Phillips Edison & Company Reports Third Quarter 2024 Results and Updates Full Year Earnings Guidance
Phillips Edison & Company (PECO) reported strong Q3 2024 financial results with net income of $11.6 million ($0.09 per diluted share). Key highlights include Core FFO of $84.4 million ($0.62 per diluted share), representing a 9.6% increase year-over-year. The company updated its 2024 guidance, projecting Core FFO of $2.40-$2.44 per diluted share and same-center NOI growth of 3.50-4.00%. Portfolio performance remained robust with 97.8% leased occupancy and record-high new lease rent spreads of 55.0%. During Q3, PECO acquired five shopping centers and two land parcels for $95.7 million, and completed a $350 million senior notes offering at 4.950%.
Phillips Edison & Company (PECO) ha riportato risultati finanziari solidi per il terzo trimestre del 2024, con un reddito netto di 11,6 milioni di dollari (0,09 dollari per azione diluita). I punti salienti includono un Core FFO di 84,4 milioni di dollari (0,62 dollari per azione diluita), che rappresenta un incremento del 9,6% rispetto all'anno precedente. L'azienda ha aggiornato le previsioni per il 2024, prevedendo un Core FFO di 2,40-2,44 dollari per azione diluita e una crescita del NOI dei centri stessi del 3,50-4,00%. Le prestazioni del portafoglio sono rimaste robuste, con un tasso di occupazione locata del 97,8% e un aumento record degli spread sui nuovi canoni di affitto del 55,0%. Durante il terzo trimestre, PECO ha acquisito cinque centri commerciali e due appezzamenti di terreno per 95,7 milioni di dollari, e ha completato un'offerta di note senior da 350 milioni di dollari al 4,950%.
Phillips Edison & Company (PECO) reportó resultados financieros sólidos para el tercer trimestre de 2024, con un ingreso neto de 11,6 millones de dólares (0,09 dólares por acción diluida). Los puntos destacados incluyen un Core FFO de 84,4 millones de dólares (0,62 dólares por acción diluida), lo que representa un aumento del 9,6% en comparación con el año anterior. La empresa actualizó sus previsiones para 2024, proyectando un Core FFO de 2,40-2,44 dólares por acción diluida y un crecimiento del NOI de los mismos centros del 3,50-4,00%. El rendimiento de la cartera se mantuvo robusto con un 97,8% de ocupación alquilada y márgenes de nuevo alquiler récord del 55,0%. Durante el tercer trimestre, PECO adquirió cinco centros comerciales y dos parcelas de tierra por 95,7 millones de dólares, y completó una oferta de notas senior de 350 millones de dólares al 4,950%.
필립스 에디슨 앤 컴퍼니 (PECO)는 2024년 3분기 강력한 재무 결과를 보고했으며, 순이익은 1,160만 달러(희석 주당 0.09달러)입니다. 주요 하이라이트로는 8,440만 달러(희석 주당 0.62달러)의 핵심 FFO가 있으며, 이는 전년 대비 9.6% 증가한 것입니다. 회사는 2024년 가이던스를 업데이트하여 희석 주당 핵심 FFO가 2.40~2.44달러이고 동일한 센터 NOI 성장률이 3.50~4.00%로 예상하고 있습니다. 포트폴리오 성과는 97.8%의 임대 점유율과 55.0%의 역대 최대 신규 임대료 스프레드로 건전하게 유지되었습니다. 3분기 동안 PECO는 9,570만 달러에 다섯 개의 쇼핑센터와 두 개의 토지 구획을 인수하고, 4.950%로 3억 5천만 달러의 선순위 노트 공모를 완료했습니다.
Phillips Edison & Company (PECO) a rapporté des résultats financiers solides pour le troisième trimestre 2024, avec un bénéfice net de 11,6 millions de dollars (0,09 dollars par action diluée). Les faits saillants incluent un Core FFO de 84,4 millions de dollars (0,62 dollars par action diluée), représentant une augmentation de 9,6 % par rapport à l'année précédente. L'entreprise a mis à jour ses prévisions pour 2024, projetant un Core FFO de 2,40 à 2,44 dollars par action diluée et une croissance du NOI du même centre de 3,50 à 4,00 %. La performance du portefeuille est restée robuste avec un taux d'occupation de 97,8 % et des écarts de loyer pour les nouveaux baux à un niveau record de 55,0 %. Au cours du troisième trimestre, PECO a acquis cinq centres commerciaux et deux parcelles de terrain pour 95,7 millions de dollars, et a complété une émission de titres senior de 350 millions de dollars à 4,950 %.
