Phillips Edison & Company, Inc. (PECO) Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

NAREIT FFO: Increased to $92.9 million, or $0.67 per diluted share (+4.7% YoY).

Core FFO: Rose to $96.4 million, or $0.69 per diluted share (+6.2% YoY).

Same-Center NOI: Grew by 3.5%.

Occupancy Rates:

Total leased portfolio: 97.1%

Leased anchor occupancy: 98.4%

Leased inline occupancy: 95%

Comparable Renewal Rent Spreads: 21.2%

Comparable New Rent Spreads: 36.2%

Bad Debt: Lower than expected at 60 basis points of revenue; expected to align with 2025's 78 basis points.

2Strategic Updates and Business Highlights

Continued strong demand for necessity-based retail, with 74% of rents derived from this category.

Active development pipeline with 19 projects under construction, totaling an estimated investment of $74 million, expected yields between 9% and 12%.

Year-to-date acquisition activity reached $185 million, including grocery-anchored and everyday retail centers.

The company is focused on disciplined capital allocation, including potential asset sales and joint ventures to optimize growth funding.

3Forward Guidance and Outlook

Full-year 2026 guidance for NAREIT FFO per share increased by 5.9% over 2025, and core FFO per share guidance increased by 5.8%.

Same-center NOI growth guidance maintained at 3% to 4%.

Anticipates continued strong operating environment and solid consumer demand, with a long-term growth target of mid to high single-digit core FFO per share growth.

4Bad News, Challenges, or Points of Concern

The macroeconomic environment remains volatile, with uncertainties around interest rates, global trade, and geopolitical conflicts.

Concerns about potential impacts on discretionary spending from consumers, though necessity-based retailers are currently performing well.

Increased competition for acquisitions, with a noted spread between private and public market valuations, which could affect future capital raising strategies.

5Notable Q&A Insights

Retailer Conversations: Management noted strong demand from both necessity-based and discretionary retailers, with no signs of slowing in leasing activity.

Transaction Environment: There is a significant supply of products in the market, with a noted increase in competition among buyers.

Leasing Strategies: Management is focused on optimizing lease terms with inline tenants and exploring opportunities to renegotiate terms with larger box retailers.

Health Ratio: Inline tenant health ratios are being monitored, with potential to gradually increase from 10% to 13% over time, depending on retailer performance.

Capital Allocation: Management is considering adjustments to capital deployment strategies based on market conditions, with a focus on maintaining a strong balance sheet. Overall, PECO reported strong Q1 results, increased guidance for the year, and remains optimistic about its positioning in the necessity-based retail sector, despite some macroeconomic uncertainties.