Shopping Centers Today International

APR 2016

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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anchored shopping centers. Edison says his company was the largest ac- quirer of grocery-anchored proper- ties in the country last year, having bought some 80 properties, though that was slower than the year before. "In 2014 we bought $1.2 billion worth of properties," he said. "In 2015 we bought $800 million. For 2016 we plan to be an active partici- pant in the market again as we con- tinue to see attractive opportunities that align with our investment strat- egy, which focuses on identifying gro- cery-anchored shopping centers. W i t h a l l t h i s s h o p p i n g g o i n g on, one would think nothing to be left on the shelves. One would be wrong. "The market is around 30,000 centers that we would con- sider buying," Edison said. "If you figure that all those centers trade every 10 years, that's about 3,000 properties a year. Although shop- ping centers do go through cycles, that's still a big enough volume to find good properties." The company's aim is to buy high- quality, grocery-anchored centers with the market's No. 1 or No. 2 grocer as anchor. Phillips Edison hopes to grow income over a sustained period. If some companies are agnostic to the types of shopping centers acquired or are totally focused on set markets, Phillips Edison is the opposite: It is singularly focused on one product, and exactly where that product might be sitting is less important. "We look across the country for opportunities," said Edison. "That's because we are not focused on the macro market, we are focused on the micro market. Our shopping centers effectively service a three-mile trade area. We look at these micro markets very closely, and they can be in Indianapolis, Cincin- nati or Atlanta." The 2,000 to 3,000 grocery-an- chored shopping center deals there are in a given year may be a consis- tent flow, Edison says, but not evenly spread: In the top 10 markets, com- petition is extreme, but beyond those, things ease up, he asserts. "In the ma- jor markets, competition has meant a meaningful compression," said Edison. "The secondary markets have also seen compression, but it has not been as significant. We have to be se- lective and disciplined in what we are looking for. There's a voracious appe- tite for the top five or top 10 markets in the country; that will be a difficult place for us to buy. From our perspec- tive, there will be more opportunities in less frothy markets." The Phillips Edison deal flow has not slowed as of the beginning of this year. Through the first month, the company closed about a half dozen deals, including a Publix-anchored 50 S C T / A p r i l 2 0 1 6 The Institute For Real Estate Operating Companie s The bridge between institutional investors and real estate operating companies FOR MORE INFORMATION CONTACT: Kathy Norton Managing Director Tel: +1 312-925-3680 Email: k.norton@irei.com Jonathan Schein Managing Director Tel: +1 917-854-2345 Email: j.schein@irei.com The Institute for Real Estate Operating Companies A division of Institutional Real Estate, Inc.

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