Chicago-based Aries Capital's Phoenix office arranged the financing package for the 3.31-acre property at 270-280 Highway 89A. Canyon Portal commands $60 per sf for rent and boasts a 10-year record for 100% retail occupancy.
The loan will be used to retire the current mortgage and remaining rehab costs, according to Aries Capital. The financing agent says the arrangement was difficult to orchestrate because high rents and specialty nature "made loan underwriting hard to support" as well as the legal structuring of a master lease, ground lease and first and second deeds of trust.
Neil D. Freeman, Aries' president and CEO, says the borrower will save close to $500,000 per year with the structured financing arrangement. The Phoenix branch of Columbus, IN-based Irwin Union Bank provided $7.75 million at 5.25% interest for the first mortgage and ground lease. A $2-million second mortgage package, at 10 1/2% interest, was floated through US Bancorp Piper Jaffrey in Minneapolis. Aries Capital brokered the first mortgage and acted as servicing correspondent for the second component. The five-year loans carry an LTV of 65%.
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