Gaw Capital Leads $325M Purchase of Hollywood Shopping Mall

Gaw Capital USA and US private equity firm DJM have purchased a Hollywood megamall in the largest acquisition of a single US retail asset outside of Manhattan in nearly three years, according to a joint announcement by the companies.

Los Angeles real estate company CIM Group is said to have sold the 463,000 square foot (43,014 square metre) Hollywood and Highland shopping and entertainment complex to the pair of companies for $325 million, according to market sources.

“We are delighted to be partnering with DJM to acquire this iconic asset in Hollywood,” said Goodwin Gaw, chairman and managing principal of Gaw Capital Partners, adding that it marked an important milestone for Gaw Capital in the Los Angeles real estate market.

Gaw went on to say that the companies will enhance the asset with digital content and innovative technology to turn it into the “new town centre for the Hollywood community”.

At the reported price, Gaw and DJM are paying the equivalent of just under $702 per square foot of gross floor area for the 18-year-old property.

The US affiliate of the Hong Kong private equity shop will be joining forces with DJM, which manages a real estate portfolio valued at $1 billion, in a partnership that the companies said in a statement combines Gaw’s capital markets expertise and experience in repositioning assets around the world with the US firm’s knowledge of experiential retail in the Los Angeles market.

Gaw USA, which is currently investing its third dedicated US private equity fund, has been investing in the US through its associate Downtown Properties since 1995.

Price Tops Market Predictions

The price the partnership is said to be paying for Hollywood and Highland exceeds market expectations, after the five-storey complex was listed for sale last November with market sources predicting at the time that it would fetch bids in the region of $300 million.

Located at 6801 Hollywood Boulevard, the shopping centre is spread across a 7.6 acre (30,756 square metre) site just outside of Hollywood’s Walk of Fame at the heart of the Tinseltown entertainment district.

The Dolby Theatre, which hosts the Oscars and comprises a further 169,000 square feet of the complex, is not included in the sale, and will be retained by CIM Group.

Adjacent to the TCL Chinese Theatre, more commonly known as Grauman’s Chinese Theatre, at the crossroads of Hollywood Boulevard and Highland Avenue, the retail asset is one of the busiest shopping and entertainment destinations in Los Angeles welcoming over 25 million visitors annually, according to the statement.

Current retail and F&B tenants include Sephora, Johnny Rockets, Dave and Busters, Footlocker, and Guess.

Re-Imagining a Tinseltown Mall

The companies said in their statement that they plan to “reimagine” the site over the next 24 to 30 months, upgrading and rebranding the retail hub in a renovation process which is expected to finish in 2021.

“The retail landscape has shifted, consumer tastes have adapted, and ‘New Hollywood’ is constantly redefining itself,” said Stenn Parton, chief retail officer at DJM. “With Hollywood and Highland, we at DJM and Gaw Capital are eager to seize the opportunity to create, in the heart of Los Angeles, an environment where the iconic allure of ‘Old Hollywood’ meets the modern innovation of new media.”

The DJM executive indicated that the company plans to introduce new retail concepts featuring global brands and a digital approach with an emphasis on food and beverage offerings.

20-Plus Years in LA

Gaw Capital, which currently manages over $23 billion in real estate assets globally, including $6.5 billion in retail properties, has invested in a number of Hollywood landmarks as it developed Los Angeles buildings over the last 20 years.

The Hong Kong firm, which last year closed on $412 million in capital for its latest US value-add real estate fund, started off its US adventures when company chairman Goodwin Gaw acquired the circa 1927 Hollywood Roosevelt Hotel in 1995.

Following a $24 million makeover, that property, which is only one block away from the Hollywood and Highland centre, has gone on to host Oscars afterparties attended by the likes of Brad Pitt and Leonardo di Caprio.

Gaw Capital also owns Los Angeles’ iconic Bradbury Building, whose atrium and spiraling stairwell has starred in Hollywood films including 1949 noir classic DOA and Roman Polanski’s Chinatown.

Earlier this year a Gaw affiliate exited its investment in the 94-year-old MacArthur building along Los Angeles’ famed Macarthur Park, after having first invested in what was then known as the Park Plaza Hotel in 2015.