Regency Centers Corporation (REG - Free Report) recently announced the acquisition of 120,000-square-foot Circle Marina Center in Long Beach, CA. This off-market buyout marks the company’s fifth property owned in Long Beach.
Positioned in a high density submarket, this property is presently 95% leased. It includes 33,000 square feet area of a three-story office building and above-retail office, enjoying proximity to three other Regency shopping centers.
With solid surrounding demographics, this Pacific Coast Highway property is likely to capture significant business from the affluent neighborhood. Particularly, it has a population of nearly 250,000, with an average home value of $952,000.
Also, over the last 10 years, the region has lured investors, resulting in substantial amount of new development. In fact, in 2018, Long Beach witnessed more than $5-billion investment in private/public development. Presently, more than 60 projects are in development.
Notably, Regency Centers has considerable experience in the retail real estate industry. In fact, the company’s $1 billion of development and redevelopment starts, over the last five years, are generating $550 million in value creation. Furthermore, the company’s 2019 estimated starts of $150-$250 million augur well for long-term growth. Backed by its capabilities, the company expects to deliver $1.25-$1.50 billion in developments and redevelopments at attractive returns, over the next five years.
Moreover, the company has resorted to strategic acquisitions in a bid to fortify its portfolio in prosperous sub-markets. In fact, the above-mentioned acquisition seems a prudent choice, given its appropriate location in a thriving city.Such strategic moves are expected to enhance the company’s portfolio quality and drive long-term growth.
Shares of this Zacks Rank #3 (Hold) company have gained 2.7% in six months’ time, while the industry has rallied 1.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, the retail real estate market is witnessing a shift in retail shopping from the brick-and-mortar stores to Internet sales. Particularly, recent efforts of online retailers to go deeper into the grocery business have emerged as a concern for this REIT that focuses on building a premium portfolio of grocery-anchored shopping centers. Store closures and bankruptcies are becoming rampant. This, in turn, will likely affect the performance of retail REITS, including Macerich Company (MAC - Free Report) , Taubman Centers (TCO - Free Report) , Kimco Realty Corporation (KIM - Free Report) and Regency as well.
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