Phillips Edison & Company (PECO) 6 May 222022 Q1 Earnings call transcript

Company Profile

Participants

Stephanie Hout	Director-Investor Relations
Jeff Edison	Chairman and Chief Executive Officer
Devin Murphy	President
John Caulfield	Chief Financial Officer
Craig Schmidt	Bank of America
Caitlin Burrows	Goldman Sachs
Richard Hill	Morgan Stanley
Floris van Dijkum	Compass Point
Mike Mueller	JPMorgan
Todd Thomas	KeyBanc Capital Markets
Tammy Fique	Wells Fargo Securities

Call transcript

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Operator

Good morning, and welcome to Phillips Edison & Company’s First Quarter 2022 Results Presentation. My name is Latif and I will be your conference call operator today.

Before we begin, I would like to remind our listeners that today's presentation is being recorded and simultaneously webcast. The company's earnings release, quarterly financial supplement, and 10-Q were issued yesterday, May 5 after market close. These documents and a replay of today's call can be accessed on the Investors section of the Phillips Edison & Company website at phillipsedison.com. to Edison call & like Hout to now Phillips with Company. would turn over the Stephanie I

Stephanie Hout

Thank you, and operator. & for of joining Good Relations Company. afternoon, everyone. My Investor is And name Stephanie Phillips Hout with I'm Director us. the Edison thank you

Edison; Financial Joining Jeff Officer, call John Executive today's Murphy; Devin on our Chairman Caulfield. President, me Chief and and are Officer, our our Chief

discuss the results, our first strategy presentation, quarter and our touch quarter. Jeff Devin and highlights the quarter capital today's and will During results activity differentiated for first our operational our John our will on review guidance. discuss markets discuss will recent financial

will provide investment Lastly, to update an activity return closing on and our Jeff comments. provide

analyst Following community. we'll our the prepared remarks, answer questions institutional from

to subject to our risks described begin, audience call SEC would our filings. today's during as we that various are be made I considered which in may like remind and uncertainties forward-looking, statements Before

measures. refer to to In our Edison, it's our addition, measures issued that, our our also are these will GAAP these to on use pleasure Officer. earnings the we non-GAAP turn results to are Executive supplemental website. available our Information and of yesterday, disclosure over and of Jeff? my With in regarding measures reconciliations release call financial which Chief certain Jeff

Jeff Edison

leasing the the foot The Stephanie. our located spreads, high drive you, our results. anchored leasing These market the high high or grocers retailers occupancy level. of start and year, be small by evidenced since retention levels continues two activity is Good our centers by one There which strong demand resulting seen QX of as to Thank rate in afternoon, reflected robust grocer. continued shops. have everyone. traffic the and the necessity-based number We're to by we our is in be encouraged environment to

occupancy to able spreads. power as renewal and result produce pricing high leasing been that this exceptional demand team a Our of to have we the new has leverage and the

to our their results. level Our rates high retention and neighborhood strong our and drive strategy, are testament shopping a centers of collections formats

the On competitive. the for remains centers grocery-anchored acquisition front, market

a differentiator we markets the However, for us key operate we believe is in.

to team drive the returns or two by our one number centers value in in anchored continues grocer Our and find markets.

reaffirming done and multiple We for Yesterday, acquired assets, better we're one underwriting. we we continue over successfully across announced have acquisition cycles time. all are million in guidance our year. of XX to review optimistic net we of asset acquisitions efforts X%. acquisition we performing our years, than our And XXXX target We our disciplined this over very million to a in remain they're XXXX When acquisitions. XXXX, at IRRs about this have $XXX the $XXX

We are of over targeting X%. IRRs unlevered

our allowed and results FFO same by have growth team to of successful for end this the center strong raise the for execution us guidance continued Our about John our shortly. will the core and XXXX. speak NOI lower the quarter strategy of

Devin? speak our more quarter. results Now, to turn like the who over I’d in for call detail Devin about operating will the to

Devin Murphy

afternoon, Good Thank joining you us everyone. Jeff. you, for Thank today.

of and will I the leasing review the highlights operational First, quarter.

points As leased points. to compared increased basis Anchor at leased our XXX was ago XX.X% X/XX/XXXX, XX increase by an occupancy of XX.X%. XX.X%, X/XX, to of basis occupancy a portfolio from year

