Phillips Edison & Company, Inc. · NASDAQ:PECO
Phillips Edison & — Q2 2023 Earnings Presentation
46 slides from Phillips Edison &'s earnings presentation, Aug 2, 2023
Slide 1: August 2023 Investor Presentation
August 2023 Investor Presentation Grocery Centered. Community Focused.
Slide 2: Safe Harbor and Non-GAAP Disclosures
Safe Harbor and Non-GAAP Disclosures PECO’s Safe Harbor Statement This presentation contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Phillips Edison & Company,
Slide 3: PECO at a Glance
PECO at a Glance Founded/IPO ABR from Record Leased 1991/ Nasdaq Properties Total GLA Grocery Centers Occupancy PECO 97% 274 31.4M 2021 Square Feet 98% We create great omni-channel We are an experienced owner and grocery-anchored shopping Grocery Centered. operator exclusively focused on experiences
Slide 4: Our Focused and Differentiated Strategy
Our Focused and Differentiated Strategy Exclusively Focused on Omni-Channel Grocery-Anchored Neighborhood Shopping Centers Key Elements of Our Strategy Cycle-Tested and Resilient Advantage #1 or #2 grocery anchor by sales (87% of ABR) 97.8% record-high portfolio leased occupancy with continued s
Slide 5: Table of Contents
Table of Contents Grocery-Anchored Portfolio 6 2023 Earnings Guidance 25 Investments 18 Long-Term Growth 27 Balance Sheet 22 Corporate Responsibility 31
Slide 6: Grocery-Anchored Portfolio
Grocery-Anchored Portfolio
Slide 7: Grocery-Anchored Centers Benefit from Trends that Provide Strong Tailwinds
Grocery-Anchored Centers Benefit from Trends that Provide Strong Tailwinds Necessity-Based High Traffic Omni-Channel • Consumer staple goods and services that • U.S. consumers visit grocery stores 1.6 • PECO centers are a critical component of are indispensable for day-to-day living times per week(2
Slide 8: Strategic Presence in Top Markets
Strategic Presence in Top Markets Well-Positioned for Future Growth with Significant Presence in Sun Belt Markets and Growing U.S. Cities 274 Properties Across 31 States Top 10 Markets(1) 50% of ABR from Sun Belt Markets(1) 1. Atlanta Strong Presence in Fast-Growing U.S. Cities(2) 2. Dallas 3.
Slide 9: Sun Belt Markets Expected to Continue to Lead the Way for Rent Growth
Sun Belt Markets Expected to Continue to Lead the Way for Rent Growth PECO Has a Strong Presence Across 31 Sun Belt Markets – Sun Belt Markets Have Enjoyed Consistently Strong Demand from Local, Regional and National Retailers Annual Retail Rent Growth as of Q3 2022 PECO Market Fort Lauderdale 11.
Slide 10: Smart Retailers are Getting Ahead of the Secondary Market Trend
Smart Retailers are Getting Ahead of the Secondary Market Trend Retailers Saw Higher Visits Per Location in Secondary Markets Chipotle: Raised its long-term store base target from 6,000 units Petco: Pet products represents a $7B total addressable to 7,000 because “smaller market locations have prove
Slide 11: Targeted Trade Areas Align with Leading Grocer Demographics
Targeted Trade Areas Align with Leading Grocer Demographics Demand for Space Reinforces the Demographic Strength of Our Trade Areas Average 3-Mile Population (000s) 65 62 57 PECO Publix Kroger Average 3-Mile Median Household Income ($000s) $79 $74 $70 PECO Publix Kroger Source: Synergos Technologies
Slide 12: SOAR with PECO
How PECO Defines Quality PECO has 30+ Years of Experience in the Grocery-Anchored Shopping Center Industry and an Informed Perspective on what Drives Quality and Success at the Property Level SOAR with PECO Important and Sustainable Measures of Quality in PECO Grocery-Anchored Centers Spreads Occupa
Slide 13: Our Grocery-Anchored Advantage
Our Grocery-Anchored Advantage 97% of Our Rents Come from Grocery-Anchored Centers 2.3% +8% $668 | 5.0% PECO Grocer Health Ratio(1) U.S. Food At Home Spending PECO Grocer Sales PSF | Q2 2023 YoY Growth(3) YoY Growth(2) 87% +7.4% +8.3% PECO ABR from Grocers that are U.S. Food at Home Spending 2022 U.
