PECO - Earnings call 4 2023 | Phillips Edison & Company, Inc.

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Operator

Good day, and welcome to Phillips Edison & Company's Fourth Quarter and Full Year 2023 Earnings Conference Call. Please note that this call is being recorded. I will now turn the conference over to Kimberly Green, Head of Investor Relations. Kimberly, you may begin.

Kimberly Green

Thank you, operator. Managing call our Chairman Chief President, John and this Officer, Chief Financial on Management, Caulfield; Edison; Investment Jeff Bob our joined by and our Executive Officer, Devin I'm Murphy. of Director Myers; our will our to we the call Once we remarks, open conclude prepared Q&A. our call, an on will be version today's After published archive website.

based Information As company's forward business are future performance, our including management's view earnings our XX-Q. these that Please reconciliations regarding conditions. Form which information in today's and statements our forward-looking presentation with on measures and today to may and have to market additional measures most measures. earnings supplemental and specifically posted of are uncertainties forward-looking contain and XX-K and website. also also are these discussion financial reminder, these press as to our beliefs of use non-GAAP are to a And statements described the note available future guidance on expectation, in of our about current caution subject filings, packet, we information recent risks applies financial SEC These a been and GAAP various discussion have certain materials. our results posted in and reference release will our

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

Jeffrey Edison

for operating our PECO spreads, from we is resilient the growth. our of market original X.X% in and The early of X.X%. strong that where us These of increase us occupancy, rates December. PECO increased capital Investor part portfolio driven transaction proud high to team demand space our traffic. when be The macroeconomic neighborhood for FFO a centers. allow our rising accomplished several the improved retention be lot want year drive improved. presented with delivering a our we increased for a markets during macroeconomic NOI where of continues acquisitions. many of in and to from challenges in tailwinds strong the NAREIT today. us shopping remains guidance At recurring leasing and Kim, our inflation, to centers create have high and strong We the for The have meaningfully of. conflict. Day markets with you, for XXXX, high foot rates volatile our The joining XXXX NOI positive level, Thank latter midpoint and us XXXX, continued track operate thank guidance allowing by located trends environment to to I in growth. the preliminary factors performance our great exceed many also provided grocers core consistent strong you, record changed everyone, and increased our and deal XXXX XXXX continued consumer. Retailers and FFO guidance. have Same-center X.X%. suburban in the advantages global interest The Interest benefit

rightsized owning is our focused grocer exclusively by #X #X However, centers the a the in or differentiated testament sales our strategy neighborhood market. grocer-anchored of and growth to of a shopping consistency anchored by

no to have Our our PECO integrated our of team. I'd $XXX exception in entire work results has XXXX our and experienced property hard by accomplished level the always and the with for company, and could platform a driven efforts. without quarter at continue was operating We the The to cycle-tested their growth positioned are well all results PECO of million not grow. fourth associates. team been are thank acquisitions. like our PECO we to

rate centers, X of totaling $XXX weighted acquisitions X acquired a million XXXX, year land parcel full XX cap the at net we shopping for average and outparcels X.X%. For

Joe's Trader spreads anchored We our are more very XXXX were particularly the The another in market wide. centers add HEB-anchored tight as center portfolio. bid-ask was to and excited transaction to two

its Our successfully ability markets reputation these opens and to many further. ability and as as strong across the in buy the team a We're in to has to to high-quality all-cash due country, to scale, execute continue This navigate acquire proven buyer our through our transaction confident result tough is our ability our centers relationships. markets. market up sophisticated our

the continue we Activity early, quarter attractive in it's While find strong. first opportunities. successfully acquisition remained to

less rest of Our ability predict acquisition volume to is clear. the the for year

we such, million to are million our of reaffirming $XXX acquisitions. for guidance As $XXX net

attractive We have the opportunities capabilities and leverage acquire if much materialize. more capacity to

of the second IRR X.X% an acquisitions. underwrote we unlevered of to XXXX our The for to unlevered acquisitions continue that We IRR. half X% or greater in target completed over

approach focus our and portfolio. accretively We will on our growing disciplined maintain

that our best opportunities. increase historically times the We is through evolving volumes are have of year. hopeful in will an we market this like found It that some

growth. market target the runway With external across U.S., of we centers long X,XXX for the have a identified

and XXXX interest FFO on long-term market, we our environment growth. and mid driven This core growth beyond deliver single-digit basis. a be acquisition will both can high by more external stable share and to assuming rate Looking portfolio a per believe internal

than in in ability the high occupancy sustain retention anticipate core strong FFO should capital expenditures to future. confident growth We our the headwinds. lower near long-term AFFO growth will in support expense growth interest be and growth to are term We despite require higher as

capacity leverage low meet us long-term objectives. growth the financial gives to Our our

leverage our well and in our levered $XXX deployment growth combined generates be years This our successfully distributions external. and free to raising We XXXX. capital We expect additional flow, while strategy. strong in acquire internal of earnings the given to $XXX ratio generate cash both dividend sheet, ahead. equity. less allows executing more low achieve a in without free our beta drive our and committed level remain with growth to to approximately focused positioned goals differentiated strategy, alpha to continues PECO flow PECO us million with balance cash any maintaining after targeted million year

date remain cautiously impact pushed PECO. do We on the Albertsons, announced about this was by merger optimistic Kroger for closing previously recently proposed of As the back. estimated merger and the

serve. for our communities that to the a our positive believe continue and PECO, We is centers it for ultimately centers, for

While the probability we and a CNS, low market it XXX the occurring, to PECO of gives net stores the positive. close impact should is merger believe are on a sold still

to over to With color Kroger, that strong our on Albertsons will Albertsons which invest in call I'll they now regularly the the Myers, the turn produced merger operated be provide performance stores does continue date. and centers volumes. environment. President, Our to new the by we Bob If our will sales Bob? their operating higher have that, not stores occur, produces anchored more

