Phillips Edison & Company, Inc.

Good day and welcome to Phillips Edison and Company's fourth quarter and full year 2023 earnings conference call. Please note that this call is being recorded. I will now turn the conference over to Kimberly Green, head of investor relations. Kimberly, you may begin.

Thank you, operator. I'm joined on this call by our chairman and chief executive officer, Jeff Edison, our president, Bob Myers, our chief financial officer, John Caulfield, and our Managing Director of Investment Management, Devin Murphy. Once we conclude our prepared remarks, we will open the call to Q&A. After today's call, an archived version will be published on our website. As a reminder, today's discussion may contain forward-looking statements about the company's view 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'll 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 2023 continued our track record of delivering strong growth. Same Center NOI increased 4.2 percent, Nareed FFO increased 6.7 percent, and Core FFO increased 5.2 percent. The continued strong performance of our portfolio is driven by our high occupancy, strong leasing spreads, high retention, and the many advantages of the suburban markets where we operate our neighborhood shopping centers. The operating environment remains strong with a resilient consumer. Retailers want to be located in our centers where our grocers drive consistent and recurring foot traffic. PECO continues to benefit from several positive macroeconomic trends that create demand for space and tailwinds for NOI growth. The transaction market also improved for us in the latter part of 2023, allowing us to exceed the midpoint of our original guidance for acquisitions. The capital markets have improved. Interest rates have meaningfully changed from when we provided preliminary 2024 guidance during our investor day in early December. These factors allow us to increase our 2024 guidance. We accomplished a great deal in 2023, and I have a lot to be proud of. At the macroeconomic level, the year presented many challenges with high inflation, volatile and rising interest rates, and global conflict. However, the consistency of our growth is a testament to our differentiated and focused strategy of exclusively owning right-sized, grocery-anchored neighborhood shopping centers anchored by the number one or two grocer by sales in a market. Our results at the property level are driven by our integrated operating platform and our experienced and cycle-tested team. We could not have accomplished our 2023 results without the hard work of our PICO associates. I'd like to thank the entire PICO team for all of their efforts. PICO has always been a growth company, and we are well-positioned to continue to grow. The fourth quarter was no exception with 186 million in acquisitions. For the full year 2023, we acquired 11 shopping centers, two out parcels, and one land parcel for net acquisitions totaling $272 million at a weighted average cap rate of 6.6%. We are particularly excited to add two more Trader Joe's anchored centers and another HEB anchored center to our portfolio. The transaction market was tight in 2023, as the bid-ask spreads were very wide. Our team has proven its ability to navigate and successfully execute through these tough markets. This result is due to our scale, our ability to buy in many markets across the country, our reputation as a sophisticated all-cash buyer, and our strong relationships. We're confident in our ability to continue to acquire high-quality centers as the transaction market opens up further. While it's early, we continue to successfully find attractive acquisition opportunities. Activity in the first quarter remains strong. Our ability to predict acquisition volume for the rest of the year is less clear. As such, we are reaffirming our guidance for 200 to 300 million of net acquisitions. We have the capabilities and leverage capacity to acquire much more if attractive opportunities materialize. We continue to target an unlevered IRR of 9% or greater for our acquisitions. The acquisitions that we completed in the second half of 2023 underwrote to over 9.5% unlevered IRR. We will maintain our disciplined approach and focus on accretively growing our portfolio. We are hopeful that volumes will increase through the year. It is times like this in an evolving market that we have historically found some of our best opportunities. With a target market of 5,800 identified centers across the U.S., we have a long runway for external growth. Looking beyond 2024 and assuming a more stable interest rate environment and acquisition market, We believe our portfolio could deliver mid to high single-digit core FFO per share growth on a long-term basis. This will be driven by both internal and external growth. We are confident in our ability to sustain growth in the near term despite interest expense headwinds. We anticipate long-term AFFL growth will be higher than core FFO growth as high occupancy and strong retention should require lower capital expenditures to support growth in the future. Our low leverage gives us the financial capacity to meet our long-term growth objectives. We expect to generate approximately $100 million in free cash flow after dividend distributions in 2024. This level of free cash flow, combined with our low levered balance sheet, allows us to acquire $250 million a year while maintaining our targeted leverage ratio without raising any additional equity. PICO continues to be well-positioned to drive strong earnings growth and achieve our capital deployment goals in the years ahead. We remain committed to successfully executing our growth strategy, both internal and external. PICO generates more alpha with less beta, given our focused and differentiated strategy. As previously announced by Kroger and Albertsons, the estimated closing date for the proposed merger was recently pushed back. We do remain cautiously optimistic about the impact of this merger on PECO. We continue to believe it is ultimately a positive for PECO, for our centers, and for the communities that our centers serve. While the market still gives the merger a low probability of occurring, should it close and 413 stores are sold to CNS, we believe the impact on PECO is a net positive. Our Albertson stores will be operated by Kroger, which reinvests regularly in their stores and produces higher sales volumes. If the merger does not occur, our Albertsons Anchored Centers will continue the strong performance that they have produced to date. With that, I'll now turn the call over to our new president, Bob Myers, to provide more color on the operating environment. Bob?