Phillips Edison & Company Reinstates Monthly Distribution, to Launch a Tender Offer

• Monthly distribution to resume in January 2021 at approximately $0.0283 per share, which equates to $0.34 per share annualized

• Company intends to repurchase up to 4.5 million shares of common stock at $5.75 per share

• Company to execute one-for-four reverse stock split in March 2021

November 10, 2020 | SEC

Phillips Edison & Company, Inc. (“PECO” or the “Company”), an internally-managed real estate investment trust (“REIT”) and one of the nation’s largest owners and operators of grocery-anchored shopping centers, has declared a monthly distribution payable in January 2021 at an annualized rate of $0.34 per share and intends to launch a voluntary tender offer to repurchase up to 4.5 million shares of common stock at $5.75 per share during the fourth quarter of 2020.

Management Commentary

“Distributions are a critical attribute of this investment and we are pleased to announce the reinstatement of the monthly distribution,” said Jeff Edison, chairman and chief executive officer of PECO. “We are seeing solid collections and improving results at our properties, and our results have given us the necessary clarity in order to resume our distribution.”

“When evaluating the distribution, it is prudent to balance our distribution level with the uncertainties in the market, to provide interim liquidity to investors that need it, and to invest in the long-term growth of the company. We remain concerned about our properties and face the difficult task of working with our neighbors as we head into the colder winter months with an increasing number of COVID-19 cases.

“With that in mind, our Board of Directors has declared a distribution for December 2020 at $0.34 per share annualized and will evaluate distributions on a monthly basis thereafter. Additionally, we intend to launch a tender offer aimed at providing an option to our stockholders that require immediate liquidity.”

Distributions

On November 4, 2020, PECO’s Board of Directors reinstated distributions for December 2020 to stockholders of record at the close of business on December 28, 2020 equal to a monthly amount of $0.02833333 per share, or $0.34 on an annualized basis. Operating partnership unit (“OP Unit”) holders will receive distributions at the same rate as common stockholders, subject to required tax withholding.

The December 2020 distribution is expected to be made on January 7, 2021. Future distributions are not guaranteed; however, the Board intends to evaluate distributions on a monthly basis throughout 2021.

Additionally, the Dividend Reinvestment Plan (“DRIP”) has been reinstated by the Board effective January 7, 2021. Stockholders participating in the DRIP will reinvest their monthly distributions at the current estimated value per share (“EVPS”) of $8.75, starting with the upcoming distribution on January 7, 2021.

To date, the Company has distributed over $1.3 billion to its stockholders and OP Unit holders in the form of monthly distributions.

Tender Offer

PECO intends to commence a voluntary fixed price tender offer on November 10, 2020 (the “Tender Offer”) for up to 4.5 million shares, or approximately $26 million, of its outstanding common stock at $5.75 per share.

This price is 34% lower than the Company’s current EVPS of $8.75, reflecting, among other factors, the Board of Directors’ acknowledgment that the share prices of the Company’s publicly-traded shopping center REIT peers have declined significantly below their respective estimated net asset values, primarily as a result of the ongoing market uncertainty caused by the COVID-19 pandemic. As of October 30, 2020, the publicly traded equity of these peers was trading at an average discount to net asset value of 41%, and a median discount to net asset value of 39%, according to S&P Global Market Intelligence. Similarly, PECO’s shares of common stock have traded at a significant discount to its current EVPS in secondary market transactions reported by third parties. For example, during the six-month period ended October 31, 2020, approximately 67,000 shares were sold through a secondary market maker at an average price per share of $5.27. However, given the current economic climate, market prices are highly volatile as seen by market dynamics this week related to the timing of a potential vaccine for COVID-19. Accordingly, while the Board has approved the Tender Offer, the Board makes no recommendation to stockholders as to whether to tender or refrain from tendering their shares.

If more than 4.5 million shares are properly tendered and not properly withdrawn, PECO will purchase the shares on a pro rata basis. In that case, shares that are not purchased will be returned to stockholders.

The Tender Offer will expire at 5:00 p.m. Eastern time on December 15, 2020, unless extended or withdrawn by PECO. The Tender Offer will not be conditional upon any minimum number of shares being tendered. The Tender Offer will, however, be subject to other conditions, and PECO will reserve the right, subject to applicable laws, to withdraw or amend the Tender Offer if, at any time prior to the payment of deposited shares, certain events occur.

This Tender Offer has not yet commenced. This press release is not a recommendation, an offer to purchase, or a solicitation of an offer to sell shares of the Company. The Company expects to file with the Securities and Exchange Commission (“SEC”) a tender offer statement on Schedule TO and related exhibits, including an offer to purchase, a related letter of transmittal, and other related documents (the “Tender Offer Documents”).

Notice of the Tender Offer will be sent by mail to all stockholders and OP Unit holders. Equity holders may obtain full copies of the Tender Offer Documents from the Company, without charge, by contacting the Information Agent for the Tender Offer, Georgeson LLC, at 866-296-5716. The Tender Offer Documents will also be available at www.phillipsedison.com/investors, or on the SEC’s website at www.sec.gov. Equity holders should read these documents and related exhibits, as the documents contain important information about the Company’s Tender Offer.

Questions regarding the Tender Offer can be directed to the Company’s Information Agent for the Tender Offer, Georgeson LLC, at 866-296-5716.

The PECO Board of Directors intends to consider periodic tender offers going forward, with pricing and terms subject to market conditions.

Share Repurchase Program (“SRP”) – Death, Qualifying Disability, and Determination of Incompetence (“DDI”)

Effective January 2021, the Company expects to recommence repurchases under the DDI portion of its amended and restated SRP. The first redemption under the program is expected to take place at the end of January 2021 and continue monthly thereafter.

Qualifying repurchase requests under the amended and restated SRP are projected to be made at the current tender offer price of $5.75.

The deadline for monthly repurchases is expected to be the business day before the fifth business day prior to month end. The standard portion of the SRP remains inactive and such repurchase requests will not be accepted. For more information, including forms, please visit www.phillipsedison.com/investors or call 888-518-8073.

Reverse Stock Split

On November 4, 2020, the PECO Board of Directors approved a one-for-four reverse stock split to take place on or about March 9, 2021.

As a result of the reverse split, every four shares of PECO’s issued and outstanding common stock will be automatically combined and converted into one issued and outstanding share of common stock, par value $0.01 per share. A corresponding reverse split of the outstanding OP Units will also be effective at that time.

After the split, PECO’s common stock and OP Units will have an initial EVPS of $35.00, and PECO will continue as a publicly registered, non-traded REIT. The common stock will have a new CUSIP number, which will be provided closer to the split date.

The reverse stock split impacts all holders of PECO’s common stock and OP Units proportionately and will not impact any equity holder’s percentage ownership of common stock. The Company’s management believes that a higher share price will prepare PECO for a future liquidity event while a smaller number of shares will provide improved per-share visibility into its financial results.

PECO expects to appoint its transfer agent, Computershare Trust Company, N.A. (“Computershare”), to act as exchange agent for the reverse stock split. Stockholders owning shares via a custodial or brokerage account will have their positions automatically adjusted to reflect the reverse stock split and will not be required to take further action in connection with the reverse stock split, subject to the custodian’s or broker’s particular processes.

Addressing the stock split, Edison commented: “Executing a reverse stock split is a necessary undertaking before potentially listing our shares on a national stock exchange. Doing so in the first quarter of 2021 grants our investors and advisors time to acclimate to the change and avoids potential confusion in the future around a potential liquidity event. Additionally, it will provide a more granular representation in our financial reporting, as fewer shares outstanding allow for more detail in our per share reporting metrics.”