Phillips Edison: A Buy Opportunity for Lasting Income Amid Market Volatility

Phillips Edison, a real estate investment trust, is on sale due to the recent market sell-off, making it a good opportunity for investors seeking durable income. Despite the downturn, the company has a proven track record of generating consistent income and is well-positioned for long-term growth. Its diversified portfolio of retail properties and strong management team make it an attractive option for investors looking for a reliable source of income.

Phillips Edison & Company, Inc. (NASDAQ:PECO), a real estate investment trust (REIT), has been on sale due to the recent market sell-off, presenting an opportunity for investors seeking durable income. Despite the downturn, PECO has a proven track record of generating consistent income and is well-positioned for long-term growth.

On July 25, 2025, PECO reported its Q2 2025 earnings, showcasing strong financial performance and a resilient portfolio. The company's same-center NOI increased by 4.2% and core FFO per share grew by 8.5% [1]. This growth is driven by a grocery-anchored strategy and necessity-based focus, which create a resilient portfolio that delivers steady growth. The company's ability to maintain strong rent spreads, increase occupancy, and generate dependable cash flows is a testament to its strategic approach.

PECO's management team, led by Chairman and CEO Jeff Edison, President Bob Myers, and Chief Financial Officer John Caulfield, highlighted the company's unique advantages. These include experienced and locally smart teams, strong grocer and national neighbor relationships, and a portfolio focused on rightsized neighborhood centers in suburban trade areas with compelling demographic trends [1]. The company's active acquisitions strategy, which involves buying centers that fit its grocery-anchored strategy and rightsized format, has been a key driver of growth.

The company's portfolio is also well-positioned to weather potential impacts from tariffs. Approximately 70% of PECO's ABR comes from necessity-based goods and services, providing predictable, high-quality cash flows and downside protection [1]. Additionally, 85% of PECO's neighbors based on ABR are expected to experience limited impact from tariffs.

PECO's strong leasing momentum is another key factor driving growth. The company's operating results for the second quarter reflect continued high occupancy, strong rent spreads, and high retention. Comparable renewal rent spreads were 19.1%, and comparable new leasing rent spreads were 34.6% [1]. The company's robust leasing pipeline is expected to maintain high in-line occupancy throughout the year.

Despite the recent market volatility, PECO remains confident in its ability to acquire high-quality centers at attractive returns. The company affirmed its guidance range of $350 million to $450 million in gross acquisitions for the year, and it is on track to exceed its unlevered 9% IRR target [1].

In summary, PECO's proven track record of generating consistent income, strong management team, and well-positioned portfolio make it an attractive option for investors seeking durable income. While the market sell-off has made the stock more affordable, investors should consider the company's long-term growth potential and strong fundamentals.

References:
[1] https://www.insidermonkey.com/blog/phillips-edison-company-inc-nasdaqpeco-q2-2025-earnings-call-transcript-1578088