Magellan Group Inc. knows firsthand just how crazy commercial real estate finance is these days.

The Century City industrial developer recently completed a deal that saved it millions, and, ironically, never would have even warranted a term sheet during the boom years.

Magellan was able to repay a $45 million loan on a fully leased City of Commerce business park at a 29 percent discount simply because the lender wanted the debt off its books and couldn't sell the full loan in the secondary market.

There was a catch, though. Magellan had just 30 days to complete the deal before the discounted note was offered up to some other entity.

"It was a complete surprise to us. It was both a threat and an opportunity," said Magellan co-founder Kevin Staley. "It was something we felt we really needed to try to make happen."

What ensued was a mad scramble to find financing that only ended when a new player in L.A. real estate Mesa West Capital LLC ponied up $26.5 million to complete the $32 million note retirement.

"We explored the entire market that was available. We probably talked to at least 50 groups," said Brian Halpern of CB Richard Ellis Group Inc.'s capital markets division, who arranged the financing with Mesa West and a second lender.

The topsy-turvy loan market created the deal of a lifetime for Magellan, but others haven't been so lucky. The credit crunch and recession have crippled real estate finance, especially the secondary market in which loans are either resold whole or sliced up for mortgage-backed securities.

These days, if you need a commercial real estate loan whether financing an acquisition or buying back a note you'll have to have a thick skin, a thick wallet and an even thicker Rolodex.

But in this environment, a new set of lenders has stepped in to try to fill the void.

Local companies such as Mesa West, Buchanan Street Partners Inc. and Karlin Real Estate are either already making loans or are ramping up to do so. And local hard-money lenders such as Peak Financial Partners Inc. and Fidelity Mortgage Lenders Inc. are expanding their reach in the lower end, or riskier side, of the market.

"Our lending will help fill the void, but the void is massive given the impairment of the major financial institutions," said Jeff Friedman, Mesa West co-founder and co-chief executive.

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