Phillips Edison Company, Inc. “PECO”, a managed real estate investment fund (REIT) focused on grocery stores, has reported to its board that management is exploring alternatives to provide liquidity to the company’s shareholders. If the company cannot provide specific liquidity, alternatives may be the sale of its assets or the listing of shares on a national stock exchange.
Despite the tender offer and rearranging of assets, the REIT is experiencing liquidity issues. Much of this is caused by Covid-19, but the firm is unlikely to see any breaks in the situation. PECO investors have limited options to sell their shares. As result, many have consulted with investment fraud lawyers on recovering losses.
Phillips Edison Tender Offer
PECO announced late last year the results of its offer (the “Tender Offer”) to purchase up to 17,400,000 shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at $5.75 per share. The company accepted 13,502,940 shares were tendered for an aggregate cost of $77,641,905 which leaves 319.9 million shares outstanding. The offer has been extended. Investors are upset because they lose over 40% of their principal with the offer.
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Dividend Reinvestment & Distribution Plans Suspended
The Board of Directors has suspended the dividend reinvestment plan during the review process and will commence distribution on April 1, 2021. Shareholders will receive their full cash distribution, which equates to an annualized monthly amount of $0.0283,333 per share, or $0.34 per share.
The share buyback program, which is limited to buybacks caused by the death of the shareholder, a qualified disability, or a declaration of incompetence (DDI), has also been suspended. As of March 31, 2021, the DDI buyback was not carried out under the program and will remain suspended “until further notice,” the Executive Board announced.
Phillips Edison reported the most recent net asset value per share was $8.75 as of March 31, 2020. This is down compared to the previous year’s NAV per share of $11.10.
In response to the COVID-19 pandemic, the REIT suspended distributions and share buybacks in March 2020. Monthly distributions were reinstated in early December 2020, and the distribution per share of the repurchased DDI was reinstated at $5.75 per share in January 2021.
The REIT previously announced a reverse stock split, expected to take place in March, when four shares of newly issued common stock will be combined and converted into one share of common stock, has been delayed under market conditions, according to a recent filing with the Securities and Exchange Commission.
Phillips Edison Company, Inc., also known as Phillips Edison Grocery Center REIT (i), Inc., is one of the largest owners and operators of grocery stores with a portfolio of 308 properties.
The offer declared effective by the SEC in August 2010, raised approximately $1.8 billion in investor capital, and was completed in February 2014.