Transaction Overview
GSP successfully placed $7,490,000 of non-recourse, ten-year fixed rate first mortgage debt for the recapitalization of an approximately 80,000 square foot, 95% leased multi-tenant retail property anchored by a regional Hispanic grocer.
The sponsor initially acquired the 1980’s vintage property in 2013 and proceeded to undertake a major renovation and increase leasing from 5% to over 90% with the goal of recapitalizing the ownership structure and placing permanent debt on the asset at stabilization. During the permanent loan diligence process one of the tenants vacated due to a corporate mandate, however GSP and the lender worked with the sponsor to maintain loan proceeds and full term Interest Only payments despite the associated loss of income. The lender was able to partially underwrite income derived from a newly signed lease even though there is a substantial delay between lease execution and rent commencement for the new tenant, and held back tenant improvement funds for the new tenant’s buildout at loan closing.
The 66% leverage non-recourse loan was sized to the greater of a 9.0% debt yield or 1.45x debt service coverage ratio on the 4.61% fixed rate coupon. The 10-year term has Interest Only payments for the entire loan term, maximizing sponsor cash flow.
