Phillips Edison & Company Reports Second Quarter 2024 Results and Reaffirms Full Year Earnings Guidance
Phillips Edison & Company (Nasdaq: PECO) reported second-quarter 2024 results, recording net income of $15.3 million, or $0.12 per diluted share. For the first half of 2024, net income was $32.9 million, or $0.27 per diluted share. Nareit FFO increased 3.3% to $78.4 million, or $0.57 per diluted share, while Core FFO rose 2.9% to $80.0 million, or $0.59 per diluted share. The company reaffirmed its full-year earnings guidance, projecting Nareit FFO per share between $2.34 and $2.41, and Core FFO per share between $2.37 and $2.45. Same-center NOI for Q2 increased by 1.9% year-over-year to $105.6 million. The company maintained high occupancy rates, with leased portfolio occupancy at 97.5% and record-high inline occupancy at 95.1%. PECO executed 277 leases in Q2, achieving significant rent spreads. Recent acquisitions include shopping centers and land parcels worth $59.5 million. The company also launched a joint venture with Cohen & Steers targeting $300 million in equity. As of June 30, 2024, PECO had approximately $743 million in liquidity and completed a $350 million debt offering.
Phillips Edison & Company (Nasdaq: PECO) ha riportato i risultati del secondo trimestre del 2024, registrando un reddito netto di 15,3 milioni di dollari, ovvero 0,12 dollari per azione diluita. Per la prima metà del 2024, il reddito netto è stato di 32,9 milioni di dollari, o 0,27 dollari per azione diluita. Il Nareit FFO è aumentato del 3,3% raggiungendo 78,4 milioni di dollari, ovvero 0,57 dollari per azione diluita, mentre il Core FFO è cresciuto del 2,9% a 80,0 milioni di dollari, o 0,59 dollari per azione diluita. L'azienda ha ribadito le sue previsioni di utili per l'intero anno, proiettando un Nareit FFO per azione compreso tra 2,34 e 2,41 dollari, e un Core FFO per azione tra 2,37 e 2,45 dollari. Il NOI a stesso centro per il secondo trimestre è aumentato dell'1,9% rispetto all'anno precedente, raggiungendo 105,6 milioni di dollari. L'azienda ha mantenuto alti tassi di occupazione, con un'occupazione del portafoglio locato al 97,5% e un'occupazione record al 95,1%. PECO ha eseguito 277 contratti di locazione nel secondo trimestre, ottenendo significativi aumenti dei canoni. Tra gli acquisti recenti figurano centri commerciali e appezzamenti di terreno per un valore di 59,5 milioni di dollari. L'azienda ha anche avviato una joint venture con Cohen & Steers per un obiettivo di 300 milioni di dollari in capitale. Al 30 giugno 2024, PECO disponeva di circa 743 milioni di dollari in liquidità e ha completato un'offerta di debito da 350 milioni di dollari.
Phillips Edison & Company (Nasdaq: PECO) informó los resultados del segundo trimestre de 2024, registrando un ingreso neto de 15,3 millones de dólares, o 0,12 dólares por acción diluida. Para la primera mitad de 2024, el ingreso neto fue de 32,9 millones de dólares, o 0,27 dólares por acción diluida. El Nareit FFO aumentó un 3,3% a 78,4 millones de dólares, o 0,57 dólares por acción diluida, mientras que el Core FFO creció un 2,9% a 80,0 millones de dólares, o 0,59 dólares por acción diluida. La compañía reafirmó su guía de ganancias para todo el año, proyectando un Nareit FFO por acción entre 2,34 y 2,41 dólares, y un Core FFO por acción entre 2,37 y 2,45 dólares. El NOI en los mismos centros para el segundo trimestre aumentó un 1,9% interanual a 105,6 millones de dólares. La compañía mantuvo altas tasas de ocupación, con una ocupación del portafolio arrendado del 97,5% y una ocupación alineada récord del 95,1%. PECO ejecutó 277 contratos de arrendamiento en el segundo trimestre, logrando márgenes de renta significativos. Las adquisiciones recientes incluyen centros comerciales y parcelas de tierra por un valor de 59,5 millones de dólares. La compañía también lanzó una empresa conjunta con Cohen & Steers con un objetivo de 300 millones de dólares en capital. Al 30 de junio de 2024, PECO contaba con aproximadamente 743 millones de dólares en liquidez y completó una oferta de deuda de 350 millones de dólares.
