Nearly $26M Refinances 89,000-SF Retail Center

ROWLAND HEIGHTS, CA-JTNA Enterprises, owner of the 89,000-sf Rowland Heights Shopping Center, has completed a financing that is a sign of the times, drawing cash out of a retail property about a year after acquiring it. JTNA lined up the $25.5 million in refinancing through the L.A. office of Holliday Fenoglio Fowler. The Rowland Heights Shopping Center, at 18305 through 18397 E. Colima Rd., occupies a site near the 60 Freeway and is 99% leased.

Mitch Paskover of Holliday Fenoglio Fowler, who placed the 10-year, 5.3% fixed-rate loan with a conduit lender, notes that it is for interest only for the first three years and then converts to a 30-year amortization schedule and gives the borrower a $2-million cash-out above the cost basis. Paskover calls the deal "challenging" in that the borrower wanted to lock in a loan amount that was more than JTNA paid for the property 12 months ago.

The financing illustrates how values continue to rise and lender remain confident about the strength of well-leased and well-located retail properties in Southern California. A recent report by Marcus & Millichap lists the L.A. retail market as one of the strongest in the nation, with low vacancies and "owners capitalizing on tight market conditions by raising rents."

With rents rising and pushing up the values of properties, competition for shopping centers has been intense, according to the Marcus & Millichap reports. It says that buyers have driven up the median price 27% over the past year to nearly $200 per sf, and the average cap rate has slipped 1.2% to 6.8%.