Grocery-Anchored Retail REIT to Sell Majority of Properties

Grocery-anchored retail properties are all the rage in commercial real estate, but one operator in the space is seeking to sell a majority of its assets.

Wheeler Real Estate Investment Trust tapped CBRE to sell 35 of its properties in a portfolio deal, Bisnow reported. The marketing of the unnamed properties was disclosed last week in regulatory filings.

The portfolio is stabilized and 94 percent occupied, according to the REIT. It accounts for a majority of the 59 assets Wheeler owns, which largely span the East Coast. Wheeler grew a few years ago when it capitalized on Cedar Realty Trust’s selloff, taking multiple assets in an all-cash merger that valued those properties at $291.3 million.

Wheeler sold four properties in the first quarter, generating less than $6 million in proceeds.

While scoring $23.8 million in revenue in the first quarter, Wheeler posted a net loss of $5.3 million during the period, a small improvement from the loss the REIT posted in last year’s first quarter.

In early trading on Tuesday, shares in the REIT dropped by more than 25 percent. They’ve fallen off a cliff recently, down 95 percent year-to-date. Wheeler executed a 1-for-4 reverse stock split earlier this month, leaving 549,000 shares outstanding.

Wheeler’s planned sale of dozens of properties could find a number of interested suitors, considering how popular the grocery-anchored retail segment is today.

This month, an investment group led by TPG, in a joint venture including PSP Investments, La Caisse and Norges Bank Investment Management, acquired operator Echo Realty at a roughly $2 billion valuation. The company counts more than 230 retail centers in its portfolio, primarily in the Midwest and Southeast.

Last month, Bain Capital Real Estate and 11North Partners’ joint venture acquired five open-air retail centers for approximately $300 million, a portfolio covering 757,000 square feet, which is 93 percent occupied and is filled by major tenants like Walmart, Costco, and Trader Joe’s.

Slate Grocery REIT, meanwhile, recently formed a special committee to evaluate strategic alternatives following an unsolicited takeover bid from private affiliates of its external manager, Slate Asset Management.

— Holden Walter-Warner