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1/21/15
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Thorofare Capital has funded three loans secured by shopping centers in Louisville, KY; Santa Fe, New Mexico; and Oakland, CA. The financings were for separate transactions totaling $29.2 mil.
In the largest of the three financings, Thorofare funded a $13.5 mil bridge loan for the refinancing of Forum Center, a 140k sf shopping center in the Hurstbourne Parkway corridor of Louisville, KY.
The sponsor, a Scottsdale, AZ-based real estate investment, development and management company, acquired Forum Center in 2012 and immediately undertook an extensive renovation, rebranding and leasing effort. In less than 15 months net operating revenue doubled as occupancy improved to 80% from 50% due in large part to a long-term lease to Boulder-CO-based natural and organic food chain Lucky’s Farmer’s Market.
The non-recourse financing, carries an initial term of one-and-a-half years with an interest rate pegged at LIBOR plus 680 basis points. The attractively structured debt deal allows a major repatriation of equity to the equity investors in the partnership and additional “good news” money for tenant improvements and leasing commissions upon additional leasing.
Thorofare also funded $9.67 mil in senior debt for the discounted payoff (DPO) of a construction note secured by The Market Station at Santa Fe Rail Yard, a Class A retail property located at 500 Market St in Santa Fe, NM. Formerly a rail yard and train station dating back to 1880, The Market Station at Santa Fe Rail Yard is a public/private development with the land owned by the City of Santa Fe and leased to private entities. The property is part of the broader re-development occurring in downtown Santa Fe.
To execute on the DPO opportunity, Thorofare collaborated with sponsorship to purchase the construction note for $8.7 mil, representing 63% of the $13.8 mil unpaid balance. Upon closing, Thorofare amended and restated the note terms to include a CapEx reserve towards construction completion, a TI/LC reserve towards completing the build-outs for pre-leased space, and a hybrid payment reserve while the rent abatements burn off to bring the property to a double-digit debt yield. The financing transaction provided an opportunity for the sponsorship to reset its basis in the project and ultimately profit from this development upon a refinance or sale.
Thorofare Capital has provided a San Francisco-based private investment firm with a $7 mil bridge loan for the recapitalization, capital upgrades, and partnership buyout of Jack London Gateway, a 58.6k sf neighborhood shopping center located at 800-900 Market St in Oakland, CA.
Built in 1985, the property is well-located along Brush and 7th Streets in West Oakland. Occupancy will increase to 91% from 65% within nine months once a sponsor-affiliated grocer completes its tenant improvements and opens for business. With current in-place net operating income producing a below-breakeven DSCR, Thorofare structured a “delta” interest reserve to support debt service. Other tenants include McDonald’s, KFC, and Citi Trends.
This financing transaction provided an opportunity for the sponsor to buy-out legacy partners to gain full control of the impending value-add business plan by initiating the grocer launch. The new capital stack will provide for the funds essential to the improvement, leasing, and stabilization of the property.
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