Phillips Edison & Company, Inc. · NASDAQ:PECO
Phillips Edison & — Investor Day (December 2023)
129 slides from Phillips Edison &'s investor day presentation, Dec 14, 2023
Slide 1: Investment Community Day
DECEMBER 2023 Phillips Edison & Company Investment Community Day
Slide 2: Safe Harbor and Non-GAAP Disclosures
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 PECO | N A S D A Q LISTED 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
Slide 3: Today's Agenda
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 PECO | N A S D A Q LISTED Today’s Agenda 01 02 03 04 MISSION AND TRACK INTEGRATED CORPORATE STRATEGY RECORD OPERATING PLATFORM RESPONSIBILITY 05 06 07 GROWTH FINANCIALS AND QUESTION AND INITIATIVES BALANCE SHEET ANSWER SESSION
Slide 4: Our Mission & Strategy
Jeff Edison Chairman and CEO Our Mission & Strategy 4
Slide 5: PECO's Experienced Team Has Delivered on Our Core Strategy for 30+ Years
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 PECO | N A S D A Q LISTED PECO’s Experienced Team Has Delivered on Our Core Strategy for 30+ Years PECO is a Growth Company with Both Internal and External Growth Drivers PECO’s Focused Strategy is Cycle-Tested PECO Delivers More Alpha with Less
Slide 6: Why Invest in PECO?
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 PECO | N A S D A Q LISTED Why Invest in PECO?
Slide 7: Our Mission
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 PECO | N A S D A Q LISTED Our Mission We create great omni-channel grocery-anchored shopping experiences and improve our communities, one center at a time GROCERY CENTERED. NEIGHBORHOOD FOCUSED.
Slide 8: Our Focused Strategy
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 8 PECO | N A S D A Q LISTED Our Focused KEY ELEMENTS OF OUR STRATEGY Strategy #1 or #2 grocery anchor by sales (86% of ABR) Exclusively focused on grocery-anchored neighborhood shopping centers 97% of ABR from omni-channel grocery-anchored neighbor
Slide 9: Our Experienced Leadership Team
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 9 PECO | N A S D A Q LISTED Our Experienced Leadership Team Deep management team with an average 30 years of experience JEFF JOHN TANYA JOE DEVIN BOB EDISON CAULFIELD BRADY SCHLOSSER MURPHY MYERS Chief Financial General Counsel and Chairman and Chi
Slide 10: Culture and Community
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 PECO | N A S D A Q LISTED Culture and Community We are proud of our PECO Culture: • Experienced and cycle-tested team • 90% associate engagement rate • Locally Smart™ associates focused on the right merchandising mix for every center • PECO was
Slide 11: Strong Operating Environment
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 1 PECO | N A S D A Q LISTED LEADING PERFORMANCE Strong Operating Environment LEASED PORTFOLIO OCCUPANCY PORTFOLIO RETENTION 93.1% 97.8% 97.4% 90.7% PECO expects to continue to 96.3% 87.8% deliver positive earnings growth 95.4% 85.7% 85.2% 94.7% d
Slide 12: Macro Tailwinds
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 PECO | N A S D A Q LISTED Macro Tailwinds Resilient consumer Hybrid work Migration to the Sun Belt Population shifts that favor suburban communities Importance of physical locations in last-mile delivery Amplified by high occupancy rates and li
Slide 13: Lack of New Supply
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 3 PECO | N A S D A Q LISTED Lack of New Supply Lack of new development over the last 10+ years Current economic returns do not justify the cost of new construction STRIP CENTER SUPPLY GROWTH (AS A % OF EXISTING STOCK) 3.00% 2.50% 19 9 9 - 2 0 22
Slide 14: PECO is a Growth Company
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 4 PECO | N A S D A Q LISTED PECO is a Growth Company
Slide 15: Long Term Targets: Internal Growth
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 5 PECO | N A S D A Q LISTED Long Term Targets: Internal Growth PECO remains committed to delivering sustainable organic long-term growth and value Increase in occupancy Redevelopment and expected to contribute 50 development activity to 100 bps o
Slide 16: Long Term Targets: External Growth
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 6 PECO | N A S D A Q LISTED Long Term Targets: External Growth $200M to $300M in net acquisitions per year Unlevered IRR 9%+ PECO has the capabilities and leverage capacity to acquire more if attractive opportunities materialize
Slide 17: Long Term Targets
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 7 PECO | N A S D A Q LISTED Long Term Targets Mid-to-High- Long Term Targets: Leverage Ratio Assumes a more Driven by both stabilized interest Single-Digit internal and Mid-to-High- Consistent with rate environment Single-Digit Core FFO Growth BB
