Slides
Page 1
GROCERY CENTERED. COMMUNITY FOCUSED PECO | N ASDAQ L I STE D February 2025 GROW with PECO
Page 2
Safe Harbor and Non-GAAP Disclosures PECO’s Safe Harbor Statement This presentation contains certain forward-looking statement s within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21E of the Securities Exchange Act of 1934 , as amended . The Company intends such forward -looking statements to be covered by the safe harbor provisions for forward -looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with the safe harbor provisions . Such forward -looking statements can generally be identified by the Company’s use of forward -looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “seek,” “objective,” “goal,” “strategy,” “plan,” “focus,” “priority,” “should,” “could,” “potential,” “possible,” “look forward,” “optimistic,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation . Such statements include, but are not limited to (a) statements about the Company’s plans, strategies, initiatives, and prospects, (b) statements about the Company’s underwritten incremental unlevered yield, and (c) statements about the Company’s future results of operations, capital expenditures, and liquidity. Such statements are subject t o known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation : (i) changes in national, regional, or local economic climates ; (ii) local market conditions, including an oversupply of space in, or a reduction in demand for, properties similar to those in the Company’s portfolio ; (iii) vacancies, changes in market rental rates, and the need t o periodically repair, renovate, and re -let space; (iv) competition from other available shopping centers and the attractiveness of properties in the Company’s portfolio to its tenants; (v) the financial stability of the Company’s tenants, including, without limitation, their ability to pay rent; (vi) the Company’s ability to pay down, refinance, restructure, or extend its indebtedness as it becomes due ; (vii) increases in the Company’s borrowing costs as a result of changes in interest r ates and other factors; (viii) potential liability for environmental matters; (ix) damage to the Company’s properties from catastrophic weather and other natural events, and the physical effects of climate change ; (x) the Company’s ability and willingness to maintain its qualification as a REIT in light of economic, market, legal, tax, and other considerations ; (xi) changes in tax, real estate, environmental, and zoning laws ; (xii) information technology security breaches ; (xiii) the Company’s corporate responsibility initiatives ; (xiv) loss of key executives; (xv) the concentration of the Company’s por tfolio in a limited number of industr ies, geographies, or investments ; (xvi) t he economic, political, and social impact of, and uncertainty relating to, pandemics or other health crises; (xvii) the Company’s ability to re-lease its properties on the same or better terms, or at all, in the event of non-renewal or in the event the Company exercises its right to replace an existing tenant; (xviii) the loss or bankruptcy of the Company’s tenants; (xix) to the extent the Company is seeking to dispose of properties, the Company’s ability to do so at attractive prices or at all; and (xx) the impact of inflation on the Company and on its tenants . Additional important factors that could cause actual results to differ are described in the filings made from time to time by the Company with the SEC and include the risk factors and other risks and uncertainties described in the Company’s 2024 Annual Report on Form 10-K, filed with the SEC on February 11, 2025 , as updated from time to time in the Company’s periodic and/or current reports filed with the SEC, which are accessible on the SEC’s website at www.sec.gov. Therefore, such statements are not intended to be a guarantee of the Company’s performance in future periods. Except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Non-GAAP Disclosures The Company presents Same-C enter NOI as a supplemental measure of its performance. The Company defines NOI as total operating revenues, adjust ed to exclude non-c ash revenue items, less proper ty oper ating expenses and real estate taxes. For the three months and year to dat e ended December 31, 2024 and 2023, Same-Center NOI represents the NO I for the 270 properties that were wholly-o wned and operational for the entire portion of all comparable reporting per iods. The Company believes Same-C enter NOI provides useful information to its investors about its financial and operating performance because it provides a performance measure of the revenues and expenses directly involved in owning and operating real estate assets and provides a perspective not immediately apparent from net income (loss). Because Same-Center NOI excludes the change in NOI from properties acquired or disposed of after December 31, 2022, it highlights operat