Phillips Edison & Co. (PECO) 2Q26 First Take Slight beat and raise for all the right reasons (SS NOI, acquisitions) & some ...

Equity Research 23 July 2026 | 11:20PM EDT

Phillips Edison & Co. (PECO): 2Q26 First Take: Slight beat and raise for all the right reasons (SS NOI, acquisitions) & some ATM utilization

2Q FFO: PECO reported Core 2Q26 FFOPS of $0.69, in-line/1.4% above the Caitlin Burrows | GS/FactSet consensus estimates of $0.69/$0.68, and +8.4% y/y. Note that our +8.4% Goldman Sachs & Co. LLC referenced growth rate differs from the company-reported +7.8%, as we reference Jeremy Kuhl non-rounded quarter FFO/share results. | Goldman Sachs & Co. LLC

Economic occupancy reached 96.9% (+20bps q/q and +30bps y/y), while quarterly Harrison Slater, CFA | leasing spreads (including new, renewal, and options) rose to +18.4% and bad debt Goldman Sachs & Co. LLC was only 73bps. SS NOI growth was +3.8% in 2Q, where the larger 8.4% Core FFO growth highlights the additional impact of PECO’s active acquisition strategy (1H26 Shailee Lnu | SS NOI growth +3.7%, Core FFO growth +6.6%). Goldman Sachs India SPL

Guidance: PECO increased its ‘26 core FFO guidance by a penny at the low and high-end of the range (to $2.73-$2.79), with the new midpoint of $2.76 implying 6.2% y/y growth (vs 5.4% growth in the initial guidance, and comping 7.0% y/y growth in 2025) and comparing somewhat favorably to the consensus estimate of $2.75. The GS FY26 Core FFO estimate is closer to the higher end, at $2.78.

Equity Issuance: During 2Q26, PECO issued 2.0mn shares of equity via its ATM, generating $85.3mn of net proceeds (wtd avg share price of $42.06), followed by another 0.2mn shares subsequent to quarter end, generating $6.4mn (wtd avg share price of $42.20). We are encouraged that PECO utilized its ATM program, and are curious to hear more details of what impact a higher share price can have on PECO’s business (including funding of property acquisitions).

We are encouraged by PECO’s 2Q26 results and increased 2026 core FFOPS guidance, and believe it could outperform slightly on Friday (7/24). Our retail preview indicated PECO was a company where we were expecting an increase to FY26 FFO and SS NOI growth guidance with 2Q26 earnings. We are Buy-rated on PECO, as we view its ability to reliably drive earnings growth via internal (same store) and external (acquisitions) means as a positive.

2Q26 Details The following are additional key details from PECO’s 2Q26 earnings release:

n The FY26 FFO guidance increase mentioned above included positive revisions to SS NOI growth (to 3.4%-4%, from 3%-4%), property acquisition volume ($500-$600mn, from $400-$500mn), adjustments to collectibility (smaller headwind: $4-$7mn, from $5-$8mn previously), and higher non-cash revenue

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Goldman Sachs Phillips Edison & Co. (PECO)

items ($21-$23mn, from $19-$21mn). We view these as generally high quality drivers, which should have positive implications for 2027 as well. n The leased rate for the full portfolio was 97.3% in the quarter, +20bps q/q and -10 bps y/y, while economic occupancy was 96.9%, +20bps q/q and +30bps y/y. The portfolio SNO spread of 40bps (as shown in Exhibit 1) is 21bps below PECO’s historical average. At the same time, the leased rate for the SS portfolio was +20bps q/q and -10bps y/y, while SS economic occupancy was +10bps q/q and +30bps y/y. Key takeaway: PECO’s economic occupancy continues to strengthen, but has some remaining upside. We will look for color on the earnings call about expectations for economic occupancy through the rest of 2026 and going forward. The inline leased rate of 95.5% for both the full portfolio and SS portfolio is a record for PECO. n Leasing spreads: PECO reported total leasing spreads of 18.4% in 2Q26, above the +14.2% realized over…