Phillips Edison & Company (PECO) meldete für das dritte Quartal 2024 starke finanzielle Ergebnisse mit einem Nettogewinn von 11,6 Millionen USD (0,09 USD pro verwässerter Aktie). Zu den wichtigsten Punkten gehören ein Core FFO von 84,4 Millionen USD (0,62 USD pro verwässerter Aktie), was einem Anstieg von 9,6% im Jahresvergleich entspricht. Das Unternehmen aktualisierte seine Prognosen für 2024 und erwartet einen Core FFO von 2,40-2,44 USD pro verwässerter Aktie sowie ein NOI-Wachstum der gleichen Standorte von 3,50-4,00%. Die Portfolioperformance blieb robust mit einer vermieteten Belegungsquote von 97,8% und rekordhohen neuen Mietspreads von 55,0%. Im dritten Quartal erwarb PECO fünf Einkaufszentren und zwei Grundstücke für 95,7 Millionen USD und schloss ein Angebot über vorrangige Anleihen im Wert von 350 Millionen USD zu 4,950% ab.
- Core FFO increased 9.6% to $84.4 million in Q3 2024
- Record-high portfolio comparable new lease rent spread of 55.0%
- Strong portfolio occupancy at 97.8%
- Same-center NOI increased 3.2% year-over-year
- Successful completion of $350 million senior notes offering
- Acquired $95.7 million in new properties during Q3
- Net income per share decreased from $0.10 to $0.09 in Q3 year-over-year
- $1.2 million loss on extinguishment of debt
Insights
PECO delivered strong Q3 2024 results with notable improvements in key metrics. Core FFO increased 9.6% to
The updated guidance reflects operational strength, with Core FFO now expected at
PECO's grocery-anchored strategy continues to demonstrate resilience. The portfolio's strong leasing momentum is evidenced by record-high new lease spreads and sustained high occupancy levels. The acquisition of five strategic shopping centers this quarter strengthens market presence in key suburban locations.
The
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
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 t o$2.39 per diluted share and$2.40 t o$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% to4.00% - 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 of97.9% - Increased leased inline occupancy by 10 basis points year-over-year to
95.0% ; same-center leased inline occupancy remained strong at94.9% - Executed portfolio comparable new leases at a record-high rent spread of
55.0% and inline comparable new leases at a rent spread of28.3% during the quarter - Executed portfolio comparable renewal leases at a rent spread of
19.8% and inline comparable renewal leases at a rent spread of19.6% during the quarter - As previously announced, completed a public debt offering of
$350 million aggregate principal amount of4.950% senior notes due in 2035, and93.2% 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 t o$325 million
Management Commentary
Jeff Edison, Chairman and Chief Executive Officer of PECO stated: “The ongoing strength of our performance is attributable to our differentiated and focused strategy of owning right-sized, high-quality, grocery-anchored neighborhood shopping centers anchored by the #1 or #2 grocer by sales in a market. Our results at the property level are driven by our integrated operating platform and our experienced and cycle-tested team. Based on the continued strong operating environment and health of our Neighbors, we are pleased to increase our full year 2024 earnings guidance for Core FFO per share. In addition, we are increasing our full year 2024 acquisitions guidance to
Financial Results for the Third Quarter and Nine Months Ended September 30, 2024
Net Income
Third quarter 2024 net income attributable to stockholders totaled
For the nine months ended September 30, 2024, net income attributable to stockholders totaled
Nareit FFO
Third quarter 2024 funds from operations attributable to stockholders and operating partnership (“OP”) unit holders as defined by Nareit (“Nareit FFO”) increased
For the nine months ended September 30, 2024, Nareit FFO increased
Core FFO
Third quarter 2024 core funds from operations attributable to stockholders and OP unit holders (“Core FFO”) increased
For the nine months ended September 30, 2024, Core FFO increased
Same-Center NOI
Third quarter 2024 same-center net operating income (“NOI”) increased
For the nine months ended September 30, 2024, same-center NOI increased
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
Leased anchor occupancy was
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
Comparable rent spreads during the nine months ended September 30, 2024 were
Transaction Activity
During the third quarter of 2024, the Company acquired five shopping centers and two land parcels for a total 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.
