PECO - Earnings call transcript Q1 2024 | Phillips Edison & Company, Inc.

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Operator

Good day, and welcome to Phillips Edison & Company First Quarter 2024 Earnings Call. Please note, this call is being recorded. I will now turn the call over to Kimberly Green, Head of Investor Relations. Kimberly, you may begin.

Kimberly Green

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

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

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

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

Jeffrey Edison

expense allowed at advantages we continue our earnings for nearly continued and of to guidance our the continues X.X% at which see of X% affirm operating high for despite midpoint XX% XXXX strong the of and us remains Today, per resilient, differentiated owning to core you, interest Occupancy strong our growth, team's spaces strength drive spaces, sales range. another FFO the increased by suburban markets and The has we of anchored attributable active. headwinds to deliver The the continues solid team The our The year-over-year This positive is X.X%. us FFO strategy pricing grocer headwinds. to many market, leased, we limited Thank with by #X interest of more continued PECO joining or our quarter we in driving big-box despite increased and traffic centers. is represents shopping level The spreads. the our proactive ability same-center Leasing elevated you, centers. we PECO new performance portfolio to be results in growth continued market increasingly and expense to drive and property transaction groceranchered and by reflected Kim, and share, centers and strong, PECO grocers environment to that thank is can FFO focused power. rent remains the the core Retention operating significant everyone, NAREIT gives of higher today. demand exposure growth $X.XX getting a X.X%. continue our have the strong consumer us team strong recurring where delivered of operate performance be NOI neighborhood in-line believe our increasing #X our remains retailers. foot continued to rents. significantly back in to

continues drive In and strong positive tailwinds neighbor PECO create that addition, strong benefit number macroeconomic from a trends to demand. of

well a positioned acquisitions great sheet, we have and balance growth. are We for and accretive

our centers high-quality of and confident $XX in land million. ability first acquire to market transaction at X the We the further. centers remain parcel a acquired opens we up returns as attractive for X shopping During quarter, total

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

for million our the of Given net the $XXX current million environment, year. $XXX we are of guidance acquisitions reaffirming to

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

of target our acquisitions. IRRs to X% greater unlevered for continue or We

to underwrote we completed that of XXXX IRR. X.X% over the a As acquisitions the half unlevered reminder, in second

will deliver maintain hopeful and a throughout on disciplined continue year.Looking per basis. will This executing can volumes to approach to more acquisitions increase external share assuming high market, our beyond We're portfolio committed our by a to We We the focus accretively growing internal believe long-term on FFO environment that our core single-digit continue growth XXXX stable driven portfolio. both strategy. growth. and remain we rate and mid- will to growth our and successfully interest be

sheets high-quality in suburban long-term our focused earnings PECO anchored more strategy. markets, generates provides one a and the best portfolio favorable top grocers supported in steady growth the data with by differentiated Our profile. by of given sector alpha less balance

announced closing to back the previously Also the proposed to added on this stores disposition XXX cautiously list and estimated merger by We Albertsons, CNS. the the of Kroger later this year. pushed for remain to about date impact optimistic merger PECO. this As Kroger was week,

the our continue for pico believe it market to and We gets believe is ultimately communities merger to and positive. positive sold PECO merger that the But occurring. probability low the net is impact now The a on centers for of still we our should CNS, XXX the close on stores the are centers serve. a list for a

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

Robert Myers

afternoon, strong us. good of and We you another leasing thank had and Jeff, momentum. for quarter everyone, results joining and operating you, Thank

to anchor higher remained quarter, during quarter occupancy demand leases, leasing at leased. XX.X% We continue retailer a no In at remained boxes quarter, back. Breeze including currently received continues center Ulta Below Crunch Marketplace first and spaces Portfolio X Creek medical rents and and at XX high occupancy tail X Hilfiger vacant at high portfolio. slowing occupancy with see Colonial we Center current PECO's Five Anchor with to at have anchor our Center, Plaza high Kirkwood And retailer Promenade. executed demand high Med into We centers. Beauty signs of and ended Bear Rise we the XX.X%. Plaza convert down. our team Fitness at just Shopping at anchor X uses, Ocean in the the

are we rents these on to Importantly, significantly able units. higher drive

For we reference, Activity had leases anchor had occupancy strongest out signature executed an points basis this fourth the quarter of anchor and points we've currently ABR XX spaces in the XX positive, year-over-year over for of years. sequential ended we extremely XX.X%, demand XX the an increase for at In-line increase. average increase X are average from basis of of experiencing a the and a quarter $X.XX and quarter. average X seen ABR an these $XX.XX XXX% currently is

Wingstop, neighbors med necessity-based restaurants, retailers New great tail beauty Nashville Hot and services. as health and and such first in Chicken, uses, quarter in the other goods added -- Starbucks hand stone, salons included and the Greek, such quick-service solar several as

