S&P Upgrades Phillips Edison & Company’s Rating Outlook to ‘Positive’ from ‘Stable’
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The revised rating outlook for Phillips Edison & Company by S&P Global Ratings to 'Positive' is indicative of the company's robust financial health and strategic positioning within the grocery-anchored shopping center niche. This sector is particularly resilient due to its focus on necessity-based goods and services, which tend to be less volatile and more recession-proof compared to other retail segments. The affirmation of the 'BBB-' Issuer Credit Rating underscores a baseline creditworthiness that can influence investor confidence and the company's cost of capital.
PECO's strategic shift to a lower long-term leverage target from 6.0x to 5.5x demonstrates a prudent financial management approach. This conservative leverage strategy, paired with a well-laddered debt maturity profile that defers significant maturities to November 2025, minimizes near-term refinancing risk and could provide a buffer against potential interest rate fluctuations. For investors, these factors may signal a stable investment with managed risk exposure.
The positive outlook from S&P reflects a broader industry trend where grocery-anchored centers are becoming increasingly valuable. PECO's focus on investing in omnichannel grocery-anchored centers capitalizes on the evolving consumer behavior toward convenience and online grocery shopping. Having top-ranked grocers within their target markets not only drives consistent foot traffic but also ensures tenant stability and potentially higher rental income stability.
Furthermore, with approximately 71% of PECO's annualized base rent coming from necessity-based goods and services, the company is well-positioned to maintain occupancy rates and revenue streams even during economic downturns. This focus on necessity-based retail may serve as a hedge against the e-commerce disruption faced by other retail sectors, solidifying PECO's market position and potentially enhancing its long-term growth prospects.
CINCINNATI, Jan. 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 S&P Global Ratings (“S&P”) revised its rating outlook for PECO to ‘Positive’ from ‘Stable’ and affirmed the Company’s ratings, including the ‘BBB-’ Issuer Credit Rating.
In its public announcement, S&P stated: “Phillips Edison's solid operating results are a byproduct of its strategy to invest in omnichannel grocery-anchored centers and having the top or second-ranked grocer within target markets. Additionally, approximately
In addition, S&P stated: “The company further displayed its commitment to operating with a conservative balance sheet by revising its long-term leverage target to 5.5x from 6.0x. Its leverage profile is supported by its well-laddered debt maturity profile, with no significant maturities until November 2025. The company has been operating with leverage below that target, supported by solid operating performance and external growth funded in a relatively leverage-neutral manner. The positive outlook reflects our expectation for continued solid operating performance.”
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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 September 30, 2023, PECO managed 295 shopping centers, including 275 wholly-owned centers comprising 31.4 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 2022 Annual Report on Form 10-K, filed with the SEC on February 21, 2023, 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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