White Marsh stores are sold

The Avenue at White Marsh among 3 complexes acquired by Rockville firm for $189 million

March 10, 2007|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

A Rockville real estate investment trust said yesterday that it has made a major push into the Baltimore-area market, buying the high-profile The Avenue at White Marsh and two nearby retail complexes in a deal valued at $189 million in equity and debt.

Federal Realty Investment Trust purchased The Avenue, White Marsh Plaza and the Shoppes at Nottingham Square from Towson-based Nottingham Properties Inc., which recently sold its office properties to another local REIT.

Nottingham executives did not return calls seeking comment.

The Avenue, which opened in 1997, was part of the groundswell of so-called "lifestyle centers" - Main-Street-like shopping that aims to re-create the feeling of a small town on raw suburban land. It's a key part of Nottingham's transformation of White Marsh from sand and gravel pits to homes, offices and retail.

The sale significantly increases Federal Realty's presence in the Baltimore region. Its other local properties are Governor Plaza in Glen Burnie and Perring Plaza in the Carney area, built more than 40 years ago and acquired by the REIT in 1985.

The 300,000-square-foot Avenue, much newer and more upscale, has tenants ranging from Old Navy to Omaha Steaks, with a 16-screen movie theater as a draw.

White Marsh Plaza, on the other side of Honeygo Boulevard, is a 79,000-square-foot shopping center anchored by Giant Food. The Shoppes at Nottingham Square, on nearby Campbell Boulevard, has about 186,000 square feet of retail, including Lowe's Home Improvement.

"We got a lot of really good stuff here," said Andy Blocher, Federal Realty's senior vice president of capital markets and investor relations.

"It's obviously been something we've had our eye on for a while, but we haven't had the opportunity to buy it until now," added John Hendrickson, the company's vice president of strategic transactions.

A broker working for Nottingham approached Federal Realty about the possibility of a sale, he said. In the end, the two sides agreed on $116 million in equity - Federal Realty stock and units that can later be traded in for stock - and $73 million of assumed debt.

Hendrickson thinks the structure of the deal helped his REIT beat out the competition.

Nottingham has been swiftly disposing of its holdings. In December, it struck a deal to sell its office portfolio to Columbia-based Corporate Office Properties Trust. What will happen to the company's residential projects is unclear, but an executive with COPT said Nottingham still owns those properties.

Nottingham developed the Avenue as a way to bring a town-center feeling to a suburb without a center - a reaction against suburban malls, located directly across the road from one. It was not the first such pseudo Main Street, but it was part of a wave of similar destination retail sites across the country.

"In '97, it was really the beginning of the lifestyle center trend," said Patrice Duker, a spokeswoman for the International Council of Shopping Centers. "It's still a very hot development concept."

Federal Realty has no plans to change its White Marsh acquisitions, said company spokesman Vikki Kayne.

But the REIT expects to reap more rental income from the properties by bringing in new tenants at higher rates, and by helping increase sales - and therefore rents - at existing stores.

"We think there are very strong tenants there," Blocher said.


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