XX% the buying Our were leased closing. quarter us with continue acquisitions drive at will growth. centers first some vacancy in allow -- to to

new Given in growth for you we occupancy, and have economic leased center information added PECO's external same disclosures unique packet. find our strategy, which supplemental can

continue given XXX demand. another push in-line retailer occupancy continued believe points the same-center We that can strong basis XXX to to we

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

compares comparable rent achieved to in are renewal of trailing language capitalize of we XX.X%.We spreads and increase record in-line to to opportunity the and at XX-month improve our lease a making demand a quarter, continue in renewal quarter, most high higher. spreads. XX.X% rents Our new strong on which In were average first the XX.X% renewal the rent the drive first

compares which environment. leasing -- Our continued first in-line retention our average these remained XX-month XX.X%. high of the spreads renewal at spreads quarter, of in and reflect to the XX.X% trailing increases and the The strength

growing spreads this new and throughout year in NAVER first be to the rate into retention continue of remained to in PECO's and and foreseeable retention of renewal future. rents at strong terms rates. Progress strong quarter. expect attractive the We the while continues balance

per of of less TI Higher Our for retention foot In in-line contractual historical also rate and We rent higher improvements retention spent driving the $X.XX only ahead increases. quarter, downtime square successful well XX%, average XX%. first at X-year tenant means the remain lower we spend. is renewals.Â of

and population contractual locations quarter top to space of XX services, leasing resilient strength shifts to returns line our power include trade pipeline going national, our annual an long-term construction.A population X% of goods spreads the economic neighbors impact neighborhood our continue XX,XXX, to in adds necessity-based drive X-mile new last another contributor years foot of tailwinds quality the trends our XX,XXX that our that that are include grocers our people neighborhoods the of Our U.S. portfolio. strategy demographics robust do of portfolio. over PECO household first evidence respectively, is leases and These and of migration of focused these top important average given grocery-anchored demographics new regional consumer and and we our amplified average grocery-anchored macroeconomic suburban X offering which are retailers the the is last-mile Publix, and neighbors. The rents leasing X%, importance The due executed a benefits and store many of and strength reflection work renewal growth. an in-line number justify local for the average shopping new higher median. benefit pricing come than bumps rent to demand of are supply and PECO's the PECO's to the and demand with and median are to are factors These the had clear the reoccurring to limited demographics high delivery. centers. in healthy Sunbelt, and strong traffic XX% a and of create achieving continued Kroger from drive trends of physical of current continues hybrid further of forward, of XX% income which strong that demand. positive centers. area favor neighbor not a PECO's in from mix our our

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

well-diversified also We a neighbor enjoy base.

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

a and retailers. exposure neighbor X.X% exposure mix, of All Our up PECO T.J. and To has Neighbor retail Maxx. is on neighbors no put distressed largest nongrocery our that other to only point finer luxury rents, below non-grocer limited of very makes to are ABR. X% neighbor

just in neighbors watch represent while XX top quarter, of slightly we currently elevated list -- basis with more health representing Our one on no monitor our was bad of ABR the our first retailer neighbors. debt of ABR XX the than points X% our actively

are not any have don't attributed meaningful the term, environment, particularly even retailer demand. PECO aggressive have bad debt opportunities is about this an strong standpoint, concerned note, From as to stance concentrations. operations spaces not To the taking we can aggressive back. spreads. the stance bankruptcies given We in And is an near team today's we on national always where get we get taken higher to in more an

We setting goods local we rent neighbor services. on ABR from the getting units rents are neighbors. our in-line necessity-based retailers back. offering XX% from XX% of The come majority derived spreads of is local are our and

XX% local the terms Our neighbors the their neighbors A and PICO beginning offer favorable in more have businesses corporate credit retained retention local lease are neighbors, quarter. successful to hard-working retailer weaker by first bankruptcy caused economic has capital of entrepreneurs, less receives susceptible returns. high healthy they PECO locations.Local accepts run less at typical lease of by are and performing rates. friendly local

strong remained For inline spreads local rent at XX.X%. neighbors, renewal

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

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

our development ground-up outparcel repositioning pipeline to to our projects. and rental growth expand continue we addition strong In of trends,

and approximately projects over meaningful During in the our risk-adjusted returns first quarter, of These long-term growth. NOI space neighbors. X.X X have projects million They feet NOI incremental provide a to square and X of delivered annually. XXX,XXX our we stabilized superior impact add

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

Our this momentum the summary, PECO In pipeline experiencing continued the positive returns to to leasing, current focused on growing portfolio. are accretive redevelopment stay as team development. continues remains across optimistic strong the team and are we environment operating and the given the

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

John Caulfield

guidance. the first and balance XXXX our speak start to morning, by everyone. good update results, then and addressing the and quarter an affirmed good Bob, on you, I'll Thank afternoon, sheet finally provide

First $XX.X income or by share, operations. partially interest $X.XX Results property expense. quarter an in million our by increased diluted were FFO XXXX per year-over-year X.X% higher strong to rental driven from NAREIT increase impacted

