Phillips Edison & Company, Inc.

What they do

PECO owns, operates, and manages omni-channel grocery-anchored neighborhood shopping centers, primarily anchored by the #1 or #2 grocer tenants by sales in their trade areas. The company also runs a third-party investment management business providing property management and advisory services to three unconsolidated institutional joint ventures and one private fund (the Managed Funds). As of December 31, 2025, the managed portfolio of wholly-owned and joint-venture centers totaled approximately 36.7 million square feet across 31 states, and the portfolio was 97.3% leased.

Revenue drivers

• Rental income from wholly-owned shopping centers — Lease revenues from 297 wholly-owned grocery-anchored shopping centers are the majority of revenues; roughly 70% of ABR comes from tenants providing necessity-based goods and services.
• Unconsolidated joint ventures (GRP I, NRV, NGCF) — PECO holds 14% of Grocery Retail Partners I LLC (20 centers), 20% of Necessity Retail Venture LLC (4 centers), and 31.25% of Neighborhood Grocery Catalyst Fund LLC (3 centers), earning fees and sharing in results.
• Third-party investment management fees — PECO provides property management and advisory services to the Managed Funds, generating fee income separate from its owned real estate.
• Anchored and inline leasing activity — New and renewal leases drive occupancy and rent spreads; as of December 31, 2025, approximately 70% of ABR came from necessity-based goods and services tenants.

Recent performance

For the second quarter of 2026, net income attributable to stockholders was $41.1 million, or $0.33 per diluted share, versus $12.8 million, or $0.10 per diluted share, in the second quarter of 2025. Nareit FFO rose 9.0% to $93.7 million, or $0.67 per diluted share, and Core FFO rose 8.3% to $95.5 million, or $0.69 per diluted share. Same-center NOI increased 3.8% year-over-year, and the portfolio was 97.3% leased with record-high leased inline occupancy of 95.5%. Comparable new leases were executed at a 33.7% rent spread and comparable inline new leases at 32.2%, while renewal leases achieved a 21.2% spread; the company acquired six shopping centers and one outparcel for $152.4 million and sold $64.6 million in assets.

Strategy

PECO's stated strategy centers on its SOAR framework — Spreads, Occupancy, Advantages of the Market, and Retention — applied to grocery-anchored centers. It is complementing its core portfolio with everyday retail (unanchored) centers in the same trade areas, described as located in growing suburban markets with strong median household incomes. The company continues to pursue acquisitions, development, redevelopment, and portfolio recycling while maintaining balance sheet discipline. In the second quarter of 2026 it raised gross acquisitions guidance to a range of $500 million to $600 million. Management also uses its ATM program, issuing 2.0 million common shares at a gross weighted average price of $42.06 for $85.3 million of net proceeds during the quarter.

Risks

• Anchor tenant concentration and failure — Anchor Neighbors paying a significant portion of property rent could cease or downsize operations due to bankruptcy, insolvency, or lease default, triggering co-tenancy clauses and reducing rental income.
• Non-anchor tenant financial distress — A significant portion of revenue comes from non-anchor Neighbors that may have more limited financial resources and could default or close in an adverse economic climate.
• Dark anchor spaces — An anchor that goes dark while continuing to pay rent can diminish shopper traffic and impair sales for other Neighbors, with re-leasing requiring substantial capital or reconfiguration.
• Joint venture and managed fund exposure — PECO holds partial interests in three unconsolidated joint ventures and one private fund, so performance and fee income depend on partners and assets it does not wholly control.

Outlook

Management increased full-year 2026 guidance, with the increased midpoint of Nareit FFO per diluted share guidance representing 6.3% year-over-year growth, Core FFO per diluted share representing 6.2% growth, and same-center NOI representing 3.7% growth. Gross acquisitions guidance was raised to $500 million to $600 million. CEO Jeff Edison stated that PECO is well positioned for strong growth in 2027 and beyond.