By Barbra Murray, Contributing Editor
Anaheim GardenWalk, a premier retail lifestyle center in Anaheim, Calif., has just gone from the hands of a bank to the embrace of Arcturus Group and Avenue Capital Management. The two companies formed a joint venture to acquire the new 450,000-square-foot Southern California property.
Arcturus is not divulging the financial details of the transaction, but certain facts hint that the price tag was below replacement cost. GardenWalk is distressed.?It had unfortunate timing when it opened in 2008,? Matthew Stroyman, co-founder of Arcturus, told Commercial Property Executive.
Developed by Excel Realty Holdings, GardenWalk certainly looks like the latest in top-of-the-line lifestyle destinations, but its list of shops and entertainment offerings account for an occupancy level of only 50 percent. GardenWalk was stifled by the economic downturn from the beginning and ultimately ownership went from the developer to the lender.? However, the half-empty tenant roster does not intimidate Arcturus and partners. It?s not always all about timing.
?There?s location on our side,? Stroyman said.
GardenWalk sits within two miles of such entertainment venues as the Anaheim Angels stadium and the Anaheim Ducks arena, and practically just a stone?s throw from the Anaheim Convention Center and the world-famous, recently expanded Disneyland Resort. Being within close proximity to an amusement park with the unofficial title of ?The Happiest Place on Earth? can?t hurt.
?Disneyland draws close to 20 million visitors a year and there are approximately 800,000 annual pass-holders who live in Orange County alone,? he added. ?They might want go to Disneyland for a few hours and we want to give those people a reason to come and spend an additional few hours in the area at our property, and finding the right tenant mix is part of our challenge.?
And the timing is better. Orange County is growing hungrier for retail. With demand outpacing project completions, the vacancy rate is on track to drop to 7 percent by year?s end, according to a report by Marcus & Millichap Real Estate Investment Services.
Elliott Management is now onboard with Arcturus and Avenue Capital and the team has big plans for a turnaround at GardenWalk. ?So we need to create awareness in the market,? said Stroyman. ?We need to market and position GardenWalk so people are aware of it, we need to give them more reasons to come to the property. We?re prepared to spend money on tenant improvements and other capital projects that we think will improve the attractiveness of site and help us fill the occupancy up. There?s a good strategic focus.?
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