Laguna Hills Mall Up for Sale as Part of $1-Billion Portfolio

The Laguna Hills Mall soon will be sold by its owner, Pan American Properties, which is divesting all of its real estate holdings in the United States, a company official said Wednesday.

Brian Vernon, vice president of acquisitions for Pan American Properties, a New York-based real estate investment trust owned by a pension fund for British coal miners, said the mall and an adjoining strip mall are being sold as part of a portfolio of real estate holdings.

Vernon said Pan American hired Morgan Stanley & Co. four months ago to market its real estate. Since then, he said, several potential buyers have begun to participate in competitive bidding. He said the company estimates the gross value of the portfolio, including about 58 properties, at $1 billion. He said he expects a sale to be completed in November.

The 808,000-square-foot Laguna Hills Mall generated sales of nearly $133 million in 1987, the last full year for which the State Board of Equalization has statistics. That year the mall ranked sixth among 14 malls in Orange County.

In 1988, the mall, showing the symptoms of a nationwide retail slump, posted sales of $88.6 million in the first three quarters of the year, down from $91.1 million for the same period of 1987.

Located on 72 acres, the mall has four department stores--Broadway, Buffums, Sears Roebuck & Co., and J.C. Penney Co.--and 80 smaller shops. It shares a parking lot with the Laguna Hills Shopping Center, which Pan American also owns. The center contains 40,725 square feet of strip retail space with 11 tenants.

The mall was built as a joint venture between Rossmoor Corp. and the Ernest Hahn Co. at El Toro Road off Interstate 5 near Leisure World. It opened in 1973.

In 1984, Hahn sold the mall to Pan American Properties for an undisclosed price. Vernon said the mall has been “very profitable” for the company.

Other notable properties in the Pan American Properties portfolio, Vernon said, include the massive Watergate complex of condominium, retail, office and hotel buildings in Washington and the Hartford Building, an office high-rise at 650 California St. in San Francisco.

Vernon said the United Kingdom’s National Coal Board began investing pension funds in U.S. real estate in 1979, when it bought the entire portfolio of Continental Illinois Properties, another real estate investment trust.

But he said the Coal Board became discouraged by a flattening in the value growth of real estate in recent years and decided to switch to other kinds of investments.