CINCINNATI, Oct. 24, 2024 (GLOBE NEWSWIRE) -- Phillips Edison & Company, Inc. (Nasdaq: PECO) ("PECO” or the "Company”), one of the nation's largest owners and operators of high-quality grocery-anchored neighborhood shopping centers, today reported financial and operating results for the period ended September 30, 2024 and updated full year 2024 earnings guidance. For the three and nine months ended September 30, 2024, net income attributable to stockholders was $11.6 million, or $0.09 per diluted share, and $44.5 million, or $0.36 per diluted share, respectively.
Highlights for the Third Quarter Ended September 30, 2024
- Reported Nareit FFO of $81.6 million, or $0.60 per diluted share
- Reported Core FFO of $84.4 million, or $0.62 per diluted share
- Updated 2024 Nareit FFO and Core FFO guidance ranges to $2.35 to $2.39 per diluted share and $2.40 to $2.44 per diluted share, respectively
- The midpoint of full year 2024 Nareit FFO guidance represents 5.3% year-over-year growth
- The midpoint of full year 2024 Core FFO guidance represents 3.4% year-over-year growth
- Increased same-center NOI year-over-year by 3.2%
- Updated 2024 same-center NOI guidance range to 3.50% to 4.00%
- The midpoint of full year 2024 same-center NOI guidance represents 3.75% year-over-year growth
- Reported strong leased portfolio occupancy of 97.8% and same-center leased portfolio occupancy of 97.9%
- Increased leased inline occupancy by 10 basis points year-over-year to 95.0%; same-center leased inline occupancy remained strong at 94.9%
- Executed portfolio comparable new leases at a record-high rent spread of 55.0% and inline comparable new leases at a rent spread of 28.3% during the quarter
- Executed portfolio comparable renewal leases at a rent spread of 19.8% and inline comparable renewal leases at a rent spread of 19.6% during the quarter
- As previously announced, completed a public debt offering of $350 million aggregate principal amount of 4.950% senior notes due in 2035, and 93.2% of total debt was fixed-rate at quarter end
- Acquired five shopping centers and two land parcels for a total of $95.7 million
- Updated full year 2024 acquisitions guidance to a range of $275 to $325 million
Financial Results for the Third Quarter and Nine Months Ended September 30, 2024
Net Income
Third quarter 2024 net income attributable to stockholders totaled $11.6 million, or $0.09 per diluted share, compared to net income of $12.2 million, or $0.10 per diluted share, during the third quarter of 2023.
For the nine months ended September 30, 2024, net income attributable to stockholders totaled $44.5 million, or $0.36 per diluted share, compared to net income of $43.3 million, or $0.37 per diluted share, for the same period in 2023.
Nareit FFO
Third quarter 2024 funds from operations attributable to stockholders and operating partnership ("OP”) unit holders as defined by Nareit ("Nareit FFO”) increased 12.5% to $81.6 million, or $0.60 per diluted share, compared to $72.5 million, or $0.55 per diluted share, during the third quarter of 2023. Nareit FFO was impacted by a loss on extinguishment of debt of $1.2 million, which is primarily due to the repayment of the Company's term loans using proceeds from the 2024 senior notes issuances.
For the nine months ended September 30, 2024, Nareit FFO increased 6.8% to $240.0 million, or $1.76 per diluted share, compared to $224.7 million, or $1.70 per diluted share, during the same period a year ago.
Core FFO
Third quarter 2024 core funds from operations attributable to stockholders and OP unit holders ("Core FFO”) increased 9.6% to $84.4 million, or $0.62 per diluted share, compared to $77.0 million, or $0.58 per diluted share, during the third quarter of 2023.
For the nine months ended September 30, 2024, Core FFO increased 5.7% to $246.0 million, or $1.80 per diluted share, compared to $232.8 million, or $1.76 per diluted share, for the same period in 2023.
Same-Center NOI
Third quarter 2024 same-center net operating income ("NOI”) increased 3.2% to $107.7 million, compared to $104.4 million during the third quarter of 2023.
For the nine months ended September 30, 2024, same-center NOI increased 2.9% to $320.0 million, compared to $310.9 million during the same period a year ago.
