Steve Bram of George Smith Partners, who arranged the financing, says the 10-year, fixed rate non-recourse loan carries an interest rate of 5.16%, with the first two years interest only, then amortized over 25 years. The loan-to-value ratio was 80%, with a debt coverage ratio of 1.2.
According to Bram, one of the challenges in marketing the loan was that the center's occupancy was only at 85%. Shortly after funding however, the center was leased up to 91%. In addition," notes Bram, the lender was asked to fund the loan quickly to meet the acquisition schedule, as well as accept complex title issues inherent to this site, such as buildings constructed under power lines, and numerous cross easements from the adjacent residential projects.
The key to the transaction, Bram says, was identifying a lender that was willing to structure and fund fixed-rate permanent financing on a property that was not fully stabilized. Additionally, due to the low cap rate, the lender was required to go below its minimum stress constant to get to the loan amount. Bram says GSP pointed out to the lender that the property is in a strong market and the center is occupied by strong tenants.
The Montalvo Square center is anchored by a 58,000-sf Ralph's grocery store, a 23,000-sf Longs Drug Store and a 46,000-sf LA Fitness Center. It also includes in-line shops andrestaurants, plus 33,000 sf of two-story medical office space. The center also features a park and fountain square.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more information visit Asset & Logo Licensing.
