Attention Apartment Owners! Portfolio Lender

$145,450,000 Senior (5.28% Fixed, 2 Years Interest Only) and Mezzanine Acquisition Financing for 3 Property Retail Portfolio in Southern California: George Smith Partners, Inc. has arranged 90% of cost non-recourse senior and mezz financing for this 3 property retail portfolio. This is the largest fixed rate financing in GSP history! It is the 5th major retail acquisition transaction we have done with these clients. We started underwriting in mid January and funded in early May. GSP prepared equity models, negotiated with both lenders, reviewed 100+ estoppels, prepared all SNDA’s, worked with respective municipalities resolving various zoning and development issues, interfaced with adjacent property owners to clear title issues, etc.

Property #1: Non Traditionally Anchored (sporting goods store, fitness center and movie theater); 375, 627 s.f.; 42 tenants; 97% occupied. Built in late 1960’s with 1992 rehab; single level with 3 main buildings and 11 pads in a lineal configuration. Located in Northern Orange County.
Property #2: Grocery Anchored; 187,604 s.f.; 29 tenants; 98% occupied. Built in early 1980’s with anchor expansion in 2002, 4 buildings in U shape with 2 pads. Located in Southern Los Angeles County.
Property #3: Large community retail center (with some office) located next to mega-mall anchored by sporting goods store, includes “restaurant row” serving residents and local office submarket; 179,368 s.f.; 35 tenants; 97% occupied.

Senior Debt Terms: (1) Rate: 10 year T + 1.43% (5.28%); (2) Term: 10 years; (3) Amort: Interest Only for 2 years, then 28 year amort., (4) LTV: 80%; (5) DCR: 1.20; (6) Lender Fee: Par; (7) Non-recourse; (8) Not cross collateralized.

Mezzanine Debt Terms: (1) Rate: 12% accrual, 9% pay current; (2) Term: 10 years; (3) Amort: 30 years; (4) LTV: 90% (including senior); (5) DCR: 1.05 (including senior); (6) Lender Fee: 1.5%; (7) Non-recourse. (Steve Bram, Shlomi Ronen, Keith Padien, Noah Hahn, David R. Pascale, Jr.)

Property: 20 year old 85% leased (at application), 25 tenant, 75,660 s.f., 3 building industrial property (with fast food restaurants!) located across the street from the under construction 8 million s.f. Dominguez Technology Center about 1 mile east of Cal State Dominguez Hills and the new Home Depot/Galaxy Sports Complex. Special Requirement: Managing member required a loan with no personal recourse or carveout recourse because of his limited interest in the syndication. History: Borrower purchased the property in 2000 using syndicated funds from high net worth individuals. GSP obtained a $2,250,000 non recourse acquisition loan for the purchase. Average industrial gross rents at purchase were 40% below market and 87% of the leases turned in the first 24 months. Borrower used his investors reserve funds to rehab portions of the property and rolled rents to market and re-leased about 30% of the space with fast food restaurants at premium NNN rents to take advantage of the void of restaurants in the area. Mid-week daytime activity in these restaurants is phenomenal. Average rents have increased from $0.40 psf at purchase to $0.85 psf at closing. Loan Amount: $5,560,000 with an initial funding of $4,760,000 and an earn out of $800,000. Interest paid only on funds disbursed. Purpose: Cash out to pay down investor interests and establish an earn out as rents continue to increase and additional tenants are signed up to occupy the vacant space. Terms: (1) Rate: (a) 1st 5 years fixed at 5 year CMT + 2.50% with 5.50% floor and then rate is reset at the same index and spread for another 5 years or (b) Floating every 6 months at 12-MAT + 2.50% with a 4.50% floor. Note: Borrower may choose to float for 2nd 5 years after being fixed for first 5 years; (2) Term/Amort: 10/30; (3) LTV: 67%; (4) DCR: 1.25; (5) Prepayment: 5,4,3,2,1 in years 1-5 and years 6-10 using the fixed rate option (open last 6 months); no prepay penalty if the 12-MAT option is used in years 6-10; (6)Lender Fee:.50%; (7) Recourse: None; No personal or entity recourse for anything including carve outs; (8) Earn Out: Up to 24 months from funding; up to $800,000 of additional funds based on 12 months trailing NOI starting 6/1/03. (Gene Brunkhardt)