Sequentially, the we XXX closed XX that vacancy by quarter. XX/XX/XXXX due basis Our our on last by decreased from leased points through increased acquisitions points basis XX.X%. occupancy leased in-line over in occupancy that in-line year gained to we to

quickly post-leased approximately neighbors our this our spaces points. level us allow in space spread quarter move close historical this and improved size the which of occupancy XX economic and leased spread economic execution. XX to basis points, to XX.X% between occupancy The by centers to basis Our tightened smaller into the brings

leasing we the lease total our renewal volume levels new XX consistent is XXX of executed and with During totaling historical square auctions quarter, This feet. volume. leases and XXX,XXX

high that high new leasing spreads no quarter rate since Our We renewals new spreads lease. and versus inclusive option rent our our Comparable is view unless rates. larger renewal XX.X%. downtime Comparable new The of to a will total renewal expectation for were strength lease retention leases retention XX% XX.X%. required new continue percentage a as make a up was our quarter. the combined for there this rent given lease were volume rent a spread is TI of

retailers Mike’s leases to company. continue as executed We CenterWell strong Jersey quarter Panera Care, our with such and centers Humana Primary this and demand see Bread, in for space a

Jeff we are continued by centers. enjoying at encouraged that are the our neighbors success As noted, our

we quarter, enjoy. demand a combined for The that space of is currently first in seeing we that strong leasing rate high retention of spreads the XX.X%. rate centers During evidence realized our with retention the clear and power we the are pricing continued our

and discuss through activities. development will I results redevelopment we achieve the our Lastly,

to and pipeline on is unlevered. XX% which to active continue projects has be yield to up projects We these stabilized the repositioning our commenced. projects We quarter, investment two ground approximately construction, are of and fully these XX% both average estimated execute first XX rent in projects. leased have of total we of The redevelopment up Currently, on and represents under ground million. $XX

of expected we of on target us projects, for discussion of John? our a call the In our spend total million for of pace turn to begin also This to I capital of activity to markets John will quarter. guidance. XX% and pipeline the XXXX, year. active this XX-plus projects keep of $XX XX unlevered. now will to for redevelopment yields throughout meet addition million a the results over construction the our $XX of recent financial results, activity with the to concludes This operating summary balance have

John Caulfield

and good everyone. Devin, you, Thank afternoon,

and increased improvement the January of the This expense of reduction this income Nareit a rental in $X.XX issuance settlement or final result million year. liability as units $X.X First was of non-cash diluted as increase as of operating million $XX.X XX.X% quarter an earn-out by well in collections, with the XXXX result to in partnership per driven FFO in share.

underwritten higher and diluted shares quarter FFO first strong lower FFO properties our of core July FFO On $X.XX share a well per expense Sequentially, property during and per core driven by on fourth expenses. number at share and operating from IPO. our interest in increased our per we spreads, $X.XX $XX.X revenues decreased to leverage of result the levels portfolio level a incremental XXXX to million quarter as as our increased from lower issued the our G&A lower our Our a as share ago. from XX.X% leasing higher expanded revenue basis, occupancy year versus increased

was Our driven collections QX increase increased year by X.X% million up and XXXX. average occupancy, a to to XXXX rent X.X% higher same-center net operating stronger compared income a This base per foot or improvement from ago. in NOI square primarily $XX.X

balance Turning to sheet. the

had our X.X of At view our of effective monitor our of capacity years, average of cash, and weighted maturity XXXX, of and facility debt available period, adjusted to $XXX automatically plans to comprised debt liquidity evaluate XX, to to million cash ATM strength to consider approximately with March continue significant with million equivalents continue carefully compared no a we $XXX opportunities at end capital fixed times borrowing options. XX% XXXX. filed as of markets markets restricted approximately the access of facility. X.X million XX, registration cash weighted credit our $XX commenced fund X.X% debt net equity XXXX and we and to We rate until debt was utilize At $XXX On useful tool sheet acquisition rate. the This future $XXX total million as to maturities X.X times our of XX, an as arise. plus of the revolving financing to we a the average our had program. March provides shelf intend balance our a interest on us We our December as EBITDAre of credit we with due statement offering efficiently February million capital a XX,

favorable on a conditions, identifying opportunities, combination to-date proceeds of earnings future not have and evaluate will utilized uses the acquisition use are We ATM market accretive. that based of and

buy an the July, target over communicated, previously we to assets of have IPO. billion we years, underwritten XXXX our As have post $X three external growth

