Phillips Edison & Company Reports Second Quarter 2024 Results and Reaffirms Full Year Earnings Guidance


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 $15.3 million, or $0.12 per diluted share, and $32.9 million, or $0.27 per diluted share, respectively.

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 to $2.41 per diluted share and $2.37 to $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% to 4.25%
  • 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 of 97.8%
  • 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-high 95.1%
  • Executed portfolio comparable new leases at a rent spread of 34.4% and inline comparable new leases at a rent spread of 31.9% 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 of 19.7% during the quarter
  • As previously announced, completed a public debt offering of $350 million aggregate principal amount of 5.750% senior notes due in 2034, and 91.4% 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 2.8%, Nareit FFO increased 4.1% and Core FFO increased 3.7%. The continued strength of our operating performance is attributable to our differentiated and focused strategy of owning right-sized, grocery-anchored neighborhood shopping centers anchored by the #1 or #2 grocer by sales in a market, the PECO team’s ability to drive results at the property level and the many advantages of the suburban markets where we operate our centers. Based on the continued strong operating environment and health of our Neighbors, we are pleased to reaffirm our full year 2024 earnings guidance for Nareit and Core FFO per share, which represents year-over-year growth of 6.0% and 3.0% at the midpoints, respectively. In addition, we reaffirmed our full year 2024 earnings guidance for same-center NOI, which represents year-over-year growth of 3.75% at the midpoint.”

Financial Results for the Second Quarter and Six Months Ended June 30, 2024

Net Income

Second quarter 2024 net income attributable to stockholders totaled $15.3 million, or $0.12 per diluted share, compared to net income of $14.5 million, or $0.12 per diluted share, during the second quarter of 2023.

For the six months ended June 30, 2024, net income attributable to stockholders totaled $32.9 million, or $0.27 per diluted share, compared to net income of $31.1 million, or $0.26 per diluted share, for the same period in 2023.

Nareit FFO

Second quarter 2024 funds from operations attributable to stockholders and operating partnership (“OP”) unit holders as defined by Nareit (“Nareit FFO”) increased 3.3% to $78.4 million, or $0.57 per diluted share, compared to $75.9 million, or $0.58 per diluted share, during the second quarter of 2023.

For the six months ended June 30, 2024, Nareit FFO increased 4.1% to $158.4 million, or $1.16 per diluted share, compared to $152.2 million, or $1.15 per diluted share, during the same period a year ago.

Core FFO

Second quarter 2024 core funds from operations attributable to stockholders and OP unit holders (“Core FFO”) increased 2.9% to $80.0 million, or $0.59 per diluted share, compared to $77.7 million, or $0.59 per diluted share, during the second quarter of 2023.

For the six months ended June 30, 2024, Core FFO increased 3.7% to $161.6 million, or $1.18 per diluted share, compared to $155.9 million, or $1.18 per diluted share, for the same period in 2023.

Same-Center NOI

Second quarter 2024 same-center net operating income (“NOI”) increased 1.9% to $105.6 million, compared to $103.6 million during the second quarter of 2023.

For the six months ended June 30, 2024, same-center NOI increased 2.8% to $212.3 million, compared to $206.5 million during the same period a year ago.

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 97.5% as of June 30, 2024, compared to 97.8% as of June 30, 2023. Same-center leased portfolio occupancy was 97.8% as of June 30, 2024, compared to 97.9% as of June 30, 2023.

Leased anchor occupancy was 98.8% as of June 30, 2024, compared to 99.4% as of June 30, 2023. Leased inline occupancy increased 30 basis points to a record-high 95.1% as of June 30, 2024, compared to 94.8% as of June 30, 2023. Same-center leased anchor occupancy was 99.1% as of June 30, 2024, compared to 99.4% as of June 30, 2023. Same-center leased inline occupancy increased 20 basis points to 95.1% as of June 30, 2024, compared to 94.9% as of June 30, 2023.

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 34.4% for new leases, 20.5% for renewal leases and 24.5% combined.

Comparable rent spreads during the six months ended June 30, 2024 were 31.9% for new leases, 18.7% for renewal leases and 22.3% combined.

Transaction Activity

During the second quarter of 2024, the Company acquired two shopping centers and one land parcel for a total of $59.5 million. The Company expects to drive value in these assets through occupancy increases and rent growth, as well as potential future development of ground-up outparcel retail spaces. There were no dispositions in the quarter. The second quarter 2024 acquisitions consisted 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 $115.4 million.

Subsequent to quarter end, the Company acquired one property and one land parcel for a total of $11.3 million. Acquisitions completed subsequent to quarter end consisted 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 $300 million in equity and owned 80% by CNSREIT and 20% by PECO. The joint venture will focus on acquiring open-air, grocery-anchored shopping centers and will leverage PECO’s deep expertise.

Balance Sheet Highlights

As of June 30, 2024, the Company had approximately $743 million of total liquidity, comprised of $10.9 million of cash, cash equivalents and restricted cash, plus $731.6 million of borrowing capacity available on its $800 million revolving credit facility.

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 4.2% and a weighted-average maturity of 4.9 years when including all extension options.

As previously announced, PECO completed in May 2024 a public debt offering of $350 million aggregate principal amount of 5.750% senior notes due 2034. The notes were priced at 98.576% of the principal amount and will mature July 2034. As of June 30, 2024, 91.4% of the Company’s total debt was fixed-rate debt.

2024 Guidance

PECO has updated its 2024 earnings guidance, as summarized in the table below, which is based upon the Company’s current view of existing market conditions and assumptions for the year ending December 31, 2024. The following statements are forward-looking and actual results could differ materially depending on market conditions and the factors set forth under "Forward-Looking Statements" below.

(in thousands, except per share amounts)Q2 YTD Updated Full Year
2024 Guidance
 Previous Full Year
2024 Guidance
Net income per share$0.27 $0.49 - $0.54 $0.51 - $0.55
Nareit FFO per share$1.16 $2.34 - $2.41 $2.34 - $2.41
Core FFO per share$1.18 $2.37 - $2.45 $2.37 - $2.45
Same-Center NOI growth2.8% 3.25% - 4.25% 3.25% - 4.25%
Portfolio Activity:     
Acquisitions, net$115,352 $200,000 - $300,000 $200,000 - $300,000
Other:     
Interest expense, net$46,956 $98,000 - $106,000 $98,000 - $106,000
G&A expense$22,946 $45,000 - $49,000 $45,000 - $49,000
Non-cash revenue items(1)$7,428 $14,500 - $18,500 $14,500 - $18,500
Adjustments for collectibility$2,424 $4,000 - 5,000 $4,000 - 5,000

(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, $0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at June 30, 2024 and December 31, 2023     
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 122,408 and 122,024 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively 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 $32.71 and $36.48 as of June 30, 2024 and December 31, 2023, respectively.
(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