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$84M Loan Funds New Life for Everett Mall

EVERETT, WA-The initial $39.5-million funding of the three-tranche loan was used by Steadfast Commercial Properties to acquire the 677,123-sf mall in June. The remainder is being used to renovate the existing mall and add a big-box village center. The cost of the endeavor will be close to $100 million before it's done.

By Brian K. Miller | Updated on September 13, 2004

EVERETT, WA-An $84-million, three-tranche loan is funding the transformation of the 677,123-sf Everett Mall in South Everett. Steadfast Commercial Properties of Orange County, CA married the initial $39.5-million funding with equity to purchase the enclosed mall in June for $50.2 million. The remaining $44.5 million will be used to reposition the property through exterior renovations, the reconfiguration of inline space and the addition of Village Center, which will consist of a multi-screen movie theater and 100,000 sf of big-box retailers.

The loan was arranged by Newman Financial Services’ Structured Products Group. The financing consists of a bridge loan of $50.3 million, a mezzanine loan of $19.5 million and a construction loan of $14.3 million for the development of the Village Center. The interest-only, floating-rate debt was priced over 30-day Libor and has a blended interest rate of less than 6.5%. The debt has a 36-month term with two options to extend, provided the property meets certain requirements. Additionally, the financing provides a structure that allows the interest rate on the mezzanine loan to be reduced as certain performance hurdles are achieved.

Anchored by Sears, the Bon and Mervyn’s, the mall is approximately 20 miles north of Downtown Seattle. At loan closing, the property was 89% leased, but was less than 70% occupied by permanent tenants. The business plan calls for $100-million effort– acquisition, renovation, construction and re-tenanting–to be completed over a 30-month period.

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