The Source, the 600,000-square-foot mixed-use entertainment center in Buena Park that opened about four years ago, is up for sale.
Lynwood-based M+D Properties is looking to sell the mega-development along Beach Boulevard, which includes a retail center, office building, and a yet-to-open hotel.
An asking price hasn’t been disclosed.
The nearly 400,000-square-foot retail portion of The Source is the largest retail project to be built in Orange County in over a dozen years. It’s not far from the city’s best-known attraction, Knott’s Berry Farm.
Its collection of shops, restaurants and entertainment options were designed to cater to the region’s Korean community.
The hotel component of the project, a seven-story, 178-room development expected to be a Hilton and operated by Interstate Hotel & Resorts, filed for Chapter 11 bankruptcy protection in February after the developer ran into a dispute with its current lender.
Bankruptcy filings indicate that brokers with NAI Capital were approved to list the hotel development component of the project for sale a few weeks ago.
NAI now says it is looking to sell the entire Buena Park project, along with another well-known asset of M+D Properties, Plaza Mexico, a 501,800-square-foot mixed-use center anchored by Food 4 Less in Lynwood.
“This is a unique and exciting opportunity for an investor to acquire regional lifestyle and entertainment centers with the opportunity for further development,” Ted Attalla, a broker with NAI’s Torrance location, said in a statement.
Attalla has the listing with David Shaby III, as well as Chris Jackson, Todd Lorber and Grant Bullen of NAI’s Encino office.
“It is absolutely impossible to assemble this much land for development/re-development in Southern California. The potential upside for both properties is tremendous,” Attalla said.
Bankruptcy Issues
There’s no indication in court filings that the retail or office portion of the Source has fallen into the same financial hardship as the hotel development, unlike other assets owned by M+D Properties.
The Lynwood-based Plaza Mexico shopping center filed for Chapter 11 protection around the time the Source Hotel development site did.
That property was appraised at $170 million in late 2020, according to court filings.
Plaza Mexico defaulted on $106 million of senior loans and $14 million of mezzanine debt, due to the pandemic, court filings indicate.
EB-5 Backed
The nearly 13-acre Buena Park project was initially financed by the developer’s investment and financing arm M+D Regional Center, which had EB-5 regional center designation by the U.S. government. The EB-5 program granted visas to individuals outside the U.S. that invest in projects deemed beneficial to an area’s economic development.
It was reported in 2012 that the city of Buena Park gave the project a boost by promising to pay M+D the equivalent of 55% of the sales tax revenue the project generates for the next 30 years.
M+D has envisioned adding a bevy of apartments and other amenities to nearby sites in Buena Park.
The Source Hotel LLC listed assets and liabilities each in the range of $50 million to $100 million in its initial bankruptcy filing.
The hotel is about 85% completed, according to the developer. Lender Shady Bird, in court filings, has questioned how close to operation it actually is, and says that delays in development are leading to costly issues at the construction site that could add millions more to its cost.
