Phillips Edison & Company (PECO) Q2 2024 earnings summary

Executive summary

• Delivered record-high occupancy and renewal rent spreads in Q2 2024, with strong operating performance and high retention rates; portfolio comprised 286 properties and 32.6M square feet, 98% leased as of June 30, 2024.

• Maintained a differentiated strategy focused on grocery-anchored shopping centers, with 97% of centers anchored by top grocers and 70% of rents from necessity-based tenants.

• Announced a new joint venture with Cohen & Steers, targeting $600–$700 million in open-air, grocery-anchored shopping center acquisitions.

• Management holds significant ownership (8%) and the company maintains a $6.5B enterprise value.

• Continued innovation recognized with a Digital Innovation Award for AI use and ongoing operational excellence.

Financial highlights

• Nareit FFO increased 3.3% year-over-year to $78.4 million ($0.57 per diluted share); Core FFO up 2.9% to $80 million ($0.59 per diluted share); Q2 net income was $17.0 million, up from $16.2 million in Q2 2023.

• Same-center NOI growth was 1.9% for the quarter, with rental income up 4.3% year-over-year.

• Acquired two shopping centers and one land parcel for $60 million in Q2; year-to-date acquisitions total $127 million.

• Completed a $350 million bond offering at 5.75% due 2034, improving fixed-rate debt percentage to 91%.

• Dividend yield as of June 28, 2024 was 3.6%, with an annualized dividend of $1.17 per share.

Outlook and guidance

• Reaffirmed 2024 guidance: net income per share $0.49–$0.54, Nareit and Core FFO growth of 6% and 3% at midpoints, and same-center NOI growth of 3.25–4.25%.

• Net acquisition guidance maintained at $200–$300 million for 2024, with capacity to increase if market conditions improve.

• Long-term Core FFO per share growth expected in the mid to high single digits.

• Management expects current sources of liquidity to be sufficient for both short- and long-term cash demands.

• Underwritten incremental unlevered yields on development and redevelopment projects are expected to range between 9%-12%.