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SAN DIEGO-Rolando Plaza, a 72,427-sf grocery-anchored retail center, was sold to a 1031 Exchange for $14 million. The sale brought about a few occupancy issues, however, which emerged during escrow when 27%, or five of the center’s tenants, including its anchor, announced they would be vacating the property.

Despite being situated on 6.16 acres in a high-traffic, high-visibility area near the 15 Freeway, Interstate 8 and San Diego State University, this locale, which was being marketed as a value-added opportunity, hasn’t seen many nationally known tenants in recent years. This is in opposition to most of San Diego County, which has been a hotbed for national retailers. The county’s current retail vacancy rate is 2.4%, with average asking rates around $2.63 a sf and expected to rise, according to Burnham Real Estate’s 2007 Outlook.

Many, including Faris Lee’s Nicholas Coo, who, along with Richard Walter, represented Los Angeles-based seller SCI Real Estate Investments LLC, attribute Rolando’s occupancy difficulties with the perception potential retailers have of a second-tier retail trade area such as this one. Faris Lee’s Dennis Vaccaro represented exchange buyer Orange County-based 1401 Camino Investors LP.

Though the vacancy notice was a setback to closing escrow and meeting the buyer’s cash flow requirements, tight 1031 Exchange timeline and $10-million loan requirement, a lender was found and the deal was closed. According to Coo, the terms of the 10-year, fixed-interest rate loan, which was designed to provide better cash flow during ownership, included, among others, the absorption of tenant vacancies by underwriting the property based on an aggressive pro forma.

Remaining tenants include: Sav-A-Lot Foods, Davita Dialysis and Colortyme Rent To Own.

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