Phillips Edison & Co. Inc.

04/24/2026 | Press release | Distributed by Public on 04/24/2026 14:44

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our accompanying consolidated financial statements and notes thereto and the more detailed information contained in our 2025 Annual Report on Form 10-K, filed with the SEC on February 10, 2026. All references to "Notes" throughout this document refer to the footnotes to the consolidated financial statements in "Item 1. Financial Statements". See also "Cautionary Note Regarding Forward-Looking Statements" below.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q of Phillips Edison & Company, Inc. ("we," the "Company," "our," or "us") other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995 (collectively with the Securities Act and the Exchange Act, the "Acts"). These forward-looking statements are based on current expectations, estimates, and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, management of our company and involve uncertainties that could significantly affect our financial results. We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Acts. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," "seek," "objective," "goal," "strategy," "plan," "focus," "priority," "should," "could," "potential," "possible," "look forward," "optimistic", "commit," or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the SEC. Such statements include, but are not limited to: (a) statements about our plans, strategies, initiatives, and prospects; (b) statements about our underwritten incremental yields; and (c) statements about our future results of operations, capital expenditures, and liquidity. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: (i) changes in national, regional, or local economic climates; (ii) local market conditions, including an oversupply of space in, or a reduction in demand for, properties similar to those in our portfolio; (iii) vacancies, changes in market rental rates, and the need to periodically repair, renovate, and re-let space; (iv) competition from other available shopping centers and the attractiveness of properties in our portfolio to our tenants; (v) the financial stability of our tenants, including, without limitation, their ability to pay rent; (vi) our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due; (vii) increases in our borrowing costs as a result of changes in interest rates and other factors; (viii) potential liability for environmental matters; (ix) damage to our properties from catastrophic weather and other natural events, and the physical effects of climate change; (x) our ability and willingness to maintain our qualification as a REIT in light of economic, market, legal, tax, and other considerations; (xi) changes in tax, real estate, environmental, and zoning laws; (xii) information technology security breaches; (xiii) our corporate responsibility initiatives; (xiv) loss of key executives; (xv) the concentration of our portfolio in a limited number of industries, geographies, or investments; (xvi) the economic, political, and social impact of, and uncertainty relating to, pandemics or other health crises; (xvii) our ability to re-lease our properties on the same or better terms, or at all, in the event of non-renewal or in the event we exercise our right to replace an existing tenant; (xviii) the loss or bankruptcy of our tenants; (xix) to the extent we are seeking to dispose of properties, our ability to do so at attractive prices or at all; and (xx) the impact of heightened geopolitical instability, international conflicts, tariffs, and global trade disruptions on us, our tenants, and consumers, including the impact on inflation, supply chains, and consumer sentiment. Additional important factors that could cause actual results to differ are described in the filings made from time to time by the Company with the SEC and include the risk factors and other risks and uncertainties described in our 2025 Annual Report on Form 10-K, filed with the SEC on February 10, 2026, as updated from time to time in our periodic and/or current reports filed with the SEC, which are accessible on the SEC's website at www.sec.gov. Therefore, such statements are not intended to be a guarantee of our performance in future periods.
Except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
KEY PERFORMANCE INDICATORS AND DEFINED TERMS
We use certain key performance indicators ("KPIs"), which include both financial and nonfinancial metrics, to measure the performance of our operations. We believe these KPIs, as well as the core concepts and terms defined below, allow our Board, management, and investors to analyze trends around our business strategy, financial condition, and results of operations in a manner that is focused on items unique to the retail real estate industry.
We do not consider our non-GAAP measures to be alternatives to measures required in accordance with GAAP. Certain non-GAAP measures should not be viewed as an alternative measure of our financial performance as they may not reflect the operations of our entire portfolio, and they may not reflect the impact of general and administrative expenses, depreciation and amortization, interest expense, other income (expense), or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our shopping centers that could materially impact our results from operations. Additionally, certain non-GAAP measures should not be considered as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions, and may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate our business in the manner currently contemplated. Accordingly, non-GAAP measures should be reviewed in connection with other GAAP measurements and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Other REITs may use different methodologies for calculating similar non-GAAP measures, and accordingly, our non-GAAP measures may not be comparable to other REITs.
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Our KPIs and terminology can be grouped into three key areas:
PORTFOLIO-Portfolio metrics help management to gauge the health of our centers overall and individually.
•Anchor space-We define an anchor space as a space greater than or equal to 10,000 square feet of gross leasable area ("GLA").
•ABR-We use ABR to refer to the monthly contractual base rent at the end of the period multiplied by twelve months.
•ABR Per Square Foot ("PSF")-This metric is calculated by dividing ABR by leased GLA. Increases in ABR PSF can be an indication of our ability to create rental rate growth in our centers, as well as an indication of demand for our spaces, which generally provides us with greater leverage during lease negotiations.
•GLA-We use GLA to refer to the total occupied and unoccupied square footage of a building that is available for tenants (whom we refer to as a "Neighbor" or our "Neighbors") or other retailers to lease.
•Inline space-We define an inline space as a space containing less than 10,000 square feet of GLA.
•Leased Occupancy-This metric is calculated as the percentage of total GLA for which a lease has been signed regardless of whether the lease has commenced or the Neighbor has taken possession. High occupancy is an indicator of demand for our spaces, which generally provides us with greater leverage during lease negotiations.
