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CMA
March 31, 2017  

BofA Syndicate to Finance Giant Mall in Calif.

Bank of America will lead a $585 million fixed-rate loan on one of the country’s biggest malls, the Del Amo Fashion Center in Torrance, Calif.

Wells Fargo and Societe Generale are also part of the origination team. The trio will securitize the 10-year mortgage via a stand-alone offering.

The borrower, a Simon Property partnership, will use most of the proceeds to refinance a $510 million balance-sheet loan that matures in January. That floating-rate mortgage, pegged to one-month Libor plus 150 bp, was originated by a group of banks in 2013 and modified in 2015, when the balance was increased from $310 million and some changes were made in the lender syndicate. BofA is the lead lender and administrative agent. Other syndicate members include Fifth Third Bank, Landesbank Baden-Wurttemberg, MUFG, PNC and U.S. Bank.

The 2.4 million-square-foot mall was 93.8% occupied on Dec. 31, up from 80.1% at yearend 2013. The anchors are Burlington Coat Factory, JC Penney, Macy’s, Marshalls, Nordstrom and Sears. In-line sales hover around $600/sf.

The Simon team has been redeveloping the property in phases over the past few years. The existing loan included a $60 million component to finance construction costs. Improvements included the addition of the Nordstrom department store in 2015, as well as significant reconfiguring of space. Additional stores are set to open this year as space becomes available.

The current ownership structure resulted from a series of transactions that began in 2004 when Mills Corp., which had owned the mall outright, sold a 50% stake to J.P. Morgan Fleming. In 2007, Mills, a mall REIT in Alexandria, Va., was acquired by Farallon Capital of San Francisco and Indianapolis-based Simon in a $7.9 billion takeover, giving Simon and Farallon each a 25% interest in Del Amo. Simon doubled its stake to 50% in 2012 by acquiring half of J.P. Morgan’s interest. Farallon and J.P. Morgan, via its Strategic Property Fund, remain as minority partners.

The trio began talking directly to lenders about the mortgage early this year, without using a broker.

Del Amo is one of the five largest malls in the country and is the second-largest on the West Coast, behind the 2.8 million-sf South Coast Plaza in Costa Mesa, Calif., about 30 miles southeast.