필립스 에디슨 & 회사 (Nasdaq: PECO)는 2024년 2분기 실적을 발표하며 1530만 달러의 순이익(주당 희석 주식 기준 0.12달러)를 기록했습니다. 2024년 상반기 동안 순이익은 3290만 달러(주당 희석 주식 기준 0.27 달러)였습니다. Nareit FFO는 3.3% 증가하여 7840만 달러(주당 희석 주식 기준 0.57 달러)에 도달했고, Core FFO는 2.9% 상승하여 8000만 달러(주당 희석 주식 기준 0.59 달러)에 이르렀습니다. 회사는 연간 수익 가이드를 다시 확인하며, Nareit FFO의 주당 산정치를 2.34 달러에서 2.41 달러 사이로, Core FFO는 2.37 달러에서 2.45 달러 사이로 전망했습니다. 2분기 동일 센터 NOI는 전년 대비 1.9% 증가하여 1억 560만 달러에 도달했습니다. 회사는 97.5%의 높은 점유율을 유지하며, 기록적인 95.1%의 인라인 점유율을 기록했습니다. PECO는 2분기 동안 277건의 임대 계약을 체결하여 유의미한 임대 스프레드를 달성했습니다. 최근 인수에는 5천950만 달러 상당의 쇼핑 센터와 토지 Parcel이 포함됩니다. 또한 PECO는 Cohen & Steers와 3억 달러의 자본을 목표로 하는 합작 투자도 시작했습니다. 2024년 6월 30일 기준으로 PECO는 약 7억4300만 달러의 유동성을 가지고 있으며, 3억5천만 달러의 부채 발행을 완료했습니다.
Phillips Edison & Company (Nasdaq: PECO) a annoncé les résultats du deuxième trimestre 2024, enregistrant un revenu net de 15,3 millions de dollars, soit 0,12 dollar par action diluée. Pour la première moitié de 2024, le revenu net s'élevait à 32,9 millions de dollars, soit 0,27 dollar par action diluée. Le Nareit FFO a augmenté de 3,3 % pour atteindre 78,4 millions de dollars, soit 0,57 dollar par action diluée, tandis que le Core FFO a progressé de 2,9 % à 80,0 millions de dollars, soit 0,59 dollar par action diluée. L'entreprise a confirmé ses prévisions de bénéfices pour l'année complète, projetant un Nareit FFO par action entre 2,34 et 2,41 dollars, et un Core FFO par action entre 2,37 et 2,45 dollars. Le NOI des mêmes centres pour le Q2 a augmenté de 1,9 % par rapport à l'année dernière pour atteindre 105,6 millions de dollars. L'entreprise a maintenu des taux d'occupation élevés, avec un taux d'occupation du portefeuille loué de 97,5 % et un taux d'occupation record en ligne de 95,1 %. PECO a exécuté 277 baux au Q2, réalisant d'importants écarts de loyer. Les récentes acquisitions comprennent des centres commerciaux et des terrains d'une valeur de 59,5 millions de dollars. L'entreprise a également lancé une coentreprise avec Cohen & Steers visant un capital de 300 millions de dollars. Au 30 juin 2024, PECO disposait d'environ 743 millions de dollars de liquidités et a complété une émission de dette de 350 millions de dollars.
Phillips Edison & Company (Nasdaq: PECO) hat die Ergebnisse des zweiten Quartals 2024 veröffentlicht und dabei einen Nettoeinkommen von 15,3 Millionen US-Dollar oder 0,12 US-Dollar pro verwässerter Aktie erzielt. Für die erste Hälfte des Jahres 2024 betrug das Nettoeinkommen 32,9 Millionen US-Dollar oder 0,27 US-Dollar pro verwässerter Aktie. Der Nareit FFO stieg um 3,3% auf 78,4 Millionen US-Dollar oder 0,57 US-Dollar pro verwässerter Aktie, während der Core FFO um 2,9% auf 80,0 Millionen US-Dollar oder 0,59 US-Dollar pro verwässerter Aktie anstieg. Das Unternehmen bestätigte seine Jahresprognose für die Erträge und prognostizierte einen Nareit FFO pro Aktie zwischen 2,34 und 2,41 US-Dollar sowie einen Core FFO pro Aktie zwischen 2,37 und 2,45 US-Dollar. Der NOI des gleichen Zentrums für Q2 stieg im Jahresvergleich um 1,9% auf 105,6 Millionen US-Dollar. Das Unternehmen wies hohe Belegungsraten auf, mit einer Belegung des vermieteten Portfolios von 97,5% und einer Rekordbelegung in Linie von 95,1%. PECO führte im zweiten Quartal 277 Mietverträge aus, um signifikante Mietpreise zu erzielen. Zu den jüngsten Akquisitionen gehören Einkaufszentren und Grundstücke im Wert von 59,5 Millionen US-Dollar. Das Unternehmen startete auch ein Joint Venture mit Cohen & Steers, das 300 Millionen US-Dollar an Eigenkapital anstrebt. Zum 30. Juni 2024 verfügte PECO über etwa 743 Millionen US-Dollar an Liquidität und schloss eine Anleiheplatzierung von 350 Millionen US-Dollar ab.
