Skip to content
The DI Wire
Click Here to Subscribe to Our Free Daily News Updates

AR Capital Terminated as Advisor by Philips Edison II

The board of directors of Phillips Edison Grocery Center REIT II Inc., a publicly registered non-traded real estate investment trust, terminated its advisory agreement with AR Capital, effective December 3, 2015. The termination was “without cause,” according to a filing with the Securities and Exchange Commission.

It is unclear whether the collapse of the Apollo/ARC merger or ongoing fallout from the ARCP accounting scandal had any bearing on the advisory agreement termination. The company failed to respond to The DI Wire’s inquiries by press time.

The Phillips Edison Grocery Center REIT II board approved the entry into a new advisory agreement with Phillips Edison Grocery Center Operating Partnership II L.P. and Phillips Edison NTR II LLC. The new agreement will be effective on December 3, 2015, following the end of the company’s current advisory agreement with AR Capital.

Under the new advisory agreement, Phillips Edison NTR II will provide the same advisory and asset management services that ARC and Phillips Edison NTR II provide under the current advisory and sub-advisory agreements.

The new advisory agreement will have a one-year term, but may be renewed for an unlimited number of successive one-year periods upon the mutual consent of the parties. It will also have a similar fee structure, however, beginning January 1, 2016, the company will no longer pay the 0.75 percent financing coordination fee. In addition, the asset management fee will remain at 1 percent of the cost of the company’s assets, but will be paid 80 percent in cash and 20 percent in Class B units of the operating partnership instead of entirely in Class B units.

The cash portion of the asset management fee will be paid on a monthly basis in arrears at the rate of 0.06667 percent multiplied by the cost of the company’s assets as of the last day of the preceding monthly period. Under a first amendment to the amended and restated agreement of limited partnership of the Operating Partnership, the Class B units portion of the asset management fee will be based on the rate of 0.05 percent (instead of 0.25 percent) multiplied by the cost of the company’s assets. The Class B units will continue to be issued quarterly in arrears and will remain subject to existing forfeiture provisions. The conflicts committee approved these fee changes after a review of the compensation paid by peer group companies to their external advisors.

Phillips Edison Grocery Center REIT II invests in grocery-anchored neighborhood shopping centers with a mix of national and regional retailers selling necessity-based goods and services in strong demographic markets throughout the United States. The company owns and manages a retail portfolio consisting of 31 shopping centers totaling approximately 3.4 million square feet.