REIT Ties Advisor Fees to Performance

    CINCINNATI – Phillips Edison-ARC Shopping Center REIT Inc. said its board of directors and management agreed to eliminate the payment of asset management fees to its advisor, instead tying compensation to performance.

   Rather than getting cash or restricted stock, the company’s advisor will now receive Class B operating partnership units, which constitute profits interest and will be forfeited unless a performance mark is hit. This change will be effective for the fourth quarter of 2012.    The Class B units would be issued on a quarterly basis, subject to approval by the board. The units will only vest to the extent that 100% of shareholder capital is returned plus payment to investors of an annual 6% cumulative, pre-tax, non-compounded return on the capital contributed by investors.    “We believe that making advisor compensation for asset management services subject to a performance hurdle and shareholder return aligns our interest with those of our shareholders,” Jeff Edison, Co-Chairman and Chief Executive Officer, says in a press release. “We believe it is critical that, during the company’s life as a non-traded REIT, it utilize available cash to acquire assets, pay distributions and for general working capital purposes rather than to pay out asset management fees to the advisor.”    Phillips Edison-ARC Shopping Center REIT Inc. is a public non-traded REIT that  is co-sponsored by Phillips Edison & Co. and AR Capital LLC.