During the nine months ended September 30, 2024, the Company acquired nine shopping centers and four land parcels for a total of
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
Balance Sheet Highlights
As of September 30, 2024, the Company had approximately
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
As previously announced, PECO completed in September 2024 a public debt offering of
As of September 30, 2024,
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 | |||||
Nareit FFO per share | |||||
Core FFO per share | |||||
Same-Center NOI growth | |||||
Portfolio Activity: | |||||
Acquisitions, net(1) | |||||
Other: | |||||
Interest expense, net | |||||
G&A expense | |||||
Non-cash revenue items(2) | |||||
Adjustments for collectibility |
(1) Includes the prorated portion owned through the Company’s unconsolidated joint ventures.
(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
About Phillips Edison & Company
Phillips Edison & Company, Inc. (“PECO”) is one of the nation’s largest owners and operators of high-quality, 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 September 30, 2024, PECO managed 311 shopping centers, including 290 wholly-owned centers comprising 32.9 million square feet across 31 states and 21 shopping centers owned in two institutional joint ventures. 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 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, | — | — | |||||
Common stock, | 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 | ) | |||
Total stockholders’ equity | 2,249,237 | 2,310,308 | |||||
Noncontrolling interests | 329,821 | 343,043 | |||||
Total equity | 2,579,058 | 2,653,351 | |||||
Total liabilities and equity | $ | 4,950,258 | $ | 4,865,666 |
PHILLIPS EDISON & COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023
(Condensed and Unaudited)
(In thousands, except per share amounts)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Revenues: | |||||||||||||||
Rental income | $ | 161,780 | $ | 149,566 | $ | 478,134 | $ | 446,274 | |||||||
Fees and management income | 2,856 | 2,168 | 7,943 | 7,192 | |||||||||||
Other property income | 891 | 740 | 2,267 | 2,209 | |||||||||||
Total revenues | 165,527 | 152,474 | 488,344 | 455,675 | |||||||||||
Operating Expenses: | |||||||||||||||
Property operating | 27,528 | 24,274 | 81,461 | 74,010 | |||||||||||
Real estate taxes | 19,569 | 19,028 | 57,897 | 55,481 | |||||||||||
General and administrative | 11,114 | 10,385 | 34,060 | 33,604 | |||||||||||
Depreciation and amortization | 68,328 | 58,706 | 189,706 | 176,871 | |||||||||||
Total operating expenses | 126,539 | 112,393 | 363,124 | 339,966 | |||||||||||
Other: | |||||||||||||||
Interest expense, net | (24,998 | ) | (21,522 | ) | (71,954 | ) | (61,663 | ) | |||||||
(Loss) gain on disposal of property, net | (19 | ) | 53 | (34 | ) | 1,070 | |||||||||
Other expense, net | (1,068 | ) | (4,883 | ) | (3,717 | ) | (6,542 | ) | |||||||
Net income | 12,903 | 13,729 | 49,515 | 48,574 | |||||||||||
Net income attributable to noncontrolling interests | (1,301 | ) | (1,484 | ) | (4,972 | ) | (5,259 | ) | |||||||
Net income attributable to stockholders | $ | 11,602 | $ | 12,245 | $ | 44,543 | $ | 43,315 | |||||||
Earnings per share of common stock: | |||||||||||||||
Net income per share attributable to stockholders - basic and diluted | $ | 0.09 | $ | 0.10 | $ | 0.36 | $ | 0.37 |
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 nine months ended September 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 September 30, | Favorable (Unfavorable) | Nine Months Ended September 30, | Favorable (Unfavorable) | ||||||||||||||||||||||||||
2024 | 2023 | $ Change | % Change | 2024 | 2023 | $ Change | % Change | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||
Rental income(1) | $ | 113,290 | $ | 108,458 | $ | 4,832 | $ | 338,207 | $ | 324,123 | $ | 14,084 | |||||||||||||||||