ing trends such as occupancy levels, rental r ates, and operating costs on properties that were operational for all comparable periods. Other REITs may use different met hodologies for calculating Same-C enter NOI, and accordingly, PECO’s Same-C enter NOI may not be comparable to other REITs. Same-Center NOI should not be viewed as an alternative measure of the Company’s financial performance as it does not reflect the operations of its entire portfolio, nor does it reflect t he impact of general and administrative expenses, depreciation and amor tization, interest expense, other income (expense), or the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties that could materially impact its results from operations. Nareit FFO is a non-GAAP financial performance measure that is widely recognized as a measure of REIT operating perfor mance. The National Association of Real Estate Investment Trusts (“Nareit”) defines FFO as net income (loss) computed in accordance with GAAP, excluding: (i) gains (or losses) fr om sales of property and gains (or losses) fr om change in control; (ii) depreciation and amort ization related to real estate; and (iii) impairment losses on real estate and impairments of in-substance real estate investments in investees t hat are driven by measurable decreases in the fair value of t he depreciable real estate held by the unconsolidated partnerships and joint vent ures. Adjustments for unconsolidat ed partnerships and joint ventures are calculated to reflect Nareit FFO on the same basis. The Company calculates Nareit FFO in a manner consistent with the Nareit definition. Core FFO is an additional financial perfor mance measure used by the Company as Nareit FFO includes certain non-c omparable items that affect its performance over time. The Company believes that Core FFO is helpful in assisting management and investors with the assessment of the sustainability of operating performance in fut ure periods, and that it is more reflective of its core operating perfor mance and provides an additional measure to compare PECO’s performance acr oss reporting periods on a consistent basis by excluding items that may cause short-t erm fluctuations in net income (loss). To arrive at Core FFO, the Company adjusts Nareit FFO to exclude cer tain recurring and non-r ecurring items including, but not limited to: (i) depreciation and amor tization of c orporate assets; (ii) changes in the fair value of the earn-o ut liability; (iii) amortization of unconsolidated joint venture basis differences; (iv) gains or losses on the extinguishment or modification of debt and other; (v) other impair ment charges; (vi) transaction and acquisition expenses; and (vii) realized performance income. Nareit FFO and Cor e FFO should not be considered alternatives to net income (loss) under GAAP, as an indication of the Company’s liquidity, nor as an indication of funds available to cover its cash needs, including its ability to fund distr ibutions. Core FFO may not be a useful measure of t he impact of long-t erm oper ating performance on value if t he Company does not continue to operate its business plan in the manner currently contemplated. Accordingly, Nareit FFO and Core FFO should be reviewed in connection wit h other GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. The Company’s Nareit FFO and Core FFO , as presented, may not be comparable to amounts calculated by other REITs. Nareit defines Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (“EBITDAr e”) as net income (loss) computed in accordance with GAAP before: (i) interest expense; (ii) income tax expense; (iii) depreciation and amortization; (iv) gains or losses from disposition of depreciable property; and (v) impairment write-d owns of depreciable property. Adjustments for unconsolidated partner ships and joint ventures are calculated to reflect EBITDAre on the same basis. Adjusted EBITDAre is an additional performance measure used by the Company as EBITDAre includes certain non-c omparable items that affect the Company’s performance over time. To arrive at Adjusted EBITDAre, the Company excludes certain recurring and non- recurring items from EBITDAre, including, but not limited to: (i) changes in the fair value of the earn-o ut liability; (ii) other impairment charges; (iii) amortization of basis differences in the Company’s investments in its unconsolidated joint ventures; (iv) transaction and acquisition expenses; and (v) realized performance income. The Company uses EBITDAre and Adjusted EBITDAre as additional measures of operating performance which allow it to compare earnings independent of capital structure, det ermine debt service and fixed cost coverage, and measure enterprise value. Additionally, the Company believes they are a useful indicator of its ability to support its debt obligations. EBITDAre and Adjusted EBITDAre should not be considered as alternatives to net income (loss), as an indication of the Company’s liquidity, nor as an indication of funds available to cover its cash needs, including its ability to fund distribut ions. Accordingly, EBITDAre and Adjust ed EBITDAre should be reviewed in connection with ot her GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. The Company’s EBITDAre and Adjusted EBITDAre, as presented, may not be comparable to amounts calculated by other R EITs. PECO | N ASDAQ L I STE D GROCERY CENTERED. COMMUNITY FOCUSE D| 2
