9/26/2020 San Jose's Eastridge Mall sold to Goldman Sachs, Pacific Retail Capital Partners and Silverpeak Real

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COMMERCIAL REAL ESTATE

San Jose's Eastridge Mall sold in retail megadeal backed by

Goldman Sachs

Eastridge Mall in east San Jose has sold.

By Nathan Donato-Weinstein
Real Estate Reporter, Silicon Valley Business Journal
Jan 15, 2016, 1:55pm PST
Updated Jan 15, 2016, 6:04pm PST

Sn Jose's Estridge Mll, one o the lrgest shopping centers in the South By, hs sold in  del
vlued t more thn $200 million to n investment group tht plns to pump millions into 
revitliztion.

The group bcked by Goldmn Schs — Pci c Retil Prtners nd Silverpek Rel Estte Prtners —
cquired the mjority o the 1.4 million squre oot center on Sn Jose's est side, they nnounced on
Fridy. The seller ws Generl Growth Properties. An exct price ws not disclosed, but the buyers sid
the cquisition ws worth "more thn $200 million" nd ws completed o -mrket.

The del shows continued investor interest in trditionl, enclosed shopping mlls despite 
chllenging nd rpidly chnging retil environment s online shopping rises questions bout the
long-term vibility o brick-nd-mortr centers.

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But the buyers sid they remined bullish on the mll business in generl nd Estridge in prticulr.
Also on Fridy, they nnounced they hve seled  lese with "st-shion" drling H&M to join the
tennt lineup with  23,000-squre-oot store, nd would invest $15 million in updting the center.
Some o tht will go towrd reshening pint, lndscping, signge nd the ply re.

https://www.bizjournals.com/sanjose/news/2016/01/15/san-joses-eastridge-mall-sold-in-retail-megadeal.html 1/13
9/26/2020 San Jose's Eastridge Mall sold to Goldman Sachs, Pacific Retail Capital Partners and Silverpeak Real Estate Partners. - Silicon Valley Business Jou…

"It’s  gret sset," Steve Plenge, mnging principl o operting prtner Pci c Retil Cpitl
Prtners, sid in n interview. "We think this prt o Sn Jose, Est Sn Jose, is doing nothing but
getting better economiclly. Generl Growth hs done  terri c job tking the sset to where it is right
now."

Sles o mlls in Silicon Vlley hve been ew nd r between in recent yers. The most recent del
ws the cquisition o Vllco Shopping Mll in Cupertino in  series o trnsctions vlued t more
thn $300 million. But tht cquisition, by Menlo Prk's Snd Hill Property Co., ws or the demolition
nd redevelopment o the lnd.

Stcked up by squre ootge, Estridge rnks highly in Silicon Vlley's pntheon o mlls. It is second
on The Business Journl's Lrgest Shopping Center List, slotting in just under West eld's Vlley Fir,
nd bove Simon Property Group's Gret Mll o Milpits. Simon's Stnord Shopping Center comes in
ourth.

Situted on 113 cres, the two-level Estridge includes 150 shops nd resturnts, including nchors
AMC Theters, JCPenney, Mcy’s nd Sers. Bsed on property records, the new ownership ppered
to cquire bout 842,000 squre eet o lesble spce not owned by Sers nd Mcy's, which continue
to own their 22-cre nd 16-cre pieces o the mll, respectively.

The property ws built in the erly 1970s nd hs gone through severl chnges o ownership, most
recently lnding with Generl Growth in 1999. In 2007, Generl Growth completed  $140 million
expnsion nd renovtion o the mll. Most recently, the mll welcomed  24 Hour Fitness nd 
Round 1 bowling lley.

The mll hs never competed with the more glmorous, high-end centers like West eld Vlley Fir,
Sntn Row or Stnord Shopping Center. But vetern retil broker Dvid Txin sid the mll hs been
doing well, nd tht it comes with the possibility o more development thnks to cres nd cres o
extr lnd, primrily surce prking.

