LOS ANGELES—Hong Kong-based investor LT Globalhas purchased the South Hills Plaza shoppingcenter from an unnamed Los Angeles partnership for $20.7 million ata 6.8% cap rate. Sitting on 9.4 acres, the 120,598-square-footproperty is anchored by a Marukai Market and24 Hour Fitness.

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“Timing was necessitated by the partnership's desire forliquidity. The market is strong and improving, and the partnershipfelt this was an optimal time to sell,” CBRE'sPhil Voorhees tells GlobeSt.com. Voorheesrepresented the seller and the buyer in the transaction along withhis CBRE colleagues Jimmy Slusher, MeganRead, Matt Burson, BradRable and John Read.

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The sale generated exceptional interest from institutionalinvestors and private national investors, and received a total of23 offers after the brokerage team distributed nearly 400 marketingpackages. LT Global was the only publicly traded bidder. “The buyeris a sophisticated, publicly-traded developer, owner and operatorbased in Hong Kong,” Voorhees says. “South Hills Plaza provided anexcellent opportunity to enjoy strong current cash flow withimmediate upside potential through leasing. Also, as all pads atthe property were owned, the prospect of future vertical or higherdensity development at South Hills Plaza appealed to the buyer.This acquisition made sense at closing and will be a solid UScornerstone investment for the buyer.”

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The property had a CMBS loan in place, and wasmarketed with the ability for the buyer to assume the loan.According to Voorhees, the buyer instead chose to prepay anddefease the loan and obtain new financing at a lower interest rate.Similarly, the Tudor Plaza, aretail center in Rialto, CA, recentlytraded hands with a CMBS loan that needed to bedefeased. The buyer in the transaction also chose to pay thepenalty to defease the loan, which had a 5.6% interest rate, andtake advantage of more appealing financing options.

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Foreign investors have been buying properties throughoutSouthern California and across property sectors, and Voorhees saysthat the trend is only going to continue to grow. “This trendstarted in SoCal in residential properties in neighborhoods likeBeverly Hills and Arcadia, and we expect it will continue withincreasing velocity in the retail property category,” he says.“Retail is accessible and easy to understand for foreign investors,providing less management hassle than in multifamily investments.And, compared with single-tenant, net-leased properties,anchored-shopping centers, like South Hills Plaza, they provide asuperior risk adjusted return.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.