Phillips Edison Grocery Center REIT I, a publicly registered non-traded real estate investment trust, reported that CMG Partners made a tender offer to purchase 9.3 million shares of common stock from its investors for $5.25 per share. The offer expires June 6th.
On the same day CMG proposed their tender offer, Phillips Edison countered with a self-tender offer for the same number of shares priced at $6.00 each and expiring on June 7th. The REIT’s share repurchase program was temporarily suspended during its tender offer as required by SEC rules.
As reported by The DI Wire, Phillips Edison REIT estimated that its shares have an appraised value of approximately $10.20 each, which is also the price per share offered in the company’s share repurchase program. During the fourth quarter of 2015, repurchase requests exceeded the funding limits under the program – this left 3.4 million share repurchase requests unfulfilled.
CMG indicated that Phillips Edison REIT investors may be able to sell their shares in secondary market auctions, possibly at higher prices. They noted that “auction trades are reduced by steep commissions and various fees, often amounting to 10 percent or more of the transaction amount, and take 3 months on average to complete…”
The REIT has more than 40,000 holders of record owning a total of 185.4 million shares. CMG does not currently own any shares, but would own 5.02 percent of the outstanding shares if all are tendered.
Phillips Edison Grocery Center REIT I invests in grocery-anchored neighborhood shopping centers with a mix of national and regional retailers selling necessity-based goods and services. The company owns and manages a retail portfolio consisting of 147 shopping centers totaling approximately 15.5 million square feet.