Summary of PECO Q3 2025 Earnings Call

1Key Financial Results and Metrics

NAREIT FFO: Increased to $89.3 million, or $0.64 per diluted share, reflecting a year-over-year growth of 6.7%.

Core FFO: Rose to $90.6 million, or $0.65 per diluted share, a year-over-year increase of 4.8%.

Occupancy Rates: Portfolio occupancy remained high at 97.6%, with anchor occupancy at 99.2% and same-store inline occupancy at 95%.

Leasing Activity: Neighbor retention was strong at 94%, with record-high renewal rent spreads of 23.2% and new leasing spreads at 24.5%.

Acquisitions: Year-to-date gross acquisitions reached $376 million, with an additional $96 million acquired post-quarter-end.

2Strategic Updates and Business Highlights

PECO has the highest ownership percentage of grocer-anchored shopping centers among peers, with 70% of ABR derived from necessity-based goods.

The company is expanding its development pipeline, including a recent acquisition of 34 acres in Ocala, Florida, for grocery-anchored retail development.

PECO is actively pursuing joint ventures, highlighted by the acquisition of The Village at Sand Hill in South Carolina.

The company is focused on recycling lower IRR properties into higher IRR assets to enhance earnings growth.

3Forward Guidance and Outlook

Increased Guidance: PECO raised its full-year 2025 NAREIT FFO and core FFO per share guidance, projecting growth of 6.8% and 6.6%, respectively.

Same-Center NOI Growth: Expected to be between 1-2% for 2025, with a long-term target of 3-4% annually.

Acquisition Plans: The company reaffirmed its acquisition guidance of $350 million to $450 million for 2025, with a focus on maintaining low leverage and strong cash flow.

4Bad News, Challenges, or Points of Concern

Economic Stability: The market is closely monitoring tariffs and U.S. economic conditions, which could impact consumer spending and retail performance.

Competitive Market: The acquisitions market remains competitive, requiring PECO to be more selective in its underwriting and pricing strategies.

Bad Debt Management: While bad debt remains within guidance, there is ongoing concern about potential future impacts on cash flow from tenant performance.

Occupancy Upside: Although occupancy rates are strong, there is a noted limit to further increases, with potential challenges in pushing rents without affecting retention rates.

5Notable Q&A Insights

Acquisition Strategy: Management emphasized a disciplined approach to acquisitions, focusing on quality over quantity and aiming for unlevered returns above 9%.

Leverage Considerations: PECO is open to increasing leverage if clear opportunities arise, with a long-term target of maintaining debt to EBITDA below 5.5 times.

Dispositions: Plans to sell $50 million to $100 million in assets in 2025, with a potential increase next year, focusing on recycling lower-growth assets for higher returns.

Grocery Sector Outlook: Management expressed confidence in the resilience of grocers, with positive long-term growth expectations despite current economic pressures.

Bad Debt Projections: Management believes current bad debt levels are manageable and consistent with historical performance, projecting similar trends into 2026. This summary encapsulates the key points from PECO's Q3 2025 earnings call, highlighting financial performance, strategic initiatives, and future outlook while addressing potential challenges and insights from the Q&A session.