Sterling Acquires Iconic LA Shopping Center for $165M

Sterling Organization has acquired at a bankruptcy auction Plaza Mexico, a 403K SF grocery- and pharmacy-anchored shopping center located on a 33-acre infill property in Lynwood, Ca. 

Known for its iconic design and robust event calendar, Plaza Mexico was acquired for $165M by Sterling’s institutional value-add fund, Sterling Value Add Partners III. JLL advised on the sale.

Anchored by Food 4 Less and a Rite Aid pharmacy, the property also features a Mercado, which houses more than 200 unique vendors.

“Plaza Mexico presents an incredibly rare opportunity to reestablish and reposition one of the more dynamic, unique and well-known community centers in Los Angeles,” said Brian Kosoy, CEO of Sterling Organization, in a statement.

Sterling said the acquisition brings the company’s US portfolio to 75 properties with 12.5M SF of leasable space with an overall value of $2.7B.

The company’s national acquisition strategy is focused on what it has branded LAST Hour consumer fulfillment and distribution assets. In recent weeks, Sterling has been buying grocery-anchored shopping centers.

At the end of last month, Sterling acquired a portfolio of two grocery-anchored shopping centers encompassing 280K SF. The Grove, located in Orlando, and the Riverfront Plaza in NJ were purchased for $114 by the Sterling United Properties fund, GlobeSt.com reported.

The Grove, located in one of the most affluent communities in Florida in Windermere, is a 152K SF shopping center anchored by Publix; the Riverfront Plaza in Hackensack, NJ is a 129K SF shopping center anchored by ShopRite.

According to JLL’s Q1 2022 Grocery Tracker report, grocery-anchored retail had the largest share of retail property acquisitions in 2021, totaling $13.3B in sales. Last year saw a record number of grocery-anchored retail property transactions with 735 total trades, 13 more than the previous record set in 2014, the report said.

Public REITs jumped into the market for grocery-anchored retail in a big way in 2021, led by Kimco’s $425M acquisition of Jamestown’s Grocery & Growth Collection. As a result of increased demand for grocery-anchored retail, the market saw a cap-rate compression of nearly 50 bps last year from 2019 levels, JLL said.

Groceries in general were the big winners during the pandemic, with sales topping $800B last year, a 16% increase. According to CBRE, grocery-anchored shopping centers in 4Q 2021 recorded their second-most active quarter in a decade.