Slide 18: Our Track Record
Devin Murphy President (Through December 31, 2023) Managing Director (Effective January 1, 2024) Our Track Record 18
Slide 19: Who We Are
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 9 PECO | N A S D A Q LISTED Who We Are FOCUSED INTEGRATED HIGH QUALITY STRATEGY PLATFORM PORTFOLIO (1) Exclusively Focused on Grocery-Anchored 30+ Year History of Exclusive Grocery Focus and 275 Centers in 31 States with Total GLA of 31.4M Neighb
Slide 20: Who We Are
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 0 PECO | N A S D A Q LISTED Who We Are MARKET LEADING PERFORMANCE SAME-CENTER NOI GROWTH: Full Year 2023 Guidance 2017-2019(2) 2020 2021 2022 Midpoint(3) FOCUSED STRATEGY 3.6% (4.1%) 8.2% 4.5% 4.1% vs. 2.6% for the peers(1) vs. (9.4%) for the pee
Slide 21: What We Promised, What We Delivered
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 1 PECO | N A S D A Q LISTED What We Promised, What We Delivered CORE FFO PER SHARE GUIDANCE VS. ACTUAL $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 2021 2022 2023 PECO Pre-IPO Forecast(1) PECO 2023 Guidance (Midpoint)(2) Actual Sources: 1. Provided by the
Slide 22: Track Record of Performance
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 2 PECO | N A S D A Q LISTED Track Record of Performance TOTAL RETURNS SINCE PECO IPO (2) 37.7% 29.2% 17.3% 15.7% 14.8% 13.1% 9.7% 4.2% (3.0%) (13.2%) (13.4%) PECO KRG BRX RPT KIM REG IVT BFS FRT ROIC AKR Sources: 1. Nasdaq and Company Data 2. As
Slide 23: What We Promised, What We Delivered
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 3 PECO | N A S D A Q LISTED What We Promised, What We Delivered On May 6, 2021, PECO filed its S-11 with the SEC Raised $550M in July 2021 IPO Planning an IPO in mid-July to raise between $400-600M Proceeds will be used to repay $375M term loan m
Slide 24: Investment Management
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 4 PECO | N A S D A Q LISTED Investment NECESSITY RETAIL PARTNERS (NRP) GROCERY RETAIL PARTNERS (GRP) Management Year 2016 2018 Acquisition Joint Venture Seeded Joint Venture with Long term track record of Type with TPG Northwestern Mutual Investm
Slide 25: Integrated Operating Platform
Bob Myers President (Effective January 1, 2024) Integrated Operating Platform 25
Slide 26: Experienced and Cycle-Tested Team
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 6 PECO | N A S D A Q LISTED Experienced JOE and Cycle- SCHLOSSER GROWING Chief Operating VALUE Officer Tested Team DAVID WIK DRIVING EXTERNAL Head of GROWTH Acquisitions The PECO Team is focused on growing value, driving external RON ENHANCING gr
Slide 27: Integrated Operating Platform
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 7 PECO | N A S D A Q LISTED Integrated Operating Platform Learning / Improvement Innovation Cross-functional Decision Making
Slide 28: Grocery-Anchored Advantage
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 8 PECO | N A S D A Q LISTED Grocery-Anchored 2.3% 86% Advantage PECO Grocer Health Ratio(1) PECO ABR from Grocers that are #1 or #2 in Sales by Market(2) 97% of our rents come from grocery-anchored centers +8% $670 U.S. Food At PECO Grocer Sales
Slide 29: PECO Aligns with Leading Grocer Demographics
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 2 9 PECO | N A S D A Q LISTED PECO Aligns with Leading Grocer Demographics Demand for space reinforces the demographic strength of our trade areas AVERAGE 3-MILE AVERAGE 3-MILE MEDIAN POPULATION (000S) HOUSEHOLD INCOME ($000S) 65 62 $79 $74 $70 57
Slide 30: Cycle-Tested Performance
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 0 PECO | N A S D A Q LISTED LEADING PERFORMANCE Cycle-Tested LEASED PORTFOLIO OCCUPANCY (2) Performance 89.6% 85.4% 82.6% Performance following the 2008 Global 80.8% Financial Crisis highlights the resiliency of PECO’s grocery-anchored portfolio(
Slide 31: Cycle-Tested Performance
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 1 PECO | N A S D A Q LISTED Cycle-Tested LEADING PERFORMANCE Performance LEASED PORTFOLIO OCCUPANCY (1) PECO’s grocery-anchored portfolio demonstrated further resilience during 97.4% 97.8% 2020 and the pandemic-induced downturn 96.3% 95.4% • PECO
Slide 32: Cycle-Tested Performance
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 2 PECO | N A S D A Q LISTED Cycle-Tested Performance Representing 11% of PECO’s ABR,(1) quick-service restaurants have performed well in all market cycles SALES GROWTH (2) Quick-Service Full-Service Restaurants Restaurants Recession 2.43% 0.08% N
Slide 33: Resilient and Well-Diversified Neighbor Mix
