Zacks_Analysts' Blog : Washington Real Estate Buys Mall - Analyst Blog

WashingtonReal Estate Investment Trust (WRE) has recently acquired Olney Village Center – a shopping mall spanning 199,000 square feet in Olney, Maryland, for $58.0 million. The transaction was funded through a $22.6 million mortgage loan bearing an annual interest of 6.37% and scheduled to mature in 2023. The remainder of the purchase price was funded through available cash and borrowing capacity under its line of credit.

Built in 1979, Olney Village Center underwent a major renovation in 2003. The grocery-anchored shopping center is presently 98.7% leased to 32 tenants, including national retailers T.J. Maxx, HomeGoods, and SunTrust Bank.

The property is strategically located in a high barrier-to-entry market with a stable, affluent consumer base in its vicinity. The acquisition has augmented Washington Real Estate’s retail portfolio and fits in with its strategy of investing in high-quality retail properties in areas with strong demographics. The property is expected to achieve a first year unleveraged yield of 6.7% on a cash basis.

Washington Real Estate primarily invests in income-producing properties in the greater Washington metro region. The company owns a diversified portfolio of 87 properties totaling approximately 11 million square feet of commercial space and 2,540 residential units, and land held for development. These include 26 office properties, 16 industrial/flex properties, 18 medical office properties, 16 retail centers and 11 multifamily properties.

We presently have a ‘Neutral’ recommendation on Washington Real Estate, which currently retains a Zacks #4 Rank that translates into a short-term ‘Sell’ rating. We also have a ‘Neutral’ rating and a Zacks #2 Rank (short-term ‘Buy’) for Digital Realty Trust Inc. (DLR), one of the peers of Washington Real Estate.