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$47 Million Shopping Center Sale Sets Record

The Woodland Hills Shopping Center, a fully leased block-long retail strip, has been sold to new owners who are considering a complete tear-down of the property. The 110,000-square-foot center was purchased by Paragon Commercial Group of El Segundo for $47 million from Fort Worth, Texas private investment firm TPG Capital LP in an off-market transaction. It’s the area’s largest retail sale – and second-priciest on a square-foot basis –this year. The center on Topanga Canyon Boulevard, which spans from Erwin Street to near Victory Boulevard, sold for $430 per square foot. Only the nearby 10,000-square-foot Topanga Willows Shopping Center, which went for $446 per square foot in March, was pricier, according to data from the Los Angeles office of Colliers International. The Woodland Hills Shopping Center is 100 percent leased, according to real estate data firm CoStar Group Inc. Among the tenants are Toys “R” Us, Off Broadway Shoes and smaller restaurants and shops. But Mark Harrigian, principal at Paragon, said the property was mostly attractive for its potential, given all the development that is planned nearby. Westfield Group of Australia is planning its $500 million mixed-use development connecting the Westfield Topanga and Westfield Promenade malls. And United Technologies Corp. plans to turn the 47-year-old Rocketdyne site into a development with a hotel, residences, offices and retail. “It’s a well-located piece of property. And in today’s market, you’ve got to pay to get property in such a great location,” he said. Harrigan added the firm will operate the center as is for the next few years, but sees long-term opportunity in recasting the space. “Eventually we may tear some of the buildings down and re-work the density,” he said. “We could go mixed-use or maybe medical offices too. At the end of the day, it’s irreplaceable real estate. And that’s what matters.” Todd Nathanson, president of Encino firm illi Commercial Real Estate, who was not involved in the transaction, said the price almost guarantees Paragon will redevelop the property. “In its current configuration, that center is big box and it doesn’t yield the type of rates that warrant that price tag,” he said. “This is the hub now and it all starts with Westfield. It’s clearly a time for opportunists.” Bill Bauman, executive vice president, and Kyle Miller, corporate managing director, at the L.A. office of Studley Inc., represented both the buyer and the seller in the deal, which closed last month. Bauman said the deal took about 90 days and was never formally listed. “The seller had expressed an interest in selling the property and we brought it to Paragon off-market. The buyers were very interested right away,” he said. Paragon owns several retail centers throughout L.A. County, including the 73,000-square-foot Carson Shopping Center. Sunny Investment Public Storage Inc. sees opportunity in Florida. The Glendale operator of storage facilities invested almost $142 million in Palm Beach County, buying up nine self-storage facilities. The total acquisition brings the company an additional 872, 314 square feet of space. And in its second quarter earnings release, the company alluded to more acquisitions on the way. In the third quarter, Public Storage plans to buy 29 self-storage facilities for about $374 million in cash, with 21 of those properties in Florida. Public Storage did not return calls seeking comment. But in the company’s second quarter earnings call, Chief Executive Ronald Havner said the acquisitions stem from beneficial market conditions as property prices rise. “It is a sellers’ market generally, and I think that’s bringing out higher-quality portfolios than we’ve seen in some time, and so we’re actively looking at those and obviously acquiring some of them,” he said in the call. Public Storage can afford the acquisitions. In the second quarter, the company reported strong increases in funds from operations. It has about $411 million in cash and cash equivalents on hand. Public Storage operates more than 2,200 locations in the United States and Europe. Staff Reporter Elliot Golan can be reached at (818)316-3123 or egolan@sfvbj.com.

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