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July 03, 2019  

REIT With East Coast Portfolio Up for Grabs

A REIT that owns almost 20 East Coast properties is in play.

Market pros estimate that the company, First Real Estate Investment of Hackensack, N.J., could be worth in the neighborhood of $600 million. The investment vehicle, which has hired HFF Securities to line up a buyer, is externally managed by Hekemian & Co., a Hackensack shop led by chief executive Robert Hekemian and his three sons.

First Real Estate’s largest holding is a Baltimore property with 379 luxury apartments, 157,000 square feet of retail space and 135,000 sf of office space. Its portfolio also includes seven value-added apartment properties with 1,058 total units in New Jersey and New York; six grocery-anchored shopping centers totaling 1 million sf in Maryland and New Jersey; and three New Jersey parcels totaling 7.4 acres.

The unlisted REIT, which was founded in 1961, has a market capitalization of $114 million, $343.1 million of debt and $25.3 million of cash. The company generated $17 million of net operating income in the six months through April.

The mixed-use property in Baltimore, The Rotunda, is at 711 West 40th Street, within 1 mile of Johns Hopkins University. The 11-acre site was redeveloped in 2016 to retain the historic Rotunda building and add new structures in a “live-work-play” theme. First Real Estate has a 60% interest in the complex, with the remaining interest owned by the Hekemian family and other investors.

The apartment component, called Icon at the Rotunda, is 95% occupied. The units range from studios to two bedrooms. Amenities include a resort-style outdoor pool, a club room with a pool table, a fitness center, a yoga studio, a pet-washing station and an outdoor lounge with grilling stations, televisions and fire pits.

The retail and office space, which is about three-quarters occupied, is expected to be stabilized by yearend. The complex also includes a seven-story parking deck with some 1,100 spaces.

The seven apartment properties in New Jersey and New York are being pitched as value-added plays in strong submarkets with limited supply. They are 95% occupied and have an average rent of more than $2,000. Six are in New Jersey — in Hackensack, Red Bank, River Edge, Rockaway, Wayne and Westwood. They range from 45 to 266 units and were built between 1966 and 2015. First Real Estate has partial stakes in the Hackensack and Westwood properties.

The seventh property is the 132-unit Regency Club in Middletown, N.Y., some 50 miles northwest of Manhattan. It was built in 2003.

The retail portfolio has four New Jersey properties (in Franklin Lakes, Glen Rock, Wayne and Westwood), as well as two in Maryland (in Damascus and Frederick). First Real Estate has partial stakes in the Damascus and Wayne properties. The retail tenants include Mom’s Organic Market, Stop & Shop and Safeway.