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86,835-SF Back-Office's Gain Merits Refinance

PHOENIX-Equastone gets a lender's stamp of approval for South Mountain Center after pushing occupancy to 75% from 30% in three years. The financing is inked at an 80% LTV.

By John McCloud | Updated on July 01, 2008

PHOENIX­Equastone, a San Diego-based private real estate investment firm, has refinanced South Mountain Center, an 86,835-sf back-office project in the city’s Southeast Valley submarket. The firm, which owns the property through Equastone Value Fund LLC, completed the variable-rate financing in its first transaction with Wachovia Bank.

Although the new loan amount was not released, Equastone acquired the property at 3540 E. Baseline Rd. in December 2005 for $7 million. Based on the typical 80% loan-to-value ratio in place three years ago, it would put the current loan in the range of $6 million. At the time of purchase, the building, then called Raven Corporate Center, was only 30% leased. Today the seven-year-old building adjacent to the Raven Golf Club is 75% occupied and a recently signed lease will soon take it to 85%. The tenant roster includes a telecommunications company, medical device firm, real estate brokerage and title company.

According to a press release, Equastone CFO Thad Meyer says the plan is to complete lease-up of the remaining space and then consider offering the property for sale. The asset’s quoted rate is $14 per sf, triple net. Matt Fitzgerald with Colliers International leases the building.

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