News Summary
Regency Centers Corp. has purchased five retail centers in South Orange County for $357 million, marking a significant milestone in the retail real estate sector. The centers, including Bridgepark Plaza and Mercantile East, cover nearly 630,000 square feet and boast impressive occupancy rates. This acquisition reflects strong investor confidence in brick-and-mortar retail, particularly in affluent markets like Ladera Ranch, and indicates potential future development opportunities for Regency Centers and the sellers.
Lake Forest, California – Regency Centers Corp., a Jacksonville-based real estate investment trust, has made a significant move in the retail sector by acquiring five retail centers in South Orange County for $357 million. This transaction marks one of the largest retail deals in Orange County in the past decade.
The shopping centers, which were purchased from Westar Associates and Rancho Mission Viejo Corp., include Bridgepark Plaza, Mercantile East, Mercantile West, Sendero Marketplace, and Terrace Shops. Combined, the properties encompass nearly 630,000 square feet of retail space, with all five centers reportedly being 97% occupied at the time of sale.
Located in affluent areas near the 23,000-acre Rancho Mission Viejo in Ladera Ranch, these shopping centers have shown impressive sales figures as well. Grocery store sales within the centers approached $800 per square foot, significantly exceeding the national average of $500 per square foot, according to data from the Food Industry Association (FMI).
The acquisition is seen as a strong indication of investor confidence in brick-and-mortar retail, particularly in wealthier markets like Ladera Ranch. Furthermore, it enables Westar and Rancho Mission Viejo to transition their ownership interests into a larger investment in Regency Centers, suggesting a strategic move towards further investment opportunities in the region.
Regency Centers completed the purchase at a price of $567 per square foot, which is noteworthy when compared to prior retail transactions in the area. For instance, Blackstone Inc. recently acquired a national portfolio for $4 billion at approximately $372 per square foot, while DRA Advisors purchased a 45-property portfolio for $263 million, equating to $302 per square foot.
Details of the Retail Centers
- Bridgepark Plaza: Located at 27702 Crown Valley Parkway in Ladera Ranch, this plaza features tenants like Albertsons, Burger King, Chase Bank, and Starbucks.
- Mercantile East: Situated at 27612 Antonio Pkwy, this center includes AT&T Wireless, Chick-fil-A, Five Below, Home Goods, Lucky Strike, McDonald’s, and Panda Express.
- Mercantile West: Found at 25612 Antonio Pkwy, it houses tenants such as Choya Japanese Cuisine, Crumbl Cookies, CVS Pharmacy, Rancho Capistrano Winery, Stater Bros. Markets, and U.S. Bank.
- Sendero Marketplace: Located at 30721 Gateway Place in Rancho Mission Viejo, the center features Chase Bank, The UPS Store, F45 Training, Jersey Mike’s, In-N-Out Burger, Nektar Juice Bar, and Yogurtland.
- Terrace Shops: This shopping area, located at 1101 Corporate Drive in Ladera Ranch, includes Domino’s, Ladera Ranch Animal Hospital, Lola’s Café, Mathnasium, Sola Salon Studios, and Tian Tian Eatery.
Background on Rancho Mission Viejo
Rancho Mission Viejo has a rich history, having been acquired by Richard O’Neill Sr. in 1882. Over the years, it has transformed into various communities, including Mission Viejo and Ladera Ranch, now home to approximately 225,000 residents. Plans for future development in Rancho Mission Viejo include an expansion of 14,000 homes and 5.2 million square feet of commercial space.
As a publicly traded real estate investment trust valued at $13.4 billion, Regency Centers manages 482 retail centers across 61 million square feet nationally. Following this acquisition, the company intends to explore potential partnerships with Rancho Mission Viejo for future development opportunities, which could further shape the retail landscape in South Orange County.
The sale was structured as an UPREIT (Umbrella Partnership Real Estate Investment Trust), which permits Westar to defer capital gains taxes while retaining investment benefits. The closing financing for this major deal included $72 per unit of OP units, assuming $150 million in secured mortgage debt, and $7 million in cash to settle another secured loan.
For this transaction, BofA Securities served as financial advisors, while EY provided tax advisory services for Westar. Legal guidance was offered by Paul Hastings and Latham & Watkins for the involved parties.
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Additional Resources
- Orange County Business Journal: South County Shops Sell for $357M
- CoStar: Regency Centers Adds to Suburban Retail Boom with Record Orange County Deal
- Orange County Business Journal: Regency Centers Buys Retail Plazas for $357 Million
- Patch: Bowling Alley Opens Doors in Ladera Ranch
- Orange County Register: Costco Wants to Add a Retail Warehouse in Lake Forest
- Wikipedia: Rancho Mission Viejo
- Google Search: Regency Centers
- Google Scholar: Retail Real Estate
- Encyclopedia Britannica: Real Estate
- Google News: Orange County Retail
Author: STAFF HERE HUNTINGTON BEACH
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