Executive Summary

Revenue and EPS beat consensus; total revenues were $182.67M vs $177.07M consensus and GAAP diluted EPS was $0.20 vs $0.14 consensus; EBITDA tracked near expectations, producing a clean headline beat driven by strong leasing and rent spreads *. Values retrieved from S&P Global.
Guidance raised: net income per share to $0.62–$0.65 (from $0.61–$0.64), Nareit FFO/share to $2.51–$2.55 (from $2.50–$2.54), and Core FFO/share to $2.57–$2.61 (from $2.55–$2.60); interest expense guide lowered and G&A raised .
Operating KPIs remained best-in-class: leased occupancy 97.6%, same‑center NOI +3.3% YoY, record renewal spreads of 23.2%, and retention 93.9%, underscoring resilient necessity retail demand .
Management highlighted selective acquisitions and portfolio recycling as catalysts; year‑to‑date acquisitions at PECO’s share reached $376M, with expected 2026 dispositions $100–$200M to upgrade IRR profile .

What Went Well and What Went Wrong

What Went Well

Record leasing economics: comparable renewal rent spreads hit 23.2% and comparable new leases 24.5%, with average annual rent bumps of ~2.6%, driving embedded growth .
Strong occupancy and retention: leased portfolio occupancy 97.6%; same‑center leased occupancy 97.9%; portfolio retention 93.9%, supporting steady same‑center NOI growth (+3.3% YoY) .
Raised full‑year guidance (Nareit FFO and Core FFO per share midpoints +6.8% and +6.6% YoY, respectively), reflecting operating momentum and disciplined external growth; “Operating from a position of strength and stability” (CEO) .

What Went Wrong

Interest expense pressure: net interest expense YTD was $81.94M, up from $71.95M; while guidance was lowered to $108–$116M, rate environment and swap roll‑offs could increase floating exposure to ~15% if not re‑termed .
G&A guide raised to $48–$52M (from $46–$51M), reflecting higher performance‑based comp and scaling investments; a modest headwind to Core FFO leverage .
Q4 same‑center NOI set to be 1–2% due to 2024 recoveries timing creating difficult comps; underlying trajectory remains 3–4% long‑term, but near‑term optics may appear softer .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Total Revenues ($USD Millions)	$165.53	$178.31	$177.75	$182.67
Net Income per Share (Diluted) ($)	$0.09	$0.21	$0.10	$0.20
Net Income Margin (%)	7.8%*	14.8%*	7.2%*	13.5%*
EBITDA ($USD Millions)	N/A	$113.27*	$112.10*	$115.29*
EBITDA Margin (%)	N/A	63.5%*	63.1%*	63.1%*

Notes: Asterisks denote values retrieved from S&P Global.

Segment/Revenue Composition

Revenue Component ($USD Thousands)	Q3 2024	Q3 2025
Rental income	$121,156	$131,464
Recovery income	$38,235	$43,227
Straight-line rent amortization	$1,893	$2,732
Amortization of lease assets	$1,729	$2,154
Lease buyout income	$393	$144
Fees and management income	$2,856	$3,274
Other property income	$891	$1,102
Total revenues	$165,527	$182,669

KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
Leased Occupancy (Portfolio)	97.8%	97.4%	97.6%
Same‑Center Leased Occupancy	97.8%	97.6%	97.9%
Renewal Rent Spread (%)	19.8%	19.1%	23.2%
New Lease Rent Spread (%)	55.0%	34.6%	24.5%
Same‑Center NOI YoY (%)	3.2%	4.2%	3.3%
Retention Rate (Portfolio)	91.9%	92.8%	93.9%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net income per share	FY 2025	$0.61–$0.64	$0.62–$0.65	Raised
Nareit FFO per share	FY 2025	$2.50–$2.54	$2.51–$2.55	Raised
Core FFO per share	FY 2025	$2.55–$2.60	$2.57–$2.61	Raised
Same‑Center NOI growth	FY 2025	3.10%–3.60%	3.10%–3.60%	Maintained
Gross Acquisitions	FY 2025	$350M–$450M	$350M–$450M	Maintained
Interest expense, net	FY 2025	$110M–$120M	$108M–$116M	Lowered
G&A expense	FY 2025	$46M–$51M	$48M–$52M	Raised
Non‑cash revenue items	FY 2025	$19M–$21M	$19M–$21M	Maintained
Adjustments for collectibility	FY 2025	$4.5M–$7.5M	$5M–$7M	Tightened
Monthly dividend (announced)	Dec 2025–Mar 2026	—	$0.1083/month	Announced