Robert Myers

and joining us. for afternoon, and Jeff, good thank you, everyone, you Thank

XX.X%, Portfolio retailer continue slowing. remained signs ended to demand see with XX occupancy continues points current strong at at push year demand can basis believe We We points increase XXX convert rents this occupancy no year remained given retailer high in-line still of demand. the of continued ended occupancy year-over-year. XX.X% and that our team another at Anchor at centers. an to PECO's the basis higher strong XX.X%. leased. In-line strong we occupancy into to leasing XXX

drive acquisitions Buying significant will and XX% to at us vacancy growth. closing to with the opportunities. centers leased Our fourth continue were some leasing provide allow us in quarter

rents. in spreads terms driving fourth higher In new we rent Comparable have lease XX.X%. of to the quarter success new meaningfully for activity, continue were

of and opportunity renewal terms most of In the continued XX.X% rents renewal spreads. XXXX strength renewal we the and quarter, to increase and strengthen achieved the on are strong We continue comparable demand renewal rent lease key at with the in capitalize in a is achieved increase reflects the XX.X% higher. drive environment. in fourth the we This to consistent spreads increase making leasing

spreads the which renewal average high fourth in-line Our our XX.X% at XX-month remained in trailing compares XX.X%. of quarter, to

of year spreads and throughout into the be balance will We this future. the expect to leasing strong continue foreseeable

have remained spent for XX%. attractive PECO's retaining growing quarter, great retention our renewals. on the neighbors to important An per improvements continue lower And renewals. we have high spend of rents $X.XX at while rates tenant much square strong is We benefit fourth we rate this on in success retention that rates. TI foot at quarter

rent contractual successful driving remain also increases. We at higher

power the physical that strong to macroeconomic reflection of These hybrid leases a Sunbelt, of in positive the The population space evidence a consumer, renewal benefit grocery-anchored our spreads contractual we our bumps trends and supply for contributor delivery. high are power and favor and strategy And include amplified clear mile of XXXX our retention to important strong strong strength are economic resilient due XX tailwinds the executed over neighborhoods number from with average combined in last a achieving new work an pricing PECO new years. the not shifts that X% of of are our last had pricing leasing the limited respectively, in-line demand of is demand. the in of neighbor another continued locations rates importance PECO's impact suburban do forward, the that to the migration focused portfolio. factors growth. returns, current Our and to neighborhood quality long-term and demand X%, rent create continues trends shopping new of create annual the these our centers. given drive construction. and further The justify going

our drive the from our of X-mile include retailers. continue goods of mix people an U.S. services, two foot see income area regional and with line neighbors higher demographics are many XX,XXX of which come traffic the national, at PECO's necessity-based are demographics benefits than trade average in grocery-anchored to reoccurring our store offering PECO's strong top demographics is of continue average grocers local Publix, to of our healthy centers. These XX,XXX, rents a an of household We to which median and XX% neighbors. population with and and Kroger portfolio median. top

our top situated are in trade successful. and Our areas centers are are profitable neighbors where our grocers

a well-diversified base. enjoy also neighbor We

comprised top grocers of best the neighbor list Our is country. in the

point and neighbor luxury ABR. to below XX T.J. our ABR non-grocery The top from offering from To local put is to only X.X% and on neighbors retailers largest has goods neighbors. our finer currently watch other derived limited of of distressed rents our Our very are of PECO The mix, exposure come neighbor rents, that X.X% just local majority X% retailers. All no services. ABR. a of represent on neighbors Maxx. list neighbor neighbor retail exposure of and XX% non-grocery up makes is necessity-based

therapist, a physical hair think preferred retailer. your you is chiropractor that they your or favorite or your in restaurant neighborhood, salon your and likelihood a dentist high barber, If local there about are

and are offer entrepreneurs. credit They corporate local successful by weaker by of businesses neighbors performing less receives to the hard-working have neighbors economic typical Local favorable their local Our returns. A healthy at beginning are less retailer for locations. And susceptible lease, capital run has of renewal caused to quarter. retained local achieved renewal spreads remained in in-line accepts and at in rent neighbors, high XX% more retention local fourth rates PECO terms, strong spreads PECO quarter. friendly XX% the neighbors similar lease the nationals. fourth bankruptcy

customers. Importantly, retailers that meaningfully centers our differentiate local neighborhood mix the our merchandise offer

shopping Our for are been and centers years have on local resilient in neighbors average. our X.X

to In projects we stabilized ground-up XXXX, addition have our a meaningful and XXX,XXX projects to rental projects continue million incremental of These expand These feet to strong approximately trends, growth we delivered growth. repositioning risk-adjusted outparcel our add provide our impact development of pipeline In on of $X.X projects. NOI square annually. and space our XX superior long-term neighbors. and NOI over returns

and use XX%. $XX flow X% cash million average to risk. with attractive remains expect great returns in annually less opportunities and of weighted produces $XX ground-up to with continue This a between and a development activity to yields invest free million cash-on-cash We repositioning

We these we the optimistic properties, and about the growing continued the on and make redevelopment our summary, team operating great current momentum and on are team PECO working is strong environment progress pipeline.In experiencing leasing, across hard remains positive to continue this development.

of our grocery-anchored The turn PECO strength healthy now call John. overall us in capabilities will the of of grocers our steady deliver I neighbor strength strong environment, our to our operating strategy John? the continued addition, and and results. mix give to confidence the well for our ability over positions to team demand the centers, In growth. continue

