Success Stories
At Merlone Geier, we invest in properties with untapped potential and leverage our unique vertically integrated investment and operating platform to develop and grow them into well-managed and successful properties that get ROI for our investors and rave reviews from our tenants.
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The Village at San Antonio Center – Mountain View, CA
Overview
Acquired from a private seller in early 2010, this parcel was the first and largest component of our San Antonio Center investment. In the following years, we acquired and assembled various adjacent land parcels. The original property was a 16-acre parcel with an outdated Sears-anchored community center located within a dense and affluent Silicon Valley submarket. Over the course of 2012-2013, we successfully assembled adjacent land parcels through four separate purchase transactions – the most significant of which was a 4-acre property containing an old retail center anchored by Ross Dress for Less and BevMo. In aggregate, we acquired in excess of 20 acres of land in the heart of Silicon Valley.
Value-Add
As the broader economy continued its rebound from the downturn and the local Silicon Valley market began to benefit from a rapid tech industry expansion, we determined that the best use for the property was a multi-phase densification project with a mix of retail, residential, office and hotel space. Merlone Geier developed the residential/retail component through a joint venture with Carmel Partners – an experienced residential developer and investor. We received original entitlement approval in late 2011 – though the project entitlements changed over time as we assembled additional properties and refined the proposed land uses.
Results
Today, the first phase of the project contains a 91,000 square foot neighborhood center anchored by a 65,000 square foot Safeway – as well as a mixed-use component comprising 330 luxury apartments situated above 43,000 square feet of additional specialty retail. The second phase of the redevelopment includes 440,000 square feet of class A office space (100% leased), a high-end 10-screen cinema, a boutique Hyatt Centric hotel, 91,000 square feet of additional retail/restaurants, and a nine-level parking structure. Construction of the second phase commenced in mid-2015 and was completed in 2019.
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The Shops on Lake Avenue – Pasadena, CA
Overview
Merlone Geier purchased the leasehold interest in The Shops on Lake Avenue in July of 2013. The 421,000 square foot community shopping center is anchored by Macy’s, Trader Joe’s and T.J. Maxx. We inherited close to 20% vacancy in our owned portions of the project. This fact, coupled with opportune lease turnovers encumbered by under market rents, gave the property considerable upside.
Value-Add
Given the property’s historic location and affluent area, we focused on upgrading tenant quality and increasing occupancy by improving signage, landscape, hardscape and common area furnishing.
Results
As of 2018, we have added several national tenants that include full service restaurants, fast casual dining and service-oriented retailers. In 2017, we successfully acquired the fee interest of our leasehold position from Macy’s.
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The UV – Sacramento, CA
Overview
Acquired by Merlone Geier in October of 2014, the UV was well located, but there was upside in how it was operated. At the time of our acquisition, the center was operating as a low-cost provider in the area. With the anchor tenant lease priced under market and nearing expiration, we saw a significant opportunity.
Value-Add
Merlone Geier moved on from the majority of the weaker tenants, either terminating or declining to renew leases. We then reconfigured and updated the entire center, repositioning it as a retail destination, which now demands higher rents.
Results
After updating the center, spaces were leased to strong national, regional and local operators. Rents immediately increased significantly.
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Delta Shores – Sacramento, CA
Overview
Merlone Geier acquired the 100-acre Delta Shores land parcel with over one mile of frontage on Interstate 5 in early 2005. Threshold entitlements for over 5,000 residential units and 1.3 million square feet of commercial use were completed in January of 2009.
Value-Add
Successfully obtained several special permits and conditional use permits. Construction of the South Commercial retail project (over 900,000 square feet at build-out) commenced in March of 2016 and has been completed.
Results
As of 2018, the center is filled with major national retailers including Walmart, RC Willey, Regal Cinemas, Dick’s Sporting Goods, Hobby Lobby, Ross Dress for Less, PetSmart, Party City, Old Navy and ULTA Cosmetics. Phase two construction has been completed, and residential land will be sold to home developers as the market continues to improve.
