Los Angeles-based retail developer The Festival Companies landed a $21.1 million mortgage from Realty Finance Trust to fund its purchase and reposition of a San Diego shopping center, Commercial Observer can first report.
Festival bought the 55,000-square-foot property, Sorrento Court, from Blackstone Group’s Equity Office Properties Trust for $23.1 million on Aug. 6, according to two people familiar with the matter.
The three-year loan, brokered by Meridian Capital Group, carries full-term interest-only payments, a floating-rate in the low-4 percent range and two one-year extension options, according to the broker. The $21.1 million deal includes acquisition financing and additional proceeds that will be used in the near future to complete upgrades on the property.
Meridian Managing Director Seth Grossman and Associate Andy Strauss, based in the firm’s Carlsbad, Calif. office, negotiated the debt deal.
Sorrento Court, located at 9420-9460 Scranton Road, is 96 percent occupied. Major national tenants at the shopping center include Starbucks, Jamba Juice, Staples, Bank of America and J.P. Morgan Chase. The property’s success is driven, in part, by its shared access to an adjacent 1.1-million-square-foot office complex and its close proximity to more than 5 million square feet of Qualcomm office buildings, according to Mr. Grossman.
“While phenomenally located, leased and well-maintained, there remain major tenants paying below market rent that are less well-suited for the demand driven by the property’s patrons,” he said.
“Our client is extremely creative with a demonstrated track record of unlocking value in similar situations,” Mr. Grossman added. “It was great to be involved in financing this project and it will be exciting to watch the transformation unfold.”
Representatives for The Festival Companies and Realty Finance Trust could not be reached for comment in time for publication.