John Caulfield

increase offset FFO expense. afternoon, addressing driven X.X% rental the an sheet good to the and partially by increased from update were our you, share, start million XXXX expense million. higher X% by properties $X.XX an fourth I'll and quarter year-over-year quarter Fourth our FFO partially on Bob, Thank increased Results guidance. diluted impacted per interest increased quarter property provide morning, leasing strong $X.X by interest million $XX.X revenue share, a diluted driven or of finally speak higher aforementioned operations. by Fourth in results, or $XX.X then by increased NAREIT higher income everyone. our good XXXX $X.XX per levels occupancy strong in spreads, to the core and and to from balance

the quarter of X.X% NOI driven same-center minimum by growth X.X%, year-over-year. Our growth in rent was

in basis Our XX reserves quarter elevated at the for un-collectability were slightly points.

fourth health particularly and slowing. of However, an are the quarter they given XXXX. the were shows monitor debt the about upward below trend in We quarter reserves fourth see no the We demand the do each that our term, concerned in not signs of retailer near of neighbors bad closely strong year. in

gross of During ATM the during of $XX.X proceeds under grocery-anchored fourth and million. price parcels which the PECO the quarter, at share. fourth for million per dispositions in our out we total of In million shares We shopping X a average quarter. issued acquired $XX.XX net a X quarter, centers resulted X.X had $XXX.X facility, weighted no

PECO issuance price year, per full at weighted average common of million the X.X shares of proceeds through net share. $XXX.X $XX.XX of million gross the generated a For

Assets acquired when favorable, these while to in funding intentionally pipeline in access per to our market our our our equity at share and earnings low. match We keeping the equity levels. XXXX currently were accretive a leverage acquisitions time was are with at

evaluate combination a issuance that We uses favorable market of on will identifying based earnings continue and conditions, acquisition future to are equity of accretive. opportunities proceeds

to we XXXX. no of balance support Turning sheet, liquidity until to acquisition have with million plans $XXX meaningful approximately the maturities late our

EBITDA debt December X.Xx net of XX, as Our XXXX. adjusted to at was

us rate September of X.XX% exposure our options. XX, swapped swaps in when totaling and to new average effective quarter had a all October we The and extension we average into help weighted years approximately manage that matures XXXX. and debt XXXX, X.X as million. interest interest X.X% to SOFR of agreement Our instrument XX, Subsequent September $XXX expire entered swap floating have December swap including rate end, an weighted This of a XXXX. rate will maturity

rate revising of its execution the rating revised for our interest In positive curve a for we lower estimate decrease and SOFR, With swap this are stable. the S&P XXXX and in higher. estimates expense forward from outlook FFO our to PECO January,

upgrade. BaaX, we While an favorable, a believe we credit to BBB- at ratings remain on achieving underrated and focused are continue and

believe We BaaX our to are flat continue with the meet BBB with we strategies agencies or financial a least rating. as at commensurate

ended to at debt approximately be we achieve goal, continue market we to will in with XX% leverage Although Several believe the upgrade cannot January. which peers year specify XX% rate of target floating. when we an occur, this to levels access fixed X.Xx. bond We our the unsecured

look We to and continue this monitor to access it market opportunistically.

December. from XXXX Community debt in strategic to our when increase market. until no the early to we generated significant our we guidance capacity accessing cash can ability meaningful by me That we our in XXXX, the extend our maturity it our debt guidance portfolio be our for on liquidity enhance Between and will Although and flow to free the have maturities November timing leads Investment at Day the our revolver, and consider profile. available shared preliminary opportunities our

income for to per XXXX $X.XX range $X.XX per share share. updated net is Our

NAREIT Our midpoint at for is $X.XX increased $X.XX, to of FFO range. over a which X% is share range XXXX the increase the per

FFO Our share at midpoint. to increase range for which increased is is a $X.XX, over core per XXXX $X.XX X% the

previously is reserves neighbors. reaffirming given we range normalizing We of XX the the of of revenue, to Included to are health range guidance anticipated in of continued strong X.XX%, the given strong our our growth continued operating basis X.XX% our to levels for environment. provided, points our the NOI are XX reaffirming impact same-center of uncollectible negative historical

strong provides our several contract negotiation. contract X, pipeline, acquisitions of February As in a the for have either under activity year. in start This or we

early, is with this are in If number, we acquisition and be $XXX the volume and the range As million. are it Jeff million so of we guidance and guidance mentioned, and range environment. a expect we current net comfortable our increase meaningfully reaffirming still to the to markets have improve, capital are in transaction hopeful capacity this $XXX to

us at growth growth core long-term Investment to growth. in As PECO digits external share Community opportunities high single a the give FFO the outlook we believe our for per and we for Day, outlined internal mid-

faster should rate per as there share by a which are or expect occupancy because improvement the be we limiting stabilizes. earnings growth. We increases growth as In dollars interest comparable our less term, near for required AFFO impacted tenant all are, borrowers rate is

we pleased per positive are growth. However, to guide to share

million. million interest $XX $XXX are the XXXX, For rate of we to range updating to expense

guidance due the primarily lower the decreased combined the SOFA having a in December, projection is balance which year, was driven revolver equity to end Our with curves. a our PECO range by issuance of for lower at

impact not estimate If a rates could per the earnings we headwind that conflict. lessen share do core X% the the volatile FFO back for interest added year. to of guidance, XXXX presented be variance interest higher high global and inflation, XXXX headwind $X.XX We rate eliminated, rising revisions expense. $X.XX and be rates, these for challenges of growth updated with While the midpoint. interest many our to at this interest would

able earnings were guidance our and operating platform. exceed the our the we experienced integrated team to XXXX of focus due and strength to PECO's However, commitment of

ahead in the are we through questions. We line acquisitions. Operator? will for for internal the open With XXXX, growth and that, both excited opportunities

Operator

Burrows with [Operator comes Instructions] Goldman the of from Our first question Sachs. line Caitlin

