The operating partnership subsidiary of Phillips Edison Grocery Center REIT III Inc., a publicly registered non-traded real estate investment trust, has agreed to transfer all of its ownership interest in three grocery-anchored shopping centers to a joint venture entity formed with The Northwestern Mutual Life Insurance Company.
Northwestern Mutual will make an initial capital contribution of approximately $42 million in cash in exchange for a 90 percent ownership stake in the joint venture, which is named Grocery Retail Partners II LLC. The REIT’s net equity value will be approximately $4.6 million, or 10 percent of the total equity.
The three properties include Albertville Crossing in Albertville, Minnesota; St. Cloud Station in Saint Cloud, Florida; and Rolling Meadows Station in Rolling Meadows, Illinois. The properties were valued by the parties at their original cost, plus acquisition fees and expenses, leasing commissions, tenant improvements and other capital expenditures.
Phillips Edison Grocery Center REIT III will serve as the manager of the joint venture but will not receive any fees in connection with that role. Affiliates of the REIT’s advisor, PECO-Griffin REIT Advisor LLC, will serve as the leasing agent, property manager, and asset manager for the joint venture and will earn asset management, property management, construction management, and leasing fees that will be market-based.
The transaction is expected to close by November 9, 2018.
Phillips Edison Grocery Center REIT III invests primarily in grocery-anchored neighborhood and community shopping centers leased to a mix of national and regional creditworthy retailers selling necessity-based goods and services in strong demographic markets throughout the United States.
The REIT’s registration statement for its initial public offering was declared effective by the Securities and Exchange Commission in May 2018. Griffin Capital Securities LLC serves as the dealer manager for the offering.
As of the second quarter of 2018, the company’s portfolio consists of four properties located in three states totaling 381,000 leasable square feet. According to the company’s prospectus, the properties were purchased for approximately $55 million using proceeds from a private placement offering that launched in October 2016 and raised a total of $57.8 million in investor equity.