The Lahaina Gateway Center, its tenants including Outback Steakhouse and Barnes & Noble, has a new owner - the lender for the investment trust that purchased the shopping center about a year ago.
An affiliate of Torchlight Debt Opportunity Fund, headquartered in New York City, acquired the 136,000-square-foot shopping center and leasehold rights Aug. 1 from TNP Strategic Retail Trust, based in Irvine, Calif., in lieu of foreclosure, according to a TNP news release and Securities and Exchange Commission filings.
TNP purchased the Lahaina Gateway Center in November for $31 million with a $29 million loan from Torchlight affiliate DOF IV REIT Holdings LLC at 9.5 percent interest for the first year and 11.4 percent for the remainder of the loan, which was due Oct. 1, 2017, the SEC filing and county property tax records said.
The Lahaina Gateway Center with tenants Outback Steakhouse and Barnes & Noble has a new owner — an affiliate of Torchlight Debt Opportunity Fund, headquartered in New York City. The fund acquired the 136,000-square-foot shopping center and leasehold rights Aug. 1 from TNP Strategic Retail Trust, based in Irvine, Calif., in lieu of foreclosure.
The Maui News / MATTHEW THAYER photo
However, TNP found that it could not fund its debt service and operating expenses of the center with the "relatively high interest rates" of the loan, occupancy rates and loan cash reserve requirements, the SEC filing said.
TNP projected its shortfall at $1 million a year. The SEC filing said that TNP had been supporting the cash requirements of the loan with funds from other properties but eventually failed to make mandatory principal payments and deposits. It still owed $28 million in principal, the SEC filing said.
"It was a difficult decision to deed the property to the lender," TNP said, but the cash-flow issues, the scheduled interest rate increase and loan terms could have left the company with more than $40 million in obligations. The company also said that if an anchor tenant left the shopping center it would significantly reduce the value of the property.
TNP Strategic Realty Trust is a real estate investment trust that owns a portfolio of primarily grocery-anchored shopping centers, the news release said. The company's portfolio consists of 19 shopping centers anchored by such grocers as Publix, Safeway and Walmart.
In addition to Outback and Barnes & Noble, other tenants at the Lahaina Gate-way include Genki Sushi, Central Pacific Bank, Teddy's Bigger Burgers and Office Max.
The Lahaina Gateway Center opened in August 2008 and was hard hit by the economic recession.
Developer Bilarjo LLC had taken out a $41 million construction loan in 2006, and another loan for $7.3 million. After multiple extensions, lender Central Pacific Bank sued to collect on the loans.
The bank was the only bidder at the foreclosure auction.
Lahaina Gateway Commercial LLC is the fee owner of the 11.4 acres. The county has assessed the property at $31.8 million.
* Lee Imada can be reached at email@example.com.