Grocery-Anchored Centers a 'Bright Spot' in Gloomy Retail

Cedar Realty Trust is on its way to formally merging with Wheeler Real Estate Trust following the completion of a previously announced sale involving a portfolio of 33 grocery-anchored shopping centers and a redevelopment property.

The buyer is a joint venture between a fund managed by DRA Advisors LLC and KPR Centers for total gross proceeds of approximately $879 million, including assumed debt. 

JLL Capital Markets arranged the sale.

Also as part of the agreement with Wheeler, Cedar Realty is selling the Revelry redevelopment project for $34 million. The REIT is negotiating the sale of the Northeast Heights redevelopment project for $46.5 million.

Cedar Realty is selling its remaining assets to Wheeler Real Estate Investment Trust once these transactions complete, in an all-cash merger transaction that values the assets at $291.3 million.

A Sector that Proved Its Resilience

Analysts note that the sale highlights the resilience of the grocery-anchored retail niche and the institutional demand for these assets. 

Allan Swaringen, president & CEO of JLL Income Property Trust tells GlobeSt.com that he’s long believed grocery-anchored retail “to be a bright spot in the generally gloomy outlook for the broader retail property sector. 

“The stability of having well-known, good credit grocers on long-term leases in well-located, high-quality centers, and the foot traffic they bring, provides the stable cash flow we strive to provide to our stockholders. 

“Throughout the pandemic, grocery-anchored retail centers proved their resilience as people shopped at higher rates when they could not dine out, and that trend has continued. We expect to continue to add to our nationally-diversified, 15-property, $850 million portfolio of neighborhood and community grocery-anchored shopping centers as we believe grocery-anchored retail centers will be a durable source of income for our fund.”

Still Attractive for Institutional Capital

Eli Randel, chief strategy officer at CREXi, tells GlobeSt.com that strong grocery-anchored retail centers are still in high-demand with institutional capital.

“Given rent structures that can offer shelter against inflationary conditions as we are currently experiencing, goods that are necessities in all market environments, and some institutional preference for hard assets during these uncertain times, well located grocer-anchor centers with good tenant mixes continue to attract investment demand and capital,” Randel said.

Danielle Brunelli at RJ Brunelli, tells GlobeSt.com, “Grocery anchored centers always have been and continue to be the most highly sought-after retail real estate, as they draw in daily traffic that other co-tenants benefit from.”