Caitlin Burrows

driving midpoint pretty brought on be John In but only the expense think the like earnings by which increased to would relates share you guidance, And clearly I $X.XX, like interest $X.XX. release showed just it guidance as was you per assumptions of the a the guidance. guys mentioned, down, basis

have midpoint rather the than may what you little FFO range talk made wondering the I was $X.XX? core about increase $X.XX So of if could you by a bit only

Robert Myers

want to take do John, that? you

John Caulfield

Sure.

interest it quarter. $X.XX midpoint, the the look of expense that $X.XX. So in the at did rate of guidance, component was because decreased issuance yes, fourth our we if that of you at the But equity

So would interest increase actually the be expense the to $X.XX, benefit the happy guidance penny midpoint. to our guidance range net at is we a by were and

in it's I earnings what's look And could our it say, think there's for early the also opportunity than you and presented. in so growth but at future year,

Caitlin Burrows

the saying too? and it assumption part share of you underlying like related is are then, count to So that leverage

John Caulfield

correct. That's

more because because So balance end the revolver the expense year. we count. down share went at had the there's of a of the interest Because lower equity,

between the would interest And net share so lower, higher. count the be is but

$X.XX, the additional and the So it's shares. about impact it's from about is $X.XX

that $X.XX. the leaves So

Caitlin Burrows

Okay. with guys side how you year I Got in you is it. the even the same-store X% or so this declines, future? do what impact NOI without is high, achieve what And then the out guess, risk how Investor other growth of that guess, And occupancy to be? you to the take guess, Day X% laid growth. the further I think occupancy yes, likely would I occupancy and it that in could

Jeffrey Edison

additional of basis, we gets occupancy and thing what I because buy less across that from mentioned you kind of when what where to one -- at occupancy look a we've if level the doing on it we the quarter-to-quarter portfolio. lease one complicated based that give been Investor space opportunities and high what think upon portfolio acquisition don't to there's And up that a The we're at growth. occupancy such side of have to at we that for than look our is the really is things core Day in

add at you consistently would a Bob, same-store the I if mean, occupied, if separate think it -- occupancy to you from that? And portfolio be that look what anything we I I be. have think drag do to that the going projects know was that's I XX% bought, don't to So

Robert Myers

at coming Day, to the acquired points bumps, we to Redev only add occupied. new we have X% and points you net and growth, that XX% from assets X% And and fourth thing million. XXX look Yes, coming spreads, $XXX XXX is to basis we'd XXX basis Jeff. I XX Investor come rent was would overall, our projects. to with up at in it basis same-center renewal NOI said XX we The how to when XX quarter, And the development points XXX But XX%. totaled contractual from

So that's going future drive to to allow us continue growth. to

those projects. we're So about excited

Caitlin Burrows

makes Yes. up same-store about sense to NOI definitely being I isn't acquisition down able or properties. No, in those as growth, up that think the guess, pieces occupancy lease assumed. you I of the guess,

risk So same-store the the occupancy down. portfolio I'm what's in comes wondering

Robert Myers

spaces. XX.X%. we I at feel now, left now XXX XXX I of in-line points basis have that still right right another occupancy to in believe our we're

So movement. points demand that XXX we there's a of continue basis existing have. on for see spaces to And significant basis portfolio we same-center like still in feel occupancy another our the we

Caitlin Burrows

Okay.

more like sounds upside it downside? think you there's So potential would versus

Robert Myers

sure, absolutely. For

Operator

from next the question with Okusanya is Omotayo Bank. Your line of Deutsche

Omotayo Okusanya

us you a sense sense front to acquisition give year rates front-weighted, acquisition weighted throughout of expecting be the even you're kind the back it's On general cap on could transactions? and give the going and of guidance, us more a of if kind what

Jeffrey Edison

Tayo. Sure,

as into bumpy. on to previous acquisitions that belief as As we've acquisition The get any a we're probably it had that the be guidance. we've bumpy I you And last our was had. will think would difficult we I year, side got good year than know, too. assume this are bumpier going year probably and year

quarter. But the do it's to we've in -- good say the -- conservative, -- hard we when when terms be in. I back will happen.To that of had have be coming new acquisition end. going first it's would be decent of say of again, to exactly for more activity a I But couple In weeks opportunities would there'll

through cautious We're we be timing in buyers. rates, you that And IRR be out. ability it to than cash and similar will into know, we've year. IRR. continue expand of to terms back-ended. create like little to fall about how last hope properties would about some feel of them Certainly, as opportunity buy good assume cap we will that last In I year, unlevered flow growth that ended the back our and could into we're less to So said, a translated visibility And expand from X-plus year. But and we them. our less a as trying X.X% guidance. we Again, the the additional rate. underwrite this cap

Operator

Your is line Liz of the next of Bank Doykan America. question from with

Elizabeth Yang Doykan

similar just redevelopment. maybe a but So question, on quite like

I clarity if that on the timing curious of Just tends there lumpy. know as be there's to spend more XXXX throughout

Jeffrey Edison

Liz. want Bob, do that sort you as take maybe to Yes, of John and well?

Robert Myers

John, and go start. I'll Sure. ahead

I million, I look the this still everybody, we thinking are lots think feet pipeline our in we'll a centers. these year, parking those They million. smaller X,XXX $XX projects are do X,XXX when lot million size. And X,XXX, $XX our in lot of that existing at of are million a $X $X and remind I between that are mean, projects, to in just square shopping -- to and all

we're between and projects Timing with of teardown lot especially rebuilds, currently rebuilds Jeff doing is with and XX. mentioned, returns is So with XX a somewhere it up And between true, their Publix, teardown doing we'll to tricky. you're two with doing acquisition, has XX end as when timing. the targeted X and the same do

it's going a to always So bit flux. in be

at quarter-by-quarter. to can guidance $XX hard So we $XX annual feel in as hit. of range comfortable I to kind of look it's I basis, that our is on an But would million navigate that it

