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PHOENIX­Equastone, a San Diego-based private real estate investment firm, has refinanced South Mountain Center, an 86,835-sf back-office project in the city’s Southeast Valley submarket. The firm, which owns the property through Equastone Value Fund LLC, completed the variable-rate financing in its first transaction with Wachovia Bank.

Although the new loan amount was not released, Equastone acquired the property at 3540 E. Baseline Rd. in December 2005 for $7 million. Based on the typical 80% loan-to-value ratio in place three years ago, it would put the current loan in the range of $6 million. At the time of purchase, the building, then called Raven Corporate Center, was only 30% leased. Today the seven-year-old building adjacent to the Raven Golf Club is 75% occupied and a recently signed lease will soon take it to 85%. The tenant roster includes a telecommunications company, medical device firm, real estate brokerage and title company.

According to a press release, Equastone CFO Thad Meyer says the plan is to complete lease-up of the remaining space and then consider offering the property for sale. The asset’s quoted rate is $14 per sf, triple net. Matt Fitzgerald with Colliers International leases the building.

“We are pleased to have started a new relationship with Wachovia,” Meyer says. “Due to our successful leasing efforts, we were able to refinance the property and provide additional proceeds well above the previous loan balance. We were able to accomplish this even in the currently difficult lending environment, which is a testament to value we’ve already added to the project and Wachovia’s ability to underwrite the opportunity.”

Equastone executive vice president Ron Lack says the Southeast Valley submarket has experienced significant growth in the past two years. He says the project’s location along Baseline Road, a major east-west artery, and near newly established amenities and housing developments has greatly aided leasing efforts.

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