Good day and welcome to Phillips Edison & Company's Third Quarter 2024 Earnings Call. Please note that this call is being recorded. I will now turn the call 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; President, Bob Myers; and 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 Once we conclude our prepared remarks, we will open the call to Q&A. After today's call, an archived version will be published on our website.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 filings, 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 on 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 PECO team delivered another solid quarter of growth with same center NOI increasing by 3.2%, Nareit FFO per share growth increased 9.1%, and Core FFO per share growth increased 6.9%. The ongoing strength of our performance is attributable to our differentiated and focused strategy. PECO owns right-sized, high-quality, grocery-anchored neighborhood shopping centers. These centers are anchored by the Number #1 or #2 grocer by sales in a market. Our results are generated at the property level. They are driven by our integrated operating platform and our exceptional, locally smart, and cycle-tested team. The entire PECO team continues to drive significant value at the property level. You can see that reflected in our sector leading operating metrics. The experience and talent on PECO's team is significant. We have experts in every aspect of the grocery-anchored real estate industry. We remain committed to successfully executing our growth strategy to deliver long-term value to our shareholders. Our high-quality portfolio anchored by top grocers in favorable suburban markets provides a long-term steady earnings growth profile. We believe PECO is well-positioned to continue to grow and provide market-leading returns. PECO has delivered on our core strategy for over 30 years. We have developed a seasoned team that has been together for a long time. Our team is highly engaged, highly focused, and deep. PECO is a growth company. We have consistently delivered on both internal and external growth. We are well positioned to take advantage of growth opportunities. We're acquiring high-quality centers with the capacity to buy more. As Bob will highlight in a moment, we are a best-in-class operator. In addition, we are prudent with our balance sheet management. We have strong liquidity and no meaningful maturities until 2027. We believe these factors will drive solid earnings growth in 2025 and beyond. Year-to-date, we acquired nine shopping centers and several land parcels for a total of $211 million. We continue to find attractive acquisition opportunities. Activity in the fourth quarter remains strong. Given the current environment, we are updating our acquisitions guidance to $275 million to $325 million of debt acquisitions for the year. We continue to have the capabilities and leverage capacity to acquire more as attractive opportunities materialize. Moving to the Kroger-Albertsons merger, the market still gives the merger a low probability of occurring. If the merger does not occur, our Albertsons anchored centers will continue the strong performance they have produced to-date. Should the merger close, our remaining Albertson stores would be operated by Kroger, which reinvest regularly in their stores and produces higher sales volumes on average. This would have a positive impact on our portfolio. I will now turn the call over to Bob to provide more color on the operating environment.