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 3 PECO | N A S D A Q LISTED Resilient and Well-Diversified Neighbor Mix PECO’s Neighbor mix is led by top grocers and necessity-based retailers • Highly diversified with only 9 Neighbors with ABR exposure greater than 1.0% • Largest non-grocer Ne
Slide 34: Strategic Presence in Suburban Markets
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 4 PECO | N A S D A Q LISTED Strategic Presence in Suburban Markets Well-positioned for future growth with significant presence in sun belt states and growing U.S. Cities • 275 Properties Across 31 States • 50% of ABR from Sun Belt States(1) • Str
Slide 35: Suburban Market Advantage
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 5 PECO | N A S D A Q LISTED Suburban Market Advantage PECO’s suburban markets offer retailers several advantages in today's environment • Comparable, if not superior, visit-per-location trends compared to larger MSAs • Less competition • Greater
Slide 36: Suburban Market Advantage
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 6 PECO | N A S D A Q LISTED Suburban Market CHIPOTLE MEXICAN GRILL CHICK-FIL-A Advantage 61% of total locations 52% of total locations National retailers are raising long-term store base targets in PECO markets Top 25 DMA Avg Chain Avg Visits Non
Slide 37: Americans Visit Grocery Stores 1.6 Times Per Week
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 7 PECO | N A S D A Q LISTED Americans Visits Grocery Stores 1.6 Times Per Week WEEKLY TRIPS FOR GROCERIES (TO A SUPERMARKET OR GROCERY STORE) AMONG ALL SHOPPERS (1) 1.7 1.6 1.6 1.6 1.6 1.6 1.6 1.5 1.5 1.5 2014 2015 2016 2017 2018 2019 2020 2021 2
Slide 38: GROCERY CENTERED. C O M M U N I T Y F O C
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 3 8 PECO | N A S D A Q LISTED
Slide 39: Omni-Channel Landlord
GROCERY CENTERED. C O M M U N I T Y F O C U S E D PECO | N A S D A Q LISTED Omni-Channel Landlord PECO centers are a critical component of our Neighbors’ omni-channel strategies and provide an attractive last-mile solution • ~91% of PECO grocers offer BOPIS option (Buy Online, Pick-Up In Store)(1) •
Slide 40: Summary
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 4 0 PECO | N A S D A Q LISTED Summary • PECO’s integrated operating platform and team are key differentiators • Best positioned to grow our portfolio through acquisitions • Highly-focused on driving long- term NOI growth and value
Slide 41: Corporate Responsibility
Tanya Brady General Counsel, Chief Ethics & Compliance Officer, and Secretary Corporate Responsibility 41
Slide 42: PECO's Approach to Corporate Responsibility
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 4 2 PECO | N A S D A Q LISTED PECO’s Approach to Corporate Responsibility Corporate Responsibility and Sustainability is at the core of PECO’s Mission and Core Values PECO’s Corporate Responsibility framework, which we call our PECO-ECO Promise™, i
Slide 43: Environmental Stewardship
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 4 3 PECO | N A S D A Q LISTED Environmental Reducing energy consumption through LED lighting retrofits at PECO centers Stewardship • 90%+ have LED lighting • 75%+ have smart-lighting controls PECO’s environmental stewardship approach Reducing water
Slide 44: Boronda Plaza
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 4 4 PECO | N A S D A Q LISTED CASE STUDY Boronda Plaza Salinas, CA (San Jose MSA) ENVIRONMENTAL STEWARDSHIP STORY: • Two solar arrays and LED retrofit in parking lot • 80% decrease in grocery anchor third-party energy consumption • 59% decrease i
Slide 45: Culture and Community
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 4 5 PECO | N A S D A Q LISTED Culture and Community We are proud of our PECO Culture: • Experienced and cycle-tested team • 90% associate engagement rate • PECO was named a Top Place to Work for the 7th year in a row in 2023
Slide 46: Oversight and Ethics
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 4 6 PECO | N A S D A Q LISTED Oversight and Ethics PECO’s Board of Directors has oversight of the Company’s Corporate GOVERNANCE HIGHLIGHTS: Responsibility and Sustainability Program • Seasoned 10+ year SEC filer with a well-established corporate g
Slide 47: Operations Update
Joe Schlosser Chief Operating Officer (Effective January 1, 2024) Operations Update 47
Slide 48: Experienced and Cycle-Tested Team
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 4 8 PECO | N A S D A Q LISTED Experienced GREG HAUSFELD PORTFOLIO and Cycle- Senior Vice President, Portfolio Management PECO 13, Industry 15 MANAGEMENT EAST REGION Tested Team KC BILLS Vice President, PORTFOLIO MANAGEMENT Portfolio Management WEST
Slide 49: Portfolio Management Team
