Sales  ·  Retail

Centennial Pays $199M for Santa Clarita Westfield Mall, Mulls Big Changes

1.1 million-square-foot center in Los Angeles County is 87 percent occupied

reprints


Centennial Real Estate is growing where Unibail-Rodamco-Westfield (URW) is shrinking.

Dallas-based Centennial has agreed to pay $199 million for the Westfield Valencia Town Center in Southern California, both firms announced this week. The move is part of URW’s plan to unload most of its U.S. real estate, while Centennial said it is considering major changes to expand the shopping mall property with a potential mixed-use redevelopment, including luxury living and office spaces.

SEE ALSO: How GenAI Threatens the Use of Office Space in the U.S.

URW said the sales price represented a 3 percent discount to the mall’s appraised value at the end of 2022, meaning it was worth almost $205 million last year. The company had a 50 percent stake in the property, with TIAA holding the other half at securitization.

The Class A shopping center spans almost 1.1 million square feet, with more than 140 retailers, restaurants and entertainment venues, plus an outdoor district known as The Patios. The property was 87 percent occupied at the time of the sale. The property was built in 1992 and renovated in 2010 on 60 acres at 24201 Valencia Boulevard in Santa Clarita, Calif., about 36 miles northwest of Downtown Los Angeles.

Centennial officials said the company is committed to the shopping center and to the Santa Clarita community for the “long haul.”

“We do envision some changes for Valencia Town Center, similar to the strategic redevelopments taking place now at Hawthorn and Fox Valley in the Chicago area,” Carl Tash, chief investment officer and senior executive vice president at Centennial, said in a statement. “While it is too soon to announce any definitive plans, Valencia Town Center is in the perfect location to become a multi-use live-work-play destination that seamlessly and aesthetically combines retail, restaurants, entertainment, luxury living and office space in a single master-planned campus.” 

The property was supported by a $195 million, fixed-rate 3.63 percent loan from UBS that matured at the start of the year. The sale was an alternative to transferring ownership back to the lender, URW said.

According to Trepp, the special servicer was waiting for information from a proposed new ownership group so it could underwrite an assumption of the loan and an extension of the maturity date.

“The loan did not pay off as scheduled in January 2023. The note makes up 73 percent of the collateral behind [the asset],” Trepp reported. “CMBS investors should trade that deal carefully as a maturity extension could be announced in the near future. … At securitization, the collateral was valued at $398 million. Earlier this year, the value was lowered to $181.1 million.”

In completing the transaction, URW has continued efforts that started in 2021 to sell off most of its U.S. portfolio, which has now generated $1.8 billion in what the company calls “U.S. deleveraging proceeds.” That effort has included other major trades in Southern California, including the 1.5 million-square-foot Westfield Mission Valley shopping centers in San Diego for the discounted price of $290 million; The Village in the San Fernando Valley for $325 million; the Promenade development parcel for $150 million; and the Westfield Santa Anita for $537.5 million.

URW reversed course on one prized property, though, and recently secured a $925 million loan to refinance Westfield Century City in one of the largest CMBS deals in the country this year.

Meanwhile, Centennial owns and operates a growing retail real estate portfolio, and recently secured the management contract for the aforementioned Mission Valley mall in San Diego. Centennial also owns or manages other California properties, including MainPlace in Santa Ana, Pacific City in Huntington Beach, The Shops at Montebello in Montebello, Antelope Valley Mall in Palmdale, and Northridge Mall in Salinas. 

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.