Phillips Edison & Company, Inc. Common Stock BofA NY Global Real Estate Conference 2026

John, our CFO, and Kim, our head of IR. In terms of opening remarks, they say it's great to live in interesting times. We don't need things to be this interesting because it's really trying to figure out what's going on. We're in one of the best operating environments we've been in. We saw a little run-up over the last 45 days, then all of a sudden it starts going back, and the operating market is as good as it's ever been in terms of leasing margins, leasing occupancy, all just very strong, like record kind of strong. Not just good, but really as good as they've been. The acquisition market, our volume is going to be as high as it's been, quite a bit higher, actually, than it's been any time since we've been public.

At numbers that we think are very consistent with what we've been targeting. You have 9% unlevered IRRs on what we're buying. We're buying in at about a 6.7 initial yield. So very strong dynamics there. You got great operating environment. You got a great acquisition market where we're seeing stuff. We're selling stuff at basically a 5.9 yield. So we're buying at a 6.7 and we're selling at a 5.9. We have a really strong ask and buy front on that side. Again, we've increased our disposition numbers as well at those kind of rates. If I woke up and I said, "This is as good of environment as you can get, but the market's not trading great." There are obviously a lot of explanations for that.

What we're focused on is continuing to do the things that we influence, which is put great numbers on the board, which I think we have and will continue to do throughout the year. The market will do what the market does. Over time, what we're committed to is growing our FFO per share mid to high single digits, paying a 3.5%+ dividend, and getting a 10% return for investors year in, year out in a hard asset, low leverage business. We think that's a good return. Our management team owns more of PECO than any other of our peers in terms of percentage of it that's owned by the team that's rep.

We have skin in the game, and we are going to keep skin in the game because we believe in this business, and we think that it is, particularly in environments where there is uncertainty, we have a lot less beta in what we do, but we are convinced that we got a really good alpha, and we are putting scores on the board that would say we got good alpha. That is our opening remarks, what we are feeling. As we said, we are going to keep taking advantage of what is a very strong market and growing the business.

The consumer is actually doing really well. It was two months ago, we were talking about the K and everything is going to be, the lower end of the market is not going to do well. Well, that is sort of gone.

Yeah Because the lower end is growing faster.

Our market is the top of the K anyway because if you look at our median household income of our centers, it is, whatever, 17%-18% higher than the median. So that is what we service, and that is what, we are in density and incomes that are above what Kroger is and Publix are, which are our two largest tenants. So we are doing well in that. This concept that the consumer is having trouble is one that, the credit card debt and all that, those are actually pretty healthy right now. You are hearing stories like, oh, the consumer is in trouble and having to But you are not seeing it. We are not seeing it.

One of the things that we look at really closely is our local neighbors, those are what would be called mom and pops, but they're really the true entrepreneurs, the people who are counting on that business as what they're going to pay their rent with and what they're going to pay for their house and that's what they live on. Every time when they renew a lease, they come back to us, and they have to make a decision, what are they going to do? They can walk from the deal if it's not profitable, or if they see the future is not profitable. They can extend for a year or 2 and just kind of see what happens, or they can extend their leases for long-term. They come at us negotiating in, and we keep very close look at that.

Today, that retailer is looking for longer term. They're renewing at 90% of their spaces. So you think about that means the person who knows the consumer the best, which you can have all the talking heads, you can have all the research you want. There's nobody who knows the consumer better than the entrepreneurial local retailer, because they actually know when somebody's husband or wife got laid off. They know why they're buying something and what's too expensive, what's not. That is their job. They're making the bet on a long-term basis. They want to be there. They're trying to tie up the space for as long as they can. That to me is probably, certainly one of the things we watch really closely, and encourages us that we're in a much better position than what you're kind of hearing about from their perception of the consumer.

Our stuff is right-sized grocer anchor shopping centers with small stores that provide necessity-based goods. My answer to you is based on that. There are a lot of people in the open air space who are doing more discretionary spending and that stuff. That is not where we spend our time. In that particular market, the necessity-based side, it is very strong. We are not seeing the consumer react in any sort of dramatic way. As a matter of fact, they are actually spending more. That would be, we think, a positive.