Phillips Edison & Co. (PECO) has entered into a definitive merger agreement with Phillips Edison Grocery Center REIT II (REIT II), a public non-traded REIT currently advised and managed by PECO.
The transaction is a 100 percent stock-for-stock merger with REIT II, having a total enterprise value of approximately $1.9 billion.
PECO’s merger with REIT II’s 86 properties will create a national portfolio of 323 grocery-anchored shopping centers encompassing approximately 36.7 million square feet located across 33 states and a total enterprise value of approximately $6.3 billion.
“This strategic merger of two highly complementary grocery-anchored shopping-center portfolios is the next step on the path to liquidity for both sets of shareholders,” said Jeff Edison, chairman and CEO of PECO. “The enhanced size, scale and prominence of the combined portfolio will greatly improve our access to the capital markets, which can be used to support ongoing strategic investments, as well as to drive future growth opportunities.”
The combined enterprise will have: larger size and scale, 3.2 percent higher annualized base rent per square foot, 2.4 percent increase in average household income and 3.8 percent increase in population density within a three-mile radius of the center, broader tenant diversification, and a simpler, more efficient operating platform. In addition, the merger includes REIT II’s 20 percent ownership interest in Necessity Retail Partners, a joint venture with TPG Real Estate that presently owns 14 grocery-anchored shopping centers.
The transaction is expected to close in fourth quarter 2018.
