Phillips Edison & Company(PECO)2025-02-07 20:09Financial Data and Key Metrics Changes - Phillips Edison & Company reported a core FFO per share growth of nearly 4% in 2024, which would have been 6% if adjusted for increased interest rates [8][43] - The fourth quarter NAREIT FFO increased to 0.61 per diluted share, reflecting year-over-year per share growth of 8.9% [43] - The same-center NOI growth in the fourth quarter was 6.5% [43] Business Line Data and Key Metrics Changes - The company achieved comparable new rent spreads of 30.2% and renewal rent spreads of 20.8% in the fourth quarter [27][28] - Portfolio occupancy remained high at 98% leased, with anchor occupancy at 99% and in-line occupancy at 95% [30] - The average annual contractual rent bumps for new and renewal in-line leases were 2% and 3%, respectively [29] Market Data and Key Metrics Changes - The average three-mile trade area demographics include an average population of 67,000 and a median household income of 350 to 450 million in gross acquisitions in 2025, with a strong pipeline already in place [17][50] - Phillips Edison & Company focuses on acquiring neighborhood shopping centers anchored by top grocers, which drives consistent foot traffic and cash flow [11][12] - The company is committed to a disciplined acquisition strategy, targeting high-quality assets with better initial yields and growth opportunities [10][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong retailer demand and the ability to deliver mid to high single-digit core FFO and AFFO per share growth on a long-term basis [23][52] - The company anticipates that the actions taken in 2024 to improve merchandising and capture mark-to-market rent growth will be a slight headwind to 2025 growth [49] - Management noted that the overall demand environment and the health of in-line neighbors provide confidence in delivering strong growth in 2025 [42] Other Important Information - The company has approximately 948 million of liquidity to support acquisition plans and no meaningful maturities until 2027 [44] - The weighted average interest rate on debt is 4.3%, with 93% of total debt being fixed rate [46] Q&A Session Summary Question: How does the current tenant demand and external opportunities compare to last year? - Management feels more optimistic about the current year due to a larger pipeline of projects under contract compared to last year [56] Question: How is the company balancing high occupancy with tenant retention? - Management is taking a more aggressive approach to merchandising, which may temporarily lower occupancy but aims to improve long-term property value [60] Question: What role will dispositions play in funding acquisitions? - Dispositions will be considered selectively to ensure better returns on new acquisitions compared to sold assets [67] Question: What is the company's bad debt experience and outlook? - The bad debt experience in 2024 was around 75 basis points, with guidance for 2025 set at 60 to 120 basis points [75] Question: What are the plans for joint ventures and acquisitions? - Joint ventures are expected to represent about 10% of anticipated acquisitions, with ongoing discussions for more opportunities [109]