Phillips Edison & Company(PECO) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Same center NOI increased by 3.2% [3] - Nareit FFO per share grew by 9.1% [3] - Core FFO per share increased by 6.9% [3] - NAREIT FFO for Q3 2024 was $81.6 million or$ 0.60 per diluted share, a 12.5% increase [18] - Core FFO for Q3 2024 was $84.4 million or$ 0.62 per diluted share, a 9.6% increase [18] - Year-to-date acquisitions totaled $211 million [6] Business Line Data and Key Metrics Changes - Portfolio occupancy ended at 97.8%, a sequential increase of 30 basis points [8] - Anchor occupancy increased to 99.4%, up 60 basis points [8] - Inline occupancy ended at 95% [8] - Comparable new rent spreads for Q3 were 55% [9] - Inline new rent spreads were 28.3% [9] - Renewal rent spreads increased by 19.8% [11] Market Data and Key Metrics Changes - PECO's centers experienced approximately 30,000 average trips per week, totaling nearly 500 million trips in the last 12 months [13] - The average population in PECO's three-mile trade area is 67,000, with a median household income of$ 87,000, which is 12% higher than the US median [14] - 70% of rent comes from necessity-based goods and services [14] Company Strategy and Development Direction - The company focuses on acquiring high-quality, grocery-anchored neighborhood shopping centers [4] - PECO aims to invest $40 million to$ 50 million annually in ground-up development and repositioning opportunities [17] - The company is optimistic about growth opportunities and plans to increase acquisition guidance to $275 million to$ 325 million for the year [6][20] Management's Comments on Operating Environment and Future Outlook - Management noted strong retailer demand with no signs of slowing down [7] - The company is well-positioned to take advantage of growth opportunities and has a strong balance sheet with no meaningful maturities until 2027 [6][19] - Management expects solid earnings growth in 2025 and beyond [6][19] Other Important Information - PECO acquired nine shopping centers and several land parcels year-to-date [6] - The company has a strong liquidity position with approximately $752 million available [18] - Management reaffirmed guidance for same-center NOI growth, indicating continued strong operating conditions [20] Q&A Session Summary Question: Can you talk about the acquisitions made during the quarter? - Management noted that they acquired six properties, with three anchored by King Soopers, Pete's, and Big Y, and highlighted the quality and development opportunities of these assets [24][25] Question: What are your views on the restaurant category? - Management observed that quick-service restaurants are performing well, with strong demand for new locations, while formal sit-down restaurants have been more volatile [27] Question: Can you provide details on bad debt? - Bad debt was reported at 86 basis points year-to-date, with management expressing confidence in the health of their tenants and the ability to re-lease spaces effectively [29][30] Question: What is the outlook for same-store NOI? - Management expects an acceleration in same-store NOI growth in the fourth quarter, driven by strong demand and recovery timing [32][33] Question: How are you planning to fund acquisitions? - Management indicated that they have over$ 750 million in liquidity and are comfortable funding upcoming acquisitions, considering equity if it is accretive [62]