Stockbridge to Buy 12-Property Grocery-Anchored Retail Portfolio

Private equity firm Stockbridge has entered into an agreement to acquire a 12-property grocery-anchored retail portfolio from Branch Properties. The portfolio totals 1.25 million square feet, and all 12 properties are located in five growth markets within the Southeast region. Stockbridge has already acquired six properties, and plans to acquire the additional six over the next year with Branch maintaining a minority ownership in the portfolio.

In the initial acquisition, Stockbridge acquired Burnt Store Marketplace in Punta Gorda, FL; Village Shoppes of Sugarloaf in Lawrenceville, GA; Five Forks Corners in Lilburn, GA; Waterford Village in Wilmington, NC; Village at Waterside in Chattanooga, TN; and Lightfoot Marketplace in Virginia Beach, VA. The properties total 765,969 square feet. The grocery anchors in the portfolio include Publix Super Markets and Harris Teeter, along with other essential retailers and restaurants.

The acquisition underscores the strength of the grocery-anchored retail sector. Stockbridge managing director of acquisitions David Nix said, “As the grocery-anchored retail sector remains a resilient asset class, the opportunity to invest in a high-quality, diversified portfolio provides a significant investment opportunity for Stockbridge,” in a statement about the purchase. It’s a trend most market experts agree on. Ben Snyder, EVP and national director of shopping centers at Matthews Real Estate Investment Services, has explained that daily needs-anchored retail shopping centers and regional power centers proved to be resilient through the last two challenging years, and retail is available at much more attractive cap rates than other asset classes that performed well through the pandemic, like multifamily and industrial—and the dynamic is driving new capital entry into the retail space.

The dynamic is also encouraging active investors to increase allocations to the asset class. Last year, for example, Blackstone acquired a portfolio of six Publix-anchored Sunbelt region shopping centers in a two-step deal, which began with Kimco Realty purchasing 70% interest in the portfolio from its existing joint venture partner Jamestown for $425.8 million; then, the REIT entered into a 50-50 joint venture partnership with Blackstone Real Estate Income Trust. Kimco will continue to manage the portfolio on behalf of the joint venture. The portfolio totals 1.2 million square in the Southeast.

Stockbridge has been busy purchasing other assets with growth potential. This year, the firm has acquired 1.3 million square feet in commercial space and 579 apartment units.