WASHINGTON, DC—WashREIT has entered into two definitive agreements with separate institutional buyers to sell a total of eight retail assets, including all three of its power centers. The REIT has not announced the total price at which these assets are trading—it did say that five were selling for $485 million—but did report that they have a blended estimated cap rate of 6.2%.
The sale is a significant one for WashREIT as it furthers its strategy of emphasizing its multifamily assets while reducing exposure to the retail asset class. CEO Paul T. McDermott says that the transactions will grow the percentage of NOI contributed by multifamily to approximately 45% and reduce its retail portfolio to approximately 6% of NOI on a proforma basis, assuming the REIT completes the dispositions and acquisitions assumed in its 2019 guidance.
In a separate transaction, WashREIT has contracted to buy an urban-infill, value-add multifamily asset by late-July for approximately $70 million. The REIT’s push to multifamily was also on display earlier this year when it closed on the first tranche of its acquisition of a 2,113 unit multifamily portfolio for $461 million. The entire portfolio consists of seven suburban Class B apartment communities in Northern Virginia and Montgomery County, MD.
“By year-end, we expect to have significantly de-risked and strengthened our cash flows and recycled approximately 75% of the large capital gains embedded in our retail portfolio,” he says in prepared remarks.
The first sale agreement is for five retail assets, which total approximately 800,000 square feet and are expected to generate gross proceeds of approximately $485 million. They are Gateway Overlook in Columbia, MD; Wheaton Park, in Wheaton, MD; Olney Village Center in Olney, MD; Bradlee Shopping Center in Alexandria, VA; and Shoppes of Foxchase, Alexandria, VA.
The second sale agreement provides for the disposition of WashREIT’s power center assets: Centre at Hagerstown, Hagerstown, MD; Frederick Crossing, Frederick, MD; and Frederick County Square, Frederick, MD, totalling approximately 850,000 square feet. The REIT plans to announce proceeds for the second sale when the deal closes.