•Underwritten incremental unlevered yield-This reflects the yield we target to generate from a project upon expected stabilization and is calculated as the estimated incremental NOI for a project at stabilization divided by its estimated net project investment. The estimated incremental NOI is the difference between the estimated annualized NOI we target to generate by a project upon stabilization and the estimated annualized NOI without the planned improvements. Underwritten incremental unlevered yield does not include peripheral impacts, such as lease rollover risk or the impact on the long-term value of the property upon sale or disposition. Actual incremental unlevered yields may vary from our underwritten incremental unlevered yield range based on the actual total cost to complete a project and its actual incremental NOI at stabilization.
LEASING-Leasing is a key driver of growth for our company.
•Comparable lease-We use this term to refer to a lease with consistent terms that is executed for substantially the same space that has been vacant less than twelve months.
•Comparable rent spread-This metric is calculated as the percentage increase or decrease in first-year ABR (excluding any free rent or escalations) on new or renewal leases (excluding options) where the lease was considered a comparable lease. This metric provides an indication of our ability to generate revenue growth through leasing activity.
•Cost of executing new leases-We use this term to refer to certain costs associated with new leasing, namely, leasing commissions, tenant improvement costs, and tenant concessions.
•Portfolio retention rate-This metric is calculated by dividing (i) the total square feet of retained Neighbors with current period lease expirations by (ii) the total square feet of leases expiring during the period. The portfolio retention rate provides insight into our ability to retain Neighbors at our shopping centers as their leases approach expiration. Generally, the costs to retain an existing Neighbor are lower than costs to replace with a new Neighbor.
•Recovery rate-This metric is calculated by dividing (i) total recovery income by (ii) total recoverable expenses during the period. A high recovery rate is an indicator of our ability to recover certain property operating expenses and capital costs from our Neighbors.
FINANCIAL PERFORMANCE-In addition to financial metrics calculated in accordance with GAAP, such as net income or cash flows from operations, we utilize non-GAAP metrics to measure our operational and financial performance. See "Non-GAAP Measures" below for further discussion on the following metrics.
•Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate ("Adjusted EBITDAre")-To arrive at Adjusted EBITDAre, we adjust EBITDAre, as defined below, to exclude certain recurring and non-recurring items including, but not limited to: (i) changes in the fair value of the earn-out liability; (ii) other impairment charges; (iii) adjustments related to our investments in unconsolidated joint ventures; (iv) transaction and acquisition expenses; and (v) realized performance income. We use EBITDAre and Adjusted EBITDAre as additional measures of operating performance which allow us to compare earnings independent of capital structure and evaluate debt leverage and fixed cost coverage.
•Core Funds From Operations Attributable to Stockholders and OP Unit Holders ("Core FFO")-To arrive at Core FFO, we adjust Nareit FFO, as defined below, to exclude certain recurring and non-recurring items including, but not limited to: (i) depreciation and amortization of corporate assets; (ii) changes in the fair value of the earn-out liability; (iii) adjustments related to our investments in unconsolidated joint ventures; (iv) gains or losses on the extinguishment or modification of debt and other; (v) other impairment charges; (vi) transaction and acquisition expenses; and (vii) realized performance income. We believe Nareit FFO provides insight into our operating performance as it excludes certain items that are not indicative of such performance. Core FFO provides further insight into the sustainability of our operating performance and provides an additional measure to compare our performance across reporting periods on a consistent basis by excluding items that may cause short-term fluctuations in net income (loss).
•EBITDAre-The National Association of Real Estate Investment Trusts ("Nareit") defines EBITDAre as net income (loss) computed in accordance with GAAP before: (i) interest expense; (ii) income tax expense; (iii) depreciation and amortization; (iv) gains or losses from disposition of depreciable property; and (v) impairment write-downs of
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depreciable property. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDAre on the same basis.
•Equity Market Capitalization-We calculate equity market capitalization as the total dollar value of all outstanding shares and OP Units using the closing price for the applicable date.
•Nareit FFO Attributable to Stockholders and OP Unit Holders ("Nareit FFO")-Nareit defines Funds From Operations ("FFO") as net income (loss) computed in accordance with GAAP, excluding: (i) gains (or losses) from sales of property and gains (or losses) from change in control; (ii) depreciation and amortization related to real estate; (iii) impairment losses on real estate and impairments of in-substance real estate investments in investees that are driven by measurable decreases in the fair value of the depreciable real estate held by the unconsolidated partnerships and joint ventures; and (iv) adjustments for unconsolidated partnerships and joint ventures, calculated to reflect FFO on the same basis. We calculate Nareit FFO in a manner consistent with the Nareit definition.
•Net Debt-We calculate net debt as total debt, excluding discounts, market adjustments, and deferred financing expenses, less cash and cash equivalents.
•Net Debt to Adjusted EBITDAre-This ratio is calculated by dividing net debt by Adjusted EBITDAre (included on an annualized basis within the calculation). It provides insight into our leverage rate based on earnings and is not impacted by fluctuations in our equity price.
•Net Debt to Total Enterprise Value-This ratio is calculated by dividing net debt by total enterprise value, as defined below. It provides insight into our capital structure and usage of debt.
•NOI-We calculate NOI as total operating revenues, adjusted to exclude non-cash revenue items and lease buyout income, less property operating expenses and real estate taxes. NOI provides insight about our financial and operating performance because it provides a performance measure of the revenues and expenses directly involved in owning and operating real estate assets and provides a perspective not immediately apparent from net income (loss).