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

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

acquisitions Regarding had we acquired no and land quarter. a first $XX of million. quarter, the during X parcel centers the for shopping dispositions We X during total

the to balance sheet. Turning

We of acquisition our liquidity November million $XXX have meaningful until plan support approximately maturities no XXXX. to and

EBITDA adjusted X.Xx. to debt net Our at remained

extension options. X.X% average Our and a of rate years weighted all when X.X debt had interest including a maturity weighted of average

us September $XXX floating. new that SOFR we XXXX. quarter ended on October December XXXX, an we our entered rate XX, This totaling of effective million. XXXX. manage During approximately matures the to at debt have interest in September helps X.XX% The the rate We agreement expire swap XX, rate as exposure floating swapped with swap XX% instrument and XX% quarter, into and fixed swaps

debt to continue access we opportunistically. it We the to market and look monitor

favorable, the credit long-term recent move been treasuries While in year-end. have from not improved has spreads

continually profile. our debt our enhance opportunities liquidity extend to We are and maturity looking at

to of we debt in lack by free XXXX. access to provides flexibility patient. Our our cash to strategic flow our maturities available our us on the and portfolio year revolver, capacity timing for our with be Between this guidance market.Turning be significant the can the near-term generated

X% range We have share guidance per over XXXX at our to and updated net growth core we've affirmed NAREIT and midpoints, the $X.XX $X.XX. which FFO, to income a And the for reflects respectively. X%

operating In of of have continued guidance impact NOI same-center given our our in is addition, negative environment. X.XX% we uncollectible to strong Included affirmed range X.XX%, growth the the reserves. for

of the affirming are neighbors. our given the provided, We previously range strong continued health

back team high the However, spaces range likely the earlier. being will rent our strong for this be and an stance we under pipeline, acquisitions our aggressive taking year, mentioned is a negotiation. spreads, contract higher We activity year. still contract getting or have to the but it's for at Bob end several start either on by in in drive of currently This early, as influenced the provides

in expect of acquisition million. early, are range $XXX volume so $XXX net affirming million Jeff it mentioned, still As is we to our guidance and be to the

comfortable current As number, increase the and in capital this we transaction improve, guidance have capacity the the markets to meaningfully this but with environment. we range are

growth. our beyond Looking to we in outlook mid- per the external and for share single us core XXXX, growth digits opportunities give growth believe high FFO long-term internal a

growth. our because We which said, pleased as to That we to interest AFFO or growth. increase expect as to by guide to invested be rate comparable less are, dollars all per share improvement are near there earnings a impacted rate tenant In borrowers term, should same-center for faster continue we positive impacts the increases occupancy. be growth continue we

are volatile midpoint. per of this a growth rate share challenges be to range to interest the $XXX with estimate For and updated XXXX million the rates interest expense of high the and rate impact for $X.XX XXXX, to inflation, rates to higher updating interest interest headwind to added could increases FFO continuing would back that we is conflict. year. present X% of We If our global core the XXXX $XX at million. guidance, be rising $X.XX we

the for steady excited opportunities we the and growth both well this of line integrated the will Operator? positions for open earnings internal acquisitions. for our PECO We're year, questions. With ahead platform growth. that, through However, long-term strength operating additional

Operator

first with the Instructions] ofÂ Caitlin from is Sachs. line question Â [Operator Your Goldman Burrows

Caitlin Burrows

just on Maybe John, last on up, following point bad that the debt headwind.

now So neighbors to generally are in the guidance XX mentioned It's your early could high at was points, know performing the XX like well. end, basis I you It year. come granted. sounds and very it the still in

driving what's the driven, results? you if XQ is anything And kind go wondering PECO on nuance? view through just the So of that updated can

Jeffrey Edison

continue our we Jeff. of now, who at back question. paying. at not think as do that? but what right has a But goes That you have to it's to as an are very on we're to that's impact. and the normalize we we're aggressive anything -- aggressive to impact we're here. any generally we the about operating Thanks changing stance spaces did the John, basis, -- that on properties getting additions we occupancy those through. environment going over look happening be getting have when levels -- at numbers, really Kate, they a that neighbors and the getting -- that secularly are The -- on seeing some get for taking not Well, talking will will back And year more is we're go-forward

John Caulfield

No.

captures, I mean, anything by at early year not bankrupcies Jeff can mean, it seeing as the is it, national at we said, But move driven look look and that it I it, we're think I from as that is Kate, quarter-to-quarter. things. in pervasive. or we still when this is not

And expect And we were the Bob's higher guidance this of about. the NOI the same-store that but space so -- do our aggressive reaffirm is taking the be range, end important tell. to we us has at ultimately, for on it's back at thing we for time, taking able the early still year. We the getting are do steps stance talked we'll to that that have team an and

about feel very that. So we strong

Caitlin Burrows

someone. just Jeff, on, or go then maybe guess Â I

Robert Myers

to seeing and platform back, No, to we I'm that. seeing even spaces that of in add but light we're long just continue XX% going the we on Bob. the how that space, -- so In the benefit from. over we demand we're spreads there, push, sorry, is as new received seeing demand space-by-space to were operations we're I'm some a for we the able it to a it's decision and strategy as it is see that the leasing hard what get

the and spreads encouraged So seeing. the I'm demand by we're

Caitlin Burrows

just guys expected? Got can point of some offsets than better higher being being I through then NOI it. target FFO might the on interest reaffirmed of despite of what the maybe the you And the guess performing expense. same-store and guidance be go reaffirmed

Jeffrey Edison

John, do that you want take to one?

