Phillips Edison & Company, Inc. Q4 FY2024 earnings call

• Phillips Edison & Company achieved market-leading operating results in 2024 with core FFO per share growth.
• Retailer demand across the portfolio is strong, evidenced by high occupancy, strong rent spreads, and a robust leasing pipeline.
• Exceeded acquisition guidance in 2024, targeting $350 to $450 million in gross acquisitions for 2025.
• Engaged in joint ventures with Cohen and Steers, Lafayette Square, and Northwestern Mutual, with a significant pipeline of acquisitions in these JVs.
• Focus on ground-up development and repositioning projects with weighted average cash-on-cash yields between 9% and 12%, using free cash flow to drive attractive returns.
• Low leverage and diverse capital sources (debt, dispositions, equity) to support growth targets.

Phillips Edison & Company delivered solid core FFO per share growth of nearly 4% in 2024, despite interest expense headwinds; if interest rates were excluded, core FFO per share growth would have been 6%. Approximately 70% of ABR comes from necessity-based goods and services, and 30% from grocery. Portfolio occupancy ended the quarter at 98%, anchor occupancy at 99%, and in-line occupancy at 95%. Retailer demand remains strong with high lease spreads and a robust leasing pipeline.

• 2025 net income guidance range: $0.54 to $0.59 per share (10.8% increase over 2024 midpoint).
• 2025 NAREIT FFO guidance range: $2.47 to $2.54 per share (5.7% increase over 2024 midpoint).
• 2025 core FFO guidance range: $2.52 to $2.59 per share (5.1% increase over 2024 midpoint).
• 2025 same-center NOI growth guidance: 3% to 3.5%.
• 2025 gross acquisition guidance range: $350 to $450 million, with over $150 million in pipeline to close in Q1 and early Q2 2025.

• Interest rate headwinds, a near-term challenge but expected to stabilize.
• Tenant credit concerns, with bad debt experience around 75 basis points in 2024 and 2025 guidance range of 60 to 120 basis points.
• Impact of tariffs and higher labor costs on retailers, though grocers generally feel they can pass these on to consumers.

Q: How does Jeff feel today versus one year ago in terms of tenant demand and external opportunities?

A: Jeff notes a bigger pipeline of projects under contract and controlled compared to a year ago, with stronger fourth quarter acquisitions, indicating a better position but still disciplined in acquisitions.

Q: How much of a role do dispositions play in funding acquisitions?

A: Dispositions are considered selectively, with decisions based on market pricing and capital source returns, currently a one-off with seller financing in a specific case.

Q: Color on reserve and credit loss in 2024?

A: Bad debt experience in 2024 was around 75 basis points, with 2025 guidance range of 60 to 120 basis points, set wider to account for variability.

Q: Leasing pipeline and interest level?

A: Leasing pipeline is strong with consistent demand, including fast casual, med tail, and health and beauty retailers, with visibility into 2026-2027 openings.