"The ply there is the extr lnd," sid Txin, o Mechm/Oppenheimer CORFAC Interntionl. "The
mll itsel is in pretty good shpe nd does pretty good numbers. It’s ll ull, nd ull o ntionl
retilers. It does some serious volume."

Indeed, Generl Growth's most recent ernings report pegged the mll t 97.3 percent lesed.

Yet it's cler tht the mll business is cing threts s the trditionl nchor stores like Sers nd
Penney continue to shrink. Just this week, Sers con rmed it would close its Sn Mteo store, 
Peninsul stlwrt or genertions.

Estridge hs exposure to severl retilers who hve been wekened in recent yers, including Penney,
Mcy's, Sers nd Brnes & Noble — something Pci c Retil's Plenge is well wre o.

"It’s  question on  lot o investors' minds, becuse they’re ubiquitous," he sid. "But hving sid tht,
they’re not ll struggling. We obviously did  very detiled, grnulr vetting o the nncil helth o
ll the retilers in this property, including the nchors. Mcy's nd Penney hve very, very robust
sles. This is one o the top Sers in the chin."

https://www.bizjournals.com/sanjose/news/2016/01/15/san-joses-eastridge-mall-sold-in-retail-megadeal.html 2/13
9/26/2020 San Jose's Eastridge Mall sold to Goldman Sachs, Pacific Retail Capital Partners and Silverpeak Real Estate Partners. - Silicon Valley Business Jou…

As or the uture o the lrger shopping-center business, Plenge sid it's ll bout evolving to meet your
customers' chnging tstes. "You hve to provide ctivities nd experiences the customer wnts —
whether it’s dining or entertinment, such s with Round 1, or being ble to see  movie," he sid. "One
thing we’ll try to do is better ppel to milies, upgrding the ply re. We’re going to look to urther
enhncing the restrooms, mking tht  more plesnt experience, nd sme with the ood court. The
generl cosmetics will certinly improve."

Plenge lso sid tht the center will work to ppel to the diverse demogrphics o est Sn Jose. One
possibility is to bring in  grocer trgeting the Asin mrket.

The del is the ltest or Pci c Retil, n opertor with eight properties in its portolio tht Plenge
describes s "boutique." The compny ws ormed in 2007 by  group o retil veterns with
experience t mrquee retil opertors like Federl Relty nd West eld. With  vriety o cpitl
prtners, Pci c Retil's portolio includes West Oks Mll in Houston; Yorktown Center in suburbn
Chicgo; Colonie Center outside Albny, New York; South Towne Center in Sndy, Uth; Queen
K’humnu Center on Mui; nd Pseo Nuevo in Snt Brbr.

Plenge sid Pci c Retil looks or "trnsitionl" properties where sles, mrket penetrtion nd
"generl chrcteristics" cn be improved in  three- to ve-yer period.

"Our growth is relly bout continuing to look in mjor mrkets or trnsitionl properties with gret
loctionl chrcteristics nd mcro undmentls, where we cn see clerly we cn mke 
di erence."

The Estridge del cme together reltively quickly — in bout 90 dys — but Plenge sid he hs long
been n dmirer o the mll. He declined to sy how the del ws structured or n exct price, but
con rmed tht Goldmn Schs is the mjority owner. Lesing will be hndled by BMW Relty
Advisors.

"I hd wtched it go up nd down over the decdes, nd wtched Generl Growth commit  sizble
equity commitment over the yers," he sid. "In 2007 they spent $140 million expnding nd
renovting, nd they did  relly good job."

The lrger neighborhood is lso undergoing chnges. Just south o Quimby Rod, Hunter Properties is
working with property owner Arcdi Development on  344,000-squre-oot retil center. About 276
single-mily homes re lso plnned.

In ddition, Estridge is slted eventully to be connected to downtown Sn Jose through the VTA's
Bus Rpid Trnsit project, which is under construction but behind schedule.

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https://www.bizjournals.com/sanjose/news/2016/01/15/san-joses-eastridge-mall-sold-in-retail-megadeal.html 3/13