Merlone Geier has seen both sides of the pricing spectrum in 2020, with the San Diego retail investor and developer trading notable properties in pre-, and now post-COVID-19 deals.
The company in late September sold the 285,000-square-foot Fullerton Crossings shopping center for about $86 million, property records indicate.
The Fullerton power center—a 30-acre property a few blocks west of the Orange (57) Freeway, along Placentia Avenue—is anchored by a Sam’s Club and Home Depot, the latter of which has been a tenant since the mid-1980s.
The home improvement giant and Sam’s Club recently completed upgrades to its facilities; the two anchors have leases that run for another 19 and 15 years, respectively.
Fullerton Crossings sold for about $300 per square foot, according to property records.
2nd Big Sale
September’s transaction marks the priciest reported retail sale in Orange County since the onset of the pandemic, and the second-priciest retail deal of the year in OC.
The most expensive deal in OC was another Merlone Geier sale, for a collection of six neighborhood shopping center across OC totaling some 700,000 square feet.
Those six centers—one each in Dana Point, Irvine, Lake Forest, and Mission Viejo, and two in Huntington Beach—sold for a cumulative price of nearly $290 million, according to reports. They traded hands prior to the pandemic, at a price of about $424 per square foot, according to records.
ShopCore Properties, a retail arm of private equity giant Blackstone Group whose West Coast offices are in San Diego, bought that collection of buildings.
Irvine Co. Ties
The buyer of Fullerton Crossings is yet another San Diego investor: Realty Income Corp. (NYSE: O).
The $21 billion-valued real estate investment trust is known for buying free-standing, single-tenant commercial properties.
Its executive team has deep knowledge of OC’s retail market; it’s non-executive chairman is Mike McKee, long the No. 2 executive at Irvine Co., OC’s largest real estate owner. He left Newport Beach’s Irvine Co. in 2008 and has since taken on several executive positions in the real estate world; he currently serves as a principal at Peter Ueberroth’s Contrarian Group.
Despite having anchor tenants whose financial results have been strong during the pandemic, the $86 million price for Fullerton Crossings fell short of prior expectations.
When the center first hit the market in March 2019, brokers quoted a listing price closer to $100 million. Eastdil Secured had the listing for the center, according to CoStar Group Inc. records.
The deal for Fullerton Crossings is the highest-priced retail sale reported in OC since April, when a private retail investor based in Roseville acquired a 133,000-square-foot Home Depot store in Brea.
That stand-alone center traded for nearly $45 million, or $337 per square foot.
Future Plans
Merlone Geier remains in the early stages of the entitlement process for its most closely watched development site in OC, the Five Lagunas mall in Laguna Hills, renamed Village at Laguna Hills last year.
The most recently-announced plan from the developer for the site calls for turning the property into a mixed-use project with as much as 250,000 square feet of retail and as much as 390,000 to 520,000 square feet of office space, apartments and a 125-room hotel.
A timeframe for the project remains in limbo.
