By Jon Peterson
White Plains, New York-based Acadia Realty Trust has put under contract the $155 million acquisition of the 204,000 square foot City Center retail property in downtown San Francisco. It has not been determined when the deal might be closing. The projected cap rate on this deal is anticipated to be someone in the range of 5 percent.
The property is located at the corner of Geary Blvd. and Masonic Avenue. This is an area with a high population density with nearly 300,000 residents located within two miles of the site. The trade area also has average household income of $100,000.
“This property fits in with our focus of investing in property is strong growing gateway markets. This project was large and very stable for us to be interested,” said Ken Bernstein, president and chief executive officer for Acadia during a conference call discussing the company 2014 fourth quarter results.
City Center is currently anchored by a Target store. The property does have Best Buy as a tenant. There could be a re-leasing potential with this retailer over the next three to five years. The center is situated in an area that has strict zoning regulations that has resulted in limited retail competition in the immediate trade area.
This potential transaction for Acadia would represent the company’s first direct acquisition in the West Coast. The company has had an ownership interest in and tracked the former Mervyns property for several years through its successful fund retailer controlled property venture.
San Francisco is a market that has below the national average of retail per square foot per capita. In San Francisco this is five square feet per capita versus the national average of 24 square feet per capita.
Acadia is a real estate investment trust that buys urban and suburban shopping centers on a nationwide basis. Some of its other markets include New York, Pennsylvania, Maryland, Illinois, Virginia and Massachusetts. The company invests directly for the REIT or through investment funds it has formed with institutional investors.
Acadia is planning a very active year in acquisitions nationwide. “We are targeting totaling acquisitions in the range of $300 million to $400 million for 2015 for our core properties,” said Bernstein in the conference call. The company on a long range basis would like to find additional investment opportunities in the San Francisco area.