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LAS VEGAS-The mammoth World Market Center, the 12-million-sf home-furnishings showroom complex coming out of the ground here, has just gotten another piece of its financing puzzle in place. The engine of that move is a $225-million forward take-out on the recently completed 1.3-million-sf first-phase building.
The funds were provided by Bear Stearns in a deal arranged by New York City-based Ackman-Ziff. The original construction loan was set by Hypo Real Estate. The expectation is that Bear Stearns will securitize the loan and sell off the B piece.
A trick for the Ackman-Ziff team was creating a low lending-risk environment for a building that is essentially open two weeks out of the year. "Lenders had to understand the property type," says director Alex Draganiuk. "It's a specialty asset serving an industry where manufacturers essentially sell their goods twice a year through markets and trade shows." While the building's two floors of design-center space are open year-round, eight floors of showroom space are open to the public only for those markets.
Draganiuk explains that the 10-year loan carries a 65% LTV based on the appraisal and a modified amortization schedule wherein there is an interest-only schedule for the first two years.
The total Market Center project is parsed out over eight phases stretching well into 2010. According to Marty Berger, president of Related Las Vegas, the expectation is to break ground on the 1.6-million-sf second building sometime this month, with a building to follow every year, based as he says, "on leasing."
The original concept for the center was hatched by developers Jack Kashani and Shawn Samson in 1999. They partnered up with Manhattan-based Related Cos. last year in a joint venture dubbed World Market Center LLC.
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John Salustri
John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.
