05/11/2012

JP Morgan Wins Big Floater on Vegas Complex

J.P. Morgan has agreed to originate a $200 million floating-rate mortgage on a retail/office complex in Las Vegas.

The 1.2 million-square-foot property, called Town Square, is owned by a Five Mile Capital partnership, which seized it last year after the developer defaulted.

J.P. Morgan beat out a number of rival lenders for the assignment, including Cantor Fitzgerald and GE Capital Real Estate. The loan will have a three-year term, with two one-year extension options. Eastdil Secured is advising the Five Mile partnership.

Town Square, at the southern end of Las Vegas Boulevard, was developed by Turnberry Associates of Aventura, Fla. The company raised about $500 million of construction financing almost a decade ago from a Deutsche Bank syndicate for the planned 1.5 million-sf development, but stopped shy of that goal as the recession took hold.

The sharp drop in property valuations left Turnberry unable to refinance the debt, which had been bought up in pieces independently by Five Mile, a fund shop in Stamford, Conn., and two other high-yield investment firms Centerbridge Partners of New York and Oaktree Capital of Los Angeles. The trio then joined forces and foreclosed in March 2011.

Town Square encompasses about 900,000 sf of stores and 250,000 sf of offices. The retail portion is 80% occupied, and annual sales are described as strong in the neighborhood of $550/sf. Tenants include Guitar Center, H&M, Old Navy, Whole Foods and more than a dozen restaurants. The office component is only about 30% occupied.

There are indications that the Five Mile group plans to complete some of the unfinished portion, which includes partially built space that could be used for a hotel.

The complex is on a 93-acre site on the edge of McCarran International Airport, about five miles south of downtown Las Vegas.

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