September 5, 2019
Phillips Edison Grocery Center REIT III to Merge with Sponsor
Phillips Edison Grocery Center REIT III Inc., or PECO III, reached a deal to merge with Phillips Edison & Co. Inc., or PECO, following its...

Phillips Edison Grocery Center REIT III to Merge with Sponsor

September 5, 2019 | James Sprow | Blue Vault

Phillips Edison Grocery Center REIT III Inc., or PECO III, reached a deal to merge with Phillips Edison & Co. Inc., or PECO, following its strategic review.

Under the terms of the deal, the weighted average merger consideration is $7.59 per share, based on PECO’s most recent estimated net asset value per share of $11.10.

Once the merger takes effect, holders of PECO III class A common stock will receive 0.6693 PECO common share and 9.39 cents in cash per Class A share they hold; holders of PECO III Class I common stock will receive 0.7436 PECO common share and 9.41 cents in cash per Class I share they hold; and holders of PECO III Class T common stock will receive 0.7749 PECO common share and 9.89 cents in cash per Class T share they hold. All stockholders will have the ability to receive additional shares of PECO common stock in lieu of the cash portion of the merger consideration.

According to the announcement, the merger consideration, on an aggregate basis and for each of the Class A, I and T shares, represents a substantial premium over both the $6.54 midpoint and the $6.88 high end of PECO III’s estimated net asset value per-share range. Blue Vault reports that this is a substantial discount from both the private and public offering prices. The Class A shares were sold in a private offering in Q1 2018 at an average price of $9.87 per share.  The Class I and Class T shares were sold in a public offering for $10.00 and $10.42 per share, respectively. 

PECO III’s special committee concluded that the proposed merger is the best available option for the company and its shareholders, citing relative valuation, timing and transaction cost considerations, according to a filing. Possible alternatives to the merger explored by PECO III’s special committee included continuing to operate as a stand-alone entity, liquidation, or seeking a business combination with or sale of assets to another party.

The proposed merger has been approved by PECO III’s special committee of independent directors and PECO’s board.

PECO III, a nontraded real estate investment trust focused on grocery-anchored shopping centers, is co-sponsored by PECO and Griffin Capital Co. LLC. PECO III’s adviser is jointly owned by affiliates of PECO and Griffin.

PECO III completed a private placement offering of shares of Class A common stock to accredited investors and ceased offering Class A shares in the private offering during the first quarter of 2018. During the private placement offering, the REIT raised $57.7 million in gross offering proceeds from the issuance of 5.9 million Class A shares, inclusive of the DRIP.  

A public offering was declared effective on May 8, 2018, consisting of  (i) $1.5 billion in shares of common stock in the primary offering, consisting of two classes of shares, Class T and Class I, at purchase prices of $10.42 per share and $10.00 per share, respectively, with discounts available to some categories of investors with respect to Class T shares, and (ii) $0.2 billion in Class A, Class T, and Class I shares of common stock pursuant to the DRIP at a price of $9.80 per share.

In connection with a review of potential strategic alternatives, on June 12, 2019, PECO III’s Board of Directors approved the suspension of the public offering and the share repurchase program (“SRP”), effective June 14, 2019. As of June 30, 2019, PECO III had raised $1.1 million and $3.3 million in gross offering proceeds from the issuance of Class I and Class T shares, respectively. 

As of June 30, 2019, PECO III wholly-owned three properties and a 10% equity interest in Grocery Retail Partners II LLC, an unconsolidated joint venture with Northwestern Mutual Life Insurance Company, that owned three properties as of June 30, 2019. 

PECO III wholly owns a shopping center in Ashburn, Virginia, purchased in January 2019 for $31.73 million. The property is anchored by a 49,000 square foot Giant grocery store.  It purchased a shopping center in Sudbury, Massachusetts, in July 2018 for $19.47 million, with Rite Aid, T.J. Maxx, and Walgreens as tenants.  It purchased a shopping center in North Fort Meyers, Florida, in December 2017 for $8.84 million, with Publix Super Markets as the anchor tenant. 

Sources:  S&P Global, SEC, Blue Vault

Recent

Eagle Point Credit Creditflux Awards

Eagle Point Credit Creditflux Awards

Eagle Point won 48% of the vote for “Best US CLO Equity Investor” and 42% of the vote for “Best US CLO Junior Debt Investor”.

Most Popular

Blue Vault Q2 2023 Performance Reports Update

Blue Vault Q2 2023 Performance Reports Update

Blue Vault Q2 2023 Performance Reports Update 10-3-2023 Blue Vault wishes to acknowledge and apologize for the delay in publishing some Q2 2023 NTR Individual Performance Pages (IPPs) as well as the full review. We recently added additional reporting metrics to our IPPs, and that, combined with coverage of all share classes and some additional…
Blue Vault Q2 2023 Performance Reports Update

Blue Vault Q2 2023 Performance Reports Update

Blue Vault Q2 2023 Performance Reports Update 9-25-2023 Blue Vault has published the Q2 2023 Nontraded BDC Industry Review as well as Individual Performance Report and Limited Operations pages for the following offerings (newly published pages in bold font): Nontraded REITS American Healthcare REIT Q2 2023 Apollo Realty Income Solutions Q2 2023 (limited operations) Ares…

Explore

Blue Vault Logo
Don’t miss alts news
and educational events

Subscribe Now