Smart & Final Inc. has taken a load off its balance sheet with a $230 million portfolio sale of 40 properties to three separate buyers.
Nearly half of the portfolio of 39 retail stores and one distribution center were located in Los Angeles County. All are part of sale-and-lease-back transactions that allow the Commerce-based grocery warehouse chain to continue operating at the sites on long-term leases.
Affiliates of Escondido real estate investment trust Realty Income Corp. bought 36 of the properties. Among those are a nearly 33,000-square-foot retail store at 6601 W. Laurel Canyon Blvd. in North Hollywood and a smaller store at 210 W. Verdugo Road in Glendale.
Smart & Final had owned most of the portfolio for at least 20 years, but decided to sell because a mortgage loan on the properties was coming due in June. TIAA-CREF purchased the Commerce distribution center, 5500 Sheila St., for $54 million.
“Beginning in mid-2011, the company evaluated several alternatives, including refinancing of the loan or sale of some of the underlying properties,” said Richard Phegley, senior vice president of Smart & Final. “The properties sold offered the best overall economic return to the company through a sale.”
The retailer chose to sell to Realty Income and TIAA-CREF because of the companies’ existing portfolios and reputations in the retail and industrial market, he said. The sales concluded in December and included an undisclosed third buyer.
Smart & Final still owns 22 properties nationwide.
Melrose Crossing
A 23,000-square-foot retail and office building at Melrose and La Brea avenues is about to undergo significant renovation.
An affiliate of L.A.’s Tiger West Capital last month paid the Diane L. Rodriguez Living Trust $8.65 million for the two-story property and an adjacent building used for storage.
“It’s got beautiful bones,” said Daniel Farasat, head of Tiger West. “It’s a 1920s (structure) and our plan is to restore it.”
The building, at 7000-7024 Melrose, has exposed bricks and a high wood-truss ceiling. Plans are to renovate the interior, including lobby and bathrooms, as well as give the exterior a new coat of paint. The building is fully occupied by retailers including a home furnishing store on the bottom floor and a range of companies on the second.
This is among the first buildings that Tiger West has purchased, though it has been a partner in renovations of buildings in Los Angeles and New York. Farasat intends to rename the building Melrose Crossing.
“I think it really represents the location of the building,” he said. “It’s a crossing for a lot of neighborhoods – the Westside and downtown and Hollywood.”
Tiger West was represented by Steve Ravan, senior vice president of South Park Group Inc.
The trust was represented by Encino brokerage and auction house Flans & Weiner Inc.
Best Forgotten
Some things are just best forgotten. And for CBRE Group Inc. it’s the fourth quarter, despite an improving economy.
The West L.A. real estate services firm signed 33 contracts to represent companies as diverse as Unilever and NewellRubbermaid Inc. in the quarter, but still saw its Americas leasing business decline 4 percent year over year.
That led to the company reporting a mixed quarter last week, as revenue fell short but adjusted earnings beat Wall Street estimates. Shares fell more than $1 the day after earnings were reported, closing at $18.10 on Feb. 8.
Brandon Dobell, an analyst with William Blair & Co. in Chicago, said that the stock decline can partly be attributed to a steady rise in stock prices after competitor Jones Lang LaSalle Inc. earlier posted a much stronger fourth.
“Expectations after Jones’ quarter were elevated,” Dobell said.
CBRE reported adjusted net income of 46 cents a share for the quarter ended Dec. 31, a decline from a year earlier but higher than analysts’ expectations by two pennies. Revenue hit $1.76 billion, up almost 7 percent but off from the $1.86 billion analysts expected.
Staff reporter Jacquelyn Ryan can be reached at [email protected] or (323) 549-5225, ext. 228.
