George Smith Partners maintains relationships with over 900 private and institutional capital providers, suitable for a broad variety of transactions and relationships. GSP sources debt from local, regional, national and international individuals and institutions based on the structure of the loan request, region of the country and product type of the collateral. While the majority of our relationships are “institutional” and prefer larger transactions, we also maintain dialogs with smaller national and local capital to customize transactions for the best possible execution.
Our value proposition extends deep into negotiations and loan structuring. In this arena, our services include modeling cash flow; both actual and proforma, while assisting our clients to determine the most advantageous cash flow structure for the evolution of their commercial investment. With billions placed over the +20 year history of our firm for cash flowing and future cash flowing assets, our staff has the expertise to deftly structure and negotiate every type of commercial asset; from operating marinas to the apartment complex in your neighborhood.
Mezzanine debt (also called subordinate debt) is a structured financing product used to increase leverage. It is generally higher risk than senior debt, and therefore demands higher returns.
Mezzanine debt can be secured by a second trust deed, and is therefore subordinate to the senior mortgage, but primes any equity. Mezzanine loans may also be secured by a pledge of partnership interest in the ownership entity. Unsecured mezzanine is treated as preferred equity.
Mezzanine financing is limited by ratios based on the combined senior and subordinate debt. The most important of which include loan principal to property value (LTV), and annual net operating income to annual debt service (DSCR). Subordinate lenders accept some minimal risk to their principal balance, and may be willing to accrue some portion of their interest payments.
The flavors and sources of mezzanine debt are myriad. Designing structured financing is an art form that takes many years of financing experience and access to a multitude of sources. GSP is adept at arranging financing to accommodate unusual needs and higher leverage structures. We have become known for this type of “financial engineering”.
George Smith Partners maintains relationships with hundreds of equity investors, suitable for a broad variety of transactions and relationships. We typically source transactional equity for specific real estate projects, but also raise capital for discretionary funds.
Most of our sources are “institutional”, and prefer large, passive investments. These investors limit their project involvement to asset management and oversight. However, we also maintain contact with small, opportunistic investors that will consider smaller deals and active participation. They usually have development and management expertise in addition to capital, and therefore seek to maximize their returns by deploying both capabilities. Only rarely will GSP “syndicate” equity for a project among a handful of high net worth investors.
Our value proposition extends deep into negotiations and structuring. In this arena, our services include modeling of equity investments and determining investor IRRs based on various waterfall scenarios. With years of practice and billions placed, our staff has the expertise to deftly structure, negotiate, and surface potential risks. We endeavor to set up strong long term relationships that are successful for both sponsor and investor.