In exchange, the REIT is committing to first mortgage liens and the assignment of rents and leases. The refinancing is part of a larger corporate strategy undertaken this year by the REIT to refinance certain properties in its portfolio and to raise additional capital.

Under terms of the loan agreement, the transaction is secured by three cross-collateralized and cross-defaulted first-mortgage liens on the mall and an assignment of rents and leases. Monthly debt service payments are fixed at an annual interest rate of 7.18% on a 30-year amortization.

In a preliminary report, the New York-based securities ratings service Standard & Poor's assigned high marks to the Sawgrass Mills loan package. The ratings service cited the value of the underlying real estate collateral, the experience of the property ownership and management, the historical and projected performance of the property, the terms of the loan documents, the transaction structure and the liquidity of the loan servicer and trustee.

It is estimated the Sawgrass Mills property is worth $460 million, according to a Cushman & Wakefield appraisal cited in the S&P report. Following an analysis on the property, S&P concluded the loan has a beginning loan-to-value ratio of 66.1% and an ending LTV ratio of 62.8%. The loan has a debt service coverage ratio of 1.35 times, based on an assumed constant of 9%.

"Sawgrass Mills is the dominant retail property in its market, with a good location, unusually wide trade area, low historical occupancy costs and strong historical sales performance," according the S&P presale report.

As of April 1, according to S&P, Sawgrass Mills reported an average occupancy of 96.5% with 20 anchor tenants and 254 specialty retail tenants. The REIT promotes the property as the second leading generator of tourism traffic in Florida, behind Walt Disney World in Orlando, with 26 million shoppers in 2000.

"The weighted average occupancy cost for all tenants at Sawgrass Mills in 2000 was 8.4% of sales," according to the report. "Comparable in-line sales, major tenant sales and anchor sales were $476 per sf, $351 per sf and $299 per sf, respectively, in 2000."

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