Item 2. Properties
ITEM 2. PROPERTIES
REAL ESTATE INVESTMENTS —The following table details information for our wholly-owned properties and those owned through our unconsolidated joint venture as of December 31, 2022, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):
Ownership Percentage Number of Properties ABR GLA
Wholly-owned properties 100% 271 $ 435,712 31,093
GRP I 14% 20 30,542 2,209
In May 2022, we sold the final property in our NRP joint venture.
The following table presents information regarding the geographic location of our properties, including wholly-owned and the prorated portion of those owned through our unconsolidated joint venture, by ABR as of December 31, 2022. For additional portfolio information, refer to “Schedule III - Real Estate Assets and Accumulated Depreciation” (dollars and square feet in thousands):
State ABR (1)
% ABR ABR/Leased Square Foot GLA (2)
% GLA % Leased Number of Properties
Florida $ 52,878 12.0 % $ 14.12 3,899 12.4 % 96.0 % 49
California 48,079 10.9 % 20.55 2,412 7.7 % 97.0 % 25
Georgia 37,499 8.5 % 13.20 2,862 9.1 % 99.2 % 29
Texas 35,283 8.0 % 17.03 2,108 6.7 % 98.3 % 18
Ohio 25,488 5.8 % 10.81 2,408 7.7 % 97.9 % 20
Colorado 24,563 5.6 % 17.80 1,408 4.5 % 98.0 % 12
Illinois 24,208 5.5 % 15.52 1,637 5.2 % 95.3 % 14
Virginia 21,980 5.0 % 16.80 1,363 4.3 % 96.0 % 13
Minnesota 17,971 4.1 % 14.65 1,265 4.0 % 96.9 % 12
Massachusetts 16,259 3.7 % 14.72 1,146 3.7 % 96.4 % 9
Nevada 13,124 3.0 % 21.93 623 2.0 % 96.0 % 5
Pennsylvania 12,068 2.7 % 12.27 1,001 3.2 % 98.3 % 6
Wisconsin 11,966 2.7 % 11.40 1,061 3.4 % 99.0 % 9
Arizona 10,376 2.4 % 14.39 736 2.3 % 98.0 % 6
Maryland 9,459 2.2 % 20.70 467 1.5 % 97.7 % 4
South Carolina 9,329 2.1 % 11.19 867 2.8 % 96.2 % 8
North Carolina 8,184 1.9 % 12.49 659 2.1 % 99.5 % 10
Indiana 6,981 1.6 % 8.71 832 2.7 % 96.2 % 5
Michigan 6,903 1.6 % 9.58 723 2.3 % 99.7 % 5
Kentucky 6,511 1.5 % 10.67 616 2.0 % 99.1 % 4
Tennessee 5,896 1.3 % 8.61 692 2.2 % 99.0 % 4
Connecticut 5,825 1.3 % 14.12 421 1.3 % 98.0 % 4
New Mexico 5,591 1.3 % 14.52 404 1.3 % 95.3 % 3
Oregon 4,724 1.1 % 15.48 314 1.0 % 97.2 % 4
Kansas 4,503 1.0 % 12.21 376 1.2 % 98.0 % 3
New Jersey 4,152 0.9 % 24.50 169 0.5 % 100.0 % 1
Washington 2,741 0.6 % 16.16 173 0.6 % 98.1 % 2
Iowa 2,623 0.6 % 7.67 360 1.1 % 95.2 % 3
Missouri 2,577 0.6 % 11.91 222 0.7 % 97.6 % 2
New York 1,796 0.4 % 11.29 163 0.5 % 97.3 % 1
Utah 450 0.1 % 30.90 15 — % 100.0 % 1
Total $ 439,987 100.0 % $ 14.38 31,402 100.0 % 97.4 % 291
(1) We calculate ABR as monthly contractual base rent as of December 31, 2022, multiplied by twelve months.
(2) Gross leasable area (“GLA”) is defined as the total occupied and unoccupied square footage of a building that is available for Neighbors to lease.