Thank you, Jeff. Good afternoon, everyone, and thank you for joining us. We have another quarter of strong operating results and leasing momentum. We continue to see high retailer demand with no current signs of slowing down. PECO's leasing team continues to convert retailer demand into high occupancy with higher rents at our centers. Portfolio occupancy remained high and ended the quarter at 97.8% leased, a sequential increase of 30 basis points. Anchor occupancy of 99.4% increased 60 basis points sequentially as we executed eight anchor leases. Inline occupancy ended the quarter at 95%. New neighbors added in the third quarter included quick-service restaurants such as Jersey Mike's, Dunkin' Donuts, and Tropical Smoothie, along with several med tail uses, health and beauty retailers, and other necessity-based goods and services. In terms of new lease activity, we continue to have success in driving higher rents. Comparable new rent spreads for the third quarter were 55%. Our inline new rent spreads remained strong at 28.3% in the quarter. As it relates to bad debt in the third quarter, we actively monitor the health of our neighbors. We are not concerned about bad debt in the near term, particularly given the strong retailer demand, and we don't have any meaningful concentrations. From an operations standpoint, we have always taken an aggressive stance to get spaces back. In today's environment, the PECO team is taking an even more aggressive stance on opportunities where we can get higher rent spreads and improve the merchandising at the center. According to Placer.ai, PECO's suburban markets offer retailers several advantages in today's environment. Chipotle, Chick-fil-A, Wingstop, and Jersey Mike's are some examples of retailers that have been focusing on suburban markets for expansion. National retailers continue to raise their long-term store targets in our markets because these locations have proven to deliver the same or better store-level economics as traditional locations. In addition, retailers are increasingly looking to open smaller-sized locations in spaces between 2,000 and 3,000 square feet. PECO's small shop average lease size has remained consistent at 2,300 square feet. For over 30 years, we have excelled in leasing this small shop format, and we continue to see strong demand for these spaces. We continue to capitalize on strong renewal demand and are making the most of the opportunity to improve lease language at renewal and drive rents higher. In the third quarter, we achieved a 19.8% increase in comparable renewal rent spreads. Our inline renewal spreads remained high at 19.6% in the quarter. These increases in spreads reflect the continued strength of the leasing and retention environment. We expect new and renewal spreads to continue to be strong throughout the balance of this year and into the foreseeable future. Our neighbor retention remained high at 92% while growing rents at attractive rates. Higher retention means less downtime and lower tenant improvement spend. In the third quarter, we spent only $0.73 per square foot on tenant improvements for renewals. We also remain successful at driving higher contractual rent increases. Our new and renewal inline leases executed in the quarter had average annual contractual rent bumps of 2% and 3% respectively, another important contributor to our long-term growth. The leasing spreads that we are achieving and the strength of our leasing pipeline are clear evidence of the continued high demand for space in our grocery-anchored neighborhood shopping centers. PECO's pricing power reflects the strength of our focused strategy and the quality of our portfolio. Today, we believe the consumer remains resilient. Our grocers continue to drive strong recurring foot traffic to our centers. Consumers continue to visit grocery stores 1.6 times per week. There are approximately 30,000 average trips per week to each PECO Center. This equates to nearly 500 million total trips to PECO Centers in total during the last 12 months. Strong foot traffic benefits inline neighbor sales and enhances our ability to drive rents higher. PECO's three-mile trade area demographics include an average population of 67,000 people and an average median household income of 87,000, which is 12% higher than the US median. These demographics are in-line with the store demographics of Kroger and Publix, which are PECO's top two neighbors. Our centers are situated in trade areas where our top grocers are profitable and our neighbors are successful. The necessity-based focus on our properties is important when demographics are considered. If you are comparing a Publix to an Apple store or high-end fashion, the demographics that each retailer needs to be successful are very different. 70% of our rent comes from necessity-based goods and services, and our demographics are very strong in supporting our neighbors. PECO continues to benefit from a number of positive macroeconomic trends that create strong tailwinds and drive robust neighbor demand. These trends include a resilient consumer, hybrid work, migration to the Sunbelt, population shifts that favor suburban neighborhoods, and the importance of physical locations and last-mile delivery. Leasing demand continues to be at historically high levels for our in-line spaces, as these macro tailwinds have retailers more focused on having stores in our centers. The impact of these demand factors is further amplified due to limited new supply over the last 10 years, and going forward, given that current economic returns do not justify new construction of shopping centers. In addition to our strong rental growth trends, we continue to expand our pipeline of ground-up outparcel development and repositioning projects. Year-to-date through the third quarter, we stabilized 10 projects and delivered over 274,000 square feet of space to our neighbors. These 10 projects add incremental NOI of approximately $4.2 million annually. They provide superior risk-adjusted returns and have a meaningful impact on our long-term NOI growth. We continue to expect to invest $40 million to $50 million annually in ground-up development and repositioning opportunities with weighted average cash on cash yields between 9% and 12%. This activity remains a great use of free cash flow and produces attractive returns with less risk. Our team continues to stay focused on growing this pipeline as returns are accretive to the portfolio. The overall demand environment, the stability of our centers, the strength of our grocers, the health of our in-line neighbors, and the capabilities of our team give us confidence in our ability to continue to deliver solid operating results. I will now turn the call over to John.

