According the Conover, the key to the deal was securing a buyer willing to put 60% down and assume an existing loan on the property. Conover represented the seller, Newport Beach-based Day Creek Investors LLC. The 1031 exchange buyer was Towne Park Plaza LP, which was represented by first vice president Scott Hook of the Newport Beach office of Marcus & Millichap.
Built in 2004, Day Creek Village is a 100% leased shopping center anchored by Ralphs, which was not a part of the sale. Tenants included in the sale were Starbucks, Wells Fargo, the UPS Store and Supercuts. The shopping center is close to the I-210 Freeway on/off ramp, with more than 156,000 cars per day traveling by the center.
Conover says that the property offered offered the investor "a unique opportunity to acquire a portion of a newly constructed, 100% leased retail property with an excellent tenant roster, below-market assumable debt and an attractive total return." According to Richard Walter, president of Faris Lee Investments, the deal reflects a trend in the market: "There is a flight to real estate because it provides cash-on-cash returns versus alternative investments such as stocks, bonds and CDs, which continue to be challenged," Walter comments. Even though retail real estate is getting a lot of bad press, Walter adds, "It is ultimately the shining star, with caution."
According to Hook of Marcus & Millichap, the deal closed at a cap rate of 7.59%. He notes that the center is located in a high-growth area and that the average household income within three miles of the center is more than $89,000 per year.
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