Phillips Edison & Company, Inc. Q2 FY2026 earnings call

• Overall Portfolio Performance & Strategic Positioning • Delivered 8.1% year-over-year NAREIT FFO per share growth, 7.8% core FFO per share growth, and 3.8% same-center NOI growth in Q2 2026, driven by high demand for grocery-anchored center space and strong operational execution • Maintains an investment-grade balance sheet, with significant liquidity and diversified capital access (equity, debt, joint ventures, portfolio recycling); Moody's recently revised the company's credit outlook to positive, reflecting consistent operating performance and disciplined balance sheet management • Strategy focuses on generating

Phillips Edison & Company is a REIT focused on grocery-anchored and everyday retail shopping centers, with all operating results consolidated at the portfolio level (no separate segmented financial reporting provided in the transcript). Key consolidated Q2 2026 financial results are as follows: NAREIT FFO increased to $93.7 million, or 67 cents per diluted share; Core FFO increased to $95.5 million, or 69 cents per diluted share; Same-center NOI growth hit 3.8% year-over-year. 74% of total portfolio rent comes from necessity-based goods and services segments, with the remaining 26% from other retail categories. Core grocery-anchored neighborhood centers represent over 90% of the total portfolio, while the complementary everyday retail segment makes up less than 10% of the portfolio.

• Full-year 2026 NAREIT FFO per share guidance was increased, with the midpoint representing a 6.3% increase over 2025 results
• Full-year 2026 core FFO per share guidance was increased, with the midpoint representing a 6.2% increase over 2025 results
• Same-center NOI growth guidance for 2026 was updated to 3.7% at the midpoint, within the company's long-term 3% to 4% target range
• Full-year 2026 gross acquisitions guidance was increased from $400-$500 million to $500-$600 million, which also represents a $100 million increase to the net acquisition outlook
• 2026 disposition guidance is maintained at $100 to $200 million in asset sales
• Full-year 2026 bad debt guidance was lowered, with management now expecting full-year bad debt to be in line with or slightly better than 2025 levels (Q2 2026 bad debt came in below expectations at ~70 bps of revenue)
• Management maintains a long-term target of mid-to-high single digit core FFO per share growth

• Consumer spending weakness and pressure on grocers could eventually impact tenant demand, occupancy, and rent growth, though management has not observed this impact on portfolio foot traffic to date
• Highly competitive acquisition market requires strict discipline to meet target return thresholds, as increased competition can compress available returns
• Short-term cash flow gaps from ahead-of-schedule dispositions and reinvestment of proceeds into new acquisitions may create modest near-term FFO headwinds, though this positions the company for stronger growth in 2027
• Over-concentration of exposure to any single grocery chain is a portfolio risk, which management mitigates through ongoing portfolio curation to limit reliance on any single anchor tenant

Q: The gross acquisition guidance was raised by $100 million; is net acquisitions also up $100 million, and why was the FFO guidance increase only modest given strong quarterly results? / A: Yes, net acquisition guidance is also up $100 million, funded by a recent $92 million equity raise and current leverage of 5.0x LQA debt to EBITDA. While first half operating performance and tenant credit trends are strong, and same-center guidance is now at the upper end of the long-term target, the modest FFO increase reflects a short-term cash flow gap from ahead-of-schedule dispositions, as proceeds are reinvested for stronger growth in 2027.

Q: Is the higher 2026 acquisition guidance a new run rate for future years, and how does equity fit into funding plans? / A: The 2026 guidance increase reflects a strong current pipeline, not a permanent new run rate. Long-term, management expects to be able to do ~$300 million in net acquisitions annually while remaining leverage-neutral. Full-year 2026 guidance does not assume any additional equity issuances, and the company will maintain balance sheet capacity while pursuing higher acquisition volumes if attractive opportunities persist.

Q: With grocers warning of consumer pressure and cutting outlooks, is this a sign of upcoming weakness for PICO's leasing demand? / A: The recent Albertsons outlook cut reflects their ongoing transition related to the proposed Kroger merger, not broad-based sector weakness. Major grocers like Walmart and Kroger are reinvesting in pricing in response to consumer trading down to private label, but PICO has not seen an impact on portfolio foot traffic, which is up 2% YoY in June and year-to-date. PICO mitigates single-tenant risk through portfolio curation, with limited exposure to any single grocer.

Q: What gives PICO a competitive edge in the current heated acquisition market? / A: PICO benefits from a national footprint across 30 states that allows it to source opportunities across a broader geographic range, plus increased investment in acquisition team resources to source more deals and off-market opportunities. The team also sees a 33% increase in deal flow and 25% more deals presented to the investment committee versus prior periods, and remains disciplined on hitting 9% to 11% unlevered return targets for all acquisitions.