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 4 9 PECO | N A S D A Q LISTED Portfolio N O R T H E A ST R E G I O N Management TOM MEYERS Vice President SEAN VALERIO Associate Vice President Team PECO 16, Industry 18 PECO 10, Industry 16 EAST REGION S O U T H E AST R E G I O N GREG GREG HAUSFEL
Slide 50: Portfolio Management
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 0 PECO | N A S D A Q LISTED Portfolio Management PECO’s Portfolio Management Team executes the business plan for every property in the portfolio, including new acquisitions and planned dispositions • Average over 15 years of industry experience,
Slide 51: Property Management Team
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 1 PECO | N A S D A Q LISTED Property CLAY Management RALSTON NORTH Vice President of Property REGION Management PECO 13, Industry 22 Team LIESL ELISWORTH Vice President of Property WEST REGION Management PECO 2, Industry 35 PECO’s Property Manage
Slide 52: Property Management
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 2 PECO | N A S D A Q LISTED Property Management PECO has one of the best Property Management Teams in the business • Average over 22 years of industry experience • Locally Smart™ associates situated in 17 states • Each Property Manager responsibl
Slide 53: Property Management
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 3 PECO | N A S D A Q LISTED Property Management EXPENSE CAPITAL ANCILLARY MANAGEMENT PROJECTS INCOME 2,000+ contracts bid annually 750 capital projects annually Source, negotiate, and execute short term & long-term deals in common area 20 sites w
Slide 54: Construction Team
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 4 PECO | N A S D A Q LISTED JOHN MERRICK Construction MALPHURS REYNOLDS Associate Vice President of Director of Construction Construction PECO 28, Industry 35 PECO 2, Industry 27 Team NEIL MADEWELL DRU BROWN Director of Senior Project Development
Slide 55: Construction
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 5 PECO | N A S D A Q LISTED Construction Construction key focus areas include cost reduction and rent acceleration • Value engineering and detailed research • Utilize a network of 300+ designers and general contractors to hire the best and most c
Slide 56: Operations Regional Structure
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 6 PECO | N A S D A Q LISTED Operations Regional Structure 2 WEST 1 REGION NORTHEAST 2 REGION 1 3 SOUTHEAST 3 REGION
Slide 57: Cross Functional Collaboration
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 7 PECO | N A S D A Q LISTED Cross Functional Collaboration COLLABORATION & COORDINATION TO OPTIMIZE RESULTS + = NOI GROWTH & MAXIMIZE REVENUE VALUE CREATION OPPORTUNITIES + DISCIPLINED EXPENSE MANAGEMENT
Slide 58: 30+ Years of Learning and Data
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 8 PECO | N A S D A Q LISTED 30+ Years of Learning and Data PECO PowerScore® PECO GOLD Score® PECO STAR Score Property Grocer longevity NOI growth quality index and risk assessment prediction model
Slide 59: 30+ Years of Learning and Data
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 5 9 PECO | N A S D A Q LISTED 30+ Years of Learning and Data EXTERNAL AND INTERNAL DATA SOURCES: PECO performance data Foot Traffic PECO DashComm Retail trends PECO Lease Analysis Tool Void Analysis PECO TOT Dashboard Research Trade area demographi
Slide 60: Efficiencies with AI
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 0 PECO | N A S D A Q LISTED Efficiencies with AI PECO is actively using Artificial Intelligence to enhance and expedite our data • Every department has an ‘AI Champion’ who oversees the development and implementation of AI based projects • PECO i
Slide 61: Leading Grocer Relationships
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 1 PECO | N A S D A Q LISTED Leading Grocer Relationships
Slide 62: (Re)development
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 2 PECO | N A S D A Q LISTED (Re)development Development and redevelopment projects provide risk-adjusted returns and have a meaningful impact on long term growth SINCE IPO • Completed 30 projects • Delivered 580,000+ SF to Neighbors • Incremental
Slide 63: Kings Crossing
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 3 PECO | N A S D A Q LISTED CASE STUDY ACQUISITION STORY: • Acquisition Year: 2014 Kings Crossing • Acquisition Price: $14M • Anchor: Publix Sun City Center, FL (Tampa MSA) • Occupancy: 97% • NOI at Acquisition: $876K EXECUTION STORY: • 100% leas
Slide 64: Evans Towne Centre
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 4 PECO | N A S D A Q LISTED CASE STUDY ACQUISITION STORY: • Acquisition Year: 2017 Evans Towne Centre • Acquisition Price: $11.8M • Anchor: Publix Evans, GA (Augusta MSA) • Occupancy: 92% • NOI at Acquisition: $725K EXECUTION STORY: • 98% occupan
