Cantor Commercial Real Estate (CCRE) has provided $31 million in debt to refinance two mid-size retail properties in Los Angeles and Orange counties.
The Westlake Village Marketplace in Westlake Village was refinanced with an $18 million loan, and the Aliso Viejo Plaza in Aliso Viejo was refinanced with a $13 million loan. Property and title records show the two locations belong to entities tied to a private investor named Jeffrey G. Wood, who did not return a request for comment.
CCRE, a division of Cantor Fitzgerald that’s led by industry veteran Paul Vanderslice, originated the 10-year, interest-only loans for its commercial mortgage-backed securities (CMBS) program. David Pike, managing director at CCRE’s Newport Beach office, confirmed the loan agreements.
“These are two spectacular assets,” Pike told Commercial Observer. “They’re shadow-anchored to some of the best tenants that you can have. […] There’s nothing not to like about them.”
Westlake Village Marketplace is located at 5752 Lindero Canyon Road near the northwest border of L.A. County. It was completed in 1998 with almost 74,200 square feet of rentable space. Title records show it was purchased in December of that year for $15.5 million. Staples and a Michaels supplies and framing store are the anchor tenants, with other retailers including Chase Bank, Chipotle, Panera, and Panda Express. Smart & Final, Dollar Tree and PetSmart are the shadow anchors.
Aliso Viejo Plaza is at 26852 La Paz Road in Orange County. It was built in 1987 with 35,800 square feet of rentable area. Tenants include Starbucks, UPS Store, Massage Envy, and Baskin Robbins. The center is shadow-anchored by Target and Stater Bros.
Pike said the refinancing was an easy decision because both properties have had high occupancy rates, and both loans have loan-to-value ratio for about 45-50 percent, as well as high debt yields. He added that CCRE was encouraged by current tenants adjusting to consumer habits with updated features, and Target and Stater Bros. each completed renovations of their locations in the past two years.
“We believe in this product all day long in these two markets,” he said.
Sharon Kline and Marina Massari of CBRE’s Newport Beach office arranged the financing on behalf of CCRE.
“Both shopping centers had a long history of excellent sales,” Kline said in a press release. “However, because each center was shadow-anchored — meaning that all or some of the anchor tenants were not part of the security — and even though both loan requests were low leverage, it eliminated life companies from competing for the transactions, which is why we sought a CMBS execution.”
Many department stores and retailers are struggling to maintain their properties across the country in the face of competition from e-commerce. Coresight Research reported last month that the U.S. surpassed 9,300 store closures before the end of 2019, compared to 5,844 closures for full-year 2018.
According to CBRE’s third quarter report, the Greater L.A. retail market’s negative absorption was attributed to small and mid-sized declines in almost every submarket. Average asking lease rates declined $0.11 per square foot that quarter to $2.78 per square foot.