Simi Valley Town Center is a large power center located on
the 118 Freeway anchored by Lowes, Best Buy and Babies R Us.
In 2006, the anchors, sub-anchors and most of the connected
shops of the center were in the final stages of construction
and opening for business, and the community was responding
very well to this new development.
Milan saw an opportunity
to take part in this exciting new shopping center by purchasing
the outparcel retail pads in front of the Lowes. Recognizing
that significant costs generally required for this type of
development had already been assumed by the master developer,
coupled with the strong leasing market for retail space in
the area, Milan determined that this development should beat
expectations for a return on investment compared to other
Using its experienced construction management personnel, Milan
quickly set its preferred construction contractor to work
to implement a rapid construction schedule. Meanwhile, Milan’s
development team finalized the previously-negotiated leases
for the tenants for the space, while marketing the remainder
space to the best tenants for the center. The final rent roll
included Chipotle, Cingular Wireless, Barbeques Galore, Sterling
Jewelers, and Countrywide. Within a year of acquiring the
property, all tenants were open for business.
One of the most attractive elements of this development was
the relative pace and surety of return for Milan’s investors.
Within the first year of ownership, Milan sold a completed
portion of the property to an exchange buyer, paid off its
construction loan, and returned 80% of the equity to its investors.
The balance of the property was sold in July 2007, just over
a year and a half from acquisition. Milan’s investors
earned an annualized IRR of approximately 30% during the hold