John Caulfield

Sure, that. I'll take

about we activity talking the better that and do ultimately, so goes leasing having allows actually also are is the that, and the yes, this So to was level operating leasing at Bob the FFO. spread to

having than experience better are NOI We our G&A margin and things quarter, expense forecasting increased helped as a seeing expenses little mean, of our still but the had well as some we I are level offsetting. like property we're anticipated. this

interest increase the and guidance manage is to that in good feel our ranges. able we So were something, about but

Operator

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

Elizabeth Yang Doykan

could was talk the more you the leased I in -- bit seemed centers little the quarter. first acquisition. just a guys acquired you of at hoping Both about if well X point pretty

on centers. you on plans wondering that just for that set at I'm land And wondering of just parcel the see the each opportunity So those was acquired.

Jeffrey Edison

Why talk purchase. properties, I we the don't X can land you parcel I'll through cover the -- Bob, that

a market is We like really public trade area. particular outside of at have of It's a first Mary in its we a actually Orlando. project It center like that that one for the The we center. bought was anchored long publics best time. looked

very mark-to-market And there. good so we that was opportunities and -- we there some find did

our underwriting and in was sort think of basis. IRR on unlevered X% an the -- I between X.X%

we acquisition. pretty that about good So felt

very -- familiar center in short purchase. very time we with higher our dominant property with a for with were market in guess, from acquisition very, a long we opportunistic in seen second that was density grocer a was the distance was in end not that in It had Our a a it mind, a but I within center. very and a with active market the a

first as pretty I pipeline. as was committee knew one suburban that year advantage in strong would IRR we say were this year a major, shopper. that going into a well, really would almost was many was we an last for very terms of we mind, we in quarter for X.X% seen it And good second year. it thought -- acquisitions X our getting product had We've a that that quarter last have market So quarter we opportunity twice we and put committee, to of and first well investment where through projects of. take was tough a did a second investment corridor -- almost Obviously, say through were on. I those the the coming we north And the in in

year. outlook So than we the may we by go that are the from last we you opportunities want that as in well? see to year a bit market difficult encouraged purchase that, through this little did do we better the Bob,

Robert Myers

Yes, absolutely.

it's it's the it's called this account Florida, had around parcel. national X-acre it. in is our and that $X point, Tampa, X a marketing we've about one actually and been for And our this So team for eyes has months. right and last Golsby million really on paid We

the So separating acres parcels, currently have smoothies interest retailers urgent Chase already X-X-acre Dutch are and tropical Brothers strong thinking into the the national and and from and banks about the we care. and we X

Medtail see you're in demand going continue space. for and the So these opportunities fast-casual to the again, to

opportunities complements our they're returns existing assets. we're that find these generate great and can we to as So focused the XX% X% to on,

we to opportunistic to look continue land. for and So want stay

Elizabeth Yang Doykan

acquisitions. And Okay. you any there been employing just funding the in fund That's year? a to acquisitions? color. around strategy quarter guys Or your throughout good you fund did updated rest this is the thoughts on could And thinking that. first to just How if the you give funding change of follow-up match have

Jeffrey Edison

would pace. -- our say, have Lizy, we The reaffirmed I Yes.

about in is standpoint, And have -- -- that volatility acquisitions. from -- you're it's funding positive to continues changing market to it's for that the $XXX for $XXX be million daily. match So in expectations. not will -- anticipate range and a pricing buyers a of but real of a we generally is just environment we harder talking almost million and that quite in volume, that sellers that's this actually we bit terms because And the

And and our -- the so tapped to our figure sort disciplined where -- in it's so we're make of But a see we've that to the out. you we get returns think we're staying got time terms -- difficult of are I to that very that's we -- to of of accretive terms them extended we're debt year, the sort how side match last ATM of equity the as in model maturities on did the well. doing and all funding, the

So using line rate as will we that we've acquisitions, to have anything and looking our longer-term got in we be acquisitions. did be will we for those on then additional debt that? in these tie John, fixed you tie

John Caulfield

it. front we target as us. about I in No, hits to of and liquidity, and ultimately looking I of maintain floating, XX% the feel think we we're flexibility opportunities we're to but are that of get our that million looking assets have the buying long-term to our $XXX mean good

