Done Deals: Single-tenant grocery portfolio in Northeast U.S. sells for $295 million

Thursday, April 22, 2021

Single-tenant grocery portfolio in Northeast U.S. sells for $295 million

Lauren O’Neil

BOSTON, MA, April 22, 2021 – JLL Capital Markets announced today that it has closed the $295 million sale of—and arranged $157.95 million in acquisition financing for—a portfolio of 11 single-tenant retail buildings net leased on a long-term basis to Stop & Shop in densely populated markets throughout Connecticut, Massachusetts and Rhode Island.

Elliott Throne

JLL marketed the portfolio on behalf of the seller, Winstanley Enterprises and Surrey Equities. The Inland Real Estate Group of Companies, Inc. acquired the assets.

Additionally, working on behalf of the new owner, JLL secured two separate 10-year, fixed-rate loans with a life company and with a CMBS lender.

The pandemic-, internet- and recession-resistant retail properties are net leased to Stop & Shop, a division of Ahold Delhaize USA, Inc., the third-largest supermarket operator in the U.S.

Additionally, Stop & Shop is the No. 1 grocer by market share in Connecticut, Massachusetts and Rhode Island.

The 748,141-square-foot portfolio of irreplaceable, essential retail properties includes:

19 Howley St., Peabody, Mass. (Boston MSA)
905 Massachusetts Ave., Arlington, Mass. (Boston MSA)
35 Bedford St, Lexington, Mass. (Boston MSA)
55 Long Pond Dr., South Yarmouth, Mass. (Cape Cod area)
469 Pleasant St., Attleboro, Mass. (Providence MSA)
595 Smithfield Rd., North Smithfield, R.I. (Providence MSA)
446 Putnam Turnpike, Greenville, R.I. (Providence MSA)
333 W. River St., Providence, R.I.
1391 Main St., Willimantic, Conn. (Hartford MSA)
195 West St., Cromwell, Conn. (Hartford MSA)
15 Franklin St., Seymour, Conn. (Hartford MSA)

Matthew Tice

According to JLL Research’s recently released U.S. Grocery Tracker 2021 report, grocery-anchored retail centers continue to be investors’ preferred retail property type.

Single-tenant grocery assets, like the ones represented in this portfolio, along with grocery-anchored retail under 100,000 square feet, will be one of the most sought-after asset classes during the recovery.

JLL anticipates there will be significant cap rate compression over the next 12 to 18 months.

Matthew Tice, senior vice president of Inland Real Estate Acquisitions, LLC, facilitated the acquisition on behalf of The Inland Real Estate Group of Companies, Inc.

Nat Heald

“This portfolio’s established and necessity-based footprint, combined with 20-year leases at all 11 properties in strong market locations, is an ideal example of the opportunities we seek to acquire as we move further into 2021,” Tice said.

The JLL Capital Markets Investment Sales Advisory team representing the seller was led by Managing Director Nat Heald and Senior Managing Director Jose Cruz along with Senior Managing Director Chris Angelone and with support from Managing Director Matthew Sherry.

Jose Cruz

“The demand and ultimate pricing we saw for this portfolio represents a new pricing paradigm within the single-tenant net-lease space,” Heald said.

“Since the value of these types of assets appreciated throughout the pandemic, we anticipate investors will continue to aggressively pursue these defensive positions within the retail sector and that demand will far outstrip supply for the foreseeable future.”

The JLL Capital Markets Debt Placement team representing the new owner included Senior Managing Directors Lauren O’Neil and Elliott Throne.

“Entering 2021, lenders were hungry to put out capital, particularly in lower-risk assets, like credit, long-term, net-leased retail,” O’Neil added.