IRVINE, Calif., April 2, 2020 – Faris Lee Investments, a leading capital markets, and investment sales firm, is pleased to announce the successful financing of a 3-year bridge loan for Packing House Square, a 141,504 sq.ft., mixed-use center with a dominant and growing regional medical anchor. The property is located at 18180-18380 Yorba Linda Blvd, a premier intersection of North Orange County in Yorba Linda, CA.
The proceeds from the refinance will be used to reposition the Packing House building as a medical arts plaza with a medical anchor tenant, renovate the existing retail plaza by adding an additional 11,450 sq.ft. new corner retail wing and re-tenant the vacant units.
Jay Quinn and Kirt Boultinghouse, capital markets senior managing directors at Faris Lee Investments, sourced the loan with a Los Angeles-based lender: Ares Management. Nick Coo, senior managing director, Matt Brooks, and Joe Chichester, managing directors represented the seller, a private investment company and repeat client with a long-term relationship. The seller initially hired Faris Lee Investment to dispose of the value-add infill property.
The property was situated at the convergence of two major arterials, Imperial Hwy & Yorba Linda Blvd, featuring 65,000+ vehicles per day. Across from the property was the fully preleased, 140,000 sq. ft. Bristol Farm and Regal Cinemas anchored Yorba Linda Town Center, which demonstrated the strength of the intersection. The 3-mile trade area boasts 109,000+ residents, the median home value of $847,500, and average household income of $148,000+.
“The favorable location, as well as the lack of retail and retail development in the trade area, presented significant opportunities for the disposition of the asset. However, the future of the property faced many challenges like the high vacancy, the lack of anchor, the complex site plan with multi-level layout, the lack of entitlement for the additional retail development built into the projected Pro-forma, and the uncertainty of the office building lease-up,” said Nicholas Coo.
“We received great interest, especially from private buyers, looking for value-add / core-plus investment opportunity, said Joe Chichester. “But we had concerns regarding the office building lease-up and the challenging layout of the retail. Moreover, the retail level lacked a true anchor tenant space and the parking was split between lower-level parking accessed through stairs and a level parking which was perceived to be limited for the amount of retail space.”
Despite, the significant upside of the asset presented through lease-up, the discount to sell the asset “As Is” would have been too significant compared to what could be obtained once finished. The new lease to consolidate the medical anchor tenant from the retail plaza to the freestanding medical arts plaza was still being finalized and the entitlement process for the new retail wing was still in process. Since the in-place loan was coming due, the seller decided to refinance to pay off the existing loan balance and use proceeds to finance the medical anchor consolidation, complete the entitlement process, and lease-up some spaces to true up the business plan for a future buyer.
“We chose our internal capital markets team to source the transaction to guarantee execution and creativity. The loan required “Outside of the Box” thinking and surety of closing. The integration allowed our Faris Lee team to shift seamlessly from a sale driven effort to a refinance and debt placement effort. Our capital markets group was part of our sales process and remained updated on the property throughout the entire process. The decision to refinance followed the natural development of the transaction. Using our internal resources was a seamless and natural shift versus a continued sale effort,” said Matt Brooks.
“We were able to find a lender comfortable with the development plan, arrange the financing, and raise the capital needed to successfully refinance Packing House Square,” said Quinn and Boultinghouse.
About Faris Lee Investments: Faris Lee Investments is a national leading retail advisory and investment sales firm. The company’s high-level retail investment advisors and sophisticated financing experts develop forward-thinking strategies for all retail acquisitions and dispositions and guide clients through complex transactions. Through its recent strategic affiliation with X-Team Retail Advisors, a nationwide partnership of seasoned retail leasing experts, Faris Lee offers a fully integrated platform with disciplined expertise in landlord leasing, tenant representation, capital markets, and investment sales to maximize value for clients.
For more information, visit www.farislee.com