•Same-Center-We use this term to refer to a property, or portfolio of properties, owned for the entirety of both calendar year periods being compared.
•Total Enterprise Value-We calculate total enterprise value as our net debt plus our equity market capitalization on a fully diluted basis.
OVERVIEW
We are a REIT and one of the nation's largest owners and operators of omni-channel grocery-anchored shopping centers. Our portfolio primarily consists of neighborhood centers anchored by the #1 or #2 grocer tenants by sales within their respective formats by trade area. Our Neighbors are a mix of national, regional, and local retailers that primarily provide necessity-based goods and services.
As of March 31, 2026, we owned equity interests in 326 shopping centers, including 299 wholly-owned shopping centers and 27 shopping centers owned through three unconsolidated joint ventures, which comprised approximately 36.9 million square feet in 31 states. In addition to managing our shopping centers, our third-party investment management business provides comprehensive real estate management services to the Managed Funds.
PORTFOLIO AND LEASING STATISTICS-Below are statistical highlights of our wholly-owned portfolio as of March 31, 2026 and 2025 (dollars and square feet in thousands):
March 31, 2026 March 31, 2025
Number of properties 299 298
Number of states 31 31
Total square feet 33,669 33,512
ABR $ 548,490 $ 518,115
% ABR from omni-channel grocery-anchored shopping centers 94.3 % 95.3 %
% ABR from necessity-based goods and services 74.3 % 70.6 %
Leased occupancy %:
Total portfolio spaces 97.1 % 97.1 %
Anchor spaces 98.4 % 98.4 %
Inline spaces 95.0 % 94.6 %
Average remaining lease term (in years)(1)
4.6 4.5
(1)The average remaining lease term in years excludes future options to extend the term of the lease.
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The following table details information for our unconsolidated joint ventures as of March 31, 2026, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):
March 31, 2026
Joint Venture Ownership Percentage Number of Properties ABR GLA
GRP I 14% 20 $ 33,917 2,221
NRV 20% 4 12,845 744
NGCF 31% 3 4,315 225
LEASE EXPIRATIONS-The following chart shows the aggregate scheduled lease expirations for our over 3,500 unique Neighbors, excluding our Neighbors who are occupying space on a temporary basis, after March 31, 2026 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ventures:
Our ability to create rental rate growth generally depends on our leverage during new and renewal lease negotiations with prospective and existing Neighbors, which typically occurs when occupancy at our centers is high or during periods of economic growth and recovery. Conversely, we may experience rental rate decline when occupancy at our centers is low or during periods of economic recession, as the leverage during new and renewal lease negotiations may shift to prospective and existing Neighbors.
See "Results of Operations - Leasing Activity" below for further discussion of leasing activity.
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PORTFOLIO TENANCY-We define national Neighbors as those Neighbors that operate in at least three states. Regional Neighbors are defined as those Neighbors that have at least three locations in fewer than three states. The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ventures, by Neighbor type as of March 31, 2026:
The following charts present the composition of our portfolio by Neighbor industry as of March 31, 2026:
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NECESSITY-BASED GOODS AND SERVICES-We define "necessity-based goods and services" as goods and services that are indispensable, necessary, or common for day-to-day living, or that tend to be inelastic (i.e., those for which the demand does not change based on a consumer's income level). We estimate that approximately 74% of our ABR, including the pro rata portion attributable to properties owned through our unconsolidated joint ventures, is generated from Neighbors providing necessity-based goods and services.
TOP 20 NEIGHBORS-The following table presents our top 20 Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ventures, as of March 31, 2026 (dollars and square feet in thousands):
Neighbor(1)
ABR % of ABR Leased Square Feet % of Leased Square Feet
Number of Locations(2)
Kroger $ 28,409 5.1 % 3,475 10.5 % 63
Publix 27,838 5.0 % 2,530 7.6 % 62
Albertsons 19,088 3.4 % 1,683 5.1 % 30
Ahold Delhaize 17,215 3.1 % 1,184 3.6 % 22
Walmart 8,483 1.5 % 1,733 5.2 % 12
TJX Companies 7,517 1.3 % 605 1.8 % 21
Giant Eagle 7,437 1.3 % 759 2.3 % 10
Sprouts Farmers Market 6,725 1.2 % 411 1.2 % 14
Raley's 4,708 0.8 % 288 0.9 % 5
Dollar Tree 4,521 0.8 % 399 1.2 % 39
Planet Fitness 3,951 0.7 % 315 0.9 % 16
Starbucks Corporation 3,912 0.7 % 82 0.2 % 42
Big Y 3,540 0.6 % 167 0.5 % 3
UNFI (SuperValu) 3,500 0.6 % 336 1.0 % 5
United Parcel Service 3,204 0.6 % 105 0.3 % 84
Subway Group 3,015 0.6 % 96 0.3 % 66
Pet Supplies Plus 3,014 0.5 % 185 0.6 % 24
Great Clips 2,863 0.5 % 94 0.3 % 83
Trader Joe's 2,860 0.5 % 122 0.4 % 9
H&R Block 2,773 0.5 % 99 0.3 % 59
Total $ 164,573 29.3 % 14,668 44.2 % 669
(1)Neighbors are grouped by parent company and may represent multiple subsidiaries and banners.