Jeffrey Edison

your that question? Lizy, answer does

Elizabeth Yang Doykan

Yes. That great. was

Operator

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

Ronald Kamdem

my and Â Just I Day, was about talked of management partnerships one you quick first Investor at the so forth. sort asset remember back

was the on there was? wondering and update any Just what thinking that

Jeffrey Edison

brought Â I -- detail our a I into we should quarter, have announcement. we here think want we making funds in public -- these a we giving projects they point there. we openly make projects any into more where lot more will And we discussing to goal these -- at But the second are. on progress before what are be do be is

in progress, hopefully to for will we and continue more second we quarter. the So you have news

Ronald Kamdem

has was just because year acquisition or been And to lot more to you Great. second going talked pipeline forth, about seeing deals? to just differently my year, to for then a versus guys to creative more be I anything and are the of be Or volumes look the at back question all think this so last environment? it source you doing

Jeffrey Edison

I grocery are put we system XX shopping have acquiring anchored this volume. and think the centers. we've that I -- -- being in years place it's refined a over general in probably mean we

X,XXX sure the we're So in That and terms we those own owners those part and that things. we we're has have make when But focusing they -- available. to of become the core centers both sure technology we consistent.Â obviously and of really updating making want of strategy on our see pretty that front stayed brokers to in

Operator

next of is the from question Your line St. Haendel

Mizuho. with Juste

Ravi Vaidya

guys Ravi Haendel. Vaidya line doing well. is on hope are This the you for I

Just issue what what debt? money convertible would or these debt financing is you be appetite different options? doing guess, today, short-term can And curious, I XX-year your interest or it were Just cost? a to your agents alternative what's if deal for in any

Jeffrey Edison

question. Great

-- of at all public point are looking the our public at -- them. the We longer-term focus the get And markets. into our to primary this is debt

something though, alternatives, could the work so And us. for that interesting and

that we're to But sort attractive pursued of we not -- have We continuing pretty we some there's options there look additions that? at. yet, that because those actively but will to John, are reviewing them any they are --

John Caulfield

Sure.

would everything. X% were be, that So to we X.XX%. at looking currently, our are if let's we say, to issue say I would cost long-term

with the track investors opportunity. bond them The record progress and been that. market. important we've thing in for us is waiting for right But a speaking and We've with made great building the building unsecured

a As the were the I mentioned prepared the little in but expanded. improved, wide base year has beginning the spreads at rate of the and they've remarks, now

this in calendar, So the time because something actively are is we built to be we we our ability it patient. maturity have monitoring. that have But

that the record all do so use sheet track and market But said, them liquidity in our that that, And availability. it evaluate like that sure just accessing the balance strategies, the make has current and to if most market depending things we building you on and we're we're at reputation wanting look and all. we funding, timing

debt. bank have We

debt, We unsecured we secured and bonds. have have

assets. So getting forward capital buy we're we watching, more and it's to and look something accessing going more that to

Ravi Vaidya

here. more Just one

that a this your to that Regarding hang from you're what was can cap -- the we would this acquisitions year's. in And Is year acquisition year's around we perspective, bit can of higher rate than now? last pipeline in X% cap what's assume rates, quarter's based on right X% kind this range? seeing -- a modeling

Jeffrey Edison

I were we X.X%. XX we pricing, favorable of stay where on these range. at stories X but a kind guidance off There would of really pretty to of come specific that haven't acquisitions the got XX

it from that's there's again, X this don't year. don't midpoint -- we'll the at the X.X% see kind we're would year. about So think But of make that movement how much we point. marks thinking how progresses. I the And

Operator

Your Michael the from of line JPMorgan. next with question is Mueller

Michael Mueller

see occupancy anchor quick a and economic the ending you do up year. where question. Just Jeff occupancy fiscal overall or

Jeffrey Edison

take Bob we to want that? you are Â Bob you. missing

Robert Myers

Jeff. Â Sorry,

range at be and in-line the what our I anchor seeing. it's certainly that that in that the And would elevated. and the be certainly in today we'll our think know XX.XX% and on demand but exactly we XX.X% anchor will pipeline occupancy believe of of our the given is, the seeing at to I think demand. anchor line. the hard be that north Looking we're that the definitely would higher I we're

will So for pinpoint elevated, at it exactly this it's it to hard really but what point, be. certainly will I'd say me be

Operator

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

Juan Sanabria

the driven of it renewal to in out, not leases color bankrupcies driven debt. hoping more versus break just sounds of was a on bad it's mom-and-pop if space. And could It higher trying by Is re-leasing the of guys by could smaller little upon like in being national tenants. give some of that lines? or it curious to you related you being Just much the bit more debt get tenclosures how just you proactive like bad

Jeffrey Edison

one? John, do you to that want take

John Caulfield

say to we debt, I as as could the -- national, would disputes it is not look at Â So when not be well. say it's related it bad I

So it's bankrupcy. not saying national was I

that are going, bad regional those at from contribution There that's national, from and looking neighbors. from not was a you're when names to debt impacting. the So local

enough is that the As are to momentum portion we the look it say balances. of few But more place, which terms But less to say kind little take just trigger we would at us bit more. action got outsized. full it, to it does we was that. actions, processes influence in that of a more it of that that majority have reserve when of had those probably take our is neighbors -- maybe larger and that conservative which I would becomes is I we internal might to takes a close quickly, them taking leasing why kind than a we've the

that we're specific I a else we're So you're saying would anything that got the rent as we complemented leasing And any adjustments. quite on But growth spreads we've that ahead, look and seeing, not why by or instances, think other the made which it's are seeing. opportunistic concerns activity we're it's is trend-wise the seeing basis. have broad we

continue we so be to And bullish.

