Phillips Edison Posts Record Renewal Rent Spreads as Core FFO Rises 9% and Guidance Edges Up

Phillips Edison & Company (PECO), owner of grocery-anchored shopping centers, reported third-quarter Core FFO of $0.71 per diluted share after the close on Monday, up 9.2% from $0.65 a year ago, and raised the low end of its 2026 guidance. Same-center net operating income (NOI) grew 5.3%, and renewal rent spreads hit a record 25.2%.

Third-quarter results

Through nine months, Core FFO was $2.09 per share, up from $1.94, and same-center NOI rose 4.3% to $361.8 million. Chairman and CEO Jeff Edison said, "PECO delivered another quarter of strong financial results, and the operating environment remains solid. Our record renewal rent spreads and high occupancy showcase the strength of PECO's operating engine."

Leasing and occupancy

Leased occupancy was 97.5%, essentially flat from 97.6% a year ago. Anchor occupancy was 99.0% (99.2% a year ago) and inline-shop occupancy rose to 95.1% from 94.8%. Leasing volume was lower: 238 leases covering about 1.1 million square feet, versus 270 leases and 1.7 million square feet in the third quarter of 2025.

Acquisitions and dispositions

PECO bought $181.8 million of properties in the quarter, including South Shore Commons, Alafaya Square and Easton Commons, and sold $87.1 million, covering five shopping centers and a land parcel. Year to date through Oct. 26, it has acquired $519.1 million at its prorated share and sold $174.8 million. By our calculation, hitting the $600 million to $700 million acquisition guidance requires another $81 million to $181 million of purchases.

2026 guidance

The raise is small: the Core FFO midpoint moves to $2.77 from $2.76, and the Nareit FFO midpoint to $2.70 from about $2.695. By our calculation, the new Core FFO range implies fourth-quarter results of $0.66 to $0.70 per share after $2.09 in the first nine months, which would be at or below the third quarter's $0.71. The sharp increase in net income guidance is much larger than the FFO change, which points to items outside the FFO measures, such as property sale gains.

Balance sheet

Net debt to adjusted EBITDAre was 5.2 times on a trailing 12-month basis and 5.0 times on a current-quarter annualized basis, compared with 5.2 times and 5.1 times at the end of 2025. Total liquidity was about $762 million at Sept. 30, including $744.3 million available on its $1.0 billion revolver, and about $950 million pro forma for a new $350 million unsecured term loan. The weighted-average interest rate was 4.5%, and 85.2% of debt was fixed-rate.

What it means for investors

Rents on new and renewed leases are resetting about 25% higher, which supports earnings growth even with occupancy already near 98%. The caution is that the guidance leaves little upside, the implied fourth quarter is not above the third, and lower leasing volume and the 10 basis point dip in occupancy suggest the easy gains from filling space are behind it. For a REIT, funding more acquisitions while holding leverage near 5 times will depend on the cost of debt.

Sources: Phillips Edison & Company, Inc., third-quarter 2026 results and updated 2026 guidance (Oct. 26), filed on Form 8-K, and earnings call announcement. FFO is a non-GAAP measure. This is informational, not a recommendation to buy or sell.