Earnings Call Themes & Trends

Topic	Q1 2025 (Previous Mentions)	Q2 2025 (Previous Mentions)	Q3 2025 (Current)	Trend
Guidance	Affirmed FY25; midpoints implied +5–6% FFO/share	Raised midpoints; 6–6.3% growth	Raised again; ~6.6–6.8% growth	Positive revisions
Leasing spreads	Renewal record 21.7%	New 34.6%, renewal 19.1%	Renewal 23.2%, new 24.5%	Strong, normalizing
Occupancy	Leased 97.1%	Leased 97.4%	Leased 97.6%; inline +20bps seq	Gradual uptick
Acquisitions	$146M in Q1; guidance $350–$450M	$133M in Q2; YTD $287M	Selective; $376M YTD incl. post‑Q3	Ongoing, selective
Dispositions	One shopping center sold ($24.9M)	Target $50–$100M in 2025	2026 plan $100–$200M; focus higher IRR	Rising recycling
Macro/tariffs	Necessity exposure reduces tariff risk	—	Competitive market; discipline emphasized	Stable/monitored
Bad debt	~70–80bps run‑rate; guide midpoint 90bps	—	No material change expected Q4’25/2026	Stable
Balance sheet/rates	Revolver upsized/extended	Issued $350M 5.25% notes due 2032	Swaps burn off; ~15% floating if not extended; target ~90% fixed; potential bond market access	Manage duration/mix
Development/redevelopment	Pipeline contributing 9–12% yields	—	22 active projects; 9–12% yields; new Ocala land (10.5% unlevered)	Expanding

Management Commentary

“PECO continues to drive solid earnings growth… Nareit FFO and Core FFO per share growth of 6.7% and 4.8%… Operating from a position of strength and stability” — Jeff Edison, CEO .
“Comparable renewal rent spreads of 23.2%… average annual rent bumps of 2.6%… inline occupancy ended the quarter at 95%, a sequential increase of 20bps” — Bob Myers, President .
“We are reaffirming our guidance range for 2025 same‑center NOI growth… Q4 growth between 1% and 2% due to prior-year recovery timing… long-term same‑center NOI 3–4%” — John Caulfield, CFO .
“We believe PECO can deliver mid‑to‑high single-digit Core FFO/share growth annually on a long‑term basis” — Management closing remarks .

Q&A Highlights

Development land rationale: 34‑acre Ocala FL site partnered with a national grocer; expected ~10.5% unlevered return, seven outparcels; complements long‑term growth strategy .
Acquisition pipeline/selectivity: Comfortable at bottom/midpoint of $350–$450M; underwriting tightened given macro; still achieving ~9% unlevered IRR targets .
Leverage and funding: Long‑term net debt/EBITDA target ≤5.5x; funding via >$100M retained FCF, dispositions ($100–$200M planned 2026), and bond market access as needed .
Dispositions IRR/cap rates: Selling stabilized, lower growth assets at ~6.3%–6.8% caps; recycling into 9%–10%+ unlevered return deals adds ~200bps IRR spread .
Bad debt run‑rate: 70–80bps reasonable; guidance midpoint 90bps provides cushion; no material change expected in Q4’25 or 2026 .

Estimates Context

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue Consensus ($USD)	$170,480,580*	$173,828,960*	$177,068,830*
Revenue Actual ($USD)	$178,311,000*	$177,753,000*	$182,669,000*
EPS Consensus (Primary) ($)	0.14745*	0.14282*	0.13967*
EPS Actual (Primary) ($)	0.16520*	0.09250*	0.14710*
EBITDA Consensus ($USD)	$110,855,230*	$112,582,040*	$116,855,860*
EBITDA Actual ($USD)	$113,266,000*	$112,102,000*	$115,290,000*

Notes: Asterisks denote values retrieved from S&P Global. PECO also reports Nareit FFO and Core FFO; GAAP EPS may differ from “Primary EPS” used by consensus .

Implications:

Q3 2025 beat on revenue (+3.2% vs consensus) and EPS; EBITDA modestly below consensus, but adjusted EBITDAre grew YoY (+10.1%) supporting raised FFO guidance *. Values retrieved from S&P Global.

Key Takeaways for Investors

Clean beat with raised full‑year guidance; sustained leasing economics and occupancy underpin FFO/share growth (midpoints +6.6–6.8%) .
Expect softer Q4 same‑center NOI optics (1–2%) due to 2024 recovery timing; trajectory remains intact at 3–4% long‑term, reducing risk to 2026 estimates .
Portfolio recycling accelerates: 2026 dispositions ($100–$200M) to upgrade IRRs; watch for continued spread capture between sold (~6.3–6.8% caps) and acquired (~9–10%+) assets .
Funding flexibility: >$977M liquidity and net debt/EBITDA at 5.3x create room to pursue selective acquisitions without equity dependence .
Rate management: Swap expirations could lift floating mix to ~15%; management evaluating opportunistic long‑term issuance to maintain ~90% fixed exposure .
Development optionality: Ocala project and 22 active redevelopments with 9–12% yields add internal growth drivers beyond leasing spreads .
Dividend visibility: Monthly dividend declared at $0.1083 per share through March 2026; cash flows and payout ratios remain conservative .

Further references:

Q3 Earnings Press Release and Supplemental (Item 2.02/99.1/99.2) .
Q3 Earnings Call Transcript (strategic commentary and Q&A) –.
Business Update webcast scheduled for Dec 17, 2025 (potential preliminary 2026 guidance) .

Phillips Edison & Company, Inc. (PECO)·Q3 2025 Earnings Summary