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Regency Centers (REG) Acquires The District at Metuchen

Zacks Equity Research

Regency Centers Corporation REG recently announced that it has acquired The District at Metuchen — a Whole Foods Market-anchored shopping center — in Metuchen, NJ. The move comes as part of the retail real estate investment trust’s (REIT) strategic efforts to expand in this market.

Spanning 66,000 square feet of space, this shopping center is situated in the thriving downtown. It enjoys proximity to the I-287 and I-95 interchange. These are the main arteries of the metro New York market. Moreover, the Metuchen and Metropark stations are located nearby which services a total of 11,000 commuters each weekday.

Also, Metuchen enjoys high barriers to entry, while the immediate area is experiencing an inflow for residential needs. These raises hope for a greater footfall at this center and hence the buyout seems a strategic one. Further, besides Whole Foods Market, the property has other notable names in its tenant roster, including European Wax, Title Boxing, and Chipotle Mexican Grill CMG.

Notably, mall traffic continues to suffer amid rapid shift in consumers’ shopping preferences toward online channels, resulting in an increasing number of retailers jumping on the dot-com bandwagon. These have made retailers reconsider their footprint and eventually opt for store closures in recent times. In fact, the decision to close stores by a number of reputable retailers like Macy's, Inc. M and J. C. Penney Company, Inc. JCP have raised concerns over cash flows of mall landlords.

However, at such a time, Regency’s focus on building a premium portfolio of grocery-anchored shopping centers, which are usually necessity driven, augurs well. Such centers are usually necessity driven and steer a dependable traffic.

Moreover, groceries mark one of the major categories of U.S. consumer spending. Although online retailers have made efforts to penetrate deeper into the grocery business, only a minimal percentage of U.S. grocery shopping takes place online.

Regency currently carries a Zacks Rank #3 (Hold). Also, shares of the company have gained 3.5% in three months’ time and outperformed its industry that ascended 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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