- Second-quarter net income of $15.3 million, up from $14.5 million year-over-year
- Nareit FFO increased to $78.4 million, up 3.3% year-over-year
- Core FFO increased to $80.0 million, up 2.9% year-over-year
- Reaffirmed 2024 earnings guidance for Nareit FFO and Core FFO
- Second-quarter same-center NOI increased by 1.9% year-over-year
- Leased portfolio occupancy at 97.5%
- Record-high leased inline occupancy at 95.1%
- Executed portfolio comparable new leases at a 34.4% rent spread
- Executed portfolio comparable renewal leases at a record-high 20.5% rent spread
- Acquired shopping centers and land parcels worth $59.5 million
- Launched a joint venture targeting $300 million in equity
- Second-quarter net income per diluted share remained flat at $0.12 year-over-year
- Leased anchor occupancy decreased to 98.8% from 99.4% year-over-year
Insights
Phillips Edison & Company's Q2 2024 results demonstrate solid performance and growth in key metrics. The company reported Nareit FFO of
Notably, same-center NOI grew by
PECO's leasing spreads were particularly impressive, with portfolio comparable new leases at
The company's balance sheet remains solid, with
While these results are encouraging, investors should monitor the impact of potential economic headwinds on consumer spending and retailer performance in the coming quarters.
PECO's Q2 2024 results reflect the ongoing strength in the grocery-anchored retail sector. The company's focus on suburban markets and properties anchored by top-performing grocers continues to pay dividends, as evidenced by the high occupancy rates and strong leasing spreads.
The
PECO's acquisition strategy remains active, with
The newly announced joint venture with Cohen & Steers Income Opportunities REIT is an interesting development. This
Looking ahead, investors should watch for the impact of rising interest rates on PECO's acquisition and development activities. While
CINCINNATI, July 25, 2024 (GLOBE NEWSWIRE) -- Phillips Edison & Company, Inc. (Nasdaq: PECO) (“PECO” or the “Company”), one of the nation’s largest owners and operators of grocery-anchored neighborhood shopping centers, today reported financial and operating results for the period ended June 30, 2024 and reaffirmed full year 2024 earnings guidance. For the three and six months ended June 30, 2024, net income attributable to stockholders was
Highlights for the Second Quarter Ended June 30, 2024
- Reported Nareit FFO of
$78.4 million , or$0.57 per diluted share - Reported Core FFO of
$80.0 million , or$0.59 per diluted share - Reaffirmed 2024 Nareit FFO and Core FFO guidance ranges of
$2.34 t o$2.41 per diluted share and$2.37 t o$2.45 per diluted share, respectively - The midpoint of full year 2024 Nareit FFO guidance represents
6.0% year-over-year growth - The midpoint of full year 2024 Core FFO guidance represents
3.0% year-over-year growth - Increased same-center NOI year-over-year by
1.9% - Reaffirmed 2024 same-center NOI guidance range of
3.25% to4.25% - The midpoint of full year 2024 same-center NOI guidance represents
3.75% year-over-year growth - Reported leased portfolio occupancy of
97.5% and same-center leased portfolio occupancy of97.8% - Increased leased inline occupancy by 30 basis points year-over-year to a record-high
95.1% ; increased same-center leased inline occupancy by 20 basis points year-over-year to a record-high95.1% - Executed portfolio comparable new leases at a rent spread of
34.4% and inline comparable new leases at a rent spread of31.9% during the quarter - Executed portfolio comparable renewal leases at a record-high rent spread of
20.5% and inline comparable renewal leases at a rent spread of19.7% during the quarter - As previously announced, completed a public debt offering of
$350 million aggregate principal amount of5.750% senior notes due in 2034, and91.4% of total debt was fixed-rate at quarter end - Acquired two shopping centers and one land parcel for a total of
$59.5 million - Subsequent to quarter end, acquired one property and one land parcel for a total of
$11.3 million - As previously announced and subsequent to quarter end, acquired one grocery-anchored shopping center in partnership with Cohen & Steers Income Opportunities REIT, launching a new joint venture targeting
$300 million in equity
Management Commentary
Jeff Edison, Chairman and Chief Executive Officer of PECO stated: "The PECO team delivered another solid quarter of growth and market-leading operating metrics. Year to date, same-center NOI increased by
Financial Results for the Second Quarter and Six Months Ended June 30, 2024
Net Income
Second quarter 2024 net income attributable to stockholders totaled
For the six months ended June 30, 2024, net income attributable to stockholders totaled
Nareit FFO
Second quarter 2024 funds from operations attributable to stockholders and operating partnership (“OP”) unit holders as defined by Nareit (“Nareit FFO”) increased
For the six months ended June 30, 2024, Nareit FFO increased
Core FFO
Second quarter 2024 core funds from operations attributable to stockholders and OP unit holders (“Core FFO”) increased
For the six months ended June 30, 2024, Core FFO increased
Same-Center NOI
Second quarter 2024 same-center net operating income (“NOI”) increased
For the six months ended June 30, 2024, same-center NOI increased
Portfolio Overview for the Second Quarter and Six Months Ended June 30, 2024
Portfolio Statistics
As of June 30, 2024, PECO’s wholly-owned portfolio consisted of 286 properties, totaling approximately 32.6 million square feet, located in 31 states. This compared to 274 properties, totaling approximately 31.4 million square feet, located in 31 states as of June 30, 2023.
