Phillips Edison & Company, Inc. · NASDAQ:PECO
Phillips Edison & — Merger or Acquisition (July 2018)
29 slides from Phillips Edison &'s merger presentation, Jul 18, 2018
Slide 1: REIT II to Merge with Phillips Edison & Company
Phillips Edison Grocery Center REIT II (“REIT II”) to Merge with Phillips Edison & Company (“PECO”) July 18, 2018 Exhibit 99.4
Slide 2: Forward-Looking Statement Disclosure
Forward-Looking Statement Disclosure Certain statements contained in this presentation may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (
Slide 3: Information disclosure: Additional Information and Where You Can Find It
Information disclosure Additional Information and Where You Can Find It This communication relates to the proposed merger transaction of REIT II and PECO pursuant to the terms of the Agreement and Plan of Merger, dated as of July 17, 2018. PECO and REIT II intend to file a joint proxy statement/pros
Slide 4: REIT II to Merge with PECO
REIT II to Merge with PECO Property Count as of March 31, 2018 Phillips Edison Grocery Center REIT II, Inc. 86 Shopping Centers Phillips Edison & Company, Inc. Asset Manager Real Estate 323 Shopping Centers Phillips Edison & Company, Inc. Asset Manager Real Estate 237 Shopping Centers Phillips Ediso
Slide 5: Transaction Overview
Transaction Overview Transaction Details Phillips Edison Grocery Center REIT II to merge with Phillips Edison & Company in a 100% stock-for-stock transaction Total transaction value of approximately $1.9 billion, includes the assumption of REIT II’s outstanding indebtedness of approximately $801 mil
Slide 6: Overview of Phillips Edison & Company
Overview OF Phillips Edison & company Structure Internally-managed non-traded REIT Total Enterprise Value (TEV)1 $4.4 billion Owned Shopping Centers 237 Total Gross Leasable Area (GLA - sq. ft.) 26.4 million Q1 2018 Same Center NOI Growth 4.3% Managed Shopping Centers 104 Assets Under Management ($)
Slide 7: Advisors; Due Diligence and Negotiation Process
PECO – Board of Directors REIT II – Independent Special Committee Advisors Advisors Lead Financial Advisor: Financial Advisors: Legal Advisor: Exclusive Financial Advisor: Exclusive Legal Advisor: Due Diligence and Negotiation Process The REIT II Independent Special Committee and the PECO Board of D
Slide 8: Enhances Potential Public Market Valuation and Positions Company for Liquidity
Enhances Potential Public Market Valuation and Actively Positions Company for Liquidity REIT II shareholders will benefit from PECO’s internally-managed structure, which is likely to receive a better valuation in the public equity markets compared to externally-managed REITs Internally-managed REITs
Slide 9: Pro forma portfolio metrics
Pro forma portfolio metrics Total Enterprise Value $1.9 billion $4.4 billion $6.3 billion Number of Properties 86 237 323 Total Square Feet 10.3 million 26.4 million 36.7 million Total Occupancy 95.1% 93.6% 94.0% Anchor Occupancy 99.8% 98.1% 98.6% Inline Occupancy 86.0% 84.8% 85.1% Number of States
Slide 10: Combined portfolio remains focused on grocery-anchored shopping centers
The combined portfolio and all assets under management remain exclusively focused on grocery-anchored shopping centers with an emphasis on necessity-based retailers, which have proven to be both internet and recession resilient increased diversification On a pro forma basis, PECO will own 323 proper
Slide 11: Larger REITs Have Generally Outperformed Smaller REITs
Larger REITs Have Generally Outperformed Smaller REITs Small Cap REITs Tend to Trade at a Discount vs. Larger REITs Larger REITs Attract Dedicated Investors Increased Scale Provides Greater Capital Market Access Larger REITs have more institutional investors when compared to smaller REITs <$1B avera
Slide 12: Investment Management Business
INVESTMENT MANAGEMENT BUSINESS Raised $200M from High Net Worth Investors1 2000 – Fund I 2002 – Fund II 2007 – SIF1 2011 – SIF II Raised $2.8B in Public Non-Traded REITs 2010 – PECO 2014 – REIT II History of Fundraising and Value Creation Raised $695M from Institutional Investors1 2005 – Fund III 20
Slide 13: Lower Leverage Ratio Maintains strong debt profile
Lower Leverage Ratio Maintains strong debt profile REIT II Pro Forma Net Debt / TEV 42.9% 42.5% % Fixed / % Floating 89.7% / 10.3% 86.8% / 13.2% % Secured / % Unsecured 18.5% / 81.5% 28.5% / 71.5% Weighted Average Duration 3.2 years 4.7 years Pro Forma Debt Maturity Schedule 0.9% 10.8% 13.4% 14.5% 1
Slide 14: History of Creating Shareholder Value
history of Creating shareholder value Offering commenced on January 9, 2014 and ended on September 15, 2015 Annual distributions of $1.625 per share paid monthly Equity Multiple range of 1.1x to 1.2x for shareholders Returns vary based on date of investment and DRIP participation Return Calculation1
Slide 15: Temporary Suspension of DRIP and SRP
