Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to Phillips Edison & Company's First Quarter 2023 Earnings Conference Call. Please note that this call is being recorded.

I'll now turn the conference over to Kimberly Green, Head of Investor Relations. Kimberly, you may begin.

Kimberly Green

Thank you, Operator. call our Chairman our President, Officer, Caulfield. today’s Officer, Chief Chief on John Edison; Jeff Devin joined by and our Executive Financial I'm Murphy; and call prepared will Once remarks, conclude our open we the to Q&A. we today's on Investor available Relations will our an version After call, be archived website.

and the conditions. management's performance, As earnings including in today's about guidance contain and XX-K These Form future on of expectations and forward-looking may reminder, and views to most beliefs our in business and market are subject forward current based as a uncertainties XX-Q. recent statements specifically our future various discussion company's are and financial filings, SEC risks described

measures today, certain and measures will also reference these on posted a discussion are Information to that non-GAAP our our with Please GAAP regarding information. packet, have in information we our release reconciliations of press and website. our earnings note additional results of measures. In are these which available supplemental financial our presentation use we

on caution to these also forward-looking applies materials. statements Our

Now, the to Chief our Edison, call Officer. I'd Jeff? turn Jeff Executive over to like

Jeff Edison

you, thank Kim, for everyone, us Thank you, today. joining and

centers focus record team of leasing strength by of at NOI the quarter The X.X% our operating strategy grocery-anchored level. another performance ability occupancy, and our shopping spreads, property of team's both in growth same-center differentiated and exclusively to with delivered PECO and our solid retention. consistent to achieving highs drive renewal increasing The attributed neighborhood results is owning

We the grocer of one drives and space our anchored XX% times from repeating say goods neighborhood owning PECO heard but before, market, over it is focus results, in number services. the by right exclusively not format with centers you've size and know coming two many on rents shopping all necessity-based or the team create equal. I bears it

know X.X store the times family visits average Why? Because week. per we American a grocery

our foot small traffic centers, to store consistent our benefiting shopping draw grocers daily Our spaces.

use our size to we While another of of define differentiator. critical long-term important right portfolio quality continues and format PECO's grocery-anchored the spreads occupancy, our is leasing we spreads, includes by are pillar our of of new neighbors. be the retention. high markets, from driven portfolio PECO, acronym our SOAR. of renewal success, our and quality the our the believe through the This advantages demand At

serve. services Our creating that for and pride the mix needs and serve our essential have they merchandising that retailers neighborhood of necessity-based provide communities. on the goods optimal being locally centers ourselves We communities the smart

The there of continues currently remain and and Our also and continue health We're regions. restaurants, signs leasing pipeline its no categories geographic are to strong, demand strong medical, across beauty. all consistent to slowing. most be seeing active quick-serve

that centers. record are just sign our combined leasing PECO's with I a spreads are of at mentioned successful occupancy the level XX.X% retailers

Our of communities to neighbors serve. and to they be want the the closer customers in the neighborhood

Our still basis occupancy of the the occupancy portfolio. basis lease believe points year-over-year XXX high and there's upside points quarter sequentially reaching XX.X%. all-time portfolio increased fourth XX an We by in by from

growth our of we NOI continue believe growth will growth longer rent is driver as When as of no because a occupancy power. pricing increases available, our spread our

driven number advantages grocery-anchored on continues remain by one and limited. grocer. strategy is our and the retailers two to to of the result on or in In market unique PECO's This exposure services. focus deliberate addition, at-risk our goods our necessity-based focused are

other growing Sunbelt Our strategic markets. presence in the fast and suburban

demographics. in and two PECO line landlord trade and store are with neighbors Publix's neighbors, and PECO's area grocers; Kroger second largest one Kroger's demographics are top Kroger's and Publix's number PECO's is respectively. largest strong Our Publix landlord. are

allows PECO end in centers make Our turn, our neighbors grocers money, make close the where money make and consumer are which to money. leading Americans to

rather Maine diverse strong focusing Maine. corner geographically well-located of our markets, than We the populations suburban demographics. growing on addition, and on focus portfolio coastal and markets compete exclusively is on with we In

neighbors businesses attractive healthy over Our diverse enable are local grow and successful and run and at rates rents to time. us mix regional, retailers who of national,

have demonstrated retaining of success high our retention We record five-year continue and ahead current excellent by to first our XX%. as the historical well neighbors of a XX% of quarter rate average

who are remain Our local our resilient years. neighbors on centers in and retailers successful have X.X average been

and Importantly, that our offer. neighborhood merchandising the mix they enhance differentiate centers

shopping quality, grocery-anchored perspective growth, of our at With more occupancy, success what than and retention. on and long-term informed quality sustainable spreads, provides property in years' the important an the experience level, and which XX drives center believe drive of and market SOAR measures the industry, we advantages

continue If cycles. any will history is centers details market will in on size cycle-tested a resilient performance to shopping grocery-anchored all right moment. in neighborhood Devin our provide be indication, more PECO's

favor the and Looking structural positive to These ahead, due supply include the that we from in new strong continue of further the trends number healthy of construction tailwinds shifts lack last population the to to factors work, limited hybrid and amplified and XXXX. since benefit delivery. communities, mile demand. suburban retail consumer, macroeconomic demand of are migration trends physical and importance Sunbelt, create location drive These neighbor a new that

continued with retailers, retention, our by When that tailwinds, of we and necessity-based aforementioned pricing believe, the generate continue growth consider spreads, with and we demand less our advantages alpha renewal beta. combined power more our strategy to and strong occupancy high the will markets, our indicated record

to constrained and interest continue capital national higher in to our patient we availability use With the market, and platform opportunistic. rates be be

was properties first year. acquisition allow right-sized grocery-anchored that high started quality X% that unlevered acquisition of volume will our PECO transaction a last portfolio. our the quarter, the well neighborhood and activity us with IRR. centers hurdle exceed fit On front, These earnings achieve These incremental we're with by growth pleased which to our largely driven drive strong will in

be The IPO and also and sporadic, are a outperforming slower are average, our quarter. acquisitions relative relative since pace in performance On to to underwriting. acquired with underwriting. pleased We seeing to we're the our the second continues market the fragmented of our assets transaction

million gaps interest there rates, are response we're the for being we still guidance in buyer delta While to markets higher market because to rates and the of seeing deliver our in net wide our between cap our provide and That private move expectations. this million on to affirming seller's are a conditions said, current the acquisitions $XXX to in allows year. strategic range We on wide us it $XXX be based still expectations.

