PECO — Phillips Edison & Company, Inc.

Summary of Phillips Edison & Company, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• NAREIT FFO: Increased to $92.9 million, or $0.67 per diluted share (up 4.7% year-over-year).
• Core FFO: Increased to $96.4 million, or $0.69 per diluted share (up 6.2% year-over-year).
• Same-Center NOI: Grew by 3.5%.
• Leased Portfolio Occupancy: Remained high at 97.1%, with anchor occupancy at 98.4% and inline occupancy at 95%.
• Comparable Renewal Rent Spreads: Strong at 21.2%, with new rent spreads at 36.2%.
• Bad Debt: Lower than expected at around 60 basis points of revenue, with expectations for 2026 to align with 2025’s 78 basis points.

2. Strategic Updates and Business Highlights:

• Continued strong demand for necessity-based retail, with 74% of rents derived from these categories.
• Active construction on 19 projects with an estimated investment of $74 million, targeting yields between 9% and 12%.
• Year-to-date acquisition activity totaled $185 million, with an additional $150 million in the pipeline.
• Focus on disciplined capital allocation and efficient funding strategies, including public markets and joint ventures.
• Emphasis on enhancing the development pipeline and pursuing accretive acquisitions.

3. Forward Guidance and Outlook:

• Full-year 2026 guidance for NAREIT FFO per share reflects a 5.9% increase over 2025, with core FFO per share guidance indicating a 5.8% increase.
• Same-center NOI growth guidance maintained at 3% to 4%.
• Long-term growth targets remain unchanged, with expectations for mid to high single-digit annual earnings growth.

4. Bad News, Challenges, or Points of Concern:

• The macroeconomic environment remains uncertain, with volatility in interest rates and global trade dynamics.
• The company is closely monitoring the gap between private and public market valuations, which could impact acquisition strategies.
• A slight decline in retention rates to 88% due to a significant tenant vacating, although adjusted retention would be 92.4% without this factor.

5. Notable Q&A Insights:

• Management noted strong demand from both necessity-based and discretionary retailers, with no signs of slowing down.
• The competitive landscape for acquisitions remains robust, with a notable increase in the volume of available products.
• Discussions around the potential for increased leverage in lease negotiations with larger tenants, particularly regarding rent step-ups and option periods.
• The company is actively pursuing opportunities in everyday retail, which may yield higher returns compared to traditional grocery-anchored properties.
• Management expressed confidence in the health of their tenant base and the overall operational environment, despite potential macroeconomic headwinds.

Overall, Phillips Edison & Company, Inc. reported strong quarterly results and maintained an optimistic outlook, supported by a resilient retail environment and strategic growth initiatives, while remaining cautious of external economic factors.