A half-billion-dollar sale of a Birmingham, Alabama, shopping center shows that deep-pocketed investors are still hungry for retail.
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Maryland-based Federal Realty Investment Trust acquired The Summit, an open-air retail property spanning 870K SF, from its original developer for $508M, according to a release.
The deal marks the first time the property, which is the state’s most-visited retail destination, has changed hands since Bayer Properties developed it more than 30 years ago.
"Opportunities to buy truly irreplaceable, dominant assets like The Summit don't come along often, and we can't be more excited about adding this property to our portfolio," Federal Realty CEO and President Don Wood said in a statement.
The Summit, which is 92% occupied, sits between Mountain Brook — one of the wealthiest suburbs in the U.S. — and Vestavia Hills, where median household incomes are almost double Alabama's statewide median.
The acquisition deepens Federal Realty's holdings in the middle of the country after decades focused on retail and mixed-use developments on the coasts. The REIT's seven-property central region portfolio now spans 2.7M SF and includes properties in Chicago, Kansas City and Omaha.
Federal Realty owns a total of 28.8M SF of commercial real estate across 103 properties. The REIT expects to fund its acquisition of The Summit via a combination of asset sales, cash flow and proceeds from recently issued debt.
The deal for the Birmingham retail property also follows executives’ proclamations during a February earnings call that the REIT intends to buy more retail around the country over the course of 2026.
Federal Realty boosted its earnings guidance at the end of the second quarter. Its shares are up more than 8% in 2026, although they had been rising faster in the first half of the year before the recent run-up in borrowing costs placed a damper on real estate stocks.
Federal Realty’s acquisition comes as retail's post-pandemic recovery and historically low construction pipeline have caught the eye of investors.
Roughly $33B of retail properties changed hands during the first six months of the year, up 14% year-over-year and the best first half since 2022, according to JLL.
Rents have risen sharply in recent years, especially in the Sun Belt markets where construction has not kept pace with population growth, generating strong returns.
“By far, our most favorite asset class over the past, probably, three years, four years has been retail,” Wafra Head of Real Estate David Hamm said Wednesday at Bisnow's National Commercial Real Estate Finance Event in New York. “It's just been a phenomenal performer.”
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