Phillips Edison & Company, Inc. (NASDAQ:PECO) management highlighted “strong 2025 results” and laid out expectations for continued mid-single-digit earnings growth in 2026 during the company’s fourth-quarter 2025 earnings call, citing resilient demand for grocery-anchored shopping centers, high occupancy, and an active acquisition and redevelopment pipeline.
2025 performance and 2026 outlook
Chairman and CEO Jeff Edison said the company delivered 2025 growth of 7.2% in Nareit FFO per share, 7% in Core FFO per share, and 3.8% same-center NOI growth. Edison added that PECO’s 2026 guidance implies mid-single-digit growth in both Nareit and core FFO per share, and he said management’s outlook remains unchanged despite broader market concerns about consumer health and the potential impact of tariffs on retailers.
Leasing results: occupancy, spreads, and retention
President Bob Myers said PECO continues to see “high demand for necessity-based retail,” with strong leasing activity and record-high inline occupancy. The company executed 1,026 leases totaling approximately 6 million square feet in 2025. Portfolio occupancy ended the year at 97.3% leased, with anchor occupancy at 98.7% and inline leased occupancy at a record 95.1%, up 30 basis points sequentially. The portfolio retention rate was 93% at year-end.
Myers reported comparable renewal rent spreads of 20% in the fourth quarter and comparable new leasing rent spreads of 34.3% for the quarter. He said leasing executed in 2025 (new and renewal) achieved average annual inline rent increases of 2.7%, supported by “embedded rent escalators” and demand for PECO’s centers.
On occupancy upside, management said it believes there is still room to improve. Edison said PECO sees “one or two points” of potential additional inline occupancy growth. Myers added that he believes anchor occupancy could move to roughly 99.1% to 99.3% and that inline occupancy could rise another 100 to 150 basis points, supported by an active pipeline and limited new retail supply.
Bad debt, tenant health monitoring, and option strategy
Myers said PECO actively monitors tenant health and expects bad debt in 2026 to be in line with 2025. He reported bad debt of approximately 78 basis points of revenue for 2025. In Q&A, Caulfield said fourth-quarter bad debt was “a little elevated” but still consistent with the company’s overall experience during the year, and he said trends in January and February were consistent with the bad debt assumptions embedded in guidance.
Management also addressed lease options. In response to a question about option-related impacts on leasing spreads, Myers said the company’s posture on new deals is to start with “no” on options, while acknowledging many tenants seek protection beyond a five- or 10-year primary term. When options are granted, he said PECO has been pushing for 20% increases during each option period plus about a 3% CAGR, though he described that as difficult to obtain.
Capital allocation: acquisitions, redevelopment, dispositions, and financing
Management reiterated its confidence in executing 2026 acquisitions guidance of $400 million to $500 million at PECO share. Edison said grocery-anchored shopping centers continue to draw investor attention and PECO remains a “disciplined buyer,” targeting an unlevered IRR of 9% for grocery-anchored acquisitions and above 10% for “everyday retail” centers. Myers said the acquisition pipeline includes a mix of core grocery-anchored centers, everyday retail centers, and joint venture opportunities.
Myers said PECO’s 2026 year-to-date acquisition activity totaled $77 million, including two core grocery-anchored centers, and that the company had visibility into roughly $150 million of assets awarded or under contract expected to close by the end of the first quarter or early in the second quarter.
On the competitive market for grocery-anchored assets, Edison said PECO is seeing more competition but also more product coming to market, which he believes can “balance itself out.” Myers added that in 2025 the company saw more than a 200% increase in new potential opportunities versus 2024, and in early 2026 the company has already seen a 70% increase in opportunities reviewed and a 67% increase in deals underwritten compared to the prior period he referenced.
On redevelopment and development, Myers said PECO has 20 projects under active construction with an estimated total investment of about $70 million and average estimated yields of 9% to 12%. He said 23 projects were stabilized in 2025, delivering over 400,000 square feet and approximately $6.8 million of incremental annual NOI.
Regarding capital deployment beyond acquisitions, Edison said redevelopment and “small” ground-up development remain part of the strategy, noting PECO expects to invest roughly $70 million in redevelopment and ground-up spending in 2026. He also said the company “always” evaluates share buybacks, but currently believes it can generate better returns through acquisitions and redevelopment than repurchasing stock.
PECO also discussed capital recycling. Caulfield said the company sold about $145 million of assets in 2025 and plans to sell $100 million to $200 million in 2026, reinvesting proceeds into assets with higher long-term IRRs. Myers described the disposition strategy as selling stabilized assets with lower unlevered return profiles and recycling into opportunities with unlevered returns of 9% to 10.5%. Caulfield confirmed that planned dispositions are included in the company’s guidance.
On liquidity and leverage, Caulfield said PECO ended 2025 with approximately $925 million of liquidity. Net debt to trailing 12-month annualized adjusted EBITDA was 5.2x at year-end. The company’s fixed-rate debt target is about 90%, and it finished 2025 at 85%, with Caulfield saying PECO anticipates addressing floating-rate exposure through financing activity in 2026 and working on maturities coming in January 2027.
In Q&A, management also discussed joint venture activity, saying it expects increased opportunity in 2026 and continued engagement with potential partners, particularly given the company’s view that its stock is not trading at desired levels. On the retail landscape, Edison said Amazon Fresh store closures were “not a surprise,” adding that PECO continues to monitor Amazon’s grocery delivery efforts and the broader competitive dynamics.
In closing remarks, Edison said PECO’s grocery-anchored, necessity-based portfolio provided “both growth and stability” in 2025 and that the company is carrying momentum into 2026 with a focus on acquisitions, redevelopment, and “attractive long-term IRRs.”
About Phillips Edison & Company, Inc. (NASDAQ:PECO)
Phillips Edison & Company, Inc is a publicly traded real estate investment trust (REIT) that specializes in the acquisition, ownership and operation of grocery-anchored, necessity-based shopping centers. The company’s investment strategy is centered on properties that benefit from everyday consumer demand, seeking to deliver stable cash flows through long-term, triple-net leases with national and regional tenants in the grocery, drugstore and essential retail sectors.
In addition to its core retail portfolio, Phillips Edison & Company provides integrated services covering property management, asset management, leasing, development and acquisition sourcing.
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