Changes could be in the cards this year for two of Orange County’s largest shopping centers, due to the forthcoming closure of anchor tenant Sears.
This month the struggling retailer announced its latest round of store closures across the country, including 64 Kmarts and 39 Sears stores.
Local stores closing as part of cutbacks include Sears locations at Brea Mall—OC’s fourth-largest shopping center last year, with $494 million in taxable sales—and Westminster Mall, No. 10, with $223 million in taxable sales.
Both locations are scheduled to close in April, resulting in 160 job cuts.
The retailer’s valuable South Coast Plaza location, whose real estate was sold back to the owners of the Costa Mesa luxury mall last year in what many industry watchers expect is a prelude to a big redevelopment, was somewhat surprisingly not part of the latest closures.
Westminster Mall, with about 1.2 million square feet, is owned and operated by Columbus, Ohio-based Washington Prime Group, although its nearly 200,000-square-foot Sears is independently owned by Seritage Growth Properties, a New York-based Sears real estate spinoff.
The main Sears site is now up for lease on Seritage’s website, as is the nearly 18,000-square-foot auto center at the mall, which is at the San Diego (405) Freeway and Bolsa Avenue interchange.
But there’s no indication yet that Seritage’s property at the mall, which includes land, is up for sale.
Despite not owning the Sears buildings at the mall, Washington Prime could still face financial issues, according to recent reports.
The mall has two loans totaling about $80 million tied to a Commercial Mortgage-Backed Securities bond issued in 2014, according to a recent report by credit rating agency Morningstar.
Though the Sears space isn’t part of the collateral for the loan, whose debtor is current in its payments, Morningstar nevertheless cited Westminster Mall as one of six shopping centers whose $302 million in CMBS mortgages are now at risk due to the latest Sears closures.
With the loss of Sears and Kmart as anchors, “We are concerned that these properties could begin to lose in-line tenants if the anchor boxes are not backfilled,” Morningstar said.
Washington Prime, a real estate investment trust valued at about $1.2 billion, was formed in May 2014 following a spinoff from Indianapolis-based Simon Property Group, one of the country’s largest mall owners.
Simon Property, a REIT with a $53 billion market value, owns Brea Mall, which is just off the Orange (57) Freeway. It also recently bought the Sears space there, paying Seritage $68 million to buy out its 50% interest in the property, plus four other properties elsewhere.
The nearly 170,000-square-foot Sears hasn’t yet been listed as available for lease, according to CoStar Group Inc. records.
Bixby President
Newport Beach-based Bixby Land Co. has promoted Aaron Hill to president of the commercial real estate operator and investment manager.
Hill has been with the company for 11 years, and most recently served as executive vice president and chief operating officer.
Bixby owns and operates a portfolio that includes 6 million square feet of office and industrial properties in the western U.S. that the privately held company says are valued at more than $1 billion.
Hill’s new role puts him in charge of its investment strategy and growth objectives.
The company said it plans to purchase an additional $300 million to $400 million in industrial property over the next three to five years.
It’s been active in the creative-office redevelopment business in the past few years across several West Coast markets, but last made that type of purchase in OC in 2015.
Chief Executive Bill Halford, who previously also held the president position, will now focus on strategic direction of the company and building a new equity joint venture, Bixby said in a statement.