want do to maintain per share us to accretive equity consider to markets reiterate will that will issue opportunities capital we this to or I to sheet strong be any manner appropriate proceeds be need equity our believe we plan, that balance allow raised in execute metrics. a as debt our the position. equity to financial in not invested we in will While the future

our favorable success we’re of year, FFO guidance results Jeff raise assets share year-to-date. early and and the As FFO per Core based pleased Nareit mentioned, midpoint in our the in identifying our on operating to

per range $X.XX. new is $X.XX FFO to Our share for Core

increasing NOI X%. and same We midpoint are guidance range also the for tightening our to to the X.XX% center

net $XXX for acquisition reaffirming opportunity Jeff our in target We our confidence of acquisition pipeline. of XXXX. reach period, $XXX million as The will our discussing ahead gives guidance to as the acquisitions our are well during be schedule for us financial million the guidance our to year.

they of quad our for the squad we of existing We the markets strategy. additional investment evaluate market. back expand investment assets use funding exercise activity like debt this turn portfolio. prudent for criteria on And we and look rates call centers market. long-term on Jeff? of come acquisitions our the strategic is We growth to impact and continue to consider in capital our that, to portfolio transaction recap evaluate lower to the all interest we that With Jeff, as as I to would growth quarter as fit ahead, to our the rising over match will trades analysis our believe

Jeff Edison

of quarter for $XXX you, John. XXXX, the million. three In acquired centers approximately Thank shopping we first grocery-anchored

Virginia income with population is Cascades area Our trade D.C., in very demographics. MSA. acquisitions Sterling, favorable in This Overlook included in a the center and

at to this we plan is market. marking at vacancy, the rents center. addition a there asset believe We lease increasing to the upside and occupancy through leasing In

Austin, in Meadows process bumps. of leasing rent in the can existing as and MSA. as where trade by Oak It We achieve expect contractual a a continued completing developments location well to is in believe through area. we growth purchased the efforts see surrounding as also growth the we result planned We in

unique the ground included development Florida purchase center opportunity a space. and growth we sales. through where the This was Our is ground parcels, the we can forms, believe at through vacant Hill, during land leasing various for final up The to achieve located upside existing Avalon provides including multiple us. period This and an deliver purchase leases, the can addition Tampa. growth in we undeveloped Spring land near Shoppes the

center currently shopping additional which for are approximately this the close grocery-anchored up $XX month. in We of million, closing an process should

closer meaningfully us in active our are to other centers we that bring Additionally, on acquisition negotiations target. would

confident we are guidance. would our We acquisition acquired unlevered our these or centers contract IRR. under exceed All will meet X%

in to excited the We has convert been our are opportunities identify able this market. at team and

Now, rates. I before evidenced recap The continues get Q&A leasing like section, and by would spreads our retention to to our to leasing we quarter. the be It’s strong. environment quickly

on drive capitalizing our are to We ability rents.

the required Our to find meet team continues in acquisition returns. our market that opportunities

a able ranges. As and to growth, result guidance tighten we’re external improve this internal of and our financial

will our Q&A we begin call. Operator? that, with Now, of portion the

Operator

[Operator from of Craig America. Instructions] question first Our of comes Bank Schmidt

Your open. line is

Craig Schmidt

leasing given, versus the Well, a was you volume? you Or third quarter pause second, first and see might for happening quarter? thank I’m higher just the do wondering, fourth reduction XXXX, activity you. and this return in that to XXXX

Jeff Edison

for volume We Hi, of than the new Craig. the we’ve to were retention line able our level – more the slightly, little Jeff. quarter. and the backlog think with And it just was if activity, that. Thank lot do leasing a mean, you I it of during what first mean, into look consistent question quarter in This leases all total our at had is a normal. I very you not is very historically overall, is if going quite ahead that of I but down our strong we been

Craig Schmidt

into ties Okay. guess of the that kind I follow-up.

better anything was that’s leasing leasing, strong there your had renewals. renewals strong but than particularly peers? driving some heard on of your impressive You you Is

