FULLERTON, CA—As GlobeSt.com reported last week, an institutional-investment manager has sold Amerige Heights Town Center, a 163,514-square-foot, dual-grocery-anchored retail center here, to Shin Yen International Pty. Ltd., for $48.5 million. GlobeSt.com spoke with CJ Osbrink, associate director of HFF, who along with Ryan Gallagher exclusively marketed the property on behalf of the seller, about the impact foreign buyers are having on retail trades in Southern California.

GlobeSt.com: What impact are foreign buyers having on the retail investment market in Southern California?

Osbrink: Southern California has seen a huge pickup in foreign investor activity recently, and it is creating a much more competitive marketing process for well-located deals. For example, we just worked on a deal, the River at Rancho Mirage, that was sold to a local advisor with a mainland Chinese equity partner. This is the second property our team has sold to a foreign equity buyer in the last few months. They are very active and showing up on every one of our deals. A large driver of this activity is the increase of ultra-high-net-worth individuals looking to place their capital into more tangible investments, as well as improving macroeconomic and retail fundamentals in the US.

GlobeSt.com: Can domestic investors hope to compete with the aggressive capital that foreign buyers are providing?

Osbrink: Absolutely. We're seeing an interesting change-up in the conventional terms of an offer that we have not seen in a long time. Outside of price—which is obviously one of the most critical components to any offer—there is certainty of close, which is the big question mark. These groups are now electing to push on other areas of their offer, such as the deposit, going non-refundable upon execution of a contract, shorter due-diligence and closing periods along with substantial proof of funds.

GlobeSt.com: What types of retail properties are foreign buyers most interested in, particularly in Orange County?

Osbrink: In Orange County, as in other parts of Southern California, they are looking for anything trophy oriented. These are pride-of-ownership assets that show very well and have a trophy appeal to them—something they can put on a brochure and show their investors, whether here or overseas. There is also very strong interest in generational, safe investments that they will hold for the long-term.  

GlobeSt.com: Are these buyers institutional or private?

Osbrink: For foreign investors, it's across the board, a mix of existing developers who have a large portfolio overseas to private high-net-worth-individuals utilizing the EB-5 platform to groups that have enough capital overseas and are able to get that capital here to the US and invest it. It's not just one single profile. The Amerige Heights Town Center deal was a highly competitive asset that catered to a wide profile of buyers from private to foreign to institutional. This was the largest retail transaction so far in 2014 for Orange County and saw a very competitive marketing process due to the lack of retail product for sale in Orange County, coupled with affluent demographics, national tenant roster, and daily needs shadow anchors on each side of the center (Target and Albertson's).