On Oct. 29, Equity One acquired Westbury Plaza for $103.7 million from joint owners, Kimco Realty Corporation and DRA Advisors.

Westbury Plaza is a 400,000-square-foot shopping center situated at 1220-1250 Old Country Road in the center of Nassau County, Long Island. Anchored by Walmart (110,054 sq. ft.), Costco (148,925 sq. ft.), Marshalls (45,826 sq. ft.), Sports Authority (43,000 sq. ft.) and Borders (30,550), the center also features restaurant chains Ruby Tuesday, Olive Garden, and California Pizza Kitchen. Westbury Plaza was built in 1993 and was last renovated in 2004. According to CoStar Property, it is currently 100% leased.

The transaction marks Equity One's entry into the New York market. "There is enormous demand for retail in this region as the demographics are strong and barriers to entry are high. It is one of the most productive retail corridors in the entire country, and our center is the dominant center in this market. Our tenants generate sales of nearly $500 million per year," said CEO Jeffrey Olson. "The productivity of the tenants at Westbury Plaza is higher than any center I have seen in over 25 years in the acquisition business,” added Equity One President Tom Caputo.

Westbury was put on the market for sale in May 2009 and was widely marketed by Eastdil. Equity One put the center under contract in early August. In Kimco's third quarter conference call, David Henry said the company received more than 20 bids on the shopping center. "We've seen a substantial shift in the demand for high quality retail. The investors we meet with are definitely being much more aggressive today than they were, especially foreign institutions which have seen the value of their currency increase compared to ours and feel today is an excellent time to invest in high quality retail in the United States, especially with a hint of inflation down the road for good hard assets," commented Henry.

Olson said that while Westbury looked like a stabilized property at face value, Equity One saw it as a value-add play because many Westbury Plaza tenants have below market rent and are undersized. On top of that, in a few weeks, the company is scheduled to close on a development site that is very close by to Westbury that could provide for expansion of some of the center's "undersized retailers" and allow the company to "recapture" some of its below-market leases.

Equity One is still evaluating its financing options for Westbury Plaza, but Olson said, "should we decide to place a long-term mortgage on it, our initial cash-on-cash returns would be in excess of 10.5% based on the most recent quotes we have received from potential lenders." The transaction closed at an 8% capitalization rate.

Commenting further on the financing market, Olson said, "It's amazing how much [financing] has changed in just a short period of time. It was only six months ago when we were repurchasing our public bonds for $0.60 to $0.70 on the dollar, implying yields to maturity of 13% to 15%. Now, we are receiving daily loan quotes from the banks on issuing ten-year bonds in the unsecured market in the mid 7% rate range, and we have also received ten-year mortgage quotes on Westbury in the low 6% rate range." He added that the company has already received "expressions of interest on Westbury from several potential joint venture partners."

As of September 30, 2009, Equity One owned or had interests in 166 shopping centers comprising nearly 19 million square feet.
For more information, see CoStar COMPS ID# 1819908.

This article appears in CoStar's Retail News Roundup: Nov. 8 - 14, 2009
This week in the Retail Roundup, CoStar reports on expansions or new concepts at Sports Fan Attic and Bajio Mexican Grill; closings, cutbacks, defaults, or bankruptcy news at Waldenbooks; acquisition, merger, loan, sale, or IPO activity at Crown Acquisitions, Goldman Properties and The Feil Organization, Blackstone and Glimcher, Coventry and DDR, Equity One, Kimco and DRA Advisors, KKR and Dollar General, Iconix and Ecko, and Landry's Restaurants; new retail development news in MD; personnel or corporate announcements at Wal-Mart and ICSC, and Developers Diversified; sustainability and green building news at Food Lion; and more.