John Caulfield

you'd it at to if in assumptions it's even Bob we had said, even towards year. I weighting back. is, of half it, that, But as say, Liz, nudge to look I But our be slight with a it as was the fairly throughout. a going the add the is little more bit to pretty to second

Elizabeth Yang Doykan

in. just curious if to it the just maybe I like as to helpful? same-store that if NOI And up you us a on limited maybe more portfolio, relates following your on factored and understand. Caitlin's that on explaining downside the really if you of there occupancy sounds Yes, understand be question or if function this there's a occupancy nature same-store maybe box uncertainty no just provide exposure could it's from it then may I'm of characteristics NOI, really scenario help past before year would being And of the year this could there to color geography of strong environment. or be that the big to kind is areas

Jeffrey Edison

and see think and to as want the you a activity be and national you in to you're excess any of the I where kind and change the new and or is, that a be. to and be a the a months of you of at you a Liz? retail we're take time. that, of regard in really be in properties. regional want they grocer. this of well. our not as necessity-based good there -- leasing, don't And to first have for me that strong. let the into the X And next our that pretty results to occupancy that change, just be our legs, and is demand frame have be strong homes and to is demand is visibility that there's And continues seems we be it's with And market that supply want if that very or a the with down. step necessity-based we location differentiated can going in we we property, strategy to know, going other #X to there a period If do. what look where We the have jump local necessity for see development don't advantage lot risk. And we Well, what Liz, to add-ons were retailers. we see terms that want Bob, then happening for extended because way driving to the slowing happening, come some it to And it it as of place to do into of -- you of time lot they continues #X you're would don't I are preferred of close a the â€“ biggest being shorter near tenant Bob, people's for think is retailers are any

Robert Myers

grocer #X is of #X think the the square our strategy around XXX,XXX part I No, centers footprint in feet. of by shopping our biggest or having market. Average are the

We X,XXX a And space exposure. all-time focused at is average on box necessity-based neighbors staying square don't Our have highs. merchandising feet. key. earlier, just is Jeff's point in-line are to the disciplined is XX% where of your Occupancy strategy

We going of mentioned, happen, If of demand it's retention is in the to see retention see we were And the your signs a your history highest would still you there. it been company. spreads. Jeff something consumer. the and resilient As see our in is

to mid in the in in And upper a environment healthy operational We're we're any still slowdown are spreads Our today. very, teens. that. seeing very not just

Operator

Our the Thomas KeyBanc. next from Todd question with of is line

Todd Thomas

$X.XX the John, following and where the up on and just you you adjustments The I'm guidance on transacting that throughout company's the the the follow future does rates I balance wanted there. the on cost is expense I'm revolver given relative equity offset that not to cap specifically, year? the was interest equity savings paid guess that also the where include sure $X.XX of down you're issuance to mentioned, the just to and pricing at. that

John Caulfield

Sure.

towards not equity quarter, later the equity additional $X.XX in have it to more did tend assumption the XXXX. when we was to higher issued that look does with in the quarter, issuance in any the regards but really, that you an So be at weighted the issuance fourth

And it so it's of more much that so an offset. dilution. was It not was

should point that So out kept again, again levered. leverage X.Xx we're we low. I

we you think it's key do we're the is we're was the at look buy equity rather on a replacing part of the our levels really interest acquisitions. but closed to headwind, than the that strategy it at of and our with so And expense. it match We those issuance. lot. But it, that about, is accretive when acquisitions thinking a looking And that have trying opportunity we to at

growth is And guidance so open increased that's ultimately, the wanted penny, it's and last rounding $X.XX the you we a get of opportunity we've left, position the into in year on $X.XX that got so the that but the kind a -- for in then to future. we've by penny,

Todd Thomas

how relative year better within half like. to guidance might in million I'm back early to what curious we and mix of or that you how of XX% on net think, XX% a investment about the currently I dispositions million like factor Okay. of And or it the sort think grocer sort anchored of not side, then $XXX you just portfolio the that #X market. have into the in by of the look the sounds the disposition and visibility should $XXX they the #X that's year maintained and

Jeffrey Edison

to Yes. is number. $XXX do product a million and we that, $XXX put plan on the million net Todd, The have we market. to our will

the we So find be if we And have market. opportunity to acquisition with that we're acquisitions and favorable And we disciplined, we've pricing pace And look what returns the continue to mean we as -- said, to disposition that creates get the that dispositions dispo pricing a we on side get the disciplined are side. go we to the at act on will with as we're balancing balancing between number. I plan.

or we, for I So, not? year. think have this we the dispo being amount we anticipate Do John, what disclosed just

John Caulfield

portfolio we're for haven't We ultimately, the there. have. to a flexibility of very we look strategically. about you're And because looking feeling the that and I total, for we solve mean, at we're confident things looking that

but only we're that's risk at be look a if greater felt so opportunistic. We it, And need, if have we there more. last would it'll year. million done we that we And where sold management, was $X looking at

of just kind So net total a guiding to we're number.

Operator

from comes the of Ronald question next here. time Stanley. Kamden with Morgan Your line The

Richard Hill

for Ron. Richard here on

one wanted guide. Just and -- about ask to more the apologies,

core full could you of of at through the $X.XX to from Maybe midpoint the your Maybe and kind sort for So is kind I much year, new walk very presumably, if midpoint of just us kind guide. I rate. it a how NOI in XXXX, of increase the same-store is, first to or $X.XX you understand, of right? how stuff, number really $X.XX acquisition of that like $X.XX. much the the of same-store of the the guess, other a was all, late run think good from develop just FFO it's I amount kind to look portfolio versus kind want it it's of not of in year

trying year any numbers? just upside XXXX to the of if upside in for kind maybe So think acquisition the late of to any there's activity, kind

Jeffrey Edison

take want to do John, you that?