accretively growing shopping always We opportunistic portfolio, and continue we to remain we center on focused as be will our are.

focused portfolio our cash portfolio headwinds, and rates, and to There's growth external With flow to no our record and share investing conflict, global bank combined mid challenges. on basis. drivers, we to continue FFO on growth. deliver question in driving believe remain inflation, growth a can interest create high-single-digit rising failures continue per Despite our that long-term internal we these

of sheets and space. still in center this the the balance we a one rest the opportunities year. we arise lowest shopping addition, for that liquidity, have levered sheet fortress for With ample prepared may challenges of and balance In remain

merger. like would proposed a the I Albertsons provide to quick on Kroger update and

While it the centers. remain in merger, our we there have that will the major been haven't new on impact positive on developments any

centers PECO, performance for that We it should the to-date. If merger a positive centers anchored merger our have strong will occur. serve does our not Albertsons centers, continue our if the believe communities they continue the to ultimately the for enjoyed occur, for and is

turn will I it that, Devin? to With over Devin. now

Devin Murphy

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

The operating strong. environment remains

a me team into in emphasize continued the continues leasing, convert note. demand our leasing let strength at to retailer Jeff but Our strong of few centers. rents higher highlighted earlier metrics

during XX.X% XXX points Our activity increased anchor executed compared executed totaling to and increased first X.X increases and year-over-year to first Year-over-year XXX lease XX.X% strong leases and a points occupancy to XXX,XXX year deals square and increased to of of leases XXX feet inline million basis volume the respectively. our the Leasing ago. our quarter. XXX feet executed occupancy quarter basis in square remains

PECO's improvement retention a no shop in by small quarter at to tenant was rate XX.X%. and this our rate lower driven retention costs. high High downtime retention increases means record XX% exceptional

five renewals our As the over years square last has a averaged improvement on foot. $X below reminder, tenant per spend

continue spreads rent attractive We remain that including optimistic contractual re-leasing terms, solid bumps. can to drive lease favorable we with

the QX XX.X% XX.X% inline contributor and On rent quarter and to executed respectively. growth. average, new our renewal and for long-term had renewal annual at another first in important rent of contractual new Comparable were leases strong our X.X%, spreads bumps

centers. The continuing high rates, leasing the grocery-anchored are retention to space record spreads that we see, with high of combined are our demand in per evidence our continued clear

of steady and a power our strategy pricing strong reflection our the portfolio. quality strength the of and is Our of

our to now activities. development and Turning redevelopment

cash invest development limited projects. use continue creating produces great attractive This risk. with We remains a activity of in repositioning to outparcel returns free ground-up flow and and our value

are we and future projects these continue on progress build hard great to pipeline. our making are We working to

add delivered we approximately the stabilize XX,XXX long-term approximately meaningful incremental of our space impact over square growth. neighbors returns provide which In feet quarter, and and at on superior projects NOI new XX%. $XXX,XXX risk an of annually on cost first returns adjusted These have of a projects, three to NOI

and continue expect cash-on-cash with between invest development million average XX%. opportunities and to to For the estimated repositioning to X% full-year of XXXX, million $XX yields in we outparcel $XX ground-up

strong our necessity-based with services. XX% neighbors We traffic foot recurring come continue continue local our to to top national, centers. of benefits see to a rents regional, many mix our healthy offering grocery-anchored portfolio than drive retailers. the of grocers and More of and our And from goods

traffic XXXX in first foot in of strong line was with QX levels. Our the quarter remained and

will centers luxury on and on even neighbors Looking our ahead, we believe categories, and our other necessity-based visit and reduce to discretionary spend if purchases. spending they items continue consumers

resilient proven has historically. portfolio Our economic through to be downturns

crisis, centers we owned grocery-anchored points points, at portfolio. fully We its were XXXX our of in look By declined currently financial decreased Occupancy by pre-GFC those resiliency performance We to XXXX. the but performance XXXX. had NOI us level own went XXX following highlights in XXX recovered back but it reviewed and recovered by XXXX, basis XX basis the of assets. PECO's lowest to the by by When levels XXXX. XXXX, that global

Looking today pandemic, during XX and neighbors of XXXX We and locals we PECO small of XXXX. fully our back the strong centers. of and weaker induced lost in including are shop at points occupancy the peak thriving downturn, XXXX middle the the recovered just the our and COVID operators by our basis during lost

ability right continue the quality and portfolio including face, format, in to resiliency demonstrate platforms high to to our neighbor provide experiences. stores supply shortages. order labor manage continue PECO's believe technology be grocery-anchors, challenges, well-positioned We and and our size mix. many invest neighbors and these inflation, their many they challenges to to our given chain customer Despite necessity-based their our continues issues, in Our neighbors

base. well-diversified a enjoy neighbor We

of To limited put X.X% has our theaters, the represent neighbor our That XX neighbors T.J.Maxx. that, top and or retail our comprised very on just retailers. Our watch distressed to non-grocer a best largest is X% no to exposure finer neighbor country, ABR. top is non-grocer exposure The rents. PECO the other below only list list of ABR. currently are in point of makes neighbors neighbor All our X% our on of grocers luxury office and up

reminder, and our Party Tuesday a basis minimal Morning Bath is exposure points City Beyond, combined As to XX Bed & of just ABR. at

neighbor our format, retention our neighbors differentiated sheet lack strong in high neighbor leasing record all credit our high diversified our the right markets, continued grocery-anchored PECO and strategy size suburban growing strong for occupancy in cycle-tested to necessity-based well mix, and our teams. distressed continued importantly locations exposure with strong position well-positioned summary, most aligned our our balance and record retailers, rates, demand, and Due steady of high mix, to continues cycles. neighbor spreads, our economic In well exclusive our growth to focus, our

John? I over to will now the turn call John.

