$36M Refinances Mixed-Use Theater, Condos

According to Robert M. Campbell, president of Newport Beach-based CT Realty Corp. and one of the principals in the CT/KDF partnership, the Raymond Renaissance encountered delays and budget overruns during construction, like so many other projects in the current environment. Despite being within weeks of delivering the units to interested buyers, there were insufficient funds available to obtain the final certificate of occupancy. CT/KDF, through its allocation of New Markets Tax Credit (NMTC) funds, injected the necessary capital to see the project through to completion and delivery, working intandem with the original construction lender, East West Bank.

The Raymond Renaissance is being developed by Gene and Marilyn Buchanan through their development company, AJB Enterprises Inc. The Buchanans have been developing and renovating historical projects, primarily in the Pasadena area, since l979. The Raymond Renaissance represents the culmination of years of planning to renovate and restore the historical Jensen Raymond Theatre into a viable and productive mixed-use destination.

With the new infusion of capital, buyers have begun to move in. The financing will also enable payment to more than 40 contractors and vendors affiliated with the project.

CT/KDF received $90 million in late 2006 from the Community Development Financial Institutions Fund (CDFI) of the US Treasury Department for investment in distressed areas in Southern California. The partnership has been using its allocation primarily in the form of below-market mezzanine debt to catalyst the development and redevelopment of commercial and for-sale housing projects. With the financing for the Raymond Renaissance, CT/KDF has now invested $54 million of its NMTC allocation.

Campbell explains that the CT/KDF partnership has used its NMTC funds as a mechanism for the workout of non-performing, overleveraged real estate projects which have hit maturity on the original construction loan. "Using the New Markets Tax Credits, we can stabilize the projects and complete the necessary improvements for these properties," Campbell points out.

Sarah Woodward, a CT/KDF partner, says that the partnership will be able to redeploy proceeds from this investment into new transactions. "The loan proceeds from this investment will be repaid to us through unit closings," Woodward explains. The partnership will then be able to re-invest this $36 million into new transactions over the coming months.