Phillips Edison & Company (PECO) Bank of America 2024 Global Real Estate Conference summary

Business strategy and market positioning

• Focuses exclusively on grocery-anchored shopping centers, with 97% of ABR from such centers and 86% from #1 or #2 grocers by sales, operating in 31 states with 286–300 properties averaging 114,000 sq ft.

• Maintains high occupancy, rent spreads, and retention by targeting necessity-based retail and prime locations, with a strong presence in the Sun Belt and use of proprietary algorithms to identify growth markets.

• Demographics, education, and population growth are key acquisition criteria, with a median household income of $87,000 and a three-mile population of 67,000.

• Corporate responsibility initiatives include DEI, environmental stewardship, and community engagement.

• Suburban market focus provides higher visit rates, less competition, and favorable migration trends.

Financial performance and growth

• Achieves market-leading occupancy (97.5–98%), anchor occupancy (98.8%), and in-line occupancy (95.1%), with an 89% retention rate.

• Annual acquisitions range from $200M to $300M, with $180M closed year-to-date and a strong pipeline expected to reach the high end of guidance.

• Renewal spreads at 20.5% and new leasing spreads at 34.4% in Q2, with CAGRs of 3% and same-center NOI growth guidance midpoint for 2024 at 3.75%.

• Dividend yield is 3.3% with 14.7% dividend per share growth since IPO; Core FFO per share growth guidance for 2024 is 3.0%.

• Maintains leverage at 5.1x debt-to-EBITDA, investment grade ratings, and $743M–$800M in available credit, with no significant maturities until 2027.

Capital allocation and development

• Maintenance capital, tenant improvements, and leasing commissions total 12–13% of NOI, with $38M–$50M annually on development and redevelopment.

• Sixteen development/redevelopment projects underway, with expected yields of 9–12%.

• Focus on smaller spaces (avg. 2,500 sq ft) outside grocers, which have higher demand and lower capital requirements.

• Acquisitions are typically at 40–50% of replacement cost, providing a cost advantage over new builds.

• Limited new construction expected until rents nearly double; ground-up development only for specific grocer expansions.