Thank you, Bob, and good morning and good afternoon everyone. I'll start by addressing third quarter results, then provide an update on the balance sheet and finally speak to our updated 2024 guidance. Third quarter 2024 NAREIT FFO increased 12.5% to $81.6 million or $0.60 per diluted share, driven by an increase in rental income from our strong property operations. This quarter was impacted by the write-off of approximately $1.2 million in deferred financing costs related to debt extinguished by our bond offerings this year, which is just under $0.01. Third quarter core FFO increased 9.6% to $84.4 million or $0.62 per diluted share, driven by increased revenue at our properties from higher occupancy levels and strong leasing spreads, partially offset by the higher interest expense. Our same-center NOI growth in the quarter was 3.2%, driven by rental income growth of 4.5% year-over-year, partially offset by lower tenant recovery income and higher property-level expenses. Turning to the balance sheet. We have approximately $752 million of liquidity to support our acquisition plans and no meaningful maturities until 2027. Our net debt to adjusted EBITDA remained at 5.1 times. Our debt had a weighted average interest rate of 4.4% and a weighted average maturity of six years when including all extension options. In September, PECO completed a public debt offering of $350 million of 4.95% senior notes due 2035. Proceeds were used to replenish the liquidity on our line and repay term loans that were due in 2025 and 2026. As of September 30, 2024, 93% of PECO's total debt was fixed rate which is near our target range of 90%. We expect PECO's fixed rate to be at approximately 90% at year-end. PECO continues to have one of the best balance sheets in the sector, which has us well-positioned for continued external growth. Turning to our guidance for 2024. We have updated the net income per share range to $0.48 to $0.50. We've updated our guidance for NAREIT FFO to a range of $2.35 to $2.39 per share. This reflects 5.3% growth over 2023 at the midpoint. The updated range was primarily due to the write-off of deferred financing costs related to debt extinguished in connection with our two 10-year bond offerings this year. We've updated our guidance for core FFO to a range of $2.40 to $2.44, increasing the midpoint by $0.01. This reflects 3.4% growth over 2023 at the midpoint. In addition, we have reaffirmed the midpoint and narrowed our range for same-center NOI growth, given the continued strong operating environment. Included in our guidance is the negative impact of uncollectible reserves. We are affirming the range previously provided, given the continued strong health of our neighbors. However, we will likely be at the high end of the range for the year. We currently have several acquisitions in our pipeline either under contract or in contract negotiation. This activity allows us to increase our acquisition guidance for the year, as Jeff mentioned earlier. Looking beyond 2024, we believe our internal and external growth opportunities give us a long-term growth outlook in the mid-to-high single digits for core FFO per share. We expect a comparable or faster growth rate for AFFO because there should be less tenant improvement dollars invested, as we continue to increase same-center occupancy. I would like to mention that PECO will be hosting a virtual business update on Thursday, December 19. We plan to provide an update on the business and our preliminary outlook for 2025. Please save the date, and additional details will be shared by our Investor Relations team in the coming weeks. With that, we will open the line for questions.

Thank you. Your first question comes from the line of Jeff Spector with Bank of America. Please go ahead.

Great. Good afternoon. Thank you. I guess if I could focus my question, follow-up on the transaction market. First, I guess can you talk about the acquisitions that you made during the quarter, the strategy I see the occupancy is lower than your occupancy.

Sure, Jeff. Thank you for your question. I'll address the first part regarding the market, and then Bob can discuss the specific properties we acquired. The market is similar to what we mentioned after the second quarter, with an increase in both available products and buyers. We have identified some excellent opportunities in the market that we are excited about, and we believe this trend will continue as retail gains a more favorable perception among investors. New buyers are entering the market, and we expect this trend to persist. Additionally, the increase in available products is helping us discover great opportunities for acquisition. Bob, would you like to share some details about the assets we purchased?

Yes, absolutely. Thanks, Jeff. So we acquired six properties in the third quarter, and three of those properties were anchored by King Soopers, Pete's, and Big Y. You mentioned the occupancy being a little bit lower. I think the Big Y deal was 91%, and then Pete's was 96.6% and then Colorado Springs at 90%. What I liked about the quality of the assets, not only are they solving for above a 9% unlevered return, they also provided some development opportunity. And I think when I think about the property, Ridgeview marketplace, there is a pad out there that we are already working with several national retailers for either a ground lease scenario or a build-to-suit. Last year, as an example, in the fourth quarter, we acquired eight assets that had a blended occupancy of around 84%. So as we are building out the portfolio, part of our acquisition strategy is to find some great properties that are anchored by the #1 or #2 grocer and continue to give us upside and strong NOI growth year-over-year. We also acquired three outparcels, which are adjacent to our Publix locations where our national account team has done a great job of identifying potential new retailers for those sites. So always looking for some of those development opportunities as well.

Thank you, that's very helpful. Jeff addressed my previous question, so I would like to shift my follow-up to the restaurant category. I recognize there are various subcategories within restaurants. You mentioned several restaurant retailers joining the portfolio, but it seems there are mixed results for restaurants in different regions of the country. Could you share your thoughts on restaurants and your perspective on the different categories? Thank you.

I'll provide some insights, and Bob can add his thoughts as well. The restaurant industry clearly has several segments. Our observations indicate that formal sit-down restaurants have experienced more volatility compared to quick-service options, which is reflected in our portfolio. Most of our restaurants are quick-service, and they have shown strong performance across different cycles. We're also noticing a robust demand for new locations from quick-service restaurants, with no indications of a slowdown in that area. Bob, do you have anything to add?

