Phillips Edison & Company, Inc. · NASDAQ:PECO
Phillips Edison & — Q1 2023 Earnings Presentation
50 slides from Phillips Edison &'s earnings presentation, May 3, 2023
Slide 1: May 2023 Investor Presentation
May 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% 275 31.5M 2021 Square Feet 97.5% We create great omni-channel We are an experienced owner and grocery-anchored shopping Grocery Centered. operator exclusively focused on experienc
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) 97.5% record-high portfolio leased occupancy with continued s
Slide 5: Table of Contents
Table of Contents Grocery-Anchored Portfolio 6 2023 Earnings Guidance 28 Investments 22 Long-Term Growth 30 Balance Sheet 25 Corporate Responsibility 35
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: Portfolio Foot Traffic Remains Strong
Portfolio Foot Traffic Remains Strong Our Top Grocers Continue to Drive Strong Recurring Foot Traffic to Our Centers PECO Portfolio Foot Traffic as a % of 2019 Foot Traffic (2020-Q1 2023)(1) 120% 110% 100% Midatlantic 90% 97% North 97% 80% • During the pandemic, grocery stores recovered and sustaine
Slide 9: Continued Outperformance Expected for Grocery-Anchored Shopping Centers
Continued Outperformance Expected for Grocery-Anchored Shopping Centers Grocery-Anchored Centers are Well Positioned to Maintain Lower Vacancies Compared to Non-Grocery-Anchored Centers in 2023 • Grocery stores and other forms of essential retail are among the most resilient retailers during recessi
Slide 10: New Store Openings Continue to Far Outpace Store Closings
New Store Openings Continue to Far Outpace Store Closings Announced Store Closures Remain Low Due to a Healthier Retail Market • In 2021 and 2022 combined, 57M SF have been announced for closure, and retailers have announced store openings of over 130M SF • Store closures are not expected to return
Slide 11: 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 275 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 12: 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 13: Retailers Continue to Recognize the Benefits of Fast-Growing Markets
Retailers Continue to Recognize the Benefits of Fast-Growing Markets Migration Changes Have Flipped the Script and Make Suburban Locations More Favorable to Retailers Several Advantages for Retailers: • Comparable (if not superior) visit per location trends compared to larger MSAs • Less competition
Slide 14: 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 15: 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 16: Our Grocery-Anchored Advantage
Our Grocery-Anchored Advantage 97% of Our Rents Come from Grocery-Anchored Centers 2.2% +8% $665 | 5.4% PECO Grocer Health Ratio(1) U.S. Food At Home Spending PECO Grocer Sales PSF | Q1 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 17: 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 18: 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 8.8 years This length of tenancy compares favorably to the capital investment payback period of 10 months for inline Local Neighbo
Slide 19: Expansion with Local Neighbors
Expansion with Local Neighbors PECO Has a Long Track Record of Identifying Strong Local Operators Total Men’s Primary Care executed their The Backyard executed their first lease Westside Children’s Therapy opened their first lease with us in 2019 when they with us in 2019. They have expanded, first
Slide 20: 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 6.2% 5 0.7% 61 5.8% 66 0.6% 31 4.1% 4 0.5% 23 3.9% 30 0.5% 13 2.0% 32 0.5% 10 1.6% 2 0.5% 14 1.5% 19 0.5% 18 1.4% 4 0.5% 5 1.0% 8 0.5% 36 0.8% 65 0.5%
Slide 21: PECO's Portfolio Snapshot
PECO’s Portfolio Snapshot ABR by Neighbor Composition(1) 97% 97.5% 6.2% of ABR 63 63 63 of ABR from Grocery- Top Neighbor 71% Anchored Centers Leased Occupancy Necessity-Based Goods and Exposure (Kroger) Services 32.3% 2.2% $665 63 63 63 Grocer ABR of Grocer Avg. Annual Grocer Sales Total ABR Health
Slide 22: Investments
es |_| Investments PHILLIPS EDISON & COMPANY
Slide 23: 2023 Acquisition Summary
2023 Acquisition Summary PECO Executed $79M of Accretive Acquisitions in Q1 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 Commons Mt. Juliet,
Slide 24: 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 • 13 projects under active construction • Of these, 11 are being developed on land PECO already owned and 2 are being developed
Slide 25: Balance Sheet
Balance Sheet PHILLIPS EDISON & COMPANY
Slide 26: Peer Leverage Comparison
Peer Leverage Comparison PECO is Among the Lowest Levered Shopping Center REITs Net Debt / Adjusted EBITDAre, as of 12/31/2022(1) 7.5x • PECO has continued to preserve low leverage ratios and holds investment grade ratings from 6.9x both Moody’s and S&P 6.8x 6.4x • PECO’s net debt / adjusted EBITDAr
Slide 27: 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) $12M • Significant liquidity position of $634M • Net debt / adjusted EBITDAre of 5.3x $634M • Approximately 83% of our assets are unencumbered •
Slide 28: 2023 Earnings Guidance
An. 2023 Earnings PHILLIPS EDISON & COMPANY’ Guidance
Slide 29: 2023 Earnings Guidance Summary
2023 Earnings Guidance Summary PECO’s Full Year 2023 Earnings Guidance All figures in millions, except per share data Initial 2023 May 2023 2022 • Nareit FFO / share growth of 5.1% at the midpoint Guidance Guidance Update Actual • Core FFO / share growth of 1.8% at the midpoint Net Income / Share $0
Slide 30: Performance and Long-Term Growth
Performance and Long-Term Growth
Slide 31: 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 32: 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% 8.2% 96.3% 95.4% 94.7% 4.9% 4.5% 3.7% 2019 2020 2021 2022 Q1 2023 2019 2020 2021 2022 Q1 2023 -4.1% • PECO’s
Slide 33: 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% 16.1% 27.4% 14.6% 15.7% 8.5% 8.1% 13.3% 6.7% 8.2% 2019 2020 2021 2022 Q1 2023 2019 2020 2021 2022 Q1 2023 • PECO’s portfolio is at
Slide 34: Roadmap to Our Long-Term Growth
Roadmap to Our Long-Term Growth PECO Remains Committed to Delivering Sustainable Organic Long-Term Growth and Value Continued increase in Redevelopment and occupancy expected to development activity contribute 50 to 100 expected to contribute bps of growth 75 to 125 bps of growth 3% to 4% Same-Cente
Slide 35: Corporate Responsibility
Corporate Responsibility
Slide 36: PECO's Approach to Corporate Responsibility
PECO’s Approach to Corporate Responsibility Grocery Centered. Community Focused. 36
Slide 37: 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 38: 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 39: Recognition and Partnerships
Recognition and Partnerships In 2022 PECO was Named a Top Place to Work for the 6th 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 Real WOMEN OF RETAIL Cincinnati Magazine GlobeSt. / Rea
Slide 40: 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 41: 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 42: 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 43: Non-GAAP Reconciliations
Non-GAAP Reconciliations APPENDIX APPENDIX Non-GAAP Reconciliations
Slide 44: 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 45: 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 46: 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): Notes: 1. Includes straight-line rent adjustments for Neighbors for whom revenue is being recorded on a cash basis 2. Includes operating revenues and expenses fro
Slide 47: 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 48: 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 49: 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): Notes: 1. Realized performance income includes fees received related to the achievement of certain perform
Slide 50: 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 March 31, 2
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