Los Angeles–based commercial real estate capital-markets advisor George Smith Partners has arranged $18.032 million in non-recourse acquisition/bridge financing for a portfolio of multi-tenant office properties in Orange County, California, on behalf of the sponsor, a full-service commercial real estate investment and operating company based also in Orange County. The financing was arranged by George Smith Partners’ SVP Alina Mardesich and assistant VP Joseph P. Cannizzaro II.
The portfolio includes four newly acquired office properties, along with a fifth office building already owned by the sponsor. Loan proceeds will be used to renovate and reposition the assets strategically and to maximize the value of the portfolio, driving yields for the sponsor and its investors.
George Smith Partners secured the loan at a rate of 3.75 percent plus one-month LIBOR for a term of three years with two one-year extension options. The non-recourse loan is interest-only during the initial term and then moves to an extended 30-year amortization schedule. The loan was priced at 66 percent of cost and 53 percent of the asset’s stabilized value with favorable release pricing that allows for not only maximum refinance/exit opportunities but also returns.
“This portfolio represents a rare value-add opportunity in the tightening Orange County office market,” Mardesich says. “With office occupancy rates steadily rising and asset prices reaching new highs, many investors are looking toward both mid-rise and cost effective low-rise properties. The opportunity to acquire and improve a portfolio of under-performing assets is well-timed by the sponsor.”
The overall portfolio is currently 85 percent occupied and located in the cities of Santa Ana, Anaheim and Lake Forest. “By capitalizing on the strength of the market, the value-add potential in the portfolio, and the sponsor’s solid expertise, we were able to successfully secure competitive financing that met the needs of the borrower and the lender,” adds Mardesich.