Acadia Realty Trust, a real estate investment trust based in White Plains, has paid $78 million for the 640,000-square-foot Cortlandt Towne Center in the town of Cortlandt, where the bankruptcies of two retail tenants have caused a 10 percent drop in occupancy.
Acadia officials said the purchase price of $122 per square foot was a 40 percent discount to the property”™s replacement cost. The seller was Centro Properties Group, an Australian retail real estate company that recently worked out a stabilization agreement for $4.95 billion in debt owed Australian and private U.S. lenders.
The Cortlandt shopping center is anchored by Wal-Mart, A&P Food Market, Marshalls, Barnes & Noble, Regal Entertainment Group and Best Buy. Acadia officials said its net income historically has been more than $9 million with occupancy rates above 95 percent. But space vacated by bankrupt junior anchors, Linens-N-Things and Levitz furniture company, reduced net operating income to about $7 million and 85 percent occupancy.
The new owner said national retailers have shown strong interest in “a substantial portion” of the 100,000 square feet of available space.
Acadia President and CEO Kenneth F. Bernstein said the purchase allows the REIT to acquire “a proven asset at a discount to replacement cost with an attractive going-in yield, even after providing for additional potential reserves against the soft retailing market. The property is well-situated, well-anchored, and located in a high barriers-to-entry market with significant upside potential. The current anchors are retailers that are well-positioned to outperform their peers during this phase of the economic cycle.”
Bernstein said Acadia”™s discretionary investment opportunity fund structure “provides us with a competitive advantage during a period of significant capital constraint in the marketplace. Although we may be acting ahead of the real estate market”™s trough, we think we are being well-rewarded by buying irreplaceable real estate at a great price.”
Acadia primarily focuses on retail and mixed-use properties, including neighborhood and community shopping centers, in urban and suburban markets in major metropolitan areas. It owns and operates 75 properties totaling approximately 10 million square feet. Its Westchester County properties include Crossroads Shopping Center in White Plains, Tarrytown Centre and Pelham Manor Shopping Plaza.
