Regency Centers’ $357M Acquisition Bolsters Shopping Center Footprint in West Coast
Regency Centers Corp. has acquired five shopping centers in Orange County, California, for $357 million — a move that strengthens its retail portfolio in the suburbs.
Jacksonville-based Regency said it funded the purchase with $150 million in assumed mortgage debt (4.2 percent interest rate, with roughly a 12-year maturity), $7 million in cash to pay off a loan and operating partnership units, which were issued at $72 each.
“This acquisition strategically aligns with Regency’s capital allocation objectives, including accretion to earnings, quality and growth,” Nick Wibbenmeyer, west region president and chief investment officer, said in a statement.
“Additionally, our structure as an UPREIT and ability to issue OP units provided flexibility for the sellers in structuring the transaction.”
The portfolio includes Mercantile West, Mercantile East, Terrace Shops, Sendero Marketplace and Bridgepark Plaza. The assets take up a total of 630,000 square feet.
The properties are 97 percent leased and grocer sales are near $800 per square foot, according to Regency.
All the shopping centers are located within the Rancho Mission Viejo (“RMV”) master-planned community, a 23,000-acre area that was originally designed to provide thousands of homes and dedicate some for those aged 55 and older. Household income within three miles of the community averages roughly $200,000, Regency noted. Moreover, the company said that the shopping centers are located "within one of the most supply-constrained coastal markets in the U.S.”
In fact, a first-quarter JLL report noted that retail availability in Orange County fell to just 3.8 percent — just 30 basis points above its record low. Only 180,000 square feet was under construction during the quarter, representing only 0.1 percent of the existing inventory. JLL Managing Director Shauna Mattis told GlobeSt.com that market experts are predicting "elevated rent growth" through 2025 in the county, as a result.
Regency, which focuses on shopping centers in suburban trade areas, manages 482 properties and 61 million square feet of retail space across the country. Of that, 80 percent of its assets are anchored by a leading grocer, according to the company. In addition to California, the company manages properties in other West Coast markets, including Washington State, Oregon and Colorado. Plus, the firm operates in the Northeast, Southeast and Midwest as well.
Paul Hastings advised Regency on the legal side of the Orange County acquisition. Regency said it would provide more details about the portfolio in its upcoming Tuesday earnings results.
Source: GlobeSt/ALM