CINCINNATI—Phillips Edison Grocery REIT I (PECO I) is acquiring the real estate assets and third-party asset management business of its sponsor to create a pure-play grocery-anchored center REIT with an enterprise value of $4 billion. The cash-and-stock deal for Phillips Edison Limited Partnership (PELP) is valued at approximately $1 billion, subject to closing adjustments. As part of the deal, PECO I will assume about $501 million of debt.
The REIT that results from the acquisition will own a nationally-diversified portfolio of 230 shopping centers in 32 states. PECO I says that on a pro forma basis, its funds from operation would have between 8% and 10% on a per share basis for the three months ended March 31, 2017, compared to actual results.
“Shareholders of PECO I will benefit from a combined enterprise with internalized management, increased size and scale, higher earnings potential, greater earnings growth potential, improved dividend coverage and enhanced access to capital,” says Stephen Quazzo, chair of the special committee of PECO I's board of directors. “Importantly, we expect this strategic transaction to be immediately accretive to FFO per share, and it positions PECO I well for future capital market opportunities including potential liquidity alternatives.”
Lazard is acting as the exclusive financial advisor and Sidley Austin LLP is acting as legal advisor to the special committee of PECO I's board. Goldman Sachs, JP Morgan Securities LLC, and KeyBanc Capital Markets Inc. are acting as financial advisors, and Latham Watkins LLP is acting as legal advisor to PELP.
(Phillips Edison's Mike Conway offers insights on getting the most out of ICSC RECon, the annual retail super-conference getting underway this weekend in Las Vegas. Click here for more.)
CINCINNATI—Phillips Edison Grocery REIT I (PECO I) is acquiring the real estate assets and third-party asset management business of its sponsor to create a pure-play grocery-anchored center REIT with an enterprise value of $4 billion. The cash-and-stock deal for Phillips Edison Limited Partnership (PELP) is valued at approximately $1 billion, subject to closing adjustments. As part of the deal, PECO I will assume about $501 million of debt.
The REIT that results from the acquisition will own a nationally-diversified portfolio of 230 shopping centers in 32 states. PECO I says that on a pro forma basis, its funds from operation would have between 8% and 10% on a per share basis for the three months ended March 31, 2017, compared to actual results.
“Shareholders of PECO I will benefit from a combined enterprise with internalized management, increased size and scale, higher earnings potential, greater earnings growth potential, improved dividend coverage and enhanced access to capital,” says Stephen Quazzo, chair of the special committee of PECO I's board of directors. “Importantly, we expect this strategic transaction to be immediately accretive to FFO per share, and it positions PECO I well for future capital market opportunities including potential liquidity alternatives.”
Lazard is acting as the exclusive financial advisor and
(Phillips Edison's Mike Conway offers insights on getting the most out of ICSC RECon, the annual retail super-conference getting underway this weekend in Las Vegas. Click here for more.)
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