John Caulfield

Thank you, good Devin, and good afternoon, everyone. morning, and

offset XXXX Nareit rental or driven per in FFO expenses. higher by share to First $XX.X partially property an XX.X% operating by $X.XX quarter diluted increase million increased income,

by quarter First strong revenue $XX.X by partially to increased $X.XX occupancy operating driven and FFO diluted leasing million per offset property higher at higher core increased spreads, levels X.X% expenses. our share or from properties

year a increase quarter in first increased rent million, primarily and driven from an our per NOI $XX.X average spreads. leasing to was Our This strong by occupancy up driven improvement ago. base by square higher foot, same-center XXXX X.X%

not in next overage increase In first of addition, grocers. strong performance and expect a of so QX, rent quarter, the last until sales note our is reflecting year, that XX% Overage is approximately $X again I million do the typically annual we will in in rent year. highest this over we collected QX

growing with $XX.X and population. we income anchored Nashville centers in the During quarter, strong centers four Atlanta, Miami, acquired are neighborhood Publix suburbs shopping of million. household for median and located These

to drive in occupancy growth. expect We growth these and increases rent through assets

approximately available ended free the a and with million From our facility, balance perspective, $XXX our annual have borrowing debt approximately we available growth our the flow million and sheet to significant fund of our of revolver, credit second of by maturities on quarter $XXX confident XXXX. capacity are no significant we plans. until ability on capacity $XXX Between quarter we the cash million generated in portfolio our

continue markets and high and maturity priority including the to cost considering profile for public debt options In unsecured capital We of is closely lowest all the bond extend our the market, bank markets. to right our obtain for a to available placements, monitor for we this uncertain debt, market, capital are opportunity secured, this in private order us. the

volume acquisition anticipate later year. our long-term maturities with this our for XXXX We addressing along funding

prudent our remaining net to strong sheet growth, adjusted as of as X.Xx our at leverage Our as of earnings XXXX as with management ratio result our well EBITDAR March XX, low balance a continues debt

the weighted of of and first had interest At debt a was approximately end X.X% rate. our quarter, years, our fixed the of average debt X.X XX% of average a maturity rate weighted

three-year million at notional executed of with a rate a swap of September XXXX, value a X.XX%. the PECO effective forward-starting quarter, During $XXX opportunistically XX,

of pleased per continued are our FFO Nareit and share. We guidance strength with for affirming core and are our FFO full-year the business

affirming to our X% also are NOI We guidance X%. same-center of

assumptions. interest year We as remainder in of of of reflected do seasonality moderate anticipate to expense, earnings in as our which earnings, guidance the the a result to is the higher well our due

we and As believe internal be Jeff continue we are well-positioned growth, we delivering external and growth. to for strong long-term mentioned,

Importantly, on in we us XXXX uncertainties, and sheets contributions and to and pivot of the economic they NOI the importantly, consider offense continue the strongest one sector, pursue expect as patient Maybe be we ability respond as have provide strategic allowing balance in we current beyond. remain and to the have conditions. flexibility that quickly the accretive we to market opportunities meaningful most arise, XXXX, to

With we your Operator? to that, look forward questions. taking

Operator

[Operator Instructions].

Schmidt America. comes question of Craig first with Your Bank from line the of

line Your is open.

Craig Schmidt

results could is wondering you Thank and see the what second the to I strong, leasing you. that, that a in of if in I the year, position, the your operating In hard mean consumer at it's half derail PECO's results. looking remains weaker earnings year. that to would and dynamic even -- seeing I'm would what there of be terms XXXX, you're XXXX. that just more for in out impact downside likely that, just the lead your not could the

Jeff Edison

-- that to we that concerns box the This for is I call -- thanks. exposure question and that you analysis the And think there is the but as Craig, closures Jeff. your don't fairly have do questions always out, you and are got baked. accurate. you've I XXXX mean, point out the I there. out big and that call. the well There is that Thank potential -- for think are

-- we to the we but impacted are an extent, rate highly -- side are interest And fixed. obviously the on the

fixed the that the And those XX% looking change but in But -- an XXXX, at that's out -- that as than in at. XXXX. the -- we're be is in point would things think you we're consumer. that really obviously then range, effect I XX XXXX it a

Craig Schmidt

the I assets suburbs level looking just the four MSAs, what last is And assets? just larger grow current of some these four more to markets. then of noticed I then Great. were you're if major the acquired in the and wonder occupancy in

Jeff Edison

of I markets the our the we Chicago, Craig, top Dallas, do Minneapolis, occupancy XX thing exact Denver, look I have. -- don't the and point at occupancy Atlanta, can they're and Las and the you you assets? I out, if one D.C., John, four I Washington, should Sacramento, the -- -- mark number get And the Vegas, Tampa. XXth Phoenix. -- mean is But

in project So I that we the similar -- extensive the they're are very where than projects experience. a it not we've lot and bought Nashville. -- top two mean than our the bought we where markets have in -- different -- markets our we're Florida

at again, and we John, in have for stay focused a and to the long that Florida key it -- if can continue the for mid Southern and Do time will have you are the Atlanta, and sort of us Nashville, of markets then been of bot. the Florida on. but those look to -- you occupancy numbers The we've -- the

John Caulfield

do. do. I I

So it's -- they're the across about XX% four them. of occupied

as said Jeff lists And both occupancy have grow as so to rents. opportunity well we as pushing through

Jeff Edison

Yes.

have also those and some making assets already. those give actually great opportunity additional about we're at we're which will that as we purchased We assets purchasing land excited progress us we're goes -- time that actually on, with

it's yes, market. So north which pretty across on think what be think going way It's was, an well nine -- our this that well strong of unlevered, we the we're underwriting to Board. and getting a I in return the to was is of

Devin Murphy

Jeff, the add, that occupancy only upside see thing level I the you an properties four, average of the in but Craig, the in asset. of has and particular attractive the John one gave that pretty would we that, occupancy mid-XXs,