Juan Sanabria

where strong And then guys general. in still push that I disparate you demand could if and those of tenants good changed I group back, neighbors the what felt maybe aimed you about take guess, to with just around to reserves feeling you

Jeffrey Edison

That we -- bad be that. among you're done took I haven't want retention that the mean we aggressive the will those more it how it why an get -- in to -- It's as putting with going strategy mean, you of of the It's down peers impetus opportunity opportunity will sort think when more movement. to huge pursue at. the market. spreads. you're And where for occupancy closer up -- to is and rent you a we aggressive edge to natural of about going mark sort And strategic bumps mean do to it on I -- The are the we're the that but a that to aggressively. And going to those environment And who can -- level as the a to debt. there's have, is I a -- high it, increased terms some on is will think getting number to have sort us, always do in have answer? rents. on you're that. look, I that this terms process for a to to not see it we're of retailers, of going we it's in see we're -- taking of impacts of not do going level And that going whether you're any I outsized the and be right negative will in XX% is in where just our going -- growth that -- Does we we someone like Juan, of that, from that as -- and more and that this we'll I the they is -- weigh top see see than there's not you're to think to accelerate accounting demand -- change us, will that on back move upweight from thinking we -- them of you spaces your line, things when we're but reserves. you we have when line, like the think is get of as the you want quickly

Juan Sanabria

anything-- not Â It to does.Â Yes, not... sure I'm John wanted if add

On the...

Sorry, John

John Caulfield

you're No, good. going I Go to ahead, was say sorry.

Juan Sanabria

the is the weighing cap changes side bit the every acquisitive, on bullish broadly sold surprised not the the and you guys rates as and but have equity capital rates side. IRR I about debt of that's do of return bit. your markets on implied I'm higher changes just to been but day very you the cost a require off of guys capital, just equity little cap -- so rate on your the a then Â And in with you spreads, are pull with need rate a as and how up side, on little maybe but given and cap acquisition similar mean, just much push or that and deteriorating gone think the have cost

think that? you guys do broadly just how about So

Jeffrey Edison

is came seeing we as IRR of at we And things out in north accretive To moved and that are they're are recall, underwriting a today. where advantages of And the well us, those X%. one north X%. targeted of being of product X% it are of as the the an has unlevered is market year, the So times look when a north to won't at market I IPO, that And good you that, -- was moved, we first to mean, to our last that there that opportunities the on cycle some will X.X%, you mean take what -- the the But company. on perfectly. where underwrote you a be long-term accretive that you be will will basis we of will bought advantages, more and at you regular I be basis feel north we X%. and significantly than well will hit

aggressive very So invest where that's we where that's capital history that been -- about company, and sort see less for strategy upon we get of a us. and money successful what between that that -- cost of that is. can we the our you'll and aggressive how more think the the spread based it, And throughout of

be will we mean And be that of But accretive as -- kind Does in if market, we we do. Well, so going the more no. question? aggressive get will answer we comfortable for pricing? -- your the we'll answer will and capital our find to I what opportunities does year we is be highly I'm that don't are cost so is of this the that

Operator

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

Dori Kesten

your you years? year? with maturing comfortable next what with generally, are on Can And floating the swaps exposure then rate most just you intentions comment over few this later the

Jeffrey Edison

that? question. through Dori, to thanks walk for John, want you do sort of the

John Caulfield

Sure.

$XXX So be longer, later At ultimately, are it the was in in was did we there time, today. point have the and first swaps execute higher -- it we we that was are for mature year. believe swap XX% time. to were quarter. We that cuts going -- it at We rate this X a -- opportunistically do million floating agreement for

fixed basis, we instruments, in unsecured long-term plan the through to our get market. that fixed target So But would a rate of long-term move primarily do opportunistically. like to we with on rate our to bond XX%, incremental financing

move elevated we exposure. look there we our the we we rate from at an rate there, and as longer, mean, here. more will go regards to likelihood it are floating as rates even with the for forward, I up it than harder though also, down debt there's view at come So is But is stability that

And underneath look useful swaps, as so it. we And have choosing at are as debt instrument maintain are that we you flexibility. to the rate floating swaps

floating, earnings term, higher up. higher but in are And near percentage is to moving are allowing we which certainly as to to months, positive the move are so our rate we also us will we and we growth percent deliver help next would choosing growth. overall because exercise the to XX a towards us having hope FFO bond X And in the positive unsecured that in do market,

our just we waiting so were extending to and in lock that right And as rates opportunity begin for durations.

