DALE CITY, VA-Palm Beach, FL-based Sterling Organization has acquired two grocery-anchored properties in Prince William County in an off-market trade with Regency Centers, based in Jacksonville, FL. The two properties, which total 261,352 square feet, sold for $40 million. Located about four miles apart, they are the Market at Opitz Crossing, in Woodbridge, and Cheshire Station, in the heart of Dale City.

Market at Opitz Crossing is 155,758 square feet and is situated at the intersection of Jefferson Davis Highway and Opitz Boulevard. Cheshire Station is 105,594 square feet and is located at the intersection of Minnieville Road and Dale Boulevard.

They are anchored by PriceRite and Safeway respectively, and house such tenants as Petco, Starbucks, BB&T, Capital One, Advance Auto Parts, RadioShack, AutoZone, Sherwin Williams, GNC, and Hair Cuttery. The portfolio is currently 86% occupied.

Brian Kosoy, president and CEO of Sterling Organization, said that the company is hopeful "that this is the first of many transactions with the good folks at Regency."

Little wonder—grocery anchored retail is a solid income-generating asset class in the Washington, DC area and one that is in short supply for investors.

The DC area has always been under-retailed--particularly for grocery-anchored projects, Delta Associates' statistics show. It noted that there was less than 3 million square feet of development underway at year-end 2012, which it deemed "insufficient to keep pace with demand."

Still, deals do get done as Sterling Organization just illustrated. Another notable transaction is H&R REIT's recent one-third stake in ECHO Realty, which holds an 8-million square foot portfolio of commercial properties in Pennsylvania, Ohio, Maryland and West Virginia. Of these 173 properties, 62 are grocery stores.

"This portfolio, consisting largely of grocery and convenience stores, proved immensely appealing to H&R," Jones Lang LaSalle's Bruce Westwood-Booth said in a prepared statement. "Grocery-based retail assets can be relied upon to produce steady returns in all economic conditions providing investors with a secure income stream."

Westwood-Booth and Guy Ponticiello led the JLL team in the capital raise for this deal.

The development appeal of this asset class is strong as well—as can be seen by the recently announced venture between Inland Real Estate and MAB Retail Partners to develop as many as 20 grocery-anchored retail centers throughout the southeastern US and Mid-Atlantic states. The projects are expected to have a value of as much as $325 million.

Instant Insights /

Grocery-anchored Portfolio Trades for $40M Off-Market

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