Phillips Edison & Co. Reports Strong Q2 Earnings, Raises 2025 Guidance

Phillips Edison & Co. reported strong Q2 earnings with 8.5% Core FFO per share growth and 4.2% same-center NOI growth. Occupancy rates remained high at 97.4%, with significant leasing spreads. The company raised its 2025 guidance, forecasting 3.1%-3.6% same-center NOI growth and 6% Core FFO per share growth. PECO completed a $350 million bond offering and expects to achieve its full-year acquisition guidance of $350-$450 million. However, concerns over tariffs and increased bad debt were noted.

Phillips Edison & Co. Inc. (PECO) reported its Q2 2025 earnings, revealing an EPS of $0.10, falling short of the $0.15 forecast, marking a 33.33% negative surprise. However, the company surpassed revenue expectations with $177.75 million, a 2.01% positive surprise. The stock closed at $34.76, down 0.58% post-report, reflecting investor caution amid mixed results.

Key Takeaways

Phillips Edison missed EPS forecasts but exceeded revenue expectations. The stock declined by 0.58% post-earnings, showing investor caution. Strong growth in NAREIT FFO and Core FFO highlights operational strength. High occupancy rates and strong leasing spreads indicate robust demand.

Company Performance

Phillips Edison demonstrated strong operational performance in Q2 2025, with notable growth in NAREIT FFO and Core FFO. The company’s focus on grocery-anchored neighborhood shopping centers continues to drive results, as evidenced by high occupancy rates and strong leasing spreads. This performance comes amid a challenging economic environment, where consumer sentiment and spending patterns remain in focus.

Financial Highlights

- Revenue: $177.75 million, exceeding forecasts by 2.01%
- Earnings per share: $0.10, missing forecasts by 33.33%
- NAREIT FFO: $86 million, or $0.62 per share, up 8.8% year-over-year
- Core FFO: $88.2 million, or $0.64 per share, up 8.5% year-over-year

Earnings vs. Forecast

The Q2 2025 EPS of $0.10 fell short of the expected $0.15, resulting in a significant negative surprise of 33.33%. In contrast, revenue came in at $177.75 million, surpassing the forecast by 2.01%. While the EPS miss may raise concerns about profitability, the revenue beat suggests strong sales performance.

Market Reaction

Phillips Edison’s stock declined by 0.58% to $34.76 following the earnings release. This movement reflects investor caution, possibly due to the EPS miss, despite the revenue beat. According to InvestingPro analysis, analyst price targets range from $36 to $44, suggesting potential upside. The stock maintains a beta of 0.45, indicating lower volatility compared to the broader market.

Outlook & Guidance

The company raised its full-year 2025 guidance for same-center NOI, NAREIT FFO, and Core FFO per share. It projects same-center NOI growth between 3.1% and 3.6%, with gross acquisitions guidance set at $350-$450 million.

Executive Commentary

CEO Jeff Edison emphasized the company’s resilience, stating, "We continue to see a resilient consumer and we believe our portfolio will outperform as retailer demand remains strong." President Bob Myers highlighted the company’s strategic insights: "Our long operating history has given us an informed measure of what drives quality and value at the shopping center level."

Risks and Challenges

The EPS miss may signal profitability challenges. Economic conditions and consumer sentiment could impact future performance. Potential market saturation in the grocery-anchored retail space. Supply chain issues and inflationary pressures may affect costs. Changes in interest rates could impact financing conditions.

Q&A

During the earnings call, analysts inquired about the company’s strategy for unanchored centers and the impact of Kroger store closures. Management addressed these concerns, highlighting minimal impact from closures and a focus on expanding into shadow-anchored and select unanchored centers.

References

[1] https://www.investing.com/news/transcripts/earnings-call-transcript-phillips-edison-co-misses-eps-beats-revenue-in-q2-2025-93CH-4154061