Phillips Edison & Company, Inc. · NASDAQ:PECO
Phillips Edison & — Q3 2020 Earnings Presentation
29 slides from Phillips Edison &'s earnings presentation, Nov 9, 2020
Slide 1: Third Quarter 2020 Results Presentation
Third Quarter 2020 Results Presentation Thursday, November 12, 2020
Slide 2: Agenda
AGENDA PREPARED REMARKS JEFF EDISON - Chairman and CEO Portfolio Overview COVID-19 Update Q3 2020 Highlights JOHN CAULFIELD - CFO Financial Results Balance Sheet JEFF EDISON - Chairman and CEO Declaration of December 2020 Distribution Tender Offer Outlook QUESTION AND ANSWER SESSION WWW.PHILLIPSEDIS
Slide 3: Forward-Looking Statement Disclosure
FORWARD-LOOKING STATEMENT DISCLOSURE Certain statements contained in this presentation for Phillips Edison & Company, Inc. (“we,” the “Company,” “our,” or “us”) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, a
Slide 4: PECO's National Portfolio
PECO’S NATIONAL PORTFOLIO 283 Our broad national footprint of grocery-anchored shopping centers WHOLLY-OWNED PROPERTIES is complemented by local market expertise. 97.0% GROCERY-ANCHORED 31 STATES 31.7 million SQUARE FEET 95.3% TOTAL OCCUPANCY 89.5% IN-LINE OCCUPANCY 76.6% RENT FROM GROCER, NATIONAL
Slide 5: Diverse Roster of Necessity- and Service-Based Neighbors
DIVERSE ROSTER OF NECESSITY- AND SERVICE-BASED NEIGHBORS Top 5 Grocery Anchors & Top 5 In-line Neighbors & Percent of Total ABR* Percent of In-line ABR* 7.0% 5.6% 4.5% 4.2% 2.3% 1.5% 1.4% 1.0% 0.9% 0.9% ABR by Neighbor Industry* ABR by Neighbor Type* Grocery Grocery Anchor Anchor 35.9% Retail 35.9%
Slide 6: PECO Portfolio and Neighbor Details by ABR
PECO PORTFOLIO AND NEIGHBOR DETAILS BY ABR Grocery, 36% Essential Retail Banks, 2% & Services Dollar stores, 2% 51% Pet supply, 2% Medical, 2% Hardware/Automotive, 2% Wine, beer, and liquor, 1% Pharmacy, 1% Entertainment, 1% Other essential, 3% Fitness, 3% Restaurants 16% Quick service, 10% Other Re
Slide 7: Resilient Portfolio: Grocery Proves Resilience During COVID-19 Pandemic
RESILIENT PORTFOLIO GROCERY PROVES RESILIENCE DURING COVID-19 PANDEMIC • When the pandemic hit, our top priority became preservation of capital as we executed a number of cost-cutting initiatives: ◦ Reductions of compensation for executives and Board of Directors ◦ Delayed capital projects and reduc
Slide 8: Portfolio Impact as a Result of the COVID-19 Pandemic
PORTFOLIO IMPACT AS A RESULT OF THE COVID-19 PANDEMIC 100% OF OUR CENTERS HAVE REMAINED OPEN THROUGHOUT THE PANDEMIC 98% OF OUR NEIGHBOR SPACES (99% OF OUR ABR) ARE OPEN FOR BUSINESS1 We currently have 79 Rent and Recoveries projects completed or Collected(1,2) under construction to As a % of monthl
Slide 9: Q3 2020 Highlights
Q3 2020 HIGHLIGHTS THIRD QUARTER 2020 HIGHLIGHTS (VS. THIRD QUARTER 2019) • Reported net income of $13.4 million • Same-center net operating income (“NOI”) decreased 4.1% • Core funds from operations (“Core FFO”) increased 1.1% to $59.7 million, and remained steady at $0.18 per diluted share • Subse
Slide 10: Same-Center NOI
SAME-CENTER NOI(1) Nine Months Ended Favorable September 30, (Unfavorable) (in thousands) 2020 2019 $ Change % Change Revenues: Rental income(2) $ 261,061 $ 268,046 $ (6,985) (2.6) % Tenant recovery income 88,283 87,369 914 1.0 % Other property income 2,243 1,549 694 44.8 % Total revenues 351,587 35
Slide 11: FFO and Core FFO
FFO AND CORE FFO Nine Months Ended Favorable September 30, (Unfavorable) (in thousands, except per share amounts) 2020 2019 $ Change % Change Net Income (Loss) $ 18,216 $ (77,687) $ 95,903 123.4 % Adjustments(1) 157,432 238,242 (80,810) (33.9) % FFO Attributable to Stockholders and Convertible Nonco
Slide 12: Same-Center NOI and Core FFO Quarterly and YTD
SAME-CENTER NOI AND CORE FFO QUARTERLY AND YTD 2020 2019 % Change QTD Same-Center NOI - Q1 $ 86,925 $ 84,714 2.6 % Same-Center NOI - Q2 80,272 84,672 (5.2) % Same-Center NOI - Q3 83,484 87,092 (4.1) % YTD Same-Center NOI - YTD(1) $ 249,745 $ 255,568 (2.3) % 2020 2019 % Change Q1 Core FFO $ 60,242 $
Slide 13: Debt Profile and Maturity Ladder
DEBT PROFILE AND MATURITY LADDER September 30, 2020 Net Debt to Total Enterprise Value(1) 43.8% Net Debt to Adjusted EBITDAre(2) 7.0x Weighted-Average Interest Rate 3.1% Weighted-Average Years to Maturity(3) 4.3 Fixed-Rate Debt 75.1% Approximate Availability Remaining on $500M Line of Credit(4) $490
Slide 14: Reinstatement of Distributions at $0.34 per Share Annualized
REINSTATEMENT OF DISTRIBUTIONS AT $0.34 PER SHARE ANNUALIZED DECEMBER 2020 DISTRIBUTION AUTHORIZED AT AN ANNUALIZED RATE OF $0.34 PER SHARE • Stockholders of record on December 28, 2020 will receive a monthly distribution of $0.0283 per share payable on January 7, 2021, which equates to $0.34 annual
