from the economic downturn, historically operating below break-even coverage. To achieve requested proceeds and cover the existing debt, capital providers needed to look past historic cash flow and focus on trailing 3 month collections. Solutions: George Smith Partners promoted the significant operational turnaround since the instillation of a new management company. George Smith Partners then identified a portfolio lender that vetted and underwrote the new operator, allowing them to model the recent cash flow to secure the requested proceeds. A higher than expected appraised value and Sponsors’ financial strength further solidified the return of equity.