Phillips Edison & Company, Inc. · NASDAQ:PECO
Phillips Edison & — FY2018 Earnings Presentation
25 slides from Phillips Edison &'s earnings presentation, Mar 13, 2019
Slide 1: Fourth Quarter and Full Year 2018 Results Presentation
Fourth Quarter and Full Year 2018 Results Presentation Wednesday, March 13, 2019
Slide 2: Agenda
Agenda Prepared Remarks Jeff Edison - Chairman and CEO • Highlights • Portfolio Update Devin Murphy - CFO • Financial Results • Balance Sheet • Share Repurchase Program Jeff Edison - Chairman and CEO • 2019 Initiatives Question and Answer Session www.phillipsedison.com/investors 2
Slide 3: Forward-Looking Statement Disclosure
Forward-Looking Statement Disclosure This presentation 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 not limited to, statements related the Company’s exp
Slide 4: Highlights
Highlights Fourth Quarter 2018 Highlights • Completed $1.9 billion merger with Phillips Edison Grocery Center REIT II, Inc. (“REIT II”), acquiring 86 shopping centers • Entered into joint venture with Northwestern Mutual valued at $359 million • Together with REIT II, surpassed $1.0 billion of total
Slide 5: Strategic Merger with REIT II Positions PECO for Increased Growth & Liquidity
Strategic Merger with REIT II Positions PECO for Increased Growth & Liquidity 1. Maintains exclusive grocery focus 2. Increases size, scale, and market prominence 3. Improves demographics and earnings quality 4. Better positions combined company for liquidity 5. No internalization or disposition fee
Slide 6: Northwestern Mutual Joint Ventures
Northwestern Mutual Joint Ventures PECO and Phillips Edison Grocery Center REIT III, Inc. (“PECO III”), currently sponsored and managed by PECO, entered into separate joint ventures with Northwestern Mutual, one of the country’s largest and most experienced commercial real estate investors. PECO JV
Slide 7: Investment Management Business
Investment Management Business • Our investment management business currently provides asset and real estate management for 37 properties currently owned by third parties totaling approximately $680 million ⦁ Grocery Retail Partners I, LLC (“GRP I”) - joint venture (“JV”) with Northwestern Mutual: 1
Slide 8: Portfolio Overview
Portfolio Overview December 31, 2018 Wholly-owned Properties 303 Leading Grocery Anchors 38 States 32 Square Feet 34.4 million Total Leased Occupancy 93.2% In-line Leased Occupancy 84.9% Rent from grocer, national and regional tenants* 76.8% www.phillipsedison.com/investors *Reflects entire portfoli
Slide 9: Portfolio Results at December 31, 2018
Portfolio Results at December 31, 2018 Annualized Base Rent by Tenant Type Annualized Base Rent by Tenant Industry Top 5 Grocers by % of Annualized Base Rent Grocer % of ABR # of Locations Kroger 6.7% 69 Publix 5.5% 58 Ahold Delhaize 4.5% 26 Albertsons-Safeway 4.3% 32 Walmart 2.7% 16 Top 5 Subtotal
Slide 10: Q4 2018 Pro Forma Same-Center NOI
Q4 2018 Pro Forma Same-Center NOI Three Months Ended December 31, (in thousands) 2018 2017 $ Change % Change Revenues:(1) Rental income(2) $ 87,106 $ 86,019 $ 1,087 1.3% Tenant recovery income 28,818 30,900 (2,082) (6.7)% Other property income 645 576 69 12.0% Total Revenues 116,569 117,495 (926) (0
Slide 11: 2018 Pro Forma Same-Center NOI
2018 Pro Forma Same-Center NOI Twelve Months Ended December 31, (in thousands) 2018 2017 $ Change % Change Revenues:(1) Rental income(2) $ 348,765 $ 341,382 $ 7,383 2.2% Tenant recovery income 117,796 115,849 1,947 1.7% Other property income 2,193 2,130 63 3.0% 468,754 459,361 9,393 2.0% Operating e
Slide 12: Q4 2018 Financial Results
Q4 2018 Financial Results Three Months Ended December 31, (in thousands) 2018 2017 $ Change % Change Net Income (Loss) $ 79,155 $ (33,255) $ 112,410 NM Adjustments(1) (39,991) 41,387 (81,378) NM FFO Attributable to Stockholders and 39,164 8,132 31,032 NM Convertible Noncontrolling Interests(2) Adjus
