Mesa West Backs Washington Mall

Commercial Mortgage Alert
Last updated: March 10, 2006
www.cmalert.com

Mesa West Capital has originated a $90.5 million floating-rate loan on Everett Mall in Everett, Washington.

The borrower, Steadfast Properties of Newport Beach, Calif., used most of the proceeds to retire a $69 million mortgage from GMAC Commercial Mortgage. The developer used that loan to finance the purchase and renovation of the mall.

Mesa West plans to hold the mortgage on its books. Since being formed last year, the Los Angeles firm has booked more than $500 million of loans. It may eventually securitize the loans via a CDO, but no timetable has been set for a deal.

The mortgage is backed by most of the 687,000-squarefoot mall, as well as 80,000 sf of adjacent big-box stores. The mall, which was built in 1970, is anchored by Sears and Macy’s. A third anchor, Mervyn’s, is in the process of vacating its space and will be replaced by one or more tenants.

The property, originally an outdoor shopping center, was converted to an enclosed mall and enlarged in 1989 by Titanic Associates, a New Jersey partnership. When Titanic defaulted on a $55 million mortgage from Equitable Life in 2001, the insurer took control of the mall.

Steadfast bought the property in 2004 for $50 million and has since sunk more than $25 million on a redevelopment that included the addition of a 16-screen Regal Theater and Borders and Old Navy stores. Steadfast also built big-box stores on outparcels and leased them to Best Buy, Petsmart and Bed, Bath & Beyond. In-line sales are currently $320/sf.

Steadfast controls a portfolio of multi-family, resort, retail and office space concentrated in the West Coast.

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