| Transaction of the Week |  | |  | | Transaction Description: | | $8,750,000 Cash-out Refinance on an Acquisition? Not a typo – long-term leaseholds do expire. GSP successfully placed the cash-out refinance of the fee interest as the ground-lease expired and leased retail improvements reverted to the fee owner. Prior to the transfer, the borrower approached the two anchor tenants and had them execute a five year extension as all tenant leases were co-terminus with the ground-lease. The lenders' collateral consists of the fee interest and all improvements. |
Challenge: The borrower did not own the leasehold interest until close of escrow, and therefore did not have access to any historical cash flow, retail sales or a verifiable rent roll. The two anchor lease terms are for five years while all other leases are month-to-month, presenting an event risk five years out. Former recorded leases from non-existent tenants posed title impediments as the borrower had no relationship with those tenants. |
Solution: GSP drew on their extensive capital relationships to identify a Southern California portfolio lender willing to mitigate the reporting shortcomings with the strong location and strength of sponsorship. This lender underwrote the upside potential while becoming comfortable with the low cost of occupancy for the short termed tenants. GSP worked closely with title in tracking down and securing quit claims from prior occupants. | | | Rate: 5.50% fixed | | Term: 5 years | | Amort: 25 years | | LTV: 75% | | Prepayment: 3%,2%,1%,0%,0% | | Lender Fee: 0.5% | | Recourse: Limited to a capitalized entity. Brokers: David Stepanchak, Andrew Sandler | | | |  | | | | No Floor Money Center Bank at LIBOR + 250 A national Money Center Bank is looking to expand their on-book commercial real estate holdings by $500,000,000 and will price down to LIBOR + 250 without a floor on multifamily, office, retail and industrial properties. Initial transactions of $10,000,000 or more will be required for smaller transactions to be considered on a go-forward basis. The floating rate loan does not carry a pre-payment penalty and can be swapped for a fixed coupon. Ground-up construction will be considered with a repayment guarantee. Non-recourse debt is available for cash flowing assets below 65% LTV. Mezzanine debt to 85% of value is permitted from an approved partner. | | | | Hot Money | Construction Mezzanine Financing; $4,000,000 - $15,000,000 to 100% LTV A national capital provider is funding construction mezzanine for ground-up multifamily projects to 90% of cost or 100% of value in primary and secondary markets nationwide. The loans are priced at 12% - 14%. This lender will also selectively consider student housing and retail projects built to a 6.5% return on un-trended rents. | | | 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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