Slide 65: Meadowthorpe Manor Shoppes
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 5 PECO | N A S D A Q LISTED CASE STUDY ACQUISITION STORY: • Acquisition Year: 2012 Meadowthorpe Manor Shoppes • Acquisition Price: $8.5M • Anchor: Kroger Lexington, KY • Occupancy: 95% • NOI at Acquisition: $707K EXECUTION STORY: • Added Kroger f
Slide 66: Kleinwood Center
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 6 PECO | N A S D A Q LISTED CASE STUDY ACQUISITION STORY: • Acquisition Year: 03/21/13 Kleinwood Center • Acquisition Price: $32.5M • Anchor: H.E.B. Spring, TX (Houston MSA) • Occupancy: 93% • NOI at Acquisition: $2.1K EXECUTION STORY: • Occupanc
Slide 67: Shoppes of Lake Village
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 7 PECO | N A S D A Q LISTED CASE STUDY ACQUISITION STORY: • Acquisition Date: 02/26/18 Shoppes of Lake Village • Acquisition Price: $8.4M • Anchor: Publix Leesburg, FL (Orlando MSA) • Occupancy: 85% • NOI at Acquisition: $635,000 EXECUTION STORY:
Slide 68: Case Study Demographics
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 8 PECO | N A S D A Q LISTED Case Study Demographics CASE STUDY 3-MILE 3-MILE MEDIAN ASSETS POPULATION HOUSEHOLD INCOME Kings Crossing 43,482 $55,526 Evans Towne Centre 55,333 $81,866 Meadowthorpe 90,106 $46,224 Manor Shoppes Kleinwood Center 96,6
Slide 69: Summary
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 6 9 PECO | N A S D A Q LISTED Summary • Highly-experienced and cycle-tested team • Focused on cross-functional collaboration • Industry leaders in technology and innovation • 30+ years of data on operating grocery- anchored neighborhood shopping ce
Slide 70: Leasing Update
Ron Meyers Head of Leasing Leasing Update 70
Slide 71: Focus and Responsibilities
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 1 PECO | N A S D A Q LISTED NORTH Focus and JIM FARMER Vice President • • 3 Senior Leasing Agents 1 Leasing Agent Responsibilities: SOUTH PECO 20, Industry 20 JAMES 30 Locally Smart® leasing BOLD • 3 Senior Leasing Agents Vice President • 1 Leasi
Slide 72: Leasing Specialists
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 2 PECO | N A S D A Q LISTED Leasing Specialists
Slide 73: Why Create Department Specialists?
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 3 PECO | N A S D A Q LISTED Why Create Department Specialists? Maximizes The best Renewal Creates internal Marketing specialists OVERALL our National marketing and specialists bring competition and our National BETTER Neighbor technology us the h
Slide 74: Marketing Specialist Team
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 4 PECO | N A S D A Q LISTED Marketing Specialist Team • Dedicated marketing specialists for each leasing region • Organizes incoming leads with contact management tool • Optimizes lead generation for agents with cutting-edge prospecting platforms
Slide 75: Technology and Marketing
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 5 PECO | N A S D A Q LISTED Technology and Marketing
Slide 76: Specialists Increase Leasing Efficiency
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 6 PECO | N A S D A Q LISTED Specialists Increase LEASING NATIONAL Leasing MARKETING TEAM ACCOUNTS TEAM Efficiency QUALIFIED • PECO’s Leasing Agents spend 20% LEADS of their time prospecting and 80% closing • PECO’s New Leasing Agents will execute
Slide 77: Internal Competition Drives Strong Rent Growth
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 7 PECO | N A S D A Q LISTED Internal Competition Drives Strong Rent Growth
Slide 78: Record Demand Driving Leasing Spreads
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 8 PECO | N A S D A Q LISTED Record Demand Driving Leasing Spreads LEASING SPREADS VS. LEASED OCCUPANCY 98.0% 25.0% 97.0% 20.0% 96.0% 15.0% 95.0% 10.0% 94.0% 5.0% 93.0% 0.0% Q1 - 2021 Q2 - 2021 Q3 - 2021 Q4 - 2021 Q1 - 2022 Q2 - 2022 Q3 - 2022 Q4
Slide 79: Local Neighbors
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 7 9 PECO | N A S D A Q LISTED Local Neighbors TOTAL PORTFOLIO COMPOSITION LOCAL NEIGHBOR COMPOSITION % of ABR as of 9/30/23 % of Local ABR as of 9/30/23 27% of PECO’s ABR is derived from Local Neighbors, 7% comprised primarily of: 27% 9% 31% • Rest
Slide 80: Strong Local Neighbors
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 8 0 PECO | N A S D A Q LISTED NORTHSTAR TAVERN AT NORMANDALE VILLAGE | BLOOMINGTON, MN Strong Local Neighbors
Slide 81: Strong Local Neighbors
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 8 1 PECO | N A S D A Q LISTED THE BACKYARD KITCHEN & COCKTAILS AT MURPHY MARKETPLACE | MURPHY, TX Strong Local Neighbors
Slide 82: Strong Local Neighbors
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 8 2 PECO | N A S D A Q LISTED HUNTER SALON AT VINEYARD CENTER | TEMPLETON, CA Strong Local Neighbors
