Cohen & Steers Income Opportunities REIT, Inc. Acquires the Marketplace at Highland Village in Dallas, TX

Rhea-AI Summary

Cohen & Steers Income Opportunities REIT, Inc. (CNSREIT) announced its acquisition of the Marketplace at Highland Village, an open-air community shopping center in Dallas, TX, through a joint venture partnership with Sterling Organization. The property is an approximately 451,000 square foot shopping center with a Walmart-owned Supercenter and tenants including TJ Maxx, HomeGoods, LA Fitness, DSW, and Petco. The acquisition marks CNSREIT's entry into well-anchored, necessity-driven shopping centers, in line with the current high occupancy levels of open-air shopping centers. The property's location in the rapidly growing Dallas Fort-Worth metro, with its strong tenant lineup and high foot traffic, presents an attractive investment opportunity for CNSREIT.

Insights

Real Estate Investment Analyst

The acquisition of the Marketplace at Highland Village by Cohen & Steers Income Opportunities REIT (CNSREIT) in partnership with Sterling Organization is a strategic entry into the commercial real estate market. This move is noteworthy, given the property's high occupancy rate of 93% and its anchor by a Walmart Supercenter, which is indicative of a stable income stream. The property's success, as evidenced by its status as the most visited shopping center within a 10-mile radius in 2022, suggests a robust consumer base that could offer resilience against economic downturns.

From an investment standpoint, the focus on necessity-driven shopping centers aligns with industry trends, where such properties have shown to be more recession-proof compared to other retail sectors. The partnership with Sterling, a firm with a 25-year track record, may also mitigate risks associated with property management and operations. Investors should note the potential for consistent rental income, which is a key factor for REITs in distributing dividends.

However, investors should also consider the changing dynamics of retail, including the rise of e-commerce, which could influence the long-term viability of brick-and-mortar shopping centers. The Dallas Fort-Worth area's projected growth is a positive indicator, but the actual pace of growth and its impact on the property's value should be monitored closely.

Market Research Analyst

The strategic location of the Marketplace at Highland Village in a rapidly growing high-income sub-market of Dallas, TX, is a significant factor in its potential for growth. The Dallas Fort-Worth area's expected position as the fastest-growing U.S. metro over the next five years presents opportunities for increased consumer spending and tenancy demand. This demographic shift implies a favorable market trajectory for CNSREIT's newly acquired asset.

Additionally, the presence of high-traffic tenants like TJ Maxx, HomeGoods and a Walmart Supercenter may contribute to sustained foot traffic, a key metric for the success of retail properties. The property's performance, with 4.3 million visits in 2022, could be leveraged to attract additional high-quality tenants, further enhancing its value proposition.

It's important for stakeholders to assess the local market's ability to absorb new retail space and maintain high occupancy rates, especially in light of the current economic climate and the potential for shifts in consumer behavior. The open-air shopping center's highest occupancy level in 16 years suggests a resilient market segment, but continuous market research is essential for anticipating changes that could affect asset performance.

Economist

The acquisition reflects a broader economic trend where Sunbelt cities like Dallas are experiencing significant corporate and population growth due to supportive economic policies. This growth can result in increased disposable incomes and consumer spending, which are critical drivers for the retail sector. CNSREIT's investment taps into this regional economic expansion, potentially offering a hedge against market volatility in other geographies.

However, the long-term success of this investment will hinge on the sustained economic growth of the Dallas Fort-Worth area. Should the region face economic headwinds or a downturn, the property's performance could be adversely affected. It is essential for investors to consider the cyclical nature of real estate and the impact of macroeconomic factors on property values and rental incomes.

Furthermore, CNSREIT's partnership approach with Sterling Organization may provide additional strategic advantages in navigating local market conditions and leveraging Sterling's expertise in shopping center investments. This collaborative strategy could be a model for future acquisitions, particularly in high-growth markets where local knowledge and operational experience are paramount.

The inaugural acquisition was made through a joint venture partnership with Sterling Organization.

NEW YORK, Jan. 24, 2024 /PRNewswire/ -- Cohen & Steers Income Opportunities REIT, Inc. ("CNSREIT") announced today its acquisition of the Marketplace at Highland Village (the "property"), an open-air community shopping center located in Dallas, TX. The acquisition was made through a programmatic joint venture with Sterling Organization ("Sterling"), a real estate investment firm with extensive expertise in shopping centers in the U.S. The acquisition is the first investment for CNSREIT, which plans to acquire high quality properties that generate attractive income across the U.S. alongside best-in-class operators.

