Cohen & Steers Income Opportunities REIT, Inc. Acquires Publix-Anchored Shopping Center in Orlando, FL with Phillips Edison & Company

Rhea-AI Summary

Cohen & Steers Income Opportunities REIT (CNSREIT) and Phillips Edison & Company (NASDAQ: PECO) have announced their acquisition of Oak Grove Shoppes, a grocery-anchored shopping center in Orlando, Florida. This marks their second acquisition in a $300 million equity joint venture, with CNSREIT owning 80% and PECO 20%.

The 142,000 square foot open-air shopping center, redeveloped in 2023, is located in the Altamonte Springs submarket, nine miles from downtown Orlando. The center is 91% leased, anchored by a 48,000 square foot Publix grocery store and Marshalls, along with various food, healthcare, and childcare tenants.

The property is situated in Orlando's high-growth market, ranking in the top 10 U.S. cities for five-year population and job growth. The Altamonte Springs submarket demonstrates strong fundamentals with a 94% retail occupancy rate and 7.5% year-over-year retail rent growth.

Positive

• Joint venture with $300 million in equity targeting grocery-anchored shopping centers
• High occupancy rate of 91% with strong anchor tenants (Publix and Marshalls)
• Located in top 10 U.S. city for population and job growth
• Strong market fundamentals with 7.5% YoY retail rent growth in the submarket

Negative

• None.

Insights

Real Estate Investment Analyst

This strategic acquisition in Orlando's Altamonte Springs represents a compelling investment thesis. The 91% leased Oak Grove Shoppes, featuring a new 48,000 sq ft Publix anchor and Marshalls, is positioned in a market displaying robust fundamentals with 94% retail occupancy and 7.5% YoY rent growth. The property's 2023 redevelopment and prime location near I-4 enhance its competitive positioning.

The joint venture structure, with PECO holding 20% ownership, aligns interests effectively while leveraging PECO's operational expertise in grocery-anchored retail. The $300 million equity targeting program suggests additional acquisitions are forthcoming, potentially creating economies of scale. Orlando's demographic tailwinds, ranking top 10 in population and job growth, support long-term value appreciation potential.

The necessity-based tenant mix across food, healthcare and childcare provides defensive characteristics, while the 95.7% national occupancy rate for open-air centers indicates strong sector fundamentals. This acquisition appears well-timed given the market's strong absorption and rent growth trajectory.

Market Research Analyst

Orlando's fundamentals make this a strategically sound acquisition. The metro area's 2.8 million population base combined with 74 million annual visitors creates a robust consumer ecosystem. The market's population and job growth metrics outperforming national averages by 3.6x and 2.2x respectively signal strong underlying demand drivers.

The Altamonte Springs submarket's retail metrics are particularly noteworthy. The 94% occupancy rate indicates available space, while 7.5% year-over-year rent growth suggests strong landlord pricing power. The center's location near downtown Orlando and I-4 provides excellent accessibility, critical for retail success.

The recent redevelopment in 2023 positions the asset to capture market share with modern retail space meeting current tenant demands. The anchor tenant mix of Publix and Marshalls provides a strong foundation of credit-worthy tenants that should drive consistent foot traffic to support smaller inline retailers.

NEW YORK, Jan. 21, 2025 /PRNewswire/ -- Cohen & Steers Income Opportunities REIT, Inc. ("CNSREIT") announced today its acquisition of Oak Grove Shoppes, a grocery-anchored shopping center in Orlando, Florida, with Phillips Edison & Company (NASDAQ: PECO – "PECO"), a publicly-traded owner and operator of grocery-anchored shopping centers in the U.S. This is the second acquisition in a programmatic joint venture targeting $300 million in equity and owned 80% by CNSREIT and 20% by PECO. The joint venture is focused on acquiring open-air, grocery-anchored shopping centers and leverages PECO's deep sector expertise.

Oak Grove Shoppes is a 142,000 square foot grocery-anchored, open-air shopping center that was redeveloped in 2023. Located in the Altamonte Springs submarket, the property is nine miles from downtown Orlando and proximate to the Interstate 4 interchange. The center is 91% leased and is anchored by a 48,000 square foot Publix grocery store that opened in 2023 and a recently-opened Marshalls along with an array of tenants in the food, healthcare and childcare industries.

The property benefits from the high-growth Orlando market, which ranks in the top 10 U.S. cities for five-year population and job growth and has outperformed U.S. averages by 3.6x and 2.2x respectively¹. The city has approximately 2.8 million residents, making it the 22^nd largest metropolitan statistical area in the U.S., and attracts 74 million visitors annually². As a result, the Altamonte Springs submarket boasts strong fundamentals, including a 94% retail occupancy rate and 7.5% year-over-year retail rent growth³.

