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

Research evidence excerpt

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

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 the TTM (Exhibit 2), influenced by a low portion of option

leases, but also spreads on new leases tracked at +33.7% in 2Q26 above the

+32.4% over the TTM (Exhibit 3). Given PECO’s high occupancy, we expect pricing on

new and renewal leases to remain strong, and realize that the mix of leases (including

options) can impact a specific quarter’s reported spreads. With renewal spreads at

+21.2% (20 bps below the 21.4% realized over the TTM), PECO is showing that the

tenants it chooses to renew are also willing to pay higher rents in order to stay.

o On the earnings call we will listen for details on PECO’s ability to sustain or