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CBRE GIP acquires stake in $1.5bn US retail portfolio

The Los Angeles-based investment manager bought into 55 West Coast assets comprising nearly seven million square feet.

CBRE Global Investment Partners (GIP) has purchased a 45 percent stake in a $1.5 billion US retail portfolio totaling nearly seven million square feet, the Los Angeles-based investment manager said Tuesday.

The firm bought the interest in 55 retail assets located in 12 West Coast markets from Merlone Geier Partners, a San Francisco-based private equity real estate firm that assembled the portfolio through five of its commingled funds, according to the statement.

Capital for CBRE GIP’s acquisition came from its open-ended core-plus vehicle, the Global Alpha Fund, and various separate accounts. The Global Alpha Fund was launched in November 2010 and reached $2 billion in size earlier this month, according to the firm. CBRE GIP targets a 9 percent to 11 percent annual return through its global investments on behalf of the fund.

The portfolio’s anchor tenants are largely grocery and other needs-based retailers. CBRE GIP said these anchors have performed well across market cycles and will be insulated from e-commerce competition.

“This joint venture gives us a rare opportunity to access for our clients a large diversified portfolio of high-quality retail centers that would be challenging to acquire in scale,” said Ian Gleeson, CBRE GIP’s chief investment officer, in Tuesday’s statement. “We are pleased to partner with Merlone Geier because they are a leading operator that has significant experience in the retail sector.”

Merlone Geier will retain its majority interest and continue operating the properties, according to the statement. The firm, which could not be reached for comment, is currently investing Merlone Geier Partners XI, which it closed on more than $900 million in 2014, according to its website.

Eastdil Secured advised Merlone Geier on the transaction.