Jeffrey Edison

it's just Jeff. our... say of was Dory, One to going I

to our able that not match on But balance enter opportunistic strategy our on we over can is basis, very risk where will space X-year we'll to on doing swaps. talked be I but we they Those that the X-year our the one rates do at And we debt fund duration and or of advantages that. my be mean, being sheet mean our of X-month a focused get until better a can. swaps is And and when -- match funding company the or view set swap One we about, of one we're mind, XX-month true matched why can thing, sheets longer-term do a markets. is make the in we very as not our actually where of of waiting balance part the sort the of to strategies, find in up continue favorable, sheet. have we that we've the be we're having time of is I patient these it's longer-term be balance will to and impact And that. funding. sure getting is have they're that's we're minimal where

Dori Kesten

retailers It's difficult which have more conversations been then to easier And do you category what continue And of to higher push down? Okay. fees escalators with. for?

Jeffrey Edison

Bob, do cover to that? you want

Robert Myers

question. Great sure. Yes,

to of some fitness is lot continue service little restaurants, our quick beauty, bit restaurants and the Med like still we where and from see entertainment demand a So tail, our health uses. a in

example, an mentioned and As as services. goods over is of we from rent our XX% earlier, necessity-based

the So renewal the continue from a to positive leasing XX% and merchandising spreads. the we see standpoint, spreads that's of where

a had we've our escalators lot success labors. And with local XX.X%. then at saw with of You

on overall XX% quarter local are naborers. with spreads you'll of generate And number first can you even when higher renewal in the that the we believe addition find our 'XX. are And renewal X.X% seeing in-line the lines our our X XX% that I play in year between -- to merchandising XX.X% of escalators. and at with So or neighbors. for And typically X% was type local escalators

segments are service-based So we that see continue these opportunities necessity-based. in to

portfolio in So I'm across of -- retention cracks of seeing terms consistency I'm in not the merchandising any seeing our terms then strategy. and

So working. it's

Operator

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

Omotayo Okusanya

everyone has I and but at growth very general of this general, ride about a quick just Most everyone's general, in kind been The profile. good of people talking strong. a because think, per centers a strong point now. but asked, in have year just really I this one, and of shopping specific, not The stocks it's very again, having of share rough questions just my everyone's bit XXXX environment is have demand FFO

involved is in stocks start again? private Is get equity this see is, we if strong, So that to there maybe is the cost space themselves question fundamentals capital challenging. somewhat viewpoint a of more

Jeffrey Edison

and they're bumpy years, X yes. some -- Blackstone anything of of It's to out on while, seeing not said don't -- they're they're the interest going mid-teens there will think it I for answer to create The do that they But environment retail maybe look has there. fundamentals side. is underlying I a trigger significance significant are is equity to long-term a market. that but mispriced, get returns, sort will pull can little "Look, an of private those it's like opportunity can on levered some we're -- number and not probably they that. -- the when the there's are But I seeing they're in And in get XX, mid-teen circling or a threat firms they these growth. -- buyer that X -- but can -- is be in going business of there be so to really this, a this that saying, out

the boxes on some time. rent some And costs rent rents. of big of the those are I opportunity. and that -- time, a of they're period they've our you And a -- new looking can the operating out it's become see normal -- peers and environment. rent in is they refitting for going But market of more that mean, lack it that significant that the those not of So been that it's mean retail the period to significant is of more my I belief part There is in demand. are significantly all some is are some all fundamentals. that read are at our of of through pretty pretty peers there's a cost. when facing Those a some our I are get spreads. really not mean spreads are of you based strong

entering be out. -- how think will plays see We'll you're where how you'll I think so going and that see And to them interesting. I

Operator

Thomas Todd Capital. KeyBanc is question next from The with

Todd Thomas

the Â I there in just sound back wanted underwriting, comments tied about in what they a John, And the up. of you're properties are little And encouraging Does pipeline. current such in go in have more what's bit. range for get accounted pipeline, mentioned investment the that sort terms half? some range million what's $XXX year volumes bit the the second at slow to guidance point a activity to you to you and the contract you that the under of $XXX to million this in down the

Jeffrey Edison

the to we last more mean, do of in I -- don't than have increases. that be We like happening be year have on a we we stabilized terms think a over have quarter oriented. last were very not year -- -- year we on I yet. year. will -- fourth will do was guess, more it our would a that anticipate full gradual this don't But the guidance if We commitment year

with a we'll this But this flow be year would I year. think and the plays consistent early on we've point. out. will got assume a quarter-by-quarter basis more pretty how in that it's -- can it and consistent stuff But we see the happen, at again,

sense? make that Does Okay.

