Hanford
- Passco Real Estate has put the Hanford Mall up for sale after owning
it for just over four years. The sale excludes about a third of the 487,000-square-foot
retail property, the two anchor properties at the mall leased to Mervyns and
Gottschalks. Passco and partners bought the mall in early 2004 for a reported
$49 million and are likely to sell it for more – around $60 million
by one estimate.
The property is being marketed by L.A.-based Reza Investments that handled the sale of the mall to Passco the last time. “We just began the marketing in the past week,” said a Reza representative.
Passco is the same L.A. firm that bought and held, then sold the old Sequoia Plaza center in Visalia that was anchored by Costco, Home Base and Circuit City – now anchored only by Circuit City on South Mooney.
Passco
is based in Santa Ana. The company buys and holds real estate and hands management
off to an affiliated firm that manages over 3 million square feet of retail
space in the state.
Sources say Passco operates as a management company for investors who are seeking tax free exchange of property. Passco “acquires” the property for management purposes and pays the individual property owners a fee without triggering a tax bite from the IRS. However, the key is that management must be successful in keeping the rent money flowing in or the investors can potentially lose money.
Busy Retail District
It's not clear why Passco is choosing to sell the mall at this time. On the plus side, the mall is now surrounded by several new big power center retailers and they are drawing more retail traffic. Since Passco bought the mall, the new Wal-mart and Target centers have opened along with scores of smaller retailers and restaurants. A new hospital is being built across the street increasing the traffic count as well with new development on all sides of this well-placed property.
On the other hand, retail prospects are down these days with most major retailers suffering sales declines, including Gottschalks and Mervyns – the big anchors here. Mervyns recently declared bankruptcy and announced it would close 11 stores in the state – none in this region. Gottschalks continues to report slower sales and its stock has fallen to the $1 to $2 range.
Merchants say traffic is slow in the Hanford Mall with the food court now down to just four restaurants with three spots empty.
Enclosed malls have been generally out of favor in recent years as investments with few new malls being built. But in the sweltering San Joaquin Valley, the air-conditioned mall remains a way of life.
The above story is the property of The Valley Voice Newspaper and may not be reprinted without explicit permission in writing from the publisher.