Phillips Edison & Company Acquires Grocery-Anchored Shopping Center in Partnership with Cohen & Steers Income Opportunities REIT, Inc.
Rhea-AI Summary
Phillips Edison & Company (Nasdaq: PECO) has partnered with Cohen & Steers Income Opportunities REIT, Inc. (CNSREIT) to acquire Des Peres Corners, a grocery-anchored shopping center in Des Peres, Missouri. This acquisition is part of a $300 million equity joint venture, with CNSREIT owning 80% and PECO 20%. The 121,000 square foot center, built in 2009, is 90% occupied and anchored by a 74,000 square foot Schnucks grocer.
The joint venture aims to leverage PECO's expertise in acquiring open-air, grocery-anchored shopping centers. Des Peres, a St. Louis suburb, is noted for its strong retail market and proximity to key employers and educational institutions. The partnership is expected to generate attractive returns and increase PECO's access to growth capital and acquisition opportunities.
Positive
- Joint venture with CNSREIT provides PECO access to $300 million in equity for acquisitions
- Acquisition of Des Peres Corners, a 90% occupied shopping center in a prime location
- Partnership leverages PECO's expertise in grocery-anchored shopping centers
- Des Peres market shows strong retail occupancy rates, outperforming neighboring areas
Negative
- None.
Insights
The acquisition of Des Peres Corners by Phillips Edison & Company (PECO) in partnership with Cohen & Steers Income Opportunities REIT (CNSREIT) is a strategic move that could yield positive results for both entities. Here's why this deal is noteworthy:
- The joint venture targets
$300 million in equity, with CNSREIT owning80% and PECO20% . This structure allows PECO to leverage CNSREIT's capital while maintaining operational control. - Des Peres Corners, at
90% occupancy, is anchored by Schnucks, the market leader in St. Louis. This suggests a stable, high-quality asset with strong cash flow potential. - The focus on grocery-anchored centers is timely, given that open-air shopping centers are at a 16-year high occupancy of
95.7% . This trend indicates resilience in the face of e-commerce competition. - For PECO, this venture increases access to growth capital and expands its acquisition universe, potentially accelerating its growth strategy.
- For CNSREIT, partnering with PECO provides access to specialized expertise in grocery-anchored centers, potentially enhancing returns for shareholders.
While the deal seems promising, investors should monitor how effectively PECO can leverage this partnership to drive growth and whether the joint venture can maintain high occupancy rates in its acquisitions.
The acquisition of Des Peres Corners reveals several key trends in the retail real estate market:
- The focus on grocery-anchored centers underscores the resilience of necessity-based retail. These properties have shown strength even as other retail segments struggle with e-commerce competition.
- The
90% occupancy rate of Des Peres Corners, coupled with the95.7% national occupancy rate for open-air centers, indicates robust demand for well-located retail spaces. - The emphasis on Des Peres' affluent demographics and proximity to employers and educational institutions highlights the importance of location in retail real estate performance.
- The partnership between a REIT (CNSREIT) and an experienced operator (PECO) demonstrates a trend towards specialized expertise in property management, potentially leading to improved operational efficiencies.
This deal suggests that investors are seeking stable, income-producing assets in strong submarkets. The high occupancy rates and focus on necessity-based retail indicate a defensive strategy, which could prove valuable if economic conditions deteriorate. However, the success of this venture will depend on the partners' ability to identify and acquire similarly attractive properties in a competitive market.
CINCINNATI, July 25, 2024 (GLOBE NEWSWIRE) -- Phillips Edison & Company, Inc. (Nasdaq: PECO) (“PECO”), one of the nation’s largest owners and operators of grocery-anchored neighborhood shopping centers, today announced its acquisition of Des Peres Corners, a grocery-anchored shopping center in Des Peres, Missouri, with Cohen & Steers Income Opportunities REIT, Inc. (“CNSREIT”). The acquisition was made through a programmatic joint venture targeting
Des Peres Corners is an approximately 121,000 square foot grocery-anchored, open-air shopping center built in 2009, located at one of the most prominent intersections in Des Peres, a growing suburb of St. Louis. The property is
Des Peres is recognized as a top suburban market for its proximity to high-profile employers in the area, 30 colleges and universities and a highly-rated local school system. The affluent submarket boasts strong five-year average occupancy rates for retail properties, consistently outperforming neighboring submarkets and the U.S. average, with local retail vacancy at all-time lows.
James S. Corl, Chief Executive Officer of CNSREIT and Head of the Private Real Estate Group at Cohen & Steers, said: “We are excited to launch our programmatic joint venture with Phillips Edison & Company through this first acquisition. PECO is one of the largest publicly traded owners of grocery-anchored shopping centers in the U.S., and we have watched them operate skillfully for many years in this property segment. We believe their expertise will drive value in this joint venture. More broadly, we believe CNSREIT shareholders will continue to benefit from the superior operating capabilities and access to superior deal flow that our best-in-class partners bring to our investment program.”
Jeff Edison, Chairman and Chief Executive Officer of Phillips Edison & Company, added: “We are pleased to partner with CNSREIT on this joint venture and first acquisition. This joint venture increases PECO’s access to growth capital and increases the acquisition universe available to us. We believe this joint venture will generate attractive returns for both partners.”
CNSREIT is acquiring high quality properties that generate attractive income potential across the U.S. alongside best-in-class operators. The vehicle’s initial investment focus includes well-anchored, necessity-driven shopping centers. Open-air shopping centers are at their highest occupancy level of the past 16 years at
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 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. is one of the nation’s largest owners and operators of 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 March 31, 2024, PECO managed 304 shopping centers, including 284 wholly-owned centers comprising 32.4 million square feet across 31 states and 20 shopping centers owned in one institutional joint venture. PECO is focused on creating great omni-channel, grocery-anchored shopping experiences and improving communities, one neighborhood shopping center at a time.
PECO uses, and intends to continue to use, its Investors website, which can be found at https://investors.phillipsedison.com, as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD.
Forward-Looking Statements
This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can generally be identified by the Company’s use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “seek,” “objective,” “goal,” “strategy,” “plan,” “focus,” “priority,” “should,” “could,” “potential,” “possible,” “look forward,” “optimistic,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including the risk factors and other risks and uncertainties described in the Company’s 2023 Annual Report on Form 10-K, filed with the SEC on February 12, 2024, as updated from time to time in the Company’s periodic and/or current reports filed with the SEC, which are accessible on the SEC’s website at www.sec.gov. Except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
Cohen & Steers Income Opportunities REIT, Inc. Contact:
Robert Klemens
Vice President, Communications
media@cohenandsteers.com
Phillips Edison & Company Contact:
Kimberly Green
Senior Vice President, Investor Relations
kgreen@phillipsedison.com
FAQ
What is the ownership structure of the joint venture between PECO and CNSREIT?
How large is the Des Peres Corners shopping center acquired by PECO and CNSREIT?
What is the current occupancy rate of Des Peres Corners?
Who is the anchor tenant of the Des Peres Corners shopping center?
