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Phillips Edison & Co.'s Q2 2025: Unpacking Contradictions in Tenant Turnover, NOI Growth, and Retail Demand
Generated by AI AgentEarnings Decrypt
Friday, Jul 25, 2025 9:24 pm ET1min read
Aime SummaryTenant turnover and leasing activity, same-store NOI growth and timing, consumer behavior and retailer performance, tenant turnover and leasing demand, and disposition strategy and funds for acquisitions are the key contradictions discussed in & Company's latest 2025Q2 earnings call.
Strong Financial Performance and Guidance Increase:
- Phillips Edison & Company (PECO) reported an increase in same-center NOI by 4.2% and core FFO per share by 8.5% for Q2 2025.
- They raised their full year 2025 earnings guidance for same-center NOI, core FFO per share, and NAREIT FFO per share.
- Growth was driven by strong leasing momentum, elevated renewal demand, and strategic acquisitions.
Acquisition Activity and Strategy:
- purchased $133 million of assets in Q2 2025, with year-to-date acquisitions totaling $287 million.
- The company reported acquiring 3 unanchored centers, 7 shadow-anchored centers, and 4 anchored centers in the first half of 2025.
- These acquisitions are part of PECO's strategy to purchase properties through all market cycles, focusing on grocery-anchored and rightsized neighborhood centers.
Leasing and Occupancy Trends:
- PECO achieved high occupancy levels, with anchor occupancy at 98.9% and in-line occupancy at 94.8%.
- The company reported strong comparable renewal rent spreads of 19.1% and new leasing rent spreads of 34.6%.
- The robust leasing pipeline and high retention rates were driven by strong demand from retailers and strategic merchandising.
Impact of Tariffs and Economic Conditions:
- PECO's portfolio is exposed to 15% of retail tenants potentially impacted by tariffs, limiting their exposure to retailer risk.
- The company's focus on necessity-based goods and services provides stable cash flows and reduces exposure to discretionary goods affected by tariffs.
- The resilience of the portfolio is attributed to the company's focus on grocery-anchored centers and high-quality tenants.
Strong Financial Performance and Guidance Increase:
- Phillips Edison & Company (PECO) reported an increase in same-center NOI by 4.2% and core FFO per share by 8.5% for Q2 2025.
- They raised their full year 2025 earnings guidance for same-center NOI, core FFO per share, and NAREIT FFO per share.
- Growth was driven by strong leasing momentum, elevated renewal demand, and strategic acquisitions.
Acquisition Activity and Strategy:
- purchased $133 million of assets in Q2 2025, with year-to-date acquisitions totaling $287 million.
- The company reported acquiring 3 unanchored centers, 7 shadow-anchored centers, and 4 anchored centers in the first half of 2025.
- These acquisitions are part of PECO's strategy to purchase properties through all market cycles, focusing on grocery-anchored and rightsized neighborhood centers.
Leasing and Occupancy Trends:
- PECO achieved high occupancy levels, with anchor occupancy at 98.9% and in-line occupancy at 94.8%.
- The company reported strong comparable renewal rent spreads of 19.1% and new leasing rent spreads of 34.6%.
- The robust leasing pipeline and high retention rates were driven by strong demand from retailers and strategic merchandising.
Impact of Tariffs and Economic Conditions:
- PECO's portfolio is exposed to 15% of retail tenants potentially impacted by tariffs, limiting their exposure to retailer risk.
- The company's focus on necessity-based goods and services provides stable cash flows and reduces exposure to discretionary goods affected by tariffs.
- The resilience of the portfolio is attributed to the company's focus on grocery-anchored centers and high-quality tenants.
Earnings Decrypt
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