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Deer Creek Village – Petaluma, CA
Overview
A 36-acre project with 315,000 square feet of building area, Deer Creek Village was a rare, undeveloped parcel of land in the North Bay. Incredibly well-located with over a quarter mile of freeway frontage on Highway 101, the property offered an opportunity to provide new retail space that was scarce in the city of Petaluma.
Value-Add
We designed a vibrant, mixed-use community center that fit the tastes of the neighborhood on the lot and anchored the project with three strong new tenants: Friedman’s Home Improvement (a family owned, regional business), City Sports and Smart & Final.
Results
Merlone Geier created a much-needed, environmentally friendly retail and community center for the City of Petaluma. The project includes over six acres of open space, parks, wetlands, jogging and biking paths, as well as space for a Farmers’ Market in the pedestrian oriented paseo of shops and restaurants. The project to date has created approximately 500 jobs and over $1 million in annual sales and property tax revenue to the City of Petaluma. Twenty percent of the property remains open for lease in this vibrant community center.
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Stella – Marina Del Rey, CA
Overview
Originally a part of the Villa Marina/Marina Marketplace shopping center – which we purchased in 2001 – this four acre site located in Marina Del Rey in Los Angeles County was underutilized in this thriving market. We sold the broader Villa Marina/Marina Marketplace components to a large investment advisor in 2006 at the height of the market but carved out and retained ownership in this prime parcel of land.
Value-Add
Though entitlements for 244 condominium units were obtained in 2006, the plummeting housing market in the economic downturn made it evident that the best use for the parcel was a luxury apartment product. We re-submitted entitlement plans to the municipality and in early 2010 gained approval for 244 apartment units and 9,000 square feet of ground floor retail.
Results
We commenced construction of Stella in late 2010, stabilized the project by mid-2013 and sold the property to an institutional investor in late 2013.
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La Habra Market Place – La Habra, CA
Overview
We acquired La Habra Marketplace – a 215,000 square foot community shopping center anchored by Service Merchandise, Drug Emporium and Ross Stores – in June of 1994. A depressed economy and poor management had left the property 30% vacant, forcing foreclosure. As a result, we were able to acquire the property from the lender at a significant discount. We subsequently purchased an adjacent vacant Bullock’s department store to combine the sites and perform a larger scale redevelopment.
Value-Add
We focused on upgrading tenant quality and increasing occupancy on the original portion of the center by improving facades and leasing several vacant pad buildings. We demolished the existing department store on the adjacent parcel and added a 16-screen Regal Cinemas, Office Max, Oshman’s Sporting Goods and multiple retail pad buildings.
Results
The GLA of the fully redeveloped shopping center increased to 375,000 square feet and the operating income quadrupled. We sold the shopping center in a single transaction in May of 2004.
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Mira Mesa Mall – San Diego, CA
Overview
We purchased Mira Mesa Mall, a community-serving mall originally developed in 1975, in June of 2000. Although the property was well-located in a dense in-fill submarket, it was undersized and began to suffer in the 1990’s as larger regional malls in the trade area pulled tenants away. After multiple ownership changes and a failed redevelopment effort, we purchased the property with a plan to reposition it.
Value-Add
We executed an aggressive redevelopment plan that included relocating nearly all the major tenants in the inward-facing portion of the center, while simultaneously terminating over 20 small tenant leases. We reconfigured the property to consolidate shop space to create large spaces for big name anchor tenants. We also upgraded the design of the center through new facades, signage, landscape and hardscape.
Results
Within two years of purchase, we turned the mall into a core, institutional power center in the region. We sold the shopping center in October of 2003.
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Esplanade Plaza – Oxnard, CA
Overview
We purchased Esplanade Plaza in December of 1999. The 490,000 square foot enclosed mall, originally developed in 1970, was anchored by Sears and Robinsons-May. Though the property was well located adjacent to Highway 101 and dominated the trade area for 20 years, it was ultimately over-shadowed by the expansion and renovation of another mall in a nearby city. By the end of 1999, Sears and Robinsons-May had closed their stores. We acquired the enclosed mall portion of the property with 38% vacancy and subsequently acquired both the Sears and Robinsons-May parcels.
