Phillips Edison & Company, one of the nation’s largest owners of grocery-anchored shopping centers, has entered into a merger agreement with Phillips Edison Grocery Center REIT II.
The transaction is a 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 TEV of approximately $6.3 billion.
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.
“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 Chief Executive Officer 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 transaction also highlights the value and growth opportunities inherent in our investment management platform. In REIT II, we raised $1.1 billion in equity in 2014 and 2015 and have acquired real estate valued at approximately $1.9 billion since. PECO earned fees as the external advisor and property manager, and now, PECO has the opportunity to merge with this complementary, institutional-quality portfolio, materially increasing its size, scale and diversification.”
“We remain bullish on the current operating environment as well as the long-term fundamentals supporting grocery-anchored shopping centers, and this merger demonstrates our unwavering confidence in the asset class.”
BofA Merrill Lynch is acting as lead financial advisor with Citigroup Global Markets Inc. and Goldman Sachs & Co. LLC also acting as financial advisors to PECO.
Latham & Watkins LLP is acting as legal advisor to the board of directors of PECO. Morgan Stanley & Co. LLC is acting as exclusive financial advisor and Hogan Lovells US LLP is acting as exclusive legal advisor to the scommittee of REIT II.