Unibail-Rodamco-Westfield has sold Westfield Santa Anita in Arcadia for $538 million, or $363 per square foot.

The sale of the mall — to an undisclosed commercial real estate investor who owns other retail assets in Southern California — represents the largest retail purchase in the U.S. in the last four years, according to Eastdil Secured, who advised URW on the deal.

The 1.48-million-square-foot property, which is 96% leased, posts sales of $611 per square foot. Westfield had owned and operated the mall since 2007, prior to when Unibail Rodamco bought the Australian firm for $25 billion in 2018.

“This transaction bodes well for the mall industry as a whole, as it further demonstrates the private capital market’s recognition of the significant improvement in the sector’s operational performance,” said Chris Hoffmann, managing director at Eastdil Secured. “We see interest in owning high-quality and irreplaceably located malls as increasingly diversifying.”

According to Eastdil Secured data, this transaction represents the largest amount paid for a single mall asset in the U.S. since 2018, whether as a 100% or partial-interest sale.
The sale continues Unibail-Rodamco-Westfield’s mission to shed its properties in the U.S. In March, the company sold the 34-acre site of the shuttered Westfield Promenade in Woodland Hills for $150 million to Los Angeles Rams owner Stan Kroenke. Kroenke is expected to turn the property into a training facility for his Super Bowl champions.

URW also sold a 300-unit residential tower at UTC Westfield in La Jolla for $238 million.
In Florida, URW unloaded four malls in foreclosure.
URW still owns Westfield Century City, Westfield Culver City, Westfield Topanga and the Village at Warner Center, as well as Westfield Fashion Square in Sherman Oaks and Westfield Valencia Town Center in Santa Clarita.

 

Retail’s rebound

Jimmy Slusher, first vice president of CBRE Group Inc.’s National Retail Partners – West group, is not surprised by how much Westfield Santa Anita sold for. Last December, Slusher and his group closed the sale of GH in Granada Hills for $69.8 million.

“It’s really a positive time right now for retail,” Slusher said. “The combination of pent-up demand for capital investment, historically low cost of capital or favorable financing layered on top of a huge vote of confidence for retail as it emerged successfully from the pandemic resulted in the perfect environment for ideal results for both buyer and seller.”

“From a macro perspective, prior to Covid, retail saw a lot of negativity,” said Bryan Ley, managing director of Jones Lang LaSalle Inc. “There was too much retail. Covid pushed a lot of the weaker retail businesses out of business.”
Until recently, interest rates have been very low, thus spurring investors to buy as retail came out of the pandemic.

“We survived governments shutting down our properties and stopping them from operating,” Slusher said. “A number of tenants found creative ways to continue their businesses.”

Slusher said that retail has come out of the tunnel it entered during the Covid period.
“Retail now has a huge vote of confidence,” Slusher said. “Retail has survived quite the storm and proven to be much more resilient than anyone expected.”

Target, for example, had invested in online shopping prior to the pandemic, with customers picking up their online purchases at Target stores. The company was well positioned in e-commerce by the time the pandemic hit.

“Yes, everyone bought stuff online, but now we’re seeing patrons enjoy the shopping experience,” Slusher said. “All of this has gone into a huge vote of confidence from an investor’s perspective.”

“All investors are looking for the next opportunity,” Ley said. “Retail is a nice risk-adjusted return.”
“What the market is starving for is more grocery-anchored tenants,” Ley continued. “That’s what seems important is to bring in more needs-tenancy properties. That density and foot traffic is helpful to that asset. That furthers the lifespan and relevancy of that mall.”

Retail also has more outsize returns than industrial or apartments, according to Ley.
“Your initial yield is higher with these assets,” Ley said.

 

Next steps

Richard Rizika of El Segundo-based Beta Agency sees URW’s sale of Westfield Santa Anita as a predictable step in downsizing its presence in the U.S.
“Retail is more and more becoming a local business,” Rizika said. “People have to be compelled to go to shopping centers. That’s easier to do when you’re local. It’s harder to do when you’re abroad.”

Rizika said he wouldn’t be surprised to see the Arcadia mall’s new owner refresh the site. He points to the success of what Westfield did to revitalize Westfield Century City, where the company invested $1 billion and expanded the mall by a third to 1.3 million square feet.

“That property has tremendous potential to be curated for that community through additional redevelopment,” Rizika said of Westfield Santa Anita.
Ley added, “It’s a strong-performing mall while also having some long-term benefits of other uses over time if they plan to change from retail.”