Phillips Edison & Company (PECO) Status Update summary

Strategic vision and growth targets

• Aims to grow total enterprise value to over $10 billion in 3–5 years, driven by $1 billion in acquisitions over three years and 3–4% Same-Center NOI growth annually.

• Targets $350M–$450M in annual acquisitions, with mid- to high single-digit core FFO per share growth and even higher AFFO per share growth, supported by low leverage and strong financial capacity.

• Focus remains on right-sized, high-quality, grocery-anchored neighborhood shopping centers anchored by top grocers, with 97% of ABR from grocery-anchored centers and 84% from #1 or #2 grocers by sales.

• Emphasizes internal and external growth, supported by an integrated operating platform, experienced team, and significant management ownership aligning interests with shareholders.

• Pipeline includes ground-up outparcel development and repositioning projects in fast-growing markets.

Operating environment and portfolio performance

• Operating environment is the strongest in 25 years, with high demand and limited supply for grocery-anchored centers.

• Portfolio occupancy at 98%, with anchor occupancy at 99.4% and inline occupancy at 95%.

• Achieved #1 peer ranking in renewal lease spreads and net asset acquisitions in 2023 and YTD Q3 2024, with renewal rent spreads above 16%, new rent spreads over 30%, and combined leasing spreads at 22% on a trailing 12-month basis.

• Retention rate at 92% as of Q3 2024, with high retention driving better economics and lower tenant improvement costs.

• Grocer sales PSF grew 36% since 2019, with Q3 2024 PSF at $711 and a 4.4% increase over 2023.

Acquisition strategy and guidance

• 2024 net acquisitions expected to reach ~$985 million, with 2025 gross acquisition guidance at $350–$450 million and a 9%+ unlevered IRR target.

• Acquisition focus: core grocery-anchored centers, unanchored centers in existing markets, and investment management opportunities.

• Unanchored assets expected to be a small but growing part of the portfolio, potentially over $100 million annually.

• Joint venture with Cohen & Steers targeted at $100 million for 2025, with potential for more.

• Investment strategy balances acquisitions, development, and capital expenditures, with external growth expected to contribute 100–350 bps to long-term Core FFO per share growth.