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Company Profile:
Edens & Avant Mixes it Up

This fall, Edens & Avant plans to break ground on the Mosaic District, a 1.8 million-square- foot, mixed-use project in suburban Washington D.C. The $200 million project is by far the largest and most ambitious development the Columbia, S.C.-based company has ever taken on. It also is evidence of Edens & Avant's evolution from a developer and owner that invested in grocery-anchored shopping centers into one that invests in urban infill locations and mixed-use projects.


"We're interested in real estate in extraordinary locations - the locations that will still be great in 50 years," explains Edens & Avant CEO Terry Brown. "That's led us to be more focused on urban and infill locations and to look at mixed-use."

Today, Edens & Avant boasts a portfolio of 130 properties totaling 15.5 million square feet in 14 states. Valued at $3.5 billion, the portfolio consists primarily of grocery-anchored shopping centers located along the East Coast from Boston to Miami. And, the company has a development pipeline in excess of $1.2 billion, with mixed-use projects like the Mosaic District representing a good portion of that pipeline.

Portfolio evolution
For more than 40 years, Edens & Avant's bread and butter has been necessity retail. Joe Edens, founder, chairman & former CEO of Edens & Avant, developed his first grocery-anchored retail center in the mid-1960s in South Carolina. It was so successful that he had developed 27 more centers within an eight-year period and expanded outside of his home state in the mid-1970s.

Edens, who spent his early years working in his father and uncle's food markets, brought a unique perspective to the retail real estate world. When he stepped down as CEO in 2002, Edens chose a CEO with a strong financial background. That person was Terry Brown, who began working as the company's financial adviser in 1995 while he was chief executive of Andersen Corporate Finance L.L.C., the investment banking and financial advisory arm of Arthur Andersen.

At the same time, Edens promoted his protegee, Jodie McLean, to the position of president. McLean joined Edens & Avant right out of college, working her way up to chief investment officer in 1997. Today, as president & chief investment officer, McLean handles the company's operations including its 14 regional offices.

When Brown joined the company, its portfolio was worth about $1.8 billion. With his financial background, he was able to bring Edens & Avant well-capitalized and credible investors such as The State of Michigan Retirement System, The New York State Teachers' Retirement System and JP Morgan Investment Management Inc.

In fewer than 18 months, Brown and his team increased the company's portfolio to more than $2.2 billion, primarily through acquisitions in the Northeast and Mid-Atlantic regions. And, over the past four to five years, Edens & Avant has sold $1 billion of existing assets and added more than $1 billion of new properties, radically changing the company's portfolio, Brown says.

Today, the Mid-Atlantic region (Washington D.C.) accounts for about one-third of the company's portfolio, while the Northeast region (Boston) makes up about 30 percent and Florida represents about 10 percent. The remainder of the portfolio is concentrated in other Southeast markets, Brown says.

That's a change from just a few years ago when the bulk of Edens & Avant's portfolio was situated in the Carolinas and Georgia. And, the portfolio has shifted from being mostly suburban properties to a balance of urban and suburban, especially as it relates to new development work, McLean notes.

Edens & Avant is scaling back its disposition efforts, Brown says, and is planning to sell only $100 million to $150 million worth of assets. "It's not a favorable market for selling right now, and we don't have to because we don't need to generate any additional capital," he adds.

Edens & Avant has worked hard over the past few years to migrate from a secured balance sheet to an unsecured balance sheet. Today, the company has leverage of just 40 percent after refinancing $1 billion of debt during the first half of 2007. And, this past January, the company achieved a significant financial milestone - it became an investment-grade rated company. "That creates different access to capital for us that we didn't have before," Brown notes.

Continued acquisitions
With money to spend, Edens & Avant is actively acquiring assets and developing properties. On the acquisition front, the company is acquiring core stabilized assets, as well as well-located properties with redevelopment potential.

"We clearly are being much more selective this year," Brown says, adding that the company will likely acquire the same amount this year as it did last year. Last year, Edens & Avant acquired $161 million worth of retail assets totaling 850,000 square feet.

Brown says the company is looking for deals throughout all of its regions and has made some significant progress in the Washington D.C area and in South Florida. It began expanding in South Florida in 2006 and has been selectively growing its portfolio there, according to Jami Passer, vice president of the South Florida region for Edens & Avant.

Last year alone, the company acquired 450,000 square feet of space in South Florida including Coral Shores in Cape Coral and Lakeside Town Shops in Davie, Fla. Today, the company owns 11 centers in this market.

Brown says the company will continue to expand in Florida, albeit cautiously. Although the state has strong population growth, a lot of the people exist on fixed-incomes, he notes, adding that low investment earnings and higher food costs really hit the fixed-income segment hard. "That has an impact on retailing in Florida," Brown explains.

The company also is looking for ways to invest in the greater New York metro area including New Jersey and Connecticut. "That's the final territory that will link us on the East Coast," Brown says. But, the company has no plans to expand beyond the East Coast.

Picky partner
Over the past few years, Edens & Avant has been aggressively developing properties in its key regions. "We're on a pace to deliver $200 million in new developments annually over the next four years," Brown says.

So far this year, the company has already delivered two projects - the Center at Innovation, a 280,000-square-foot center in Manassas, Va. that is anchored by SuperTarget, PetSmart and TJ Maxx, and Davidson Commons, 92,000-square-foot Harris Teeter-anchored center in Davidson, N.C. just outside of Charlotte. Another project is scheduled to open this fall - Shoppes at Page Point, a 193,000-square-foot project in Stoughton, Mass. that will be anchored by a two-level Target.

Overall, Edens & Avant's most significant development activity is in the Washington D.C. area. In addition to the Center at Innovation, it has several mixed-use projects under development or in the planning stages in the D.C. region. The aforementioned 31-acre Mosaic District is one of them; it will consist of community-serving retail, hotel, office and a mix of residential, inclusive of affordable, workforce and market-rate housing. It has a build-out schedule of five years, and the first delivery will be in 2009.

Edens & Avant will work with development partners for the non-retail pieces - a new experience for the company that has always tackled development single-handedly. "We are learning how to partner," McLean says.

And, Edens & Avant is being picky about its partners, McLean adds. "These projects are so detailed and they have so much manufactured stress and so many more pressure points versus typical grocery anchored shopping centers that you have to make sure you have a partner with a similar vision for the project," she says.

Later this year, Edens & Avant will also begin construction on Albemarle Place in Charlottesville, Va. The project will include 200,000 square feet of community-serving retail, 395,000 square feet of lifestyle retail, a 16-screen cinema, 90,000 square feet of Class A office space, a 200-room luxury hotel and 800 residential units. It's scheduled to open in 2010.

And finally, the company is venturing with Washington D.C.-based J Street Development to redevelop the area near New York and Florida Avenues. In December 2007, it closed on DC Farmers Market, a structure with about 50 retail tenants.

Farther south, Edens & Avant is in preliminary planning for Moores Mill, a proposed 115,000-square-foot, mixed-use project in urban Atlanta. Scheduled to open in 2010, it will be anchored by a national grocer and will include 345 residential units.

"We're only doing projects that are retail-driven," Brown says. "And, even though a lot of developers had considered mixed-use projects, the credit markets have impacted them. Today, mixed-use isn't as competitive as traditional retail-only centers."

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