(2)Number of locations excludes auxiliary leases with grocery anchors such as fuel stations, pharmacies, and liquor stores. Additionally, if a parent company has multiple subsidiaries or banners in a single shopping center, those subsidiaries are included as one location.
RESULTS OF OPERATIONS
KNOWN TRENDS AND UNCERTAINTIES-We continue to operate in a resilient yet evolving retail real estate environment characterized by strong tenant demand, limited new supply, and sustained leasing momentum. Grocery-anchored shopping centers remain defensive, with healthy occupancy, stable foot traffic, and durable tenant performance; however, broader macroeconomic conditions continue to introduce uncertainty. Interest rate volatility may affect acquisition activity, redevelopment yields, and capital-market execution. Inflation has eased but remains uneven across categories, influencing operating expenses, construction costs, and retailer margins; in addition, energy and transportation costs may be volatile and could increase due to geopolitical instability, including international conflict. Regulatory and executive decisions regarding tariffs have created incremental uncertainty around sourcing and input costs for certain tenants, though to date we have observed minimal disruption to leasing activity or rent-collection trends. Additionally, ongoing retailer rationalization, including periodic bankruptcy filings and strategic store closures, may create near-term downtime but also provide opportunities to re-lease space at higher rents. Consumer behavior has remained broadly stable, supported by the essential-needs orientation of our centers; however, pressure on lower-income shoppers and any broader economic slowdown could impact retailer sales performance and, in turn, leasing decisions. We continue to monitor these trends, along with evolving insurance markets, property-tax environments, and regulatory developments, each of which could influence operating results, cash flows, or asset valuations in future periods.
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MARCH 31, 2026 FORM 10-Q
SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025
Three Months Ended
March 31, 		Favorable (Unfavorable)
Change
(Dollars in thousands) 2026 2025 $
%(1)
Revenues:
Rental income $ 186,281 $ 174,183 $ 12,098 6.9 %
Fees and management income 3,445 2,783 662 23.8 %
Other property income 1,015 1,345 (330) (24.5) %
Total revenues 190,741 178,311 12,430 7.0 %
Operating Expenses:
Property operating 32,990 29,936 (3,054) (10.2) %
Real estate taxes 22,067 21,079 (988) (4.7) %
General and administrative 11,943 12,086 143 1.2 %
Depreciation and amortization 65,531 65,274 (257) (0.4) %
Total operating expenses 132,531 128,375 (4,156) (3.2) %
Other:
Interest expense, net
(29,772) (25,672) (4,100) (16.0) %
Gain on disposal of property, net
6,817 5,609 1,208 21.5 %
Other expense, net
(2,013) (980) (1,033) (105.4) %
Net income
33,242 28,893 4,349 15.1 %
Net income attributable to noncontrolling interests
(2,864) (2,584) (280) (10.8) %
Net income attributable to stockholders
$ 30,378 $ 26,309 $ 4,069 15.5 %
Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities. We define our same-center portfolio as the 282 properties that were owned for the entirety of both calendar year periods being compared. We define our non-same-center portfolio as those properties that were not fully owned in both calendar year periods being compared owing primarily to real estate asset activity occurring after December 31, 2024, which includes eleven properties disposed of and 17 properties acquired. Below are explanations of the significant fluctuations in the results of operations for the three months ended March 31, 2026 and 2025:
Rental Income increased $12.1 million primarily as follows:
•$6.4 million increase primarily related to our same-center portfolio as follows:
▪$3.7 million increase primarily due to a $0.52 increase in average minimum rent PSF and a 0.3% improvement in average occupancy;
▪$1.5 million increase primarily due to lease buyout income; and
▪$1.2 million increase primarily due to an increase in recoverable income attributed to an increase in common area maintenance spending.
•$5.7 million increase primarily related to our net acquisition activity.
Property Operating Expenses increased $3.1 million primarily as follows:
•$2.0 million increase from our same-center portfolio and corporate operating activities primarily due to higher compensation costs and an increase in utilities and common area maintenance spending; and
•$1.1 million increase primarily due to our net acquisition activity.
Real Estate Tax Expenses:
•The $1.0 million increase in real estate tax expenses is primarily due to our net acquisition activity.