Operator

Your line next question with comes Caitlin Goldman from the Sachs. of Burrows

Your open. line is

Caitlin Burrows

the or everyone. I afternoon, had good all acquisitions that in that of been you XXXX. started mentioned a did you XQ in lot Jeff, Hi, think maybe

for come think was that I you extent already that or you're the kind activity have year the you on is will as think your you out to goes guidance is as activity based guys wondering laid So seeing, just the the it about what expectations that pipeline now of on? to fruition year and you

Jeff Edison

muted into going second Well, quarter. quarter the we got first in quarter our We a is had I for we what question. think -- Caitlin, more much backlog than the and thanks first strong

first for why acquisition The market wide of answering year. -- I -- is is keeping sort that's right a the now a on and range question, of target that's pretty so way roundabout we're last the the they through which when the So than cooler late time we under the did year to close the and projects in the in put was the because significant it process quarter -- there was changes contract, acquisitions. take a these four long on

between would year. So the to of going where we the I markets less certain and are be the end than that say about now

one grow we've drive confident And we're how grow acquire. to of we get range unlevered, we occupancy. get really how And really we're to and that If of about our that high-end where that to the got we be if going number markets we and much can the that the results that's range. it. that and that's grocer got that two the in of can And lower we of again, and end nine sort at that be rents what's can't, in we've terms feel at we'll or will thinking

Caitlin Burrows

it. Got

And then the balance sheet. Okay. switching over maybe to

in expiring how going So have for of and $XX the guess interest swaps the to you picture, have bigger you $XXX the now the rate how may forward, maybe floating you've is million maturities? guys into what September, that right decisions of but remaining and rate are debt I XXXX your addressing that. about amount addressed million, thinking play

Jeff Edison

our that do John, terms Great. plan our is? to you in -- want what take of

John Caulfield

fixed and are -- we floating, -- The did Caitlin. so afternoon, Good we swap Sure. opportunistically. today, about execute that we're the XX%

of we then options are the the different trying kind open to swap. -- strategies fixed think all remarks, can or said synthesize the keep and it of with I either come our we as prepared with I a in

but will evaluating be this long-term is would at would different so XX%, above to forms financing, certainly address it that opportunities I And to as our say that at time. XX% the are time, target, our we be we of certainly our in target higher.

well. taking that that forward acquisitions as XXXX XXXX off But we pieces would execute at forward-starting part opportunistically that our extending And the will move for fix funding time plans I the did we so swap some and of maturities swap. over table And it of with as we think was our then just and time.

Operator

question is Tayo Suisse. Okusanya Your next Credit with from

open. line Your is

Tayo Okusanya

ahead talk when XQ of afternoon, performance, Hi, just to going you in yes. your and another if guidance, look of you there's rest wanted maintained your kind current the going but in rent about Good there some quarter. maybe just guys to more of do the year. further to recur should it, at again, for even solid acquisitions but we on first annualize that's guidance, year, I overage everyone. Congrats the the you not of way than the probably are rest by quarter, and high-end your of you're granted

kind high of in how thinking So kind and the to end like XQ. your strong about performance end right relative of low just guidance you're now, the curious especially

Jeff Edison

as Yes. the the tell you, year. Thanks for be first the going more to visibility question. the in across the I Board conservative naturally into will quarter get rest we've we're have fairly we did which strong our quarter, we positive very the really by sales grocers. in yes, at paid was the driven strong percentage obviously had And a first that rent of

part given go And but occur the overall -- certain I would process in acceleration of And that's it by. recur err rates be the coming is each box we as just kind -- of will Overall, the terms clarity I in our the thought will And have affirmation of that that'll relatively of the we will the environment, that, more in more in will mean be as the -- side we're quarters we're our first on guidance year, to have conservative and happen. of the what or the economic out conservative in think we something quarter. -- with we we'll interest almost uncertainty this get in rest. environment will

Tayo Okusanya

of future about trying again, just kind ICSC, leasing team. telling what's about see you helpful. a of also of take heading just or then kind general kind into the your high-level to curious And And new specifically given categories that's ICSC the environment? retailer kind that's with of kind into sense to you that your of and demand meeting of demand not thought That's some confidence heading

Jeff Edison

Yes.

side. backlog strong of meetings a really on leasing have we the So

in retailers the to fair say indications So that the be that going to from I on continue there's demand. strong market that product it We're that coming ICS size -- as be our there market the projects bookings several there'll of of those coming the will -- really part at we all anecdotally ICSC of the one two be amount the hearing are That on kind have grocery-anchored is the would target. if -- more or grocers right a number of there's understand ICSC. not

kind I remember, coming that, product a thing that's be you ICSC As that that sort get coming -- past when -- and a with the out. plays big And we'll get mean, from the we'll that, where demand more to some back. who's at We you understand or the of there's at realistic sort we'll that should been cycle how away sale seller whether always that trying see see but pricing. And comes decent through people that for or three obviously a lot seller coming a appearing last out went the a brokerage of it's two for now years, what ICSC, of to there of through. old that be

good. seems activity But

XX,XXX I they're talking to -- for coming think it. about XX,XXX the people

So in the of and we -- say so pre-pandemic we're back but -- terms out. we'll but we're and positive -- how wait sort positive not see that's optimistic, -- I'd ICSC numbers, comes to we're it's of

Devin Murphy

demand category your by Hey, only Tayo, seeing add for to Jeff, are thing that question. of in would the where retailer I terms we

line in portfolio. the with it's So current

to strong to to have are Those the plans. for so is we're demand and strength approximately the three continues where Medical is percentage retailer concerned then, do see their being the quick-serve demand. the of lastly, about the by And restaurants a very are have retailers in our not our and of demand centers. consumer demand; medical. seem strong health strong categories to pipeline So current pipeline of and beauty, continuing growing XX% those be aggressive growth continue

Tayo Okusanya

you. Thank Great.

Jeff Edison

answer question, want Tayo? Is sure that it we your make -- covered. we Did got I to Yes.

John Caulfield

did guess All right. I we hopefully.

