BURBANK, CA—Tourmaline Capital has purchased Plaza del Sol, a fully occupied retail center, for $26 million from an affiliate of Barco Real Estate Management operating as HRB Plaza Del Sol LLC. Located in Burbank, CA, the 166,216-square-foot retail center is anchored by a Vallarta Supermarket.
According to Geoff Tranchina, SVP at Wilson Commercial Real Estate, who represented the buyer in the transaction along with senior investment advisor Jason Gribin, Tourmaline Capital bought the property because it was in a well-located infill market and a tenant roster of service businesses and a grocery store, which can be difficult to find in this tight retail market. “In this type of environment, sophisticated buyers are focused on acquiring high-quality assets with potential (or contractual) NOI growth that may offset future increases in interest rates,” Tranchina tells GlobeSt.com. “Opportunities still exist but you have to be creative while at the same time, extending your holding period to take advantage of the longer-term trends.”
This asset sits on 11.4 acres. In addition to Vallarta Supermarket, Powerhouse Gym, Oakwood Corporate Housing and Freshology also occupy the center. The center serves North Hollywood and Sun Valley as well as the Burbank submarket, reaching a customer-base of over 500,000 people with an average household income of $62,000.
“Retail in L.A. continues to be one of the most attractive sectors in the investment universe. Scarcity, lack of new development and demographic trends will continue to push pricing higher for class-A product,” Tranchina says. At a recent RealShare Los Angeles conference, experts noted that retail values were strongest in centers like these with grocery stores, gyms and other service-driven tenants. However, Tranchina explains that values are rising for all retail property types, especially if you bought it at the right time. “If you invested in 2009-2011, when fear was high and capital was scarce, your investment has likely appreciated in value, and in some cases quite substantially just from market timing. Today, we often see pricing getting way ahead of the fundamentals so the risk is greater for buyers than over the previous six years.”