SAN FRANCISCO-CDC Mortgage Capital of New York has made an $11.5 million equity investment in the leasehold interest of Pier 39, the popular shopping and entertainment center on the San Francisco waterfront. The owner of the leasehold, Pier 39 LP, plans to spend the cash infusion on maintenance and upkeep of the 242,000-sf development.The four-year, floating rate investment was arranged by Los Angeles based Sonnenblick-Eichner Company. David Sonnenblick tells the money had to be in the form of an equity investment because the securitized fist mortgage on the Pier improvements, which doesn’t mature for several more years, prohibits both prepayment and subordinate debt. “We had to structure a creative investment vehicle that would not violate any of the underlying loan covenants,” says Sonnenblick, who arranged the $117-million first mortgage. “The preferred equity structure we arranged for the owner allowed them to extract equity that has been locked up in the project at a cost of capital commensurate with a traditional secured property debt structure.” Pier 39 LP CFO Dan Hovey tells that Pier 39 LP acquired the leasehold interest from developer Warren Simmons in 1981. The term of the leasehold runs into 2042. The pier is owned by the Port of San Francisco.Located two blocks east of Fisherman’s Wharf at the northern tip of the San Francisco Peninsula, Pier 39 is one of San Francisco’s top attractions. Currently 96% leased, Pier 39 comprises 110 specialty shops, restaurants and entertainment venues, including: the Hard Rock Cafe and Bubba Gump Shrimp Co. eateries; Aquarium of the Bay, a 707,000-gallon aquarium and marine attraction; and the Blue & Gold Fleet, the exclusive provider of transportation to and from Alcatraz Island. The Pier opened in 1978. In 1981, gross sales were about $30 million annually. Last year, gross sales were about $155 million.

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