Trends Watch: Private Equity Real Estate Investing in Grocery-Centered Retail

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.  

This week, Elana talks with Jake Bisenius, President & Chief Investment Officer, AmCap Incorporated.

What is your outlook for private equity real estate? 

The outlook is strong for private equity real estate, at least the type of necessity retail that we focus on in our space.  There has been a large increase in suburban populations post-COVID and work-from-home has made our grocery-anchored shopping centers busier during the week.  We are seeing one of the best leasing environments in 15 years.  Real assets like real estate have generally been used as an inflation hedge. 

What are the greatest opportunities you see and why?

The greatest opportunities will arise from purchasing centers from owners that are forced to sell in the next 12-18 months.  Interest rates have increased dramatically; this will make it hard for some owners to refinance at the same loan amount.  These owners will then either have to invest more equity or be forced to sell, most likely at a discount to recent pricing.

What are the greatest challenges you face and why?

The greatest challenge we have is in educating investors that grocery-anchored retail is thriving and that our space has been performing well unlike other types of retail like malls or high street.  Fortunately, the strong performance of grocery-anchored retail during the pandemic has helped investors differentiate this niche category within retail and realize it has strong risk-adjusted returns.   Many of our retailers have used an omni-channel approach and use their physical stores to enhance their customers experience, whether it be ordering online and picking up at the store or returning to the store, or having items delivered within hours from their local store.

What keeps you up at night?

I think the polarization of the world whether it be in politics or wars like in Ukraine.  I think most people are generally good and we should focus on the things we have in common like wanting our kids to have productive, thriving lives.  One of the ways we can do this is focusing on serving others, like I tell my team: If we focus on serving our investors, tenants and communities then good things will happen for us all naturally.

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.