Caroline Lops

Caroline Lops, on behalf of Ron Kamdem, asked for more details on Phillips Edison & Company's disposition activity, including what is being seen or anticipated, and insights into cap rates and unlevered IRRs for those dispositions.

Answer

President Bob Myers stated that PECO sold approximately $140 million in 2025, with a core strategy of recycling assets that have stabilized (unlevered return targets around 7%) and replacing them with opportunities yielding 9%-10.5% unlevered returns. He budgeted $100 million-$150 million for dispositions in 2026. Chairman and CEO Jeff Edison elaborated on two disposition buckets: stabilized projects with limited upside (unlevered IRR 7-7.5%, e.g., a California property sold at a 5.7-5.8% cap rate) and de-risking opportunities (unlevered IRR 6.5-7%). He emphasized a disciplined approach to ensure optimal pricing.

Caroline Lops asked for more details on Phillips Edison & Company's disposition activity, including market observations, anticipated volumes, and the cap rates and unlevered IRRs achieved on these sales.

Answer

President Bob Myers noted that PECO sold approximately $140 million in 2025, intentionally recycling assets with unlevered returns around 7% for new opportunities yielding 9%-10.5%. Chairman and CEO Jeff Edison elaborated on two disposition buckets: stabilized assets with limited upside (7-7.5% unlevered IRR, like a California project sold at a 5.7-5.8% cap rate) and de-risking sales (6.5-7% IRR), emphasizing a disciplined approach to pricing.