Operator

of JP the is Morgan. question Mike from with line Mueller next Your

open. That is you mute there. line Take help. Your off would

Mike Mueller

was different question the shops, today quick has is significantly? than COVID? the terms in say, So into any of it mean, evolved mix I heading it small

Jeff Edison

a answers Well, to amount is are crisis been the great financial of two pandemic. had the there there significant that. time and that, between One

have And natural into survive because where able happens there's the the and business what are market. a you weaker the some of that so thing is get retailers to

lot When eliminated marginal those players. of of more the pandemic a sort hit, it

look as so, we not we're that it out. today, at And far

think pretty a sort so if of long somewhere time of ever the the and know and in nationals terms I but base makeup. our bigger. other being in small that XX% points got you we've over range any period don’t we've it's terms of we being our -- small stores like then sort if the local regionals not Devin, And that that have of of mix strong maintain had stronger -- than tenant a of much we've in And of got?

Devin Murphy

portfolio, Right that Yes, I look what a number And in is retailers neighbors. we what tend thing those Jeff medical as to that terms add said only more be the of local see use my of as would medical I like our pipeline we question, percentage growing about a again, to Tayo's about it's total Mike, of rent at roll. XX%, it's mentioned we to our XX%. now the but and that in answer as about

percentage local have our are we been in neighbors in they what on the users neighbors leases medical our of our them about medical. they're typically one, on our longer number about local very average for And this years a resilient are of and sign portfolio, XX like medical centers local our XX% And neighbors is average.

So space. they sign long leases stay and in the they

resistant. and Again, has e-commerce is it that evolved like use tends to health be this beauty. we other The is because

nails can't You done get the on your hair your done internet. and

with for on been local sign they've again, average e-commerce portfolio, leases. a it's years, medical, medical, over similar these in to And our tenants space to And so so use. tend again, the resistant XX in And longer-term as resilient.

are the signing tenants time length they're So highly over is those XX years. given believe up the evolution base that, categories. been to be fact and for in that's evolution in then that And local continuing that of tenants that constructive that, the for the particular the we neighbor

Mike Mueller

Got ceiling a I'm that? do think see XX.X%, is the follow-up, then for it. occupancy if I And just you not quick mistaken. the Where inline

Devin Murphy

we've Mike, which pushing in as spreads can any basis got has we've five how the been historically. to our we know we meaningfully quarters, been emphasize, And point upside is And of that higher over been quarter, metric they've than which at level is you that doing points last as a highlighted than as weakness, to NOI first occupancy; our a said push we've the interesting continue is as get and as we spreads. do first consistently, weakness. to level points have the think And in see that quarter, higher continue of XX%, the were that's this that will terms we XXX metrics being with that. continue is in basis been in portfolio achieve from we'll again, we the as we've another seen the we as is perceived able you've occupancy able are up bump we've of growth, to ceiling against And to continued to metric. concept an as in rents. that given XXX high which But we strength of we're what occupancy to potentially is state

Operator

Your is of from next St. Haendel question the line

with Juste Mizuho.

Your line is open.

Haendel St. Juste

but I Party Bed that Morning. XX about mentioned that remarks to exposure questions. then think City there, of bps for Hey also overall, your the My first X% Bath, taking my you you watch about Tuesday you in on question's thanks have it's and list, mentioned

also you're for guess what I risk us budgeted for debt talk your So is? that or what on you've other that, anticipated tenant list, you known year categories reserve guide and your unanticipated else risk And concerned what in tenant this what is can remind about? bad about Thanks.

Jeff Edison

for The Thanks John about Haendel. bad first Thanks, you Great. want take then Devin, -- calling want to the debt? do and in. the to you talk

Devin Murphy

Sure.

Jeff Edison

Question?

Devin Murphy

thanks Sure. joining Hi for Haendel, call. the

cities tenants expect Morning we portfolio the the Bath, be just of all City, we five terms Tuesday remind in everyone, Haendel, have assumed. and of to Bed party again, to leases those In and three Party five

those five will So we needs have any backfill stores. on not

already are locations in negotiation. increase is meaningfully to rents on the the two better have place the we Morning, in in one backfilled them, Tuesday XX% are And and On rental those XX% three metrics than of range.

a $XX of have backfill Bed we be can rent we of and in that that we low-double-digits, rent. little bit will those locations not a we'll from one, to have a a the on the on two terms what think $X the we be, rent we're backfilled in in to rent optimistic rents yet, the a other, $X have go portfolio, backslide have to able Bath but the On then

the not we're have those overall, three that impact tenants the on portfolio. will concerned So about

on our and terms the top list tenants watch are of In the tenants on watch list. other Haendel, those our XX

it large space pet are the et care, the therapy retailers ranges a of that personal to it's from tenants cetera. and in universe So to space physical

wide So and than range for it's a ABR basis us. those not tenants of more of represents one points XX

the diversity roll rent again, in our So benefit to continues us.

list. our watch about And not one any particularly so category we're in worried

John Caulfield

bad the debt. on And jump I in will

the debt. long has So we our a bad that. consistently just what And that space have of point, XX guidance do basis is space that. right by fairway is do fallout with of. we don't to of this our the disclosure, portfolio in We to XX volatility. the provide down -- on That budgeting, unexpected points or things regards delivered is basis between guidance time quarter But to over based and but first Devin's points off period like and experience

good we're from So a I perspective. think place guidance in a

Haendel St. Juste

helpful. very That's Great. Great.

list, had my that's yield. all thank I'll on I so think I you.

Devin Murphy

Yes. Thanks, Haendel.

