Moody’s Upgrades Phillips Edison & Company’s Rating Outlook to ‘Positive’ from ‘Stable’
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The upgrade of Phillips Edison & Company's outlook by Moody's from 'Stable' to 'Positive' is a significant indicator of the company's financial health and operational stability. Such a revision typically reflects an agency's confidence in a company's future performance and its ability to meet financial commitments. The affirmation of the 'Baa3' Issuer Credit Rating suggests a moderate credit risk, which is relevant for investors considering the risk-return profile of the company's debt instruments.
From a market research perspective, the emphasis on PECO's high-quality portfolio of grocery-anchored open-air neighborhood and community shopping centers is crucial. The retail real estate sector has faced challenges due to the rise of e-commerce, but grocery-anchored centers tend to be more resilient, as they provide essential services that are less prone to online competition. The portfolio lease rates and tenant retention figures cited, which are indicative of operational strength, are particularly important for potential investors and current shareholders to consider.
The positive outlook revision by Moody's, accompanied by moderate leverage metrics and sound fixed charge coverage, paints a favorable picture of PECO's financial prudence and liquidity management. For investors, these factors are critical as they suggest the company is well-positioned to manage its debt and financial obligations, even in a slowing macroeconomic environment. The reference to good liquidity is also reassuring, as it implies that PECO has sufficient resources to cover short-term liabilities, which can be a buffer against market volatility.
Investors should also take note of the consistency in ratings and outlook between Moody's and S&P Global Ratings, which affirmed a 'BBB-' Issuer Credit Rating earlier. Such consensus between major rating agencies can often strengthen investor confidence in the company's financial stability.
The resilience of PECO's operating cash flows is a critical factor for long-term investment considerations in the real estate sector. The high proportion of revenue derived from grocery-anchored shopping centers, which historically exhibit stable demand, is a buffer against economic downturns. The strong tenant retention and high lease rates mentioned by Moody's are indicative of the company's competitive advantage within the retail real estate market.
However, investors should also consider the potential risks associated with a heavy reliance on a single type of property, as shifts in consumer behavior or unforeseen events affecting the grocery sector could have a disproportionate impact on PECO's performance. Nonetheless, the positive rating outlook suggests that such risks are currently well-managed and do not outweigh the company's strengths.
CINCINNATI, March 11, 2024 (GLOBE NEWSWIRE) -- Phillips Edison & Company, Inc. (Nasdaq: PECO) (“PECO”), one of the nation’s largest owners and operators of grocery-anchored neighborhood shopping centers, today announced that Moody's Ratings ("Moody's") revised its rating outlook for PECO to ‘Positive’ from ‘Stable’ and affirmed the Company’s ratings, including the ‘Baa3’ Issuer Credit Rating.
In its public announcement, Moody’s stated: “PECO’s ratings reflect its high-quality portfolio of open-air neighborhood and community shopping centers, the resilient operating cash flows generated by its grocery-anchored centers, moderate leverage metrics, sound fixed charge coverage and good liquidity.”
In addition, Moody’s stated: “Moody’s expects PECO to continue reporting good operating performance over the next few quarters despite the slowing macroeconomic environment because of its portfolio mix. The high proportion of grocery-anchored shopping centers,
As previously announced, S&P Global Ratings revised in January 2024 its rating outlook for PECO to ‘Positive’ from ‘Stable’ and affirmed the Company’s ratings, including the ‘BBB-’ Issuer Credit Rating.
Connect with PECO
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About Phillips Edison & Company
Phillips Edison & Company, Inc. (“PECO”) is one of the nation’s largest owners and operators of omni-channel grocery-anchored 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 December 31, 2023, PECO managed 301 shopping centers, including 281 wholly-owned centers comprising 32.2 million square feet across 31 states and 20 shopping centers owned in one institutional joint venture. PECO is exclusively 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. 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 acquisitions, acquisition strategy and objectives and potential benefits from such acquisitions and (c) statements about the Company’s Unlevered IRR. 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
Media
Cherilyn Megill, Chief Marketing Officer
(801) 415-4373, cmegill@phillipsedison.com
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