Mid-Atlantic Realty Trust yesterday completed a $12.8 million purchase of an Easton shopping center, part of its continuing effort to boost operational income and focus its portfolio.
"This sharpens the geographic focus of the company, and mirrors the characteristics of our other holdings," said MART Chief Executive F. Patrick Hughes. "The tenants are of a national caliber, including the premier discounter in the country and the region's premier grocery chain."
The Shoppes at Easton's anchor tenants include Giant Food Inc. and Wal-Mart Stores Inc. The Bentonville, Ark.-based discounter's 92,000-square-foot store, however, was not part of MART's purchase.
The Eastern Shore purchase is significant because real estate investment trusts such as Mid-Atlantic -- which are required by federal law to pay 95 percent of their total income to shareholders through dividends -- face considerable pressure to augment their portfolios through either large or frequent
acquisitions to meet growth projections.
The purchase of the 113,000-square-foot center marks only the Linthicum-based company's second acquisition since converting to a REIT last September, after a $156 million public offering that retired debt and provided working capital. Its other purchase involved the Timonium Mall, a 231,000-square-foot project it bought for $3.8 million less than a month after its conversion.
MART financed both the Easton and Timonium purchases through a $25 million credit line with the First National Bank of Maryland, obtained in February.
By comparison, Simon Property Group Inc., the nation's largest retail-dominated REIT, last month announced a plan to acquire 19 regional malls for $1 billion to add to its property base and bolster earnings.
"What I like about companies like MART is that you get much more bang for your buck," said William Acheson, a Natwest Securities REIT analyst who tracks Mid-Atlantic. "The problem with many large companies is that they have to continually feed their acquisition machine, and it's hard to keep a $100 million acquisition pace up year after year. MART can buy one center and have a significant effect on future income growth."
Although the Easton transaction is not expected to have a measurable impact on MART's earnings, analysts noted the property's 98 percent occupancy rate and $1.3 million annual rental income represent a solid addition to its holdings.
The center was completed in August by Jacoby Development Inc., an Atlanta firm that has developed a number of Wal-Mart locations nationwide.
With the Shoppes at Easton purchase, MART's total portfolio contains 3.1 million square feet of retail and office space in 30 projects valued at roughly $250 million.
The Easton deal may be the springboard for a wave of acquisitions by the REIT. Mid-Atlantic also has expressed an interest in buying the 952,000-square-foot Towson Town Center, property that would replace the Harford Mall as the company's flagship.
Mr. Hughes cautioned that MART has not yet requested tenant sales or income figures from the present owners, numbers that must be scrutinized before an offer on any property.
Also, a representative of the Towson mall's owners said they have no intention of selling it soon.