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CBRE Investors and Phillips Edison - ARC Form JV for Neighborhood Centers

September 28, 2011
Phillips Edison - ARC Shopping Center REIT Inc. entered into a joint venture with a group of institutional international investors advised by CBRE Investors Global Multi Manager to invest in necessity-based neighborhood and community shopping centers.

Phillips Edison contributed $52 million and will own a 51% interest in the JV (PECO-ARC Institutional Joint Venture I LP) and the CBREI investors will collectively own the remainder with an investment of $50 million.

The joint venture intends to invest in centers with acquisition costs of no more than $20 million per property. Each acquired property is to have an annualized acquisition capitalization rate of at least 7.25% and an occupancy rate of at least 80%, with no vacant primary anchor tenant at the time of acquisition.

The aggregate level of debt financing is generally not to exceed 50% of the gross asset value of the properties owned by the Joint Venture once all capital contributions have been fully funded, but may go up to 60% during the investment period.

Phillips Edison intends to fund its capital commitment through the contribution of its three owned shopping centers: Lakeside Plaza in Salem, VA; Snow View Plaza in Parma, OH; and St. Charles Plaza in Haines City, FL; (valued at $31.8 million) and cash. It expects to contribute the properties over a period of months as funds are needed to acquire additional properties.

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