2 South Bay Malls Sell for About $225 Million
A large publicly held real estate company and a boutique-size investor have separately purchased a pair of popular South Bay shopping centers valued at nearly $225 million.
The deals appear to reflect continued investor confidence in the Southern California economy--and well-anchored shopping centers in particular.
Cleveland-based property giant Forest City Enterprises just repurchased a half-interest in the Galleria at South Bay in Redondo Beach in a transaction valuing the property at $116 million. Forest City, which developed the mall in the mid-1980s, once again owns the Galleria outright.
A few miles to the south, real estate finance and investment specialist Pacific Coast Capital Partners, which maintains offices in El Segundo and San Francisco, is expected to close its estimated $108-million purchase of the Torrance Crossroads this week. Torrance-based La Caze Development, Crossroads’ longtime property manager, will continue to operate the center and take a small ownership stake.
Galleria at South Bay, which includes about 1.13 million square feet of retail space, is anchored by Nordstrom, Robinsons-May and Mervyn’s and includes a General Cinema theater complex. It is 96% occupied, with tenants generating average annual sales of more than $400 per square foot of floor space.
In 1992, Forest City sold California Public Employees’ Retirement System a 50% stake in the Galleria property, which opened in 1985 at Hawthorne and Artesia boulevards. That sale reportedly valued the property at about $110 million.
Forest City plans to invest another $10 million into renovations. Regional leasing director Lisa Chatham said an 80,000-square-foot Home Depot Expo Design Center is also about to open at a strip center the company owns just south of the Galleria.
The company recently completed malls in New York, Atlanta and Pittsburgh. Forest City also owns the Antelope Valley Mall in Palmdale and the Promenade in Temecula.
Torrance Crossroads, at Crenshaw and Lomita boulevards, includes just under 500,000 square feet of retail space. The fully leased property features “big-box” anchor tenants Home Depot and Sam’s Club as well as Longs Drugs, Office Depot, Petco and a Vons supermarket.
Developer Overton Moore Properties completed the Crossroads in 1992, in a venture with an institutional client of Boston investment advisor AEW Capital Management. Pacific Coast Capital is buying the property, while retaining the management group headed by developer Norm La Caze.
The property’s location at the foot of the Palos Verdes peninsula prompted the developers to design Crossroads with higher-end architectural touches than would typically be seen with a value-oriented shopping center, said La Caze manager John Mastandrea. He said the center is generating sales “north of $350 per square foot.”
The Pacific Coast Capital group, headed by partners Nicholas Colonna and William Lindsay, has been a partner of Overton Moore in nearby development projects, including the Port Los Angeles Distribution Center in San Pedro and the Cross Pointe commercial development near El Segundo.
Overton Moore and AEW hired Los Angeles real estate investment banking firm Secured Capital Corp., which teamed with brokerage Colliers Seeley to represent the sellers.
Commercial property investment broker Larry Krasner noted that real estate investors remain attracted to shopping centers featuring strong national retailers.
