Phillips Edison & Company, Inc. · NASDAQ:PECO
Phillips Edison & — Phillips Edison Grocery Center REIT I — Q3 2017 Earnings Presentation
27 slides from Phillips Edison &'s earnings presentation, Nov 9, 2017
Slide 1: Third Quarter 2017 Results Presentation
Third Quarter 2017 Results Presentation Thursday, November 9, 2017
Slide 2: Agenda
2 www.phillipsedison.com Agenda R. Mark Addy - Executive Vice President • Portfolio Results • Financial Results • Shareholder Repurchase Program (SRP) Jeff Edison - Chairman and CEO • Estimated Value per Share Update • Acquisition of Phillips Edison Limited Partnership (PELP) • Liquidity Question an
Slide 3: Forward-Looking Statement Disclosure
3 www.phillipsedison.com Forward-Looking Statement Disclosure This presentation and the corresponding call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are
Slide 4: Portfolio Highlights
4 www.phillipsedison.com Portfolio Highlights September 30, 2017 October 4, 2017 Total Properties 159 235 Leading Grocery Anchors 25 34 States 28 32 Square Feet 17.4 million 26.1 million Leased Occupancy 96.4% 94.4% Rent from grocer, national and regional tenants 78.0% 77.5%
Slide 5: Q3 2017 Portfolio Results
5 www.phillipsedison.com Q3 2017 Portfolio Results Grocer % of ABR # of Locations Kroger 9.2% 41 Publix Super Markets 7.3% 32 Ahold Delhaize 4.0% 10 Albertsons Companies 3.7% 13 Giant Eagle 2.6% 7 Top 5 Grocers by % of Annualized Base Rent Annualized Base Rent by Tenant Type Annualized Base Rent by
Slide 6: Pro Forma Portfolio Results
6 www.phillipsedison.com Pro Forma Portfolio Results Grocer % of ABR # of Locations Kroger 9.2% 56 Publix Super Markets 5.8% 34 Ahold Delhaize 3.7% 19 Albertsons Companies 3.5% 18 Giant Eagle 2.5% 9 Top 5 Grocers by % of Annualized Base Rent Annualized Base Rent by Tenant Type Annualized Base Rent b
Slide 7: Acquisition Highlights
7 www.phillipsedison.com Acquisition Highlights Q3 2017 Acquisition Activity Name Location Grocer GLA Hoffman Village Hoffman Estates, IL Marino's Fresh Market 159,443 Acquisition of Real Estate from PELP # of Assets States % ABR from Grocers, National and Regional Tenants GLA 76 25 76% 8.7 million
Slide 8: Q3 2017 Financials - Three Month Results
8 www.phillipsedison.com Q3 2017 Financials - 3 Month Results Three Months Ended September 30, (in 000s) 2017 2016 $ Change % Change Net (Loss) Income Attributable to Stockholders $ (8,232 ) $ 2,464 $ (10,696 ) NM Adjustments(1) $ 28,240 $ 26,186 $ 2,054 7.8 % Funds from Operations (FFO) $ 20,008 $
Slide 9: Q3 2017 Financials - Nine Month Results
9 www.phillipsedison.com Q3 2017 Financials - 9 Month Results Nine Months Ended June 30, (in 000s) 2017 2016 $ Change % Change Net (Loss) Income Attributable to Stockholders $ (8,319 ) $ 5,243 $ (13,562 ) NM Adjustments(1) $ 83,237 $ 77,095 $ 6,142 8.0 % Funds from Operations (FFO) $ 74,918 $ 82,338
Slide 10: Q3 2017 Same-Center NOI - 3 Month Results
10 www.phillipsedison.com Q3 2017 Same-Center(1) Net Operating Income (NOI) - 3 Month Results Three Months Ended September 30, (in 000s) 2017 2016 $ Change % Change Revenues: Rental income(2) $ 42,621 $ 41,797 $ 824 Tenant recovery income 13,620 14,020 (400 ) Other property income 274 195 79 56,515
Slide 11: Q3 2017 Same-Center NOI - 9 Month Results
11 www.phillipsedison.com Q3 2017 Same-Center(1) NOI - 9 Month Results Nine Months Ended September 30, (in 000s) 2017 2016 $ Change % Change Revenues: Rental income(2) $ 127,588 $ 124,664 $ 2,924 Tenant recovery income 41,337 42,583 (1,246 ) Other property income 615 562 53 169,540 167,809 1,731 1.0
Slide 12: Debt Profile
12 www.phillipsedison.com Debt Profile 1) Calculated as net debt (total debt, excluding below-market debt adjustments and deferred financing costs, less cash and cash equivalents) as a percentage of enterprise value (equity value, calculated as total common shares and OP units outstanding multiplied
Slide 13: Share Repurchase Program
13 www.phillipsedison.com Share Repurchase Program Our Share Repurchase Program (SRP) states that the cash available for repurchases on any particular date will generally be limited to the proceeds from the DRIP during the preceding four fiscal quarters, less any cash already used for repurchases si
