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SEDONA, AZ-Taking out a fourth loan in four years, a local limited liability company has closed a $21-million refinance for the 26,000-sf Canyon Portal Shops. The five-year loan will be used to maintain the upscale retail center, which is fully leased to high-end local and regional tenants.

Located at 270-80 Highway 89A on about two acres, the owner began his borrowing history on the property in 2001 with a $10-million mezzanine loan. "About a year later, he'd come back to us with increased rents and said he needed more money so we ended up structuring a $12.5-million loan for him," explains Craig C. Johnson, executive vice president and COO for Aries Capital's Phoenix office. He says the Chicago-based Aries Capital structured a $16.5-million loan for Canyon Portal II LLC in 2004 as well.

The borrower's most recent loan is the second one underwritten by JPMorgan Mortgage Capital's St. Louis, MO office. The package has a 6.21% fixed-rate interest, 30-year amortization and 69% loan-to-value ratio.

Johnson tells GlobeSt.com that the underwriter had no problems approving a second refi due to Canyon Portal's stabilization and expansion. When the owner had acquired Canyon Portal Shops 10 years ago, the center had 9,000 sf of retail space and a 33-unit motel. In addition to expanding the retail footprint, the owner added 41 updated motel units to the property.

Johnson points out that another reason why the borrower is so attractive is because his property is in a booming area. "The first thing any lender wants to know is what sales per sf are like," he says. "They want to know if the borrower is getting at least $100 per sf. With this property, he's getting in excess of $200 per sf in sales."

Furthermore before the current request for refinancing, the owner "went out and exercised his option to expand leases," Johnson says. "The top-end rents are averaging $100 per sf, with an average in the mid-60s."

Nor will this be the borrower's final loan request. "The rents roll over within the next three to five years," Johnson says. "At that time, we'll turn around and do it all again."

Instant Insights /

High-End Retail Center Fuels $21M Refi

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