Leased portfolio occupancy was
Leased anchor occupancy was
Leasing Activity
During the second quarter of 2024, 277 leases were executed totaling 1.7 million square feet. This compared to 285 leases executed totaling 1.6 million square feet during the second quarter of 2023.
During the six months ended June 30, 2024, 522 leases were executed totaling 3.0 million square feet. This compared to 548 leases executed totaling 2.6 million square feet during the same period in 2023.
Comparable rent spreads during the second 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
Comparable rent spreads during the six months ended June 30, 2024 were
Transaction Activity
During the second quarter of 2024, the Company acquired two shopping centers and one land parcel for a total of
- Loganville Crossing, a 149,187 square foot shopping center anchored by Kroger located in an Atlanta, Georgia suburb.
- Walden Park, a 91,049 square foot shopping center anchored by Super Target located in an Austin, Texas suburb.
During the six months ended June 30, 2024, the Company acquired four properties and two land parcels for a total of
Subsequent to quarter end, the Company acquired one property and one land parcel for a total of
- Ridgeview Marketplace, a 22,759 square foot shopping center anchored by King Soopers located in a Colorado Springs, Colorado suburb.
Joint Venture with Cohen & Steers
As previously announced and subsequent to quarter end, 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
Balance Sheet Highlights
As of June 30, 2024, the Company had approximately
As of June 30, 2024, the Company’s net debt to annualized adjusted EBITDAre was unchanged from 5.1x at December 31, 2023. As of June 30, 2024, the Company’s outstanding debt had a weighted-average interest rate of
As previously announced, PECO completed in May 2024 a public debt offering of
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) | Q2 YTD | Updated Full Year 2024 Guidance | Previous Full Year 2024 Guidance | ||
| Net income per share | |||||
| Nareit FFO per share | |||||
| Core FFO per share | |||||
| Same-Center NOI growth | |||||
| Portfolio Activity: | |||||
| Acquisitions, net | |||||
| Other: | |||||
| Interest expense, net | |||||
| G&A expense | |||||
| Non-cash revenue items(1) | |||||
| Adjustments for collectibility |
(1) 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 | $ | 0.49 | $ | 0.54 | |||
| Depreciation and amortization of real estate assets | 1.83 | 1.85 | |||||
| Gain on sale of real estate assets | — | — | |||||
| Adjustments related to unconsolidated joint ventures | 0.02 | 0.02 | |||||
| Nareit FFO per share | $ | 2.34 | $ | 2.41 | |||
| Depreciation and amortization of corporate assets | 0.01 | 0.01 | |||||
| Transaction costs and other | 0.02 | 0.03 | |||||
| Core FFO per share | $ | 2.37 | $ | 2.45 | |||
Conference Call Details
PECO will host a conference call and webcast on Friday, July 26, 2024 at 12:00 p.m. Eastern Time to discuss second 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.
Second Quarter 2024 Earnings Conference Call Details:
Date: Friday, July 26, 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: Second 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 June 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
About Phillips Edison & Company
Phillips Edison & Company, Inc. (“PECO”) is one of the nation’s largest owners and operators of grocery-anchored neighborhood shopping centers. Founded in 1991, PECO has generated strong results through its vertically-integrated operating platform and national footprint of well-occupied shopping centers. PECO’s centers feature a mix of national and regional retailers providing necessity-based goods and services in fundamentally strong markets throughout the United States. PECO’s top grocery anchors include Kroger, Publix, Albertsons and Ahold Delhaize. As of June 30, 2024, PECO managed 306 shopping centers, including 286 wholly-owned centers comprising 32.6 million square feet across 31 states and 20 shopping centers owned in one institutional joint venture. PECO is focused on creating great omni-channel, grocery-anchored shopping experiences and improving communities, one neighborhood shopping center at a time.