Jeff Edison

Haendel. Thanks,

Operator

Your Stanley. the question Morgan Kamdem from is Ronald of next with line

Your open. line is

Ronald Kamdem

Hey, quick just ones. two

have of some cap been rate. asked the the I just see to but acquisitions, going back already, And these

then activity, came after and two, year? how and in this more into and month up sort of then of and more out us one, past your number on deal the events to of for the the a Thanks. remind those that translate second to trying number lending deals half you're still going the people about, is pick environment company are pause is sort activity the Just half, just thinking for figure opportunities Or pipeline? when sort of does of tight

Jeff Edison

you're seller who where Thanks, very accept we're to its is you sellers at a each And Ronald. will in a to about the environment, is core because it. find new one the that four transition, trying that at specific motivated look The projects seeing story this motivated pricing. -- has story a if really

then we significant And of up. ways to outlaw were lot it is that the was new had that in of one to And them. upside development do in ramp was of that we spreads, contractual able found opportunities assets a lot a and new leasing

to a but perceived to could a but specific tremendous -- a lot a that be cap more -- things the property, allowed were what very they aggressive more us with these upside. have were with as So rate,

and that, fund. alternative, management terms we to were would really the that what expectations And what the for owners seller that were. gap how be needs they were between with be was institutional last asset And selling. They the we're our those of like a bridge things where -- where portfolio -- pricing in in would able

different the motivated pieces, a was but all seller. story, a had which of it similar So variety sort of was

-- pace, FDIC lot this of that it'll can In year. lot anticipate think year. type a the see muted think I we'll will terms we're I a the us of part be pace tell of from second we what about do for [ph],

be difficult number sellers. will it Board the market. X,XXX buy one the the the to it's be country two find -- we demographics the or that across like to big with think we've motivated want. that and we'd mean, and But I the appropriately across a got grocer I centers it'll

pricing is that And it's Ronald? obviously in it. always it's lot your question, answer So a more Does gets recognized. today there muted volume market. a as big But

Ronald Kamdem

the what's we today think you just so to can debt just issue three I'm think happen going what's term looking interest out, when at guess perfect. I'm so was the figure planning mark-to-market And the to that? for loans do you how the What the I Yes, then and there? Like should to those was due? going and second where due, see my those? look cost that to come you on So supplemental. are guys trying page basically, Thanks. XXXX on coming back swaps. just I at about those when question I

Jeff Edison

want do take that to John, one? you

John Caulfield

Sure. Yes.

are maturities, from rates. there have, we as and various options focused a XXXX low-Xs rate But swapped be I on So from different say we the those we very perspective, low-Xs. goes look with at it the Ron, can anywhere they but would in to the come some variability,

close and where their the based the where terms looking is. you're SOFR looking swaps could in at -- X%, that X.XX%. when I'm In just I are we probably it X.X% what at depending were on five-year, a it X.XX%, what you're at. at the based you that's on is rate mean, XX-year, executed of look those at on be to be interest based could be on could And swaps

think I portfolio on are I of grow there level. those so to is headwind, a that the of the growth think of look swaps performance continue operating us allowing full And is what fixing if but you at the at to kind

like. our plans the play into something But very focused and it we're funding acquisition because does it is on

the various gives because reason durations we're a as are sense that that I on rates I'm the So and hopefully that less examining you that at. forms looking maturities. we But of for exact is mentioned,

Operator

BMO from Your with the Juan Markets. of Sanabria next Capital question is line

open. is line Your

Juan Sanabria

I a quarter again. strong just wanted earnings to follow-up first off trajectory on the

of there for guidance the just an sequential grocers think then first quarter. percent rents to the the on occupancy year? but one range secondly, So occupancy renter Just was the relative about overage Morning, your from performance two thinking guess break and event budgeting a I you that earnings. Bath if bit a kind trending guess Tuesday that from I first Bed you're of stores we annual first, how about what's anything throughout should down, drop-off a could quarter in perspective, assumed And was your little end the in the bottom from

Jeff Edison

one? Great. Hey, for that take calling John, thanks Juan, do to you in. want

John Caulfield

Sure.

$X.XX So in we was ago, expect that their call scale overage it remarks. that as Devin go-forward. I think prepared to out was a mentioned the the first rent quarter, as it in say is I about I over repeat would volumes. sales we would even continue to would increase increased there at say, year likely my in grocers our that not repeat XXXX to of But

So the I would starting piece. say that's

there $X.XX, range growth got The And second you've seemingly is you a looking certain full of kind second better you expenses around probably another small a seasonality -- gives of that in dollar but the bit we're get us a at little little at. that from the give amount, but bit are a not quarter that that there. then

result bit QX of a do than off So little that I different a think you normalizing full-year. gives a of

underscores ability increased will leasing we spread mentioned, our occupancy, the expect to of the terms With about those he we us, occupancy for regards of give execute But leasing Devin our occupancy our I to diversity and stability plans. again that levels. as continue the us note and we and neighbors as move our quickly in when for as can. it's which economic really tightened really in economic will do to that the a talked between our you leased grow base,

basis. it's compress basis basis been quarter. usually is that quarter points. on we this that something XX That's XX about long-term so believe points And this a I

or do those but adjustments some just any compression in just So I few -- swings we items not there, more major It's the mentioned. that. there's foresee

Operator

next Thomas Your from question Capital is KeyBanc Todd with Markets. the of line

is open. line Your

Todd Thomas

Yes. the just on Hi, two mentioned thanks. One, in had just following-up little seasonality of I guess John, so that questions. the you I terms bit you a more, guidance anticipate. that

second, of are you referring quarters? seasonality third of exactly and overage just fourth what that are in rent So sort in What you you seasonality of to discussed? pointing to the terms the outside

John Caulfield

say was specific, comment we look it my brought the to really ICSC. And was Tayo as It up second quarter. I would more at

nothing of. I But had was that those than that you to as would you that annualize then the big difficult So that see it's so be that amount, that but $X.XX -- that base, the we there's quarters, I'm something a kind the just just increase then more so proxy get referencing. our items of can also to later there, and stability again sequencing, mean dollar costs, that not I got cost off of then had, in terms of then you've there's

Todd Thomas

and Okay. that's to of do particularly power expect around uncertainty mentioned around of have further. too Got portfolio's rents the it. it's you've the that economy, occupied I'm that XX% health? of too portfolio at spreads of sort improve sort been the around consumer your the how strong cited you're of Jeff, sort the Is and concern high, terms all thinking And portfolio driving you local you some then pushing measure hard that and spreads just is you tenants. leasing a you How the leased, which pricing XX%, well given the of to-date. the in if -- know well do in

Jeff Edison

Yes.

