Phillips Edison raises 2025 FFO guidance and plans $100M–$200M dispositions while expanding unanchored retail strategy

Earnings Call Insights: Phillips Edison & Company (PECO) Q3 2025

MANAGEMENT VIEW

* Jeff Edison, Co-Founder, Chairman & CEO, emphasized increased guidance for NAREIT and core FFO per share, stating "The midpoints of our increased full-year 2025 NAREIT and core FFO per share guidance represent a 6.8% growth and a 6.6% growth, respectively." Edison highlighted PECO’s high ownership in grocery-anchored centers, with 70% of ABR from necessity-based goods and services, and noted $376 million in year-to-date gross acquisitions at PECO’s share. He added, "We remain committed to our unlevered return targets, and we remain confident about our ability to deliver on our full-year acquisition guidance."
* Robert Myers, President, reported record-high comparable renewal rent spreads of 23.2% and stated that "portfolio occupancy remained high and ended the quarter at 97.6% leased." He detailed that PECO had 22 projects under active construction with a total estimated investment of $75.9 million.
* John Caulfield, CFO, Executive VP & Treasurer, stated, "Third quarter NAREIT FFO increased to $89.3 million or $0.64 per diluted share, which reflects year-over-year per share growth of 6.7%." Caulfield also noted, "Our net debt to trailing 12-month annualized adjusted EBITDA was 5.3x as of September 30, 2025."

OUTLOOK

* PECO reaffirmed its 2025 guidance for same-center NOI growth, targeting "solid full-year growth of 3.35% at the midpoint." Caulfield explained, "Our increased guidance for 2025 NAREIT FFO per share reflects a 6.8% increase over 2024 at the midpoint, and our increased guidance for 2025 core FFO per share represents 6.6% year-over-year growth at the midpoint."
* The company plans to sell $50 million to $100 million of assets in 2025 and expects to increase dispositions to $100 million to $200 million in 2026, with more details to be shared in December.

FINANCIAL RESULTS

* Third quarter NAREIT FFO was $89.3 million or $0.64 per diluted share, and core FFO was $90.6 million or $0.65 per diluted share. Both represented year-over-year per share growth, echoing a trend of steady expansion.
* Portfolio occupancy reached 97.6%, with anchor occupancy at 99.2% and same-store in-line occupancy at 95%. Myers reported, "Leasing deals we executed during the third quarter, both new and renewal, achieved average annual rent bumps of 2.6%."
* PECO’s liquidity stood at approximately $977 million, with no meaningful maturities until 2027.

Q&A

* Andrew Reale, BofA Securities, questioned the timing for acquiring development land and current acquisition volume. Myers responded with details on a new 34-acre site in Ocala, Florida and described "about a 10.5% unlevered return" for the project. Edison added confidence in meeting the acquisition range, while Myers emphasized "we've acquired 18 assets this year for $376 million, and we do have deals that have been awarded and under contract to close before year-end."
* Caitlin Burrows, Goldman Sachs, raised questions on leverage and dispositions. Edison replied, "We want to be in that 5.5 or below range debt-to-EBITDA on a long-term basis." Caulfield affirmed, "We believe that recycling will be beneficial to our earnings per share over time."
* Ravi Vaidya, Mizuho, asked about redevelopment and bad debt. Myers projected $50 million to $60 million a year in redevelopment, and Caulfield indicated that "70 to 80 basis points in the range that we have is pretty reasonable" for bad debt.
* Ronald Kamdem, Morgan Stanley, explored occupancy upside and unanchored centers. Myers saw "another 125 to 150 basis points of in-line occupancy," and PECO highlighted ongoing success with their unanchored retail strategy.
* Additional questions covered selectivity in acquisitions, competition, grocer trends, funding sources, and cap rates. Management consistently reiterated a disciplined, selective approach and confidence in internal and external growth drivers.

SENTIMENT ANALYSIS

* Analysts focused on capital allocation, acquisition selectivity, and the shift towards unanchored centers, with a tone that was neutral to slightly positive. Questions were probing, particularly on funding and market competition.
* Management maintained a confident, upbeat tone in prepared remarks and during Q&A. Edison frequently framed PECO as "operating from a position of strength and stability" and described the company as "the most aggressive operator in the shopping center space."
* Compared to the previous quarter, both management and analysts maintained a similarly constructive but disciplined outlook, with minimal shifts in tone.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for FFO per share was raised from the previous quarter’s 6.3%–6% range to 6.8%–6.6% for NAREIT and core FFO, respectively.
* Gross acquisitions increased from $287 million year-to-date in Q2 to $376 million in Q3. The project pipeline also grew, with more active development and an expanding disposition target for next year.
* Analysts continued to focus on acquisition discipline, capital structure, and NOI growth, while management’s confidence and strategic direction remained consistent.
* PECO’s tone shifted towards highlighting unanchored retail as a complementary growth driver, with greater attention to portfolio recycling in the current quarter.

RISKS AND CONCERNS

* Management highlighted broader market concerns, including tariffs and U.S. economic stability, but asserted that "bad debt remains well within our guidance range."
* Potential risks from discretionary goods were mitigated by the company’s focus on necessity-based retail.
* Analyst concerns centered on leverage, acquisition selectivity, redevelopment pipeline scale, and cap rate trends. Caulfield indicated readiness to adapt, noting "we have diverse sources of capital that we can use to grow and match fund our investment activity."

FINAL TAKEAWAY

In summarizing the quarter, Phillips Edison’s management underscored increased FFO guidance, robust acquisition activity, and a strategic focus on expanding both grocery-anchored and unanchored retail centers. The company reiterated its commitment to disciplined capital allocation, portfolio recycling, and leveraging its operational strengths to drive sustainable growth, with further updates on long-term plans and 2026 guidance anticipated at the December business update.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/peco/earnings/transcripts]

MORE ON PHILLIPS EDISON

* Phillips Edison & Company, Inc. (PECO) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4833247-phillips-edison-and-company-inc-peco-q3-2025-earnings-call-transcript]
* Phillips Edison & Company, Inc. 2025 Q3 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4833202-phillips-edison-and-company-inc-2025-q3-results-earnings-call-presentation]
* September 2025 PECO GROW Update for Financial Advisors and Retail Investors [https://seekingalpha.com/article/4825608-september-2025-peco-grow-update-for-financial-advisors-and-retail-investors]
* Phillips Edison FFO of $0.65 in-line, revenue of $182.67M beats by $5.6M [https://seekingalpha.com/news/4507898-phillips-edison-ffo-of-0_65-in-line-revenue-of-182_67m-beats-by-5_6m]
* Seeking Alpha’s Quant Rating on Phillips Edison [https://seekingalpha.com/symbol/PECO/ratings/quant-ratings]