Totaling 665,000 sf, the 16-asset portfolio is largely retail, dominated by three assets in the White Marsh submarket: White Marsh Plaza, Shoppes at Nottingham Square and Avenue at White Marsh--which, at roughly 300,000 sf, is almost half of the portfolio. With this addition, Federal Realty's footprint in the Baltimore/Washington, DC area increases by some 12%.
Other assets include a 13,000-sf retail center, one office building, three hotels, one parking lot in Towson that is under negotiations to be developed into a bank, and small net-lease, single-tenant restaurants and banks, according to John Hendrickson, vice president, strategic transactions. "It is a stabilized portfolio with an aggregate occupancy rate roughly in the high 90s," he tells GlobeSt.com. Long-term ground leases generating approximately $2.9 million of rent from credit tenants were part of the acquisition.
Hendrickson declined to estimate the portfolio's projected income-growth rate, but he did say the firm expects it will meet or exceed growth in its current portfolio. "I wouldn't call this acquisition a value-add play. Our plans are to focus on growth in income by focusing on quality tenants and increasing market rents as tenants turn over," he explains.
The Rockville, MD-based company likes the Baltimore area's demographics, which is one reason it wanted to further invest here. "Quality retail in this market is something we definitely want to own," Hendrickson says. "This portfolio was the best retail node in the Baltimore area."
For instance, the Avenue at White Marsh is a destination lifestyle center, whose primary trade area includes more than 235,000 households with average household incomes of almost $68,000 in comparison to average household incomes of $50,500 in the greater metro area, according to Federal Realty's stats. Tenants there include national and specialty retailers, restaurants and a 16-screen Loew's cinema.
Anchored by Giant Food, White Marsh Plaza is a 79,000-sf neighborhood shopping center. The Shoppes at Nottingham Square is about 186,000 sf and includes two multi-tenant retail buildings as well as a number of retail pad sites with credit tenants including Lowe's Home Improvement, Sun Trust Bank, Panera Bread and others.
Nottingham has been in disposition mode since December 2006. The majority of its office assets were bought by Corporate Office Properties Trust for for $362.5 million.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