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 JUNE 30, 2024 AND DECEMBER 31, 2023
(Condensed and Unaudited)
(In thousands, except per share amounts)
| June 30, 2024 | December 31, 2023 | ||||||
| ASSETS | |||||||
| Investment in real estate: | |||||||
| Land and improvements | $ | 1,813,970 | $ | 1,768,487 | |||
| Building and improvements | 3,907,875 | 3,818,184 | |||||
| In-place lease assets | 506,054 | 495,525 | |||||
| Above-market lease assets | 74,835 | 74,446 | |||||
| Total investment in real estate assets | 6,302,734 | 6,156,642 | |||||
| Accumulated depreciation and amortization | (1,655,987 | ) | (1,540,551 | ) | |||
| Net investment in real estate assets | 4,646,747 | 4,616,091 | |||||
| Investment in unconsolidated joint ventures | 24,129 | 25,220 | |||||
| Total investment in real estate assets, net | 4,670,876 | 4,641,311 | |||||
| Cash and cash equivalents | 7,058 | 4,872 | |||||
| Restricted cash | 3,890 | 4,006 | |||||
| Goodwill | 29,066 | 29,066 | |||||
| Other assets, net | 196,041 | 186,411 | |||||
| Total assets | $ | 4,906,931 | $ | 4,865,666 | |||
| LIABILITIES AND EQUITY | |||||||
| Liabilities: | |||||||
| Debt obligations, net | $ | 2,042,483 | $ | 1,969,272 | |||
| Below-market lease liabilities, net | 112,770 | 108,223 | |||||
| Accounts payable and other liabilities | 118,120 | 116,461 | |||||
| Deferred income | 18,158 | 18,359 | |||||
| Total liabilities | 2,291,531 | 2,212,315 | |||||
| Equity: | |||||||
| Preferred stock, | — | — | |||||
| Common stock, | 1,224 | 1,220 | |||||
| Additional paid-in capital | 3,554,309 | 3,546,838 | |||||
| Accumulated other comprehensive income | 11,356 | 10,523 | |||||
| Accumulated deficit | (1,287,271 | ) | (1,248,273 | ) | |||
| Total stockholders’ equity | 2,279,618 | 2,310,308 | |||||
| Noncontrolling interests | 335,782 | 343,043 | |||||
| Total equity | 2,615,400 | 2,653,351 | |||||
| Total liabilities and equity | $ | 4,906,931 | $ | 4,865,666 | |||
PHILLIPS EDISON & COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(Condensed and Unaudited)
(In thousands, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenues: | |||||||||||||||
| Rental income | $ | 158,286 | $ | 148,980 | $ | 316,354 | $ | 296,708 | |||||||
| Fees and management income | 2,522 | 2,546 | 5,087 | 5,024 | |||||||||||
| Other property income | 707 | 611 | 1,376 | 1,469 | |||||||||||
| Total revenues | 161,515 | 152,137 | 322,817 | 303,201 | |||||||||||
| Operating Expenses: | |||||||||||||||
| Property operating | 27,399 | 24,674 | 53,933 | 49,736 | |||||||||||
| Real estate taxes | 19,474 | 18,397 | 38,328 | 36,453 | |||||||||||
| General and administrative | 11,133 | 11,686 | 22,946 | 23,219 | |||||||||||
| Depreciation and amortization | 61,172 | 59,667 | 121,378 | 118,165 | |||||||||||
| Total operating expenses | 119,178 | 114,424 | 236,585 | 227,573 | |||||||||||
| Other: | |||||||||||||||
| Interest expense, net | (23,621 | ) | (20,675 | ) | (46,956 | ) | (40,141 | ) | |||||||
| (Loss) gain on disposal of property, net | (10 | ) | 75 | (15 | ) | 1,017 | |||||||||
| Other expense, net | (1,720 | ) | (904 | ) | (2,649 | ) | (1,659 | ) | |||||||
| Net income | 16,986 | 16,209 | 36,612 | 34,845 | |||||||||||
| Net income attributable to noncontrolling interests | (1,715 | ) | (1,758 | ) | (3,671 | ) | (3,775 | ) | |||||||
| Net income attributable to stockholders | $ | 15,271 | $ | 14,451 | $ | 32,941 | $ | 31,070 | |||||||
| Earnings per share of common stock: | |||||||||||||||
| Net income per share attributable to stockholders - basic and diluted | $ | 0.12 | $ | 0.12 | $ | 0.27 | $ | 0.26 | |||||||
Discussion and Reconciliation of Non-GAAP Measures
Same-Center Net Operating Income
The Company presents Same-Center NOI as a supplemental measure of its performance. The Company defines NOI as total operating revenues, adjusted to exclude non-cash revenue items, less property operating expenses and real estate taxes. For the three and six months ended June 30, 2024 and 2023, Same-Center NOI represents the NOI for the 270 properties that were wholly-owned and operational for the entire portion of all comparable reporting periods. The Company believes Same-Center 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 operating trends such as occupancy levels, rental rates, and operating costs on properties that were operational for all comparable periods. Other REITs may use different methodologies for calculating Same-Center NOI, and accordingly, PECO’s Same-Center 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 the impact of general and administrative expenses, depreciation and amortization, 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 Funds from Operations and Core Funds from Operations
Nareit FFO is a non-GAAP financial performance measure that is widely recognized as a measure of REIT operating performance. 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) from sales of property and gains (or losses) from change in control; (ii) depreciation and amortization related to real estate; and (iii) impairment losses on real estate and impairments of in-substance real estate investments in investees that are driven by measurable decreases in the fair value of the depreciable real estate held by the unconsolidated partnerships and joint ventures. Adjustments for unconsolidated 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 performance measure used by the Company as Nareit FFO includes certain non-comparable 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 future periods, and that it is more reflective of its core operating performance and provides an additional measure to compare PECO’s performance across reporting periods on a consistent basis by excluding items that may cause short-term fluctuations in net income (loss). To arrive at Core FFO, the Company adjusts Nareit FFO to exclude certain recurring and non-recurring items including, but not limited to: (i) depreciation and amortization of corporate assets; (ii) changes in the fair value of the earn-out liability; (iii) amortization of unconsolidated joint venture basis differences; (iv) gains or losses on the extinguishment or modification of debt and other; (v) other impairment charges; (vi) transaction and acquisition expenses; and (vii) realized performance income.
