Phillips Edison & Co. (PECO): 2Q26 Update: Disciplined property acquisitions driving long-term growth; Buy

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Phillips Edison & Co. (PECO): 2Q26 Update: Disciplined property acquisitions driving long-term growth; Buy

Goldman Sachs Phillips Edison & Co. (PECO)

allowing PECO to watch market comps and drive mark-to-market upside. On the

durability of spreads (34%-35% new / 21%-22% renewal), management stressed

that the elevated renewal spreads persisting over many quarters are demand-driven

as competing neighbors gives PECO negotiating leverage.

o Management also reiterated their targeted approach in which leadership

identified the top 100 highest-NOI/ABR-generating vacant spaces remaining

to be leased and placed bounties and additional incentives on the leasing

team to fill them. That focus is producing results, with ~65 of the 100 spaces

already leased as of about July 17 (vs 28 through April), and management

indicated it intends to repeat the same incentive-driven,

accountability-focused approach next year.

n Management noted it is deliberately targeting tenant health ratios (OCRs) in the

10%-10.5% range, signaling that PECO is managing rent growth to preserve

long-term neighbor viability rather than maximizing near-term spread. PECO stated

that they believe there is another ~100bps of inline occupancy upside that they can

capture, which they plan to do selectively, noting that it may take 24 months as they

are intentional about their merchandising and Everyday Retail approach, where they

have already driven occupancy up 450bps across the 12 acquired assets. Further,

management guided to another 50-60bps of anchor occupancy gains by year-end

(currently at 98.5% on a same-center basis).

n Everyday Retail continues to be positioned as a differentiated growth channel

with a less-competitive transaction market. Management detailed that the 12