Tenant recovery income | 35,685 | 35,695 | (10 | ) | 106,167 | 106,377 | (210 | ) | |||||||||||||||||||||
Reserves for uncollectibility(2) | (1,459 | ) | (893 | ) | (566 | ) | (3,860 | ) | (2,169 | ) | (1,691 | ) | |||||||||||||||||
Other property income | 734 | 734 | — | 2,031 | 2,178 | (147 | ) | ||||||||||||||||||||||
Total revenues | 148,250 | 143,994 | 4,256 | 3.0 | % | 442,545 | 430,509 | 12,036 | 2.8 | % | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||
Property operating expenses | 22,394 | 20,674 | (1,720 | ) | 68,168 | 64,237 | (3,931 | ) | |||||||||||||||||||||
Real estate taxes | 18,132 | 18,930 | 798 | 54,346 | 55,355 | 1,009 | |||||||||||||||||||||||
Total operating expenses | 40,526 | 39,604 | (922 | ) | (2.3 | )% | 122,514 | 119,592 | (2,922 | ) | (2.4 | )% | |||||||||||||||||
Total Same-Center NOI | $ | 107,724 | $ | 104,390 | $ | 3,334 | 3.2 | % | $ | 320,031 | $ | 310,917 | $ | 9,114 | 2.9 | % |
(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 September 30, | Nine Months Ended September 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Net income | $ | 12,903 | $ | 13,729 | $ | 49,515 | $ | 48,574 | |||||||
Adjusted to exclude: | |||||||||||||||
Fees and management income | (2,856 | ) | (2,168 | ) | (7,943 | ) | (7,192 | ) | |||||||
Straight-line rental income(1) | (2,148 | ) | (2,265 | ) | (6,585 | ) | (8,129 | ) | |||||||
Net amortization of above- and below-market leases | (1,743 | ) | (1,294 | ) | (4,732 | ) | (3,784 | ) | |||||||
Lease buyout income | (393 | ) | (587 | ) | (844 | ) | (1,016 | ) | |||||||
General and administrative expenses | 11,114 | 10,385 | 34,060 | 33,604 | |||||||||||
Depreciation and amortization | 68,328 | 58,706 | 189,706 | 176,871 | |||||||||||
Interest expense, net | 24,998 | 21,522 | 71,954 | 61,663 | |||||||||||
Loss (gain) on disposal of property, net | 19 | (53 | ) | 34 | (1,070 | ) | |||||||||
Other expense, net | 1,068 | 4,883 | 3,717 | 6,542 | |||||||||||
Property operating expenses related to fees and management income | 983 | 649 | 2,328 | 1,675 | |||||||||||
NOI for real estate investments | 112,273 | 103,507 | 331,210 | 307,738 | |||||||||||
Less: Non-same-center NOI(2) | (4,549 | ) | 883 | (11,179 | ) | 3,179 | |||||||||
Total Same-Center NOI | $ | 107,724 | $ | 104,390 | $ | 320,031 | $ | 310,917 | |||||||
Period-end Same-Center Leased Occupancy % | 97.9 | % | 97.8 | % |
(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 September 30, | Nine Months Ended September 30, | ||||||||||||||
2024 | 2023 | 2024 | 2023 | ||||||||||||
Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders | |||||||||||||||
Net income | $ | 12,903 | $ | 13,729 | $ | 49,515 | $ | 48,574 | |||||||
Adjustments: | |||||||||||||||
Depreciation and amortization of real estate assets | 67,887 | 58,144 | 188,374 | 175,212 | |||||||||||
Loss (gain) on disposal of property, net | 19 | (53 | ) | 34 | (1,070 | ) | |||||||||
Adjustments related to unconsolidated joint ventures | 745 | 646 | 2,055 | 1,989 | |||||||||||
Nareit FFO attributable to stockholders and OP unit holders | $ | 81,554 | $ | 72,466 | $ | 239,978 | $ | 224,705 | |||||||
Calculation of Core FFO Attributable to Stockholders and OP Unit Holders | |||||||||||||||
Nareit FFO attributable to stockholders and OP unit holders | $ | 81,554 | $ | 72,466 | $ | 239,978 | $ | 224,705 | |||||||
Adjustments: | |||||||||||||||
Depreciation and amortization of corporate assets | 441 | 562 | 1,332 | 1,659 | |||||||||||
Impairment of investment in third parties | — | 3,000 | — | 3,000 | |||||||||||
Transaction and acquisition expenses | 1,181 | 580 | 3,501 | 3,179 | |||||||||||
Loss on extinguishment or modification of debt and other, net | 1,231 | 375 | 1,230 | 366 | |||||||||||
Amortization of unconsolidated joint venture basis differences | 3 | 4 | 8 | 12 | |||||||||||
