Retail Project Secures $62M Construction Loan
As building starts to resume in South Florida, Kite Realty Group Trust is getting in on the action.
Kite just closed on a $62 million construction loan for Delray Marketplace, a shopping, dining, and entertainment center under construction in Delray Beach.
Bank of America and U.S. Bank financed the construction loan. The loan bears an interest rate of LIBOR plus 175 to 200 basis points, and has a three-year term with an option to extend for an additional two years. The grand opening is scheduled for November 15, 2012.
Delray Marketplace will be anchored by Publix Super Market and Frank Theatres, which includes a 12-screen movie theatre and 16-lane bowling center. The developer has already inked 23 deals, bringing the center to 66% pre-leased. The tenant roster includes Apricot Lane, Bobby Chan, Charming Charlie’s, Chico’s, JoS. A. Bank, Max’s Grille, and White House | Black Market. Upon completion of the development, the center will total approximately 258,000 square feet.
“Retail is more difficult than multifamily,” says Ashley Bedell, project manager at Kite Realty Group. “Multifamily loans have the luxury of federal loan programs which support high loan-to-values and require no pre-leasing. Retail requires substantially more equity than multifamily and high levels of pre-leasing.”
But residential is playing a role in the early success of Delray Marketplace. Currently, there are more than 1,000 residential units in various phases of development and construction near the site. GL Homes is developing most of the projects. There is not another retail project of comparable size under development in the area.
Bedell believes Delray Marketplace has already overcome its biggest challenge—securing a strong tenant lineup. She expects starting construction to attract additional attention from retailers.
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