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Interest Expense, Net:
•The $4.1 million increase was primarily due to increased debt outstanding and loss on extinguishment of debt in 2026. Interest Expense, Net was comprised of the following (dollars in thousands):
Three Months Ended March 31,
2026 2025
Interest on senior notes $ 17,183 $ 11,659
Interest on unsecured term loans, net 4,177 6,695
Interest on secured debt 3,627 4,055
Interest on revolving credit facility, net 1,957 1,261
Non-cash amortization and other 1,748 2,001
Loss on extinguishment or modification of debt and other, net 1,080 1
Interest expense, net
$ 29,772 $ 25,672
Weighted-average interest rate as of end of period 4.4 % 4.4 %
Weighted-average term (in years) as of end of period 5.7 5.3
Other Expense, Net:
•Other Expense, Net was comprised of the following (in thousands):
Three Months Ended March 31,
2026 2025
Transaction and acquisition expenses $ (2,077) $ (1,322)
Federal, state, and local income tax expense (242) (146)
Equity in net income of unconsolidated investments
36 121
Other income
270 367
Other expense, net
$ (2,013) $ (980)
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LEASING ACTIVITY-Below is a summary of leasing activity for our wholly-owned properties for the three months ended March 31, 2026 and 2025(1):
Total Deals Inline Deals
2026 2025 2026 2025
New leases:
Number of leases 78 78 76 71
Square footage (in thousands) 252 326 160 161
ABR (in thousands) $ 6,121 $ 6,289 $ 5,159 $ 4,281
ABR PSF $ 24.30 $ 19.30 $ 32.21 $ 26.64
Cost PSF of executing new leases $ 32.16 $ 20.84 $ 42.69 $ 36.77
Number of comparable leases 31 35 30 33
Comparable rent spread 36.2 % 28.1 % 37.9 % 27.5 %
Weighted-average lease term (in years) 9.4 8.3 7.7 7.6
Renewals and options:
Number of leases 168 156 150 140
Square footage (in thousands) 1,322 1,216 332 329
ABR (in thousands) $ 19,502 $ 18,000 $ 10,136 $ 10,069
ABR PSF (all leases) $ 14.76 $ 14.80 $ 30.51 $ 30.64
ABR PSF prior to renewals (all leases) $ 13.45 $ 13.39 $ 26.14 $ 25.85
Percentage increase in ABR PSF (comparable leases only) 9.7 % 9.9 % 16.7 % 17.4 %
Cost PSF of executing renewals and options $ 1.10 $ 0.17 $ 0.77 $ 0.63
Number of comparable leases(2)
110 111 110 110
Comparable rent spread(2)
21.2 % 20.8 % 21.2 % 21.7 %
Weighted-average lease term (in years) 4.9 4.7 4.5 4.6
Portfolio retention rate 87.8 % 91.4 % 78.5 % 78.6 %
(1)PSF amounts may not recalculate exactly based on other amounts presented within the table due to rounding.
(2)Excludes exercise of options.
NON-GAAP MEASURES
See "Key Performance Indicators and Defined Terms" above for additional information related to the following non-GAAP measures.
SAME-CENTER NOI-Same-Center NOI is presented as a supplemental measure of our performance, as it highlights operating trends such as occupancy levels, rental rates, and operating costs for our same-center portfolio. Other REITs may use different methodologies for calculating Same-Center NOI, and accordingly, our Same-Center NOI may not be comparable to other REITs. For the three months ended March 31, 2026 and 2025, Same-Center NOI represents the NOI for the 282 properties that were wholly-owned for the entirety of both calendar year periods being compared.
Same-Center NOI should not be viewed as an alternative measure of our financial performance as it does not reflect the operations of our entire portfolio, nor does it reflect the impact of general and administrative expenses, depreciation and amortization, interest expense, other income (expense), or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties that could materially impact our results from operations.
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The table below presents our Same-Center NOI (dollars in thousands):
Three Months Ended March 31, Favorable (Unfavorable)
2026 2025 $ Change % Change
Revenues:
Rental income(1)
$ 127,761 $ 124,044 $ 3,717
Tenant recovery income 41,568 40,339 1,229
Reserves for uncollectibility(2)
(986) (1,206) 220
Other property income 976 1,223 (247)
Total revenues 169,319 164,400 4,919 3.0 %
Operating expenses:
Property operating expenses
26,502 25,838 (664)
Real estate taxes
20,567 20,460 (107)
Total operating expenses 47,069 46,298 (771) (1.7) %
Total Same-Center NOI $ 122,250 $ 118,102 $ 4,148 3.5 %
(1)Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income.
(2)Includes billings that will not be recognized as revenue until cash is collected or the Neighbor resumes regular payments and/or we deem it appropriate to resume recording revenue on an accrual basis, rather than on a cash basis.
Same-Center NOI Reconciliation-Below is a reconciliation of Net Income to NOI and Same-Center NOI (in thousands):
Three Months Ended March 31,
2026 2025
Net income
$ 33,242 $ 28,893
Adjusted to exclude:
Fees and management income
(3,445) (2,783)
Straight-line rental income(1)
(2,883) (2,675)
Net amortization of above- and below-market leases
(2,451) (1,944)
Lease buyout income
(1,709) (1,739)
General and administrative expenses
11,943 12,086
Depreciation and amortization
65,531 65,274
Interest expense, net 29,772 25,672
Gain on disposal of property, net
(6,817) (5,609)
Other expense, net
2,013 980
Property operating expenses related to fees and management income 2,081 896
NOI for real estate investments 127,277 119,051
Less: Non-same-center NOI(2)
(5,027) (949)
Total Same-Center NOI $ 122,250 $ 118,102
Period-end Same-Center Leased Occupancy % 97.3 % 97.2 %
(1)Includes straight-line rent adjustments for Neighbors for whom revenue is being recorded on a cash basis.
(2)Includes operating revenues and expenses from non-same-center properties, which includes properties acquired or sold, and corporate activities.
NAREIT FFO AND CORE FFO-Nareit FFO is a non-GAAP financial performance measure that is widely recognized as a measure of REIT operating performance. Core FFO is an additional financial performance measure used by us as Nareit FFO includes certain non-comparable items that affect our performance over time. We believe that Core FFO is helpful in assisting management and investors with assessing the sustainability of our operating performance in future periods.
Nareit FFO and Core FFO should not be considered alternatives to net income (loss) under GAAP, as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions. Core FFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate our business plan in the manner currently contemplated.
