Phillips Edison, Northwestern Form Two JVs Valued at $415M
Under the terms of the GRP I joint venture, Northwestern Mutual will acquire an 85% interest in the 17-center portfolio which is currently valued at $368 million.
CINCINNATI—In what is reportedly the largest shopping center recapitalization of 2018, retail REIT Phillips Edison & Company, Inc. (PECO) and Northwestern Mutual report they have formed two joint ventures valued at $414.5 million that will invest in 20 grocery-anchored shopping centers currently owned by PECO.
In regards to the newly formed Grocery Retail Partners I (GRP I), Milwaukee-based Northwestern Mutual will invest in 17 high-quality, grocery-anchored shopping centers currently owned and operated by PECO across eight states.
Under the terms of the GRP I joint venture, Northwestern Mutual will acquire an 85% interest in the 17-center portfolio which is currently valued at $368 million. PECO will maintain 15% ownership in the portfolio while providing asset management and property management services for the joint venture. Phillips Edison states that proceeds from GRP I will be deployed by PECO to delever its balance sheet, fund redevelopment projects, and further expand its portfolio of grocery-anchored centers.
“Entering into this joint venture with Northwestern Mutual, one of the country’s largest and most experienced commercial real estate investors, is a compelling illustration of the continued strength in grocery-anchored real estate,” says Jeff Edison, chairman and CEO of PECO. “We are thrilled to be forming a relationship with such a well-respected partner in Northwestern Mutual, and believe this further validates our position as the leading fully-integrated operator of grocery-anchored real estate.”
Rob Francour, portfolio director of commercial real estate acquisitions at Northwestern Mutual adds, “This joint venture with PECO creates an opportunity to invest in a portfolio of necessity-based retail real estate currently managed by one of the leading operators in the sector. We’re confident these assets will produce consistent cash flow that complements our current commercial real estate portfolio.”
In addition, Phillips Edison Grocery Center REIT III, Inc. (PECO III), which is currently sponsored and managed by PECO, has entered into a separate joint venture with Northwestern Mutual to create Grocery Retail Partners II. Under the terms of GRP II, Northwestern Mutual will acquire a 90% interest, valued at approximately $46.5 million, in three grocery-anchored shopping centers currently owned by PECO III across three states. PECO III will maintain a 10% ownership interest in the assets while PECO will continue to provide asset management and property management services.
The New York City office of Holliday Fenoglio Fowler, L.P. acted as exclusive financial advisor to PECO and its affiliate in facilitating the formation of the two joint venture partnerships.
The HFF equity placement team representing PECO and PECO III included senior managing directors Steve Hentschel and Danny Finkle and senior director Sheheryar Hafeez along with senior managing directors Michael Joseph and Doug Bond.
“The formation of the JVs between Northwestern Mutual, one of the country’s largest and most experienced commercial real estate investors, and PECO reaffirms the high-quality nature of its grocery-anchored shopping center portfolio and validates the strength of PECO’s best-in-class platform,” HFF’s Hentschel says.