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Now best known for owning sports teams like the Los Angeles Rams and London’s Arsenal F.C., billionaire Stan Kroenke first made his fortune in real estate, and in shopping centers in particular.
In the L.A. area, the Kroenke Group’s holdings include the Colony Plaza mall in Malibu, which the developer acquired in 2005 for $68.5 million. The grocery-anchored property, located on the beach side of the scenic Pacific Coast Highway, benefits from an affluent market with high barriers to entry.
In May, the landlord secured a $48 million CMBS refinancing for the mall from Rialto Mortgage Finance. Rating documents associated with the securitization provide a closer look at the Malibu Colony Plaza’s finances, and the impact of the pandemic.
As of April, the 115,000-square-foot property was 83.2 percent leased to 21 tenants. The two anchor tenants, Ralph’s and CVS, have occupied space since it was built in the late 1980s and account for about half of the total space. Base rent for the anchors is less than $10 per square foot, though both also pay percentage rent — 1.5% of gross sales for Ralph’s and 1.75% of gross sales exceeding $6 million a year for CVS, according to Fitch.
Other tenants include Starbucks, the U.S. Postal Service, two bank branches, three restaurants, a dry cleaner and a nail salon. A fourth restaurant, Zinqué, is set to move in next spring pending approval of its liquor license.
“Tenants who want a continued presence in Malibu are likely to choose to stay at the property, as there are few retail alternatives in the Malibu community,” DBRS Morningstar analysts wrote in a recent report noting that many tenants have been at the Plaza for more than 20 years.
Ralph’s and CVS are both essential retailers that remained open during the pandemic, and their stores at Colony Plaza reported sales of $26.1 million and $11.5 million in 2020, respectively. The totals were above the national average for their brands, according to Moody’s.
The shopping center has 580 parking spaces, and sees more than 45,000 vehicles pass by the nearest intersection per day. Median household income within a mile of the plaza was more than $156,000 in 2020, more than double the national median.
Apart from the essential anchors, several smaller retailers at the plaza struggled during pandemic-related lockdowns. Seven tenants covering 15,000 square feet — about a third of the total base rent — received rent abatements or deferrals last year.
As part of the refinancing, Kroenke’s firm provided a 10-year master lease to cover any cash flow shortfalls related to those tenants. Rent collections at the property had risen to 97.5 percent in June, up from 83 percent the month before.
Stan Kroenke is married to Ann Walton Kroenke, daughter of Walmart co-founder Bud Walton. Kroenke’s early real estate projects included many shopping centers with Walmart stores, and he was a member of Walmart’s board of directors from 1995 to 2000.
In addition to more than 37 million square feet of commercial real estate across over 200 properties, Kroenke is also one of North America’s largest landowners, with about 1.4 million acres of ranch land in the U.S. and Canada.
Kroenke’s main project in Los Angeles these days is Hollywood Park, a $5 billion mixed-use megadevelopment that includes the L.A. Rams’ new home, SoFi Stadium in Inglewood. The 70,000-seat arena is also set to host the opening and closing ceremonies of the 2028 Summer Olympics.