The Marketplace at Highland Village is an approximately 451,000 square foot open-air community shopping center built in 2006, that includes a Walmart-owned Supercenter. The acquired premises comprise nearly 207,000 square feet and are approximately 93% occupied by tenants including TJ Maxx, HomeGoods, LA Fitness, DSW and Petco. The highly visited retail property benefits from its rapidly growing high income sub-market, strong tenant lineup and cross-shopping traffic generated by the only Walmart Supercenter in the sub-market. Furthermore, the property was the most visited shopping center within a 10-mile radius in 2022, drawing 4.3 million visits, according to location analytics provider PlacerAI.

James S. Corl, Chief Executive Officer of CNSREIT and Head of the Private Real Estate Group at Cohen & Steers, said:
"Dallas Fort-Worth is expected to be the fastest growing U.S. metro over the next five years, making it an ideal example of a growing Sunbelt city that has benefited greatly from supportive economic policy leading to increased corporate and population growth. We believe the Marketplace at Highland Village represents an attractive investment opportunity given its dominant position at a critically important retail node serving a very desirable submarket. We are also excited to enter into a partnership with Sterling and believe they are the partner of choice for this type of center considering their national footprint, their 25-year track record and our team's long history of working together on shopping center investments."

The Marketplace at Highland Village is CNSREIT's first acquisition and highlights the investment vehicle's initial focus on well-anchored, necessity-driven shopping centers. Open-air shopping centers are at their highest occupancy level of the past 16 years at 95.8%, according to real estate analytics provider CoStar Group.

About CNSREIT. Cohen & Steers Income Opportunities REIT, Inc. is a perpetual-life, non-listed REIT formed to invest primarily in high quality, income-focused, stabilized properties within the United States. CNSREIT is externally managed by Cohen & Steers Capital Management, Inc., a subsidiary of Cohen & Steers, Inc. Further information can be found at www.cnsreit.com.

About Cohen & Steers. Cohen & Steers is a leading global investment manager specializing in real assets and alternative income, including real estate, preferred securities, infrastructure, resource equities, commodities, as well as multi-strategy solutions. Founded in 1986, the firm is headquartered in New York City, with offices in London, Dublin, Hong Kong, Tokyo and Singapore.

About Sterling Organization. Sterling Organization is a vertically integrated private equity real estate firm whose national platform is focused on investing in retail, LAST HOUR® consumer fulfillment and distribution real estate assets across the risk spectrum in major markets within the United States. The firm has approximately $2.0B of assets under management across the U.S., including more than 12 million square feet of primarily retail real estate. Sterling Organization, with offices across the nation, is headquartered in West Palm Beach, FL.

Forward-Looking Statements
This press release contains forward looking statements within the meaning of the federal securities laws. These forward-looking statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," "identified" or other similar words or the negatives thereof. These may include CNSREIT's financial projections and estimates and their underlying assumptions, statements about plans, objectives and expectations with respect to future operations, statements with respect to acquisitions, statements regarding future performance and statements regarding identified but not yet closed acquisitions. Such forward-looking statements are inherently uncertain and there are or may be important factors that could cause actual outcomes or results to differ materially from those indicated in such statements. CNSREIT believes these factors also include but are not limited to those described under the section entitled "Risk Factors" in the prospectus, as amended and supplemented from time to time, filed with the Securities and Exchange Commission (the "SEC"), which is accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this document. Except as otherwise required by federal securities laws, CNSREIT undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities.

Website: https://www.cnsreit.com/
Symbol: NYSE: CNS

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SOURCE Cohen & Steers Income Opportunities REIT, Inc.

FAQ

What property did CNSREIT acquire through a joint venture partnership with Sterling Organization?

CNSREIT acquired the Marketplace at Highland Village, an open-air community shopping center in Dallas, TX.

What type of shopping center is the Marketplace at Highland Village?

The Marketplace at Highland Village is an approximately 451,000 square foot open-air community shopping center.

What are some of the tenants at the Marketplace at Highland Village?

The tenants include TJ Maxx, HomeGoods, LA Fitness, DSW, and Petco.

What is the occupancy level of open-air shopping centers currently?

Open-air shopping centers are at their highest occupancy level of the past 16 years at 95.8%.

What is the significance of the Marketplace at Highland Village's location?

The property's location in the rapidly growing Dallas Fort-Worth metro, with its strong tenant lineup and high foot traffic, presents an attractive investment opportunity for CNSREIT.