Phillips Edison Executes One-for-Three Reverse Stock Split, Secures $980 Million Credit Facility
Phillips Edison & Company Inc., publicly registered non-traded real estate investment trust focused on grocery-anchored shopping centers, executed a one-for-three reverse stock split.
Phillips Edison & Company Inc., a publicly registered non-traded real estate investment trust focused on grocery-anchored shopping centers, executed a one-for-three reverse stock split of each outstanding share of common stock and reclassified its outstanding shares into newly created Class B shares. The company also refinanced one of its term loans and secured a new $980 million unsecured credit facility.
In May, the company filed a registration statement with the Securities and Exchange Commission relating to a potential public offering in conjunction with listing its shares on a national stock exchange. Shareholders recently approved a charter amendment that would facilitate a potential listing and/or a concurrent registered public offering that could provide liquidity for shareholders.
As a result of the reverse stock split and reclassification transaction, Phillip Edison’s stockholders received one share of post-split Class B common stock for every three shares of pre-split common stock they held.
The new Class B shares are identical to the pre-split common stock, including voting and distributions rights (i.e., monthly distributions), except that on the six-month anniversary of the potential listing on a national securities exchange, each Class B share will automatically convert into one share of listed common stock.
Prior to the split, the REIT’s net asset value per share was $10.55 as of March 31, 2021, thus, the new NAV per share is $31.65.
The company said that although the reverse stock split reduced its total shares outstanding, it had no economic impact to stockholders.
In addition, Phillips Edison & Company refinanced one of its term loans and secured a new $980 million senior unsecured credit facility led by PNC Bank N.A. as administrative agent. The facility is comprised of a $500 million revolving credit facility and two separate $240 million unsecured variable rate term loans.
Proceeds from the term loans are being used to repay an existing term loan at a reduced interest rate. The first $240 million term loan has a maturity in November 2025, and the second $240 million term loan has a maturity in July 2026. Borrowings will bear interest at an annual rate of LIBOR plus 125 basis points.
The revolver has a maturity in January 2026, with options for PECO to extend the maturity for two additional six-month periods, replacing the previous revolving credit facility which had a maturity of October 2021. Borrowings will bear interest at an annual rate of LIBOR plus 135 basis points.
The revolver allows for an additional one basis point margin reduction if certain environmental, social, and governance initiatives targets are achieved.
Phillips Edison & Company Inc. (formerly known as Phillips Edison Grocery Center REIT I Inc.) is one of the nation’s largest owners and operators of grocery-anchored shopping centers and oversees a portfolio of 278 properties, totaling approximately 31.3 million square feet, located in 31 states. The company’s offering was declared effective by the SEC in August 2010 and raised approximately $1.8 billion in investor equity before closing in February 2014.
