Sydney Rome

Sydney Rome asked for clarification on how Phillips Edison & Company plans to bridge the funding for its $400 million-$500 million acquisition guide alongside higher interest expense, specifically detailing how much of the remaining funding comes from incremental debt versus free cash flow generation, considering the $100 million-$150 million disposition budget.

Answer

CFO John Caulfield explained that PECO expects to generate over $120 million in cash flow available after distributions, with approximately $70 million allocated to development and redevelopment. This, combined with proceeds from disposition activity, will fund growth. He stated that PECO would utilize incremental debt capital, potentially through one to two bond offerings or other debt offerings, depending on market pricing. He also highlighted over $900 million in liquidity available from the revolver and 1031 proceeds, which have already been invested in closed acquisitions, providing strong financial capacity.

Sydney Rome asked for clarification on how Phillips Edison & Company plans to bridge the funding for its $400 million-$500 million acquisition guide, considering higher interest expense and the $100 million-$150 million disposition budget, specifically regarding incremental debt versus free cash flow generation.

Answer

CFO John Caulfield explained that PECO expects over $120 million in free cash flow after distributions, with approximately $70 million allocated to development and redevelopment. The remaining funding will come from disposition proceeds and incremental debt capital, potentially through 1-2 bond offerings or other debt offerings, depending on market pricing. He highlighted over $900 million in available liquidity, including a revolver and 1031 proceeds, ensuring ample capacity.

Sydney Rome asked for expectations regarding rent spreads and whether they are anticipated to remain at current elevated levels.

Answer

Alan Roth, East Region President and Chief Operating Officer, expressed pride in the team's commitment to elevated rent spreads, gap spreads, and embedded rent steps. He highlighted that 85% of Q3 new shop leases included 3% or higher embedded rent steps, with 25% at 4% or higher, indicating a sustainable approach in a supply-constrained environment.

Sydney Rome asked for Regency's expectations regarding rent spreads, specifically if they anticipate current elevated percentages to continue.

Answer

Alan Roth, East Region President and COO, expressed pride in the team's commitment to maintaining elevated rent spreads, particularly gap spreads and embedded rent steps. He highlighted that 85% of Q3 new shop leases included 3% or higher embedded rent steps, with 25% at 4% or higher, indicating a focus on long-term sustainable growth in a supply-constrained environment.