Search
 

REIT Ties Advisor Fees to Performance

CINCINNATI - Phillips Edison-ARC Shopping Center REIT to change the payment of asset management fees to its advisor from cash or restricted stock to operating partnership units.

By Chip Barnett | Updated on January 15, 2013

    CINCINNATI – Phillips Edison-ARC Shopping Center REIT Inc. said its board of directors and management agreed to eliminate the payment of asset management fees to its advisor, instead tying compensation to performance.

   Rather than getting cash or restricted stock, the company’s advisor will now receive Class B operating partnership units, which constitute profits interest and will be forfeited unless a performance mark is hit. This change will be effective for the fourth quarter of 2012.    The Class B units would be issued on a quarterly basis, subject to approval by the board. The units will only vest to the extent that 100% of shareholder capital is returned plus payment to investors of an annual 6% cumulative, pre-tax, non-compounded return on the capital contributed by investors.    “We believe that making advisor compensation for asset management services subject to a performance hurdle and shareholder return aligns our interest with those of our shareholders,” Jeff Edison, Co-Chairman and Chief Executive Officer, says in a press release. “We believe it is critical that, during the company’s life as a non-traded REIT, it utilize available cash to acquire assets, pay distributions and for general working capital purposes rather than to pay out asset management fees to the advisor.”    Phillips Edison-ARC Shopping Center REIT Inc. is a public non-traded REIT that  is co-sponsored by Phillips Edison & Co. and AR Capital LLC.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.