Page 3
Grocery Centered. Neighborhood Focused. ABR from Grocery- Anchored Centers 96% Nasdaq PECO Founded/IPO 1991/ 2021 Leased Portfolio Occupancy 98% Properties 294 Dividend Yield 3.3% Total Enterprise Value(1) $7.3B Portfolio Retention Rate 89% Total GLA 33.3M Square Feet ABR from Necessity- Based Neighbors 69% Management Ownership 8% ABR from #1 or #2 Grocery Anchor by Sales 84% We create great omni-channel grocery-anchored shopping experiences and improve our communities one center at a time. We are an experienced owner and operator focused on high-quality grocery-anchored neighborhood shopping centers. Source: Company data as of December 31, 2024; Dividend yield as of December 31, 2024 and is based on an annualized rate of $1.23 per share 1. For non-G AAP reconciliations, refer to the Company’s latest quarterly financial supplement or Form 10 -K PECO at a Glance PECO | N ASDAQ L I STE D GROCERY CENTERED. COMMUNITY FOCUSE D| 3
Page 4
Operational Strength • 98% portfolio leased occupancy with continued strong Neighbor demand • 30.2% and 20.8% new and re newal leasing spreads in Q4 2024, respectively • 69% ABR from necessity- based goods and services • 96% of ABR from grocery- anchored neighborhood centers Liquidity Strength • As of December 31, 2024, Net Debt-to-Adjusted-EBITDAre was at 5.0x(1) • Full year 2025 gross ac quisition guidance of $350M to $450M(2) • With a fortress balance sheet and $948M of liquidity, PECO is well-prepared for future opportunities(3) • Approximately 86% of our asse ts are unencumbered • Net income attributable to stockholders of $ 62.7M in 2024 • Increased Same-Center NOI year-over-year by 6.5% in Q4 2024, and increased Same- Center NOI by 3.8% in 2024(1) • The midpoint of full year 2025 Core FFO per share guidance represents 5.1% year-over-year g rowth(1)(2) • PECO has a long track record of outperformance in AFFO g rowth vs. its peers Financial Results Q4 and Full Year 2024 GROWTH Results Source: Company data as of December 31, 2024 1. For non-G AAP reconciliations, refer to the Company's latest quarterly financial supplement or Form 10 -K 2. 2025 guidance provided on February 6, 2025 3. Pro forma as of December 31, 2024, reflects the January 2025 amendment to PECO’s credit facility PECO Continues to Operate from a Position of Strength PECO | N ASDAQ L I STE D GROCERY CENTERED. COMMUNITY FOCUSE D| 4
Page 5
Last-mile solution for necessity-based and essential retailers 96% of ABR from grocery-anchored neighborhood centers Right-sized centers averaging 113,000 SF with strategic locations in fast-growing markets 69% ABR from necessity-based goods and services Targeted trade areas where leading grocers and small shop Neighbors are su ccessful Key Elements of Our Strategy Cycle-Tested and Resilient Advantage Focused on High-Quality, Grocery-Anchored Neighborhood Shopping Centers Format Drives Results – PECO is Operating from a Position of Strength Source: Company data as of December 31, 2024 1. For non-G AAP reconciliations, refer to the Company's latest quarterly financial supplement or Form 10 -K 98% portfolio leased occupancy with continued strong Neighbor demand Experienced, cycle-tested team with local expertise and strong Neighbor relationships Strong-credit Neighbors and diversified mix Lack of distressed retailers in PECO’s portfolio Growing pipeline of ground-up outparcel development and repositioning projects Balance sheet and liquidity strength with trailing 12-month net debt / adj. EBITDAre of 5.0x(1) PECO’s Focused and Differentiated GROWTH Strategy #1 or #2 grocery anchor by sales (84% of ABR) PECO | N ASDAQ L I STE D GROCERY CENTERED. COMMUNITY FOCUSE D| 5
Page 6
PECO | N ASDAQ L I STE D GROCERY CENTERED. COMMUNITY FOCUSE D| 6 GROW with PECO GROCERY ANCHORED REGULAR INCOME; STRONG RETURNS OMNI-CHANNEL LANDLORD WELL-ALIGNED & EXPERIENCED
Page 7
Grocery-Anchored Source: Company data as of December 31, 2024 1. For non-G AAP reconciliations, refer to the Company’s latest quarterly financial supplement or Form 10 -K PECO is one of the nation’s largest owners and operators focused on high- quality, right-sized, grocery-anchored neighborhood shopping centers PECO | N ASDAQ L I STE D GROCERY CENTERED. COMMUNITY FOCUSE D| 7 294 Shopping Centers Kroger and Publix PECO’S #1 and #2 Neighbors: Kroger’s Largest Landlord Publix’s Second Largest Landlord $7.3B Total Enterprise Value(1) 96% ABR from Grocery-Anchored Shopping Centers
Page 8