Todd Thomas

what that today? a And buying you've bit smaller what you're then recently? similar that seen you how you little is That's compared own product, to helpful... the looks predominantly talk product grocery-anchored of product to Absolutely. Sure And can you're everything underwriting, about more that the format, quality

Jeffrey Edison

Yes.

So I we've centers were quality the targeted some consistent would X,XXX look that opportunities say are that that pretty I there When to are of really the willing projects. fit it's great sort but of think at group box, of. perfectly select don't a -- consistent. in is do take advantage we pretty got, The you opportunities

us, that growth see it's going shadow-anchored really exposure, a get might of stuff you Some we -- -- small XXX,XXX as going amount and at. we from strong be expect look Maxx But we a to kind some can has stuff thing seeing. or and of seeing operating we that T.J. good I returns, whole, what mean, would on to be square are seen that where where it's our feel consistent It's an ongoing enough guidance. And obviously, in -- with wouldn't that to #X what have foot, a no I of pretty that we any of we basis. grocer, pretty it's drop with X drop-off. terms quality we we're

feel bit Just -- a volume there's us that better. more makes little and the

Todd Thomas

one I Â Okay. just And could here. more, if then

up that comments on amounts here being line. taking $XXX It your a million I volatile the gives acquire change. like you sounds said continued with about capacity and from a you which that sort sort you're and think strategy to that, and on rates mentioned utilizing of come you down, comfortable of bit if have capital expect leverage-neutral free basis markets just the it's environment line right to in near above leverage with, guess, that's that's little flow you strategy. been And cash what the confidence term. that curious has the previously John, fairly rate to right outlook, interest a but you the I

Jeffrey Edison

not significant our are any leverage. of we kind So projecting change in

we've the So this between as X.X, -- -- and anticipated if in we somewhere we X execute -- strategy be that we'll year. our

we going have on So acquisitions given there what terms one of buy. we part the And we reasons we're any of in will real don't the opportunity not guidance -- in we're I disciplined is but is don't be really think -- it. -- movement to that of

so a And if there. not our period we're that can there, sold, not a kind we it's do strategy. we're time that not sustained -- the X-year -- a model think can but we know balance to can that over, over X and it's it's we because going we're just buyer keeping be get over but again, the underwriting. it growth-wise doing of months, And we're regard. getting there there pricing, generate But what X- for up get business our to at sheet I that's lever a it's if that it -- we're trying. we're don't and going and of over we not And what this in in right we out and strong to skis -- that not very committed our mean, to that's on is not

John Caulfield

X.X% is that in the X.XX%, acquisitions target long-term neutral we to that debt. when add leverage have, leverage are and And range. as leverage just mean, Â I'll that. said, adding I neutral talk being and our mean we growth Jeff the does about you

being made to will buying, the -- rates basis to dependent don't to mean not all. flow grows. maintaining made just a on the assets this, are I about You're Jeff acquisitions And and go just the that imply down. I that interest for at that I of cash mean, as debt we're rates, spoke our that say to that your EBITDA comment with growth to we regards I because

execute we're look we we match to are I that is think strategy. long-term what saying floating temporarily that as

and And so we've today forward. got going positive leverage

it about so -- be that we are And our managing to leverage are going opportunistic but something is cautiously. we

Jeffrey Edison

at then I down anticipating we they capital. probably we're that more on think because on. it likely would I really of the to think risk that that mean, decline say a up. you're go Todd, they would range -- is really the way say that waiting down it that, wouldn't is -- we're we would years, But that's see getting the pretty that go there's if that we're really if talking which is they I it looking I pure think from duration a next stay think bound, like about XX-year focus range Yes. And at what that They're I couple we look rates. standpoint, is on longer over our in more

we're we're think exposure. are are are on going And to you manage it not terms So of what doing. go -- but we your what in where -- how rates economists. we But business, in this that that's we'll And lay we we interest interest what because bets rate continue of out -- that we way. making to

Operator

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

Jeffrey Edison

Â Great. everybody, the call. quarter. for the thank Well, PECO operator. of the what thanks, closing, being And you, we're In first in accomplished on proud

we've team, in we to about. environment, focused create shopping continue enjoy as strong Our and combined strategy leader differentiated our and talented a to center market the operating talked business, a

the market-leading deliver continue Our see to that neighbors We're healthy, results. remain PECO and we confident will cracks. any don't team

more their believe And is team, prepared our support. liquidity, they alpha sheets PECO Thank have to space. sheet We you time our weekend. shopping beta. shareholders, look well the we have great of and the of do and provide neighbors continued arise. lowest And ample our investors for fortress On grow balance center forward. management positioned to one we with like opportunities We PECO everyone, associates balance for successfully to remain I'd your as the with thank continue leveraged less in and as for today. our we a behalf

Operator

concludes today's conference. This

disconnect. You may now

Phillips Edison & Company (PECO) 26 Apr 242024 Q1 Earnings call transcript