Portfolio Overview for the Third Quarter and Nine Months Ended September 30, 2024
Portfolio Statistics
As of September 30, 2024, PECO's wholly-owned portfolio consisted of 290 properties, totaling approximately 32.9 million square feet, located in 31 states. This compared to 275 properties, totaling approximately 31.4 million square feet, located in 31 states as of September 30, 2023.
Leased portfolio occupancy was 97.8% as of September 30, 2024, compared to 97.8% as of September 30, 2023. Same-center leased portfolio occupancy was 97.9% as of September 30, 2024, compared to 97.8% as of September 30, 2023.
Leased anchor occupancy was 99.4% as of September 30, 2024, compared to 99.3% as of September 30, 2023. Leased inline occupancy increased 10 basis points to 95.0% as of September 30, 2024, compared to 94.9% as of September 30, 2023. Same-center leased anchor occupancy was 99.4% as of September 30, 2024, compared to 99.3% as of September 30, 2023. Same-center leased inline occupancy remained strong at 94.9% as of September 30, 2024, compared to 95.0% as of September 30, 2023.
Leasing Activity
During the third quarter of 2024, 268 leases were executed totaling approximately 1.6 million square feet. This compared to 231 leases executed totaling approximately 0.9 million square feet during the third quarter of 2023.
During the nine months ended September 30, 2024, 790 leases were executed totaling approximately 4.6 million square feet. This compared to 779 leases executed totaling approximately 3.6 million square feet during the same period in 2023.
Comparable rent spreads during the third quarter of 2024, which compare the percentage increase of new or renewal leases to the expiring lease of a unit that was occupied within the past twelve months, were 55.0% for new leases, 19.8% for renewal leases and 27.6% combined.
Comparable rent spreads during the nine months ended September 30, 2024 were 37.7% for new leases, 19.0% for renewal leases and 23.8% combined.
Transaction Activity
During the third quarter of 2024, the Company acquired five shopping centers and two land parcels for a total of $95.7 million. This includes the Company's prorated share of one shopping center purchased through Necessity Retail Venture LLC. The Company expects to drive value in these assets through occupancy increases and rent growth, as well as potential future development of ground-up outparcel retail spaces. There were no dispositions in the quarter. The third quarter 2024 acquisitions consisted of:
- Ridgeview Marketplace, a 22,759 square foot shopping center anchored by King Soopers located in a Colorado Springs, Colorado suburb.
- Lemont Plaza, a 119,013 square foot shopping center anchored by Pete's Fresh Market located in a Chicago, Illinois suburb.
- Rue de France, a 63,331 square foot shopping center located in a Minneapolis, Minnesota suburb.
- Bethel Shopping Center, a 101,205 square foot shopping center anchored by Big Y Foods located in a Bethel, Connecticut suburb.
Joint Venture with Cohen & Steers
As previously announced, PECO acquired Des Peres Corners, a grocery-anchored shopping center located in a St. Louis, Missouri suburb, with Cohen & Steers Income Opportunities REIT, Inc. ("CNSREIT”). The acquisition was made through a programmatic joint venture targeting $300 million in equity and owned 80% by CNSREIT and 20% by PECO.
Balance Sheet Highlights
As of September 30, 2024, the Company had approximately $752 million of total liquidity, comprised of $9.3 million of cash, cash equivalents and restricted cash, plus $742.9 million of borrowing capacity available on its $800 million revolving credit facility.
As of September 30, 2024, the Company's net debt to annualized adjusted EBITDAre was unchanged from 5.1x at December 31, 2023. As of September 30, 2024, the Company's outstanding debt had a weighted-average interest rate of 4.4% and a weighted-average maturity of 6.0 years when including all extension options.
As previously announced, PECO completed in September 2024 a public debt offering of $350 million aggregate principal amount of 4.950% senior notes due 2035. The notes were priced at 98.458% of the principal amount and will mature January 2035.
As of September 30, 2024, 93.2% of the Company's total debt was fixed-rate debt.
