Sport Chalet family sells mall at a loss
The Olberz family, founders of the beleaguered Sport Chalet sporting goods chain, have sold their La Canada Flintridge mall to a Los Angeles investment firm for more than $40 million -- significantly less than what the project cost to build.
La Canada Flintridge Town Center, completed in 2008, was built for about $60 million by the Olberz family’s company La Canada Properties Inc. during the peak of the last real estate boom. Sport Chalet will continue to be a tenant in the mall.
Although commercial property sales have fallen dramatically since the economic downturn began, investors have recently been buying high-quality properties in choice locations, especially if they can get them for less than the cost of construction, industry observers said.
New owner IDS Real Estate Group plans to upgrade the 7.6-acre mall on Foothill Boulevard at Angeles Crest Highway that is one of the most prominent retail centers in the upscale community north of Los Angeles.
“The goal is to make it more pedestrian friendly and add some additional amenities,” said Rob Fuelling, senior vice president of IDS.
Plans include redesigning and enhancing the project’s common areas, landscaping and outdoor lighting, he said. IDS also hopes to host community-oriented events.
“The idea now would be to make it a little more of a village concept, where people feel a little more comfortable sitting outside with a sandwich or cup of coffee,” said consultant Greg Gotthardt of Alvarez & Marsal Real Estate Advisory Services, who was not involved in the deal.
Gotthardt said the transaction fits into the recent pattern of commercial real estate sales, in which investors seek properties in neighborhoods where it’s tough to get new projects built. It took more than two decades to get La Canada Flintridge Town Center planned and approved.
“There is a lot of capital chasing relatively few deals” in that category, he said.
The mall is 88% occupied. Other tenants include home furnishing store HomeGoods and Taylor’s Steakhouse. The headquarters of Sport Chalet Inc., which are next door to the mall, were not included in the sale.
German immigrant Norbert Olberz founded Sport Chalet in 1959 in what is now La Canada Flintridge. Building a local mall with a Sport Chalet as the centerpiece was a longtime dream of his, but his campaign to develop the Foothill Boulevard parcel pitched the normally tranquil bedroom community into a furor in the 1990s. The city ended up creating a master plan to guide development.
The recession and fierce competition went on to pound Sport Chalet, and the company went into the red. Its net loss for fiscal 2011 was $3 million, or 21 cents a share, compared with a loss of $8.3 million, or 59 cents, in 2010.
The company’s stock is down 40% so far this year, but Sport Chalet is making positive strides, Chief Executive Craig Levra said Friday. It showed a small profit in the first quarter of its current fiscal year.
Sport Chalet has negotiated $37 million in rent reductions for its 55 stores and has seen a 110% increase in online sales, Levra said. The La Canada store is where new merchandise is tested
“We are after people who are serious about the sport they are in and participate to a large degree,” he said. “Our strategy is to be first to market with performance technology and lifestyle merchandise.”
The company’s stock fell to just a few cents a share in 2009 after trading for more than $11 a share in 2007. It closed Friday at $2.24.
IDS leases, manages or has built more than 1 million square feet of retail space in the West. Among the projects it has developed is Crown City Center, an office building at 888 E. Walnut St. in Pasadena.
