GSPartners
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Volume XXIII | No. 27 | July 15, 2015
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KEY RATE INDICES
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Prime Rate
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3.25%
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1 Month LIBOR
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0.19%
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5 Yr US Treasury
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1.63%
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5 Yr Swaps
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1.75%
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12-MAT
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0.18%
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3 Month LIBOR
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0.29%
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10 Yr US Treasury
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2.35%
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10 Yr Swaps
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2.44%
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11th Dist COFI
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0.69%
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6 Month LIBOR
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0.46%
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30 Yr US Treasury
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3.14%
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| | | Transaction Description: | | $15,500,000 Refinance and Renovation Financing GSP arranged the refinance and Net-Zero Energy (NZE) renovation financing of a 141,770 square foot industrial/office building in Commerce, California. Totaling 75% of as-completed value, the structured financing consisted of a $4,750,000 first trust deed, a $10,250,000 second trust deed and an unsecured loan of $500,000. The three loans carry a fixed blended rate of 4.62% and self-liquidates over 12 years. |
Challenge: The Sponsor initially reached out to GSP with only three weeks before a maturity default on their existing debt. They also requested funds to convert the entire facility to Net Zero Energy, but had not finalized plans or a budget. GSP identified a lender willing to refinance the first trust deed on a short timeline and also commit to funding the projected NZE budget. The lender’s only condition for the rapid closing was that the roof and parking lot be replaced within one year. When the scope of the NZE project and budget ballooned far beyond initial projections, the Sponsor elected to delay the roof and parking lot replacement while researching an alternative financing through New Market Tax Credit and PACE bonds for the expanded project’s scope. After a lengthy delay and once again approaching technical default on the new first trust deed, the Sponsor reached out to GSP to restructure the capital stack. |
Solution: GSP successfully negotiated an extension on the technical default and structured new secured capital stack plus an unsecured note to provide the funds necessary to complete the NZE renovation. |
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| | | Transaction Description: | | $6,037,500 Acquisition of an Unanchored Rail Shopping Center George Smith Partners arranged the $6,037,500 acquisition loan for the purchase of an unanchored retail center in San Antonio, Texas. Market conditions were mitigated with long-term leases and an extensive history of stable cash flow. The largest tenant is a non-credit medical office user with multiple locations throughout the San Antonio area. Sized to 75% of the acquisition price, the ten year term offers two years of interest only before amortizing over 30 years for the duration of the term. |
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| | | Transaction Description: | | $3,400,000 Non-Recourse Refinance for a Single-Tenant Walgreens George Smith Partners successfully placed senior debt to refinance a standalone Walgreens in the tertiary market of St. Joseph, Missouri. The 14,550 square foot structure is one of three Walgreens serving St. Joseph, a city of 76,000 residents; 55 miles north of Kansas City. This refinance included a recapitalization of the current interest-only loan although required a minimal (1.2%) cash contribution from the Sponsor. Fixed at 4.56% for 10 years, the non-recourse loan was sized to 65% of appraised value and amortized over 25 years. |
Challenge: The Sponsor purchased the property in 2005 with 10 year full-term interest-only financing, and therefore enjoyed strong cash flow during that time but did not amortize the loan. This location was experiencing declining store sales due to competing Walgreens in the St. Joseph area. Walgreens corporate had announced that they were closing 200 stores in the United States during the marketing process. |
Solution: GSP reached out to Walgreens, and learned that a new management team had recently been installed and was actively turning around the store’s performance. Jonathan Lee coordinated a lender visit to the Property with Walgreens’ management that ultimately led to a favorable outcome in loan committee. The Sponsor was able to secure 10 year non-recourse financing, amortized over 25 years without a significant Sponsor contribution to mitigate the prior interest only loan. |
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| | | | Forward Rate Lock From $1,000,000 Treasuries and SWAPs are in flux as Greece moves to resolve their cash crisis, placing a strain on borrowers and underwriters as they size debt coverage constrained commercial loans. GSP is placing fixed rate debt on stabilized assets with a non-Life Insurance portfolio provider funding forward rate locks to 12 months for loans from $1,000,000 to $10,000,000. Multifamily and multi-tenant commercial assets in major metro-markets are leveraged to 75% of appraised value for loan terms to 15 years, amortized over a 30 year schedule. Flexible step-down prepayment options may be structured to match a borrower’s investment strategy. A 2% refundable deposit is required for locks in excess of 60 days as is a small spread-premium based on loan and lock terms. |
| | | If you have an inquiry regarding George Smith Partners' commercial real estate financing, please contact your GSP representative or Todd August, Chief Operating Officer, at (310) 867-2995 or TAugust@GSPartners.com |
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©2015 George Smith Partners, Inc. DRE # 00822654 FINfacts is an ePublication of
George Smith Partners, Inc. For Promotional Purposes Only. All Rights Reserved.
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