SALT LAKE CITY -- Scanlan Kemper Bard of Portland, OR has paid $38.6 million for the 226,092-sf Trolley Square retail center and plans a $54 million renovation of the tourist attraction that will include an expansion and condominiums. The real estate merchant banking firm's plans will reposition the historic property as a neighborhood shopping center and residential project.

The 13.5-acre shopping center just outside of Downtown Salt Lake City is listed on the National Register of Historic Places and is also designated a Utah Historic Site. It is the second-most visited tourist site in the city, with 30% of the property's three million customers each year visiting as tourists.

Trolley Square's location at 602 E. 500 South is one block from the city's light rail system and within walking distance of Temple Square, the Salt Lake Temple, the Salt Palace Convention Center and the University of Utah. The center has parking for 1,025 vehicles.

SKB principal Bob Scanlan points out that average sales at the center are strong at around $300 per sf, but adds, “We don't feel the existing improvements match the quality of the location." Trolley Square is 86% occupied, with a tenant roster including Restoration Hardware, Pottery Barn, Pottery Barn Kids, Banana Republic, Gap Kids, Hard Rock Café and Williams Sonoma.

The two-phase repositioning plan includes increasing the leasable area, updating the mix of retailers, improving signage, rehabilitating the parking areas, extensive interior and exterior improvements including seismic upgrades and entitling a portion of the property for residential use. SKB expects to announce a major new anchor tenant within 60 days.

The $26-million first phase of the project, which will overhaul of the existing structure, is scheduled to begin in January and be complete in summer 2007. The $28-million second phase includes a new 50,000-sf anchor-tenant building with underground parking, which will replace a surface parking lot east of the Hard Rock Café.

For the housing component of the repositioning, SKB plans to seek approvals to tear down the mall's existing parking structure and build a new one that would be topped with 150 residential condominiums. SKB principal Todd Gooding notes that all of the work that the company envisions is allowed under current zoning.

SKB acquired Trolley Square from the Simon Property Group, which has owned and self-managed the buildings since 1986. SKB has selected Blake Hunt Ventures, a private real estate development and services company based in the San Francisco area, to manage the repositioning of Trolley Square.

Goldman Sachs Commercial Mortgage Capital will serve as lender for the project, with Okland Construction of Salt Lake City. as general contractor. Trolley Square is third acquisition under SKB's new private equity investment fund, which is providing half of the equity for the purchase and repositioning of the property.