2024 Guidance
PECO has updated its 2024 earnings guidance, as summarized in the table below, which is based upon the Company's current view of existing market conditions and assumptions for the year ending December 31, 2024. The following statements are forward-looking and actual results could differ materially depending on market conditions and the factors set forth under "Forward-Looking Statements" below.
| (in thousands, except per share amounts) | Q3 2024 YTD | Updated Full Year 2024 Guidance | Previous Full Year 2024 Guidance | ||
| Net income per share | $0.36 | $0.48 - $0.50 | $0.49 - $0.54 | ||
| Nareit FFO per share | $1.76 | $2.35 - $2.39 | $2.34 - $2.41 | ||
| Core FFO per share | $1.80 | $2.40 - $2.44 | $2.37 - $2.45 | ||
| Same-Center NOI growth | 2.9% | 3.50% - 4.00% | 3.25% - 4.25% | ||
| Portfolio Activity: | |||||
| Acquisitions, net(1) | $211,082 | $275,000 - $325,000 | $200,000 - $300,000 | ||
| Other: | |||||
| Interest expense, net | $71,954 | $96,000 - $99,000 | $98,000 - $106,000 | ||
| G&A expense | $34,060 | $45,000 - $47,000 | $45,000 - $49,000 | ||
| Non-cash revenue items(2) | $11,320 | $15,000 - $19,000 | $14,500 - $18,500 | ||
| Adjustments for collectibility | $4,050 | $4,000 - $5,000 | $4,000 - $5,000 |
(2) Represents straight-line rental income and net amortization of above- and below-market leases.
The Company does not provide a reconciliation for same-center NOI estimates on a forward-looking basis because it is unable to provide a meaningful or reasonably accurate calculation or estimation of certain reconciling items which could be significant to the Company's results without unreasonable effort.
The following table provides a reconciliation of the range of the Company's 2024 estimated net income to estimated Nareit FFO and Core FFO:
| (Unaudited) | Low End | High End | |||||
| Net income per share | $ | 0.48 | $ | 0.50 | |||
| Depreciation and amortization of real estate assets | 1.85 | 1.87 | |||||
| Adjustments related to unconsolidated joint ventures | 0.02 | 0.02 | |||||
| Nareit FFO per share | $ | 2.35 | $ | 2.39 | |||
| Depreciation and amortization of corporate assets | 0.01 | 0.01 | |||||
| Loss on extinguishment or modification of debt and other, net | 0.01 | 0.01 | |||||
| Transaction costs and other | 0.03 | 0.03 | |||||
| Core FFO per share | $ | 2.40 | $ | 2.44 | |||
Conference Call Details
PECO will host a conference call and webcast on Friday, October 25, 2024 at 12:00 p.m. Eastern Time to discuss third quarter 2024 results and provide further business updates. Chairman and Chief Executive Officer Jeff Edison, President Bob Myers and Chief Financial Officer John Caulfield will host the conference call and webcast. Dial-in and webcast information is below.
Third Quarter 2024 Earnings Conference Call Details:
Date: Friday, October 25, 2024
Time: 12:00 p.m. ET
Toll-Free Dial-In Number: (800) 715-9871
International Dial-In Number: (646) 307-1963
Conference ID: 4551083
Webcast: Third Quarter 2024 Webcast Link
An audio replay will be available approximately one hour after the conclusion of the conference call using the webcast link above.
For more information on the Company's financial results, please refer to the Company's Form 10-Q for the quarter ended September 30, 2024.
Connect with PECO
For additional information, please visit https://www.phillipsedison.com/
Follow PECO on:
- Twitter at https://twitter.com/PhillipsEdison
- Facebook at https://www.facebook.com/phillipsedison.co
- Instagram at https://www.instagram.com/phillips.edison/; and
- Find PECO on LinkedIn at https://www.linkedin.com/company/phillipsedison&company
PECO uses, and intends to continue to use, its Investors website, which can be found at https://investors.phillipsedison.com, as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD.
