$25,500,000 Interest Only Bridge Financing for an Industrial Park Reposition in St. Louis, Missouri
Rate: One-Month LIBOR + 2.40%
Loan to Cost: 100% of the projected CapEx/TI/LC costs to stabilization with no additional borrower equity required
Loan to Stable Value: 70%
Term: Three years plus two one-year extension options
Amortization: Two years interest only; 25-year amortization thereafter
Lender Fee: 0.625%
Prepayment: 1% of the outstanding loan balance months 1-12; Open thereafter
George Smith Partners secured $25,500,000 in bridge financing collateralized by a 72% occupied, multi-tenant, 55-acre industrial park in St. Louis, Missouri. Sized to 70% of as-stable value, proceeds from the interest-only bridge loan were used to refinance out two existing permanent loans, cover closing costs and fund 100% of future costs, including CapEx and leasing costs, associated with the final reposition of the 100-year-old industrial park. The borrower had previously upgraded a portion of the Property, including replacing obsolete structures with new tilt-up buildings, however wanted to also take advantage of recent lease expirations within the functionally obsolete suites. The financing secured by GSP will allow the Borrower to modernize and upgrade the structures in an effort to further improve the park and capitalize on St. Louis’s strong industrial market fundamentals, and the Borrower will benefit from the resulting higher rents and additional cash flow after debt service without having to invest additional equity.
The Property’s existing improvements vary with respect to age, functionality and uses, which made it difficult for the borrower to define a specific suite-by-suite future funding budget. In line with the flexibility required by Borrower’s business plan, the Lender allowed the future loan funds to be pooled in lieu of allocating the capital budget on a suite-by-suite basis since the re-tenanting costs will vary based on each future tenants’ specific use. The loan also provides flexibility with interest paid only on drawn funds plus a nominal 1% prepayment penalty during only the first 12 months of loan term allowing payoff at par thereafter.