CINCINNATI—The Phillips Edison-ARC Shopping Center REIT Inc. has been one of the most active buyers of shopping centers in the US. And in the second quarter, the Cincinnati-based trust kept up the speedy pace by purchasing 20 centers in 11 states with an aggregate price of $315 million. This tops the first quarter, when the company picked up 17 centers across the US with an aggregate price of $285.7 million. Its long-term strategy has been to assemble a portfolio of neighborhood and community shopping centers anchored by the #1 or #2 grocers in its targeted markets.
The second quarter acquisitions expanded the REIT’s presence in Florida, Georgia, Kentucky, Pennsylvania, Virginia, South Carolina and Texas. And it reached into the far west and New England by adding for the first time properties in Massachusetts, Nevada and Washington, as well as Tennessee.
“Our strategy is to build a portfolio of assets diversified by geography, grocery anchor, tenancy, creditworthiness and lease expirations,” Jeff Edison, chairman of the board and chief executive officer, tells GlobeSt.com. “We have an in-house acquisitions team with national coverage that looks for opportunities in strong infill growth markets across the country. We continue to look for opportunities in the west and New England that support our diversification strategy.”
The purchases added about 2.1-million-square-feet to the company’s portfolio, which now totals about 12.6-million-square-feet of gross leasable area in 120 grocery-anchored shopping centers with an aggregate purchase price of over $1.8 billion.
Phillips Edison & Company and AR Capital, LLC sponsor the company. And Edison says that they are currently raising equity for another non-traded REIT, called Phillips Edison-ARC Grocery Center REIT II.
“Competition is definitely heating up for grocery-anchored centers in top coastal markets – the exchange traded REITs, institutions and foreign investors are the primary buyers of centers in those markets,” Edison adds. However, Phillips Edison-ARC has “a contrarian approach to acquisitions, and focus on buying quality assets in secondary markets. Rent growth in our markets tracks and eventually outpaces the top 25 markets, and we can acquire these assets at higher initial yields. The rent growth and higher initial yield factors combined with our ability to grow net operating income leads to overall better returns. We see tremendous opportunities in secondary markets, and the public companies and other investors don’t see that.”
The second quarter acquisitions included: Kirkwood Market Place, anchored by Sprouts in Houston; Hampton Village, anchored by Publix in Taylors, SC; Southwest Marketplace, anchored by Smith’s Food and Drug in Las Vegas; Hamilton Village, anchored by Walmart Supercenter in Chattanooga; Waynesboro Plaza, anchored by Martin’s in Waynesboro, VA; Fairview Plaza Shopping Center, anchored by Giant in New Cumberland, PA; Townfair Center, anchored by Giant Eagle in Indiana, PA; Cushing Plaza, anchored by Shaw’s in Cohasset, MA; Shaw’s Plaza, anchored by Shaw’s in Easton, MA; Shaw’s Plaza, anchored by Shaw’s in Hanover, MA; Hannaford Bros. Plaza, anchored by Hannaford in Waltham, MA; Central Station, anchored by Kroger in Louisville; Park View Square, anchored by Winn-Dixie in Miramar, FL; St. John’s Commons, anchored by Winn-Dixie in Jacksonville, FL; Deerwood Lake Commons, anchored by Publix in Jacksonville, FL; Orchards Shopping Center, anchored by Rosauers in Yakima, WA; Lovejoy Village, anchored by Kroger in Jonesboro, GA; Heath Brook Commons, anchored by Publix in Ocala, FL; West Creek Commons, anchored by Publix in Coconut Creek, FL; and Broadway Promenade, anchored by Publix in Sarasota, FL.