Accordingly, Nareit FFO and Core FFO should be reviewed in connection with other GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Our Nareit FFO and Core FFO, as presented, may not be comparable to amounts calculated by other REITs.
PHILLIPS EDISON & COMPANY
MARCH 31, 2026 FORM 10-Q
The following table presents our calculation of Nareit FFO and Core FFO (in thousands, except per share amounts):
Three Months Ended March 31,
2026 2025
Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders
Net income
$ 33,242 $ 28,893
Adjustments:
Depreciation and amortization of real estate assets 65,182 64,897
Gain on disposal of property, net
(6,817) (5,609)
Adjustments related to unconsolidated joint ventures 1,315 867
Nareit FFO attributable to stockholders and OP unit holders $ 92,922 $ 89,048
Calculation of Core FFO Attributable to Stockholders and OP Unit Holders
Nareit FFO attributable to stockholders and OP unit holders $ 92,922 $ 89,048
Adjustments:
Depreciation and amortization of corporate assets 349 377
Transaction and acquisition expenses 2,077 1,322
Loss on extinguishment or modification of debt and other, net 1,080 1
Adjustments related to unconsolidated joint ventures (25) 25
Core FFO attributable to stockholders and OP unit holders $ 96,403 $ 90,773
Nareit FFO/Core FFO Attributable to Stockholders and OP Unit Holders per diluted share
Weighted-average shares of common stock outstanding - diluted 138,977 138,640
Nareit FFO attributable to stockholders and OP unit holders per share - diluted $ 0.67 $ 0.64
Core FFO attributable to stockholders and OP unit holders per share - diluted $ 0.69 $ 0.65
PHILLIPS EDISON & COMPANY
MARCH 31, 2026 FORM 10-Q
EBITDAre AND ADJUSTED EBITDAre-We use EBITDAre and Adjusted EBITDAre as additional measures of operating performance which allow us to compare earnings independent of capital structure, determine debt service and fixed cost coverage, and measure enterprise value. Additionally, we believe they are a useful indicator of our ability to support our debt obligations.
EBITDAre and Adjusted EBITDAre should not be considered as alternatives to net income (loss), as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions. Accordingly, EBITDAre and Adjusted EBITDAre should be reviewed in connection with other GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Our EBITDAre and Adjusted EBITDAre, as presented, may not be comparable to amounts calculated by other REITs.
The following table presents our calculation of EBITDAre and Adjusted EBITDAre (in thousands):
Three Months Ended March 31, Year Ended December 31,
2026 2025 2025
Calculation of EBITDAre
Net income
$ 33,242 $ 28,893 $ 122,968
Adjustments:
Depreciation and amortization 65,531 65,274 266,374
Interest expense, net 29,772 25,672 110,338
Gain on disposal of property, net
(6,817) (5,609) (38,790)
Federal, state, and local tax expense 242 146 1,307
Adjustments related to unconsolidated joint ventures 2,048 1,278 6,200
EBITDAre
$ 124,018 $ 115,654 $ 468,397
Calculation of Adjusted EBITDAre
EBITDAre
$ 124,018 $ 115,654 $ 468,397
Adjustments:
Transaction and acquisition expenses 2,077 1,322 5,523
Adjustments related to unconsolidated joint ventures (21) 25 60
Realized performance income(1)
- - (30)
Adjusted EBITDAre
$ 126,074 $ 117,001 $ 473,950
(1)Realized performance income includes fees received related to the achievement of certain performance targets in our Necessity Retail Partners joint venture, which was dissolved in December 2025.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL-Aside from standard operating expenses, we expect our principal cash demands to be for:
•investments in real estate;
•cash distributions to stockholders;
•redevelopment and development projects;
•capital expenditures and leasing costs; and
•principal and interest payments on our outstanding indebtedness.
We expect our primary sources of liquidity to be:
•operating cash flows;
•borrowings from our unsecured revolving credit facility and proceeds from debt financings;
•proceeds from any equity offering activities;
•proceeds received from the disposition of properties; and
•available, unrestricted cash and cash equivalents.
At this time, we believe our current sources of liquidity are sufficient to meet our short- and long-term cash demands.
ATM Program-In February 2024, we entered into a sales agreement relating to the potential sale of shares of common stock pursuant to a continuous offering program. In accordance with the terms of the sales agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million from time to time through our sales agents, or, if applicable, as forward sellers. We issued no shares of our common stock under this ATM program during the three months
PHILLIPS EDISON & COMPANY
MARCH 31, 2026 FORM 10-Q
ended March 31, 2026 and the year ended December 31, 2025. As of March 31, 2026, approximately $177 million of common stock remained available for issuance under the ATM program.
DEBT-The following table summarizes information about our debt as of March 31, 2026 and December 31, 2025 (dollars in thousands):
March 31, 2026 December 31, 2025
Total debt obligations, gross $ 2,517,631 $ 2,402,145
Weighted-average interest rate 4.4 % 4.5 %
Weighted-average term (in years) 5.7 5.2
Revolving credit facility capacity(1)
$ 1,000,000 $ 1,000,000
Revolving credit facility availability(2)
787,881 881,771
(1)The revolving credit facility matures in January 2029, with options to extend the maturity for two additional six-month periods.
(2)Net of any outstanding balance and letters of credit.
