California

George Smith Partners successfully arranged refinancing of a 36,882 square foot multi-tenant strip center anchored by Walgreens in La Palma, California. The property is located on a high traffic signalized corner and was completely occupied at funding. Fixed at 4.7% for seven years, the 63% leveraged portfolio loan self-amortizes over 25 years and offers a step-down prepayment. Challenge: The Walgreens lease contains a bifurcated income stream including a development reimbursement for construction of the building that ceases after 25 years, making the income stream difficult to underwrite for lenders and appraisers. Our application structured an interest rate based on a 55% loan-to-value. Solution: Mr. Stein identified a sophisticated lender familiar with similar rent structures and understood how to value property based on this diminishing cash flow stream. Although the appraisal supported a 63% loan-to-value, the lender agreed not to modify the interest rate as a result of the property’s strong operating history, location and the sponsorship of the loan.