Deal of the Month – January
103,047 Square Foot Anchored Retail Center in Washington
Collateral
• Approximately $21 million
• Anchored retail center in Washington
• 2006 origination
• 11/2016 loan maturity
• $24.8 million value at time of underwriting
Challenge
• Existing grocery anchor wanted to construct a fuel center in parking lot.
• Deed of Trust expressly prohibits installation of underground storage tanks.
• Grocery anchor tenant possesses right of consent to any leases for tenants that sell products/services which compete with those offered by grocery.
• Landlord wishes to execute a ground lease for another outparcel kiosk tenant that grocer would have to consent to.
• Grocer not required to begin construction upon consent, has ability to pay rent and “land bank” parcel.
• On the basis of Deed prohibition, Master Servicer declined consent to fuel center lease.
Solution
• Requested partial release/sale of two parcels in question to affiliate of Borrower, with associated pay down of note – Request declined.
• Renewed request for approval of fuel center lease – waiver of prohibition of underground storage tanks.
• After speaking with Master Servicer and MS Counsel – request approved.
• Grocer must provide proof of insurance for construction, all risk and environmental prior to beginning construction.
• Grocery tenant must indemnify Lender as well as Borrower/Landlord for environmental contamination.
• All other standard conditions of construction (Plans & specs, permits and certifications, etc.)
• If grocery tenant “land banks” parcel, Lender consent not deemed granted, at such time as they are prepared to begin construction, until tenant satisfies all conditions in a manner satisfactory to Lender.