On February 12, 2024, Phillips Edison & Company, Inc. (the “Company”) and Phillip Edison Grocery Center Operating Partnership I, L.P. (the “Operating Partnership”) entered into a sales agreement (the “sales agreement”) with Morgan Stanley & Co. LLC, BMO Capital Markets Corp., BofA Securities, Inc., BTIG, LLC, Capital One Securities, Inc., Citigroup Global Markets Inc., Fifth Third Securities, Inc., Goldman Sachs & Co. LLC, Jefferies LLC, J.P. Morgan Securities LLC, KeyBanc Capital Markets Inc., Mizuho Securities USA LLC, Regions Securities LLC, Wedbush Securities Inc. and Wells Fargo Securities, LLC, as sales agent, forward seller and/or principal (collectively, the “Agents”), and the relevant Forward Sellers and Forward Purchasers (each, as defined below), relating to the offer and sale of shares of the Company’s common stock, $0.01 par value per share (“common stock”), pursuant to a continuous offering program. In accordance with the terms of the sales agreement, the Company may offer and sell shares of common stock having an aggregate offering price of up to $250.0 million (the “Shares”) from time to time through or to the Agents as our sales agents or principals, respectively, or through the Forward Sellers.
Sales of the Shares, if any, may be made by means of ordinary brokers’ transactions on the Nasdaq Global Select Market (“Nasdaq”), in negotiated transactions or in transactions that are deemed to be “at-the-market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), including sales made to or through a market maker other than on an exchange, in block transactions or by any other method permitted by law, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices, subject to certain minimum prices. The applicable Agent or Forward Seller, as applicable, will use its commercially reasonable efforts consistent with its normal trading and sales practices to solicit offers to purchase Shares, under the terms and subject to the conditions set forth in the sales agreement. The Company or any of the Agents or Forward Sellers may suspend the offering at any time upon proper notice and subject to other conditions.
The Company also may sell Shares to each of the Agents, as principal for its own account, at a price to be agreed upon at the time of sale. If the Company sells Shares to any of the Agents as principal, it will enter into a separate terms agreement with such Agent, and it will describe the terms agreement in a separate prospectus supplement or pricing supplement.
The Company will pay each of the Agents acting as its sales agent a commission that will not exceed, but may be lower than, 2.0% of the gross sales price per share of Shares sold through it as sales agent under the sales agreement. The compensation to each Forward Seller will be a mutually agreed commission in the form of a reduction to the initial forward price under the related forward sale agreement that will not exceed, but may be lower than, 2.0% of the gross sales price of the borrowed shares sold through such Forward Seller during the applicable forward hedge selling period for such shares (which gross sales price will be adjusted for daily accruals based on a floating interest rate and specified amounts related to expected dividends on shares of common stock if an “ex-dividend” date occurs during such forward hedge selling period).
None of the Agents or Forward Sellers is required to sell any specific number or dollar amount of Shares but each will use its commercially reasonable efforts, subject to the terms of the sales agreement, to sell the Shares offered as instructed by the Company (if an Agent) and all the shares borrowed by the relevant Forward Purchaser pursuant to the sales agreement (if a Forward Seller). The offering of the Shares pursuant to the sales agreement will terminate upon the earlier of (1) the sale of all the Shares subject to the sales agreement (including Shares sold by the Company to or through the Agents and borrowed shares sold through the Forward Sellers) or (2) termination of the sales agreement in accordance with its terms.
The sales agreement contemplates that, in addition to the issuance and sale by the Company of Shares to or through the Agents as sales agents, the Company may enter into separate forward sale agreements (each, together with any related pricing supplement, a “forward sale agreement,” and, collectively, the “forward sale agreements”), with any of, respectively, Morgan Stanley & Co. LLC, Bank of America, N.A., Bank of Montreal, Citibank, N.A. (or an affiliate thereof), Goldman Sachs & Co. LLC, Jefferies LLC, JPMorgan Chase Bank, National Association, KeyBanc Capital Markets Inc., Mizuho Markets Americas LLC, Nomura Global Financial Products, Inc., Regions Securities LLC and Wells Fargo Bank, National Association, as forward purchasers (in such capacity, each, a “Forward Purchaser,” and, collectively, the “Forward Purchasers”). If the Company enters into a forward sale agreement with any Forward Purchaser, it expects that such Forward Purchaser, acting in accordance with the mutually accepted instructions related to such forward sale agreement, will attempt to borrow and sell, through the relevant Forward Seller, acting as agent for such Forward Purchaser, shares of common stock to hedge such Forward Purchaser’s exposure under such forward sale agreement. The Company refers to an Agent, when acting as sales agent for the relevant Forward Purchaser, as, individually, a “Forward Seller” and, collectively, the “Forward Sellers”, except that with respect to Nomura Global Financial Products, Inc., the relevant Forward Seller is Nomura Securities International, Inc. (acting through BTIG, LLC as agent). Unless otherwise expressly stated or the context otherwise requires, references herein to the “related” or “relevant” Forward Purchaser mean, with respect to any Agent, the affiliate of such Agent that is acting as Forward Purchaser or, if applicable, such Agent acting in its capacity as Forward Purchaser, and vice versa mutatis mutandis with respect to references herein to the “relevant” or “applicable” Agent (except with respect to BTIG, LLC, in which case the relevant Forward Purchaser is Nomura Global Financial Products, Inc. and the relevant Forward Seller is Nomura Securities International, Inc. (acting through BTIG, LLC, as its agent)). The Company will not initially receive any proceeds from any sale of shares of our common stock borrowed by a Forward Purchaser and sold through a Forward Seller.
The Company currently expects to fully physically settle each forward sale agreement, if any, with the relevant Forward Purchaser on one or more dates specified by the Company on or prior to the maturity date of such forward sale agreement. If the Company elects to cash settle any forward sale agreement, it may not receive any proceeds and it may owe cash to the relevant Forward Purchaser. If the Company elects to net share settle any forward sale agreement, it will not receive any proceeds, and it may owe Shares to the relevant Forward Purchaser.
