CINCINNATI — Phillips Edison – ARC Shopping Center REIT Inc., a publicly-registered, non-traded REIT focused on grocery-anchored neighborhood and community shopping centers, has entered into a joint venture between itself and clients of the CBRE Global Multi Manager group, the private equity indirect investment division of CBRE Investors. The venture, named PECO-ARC Institutional Joint Venture I, plans to invest approximately $102 million of equity to acquire more than $200 million of grocery-anchored neighborhood and community shopping centers throughout the United States. The venture hopes to capitalize on acquisition opportunities and the traffic-driving ability of grocers to produce favorable risk-adjusted returns for their investors.
“We believe this joint venture is a game changer for the REIT,” said Mark Addy, chief operating officer for Phillips Edison – ARC Shopping Center REIT. “Not only does this speak to our ability to strategically place and manage capital, but it also reflects the CBRE Global Multi Manager team’s support of our investment strategy, which is that shopping centers anchored by top-performing grocers provide stable long-term returns for investors. Since this joint venture allows us to double our purchasing power immediately, we expect to be able to double the REIT’s portfolio by the end of the year.”
Under the terms of the agreement, the companies will contribute approximately $102 million of equity capital. Of this, CBRE Global Multi Manager has committed $50 million and Phillips Edison – ARC Shopping Center REIT will contribute $52 million of equity. Phillips Edison – ARC Shopping Center REIT will maintain a majority interest and serve as the general partner of the joint venture, managing its operations.
“Grocers perform well in most economic environments because people always need to eat,” said Scott Brown, managing director and head of the Americas in the CBRE Global Multi Manager group. “We are confident this investment will allow us to leverage off of the Phillips Edison platform to acquire high-quality grocery-anchored real estate assets in solid markets.”
Recent statistics point to the market opportunity in grocery-anchored real estate. The top 20 owners hold less than 7 percent of the more than 100,000 shopping centers in operation, according to ICSC Research. Much of the other 93 percent are owned by non-institutional owners, many of whom are looking to sell as part of the large amount of commercial debt coming due in the next 2 to 3 years.
“This is a great time to be a buyer,” says Jeffrey Edison, chief executive officer of Phillips Edison – ARC Shopping Center REIT. “We are seeing a growing pipeline of quality centers coming to market.”
— Dan Marcec