Phillips Edison & Co Inc Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Reale - BofA Merrill Lynch - Analyst : Good afternoon. Thanks for taking my questions. First, can you just share more on your thinking around acquiring development land at this point in the cycle? Why is right now the right time to pursue opportunities like this? And are you evaluating other ground-up development sites at this point in time?

Question: Andrew Reale - BofA Merrill Lynch - Analyst : Okay, thank you. That's helpful color. And then if I could just ask a follow-up. Could you maybe just provide more detail on the makeup of your current acquisition pipeline? And just how much more incremental volume could you potentially close before year-end? I know, Jeff, you had mentioned you're being a little more selective in the second half now. So just curious on where we might shake out relative to the acquisition range. Thank you.

Question: Caitlin Burrows - Goldman Sachs Group Inc - Analyst : Hi everyone, maybe sticking on the acquisition side. So looking at leverage now, it's at 5.1 times, which I'd say is totally reasonable. But I guess it sounds like going forward, you might be interested or willing to increase leverage. So wondering if you could discuss a little bit, what the kind of upper level is on leverage and how you think about that as a funding source.

Question: Caitlin Burrows - Goldman Sachs Group Inc - Analyst : And then just as the other kind of source of funds, it sounds like you might lean more into dispositions. And so if we look at the dispositions you guys have done historically, you do give great disclosure on the cap rates of the acquisitions versus dispositions, historically, the dispose have been at higher cap rates. So I was wondering, going forward, are there assets that you would maybe newly looking to sell that would make that process accretive? Or how are you thinking about that acquisition versus disposition cap rate and kind of the types of properties you'd be looking to sell and who the buyers are and what they're willing to pay for them? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2025 / 4:00PM, PECO.OQ - Q3 2025 Phillips Edison & Co Inc Earnings Call

Question: Ronald Kamdem - Morgan Stanley - Analyst : Hey, thanks so much. Just going back to sort of the occupancy and more of the in-line occupancy here. You're getting good retention rates, you're pushing rents. Just remind us what the message is for the team, how much more occupancy upside you sort of think that is there? And just strategically, how are you guys messaging sort of pushing rents here at the expense of retention rates? Thanks.

Question: Ronald Kamdem - Morgan Stanley - Analyst : Great. And then if I could ask a quick follow-up, just on the unanchored centers. We talked about it last quarter, but as you're sort of looking at more of the opportunities, just what's the update in terms of the opportunity set and sort of the conviction of that strategy? Thanks.

Question: Michael Goldsmith - UBS AG - Analyst : Good afternoon. Thanks a lot for taking my question. My first question, Jeff, is when you said in the prepared remarks about being more selective in the second half, what do you mean by more selective? Are you looking more on price? Is it more on location? Is it more on shopping center format just trying to get a sense of where that selectivity is leading you?

Question: Michael Goldsmith - UBS AG - Analyst : Thanks for that. And my follow-up is, right, on the competition, you said it remains competitive. Has it gotten any more incrementally competitive in the last quarter? And then just like -- if you can provide some color on deals that you don't win, who are you losing to? Is it new -- is it new entrants? Or is it kind of the same folks that are still --

Question: Omotayo Okusanya - Deutsche Bank AG - Analyst : Hi, good afternoon, everyone. I was wondering if you could just give a view on the outlook for grocers in general. I think, again, your sales are going up, but just -- but again, just going to hear a lot of conflicting noise around more selective consumer, inflation is kind of causing volumes or trips to grocers to kind of slow down? Just if you just kind of give us an update on general kind of what you're seeing and how you think that space is evolving. We'd appreciate that.

Question: Omotayo Okusanya - Deutsche Bank AG - Analyst : That's helpful. And then how do you think about -- when you're kind of thinking about sources and uses of capital, how does potential stock buybacks kind of stem into the equation at current stock prices?

Question: Omotayo Okusanya - Deutsche Bank AG - Analyst : Got you. And then one quick last one for me. How do you think about acquisitions? Again, you already had $376 million year-to-date guidance of $350 million to $450 million. I'm just kind of curious whether there's some conservatism in that number or the way 4Q is shaping up, there may not be a lot of deal activity?

Question: Todd Thomas - KeyBanc Capital Markets Inc - Analyst : Hi, thanks. First question, just regarding dispositions you commented, it sounds like next year will be higher than this year's $50 million to $100 million target. Is there a segment of the portfolio or kind of a larger portion of the asset base that you ideally would like to recycle out of? Is there any insight around how much you might look to sell over time and also whether the plan is to sell assets on a one-off basis or if there could be some larger transactions, perhaps just given the increased competition that you're seeing?

Question: Todd Thomas - KeyBanc Capital Markets Inc - Analyst : Okay. Got it. So it sounds like a little more of an ongoing portfolio sort of asset management process. Just the plan is to remain that acquirer is just sort of prune the portfolio over time by selling lower growth assets and upgrading quality and improving growth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2025 / 4:00PM, PECO.OQ - Q3 2025 Phillips Edison & Co Inc Earnings Call

Question: Todd Thomas - KeyBanc Capital Markets Inc - Analyst : Yeah, okay. And then my last -- just for John, real quick, can you just talk about the drivers behind the interest expense decrease underlying the updated guidance? And are there any updates on the swap expirations in November and December?

Question: Hong Zhang - JPMorgan Chase & Co - Analyst : I guess just a question on funding your acquisition pipeline for next year. You've traditionally funded your acquisitions through with majority debt. I guess what is the thinking around changing that composition to be more with dispositions next year, especially with rates falling where they are? Because correct me if I'm wrong, but once you get more of a spread, if you were to fund your acquisitions on debt currently?

Question: Hong Zhang - JPMorgan Chase & Co - Analyst : Got it. And then I guess just on thinking about the cap rate on your potential dispositions, I mean you've talked about selling, I guess, stabilized centers. I guess, could you give a general range of what cap rate those centers would trade out to that?

Question: Paulina Rojas - Green Street - Analyst : Good morning. Among your lease position, you have the sale of Point Loomis, which, to my knowledge, included a progress store that recently closed and I understand the buyer is a small grocery operator. And -- so when you consider the sale price of that property, how do you think the store's closure impacted its value, if at all, compared to what it might have been had -- not closed?

Question: Paulina Rojas - Green Street - Analyst : Yeah, that makes sense. And somehow related a little bit. But regarding the new development that you mentioned, I think I heard an IRR of around -- expected IRR around 10%. And I also believe you mentioned that you plan to sell a portion to the grocer. And so I presume you will focus on small shops mostly in that center. And my question is how much would your IRR defer if you retained ownership of the grocer store rather than selling it to the retailer?

Question: Juan Sanabria - Bank of Montreal - Analyst : All right, thanks for the time. Just curious if the plan for '26 may include moving the acquisition volume or focus more towards that unanchored given presumably higher yields or that's not necessarily the case. And as part of that the unanchored centers that you're interested in buying also had that previously mentioned occupancy upside or that not part of that particular story?

Question: Juan Sanabria - Bank of Montreal - Analyst : Okay. And then just the last one for me. G&A went up the guidance there. If you could just provide a little color as to why and how we should think about growth in '26? Is that more in line with inflation? Is there any sort of tech or other type of investment opportunities you're looking at that may to increase is higher relative to history next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2025 / 4:00PM, PECO.OQ - Q3 2025 Phillips Edison & Co Inc Earnings Call