Santa Monica Mixed-Use Trades To Institutional Investor
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American Realty Advisors has acquired the Criterion on the Promenade, a high-street retail/mixed-use asset in the heart of Santa Monica’s shopping and entertainment district, at the corner of Arizona Avenue and the Third Street Promenade. Bisnow now caught up with American Realty senior director of investments Gary Steinhardt to get the details.
Gary (pictured) tells us the buy is a core investment the firm believes will benefit from appreciation. "Our business plan calls for lease-up of the renovated apartment units that were vacated for construction, as well as some targeted improvements to enhance the tenant experience,” he adds. The value of the deal was not disclosed.
Originally a movie theater, the structure was renovated in the 1980s to create a multiplex movie theater, keeping the historic façade intact, and expanded for multiple uses. Completely renovated again in 2015, the Criterion complex includes 30k SF of retail, nearly 23k SF of office space and 32 apartments. The property enjoys 150 feet of frontage on both Arizona and the Third Street Promenade, and major tenants include Victoria’s Secret, Riverstone Brookstone and WeWork.
Gary tells us the asset has an effective age of zero, translating to low capital requirement, which in older properties can reduce cash flow from operations by 20% to 40% on a normalized basis. “We view this as a long-term hold, and we will patiently wait to capture the upside inherent in the existing leases," he adds.
Criterion is near the area’s most visited destinations, including the coming Metro station at 4th Street and Colorado Avenue, and benefits from a significant influx of tourists year-round, as well as 400,000 residents within a five-mile radius. Seller Criterion Santa Monica LLC, a JV of and an opportunistic commingled fund managed by Clarion Partners, was repped by Eastdil Secured LA managing directors Christopher Hoffman and Rikki Keating.