Phillips Edison & Company’s Q1 2025 Surge: A Bull Market Play for Retail REITs?

Let’s cut to the chase: Phillips Edison & Company (PECO) just delivered a quarter that’s hard to ignore. With net income up 48% year-over-year, same-center NOI soaring past guidance, and rent spreads hitting eye-popping levels, this grocery-anchored retail REIT is proving that the “retail apocalypse” is anything but apocalyptic—if you’ve got the right properties and the right strategy.

The Numbers That Pop
First off, let’s talk cash flow. PECO’s Nareit FFO jumped 11.2% to $0.64 per share, while Core FFO matched that pace at $0.65. These aren’t incremental gains—this is meaningful growth fueled by a portfolio that’s firing on all cylinders. Same-center NOI, the lifeblood of REITs, grew 3.9%, blowing past the company’s own 3.0–3.5% guidance. That’s not just a win—it’s a statement.

Leasing: The Engine of Growth
Now, let’s talk about what’s driving this. PECO’s leasing machine is cranking out results that would make even the most skeptical investor sit up. Occupancy rates remain sky-high at 97.1%, with anchors (the big-box grocery stores like Kroger and Publix) locked in at a staggering 98.4%. But the real fireworks are in the rent spreads: 28.1% for new leases and 20.8% for renewals, averaging 22.3% overall. That’s premium pricing power in a sector many still write off.

Think about it: When a retailer is willing to pay over 20% more for space, it’s not just a good deal—it’s a sign of confidence in foot traffic and demand. And with 71% of PECO’s portfolio tied to necessity-based goods (think groceries, pharmacies, and healthcare), this isn’t a luxury play. This is recession-resistant real estate.

Acquisitions and the “Necessity” Play
PECO isn’t just sitting on its portfolio. The company spent $146.4 million on six shopping centers this quarter, targeting properties with “upside” in occupancy and rents. They even added Oak Grove Shoppes in Orlando—a grocery-anchored gem—through their joint venture. Meanwhile, they sold one underperforming asset for $24.9 million, showing discipline in capital allocation.

The balance sheet? Bulletproof. Liquidity remains at $760 million, with a net debt-to-EBITDAre ratio of 5.3x—still conservative for a REIT. And with 85.6% of their debt fixed-rate, they’re insulated from rising interest rates. This isn’t a company playing with fire; it’s playing to win.

Why This Matters for Investors
CEOs love to talk about “strategic advantages,” but PECO’s are real and measurable. Their vertically integrated model (owning, managing, and leasing their own properties) cuts out middlemen. Their national footprint of 321 centers spans 31 states, diversifying risk. And their focus on omni-channel shopping centers—places where retailers can blend physical and online experiences—is a smart play for the evolving retail landscape.

The Bottom Line: PECO Is Built to Outlast
When the market gets skittish about retail, PECO’s numbers don’t lie. They’ve exceeded guidance, maintained occupancy in the high 90s, and grown NOI faster than almost any competitor. With full-year 2025 Core FFO guidance set at $2.52–$2.59 per share—and Q1 already nailing those numbers—this is a company that’s not just surviving, but thriving.

Final Takeaway: In a world where “retail” is often a dirty word, Phillips Edison & Company is proving that necessity-based real estate isn’t just a safe bet—it’s a growth engine. With 3.9% same-center NOI growth, 22% rent hikes, and a fortress balance sheet, this is a stock you want to own if you believe in defensive, cash-generating assets. The question isn’t whether PECO can weather the storm—it’s already done that. The question is: Are you ready to ride the wave?

The data doesn’t lie. This is a REIT that’s built to last—and right now, it’s delivering the goods.