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SAN DIEGO-A joint venture between Bala Cynwyd, PA-based Stoltz Real Estate Fund II LP and El Segundo-based Pacific Coast Capital Partners LLC recently closed on their second San Diego area deal with the acquisition of San Carlos Village. San Francisco-based M&H Realty sold the 127,634-sf property for an undisclosed amount. The retail center is 100% occupied, but includes a 46,000-sf space formerly occupied by Ralphs that will be repositioned.

Currently, Crown Books holds the space in a month-to-month sublease, according to Jennifer Diaz, vice president of acquisitions for PCCP. The Ralphs lease runs to 2008 Diaz tells GlobeSt.com, and the plans are to reposition the property at that time with either a big box tenant or subdividing it to add value. Ralphs vacated the space in 2004.

Since the ink is still drying on the deal, Diaz says the JV has not fully explored options of bringing in long-term tenants prior to the 2008 date. “We just closed a few days ago and haven’t thought about Ralphs leaving (their lease) early,” adds Diaz. “We’re not sure what plans there are (if any) to terminate that lease.”

In any event, Diaz says the long-term play provides a strong value-add opportunity for PCCP and Stoltz, who have had success with their Plaza Las Americas project, a 46.8-acre retail property in the San Ysidro neighborhood of San Diego, on the Mexican border. The partners acquired that site in a JV under Stoltz’ Fund I in late 2004. That property included a development component and is now built-out at 560,000 sf and 96% occupied, with tenants such as Banana Republic and The Gap.

San Carlos Village, which is located in the San Carlos submarket near La Mesa, is located in a very tight market, according to Diaz. She says that the market has no contiguous chunks of space to compete with the 46,000-sf block that will eventually be freed for lease.

“There’s not even a 15,000-sf space available in the area,” Diaz says. The submarket carries a retail vacancy rate under 2%, she adds. According to the latest figures, the submarket counts a population of 51,000 within a two-mile radius to the property, with an average household income of $71,000.

Developed in 1970, the space underwent a 2004 renovation. Located on 13.5 acres, the site includes two big box buildings among its properties. Tenants include Walgreens, LA Fitness, Starbucks and Washington Mutual.

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