Retail Properties of America, Inc. RPAI has signed a deal to acquire One Loudoun Downtown in the Washington, D.C. Metropolitan Statistical Area ("MSA") from Miller & Smith and North America Sekisui House, LLC. This acquisition would close in phases, for a gross price of up to $163.1 million, based on specific performance thresholds.
Anchored by Alamo Drafthouse Cinema, The Fresh Market, Great Gatherings and The Fitness Equation, the property also has a solid mix of fast, casual and sit-down restaurants. Its location in Ashburn, VA, with an affluent, well-educated neighborhood, makes it a premium property. Particularly, with a solid demographic profile – a population of 182,000 and average household income of $142,000 within a five-mile radius – the property is expected to experience high footfall.
In the first phase, around 342,000 square feet of space is involved and represents a purchase price of up to $125.0 million. This phase includes 236,800 square feet of retail and 105,200 square feet of office area that are 85.6% occupied and 89.7% leased. The first phase acquisition is slated to close by the end of 2016.
On the other hand, the remaining phases – representing a purchase price of up to $38.1 million – are presently under construction. These phases are likely to involve around 78,300 square feet of retail and approximately 46,300 square feet of office that are 71.0% leased. The remaining phases’ acquisitions are planned throughout the first three quarters of 2017 as the seller concludes construction of the stand-alone buildings.
This buyout seems a strategic fit for Retail Properties as it would fortify the company’s presence in the Washington, D.C. market. Also, with the property being the retail foundation of One Loudoun, which is a 360-acre, mixed-use master-planned community having entitlements for residential, hospitality, retail and office uses, there are solid chances of experiencing decent demand for space in the property from the tenants.
Retail Properties currently has a Zacks Rank #3 (Hold). A better-ranked stock in the REIT industry is InfraREIT, Inc. HIFR, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Also, investors can consider stocks like American Assets Trust, Inc. AAT and EPR Properties EPR, both carrying the Zacks Rank #2 (Buy).
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