be deciding retain but it a a retention on high we're question. lot at is Because a that the we part able their stay it's retain So a on when and the Todd, And do a the talk XX%, retailer center, of our profitability. -- is so negotiations about percentage -- that to about great in decision it in day not end shopping only see our you direct and we're to for we at when getting numbers, issue means reasons. because doing at you where money to growth about kind it they're a it. two these that that means philanthropic it They're can we are make the to of when also profitable. doing that That see too And they that that not able nowhere they of get talking locations. near those this on were can't number kind high of XX.X% you're

-- getting we that, as annual to So a bump addition well. to and we're those close X% in on

profitable question -- number the not to at you're seeing they the but to more often, their actions be dramatically, probably asking that numbers now So are telling we're And those -- change going us they're that got right when when -- at start centers. that retailers it our you've when all. that with

Todd Thomas

if And at Okay. look we --

Jeff Edison

you? to that make Does sense

Todd Thomas

rents anchor you've in anything see XXXX today And helpful. at would similar that those if leases, forward? seeing specifically moving similar and anything achieving XXXX expiring years and there prevent rents inline we the that that is That's two look you or Yes. in new rents and you renewal been from compared to spreads and on rent

Jeff Edison

can we Yes. there's on have But our continue indicating I happen. it, in to screen and in -- grow to lease but never that's we've -- don't space anything now know -- radar that ability a more would a those. we -- to crystal that look less you have -- as very anticipate at ball, nothing to at strong to be when position. demand. able what don't right being got our we And We so very

the just being one dynamics developed, now. to And going there's supply/demand anything And that the change very out I there, don't to change see Todd, going so way look at of say, or mean would amount you for dramatically the and that's we they're new positive okay, right supply. that us well, there's certainly nothing that's other. construction no

is the that of our in an it drive a these sort of us be we're that rates recession. certainly plan not that to we'd and But stability where that basically current of outlier don't is or we environments well our demand gives that lot positive. of anticipate planning that, on. necessity-based issue. are not the And kind And again, it And would would as it's seeing a be major certainly thing -- we we're to for we're that, increasing. slowdown anyway, we thinking in have would we're that from recession. with But now negative is this so focus, major as real and think thing interest any a not that demand stuff And only kind

Todd Thomas

of rents at doing more away bit expiring option are all, with or sign at new you leases? and distribution rents have option leases renew little as a that And margin you a stated stated that similar the

Jeff Edison

space our they're the us part they to of mean, years. on I long-term it it want stores want they building been At a They is with want -- basis. a small on They Yes. demand. yes. the average have of retailers' control lot still -- margin, But business. nine a the long-term, for want a

get could bumps rid commensurate more which It where able they of options help for And accommodate bumps get we feel options -- has say, become the we day-to-day of that on pricing consistent that. I so does really sure would getting a fight accelerate have where rent basis it's a we be. one market the good get that been about making term, that contractual us and during to things our and get ability That's have to much the our to of where power.

at the of bumps five-year a term getting year the and each time getting then you're So store option. the if of small bump -- space, X% you're for you're the

stay -- sense? we way, in in okay Does at feel that about being rents make able regard. to that that market You

Todd Thomas

Yes, absolutely. you. Thank

Jeff Edison

Thanks. Thanks, Todd. Yes. Okay.

Operator

Compass is Your van from line Point. with question Floris next the of Dijkum

Your open. line is

Floris van Dijkum

about was sorry I mute. Hey, on that.

at four-year of And it look does of on space shop tenants seem this your and look particularly look but all your but earnings X.X% drive of for an look XX.XX%. opportunity -- low XX% we your quickly. option ability rents, remaining, but the the term how work? also before next you couple massive I at options, like X.X%, and year, you rents including terms have your pretty mean get opportunity or for term, X.X-year shop maybe, do here, that's just Jeff, to back a -- essentially there and I opportunity, that I the remind a of space in of about talking at or occupancy, would average your more going touched say sounds I and on it appear to a Maybe So rents can stated another, shop have is bit clearly term they then a and that forward. if lot think your touch you as I you little sort lease expiry If greatest that in terms the your space a were before are if things upside of potentially, of like

Jeff Edison

Devin, next into can or for leases feeling you think of want and walk are John, the do the for sort thanks I that Floris, due mark-to-market the coming take our call. year. of you maybe kind where is

Devin Murphy

is answer a Floris, not Sure. an every crack shop lease has option. small at the simple it. take I'll

top and your so new based the As in option options options order leases, Jeff the guide? the comes off of of have in. John, where that's for what's the inline tenants hard to of push head? national sign know Do the indicated, percentage you retailers our number

John Caulfield

the of blend I top of but my don't know think do. I off options. a it X.X mix the they mean head, that a multiple is is but I

percentage the factors them is option that So X.X. versus that say again, that someone has what into have options one versus two

Devin Murphy

Yes.

pushing So back we're signing do to in that that we in what options that lease. trying into agree to leases, retailer. are option they the looking increases willing fill given are as with annual And market that for to we're that Jeff rent, is that mentioned, Floris, rent seeing on they're team we'll follow-up with for the specifics. retailers negotiating But and when indicated, a the is to national you that is meaningful on give it where point they the as you exact our can. extent Jeff leasing This something is our the

it's that the a we're -- when account to agreeing equation taking So we're multi-variable all that. into factors

will of basis. spot place capture However, your there that meaningful expiring be is thesis on XX% and portfolio rent on, in a in upside with is that which is our the XXXX to go-forward able in rent

Floris van Dijkum

sorry. Yes, Devin. Thanks, Yes.

Jeff Edison

Yes.

that's there maybe at depending you're mean, Of slightly get a XX% the just that course, your got opportunity XX% certainly the we XX% fact income. renewals. that's if you at impact -- look is conditions, of spread that positive upon overstated that, obviously -- spreads I market real and a mean, on you look renewal did I but we've there.