Slide 15: Tender Offer
TENDER OFFER 4.5 MILLION SHARES, OR APPROXIMATELY $26 MILLION, TO BE TENDERED AT $5.75 PER SHARE • The tender will provide an option for stockholders seeking immediate liquidity • Tender price of $5.75 is a 34% discount to our current estimated value per share of $8.75 ◦ Our publicly traded shopping
Slide 16: Intended Tender Offer - Timeline
INTENDED TENDER OFFER - TIMELINE VISIT WWW.PHILLIPSEDISON.COM/INVESTORS/TENDER FOR MORE DETAILS • November 10, 2020 - Formal launch of tender offer ◦ Notice will be mailed to all stockholders’ address of record ◦ Details are on our website: www.phillipsedison.com/investors/tender ◦ Dedicated tender
Slide 17: Stockholder Alignment and Total Return
STOCKHOLDER ALIGNMENT AND TOTAL RETURN Internal Management Structure PECO Total Return In 2017, we merged with our external Original PECO investors have seen a total advisor to become a fully internally-managed return between 29% and 65% on their REIT. original investment.(1) No asset management fee
Slide 18: Outlook
OUTLOOK PRESERVATION OF CAPITAL • Maintain focus on cash conservation • Commitment to expense reductions • Preserve flexible capital position • Continue regular dialogue with neighbors • Implement plans for missed rent POSITIONING FOR STRATEGIC GROWTH • Patiently evaluate accretive growth opportunit
Slide 19: Question and Answer Session
QUESTION AND ANSWER SESSION IF YOU ARE LOGGED INTO THE WEBCAST YOU CAN SUBMIT A QUESTION BY TYPING IT IN THE TEXT BOX AND CLICKING “SUBMIT QUESTION” WWW.PHILLIPSEDISON.COM/INVESTORS PHILLIPS EDISON & COMPANY | 19
Slide 20: For More Information
FOR MORE INFORMATION INVESTORRELATIONS@PHILLIPSEDISON.COM WWW.PHILLIPSEDISON.COM/INVESTORS INVESTORS AND NIGO SERVICING: (888) 518-8073 PHILLIPS EDISON ADVISOR SERVICES: (833) 347-5717 WWW.PHILLIPSEDISON.COM/INVESTORS PHILLIPS EDISON & COMPANY | 20
Slide 21: Appendix
APPENDIX WWW.PHILLIPSEDISON.COM/INVESTORS PHILLIPS EDISON & COMPANY | 21
Slide 22: Non-GAAP Measures
NON-GAAP MEASURES We present Same-Center NOI as a supplemental measure of our performance. We define NOI as total operating revenues, adjusted to exclude non-cash revenue items, less property operating expenses and real estate taxes. For the three and nine months ended September 30, 2020 and 2019, S
Slide 23: Non-GAAP Measures
NON-GAAP MEASURES Below is a reconciliation of Net income (loss) to NOI for real estate investments and Same-Center NOI (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019(1) 2020 2019(1) Net income (loss) $ 13,430 $ (29,727) $ 18,216 $ (77,687) Adjusted to exc
Slide 24: Non-GAAP Measures
NON-GAAP MEASURES Funds from Operations and Core Funds from Operations FFO is a non-GAAP performance financial measure that is widely recognized as a measure of REIT operating performance. The National Association of Real Estate Investment Trusts (“Nareit”) defines FFO as net income (loss) computed
Slide 25: Non-GAAP Measures
NON-GAAP MEASURES The table below presents our calculation of FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and Core FFO and provides additional information related to our operations (in thousands, except per share amounts): Three Months Ended September 30, Nine Mon
Slide 26: Non-GAAP Measures
NON-GAAP MEASURES Three Months Ended Favorable September 30, (Unfavorable) (in thousands, except per share amounts) 2020 2019 $ Change % Change Net Income (Loss) $ 13,430 $ (29,727) $ 43,157 (145.2) % Adjustments(1) 44,011 86,136 (42,125) (48.9) % FFO Attributable to Stockholders and Convertible Non
Slide 27: Non-GAAP Measures
NON-GAAP MEASURES Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (“EBITDAre”) and Adjusted EBITDAre We have included the calculation of EBITDAre to better align with publicly traded REITs. Additionally, we believe that, as another important earnings metric, it is a u
Slide 28: Non-GAAP Measures
NON-GAAP MEASURES The following table presents our calculation of EBITDAre and Adjusted EBITDAre and provides additional information related to our operations (in thousands, except per share amounts): Three Months Ended September 30, Nine Months Ended September 30, Year Ended 2020 2019 2020 2019 201
Slide 29: Non-GAAP Measures
NON-GAAP MEASURES The following table presents our calculation of net debt to Adjusted EBITDAre and net debt to total enterprise value as of September 30, 2020 and December 31, 2019 (dollars in thousands): September 30, 2020 December 31, 2019 Net debt to Adjusted EBITDAre - annualized: Net debt $ 2,
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