In February 2026, we issued $350 million of 4.750% senior notes due 2033 at an issue price of 99.920% in an underwritten offering.
The 2026 senior notes are fully and unconditionally guaranteed by us.
Debt Obligation Guarantees-At March 31, 2026, the Operating Partnership had issued and outstanding its unsecured senior notes due 2031, 2032, 2033, 2034, and 2035, all issued under effective registration statements. The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the unsecured senior notes due 2031, 2032, 2033, 2034, and 2035 are, and on any future debt securities of the Operating Partnership registered under an effective registration statement will be, fully and unconditionally guaranteed by us on a senior basis. As a result of the amendments to SEC Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that: (i) the subsidiary obligor is consolidated into the parent company's consolidated financial statements; (ii) the parent guarantee is "full and unconditional"; and (iii) subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 of Regulation S-X is provided, which includes narrative disclosure and summarized financial information. We meet the conditions of this requirement and thus, are not presenting separate financial statements. Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the summarized financial information for the Operating Partnership because the assets, liabilities, and results of operations of the Operating Partnership are not materially different than the corresponding amounts in our consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.
PHILLIPS EDISON & COMPANY
MARCH 31, 2026 FORM 10-Q
FINANCIAL LEVERAGE RATIOS-We believe our net debt to Adjusted EBITDAre, net debt to total enterprise value, and debt covenant compliance as of March 31, 2026 allow us access to future borrowings as needed in the near term. The following table presents our calculation of net debt and total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our unconsolidated joint ventures, as of March 31, 2026 and December 31, 2025 (in thousands):
March 31, 2026 December 31, 2025
Net debt:
Total debt, excluding discounts, market adjustments, and deferred financing expenses $ 2,572,401 $ 2,456,933
Less: Cash and cash equivalents 5,306 5,124
Total net debt $ 2,567,095 $ 2,451,809
Enterprise value:
Net debt $ 2,567,095 $ 2,451,809
Total equity market capitalization(1)(2)
5,190,640 4,926,872
Total enterprise value $ 7,757,735 $ 7,378,681
(1)Total equity market capitalization is calculated as diluted shares multiplied by the closing market price per share, which includes 138.7 million and 138.5 million diluted shares as of March 31, 2026 and December 31, 2025, respectively, and the closing market price per share of $37.42 and $35.57 as of March 31, 2026 and December 31, 2025, respectively.
(2)Fully diluted shares include common stock and OP units.
Pursuant to the terms of our credit agreements, we are subject to, among other things, the maintenance of various financial covenants. We were in compliance with these covenants as of March 31, 2026.
The following table presents our calculation of net debt to Adjusted EBITDAre and net debt to total enterprise value as of March 31, 2026 and December 31, 2025 (dollars in thousands):
March 31, 2026 December 31, 2025
Net debt to Adjusted EBITDAre - annualized:
Net debt $ 2,567,095 $ 2,451,809
Adjusted EBITDAre - annualized(1)
483,023 473,950
Net debt to Adjusted EBITDAre - annualized
5.3x 5.2x
Net debt to total enterprise value:
Net debt $ 2,567,095 $ 2,451,809
Total enterprise value 7,757,735 7,378,681
Net debt to total enterprise value 33.1% 33.2%
(1)Adjusted EBITDAre is based on a trailing twelve month period. See "Non-GAAP Measures - EBITDAre and Adjusted EBITDAre" above for a reconciliation to Net Income.
CAPITAL EXPENDITURES AND REDEVELOPMENT ACTIVITY-We make capital expenditures during the course of normal operations, including maintenance capital expenditures and tenant improvements, as well as value-enhancing anchor space repositioning and redevelopment, ground-up outparcel development, and other accretive projects.
PHILLIPS EDISON & COMPANY
MARCH 31, 2026 FORM 10-Q
During the three months ended March 31, 2026 and 2025, we had gross capital spend of $26.5 million and $26.4 million, respectively. Below is a summary of our capital spending activity, excluding leasing commissions, on a cash basis (in thousands):
Three Months Ended March 31,
2026 2025
Capital expenditures for real estate:
Capital improvements $ 3,260 $ 3,055
Tenant improvements 6,570 9,578
Development and redevelopment 13,988 11,749
Total capital expenditures for real estate 23,818 24,382
Corporate asset capital expenditures 705 458
Capitalized indirect costs(1)
1,889 1,440
Total capital spending activity(2)
$ 26,412 $ 26,280
(1)Amount includes internal salaries and related benefits of personnel who work directly on capital projects as well as capitalized interest and other external expenses.
(2)Amounts reported are net of insurance proceeds of $0.1 million for property damage claims for the three months ended March 31, 2026 and 2025.
We anticipate that obligations related to capital improvements, as well as development and redevelopment, in 2026 can be met with cash flows from operations, cash flows from dispositions, and/or borrowings on our unsecured revolving credit facility.
Generally, we expect our development and redevelopment projects to stabilize within 24 months. Our underwritten incremental unlevered yields on development and redevelopment projects are expected to range between 9%-12%. Our current in process projects represent an estimated total investment of $74.4 million. Actual incremental unlevered yields may vary from our underwritten incremental unlevered yield range based on the actual total cost to complete a project and its actual incremental annual NOI at stabilization. See "Key Performance Indicators and Defined Terms" above for further information.
