Phillips Edison & Company (PECO) Barclays 24th Annual Global Financial Services Conference summary

Industry fundamentals and market dynamics

• Retail REITs benefit from a strong supply-demand imbalance, with limited new construction and high occupancy rates supporting pricing power and rent growth.

• Institutional ownership in retail real estate remains low, but recent years have seen increased transaction activity and sector allocation shifts.

• Retailers are adapting to omni-channel strategies, with physical stores playing a critical role in brand value and inventory management.

• REIT-owned centers are typically higher quality, attracting top tenants and supporting resilient foot traffic and sales.

• Private market values for retail assets often exceed public market valuations, creating investment opportunities.

Growth strategies and capital allocation

• Internal growth is driven by re-merchandising, densification, and redevelopment, with double-digit returns on capital for outparcel and expansion projects.

• External growth includes selective acquisitions, capital recycling, and structured investment programs that provide future acquisition options.

• Balance sheet strength and low leverage enable flexibility in capital deployment, including opportunistic acquisitions and share buybacks.

• Cap rates for institutional-quality retail assets are in the low to mid-5% range, while public REITs often trade at higher implied cap rates, allowing for accretive capital recycling.

• Interest rate increases create opportunities for well-capitalized REITs to acquire assets from more constrained buyers.

Earnings growth and return outlook

• Retail REITs target mid to high single-digit annual FFO or EPS growth, supported by 3%-4% same-store NOI growth and disciplined capital allocation.

• Dividend growth is closely tied to cash flow growth, with total annual returns for investors targeted at 9%-10% when combining earnings and dividends.

• Focus remains on operational excellence, prudent investment, and maintaining strong credit ratings to support long-term value creation.

• The stability of cash flows in retail real estate is emphasized as a key differentiator versus more volatile asset classes.

• Management teams stress the importance of controlling what they can—operations, capital allocation, and tenant mix—to drive sustainable growth.