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Federal, ING deal spurs Calif. growth

BY IAN RITTER

Federal Realty Investment Trust has taken another step in its strategy to expand in California.

Rockville, Md.-based Federal Realty and ING Clarion Partners are joining up to acquire as much as $350 million worth of grocery-anchored shopping centers there and on the East Coast over the next two years.

Federal Realty has committed $42 million to the venture, as well as a stake in its Giant Food-anchored Plaza del Mercado, Montgomery County, Md. ING Clarion, a real estate investment management firm, is kicking in $98 million. Federal will manage and lease the centers.

Federal Realty owns about 2 million square feet of retail real estate in California, including Santana Row, a mixed-use project that opened in San Jose in November 2002. In April it bought Westgate Mall, also in San Jose, for $97 million. The firm currently values its portfolio in the state at about $1 billion.

Federal Realty is looking to make additional acquisitions in the Los Angeles, San Diego and Bay-area markets, executives say. “Over time, we’d like to make our California portfolio a $2 billion portfolio,” said Jeffrey S. Berkes, Federal Realty’s senior vice president and chief investment officer.

Most of the properties in Federal Realty’s 16.9 million-square-foot portfolio are located on the East Coast.

New York City-based ING Clarion, a U.S. affiliate of Dutch financial institution ING Group, is participating in the new venture through Clarion Lion Properties Fund, a $1.4 billion operation that invests in retail, office and residential properties.