Phillips Edison & Company, Inc. NASDAQ: PECO reported first-quarter 2026 results that management described as another period of “strong results,” supported by leasing strength across its grocery-anchored and necessity-based shopping center portfolio. The company also raised its full-year 2026 outlook, citing operating momentum, acquisition activity, and the benefits of recent financing.
First-quarter performance and raised 2026 outlook
Chairman and CEO Jeffrey Edison said the company generated “NAREIT FFO per share growth of 4.7%, core FFO per share growth of 6.2%, and same center NOI growth of 3.5%” in the first quarter. He added that Phillips Edison is “pleased to increase our full year 2026 guidance,” with growth rates for NAREIT FFO and core FFO per share “in the mid to high single digits,” which he said is consistent with the company’s long-term targets.
CFO John Caulfield provided the quarterly figures, reporting first-quarter 2026 NAREIT FFO of $92.9 million, or $0.67 per diluted share, and core FFO of $96.4 million, or $0.69 per diluted share. Same-center NOI increased 3.5% in the quarter, which Caulfield said was “primarily due to higher revenue,” driven by “increases in average rents and economic occupancy.”
On guidance, Caulfield said the updated 2026 NAREIT FFO per share outlook reflects a 5.9% increase over 2025 at the midpoint, while the updated core FFO per share guidance represents a 5.8% increase over 2025 at the midpoint. The company reiterated its expectation for 3% to 4% same-center NOI growth in 2026 and reaffirmed its full-year gross acquisitions guidance of $400 million to $500 million at PECO share.
Asked why FFO guidance increased while underlying ranges were largely unchanged, Caulfield pointed to a “strong operating environment,” “strong year-to-date acquisition activity,” and the company’s “recent bond offering.” He also noted first-quarter bad debt came in “near the lower end” of the company’s range and said the bond offering priced at an interest rate “lower than we budgeted,” while adding the company is monitoring the SOFR curve, which he said is “higher than where we started the year.”
Leasing: high occupancy and strong rent spreads
President Robert Myers highlighted continued demand from necessity-based categories and said “74% of PECO’s rents come from necessity-based goods and services.” He said the company continues to see “high retailer demand with no current signs of slowing,” pointing to categories such as quick service and fast casual restaurants, health and wellness, beauty, fitness, and “medtail.”
Occupancy remained elevated in the first quarter, with Myers reporting:
- Lease portfolio occupancy of 97.1%
- Leased anchor occupancy of 98.4%
- Leased inline occupancy of 95%
Myers also emphasized rent spread strength. Comparable renewal rent spreads were 21.2% in the first quarter, and comparable new rent spreads were 36.2%. He said in-line leasing deals executed during the quarter, both new and renewal, achieved average annual rent bumps of 2.7%.
In response to a question about whether there were signs of softening among discretionary or smaller tenants, Myers said the company’s “best renewal pipeline and new leasing pipeline” has been as strong as what the company has seen over the past six to nine months. He cited that the company “just approved 28 deals in the last nine days,” and said the company is “not seeing any pullbacks” from local or national tenants. Myers also said occupancy costs “continue to remain very strong at 10%.”
Addressing inline occupancy upside, Myers said the company implemented a “bounty targeted space approach” focused on its top 100 spaces by annual base rent opportunity. He said PECO had executed 28 deals on those spaces through April, with another 24 at LOI or lease out, describing the initiative as a “needle mover” for closing the gap toward higher inline occupancy.
Bad debt and tenant health monitoring
Myers said bad debt was lower than expected in the first quarter at “around 60 basis points of revenue.” He added the company continues to expect bad debt in 2026 to be in line with 2025, when it was “just 78 basis points of revenue for the year.”
On collectability assumptions, Caulfield said the components of the company’s guidance were “pretty consistent” with prior periods, and he noted that the “absolute count of neighbors that we are focused on actually declined this quarter compared to last,” which he called a “very positive sign,” particularly given ongoing acquisitions.
Myers and Edison also discussed tenant “health ratios” and occupancy costs. Edison said the 10% occupancy-cost figure is “such a generic number” because health varies by retail category, and he pointed to the benefit of inflation and sales growth in keeping the ratio steady while rents rise. Myers said the company has been able to hold the health ratio around 9.5% to 10% while still producing renewal increases, and he said he sees room over time to move toward 10% to 13% or 14%, depending on use and merchant type.
