{"id":1004064985,"date":"2013-01-25T07:31:25","date_gmt":"2013-01-25T15:31:25","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004064985"},"modified":"2022-12-07T01:07:19","modified_gmt":"2022-12-07T09:07:19","slug":"george-smith-partners-secures-185m-in-financing-for-retail-portfolio","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/george-smith-partners-secures-185m-in-financing-for-retail-portfolio\/","title":{"rendered":"George Smith Partners Secures $185M in Financing for Retail Portfolio"},"content":{"rendered":"

By Gail Kalinoski, Contributing Editor<\/em><\/p>\n

\"\"<\/a><\/p>\n

DJM Partners, Inc. has refinanced a four-property retail portfolio in southern California with $185 million in financing arranged by\u00a0the Los Angeles-based real estate investment banking firm George Smith Partners.<\/p>\n

The portfolio loan allowed DJM, a San Jose, Calif.,-based private equity real estate investment group, to lock in long-term, low-rate, fixed-rate financing on the four shopping centers, which are core assets for the company.<\/p>\n

The loans were: $70.6 million for La Habra Marketplace in La Habra, Calif.; $40.2 million for Village Del Amo in Torrance, Calif.; $42.2 million for Montalvo Square in Ventura, Calif.; and $32 million for Lakewood Square in Lakewood, Calif. They will be used to pay off existing senior and mezzanine loans which are due in the next 12 to 18 months, and defeasance costs.<\/p>\n

The properties range from 181,000 square feet to 375,000 square feet and feature tenants such as Ralph\u2019s, Vons, Ross, CVS, Office Max, Regal Cinemas, Cost Plus, LA Fitness, Benihana, El Torito and Red Lobster. DJM purchased Montalvo Square in 2003 and the remaining three in 2004, according to the George Smith Partners team.<\/p>\n

Steve Bram, principal and managing director of George Smith Partners, and David Pascale, senior vice president, secured the loans. They were assisted by Ari Shram, a George Smith Partners analyst.<\/p>\n

\u201cOur decade-long relationship with DJM has included arranging more than a dozen loans for the firm, including the original financing of these assets 8 to 10 years ago,\u201d Bram said in a statement. \u201cFor this portfolio, DJM wanted a fixed-rate portfolio lender that would keep the loans on book for the entire term to simplify their servicing with the lender since these properties have a total of 155 tenants. DJM also requested we structure the financing as four separate loans with no cross collateralization.\u201d<\/p>\n

They secured four uncrossed non-recourse permanent loans at a sub 3.9 percent interest rate. The seven-year loans had a 90-day rate lock with two years interest only and a 30-year amortization. The unidentified lender also allowed DJM to place another $60 million of mezzanine debt on the properties from an institutional investor.<\/p>\n

\u201cWe wanted to recapitalize our core retail portfolio at a time of historically lower interest rates,\u201d Eric Sahn, Sr., DJM vice president and CFO said in a statement. \u201cUtilizing George Smith Partners we were able to expose our properties to a tremendous group of qualified capital providers, and I could not be more pleased at the outcome of this refinance.\u201d<\/p>\n

Bram and Pascale faced numerous challenges in arranging the portfolio loans, including getting a life insurance company to provide the loans as requested by DJM, and getting one lender to agree to refinancing all four properties but as separate loans that would not be cross collateralized.<\/p>\n

\u201cThe client chose to work with a lender that was going to continue to own the loan and not sell the loan,\u201d Pascale told Commercial Property Executive<\/em> as he and Bram discussed details of the deal.<\/p>\n

\u201cThe deal doesn\u2019t necessarily fit into an insurance company right away because some of the properties are not grocery anchored or anchored by a major grocer,\u201d he added. \u201cThe properties are all good properties but it reduced the number of potential lenders.\u201d<\/p>\n

Another challenge the brokers faced was that there may be some repositioning of tenants due to expiring leases.<\/p>\n

\u201cWhile this posed a concern to some lenders, other lenders including the ultimate lender of the deal, were very comfortable with the sponsor\u2019s tremendous expertise in managing large retail assets on a hands-on basis,\u201d Bram said, adding that DJM\u2019s main management office is within an hour\u2019s drive of all four properties.<\/p>\n

Bram said they chose to focus on DJM\u2019s strong retail management experience in showcases to prospective lenders and also keyed in on the properties\u2019 97.2 percent average occupancy rate over the last decade.<\/p>\n

DJM, founded in 1992, provides its own development and asset management services. The company\u2019s West Coast portfolio is valued in excess of $1 billion. The private investment company is known for its aggressive growth strategy and specializes in acquiring undervalued commercial properties in California.<\/p>\n

Another hurdle for the George Smith team was DJM also wanted a lender that would allow them to have mezzanine financing.<\/p>\n

\u201cMany lenders don\u2019t want mezzanine financing behind them, this lender agreed,\u201d Bram said. \u201cOur relationships with the senior people at these lenders allowed us to get the attention we need to focus on the unique requests if we come across them.\u201d<\/p>\n

Bram and Pascale said this deal, which took several months to market, package, negotiate and close, is an example of the close scrutiny lenders are still giving commercial real estate deals.<\/p>\n

\u201cThere is a lot of capital but it\u2019s choosy and the best sponsors with the best assets are attracting good capital and it\u2019s just starting to get to the secondary markets right now,\u201d Pascale said.<\/p>\n

\u201cThis time around retail is more difficult to do because lenders are being very careful about viability and credit,\u201d Bram added.<\/p>\n

Pascale concluded that after the downfall of such large retailers as Circuit City and Linens \u2018n Things, lenders are concentrating on sales, occupancies, costs and they are also cognizant of Internet encroachment on the physical stores.<\/p>\n","protected":false},"excerpt":{"rendered":"

DJM Partners has refinanced a four-property retail portfolio in Southern California with $185 million in financing arranged by the Los Angeles-based real estate investment banking firm George Smith Partners.<\/p>\n","protected":false},"author":1068,"featured_media":1004064986,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21783,1594,21742,21749,15],"tags":[],"class_list":["post-1004064985","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment","category-los-angeles","category-latest","category-retail","category-west"],"acf":[],"yoast_head":"\nGeorge Smith Partners Secures $185M in Financing for Retail Portfolio - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/george-smith-partners-secures-185m-in-financing-for-retail-portfolio\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"George Smith Partners Secures $185M in Financing for Retail Portfolio\" \/>\n<meta property=\"og:description\" content=\"DJM Partners has refinanced a four-property retail portfolio in Southern California with $185 million in financing arranged by the Los Angeles-based real estate investment banking firm George Smith Partners.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/george-smith-partners-secures-185m-in-financing-for-retail-portfolio\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2013-01-25T15:31:25+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-07T09:07:19+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2013\/01\/Montalvo_George-Smith-partners.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1582\" \/>\n\t<meta property=\"og:image:height\" content=\"1000\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Gail Kalinoski\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/george-smith-partners-secures-185m-in-financing-for-retail-portfolio\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/george-smith-partners-secures-185m-in-financing-for-retail-portfolio\/\",\"name\":\"George Smith Partners Secures $185M in Financing for Retail Portfolio - 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