Brixmor Expands Grocery-Anchored Portfolio With $2.3B REIT Bet
Brixmor Property Group Inc. has teamed up with Everview Partners to acquire Slate Grocery REIT for $2.34 billion.
In total, Slate Grocery operates 115 grocery-anchored retail properties. The transaction will be split into two main parts. For one, Brixmor is paying $636 million for 100 percent control of the equity in 22 shopping centers and 50 percent in another. These assets span roughly 3 million square feet and are positioned mainly across the Carolinas, Georgia and Florida. This portfolio is roughly 96 percent leased.
The remaining 92 shopping centers will be 80 percent controlled by Everview, with Brixmor snagging 20 percent equity. The about 12 million square foot portfolio will also get a $174 million preferred equity investment from Brixmor, with the CRE firm serving as the property manager, asset manager and leasing representative for the group of assets.
For Brixmor, this expands the New York-based firm's grocery footprint, with all of its existing assets already featuring a grocery anchor. This includes major brands including Harris Teeter, Kroger and Publix. The two portfolios acquired average in-place rents that are 32 percent less than what's currently inside Brixmor's holdings.
However, Brixmor expects to see long-term NOI growth of 4 percent and the transaction to result in an immediate accretion to its Nareit FFO per share.
Additionally, Brixmor said that about $100 million in both outparcel development and repositioning opportunities exist across its entire portfolio.
"Across both the wholly owned and joint venture assets, we see meaningful embedded value through below-market rents and a robust pipeline of remerchandising, redevelopment, and outparcel opportunities," Brian T. Finnegan, Brixmor's CEO and president, said in a statement.
"We believe our extensive retailer relationships and proven execution capabilities will position us to unlock that value and generate meaningful cash flow growth over time."
Billy Rahm, Everview's CEO and founder, said that the bet on the REIT was thanks to strong fundamentals inside grocery-anchored open-air retail, which hosts stable tenant demand and scarce supply.
The transaction is expected to close by the first quarter of 2027, subject to customary conditions and approval of Slate shareholders.
Source: GlobeSt/ALM