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GLENDALE, AZ-A $28.6-million loan is backing the vertical development of the 112,036-sf Citadelle, which will begin foundation work next week. The project–74,648 sf of retail and 37,388 sf of office–has an estimated all-in development cost well north of $30 million.

According to Louise Stephens, co-owner of Glendale-based Stephens Land Co., the shell space will be turned over to tenants in the spring, most of which are looking to be open for business by the fall. The project is 60% preleased although the dirt work’s just begun at the intersection of 59th Avenue and Utopia Road.

“Given the interest we’ve had, by the time we open up, we’ll be fully leased,” Stephens tells GlobeSt.com. Current tenants are mainly local and include Italian restaurant Tutti Santi and Corbin’s Bar & Grill.

The financing, a mix of construction and permanent, was provided by 40/86 Mortgage Capital Inc. of Carmel, IN, a company chosen for its debt flexibility. The 11-year loan carries a first-year interest-only portion for the construction period and the 10-year balance at a fixed rate that amortizes on a 30-year schedule. The interest rate on the fixed component is sub-6.5%.

“With this, they could literally put two loans under one application,” explains Josh Swindell, vice president for Johnson Capital in Phoenix. He says the advantage of the loan’s structure is its simplicity. “They have one closing, one loan, then they’ll roll into a permanent loan without the additional paper work,” he adds. “The fees are lower, too.” Johnson Capital’s Keaton Merrell and Jim Pierson arranged the financing.

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