A regional bank lent 78% on a White Plains grocery center

JLL Capital Markets sold City Center, the 361,948-square-foot grocery-anchored center at 5 Mamaroneck Ave. in downtown White Plains, for $50 million on behalf of Kite Realty Trust, and arranged $39.2 million of acquisition financing for PropUp Group from a regional bank, a loan that pencils to 78.4% loan-to-price against a sale that works out to roughly $138 a square foot. The leverage is the part a lender had to get comfortable with.

ShopRite anchors the property, with Burlington, Nordstrom Rack, New York Sports Club and a 15-screen Apple Cinemas among the additional and junior anchors, plus 24 affordable apartment units inside the square footage. Grocery traffic is easy to describe and hard to convert into rent, so the second tier of tenants carries more weight than the anchor. Burlington and Nordstrom Rack both sit in the off-price box where demand has been unusually forward-looking: this publication noted in August that TJX had raised its long-term store target to 7,500, handing owners a forward occupancy number to underwrite against. A cinema and a fitness club add two more reasons for a car to turn onto Mamaroneck Avenue, and a bank sizing a loan against a center with several independent demand sources is sizing it against something more durable than one lease.

That leverage is the argument in the trade. The maturity wall is clearing mostly through structured extensions, preferred equity and stack compression rather than distress sales, and the assets stuck in that queue tend to be the ones without durable traffic. City Center sits on the other side of that split: a bank writing 78.4% of price against a multi-level urban center suggests grocery-anchored retail with a full roster is still borrowing on ordinary terms, at some distance from the loans grinding through modifications. The corollary cuts against the gloomier read of retail credit — the financing market has not closed; it has sorted.

Kevin O'Hearn, who led the JLL investment sales team alongside J.B. Bruno and Jose Cruz, called White Plains "a phenomenal submarket and only getting better with more luxury residential and mixed-use developments underway," and said the grocery-anchored, multi-level urban asset drew "a tremendous response." Read against that pipeline, PropUp is buying a rent roll but underwriting a neighborhood whose residential and mixed-use projects are still under construction, which is a longer-dated bet than the ShopRite lease underneath it. The price reflects what a competitive process produced for a center that already draws regional traffic; the upside sits in the apartments and mixed-use density arriving around it.

Watch the next grocery-anchored trade in Westchester and the loan-to-price it clears at. If a comparable deal borrows in the same range, the constraint on retail lending runs through tenant rosters rather than through the supply of debt, and City Center stops looking like a one-off.