Federal Realty returns to grocery-anchored properties

Federal Realty Investment Trust today announced the acquisition of South Valley Shopping Center and Mount Vernon Plaza, adjacent properties located in Fairfax County, Va. Acquired from unrelated, private owners, the Federal Realty purchased the fee interest in South Valley Shopping Center for approximately $13.7 million in an all cash transaction and acquired the leasehold interest with a purchase option in Mount Vernon Plaza for aggregate consideration of approximately $17.5 million in the form of cash, down-REIT partnership units and the assumption of debt.

"Acquisitions remain an integral part of our growth strategy," Donald C. Wood, Federal Realty’s president and chief executive officer, said in a press release. "Our acquisitions team has been extremely patient and diligent in identifying operating shopping centers in our core markets that possess redevelopment and remerchandising potential in order to provide generous returns to our shareholders."

The shopping centers are located on the west side of Route 1 in Fairfax County, Virginia approximately three miles south of the Capital Beltway. With more than 91,000 people and an average household income of over $94,000 within a three-mile radius of the properties, the acquisitions enhance the Trust’s existing portfolio of properties located in densely populated affluent areas within the Washington, D.C. metropolitan area.

Originally constructed in 1966, and renovated and expanded in the 1980s, South Valley Shopping Center contains over 213,000 sq. ft. of retail space and is currently anchored by Home Depot and TJ MAXX. The property is currently 83% occupied, with the most significant vacancy being a 16,000 square foot space at the site of a former Frank’s Nursery. Mount Vernon Plaza was constructed in 1972 and contains more than 257,000 sq. ft. with Shoppers Food Warehouse as its current anchor. The property is 67% occupied with the principal vacancy coming from an 80,000 sq. ft. space previously leased to Ames, but now under the control of Federal Realty. Federal Realty is currently evaluating a number of redevelopment and re-leasing scenarios with respect to the acquired properties, all of which would significantly increase Federal Realty’s return on invested capital in the properties.

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