The only thing I’d add is I was down in Atlanta at the Southeast conference meeting with retailers. And I mean the Starbucks, the Chipotles, the Wingstop’s, they're all very, very busy. Dave's Hot Chicken, Swig, First Watch, CAVA, we just have a long list of fast-casual concepts that are looking to secure sites in '25, '26, and '27. So I'm not seeing a slowdown in the fast-casual aspect. It is the biggest part of our leasing pipeline as I look out. So it is still very strong, so I'm encouraged by the activity that exists and what we will continue to see.

Great. Thank you.

Sure. Thanks for the question, Caitlin. Bad debt was 86 basis points year-to-date. Keep in mind, we are only discussing a few hundred thousand dollars here. As Bob mentioned, we are finding opportunities to enhance the merchandising mix of our centers with 55% new leasing spreads and continued strong retailer demand. We are not concerned about the environment. We have been more proactive in taking over those spaces throughout the year, and our re-leasing of those spaces has been very strong, which is evident when you look at our total occupancy on a lease basis, which has remained very stable. The economics have slightly adjusted, which is what you are observing in this process. Ultimately, we are pleased to reaffirm our same-store guidance and look for opportunities to drive further rents, which will benefit us in 2025 and beyond.

And in terms of that benefit, it's just that then you can get back the space and complete new leases, yes?

Yes. And so, I mean, ultimately, we do like our renewal business with 19% renewal spreads and no downtime. But overall, we think this is a great opportunity to improve the merchandising and to drive the rent spreads at the properties.

Got it. Makes sense. And then just a quick one on the full-year same-store guide, it implies a big pickup. I know you had previously talked about recoveries; timing could drive that. But just wondering, is that it? Is there anything else? And kind of how much visibility do you have on that to reaffirm the same-store midpoint?

Yes, sure. I'll take that one as well. I mean, ultimately, we do believe that there will be an acceleration here in the fourth quarter, part of it will be a little bit of a comp to last year. But I mean, I think one of the benefits of Phillips Edison is the overall consistency to our business. And so even though quarter-to-quarter, the numbers move into fourth quarter, we are expecting to be outsized. Ultimately, the 3% to 4% that we guide to and this year, the 3.5% to 4%, is it consistency? I wouldn't say there is anything that's too unusual in that other than the timing of recoveries. I think the biggest piece this year to last year was that our spend was different last year than it was this year in terms of that cadence. When we look to next year, which we are not going to talk about yet, hopefully it either matches or smoother.

Thanks.

Thanks, Caitlin.

Hi there. This is Ravi Vaidya on the line for Haendel. Hope you guys are doing well? Can you offer some additional color on the 2025 guide? The savings with interest expense and G&A appear to provide about a $0.04 lift and the same-store midpoint was maintained. So what are the offsets that resulted in only a $0.01 increase? Is it higher bad debt expense or watch list? Or just what are some of the moving parts there?

John, you want to take that?

Sure. Hi Ravi, I'm going to say I think you said 2025 guide, I think you mean the '24 guide because that was the component. So the '25 guide is a plug note; we are planning to talk about that in our December virtual update that I hope you'll join for. With regards to the 2024 guidance, we are very pleased to be able to raise guidance this quarter. When comparing the components to the original guidance, there is about $0.02 less in lease buyout income than we expected because now we anticipate that those neighbors will actually stay longer than originally anticipated. So we raised guidance for acquisitions but they're later in the year and don't have a significant impact on core FFO. But that acquisition timing does come through as lower interest costs in our guidance. We did not issue equity in the quarter, which is, I think, something that people have asked about. Net-net, after these different pieces, we are comfortable raising guidance by $0.01, which we believe will collect solid growth at the midpoint.

Got it. That's helpful. And yes, I was talking about '24 guide. I will be sure to join in for the seminar later. Just one more here. Can you discuss how you are planning on funding acquisitions? I believe that you said that above $250 million in acquisition, you would likely need to raise additional equity. Are you planning on doing so or are you comfortable with letting leverage tick up a bit from the currently?

We currently do not have any equity plans for expansion, but we would consider that if the pricing is right for significant acquisitions. For this year, we believe we can achieve our targets with minimal effect on the balance sheet. We are optimistic about next year, which may require a more thorough examination of how we would raise the necessary capital.

Thanks good morning. Since you announced the JV with Cohen & Steers, have you seen an increase in, I guess the number or maybe a variety of deals that is, I guess being put before you?

