LOS ANGELES-Investment banking firm George Smith Partners recently completed its 12th deal with client DJM Capital Partners. As GlobeSt.com reported in January, GSP arranged and closed $185 million in financing on behalf of DJMfor the recapitalization of a retail portfolio consisting of four class-A retail shopping centers in Southern California.
Principal and managing director Steve Bram and SVP David Pascale were assisted by analyst Ari Shram in the financing transaction for the portfolio, which included La Habra Marketplace, for $70.6 million, Village Del Amo for $40.2 million, Montalvo Square for $42.2 million, and Lakewood Square for $32 million.
“DJM gave us their requirements, and we found customized financing,” Pascale tells GlobeSt.com. “We found a portfolio lender who could provide standalone loans—no crossover—and rate lock for 90 days, and that portfolio lender agreed to serve the loan in-house for the life of the loan, which is extremely important. Since there are 155 tenants, some with leases expiring every other month, it’s nice for them to be able to contact a relationship lender and not a servicer.”
Pascale adds that two of the properties had slight repositioning elements to them with some expiring tenants, and the lender was able to structure for that.
While a typical lender for this portfolio would have been a life insurance company, Bram and Pascale say the deal would not have fit all insurance companies because of the amount of leverage required and the makeup of the deals. For one thing, two of the properties did not have traditional grocery anchors at the time of the deal.
“And one of them has a restaurant row concept containing a number of large restaurants, which also doesn’t fit into a large insurance company,” Bram tells GlobeSt.com. “All of these elements led to a non-traditional insurance deal done by an insurance company for the capital it provides, and the lenders allowed for some subordinate finance in the form of mezzanine/equity.”
GSP’s relationship with DJM goes back 12 years to its first deal with a DJM partner in 2001 and its first deal with DJM as a firm in 2003. “We’ve had 12 years of business with them as the firm has grown,” says Pascale.
“Our relationship with them is similar to most of our clients—it’s an all-encompassing investment-banking/advisory relationship,” says Bram. “We do underwriting and analysis of many of the deals they’re looking to buy, senior loans, bridge loans, mezzanine and equity. This is typical of the service we provide many of our clients. When you work with a client long enough, it’s nice to be financing the same assets a second time—we financed some of these properties in ’03 and ’04 when they purchased them.”
Bram, who has been with the firm for 29 years, says GSP’s relationships with clients are “very deep and very long-standing and provide high-end service. You might not get paid for everything you do, but if you provide a high level of service, they respect it and are loyal.”
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