Phillips Edison to hold second close for $500m retail fund

The Cincinnati-based real estate investment firm says distressed neighborhood shopping centers are proving an attractive niche market despite the general economic downturn.

Phillips Edison, a Cincinnati-based real estate investment firm focusing on distressed neighborhood shopping centers across the US, is close to completing its second close on a $500 million (€316 million) fund.

Phillips Edison Fund IV, the firm’s second institutional fund, is expected to close on $170 million at the end of April, with a final close expected on $500 million towards the end of the year. The fund had a first close on $145 million last December.

Sigrid Campbell, vice president of Phillips Edison Capital, said the local grocery sector was riding out the current economic downturn and was at present a “very nice niche” market to be in.

“The stores we deal with are about necessity-based goods. People may be cutting back on some areas but we all still need food and groceries,” Campbell told PERE.

Founded in 1990, Phillips Edison owns and manages 220 properties totaling more than 24 million square feet of shopping centers in 34 US states, focusing on national grocery chains and national tenants with a large grocery component and with potential for value-add development. The firm, which says it is the 20th largest shopping center owner in North America, also manages, redevelops and leases properties it acquires and is acting as placement agent for its fourth fund.

Phillips Edison raised $275 million for its third fund, Phillips Edison Fund III, in January 2006. The fund was used to acquire a $1 billion portfolio of 116 value-added, anchored community shopping centers totaling more than 12 million square feet.