Federal Realty Acquires Three Assets in Boston Market, Including 250,000 Square Foot Redevelopment in Wellesley, Mass.
-Acquisitions Increase the Trust's Boston Portfolio to More Than Two Million Square Feet-
ROCKVILLE, Md., Aug. 28 /PRNewswire-FirstCall/ -- Federal Realty Investment Trust (NYSE: FRT) today announced the acquisition of three retail assets in the Boston metropolitan area from a private developer through an off-market transaction for approximately $150 million. With the addition of these properties, Linden Square in Wellesley, Mass., Chelsea Commons in Chelsea, Mass., and North Dartmouth Shopping Center in North Dartmouth, Mass., the Trust's Boston portfolio now contains more than two million square feet of retail space, including the properties owned through Federal Realty's joint venture with Clarion Lion Properties Fund.
Linden Square, an 18.4-acre parcel located in highly affluent Wellesley, Mass., is currently in the midst of redevelopment, and represents approximately two-thirds of the total purchase price for the three assets. Within a three-mile radius around Linden Square, there are more than 53,000 people with average household incomes of $191,000.
Upon completion of the current redevelopment, the property will include 10 buildings comprising approximately 250,000 square feet of retail and office space including a relocated, prototypical Roche Brothers supermarket and a CVS Pharmacy. The redevelopment plans also encompass the creation of new small shop buildings, the addition of a spa and health club, canopy renovations, 17,000 square feet of office space, and common area improvements including new site lighting, landscaping, and park areas. Extensive improvements will also be made to a section of Linden Street. The initial phase of the redevelopment is scheduled to open during the latter part of 2007, and the second phase of the redevelopment is expected to stabilize in mid-2008. Federal Realty anticipates investing approximately $50 million of additional redevelopment capital to complete the first two redevelopment phases at Linden Square. Upon stabilization of the redevelopment at Linden Square, the property is expected to represent three-quarters of the total $200 million capital investment in the three assets. Potential additional redevelopment opportunities at Linden Square may be explored over the next few years.
Chelsea Commons is an approximately 192,000 square foot community shopping center in Chelsea, Mass., and North Dartmouth Shopping Center is a 28.2 acre parcel of land with long-term, triple net leases to Lowe's Home Improvement and Stop & Shop in North Dartmouth, Mass.
"Over the past two years, the Trust has increased its Boston portfolio from under 600,000 square feet to more than 2.1 million square feet, including those properties in our joint venture with Clarion Lion Properties Fund," said Don Wood, Federal Realty's president and chief executive officer. "Our increased presence in Boston includes a variety of retail product types dramatically increasing our ability to meet the needs of retail tenants looking to expand into or increase their presence in and around Boston."
The Trust funded the acquisition of the three properties with the proceeds of a bridge facility provided by Wachovia, which it expects to replace with permanent financing later this year. To obtain these properties through an off-market deal, the Trust also purchased three other properties located in less densely populated areas of New England for approximately $60 million that the Trust anticipates selling in the near term.
"These acquisitions reflect our ability to source the right assets for the Trust by creatively structuring deals," said Jeff Berkes, executive vice president and chief investment officer for Federal Realty. "Our selective approach to acquisitions allows us to spend the necessary time to create deal structures that address sellers' unique issues."
About Federal Realty
Federal Realty Investment Trust is an equity real estate investment trust specializing in the ownership, management, development, and redevelopment of high quality retail assets. Federal Realty's portfolio (excluding joint venture properties) contains approximately 18.3 million square feet located primarily in strategic metropolitan markets in the Northeast, Mid-Atlantic, and California. In addition, the Trust has an ownership interest in approximately 0.7 million square feet of retail space through its joint venture with Clarion Lion Properties Fund in which the Trust has a 30% interest. Our operating portfolio (excluding joint venture properties) was 96.7% leased to national, regional, and local retailers as of June 30, 2006, with no single tenant accounting for more than approximately 2.6% of annualized base rent. Federal Realty has paid quarterly dividends to its shareholders continuously since its founding in 1962, and has increased its dividend rate for 39 consecutive years, the longest record in the REIT industry. Shares of Federal Realty are traded on the NYSE under the symbol FRT.
Safe Harbor Language
Certain matters discussed within this press release may be deemed to be forward-looking statements within the meaning of the federal securities laws. Although Federal Realty believes the expectations reflected in the forward- looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. These factors include, but are not limited to, the risk factors described in our most recent annual report on Form 10-K (as amended), and include the following:
- risks that our tenants will not pay rent or that we may be unable to renew leases or re-let space at favorable rents as leases expire;
- risks that we may not be able to proceed with or obtain necessary approvals for any redevelopment or renovation project, and that completion of anticipated or ongoing property redevelopments or renovations may cost more, take more time to complete, or fail to perform as expected;
- risks that we may not be able to sell the condominium units at Santana Row for the expected prices or within the anticipated time frames;
- risks that the number of properties we acquire for our own account, and therefore the amount of capital we invest in acquisitions, may be impacted by our real estate partnership;
- risks normally associated with the real estate industry, including risks that occupancy levels at our properties and the amount of rent that we receive from our properties may be lower than expected, that new acquisitions may fail to perform as expected, that competition for acquisitions could result in increased prices for acquisitions, that environmental issues may develop at our properties and result in unanticipated costs, and, because real estate is illiquid, that we may not be able to sell properties when appropriate;
- risks that our growth will be limited if we cannot obtain additional capital;
- risks of financing, such as our ability to consummate additional financings or obtain replacement financing on terms which are acceptable to us, our ability to meet existing financial covenants and the limitations imposed on our operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense; and
- risks related to our status as a real estate investment trust, commonly referred to as a REIT, for federal income tax purposes, such as the existence of complex tax regulations relating to our status as a REIT, the effect of future changes in REIT requirements as a result of new legislation, and the adverse consequences of the failure to qualify as a REIT.
Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this press release. Except as may be required by law, we make no promise to update any of the forward-looking statements as a result of new information, future events or otherwise. You should carefully review the risks and risk factors included in our most current annual report on Form 10-K (as amended) and our quarterly reports on Form 10-Q.
SOURCE Federal Realty Investment Trust
CONTACT: Andrew Blocher, Vice President, Capital Markets & Investor Relations, +1-301-998-8166, firstname.lastname@example.org, or Vikki Quinn, SCMD, Vice President, Marketing & Corporate Communications, +1-301-998-8178, email@example.com, both of Federal Realty Investment Trust