Slide 14: Strength and Resiliency of Our Local Neighbors
Strength and Resiliency of Our Local Neighbors Portfolio Occupancy Performance Reinforces the Strength of Our Inline and Local Neighbors ~26% of PECO’s ABR is derived from Local Neighbors, comprised primarily of: • Restaurants including quick-service, fast casual and full-service • Personal services
Slide 15: Math Behind Our Local Neighbors
Math Behind Our Local Neighbors Our Local Neighbors Offer Attractive Economics Our inline Local Neighbors are resilient and have been in PECO’s centers an average of 9 years This length of tenancy compares favorably to the capital investment payback period of 10 months for inline Local Neighbors
Slide 16: Retailers Growing with PECO
Retailers Growing with PECO Dedicated Team Focused on Building Strong Connections with Leading and Expanding Neighbors Across a Variety of Industries Local Restaurants Beauty/Health Medtail Grocery Centered. Community Focused. 16
Slide 17: Highly Diversified Neighbor Mix Led by Top Grocers and Necessity-Based Retailers
Highly Diversified Neighbor Mix Led by Top Grocers and Necessity-Based Retailers Neighbor Location Count % ABR(1) Neighbor Location Count % ABR(1) 62 6.1% 5 0.7% 61 5.9% 32 0.6% 31 4.0% 4 0.5% 23 3.9% 62 0.5% 13 2.0% 29 0.5% 10 1.6% 2 0.5% 14 1.5% 19 0.5% 18 1.4% 65 0.5% 5 1.0% 4 0.5% 35 0.8% 8 0.5%
Slide 18: Investments
es |_| Investments PHILLIPS EDISON & COMPANY
Slide 19: 2023 Acquisition and Disposition Summary
2023 Acquisition and Disposition Summary PECO Executed $79M of Accretive Acquisitions in 2023 at a Weighted Average 6.3% Cap Rate 0 0 Providence Commons Village Shoppes at Windermere Mt. Juliet, TN Suwanee, GA Purchase Price 2023 Acquisitions YTD Location GLA Anchors (in thousands) Providence Common
Slide 20: Large Addressable Market Provides Continued Opportunity for External Growth
Large Addressable Market Provides Continued Opportunity for External Growth Identified Target Properties Anchored by the #1 or #2 Grocer in a Market Identified 5,800+ Grocery-Anchored Neighborhood Shopping Centers Across the Country Grocery Centered. Community Focused. 20
Slide 21: Development and Redevelopment Activity Provide Long-Term Growth Opportunities
Development and Redevelopment Activity Provide Long-Term Growth Opportunities Continued Focus on Our Pipeline of Accretive Ground-Up Development and Redevelopment Projects • 11 projects under active construction • Of these, 9 are being developed on land PECO already owned and 2 are being developed o
Slide 22: Balance Sheet
Balance Sheet PHILLIPS EDISON & COMPANY
Slide 23: Peer Leverage Comparison
Peer Leverage Comparison PECO is Among the Lowest Levered Shopping Center REITs Net Debt / Adjusted EBITDAre(1) (2) • PECO has continued to preserve low leverage ratios and holds investment grade ratings from 6.9x both Moody’s and S&P 6.7x 6.6x 6.2x 6.2x 6.2x 5.3x 5.2x 4.9x S&P(2) NA NA BBB- BBB- BB
Slide 24: Strong and Flexible Balance Sheet Position
Strong and Flexible Balance Sheet Position Investment Grade Balance Sheet Highlights(1) Liquidity Strength(1) • Moody’s: Baa3 (stable); S&P: BBB- (stable) $10M • Significant liquidity position of $629M • Net debt / adjusted EBITDAre of 5.2x $629M • Approximately 83% of our assets are unencumbered •
Slide 25: 2023 Earnings Guidance
An. 2023 Earnings PHILLIPS EDISON & COMPANY’ Guidance
Slide 26: 2023 Earnings Guidance Summary
2023 Earnings Guidance Summary PECO’s Full Year 2023 Earnings Guidance All figures in millions, except per share data Previous Full Updated Full • Nareit FFO / share growth of 6.7% at the midpoint Full Year Year 2023 Year 2023 Guidance Guidance 2022 Actual • Core FFO / share growth of 2.6% at the mi
Slide 27: Performance and Long-Term Growth
Performance and Long-Term Growth
Slide 28: PECO's Strong Historical Performance
PECO’s Strong Historical Performance Record Occupancy Levels are Driving Immediate, Measurable Growth in Our Financial Results Leased Portfolio Occupancy Same-Center NOI Growth(1) 97.4% 97.5% 97.8% 8.2% 96.3% 95.4% 94.7% 5.3% 4.9% 4.5% 3.7% 2019 2020 2021 2022 Q1 2023 Q2 2023 2019 2020 2021 2022 Q1
Slide 29: PECO's Strong Historical Performance
PECO’s Strong Historical Performance Leasing Spreads Demonstrate PECO’s Pricing Power and Sustainable Organic Growth Comparable Leasing Spreads New Leases Renewals 32.2% 17.7% 27.4% 16.1% 25.1% 14.6% 15.7% 8.5% 8.1% 13.3% 6.7% 8.2% 2019 2020 2021 2022 Q1 2023 Q2 2023 2019 2020 2021 2022 Q1 2023 Q2 2
Slide 30: Roadmap to Our Long-Term Growth
Roadmap to Our Long-Term Growth PECO Remains Committed to Delivering Sustainable Organic Long-Term Growth and Value Increase in occupancy Redevelopment and expected to contribute development activity 50 to 100 bps of expected to contribute growth 75 to 125 bps of growth 3% to 4% Same-Center NOI Long
Slide 31: Corporate Responsibility
