Record-Breaking Retail Sale Closes in Orange County

CBRE has facilitated the market’s highest-priced retail purchase of 2018, with the Huntington Beach asset changing ownership from Watt Cos. to Stockbridge.
Edinger Plaza
Edinger Plaza

Stockbridge, on behalf of its Smart Markets Fund, has acquired Edinger Plaza, a 155,275-square-foot power shopping center in Huntington Beach, Calif., from Watt Cos. CBRE’s National Retail Partners-West team mediated the deal. According to the firm, the sale represents the highest-priced retail property to trade in Orange County so far this year, besting the $46.5 million sale of the Bristol Center in Santa Ana, which was also completed by the NRP-West team earlier in June. CBRE would not comment on the price of Edinger Plaza, but records show that the property sold for $65.5 million. 

Located at 7490-7664 Edinger Ave., Edinger Plaza is right across the street from Bella Terra and in proximity to Costco and hundreds of residential units. Watt Cos. developed the retail asset in 1976 on roughly 13 acres, and the property underwent an extensive redevelopment in 2012.

“After two decades of selling retail, we’ve found there is always a market for best-in-class assets,” Philip Voorhees, CBRE’s executive vice president, told Commercial Property Executive. “With a limited retail development pipeline since the Great Recession in the primary, coastal markets of the West Coast, a real shortage of ‘core’ retail properties is available for sale.”

In the case of Edinger Plaza, he added that the original developer found this the right time to sell and create liquidity for its partners who invested in the project.

“Despite increases in the US 10-Year Treasury Yield in the past 14 months, interest rates remain historically low. Rental rates are at or above peak levels of the last cycle and occupancy is high. It’s a great time to sell and create liquidity,” Voorhees said.

Top-notch retail roster

Edinger Plaza
Edinger Plaza

At the time of the deal, the shopping center was 99 percent leased to a tenant roster that includes Nordstrom Rack, Dick’s Sporting Goods, PetSmart, Michaels and a variety of other national and regional credit tenants.

With this sale, CBRE’s NRP-West team increased its transactions to more than $10.9 billion. Joining Voorhees in the deal were CBRE retail experts Megan Wood, Jimmy Slusher and Sean Heitzler. Their marketing efforts resulted in approximately 410 managed bid offers and multiple offers to purchase the property.

“As you would expect, Edinger Plaza drew strong interest from the investment marketplace,” Voorhees said. “Given the current lower leverage debt financing market, however, many private capital investors that would have loved to own Edinger Plaza simply could not be competitive due to the large equity requirement. The three finalists in the bidding process were a fund manager (Stockbridge, the successful purchaser), a high-net-worth family office and a REIT.”

Images courtesy of CBRE