Transaction Overview
Bryan Shaffer and Jon Shapiro placed a complex quick-close refinance for a San Francisco asset in monetary default and pending foreclosure. The 47,000 square foot office/warehouse industrial building is located in the South of Market District of San Francisco. Vacant at funding, there was no cash flow generated from the real estate. Once the project is re-leased, the overall value is anticipated to increase by more than 50% based on market rate metrics. Funding occurred one week prior to foreclosure. Our Sponsor was not required to contribute new cash equity to the loan although the lender did fund an $800,000 re-tenanting reserve. The non-recourse loan is fixed at 7.9% for 6 months and does not carry a pre-payment penalty or exit fee.
Challenge: The current mortgage was in default and weeks away from foreclosure. There was no income to cover operating costs and the Sponsor had significant financial issues. No lease LOIs were in hand and TI funds were not available to be invested into the reposition.
Solution: GSP quickly conducted a detailed market study and researched sales and lease comps to establish a suitable reposition plan. Sales comparables supported a much higher asset value on a per square foot basis. Sized to 60% of stabilized value, this transaction closed within 5 days from our engagement.
