A life company prices Koreatown's nightlife as core retail

Voya Investment Management agreed to lend against Chapman Market, the 41,241-square-foot dining and entertainment center at 3465 W. 6th St. in Los Angeles, with no grocer and no drugstore, as Northmarq arranged a $29.3 million refinance for borrower Arc Capital Partners through its correspondent relationship with the life company. The loan works out to roughly $711 per square foot, a debt basis that implies conservative leverage and a sponsor with equity already in the asset.

Joe Giordani, who led the Northmarq team with Alex Kane and Karl Weidell, described the property as sitting at the center of Koreatown's nightlife and the sponsor as institutional in quality; Bryan Ley and Tim Kuruzar of Northmarq's National Shopping Centers Group originated the relationship and the financing. Giordani also said the assignment drew interest from banks, life companies and debt funds before Voya won it, on a combination of terms and a reputation for execution and certainty of closing. Certainty of closing now decides contested refinancings: a sponsor taking out stabilized debt is buying a closing date as much as a rate, and a correspondent network that can deliver both is worth paying up for.

The part that matters is what Voya agreed to underwrite, because Chapman Market's income is dining and entertainment tenancy and the credit committee priced operator credit rather than a national anchor's lease guaranty. The received wisdom in retail debt is that life companies want grocery anchors and leave restaurant-heavy urban strips to banks and debt funds. In August this publication covered Northmarq placing a life-company loan from Principal on a Queens grocery center anchored by Stop & Shop and held by its owner for 26 years, the textbook version of that trade. Underwriting a 41,241-square-foot Koreatown center without an anchor, at a basis near $711 a foot, is the same lender class reaching one rung down the collateral ladder, which makes sense in an infill corridor where competing new supply is close to unbuildable.

The coverage does not say what the new debt replaced or on what terms, which keeps this out of the refinancing-wall ledger even as the broader argument is that those walls are being rolled rather than repriced. The sponsor is no mega-manager: per PRED's records, Arc Capital Partners reports $862 million in regulatory assets under management across 11 accounts and 16 employees, so the real estate, rather than the balance sheet behind it, appears to have carried the credit.

Northmarq's correspondent shelf has been busy in Los Angeles this month, including a $6.1 million refinance on a Van Nuys industrial trio it placed in early September. The test for retail pricing is whether the same insurance-company channel quotes another unanchored, dining-heavy center outside a nightlife district, where the demand story does not do the underwriting for it.