West Los Angeles

George Smith Partners placed the 15 year cash-out refinance of a 3-story garden-style office building in West Los Angeles. The loan amortizes over 25 years, is non-recourse, and carries a 4.75% coupon. The resulting 15-year fixed coupon is lower than the 10-year quotes obtained by the borrower prior to engaging George Smith Partners. Challenge: The borrower insisted on the longest fixed rate term available on a non-recourse basis. Life Insurance Companies typically provide the longest fixed rate terms at the most aggressive pricing. This asset, while in an excellent market, does not qualify for Life Company underwriting. The tenant profile of the 60 small tenants made the processing of a cmbs loan untenable with regard to SNDA and estoppel requirements. Solution: GSP tapped their portfolio relationships and identified a bank willing to underwrite and fund a non-recourse loan to 60% LTV. They were comfortable with the borrowers’ experience and ownership history to allow a small return of capital. GSP demonstrated (i) historic occupancy was 95%+ (ii) an extensive waiting list, and (iii) highlighted the SNDA language in all current leases. On the basis of these facts, the Lender agreed to waive all estoppel and SNDA requirements.