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BURBANK, CA-Crown Realty & Development has refinanced its 1.2-million-sf Burbank Town Center mall with a $183 million loan that will capitalize on the value that Crown has created by generating higher sales through the leasing and renovation of the regional mall. Scott San Filippo, COO at Crown, tells GlobeSt.com that the new financing through Eurohypo AG is earmarked to provide funds for Crown’s continued growth at the Burbank property and for other investments.

“The proceeds can be used for whatever we choose, and we have earmarked them for the continued growth at Crown,” San Filippo says. He points out that the new financing taps into the value Crown has created after acquiring the Burbank Town Center for $111 million. One measure of that value is that sales now average more than $425 per sf for the in-line space at the mall, up 26% since Crown bought the property, renovated it and introduced new tenants.

Robert Flaxman, co-founder and president of Crown Realty, points out that the company’s intention is to hold the property for the long-term. “This new finance program will take advantage of the asset’s significant appreciation and free up capital for continued improvements at the mall and future investment opportunities,”Flaxman says.

The new financing is a $183 million senior note with a 10-year term fixed at 6.14%, interest only for the term of the loan. Matt Gambetta, VP of capital markets, represented Crown Realty internally during the transaction, which was arranged and structured by Christian Dalzell of Eastdil Secured on behalf of Crown.

San Filippo points out that the interest-only feature provides additional cash flow for Crown because it means that the company will not be required to pay down the principal during the loan period. Gambetta, who closely monitors Crown Realty’s portfolio in relation to the current state of the capital markets, notes that the company “did not want to sell an asset showing such strong fundamentals and long-term potential,” but at the same time the company wanted to free inactive capital to refocus on other investment and development opportunities.

Following its acquisition of Burbank Town Center, Crown Realty began a phased renovation and rejuvenation program, with the first two phases completed and the third now under way. During the first and second phases, it improved pedestrian connections to the Village District and brought in new tenants including the P.F. Chang’s and Pomodoro Cucina Italiana restaurants and Bed, Bath & Beyond.

The renovations have included a host of other improvements as well, including the installation of the “Burbank Backlot,” a 1,500-sf children’s play area themed to showcase Burbank’s leading role in the entertainment industry. In addition to adding a number of other new retailers, Crown has erected new pylon signs identifying signature retailers to passers-by on Interstate 5.

The third phase of the renovation will include the complete revamp of Victoria’s Secret to a new store format, the addition of a new Zales Jewelers, the relocation and expansion of Anchor Blue, the addition of escalators and upgrades of public areas. Negotiations are underway to bring a number of other nationally recognized retailers to the mall before year-end.

Privately held Crown Realty & Development, based in Irvine and Beverly Hills, was founded and is owned by partners Flaxman and Jaime Sohacheski. The properties owned or under development by the company and its affiliates exceed $1 billion in value.

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