Phillips Edison & Company (PECO) Nareit REIT Week: 2024 Investor Conference summary

Portfolio strategy and market positioning

• Focuses on grocery-anchored shopping centers, with 97% of ABR from these centers and 85% from #1 or #2 grocers by sales, targeting high-traffic, stable markets.

• Operates 300 properties across 30 states, with 50% of ABR from Sun Belt states and a strong presence in high-growth U.S. cities.

• Maintains high tenant diversity and retention, with local tenants averaging over nine years' stay and 27% of ABR from local tenants in restaurants, personal services, and medical uses.

• 70% of ABR comes from necessity-based retailers, providing resilience against economic cycles and e-commerce disruption.

• Team stability and long-term relationships provide a competitive edge in acquisitions and operations.

Leasing, occupancy, and demand trends

• Achieved record-high leased occupancy at 97.2%, with in-line occupancy at 94.8% and a portfolio retention rate of 88% as of March 31, 2024.

• Leasing spreads remain elevated, with Q1 new leasing at 29.1% and renewals at 16.9%.

• Demand is strong from fast casual, health, beauty, and MedTail tenants, with a waiting list for space.

• Limited new development and high construction costs create a supply-constrained environment, supporting rent growth.

• 96% neighbor satisfaction rate and 97% interest in lease renewal reflect strong community relationships.

Financial and operational performance

• Same-center NOI growth has remained robust, with 3.7% growth in Q1 2024 and a long-term target of 3–4%.

• Comparable new lease spreads reached 25.2% and renewal spreads 14.6% in Q1 2024, reflecting strong pricing power.

• High tenant retention (88–93%) and low CapEx per renewal support long-term FFO growth.

• Outparcel projects deliver 9–12% cash-on-cash yields, with $40M–$50M invested annually.

• Aggressively reclaims underperforming spaces, re-leasing at higher spreads.