John Caulfield

Sure.

market 'XX. cost the moved. an the to be the of where market of X.XX% a acquisitions, on half market private that latter the the our to on whether position or in relative growth improved to debt FFO basis. even to side guiding are equity side portfolio we the capital, year to the the So was capital, But again, same the is same-store, and didn't in on move cost the it cap rate which extent the accretive, And X.XX% of adding certainly while public that

is So the it than those that between historically be. and spread would acquisitions, closer cost

to do we have So accretion, deliver it's growth assets. but and going in these needed the we to benefit --

we those but focusing a in continued the at Jeff some, much. gate, the return not And and unlevered buying made, on as is there one, but we're it so accretive point are look out And to acquisitions, X% and that also of assets the growth is the we're them, has on that again, portfolio.

in piece. going that that direction that say headwind that's rate I other the is persists. spoke I So that interest the will another to against

headwind So ultimately, kind the It's still cost of there has capital. though an a Day the our $X.XX piece, of around in Investment and rate it's of in we're midpoint at the Community improvement right what forward, still debt that. estimating even been

pieces. it's a So of those combination

early. are growth the growth us less I the and think they future, to our will deliver for acquisitions position but continue support and to well very progress deliver

Richard Hill

we've some small that some card kind to credit the demand of Just late. shop, given kind types about a maybe data, of local of of economic data bit of for types kind but also those of switching of of tenants, gears, I of seen the kind little wanted ask other formats health those

of of just of businesses kind walk us demand just of through for maybe types kind those So the kind now. right

Jeffrey Edison

Sure. Bob, do want take you that? to

Robert Myers

sure. for Yes,

So local friendly One, think I good for look at and have to our strong. cost landlord. specific they're tenants great. in. appreciate much sticky. comes spaces, credit we as are portfolio us They're They XX% ABR put It now, to They're doesn't of our true when honestly We tenants. local the from entrepreneurs. in-line economically the money question. our Right too. They're

car your to overall X.X years been your direct tenure I average office, factor, our strategy merchandising salon as dentist services. around our being local in their necessity-based about has and want goods correlation You hair portfolio. to your about examples, think Again,

focused there the Med So beauty, has the lot not and and on never service I'm centers service the of restaurants, shopping our drives strong. neighbor And been grocery only it's providers. health foot and tail mean very of And for traffic, I store, and just but our getting very, grocer having size a of book they're stronger. healthy demand that also benefit there's the quick that, very

I think in spreads local the our fourth XX.X%. were quarter renewal

very very, again, healthy, very, So strong. very

piece important So a overall our very merchandising. to

Jeffrey Edison

or add our issues, renewing a pulling are card just -- sort retention at that's There it's be if where rate. consumer great of record of about not a give would retailer record the and I questions wouldn't credit rents at indicator back. really, I the indicator Yes. increase leading when looking spreads, have there's they're they always staying rent what's much in may are that the of the to that's this consumer going be And when think, how The but that and not decision they and they're going when retailers on one real centers are you us, going. seeing some on.

we that point and very of some both the in retention. seeing amount time. You'd at we in reduction start this those -- closely at, in spreads to in see are And look the as not

Operator

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

Juan Sanabria

at Just a or noted opportunity the management question noted on Day. Investor funds initiatives the

latest sheet? comments on is And the funds acquisition or there? on of Is opportunities balance thoughts to related Just curious any recent enthusiasm or opportunities? that more on

Jeffrey Edison

want that? to take Devin, do you

Devin Murphy

mentioned Day, in since that business investment a we've is business management Investor we as at been founding. Juan, the the company's the Sure.

majority the us it this access XXs have and high are two Day the the for The set incremental we're for We this business platform executing. did We depending capital. teens It because to us. acquisition that ROIs expands ROIs allows high at attractive targeting strategy Investor us in to opportunity our minority a it new generates mention core upon in is one our is by in and information we The impact partners these capital center additional of we been committed the centers in grocery-anchored until partners, requested each that has any other our venture. do not communities. in fund initiatives, both a invest disclose and have a partnership, social ventures

December. we to hope be first half in We the pursuing acquisition ventures able these for as mentioned and will additional are detail the year, venture that opportunities each currently give is in our of we and expectation about

as sheet. both we volume we've for what of these so but what acquisition And also over done in balance the for the acquisition expect number that to we And these on incremental translates acquisition generate the volume we last on for years because to sheet. sheet is then of ventures, our new we've opportunities balance ventures acquisition do do into on-balance opportunities to enthusiasm comparable said, volume our

Juan Sanabria

you. And to from good hear

Just follow-up relates on question acquisitions and to occupancy. a it how the

been occupied. impact modest assets weren't some occupancy have -- the would from the same-store what I'm fully reported buying So company-wide was there decrease assuming quarter-over-quarter, that

just stabilized the in, follow-up yields going could And in quoted, are are you the on those in give stabilization sequentially? assuming if, those some maybe if delta acquisition So fact, levels? just occupancy a the kind of are that occupancy as are same-store of that, they're sort below or

Jeffrey Edison

first about John, the one is talking when answer in step I'll we then and you It income can rate we're on the in-place talk cap the occupancy. Yes. acquired. we about what that on

John Caulfield

on quarter, Juan, And our XX.X%. was third it consistent, occupancy, -- it it to XX.X% was was

Operator

of question is from St. the Your line Haendel next

Mizuho. with Juste

Haendel St. Juste

bit for ABR. realized list? full your XX neighbors your more and what the And in you in what categories talk guidance actually watch Can loss you credit embedded this on you or X.X% what's about top 'XX? year a represent, of list So who think, year for I mentioned

Jeffrey Edison

best cover that's can maybe John, that. I probably if you think Great.

