Retail's institutional bid returns through first-asset joint ventures

CBRE has arranged the sale of Water Tower Square, a 269,018-square-foot grocery-anchored shopping center in Montgomeryville, Pennsylvania, to a newly formed joint venture between ECHO Realty and TPG taking its first asset—and the buyer, not the rent roll, is the detail that carries the story.

The Goldenberg Group sold the property through Chris Munley, Colin Behr, Ryan Sciullo and Casey Smith of CBRE’s National Retail Partners team, and Home Depot and Sprouts Farmers Market anchor a center that also holds Planet Fitness, Flagship Cinemas, Bob’s Discount Furniture, World Market and Miller’s Ale House in a corridor the brokerage places in the Philadelphia MSA.

Colin Behr, one of the CBRE brokers on the sale, described Water Tower Square as best-in-class product in a dominant Philadelphia MSA corridor, anchored by what he called a unicorn tenant in Home Depot, and said the trade shows continued demand from new institutional capital.

The coverage does not include a price, and in a deal like this the number carries less information than the structure anyway. A venture that did not exist before its first closing is buying a template as much as a building: one asset through a program that a brokerage can now shop to every other owner of similar product in the same corridor, and a seller gets a buyer with no track record in the format but committed equity that has already cleared its own investment committee.

The anchor pairing is the underwriting. A home-improvement box and a grocer under one roof give the landlord two traffic sources that e-commerce has not duplicated, and that combination—not the grocery label alone—is the slice of retail institutional capital has been willing to price while commodity strip product waits for a bid. Behr’s unicorn framing is brokerly, but beneath it is what the buyer is actually paying for: an anchor that draws traffic on its own terms and cannot be rebuilt across the street.

CBRE has assembled this kind of buyer before: it brokered a Norwalk office sale to a joint venture planning apartments, as our reporting noted in August, and the pattern is a brokerage structuring the vehicle rather than simply shopping the asset.

Whether the venture repeats is the thing to watch. A second purchase of a single center would make ECHO and TPG patient assemblers of one-off trades; a portfolio would mark them as a program with a standing bid, which is a different and more useful thing for every grocery-anchored owner in the Mid-Atlantic now weighing an exit.