California shopping mall owner enters Chicago market

(Crain's) — Westwood Financial Corp., a retail property investor with large holdings in California and Phoenix, has entered the Chicago market with a $23.63 million acquisition of a Jewel-Osco anchored shopping center in Elk Grove Village.

The Los Angeles-based firm paid roughly $194 per square foot for the 121,507-square foot development, called Elk Crossing, at Biesterfield and Arlington Heights roads in the northwest suburb, according to property records.

The seller, an affiliate of the General Electric Pension Trust, was advised by GE Asset Management Inc., the investment arm of the Fairfield Conn.-based conglomerate, says Rick Drogosz, a principal at Oak Brook-based Mid-America Real Estate Corp., the transaction's only broker.

The Elk Crossing acquisition, Westwood Financial's first in Illinois, is consistent with the firm's strategy of investing up to $200 million this year in grocery-anchored retail properties, priced between $5 million and $50 million, says Scott Henard, vice-president of acquisitions in Westwood's Plano, Texas office.

"Now that we have one property, we're looking to expand our portfolio (in the Chicago area)," he says.

Westwood Financial has acquired properties totaling about $65 million in the first half of this year, including a 88,391-square-foot shopping center in the Atlanta suburb of Johns Creek. Nationally, the company owns and operates more than 90 shopping centers, with its largest holdings in the Los Angeles, Phoenix, Denver and Dallas areas. It financed the Elk Crossing deal, which closed on July 30, with a $13.9 million loan from Hartford, Conn.-based Aetna Life Insurance Co., according to property records.

Westwood's price per square foot was above the average of $148 for Chicago area strip malls, according to a July report from research firm Real Capital Analytics Inc. Nationwide sales of retail properties in the second quarter dropped 30% to $5 billion, compared to $7.2 billion in the first quarter of this year, according to the report.

The shopping center, completed in 1985, is 98% leased to tenants including Panera Bread, RadioShack and Bath & Body Works, says Mr. Drogosz. Jewel-Osco is the largest tenant at 62,000 square feet. McDonald's, Pizza Hut and LaSalle Bank occupy freestanding buildings on the more than 14.5-acre infill site, according to Mid-America.