(For more retail coverage, click GlobeSt.com/RETAIL.)
WARRINGTON, PA-Philadelphia-based Grasso Holdings and its affiliate, Metro Development Real Estate Fund LP, has obtained $106 million to fund the second phase of Valley Square. Phase II is the 392,000-sf Valley Square Lifestyle Center, which will join the already completed 500,000-sf center shadow-anchored by a 130,000-sf Wegman's Food Market.
The lender is Fremont Investment & Loan, and Craig Lockard, VP and senior loan originator in the Bethesda, MD office, handled the transaction. Gregg Wallace of Narberth-based AMA Financial was the mortgage broker.
Lockard tells GlobeSt.com the loan term is two years. This is a refinancing that replaces an earlier land acquisition loan. The new funding, he says, allows the developer "to begin vertical development prior to finalizing what would be traditional hurdle ratios for executed leases at the project."
However there are significant leasing negotiations underway for more than 90% of the initial portion. "We were comfortable with the borrower's ability to lease quickly and successfully," Lockard says.
Without disclosing the interest rate, Lockard says, "It has a declining margin, based on the amount of executed leases during the first year of the loan." In short, the rate drops from an initial margin over Libor, once a specified amount of space is leased.
The initial 500,000-sf portion of the center broke ground in September 2004 at an estimated construction cost of $125 million. Among the tenants in this traditional shopping center portion are Circuit City, Staples, Michael's and Sports Authority. All of Valley Square is a 140-acre mixed-use development that calls for 110,000 sf of office space and approximately 200 residential condos for people age 55 and older in addition to the retail components.
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