PHILLIPS EDISON & COMPANY
DECEMBER 31, 2022 FORM 10-K
23
LEASE EXPIRATIONS —The following chart shows the aggregate scheduled lease expirations, excluding our Neighbors who are occupying space on a temporary basis, after December 31, 2022 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture:
Our ability to create rental rate growth generally depends on our leverage during new and renewal lease negotiations with prospective and existing Neighbors, which typically occurs when occupancy at our centers is high or during periods of economic growth and recovery. Conversely, we may experience rental rate decline when occupancy at our centers is low or during periods of economic recession, as the leverage during new and renewal lease negotiations may shift to prospective and existing Neighbors.
For our wholly-owned properties and those owned through our unconsolidated joint venture, during the 2023 fiscal year, we have a total of 595 leases expiring, representing 2.3 million square feet of GLA. For our wholly-owned properties, during the 2023 fiscal year, we have 547 leases expiring, representing 2.2 million square feet of GLA. For our wholly-owned properties, the expiring leases have an ABR of $16.38 per square foot. While we cannot predict what rental rates we will achieve in 2023 as we renew or replace these expiring leases, the comparable rent spread of new leases signed during 2022 was 32.2%, and the comparable rent spread for lease renewals executed in 2022 was 14.6%. Further, during the fiscal year 2022, our occupancy improved 1.1% to 97.4%, indicating continued demand for leasing spaces at our centers.
See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview - Leasing Activity” of this filing on Form 10-K for further discussion of leasing activity.
PHILLIPS EDISON & COMPANY
DECEMBER 31, 2022 FORM 10-K
24
PORTFOLIO TENANCY —We define national Neighbors as those Neighbors that operate in at least three states. Regional Neighbors are defined as those Neighbors that have at least three locations in fewer than three states. The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture, by Neighbor type as of December 31, 2022:
The following charts present the composition of our portfolio by Neighbor industry as of December 31, 2022:
PHILLIPS EDISON & COMPANY
DECEMBER 31, 2022 FORM 10-K
25
NECESSITY-BASED GOODS AND SERVICES —We define “necessity-based goods and services” as goods and services that are indispensable, necessary, or common for day-to-day living, or that tend to be inelastic (i.e., those for which the demand does not change based on a consumer’s income level). We estimate that approximately 71% of our ABR, including the pro rata portion attributable to properties owned through our unconsolidated joint venture, is generated from Neighbors providing necessity-based goods and services.
TOP TWENTY NEIGHBORS —The following table presents our top 20 Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture, as of December 31, 2022 (dollars and square feet in thousands):
Neighbor (1)
ABR % of ABR Leased
Square Feet % of Leased Square Feet Number of Locations (2)
Kroger $ 27,830 6.3 % 3,411 11.2 % 62
Publix 24,125 5.5 % 2,321 7.6 % 57
Albertsons 18,232 4.1 % 1,709 5.6 % 31
Ahold Delhaize 17,738 4.0 % 1,249 4.1 % 23
Walmart 8,971 2.0 % 1,770 5.8 % 13
Giant Eagle 7,362 1.7 % 759 2.5 % 10
Sprouts Farmers Market 6,494 1.5 % 421 1.4 % 14
TJX Companies 6,030 1.4 % 516 1.7 % 18
Raley's 4,592 1.1 % 289 0.9 % 5
Dollar Tree 3,621 0.8 % 343 1.1 % 36
SUPERVALU 3,244 0.7 % 336 1.1 % 5
Lowe's 2,470 0.6 % 369 1.2 % 4
Subway Group 2,415 0.5 % 93 0.3 % 65
Starbucks Corporation 2,369 0.5 % 53 0.2 % 32
Anytime Fitness, Inc. 2,308 0.5 % 140 0.5 % 29
Food 4 Less (PAQ) 2,305 0.5 % 118 0.4 % 2
Kohl's Corporation 2,241 0.5 % 365 1.2 % 4
Office Depot 2,237 0.5 % 179 0.6 % 8
United Parcel Service 2,211 0.5 % 83 0.3 % 65
Save Mart 2,174 0.5 % 258 0.8 % 5
Total $ 148,969 33.7 % 14,782 48.5 % 488
(1) Neighbors are grouped by parent company and may represent multiple subsidiaries and banners.
(2) Number of locations excludes auxiliary leases with grocery anchors such as fuel stations, pharmacies, and liquor stores. Additionally, if a parent company has multiple subsidiaries or banners in a single shopping center, those subsidiaries are included as one location.