Jeff Edison

that? want to take Devin, you

Devin Murphy

relative to mean, retention we that the strength amount with business We’ve rate Again, over downtime very put we believe the a high retention reason view in is has having in And to lower. this that the to we’re we’ve into with what put what XXs. back not enjoyed Sure. retention of And as as dramatically quarter new TI Craig, our that I our always retention a our highly as rates rate at retention consistent the of a is time. our incurring enjoyed we’re rate in time one that in of level, rate and leases space fact that been over have model. any the portfolio. benefits on we was the high the

of we our where very centers. able high just a are to which favorably our has very performing in our So that a of our spreads that the saw well renewals, and neighbors in is kind want been and we think it’s our stay quarter, XX%. a on mid again in in compares circa and the which historically, to centers level has function And been the which teens, level X% to format get to we’re of what the therefore, function leasing

benefiting Sunbelt XX% And working of which sits benefit the is our the that from continue and we XXX% is continue trends trend because be Sunbelt from to the over beneficiary we in we suburbs. our home, in incremental number of of portfolio it’s growth this creating which that from in of the the So trend enjoyed expect and portfolio demand a the a macro the for And to that. centers. is see suburbanization the we of

Craig Schmidt

Okay. Thank you.

Operator

you. Thank

Caitlin question next Goldman Our from Burrows of Sachs. comes

is open. Your line

Caitlin Burrows

everyone. other afternoon, a just Maybe follow-up the those leasing following on Good Hi. side questions.

it that good spread, looking there’s lease have you but guys at power, demand, good occupied it specifically So some narrowed. [ph] looks has versus like pricing do

what’s wondering months, any for of current macro but on the the activity tenants some situation? deep been you leasing and continued also And if is, progressing how So outlook how know give lot cautious noticed I’m occupancy could types the a commentary get past tenants more it I increases? over six you have maybe that’s has due to potential

Devin Murphy

Hi, Caitlin.

Jeff Edison

the you Devin, want for that? thanks Caitlin, to take question,

Devin Murphy

X,XXX that circa one historical than our sign XXX basis in is what X, Sure. a very space Again, is quarter average seen. our XX Thanks points. our basis feet. saw actually QX of points last with lease. wider once we’re of And get square circa was and tenants Caitlyn. Caitlin, we spread the in tenant format is the Good more the benefits of you QX afternoon. of consistent the typically quickly spread to spread The these grocery that able into they the year

average Our to lease and commencement is five months. rank from date time signature between four

the the which taking format. lease a beginning tenant our of downtime have to lot benefit and don’t between we So signing real to rent, a actually and is progression pay

look have we not of believe able the In we’re very occupancy to back another gains confident we’re terms at Obviously, had, what seeing XXXX, hit occupancy. we’re we to leasing yet leasing not basis and that of of we’ve be able inline you pull circa on to point by on back But And to And grow be activity, the We and which very of kind we Caitlyn, occupancy of seeing when in yet. pipeline end continues occupancy spreads that. are very we’ll it’s be strong. seen XX% the continue hit we’ll tenants We our is XXX getting. then believe of something pull the fact, carefully. we’re tenants focused watched kind upside.

the addition getting the leasing the CAGRs to sign very in In attractive we’re to up that tenants are for mid spreads, twos. rent

for up bumps twos. only also to rent the teens, are they mid but CAGRs not sign they’re So mid the on renewals agreeing in in

continued of we So think that the environment. points strength just for leasing the

Caitlin Burrows

months know average I Got or Yes, impressive that of don’t it. to four no, time great. five is

to now the lower you maybe good what but you balance wondering number you to you issue need number? you times, do follow EBITDA that with don’t just X.X sheet better or know within debt I your equity And And up want John, to higher then comment at to some as acquisition range to is stay could necessarily at just what So are equally is? targets, meet range comfortable that so, if that. side, on mentioned hear

John Caulfield

this so given X.X that and Yes, that Caitlin. and want is growth we’re times the and previously I in comfortable six this seize with have mentioned Thanks, six them. so We we’ve but still front the that, all options we do around and also at. times think six what range. time can are that to But we’re to can us comfortable of have envision plans our low as take on But we macro call communicated us. uncertainty, we looking to with times I are we very the we would we opportunities as available that see at

position with in So times, we’re continue I X.X that. to our think good at do to a leverage

Caitlin Burrows

Thanks. Okay.

Operator

Thank you.

