Excel Trust Sails Past $1 Billion Assets

NEW YORK ( TheStreet) -- Excel Trust ( EXL), a retail-focused shopping center REIT, announced last week it has acquired six shopping centers for approximately $263 million. This is a significant milestone for the San Diego-based company as the small-cap REIT has now surpassed $1 billion dollars in assets under management.

Excel had around $820 million in assets of its latest reporting period (second quarter of 2012) and with the latest announced closing the company will have around $1.1 billion in assets.

Excel Trust was organized in late 2009 and completed its initial common stock offering on April 28, 2010. With initial proceeds of $194.6 million, Excel chartered (the company) with no legacy assets and its mid-market platform focused on necessity brand tenants with a value-oriented sales model.

In addition, the company's growth model -- of locating in hubs that form a lower circle around the U.S. -- have proven to be highly successful. By connecting dots in San Diego, SF Bay, Phoenix, Dallas, Atlanta and Washington, D.C., the "smile states" model forms a demographic footprint representing a broad base of retail tenants with above average sales per square foot.

Excel's recent acquisition includes West Broad Village, a mixed use center in Richmond, Va. that is comprised of approximately 385,897 square feet of retail and commercial space, with an additional 339 apartment units above the center. The retail portion is approximately 80% leased with another 35,000 square feet entitled but not constructed. Major tenants include Whole Foods ( WFM) , HomeGoods, REI, Wells Fargo ( WFC), First Market Bank, Dave & Busters, Mimi's Cafe, Kona Grill and Bonefish Grill. The apartments have experienced strong demand and are currently 98% leased.

Excel also acquired a portfolio of five retail shopping centers (four centers that are wholly owned and a 50% interest in a fifth center) which together comprise approximately 319,264 square feet. Major tenants include Walgreens ( WAG), CVS Pharmacy ( CVS), Fifth Third Bank ( FITB), Regions Bank ( RF), Fleming's, Cantina Laredo, Big Fin, Jos. A. Bank ( JOSB) and Ruth's Chris Steak House ( RUTH). The shopping centers are approximately 96% leased.

In an announcement, Gary Sabin, Excel's Chairman and CEO stated, "We are excited about the quality and earnings potential of these assets. The demographics and tenant mix are exceptional and will further strengthen and diversify our portfolio. Since our IPO in 2010, we have acquired approximately $1.1 billion of high quality assets and we continue to see attractive opportunities in our pipeline."

In addition to the $1 billion milestone achievement, Excel will also gain considerable more diversification in a very sound portfolio that includes retailers such as Bed, Bath and Beyond ( BBY), Dick's Sporting Goods, JC Penny ( JCP), Jo-Ann Stores, Lowe's ( LOW), PetSmart, Publix, Ross Stores and TJ Maxx.

U.S.-based retailers have seen solid recovery as Americans are finally getting their finances in order as the nation's credit card delinquency rate is the lowest since 2008. In addition, U.S. household balance sheets have been bolstered by a surge in stocks and even a rise in home prices. The Fed's policy of keeping interest rates near zero is also helping Americans put their finances on firmer footing.

Cantor Fitzgerald recently initiated coverage of Excel Trust with a buy rating and a $13.50 price target. Overall Cantor's price target includes a modest 5.6% premium to our NAV estimate of $12.60, which reflects the strength of the balance sheet and strong acquisition pipeline, offset by limited core growth within the operating portfolio.

As Cantor wrote: "Overall, we are confident in Excel's ability to grow the portfolio and enhance returns to investors by way of accretive acquisitions, with the backdrop of a stable operating portfolio."

Those macro-economic trends, as well as Excel Trust's increasing revenue base, should provide a perfect tailwind for investor outperformance.

Excel has a modest debt-to-market cap of 34.09% (Q2-12) and the company's market cap is around $421 million. The stock price is $12.36 per share and the dividend yield is 5.26%. The company's year-over-year total return is 30.36%.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

If you liked this article you might like

3 Hold-Rated Dividend Stocks: PAA, EXL, CM

3 Hold-Rated Dividend Stocks: PAA, EXL, CM

What To Hold: 3 Hold-Rated Dividend Stocks COP, EXL, PKY

What To Hold: 3 Hold-Rated Dividend Stocks COP, EXL, PKY

Today's Strong And Under The Radar Stock: Excel (EXL)

Today's Strong And Under The Radar Stock: Excel (EXL)

What To Hold: 3 Hold-Rated Dividend Stocks CXP, EXL, TS

What To Hold: 3 Hold-Rated Dividend Stocks CXP, EXL, TS

What To Hold: 3 Hold-Rated Dividend Stocks STM, EXL, TWO

What To Hold: 3 Hold-Rated Dividend Stocks STM, EXL, TWO