GROCERY CENTERED. COMMUNITY FOCUSED | 8 23.2% 3-Year Total Shareholder Return(1) 5.1% 2024 Increase to the Monthly Dividend Distribution Rate $1.23 Current Annualized Dividend Distribution 6.3% 2024 Earnings per Diluted Share Increase from 2023 3.8% 2024 Same-Center NOI Growth(3) Sources: Company data as of December 31, 2024 1. Total shareholder return as of December 31, 2024 2. Dividend yield as of December 31, 2024 a nd is based on an annualized rate of $1.23 per share 3. For non-G AAP reconciliations, refer to the Company’s latest quarterly financial supplement or Form 10 -K Regular Income; Strong Returns PECO | N ASDAQ L I STE D 3.3% Current Dividend Distribution Yield(2) PECO’s differentiated strategy and strong operating results allow us to provide regular income and strong total shareholder returns
Page 9
GROCERY CENTERED. COMMUNITY FO CU SE D | 9 Omi-Channel Landlord PECO | N ASDAQ L I STE D PECO’s neighborhood shopping centers are complementary to e-commerce and are positioned to thrive in today’s omni-channel environment Source: Company data as of December 31 , 2024 Click & Collect “BOPIS” Ship from Store Ship to Store Reserve in Store Return to Store Online Availability BOPIS PECO Centers Facilitate Buy Online and Pick-up in Store or “BOPIS” 91% PECO Grocers Offering BOPIS LastMile Delivery Situated Near Customers, PECO Centers Offer Last- Mile Delivery Solutions 94% PECO Centers Provide Front Row to Go® Curbside Pick-up Program
Page 10
GROCERY CENTERED. COMMUNITY FO CU SE D | 9 PECO | N ASDAQ L I STE D The PECO Team is focused on growing value, driving external growth, enhancing pricing power, expanding our (re)development pipeline and supporting our long-term growth initiatives Source: Company data as of December 31 , 2024 30 Years Average Years Experience for PECO Management Team 96% Overall Satisfaction Neighbor Survey Results Top Place to Work Named a Top Place to Work 8 Years in a Row 8% Management Insider Ownership of the Total Company Well-Aligned & Experienced
Page 11
PECO | N ASDAQ L I STE D GROCERY CENTERED. COMMUNITY FOCUSED | 11 Strategy • Neighborhood centers anchored by the #1 or #2 g rocer by sales in a market • Vertically-integrated, Locally Smart, cycle-tested platform • Right-sized format centers located in the neighborhood • Diverse geographic and N eighbor exposure • One of the largest in the U.S. wi th $7.3B total enterprise value(1) Portfolio • Focused on high-quality, grocery-anchored neighborhood centers Results and Opportunities • Cycle-tested history delivering more alpha with less beta • Consistent track record adding stockholder value • Great long-term investment opportunity • Strong foot traffic • Consumers visit grocers 1.6x per week(2) How We GROW: Our Value Proposition Source: Company data as of December 31, 2024 1. For non-G AAP reconciliations, refer to the Company’s latest quarterly financial supplement or Form 10 -K 2. The Food Industry Association U.S. Grocery Shopper Trends 2023
Page 12
PECO | N ASDAQ L I STE D GROCERY CENTERED. COMMUNITY FOCUSE D| 12 GROW with PECO GROCERY ANCHORED REGULAR INCOME; STRONG RETURNS OMNI-CHANNEL LANDLORD WELL-ALIGNED & EXPERIENCED
Page 13
GROCERY CENTERED. COMMUNITY FFO CU SE D| 13 PECO | N ASDAQ L I STE D Full Year 2024 Quarterly Infographic Quarterly Infographic Available on PECO’s Investor Relations Website
Page 14
GROCERY CENTERED. COMMUNITY FOCUSE D Corporate Responsibility and Sustainability Our Corporate Responsibility and Sustainability Program is based on the four pillars set forth below and is overseen by our Board of Directors through the Nominating and Governance Committee, reflecting PECO’s comprehensive approach to strong governance. Maximizing Resources Efficiencies & Mitigating Impact of Risks Improving Our Communities, One Shopping Center at a Time Strong Corporate Governance PECO Cultural Advantage (PECO XP) Ownership Mindset Transparency & Communication Engagement & Retention Health, Wellness & Benefits Learning Career Development Space For All TM Recognition Greenhouse Gas Emissions Resource Efficiency Renewable Energy Water Conservation Waste Management Building Certifications Data Management Climate Risk Assessment Supporting Local Entrepreneurs Connecting Residents to Necessity-Based Goods & Services Providing Jobs & Opportunities for Social Connection Enhancing Community through Re/Development Projects Creating Significant Economic Impact Culture of Integrity & Ethical Conduct Relationship of Trust & Respect with Stakeholders Sound & Ethical Decision-Making Internal Control Frameworks Independent Oversight & Review Enterprise Risk Management & Mitigation Transparent Reporting Regular Engagement with Stakeholders Source: www.phillipsedison.com/corporate-responsibility | 14 PECO | NASDAQ L ISTE D
Page 15
PECO | N ASDAQ L ISTE D GROCERY CENTERED. COMMUNITY FOCUSE D| 15 THANK YOU FOR YOUR CONTINUED SUPPORT! Email: InvestorRelations@phillipsedison.com Website: Investors.PhillipsEdison.com Investors and Transactions: (888) 518-8073 Advisors: (833) 347-5717