WSR Continues Acquisition Binge - Analyst Blog
02 October 2012 - 10:45PM
Zacks
Texas-based Whitestone REIT
(WSR) recently completed the acquisition
of a 310,979 square foot upscale community center named 'Village
Square at Dana Park' and adjacent land parcels situated in Mesa.
The $50.5 million acquisition depicts Whitestone’s ongoing
expansion spree, mainly on the off-market front.
The strategic move by Whitestone is expected to strengthen its
presence in the Phoenix area. The retail market in and around
Phoenix is currently going through a positive trend in terms of net
absorption and vacancy rates. The market witnessed positive
absorption to the extent of 1.3 million square foot by the end of
first half of 2012 compared with 648,697 square foot in the first
half of 2011. By the end of the second quarter of 2012, the
overall retail market vacancy stood at 11.3%. The key submarkets of
Phoenix such as Scottsdale, Mesa and Gilbert are the major
contributors.
Village Square at Dana Park is positioned between the northwest
corner Baseline Road and Val Vista Drive at Superstition Highway 60
in Arizona. The community center experiences per day traffic count
exceeding 250,000 cars. The property is 71% leased to a cluster of
50 eminent retail and retail service tenants. The tenant mix of the
property comprises of major retail giants and restaurateurs.
Some of the chief tenants are - Barnes & Noble, Inc.
(BKS), Coldwater Creek Inc.
(CWTR), Jos. A Bank Clothiers
Inc. (JOSB) and Chipotle Mexican
Grill, Inc. (CMG).
The acquired six developed and one undeveloped land parcels located
adjacent to the property span a total of approximately 331,056
square foot. Whitestone intends to use the acquired land parcels
for further extension of the property and thereby attract new
tenants going forward.
The company is focused on the strategy of broadening its footprint
by tactically acquiring commercial properties in high-growth
markets. Whitestone mainly targets the U.S. properties situated in
thickly populated and culturally diverse submarkets in Phoenix,
Chicago, Dallas, San Antonio and Houston.
Recently, the company added another community center named Fountain
Square located in the Scottsdale market of Phoenix. It has twelve
Community Centers in the greater Phoenix area – such as Terravita
marketplace, Pima Norte, The Citadel, The Pinnacle of Scottsdale
and The Shops at Pinnacle Peak. With the Mesa based property
acquisition, Whitestone now owns a large share of the tenant space
in the affluent submarket of Phoenix, spanning over 1 million
square feet.
The company is expected to release its third-quarter 2012 results
on November 6, 2012. The Zacks Consensus Estimate for third quarter
FFO (fund from operations) is currently pegged at 25 cents per
share.
We presently have a long-term Neutral recommendation on the stock.
It also carries a short-term Zacks #3 Rank (Hold).
Note: FFO, a widely accepted and reported measure of the
performance of REITs is derived by adding depreciation,
amortization and other non-cash expenses to net income.
BARNES & NOBLE (BKS): Free Stock Analysis Report
CHIPOTLE MEXICN (CMG): Free Stock Analysis Report
COLDWATER CREEK (CWTR): Free Stock Analysis Report
JOS A BANK CLTH (JOSB): Free Stock Analysis Report
WHITESTONE REIT (WSR): Free Stock Analysis Report
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