COSTA MESA, CA-Newport Beach-based Burnham USA Equities Inc. and affiliate Burnham-Ward Properties have acquired the foreclosed South Coast Home Furnishings Centre and plan to reposition it. Steve Thorpe, executive vice president at Burnham USA, tells GlobeSt.com that the new owners repositioning plan will expand the use of the 20-acre property to not only include home furnishing related retailers, but also to include other related disciplines such as architects, interior designers, planners and more.
He says that although the project was just constructed a couple of years ago, the new owners intend to spend a considerable amount of money on the repositioning, which will include new freeway signage. Some tenants have complained in the past that the center lacked sufficient visibility.
The home furnishings center, which was the largest project of its kind in Orange County to be built specifically as a furnishings center, went into foreclosure last year after it lost a number of tenants, including Wickes Furniture, which filed for bankruptcy in 2008. Thorpe says that most of the existing tenants “are operating successfully in a rather difficult retail environment” and that the new ownership “will work in concert with those tenants to increase awareness of the center.” The property is at 3333 Hyland Rd. along the San Diego Freeway.
Burnham and Burnham-Ward have acquired the center for a price that is “substantially below” the $100 million that former owner South Coast Home Furnishings Center LLC paid for it in August 2007, Thorpe says. In September 2008, the center was solicited for sale through a court-appointed receiver after rent failed to cover loan payments. The sale of the property was brokered by Dixie Walker of the Newport Beach office of Grubb & Ellis.
The former owner had financed its acquisition of the property via an $84 million loan with LaSalle Bank. The new owners have financed their purchase through Bank of America, which has financed a majority of Burnham USA’s acquisitions and developments over the past 25 years.
Thorpe notes that the center is strategically located along the San Diego Freeway, with exposure to more than 365,000 cars per day, and is close to South Coast Plaza, one of the highest grossing regional malls in the country. The existing tenants include La-Z-Boy, Linder’s, C.S. Wo, Easy Life, Munro’s, Creative Leather and NW Rugs.
The acquisition of the project, which is one of the largest deals to close in Orange County in the past year, is comparable in nature to a number of deals that Burnham closed in the recession of the early 1990s, when the company acquired a number of assets for repositioning. Thorpe says that the company looking to acquire other assets similar to this one because the company believes that the bottom has been reached in the Orange County commercial real estate market.