Phillips Edison & Company, Inc. Q3 FY2024 earnings call

• Jeff Edison highlighted solid quarter growth, differentiated strategy with grocery-anchored centers, and ongoing strength due to integrated platform and team. - Bob Myers discussed strong leasing momentum, high retailer demand, portfolio occupancy, new neighbors added, and ground-up development projects with $40 million to $50 million annual investment. - John Caulfield provided third quarter financial results, balance sheet details with $752 million liquidity and net debt to adjusted EBITDA at 5.1 times, and updated 2024 guidance for NAREIT FFO, Core FFO, and same-center NOI.

Same center NOI increased by 3.2%. Nareit FFO per share growth was 9.1%, and Core FFO per share growth was 6.9%. Portfolio occupancy ended the quarter at 97.8% leased, with anchor occupancy at 99.4% and inline occupancy at 95%. New rent spreads for the third quarter were 55%, and comparable renewal rent spreads were 19.8%. Year-to-date, PECO acquired nine shopping centers and several land parcels for a total of $211 million, with acquisition guidance updated to $275 million to $325 million of debt acquisitions for the year. The three-mile trade area demographics include an average population of 67,000 and median household income of $87,000, 12% higher than the US median.

• Updated acquisitions guidance to $275 million to $325 million of debt acquisitions for the year. - 2024 guidance updated: NAREIT FFO range $2.35 to $2.39 per share, Core FFO range $2.40 to $2.44, reaffirmed same-center NOI growth range with high end likely. - Planning to host a virtual business update on December 19 for 2025 outlook.

• Uncertainty regarding the Kroger-Albertsons merger, with impact on portfolio depending on merger outcome. - Macro risks including consumer credit card delinquencies and their potential impact on retailer health and spending.

Q: Jeff Spector asked about acquisitions and restaurant categories.

A: Jeff Edison and Bob Myers discussed acquisition market trends, specific properties acquired, and strong demand for quick-service restaurants.

Q: Caitlin Burrows inquired about bad debt.

A: John Caulfield explained low bad debt, aggressive re-leasing, and positive impact on future results.

Q: Ravi Vaidya questioned 2024 guidance components.

A: John Caulfield discussed lease buyout income, acquisition timing, and funding plans.

Q: Dori Kesten asked about JV with Cohen & Steers and acquisitions.

A: Jeff Edison talked about JV allowing more property consideration and optimism on acquisition market.

Q: Omotayo Okusanya asked about inline occupancy.

A: Bob Myers explained inline occupancy stability and future upside.

Q: Todd Thomas inquired about acquisitions, cap rates, and lease spreads.

A: Jeff Edison and Bob Myers discussed acquisition pipeline, cap rate considerations, and strong lease spreads.

Q: Floris Van Dijkum asked about cap rates and portfolio transactions.

A: Jeff Edison talked about unlevered IRR target, cap rate stability, and portfolio acquisition criteria.

Q: Juan Sanabria asked about balance sheet funding for acquisitions.

A: John Caulfield discussed liquidity, leverage, and equity consideration.

Q: Michael Mueller asked about balance sheet swaps and term loans.

A: John Caulfield explained bond market access and maturity laddering plans.

Q: Ronald Kamden asked about rent escalators and cap rates.

A: Bob Myers discussed lease escalators and cap rate stability.

Q: Paulina Rojas asked about pad developments.

A: Jeff Edison explained demand-driven pad developments and economic rationale.