FINfacts™ XXIV – No. 245 | November 25, 2020

MARKET RATES
Prime Rate 3.25%
1 Month LIBOR 0.14%
6 Month LIBOR 0.25%
5 Yr Swap 0.46%
10 Yr Swap 0.88%
5 Yr US Treasury 0.39%
10 Yr US Treasury 0.88%
30 Yr US Treasury 1.62%

INTRODUCTION


RECENT TRANSACTIONS
$44,000,000 Non-participating Bridge Financing for Industrial Acquisition and Reposition, 95% LTC, West Coast
Building

Rate: LIBOR + 3.95% with a floor on LIBOR of 50 basis points
Term: 3 years interest only
Amortization: Two 1-year extensions with 30-year amortization
LTC: 95%
Guaranty: Recourse, Completion of deferred maintenance and Cap-Ex, “bad” acts and environmental
Lender Fees: 1% origination and 0.25% exit fee

Transaction Description:

George Smith Partners successfully arranged $44,000,000 in non-recourse, non-participating bridge financing at 95% of cost for the lease-up and repositioning of a 5-property, 650,000 SF, industrial complex located on the West Coast. The Sponsor purchased the complex vacant and the seller carried the first mortgage for 4 months. From the open of escrow with the Seller, to the closing of this loan, there was over 82% of the available space leased making up 77% of rent with letters of intent for the remainder of the space. Although this was during the COVID-19 pandemic, and there was considerable deferred maintenance and capital expenditure required to get the properties rent ready, the space leased quickly due to the Sponsor expertise and relationships and a strong submarket.

The loan provides funds for the deferred maintenance, the capital expenditures, the tenant improvements, leasing commission and carry until the tenants are in and paying rent. Additionally, there is an earn-out of $2,000,000 after the 18th month as the asset has other potential value-add attributes.

Advisors

Gary E. Mozer
Principal/Co-Founder
Portrait Robert Horton
Portrait Dorian Aftalion
Vice President
Portrait Phillip Mozer
Analyst

Cash-Out Bridge Loan for Medical Office Building, Laguna Niguel, CA
Building

Rate: 5.90%
Term: 12 months
Amortization: Interest Only
Loan Fee: 1.0%
Prepayment: Open
Options: Two 6-Month Extensions; 0.50% Fee
Personal Guaranty: None

Transaction Description:

George Smith Partners secured a senior bridge loan for a 21,303 square foot office building in Laguna Niguel, CA. The Subject Property was unencumbered; hence the entire loan was comprised of cash-out proceeds which the Borrower is utilizing for a separate project they are developing. The loan represents approximately 60% of the original purchase price and was structured with a 1-year initial term with interest only payments. The loan allows for open prepayment and carries two 6-month extension options.

The loan was collateralized by a recently renovated 21,303 square foot office building. The building had recently upgraded the facade, landscaping, parking lot, entrance, lobby, bathrooms, HVAC and other interior finishes. A new roof and solar system had also been installed. The building was 47% occupied at loan funding. The first-floor single tenant had vacated at lease expiration several months prior leaving limited debt service coverage and unusually high vacancy compounded by other COVID related issues.

GSP selected a lender that was able to move incredibly quick to accommodate the Borrower’s development timeline. The Lender’s credit department approved the loan one-week post submission and did not require an appraisal to close. The Lender underwrote to the stabilized asset value, closed with no debt service reserve and no personal recourse.

Advisors

Shahin Yazdi
Principal/Managing Director
Jonathan Lee
Principal/Managing Director
Jarod King
Senior Vice President
Matthew Kirisits
Vice President
Kyle Redmond
Assistant Vice President
Paul Monsen
Vice President

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HOT MONEY
Non-Recourse Permanent Financing

George Smith Partners is working with a national balance sheet lender providing fixed-rate, long term permanent financing for stabilized property types including self-storage, industrial, apartments, and office/medical office in primary and secondary markets. The lender will also consider retail – grocery/drug anchor with more than 50% of tenants open/operating for loans from $4,000,000 to $25,000,000. With the ability to advance 65% of cost, pricing is in the low/mid 3’s for terms ranging from 7-10 years.

More Hot Money ›

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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