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FORT WORTH-The Urban Development Fund, a subsidiary of Chicago-based Aries Capital Inc., has made its first investment in Texas, deploying $15.6 million from a $57.5-million special pool to redevelop La Gran Plaza de Fort Worth. Upgrades to the 900,000-sf regional mall and 85,000-sf office building in South Fort Worth will be done by year’s end.

The Urban Development Fund is fueled by New Market Tax Credits, with the Aries subsidiary marking its second allocation round from a federal program aimed at commercial development in low-income areas. “We really look for job creation,” says Michael Qualizza, the fund’s CFO. “When we can be a part of this many jobs being created that appeals to us.” La Gran Plaza at 4200 South Freeway, the old Fort Worth Town Center, is expected to add 2,950 jobs when the $42.5-million redevelopment and lease-up are done, according to developer and lender calculations.

Qualizza tells GlobeSt.com that the three-year, interest-only loan has a floating rate above Libor that kicked in at 8.82%, roughly four points below other lenders’ quotes to the development partnership between Grupo Zocalo, a subsidiary of Houston-based Boxer Property Co., and Jose Legaspi, owner of Legaspi Co. of Montebello, CA. “His experience is what has led us to believe it will be a successful opportunity for them,” Qualizza says. He points out the Mercado concept didn’t qualify for traditional financing because there is no master lease guarantor, except the developer. “The fund isn’t a substitute for conventional debt,” he says, “but is a bridge until it’s stabilized.” In addition to the Aries fund, the City of Fort Worth has committed TIF financing to the redevelopment.

Qualizza says the partnership’s in-house leasing team is making plans to add a show arena to the 52%-leased mall, which has lost two anchors and driven the return from inline space to practically an all-time low due to restructured rents and move-outs. The revitalization drive has brought a Fiesta Mart Inc. grocery anchor and new synergies for the food court and eight-screen theater, including a design for scores of “hacienda” shops to further promote the Mercado setting. Built in 1962 and renovated in 1987, La Gran Plaza is expected to emerge from the redevelopment with 300 small shops as well as restaurant and entertainment space.

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