Federal Real Estate Investment Trust disclosed yesterday that it has acquired the 20-acre former Korvettes Shopping Center on Rockville Pike in Montgomery County and will spend $4 million to renovate and reopen the complex.
Steven Gutman, Federal REIT president, said that Syms, the New York-based discount clothing chain, has leased part of the long-vacant Korvettes store, and that two other major retailers are negotiating to move into the center.
Gutman said his firm plans to expand the shopping center to take advantage of zoning that will permit three times as big a building as the one now on the site.
The former Korvettes Center has been regarded as a prime candidate for redevelopment since Korvettes closed its doors two years ago. It is situated at the intersection of Rockville Pike and Old Georgetown Road between the White Flint mall and the new Evergreen and Congressional Plaza centers in the midst of the Rockville Pike strip that is becoming one of the busiest shopping areas in Metropolitan Washington.
The center began losing tenants even before Korvettes closed its doors, and now is occupied by Toys R Us, Scott's home center and four small shops.
Gutman said a major renovation and remodeling will be the first step taken by Federal REIT, a Chevy Chase-based firm that specializes in buying and revitalizing older shopping centers.
Federal did not purchase the property directly; instead, it acquired a 75-year lease from Levin Properties, a New Jersey firm that owns the land. Gutman valued the lease interest at $10 million and said it is the most valuable property ever acquired by the trust, which owns $70 million worth of real estate.
The purchase was announced at the REIT's annual meeting.
Gutman assured shareholders there has been no effort to take over Federal REIT by the Belgian investors who have acquired 7.3 percent of its stock and are now the largest shareholders. The group, known as SIAM Limited, controls the shares through a chain of companies.