Temporary Suspension of DRIP and SRP In connection with the proposed transaction, REIT II is required to temporarily suspend its Distribution Reinvestment Plan (DRIP) and Share Repurchase Program (SRP) Distribution Reinvestment Plan (DRIP) Investors Currently Participating in the DRIP will receive t
Slide 16: Projected Timeline
PROJECTED timeline OCTOBER SEPTEMBER July 2018 Executed Merger Agreement September 2018 Proxy mailed to stockholders Proxy solicitation begins November 2018 REIT II and PECO stockholder meetings to vote on the merger Q4 2018 Transaction expected to close JULY AUGUST NOVEMBER DECEMBER
Slide 17: Strategic Merger Positions Combined Company for Growth and Liquidity
Strategic Merger positions Combined company for increased growth & liquidity REIT II benefits from enhanced growth profile, lower leverage, improved distribution coverage, and efficiencies gained from size and scale: All meaningful steps toward liquidity Enhances Potential Public Market Valuation an
Slide 18: Investor & Operational Inquiries
Investor & Operational Inquiries: DST: (888) 518-8073 Financial Advisor & Broker Dealer Inquiries: Griffin Capital Securities: (866) 788-8614 Phillips Edison Contact: Michael Koehler, Director of Investor Relations InvestorRelations@PhillipsEdison.com (513) 338-2743 Download today’s materials at www
Slide 19: Appendix
PHILLIPS EDISON i ™ a | GROCERY CENTER REIT II Appendix
Slide 20: Reconciliation of Non-GAAP Financials Q1 2018
Reconciliation of Non-GAAP Financials Q1 2018 We present Same-Center Net Operating Income (“Same-Center NOI”) as a supplemental measure of our performance. We define Net Operating Income (“NOI”) as total operating revenues less property operating expenses, real estate taxes, and non-cash revenue ite
Slide 21: Reconciliation of Non-GAAP Financials Q1 2018
Reconciliation of Non-GAAP Financials Q1 2018 Three Months Ended March 31, Three Months Ended March 31, 2018 2018 2017 2017 Net loss $ (1,254 ) $ (87 ) Adjusted to exclude: Straight-line rental income (742 ) (836 ) Net amortization of above- and below-market leases (598 ) (607 ) Lease buyout income
Slide 22: Reconciliation of Non-GAAP Financials Q1 2018
Reconciliation of Non-GAAP Financials Q1 2018 Funds from Operations and Modified Funds from Operations Funds from operations (“FFO”) is a non-GAAP performance financial measure that is widely recognized as a measure of REIT operating performance. We use FFO as defined by the National Association of
Slide 23: Reconciliation of Non-GAAP Financials Q1 2018
Reconciliation of Non-GAAP Financials Q1 2018 Many of the adjustments in arriving at MFFO are not applicable to us. Nevertheless, as explained below, management’s evaluation of our operating performance may also exclude items considered in the calculation of MFFO based on the following economic cons
Slide 24: Reconciliation of Non-GAAP Financials Q1 2018
Reconciliation of Non-GAAP Financials Q1 2018 Three Months Ended March 31, Three Months Ended March 31, (in thousands, except per share amounts) 2018 2018 2017 2017 Calculation of FFO Net loss $ (1,254 ) $ (87 ) Adjustments: Depreciation and amortization of real estate assets 18,888 17,022 Depreciat
Slide 25: Reconciliation of Non-GAAP Financials 2017
Reconciliation of Non-GAAP Financials 2017 We present Same-Center Net Operating Income (“Same-Center NOI”) as a supplemental measure of our performance. We define Net Operating Income (“NOI”) as total operating revenues less property operating expenses, real estate taxes, and non-cash revenue items.
Slide 26: Reconciliation of Non-GAAP Financials 2017
Reconciliation of Non-GAAP Financials 2017 Three Months Ended December 31, Three Months Ended December 31, Year Ended December 31, Year Ended December 31, 2017 2017 2016 2016 2017 2017 2016 2016 Net loss $ (2,335 ) $ (2,344 ) $ (9,531 ) $ (5,497 ) Adjusted to exclude: Straight-line rental income (14
Slide 27: Funds from Operations and Modified Funds from Operations
Funds from Operations and Modified Funds from Operations Funds from operations (“FFO”) is a non-GAAP performance financial measure that is widely recognized as a measure of REIT operating performance. We use FFO as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be
Slide 28: Reconciliation of Non-GAAP Financials 2017
Reconciliation of Non-GAAP Financials 2017 Many of the adjustments in arriving at MFFO are not applicable to us. Nevertheless, as explained below, management’s evaluation of our operating performance may also exclude items considered in the calculation of MFFO based on the following economic conside
Slide 29: Reconciliation of Non-GAAP Financials 2017
Reconciliation of Non-GAAP Financials 2017 Three Months Ended December 31, Three Months Ended December 31, Twelve Months Ended December 31, Twelve Months Ended December 31, (in thousands, except per share amounts) 2017 2017 2016 2016 2017 2017 2016 2016 Calculation of FFO Net loss $ (2,335 ) $ (2,34
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