Phillips Edison, TPG Forming Partnership to Buy Value-Add Centers

Crossroads of Shakopee, in Shakopee, MN, one of the many retail centers in secondary metro regions that Phillips Edison has acquired in the past several years.

CINCINNATI, NEW YORK— Phillips Edison Grocery Center REIT II, Inc. and TPG Real Estate , the dedicated real estate platform of the investment firm TPG , have just formed a partnership to acquire grocery-anchored shopping centers throughout the US. The partners say they will invest up to $250 million of equity in value-add properties and leverage this capital to achieve a $750 million acquisition target. The partners will initially acquire six centers and grow the platform through add-on acquisitions located in what they call “fundamentally strong markets that present attractive return potential.” As reported in GlobeSt.com, TPG Real Estate recently exceeded its fundraising goal for its TPG Real Estate Partners II fund. The now-closed fund received more than $2 billion in equity commitments from institutional investors. Phillips Edison has long been one of the nation’s most active retail buyers. It has typically focused on buying retail centers in secondary markets where cap rates are not as aggressive. Jeff Edison , chairman and chief executive officer of Phillips Edison Grocery Center REIT II, says that “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.” “We look forward to partnering with the Phillips Edison organization to create a scaled portfolio of grocery-anchored assets that will benefit from Phillips Edison’s operational expertise, as well as positive fundamental trends in the sector,” says Avi Banyasz , partner at TPG and co-head of TPG Real Estate. Ryan Moore , principal of investment management for Phillips Edison & Co. , adds that “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.”