VIRGINIA BEACH, VA—Armada Hoffler Properties is acquiring 11 retail centers located throughout the Mid-Atlantic and south central US for $170.5 million in cash.

It didn't name the seller of the portfolio, which is 94% leased and totals 1.1 million square feet. What it did announce, though, was that it would be funding it in part with the proceeds of the Richmond Tower, a 15-story, 206,969 square foot office building in downtown Richmond that went under contract for $78 million. During the REIT's recent earnings call, executives stressed that they weren't sure how the proceeds would be deployed and therefore would be unable to provide 2016 guidance. CFO Michael O'Hara said the company would give an update once the Richmond Tower sale closed and its reinvestment plan finalized.

Clearly, then, the portfolio acquisition is important to the REIT and while the company remains a prolific builder -- it recently announced a $93 million investment in Baltimore's Point Street Apartments project -- it has also been seeking to develop a stronger presence in the Carolinas.

The core of the portfolio, or 75% of the in-place net operating income, consists of six retail centers well along the I-85 corridor between Raleigh-Durham, NC and Greenville, SC. They are anchored by such retailers as Harris Teeter, PetSmart, T.J. Maxx, Bed Bath & Beyond, Ross Dress for Less, Hobby Lobby and Petco. The remaining five properties are Kroger-anchored retail centers in Nashville and Oakland, TN, Waynesboro, VA, South Bend, IN and Pasadena, Texas.

Per the acquisition agreement, Armada Hoffler will acquire interests in each of the 11 centers.

REIT is also funding the acquisition with the proceeds from its recent sale of The Oceaneering International facility, a 154,000-square-foot, industrial flex manufacturing facility in Chesapeake, VA, that is under contract for $30 million.

Finally, it is also tapping its unsecured revolving credit facility to finance its portfolio acquisition.

The purchase might mean some reshuffling of its existing portfolio to generate more proceeds, CEO Louis Haddad said in a prepared statement.

The six retail centers located in the Carolinas fit into its core operating portfolio, he said. "We are currently evaluating certain properties located outside the Carolinas for potential sale after closing of the acquisition in order to generate proceeds of between $20 million and $25 million."

Instant Insights /

Armada Hoffler Uses Richmond Tower Proceeds to Buy $171M Retail Portfolio

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