Wells Fargo Finances Calif. Outlet Center Buy Out of Special Servicing


Wells Fargo lent $31 million to New York-based Garrison Investment Group to help fund the acquisition of a California outlet center, sources familiar with the transaction told Mortgage Observer. The center had been in special servicing since 2009.

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Garrison acquired the 55-store center, Tulare Outlet Center at 1407 Retherford Street in Tulare, Calif., from CMBS special servicer C-III Asset Management this month for an undisclosed price.

Tulare Outlet Center.
Tulare Outlet Center.

The three-year, floating-rate, balance-sheet loan closed on Nov. 17, said Terry Livingston of Wells Fargo Real Estate Capital Markets, who led the transaction on behalf of the banking giant.

In 2006, Tulare was bundled with five other shopping centers in five different states in the highly leveraged Ariel Preferred Retail Portfolio, which backs the GSMS 2006-GG8 CMBS deal, according to two other people privy to the transaction. While the 226,413-square-foot property remained more than 90 percent occupied, a number of the other centers suffered major leasing issues and the portfolio defaulted, they said.

The $94 million loan, originated by Greenwich, Conn.-based Greenwich Commercial Property, was transferred to the special servicer in June 2009, according to data from the financial research firm Trepp. The most recent loan balance is listed as $60.3 million, not accounting for the Tulare acquisition.

“Garrison saw the opportunity to realize this trapped value by purchasing the Tulare Outlet Center—only this property—and implementing a fresh capital, marketing and strategic-leasing plan,” one person familiar with the deal said on the condition of anonymity.

Garrison, a middle-market credit and asset-based investor, owns more than 8 million square feet of retail space in 15 states, including one other outlet center, Louisiana Boardwalk, in Bossier City, La. Tulare, which opened in 1995, is the first California property in the firm’s retail portfolio. The property’s tenants include Banana Republic, Coach Factory Store, Loft Outlet, Nike Factory Store and Zales Outlet.

Representatives for Garrison did not immediately return requests for comment.

“The folks at Garrison are historically great at recognizing value, often targeting properties that have either lacked appropriate funding or had recent management issues,” Mr. Livingston of Wells Fargo told MO. “We are pleased to work with their seasoned asset management team.”