Realized performance income(1) | — | — | — | (75 | ) | ||||||||||
Core FFO attributable to stockholders and OP unit holders | $ | 84,410 | $ | 76,987 | $ | 246,049 | $ | 232,846 | |||||||
Nareit FFO/Core FFO Attributable to Stockholders and OP Unit Holders per Diluted Share | |||||||||||||||
Weighted-average shares of common stock outstanding - diluted | 136,578 | 132,800 | 136,458 | 132,335 | |||||||||||
Nareit FFO attributable to stockholders and OP unit holders per share - diluted | $ | 0.60 | $ | 0.55 | $ | 1.76 | $ | 1.70 | |||||||
Core FFO attributable to stockholders and OP unit holders per share - diluted | $ | 0.62 | $ | 0.58 | $ | 1.80 | $ | 1.76 |
(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 September 30, | Nine Months Ended September 30, | Year Ended December 31, | |||||||||||||||||
2024 | 2023 | 2024 | 2023 | 2023 | |||||||||||||||
Calculation of EBITDAre | |||||||||||||||||||
Net income | $ | 12,903 | $ | 13,729 | $ | 49,515 | $ | 48,574 | $ | 63,762 | |||||||||
Adjustments: | |||||||||||||||||||
Depreciation and amortization | 68,328 | 58,706 | 189,706 | 176,871 | 236,443 | ||||||||||||||
Interest expense, net | 24,998 | 21,522 | 71,954 | 61,663 | 84,232 | ||||||||||||||
Loss (gain) on disposal of property, net | 19 | (53 | ) | 34 | (1,070 | ) | (1,110 | ) | |||||||||||
Federal, state, and local tax expense | 446 | 120 | 1,047 | 357 | 438 | ||||||||||||||
Adjustments related to unconsolidated joint ventures | 1,075 | 918 | 2,937 | 2,802 | 3,721 | ||||||||||||||
EBITDAre | $ | 107,769 | $ | 94,942 | $ | 315,193 | $ | 289,197 | $ | 387,486 | |||||||||
Calculation of Adjusted EBITDAre | |||||||||||||||||||
EBITDAre | $ | 107,769 | $ | 94,942 | $ | 315,193 | $ | 289,197 | $ | 387,486 | |||||||||
Adjustments: | |||||||||||||||||||
Impairment of investment in third parties | — | 3,000 | — | 3,000 | 3,000 | ||||||||||||||
Transaction and acquisition expenses | 1,181 | 580 | 3,501 | 3,179 | 5,675 | ||||||||||||||
Amortization of unconsolidated joint venture basis differences | 3 | 4 | 8 | 12 | 17 | ||||||||||||||
Realized performance income(1) | — | — | — | (75 | ) | (75 | ) | ||||||||||||
Adjusted EBITDAre | $ | 108,953 | $ | 98,526 | $ | 318,702 | $ | 295,313 | $ | 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 September 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 September 30, 2024 and December 31, 2023 (in thousands):
September 30, 2024 | December 31, 2023 | ||||||
Net debt: | |||||||
Total debt, excluding discounts, market adjustments, and deferred financing expenses | $ | 2,162,993 | $ | 2,011,093 | |||
Less: Cash and cash equivalents | 6,950 | 5,074 | |||||
Total net debt | $ | 2,156,043 | $ | 2,006,019 | |||
Enterprise value: | |||||||
Net debt | $ | 2,156,043 | $ | 2,006,019 | |||
Total equity market capitalization(1)(2) | 5,138,063 | 4,955,480 | |||||
Total enterprise value | $ | 7,294,106 | $ | 6,961,499 |
(1) Total equity market capitalization is calculated as diluted shares multiplied by the closing market price per share, which includes 136.3 million and 135.8 million diluted shares as of September 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 September 30, 2024 and December 31, 2023 (dollars in thousands):
September 30, 2024 | December 31, 2023 | ||||||
Net debt to Adjusted EBITDAre - annualized: | |||||||
Net debt | $ | 2,156,043 | $ | 2,006,019 | |||
Adjusted EBITDAre - annualized(1) | 419,492 | 396,103 | |||||
Net debt to Adjusted EBITDAre - annualized | 5.1x | 5.1x | |||||
Net debt to total enterprise value: | |||||||
Net debt | $ | 2,156,043 | $ | 2,006,019 | |||
Total enterprise value | 7,294,106 | 6,961,499 | |||||
Net debt to total enterprise value | 29.6 | % | 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 was PECO's Core FFO per share in Q3 2024?
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