Retail Investors Find Better Yields in the Valley

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GlobeSt.com

LOS ANGELES—Retail investors are heading to markets in the valley for better yields. Two separate investors acquired value-­add shopping centers in Oxnard and Palmdale for a combined $27 million. The two purchases show a trend of investors looking for investment opportunities in alternative markets as cap rates continue to compress in Los Angeles.

“Cap rates are still compressing and premiums are consistently being paid for quality in­fill Los Angeles retail,” Bill Asher, EVP of Hanley Investments and one of the brokers who worked on the two transactions, tells GlobeSt.com. “Areas north of Los Angeles like Oxnard or Palmdale have become viable alternatives for investors chasing better yield, yet still retaining a secure location and tenant mix, with future upside.” Asher along with Hanley Investment president Ed Hanley and SVP Kevin Fryman represented the seller in the Oxnard transaction and the buyer and seller in the Palmdale transaction.

A private investor purchased Vineyard Plaza in Oxnard for $17.6 million. The 64,421­square­foot shopping sits on 5.47 acres. It is 85% occupied by a mix of national tenants that include Big 5 Sporting Goods, US Bank, Carl’s Jr., Circle K, US Armed Forces, H&R Block, State Farm and Waba Grill. The sale of the property generated strong interest from serious prospective buyers, eventually going to a 1031 exchange buyer operating under the name 23560 Crenshaw LLC.

The Palmdale Promenade in Palmdale traded hands for $9.3 million between two unnamed private investors. The 96,352­square­foot shopping center sits on 5.52 acres and is 82% occupied by a tenant mix that includes HomeTown Buffet, Leslie’s Pool Supplies, Payless ShoeSource and Subway. “Palmdale Promenade generated a great deal of activity as it was priced below replacement cost and offered an opportunity for an investor to increase the yield by approximately 250 basis points following the lease­up of the remaining available space,” says Asher about the sale.

Other surrounding Los Angeles neighborhoods like Hawthorne and Carson have also been popular for investors looking for higher yields. Earlier this month, for example, Hawthorne X LLC purchased the Hawthorne Exchange property from Danros and Cal Select Properties for $25 million, with a 6.53% cap rate. The four ­building property is a 60,352­square­foot retail center occupied by 14 triple net lease tenants. The purchase included the assumption of a $16 million conduit loan.