Rouse Properties Refinances NewPark Mall in Bay Area for $135 Million

by Katie Sloan

Newark, Calif. —Rouse Properties Inc. (NYSE: RSE), a retail REIT based in New York, has closed a new $135 million first mortgage loan for NewPark Mall, a 1 million-square-foot retail property located in Newark, roughly 25 miles south of Oakland in San Francisco’s East Bay market.

Rouse Properties has withdrawn $114.3 million from the financing, with approximately $65 million of proceeds used to pay off the property’s previous mortgage loan and $49.3 million used for closing costs and general corporate purposes, including paying down the company’s revolving credit facility. The remainder of the refinancing will be used for renovations and additional leasing.

The new loan has a three-year term and a one-year extension option. The non-recourse mortgage carries an interest rate at Libor plus 2.1 percent, with a forward starting swap fixed at 3.26 percent effective on Jan. 1, 2016.

“This new loan facility represents a $70 million increase over our previous $65 million loan,” says John Wain, chief financial officer of Rouse Properties. “This clearly demonstrates the meaningful value creation we have already achieved with our significant renovation and repositioning initiative currently underway, which is Rouse’s largest planned capital investment in our portfolio.” 

Rouse Properties has recently arranged new leasing at NewPark Mall totaling more than 182,000 square feet. The recent transactions include 120,000 square feet of entertainment tenants such as AMC Theater, and new tenants such as Jack’s Restaurant and Bar, H&M, Footlocker, Torrid, Shoe Palace and Daniel’s Jewelers. 

According to Wain, many of the mall’s existing tenants will remodel their stores with the latest prototypes. These include Victoria’s Secret, Pink, Champs, Disney, Starbucks, Hollister and Hot Topic. 

The new AMC theater is slated to open in time for the holidays in 2015, and a new indoor/outdoor restaurant pavilion is expected to open in the first half of 2016. According to Wain, Rouse Properties assets in California account for 25 percent of the company’s net operating income.

“NewPark will be a cornerstone in our company’s growing focus on California,” says Wain.

Rouse Properties’ portfolio includes 35 malls and retail centers in 21 states encompassing approximately 24.1 million square feet. The REIT’s stock price closed Wednesday, Sept. 23 at $15.71 per share, down from $16.84 per share at this time last year.

— John Nelson

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