PHOENIX-With its 10-year mortgage near maturity, Arcadia Crossing, a 452,127-square-foot grocery-anchored center, has obtained a $24.5 million fixed-rate loan from a domestic bank to take out the conduit loan.
Cynthia Hammond of Churchill Commercial Capital Inc. sourced the loan for the borrower, a company sponsored by the Fry family, which operates the grocery store that anchors Arcadia Crossing. She tells GlobeSt. that the new loan is structured with senior and subordinate loans from the same lender to maximize proceeds.
The new loan was able to take out 94% of the existing conduit loan and represented a 70% LTV. It offers a blended interest rate in the 7% range and is partial recourse, Hammond says.
Located at the corner of 44th Street and Thomas Road, Arcadia Crossing enjoys good visibility and serves both the Arcadia neighborhood, which is an upper income area, as well as a working class neighborhood to the west.
At the time of the refinance, Arcadia Crossing was 89% leased. It had a vacant 51,000-square-foot anchor space from a dark Ultimate Electronics. "If not for the vacancy and Phoenix market dynamics, it would have been core asset and a portfolio lender would have done the refinance," Hammond says, adding that life companies were not as competitive as CMBS lenders and domestic banks.
Hammond says the borrower decided not to go with a conduit lender because of some upcoming lease rollover. "The lease for the Sears Auto expires in the next five years, and there's a high likelihood that lease will have to be renegotiated or terminated early, and we didn't want to owner have to deal with CMBS servicer," she explains.
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