Federal Realty JV Buys Mixed-Use Portfolio for $200M

Washington Street. Image courtesy of Newmark Knight Frank

In one of the largest single sales of mixed-use properties along the New Jersey waterfront, Federal Realty Investment Trust, has acquired a 39-property, mixed-use portfolio in Hoboken, N.J., through a newly formed joint venture, for more than $200 million. Concentrated along the city’s main retail corridor, Washington Street, the 278,879-square-foot collection of properties comprises 129 residential units and 171,959 square feet of urban retail including Sephora, Chipotle, Quality Greens, Honeygrow and CVS.

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Newmark Knight Frank arranged the joint venture sale on behalf of a private owner. Executive Managing Director Kevin Welsh and Managing Director Brian Schulz of NKF’s Capital Markets group represented the seller in the transaction, along with support from NKF Retail Managing Director Dean Tselepis. The team was responsible for procuring Federal Realty as the joint venture partner. Federal Realty, a Rockville, Md.-based owner, operator and redeveloper of high-quality retail assets in coastal U.S. markets, noted in its fourth quarter 2019 and year-end operating results news release that it owned 90 percent of the joint venture.

Welsh said in a prepared statement the seller created significant value by building the portfolio over more than 30 years. He said the acquisition gave Federal Realty the opportunity to acquire a portfolio with unprecedented scale in one of the nation’s premier lifestyle environments.

Located across the Hudson River from Manhattan, Hoboken is a popular residential location for New York City commuters, due to its proximity to the increasingly important Far West Side of Manhattan and the multibillion-dollar Hudson Yards development. Donald Wood, president & CEO of Federal Realty, cited the location in his prepared comments about the transaction. He said the REIT is very bullish on Hoboken and noted the joint venture creates a highly productive business development arm for the company in Hudson County, N.J.

Doubling down on mixed-use investments

In Federal Realty’s Feb. 11 earnings call with analysts about the fourth quarter and year-end 2019 financial report, Wood noted the REIT has been doubling down on investments in already successful mixed-use communities that includes less risky and mostly non-retail additions at properties like CocoWalk in Miami, totaling about $760 million of construction projects in progress. He said they were recycling assets with little opportunity for future growth and “reinvesting those proceeds in far better opportunities” in places like Hoboken. Among its recent dispositions, was the sale in December of an 11.7-acre segment of San Antonio Center, a 33-acre retail destination in Mountain View, Calif., in Silicon Valley.

Elsewhere in Hoboken, Toll Brothers City Living is building 1000 Maxwell Lane, a 12-story, mixed-use tower with 110,800 square feet of office and ground-level retail space. The high-rise is being built within the developer’s multi-phase Maxwell Place project. The development, scheduled to be completed in the second quarter of this year, also includes a five-level luxury condominium component.