VIRGINIA BEACH, VA. — Armada Hoffler Properties Inc. (NYSE: AHH) has agreed to acquire a portfolio of 11 retail centers, totaling approximately 1.1 million square feet, for $170.5 million from an undisclosed seller. The properties are located throughout the Mid-Atlantic and South Central United States and were 94 percent occupied as of Oct. 31. The agreement provides that Armada will acquire all of the interests in each of the 11 properties in the portfolio.
The core of the portfolio, which represents approximately 75 percent of the in-place net operating income, consists of six retail centers positioned along the I-85 corridor between Raleigh-Durham, N.C. and Greenville, S.C. These shopping centers feature major anchor tenants including Harris Teeter, PetSmart, T.J. Maxx, Bed Bath & Beyond, Ross Dress for Less, Hobby Lobby and Petco. The remaining five properties in the portfolio are each Kroger-anchored retail centers located in Nashville and Oakland, Tenn.; Waynesboro, Va.; South Bend, Ind.; and Pasadena, Texas.
Virginia Beach-based Armada Hoffler Properties intends to fund the $170.5 million acquisition with the net proceeds from the sale of the 154,000-square-foot Oceaneering International facility in Chesapeake, Va., and the 15-story, 206,969-square-foot Richmond Tower office building in Richmond, Va., as well as borrowings under its unsecured revolving credit facility.
More specifically, Armada has agreed to sell the Richmond Tower for $78 million and has completed the sale of the Oceaneering office and manufacturing facility for $30 million. Both the portfolio acquisition and the sale of the Richmond Tower office building are expected to close in the first quarter of 2016.
“Through this acquisition, we recycle capital into high-quality real estate, diversify our tenant base and expand our geographic footprint — all at an attractive cap rate approaching 7 percent,” says Louis Haddad, president and CEO of Armada Hoffler Properties.
“The six retail centers located in the Carolinas fit perfectly into our core operating portfolio,” adds Haddad. “We are currently evaluating certain properties located outside the Carolinas for potential sale after closing the acquisition in order to generate proceeds of between $20 million and $25 million.”
The stock price of Armada Hoffler Properties closed Thursday, Dec. 3, at $11.13 per share, up from $9.39 per share a year ago.