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California

Irvine Firm to Buy Burbank Media Center

The transaction is valued at more than $110 million. Buyer Crown Realty plans to refurbish the aging shopping mall.

January 22, 2003|Roger Vincent | Times Staff Writer

An Orange County developer is set to buy the Burbank Media City Center mall in a transaction valued at more than $110 million.

If completed, the acquisition would increase Irvine-based Crown Realty & Development's Burbank holdings to more than 70 acres of property in and around downtown.

The 1.2-million-square-foot mall is being sold by Pan Pacific Retail Properties Inc., a San Diego-based shopping center operator, which gained title to the property in November when it acquired rival Center Trust, formerly of Manhattan Beach. The sale to Crown is expected to close in March.

The pending deal is one of several large shopping center transactions in recent months that underscore the desirability of well-located Southern California malls. Large investors see the local economy as healthy compared with many other parts of the country. Other properties sold in recent months include Glendale Galleria, Paseo Colorado in Pasadena and Century City Shopping Center.

Burbank Media City Center, one of Los Angeles County's largest shopping centers, is a three-level indoor mall anchored by Macy's, Sears, Mervyn's, Sport Chalet, Gap and Bath & Body Works. It's surrounded by large free-standing stores including IKEA, Barnes & Noble, Circuit City, Office Depot and Virgin Megastore. It also has two AMC Theatres, totaling 14 screens.

The IKEA store is owned by the Swedish retailer and was not part of Crown's acquisition, but the deal does include the stores leased by other large retailers and a handful of adjacent restaurants such as California Pizza Kitchen, Chevy's, Koo Koo Roo and In-N-Out Burger.

Although the restaurants and big-box stores such as IKEA and Virgin are considered successful, the 12-year-old mall has slipped to the status of an also-ran on the region's competitive retail scene.

"They need to energize the mall and reinvigorate it to the status it had when it first opened" in 1990, said Aubie Goldenberg, a retail analyst at Ernst & Young in Los Angeles. "They have to give people a compelling reason to want to go there."

Crown Realty President Robert Flaxman said his company plans a "significant repositioning" of the mall that will take advantage of the popularity of its large national tenants, its location east of Interstate 5 and the traffic drawn by newer Burbank developments.

One of those new developments is across the freeway. Burbank Empire Center, a 900,000-square-foot mall anchored by such national retailers as Target, Lowe's Home Improvement, Costco and Great Indoors, is owned by Los Angeles-based Zelman Development.

Zelman tried unsuccessfully to buy Media City Center from Center Trust, Zelman President Ben Reiling said. "We thought it needed more work than they did," he said.

Pan Pacific representative Howard Overton did not return phone calls requesting comment.

Flaxman said Crown's plans to revitalize the mall and adjacent areas will be announced over the next several months.

The mall's challenges fit into Crown's strategy of buying real estate with the potential for long-term improvements in markets where there are high barriers for competitors to hurdle.

The property also is priced less than the estimated $250 million it would cost to replace it if it were to be rebuilt, Flaxman said.

The acquisition of the Burbank Media City Center follows Crown's recent $6-million acquisition of Oceanside's Town and Country Retail Center and its $21.5-million acquisition of Carlton Plaza, a 154,000-square-foot office in Woodland Hills.

The value of properties owned by Crown and its affiliates exceeds $380 million, Flaxman said. Its portfolio includes more than 3 million square feet of office and retail projects in Burbank, West Los Angeles and Orange County.

Crown's other Burbank properties include 30 acres starting at the northwest corner of Alameda Avenue and San Fernando Road and heading north toward downtown. Crown already has developed and sold a Ralphs, Walgreens and the headquarters of Black Entertainment Television in that area, Flaxman said, and controls the 23-acre site of Western Studio Service on San Fernando north of Alameda.

Crown is working with the city of Burbank on a plan for the studio property that will have office, retail and residential components, Flaxman said.

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