Investor Fred Sands, who once ran one of the country's largest residential sales brokerages, is adding to his growing commercial real estate portfolio by buying the large SouthBay Pavilion shopping center in Carson.
In a sign of how much real estate values have declined since the recession began, Sands' company Vintage Capital Group is expected to complete its purchase of the mall near the 405 Freeway today for $50 million.
That's well below the combined $34.4 million Hopkins Real Estate Group spent to buy it in 2003 and the $30 million it spent on improvements. Hopkins put the property up for sale for $100 million in 2005 but was unable to find a taker at that price.
"The world has changed," said Sands, who has bought and sold commercial real estate for many years. He formed Vintage Capital in 2001 to further his investment career after selling residential brokerage Fred Sands Realtors to competitor Coldwell Banker in a nine-figure deal.
The sellers are Newport Beach-based Hopkins and its financial partner, Genesis Real Estate Fund.
Genesis LA, a nonprofit that provides financing for developments to benefit low- to moderate-income neighborhoods, had always planned to hold the mall for about five years and then sell and reinvest elsewhere, said Dana Haynes, development manager of the mall for Hopkins.
But Hopkins, which co-owns a nearby former landfill being prepared for a new $800-million retail and residential complex called the Boulevards at South Bay, was not eager to sell the mall, Haynes said.
"We are disappointed to let go of it," Haynes said. "It's not the best time to be a seller, but we found a buyer."
Sands said he plans further improvements to the 1.1-million-square-foot mall that is now anchored by IKEA, Target, Sears and JC Penney. The biggest addition would be a 16-screen theater complex, he said, and discussions are underway with two potential operators.
The 73-acre site has room to grow. Sands said he plans to build as many as six free-standing restaurants soon and perhaps add a hotel when the economy improves. In the meantime, he said, "mid-scale" malls such as SouthBay Pavilion can prosper.
"When your jeans wear out, you have to replace them," Sands said. "People still have to shop. People still have to eat."
Sands said he plans to bring more national retailers to the mall while avoiding luxury brands. "They've been hit the hardest" by the recession, he said.
Sands' Vintage Capital also owns malls in Laguna Hills, Santa Clarita, New Mexico and Ohio.