| | Marty Stolzoff | The Commercial Real Estate Industry lost a true pioneer this week with the passing of Martin Stolzoff. Marty co-founded The Real Estate Conference Group with his wife Barbara 25 years ago. His organization grew to become the most popular series of real estate conferences in Southern California, hosting more than 1,800 industry leaders over 50 conferences. GSPs co-founder George Smith was a staple at the Stolzoff conference series having chaired or key-noted dozens of events. A tribute to this industry veteran may be found here. | | Transactions of the Week |  | |  | | Transaction Description: | | $10,000,000 Bridge Loan For 170,000 SF Mixed-Use Acquisition George Smith Partners successfully placed the bridge financing to facilitate the acquisition of a 10-acre, mixed-use property [130,000 SF industrial/40,000 SF retail] in Northern California. The three building, 75% occupied property suffered from passive ownership with no professional management or leasing, yet maintained high occupancy prior to the recessions, a key indicator of its leasing potential. |
Challenge: The property has an outstanding environmental issue requiring further remediation that was not resolved by closing. Multiple significant tenants have given notice to vacate, which will reduce occupancy to 40% by the end of the year. The Borrower also required an entity-level guarantor structure. |
Solution: GSP drew on its extensive lending relationships to source a capital provider comfortable with the strong entity-level guarantor, the Sponsor's expertise, and the property's leasing potential. GSP highlighted the quality second generational space and a prime central location between two international airports and a major seaport. Though the Sponsor had not resolved the environmental issue prior to closing, GSP fully vetted the potential exposure with the lender upfront, and established a cost range estimate. GSP worked with the lender in structuring a reserve containing objective criteria for releasing the funds. This mitigated the environmental risk. | | | Rate: LIBOR+2.70% | | Term: 3 Years | | Amort: Interest Only | | LTC: 61% | | Prepayment: Open | | Recourse: Limited to the Borrowing Entity Brokers: Gary E. Mozer, Michelle Lee | | | |  | | Transaction Description: | | $3,200,000 DPO Joint Venture/Recapitalization GSP arranged a new $3,200,000 equity infusion, enabling the Sponsor to execute a discounted note purchase (DPO) of his mixed use/office-retail property, plus an adjacent finished lot. The Clients' loan was in maturity default and in-place cash flow did not support new debt. Depressed market rents made a bridge loan unlikely. GSP assisted with the discount negotiations and structuring of the new ownership, as well as identifying an equity investor willing to underwrite this size of a request in a secondary market. Because a potential major tenant (a trade school), required significant TIs, they only would execute their lease once an entity purchased the property with capacity to pay for improvements. |
Challenge: The building was completed in late 2010 at a cost of $6,000,000, necessitating a bank discount in addition to fresh equity. Identifying an equity partner willing to invest less than the typical $5,000,000 allocation in a secondary market added to the complexity. The sponsor had no liquidity, requiring the partner to post 100% of the cash to purchase. |
Solution: As this process had been on-going for some time, the Bank was realistic in their value expectations. There were few other bidders for the note purchase and our proposal provided them the highest net proceeds and higher certainty of close. GSP located a private equity fund that is not adverse to secondary California markets and focuses on smaller transactions. The equity fund accrued the sponsors management fees to address the liquidity issue and supplement their co-invest. | | | | |  | | | | Southwest Regional Bank – Senior Housing Ground-Up Construction to 70% of Cost GSP is working with a regional bank financing ground-up construction requests for Skilled Nursing, Assisted Living and Memory Care facilities in California and Arizona. Transactions will range from $2,000,000 to $10,000,000 priced in the mid-5% range. Loans typically roll into a 5 year mini-perm upon certificate of occupancy. Non-recourse may be structured upon stabilization hurtles being reached. Other asset types (office, industrial, retail) will be considered with pre-leasing. | | | | Hot Money | Nationwide Non-Recourse Bridge & Mini-Perm Program from $1,000,000 to $10,000,000. GSP is working with a national balance sheet bridge-loan provider advancing up to 70% of purchase price on a non-recourse basis. The LTV will be limited to 65% on refinances and is not subjected to secondary internal underwriting. This capital provider will advance to 100% of good news dollars going forward. Note purchase financing will be considered for performing, non-performing and distressed transactions. Assets should be B quality or better, although sponsor qualifications are less stringent. Pricing ranges from mid-7's to 9% for 3 to 5 years; interest only with one point origination and one point upon exit. | | | 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. | | | In The Press | Co-Founding Partner Gary E. Mozer was recently named one of "5 Pros You Should Know" by National Real Estate Investor. Mr. Mozer's profile and the complete article in the July issue is available on-line here. | |
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