Decron Properties, an L.A. real estate and management firm that made a $30.3 million wager on a struggling shopping center in the San Gabriel Valley nearly two decades ago, has seen its bet pay off.
The company just sold the El Monte Shopping and Automotive Center last month to San Francisco’s Merlone Geier Partners for a whopping $84.5 million.
But the 473,000-square-foot retail center off the 10 freeway looked far different when it traded hands last month than it did when Decron bought it in 1998.
Today, Penske Motor Group’s Longo Lexus and Toyota dealerships – among the highest-volume dealerships in the country – are the center’s primary anchors. But that was not the plan Decron had in mind when it bought the property, said Chief Executive David Nagel.
“There was always an auto element in that the purchase included a portion of the Longo dealerships, but it was always separate from the rest of the center,” Nagel said.
At the time, HomeBase Inc., a now-shuttered home improvement store, anchored the property. Another large space was vacant, Nagel said, until Decron inked a deal with Kmart shortly after it bought the center.
“It was the first time a national department store had elected to go to the city of El Monte,” he said. “It was very exciting at the time.”
But after Sears Holdings Corp. merged with Kmart, the El Monte store was converted into a Sears store, which Nagel said was far less successful. Around the same time, HomeBase got out of the home improvement business, leaving a large hole in the property.
That’s when Decron decided to intensify its focus on the center’s auto element.
“The idea came up as a result of an issue,” Nagel said. “Longo was this extremely successful anchor to the level where we almost couldn’t control the parking. We constantly had overfill because of all the people visiting Longo and parking in our retail center.”
So Decron opted to allow Penske to use the former HomeBase location for its auto body shop and collision repair center.
“We decided to embrace them by allowing them to expand further,” Nagel said.
Decron also replaced an old gas station with Union Bank and Jamba Juice, he said, noting that it added even more value to the property.
“We felt we created as much value as we could,” he said. “That’s why we decided to sell.”
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