Paragon Commercial, Canyon Catalyst JV Acquires 158 KSF Retail Center in Rancho Mirage, Calif.
- Apr 10, 2014
A joint venture between the Canyon Catalyst Fund and Paragon Commercial Group has made its first retail acquisition in California – the 158,156-square-foot Rancho Las Palmas shopping center in Rancho Mirage.
The property, which is 50 percent occupied, was acquired from Wells Fargo NA for an undisclosed amount. Jim Dillavou, a principal at Paragon, told Commercial Property Executive the JV plans to spend about $13 million over the next several years to redevelop the neighborhood shopping center at the intersection of Bob Hope Drive and U.S. Highway 111. He said primary upgrades will be improving the visibility of the stores, particularly anchor stores, from the highway and creating new entrances into the site, which is adjacent to The River, a major retail and entertainment center in the Coachella Valley.
Main tenants of Rancho Las Palmas now are CVS and Wells Fargo, but the developers plan to buy a city-owned building housing the Chamber of Commerce at the front of the property and construct a new standalone store for CVS, Dillavou said. He confirmed the group is negotiating with Hobby Lobby to take about 55,000 square feet for one of two stores the chain is planning for the Coachella Valley.
Dillavou added that the JV is seeking a tenant for the space previously occupied by Vons grocery store. He said they are talking with some soft goods retailers about the 35,000-square-foot space that Vons had, but would prefer a supermarket.
“We are primarily focused on tenants that are daily needs driven to generate a lot of foot traffic for the tenants,” he told CPE.
The acquisition was made through the Canyon Catalyst Fund, which is a joint venture between Canyon Capital Realty Advisors and the California Public Employees Retirement System (CalPERS) that is designed to identify and develop emerging real estate managers while investing up to $400 million in investments throughout California. The JV between Canyon Catalyst Fund and Paragon, an El Segundo, Calif.-based retail investment owner, developer and management firm, was announced in July and is expected to result in $60 million to $100 million of retail property acquisitions in urban markets in the state.
“The team at Paragon Commercial Group possesses the best-in-class operating capabilities and strong retail relationships, which will benefit both the Rancho Las Palmas shopping center and the City of Rancho Mirage,” Maria Stamolis, senior managing director at Canyon Capital Realty Advisors, said in a release.
Dillavou said the joint venture is evaluating value-add, in-fill properties from San Diego to Northern California and expects to make more acquisition announcements soon. He said they would be focusing on neighborhood shopping centers with daily needs-driven tenants similar to Rancho Las Palmas.
Paragon was founded in 2009 by Dillavou and principals Mark Harrigan and Erwin Bucy, all former executives at Regency Centers Corp. They have more than 50 years of collective retail experience and have acquired or managed more than 10 million square feet of neighborhood and community centers on the West Coast. Their deep market knowledge and extensive tenant relationships provide a pipeline of retail investment opportunities.