Slide 13: 2018 Full Year Financial Results
2018 Full Year Financial Results Twelve Months Ended December 31, (in thousands) 2018 2017 $ Change % Change Net Income (Loss) $ 46,975 $ (41,718) $ 88,693 NM Adjustments(1) 109,247 125,868 (16,621) (13.2)% FFO Attributable to Stockholders and 156,222 84,150 72,072 85.6% Convertible Noncontrolling I
Slide 14: Debt Profile & Maturity Ladder
Debt Profile & Maturity Ladder December 31, 2018 Net Debt to Enterprise Value* 40.6% Weighted-Average Interest Rate 3.5% Weighted-Average Years to Maturity 4.9 Fixed-Rate Debt 90.1% Variable-Rate Debt 9.9% *See Appendix for a complete calculation of net debt to total enterprise value www.phillipsedi
Slide 15: Share Repurchase Program
Share Repurchase Program • During 2018, PECO repurchased 4.9 million shares totaling $53.8 million • The next standard repurchase is expected to be at the end of July 2019 although funds made available will likely be less than total requests received • At the closing of the merger, the combined comp
Slide 16: 2019 Initiatives
2019 Initiatives • Continued focus on growth and efficiency at the property level ⦁ Driving leasing volume, leasing spreads and renewals ⦁ Investment in redevelopment and repositioning projects to provide greater growth and returns • Expand disposition program to recycle capital into higher-quality,
Slide 17: Question and Answer Session
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. www.phillipsedison.com/investors 17
Slide 18: For More Information
For More Information: InvestorRelations@PhillipsEdison.com www.phillipsedison.com DST: (888) 518-8073 Griffin Capital Securities: (866) 788-8614
Slide 19: Appendix
Appendix
Slide 20: Reconciliation of Non-GAAP Financials
Reconciliation of Non-GAAP Financials Same-Center NOI represents the NOI for the properties that were owned and operational for the entire portion of both comparable reporting periods. For purposes of evaluating Same-Center NOI on a comparative basis, and in light of the PELP transaction as well as
Slide 21: Reconciliation of Non-GAAP Financials
Reconciliation of Non-GAAP Financials Below is a reconciliation of Net income (loss) to NOI for real estate investments and Pro Forma Same-Center NOI for the three and twelve months ended December 31, 2018 and 2017 (in thousands): Three Months Ended December 31, Twelve Months Ended December 31, 2018
Slide 22: Reconciliation of Non-GAAP Financials
Reconciliation of Non-GAAP Financials NOI from the PELP properties prior to the PELP transaction and the REIT II properties prior to the merger was obtained from the accounting records of PELP and REIT II without adjustment. The accounting records were subject to internal review by us. The table bel
Slide 23: Reconciliation of Non-GAAP Financials
Reconciliation of Non-GAAP Financials Funds from Operations and Modified 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
Slide 24: Reconciliation of Non-GAAP Financials
Reconciliation of Non-GAAP Financials Three Months Ended December 31, Twelve Months Ended December 31, (in thousands, except per share amounts) 2018 2017(1) 2018 2017(1) Calculation of FFO Attributable to Stockholders and Convertible Noncontrolling Interests Net income (loss) $ 79,155 $ (33,255) $ 4
Slide 25: Net Debt to Total Enterprise Value
Net Debt to Total Enterprise Value Our debt is subject to certain covenants and, as of December 31, 2018, we were in compliance with the restrictive covenants of our outstanding debt obligations. We expect to continue to meet the requirements of our debt covenants over the short- and long-term. Our
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