Mesa Ranch Plaza, which also includes a developable pad site, traded at a fairly low cap rate and $90 per square foot. “Depending on how you look at it, it was either a great price or very expensive because the current cash flow makes the cap rate low, yet on a price per square foot basis, it sold for about half of replacement cost,” Voorhees explains.

A local expert says the lenders held a note of $26 million to $28 million on Mesa Ranch Plaza, which means that they recovered more with this sale than the industry average for REO retail properties. Industry research indicates that lenders are recovering 60 to 65 cents on the dollar, on average.

A Newport Beach, CA-based firm developed Mesa Ranch Plaza, which is located at 1036-1118 E. Southern Ave. The property was pre-leased to two well-known Hispanic retailers: Pro’s Ranch Market and La Curacao. However, La Curacao defaulted on its 100,000-square-foot lease prior to the center’s opening, leaving the developed with half its expected income, Voorhees notes.

Voorhees notes that the prospective buyers were attracted to the center primarily because of the performance of Pro’s Ranch Market. “The store at Mesa Ranch Plaza has very strong sales – it is an extremely high performing store,” he points out.

In addition to Pro’s Ranch Market, the center is leased to Anna’s Linens, T-Mobile and a host of local and regional small shop tenants. “There was a lot of risk for the buyer coming into the deal because of the vacancy, but he felt confident he could make be successful with the center,” Voorhees says.