Please Richard comes Hill Stanley. ahead. go question next from Morgan of Our

Richard Hill

Hey, questions. good afternoon. unpacking Caitlin’s Maybe just

Just a little bit deeper.

basis inline space. on points upside XXX of So

anchor that that. not you space is like some at able might There’s be to pretty XX.X. obviously than Sounds good structural higher get reasons

total So maybe that as about portfolio total does to or portfolio, up we’re go so? can mean thinking XX% around

John Caulfield

Yes, that’s number. correct. Rich, that’s the right

Richard Hill

the have is on that, without myself. it NOI trying same-store of occupancy, XXX think So points a XX% X% going well get X% new thinking or I to uplift call we're to basis sort strong to XXXX? is as still but mind should are we like in you unpack amount Craig maybe be you look X% like, range? those well. guide, – double-digits What of my X% able the to the levels And and highlighted What And XQ of asking by the more of do I'm down to the level. even as normal Great. I'm the X% if your on should that capture? your own to in were we be think tenants spreads trying thinking more we about you it the given renewals Is renewals, in back about range XXXX. renewals renewal about do in how to to really X% go to an way, obviously Or you're low

Devin Murphy

the Rich, from on going be declining I cetera. a anything mean, these where that with environment so interest seen environment Europe, dynamic things are many we between they that leads to as to war believe know, et going and in spreads cetera, haven't we're et right very now. you in us rates are in

very to to almost in we're being predict longer the which haven't believe see a they've releasing the term in in continue But trend anything that and what us at as confident we're of you is in to double time, that double-digits historically. That been we terms out predicting that be to see that, we we said, leads long-term a with number. willing a not not seen there of hesitant kind that number going to And these spreads going is aggressive mid-teens, is near-term. So know, are Xx re-leasing a singles to number to the that something high be the in in able number the point environment. range speculating on spreads spreads almost that we're uncertainty all to given that's this are very low strong in

Richard Hill

Thank very for helpful. that's Devin, you that.

me asking at in you're IPOed just of Is expectations, backdrop? the outlook And still that more on guide? here. you're really obnoxious an the not really against really, a And and and meeting the recognize was really feels especially of an to exceeding I a uncertain risk sure approach, make company Why just scheme wanting things. it conservative maybe the taking that first newly to so strong question good. aggressive my final leads be question, quarter your

Jeff Edison

Rich, it’s say. then you couple have to things to don't want why I'll John, take and a the also Jeff. first

John Caulfield

and Thanks, thanks thanks. Jeff Yes, Rich.

and the remainder we solid did of we quarter see have a So the year. for strength first

Jeff Edison

are you mute. John, on

John Caulfield

that. about Sorry

Jeff Edison

Better?

John Caulfield

both quarter, in of few is solid And quarter was the interest And see items. than a the historical with basis debt higher bad a I All up little, think lower rates. Yes. but lease and quarter. had first first and was strengths XX inflation is did of our a right, higher Like the points we little which we uncertainty a have year, termination usually the there remainder approximately income our first level. in also we

basis we are But points look risen So full interest XX range since bad in guidance. the our rates kind to that we on year, of to as debt. initial XX have

so there. in And also included that's

So but our operating guidance our strength want estimates overall, full conservative to still be improve we is allowing to year. the look as to we and us

Jeff Edison

other and are we operate only would The really increasing Jeff. operating there is thing the It’s interest environment battle Rich. rate in Hey, a – I strong add an environment. a of

right will market. in to the out we work early so the as a nothing conservative environment, how approach generally Devin closely And we're keep, but are environment year, we're our way battle on take now that, this can watching there's the they're of pointed it to operating operating from big going the out, But seeing its watching that in to where be where it going environment and perspective we'll in clouds kind we go. and

that honestly, mean, for excited operating to the is on continue and kind interest we were operating the the rate push hard hopefully can And can through to I able side tell. So very big. too year as the about we environment, impact And we're get we that the not that you the first continue results quarter. of

that's we took approach did. So why that we the really

Richard Hill

Thank really Congrats on Great. guys. quarter. nice you a

Jeff Edison

Rich. Thanks,

Devin Murphy

Rich. Thanks

Operator

you. Thank

next question of Floris Point. comes Our van Compass Dijkum from

is open. line Your

Floris van Dijkum

talked and what for And XX% you my maybe a that? little just both gives occupancy, of but or I anchor. the know bit Maybe shop Hey guys. question. you was taking we've going small Thanks what if the peak beyond confidence that about occupancy can for your even