Development, acquisitions, and everyday retail strategy
On development and redevelopment, Myers said PECO has 19 projects under active construction, with total estimated investment of approximately $74 million and average estimated yields between 9% and 12%. During the first quarter, six projects were stabilized, delivering more than 87,000 square feet of space and reflecting incremental NOI of approximately $1.7 million annually.
Myers said year-to-date acquisition activity “through this week” totaled $185 million, including five grocery-anchored shopping centers, three everyday retail centers, and land for future development. He added the company has approximately $150 million in awarded or under-contract assets expected to close by the end of the second quarter, including grocery-anchored centers, everyday retail centers, and joint venture opportunities.
During Q&A, Edison and Myers described a transaction market with “ample supply of product” and continued buyer appetite, including “billion-plus” transactions returning to the space. Edison said PECO’s opportunities were up 70% year-over-year at the same point in time, while Myers said the company had reviewed 195 deals this year versus 115 last year. Myers also said PECO’s year-to-date acquisitions were being bought at “a cap rate of about 6.6%, 6.7%,” while still “solving for our unlevered returns above 9%,” and he said the pipeline cap rates were consistent in a 6.5% to 6.75% range.
Management also discussed PECO’s “everyday retail” acquisitions, which are not necessarily grocery anchored. Edison said the company is pursuing “very specific opportunities” where it believes it can earn “outsized returns” in a more “inefficient” market. Myers said PECO has closed on 12 assets in the strategy over roughly two and a half years for about $221 million, describing purchases from “less sophisticated owners” where PECO can apply its leasing platform. He said the subset has “5% CAGRs,” with some assets at “8%-10% CAGRs,” and that PECO has improved occupancy by 310 basis points across those assets. He also cited new leasing spreads of 45% and renewal spreads of 27% in that category, adding that the company has acquired these assets at a “6.9 cap” while targeting “between 10% and 11% unlevered returns.”
On new supply, Edison said greenfield development remains limited overall, with select pockets tied to specific grocer expansion, including Publix and H-E-B. He said PECO is “just not seeing much at all in our markets,” which he said is contributing to a favorable operating environment for occupancy and rent growth.
Balance sheet actions and capital allocation
Caulfield said the company extended weighted average debt maturity and increased its percentage of fixed-rate debt during the quarter. In February, PECO completed a public debt offering of $350 million aggregate principal amount of 4.75% senior notes due 2033, using proceeds to repay term loans maturing in 2027 and a portion of its revolver.
At quarter-end, Caulfield said PECO had $810 million in liquidity. Net debt to trailing 12-month annualized adjusted EBITDA was 5.3 times at quarter end. Outstanding debt carried a weighted average interest rate of 4.4% and a weighted average maturity of 5.8 years including extension options, with 94% of total debt fixed rate (including PECO’s share of JV debt).
On dispositions, Caulfield said PECO has sold $29 million of assets year to date at PECO share and plans to sell $100 million to $200 million in 2026.
Edison said the company is closely watching the “gap between private and public market pricing of assets,” estimating a 50 to 75 basis point difference that he said currently makes private markets “a better source of capital.” He said public companies need to focus on “the cheapest source of capital,” pointing to tools including joint ventures, equity issuance, and asset sales. In response to a follow-up on dispositions and joint ventures, Edison said investors may see “a little bit more lean in” to dispositions because “it’s attractive.”
On joint ventures, Edison said the JV strategy is primarily designed to “expand what we can buy,” adding that PECO is buying assets in JVs it “would not buy on the balance sheet,” and that the strategy helps reduce full exposure while also providing a “fee structure that’s complementary.”
In closing remarks, Edison reiterated confidence in the company’s positioning, citing “solid foot traffic and market-leading pricing power,” and said that while the macro environment remains volatile, PECO is “well-positioned to perform through cycles.”
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.
Featured Stories
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider Phillips Edison & Company, Inc., you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Phillips Edison & Company, Inc. wasn't on the list.
While Phillips Edison & Company, Inc. currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Learn the basics of options trading and how to use them to boost returns and manage risk with this free report from MarketBeat. Click the link below to get your free copy.
Get This Free Report
