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LANCASTER, PA-Cedar Shopping Centers Inc. has obtained a new 10-year, $21.5-million first mortgage on the Golden Triangle Shopping Center at the intersection of Routes 501, 222 and 30. The loan has a fixed rate of nearly 6% with 30-year amortization and replaces an $8.9-million first mortgage on the property that bore interest at 7.4% and was due this April.
The lender of the new mortgage is Cedar Rapids, IA-based Aegon USA Realty Advisors Inc. The property, which has a book value of $19.5 million, was appraised at $32 million for the purposes of the new loan. Leo Ullman, CEO of Port Washington, NY-based Cedar, tells GlobeSt.com that the $32 million represents his company's total cost of acquiring and redeveloping the asset. The company will use net proceeds of approximately $12.5 million to reduce the outstanding balance on its secured revolving credit facility.
Golden Triangle is now a 203,000-sf shopping center, which has undergone a series of expansions and redevelopments, which are now complete. Cedar acquired it from its own affiliated management company that had managed the property since the mid-1980s, which makes it one of Cedar's first acquisitions when it became a REIT in 2003. "At that time it was roughly one-third of its current size," Ullman says, and it has been thoroughly reconfigured, refaced and re-tenanted.
Assembling the current configuration required the demolition of a bowling alley, vacant Ames unit and other properties. The current anchors are L.A. Fitness, Marshall's, Staples and an Aldi's supermarket. The newly built 45,000-sf L.A. Fitness replaces the Ames location. The 15,000-sf Aldi's replaces card and dollar stores, and a 24,000-sf Staples replaces the former bowling alley and smaller in-line Staples unit.
A new Dollar Tree unit and an outdoor pool and patio store replace a small interior mall, and a 30,000-sf Marshall's replaces most of a former Weis Market. A golf shop replaces the end-cap balance of that space. A new Commerce Bank branch was built on a formerly contaminated site, which was remediated by Cedar, and a 15,000-sf Walgreen's replaces a restaurant on an outparcel.
Stabilized net operating income is expected to be $2.3 million, or 10.6% of the gross asset value this year. This compares with an NOI of $900,000, or 6.5% of gross asset value in 2004. Ullman says the center is "substantially fully leased," which takes occupancy above 98% with just two small spaces remaining available. According to a Sept. 30, 2007 financial SEC filing, the average base rent at the center was $11.92 per sf. Ullman says that has risen with the addition of Walgreen's and other new tenants.
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