The owner of the struggling Kaleidoscope shopping center,in the shadow of the newly renovated Shops at Mission Viejo,is in escrow to sell the 2-year-old mall, according to sources close to the company.
The buyer is an unnamed Seattle-based company, the sources said, adding that the deal comes after one with another potential buyer fell through.
Kaleidoscope owner Samsung Pacific Construction Inc., the La Mirada-based unit of South Korean conglomerate, put the center on the market four months ago for an undisclosed sum. Samsung built the center for $60 million with Triangle Square developers Pacific Development Partners of Beverly Hills, and became the sole owner after it purchased PDP’s stake in the company a year ago.
Don Paskewitz, senior vice president of Samsung Pacific, an affiliate of Samsung Group, would not comment on the sale.
The 210,000-square-foot center, anchored by Bristol Farms, Edwards Theatres, Crunch Fitness and Zany Brainy, has been struggling to attract tenants and shoppers since its inception. About a quarter of the center, or 10 stores, has remained vacant since the center’s opening in September 1998.
Sales for the first two quarters of 2000 were $6.7 million, compared with $5.8 million for the same period in 1999, according to taxable sales data supplied by the city of Mission Viejo. In 1999, when the center was slowly filling its space, Kaleidoscope reported sales of $12.9 million for the year, or $62 per square foot.
In comparison, 8-year-old Triangle Square in Costa Mesa,OC’s only other multi-level shopping center,has 21 tenants, including Niketown, Virgin Records and Whole Foods Market in 190,000 square feet and annual sales of roughly $30 million, or $157 per square foot. Triangle Square sold for a reported $47 million in June 1998, roughly $13 million less than what it cost PDP and San Francisco-based Capital & Counties USA to develop the center.
“A mature center of its size should be doing about $30 million in annual sales, or $150 per square foot,” said Ken Gould, senior vice president of Lee & Associates in Newport Beach.
Kaleidoscope’s 1998 debut came on the heels of the opening of Irvine Spectrum Center’s second phase and the opening of the Block at Orange. Sales at these much larger centers are roughly $182 and $155 per square foot, respectively, based on 1999 figures compiled by the Business Journal.
Don Rubin, owner of Mako Surf, Skate & Snow, said he is looking forward to a new owner filling up the center’s vacancies and putting more money into marketing.
“When we moved in a year ago, our intention was that they would fill up, but the (previous) owners had allowed a lot of (tenants) to slip through their fingers,” Rubin said, citing Ruth’s Chris Steak House and the Yard House. “I hope the new owners will be more aggressive.”
Other tenants said potential stores that the center’s management failed to sign included Sports Chalet and Nordstrom Rack.
“The new management is going to be a plus,” said Jeff Cook, owner of the newly opened Natale Coffee. “They will hopefully spend more money on the center and lease stores so we can get more business in here. The current owners refuse to lease spaces and the center has lost valuable stores by not playing ball with them and in turn cost a lot of money to store owners. Yard House was due to come in and property management didn’t play and it went to Spectrum.”
On the Friday after Thanksgiving, one of the busiest shopping days of the year, Kaleidoscope was a virtual ghost town with just a handful of shoppers visiting stores such as Zany Brainy and picking up deals at the sale held at Mako Surf Skate & Snow. n
