PHOENIX-Affluent demographics and strong maintenance were the motivating factors in Phillips Edison & Co.’s decision to buy the 171,801-square foot Village Center from Macerich Co. of Santa Monica, CA. The Cincinnati, OH-based buyer paid close to $12 million for 60,801 square feet of shop space and the ground lease for the anchor, a 110,000-square-foot Target store.

The acquisition of the asset at 4304-4326 E. Cactus Rd. means Phillips Edison owns four shopping centers in Arizona, with two of those in the Phoenix metro area, one in Tucson and the other in Page. Company director of West Coast acquisitions Paul Mittman tells that Village Center is an appealing asset on many levels. For one thing, the location is accessible to shoppers in Phoenix, Scottsdale and Paradise Valley, areas that boast a high household income. Furthermore, he goes on to say, the asset is well-established in an infill location, having been built in the mid-1980s.

Then there was the strong tenancy. “Any time we can buy Target income, we’re all for that,” Mittman says. “It’s hard to buy A credit in today’s market. But we picked that up, and a substantial component on the income stream.” Macerich, which was represented by Eastdil Secured in the transaction, is also a company that knows how to care for its investments, he adds.

There was also some upside in the deal, in the form of a 25,000 square foot vacant box. Mittman says a few prospective tenants have shown interest in the space, but no knee-jerk decisions in terms of leasing will be made. Given the intersection has 1.2-million square feet of space thanks to the adjacent Paradise Valley Mall, Mittman says the area is a strong regional draw with a number of retailers already in existence. “We want to make sure that space is a use that can either be duplicated or isn’t there,” he remarks.

Phillips Edison financed 65% of the deal with a $500 million credit facility backed by institutions including Bank of America and Wells Fargo Bank. The facility gives Phillips Edison money with which to buy even more shopping centers, and the plan calls for the company to spend upwards of $300 million by the end of 2010.

Mittman says he’s looking at possible investments in primary and secondary markets along the West Coast, Southwest and interior mountain west. He explains that the most desirable centers for the Phillips Edison portfolio are those anchored by grocery stores, Targets, Costcos or Wal-Marts. In terms of age, Mittman says he’s looking at all vintages, though the preference is for more secure, more established assets. The company has offers out, but nothing under contract at this time.