Shopping center

Sterling acquires Iconic LA mall for $165 million

Sterling Organization acquired at a bankruptcy auction Plaza Mexico, an anchored 403K SF grocery and drugstore mall located on a 33-acre infill property in Lynwood, Calif.

Known for its iconic design and robust event calendar, Plaza Mexico was acquired for $165 million by Sterling’s institutional value-added fund, Sterling Value Add Partners III. JLL advised the sale.

Anchored by Food 4 Less and a Rite Aid pharmacy, the property also includes a Mercado, which is home to over 200 unique vendors.

“Plaza Mexico presents an incredibly rare opportunity to reestablish and reposition one of Los Angeles’ most vibrant, unique and well-known community centers,” Brian Kosoy, CEO of Sterling Organization, said in a statement.

Sterling said the acquisition brings the company’s U.S. portfolio to 75 properties with 12.5 million square feet of leasable space with an aggregate value of $2.7 billion.

The company’s domestic acquisition strategy focuses on what it has called LAST Hour consumer satisfaction and distribution assets. Over the past few weeks, Sterling has bought malls anchored in a grocery store.

Late last month, Sterling acquired a portfolio of two grocery-anchored malls covering 280K SF. The Grove, located in Orlando, and the Riverfront Plaza in NJ were purchased for $114 by the Sterling United Properties fund, GlobeSt.com reported.

The Grove, located in one of Florida’s most affluent communities in Windermere, is a 152K SF mall anchored by Publix; the Riverfront Plaza in Hackensack, NJ is a 129K SF mall anchored by ShopRite.

According to JLL’s Grocery Tracker Q1 2022 report, grocery-anchored retail saw the largest share of commercial property acquisitions in 2021, totaling $13.3 billion in sales. Last year saw a record number of grocery-anchored retail real estate transactions with 735 transactions in total, 13 more than the previous record set in 2014, according to the report.

Public REITs surged into the grocery-rooted retail market in 2021, thanks to Kimco’s $425 million acquisition of Jamestown’s Grocery & Growth Collection. Due to increased demand from entrenched grocery retailers, the market saw a cap rate compression of nearly 50 basis points last year from 2019 levels, JLL said.

Groceries in general have been the big winners from the pandemic, with sales exceeding $800 billion last year, a 16% increase. Grocery-anchored malls in Q4 2021 reported their second busiest quarter in a decade, according to CBRE.