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East Hills Mall sells to investors in Southern California

20190828-bc-easthills

The former East Hills Mall in northeast Bakersfield has sold to a Southern California real estate development proposing to demolish and redevelop the property.

A Southern California-based real estate development partnership has paid about $7.2 million for the former East Hills Mall, reviving hopes that the dilapidated property in northeast Bakersfield can be put to good use after years of disuse.

The new owners, led by developer-investors Stephen Zimmerman and Michael Heslov, on Thursday announced plans to demolish the entire 350,500-square-foot mall and possibly replace it with a mixed-use project. Details of their proposed redevelopment were not disclosed.

The transaction represents the first sign of investment at the 36-acre site since 2017, when a group of local investors agreed to pay $8.75 million for the property. Their plans ultimately fell through, and in December 2019 ownership of the 33-year-old mall reverted to owners led by Modesto-based Save Mart Supermarkets.

Zimmerman said in a news release Thursday the new owners were impressed by Bakersfield's diverse economy and quality of growth and development.

"This property is extremely well located and is ideally suited for new commercial and perhaps mixed-used development," he stated.

Added Heslov, "The city of Bakersfield has demonstrated support for the redevelopment of this property and we look forward to working with them and the community to bring about a quality project."

City government said by email it is hopeful about the project and what it can offer the surrounding community.

"We also look forward to working with the developers," he said. "The city stands ready to facilitate the development process and have productive discussion when a project proposal comes forward."

Observers in the local real estate industry have long speculated what might make the best reuse of the property, which has deteriorated in recent years as people have repeatedly broken into the vacant mall and caused extensive damage.

Some real estate people have said housing might make sense there, or entertainment, or some combination of the two. Retail might also work there but there's a worry that e-commerce has limited consumers' appetite for a large grouping of conventional department stores and shops.

State records show Zimmerman is president of Arizona-based ZDI Inc., which has offices in Santa Monica and Van Nuys. They show Heslov is active in Southern California as well.

Kern County property records indicate the sale was recorded Wednesday. They show the property's ownership was divided among five limited liability companies.

The largest share went to 1240 Palmetto LLC, with 47.7 percent of the property. Palmetto Group LLC took 26 percent and Valley Oaks Investments LLC got 15.3 percent. Terrace Properties LLC obtained 6.2 percent and Hope Shields LLC (misspelled on the deed as Hope Sheilds LLC) secured 4.8 percent.

Among the ownership entities, only one — Nevada's 1240 Palmetto — is based outside California.

The seller and buyers were represented by Orbell Ovaness, Ara Rostamian and Aren Ohanian of Marcus & Millichap. Cushman & Wakefield/Pacific principal Vincent Roche consulted on the transaction.

Editors note: This story has been amended to reflect the brokers' dual roles.