Based on in-place rents, the going-in cap rate is about 7.2%; however, Sweetnam tells GlobeSt.com that the average current rent is around $6 per sf per year below market. Sweetnam says tenant rollovers will start ramping up in about three years, allowing the company to start bringing rents up to market.

Federal Realty's other properties in the Bay Area include Santana Row, a new 529,000-sf super-regional lifestyle center in San Jose; Old Town Center, a 90,000-sf development in Downtown Los Gatos, and; Kings Court, an 80,000-sf grocery-anchored community center also in Los Gatos. "It gives us a dominant position as a shopping center owner in the South Bay, both geographically and by product," says Sweetnam. "It allows us to see every retailer that wants to come to South Bay."

As part of the Trust's strategy to grow its operating platform and presence in California, the company's chief investment officer Jeff Berkes relocated from Federal Realty's Rockville, MD headquarters to its San Jose office two months ago.

"The acquisition of Westgate Mall demonstrates Federal Realty's commitment to increasing our operating platform in strategic metropolitan California markets, thereby allowing us to better leverage our West Coast team based in San Jose," states Donald C. Wood, Federal Realty's president and chief executive officer. "The acquisition coupled with the relocation of Jeff Berkes and the bolstering of our West Coast leasing, operations and acquisition teams, strengthens our presence in California and moves us significantly closer to our goal of being a dominant retail landlord in these markets."