Slate REIT to Buy 14 Grocery-Anchored Shopping Centers for $425M
Deal includes 2.5M SF in properties located in 7 states, including Florida, NC and Georgia.
Toronto-based Slate Grocery REIT has agreed to acquire a portfolio of 14 grocery-anchored shopping centers in the US for $425M. The portfolio, which encompasses 2.5M SF and is located in seven states, including Florida, North Carolina and Georgia.
The REIT did not disclose the seller, but said anchor tenants include Publix, Ahold Delhaize, Albertsons and Walmart.
Slate Grocery REIT also announced that it has entered into a strategic joint venture with Slate North American Essential Real Estate Income Fund (NA Essential Fund), a vehicle managed by Slate Asset Management, to make an initial investment of $180M into the REITs assets through the purchase of partnership interests in two of its subsidiaries.
Proceeds from the purchase will be used to fund the acquisition of the 14 grocery-anchored shopping centers, expected to close next month. Following the acquisition, the REIT’s leverage is expected to be approximately 53.7%.
The NA Essential Fund includes New Zealand’s Superannuation Fund, a global sovereign wealth fund.
According to Slate, the acquisition of the grocery-anchored shopping center portfolio reflects a pro forma 6.8% cap rate on management’s estimated 12-month-forward NOI from Q1 2022 and $150 per square foot.
The acquisition increases the size of Slate Grocery REIT’s portfolio to 15.7M SF of grocery-anchored property valued at an estimated $2.4B.
Slate Grocery REIT, an owner and operator, has made several major acquisitions in recent months. In March 2021, the REIT announced it was acquiring a grocery-anchored portfolio of 25 properties encompassing 3.1M SF in several major US markets.
Slate said the 25-property portfolio was valued at $390M and was being acquired for an equity purchase of $90M and the assumption of existing debt. The acquisition represented a 7.8% capitalization rate of $127 per square foot.
According to JLL’s Grocery Tracker report in April, grocery-anchored retail had the largest share of retail property acquisitions in 2021, totaling $13.3B in sales. Last year saw a record number of grocery-anchored retail property transactions with 735 total trades, 13 more than the previous record set in 2014, the report said.
Public REITs jumped into the market for grocery-anchored retail in a big way in 2021, led by Kimco’s $425M acquisition of Jamestown’s Grocery & Growth Collection. As a result of increased demand for grocery-anchored retail, the market saw a cap-rate compression of nearly 50 bps last year from 2019 levels, JLL said.
Groceries in general were the big winners during the pandemic, with sales topping $800B last year, a 16% increase. According to CBRE, grocery-anchored shopping centers in 4Q 2021 recorded their second-most active quarter in a decade.