John Caulfield

Absolutely.

from list every at So the watch have here we're national watch mean, list the it I'll was standpoint. And that watch we list clarify referring ultimately are X.X%. center. a we But to have, really I that

said think you X.X%. I

it's X.X%. not So And they're named.

anything we diversification really there's Lot. think And a -- like portfolio is we that is where is beneficial. imminent, things there like that this where our would just of Joan are but don't the be or So it something watching. included a in would It's someone I Big

points even they assuming wind are ]. individually, there that about all that mean, and basis I'm XX I So the talking names [ XX

And so we feel about our and very everything. good locations

in strategy We feel and looking points terms and And been we about good guidance what our in this our XX portfolio 'XX, assumed. locations that results. specifically has and at basis XX that drives that is of what between we period time, is of the we're have. have long So a format over

our So these anchors. to larger exposure of we non-grocery limiting intentionally some are

Haendel St. Juste

last what loss was That's actually mention credit actual the for very year? Could helpful. you

John Caulfield

Oh, yes.

Sure. Okay.

So year 'XX, it points. basis for total year, the XX was for

Haendel St. Juste

on to just I up And follow on, think, redevelopment. your commentary Great.

And how on working we where million guess about talked the pipeline pipeline that a curious You curious you're to projects, but if $XX capital plus that, there's should can know I about perhaps I'm million so over keeping to time? that? I of small? I'm year, returns. great healthy smaller $XX this what is to that X% spend opportunity expand grow think a

Jeffrey Edison

in getting the the you getting that entitlements, amount. years we're that mean, full going a million to. and $X done stuff it. able would we're million full we good other is been pipeline the we it's you time. with want continue through to are is it. why love is more to that to us the hard leased of X, This that And we like It's store figure of if and out out to working of an difficult it's it's That's therefore, how that ground working takes get and important we feel we'd But do that's -- going. for and being today process. help mean an the I to trying keeping and able for this out of chunks. X about land, $X really we've part in sort the doing answer think all do and sort get additional built growth getting the twice returns the how specific terms hand-to-hand of to think and of the the not easy good. on process are. I volume of mean, really I Bob, combat I but get zoning what lucky centers those them. the we're point. -- hard And buying about walk and Well, taking through And have can find our full in to we're It being We're basically volume to And to all our at that, really volume, of them opportunities process. piece

So been we've hard done to able what a them. It's we've than a put good volume really do job more lot with on to the board.

Robert Myers

only we're redevelopment getting couple that between I'll of and and the to X intentional $XX of We're Starbucks, the is that about really we things, thing we're an or do portion this point Ross, on the Jeff, capability, drive are EOS continue level good XX% our example. development returns we've think of opportunities see our generate as occupancy very a assets million why million or not those is of acquisition because add Chipotle's, development portfolio opportunities to on we're part XX in Fitness, closed assets a you too, XXXX, just business, Below one doing wanting of to I XX. to redevelopment mentioned Chick-fil-A's. mean, XX have we of some sort strategy. is also of we focused earlier, X But some which as on, And lot as year. can the Five you boxes $XX finding very with per And repositioning touched Jeff's

and that path acquisition the between run a portfolio going parallel to So you'll strategy. we're see our existing

Haendel St. Juste

could as portfolio? side like part are redevelopment opportunities That's was I pipelines to of that acquisition that it. on there's lot on far portfolio different really larger, but peers It your if makes and peers that the it a also that sourcing your more anything the over sounds guys. helpful. to about sense. have your of you're Got perhaps trying perhaps ascertain opportunities today Okay, lead the

talk. for I the I think to me. it time that appreciate was

Operator

Kesten is question from next Your Wells the Fargo. line of with Dori

Dori Kesten

regarding in were in that now? is missed John, And 'XX? later did intentions but I guidance assumed say the your if apologize what maturing you I this, swaps

John Caulfield

Dori, no. I speak to actually didn't that.

for that. you thank So

I to flexibility. or we like. execute want is ultimately, want we $XXX are still it We've XX% and as target at going of we end, the did, fixing are focused long-term market. look, fixed. in be debt more we SOFR for whether a mentioned X.XX%. We floating mean, silver bond So be issuer be maturities after those on part than locking look above the quarter starting or that rate did we million in a have would for a we of at to curve swap unsecured we And it

able we're issue so And also in if improve that. will market, that opportunistically that to

was refinancing So have But in or around our guidance piece I 'XX to and the will our question, in activity going fixing in related Todd I do assumed. have think, interest our our from guidance. already do it incremental there say things we in our one debt are not for was equity clarifying back to to guidance. other this, our financing The fixing regards issuance we with activity,

Dori Kesten

unsecured do would that market? Where you the today price in you think

John Caulfield

Sure.

We watch that have talking pursue strategy don't last So do did meaningful our we've most in market liquidity year. closely. we to ladder the The thing 'XX, been was maturity we we do manage maturities and important acquisition about. pressing have very

in seasoned unsecured our that of goals bond long-term one issuer a become So market. to is

Ultimately, little a similar our think time. the is dependent range. going X% so at is to where because to X.XX% the tenure specifically pinpoint reception be that We We And it it to will would tough that upon in the we be it's but received believe positive be peers to model, the we credit. we're of step we an a right a leverage. we believe direction, business January, our because month of in the believe S&P, underrated is lower to from in a outlook which continue better have just

market access will look we So opportunistically. to that

Dori Kesten

on One outlook. question. last Okay. that And congratulations

expectations, year net acquisition IRR exceed when within issuing equity $XXX your would did your trading If you comfortable million this today? feel you're

Jeffrey Edison

ATM don't trading about -- Today, that. Today, feel I But of debt the cost at months? last volume we specific we're at us, when for several terms have the look we and great would comfortable uses use today at an we been you feel over over be, no, the we to we generally that and that it's will price in generally, stock where mean know is -- where or acquisition me, at. accretive very like that today what the that we've we're the to

strong pieces them would take balance sheet two answer we arise. those properties a ability to the to to as the and Does while faster we're at opportunities that time, have market-leading grow mean, match-funding balance the -- like we're today, trying same grow and perspective growth longer-term to matching So question, to a sheet and and I if a certainly the have your Dori? continue we keeping

