The Kaleidoscope, the prominent but beleaguered shopping mall in Mission Viejo that has struggled to sustain foot traffic and tenants over the past two decades, has sold for $33.5 million in a sign of a new future for the property.
An entity whose execs count ties to Continuum Analytics, a Newport Beach-based investment firm that’s currently wrapped up in the Hotel Laguna portfolio dispute in Laguna Beach, paid about $138 per square foot for the retail center, on the low end for local retail transactions of late.
Westport Capital Partners LLC sold the property for a 52% premium over its 2010 acquisition of the mall, which spans roughly 243,000 square feet along Crown Valley Parkway, fronting the San Diego (5) Freeway.
The mall was about 50% leased at the time of its prior sale. That occupancy has since climbed to north of 70%, according to the new owners, operating under Tenet Sac Holdings LLC, with the mall’s largest tenants including a Regal Edwards cinema, an LA Fitness, a laser tag arena and Burke Williams Day Spa.
Efforts are underway to lease the mall and breathe new life into the property, according to Michael Kluchin, a Ladera Ranch resident who heads the local operations of Continuum Analytics, a consulting firm for owners of real estate.
New tenants that have recently inked deals at Kaleidoscope include Mariners Church and a DMV outpost, according to Kluchin.
“We are currently focused on leasing up the property and bringing back foot traffic to the center to maximize its potential, though we are open minded to new uses for the property in the long term,” Kluchin told the Business Journal.
Portions of local malls have been trading for land value of late as investors eye redevelopment opportunities; a portion of Westminster Mall sold last year for more than $3.2 million per acre to Shopoff Realty Investments, which is planning a mixed-use redevelopment including housing and hospitality.
Continuum Analytics paid roughly $6.8 million per acre for The Kaleidoscope.
Mariners Church is expected to open its location on the second floor of the center this year, while the DMV, also on the second floor, will open sometime next year.
“We’re putting in some good draws for families that should liven up the center,” Kluchin said.
Slow Traffic
Marketing materials for 4.9-acre site note “significant barriers to future development” in the area, and said that Kaleidoscope offers “a predictable income stream to complement the opportunity to add value through lease-up of available space and enhancing the established framework of the property into a best-in-class mixed-use destination.”
The site is close to Providence Mission Hospital’s expansive campus in the city, as well as Saddleback College.
Any new uses for the mall would add to an ongoing swing of shopping center conversions across the county.
The property is across the street from the Shops at Mission Viejo, which has been envisioned as a potential source for new housing and other uses from its owners in recent years.
Other notable centers in Orange County facing redevelopment include the former Laguna Hills Mall, Buena Park Mall and Santa Ana’s Main Place Mall.
The Kaleidoscope was built in 1998 for $55 million, records indicate. It has sold four times since its opening; the $33.5 million paid for it this year is the most it has traded hands for, according to real estate records.
Westport Capital tried to breathe new life into the center following its 2010 acquisition, signing on Union Market, a food hall concept, to take over a former Crunch Fitness, and bringing on other tenants like LA Fitness.
Still, poor tenant visibility and parking have been cited as large pain points for the mall since its opening.
Residential
Any potential residential redevelopment of The Kaleidoscope would join several other Class A multifamily projects that have sprouted up in recent years on the other side of the 5 Freeway in Laguna Niguel, giving a revitalized feel to the area.
Such projects include Blu Laguna Niguel, a 426-unit apartment tower delivered in 2020; the 299-unit Vilara complex, built in 2019; and the 111-unit Watermark Laguna Niguel, a new high-end assisted living facility developed by Alliance Residential.
Up the street from The Kaleidoscope lies a redeveloped retail site owned by Newport Beach-based Burnham Ward Properties; tenants at the Gateway in Mission Viejo include an Amazon Fresh grocery store.
Laguna Beach Dispute
Continuum Analytics is headed by Michael Kluchin, the new owner of The Kaleidoscope in Mission Viejo. He has been wrapped up in an extensive real estate portfolio dispute elsewhere in Orange County.
The firm, under the name MOM Laguna, is currently working through the legal process to obtain full control of a $500 million real estate portfolio once headed by businessman Mo Honarkar.
The sprawling portfolio in Laguna Beach and Newport Beach consists of nearly two dozen properties, including the iconic Hotel Laguna, which became the focal point of the legal dispute earlier this year as both Honarkar and affiliates of Continuum Analytics attempted to take control of the asset.
Hotel Laguna was temporarily shuttered as part of the dispute, but has since reopened, with a judge granting an injunction in favor of MOM Laguna to oversee the operations of Hotel Laguna and a nearby boutique hotel dubbed 14 West, preventing Honarkar’s involvement in those two properties.
The remainder of the portfolio—which includes the Laguna Arts Districts and other commercial buildings along South Coast Highway, as well as a vacant land parcel in Newport Beach envisioned to hold a new apartment building—remains in flux as both parties look to gain full portfolio control.
The origin of the legal case dates back to 2021, when Honarkar was facing a deadline for a $195 million loan taken out a few years prior to finance his local portfolio acquisition.
He sought investment partners to help refinance the loan and found a willing partner in the form of Continuum Analytics.
As part of that deal, Continuum claims Honarkar contributed all of his assets to Continuum’s group of investors, giving them management oversight of the portfolio.
“We are proceeding under the operating agreement that Mo signed when he contributed over all of his assets to our joint venture,” Kluchin told the Business Journal.
“We have full and absolute authority to control these assets.”
As such, Continuum, operating under the MOM Laguna ownership group, recently opened a restaurant dubbed Terra Laguna Beach on the Festival of the Arts grounds. The company has also been operating Hotel Laguna’s two restaurants: Larsen and Fin.
“We’ve been successful thus far in operating these properties,” Kluchin said, adding that the firm’s next goal is to renovate and open the hotel’s 66 guest rooms.
Honarkar, meanwhile, has moved for arbitration, in which he hopes a judge will side with his pleas for portfolio management.
Additional court cases have been scheduled to finalize the ownership and operations of the portfolio.
