Del Mar Highlands Town Center in San Diego County serves as a case study in the topsy-turvy valuations of retail properties during the past few years, according to the chief executive of Costa Mesa shopping center owner Donahue Schriber.
The 273,298-square-foot center, in northern San Diego County’s Carmel Valley, was built by Donahue Schriber in 1989 and is considered to be the company’s flagship property. But in late 2009, during the dark days of the last financial crisis, you could have bought a big portion of the Del Mar center for a steal, according to CEO Pat Donahue, whose company’s shopping centers bring in about $200 million of annual revenue.
“Our partner wanted to sell, and you could have bought our partner’s 50% interest for $26 million of equity,” said Donahue, speaking late last month at a commercial real estate forum sponsored by the California State University, Fullerton, Mihaylo College of Business and Economics.
That would have valued the center at about $86 million, factoring in debt.
“I begged anyone I could talk to about giving us $26 million,” but institutional investors balked on the deal, Donahue said.
Fast-forward to today: The center, which recently underwent a $20 million renovation, was just valued at about $195 million, Donahue said.
That works out to a price of more than $700 per square foot for the center.
Donahue, a 1978 graduate of Cal State Fullerton, didn’t disclose who now owns the other portion of the center but noted during the forum that “the best deal we ever did was during the meltdown.”
$113M Plano Purchase
An affiliate of Newport Beach-based KBS Realty Advisors is paying top dollar for another big office building in the Dallas area.
The active investor’s KBS Real Estate Investment Trust III Inc. said in late February it has agreed to pay $113 million for the Town Center office complex, a 522,043-square-foot office park in the Dallas suburbs.
The three-building Plano complex, formerly known as Legacy Town Center and located near a big area shopping center, is trading hands for about $216 per square foot.
A venture between JPMorgan Chase & Co. and Blackstone Group is selling the complex, which was built in stages between 2001 and 2006.
The buildings bring in a little more than $9 million in rents annually, according to the company.
The property’s about 91% leased, although two tenants totaling about 85,000 square feet of space aren’t expected to renew leases that expire later this year, according to regulatory filings.
KBS officials said they plan to fund the purchase of Town Center with proceeds from a bridge loan that’s currently under negotiation, as well as proceeds from the non-traded REIT’s ongoing fundraising. KBS REIT III had raised about $100 million through the end of last year.
The Town Center deal is the latest Dallas-area purchase that’s been made by KBS affiliates of late. The company has been one of the most active buyers of Dallas-area office buildings during the last couple of years, according to The Dallas Morning News.
Other area KBS purchases include the $44.5 million buy of a five-office complex in Richardson, Texas, late last year, and the $62 million buy of a 12-story tower in Dallas in 2009.
“Mac” is Aboard
The California division of land brokerage Land Advisors Organization has hired one of the industry’s bigger names.
Land Advisors—one of the larger brokers of land to developers and homebuilders in Southern California—recently announced it has taken aboard Mackey “Mac” O’Donnell, cofounder of one-time Irvine brokerage O’Donnell/Atkins.
He joins Land Advisor’s Irvine office as a senior marketing consultant, focusing on Riverside County as well as some larger regional accounts for the Scottsdale-based company.
O’Donnell had been working with Mission Viejo-based land-planning and development company Pacific Cascade Group.
Land Advisors’ Irvine office ranked as Orange County’s 13th-largest commercial brokerage in 2010, with about $365 million worth of transactions.
O’Donnell cofounded his namesake brokerage with partner Craig Atkins. The firm brokered more than $1 billion in land sales annually near the peak of the market.
O’Donnell/Atkins began winding down operations in late 2008 amid the housing-market crash. Atkins went on to start up Santa Ana-based homebuilder City Ventures LLC, one of the more active local buyers of land in recent years.
Land Advisors’ local office counts about half a dozen former senior-level executives and brokers from O’Donnell/Atkins.
