Phillips Edison Grocery Center REIT II Reports 2015 Financial Results
Phillips Edison Grocery Center REIT II Inc., a publicly registered, non-traded real estate investment trust, released its operating results for the year ended December 31, 2015.
On September 15, 2015, Phillips Edison Grocery Center REIT II, which intended to raise $2 billion in its initial public offering, terminated early after raising $1.1 billion. The unsold shares were reallocated to its distribution reinvestment plan, which the company continues to offer to investors.
In 2015, the company generated a net loss of $6.7 million, compared to a net loss of $5.8 million for the comparable 2014 period. The company generated modified funds from operations of $28.6 million, compared to MFFO of $2.7 million for the comparable 2014 period. This growth was primarily the result of additional property acquisitions, according to the company.
“We are pleased with our performance in 2015, which focused on the successful completion of our initial public offering and acquisition of high-quality grocery-anchored shopping centers. In 2016, we will continue to build the portfolio through property acquisitions and utilize our operating platform to drive organic growth,” said Jeff Edison, chairman of the board and chief executive officer.
In 2015, the company acquired 37 grocery-anchored shopping centers totaling approximately 4.6 million square feet for an aggregate purchase price of approximately $685.5 million. The REIT’s portfolio currently consists of 57 properties in 19 states, totaling 6.9 million square feet for an aggregate purchase price of $1 billion. The leased portfolio occupancy rate is 93.7 percent.
As of December 31, 2015, the company’s leverage ratio was 6.1 percent (calculated as total debt, less cash and cash equivalents, as a percentage of total real estate investments, including acquired intangible lease assets and liabilities, at cost). Its debt had a weighted-average interest rate of 5.6 percent, and a weighted-average maturity of 6.5 years. The only outstanding debt was from assumed property mortgage loans.
The REIT paid gross distributions of approximately $56.1 million in 2015, including $29.8 million of distributions reinvested through the dividend reinvestment plan for net cash distributions of $26.3 million.
Operating cash flow for the year was $16.6 million, compared to net cash used in operating activities of $1.3 million for 2014.
In December 2015, the company entered into a new advisory agreement with Phillips Edison NTR II, LLC, which had been acting as the company’s sub-advisor. This followed the termination of the company’s previous advisory agreement with American Realty Capital PECO II Advisors, LLC.
In February 2016, Phillips Edison Grocery Center REIT II entered into an agreement with DST Systems to replace American National Stock Transfer as its transfer agent. This became necessary after RCS Capital Corporation, ANST’s parent company, terminated the operations of the transfer agent following its recent bankruptcy. Although there will be a transition period, operations are expected to be fully in place with DST within 60 days.
The company will host a conference call on Monday, March 28, at 5:00 p.m. (Eastern Standard Time). Participants can register for the conference at http://dpregister.com/10081668.
Phillips Edison Grocery Center REIT II seeks to acquire and manage well-occupied grocery-anchored neighborhood shopping centers having a mix of national and regional retailers selling necessity-based goods and services, in strong demographic markets throughout the United States.
