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Phillips Edison & Company (NASDAQ:PECO) showcased its strong second quarter 2025 performance in its latest investor presentation, highlighting how its strategic focus on grocery-anchored shopping centers continues to drive solid financial results despite broader retail market challenges.
Executive Summary
Phillips Edison reported Nareit FFO per share growth of 6.3% at the guidance midpoint for Q2 2025, alongside Same-Center NOI growth of 4.2%. The company’s portfolio maintained a robust 97% leased occupancy rate, demonstrating the resilience of its grocery-anchored retail model in the current economic environment.
The company’s stock closed at $34.82 on July 24, 2025, down slightly by 0.17%, with after-hours trading showing a further decline of 1.06% to $34.45. Despite these modest share price movements, PECO’s operational metrics paint a picture of strong fundamental performance.
As shown in the following overview of the company’s key metrics:
Quarterly Performance Highlights
Phillips Edison’s Q2 2025 results demonstrated the strength of its business model, with comparable new lease spreads reaching 34.6% and renewal lease spreads at 19.1%. These figures represent a continuation of the positive trend seen in recent years, with leasing spreads showing consistent improvement since 2019.
The company’s portfolio retention rate remained strong at 94% during Q2 2025, reflecting tenant satisfaction and the strategic value of PECO’s properties. This high retention rate contributes to stable occupancy and predictable cash flows.
The following chart illustrates PECO’s impressive leasing spread performance over time:
PECO’s financial performance metrics underscore its ability to deliver consistent returns to shareholders, with dividend per share growth of 20.6% since its 2021 IPO. The company positions itself at the intersection of growth, value, and income, offering investors a balanced investment proposition with a current dividend yield of 3.5%.
As shown in this financial performance summary:
Strategic Positioning
Phillips Edison’s focus on grocery-anchored neighborhood shopping centers continues to be its key differentiator. With 95% of annual base rent (ABR) coming from grocery-anchored centers and 85% from properties with #1 or #2 grocery anchors by sales, the company is strategically positioned to benefit from the stability and foot traffic that top grocers provide.
The company highlighted how grocery-anchored centers benefit from current macroeconomic trends, including their necessity-based nature, high foot traffic, and role in omni-channel retail strategies. U.S. consumers visit grocery stores 1.6 times per week on average, with PECO centers receiving approximately 32,000 visits per week and a total of 537 million visits in the last 12 months.
The following slide illustrates these strategic advantages:
National grocery foot traffic has shown remarkable resilience, with a 12% increase from 2019 to June 2025, reaching 17.4 billion visits in the trailing twelve months. This trend supports PECO’s focus on grocery-anchored retail as a sustainable business model.
The company’s grocery-anchored advantage is further demonstrated by strong sales performance, with grocer sales per square foot of $743 and total grocer sales volume of $11 billion. Grocer sales per square foot grew by 5.0% in 2024 compared to 2023, and have increased by 42% since 2019, highlighting the strength of PECO’s grocery partners.
As shown in this overview of PECO’s grocery-anchored advantage:
Growth Initiatives
Phillips Edison continues to pursue growth through strategic acquisitions and development projects. The company has set a long-term target of $350 million to $450 million in gross acquisitions per year and has already completed several acquisitions in 2025 with a total contract price of $287.3 million.
On the development front, PECO has 21 projects under active construction on land it already owns, representing an investment of approximately $65 million with estimated yields between 9% and 12%. Nine projects were stabilized in the first six months of 2025, delivering over 180,000 square feet of space and generating incremental NOI of approximately $3.7 million annually.
The company is also leveraging technology to drive innovation, having won the 2025 Digie Award for Best Use of artificial intelligence at the Realcomm Conference. This marks the fourth consecutive year PECO has received this recognition, demonstrating its commitment to technological advancement in the real estate sector.
Forward-Looking Statements
Phillips Edison provided a comprehensive earnings guidance summary for full-year 2025, projecting Net Income per share of $0.61-$0.64, Nareit FFO per share of $2.50-$2.54, and Core FFO per share of $2.55-$2.60. The company expects Same-Center NOI growth of 3.10%-3.60% for the year.
This guidance represents an upward revision from the previous quarter, when the company had affirmed full-year guidance for NAREIT FFO growth of 5.7%, compared to the current projection of 6.3% at the midpoint.
The following slide details PECO’s 2025 earnings guidance:
The company maintains a strong and flexible balance sheet with investment grade ratings (S&P:BBB; Moody’s:Baa2), a significant liquidity position of $972 million, and a trailing 12-month Net debt to adjusted EBITDAre ratio of 5.4x. This financial strength positions PECO well to continue executing its growth strategy while maintaining financial discipline.
In the Q1 2025 earnings call, CEO Jeff Edison emphasized the resilience of the company’s cash flows and growth prospects, stating, "The quality of our cash flow reduces our beta and the strength of our growth increases our alpha." This sentiment appears to be supported by the Q2 results, which show continued strong operational performance despite modest stock price movements.
While the presentation highlights PECO’s strengths and opportunities, investors should note that the company faces potential challenges, including the impact of tariffs on retailers (though 85% of PECO’s tenant base is categorized as low risk), economic uncertainties, and competitive pressures in the retail real estate sector. Nevertheless, Phillips Edison’s focus on necessity-based retail and grocery-anchored centers appears to be providing resilience in the current market environment.
Full presentation:
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