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Phillips Edison Completes $6 Billion Merger with its Non-Traded REIT

Phillips Edison & Company Inc., an internally-managed real estate investment trust, has completed its merger with Phillips Edison Grocery Center REIT II Inc., a public non-traded REIT that it advises and manages.

Phillips Edison & Company Inc. (PECO), an internally-managed real estate investment trust, has completed its merger with Phillips Edison Grocery Center REIT II Inc. (REIT II), a public non-traded REIT that it advises and manages.

The 100 percent stock-for-stock transaction has created a combined company with a total enterprise value of approximately $6 billion. The merger creates a national portfolio with ownership interests in 334 grocery-anchored shopping centers encompassing approximately 37.7 million square feet located across 32 states.

“This merger creates meaningful benefits for both PECO and REIT II stockholders,” said Jeff Edison, PECO chairman and chief executive officer. “It creates an internally-managed REIT that owns a high-quality portfolio of grocery-anchored shopping centers with even greater geographic, grocery-anchor, and tenant diversification. The combined entity will have increased access to the capital markets due to its enhanced size, scale and prominence, which we believe improves our position for a liquidity event.”

In exchange for each share of REIT II common stock, REIT II stockholders received 2.04 shares of PECO common stock, which is equivalent to $22.54 per share based on PECO’s most recent estimated net asset value per share of $11.05.

Original PECO stockholders own approximately 71 percent and former REIT II stockholders own approximately 29 percent of the combined company.

The merger increases the percentage of PECO’s earnings from real estate from approximately 92 percent to approximately 97 percent.

REIT II did not pay PECO any internalization or disposition fees in connection with the merger. Additionally, the advisory agreement between PECO and REIT II has been terminated to remove fees paid by REIT II, which totaled $13.9 million in 2017.

PECO’s most recent net asset value per share is $11.05, and the combined company expects to perform its next valuation during the Spring of 2019.

At the closing of the merger, former REIT II directors John A. Strong and David W. Garrison were appointed as independent directors to the combined company’s board. Following the appointment, the PECO board was increased to seven directors, six of whom are independent.

Phillips Edison & Company Inc. is an internally-managed REIT and one of the nation’s largest owners and operators of grocery-anchored shopping centers.

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