Transaction Details

Loan Amount: $65,000,000
Rate: 4.75% Floor
Term: 3 Years with 2 one-year extensions
Amortization: Interest Only for 3 Years and then a 30 Year Amortization
LTC: 65%
DCR: 1.40
Prepayment: None
Recourse: 25% Recourse
Lender Origination Fee: 0.375%

Transaction Description

Summary: Continental Partners sourced bridge financing for Puente Hills Mall – a 754,679 Property which consists of a two-story super regional mall located with at the southeast quadrant of the Pomona Freeway (SH 60) and S. Azusa Avenue in the City of Industry, Los Angeles County, California. The Property is anchored by national mall anchor tenants including Sears and Macy’s which are not part of the subject component. The subject includes anchor spaces leased to AMC Theatres, 24 Hour Fitness, Toys/Babies “R” Us, Forever 21, and H&M. Pricing was WSJ Prime based and floated with a floor of 4.75%.

Opportunity: Most Lenders would not even look at financing malls given the negative perception in the market. Additionally, a number of anchor tenants sales were lower than national average. With an oversupply of malls, changing consumer habits and increasing competition from e-commerce, property owners frequently have to redevelop malls to make them trendier and draw more foot traffic. Commercial loans for malls are pretty much nonexistent unless a Borrower is willing to redevelop the Property. Lenders now grill landlords repeatedly about tenants’ creditworthiness and exposure to competition from neighboring developments and e-commerce. On top of that, borrowers have to pay higher interest rates than they are used to, as the perception of risk increases.

Result: Continental Partners was able to source competitive bridge financing through a syndication of 3 Asian banks. The structure allowed the Sponsor to refinance the existing permanent debt and provide funds for future tenant improvements, leasing commissions and capital improvements. The good news dollars, were structured like a construction loan where the Sponsor didn’t pay interest until additional funds were released, so as to not incur negative arbitrage.