Broad Street, MedAmerica Close Merger’s First Phase

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MedAmerica Properties Inc. is now Broad Street Realty Inc., courtesy of the completion of the first phase of the 19 definitive merger agreements MedAmerica and Broad Street Realty LLC announced in May 2019. The transaction, which involved stock and cash, leaves the new fully integrated and self-managed real estate company with a portfolio of nine grocery-anchored shopping centers totaling approximately 865,600 square feet in the Mid-Atlantic region.

Broad Street makes its debut with a footprint in Maryland, Virginia, Pennsylvania and Washington, D.C. The bulk of the collection is located in Maryland and includes the 85,900-square-foot Coral Hills Shopping Center in Capitol Heights; the 74,300-square-foot Crestview Square in Landover; the 98,900-square-foot Vista Shops at Golden Mile in Frederick; and Hollinswood Shopping Center, a Baltimore property featuring 112,600 square feet. The Virginia portion of the portfolio consists of the 109,600-square-foot West Broad Commons in Richmond along with Midtown Colonial and Midtown Lamonticello, which encompass 98,000 and 79,500 square feet, respectively, in Williamsburg. Broad Street’s largest asset, the 178,800-square-foot Dekalb Plaza is located in East Norriton, Pa., while the smallest property of the group, the 28,000-square-foot Avondale Shops, can be found in Washington, D.C.

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In conjunction with the closing of the first tranche of mergers, certain Broad Street subsidiaries entered into two financing agreements with Basis Management Group LLC. Basis provided a $66.9 million loan secured by mortgages on six of the newly formed company’s properties and committed to investing as much as $10.7 million in Broad Street subsidiaries. Broad Street secured an additional $6.5 million loan through MVB Bank Inc. The company utilized proceeds from the financings for the repayment of debt as well as for general corporate purposes.

Upon final completion of the transactions, Broad Street will have a portfolio totaling 17 shopping centers encompassing more than 2 million square feet in the Mid-Atlantic and Colorado. The new company will also operate, develop and redevelop grocery-anchored shopping centers and mixed-use properties and provide commercial real estate services.

Portfolio Purchase Slowdown

Despite such transactions as Tiffany & Co.’s $16 billion sale to LVMH Moët Hennessy Louis Vuitton, retail M&A activity did not garner the same high number of headlines in 2019 as they did the previous year. At the close of the third quarter of 2019, retail sector M&A volume was 21 percent below the two-year average, according to a report by PwC.

However, grocery-anchored shopping centers continued to be an investor favorite in 2019. Notable transactions in the shopping center arena included Rosenthal Properties and PGIM Real Estate’s joint venture acquisition of a five-property, 742,000-square-foot portfolio in Richmond, Va., in a $125 million deal. And First Washington Realty Inc. turned heads with its $485 million purchase of five shopping centers totaling 800,000 square feet in metropolitan Washington, D.C. Broad Street expects the remaining 10 MedAmerica mergers to close within the next several months.