Phillips Edison & Company, Inc.

Please stand by, we're about to begin. Good day, ladies and gentlemen. Welcome to Phillips Edison and Company's fourth quarter and full year 2022 earnings conference call. Please note that this call is being recorded. I would now like to turn the call over to Ms. Kimberly Green, head of investor relations. Please go ahead, ma'am.

Thank you, operator. I'm joined on this call by our chairman and chief executive officer, Jeff Edison, our president, Devin Murphy, and our chief financial officer, John Caulfield. Once we conclude our prepared remarks, we will open the call to Q&A. After today's call, an archived version will be published on our investor relations website. As a reminder, today's discussion may contain forward-looking statements about the company's views of future business and financial performance, including forward earnings guidance and future market conditions. These are based on management's current beliefs and expectations and are subject to various risks and uncertainties. as described in our SEC filing, specifically in our most recent Form 10-K and 10-Q. In our discussion today, we will reference certain non-GAAP financial measures. Information regarding our use of these measures and reconciliations of these measures to our GAAP results are available in our earnings press release and supplemental information packet, which have been posted to our website. Please note that we have also posted a presentation with additional information. Our caution on forward-looking statements also applies to these materials. Now I'd like to turn the call over to Jeff Edison, our Chief Executive Officer.

Jeff? Thank you, Kim, and thank you, everyone, for joining us today. The PICO team in 2022 delivered another year of strong growth with same-center NOI increasing by 4.5%. We continue to benefit from a number of positive macroeconomic trends that drive neighbor demand and support our growth, including hybrid work, migration to the Sun Belt, and population shifts that favor suburban markets. These demand factors are further amplified because limited new supply is being delivered to the market. We accomplished a great deal in 2022 and have a lot to be proud of. At the macroeconomic level, the year presented many challenges with record inflation, rising interest rates, and global conflict. However, The sustainability and consistency of our growth is a testament to our differentiated and focused strategy of exclusively owning grocery-anchored neighborhood shopping centers and the strength of our integrated and experienced operating platform. As we assess our business today, we're optimistic about the health of our neighbors and the strength and diversity of our neighbor mix. Our team in 2022 delivered record highs in occupancy of 97.4%, and combined leasing spreads of 18.1%. Our development activity provides attractive, risk-adjusted returns on investment and sustainable and meaningful contributions to our same center NOI growth. Our acquisitions are performing very well and our pipeline continues to grow. We closed on an asset in January with more under contract and in negotiation. We observed the market power shifting to the buyer and with our platform, experience, and capital, This should position us well to capture additional opportunities. Our centers are located in markets that are growing and have a strong competitive advantage with our grocery anchors. We have grown our cash flows and dividend distributions. We have a great balance sheet, low leverage, and flexibility to be both patient and opportunistic. We could not have accomplished these results without the hard work of our PICO associates. I'd like to thank the PICO team for all of their efforts. As we look ahead to 2023, we remain focused on delivering long-term growth. Our grocery-anchored neighborhood centers continue to benefit from structural and macroeconomic trends that create strong tailwinds and drive strong neighbor demand. These trends include population shifts from the suburban to suburban markets, the increase in hybrid work, the renewed importance of physical locations in last-mile delivery, wage growth and low unemployment, and low supply and lack of new construction. The resiliency of our neighbors combined with the aforementioned tailwinds position HECO well for all economic environments due to the following, our grocery anchored necessity based neighbor mix, our right size format, our well positioned locations in growing markets, our record high occupancy and continued strong neighbor demand, our strong credit neighbors and diversified mix, the lack of exposure to distressed retailers, our balance sheet, and our talented and cycle-tested team. When we consider our pricing power, created from continued retailer demand and high occupancy, combined with these aforementioned tailwinds and the resilient necessity-based focus of our neighbors, we believe our growth strategy generates more alpha with less beta. While John will provide details of 2023 guidance later, I'd like to spend a few minutes walking you through the components of our long-term growth. We believe our portfolio can deliver organic, same-store NOI growth of 3% to 4% on a long-term basis. The components of this growth include continued increases in occupancy, which will contribute 50 to 100 basis points, rental growth, which will contribute 100 to 125 basis points through new and renewal leasing spreads, and contractual rent increases, which will add 75 to 100 basis points, and redevelopment and development activity, which will add 75 to 125 basis points. This gets us to our 3 to 4 percent long-term growth. Beyond the strong internal growth, we remain focused on accretively growing our shopping center portfolio. These investments are core to PICO's long-term external growth strategy, and we continue to be well-positioned to capitalize on opportunities as they arise. We are conservatively guiding to $200 million to $300 million in net acquisitions this year, with the capabilities and the leverage capacity to acquire more if attractive opportunities materialize. We previously increased our targeted return for new acquisitions to an unlevered IRR of 9% or above. We plan to participate in the market when we can achieve this return objective while exercising the same diligence we've always exercised. We are finding those opportunities today. Therefore, with our combined internal and external growth drivers, we believe PICO can deliver mid to high single-digit FFO for share growth on a long-term basis. I'd now like to provide a quick update on the proposed Kroger and Albertsons merger from PECO's perspective. We continue to believe that the merger is positive for PECO and for our centers and for the communities that our centers serve. We have 33 stores with an overlapping brand within three miles that could potentially be impacted. These stores have average store sales of $35 million. or $620 per square foot. This compares to PICO's average of 642 per square foot. These are all productive grocery locations with strong sales and health ratios. These centers are also vital parts of their communities. We believe all 33 locations will remain productive grocery locations regardless of the ultimate outcome of the merger. This merger process will take time to unfold. but we remain positive on the impact it will have on the assets that we own. I'll now turn the call over to Devin to provide more color on the operating environment.