ValueXpress was recently engaged by the owner of two retail properties, a retail power center in Dover, Delaware and a neighborhood shopping center in Wilmington, Delaware, to obtain a CMBS conduit loan to refinance the two existing CMBS conduit loans that are maturing at the end of the year. As always, we sat with the client to explain the process and gather the required diligence. Then, back in the office, we prepared an extensive loan package that would allow CMBS lenders to provide Term Sheets.
In completing property diligence, we discovered that the Dover property was formerly a single-tenant Lowe’s Home Improvement Center. As we often hear with “big box” single-tenant retailers such as Lowe’s, Wal-Mart and K-mart, Lowe’s packed up at the end of its lease and headed down the street to a larger building. Often in these cases the former building sits vacant for a long period of time before reuse. Sometimes the building never finds a new purpose.
So it was nice to find out about a successful redevelopment of a former single-tenant building. After Lowe’s moved, the owner had the property rezoned from single-tenant retail to multi-tenant retail and secured new ten-year leases with Best Buy, Michael’s Stores and Office Depot. The owner then sold the successful redevelopment to our borrower in 2005.
Our diligence also discovered another successful redevelopment in the Dover market, just down the street. The former North Dover Walmart is being redeveloped into Dover Towne Center. This redevelopment has seen strong demand, with preleasing that includes six national tenants and Outback Steakhouse on a pad site. Ross Dress for Less, Petco, Shoe Carnival, Ulta Beauty and Five Below have signed leases at the new Dover Towne Center. All of the leases range between 10 and 20 years, plus options for extensions.
“These discoveries during diligence were great testament to the strength of the Dover retail market, which allowed for strong competition by CMBS lenders to provide the financing for these properties,” said Michael D. Sneden, Executive Vice President at ValueXpress.