PHILLIPS EDISON & COMPANY
MARCH 31, 2026 FORM 10-Q
REAL ESTATE ACQUISITION ACTIVITY-We actively monitor the commercial real estate market for properties that have future growth potential, are located in attractive demographic markets, and support our business objectives. The following table highlights our wholly-owned property acquisitions (dollars in thousands):
Three Months Ended March 31,
2026 2025
Number of properties acquired(1)
5 5
Number of outparcels and land for future development acquired(2)
1 -
Contract price $ 125,502 $ 138,425
Total price of acquisitions(3)
126,427 139,107
(1)During the three months ended March 31, 2026, we acquired a property adjacent to one that was already wholly-owned. Therefore, the property was not an addition to our total property count.
(2)Outparcels acquired are adjacent to shopping centers that we own.
(3)Total price of acquisitions includes closing costs less credits and assumed liabilities.
Subsequent to March 31, 2026, we acquired three properties for $58.9 million.
REAL ESTATE DISPOSITION ACTIVITY-We continually evaluate our portfolio of assets for opportunities to make strategic dispositions of assets that no longer meet our growth and investment objectives or assets that have stabilized in order to capture their value. The following table summarizes our real estate disposition activity for the three months ended March 31, 2026 and 2025 (dollars in thousands):
Three Months Ended March 31,
2026 2025
Number of properties sold 2 1
Contract price $ 22,250 $ 24,850
Proceeds from sale of real estate, net(1)(2)
20,947 6,466
Gain on disposal of property, net
6,817 5,609
(1)Total proceeds from sale of real estate, net includes closing costs less credits and secured loans received.
(2)During the three months ended March 31, 2025, one of our property sales included a seller financing component. We sold the property for $24.9 million and provided secured financing, receiving a note receivable of $17.4 million.
Subsequent to March 31, 2026, we sold one parcel of land for $6.7 million.
DISTRIBUTIONS-For each month beginning January 2026 through March 2026, we declared and paid monthly distributions of $0.1083 per common share and OP unit.
To maintain our qualification as a REIT, we must make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain, and which does not necessarily equal net income or loss as calculated in accordance with GAAP). We generally will not be subject to U.S. federal income tax on the income that we distribute to our stockholders each year due to meeting the REIT qualification requirements. However, we may be subject to certain state and local taxes on our income, property, or net worth and to federal income and excise taxes on our undistributed income.
We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders.
PHILLIPS EDISON & COMPANY
MARCH 31, 2026 FORM 10-Q
CASH FLOW ACTIVITIES-As of March 31, 2026, we had cash and cash equivalents and restricted cash of $22.4 million, a net cash decrease of $21.0 million during the three months ended March 31, 2026.
Below is a summary of our cash flow activity (dollars in thousands):
Three Months Ended March 31,
2026 2025 $ Change % Change
Net cash provided by operating activities
$ 55,556 $ 60,542 $ (4,986) (8.2) %
Net cash used in investing activities
(127,845) (163,556) 35,711 21.8 %
Net cash provided by financing activities
51,336 102,218 (50,882) (49.8) %
OPERATING ACTIVITIES-Our net cash provided by operating activities was primarily impacted by the following:
•Property operations-Most of our operating cash comes from rental and tenant recovery income received less property operating expenses, real estate taxes, and general and administrative costs paid. Property operations during the three months ended March 31, 2026 were positively impacted by a $4.1 million, or 3.5%, improvement in Same-Center NOI as compared to the same period in 2025. During the three months ended March 31, 2026, we had a net cash outlay of $36.4 million from changes in working capital as compared to a net cash outlay of $27.7 million during the same period in 2025. This change was primarily driven by the timing of interest payments resulting from our senior note issuances.
INVESTING ACTIVITIES-Our net cash used in investing activities was primarily impacted by the following:
•Real estate acquisitions-During the three months ended March 31, 2026, our acquisitions resulted in a total cash outlay of $126.4 million, as compared to a total cash outlay of $139.1 million during the same period in 2025.
•Real estate dispositions-During the three months ended March 31, 2026, we sold two properties resulting in a net cash inflow of $20.9 million. During the three months ended March 31, 2025, we sold one property resulting in a net cash inflow of $6.5 million.
•Investment in unconsolidated joint ventures-During the three months ended March 31, 2026, we invested $0.9 million in our unconsolidated joint ventures, as compared to $3.5 million during the same period in 2025.
•Investment in marketable securities-During the three months ended March 31, 2026, we had proceeds, net of investments, of $0.8 million from marketable securities through our captive insurance company, as compared to $1.5 million of investments during the same period in 2025.
FINANCING ACTIVITIES-Our net cash provided by financing activities was primarily impacted by the following:
•Debt borrowings and payments-During the three months ended March 31, 2026 and 2025, we had $111.9 million and $159.6 million, respectively, in net borrowings primarily as a result of our net acquisition activity.
•Distributions to stockholders and OP unit holders-Cash used for distributions to common stockholders and OP unit holders increased $3.2 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to an increase in our distribution rate.
CRITICAL ACCOUNTING ESTIMATES
"Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" of our 2025 Annual Report on Form 10-K, filed with the SEC on February 10, 2026, contains a description of our critical accounting estimates, including those relating to the valuation of real estate assets and rental income. There have been no significant changes to our critical accounting estimates during 2026.
Phillips Edison & Co. Inc. published this content on April 24, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 24, 2026 at 20:44 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]