LAGUNA HILLS Plaza

Milan filled the vacancy at 50% higher rents than the average and the NOI increased by nearly 70 %.

The Opportunity

South Orange County retail shopping space had been in high demand since the late 1990s, and retail property in Laguna Hills was no exception. However, at that time, certain shopping centers had slipped into disrepair, suffering not from a lack of demand, but from neglect; Laguna Hills Plaza was one of those centers.

 

The owner at the time had a plan to renovate the center to boost rents and image, but the project had stalled due to lack of funds and overall poor property and construction management. Milan saw an opportunity and negotiated a purchase of the asset in the middle of construction from the poorly capitalized and inexperienced owner.

 

The Project

Utilizing its extensive experience with design elements and value-add management for retail shopping centers, Milan redesigned the project significantly. The property underwent significant changes including a complete re-landscaping of the parking areas and perimeter boundaries, and an entirely new sign program was implemented providing better monument signage for the tenants. Additional parking was added to the center, which made possible the expansion of the co-anchor tenant, Chicks Sporting Goods, increasing their square footage from 28,000 to 50,000 square feet. The property also underwent extensive façade work including the addition of modern storefront glass to replace the dated wood and stucco look of the shop tenant spaces.

The Results

Due to the increased visibility of the anchors and shops as an outcome of the landscaping renovation, and the resultant increase in demand for the space in the center, Milan filled the remaining vacancy at 50% higher rents than the average rent in the center at the time. The addition to the overall square footage of the center also added directly to the return— the NOI increased nearly 70% in less than two years from the purchase. The property was refinanced in 2004 with a loan for more than the original purchase price and the property continues to yield an excellent return to Milan and its partners.