Dealmaker: George Smith Partners Arranges $39M for Office, Retail

Michael Tucker mtucker@mba.org

June 08, 2018


George Smith Partners, Los Angeles, secured $39.1 million for California office and retail assets.

In South Pasadena, Calif., GSP Principal/Co-Founder Steve Bram, Senior Vice President Allison Higgins and Assistant Vice President Huber Bongolan Jr. sourced $31.3 million of non-recourse bridge debt to purchase and renovate a multi-tenant Class A office property.

The sponsor purchased the property planning to add value through increasing rents and occupancy, Bram said. "The sponsor purchased the property because of the very strong demographics in South Pasadena and intends to lease to tenants that will pay a premium to be near their clientele. The challenge was convincing the appraiser to use downtown Pasadena rents, since there are no comparable properties in the immediate area."

GSP arranged financing at 85 percent of cost given the expected increase in value over the next three years. The two-year loan priced at LIBOR plus 565 basis points.

The firm also arranged $7.8 million in cash-out permanent financing secured by a shopping center anchored by a national grocery store and discount retailer in Tulare, Calif. The property also has 13 inline tenants, giving it a total rentable area of 82,852 square feet.

Senior Vice President Gilda Rivera and Assistant Vice President Irene Liu arranged the 10-year financing with five years of interest-only amortization followed by a 30-year amortization schedule. The non-recourse loan floats at the 10-year swap rate plus 2.20 percent.

The subject property is encumbered by a ground lease. Located in a tertiary market, the property is 88 percent occupied and 90 percent of tenant leases will roll within the next five years. GSP identified a capital provider comfortable with ground leases and short-term tenant leases by underwriting a reserve for tenant improvements and leasing commissions.

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