James S. Corl, Chief Executive Officer of CNSREIT and Head of the Private Real Estate Group at Cohen & Steers, said: 
"We believe Oak Grove Shoppes is well-positioned to continue benefiting from its best-in-class infill location in a high-growth market, anchor tenant and the surging demand for retail space with access to the necessity-driven traffic that a strong grocer generates. We look forward to growing our partnership with Phillips Edison & Company, one of the most-skilled operators of grocery-anchored shopping centers."

Jeff Edison, Chairman and Chief Executive Officer of Phillips Edison & Company, added: 
"We are pleased to partner with CNSREIT on this second acquisition of our joint venture. This joint venture allows PECO to access incremental growth capital, expand our acquisition opportunity set and leverage our integrated operating platform."

CNSREIT is acquiring high quality properties that generate attractive income potential alongside best-in-class operators and has an initial focus on well-anchored, necessity-driven shopping centers. Open-air shopping centers are at their highest occupancy level of the past 16 years at 95.7%, according to real estate analytics provider CoStar Group.

About CNSREIT. Cohen & Steers Income Opportunities REIT, Inc. is a perpetual-life, non-listed REIT formed to invest primarily in high quality, income-focused, stabilized properties within the United States. CNSREIT is externally managed by Cohen & Steers Capital Management, Inc., a subsidiary of Cohen & Steers, Inc. Further information can be found at www.cnsreit.com.

About Cohen & Steers. Cohen & Steers is a leading global investment manager specializing in real assets and alternative income, including listed and private real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, the firm is headquartered in New York City, with offices in London, Dublin, Hong Kong, Tokyo and Singapore.

About Phillips Edison & Company
Phillips Edison & Company, Inc. ("PECO") is one of the nation's largest owners and operators of high-quality, grocery-anchored neighborhood shopping centers. Founded in 1991, PECO has generated strong results through its vertically-integrated operating platform and national footprint of well-occupied shopping centers. PECO's centers feature a mix of national and regional retailers providing necessity-based goods and services in fundamentally strong markets throughout the United States. PECO's top grocery anchors include Kroger, Publix, Albertsons and Ahold Delhaize. As of September 30, 2024, PECO managed 311 shopping centers, including 290 wholly-owned centers comprising 32.9 million square feet across 31 states and 21 shopping centers owned in two institutional joint ventures. PECO is focused on creating great omni-channel, grocery-anchored shopping experiences and improving communities, one neighborhood shopping center at a time. Learn more at www.phillipsedison.com.

Forward-Looking Statements 
This press release contains forward looking statements within the meaning of the federal securities laws. These forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," "identified" or other similar words or the negatives thereof. These may include CNSREIT's financial projections and estimates and their underlying assumptions, statements about plans, objectives and expectations with respect to future operations, statements with respect to acquisitions, statements regarding future performance and statements regarding identified but not yet closed acquisitions. Such forward-looking statements are inherently uncertain and there are or may be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. CNSREIT believes these factors also include but are not limited to those described under the section entitled "Risk Factors" in the prospectus, as amended and supplemented from time to time, filed with the Securities and Exchange Commission (the "SEC"), which is accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this document. Except as otherwise required by federal securities laws, CNSREIT undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities.

Website: https://www.cnsreit.com/ 

¹ Source: CoStar
² Source: Orlando Economic Partnership
³ Source: CoStar data as of 4Q23

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SOURCE Cohen & Steers Income Opportunities REIT, Inc.

FAQ

What is the ownership structure of the Oak Grove Shoppes acquisition between CNSREIT and PECO?

CNSREIT owns 80% and PECO owns 20% of the joint venture that acquired Oak Grove Shoppes.

What is the current occupancy rate of Oak Grove Shoppes in Orlando?

Oak Grove Shoppes has a 91% occupancy rate with key tenants including Publix and Marshalls.

How large is the joint venture between CNSREIT and PECO targeting grocery-anchored shopping centers?

The joint venture is targeting $300 million in equity investments.

What is the size of the Publix store at Oak Grove Shoppes?

The Publix grocery store at Oak Grove Shoppes is 48,000 square feet and opened in 2023.

What is the year-over-year retail rent growth in the Altamonte Springs submarket where Oak Grove Shoppes is located?

The Altamonte Springs submarket has experienced 7.5% year-over-year retail rent growth.