Phillips Edison Completes $300M Shopping Center Buying Spree, Surpasses 2024 Guidance

Posted by Admin January 7, 2025 Shopping

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Phillips Edison & Company (PECO) has announced its transaction activity for Q4 2024, highlighting over $300 million in acquisitions throughout 2024. The company acquired 14 shopping centers and four land parcels, exceeding the midpoint of their upwardly revised guidance.

Q4 acquisitions included: Shops at Cross Creek (24,188 sq ft) in Houston, Harpers Station (229,060 sq ft) anchored by Fresh Thyme in Cincinnati, Lakeland Village Center (83,542 sq ft) in Houston, and Northpark Plaza (52,192 sq ft) anchored by King Soopers in Denver.

PECO targets an unlevered IRR of 9% for acquisitions and plans to drive value through occupancy increases, rent growth, and potential future development of ground-up outparcel retail spaces. No dispositions were reported for the quarter.

Positive

Completed $306 million in acquisitions, exceeding guidance targets

Acquired 14 shopping centers and 4 land parcels in 2024

Targeting 9% unlevered IRR on acquisitions

Strategic expansion in key markets (Houston, Cincinnati, Denver)

Multiple value-creation opportunities through occupancy increases and rent growth

Insights

PECO’s $306 million acquisition spree in 2024 represents a strategic expansion of their grocery-anchored retail portfolio, with particularly notable Q4 additions in key suburban markets. The company’s targeted unlevered IRR of 9% suggests a balanced approach between growth and risk management. The focus on grocery-anchored centers in suburban locations demonstrates a defensive positioning strategy, as these assets typically provide stable cash flows and resilience during economic downturns.

The acquisition of larger properties like Harpers Station (229,060 sq ft) alongside smaller tactical purchases shows portfolio diversification while maintaining the core grocery-anchor strategy. The emphasis on properties with occupancy upside and development potential through outparcel opportunities indicates multiple value-creation avenues beyond base rental income.

Geographic concentration in established markets like Houston, Cincinnati and Denver leverages existing operational infrastructure while providing market-specific growth opportunities. The absence of dispositions in Q4 signals confidence in current asset quality and suggests strong underlying property fundamentals.

The strategic importance of these acquisitions lies in their timing and market positioning. The grocery-anchored retail sector continues to demonstrate resilience against e-commerce disruption, with tenants like Fresh Thyme and King Soopers providing essential services that drive consistent foot traffic. The focus on suburban locations is particularly relevant given the post-pandemic demographic shifts favoring suburban communities.

The portfolio expansion exceeding guidance demonstrates PECO’s ability to identify and execute opportunities in a competitive market. The emphasis on properties with value-add potential through occupancy increases and outparcel development suggests a sophisticated approach to asset management that could drive higher returns compared to stabilized assets.

The $306 million deployment indicates strong capital markets access and supports the company’s growth trajectory. This expansion strengthens PECO’s position as a dominant player in the grocery-anchored retail space, potentially leading to increased operational efficiencies and enhanced negotiating power with national retailers.

01/07/2025 – 04:05 PM

CINCINNATI, Jan. 07, 2025 (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 announced transaction activity for the three months ended December 31, 2024.

Management Commentary
Jeff Edison, Chairman and Chief Executive Officer of PECO stated: “We are pleased to have completed over $300 million in acquisitions in 2024, which was above the midpoint of the upwardly revised guidance range PECO provided in October. We believe that PECO offers the best opportunity for external growth within the shopping center sector. These investments are core to PECO’s long-term growth plans. We continue to target an unlevered IRR of 9% for our acquisitions, and we remain focused on our disciplined approach to accretively grow our portfolio.”

Transaction Activity
Fourth quarter 2024 acquisitions included:

Shops at Cross Creek, a 24,188 square foot shopping center located in a Houston, Texas suburb;
Harpers Station, a 229,060 square foot shopping center anchored by Fresh Thyme located in a Cincinnati, Ohio suburb;
Lakeland Village Center, an 83,542 square foot shopping center located in a Houston, Texas suburb; and
Northpark Plaza, a 52,192 square foot shopping center anchored by King Soopers located in a Denver, Colorado suburb.

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.

During the twelve months ended December 31, 2024, the Company acquired 14 shopping centers and four land parcels for approximately $306 million. This includes the Company’s prorated share of assets purchased through joint ventures. This was above the midpoint of the upwardly revised guidance range PECO provided in its third quarter 2024 earnings press release.

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.

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