Long Island, N.Y,-based Acadia Realty Trust is expected to acquire a major open-air retail complex in Wilmington, Del. The 1 million sq. ft. Brandywine Town Center and Market Square, is 92% leased, is anchored by T.J. Maxx and Trader Joe’s Market.
The first phase of the property is roughly 450,000 sq. ft. and 97% occupied, with a tenant roster that includes Lowe’s Home Improvement, Bed Bath & Beyond, Old Navy and Dick’s Sporting Goods. The second phase of the Town Center has roughly 420,000 sq. ft. of existing space, 138,000 sq. ft. of that leased by Target. Acadia is already in late-stage negotiations with an unnamed national retailer as an additional anchor to lease approximately 125,000 sq. ft.
"We are pleased with the execution on all the components of our business plan to date, of which our acquisition program is the primary external growth component," says Kenneth Bernstein, CEO of Acadia Realty Trust.
Acadia Realty Trust is a REIT that focuses on the acquisition, redevelopment and operation of grocery-anchored shopping centers. The firm now owns and operates 36 properties totaling roughly 57 million sq. ft. located mainly in the eastern U.S.
The property is located on Route 22, one of Delaware’s prime retail corridors, 20 miles south of downtown Philadelphia. Since Delaware has no sales tax, retail is stronger here than in neighboring Pennsylvania and New Jersey.
Acadia is expected to pay roughly $87 million for the entire complex, which includes closing costs. The total purchase price is projected to be between $130 million and $150 million, a significant discount to the estimated replacement cost. Also, the purchase price represents in excess of a 10% capitalization rate — before structural reserves and imputed management fees — based on the projected 2003 net operating income. Acadia projects that the acquisition will generate roughly $.04 of FFO during 2003, approximately 4% growth over projected 2002 FFO.
"We are extremely excited by this pending acquisition not only because of the attractive initial yield but because it is an ideal blend of strong location, high-credit quality and future growth potential," says Bernstein.