Jeff Edison, chairman and CEO of Phillips Edison-ARC Shopping Center REIT, a public, non-listed REIT (PNLR), joined REIT.com for a CEO Spotlight video interview during REITWeek 2014: NAREIT’s Investor Forum, held in New York.
With more than 100 properties in its portfolio, Edison was asked to comment on the company’s strategy going forward. Edison responded that the focus is on looking at some of the “strategic alternatives” for Phillips Edison-ARC Shopping Center REIT and raising funds for a second PNLR.
“Our plans are to continue to aggressively acquire properties, to provide strong returns for our investors in the non-traded REIT space and then, over time, to create a liquidity event for our first investors in our first non-traded REIT,” Edison said.
The strategy for the second REIT, Phillips Edison-ARC Grocery Center REIT II, is essentially the same as for the first REIT, Edison explained: owning grocery-anchored shopping centers in what he called “‘A’ properties in ‘B’ markets.”
“We believe we can get stronger returns by being in those markets that are less competitive than the top 25,” Edison said. “Our focus is to buy the number one or two grocer in the market and to have that grocer doing above-average sales for that market. We think that’s where the opportunity is.”
Edison noted that he believes his company looks at the grocery-anchored shopping center business differently than its competitors. He explained that the firm looks closely at the “micro market” around a property, rather than the larger metro area.
As a result of focusing on secondary markets, “we think we’re buying 100 to 150 basis points better on yield,” Edison said. “If you look at the rental growth that we see and growth that a lot of people are projecting, we think that there is more growth in these secondary markets, or at least as good growth in the secondary markets as you have in the primary markets.”
He also noted that Phillips Edison-ARC purchased about 60 percent of properties for its first REIT off-market, which he said he expects will be the same with the second REIT.