Devin Murphy

up levels the a of has about. than higher occupancy is the in that overall historically. of the over we're it are to confident today both high we been the therefore, Yes. quality speaking take that historically And we the is time. quality Floris we And portfolio levels, are But we that reason so at can improved line. numbers for and the portfolio have occupancy

and adds them us that as look environment we're when confidence. to that given And achieved, levels the what in therefore level telling and lastly, are that also to achieve team is are of others that We have our that then at we well. the we're these leasing environment the confident, able we'll believe be

factors of combination all us. a it's So those for

Floris van Dijkum

me, your average Devin. of $XX Devin, I’ll million terms Thanks, more is in for of size one And question about assets maybe ask which your value.

to that. low bought side how going million how than But assets asset XX to in look own? a of The is that smaller like well. the how buy this you've your in are you couple portfolio quarter public a the as do And to see from transforming the although and of And you three this, you now? buying does that center the On your looking be your more what stuff that portfolio relative peers. view larger been your you that ones typical benefits currently what mean your of of does in composition years terms are

Jeff Edison

Great Jeff. Floris, is this question.

goal. than our from in As XXX,XXX we're foot taking environment got our in that mispriced. to And are, grocer kind that if of that income in where, bigger is what it. our XX,XXX you to got get of not not where make circumstances square buying core, feet. all mean, look slightly to are where not a have I our whole more is had by XX% we And exception, this slightly dynamic we've we things buyers It's think sure core at returns that can know, in center There as the and a advantage box grocer. historically. is mind, that will market the but as certain square But opportunities be concentration is XX,XXX at change. opportunistic coming is we're seeing of the of with average are we that is outsize that what or the big slightly a selective you

always we are contract got working projects got under with company, can where have which you that profile, the centers that will And actually you'll of the of even important that. in the IRR And competent of is think unlevered highly what We notice thing the with get throughout under go that will that's about will see unique unique, continue one better eight do very having to plus because that, situation. we grocer we we've we've of forward. as and perspective. just that, an see what as done two the a risk a sort them, do I where history we've from excited well things And number our we're contract as or in some still return to consistency is obviously there that the you

Floris van Dijkum

Jeff. it. Appreciate Thanks,

Jeff Edison

Yes. Thanks Floris.

Operator

Thank you.

of question next BMO Markets. comes Juan from Our Capital Sanabria

line open. Your is

Unidentified Analyst

Eric Juan. Thanks taking Hey the Kind of gears guys, for my it's on for development switching question. on pipeline.

XX% you are increase XX%, builds target of there? costs risk any as across the yield about and think things, about think we should there your So your we seeing side numerator how then to is of any embedded

Devin Murphy

Yes. Eric.

Jeff Edison

I – go Devin. Yes. ahead,

Devin Murphy

they is Yes. of one projects the redevelopment shorter benefits format a again Eric, so of and our small our are have that duration.

real to time. projections able we’re So seeing we’re build into our financial increases in that costs

of environment of the we’re cost from perspective. the quoting XX% to inclusive So a are current XX% numbers that

that cost. current to hold need the we’ve So to continue months, into to get models, XX – XX% financial are view return given the XX in costs. these XX% rents to-date, typically our that that our to is we’re delivered fact to on able projects we And build been that able circa

Unidentified Analyst

Okay. you it. Thank Got very much.

Operator

Thank you.

Mueller JPMorgan. question of from next Our comes Mike

please. question, Your

Mike Mueller

know, Yes. Hi. escalators today I you’ve months for been several time, backdrop. portfolio your don’t macro to has the what the know asking given I past, over of just trying stepped you’re backdrop, up increase over the the but magnitude

Jeff Edison

that are time, one Rent mid-Xs on staying that real is to what the So in Mike kind able get a increases and you today is its question is of answer CAGR we bigger. great working as in our – we’re know are we range. that front, and up

going we’ve we X% and to of probably, get we’ve regular bumps that have, the to X%, this we have up of to kind had upfront are the CAGRs inflation. match less seen that X%, where signing. pushback one that is process rent mean, we’re the seeing seen bigger reasons and But spreads keep we’ve people Our to the continue the we target on CAGRs is the results getting than it – bump on to leases in I those

it if in now. the So than it it right we CAGRs. I will seeing as the And to – spreads inflation get more right there are that. rent But stays where it in now believe is we’ll continue push we’re

Mike Mueller

Got it.

it. That you. Okay. Thank was

Jeff Edison

Mike. Thanks, Thanks.

Operator

Thank you.

