LA PUENTE, CA—The owner of the Sunkist Shopping Center has secured an $11.4 million CMBS loan to refinance. The shopping center is currently under construction and lease commencement with a national credit tenant. Walker & Dunlop, who secured the funds on behalf of the borrower, structured the loan so that the portion of the property that was under construction was removed from the collateral.

“We effectively looked at the property, and identified that they were going to re-tenant this pad. Instead of making a decision ahead of time, we decided to leave that open,” Mark Grace, VP at Walker & Dunlop and the originator of the loan, tells GloebSt.com. “The property's debt coverage and the underwriting worked with or without that tenant's income. So, we excluded that parcel by putting it into its own parcel, and now the owner has a free and clear national credit tenant lease.”

The 170,084-square-foot shopping center was originally built in 1948, and was renovated in 1974 and 1985. A Rite-Aid and Big Saver Supermarket anchor the property. In addition to the unique loan structure, Grace was also able to secure the funds in an accelerated timeframe of 30 days, which reduced significant interest risk rate to the borrower.

Grace could not disclose the interest rate or the terms of the loan; however, he did say that there was a competitive bidding process for the deal. “I always create a good bidding environment for my select lenders, and so this was very competitive,” says Grace. “This deal was a perfect fit for a conduit execution; it is a multi-tenant retail deal with a regional grocer, and a lot of things that would kick it out from life companies. On top of that, the leverage wasn't moderate; it was actually decent leverage. All of these things mean it was a good fit for a conduit loan. There are 40 conduits out in the marketplace today, so it is always extremely competitive. We created a very good, controlled process, but it received very good competition from a variety of different lenders.”

This deal shows that CMBS is strong and active in the retail market, on a non-national grocery-anchored center. “The credit box for conduit is robust. On the conduit side, we can really get a wide variety of deals done, which is great because we need that in the market,” adds Grace. “We are going to need that for the next two years in a big way. The conduit market is open for business, and is doing what it is suppose to do, which is to take these middle-tier deals and get them done in a nice positive way and with good structure.”