TEMPE, AZ-The $280 million acquisition of Tempe Marketplace is notable for its size – it’s one of the largest retail deals to close this year – but it also indicates the CMBS market has returned. A joint venture comprised of Vestar Development Co. and Rockwood Capital hooked a $200 million CMBS loan from Deutsche Bank to buy the 1.3-million-square-foot retail property.
“When we started the process [of getting a loan], we felt the chances of doing a CMBS deal would be slim because only a few deals had been done,” says Vestar President Rick Kuhle. The venture worked with Eastdil Secured’s Los Angeles office to find debt financing.
“To Eastdil’s credit, they said CMBS lenders were in the market and would bid aggressively to get this business,” Kuhle tells GlobeSt.com. “We were somewhat doubtful, but they brought us several CMBS proposals; the amount of interest surprised us. We were happily surprised.”
In fact, both portfolio lenders and CMBS shops were keen on the deal, Kuhle says. “It proves that CMBS is starting to flow again, although it’s not flowing like it was three or four years ago,” he contends. “Good projects in good locations with good sponsorship can get a CMBS loan.”
Kuhle believes the interest from lenders speaks primarily to the quality of Tempe Marketplace, although it also indicates renewed confidence in the Phoenix metro area. “Overall, lenders say Phoenix has bottomed and has started to come out of the trough,” he notes.
Located at the Loop 101 and 202 Freeway, the 120-acre Tempe Marketplace opened in 2007. The project currently is 94% occupied to tenants including Barnes & Noble, JCPenney, GAP, Best Buy, Old Navy, G by Guess, and Target. The project also features Dave & Buster's and Harkins Tempe Marketplace 16, as well as a number of restaurants including: California Pizza Kitchen, Lucille's Smokehouse Bar-B-Que, Cadillac Ranch, Maria Maria, Kabuki Japanese Restaurant and The Keg Steakhouse & Bar.
Recently, Tempe Marketplace won the International Conference of Shopping Centers' US Design and Development Shopping Center Awards for the country's most innovative shopping center design and its sustainable elements.
Vestar Development is the original developer of Tempe Marketplace. It constructed the project as part of a JV with DLJ/Credit Suisse. When Credit Suisse decided to sell its stake in the JV – the property was the last one to be sold to close an existing investment fund – Vestar called upon White Plains, NY-based Rockwood Capital to create a new JV to acquire the property, Kuhle says.
“We had partnered with Rockwood several months earlier to acquire retail properties, so it made sense to go to them with Tempe Marketplace,” Kuhle says. Under terms of the new JV, Vestar will be the managing partner, but Rockwood has the majority stake in the project.
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