New York, Philadelphia and St. Louis — Urban Edge Properties (NYSE: UE), a real estate investment trust, has entered into a contract to acquire a seven-property portfolio of retail assets for $325 million.
The 83 percent leased portfolio spans approximately 1.5 million square feet of leasable space, and consists primarily of retail properties in the New York City area, with holdings in the Philadelphia and St. Louis areas as well. According to CoStar Group, affiliates of New Jersey-based Acklinis Realty Holding LLC have owned the portfolio for the last four decades.
The contributors will exchange their interests for approximately $127 million of UE’s operating partnership units, which are valued at $27.02 per unit. Urban Edge will also assume $33 million in existing debt, issue roughly $117 million of non-recourse, secured debt and fund the remaining $48 million in cash.
Among the portfolio’s New York City-area properties are Yonkers Gateway Center, a 436,770-square-foot asset located at 2500 Central Park Ave. in Yonkers, which is 88 percent leased to tenants such as Burlington Coat Factory, PetSmart and Alamo Drafthouse; and The Plaza at Woodbridge, a 413,013-square-foot center located at 675 U.S. Highway 1 in Woodbridge, New Jersey, which is 81 percent leased to tenants such as Best Buy and Toys “R” Us.
The property in the greater Philadelphia area is The Plaza at Cherry Hill, a 412,969-square-foot center that is 74 percent leased and located in the eastern suburb of Cherry Hill, New Jersey. The property includes tenants such as Aldi and LA Fitness.
The asset located in the greater St. Louis area is Manchester Plaza, a 130,934-square-foot center that is 89 percent leased and located in the western suburb of Manchester. Tenants include Academy Sports + Outdoors and Bob’s Furniture.
“These properties align with our strategy of owning and improving large, well-located properties in the New York City metropolitan area and investing at a meaningful spread to our cost of capital,” says Jeff Olson, Urban Edge’s chairman and CEO. The 10 acquisitions, in aggregate, are expected to generate a 5.7 percent initial cash unleveraged yield. Additionally, net operating income should grow more than 5 percent per year over the next five years prior to any impact from expansions or redevelopments, adds Olson.
The transaction is expected to close during the second quarter. Urban Edge’s stock price closed Friday, April 7 at $26.21 per share, up from $25.16 on April 11, 2016.
— Taylor Williams