PECO Streamlines, Simplifies its Business

CINCINNATI—As reported in GlobeSt.com, Phillips Edison & Co. said Thursday it plans to spin off its strategic investment and net lease investment businesses into a standalone company known as PECO Real Estate Partners, or PREP. The new company will acquire single-tenant retail, power and lifestyle centers, enclosed malls and mixed-use retail projects. The parent company, Cincinnati-based PECO, will stick to its focus on acquiring grocery-anchored shopping centers.

Company officials say the move will simplify the business and streamline operations and they also expect that each one's investment strategies to largely remain the same.

“PECO tends to focus on more core and core plus products, while PREP is focused on more value add to opportunistic products,” Jeff Edison, principal and chief executive officer of Phillips Edison & Co., tells GlobeSt.com. “That said, grocery-anchored centers can fall into any of these categories, and strong operators like both PECO and PREP are mitigating risk in all categories through their superior operating platforms.”

“PREP will have offices in Cincinnati, New York City and Salt Lake City, but may add offices in other locations as it grows,” says Sara Brennan, chief operating officer of PREP. Currently, PREP manages about $200 million of assets. “PREP is poised to identify assets where the management team can add value through buying below replacement costs in desirable markets, leasing activities, reduction of expenses, development and redevelopment.”

PECO has been one of the more active buyers in the nation. Most recently, it acquired another three grocery-anchored shopping centers, expanding its portfolio in Ohio and Minnesota and acquiring its first shopping center in Maryland. According to public documents the total cost was more than $51 million. It now has more than 270 properties.

“We believe that necessity based grocery-anchored centers are more resistant to economic cycles,” Edison adds. “The consistent sales growth of the traditional grocers during the last recession are a testament to that belief. The low level of new construction and strong demand from our retailers are also providing an excellent operating environment for our grocery center portfolio.”