Phillips Edison & Company, Inc. Q4 Earnings Call Highlights

Core Insights - PECO reported strong demand for necessity-based retail, achieving record-high occupancy rates and strong leasing activity in 2025 [1][4] - The company anticipates continued mid-single-digit growth in earnings for 2026, with specific guidance on net income and FFO growth [2][3][7] Leasing and Occupancy - In 2025, PECO executed 1,026 leases totaling approximately 6 million square feet, ending the year with a portfolio occupancy of 97.3%, anchor occupancy at 98.7%, and inline occupancy at a record 95.1% [1][6] - The company reported renewal rent spreads of 20% and new leasing rent spreads of 34.3% for the fourth quarter [7] Financial Guidance - CFO John Caulfield provided 2026 guidance of net income between $0.74 and $0.77 per share, with same-center NOI growth projected at 3% to 4% and Nareit FFO per share growth of 5.5% at the midpoint [2][7] - Management expects core FFO per share to grow by 5.4% year-over-year at the midpoint, without assuming any equity issuance [2][7] Capital Deployment and Strategy - PECO plans to prioritize acquisitions and redevelopment, with 2026 acquisition guidance set at $400 million to $500 million and redevelopment spending of approximately $70 million [5][12] - The company aims for an unlevered IRR of 9% for grocery-anchored acquisitions and above 10% for everyday retail centers [12] Market Conditions and Competitive Landscape - PECO is experiencing increased competition for grocery-anchored assets but also sees a rise in available opportunities, with a 200% increase in new potential opportunities in 2025 compared to 2024 [14] - Management believes there is still potential for occupancy growth, with expectations of inline occupancy rising by 100 to 150 basis points [8] Financial Health and Liquidity - PECO ended 2025 with approximately $925 million in liquidity and a net debt to adjusted EBITDA ratio of 5.2x [18] - The company sold about $145 million in assets in 2025 and plans to sell an additional $100 million to $200 million in 2026 to reinvest in higher-return opportunities [17] Overall Outlook - PECO's grocery-anchored, necessity-based portfolio is expected to provide both growth and stability moving into 2026, with a focus on acquisitions and redevelopment [20]