Thomas Capital Please Our from KeyBanc Todd next question ahead. Markets. comes go of

Todd Thomas

I for quick. back wanted thanks taking real to the Hi, to question. circle investments

toward million on $XXX well the You’re $XXX guidance. achieving to track million annual

acquiring John’s or leverage range and talked sounds used costs. times the have what’s pipeline You like but is tick pretty a capacity like leverage thought X room increase margin you given level, the going just that a continue It the hitting just bit. did today? forward. macro under investments will in investments And increasing fund from the borrowing about be healthy, uncertainty comments sounds up to at little headwinds contract and the greater line that leverage to but change, given the and low, toward process before X bit times Does the

Jeff Edison

Thanks about. question. it. something in great we a of for And we constant kind it’s – discussion we’re Todd, are – it’s

not a pricing property growth. We’re strong at level laying outside on that the strong this of match is level. performance if you property the all at seeing market performance And having you this the continue the we’re over the the – in that is go we’re the forward basis, the lot of kind noise of thing can a we’re if expensive,

plan that costs those those well kind underwrite we’re environment rates even we to the against off. people able the But of returns to we be two to increasing tailwinds, those there point house things headwinds in. So back get really always in strong seeing as a way, going home of prudent are operating do, working off their things shopping people those people driving we for to have at more weighing today business IPO of be point, are often. tailwinds the guidance. $X that’s I where as we’re – coming from weighing better keep operating and and that risk environment. that to that three from capital out, because a to And the you of to pace of more as going that more centers our long mean, net our not off years that that current center, as and buying that bad in we’re tailwinds to going at And But this we’ve coming are than And that more continue – we’re results. are We two as dispositions. as three a as billion and reward, we’re use said interest convenience and think we’re over of a strong think got of that we to miles continue and are – continues make continue your the we’re

Devin Murphy

when we only as the Jeff at in look give that points underwrote. thing unlevered. believe as know, to those higher acquired than bit XXXX, we’re in targeting and eight a Jeff, And IRR assets add at Hey, perspective what be just you We said environment. unlevered circa more strength in that, we assets what on assets to we the you underwrite Todd little operating when basis of that the the given XXX we the will those

reflects given So that we said hit there’s can where the – Jeff depth environment. a returns terms strength of targeting, environment that, there believe we’re we of just to the the that where the operating to are in acquisition continue what

Todd Thomas

all? X.X% completed forward terms quarter. Are forward the in any pipeline cap pricing Okay. relative greater any on look of I assets mean expecting three of move the change maybe as like in Are the some That’s pricing helpful. that. rate here? compensate seeing change you what’s you of in you to to for uncertainty? Appreciate the pricing in kind at Maybe the

Jeff Edison

environment, rate we basis right found And stuff to be you – in we more we IRR may returns, the better what But been think past. look buy would significant making. a we in the when think bet on able to have pricing basis say the the for forward than example, is upside. that there in, It appear be has where at we’re is cap on aggressive. long-term the our a us that’s I on to

that, and And move going bit environment vacancy that the a strong with ability certainly the be amount properties. a so story of of strong cap is good not very really which IRRs to operating tells we believe, story, rate to driven little in but by

market because of seeing. that, we’re and certainly what paranoid the So sort headwinds there We do about we’re as that’s always, pricing. are to

XX up be time. than years But buyer the do over we We in anticipate historically have are much there no a progresses. think last we they the let been certainly real and forward will that some, less be months. demand seeing leverage mean, competitor real as I will going the effective

ton quickly. used of that there. So we don’t there’s getting be still but leveraged that’s part see positive, less out should a And capital up that

So we'll it. monitor continue to

has one as of think we've well? questions lot theme, tough – relative – which And XX out, I way talked are – retail to will determine all the really everything the repricing think over on. you in grocery-anchored – the in next we I risk it's over to Are we've three years, go coming profile awful all of there's going real types. other will – some it's Is things of our is, end? with shopping profile from just risk where that that their months. that moving been which seeing where these markets centers of of last just I really away estate think one working values to is about that, terms the drive sort So sort an of XX an don't

Todd Thomas

$XXX value rate last quick, notional and the April an That's there question expiration what's interest that of John had of with in real Okay. a just And What helpful. happened a XX. swap for impact. – the million

John Caulfield

Yes. Todd, so expire. did that that we let –

we XX% would the effective or be today, that where post And sit fixed of that the is at April end so for I impact

Todd Thomas

related to Once expense interest – interest the million. that change $XXX in on the

John Caulfield

Yes.

