CT/KDF Community Development Partners Provides $15.5 Million In Financing
For Repositioned Azusa Retail Center
Sarah Woodward, Longtime Real Estate Finance Expert, Joins Partnership
October 06, 2009
NEWPORT BEACH, CALIF. - October 06, 2009 - CT/KDF Community Development Partners, LLC, of Newport Beach, Calif., announced that it has closed the financing of $15.5 million in construction take-out funds for the Citrus Crossing retail center in Azusa, Calif. Located in the southwest quadrant of Citrus Avenue and Alosta Avenue, Citrus Crossing is a 172,000-square-foot community center that was overhauled and re-tenanted to include Regency Theaters, Fresh & Easy, and an expansive array of restaurants and new service retailers for the underserved neighborhood. It also served as a catalyst for the development of an adjacent new housing community. Together with CT/KDF's initial investment in the project to facilitate the renovation, this funding represents a financing commitment to the project of nearly seven years.
According to Robert M. Campbell, president of CT Realty Corp. of Newport Beach and one of the principals in the CT/KDF partnership, the funding was provided through New Markets Tax Credits (NMTC) from the CDFI Fund of the U.S. Treasury Department. CT/KDF received $90 million from the government for investment in areas of distress in Southern California in late 2006. CT/KDF has been using its allocation primarily in the form of below-market mezzanine debt to catalyst the development and redevelopment of commercial and for-sale housing projects.
"In addition to major rehab projects such as Citrus Crossing, we are now using the NMTC funds as a mechanism for the workout of non-performing, overleveraged real estate projects which have hit maturity on the original construction loan," Campbell said. "Using the New Markets Tax Credits, we are able to stabilize the projects and complete the necessary improvements for these properties, which will help revitalize their neighborhoods."
Campbell and partner Paul Fruchbom with KDF Communities LLC in Newport Beach also announced that Sarah Woodward has joined CT/KDF as a partner. Woodward previously served as vice president/regional manager of Fremont Investment & Loan's Commercial Real Estate division in Irvine, Calif. She is a 25-year veteran of real estate finance with particular expertise in property valuation, debt restructuring and structured finance.
Woodward said that an additional $10 million of funds are set for a closing next week to restructure the matured construction loan on a historic downtown San Diego office building and to complete the renovation and re-tenanting of the building. This financing also prevents foreclosure by the construction lender who has reached loan maturity.
"The NMTC investment provides the construction lender with the opportunity to reduce their leverage position and to extend the loan rather than foreclose on the property," Woodward said. "In this case, the loan was extended for seven years. Use of the NMTC funds enables financial institutions to do exactly what the FDIC has been seeking - get back into the lending business."
CT/KDF is working on several other NMTC transactions as well. Current projects include an expansion program by a Hispanic grocery store chain to buy, reposition and re-tenant failing neighborhood shopping centers in distressed market areas. Other projects include the financing of ground-up construction of a city public works complex in a distressed transit-oriented location, and funding of an adaptive re-use housing project in an urban redevelopment area.
Woodward said that, with the closing next week, CT/KDF will have invested $28 million of its allocation, and that the partnership was prudent in its lending efforts in 2007 and 2008 due to overheated real estate market conditions.
"We wanted to preserve our NMTC funds in order to accommodate the right investments at the right time," she said. "We believe we are now in prime position to make strategic investments with these funds, and are currently working on approximately $200 million of new investments with only $62 million of allocation remaining."
Woodward is hopeful that CT/KDF will be awarded the additional $125 million of NMTC allocation it has applied for in the current round. Awards are expected to be announced later this month.
CT/KDF's focus is on ground-up or major rehabilitative office, retail, industrial and mixed-use projects throughout Southern California. The projects must be located in a qualified census tract under the U.S. Treasury Department's NMTC program. For more information, contact Sarah Woodward at 714-544-9930.