Phillips Edison & Co. Tender Offer $5.75 per share

Phillips Edison & Co. to execute one-for-four reverse stock split in March 2021

 The White Law Group continues to investigate potential claims involving broker dealers who may have unsuitably recommended non-traded REITs like Phillips Edison & Co. to investors.

Phillips Edison & Company (PECO) is a retail real estate company that reportedly focuses on the purchase of under-performing, grocery-anchored properties in order to maximize their value through hands-on leasing, management, and redevelopment.

According to a press release on November 9, Phillips Edison & Company announced it is planning to reinstate monthly distributions  and its intention to launch a tender offer to repurchase up to 4.5 million shares of common stock.

The company has declared a monthly distribution payable in January 2021 at an annualized rate of $0.34 per share and intends to launch a voluntary tender offer to repurchase up to 4.5 million shares of common stock at $5.75 per share during the fourth quarter of 2020.

The company says that  it remains “concerned about our properties and face the difficult task of working with our neighbors as we head into the colder winter months with an increasing number of COVID-19 cases.

With that in mind, our Board of Directors has declared a distribution for December 2020 at $0.34 per share annualized and will evaluate distributions on a monthly basis thereafter. Additionally, we intend to launch a tender offer aimed at providing an option to our stockholders that require immediate liquidity.”

Further, the Dividend Reinvestment Plan has been reinstated by the Board effective January 7, 2021. Stockholders participating in the DRIP will reportedly  reinvest their monthly distributions at the current estimated value per share of $8.75, starting with the upcoming distribution on January 7, 2021.

The company notes that this tender offer price of $5.75 per share is 34% lower than the Company’s current EVPS of $8.75. The Board of Directors’ acknowledges that the share prices of the Company’s publicly-traded shopping center REIT peers have declined significantly below their respective estimated net asset values, primarily as a result of “the ongoing market uncertainty caused by the COVID-19 pandemic.” 

As of October 30, 2020, the publicly traded equity of these peers was trading at an average discount to net asset value of 41%, and a median discount to net asset value of 39%, according to S&P Global Market Intelligence. 

The company further notes that its shares of common stock have traded at a significant discount to its current EVPS in secondary market transactions reported by third parties. 

During the six-month period ended October 31, 2020, approximately 67,000 shares were sold through a secondary market maker at an average price per share of $5.27. 

While the Board has approved the Tender Offer, the Board makes no recommendation to stockholders as to whether to tender or refrain from tendering their shares, according to the press release.

The original offering price was $10.00 per share.

Reverse Stock Split

On November 4, 2020, the PECO Board of Directors approved a one-for-four reverse stock split to take place on or about March 9, 2021.

As a result of the reverse split, every four shares of PECO’s issued and outstanding common stock will be automatically combined and converted into one issued and outstanding share of common stock, par value $0.01 per share. A corresponding reverse split of the outstanding OP Units will also be effective at that time.

After the split, PECO’s common stock and OP Units will have an initial EVPS of $35.00, and PECO will continue as a publicly registered, non-traded REIT. The common stock will have a new CUSIP number, which will be provided closer to the split date.

The Company’s management notes that “a higher share price will prepare PECO for a future liquidity event while a smaller number of shares will provide improved per-share visibility into its financial results.”

Investigating Potential Claims

The White Law Group has handled a number of claims involving non-traded real estate investment trusts (REITs) such as Phillips Edison & Co.

The trouble with non-traded REITs is that they are complex and inherently risky products.

Broker dealers are required to inform clients of the risks associated with investment recommendations. They must ensure that those recommendations are suitable for the investor in light of the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so may be held responsible for any losses through FINRA Arbitration.

Lack of liquidity is often problematic for many investors.  Investors looking to sell often have difficulty finding a buyer, and can suffer significant losses on the sale.

If you invested in Phillips Edison & Co. or another non-traded REIT and would like to discuss your litigation options with a securities attorney, please call The White Law Group at 1-888-637-5510 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Franklin, Tennessee.

For more information on The White Law Group and its investigations, visit www.whitesecuritieslaw.com.