Phillips Edison PECO Q2 2025 Earnings Transcript

Core Insights - The company reported a 4.2% growth in Same Center Net Operating Income (NOI) for Q2 2025, leading to an increase in full-year guidance [2][11] - Core Funds From Operations (FFO) per share rose 8.5% to $0.64, while NAREIT FFO per diluted share increased 8.8% year-over-year to $0.62 [3][11] - Total portfolio occupancy reached 97.4%, with anchor occupancy at 98.9%, reflecting strong demand for grocery-anchored locations [3][29] Leasing and Retention - Comparable renewal rent spreads were 19.1%, and new leasing rent spreads reached 34.6%, indicating significant pricing power [4][28] - Neighbor retention rate was 94%, which minimizes downtime and capital expenditure for tenant improvements [4][32] Acquisition and Development - The company completed $133 million in acquisitions during Q2 2025, totaling $287 million year-to-date, with a full-year acquisition guidance of $350 million to $450 million [5][11] - There are 21 active development projects with estimated yields of 9%-12%, and nine projects have stabilized, contributing approximately $3.7 million in annual incremental NOI [5][10] Financial Position - As of Q2 2025, liquidity stood at $972 million, with a net debt to trailing twelve-month annualized adjusted EBITDAR ratio of 5.4 times [6][34] - 95% of total debt was fixed rate, with a weighted average interest rate of 4.4% and a maturity of 5.7 years [6][36] Guidance and Market Outlook - The company raised its guidance for same center NOI growth to 3.1%-3.6% for 2025, with NAREIT FFO per share growth expected at 6.3% at the midpoint [7][37] - Approximately 85% of neighbors are expected to experience limited impact from tariffs, with 70% of ABR attributed to necessity-based goods and services [8][20] Portfolio Characteristics - The three-mile trade area averages a population of 68,000 and a median household income of $92,000, which is 15% above the US median [8][30] - The top 10 "watch list" tenants represent only about 2% of ABR, indicating low concentration risk [9][31]