Regency Centers Buys SoCal Retail Portfolio for $357M

Physical retail spaces are solid investments due to strong fundamentals and tenant demand — to the point where a Florida-based real estate investment trust is spending hundreds of millions of dollars to buy properties in Southern California. 

Regency Centers, an S&P 500 company and one of the largest grocery-anchored retail owners in the U.S., has spent $357 million on a five-property portfolio at the Rancho Mission Viejo master-planned community in south Orange County. The portfolio — which is 97 percent leased — was sold by the Rancho Mission Viejo LLC development company, which began building the 23,000-acre community in the 1960s. WeStar Associates manages, leases and sometimes develops properties at Rancho Mission Viejo alongside the owner. 

Regency funded the acquisition via $150 million in assumed mortgage debt from an undisclosed lender, along with operating partnership (OP) units valued at $72 apiece and $7 million in cash to settle a separate secured loan. 

“Our structure as an [umbrella partnership real estate investment trust] and ability to issue OP units provided flexibility for the sellers in structuring the transaction,” Nick Wibbenmeyer, Regency’s president and chief investment officer for the Western U.S., said in a statement. 

The five properties, which total nearly 630,000 square feet, are Bridgepark Plaza at 27702 Crown Valley Parkway; Mercantile West at 25636 Crown Valley Parkway; Mercantile East at 27502 Antonio Parkway; Terrace Shops at 1101 Corporate Drive; and Sendero Marketplace at 30721 Gateway Place.

“The addition of this portfolio enhances our position within one of the most supply-constrained coastal markets in the U.S.,” John Mehigan, Regency’s west region senior vice president of investments, added in a statement. 

Despite concerns about President Donald Trump’s volatile tariff policies, coupled with larger general economic uncertainty, retail is currently one of the industry’s top sectors, as investors and tenants make moves after years on the sidelines. Average retail vacancy across the country in the first quarter of this year was just 4.1 percent, according to JLL, highlighting strong demand for space with few substantial projects in the development pipeline. 

Retail demand is particularly visible in Southern California. In addition to Regency’s Rancho Mission Viejo purchase, mall giant Unibail-Rodamco-Westfield recently secured a $925 million refinancing package tied to Westfield Century City, a 1.4 million-square-foot shopping plaza in the heart of Los Angeles. 

Nick Trombola can be reached at ntrombola@commercalobserver.com.