PHOENIX—In this week's Deal-Tracker, Gladstone Commercial Corporation reported that it closed a $5.6 million second mortgage development loan for the construction of an 81,371 square foot, build-to-suit transitional care facility located on a major hospital campus in Phoenix.

Construction is scheduled to be completed in approximately twelve months and the company will earn 9.0% interest, paid currently in cash, on the loan during construction and through maturity. Prior to completion of the facility, the company will be granted a right of first offer to purchase the property. If the company does not purchase the property at completion, it will receive a priority exit fee sufficient to earn an internal rate of return of 22% when the development loan is repaid upon sale of the property.

"This investment is the first in a new program to participate with developers on build-to-suit projects in primary and strong secondary markets nationwide" said Matt Tucker, managing director of the company. "This investment establishes our presence in the Phoenix market and as a capital provider for developers looking to complete single tenant build to suit office, industrial and healthcare facilities. This investment provides very good risk adjusted returns to our shareholders."