Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| So again, very, very healthy, very, very strong, so very important piece to our overall merchandising |
| The PECO team in 2023 continued our track record of delivering strong growth |
| 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 |
| PECO is positioned to continue to successfully grow as we look forward |
| 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 |
| We're confident that the PECO team will continue to deliver market-leading results in 2024 |
| Our differentiated and focused strategy and our talented team combined to create a market leader in the shopping center business |
| We accomplished a great deal in 2023 and have a lot to be proud of |
| In closing, we're extremely proud of what the PECO team accomplished in 2023 |
| That particular project is directly across the street from one of the largest -- one of the most productive jewels in the Chicago -- in Chicagoland, and we have a strong presence in Chicago with a good concentration, and this was an opportunity we saw where we could actually use the machine that we have built across the country, but particularly in this market, to get outside returns and very strong growth |
| PECO has always been a growth company and we are well-positioned to continue to grow |
| But we love those projects, and we think our team has been able to execute on them really well |
| So I'm encouraged by the activity we've seen so far, and we just recently acquired these in the fourth quarter, so, good |
| 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 |
| But when we look at H-E-B and Trader Joe's, the two -- we performed very strongly in our centers that have them as anchors, and we anticipate doing the same with those two acquisitions |
| Activity in the first quarter remains strong |
| So that you're match funding those two pieces as we grow and trying to take a longer-term growth perspective to the properties and matching them while at the same time keeping -- I mean, we're certainly a market-leading balance sheet today, and we would like to continue to have a strong balance sheet and find -- have the ability to grow faster if the opportunities arise |
| And as we mentioned earlier, we've closed on 14 assets in 2023, eight of those 14 assets had some sort of development or redevelopment capability, which is also why you see the 87% occupancy level, is that we're very intentional about wanting to continue to drive this portion of our business and we are getting really good returns, to Jeff's point, between 9 and 12 |
| So we've done a really good job with them |
| And I think we feel good about being able to continue that |
| But the returns are really good, and therefore, it's an important part of what we're trying to do with our centers and in terms of being able to find additional growth opportunities for them |
| We feel good about our locations that we have |
| We are confident in our ability to sustain growth in the near term despite interest expense headwinds |
| We anticipate long-term AFFO 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 |
| And so we feel very good about our locations and everything |
| PECO continues to be well-positioned to drive strong earnings growth and achieve our capital deployment goals in the years ahead |
| Statement |
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| Included in our guidance is the negative impact of normalizing our anticipated uncollectible reserves to historical levels of 60 basis points to 80 basis points of revenue |
| Last year was probably a difficult year on the acquisition side as we've had and probably bumpier than any previous year that we had |
| At the macroeconomic level, the year presented many challenges with high inflation, volatile and rising interest rates, and global conflict |
| However, they were below the fourth quarter of 2022 |
| If that were to change, that would be the biggest risk |
| In the near term, we are impacted by interest rate increases as all borrowers are, which is limiting our earnings growth |
| Our decreased guidance range is primarily due to PECO having a lower revolver balance at the end of the year, which was driven by our equity issuance in December combined with a lower projection for the SOFR curve |
| We're cautious about timing and how that will fall out |
| While not eliminated, these revisions do lessen the earnings headwind for interest expense, we estimate that higher interest rates could be a headwind of $0.04 to $0.10 for the year |
| And I mean, our healthy neighbor Bix has never been stronger |
| We could not have accomplished our 2023 results without the hard work of our PECO associates |
| I will say that going against that in the other direction is that, I spoke to the interest rate headwind that persists |
| These two have some bigger box -- two bigger box issues along with a lot of small-store opportunity |
| The impact of these demand factors are further amplified due to the limited new supply over the last tenures, and going forward, given the current economic returns do not justify new construction |
| This is sort of hand-to-hand combat of taking -- buying specific pieces of land, getting the zoning and the other entitlements, getting the store built and leased, and doing that in $1 million to $5 million chunks, it's a difficult process and that's why the stuff we're working on today is two, three years out and keeping the pipeline full and going |
| And I'm just curious if maybe you could help us understand the areas of uncertainty that there may be to same-store NOI or that if this past year and this year is a function of just a really strong environment |
| It's still a $0.07 headwind at the midpoint of what we're estimating in that |
| So, what would have the same-store occupancy been? The reported company-wide decrease quarter-over-quarter, I'm assuming there was some modest impact from buying assets that weren't fully occupied |
| But when you look at it, so rather than thinking about it's a headwind, but it really was replacing interest expense |
| Results were partially impacted by higher year-over-year interest expense of $4.3 million |
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