TPG, Phillips Edison Grocery REIT II Team on $250M Venture

The two companies have formed a joint venture to acquire several grocery-anchored retail centers across the U.S.

By Keith Loria, Contributing Editor

Spring Cypress Village retail center, Houston
Spring Cypress Village retail center, Houston

CincinnatiPhillips Edison Grocery Center REIT II Inc. and TPG Real Estate have entered into a partnership to acquire high-quality, value-added grocery-anchored shopping centers throughout the United States.

The partnership is expected to invest up to $250 million in equity and plans to leverage this capital to achieve a $750 million acquisition target.

“This partnership is a strong endorsement of our investment strategy and operating platform, and we are excited to be partnering with TPG Real Estate, a leading private equity real estate investor,” Jeff Edison, Phillips Edison Grocery Center REIT II chairman & CEO, said in a prepared release. “Through this new vehicle, we are able to expand the REIT’s investment universe by taking advantage of acquisition opportunities that offer the potential for higher returns.”

With the partnership in place, the plan is to initially acquire six grocery-anchored shopping centers and focus on growing the platform through add-on acquisitions located in fundamentally strong markets that present attractive return potential through operational and capital improvements.

“We believe there is a meaningful opportunity on a national scale to accumulate a high-quality portfolio of grocery-anchored centers that will attract a premium valuation at exit,” Ryan Moore, Phillips Edison & Co. principal of investment management, said in the release.

In October, TPG Real Estate completed the fundraising for TPG Real Estate Partners II by securing over $2 billion of equity commitments, exceeding the fund’s objective.

“We are proud to have reached this milestone and are appreciative of the continued support from our global investor partners,” Kelvin Davis, TPGRE founder & co-head, said in a release at the time. “Our success attracting support from new and existing investors is reflective of our talented team of professionals, our proven track record, and the distinctive nature of our investment strategy. Building on our growth over the past six years, we are looking forward to investing the fund successfully.”

Investors in TREP II include leading public and private pension funds, sovereign wealth funds, insurance companies, and other institutional investors.

Image courtesy of Phillips Edison Grocery Center REIT II