Phillips Edison & Company, Inc. · NASDAQ:PECO
Phillips Edison & — Q2 2019 Earnings Presentation
32 slides from Phillips Edison &'s earnings presentation, Aug 12, 2019
Slide 1: Second Quarter 2019 Earnings Presentation
Second Quarter 2019 Earnings Presentation Tuesday, August 13, 2019
Slide 2: Agenda
Agenda Prepared Remarks Jeff Edison - Chairman and CEO • Highlights • Portfolio & Tenant Overview • Leasing Activity Devin Murphy - CFO • Investment Management Business & Joint Ventures • Financial Results • Balance Sheet • Liquidity / Share Repurchase Program Changes Jeff Edison - Chairman and CEO
Slide 3: Forward-Looking Statement Disclosure
Forward-Looking Statement Disclosure Certain statements contained in this presentation of 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, as
Slide 4: 2019 Initiatives - Update
2019 Initiatives - Update The following strategies will improve our earnings growth rate and leverage ratios in order to maximize our potential future valuation in the public equity markets 1. Improving operating fundamentals and growing NOI at the property level a. Increasing occupancy, optimizing
Slide 5: Highlights
Highlights Second Quarter 2019 Highlights (vs. Second Quarter 2018) • Leased portfolio occupancy totaled 94.6%, an improvement from 93.2% at December 31, 2018 • Comparable new lease spreads were 10.5% and comparable renewal lease spreads were 10.8% • Net loss totaled $42.2 million while FFO increase
Slide 6: PECO's National Portfolio
PECO’s National Portfolio Our broad national footprint of grocery-anchored shopping centers is complimented by local market expertise. Wholly-owned Total Leased Properties Occupancy 298 94.6% Leading Grocery Inline Leased Anchors Occupancy 36 87.9% Rent from States grocer, national & regional tenant
Slide 7: Leading Grocery-Anchors
Leading Grocery-Anchors Grocery-anchored neighborhood shopping centers are widely viewed as the most attractive segment of retail real estate due to the necessity- based nature of their tenants.1 Top 5 Grocers by ABR Grocer % of ABR # of Locations Kroger 6.9% 69 Publix 5.5% 58 Albertsons- 4.3% 32 Sa
Slide 8: Diversified Necessity-Based Tenant Base
Diversified Necessity-Based Tenant Base Our tenants offer necessity-based products and services which have proven to be E-Commerce resistant and recession resilient. Necessity-Based Portfolio ABR by Tenant Industry Strip Centers: E-Commerce Risk* • E-Commerce resistant tenants (food, fitness, and pe
Slide 9: Q2 2019 Key Metrics (vs Q2 2018)
Q2 2019 Key Metrics (vs Q2 2018) Leased Portfolio Occupancy at June 30, 2019 vs June 30, 2018 Total: 94.6%; increased from 93.8% Anchor: 98.0%; stable at 98.0% In-line: 87.9%; increased from 85.7% Total ABR Inline ABR We calculate annualized base rent as monthly contractual rent as of June 30, 2019,
Slide 10: Leases Signed with Necessity-based National Tenants During Q2 2019
Leases Signed with Necessity-based National Tenants During Q2 2019 www.phillipsedison.com/investors 10
Slide 11: Investment Management Business
Investment Management Business Our investment management business currently provides asset and real estate management for properties currently owned by third parties totaling approximately $725 million in value • Ongoing fee revenue provides consistent, recurring income streams and allows PECO to co
Slide 12: Joint Venture Relationships
Joint Venture Relationships Some of the nation’s largest and most sophisticated commercial real estate investors have invested alongside us through joint ventures • Northwestern Mutual JV (Grocery Retail Partners I) ⦁ Northwestern Mutual acquired an 85% interest in a JV which owns a 17-center portfo
Slide 13: History of Adding Stockholder Value
History of Adding Stockholder Value Estimated Value Per Distributions1 PECO Equity Multiple Share • Offering price: $10.00 • Current: $0.67/share (annualized) • Original PECO investors have seen total returns between • August 2019: $11.10 • 6.7% of offering price of $10.00 per share 48% and 99% on t
Slide 14: Pro Forma Same-Center NOI
Pro Forma Same-Center NOI Six Months Ended June 30, 2019 Six Months Ended Favorable June 30, (Unfavorable) (in thousands) 2019 2018 $ Change % Change Revenues:(1) Rental income(2) $ 184,159 $ 182,928 $ 1,231 0.7% Tenant recovery income 58,346 61,541 (3,195) (5.2)% Other property income 1,079 1,195 (
Slide 15: Financial Results
Financial Results Six Months Ended June 30, 2019 Six Months Ended Favorable June 30, (Unfavorable) (in thousands) 2019 2018 $ Change % Change Net Loss $ (47,960) $ (15,913) $ (32,047) NM Adjustments(1) 152,106 94,966 57,140 60.2% FFO Attributable to Stockholders and Convertible Noncontrolling Intere
