PASSCO completed what it calls the largest tenant-in-common transaction in history, valued at $148 million. The Santa Ana, Calif.-based real estate investment firm created a pool of 36 investors, the largest number ever to join a tenant-in-common transaction, raising $56 million in capital to acquire the Puente Hills Mall in the City of Industry, Calif., from the San Francisco-based Krausz Cos. The $92 million loan was funded by Greenwich Capital Financial Products, Inc., a wholly-owned subsidiary of the Royal Bank of Scotland. Faris Lee advised and represented both the buyer and the seller.
The 1.2 million-square-foot Puente Hills Mall is currently 90-percent occupied with tenants such as Burlington Coat Factory, CompUSA, AMC Theatres, Linens-n-Things, Old Navy, and Spectrum Sports Club. During escrow, Circuit City signed a long-term lease as well and is currently relocating to the property. Robinsons-May and Sears also anchor the mall, but own their respective parcels. Originally built as a regional shopping center, the mall has become a "Town Center," combining department stores, big-box "power center" retailers, restaurants and entertainment venues to create high volume cross traffic within the center. Puente Hills Mall attracts more than 8 million visitors per year.
"After analyzing the components of the transaction, we took on the challenge to find a creative solution that would produce a high return for the seller and a unique investment opportunity for the buyer," Richard J. Walter, president of Faris Lee Investments, said in a press release. "Faris Lee leveraged its relationships to go after the best buyer pool. The strength of its relationships also resulted in the largest CMBS structured loan for a tenant-in-common transaction in history."
Faris Lee Investments plans to rollout this acquisition model nationwide, opening up similar opportunities for investors seeking the benefits of 1031 tax-deferred exchanges and retail real estate investing that historically has generated seven to eight percent returns as well as monthly income.