Nareit FFO and Core 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 distributions. Core FFO may not be a useful measure of the impact of long-term operating performance on value if the 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 with 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.
Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate and Adjusted EBITDAre
Nareit defines Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (“EBITDAre”) 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-downs of depreciable property. Adjustments for unconsolidated partnerships 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-comparable 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-out 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, determine 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 distributions. Accordingly, EBITDAre and Adjusted EBITDAre should be reviewed in connection with 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 EBITDAre and Adjusted EBITDAre, as presented, may not be comparable to amounts calculated by other REITs.
Same-Center Net Operating Income—The table below compares Same-Center NOI (dollars in thousands):
| Three Months Ended June 30, | Favorable (Unfavorable) | Six Months Ended June 30, | Favorable (Unfavorable) | ||||||||||||||||||||||||||||
| 2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | ||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||
| Rental income(1) | $ | 112,161 | $ | 107,542 | $ | 4,619 | $ | 224,917 | $ | 215,665 | $ | 9,252 | |||||||||||||||||||
| Tenant recovery income | 34,384 | 35,196 | (812 | ) | 70,482 | 70,682 | (200 | ) | |||||||||||||||||||||||
| Reserves for uncollectibility(2) | (629 | ) | (370 | ) | (259 | ) | (2,401 | ) | (1,276 | ) | (1,125 | ) | |||||||||||||||||||
| Other property income | 694 | 595 | 99 | 1,297 | 1,443 | (146 | ) | ||||||||||||||||||||||||
| Total revenues | 146,610 | 142,963 | 3,647 | 2.6 | % | 294,295 | 286,514 | 7,781 | 2.7 | % | |||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||
| Property operating expenses | 22,584 | 21,142 | (1,442 | ) | 45,774 | 43,562 | (2,212 | ) | |||||||||||||||||||||||
| Real estate taxes | 18,461 | 18,183 | (278 | ) | 36,214 | 36,424 | 210 | ||||||||||||||||||||||||
| Total operating expenses | 41,045 | 39,325 | (1,720 | ) | (4.4 | )% | 81,988 | 79,986 | (2,002 | ) | (2.5 | )% | |||||||||||||||||||
| Total Same-Center NOI | $ | 105,565 | $ | 103,638 | $ | 1,927 | 1.9 | % | $ | 212,307 | $ | 206,528 | $ | 5,779 | 2.8 | % | |||||||||||||||
(1) Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income.
(2) Includes billings that will not be recognized as revenue until cash is collected or the Neighbor resumes regular payments and/or the Company deems it appropriate to resume recording revenue on an accrual basis, rather than on a cash basis.