Slide 16: Debt Profile and Maturity Ladder
Debt Profile and Maturity Ladder June 30, 2019 Net Debt to Total Enterprise Value* 40.7% Weighted-Average Interest Rate 3.5% Weighted-Average Years to Maturity 4.7 Fixed-Rate Debt 86.4% Variable-Rate Debt 13.6% www.phillipsedison.com/investors *See Appendix for a complete calculation of net debt to
Slide 17: Share Repurchase Program - Activity
Share Repurchase Program - Activity • During the second quarter of 2019, we repurchased 541,000 shares totaling $6.0 million under the SRP ⦁ DDI: We fulfilled all repurchases sought upon a stockholder’s death, qualifying disability, or determination of incompetence (“DDI”) in accordance with the ter
Slide 18: Share Repurchase Program - Changes
Share Repurchase Program - Changes • The SRP has been amended and the changes will be effective September 11, 2019 • The current program was not providing an adequate level of liquidity • The changes will allow us to retain more cash to reduce our debt and to grow portfolio NOI, which we believe wil
Slide 19: Executive Changes and Board of Directors Additions
Executive Changes and Board of Directors Additions Executive Changes (effective August 15, 2019) • CFO Devin Murphy has been promoted to President ⦁ Responsibilities include expanding our investment management business and managing our current joint ventures • Senior Vice President – Finance John Ca
Slide 20: Summary
Summary 1. Improving operating fundamentals and growing NOI at the property level a. Leased portfolio occupancy increased to 94.6% from 93.2% at December 31, 2018 b. Pro forma same-center NOI grew 2.0% compared to June 30, 2018 c. Comparable new lease spreads were 10.5% and comparable renewal lease
Slide 21: Phillips Edison Advisor Services
Phillips Edison Advisor Services We are pleased to inform you that Phillips Edison & Company’s Advisor Services team will begin serving as the main support resource for our financial advisors beginning Tuesday, September 3, 2019. Phillips Edison Advisor Services • (833) 347-5717 • Monday - Friday, 9
Slide 22: 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 22
Slide 23: For More Information
For More Information: InvestorRelations@PhillipsEdison.com www.phillipsedison.com/investors Investor Services: (888) 518-8073 Phillips Edison Advisor Services: (833) 347-5717
Slide 24: Appendix
Appendix
Slide 25: Non-GAAP Measures
Non-GAAP Measures 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, we are presenting Pro Forma Same-Center NOI, which is Same-Center NO
Slide 26: Non-GAAP Measures
Non-GAAP Measures The table below provides Pro Forma Same-Center NOI (in thousands): Three Months Ended Favorable Six Months Ended Favorable June 30, (Unfavorable) June 30, (Unfavorable) (in thousands) 2019 2018 $ Change % Change 2019 2018 $ Change % Change Revenues:(1) Rental income(2) $ 92,448 $ 9
Slide 27: Non-GAAP Measures
Non-GAAP Measures Below is a reconciliation of Net Loss to NOI for owned real estate investments and Pro Forma Same-Center NOI (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2019 2018 2019 2018 Net loss $ (42,172) $ (14,076) $ (47,960) $ (15,913) Adjusted to exclude: Fees and
Slide 28: Non-GAAP Measures
Non-GAAP Measures NOI from the REIT II properties acquired in the Merger, prior to acquisition, was obtained from the accounting records of REIT II without adjustment. The accounting records were subject to internal review by us. The table below provides Same-Center NOI detail for the non- ownership
Slide 29: Non-GAAP Measures
Non-GAAP Measures 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 income (loss) attri
Slide 30: Non-GAAP Measures
Non-GAAP Measures The table below presents our calculation of FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and MFFO and provides additional information related to our operations (in thousands, except per share amounts): Three Months Ended Favorable June 30, (Unfavo
Slide 31: Non-GAAP Measures
Non-GAAP Measures The table below presents our calculation of FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and MFFO and provides additional information related to our operations (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended
Slide 32: Non-GAAP Measures
Non-GAAP Measures Our debt is subject to certain covenants and, as of June 30, 2019, 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 debt to total enterpr
Phillips Edison & Company — Q2 2019 Earnings Presentation on 6ix