Value-Add
We demolished the existing mall and redeveloped the property as a large retail power center. Working with the City of Oxnard, we secured approvals for the reconfiguration and negotiated lease terminations or buyouts with nearly 80 tenants to clear the mall. The new center included anchor tenants Staples, T.J. Maxx, Nordstrom Rack, Bed Bath & Beyond, Borders and Old Navy. We also sold a parcel in the middle of the center to Home Depot, who built a 135,000 square foot store.
Results
Within 18 months of the redevelopment the center was 100% leased. We sold the center in October 2003.
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Westgate Mall – San Jose, CA
Overview
We purchased Westgate Mall in May of 1995. The 645,000 square foot enclosed mall was originally developed in 1960 with a classic “dumbbell” design anchored by two department stores. The mall began to struggle in the 1980’s as two other malls in the trade area significantly expanded, pulling tenants away. An $80 million renovation in 1988 failed to address its high vacancy rate, which was largely due to small shop tenants located in the mall’s interior. As the economy soured in the early 1990’s, the mall suffered further, and the owners were unable to meet their debt obligations. The lender foreclosed two months prior to our purchase and we acquired the property at a significant discount to the amount of the original note – well below its intrinsic value.
Value-Add
We brought in under-represented retail categories, such as books, electronics and sporting goods. We consolidated the interior shop space and raised the ceiling heights to create junior anchor spaces, adding retailers like Any Mountain Sporting Goods, Party City and Barnes & Noble. We replaced Home Express with Nordstrom Rack, Burlington Coat Factory, and Old Navy and replaced Montgomery Ward with Target to bring more prestige to the mall.
Results
The Mall’s occupancy increased from 88% to 97% in a short period of time. We sold the property in March of 2004.
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Santa Fe Springs Mall – Santa Fe Springs, CA
Overview
We purchased Santa Fe Springs Mall in May of 1998, and shortly after we also purchased a vacant Sears building on an adjacent parcel. Built in the 1980’s, this enclosed mall never reached full occupancy due to its layout and lack of anchor tenants. Exacerbated by the closure of the Sears store, the property continued to decline, forcing the lender to foreclose in 1995. After several unsuccessful attempts to sell the property at higher prices, the lender ultimately sold to us at a steep discount.
Value-Add
We successfully converted the property from an enclosed mall format to an open-air community shopping center. The interior section of the mall was gutted and reconfigured to accommodate larger anchor tenant spaces, which were leased to Office Max and Gigante Supermarket. The Sears building was demolished, and we negotiated a long-term ground lease with Walmart. Additionally, we added shop space facing the new Walmart and two pad buildings for a Sav-On drugstore and McDonald’s. Lastly, we terminated the lease of an under-performing cinema, replacing it with a new LA Fitness sports club.
Results
After a highly successful redevelopment effort, we sold the high-performing center in a single transaction in October 2003.
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Gateway Plaza – Vallejo, CA
Overview
We purchased Gateway Plaza in February 1997. The 337,000 square foot community shopping center was originally developed in 1991 as part of a 1,165-acre master planned community, slated for 1,500 homes, office parks and community-serving retail. The property suffered as Vallejo was hit hard during the recession of the early 1990s. Homebase – the largest tenant at 102,000 square feet – vacated and exacerbated the property’s distress. The lender eventually foreclosed on the shopping center. At the time of our acquisition, Gateway Plaza had 36% vacancy.
Value-Add
Once the leasing market stabilized over a period of three years, we focused on sub-dividing the former Homebase building into four anchor spaces, which we leased to Old Navy, Michael’s, Linens ‘n Things and Cost Plus World Market. We added GLA in place of the building’s former garden center to accommodate an additional tenant. Additionally, we bought the dark supermarket – a former Savemart – and replaced it with two junior anchors. Century Theaters replaced Service Merchandise and multiple restaurant and shop pads were added to accommodate increased tenant demand.
Results
Gateway Plaza was 100% leased at disposition in October 2003.