Floris van Dijkum

you mentioned well. attention maybe my which sort as Great, And great. Thanks, else Devin, something guys. of caught

curious, those been, assets the owned during has see be the that in said, you financial guys You XXXX talked us. you'd looked NOI in you've I'd share downside owned willing have occupancy I'm the XX at CAGR -- XXXX? on to it terms of curious they how assets you to if same-store terms had the just long-term that what be since with of crisis. is And about -- you've that great limited since

Devin Murphy

couple that XX it's a points, assets we of -- Floris, Well,

Floris van Dijkum

sorry. XX,

Devin Murphy

the our has there's including a some point We owned our is making portfolio we perspective that more are held where And were think a potential in ABRs in XXXX. that you Floris, downturn. risk by

XXXX. And recovered XX XXX we XXX lost GFC NOI and points basis so assets those that went by NOI and And performed decreased during of did was it points, we lost looked by back basis we -- how what and at then we the but was occupancy.

performed So during those that. well assets

same-store one at was make to what period that over I then other me sorry. -- portfolio. we NOI was XX-year your same-store do we've can you portfolio at know I period, that of those XXXX, And gone there was in XXXX of from PECO and point portfolio time, NOI the that. wanted is look looked back point assets, I'm we Floris. was but do the But that what your -- Remind if the the had for mid-Xs not to

was we're lot continue going our years, higher look growth if NOI you're done the to and same-store the at continually it mid-Xs, points was you basis last same-store we've be which historically, leading market five peers. And NOI guys is XXX growth? in to a than you do reason our getting so the The how able to is of put think up questions

to we'll better deliver. sector believe differentiated and realize is that perceived be maybe growth therefore So than can we able the to continue that our strategy is

Operator

of is line question the Street. Green Paulina next from Rojas Your with

open. is line Your

Paulina Rojas

Good -- morning. In your presentation

Jeff Edison

Paulina. morning, Good

Paulina Rojas

margin, and regions. traffic show lagging has region been West foot presentation have huge by your the not spread other It's in you the a but Hi, sticky. you by

of are we thinking management? this? are the there about asset So for your make portfolio what implications do or any way And you

Jeff Edison

that repeat Can wasn't you Paulina can because -- I totally fine.

you our in are states were the was -- placer the -- the which about. Western saying I You're traffic, or higher talking numbers I exactly our that -- which saying didn't wasn't that that segment traffic following,

Paulina Rojas

Yes. Yes.

remember West And showed lagging against you're West well. traffic. so indexing if lagging, in the in everything of I foot You think assets XXXX, terms your the I

Jeff Edison

Yes.

Paulina Rojas

So huge but margin, again, sticky. not it's and a it's

may do yes. in read just and seeing kind you well not are wonder, traffic of I as lag metrics How this foot you So be other this?

Jeff Edison

sense Yes. occupancy and you doesn't been of our has make regions. It's West one if actually able we've kind been of at -- the rents it total look to because strongest grow where

at to that we just -- grocery looking is spreads trends So And -- you degree. trust accurate I the and our okay, at I it say, pieces, be found more look sales, with you just look our very at that. you to number. if placer the haven't look rent to sort real is at look directionally at the general at numbers when -- the we of my X% West don't how is We We a is. well. be We're occupancy it look but accurate still gut enough our to performing

know results, like seeing So what would we're other to placers the how the terms than of -- it in operating on -- side. answer not in don't seeing that I traffic

Paulina Rojas

Okay. That makes sense.

Jeff Edison

add anything have there, that, but been you if know that's don't our I experience. Devin,

Devin Murphy

than to And people Yes. on that it I if what benchmarking what of was QX it slight traffic, XXXX relative tick perspective was X% to then comparable. traffic we lower. would our give mean, relative I and higher XXXX Paulina, the of pre-COVID. today only in It looks thing are again, like pre-COVID foot foot is like add XXXX our pre-COVID a metric it QX you at traffic was was XXXX to look to the foot

you placer into it dug detail, be relied the to again, So continues pinpoint leasing traffic line directionally, metrics again the sales it it can't think is the actual can point bottom be to to strong. as foot is we've give that. on but support we point, meaningful our Jeff's on relied But and view accuracy. a we in on on, that be that data And touched

Jeff Edison

Yes.

Paulina Rojas

the your JV. of remaining own buy a in those other see is so a all Okay. you a That except at seller my that assets for have would question do scenario so in -- you have have you and makes willing would Do you XX at And envision when interest you be assets almost fully or having you you sense. there? interested properties all -- two, where you do all

Jeff Edison

Devin, Well, Devin. ahead, you I it. think Go part add can first

Devin Murphy

is Yes. is, in venture. XX-year love a to It's high we XX-year joint I that It's venture on partner that year Northwestern was Mutual. own going all five Jeff of to Paulina, quality performance our But We're that us venture. a to portfolio that the say available venture. if over were to at outperformed point X,XXX time of us. we XXXX and partner benchmark in our in with some Nareit by basis happy the Nareit is very They of a points. would

that's with very a happy partner. So a portfolio strong performing

XX So our in venture at will least that stay its through years. is place view

Jeff Edison

Yes.

Operator

session. This I concludes question-and-answer back to Edison. to our turn like Jeff the would call

Jeff Edison

and This Well, want XX% to growth, us. then have everybody being for numbers, we X.X% our call. same-center on you per thank we'd you disciplined very spreads, NOI we our a for Great. occupancy returns record We're on XX% retention, I great the When got quarter is your ahead our what acquisitions of and above at consensus share. -- that pace on great sheet and balance shape. in underwrite are be FFO

right of hope can the we've the This successful. be has stores or think that a team. a of to lot the to the give motion for differentiated making we that year. been credit integrated our demographic long two excited traffic, and got continue small one we're we team the positive this and highlight our strong -- the a number We think grocer so -- of fully in So And the rest And results focus time. through Getting We're continue very can we this our driving we strengths it platform. quarter. there, will about strategy. we doing

of are on last We this only our And this we business. but for the get years results as results years grow continue not is niche we XX get next or for think going focused very business. to a five specific to that quarter,

associates, team, to on being management the our today. thanks want and So importantly thank our to shareholders, for neighbors our behalf on everybody and I their of for call continued support, the

Operator

gentlemen, and conference Ladies concludes this call. today's

You disconnect. may now

Phillips Edison & Company (PECO) 3 May 232023 Q1 Earnings call transcript