Slide 83: Math Behind Local Neighbors
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 8 3 PECO | N A S D A Q LISTED Math Behind Local Neighbors PECO’s inline Local Neighbors offer attractive economics, have high retention rates, and achieve above average inline renewal spreads • Inline Local Neighbors are resilient and have been in
Slide 84: National Neighbor Trends
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 8 4 PECO | N A S D A Q LISTED National Neighbor Trends RESTAURANTS HEALTH & BEAUTY MEDTAIL
Slide 85: National Accounts Team
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 8 5 PECO | N A S D A Q LISTED National Accounts Team • Face of PECO Retail • Engaged with 300+ growing retail partners • Corporate Visits and Global Portfolio Reviews • Aligned with growing, credit worthy Neighbors that mirror our merchandising str
Slide 86: Starbucks and PECO
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 8 6 PECO | N A S D A Q LISTED Starbucks and PECO One contact Conformed lease Dedicated attorney Dedicated construction manager Best-in-class, efficient leasing process RYAN MITZEL Senior Director of National Accounts
Slide 87: Summary
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 8 7 PECO | N A S D A Q LISTED Summary • Experienced 100% in-house Leasing Team • Specialists maximize results • Limited vacancy along with strong retailer demand will continue to drive rent spreads to all time highs • Macro economic tailwinds conti
Slide 88: Acquisitions Update
Dave Wik Head of Acquisitions Acquisitions Update
Slide 89: Transactions Team
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 89 PECO | N A S D A Q LISTED Transactions Team • Fully integrated with average 17 years years industry experience LACY GREG ELLIOTT for Transaction Team leaders Transactions STEVENS Sr. Transactions Analyst Manager PECO 2, Industry 3 PECO 10, Indus
Slide 90: Target Ownership Composition
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 90 PECO | N A S D A Q LISTED Target Ownership 13% Composition 12% • 5,800 target properties • $116B total potential (~$20M average purchase price) 51% • $11.6B transact each year (average 10-year hold) • PECO needs to acquire less than 3% to achiev
Slide 91: Average Annual Transaction Volume Since IPO
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 91 PECO | N A S D A Q LISTED Average Annual Transaction Volume Since IPO 135 650 160 Packages 95 10 Deals Models Presented to Letters of Intent Assets Reviewed Underwritten Investment Offered Acquired Committee
Slide 92: PECO Acquisition Composition Since IPO
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 92 PECO | N A S D A Q LISTED PECO Acquisition 12% Composition Since IPO PUBLIC / PRIVATE NATIONAL/ INSTITUTIONAL: PRIVATE REIT: REGIONAL OWNER: 16% 50% 12% Institutional 50% Private Individual/ Family 12% Private National/ Regional Owner 16% REIT P
Slide 93: Performance to Underwriting
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 9 3 PECO | N A S D A Q LISTED Performance to Underwriting On average, PECO has consistently outperformed our underwritten IRRs by 50 to 150 bps on acquisitions since our July 2021 IPO, even in the short time we have owned the centers Average weight
Slide 94: Providence Commons
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 9 4 PECO | N A S D A Q LISTED CASE STUDY ACQUIRED 1/19/2023 • Anchored by Publix with strong, increasing sales Providence Commons • Included 7+ acres of retail-zoned land • Seller wasn’t equipped to develop the land • Strong retail node with growin
Slide 95: Town Center at Jensen Beach
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 9 5 PECO | N A S D A Q LISTED CASE STUDY ACQUIRED 3/27/2023: • Anchored by Publix with strong, increasing sales Town Center at Jensen Beach • Party City risk caused pricing to gap out • Institutional seller that we’d transacted with each of the pri
Slide 96: Sunridge Plaza
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 9 6 PECO | N A S D A Q LISTED CASE STUDY ACQUIRED 12/20/2022: • Newer construction anchored by Raley's in a high- Sunridge Plaza growth trade area of Sacramento, CA • Seller purchased in a portfolio and planned on spinning this one out all along VA
Slide 97: Q4 2023 Acquisitions
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 9 7 PECO | N A S D A Q LISTED Q4 2023 Acquisitions Riverpark Shopping Center: $79.0M contract price, 317,000 SF center anchored by H-E-B in Sugar Land trade area of Houston, TX Quail Pointe: $44.3M contract price, 98,000 SF center anchored by Trade
Slide 98: Financial Update and Balance Sheet
John Caulfield Chief Financial Officer and Treasurer Financial Update and Balance Sheet 98