PHILLIPS EDISON & COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023
(Condensed and Unaudited)
(In thousands, except per share amounts)
| September 30, 2024 | December 31, 2023 | ||||||
| ASSETS | |||||||
| Investment in real estate: | |||||||
| Land and improvements | $ | 1,842,671 | $ | 1,768,487 | |||
| Building and improvements | 3,977,380 | 3,818,184 | |||||
| In-place lease assets | 515,014 | 495,525 | |||||
| Above-market lease assets | 75,500 | 74,446 | |||||
| Total investment in real estate assets | 6,410,565 | 6,156,642 | |||||
| Accumulated depreciation and amortization | (1,713,033 | ) | (1,540,551 | ) | |||
| Net investment in real estate assets | 4,697,532 | 4,616,091 | |||||
| Investment in unconsolidated joint ventures | 27,294 | 25,220 | |||||
| Total investment in real estate assets, net | 4,724,826 | 4,641,311 | |||||
| Cash and cash equivalents | 6,446 | 4,872 | |||||
| Restricted cash | 2,887 | 4,006 | |||||
| Goodwill | 29,066 | 29,066 | |||||
| Other assets, net | 187,033 | 186,411 | |||||
| Total assets | $ | 4,950,258 | $ | 4,865,666 | |||
| LIABILITIES AND EQUITY | |||||||
| Liabilities: | |||||||
| Debt obligations, net | $ | 2,104,788 | $ | 1,969,272 | |||
| Below-market lease liabilities, net | 114,796 | 108,223 | |||||
| Accounts payable and other liabilities | 129,517 | 116,461 | |||||
| Deferred income | 22,099 | 18,359 | |||||
| Total liabilities | 2,371,200 | 2,212,315 | |||||
| Equity: | |||||||
| Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at September 30, 2024 and December 31, 2023 | - | - | |||||
| Common stock, $0.01 par value per share, 1,000,000 shares authorized, 122,615 and 122,024 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively | 1,226 | 1,220 | |||||
| Additional paid-in capital | 3,558,407 | 3,546,838 | |||||
| Accumulated other comprehensive income | 1,907 | 10,523 | |||||
| Accumulated deficit | (1,312,303 | ) | (1,248,273 | ()[\]\\.,;:\s@\"]+)*)|(\".+\"))@((\[[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\.[0-9]{1,3}\])|(([a-zA-Z\-0-9]+\.)+[a-zA-Z]{2,}))$/;return b.test(a)}$(document).ready(function(){if(performance.navigation.type==2){location.reload(true)}$("iframe[data-lazy-src]").each(function(b){$(this).attr("src",$(this).attr("data-lazy-src"))});if($(".owl-article-body-images").length){$(".owl-article-body-images").owlCarousel({items:1,loop:true,center:false,dots:false,autoPlay:true,mouseDrag:false,touchDrag:false,pullDrag:false,nav:true})}var a=$("#display_full_text").val();if(a==0){$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:$("#cms_article_id").val()},dataType:"json",success:function(b){},error:function(b,d,c){}})}$(".read-full-article").on("click",function(d){d.preventDefault();var b=$(this).attr("data-cmsArticleId");var c=$(this).attr("data-productId");var f=$(this).attr("data-href");dataLayer.push({event:"paywall_click",paywall_name:"the_manila_times_premium",paywall_id:"paywall_article_"+b});$.ajax({url:"/ajax/set-article-cookie",type:"POST",data:{cmsArticleId:b,productId:c},dataType:"json",success:function(e){window.location.href=$("#BASE_URL").val()+f},error:function(e,h,g){}})});$(".article-embedded-newsletter-form .close-btn").on("click",function(){$(".article-embedded-newsletter-form").fadeOut(1000)})});$(document).on("click",".article-embedded-newsletter-form .newsletter-button",function(){var b=$(".article-embedded-newsletter-form .newsletter_email").val();var d=$("#ga_user_id").val();var c=$("#ga_user_yob").val();var a=$("#ga_user_gender").val();var e=$("#ga_user_country").val();if(validateEmail(b)){$.ajax({url:"/ajax/sendynewsletter",type:"POST",data:{email:b},success:function(f){$(".article-embedded-newsletter-form .nf-message").html(f);$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000);dataLayer.push({event:"newsletter_sub",user_id:d,product_name:"newsletter",gender:a,yob:c,country:e})},error:function(f,h,g){}})}else{$(".article-embedded-newsletter-form .nf-message").html("Please enter a valid email address.");$(".article-embedded-newsletter-form .nf-message").addClass("show");setTimeout(function(){$(".article-embedded-newsletter-form .nf-message").removeClass("show");$(".article-embedded-newsletter-form .nf-message").html("")},6000)}});$(document).on("click",".article-embedded-newsletter-form .nf-message",function(){$(this).removeClass("show");$(this).html("")});
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