Dori Kesten

does. it Yes,

Operator

the Your next Zhang line from Hongliang question JPMorgan. of is with

Hong Zhang

lease on your guess, of Park timing lease-up were rate? about you about? question your talking had attaches portfolio River I representative [ expectations I to up Shops those acquisitions. to the And what are are a and of nature the your them acquisitions ] average

Jeffrey Edison

That's will take XX with won't a next believe think, I great question. grocer over but in we those And that they I centers to of the both opportunity. -- will strong see months, progress XX mean, they examples tomorrow. of, I I it mean, happen -- we are

two One bigger opportunity. of much portfolio lot is things along box a issues, the small can quickly. of our have beauties that with store These more two some happen small store of

slightly box I XX maybe say opportunity and months we'll longer small store the would So see within opportunity. on the

But have at strongly doing with we the know very Joe's, those same else as don't want of H-E-B two, and if we anticipate the in them have those. look Bob, that's anything we two add. I So way kind when you you the that we acquisitions. centers look to at performed our and anchors, Trader

Robert Myers

a XX they're H-E-B's two letters in River little of up #X But They drivers Jeff's when and the example. redevelopment are larger would the type an point we over months. doing, earlier, bit traffic the just I the shop doing boxes that on as within doing sales will assets, dominant then since the to have grocers $X,XXX that the foot, could small to on to say And over No, foot. you of a a are we're doing already our is chunkier-sized first your XX volumes already months X point, lease these markets Joe's usually take we've of to working acquired intent Trader $X,XXX opportunity. significant strike #X, Park spaces

activity So by acquired in we've so recently far, and I'm these quarter. the fourth seen the encouraged we just

good. So,

Hong Zhang

a as potential potential pool XX% ask follow-up Got stabilized acquisitions rate it. the are If many acquisitions I those question. leased you can properties today, versus, more I occupancies? look I of how with guess, of guess at

Jeffrey Edison

manage our Yes. We be is I projects, mid-XXs, say the we think we will be up the able where But and based that love sort wish team of to year. what love we acquisitions. would but targeting probably had the execute We'll we I we're on opportunities and upon really we'd more closer did of terms to fourth the quarter, total the been arise has it them during would those end in really probably the well. to XX% that I than -- think, in will say market XX%. probably XX% of

So XX% I it's be opportunities those to in total arise, And occupancy occupied but for center. more there, range. that the if likely the we'll be would that's guess

Operator

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

Paulina Rojas Schmidt

of you mostly Walgreens, shallow Marketplace. is book that think. a with And small about grocer. I have assets see it's anchored One the one two questions. the a I it's shop not by I acquired follow-up

context you do how you your how limit So of you a little of if portfolio? traditional represent and assets a have much bit by would entire this the intrigued it's more the for centers would and type these then in I of departure you, know, that acquire of a to if could much don't

Jeffrey Edison

the Paulina, into Chicago directly street a of very Yes. with actually strong an That we and we a particular project where the from growth. opportunity great Chicago and strong was particularly in outside this could have but one this is get we concentration. that across one I'm across And productive use in and glad And to returns most we and the country, saw you the presence question machine built jewels good have Chicagoland. that market asked.

to vicinity in where our centers will looking allow there be portfolio, take of be those But our of them, return anchorage. as part advantage a will the in specific we believe ground opportunities, on we a for well immediate we we the that those have continue can these to traffic underwrite the So we but as long-term small as team we opportunities we on successful. are and have it and boots do are gross the we on those that believe the need projects having generators than bigger we that

of we on grocery-anchored where at are those our if think you So would X% would IRRs centers. XX.X% traditional unlevered XX%, those, be versus

be continue it's be a good for small to area a are portfolio part could the So we will of But a that part of do our our where small company. and there believe portfolio. select opportunities growth this

Paulina Rojas Schmidt

centers the And curious perspective, I'm type issued financing have of an I is, is necessarily capital. one where and free level cash equity; asset flow acquiring. know for sources you the that have you. think you from you grocery-anchored not industry are then of to other I'm And last you asking

Jeffrey Edison

right just talking Yes. Paulina, secured actively you us market not we about. borrowing can to -- not in with we the we're now. the best not that. are give people our we're you tell mean I banks But what have

talk So But we're want that you about the we specific. versus maybe, a capital? little where and would fund side on what bit we're Devin, be inferring seeing to doing

Devin Murphy

XX% right to have assets we're be market. is in will what secured that on now we activity hearing our venture those LTV the from perspective the Paulina, XX financing because financed over. at Sure. XX% And is

where X% So come the treasury given inside today of is. just

Operator

now session. conference the some our I closing Jeff remarks. to Edison concludes turn back question-and-answer for This will

Jeffrey Edison

Great. Thank In we're PECO proud you, closing, operator. accomplished the XXXX. what in extremely of team

to lowest in continue focused our we our to deliver On create talented year. will We differentiated I'd We're space. positioned a beta. liquidity, prepared that for team, leader market-leading we may you with Our team sheet market grow and with And balance management thank the behalf eco forward. alpha shopping levered the have to as fortress team, in for the for PECO opportunities weekend. shopping time their associates sheets will and the ample balance of and the our strategy results look like to the one is neighbors challenges all have and shareholders, XXXX. that center your continue provide and center successfully we this arise and less our continued PECO great and investors of We combined a believe support. Thank business. remain confident today, more to still the in

Operator

conference. concludes This today's

may You disconnect. now

Phillips Edison & Company (PECO) 9 Feb 242023 Q4 Earnings call transcript