Federal Realty Makes Big Retail Buys in Monmouth

SHREWSBURY, NJ-Federal Realty Investment Trust on Monday said it had bought a controlling interest in a pair of Monmouth County shopping centers for a total value of $161 million. Totaling 285,600 square feet, the two centers include the Grove at Shrewsbury here and Brook 35 in Sea Girt, 15 miles to the south. Both are located along the heavily raveled Route 35.

The acquisition was made using a combination of downREIT units, cash and the assumption of $68 million of fixed-rate debt secured by the properties. “These shopping centers have been at the top of our target list for over 10 years,” says Jim Taylor, EVP and CFO at Rockville, MD-based Federal Realty. “The location, tenancy, and productivity of these trophy centers, coupled with in place rents meaningfully below market, provide great visibility on long term growth.”

Further, Taylor says Federal Realty's ability to use tax deferred currency and its long- term relationship with the ownership group allowed the REIT “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.”

Built in 1988, the 25-acre Grove at Shrewsbury boasts demographics that include a trade area of 138,000 people and average household incomes of $111,586.The center inclues more than 40 national and regional tenants including lululemon, Brooks Brothers, Anthropologie, Pottery Barn, J.Crew, Banana Republic and Williams-Sonoma.

About 15 miles to the south, Brook 35 serves a coastal trade area of more than 123,000 people with $101,487 average household incomes. Its tenant roster includes Ann Taylor, Banana Republic, Coach and Williams-Sonoma. Built in 1998, the property sits on over 10 acres on either side of Route 35 in Sea Girt.

“We see very meaningful synergies between the Grove, Brook 35 and the Federal Realty portfolio,” says Chris Weilminster, SVP of leasing at Federal Realty. “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. 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.”