LOS ANGELES, CA (Feb. 28, 2012)—Commercial real estate investment banking firm George Smith Partners has successfully arranged two loans, totaling $25 million in financing for Upside Investments, LP., for its Carriage Square Shopping Center (top left aerial and lower left photo)) in Oxnard, Calif. according to Principal and Managing Director, Steve Bram (middle right photo) and Senior Vice President, David Pascale (middle left photo).
The two permanent loans replaced a construction loan which had allowed Upside Investments to complete a redevelopment of the 173,000 square-foot outdated shopping center. George Smith Partners had previously arranged the original construction financing for the center in November 2010.
Upside Investments Inc. used the original construction loan to redevelop the functionally obsolete 1960’s retail center, including razing most of the structures, repositioning in-line retail space, constructing new space, and creating a 151,000 square-foot retail pad for new tenant Lowe’s. Lowe’s then constructed a brand-new 120,000 square-foot store and 31,000 square-foot garden center on the property.
The permanent loans included a $21 million credit tenant lease financing and a $4 million life company forward commitment. The loans were provided by two different lenders and funded within seven days of each other.
“The combination financing structure allowed our longtime client, Upside Investments, to maximize their proceeds at the lowest possible rates by taking full advantage of the Lowe’s bond lease structure while also financing the noncredit pad income,” explained Bram.
The $21 million credit tenant lease bond financing was provided for the newly constructed Lowe’s. Upside owns the fee and leases it to Lowe’s on a 20-year ground-lease. This financing was arranged through an investment bank specializing in bond placements for large institutional investors. The 20-year loan had an amortization of 20.5 years. The leases’ bond structure and the tenant’s strong credit allowed the investment bank to underwrite to a 1.01 debt coverage ratio.
The $4 million life company forward commitment provided the permanent financing on the center’s retail pads and in-line stores surrounding the new Lowe’s.
The borrower had requested a permanent loan with a six month forward rate-lock to minimize interest rate risk. At the time, all the tenants had fully executed leases in place, but not all were yet operating. The 10-year loan had a 30-year amortization and a 50 percent loan-to-value.
“Steve Bram and David Pascale of GSP provided us with invaluable support during this redevelopment project. They advised us on structure when we first put the property into contract and worked with us through the conceptual planning, lease negotiations, initial construction and permanent financing. Thanks to their expertise, we were able to transform this run-down center into a thriving shopping area for the community,” explained Gary Simons, of Upside Investments, LP.
Contact:
Corynne Randel/ Judith Brower
Brower, Miller & Cole
(949) 955-7940
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