One of Temecula’s oldest and most visible shopping centers, the Temecula Town Center, will get a makeover as a result of a $60 million Internet auction deal.
The recent transaction marked the first time the new owners, who together oversee a large portfolio of commercial properties, had participated in an online auction. But the company, Citivest Commercial Investments, was intimately familiar with the iconic Temecula Town Center.
“We’ve been following this property since it was built,” Larry Weese, company president, said in a recent interview. “We’ve looked at it for many years.”
The property, which fell into disclosure and then took years to reach the market, changed hands in a public way. News of the center’s availability initially surfaced in an Aug. 12 Wall Street Journal advertisement.
That ad announced the sale of $2 billion worth of real estate on www.Auction.com. The ad, which showcased properties from across the county, set a Sept. 30 deadline for final bids on the 25.4-acre center at the northeast corner of Ynez and Rancho California roads.
The center was built in 1989, the same year that Temecula became a city with about 27,000 residents. The center was the largest in Temecula at the time, and it became a key commercial component of the fast-growing city that quickly staked out a position as a retailing and jobs hub.
The fledgling city maintained that regional dominance as it attracted car dealers, new shopping centers and a regional mall.
Those projects generated a broadening stream of sales tax revenues that helped fuel the construction of road and freeway improvements, parks, community centers, museums and a string of other amenities. The city’s population is currently approaching 110,000 and it is expected to someday total about 150,000 residents.
The entire center totals nearly 492,000 square feet. The buildings that house Target, Vons and an office complex are key anchors of the center, but they are separately owned and were not included in the auction sale.
Many of the retail tenants have been at the Town Center since it opened. Some of the larger tenants include Active, CVS pharmacy and 24 Hour Fitness. The center contains an array of restaurants, banks, shoe stores, a pool supply store, a martial arts studio, music school, hobby shop, dentist and real estate offices and nail, beauty and bridal salons.
The center is a key player in Temecula’s retailing landscape. The city boasts about 80 community and neighborhood retail centers. A 2015 staff report noted that the city’s approximately $29 million in sales tax receipts placed Temecula 44th out of California’s 539 counties and cities. Temecula residents at that time spent about $275 per person a year on local retail products, an amount that ranked the city 79th in the state.
But the Town Center’s previous owner was caught in a financial squeeze when the recession’s grip tightened after 2008. The center languished for years in foreclosure, a period in which little money was spent on marketing or tenant improvements and Citivest and other companies kept tabs on its fate.
Before the sale, the center was owned by BACM 2006-5 Rancho California Limited Partnership.
The sale prospectus described the complex as a “stabilized, seasoned center located in a premier location giving it a strong competitive advantage.” Fifteen buildings totaling 241,870 square feet were offered.
The auctioned portion of the center had an 84.5 percent occupancy rate before the auction. The prospectus cited Temecula’s 4.5 percent unemployment rate, its $85,839 average household income and its $479,854 average price of sold homes.
The sale prospectus also stated that another 48,000 square feet of land alongside part of the center could be developed into multifamily residential uses.
There was a high level of interest in the property before the sale. Several qualified firms participated in the so-called “best and final round” that ended with Citivest submitting the winning bid.
After the auction closed, Alice Sullivan, president and executive officer of the Temecula Valley Chamber of Commerce, crossed paths with the new owners. She said Citivest made a smart purchase and she was pleased that the company plans to plug into the local business community.
“We’re really excited about that,” she said.
The name of the new owner was announced after escrow closed. Citivest is a privately held owner, operator and developer of commercial real estate.
Citivest, which is based in Newport Beach, currently owns about 15 properties across the state. They range from single industrial and commercial buildings to strip malls and large shopping centers. Their locations include San Francisco, San Diego, Santa Ana, Norwalk and Novato.
The company’s current properties include a mix of uses that include supermarkets, banks, fitness centers and restaurants. Properties that were previously bought and sold by the company span the range of office, retail and industrial uses.
In July, Citivest and its investment partner announced a $185.2 million deal that included a portfolio of properties stretching from Oceanside to Chula Vista, according to a company news release.
Weese describes the company on its website as “very humble, approachable and knowledgeable about California real estate.” He goes on to say that the company rarely acquires properties that are beyond a two-hour plane ride from its core.
The company’s three partners are Weese, Dana Haynes and Dwight Belden. Weese said Citivest will rely on experts to create a plan to upgrade and revamp vacant or underused portions of the center. The architectural themes and other details will be disclosed as the plan takes shape and it is vetted by the city, he said.
Weese said Citivest will take advantage of the center’s location as a gateway to Temecula’s popular wine country. But the firm does not plan to dabble in the housing market via the nearby property, he said.
He estimated that it could take five to seven years to bring the shopping center to its next level.
“It’s going to take a while to do it,” he said.
Citivest often relies on Buxton, a retail consultant, to help tailor its tenant mixes.
Buxton was hired by Temecula in March 2015 to do a retail recruitment report for the city. Buxton was paid $40,000 by the city to do the economic development work. A key feature of the study focused on identifying a wish list of 10 retailers that are not currently located in the city.
Buxton, which is based in Fort Worth, held a presentation October 2015 at Temecula’s conference center. The presentation attracted about 60 business owners, builders, real estate representatives, consultants and marketing firms.
The presentation set the stage for retail recruitment efforts to kick into high gear, Cheyenne Robinson, a Buxton account manager, told the audience.
“We’ve done the heavy lifting for you,” Robinson said. “Now we can reach out to those retailers and tell them why they should locate here. This is an ongoing relationship here.”
In the recent interview, Weese said his company will try to tap into such research to target retailers and restaurants that currently lack a presence in the Temecula area. In turn, that will broaden the center’s appeal to area shoppers, he said.
“Together these factors will build additional value for the property, for the city and for our customers,” he said. “We’re very serious about Temecula and the area.”
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