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RALEIGH, NC-Despite still being in lease-up, Kane Realty recently replaced the $80-million construction loan it used to redevelop the former North Hills mall here with a $105-million, fixed-rate permanent loan. Locally based Kane Realty essentially demolished the mall save for a 170,000-sf JC Penney store, added in a 130,000-sf Target as a second anchor and then built 400,000 sf of additional retail and office space over the Target and around the JC Penney. The 10-year permanent loan was funded by Archon Financial and sourced by LJ Melody senior director Mark Fisher. The rates were locked late last year at 140 basis points over the 10-year treasury. Fisher tells GlobeSt.com that Archon funded $85 million initially, withholding $5 million for tenant improvements and lease concessions that is being funded as additional leases are signed,and having an 18-month lease-up and earn-out provision for the remaining $15 million. At the time of the loan closing, there was $4.3 million of cash flow in place on an in-place NOI of $6.4 million, with the possibility of an NOI of $9.4 million upon stabilization, says Fisher. To match the cash flow to the loan payments, the first two years of the loan are interest only. "[Kane Realty] wanted to lock in a low, long-term rate as soon as they could," he says. "Archon was one of the few who stepped to the plate; it was a huge funding with very little cash flow in place."The center consists of 13 separate buildings containing ground-floor retail, second- and third-story office space, grade level parking, as well as two large parking decks. The property is located at the intersection of Interstate 440 (Inner Loop) and Six Forks Road here. Contiguous with the property is a to-be-built 200-plus room Renaissance Hotel and a luxury residential complex that is under construction. The retail at North Hills is now fully leased and the office space is 60% leased, says Fisher. "Typically, lease-up of the office space in lifestyle centers follows the leasing of the retail space," says Fisher. "So it is going as planned."