Consistent with its aim of capturing the Phoenix market, Whitestone REIT (WSR) acquired Arizona-based Class-A shopping center – Mercado at Scottsdale Ranch – for $21.3 million. The purchase price includes a debt assumption worth $11.1 million and unsecured revolving credit facility of $10.2 million.
Acquisition Details
Mercado at Scottsdale Ranch is positioned strategically at the intersection of East Via Linda and Mountain View Road in Scottsdale. Situated in a populous, master-planned and prosperous community, the shopping center spans 118,730 square feet and houses over 30 renowned outlets of Walgreen Co. (WAG), AJ’s Fine Foods and Circle K.
Notably, Mercado at Scottsdale Ranch is the chief shopping center serving the upscale neighborhood as well as the nearby vicinities of Mirador and Ensenada del Oro. Consequently, the center experiences combined vehicle arrivals of 44,300 each day at the intersection.
Additionally, it experiences current cash flow of roughly $1.7 million (8% of the purchase price). Whitestone expects to add approximately $0.06 per share in annual FFO (funds from operations) based on current shares outstanding, excluding debt interest expense.
Conclusion
Whitestone currently owns 16 Community Centers and future development land parcels in the Greater Phoenix area – Terravita marketplace, Pima Norte, The Citadel, The Shops at Pecos Ranch, The Pinnacle of Scottsdale and The Shops at Pinnacle Peak. With the Scottsdale-based property acquisition, Whitestone is now the owner of a large share of tenant space in the affluent submarket of Phoenix, spanning over 1.4 million of gross leasable area.
The recent deal would strengthen Whitestone’s presence in the upscale markets, especially on the off-market front. Notably, Whitestone has been focusing on expanding its footprint by tactically acquiring commercial properties in high-growth markets. This retail real estate investment trust (REIT) mainly targets the U.S. properties located in densely populated and culturally diverse submarkets in Phoenix, Chicago, Dallas, San Antonio and Houston.
Whitestone currently carries a Zacks Rank #3 (Hold). Better performing retail REITs that deserves our look include The Macerich Company (MAC) and Acadia Realty Trust (AKR). Both carry a Zacks Rank #2 (Buy).
Note: Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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