Same-Center Net Operating Income Reconciliation—Below is a reconciliation of Net Income to NOI and Same-Center NOI (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Net income | $ | 16,986 | $ | 16,209 | $ | 36,612 | $ | 34,845 | |||||||
| Adjusted to exclude: | |||||||||||||||
| Fees and management income | (2,522 | ) | (2,546 | ) | (5,087 | ) | (5,024 | ) | |||||||
| Straight-line rental income(1) | (2,072 | ) | (3,284 | ) | (4,437 | ) | (5,864 | ) | |||||||
| Net amortization of above- and below-market leases | (1,570 | ) | (1,262 | ) | (2,989 | ) | (2,490 | ) | |||||||
| Lease buyout income | (205 | ) | (74 | ) | (451 | ) | (429 | ) | |||||||
| General and administrative expenses | 11,133 | 11,686 | 22,946 | 23,219 | |||||||||||
| Depreciation and amortization | 61,172 | 59,667 | 121,378 | 118,165 | |||||||||||
| Interest expense, net | 23,621 | 20,675 | 46,956 | 40,141 | |||||||||||
| Loss (gain) on disposal of property, net | 10 | (75 | ) | 15 | (1,017 | ) | |||||||||
| Other expense, net | 1,720 | 904 | 2,649 | 1,659 | |||||||||||
| Property operating expenses related to fees and management income | 319 | 711 | 1,345 | 1,026 | |||||||||||
| NOI for real estate investments | 108,592 | 102,611 | 218,937 | 204,231 | |||||||||||
| Less: Non-same-center NOI(2) | (3,027 | ) | 1,027 | (6,630 | ) | 2,297 | |||||||||
| Total Same-Center NOI | $ | 105,565 | $ | 103,638 | $ | 212,307 | $ | 206,528 | |||||||
| Period-end Same-Center Leased Occupancy % | 97.8 | % | 97.9 | % | |||||||||||
(1) Includes straight-line rent adjustments for Neighbors for whom revenue is being recorded on a cash basis.
(2) Includes operating revenues and expenses from non-same-center properties, which includes properties acquired or sold, and corporate activities.
Nareit FFO and Core FFO—The following table presents the Company’s calculation of Nareit FFO and Core FFO and provides additional information related to its operations (in thousands, except per share amounts):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders | |||||||||||||||
| Net income | $ | 16,986 | $ | 16,209 | $ | 36,612 | $ | 34,845 | |||||||
| Adjustments: | |||||||||||||||
| Depreciation and amortization of real estate assets | 60,711 | 59,115 | 120,487 | 117,068 | |||||||||||
| Loss (gain) on disposal of property, net | 10 | (75 | ) | 15 | (1,017 | ) | |||||||||
| Adjustments related to unconsolidated joint ventures | 661 | 645 | 1,310 | 1,343 | |||||||||||
| Nareit FFO attributable to stockholders and OP unit holders | $ | 78,368 | $ | 75,894 | $ | 158,424 | $ | 152,239 | |||||||
| Calculation of Core FFO Attributable to Stockholders and OP Unit Holders | |||||||||||||||
| Nareit FFO attributable to stockholders and OP unit holders | $ | 78,368 | $ | 75,894 | $ | 158,424 | $ | 152,239 | |||||||
| Adjustments: | |||||||||||||||
| Depreciation and amortization of corporate assets | 461 | 552 | 891 | 1,097 | |||||||||||
| Transaction and acquisition expenses | 1,146 | 1,261 | 2,320 | 2,599 | |||||||||||
| Gain on extinguishment or modification of debt and other, net | (1 | ) | (9 | ) | (1 | ) | (9 | ) | |||||||
| Amortization of unconsolidated joint venture basis differences | 2 | 7 | 5 | 8 | |||||||||||
| Realized performance income(1) | — | — | — | (75 | ) | ||||||||||
| Core FFO attributable to stockholders and OP unit holders | $ | 79,976 | $ | 77,705 | $ | 161,639 | $ | 155,859 | |||||||
| Nareit FFO/Core FFO Attributable to Stockholders and OP Unit Holders per Diluted Share | |||||||||||||||
| Weighted-average shares of common stock outstanding - diluted | 136,439 | 131,887 | 136,456 | 132,004 | |||||||||||
| Nareit FFO attributable to stockholders and OP unit holders per share - diluted | $ | 0.57 | $ | 0.58 | $ | 1.16 | $ | 1.15 | |||||||
| Core FFO attributable to stockholders and OP unit holders per share - diluted | $ | 0.59 | $ | 0.59 | $ | 1.18 | $ | 1.18 | |||||||
(1) Realized performance income includes fees received related to the achievement of certain performance targets in the Company’s NRP joint venture.
