Retail REIT Acadia Realty Trust AKR recently announced that it has completed transactions worth $83 million, following the third quarter of 2019. The move comes as part of the company’s effort to enhance its portfolio quality through new acquisitions and selective dispositions.
Acadia Realty Trust completed the acquisition of 8436-8452 Melrose Place in Los Angeles, CA for $47.7 million this October. The move, in sync with the company’s strategy of acquiring critical mass on key urban streets with high barriers to entry, will lead to addition of five contiguous store fronts. The assets are leased to premium, luxury tenants, including Chloe (a subsidiary of Richemont), Oscar de la Renta, The Row, L'Agence, Violet Grey and Melanie Grant Skincare.
Moreover, the company has acquired 45 Greene Street, New York, NY for $12.2 million in November. In conjunction with the closing, it has also executed a lease with L’Agence. Notably, as announced previously, Acadia Realty Trust has acquired, or entered into contracts, to purchase $121.8 million worth of New York City street retail assets in Soho. The company has already closed $86.8 million of such deals and $35 million remains under contract to date. The transactions for the rest of the properties under contraction will likely be completed in phases through 2020.
Meanwhile, the company sold a 95,000-square-foot suburban shopping center in Pomona, NY — Pacesetter Park Shopping Center — for $22.6 million in an off-market transaction.
The asset sale off comes as part of Acadia Realty Trust’s effort to capitalize on attractive pricing and recycle the proceeds in its growth endeavors, including reinvestments into higher growth street and urban assets. So far in the year, the company has accomplished approximately $561 million of transactions. These include $318 million of fund acquisitions, $78 million of fund dispositions, $142 million of core acquisitions and a $23-million core disposition.
Amid changing consumer preferences, right-sizing of footprints and store closures have been making it to front-page news, while the ones unable to cope with competition are resorting to bankruptcy filing. These have emerged as pressing concerns for retail landlords, including Kimco Realty Corp. KIM, Macerich Company MAC and Taubman Centers, Inc. TCO.
Nevertheless, to counter these challenges and in an attempt to lure customers, retail REITs are continuing with their transformation measures, making strategic acquisitions, selective dispositions and seeking attention from new and productive tenants. However, implementation of such measures requires a decent upfront cost and therefore, might limit any robust growth in profit margins of the retail REITs in the near term.
Acadia Realty Trust currently carries a Zacks Rank #3 (Hold). Over the past three months, shares of the company have underperformed the industry. While the stock has edged down 0.2%, the industry has gained 4.1% during this period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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