Westport Pays $22M for Foreclosed Retail Center

MISSION VIEJO, CA-Westport Capital Partners has acquired the 220,000-square-foot Kaleidoscope Retail Center from the property's special servicer, C-III Asset Management LLC (formerly known as Centerline) for $22 million in an all-cash transaction. Dixie Walker, executive vice president  in the Financial Services Asset Management Group at Grubb & Ellis Co. who represented both the buyer and the seller, tells GlobeSt.com that the sale was one of the first significant retail foreclosures in Orange County.

Walker, who also brokered the foreclosure sale of the 300,000-square-foot South Coast Home Furnishings Centre in Costa Mesa last year, tells GlobeSt.com that the Kaleidoscope sale was also unusual in that it was contemplated first as a sale out of receivership, then a note sale, before finally becoming a foreclosure sale.

The property is a three-story center at 27741 Crown Valley Parkway at the intersection of Interstate 5 and Crown Valley Parkway. Completed in 1999 on nearly five acres, it is 62% leased.

The Kaleidoscope attracted 19 offers, more than half of them from institutionally backed buyers and the rest from local private investment firms. Walker says that Connecticut-based Westport, which ran the deal through its El Segundo, CA office, saw "tremendous potential" in the property. Westport's "hands-on management will help this property realize its full potential," he says.

"The concept here is to redevelop the property as a lifestyle-entertainment intercept point for all South County residents before they get to the Irvine Spectrum," Walker says. He notes that the restaurants at the property do very well, and he says that the center has the potential to tap into the demographics of the nearby Ladera Ranch development, which was not in existence when the Kaleidoscope was developed.

The 38% vacancy at the center reflects the departure of tenants including anchor Bristol Farms, a high-end grocery store that leased about 25,000 square feet. Walker says that despite the vacancy, the center holds much potential for the right operator with the right positioning. He cites the property's visibility along Interstate 5 and Crown Valley Parkway, where traffic counts are 300,000-plus and 75,000 vehicles per day, respectively.

Westport has named Newport Beach-based senior vice president Mark Baziak and associate Terrison Quinn of the company's retail group to contiue as the leasing agents for the property. The center is leased to retailers such as Regal Theatres, Buffalo Wild Wings, Islands Restaurant, Burke Williams Salon and Day Spa, Riptide Restaurant, The Derby Restaurant and Piano Bar, and Laser Quest.