WORLD PROPERTY CHANNEL ®

(LOS ANGELES, CA) -- California entrepreneur Fred Sands is rolling the dice and betting the retail market in his state is still alive and well.

Fred Sands

Sands is putting his money where his instincts are, investing an estimated $60 million in the purchase of  SouthBay Pavilion, a 1.1-million square-foot shopping center just off the 405 Freeway in Los Angeles.

The seller, HREG Genesis of Carson, CA, completed a $30 million remodeling of the property in 2007.  Sands purchased the center through his Brentwood-based Vintage Real Estate, LLC, a wholly-owned division of Vintage Capital Group.

He didn't disclose the purchase price. 

However, area brokers familiar with the property and the market tell Real Estate Channel the center probably went for about $54 per square foot.  That price is at least half of the property's current replacement cost, say construction sources in a position to know.

"We can't go wrong with this location just off of the 405 Freeway with more than 350,000 cars a day driving by," says Sands.  The center has 35,000 square feet of rentable space available.

"With 73 acres of land,  we have room to expand. Our team is currently negotiating with seven national restaurant chains and we intend to add at least three free-standing restaurants.

"Located in a major employment center, the mall has 150,000 workers nearby creating a tremendous demand for additional restaurants."

SouthBay Pavilion

The center is at the Avalon Boulevard exit just south of the South Bay beach cities. Anchored by Ikea, Target, Sears and JC Penney, there also are 54 specialty stores and restaurants including brands like Old Navy, Children's Place, Foot Action, Panera Bread, Panda Express, Sansai Grill, Five Guy Burgers, Wing Stop and Jamba Juice.

The team is in preliminary talks with two movie theater operators to bring a 16-screen stadium seating theater to SouthBay Pavilion. Over the long term,  Sands also envisions the addition of a hotel.

"There is consumer demand to expand the retail and add a new hotel, driven by nearby venues such as Cal State Dominguez Hills and the Home Depot Center, as well as numerous Fortune 500 companies in the immediate area including BP, Honda, Mercedes Benz, Mobil, Shell, Toyota and Honeywell," says Sands.
 
"This is a very significant acquisition, particularly in light of the difficulty of obtaining financing on regional malls today.

"Not only are the capital markets frozen, but some people are worried about how retail sales will hold up during the recession," notes Brenton Watson, President of Vintage Real Estate.

"However, some very smart and sophisticated investors are bullish on retail."

Watson points out that some major Southern California mall owners are still making huge investments in existing properties.

He says,  "The Irvine Company just announced that it is spending $100 million remodeling Fashion Island, a 1.5 million square foot mall. Westfield, one of the largest mall operators in the world, recently completed the remodel of the 800,000-square-foot Century City mall and it is currently involved in a major expansion of their Culver City mall.

"We are certainly now joining the big players."
 
Sands formed Vintage Capital Group in 2001 to continue his private investment activities in commercial real estate and operating businesses of the past two decades.

Sands previously owned Fred Sands Realtors, Southern California's largest independent residential real estate brokerage and financial services companies. Sands sold Fred Sands Realtors to Coldwell Banker in November 2000.

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