I because that when close those actually So where at look to would've several it we currently, at that, put is it been ago. years place in think were swaps

think we the – our into at which as at I to we and at So are rates effect look it I to guidance. I this that we higher, and we've X.X% as X.X%, curve, we the say for quarter, gets taken but it's that later X.X% year. the see do interest neutral, mean, look want forward I mean, I think

Todd Thomas

you. Thank right. All it. Got Okay.

John Caulfield

Thanks, Todd.

Operator

you. Thank

next Wells Tammy Fargo question of from Fique comes Our Securities.

Your line open. is

Tammy Fique

up Good anticipation demand come sellers Maybe acquisitions, the following one, of guess of of this leveraged higher just seeing sort in and I on are more lower you. market afternoon. you from to rates risk Thank the buyers.

Jeff Edison

Tammy, this is Jeff. Yes.

the fairly We beginning volume of increase it in the first a through have seen But first actually quarter. product. coming of the that there’s year the continued substantial has – and this into

we during that the see of And the in part no just year. fall volume started is pandemic. last increases Now of

more that number We for has I shopping continue to think continues would I to centers grocery-anchored expand see the and that centers market. are demand the on the just probably a regular of And aggressive continued we a and XX% committee quarter of fourth in a investment deals close on to the say, did but guesstimate. last seeing than sort we're meeting, year, that's

Tammy Fique

underwriting Thank understand Okay. a and still about you Did on to what then, of rates cap looking And guess, going next that sorry how acquisitions changed this. I more quantify at in calculation? to X% might you're you. you're in range group today? the wanting about IRRs this have just the of

Jeff Edison

on We conservative the on the on that of mean, is the the we're gotten the And – think underwriting have – rates Even have can that the underwriting is you done similar. aggressive environment don't it is I buying. just we not yet. new cap are underwriting. ones fairly we more not that. that tell though our we I assets stay not I closed really have strong. very disclosed these

more be a upside I have we of mean, centers we We create to where believe couple than have historically. they couple circumstances just happen unique, we found have to unique we mode. And found more some occupancy vacancy or a that

Tammy Fique

question my dispositions. is then And on just really Thanks. last Okay.

quarter. a in did couple You the

you looking to a have Just now year? additional sell or are anything right this contract wondering assets if under

Jeff Edison

Yes, the our second in we're, year. things some monitor stages the in the that. match half that to we're – start But market, to have that the the the of we so very market. acquisition we're we now we've in of early our looking dispose right continuing of fund And closed the – can at

the as really And I well will $XXX through of I second, the number we so million But funding your quarter. that Tammy, third number additional question? acquisitions others. million anticipate net a with match additional and matching $XXX and the would dispositions answer did – to being fourth do as again,

Tammy Fique

Yes, Thank does. you. that

Jeff Edison

Great. Yes

Operator

turn you. like concludes closing Thank Edison back would for This to I to our question-and-answer some it session. Mr. comments.

Jeff Edison

really to on call. as our going highlights the sort some free being year leasing which this which environment's – We again of of think strong, by do The for million quarter, think us. flow levels. that company, operating almost for and retention Great. Well, really, Both level our thanks we we're we $XX of is – spreads augmented great high cash of about from are the growth are the engine generate everybody is strong occupancy,

capital strong. As we acquisition about for There's lot of remains a grocery-anchored there. the the on talked side, demand

tailwind there neighbors that have the don't see about – appear strong customer. able to we're and trends we to like XX than that we quite think of are hitting will format over the been that us are we have who and be obviously, helpful think results. to don't to there, we're we but and a date – to last with they been we really us us continue that doing to number guidance see going tailwinds get one positive. quarter. not value know, away. opportunity We to there's a growths to increasing looking And cost And to will on. with guys that their that, some year the a as are for a spreads push feel continue and or will on happy. fact think Obviously a the more you the macro really that and there's got our continuing renewals through our value to We're others beat – to are the So the we a And But for close going forward that, headwinds priced proposition able we our now months to headwinds think that. net, this raise the And in be there's most keep testament that there. good a tell we're you we And out we're to centers we be. And We're And business pushing we've helping there. well. the keep eye pass leasing think are us. two in that

So at We Hopefully, thank so thanks at the for talk And time. you before you we'll guys quarter. ICSC your appreciate probably to it. or next guys you Nareit,

Operator

Thank you.

disconnect. may You now

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