Dori, thanks for the question. We've been the largest buyer of shopping centers now for 10 years, and we see everything that comes on to the market. So I wouldn't say we are seeing more than we saw before because we saw these all before. There was a time where we just would not buy them. We wouldn't look at them because they didn't fit into the box. Our box is a little bit bigger with Cohen & Steers. And so we are actually able to look more seriously at more properties because of the JV. But I wouldn't say that we are seeing a lot more deals than we did before because we had seen it before and had discarded those. Does that make sense Dori?

Yeah, it makes sense. If you had to choose high end or low end of your net acquisitions guide for where you're most likely to end the year at this point, which side would you lean into?

We're optimistic, Dori. We have some great activity and promising signs for the fourth quarter, so we feel generally positive about the acquisition market.

Hi, good afternoon. Could you please talk a little bit about your in-line occupancy? It looks like it went down a little bit this quarter. I don't know whether that's kind of just from some of the planned take-back of space that you guys have been doing, or could you just kind of talk about that a little bit?

Sure. I don't know Bob, do you want to take the occupancy? Just talk a little bit about where we are. And I think you are talking about the in-line occupancy, right or total?

Yes. I'll touch on that, Jeff. So no I appreciate the question. Our overall occupancy increased from 97.5% to 97.8% for the quarter. And as you mentioned, we have seen nice movement in our anchor occupancy that moved from 98.8% to 99.4%. Our inline occupancy went from 95.1% to 95%. So again, not much movement in the inline and I do believe the 95% is certainly leading our space consistent with our 92% retention demand that we are seeing from our retailers. I'm not seeing any cracks. I also believe that we can move that inline occupancy number another 100 basis points to 150 basis points over the next 24 months. So there is still nice upside in that number. But I'm very confident and comfortable with our current occupancy numbers. They are very strong.

Hi, thanks. Good afternoon. Jeff, it sounds like the acquisition pipeline is pretty active. Do you think 2025 could be a more active year than 2024, just given what you're seeing and where your current cost of capital is? And then are some of the acquisitions you are eyeing in the pipeline in the new fund or do you see the majority of the activity right now on balance sheet?

We are optimistic about the acquisition market this year, and we believe it could strengthen next year due to an increase in available product. Our outlook indicates that there will be more buyers and a more stable market overall. However, interest rates may introduce some volatility regarding the market's strength. Generally, from our observations today, we expect strong activity, and we have positioned ourselves with a solid balance sheet to seize opportunities if they arise.

Yes, I was just wondering with what you are seeing in the pipeline today, is some of that sort of earmarked for the new fund with Cohen & Steers? Or is the majority of that or a good amount of that on balance sheet at this point?

Yes, the vast majority will be on the balance sheet. We are hopeful that we will have some strong opportunities with Cohen & Steers as well. This year, we have purchased one property with Cohen & Steers and invested over $200 million on the balance sheet. We anticipate that this trend will likely continue.

Hi, everyone. Thank you for taking my question. I would like to discuss the acquisition market further. If I look at your current trading status, you're at a premium to both the consensus NAV and our NAV, with an implied cap rate of 6.5%. Could you share what cap rates you are considering for acquisitions? Please also discuss the cap rates related to the recently closed deals and whether you see them under upward or downward pressure, or if they seem to be relatively stable from your perspective.

Thank you for the question, Floris. We would appreciate your assistance in identifying properties that we could acquire, as our net asset value is significantly better than 6.5% and should reflect that in pricing. However, I want to clarify that we do not prioritize cap rates; our focus is on achieving a strong return for the company. We aim for an unlevered internal rate of return above 9% for our grocer-anchored shopping centers, which can be achieved from various starting cap rates. This quarter, we've identified some excellent opportunities that we believe will exceed 9%, although they come with cap rates that might be slightly more aggressive than we prefer. We are actively exploring these growth opportunities while closely evaluating the returns in relation to the properties' risk profiles. Currently, we aren't observing significant changes in cap rates, though there are some isolated instances of aggressive pricing for certain properties. Generally, the core market is experiencing increased interest from those looking to invest in grocer-anchored shopping centers, which hasn't been seen recently.

Hi, just two quick ones because a lot has been asked. Just going back to sort of the same-store NOI. I remember back in December, you talked about pricing power and being able to put sort of rent escalators or more favorable lease contracts. Just as we sit here today, just any sort of causative commentary on the rent escalators and any other favorable lease contracts that you guys have been able to get that we may not see just in the re-leasing spreads?

