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Federal Realty Acquires Two Monmouth County Shopping Centers for $161M

REIT Takes Controlling Interest in the Grove at Shrewsbury, Brook 35
January 7, 2014
Federal Realty Investment Trust (NYSE: FRT) has acquired controlling interest in two Monmouth County, NJ shopping centers for total consideration of $161 million, or about $564 per square foot.

The Grove at Shrewsbury and Brook 35 are both located on Route 35, less than three miles from the Garden State Parkway, serving the affluent communities of Shrewsbury, Red Bank, Rumson, Fair Haven, Little Silver, Middletown, the nearby New Jersey Shore, and the emerging bedroom and second home markets for the NYC metro.

The buyer completed its acquisition with a combination of downREIT units, cash on hand, and the assumption of $68 million in fixed-rate debt secured by the two properties.

"These shopping centers have been at the top of our target list for over ten years. The location, tenancy, and productivity of these trophy centers, coupled with in place rents meaningfully below market, provide great visibility on long term growth," commented Jim Taylor, executive vice president and chief financial officer at Federal Realty. "Our ability to use tax deferred currency and our long term relationship with the ownership group allowed us to avoid a marketed process. Also, we are confident that our newly formed partnership with Metrovation, which will retain a non-controlling partnership interest and provide ongoing property management services, will yield additional value creation opportunities in the Metro New York region."

The Grove boasts market-leading demographics including 138,000 people with average household income topping $111,500 in the trade area. It has over 40 national and regional tenants including fashion giants Lululemon, Brooks Brothers, Anthropologie, Pottery Barn, J. Crew, Banana Republic and Williams-Sonoma. It was built in 1988 on 25 acres on both sides of Route 35 in Shrewsbury.

Brook 35, located 15 miles south, serves over 123,000 people with average income of $101,000. A strong tenant mix of 25 retailers includes Ann Taylor, Banana Republic, Coach, and Williams-Sonoma. The property was built in 1998 on 10 acres on both sides of Route 35 in Sea Girt.

"We see very meaningful synergies between The Grove, Brook 35 and the Federal Realty portfolio. The tenant line up at both centers has a strong base of top tier, top performing retailers that we already enjoy working with at many of our core centers," said Chris Weilminster, senior vice president - leasing at Federal Realty. "We see great opportunities to continue to improve the merchandising at each center and drive rental growth as leases roll over the next several years."

Please see CoStar COMPS #2925496 for additional information on this transaction.

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