Necessity Retail REIT Completes $1.3B Buy of CIM Portfolio

The Necessity Retail REIT (RTL) has completed the second tranche of its acquisition of 81 grocery-anchored shopping centers from CIM Real Estate Finance Trust, bringing its total portfolio purchase from CIM to $1.3B. including debt assumed of $356M.

The acquired properties total 10.2M SF and were acquired at a cash cap rate of 7.24% and a weighted-average cap rate of 8.6%.

The completion of the second tranche of the acquisition from CIM grew the Necessity Retail REIT’s overall portfolio to 1.050 properties worth an estimated $5.3B.

The grocery-anchored shopping centers acquired from CIM by the Necessity Retail REIT include a concentration of centers in high-growth suburban markets in the Sunbelt. Including the CIM acquisition, about 57% of RTL’s straight-line rent now is derived from properties in Sunbelt states.

In its announcement of the completion of the portfolio acquisition from CIM, RTL also said it had reduced its exposure to economic headwinds by reducing its office properties while transitioning to a pure-play retail REIT.

“The seamless integration of these properties into our portfolio has increased tenant and geographic diversification and grown occupancy in our open-air shopping center segments, providing a strong defense against headwinds in the broader economy,” said Michael Weil, RTL CEO, in a statement.

In addition to the rapid expansion of its grocery-anchored shopping center portfolio, Weil said the REIT had decreased its “exposure to office assets to 1% of our straight-line rent.”

Weil said the acquisition of the CIM portfolio—and the strong leasing activity of the acquired properties—have had “an immediate positive impact” on RTL’s results.

In February, the REIT—then operating as American Finance Trust—announced it had completed the first tranche of the CIM portfolio acquisition, a $537M purchase of 44 grocery-anchored shopping centers.

In announcing that acquisition, RTL unveiled its new name and its aggressive goal: to become the leading REIT focused on assets leased to “necessity-based retail tenants” under the slogan “Where America Shops,” which is part of the REIT’s full name.

The 81 assets acquired by RTL from CIM are located in 27 states. At the time of the acquisition agreement in December, the portfolio had an annualized straight-line rent average of $113.4 per SF, 90% occupancy and weighted-average remaining lease terms of five years.

The top 10 tenants in the portfolio include PetSmart, which occupies 6.8% of SLR in the portfolio, Dick’s Sporting Goods (6.1%), Home Depot (5.2%) and Best Buy (3.8%).