$84M Loan Funds New Life for Everett Mall

The loan was arranged by Newman Financial Services' Structured Products Group. The financing consists of a bridge loan of $50.3 million, a mezzanine loan of $19.5 million and a construction loan of $14.3 million for the development of the Village Center. The interest-only, floating-rate debt was priced over 30-day Libor and has a blended interest rate of less than 6.5%. The debt has a 36-month term with two options to extend, provided the property meets certain requirements. Additionally, the financing provides a structure that allows the interest rate on the mezzanine loan to be reduced as certain performance hurdles are achieved.

Anchored by Sears, the Bon and Mervyn's, the mall is approximately 20 miles north of Downtown Seattle. At loan closing, the property was 89% leased, but was less than 70% occupied by permanent tenants. The business plan calls for $100-million effort-- acquisition, renovation, construction and re-tenanting--to be completed over a 30-month period.

Steadfast will benefit from a New Markets Tax Credit allocation because this property is located in an area designated by the US Treasury as a "Hot Zone" and one of a select few New Markets Tax Credit qualified communities around the nation. The allocation, provided by GMAC Commercial Holding Capital Corp., was used to provide the mezzanine financing. The use of the credits allowed a higher loan to value to be achieved and enabled the financing to be priced at a below market rate, according to Newman Financial Services.

Steadfast, which will self-manage the property, acquired the mall from New York-based Equitable Life Assurance Society of the United States. Equitable took title to the mall in 2001 after the mall's owner, a group of partnerships led by Titanic Associates of Morristown, NJ, defaulted on its mortgage.