WASHINGTON, DC—Oak Brook, IL-based Retail Properties of America has added to its considerable retail inventory in the Washington DC area with the off-market acquisition of a two-asset portfolio for $72.7 million.
Merrifield II, which was acquired for $45.7 million, is 138,000 square feet divvied up between retail and 62,000 square feet of storage. Retail Properties plans to redevelop it into a mixed-use project integrated with Merrifield I.
Shoppes at Hagerstown was acquired for $27 million. It is a 113,000-square foot power center that is 93% occupied by such tenants as Best Buy, Party City, Dollar Tree, Five Below and Starbucks.
Retail Properties was unable to speak with GlobeSt.com for this article.
Last Year's Activity
A little more than a year ago, Retail Properties already had a sizeable presence in the Washington DC area, at 2.6-million square feet plus. It went on to make several additions to its portfolio starting in January of 2015 when it acquired the retail portion of a mixed-use community in Gaithersburg, MD for $162.8 million.
About a week or so later, it announced it acquired Merrifield Town Center and Fort Evans Plaza II in an off-market deal for $121.5 million
In May it closed on a 38,000-square foot neighborhood center in Tysons, VA for $31.1 million.
Then, in November Retail Properties acquired Towson Square in Towson, MD, for $39.7 million. Retail Properties said it would integrate the 138,000-square foot center with Towson Circle, a nearby retail center it already owned, creating one larger redevelopment -- similar to what it plans to do at Merrifield.
More to Come
Retail Properties has been disposing of non-core assets as it ramps up its presence in core markets, including the Washington DC area, for a few years now.
In one case, the loan encumbering the Gateway Salt Lake City retail center, was transferred to the special servicer, "representing a significant step toward advancing the exit strategy of the asset," CFO Heath Fear said in the REIT's Q3 earnings call held in November.
In most cases, though, these non-core assets were duly sold. During that same call, EVP Shane Garrison said that the company completed $285 million of dispositions and was under contract to sell its last remaining Las Vegas asset and an additional development asset, for a total of $59 million.
The full-year disposition amount is expected to be between $500 million to $550 million, Garrison said at the time, with the weighted average cap rate to be in the low end of the 7% to 7.5% range.
At this moment the Retail Properties has a presence in 30 markets and Garrison hopes to see that number dwindle this year and beyond.
As for 2016 it will be lather, rinse, repeat for Retail Properties. That is, it plans to continue to sell off its non-core assets while match-funding acquisitions in its core markets.
The REIT anticipates $700 million to $900 million in total transaction activity this year, Garrison said, split between acquisitions and sales.
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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.