Slide 99: PECO is a Growth Company
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 99 PECO | N A S D A Q LISTED PECO is a Growth Company Focused Locally Targeted, Acquisition Smart® Scalable Strategy Leasing (Re)development
Slide 100: Internal Growth
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 0 PECO | N A S D A Q LISTED Internal Growth Increase in occupancy Redevelopment and expected to contribute 50 development activity to 100 bps of growth expected to contribute 75 to 125 bps of growth 3% TO 4% SAME-CENTER NOI LONG-TERM New and re
Slide 101: Growth Beyond Occupancy
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 1 PECO | N A S D A Q LISTED Growth Beyond Occupancy 3% TO 4% SAME-CENTER New and renewal spreads NOI Contractual rent increases expected to contribute LONG-TERM expected to contribute 85 130 to 170 bps of growth GROWTH to 120 bps of growth Rede
Slide 102: Illustrative Growth from Leasing Spreads
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 2 PECO | N A S D A Q LISTED % OF ABR ONGOING LEASING SPREAD % ASSUMPTIONS (2)(3) Illustrative EXPIRING BY YEAR (1) CALCULATED ASSUMPTIONS Growth 2023 1.7% TTM Retention % 93.3% TTM Avg Retention of 93.3% and 2022/2023 Avg of 91.9% from Leasing
Slide 103: Illustrative Growth from Rent Bumps
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 3 PECO | N A S D A Q LISTED IMPACT OF 2.50% RENT ESCALATORS ON TOTAL & INLINE ABR GROWTH (1)(2) Illustrative EXPIRING INLINE ABR ($M) 2024 2025 2026 2027 2028 Growth 2023 $6.7 2.50% 2.50% 2.50% 2.50% 2.50% from Rent 2024 2025 $31.4 $32.0 1.10%
Slide 104: Growth Beyond Occupancy
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 4 PECO | N A S D A Q LISTED Growth Beyond Occupancy These 3 components accumulate to a range of 300 - 415 bps of annual growth before any further occupancy lift 3% TO 4% SAME-CENTER New and renewal spreads NOI expected to contribute LONG-TERM C
Slide 105: Strong and Flexible Balance Sheet
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 5 PECO | N A S D A Q LISTED Strong and Flexible LIQUIDITY STRENGTH (1) $8M Balance Sheet INVESTMENT GRADE BALANCE SHEET HIGHLIGHTS (1)(2) • Moody’s: Baa3 (stable); S&P: BBB- (stable) $714M • Significant liquidity position of $714M • Net-debt-to
Slide 106: Well-Laddered Debt Maturity Profile ($M)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 6 PECO | N A S D A Q LISTED Well-Laddered Debt Maturity Profile ($M)(1)(2) $1,500 $1,250 $1,000 $706 $750 $82 $12 $500 $323 $250 $28 $240 $350 $1 $240 $201 $162 $1 $201 $0 $38 $2 $17 $3 2023 2024 2025 2026 2027 2028 2029 2030 THEREAFTER Secured
Slide 107: Lowest Leverage Among Shopping Center REITs
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 7 PECO | N A S D A Q LISTED Lowest Leverage Among Shopping 5.9x 6.0x 6.1x 6.4x 6.7x 6.9x 5.5x Center REITs 4.9x 5.1x • 4.9x net-debt-to-adjusted EBITDAre, as of 09/30/2023(1) • PECO has continued to preserve low leverage ratios and holds invest
Slide 108: Managing Headwinds
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 8 PECO | N A S D A Q LISTED 2022 2023(1) 2024 Managing GUIDANCE GUIDANCE Headwinds MIDPOINT LOW HIGH Weighted Average Interest Rate 3.3% 3.9% 4.3% 4.7% • PECO is committed to managing interest expense amidst choppy Total Interest Expense ($M) $
Slide 109: Preliminary 2024 Guidance
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 0 9 PECO | N A S D A Q LISTED Preliminary 2024 Guidance PRELIMINARY GUIDANCE RANGE Net Income Per Share $0.50 - $0.55 Nareit FFO Per Share $2.33 - $2.40 Core FFO Per Share $2.36 - $2.44 Same-Center NOI Growth 3.25% - 4.25% Acquisitions (net of di
Slide 110: Long Term Targets
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 1 0 PECO | N A S D A Q LISTED Long Term Targets Same-Center $200M to $300M NOI Growth of net acquisitions 3% - 4% per year PECO has the capabilities and leverage capacity to acquire more if attractive opportunities materialize
Slide 111: Long Term Targets
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 1 1 PECO | N A S D A Q LISTED Long Term Targets Mid-to-High-Single- Mid-5x Net-Debt- Digit Core FFO to-Adjusted Growth Per Share EBITDAre PECO plans to be a repeat issuer in the unsecured debt market with target floating rate debt of 10%
Slide 112: Summary
Jeff Edison Chairman and CEO Summary
Slide 113: PECO's Experienced Team Has Delivered on Our Core Strategy for 30+ Years
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 1 3 PECO | N A S D A Q LISTED PECO’s Experienced Team Has Delivered on Our Core Strategy for 30+ Years PECO is a Growth Company with Both Internal and External Growth Drivers PECO’s Focused Strategy is Cycle-Tested PECO Delivers More Alpha with L
Slide 114: Why Invest in PECO?
