Regency Centers Corp. (REG), a leading operator and developer of grocery-anchored and community shopping centers across the U.S., has recently acquired Calhoun Commons – a 66,150 square foot mall in downtown Minneapolis, for $21 million.
The property was purchased from its erstwhile developer Calhoun Commons Shopping Center Limited Partnership. The acquisition was structured as an off-market transaction, which refers to a deal that occurs outside a formal market directly between two participating entities primarily through negotiations.
The Class A shopping center is anchored by premier retailers of the country such as Whole Foods Market, Inc. (WFM), Chipotle Mexican Grill, Inc. (CMG) and Caribou Coffee Company, Inc. (CBOU), owing to which it has historically produced strong retail sales with an average occupancy of over 94%.
The acquisition is part of the long-term strategy of the company to own high quality shopping centers with strong co-tenancy and superior market demographics. With the deal, Regency Centers presently owns four retail centers in Minneapolis spanning over 550,000 square feet of space.
Regency Centers seeks to own assets in high-income in-fill markets that are tenanted by market-dominant grocers, category-leading anchors, specialty retailers and restaurants. As of March 31, 2011, Regency Centers owned 396 retail properties, including properties held in joint ventures, spanning 52.9 million square feet.
With properties in high-barrier markets, Regency Centers’ retail strip center portfolio is among the best in the sector, which allows it to continually perform at the top-end of its peer group. The company’s dominant anchor tenants are grocery stores, a segment that is comparatively less affected even in a challenging economy.
We maintain our long-term ‘Underperform’ recommendation on Regency Centers, which currently has a Zacks #3 Rank that translates into a short-term ‘Hold’ rating and indicates that the stock is expected to perform in line with the overall U.S. equity market for the next 1–3 months.
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