EBITDAre and Adjusted EBITDAre—The following table presents the Company’s calculation of EBITDAre and Adjusted EBITDAre (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2023 | |||||||||||||||
| Calculation of EBITDAre | |||||||||||||||||||
| Net income | $ | 16,986 | $ | 16,209 | $ | 36,612 | $ | 34,845 | $ | 63,762 | |||||||||
| Adjustments: | |||||||||||||||||||
| Depreciation and amortization | 61,172 | 59,667 | 121,378 | 118,165 | 236,443 | ||||||||||||||
| Interest expense, net | 23,621 | 20,675 | 46,956 | 40,141 | 84,232 | ||||||||||||||
| Loss (gain) on disposal of property, net | 10 | (75 | ) | 15 | (1,017 | ) | (1,110 | ) | |||||||||||
| Federal, state, and local tax expense | 464 | 119 | 601 | 237 | 438 | ||||||||||||||
| Adjustments related to unconsolidated joint ventures | 934 | 918 | 1,862 | 1,884 | 3,721 | ||||||||||||||
| EBITDAre | $ | 103,187 | $ | 97,513 | $ | 207,424 | $ | 194,255 | $ | 387,486 | |||||||||
| Calculation of Adjusted EBITDAre | |||||||||||||||||||
| EBITDAre | $ | 103,187 | $ | 97,513 | $ | 207,424 | $ | 194,255 | $ | 387,486 | |||||||||
| Adjustments: | |||||||||||||||||||
| Impairment of investment in third parties | — | — | — | — | 3,000 | ||||||||||||||
| Transaction and acquisition expenses | 1,146 | 1,261 | 2,320 | 2,599 | 5,675 | ||||||||||||||
| Amortization of unconsolidated joint venture basis differences | 2 | 7 | 5 | 8 | 17 | ||||||||||||||
| Realized performance income(1) | — | — | — | (75 | ) | (75 | ) | ||||||||||||
| Adjusted EBITDAre | $ | 104,335 | $ | 98,781 | $ | 209,749 | $ | 196,787 | $ | 396,103 | |||||||||
(1) Realized performance income includes fees received related to the achievement of certain performance targets in the Company’s NRP joint venture.
Financial Leverage Ratios—The Company believes its net debt to Adjusted EBITDAre, net debt to total enterprise value, and debt covenant compliance as of June 30, 2024 allow it access to future borrowings as needed in the near term. The following table presents the Company’s calculation of net debt and total enterprise value, inclusive of its prorated portion of net debt and cash and cash equivalents owned through its unconsolidated joint ventures, as of June 30, 2024 and December 31, 2023 (in thousands):
| June 30, 2024 | December 31, 2023 | ||||||
| Net debt: | |||||||
| Total debt, excluding discounts, market adjustments, and deferred financing expenses | $ | 2,090,144 | $ | 2,011,093 | |||
| Less: Cash and cash equivalents | 7,267 | 5,074 | |||||
| Total net debt | $ | 2,082,877 | $ | 2,006,019 | |||
| Enterprise value: | |||||||
| Net debt | $ | 2,082,877 | $ | 2,006,019 | |||
| Total equity market capitalization(1)(2) | 4,451,504 | 4,955,480 | |||||
| Total enterprise value | $ | 6,534,381 | $ | 6,961,499 | |||
(1) Total equity market capitalization is calculated as diluted shares multiplied by the closing market price per share, which includes 136.1 million and 135.8 million diluted shares as of June 30, 2024 and December 31, 2023, respectively, and the closing market price per share of
(2) Fully diluted shares include common stock and OP units.
The following table presents the Company’s calculation of net debt to Adjusted EBITDAre and net debt to total enterprise value as of June 30, 2024 and December 31, 2023 (dollars in thousands):
| June 30, 2024 | December 31, 2023 | ||||||
| Net debt to Adjusted EBITDAre - annualized: | |||||||
| Net debt | $ | 2,082,877 | $ | 2,006,019 | |||
| Adjusted EBITDAre - annualized(1) | 409,065 | 396,103 | |||||
| Net debt to Adjusted EBITDAre - annualized | 5.1x | 5.1x | |||||
| Net debt to total enterprise value: | |||||||
| Net debt | $ | 2,082,877 | $ | 2,006,019 | |||
| Total enterprise value | 6,534,381 | 6,961,499 | |||||
| Net debt to total enterprise value | 31.9 | % | 28.8 | % | |||
(1) Adjusted EBITDAre is based on a trailing twelve month period.
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Phillips Edison & Company, Inc. (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 earnings release. 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 yields; and (c) statements about the Company’s future results of operations, capital expenditures, and liquidity. Such statements are subject to 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 to 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 rates 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 portfolio in a limited number of industries, geographies, or investments; (xvi) the 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 2023 Annual Report on Form 10-K, filed with the SEC on February 12, 2024, 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.
Investors:
Kimberly Green, Head of Investor Relations
(513) 692-3399
kgreen@phillipsedison.com
Hannah Harper, Manager of Investor Relations
(513) 824-7122
hharper@phillipsedison.com
FAQ
What were Phillips Edison & Company's Q2 2024 net income results?
How did PECO's Nareit FFO perform in Q2 2024?
What is Phillips Edison & Company's full-year 2024 earnings guidance?
What is the occupancy rate of PECO's leased portfolio as of Q2 2024?
How much did PECO acquire in shopping centers and land parcels in Q2 2024?
What is the rent spread for PECO's portfolio comparable renewal leases in Q2 2024?