Bob, you want to take that one?

Yes. Thanks for the question. In terms of lease escalators, I will start with the renewals. So on the renewal side, our renewal spread for the quarter was 19.8%. And we are getting annual escalators on top of that, right around 3%. As I have visibility out on our renewal piece, you're going to continue to see annual escalators between 3% and 4% on top of a very healthy first-year increase as well. On new deals, we're getting increases, annual increases between 2% and 3%, so I'm encouraged by that number as well. Our strong retention has allowed us flexibility and, I would say, our lease negotiations around removing restrictions, exclusives, caps, those sort of things that strengthen our ability to not only drive renewal spreads and new leasing spreads but also enhance our merchandising ability at the property. So that's what we are seeing.

Hello everyone. And we talk about supply, new supply not penciling in general. And I find interesting, we see doing these pad developments and acquiring more pad developments, and I think all of them are adjacent to your centers. So related to that, two questions is, one, are you seeing more of these type of small-scale developments in your markets as a means to capitalize on the strong retailer demand? And two, can you share a little more color on them in terms of the rents you achieve in these projects and why you think they make economic sense but larger centers don't?

Sure, thank you for the question. We have always had an active out-lot development program at PECO. We were a Walgreens developer for a long time and remain very engaged in that business. It is a demand-driven sector where retailers seek visibility and access, such as drive-thru options. They prefer to be located on main roads, and their urgency for these spaces varies over time. This creates great opportunities for us, allowing us to transform parking lots and vacant land into smaller pad developments. The interesting aspect is how much retailers are willing to pay in rent for these locations. There is a select group of retailers, like Starbucks and Chipotle, who will pay enough to make ground-up development feasible. These retailers are aggressive in their expansion and see value in having drive-thrus and visibility, justifying the additional cost of new construction. We would love to pursue more of these developments because they are very profitable for us with solid returns. However, challenges arise because, even with higher rents, it's difficult to make the numbers work both from a rent and cost perspective. Paying two to three times the rent of inline spaces has to be really valuable to retailers for them to consider those locations, and finding sites that can justify those rents is challenging. This highlights how long it may take before significant new retail development occurs. Does that answer your question?

Yes, it does. Thank you. And I have a second one if I can. That is, so from a broader perspective, employment is still low, retail sales have shown resilience overall. However, one concerning trend has been the rise in credit card delinquencies. And so delinquencies have increased materially to levels that I think we have not seen since, I don't know, 2010 more or less. So what do you think about this trend? And do you think there are any direct implications for your business?

Yes, that's a great question. Historically, we've observed that our retail shoppers' demand is significantly influenced by employment levels. Fluctuations in credit card usage and delinquencies occur, but when individuals feel secure enough to transition from one job to another, they tend to keep spending. This scenario may indicate a shift in consumer behavior, especially as it has been a leading predictor of when customers start to reduce their spending. It's something that the industry is closely monitoring. Typically, these trends emerge alongside employment challenges, which we're beginning to see now. However, the major employment issues currently seem to be affecting higher income brackets, which is distinct from where many credit card problems are arising. Does that clarify things? Thank you everyone for joining the call today. In summary, during the third quarter, the PECO team continued to perform strongly. We achieved solid inline lease occupancy and outstanding renewal rent spreads. We recorded high new rent spreads, among the top in our peer group, and maintained high retention rates in our sector. We are on track to acquire between $275 million and $325 million in net acquisitions for the year, marking an increase. Our target unlevered IRRs are consistently over 9% for our acquisitions. We completed two 10-year bond offerings totaling $700 million, which extends our maturities. We continue to maintain one of the lowest leveraged balance sheets in the shopping center sector. Despite the challenges from interest expenses that many are facing, we delivered robust earnings growth. We believe our unique strategy, high-quality portfolio, and talented team position us as a market leader in the shopping center industry. We are confident that the PECO team will keep achieving exceptional results for the rest of the year. PECO's experienced inline management team owns 8% of the company, demonstrating our commitment to driving shareholder value. At PECO, we foster a culture where our leadership team and associates think and act like owners in every decision. Looking beyond 2024, PECO is well-positioned for continued growth. We believe we offer our investors greater alpha and less beta. We look forward to sharing updates on our strategy and long-term growth drivers during our December event. On behalf of the management team, we want to express our gratitude to our shareholders, PECO associates, and neighbors for their continued support. Thank you for your time today, and have a great weekend.

This concludes today's conference call, and you may now disconnect.