In California's largest mall transaction so far this year, the Promenade at Howard Hughes is being sold for what real estate sources say is more than $90 million.
Passco Real Estate Enterprises Inc. has struck a deal to purchase the 250,000-square-foot property from a partnership of ORIX Real Estate Equities and J.H. Snyder & Co. The partners developed and built the project, which had a rough start after opening in 2001 during a depressed market.
The sale is expected to close this week.
William H. Winn, president of Irvine-based Passco, confirmed that the company is buying the outdoor "lifestyle center," although he declined to confirm the price.
"We like its location," he said. "There isn't the land or the site to duplicate it, so it's one of a kind."
Passco is buying the property outright, but plans to sell stakes to 33 "tenant in common" investors within 90 days of closing. Passco would retain somewhere between 2 percent and 10 percent ownership.
Tenant in common investors avoid paying federal capital gains by sinking the profits from earlier real estate deals into properties that are of equal or greater value. The strategy has become increasingly popular during the run-up in real estate values.
The Promenade is home to popular movie complex called the Bridge: Cinema de Lux, which accounts for more than half the center's revenues.
The mall, located just off the San Diego (405) Freeway, is nearly fully leased and since opening four years ago has only lost four of its original tenants.
Winn said Passco intends to invest between $800,000 and $1 million in improvements that include installing screens and decorative awnings to dampen freeway noise. Seating and more plants in the central courtyard are also planned.
Winn said the company also will invest in better signage in the Promenade's parking garage. When Winn asked friends who go to the Promenade what needs improvement, parking was at the top of the list of complaints.
"It's easy to get in but it's hard to find your way around after that," Winn said. "We're redoing the signage within the structure so people can find their way around better."
Passco owns 22 shopping centers. Four are regional malls and the rest are either anchored by grocery stores or big-box retailers.
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