Federal Realty Investment Trust
), a real estate investment trust (REIT), recently acquired a
property - East Bay Bridge Shopping Center - located on the
Emeryville and Oakland border for $53.7 million. This strategic
acquisition is in line with the company's aim of enhancing its
retail dominance in the Bay area.
Federal Realty, which bought the shopping center from TPG
Capital, also took on an existing mortgage loan worth $62.9
million secured by the property. Texas-based TPG Capital, one of
the largest private equity investment firms globally, has
acquired the shopping center in 2010 for $505 million as part of
a four-property deal.
The acquired property complements Federal Realty's 1.8 million
square feet of properties owned in the Bay Area. This includes
150 Post St. in San Francisco, Crow Canyon Commons in San Ramon
as well as Santana Row and Westgate Center in San Jose.
East Bay Bridge Shopping - spanning 438,000 square feet - is
located in a very supply constrained trade area in the densely
populated East Bay market. The center is positioned at the
intersection of several major highways and experiences
significant traffic counts of 216,000 cars per day to the south
on I-580 and 288,000 cars per day to the west along I-580/I-880.
The traffic count is expected to increase with the completion of
the expansion of the Caldecott Tunnel this year.
Constructed in 1994, East Bay Bridge boasts a class of
industry-leading tenants such as
The Home Depot, Inc.
). The other noteworthy retailers at the center include
), Pacific Sales Kitchen and Bath, Sports Authority and
Michael's. In our view, the strategic acquisition will boost the
company's rental revenue going forward, considering the upscale
premium location of the property and strong tenant base.
Federal Realty incurred around $1 million of closing costs
related to the acquisition, due to late closing of the
transaction. However, management expects the acquisition to be
accretive to the company's earnings in early 2013 and provide
long-term value creation.
Federal Realty specializes in owning, managing, developing and
redeveloping retail, mixed-use and street-retail properties,
primarily in densely populated locations. Its community and
neighborhood shopping centers are anchored by supermarkets, drug
stores or high-volume, value-oriented retailers, which provide
As of September 30, 2012, the company's portfolio comprised
approximately 19.1 million square feet located primarily in the
Northeast and Mid-Atlantic regions of the United States, and
FED RLTY INV (FRT): Free Stock Analysis
HOME DEPOT (HD): Free Stock Analysis Report
OFFICEMAX INC (OMX): Free Stock Analysis
SAFEWAY INC (SWY): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
To read this article on Zacks.com click here.
Federal Realty is expected to release its fourth-quarter 2012
results on February 12, 2013. The Zacks Consensus Estimate for
the fourth quarter FFO (funds from operations) is currently
pegged at $1.11 per share.
Federal Realty currently has a Zacks #2 Rank (implying a
short-term Buy rating). However, we maintain our long-term
Neutral recommendation on the stock.
Note: FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.