By Jon Peterson
Denver-based Broe Real Estate Groups has paid $30.6 million to acquire the 98,406 square foot Ocean Village Shopping Center in San Francisco located at 3931-3981 Alemany Blvd. This property is a dark anchored shopping center, a term associated with properties that have signed, paying leases but remain empty.
“The two anchor tenants in the property are Albertsons and Walgreens. Both of them have signed leases that run well into the 2020s, so they are still paying rent in our property. Both of these stores are now closed. Our long-term plan is definitely to bring in a new grocery store into the property. It is not clear if we will have a new drug store or if we will lease the space where Walgreens is to some other kind of tenant,” says Doug Wells, chief executive officer of Broe Real Estate.[contextly_sidebar id=”f4YNn8K1l6K0P7fw9UIooro7lczybm0P”]He would not disclose what the cap rate is on this transaction as the property stands now. “We have seen cap rates on stabilized grocery-anchored shopping centers in San Francisco come in at below five percent. I’m not sure if that will be the case with this property or not,” said Wells.
Broe Real estate acquired the property along with Newport Beach-based Citivest Commercial. Broe is the majority owner of the property, while Citivest’s role will be to be the operating partner in the venture. The property was sold by un-named local investment group. There were no brokerage firms involved in the sale.
The property was built in 2002. The current occupancy of the property is over 90 percent. The tenants in the property beyond the anchors are a 24-Hour Fitness and a Chase Bank location.
The new owner believes that the property has very strong demographics. The population base is 60,000 within one mile of the property and 360,000 within a three-mile radius. The average household income is $90,485 within one mile of the location and $112,874 within five miles. “I think that these figures are very strong for the kind of shopping center that we acquired,” said Wells.
The property has strong a mixed-use component. The retail is on the ground floor with 370 units of condos above it. The condos have all been sold and were not part of the Broe acquisition. “I think having that many residents above our property is a plus but doesn’t necessary guarantee a success with our property. Another plus is that the center is within walking distance to the Daly City BART station,” said Wells.
Broe is a company that has been an active investor in San Francisco for a long period of time. “Ocean Village is the only San Francisco asset we own right now. We have owned other assets in the region over the years. This shopping center does fit our investment strategy of investing in high density infill based value-add properties,” said Wells.
The company invests in a variety of property types across the country. This includes a mixture of retail, office, industrial, medical office and multifamily.