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 1 4 PECO | N A S D A Q LISTED Why Invest in PECO?
Slide 115: Appendix
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Slide 116: Glossary of Terms
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 1 6 PECO | N A S D A Q LISTED 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 applicabl
Slide 117: Non-GAAP Reconciliations
Appendix Non-GAAP Reconciliations
Slide 118: Non-GAAP Measures
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 1 8 PECO | N A S D A Q LISTED Three Months Ended September 30, Nine Months Ended September 30, Non-GAAP 2023 2022 2023 2022 Net income $ 13,729 $ 12,173 $ 48,574 $ 38,826 Measures Adjusted to exclude: Below is a reconciliation of Net Fees and man
Slide 119: Non-GAAP Measures (Cont'd)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 1 9 PECO | N A S D A Q LISTED Year End December 31, 2022 2021 Non-GAAP Net income $ 54,529 $ 17,233 Measures (Cont’d) Adjusted to exclude: Fees and management income (11,541) (10,335) Below is a reconciliation of Net Income to NOI for real estate
Slide 120: Non-GAAP Measures (Cont'd)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 0 PECO | N A S D A Q LISTED Year End December 31, 2021 2020 Non-GAAP Net income $ 17,233 $ 5,462 Measures (Cont’d) Adjusted to exclude: Fees and management income (10,335) (9,820) Below is a reconciliation of Net Income to NOI for real estate S
Slide 121: Non-GAAP Measures (Cont'd)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 1 PECO | N A S D A Q LISTED Year End December 31, 2020 2019 Non-GAAP Net income (loss) $ 5,462 $ (72,826) Measures (Cont’d) Adjusted to exclude: Fees and management income (9,820) (11,680) Below is a reconciliation of Net Income to NOI for real
Slide 122: Non-GAAP Measures (Cont'd)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 2 PECO | N A S D A Q LISTED Year End December 31, 2019 2018 Non-GAAP Net (loss) income $ (72,826) $ 46,975 Measures (Cont’d) Adjusted to exclude: Fees and management income (11,680) (32,926) Below is a reconciliation of Net Straight-line rental
Slide 123: Non-GAAP Measures (Cont'd)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 3 PECO | N A S D A Q LISTED Year End December 31, 2018 2017 Non-GAAP Net income (loss) $ 46,975 $ (41,718) Measures (Cont’d) Adjusted to exclude: Fees and management income (32,926) (8,156) Straight-line rental income (5,173) (3,766) Below is a
Slide 124: Non-GAAP Measures (Cont'd)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 4 PECO | N A S D A Q LISTED Year End December 31, 2017 2016 Non-GAAP Net (loss) income $ (41,718) $ 9,043 Measures (Cont’d) Adjusted to exclude: Fees and management income (8,156) - Below is a reconciliation of Net Straight-line rental income (
Slide 125: Non-GAAP Measures (Cont'd)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 5 PECO | N A S D A Q LISTED Year End December 31, 2022 2021 Non-GAAP Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders Measures (Cont’d) Net income $ 54,529 $ 17,233 Adjustments: Below is a reconciliation of Depreciatio
Slide 126: Non-GAAP Measures (Cont'd)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 6 PECO | N A S D A Q LISTED Three Months Ended September 30, Nine Months Ended September 30, 2023 2021 2023 2021 Non-GAAP Calculation of EBITDAre Measures (Cont’d) Net income $ 13,729 $ 16,562 $ 48,574 $ 23,069 Adjustments: Depreciation and amo
Slide 127: Non-GAAP Measures (Cont'd)
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 7 PECO | N A S D A Q LISTED September 30, 2023 September 30, 2021 Net debt: Non-GAAP Total debt, excluding discounts, market adjustments, and deferred financing $ 1,913,120 $ 1,746,487 expenses Measures (Cont’d) Less: Cash and cash equivalents
Slide 128: Reconciliation of Net Income to Nareit FFO and Core FFO
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 8 PECO | N A S D A Q LISTED Reconciliation of 2023 Preliminary 2024 Net Income to (Unaudited) Low End High End Low End High End Nareit FFO and Core FFO Net income per common share $0.46 $0.50 $0.50 $0.55 Depreciation and amortization of real es
Slide 129: Full Year 2023 and Preliminary Full Year 2024 Earnings Guidance Exhibit
GROCERY CENTERED. C O M M U N I T Y F O C U S E D | 1 2 9 PECO | N A S D A Q LISTED Full Year 2023 Guidance(1) Preliminary Full Year 2024 Guidance Full Year 2023 and (in thousands, except per share amounts Low End High End Low End High End Preliminary Full Results: Year 2024 Earnings Net income per
Phillips Edison & Company — Investor Day (December 2023) on 6ix