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March 27, 2013

Phillips Edison–ARC Acquires Three-Property Portfolio

By Barbra Murray, Contributing Editor 

Kleinwood Center, Spring, Texas

Phillips Edison-ARC Shopping Center REIT Inc. continues what appears to be a bit of a buying binge with the acquisition of a three-state, three-property portfolio of shopping centers totaling 276,000 square feet. The REIT acquired the group of grocery-anchored assets from a co-investment partnership involving Regency Centers L.P. for $48.8 million, including the assumption of existing debt.

Phillips Edison-ARC stays on point with its purchases so, of course, the portfolio is a perfect fit. “We seek to acquire and manage well-occupied grocery-anchored neighborhood and community shopping centers having a mix of solid national, credit retailers selling necessity-based goods and services, in strong demographic markets throughout the United States,” Jeffrey S. Edison, CEO of Phillips Edison-ARC, told Commercial Property Executive.

The largest of the three decade-old retail destinations in the portfolio is also a first for Phillips Edison-ARC. The approximately 149,000-square-foot Kleinwood Center in the suburban Houston town of Spring, Texas, marks the REIT’s entrée into the Lone Star State. Kleinwood has a current occupancy level of 92 percent and is anchored by an H-E-B grocery store under a long-term lease scheduled to expire in 2023.

Murray Landing, a 64,400-square-foot property in Irmo, S.C., is also part of the group. Sited roughly 10 miles outside of Columbia, Murray Landing boasts a full tenant roster with a Publix grocery at the helm under a lease agreement that will also come up for renewal in 2023.

The third asset in the collection of newly purchased shopping centers is the 62,800-square-foot Vineyard Center in Tallahassee, Fla. The property, approximately 85 percent occupied, is also anchored by a Publix grocery store with a lease that will keep Publix in its place of prominence through the majority of 2022.

“The scarcity of H-E-B and Publix offerings, coupled with desirable anchor lease terms and sales performance across the portfolio, presented Phillips Edison-ARC Shopping Center REIT Inc. with a rare opportunity to acquire three high-quality, grocery-anchored centers in a single transaction,” H. Bradley Peterson, senior managing director with commercial real estate services firm HFF, said in a prepared statement. HFF represented the seller in the transaction.

Spring has only just sprung but already, it’s been quite a busy year for Phillips Edison-ARC. In January the REIT closed the $60.5 million purchase of a half-million-square-foot portfolio of six shopping centers in metropolitan Atlanta. In February, news emerged of Phillips Edison-ARC’s acquisition of the 350,000-square-foot Fairlawn Towne Centre in suburban Akron, Ohio, followed by the purchase of the 80,000-square-foot Macland Pointe shopping center in the Atlanta area.

There’s no indication that Phillips Edison-ARC’s shopping spree will come to an end anytime soon. “Our in-house acquisition team is working through a national, regional and local network of relationships with real estate brokers, shopping center owners and tenants every day,” Edison added. “This direct access allows the Phillips Edison team to review nearly all of the marketed opportunities available for sale, as well as a substantial number of off-market deals.” The right properties in the right markets practically anywhere in the country are fair game, but there is a region that is currently high on Phillips Edison-ARC’s radar. “We are interested in expanding our portfolio in the West,” he concluded.