Single-Tenant Grocery Portfolio Fetches $295M

The Inland Real Estate Group of Cos. has acquired a portfolio of 11 single-tenant retail buildings net leased to Stop & Shop Winstanley Enterprises and Surrey Equities for $295 million.

The properties, located in Connecticut, Massachusetts and Rhode Island, are leased on a long-term basis. Stop & Shop is the No. 1 grocer by market share in Connecticut, Massachusetts and Rhode Island and a division of Ahold Delhaize USA, Inc., the third-largest supermarket operator in the US.

The 748,141-square-foot portfolio includes 19 Howley St., Peabody, Mass., 905 Massachusetts Ave., Arlington, Mass., 35 Bedford St, Lexington, Mass., 55 Long Pond Dr., South Yarmouth, Mass., 469 Pleasant St., Attleboro, Mass., 595 Smithfield Rd., North Smithfield, RI, 446 Putnam Turnpike, Greenville, RI, 333 W. River St., Providence, RI, 1391 Main St., Willimantic, Conn., 195 West St., Cromwell, Conn. And 15 Franklin St., Seymour, Conn.

“This portfolio’s established and necessity-based footprint, combined with 20-year leases at all 11 properties in strong market locations, is an ideal example of the opportunities we seek to acquire as we move further into 2021,” Matthew Tice, senior vice president of Inland Real Estate Acquisitions, LLC, said in a prepared statement.

JLL Capital Markets closed the sale and arranged $157.95 million in acquisition financing for the portfolio. It also secured two separate 10-year, fixed-rate loans with a life company and with a CMBS lender.

Managing Director Nat Heald, Senior Managing Director Jose Cruz and Senior Managing Director Chris Angelone led the JLL Capital Markets Investment Sales Advisory team representing the seller. Managing Director Matthew Sherry provided support. Senior Managing Directors Lauren O’Neil and Elliott Throne were on the JLL Capital Markets Debt Placement team representing the new owner.

Unlike some other retail segments, the grocery-anchored retail space has held up well throughout the pandemic.

Earlier this month, shopping center REIT Kimco Realty announced it would acquire rival REIT Weingarten Realty Investors for roughly $3.87 billion. The combined company is expected to have a pro forma equity market cap of $12 billion and a pro forma total enterprise value of $20.5 billion.

Kimco’s portfolio consists of open-air, grocery-anchored shopping centers and mixed-use assets, and Weingarten Realty is a grocery-anchored Sun Belt shopping center owner, manager and developer.

The merger will create a national portfolio of 559 open-air grocery-anchored shopping centers and mixed-use assets comprising about 100 million square feet of gross leasable area. These properties are largely concentrated in the top major metropolitan markets in the US.

The acquisition “reflects our conviction in the grocery-anchored shopping center category, which has performed well throughout the pandemic and provides last-mile locations that are more valuable than ever due to their hybrid role as both shopping destinations and omnichannel fulfillment epicenters,” says Kimco CEO Conor Flynn in prepared remarks.  “It also gives us even greater density in the Sun Belt markets we are targeting as well as visibility into the trends shaping necessity-based retail.”