Corporate Responsibility
Slide 32: Environmental Stewardship
Environmental Stewardship Environmentally-Friendly Asset Management Reducing energy consumption through PECO’s Environmental Stewardship LED lighting retrofits In our ongoing commitment to sustainability, we can highlight the following achievements • LED retrofits at 249 centers during 2022: Compl
Slide 33: Social Responsibility
Social Responsibility Numerous Social Programs for Our Communities and Our Associates Social Responsibility Our culture is driven by our team’s connection to each other and the communities in which we live and work. Our associates are one of our most valuable resources, and we strive to have an outs
Slide 34: Corporate Governance
Corporate Governance Experienced Board of Directors Governance Highlights Jeff Edison • Co-founded Phillips Edison & Company in 1991 Seasoned 10+ year SEC filer with a Chairman • Previous roles at NationsBank’s South Charles Realty, Morgan Stanley and Taubman Centers well-established corporate gov
Slide 35: Recognition and Partnerships
Recognition and Partnerships In 2023 PECO was Named a Top Place to Work for the 7th Year in a Row Bob Myers Tanya Brady Erin Majors Marissa Visconsi Cassandra Burnham Eric Richter CINCINNATI 300 2022 BEST BOSS WOMEN IN REAL ‘10 UNDER 40’ RETAIL WOMEN OF RETAIL Cincinnati Magazine GlobeSt. / Real EST
Slide 36: Experienced Leadership Team
Experienced Leadership Team Deep Management Team with an Average of 30 Years of Experience Jeff Edison Devin Murphy Robert Myers John Caulfield Tanya Brady Executive Team Chairman and President Chief Operating Officer Chief Financial Officer General Counsel and Chief Executive Officer Secretary 38 Y
Slide 37: Glossary of Terms
Glossary of Terms Anchor space: A space greater than or equal to 10,000 square feet of gross leasable area (GLA). Annualized base rent (ABR): Refers to the monthly contractual base rent as of the end of the applicable reporting period multiplied by twelve months. ABR per square foot (PSF): ABR divid
Slide 38: Non-GAAP Reconciliations
Non-GAAP Reconciliations APPENDIX APPENDIX Non-GAAP Reconciliations
Slide 39: Non-GAAP Measures
Non-GAAP Measures Below is a reconciliation of Net Income to NOI for real estate investments and Same-Center NOI (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income $ 16,209 $ 15,255 $ 34,845 $ 26,653 Adjusted to exclude: Fees and management income (2
Slide 40: Non-GAAP Measures
Non-GAAP Measures Below is a reconciliation of Net Income to NOI for real estate investments and Same-Center NOI (in thousands): Three Months Ended March 31, 2023 2022 Net income $ 18,636 $ 11,398 Adjusted to exclude: Fees and management income (2,478) (2,461) Straight-line rental income(1) (2,580)
Slide 41: Non-GAAP Measures
Non-GAAP Measures Below is a reconciliation of Net Income to NOI for real estate investments and Same-Center NOI (in thousands): Year Ended December 31, 2022 2021 Net income $ 54,529 $ 17,233 Adjusted to exclude: Fees and management income (11,541) (10,335) Straight-line rental income(1) (12,265) (9
Slide 42: Non-GAAP Measures (Cont'd)
Non-GAAP Measures (Cont’d) Below is a reconciliation of Net Income to NOI for real estate investments and Same-Center NOI (in thousands): Year Ended December 31, 2021 2020 Net income (loss) $ 17,233 5,462 Adjusted to exclude: Fees and management income (10,335) (9,820) Straight-line rental income (1
Slide 43: Non-GAAP Measures (Cont'd)
Non-GAAP Measures (Cont’d) Below is a reconciliation of Net (Loss) Income to NOI for real estate investments and Same-Center NOI (in thousands): Year Ended December 31, 2020 2019 Net income (loss) $5,462 $(72,826) Adjusted to exclude: Fees and management income (9,820) (11,680) Straight-line rental
Slide 44: Non-GAAP Measures (Cont'd)
Non-GAAP Measures (Cont’d) Below is a reconciliation of Net (Loss) Income to NOI for real estate investments and Same-Center NOI (in thousands): Year Ended December 31, 2019 2018 Net (loss) income $(72,826) $46,975 Adjusted to exclude: Fees and management income (11,680) (32,926) Straight-line renta
Slide 45: Non-GAAP Measures (Cont'd)
Non-GAAP Measures (Cont’d) The following table presents the Company’s calculation of EBITDAre and Adjusted EBITDAre and provides additional information related to its operations (in thousands): Three Months Ended June 30, Six Months Ended June 30, Year Ended December 31, 2023 2022 2023 2022 2022 Cal
Slide 46: Non-GAAP Measures (Cont'd)
Non-GAAP Measures (Cont’d) Financial Leverage Ratios The following table presents the Company’s calculation of net debt and total enterprise value, inclusive of the Company’s prorated portion of net debt and cash and cash equivalents owned through its unconsolidated joint ventures, as of June 30, 20
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