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VALENCIA, CA-A 1031 exchange buyer has submitted the winning bid to acquire Tesoro Village, a 74,537-sf grocery-anchored neighborhood retail center that sold for $31 million, according to Irvine-based Faris Lee. Faris Lee president Rich Walter and managing director Donald MacLellan point out that the sale overcame a rising interest rate environment, uncertainty with the pending sale of Albertson’s and a lack of historical tenant sales, yet it still achieved a cap rate of less than 6%.

The marketing of the property was marked by aggressive bidding, according to Walter and MacLellan, who represented both the buyer and the seller. Tesoro Village is at 23850-23892 West Copper Hill Rd. and is described by Faris Lee as “one of the finest grocery anchored centers in Southern California.”

DSB Associates of Westlake Village bought the property from Calabasas-based Westrust in a 1031 exchange. Walter and MacLellan say that the property drew bids from other 1031 buyers, as well as from institutional and private buyers.

Bidding was aggressive despite challenges created by the possible sale of anchor tenant Albertsons/Sav-on during the process and no historical tenant sales record to rely on. “In order to secure the sale and protect the negotiated price during a period of time in which interest rates were rising, we secured a non-refundable deposit from the buyer within a very short period of time,” explains MacLellan.

MacLellan says that the deposit was crucial because of uncertainty in the capital markets that could have adversely affected the investor’s return.

Built in 2005, Tesoro Village was 100% occupied at the time of the sale. In addition to Albertsons/Sav-on Drugs, tenants include Bank of America, Starbucks, The UPS Store, Pick Up Stix, Great Clips, Red Brick Pizza and several other regional shop tenants.

The retail centers is part of the new Tesoro del Valle residential development. MacLellan says that one factor making the property so appealing to prospective investors was that the center benefits from the high income demographics of the large and growing customer base within the surrounding community.

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