Slide 14: Estimated Value per Share Update
14 www.phillipsedison.com Estimated Value per Share Update • Duff & Phelps, a third-party valuation firm, produced an estimated value per share in the range of $10.34 to $11.70 as of October 5, 2017 • The Board of Directors increased the estimated value per share by 8% to $11.00* • 10% increase from
Slide 15: Acquired PELP on October 4, 2017
15 www.phillipsedison.com Acquired PELP on October 4, 2017 • We acquired 76 real estate assets and the third-party asset management businesses from our sponsor, PELP • Formed an internally-managed REIT exclusively focused on grocery-anchored shopping centers with a total enterprise value of approxim
Slide 16: Benefits of the Acquisition
16 www.phillipsedison.com Benefits of the Acquisition • Expected to be immediately 8% - 10% accretive to MFFO per share • Estimated pro forma dividend coverage expected to exceed 100% • Realized meaningful cost synergies through internal management • Strengthened balance sheet • Increased future ear
Slide 17: Management Aligned with Shareholders
17 www.phillipsedison.com Management Aligned with Shareholders • Equity-based consideration and earn-out aligned management with stockholders and preserves capital for future investments • Management is now the Company's largest stockholder, owning 10.0% of the combined company, with a long term vie
Slide 18: Changing our Name to: Phillips Edison & Company, Inc.
18 www.phillipsedison.com Changing our Name to: Phillips Edison & Company, Inc.
Slide 19: Market Update - Competitive Market Reflects Demand for Quality Real Estate
19 www.phillipsedison.com Market Update - Competitive Market Reflects Demand for Quality Real Estate • Amazon - Whole Foods: $13.7 billion investment into brick & mortar · Amazon Fresh cutting back delivery to select markets • German grocers - Investing and expanding in the U.S. market · Lidl - Inve
Slide 20: Question and Answer Session
20 www.phillipsedison.com Question and Answer Session If you are logged in to the webcast presentation, you can submit a question by typing it into the text box, and clicking submit.
Slide 21: For More Information: Thank You
For More Information: Thank You InvestorRelations@PhillipsEdison.com www.phillipsedison.com DST: (888) 518-8073 Griffin Capital Securities: (866) 788-8614
Slide 22: Appendix
Appendix
Slide 23: Same-Center Net Operating Income definition
23 www.phillipsedison.com We present Same-Center Net Operating Income (“Same-Center NOI”) as a supplemental measure of our performance. We define Net Operating Income (“NOI”) as total operating revenues, adjusted to exclude lease buy-out income and non-cash revenue items, less property operating exp
Slide 24: Reconciliation of Net (Loss) Income to NOI and Same-Center NOI
24 www.phillipsedison.com Below is a reconciliation of net (loss) income to NOI and Same-Center NOI for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016(1) 2017 2016 Net (loss) income $ (8,376 ) $ 2
Slide 25: Funds from Operations and Modified Funds from Operations
25 www.phillipsedison.com Funds from Operations and Modified Funds from Operations FFO is a non-GAAP financial measure that is widely recognized as a measure of REIT operating performance. We use FFO as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be net income
Slide 26: MFFO adjustments explanation
26 www.phillipsedison.com Many of the adjustments in arriving at MFFO are not applicable to us. Nevertheless, as explained below, management’s evaluation of our operating performance may also exclude items considered in the calculation of MFFO based on the following economic considerations. • Adjust
Slide 27: Calculation of FFO and MFFO
27 www.phillipsedison.com Three Months Ended September 30, Nine Months Ended September 30, (in 000s, except per share amounts) 2017 2016 2017 2016 Calculation of FFO Net (loss) income attributable to stockholders $ (8,232 ) $ 2,464 $ (8,319 ) $ 5,243 Adjustments: Depreciation and amortization of rea
Phillips Edison Grocery Center REIT I — Q3 2017 Earnings Presentation on 6ix