Investors Stocking Up on Grocery-Anchored Centers Again

Posted on October 18, 2012

After sales plummeted earlier this year, investors are once more slowly warming up to grocery-anchored shopping centers. Two major portfolio of properties changed hands this past week.

Sales totals of neighborhood / community shopping centers topped $1.2 billion in every quarter of 2011, and surpassed $2 billion in each the third and fourth quarter of that year. Then sales of this type retail center plummeted to $600 million in the first quarter.

Sales volume is expected to be back at the $1.2 billion level for the third quarter of this year, according to preliminary sale information for the quarter confirmed by CoStar. And the fourth quarter appears to be off to a good start, too.

New York-based Garrison Investment Group acquired a 13-property portfolio totaling 1.7 million square feet of neighborhood and community shopping centers in Ohio and Indiana. The seller was Kimco Realty Corp.

And in a separate deal, Port Washington, NY-based Vastgood Properties LLC and a fund managed by Prudential Real Estate Investors acquired a portfolio of seven supermarket-anchored shopping centers totaling 561,000 square feet. The seller was Halifax, Nova Scotia-based Homburg Investment.

Garrison Investment Group

The 13 properties Garrison Investment Group acquired, (eight in Ohio and five in Indiana) feature many prominent retailers such as T.J. Maxx, Giant Eagle, Kroger, Bed Bath & Beyond, and Home Depot.

“While the portfolio is 90% occupied, there are still exciting opportunities for upside that work well with our investment strategy,” said Mitchell Salmon, senior vice president/director for Garrison Investment.

Garrison has engaged Select Strategies Realty in Cincinnati, Ohio, to manage and lease the properties.

The acquisition increases Garrison’s retail holdings to more than 6.3 million square feet.

Kimco Realty

While Garrison did not reveal what it paid for the properties, the seller, Kimco Realty, said it recently sold 23 non-strategic retail properties comprising 2.7 million square feet for $165 million. Kimco confirmed that the totals include the Garrison deal.

Since the start of Kimco’s asset recycling program in September 2010, the REIT has disposed of 86 non-strategic properties comprising, on a gross basis, 7.9 million square feet for $529.9 million. The properties sold had a combined gross occupancy of 82.6%.

Since the end of the second quarter of 2012, Kimco also acquired four wholly owned shopping centers comprising 581,000 square feet for $118.8 million, including $42.5 million of mortgage debt, in its primary core markets:

Since September 2010, Kimco has acquired for $984.8 million a total of 47 shopping centers comprising 6 million square feet with a combined gross occupancy of 94.5%.

Vastgood Properties

In another large portfolio sale, Vastgood Properties and PREI teamed up to buy 561,000 square feet of gross leasable area for $104 million from affiliates of Homburg Holdings (U.S.) Inc. and Cedar Realty Trust Partnership, L.P.

The properties, six of which are anchored by Giant Food Stores and one by a Nell’s Supermarket, are in central and eastern Pennsylvania.

Mark Heschmeyer, Costar.