Buchanan and Pine Tree acquired Shops at Walnut Creek from Kansas City, MO-based RED Development LLC and CDC Real Estate Corp. in May 2007 for $50 million, about $20-million less than the completed project was expected to be worth when ground broke in 2004, according to GlobeSt.com story at the time.

The original $43-million acquisition loan, supplied by LaSalle Bank, represented approximately 85% leverage and carried a fixed 5.6% interest rate. The new $23-million loan represents between 50% and 60% leverage; the interest rate floats over LIBOR and is currently between 5% and 6%.

Since acquiring the center Buchanan and Pine Tree have added 65,000 square feet of retail space and increased occupancy at the now 216,000 square-foot center to approximately 90%. As a result, Buchanan Street COO Tim Ballard tells GlobeSt.com the property continues to perform well.

"It was doing well [under the $43-million loan] and it's doing better [under the $23-million loan]," he says. "It has been accretive to the property."

The deal was made to take advantage of the current economic climate after the money center bank that inherited the loan was motivated to clear it from their balance sheet despite the property's strong operating performance, according to Buchanan.

"The property cash flows were higher than when we obtained the acquisition loan," Buchanan COO/CIO Tim Ballard tells GlobeSt.com. "The original loan was fully performing and was intended for securitization until the securitization markets shut down, preventing the bank from exiting the loan through the public markets."

Ballard said the all-cash note buyback was closed in eight days. "That's what allowed it to happen," he says. "The seller was not willing to wait around for [someone] to obtain financing."