PECO 10-K & 10-Q changes, risk factors and insider trading
Phillips Edison & Company, Inc. · Nasdaq · Real Estate Investment Trusts · CIK 1476204 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our financial performance depends on the stability and success of our Neighbors, and the loss, failure, departure or bankruptcy of significant Neighbors – including major anchor stores – or a high volume of smaller Neighbors, could adversely affect our revenues, occupancy, and results of operations.”
New heading “Our use of taxable REIT subsidiary (“TRS”) entities may jeopardize our REIT qualification and expose us to significant tax liabilities.”
Removed heading “Summary of Risk Factors”
Removed heading “Risks Related to Our Indebtedness and Liquidity”
Removed heading “Risks Related to Our Corporate Structure and Organization”
Removed heading “Risks Related to Our REIT Status and Other Tax Risks”
Removed heading “Risks Related to Business Continuity”
Removed heading “Risks Related to Our Common Stock”
Removed heading “Risks Related to Our Business and Operations”
Removed heading “Our revenues and cash flows will be affected by the success and economic viability of our anchor Neighbors.”
Removed heading “A significant percentage of our revenues is derived from non-anchor Neighbors, and our net income and ability to make distributions to stockholders may be adversely affected if these Neighbors are not successful.”
Removed heading “We may be unable to collect balances due from Neighbors in bankruptcy.”
Removed heading “We may be restricted from leasing space to certain retailers.”
Removed heading “Actual incremental unlevered yields for our development and redevelopment projects may vary from our underwritten incremental unlevered yield range.”
Removed heading “We use taxable REIT subsidiaries, which may cause us to fail to qualify as a REIT.”
Removed heading “Our ownership of TRS entities is subject to limitations that could prevent us from growing our management business, and our transactions with our TRS entities could cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on an arm’s-length basis.”
Largest changes
“We actively pursue opportunities to develop outparcels and redevelop existing properties; however, these activities require various government and other approvals, and any delay or failure in obtaining necessary entitlements can significantly postpone or even prevent a project, jeopardizing our ability to recover our investment. …”see in full comparison
“Our anchor Neighbors (generally those occupying 10,000 square feet or more) pay a significant portion of the total rent at a property and draw customer traffic to other stores. If a major anchor Neighbor ceases or downsizes operations – whether due to bankruptcy, insolvency, business downturn, lease default, or a decision not to renew its lease – we would lose a primary income source and traffic driver. This could also trigger co-tenancy provisions in other Neighbors’ leases allowing them to pay reduced rent or terminate their leases, further eroding our rental income. …”see in full comparison
“Our financial performance depends on the stability and success of our Neighbors, and the loss, failure, departure or bankruptcy of significant Neighbors – including major anchor stores – or a high volume of smaller Neighbors, could adversely affect our revenues, occupancy, and results of operations.”see in full comparison
“We may be unable to collect balances due from Neighbors in bankruptcy.”see in full comparison
“Our ownership of TRS entities is subject to limitations that could prevent us from growing our management business, and our transactions with our TRS entities could cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on an arm’s-length basis.”see in full comparison
“Inflationary pressures, rising interest rates, supply chain disruptions, and labor shortages may exacerbate certain of these risks. If we fail to reinvest in our portfolio or maintain its attractiveness to retailers and consumers, if our capital improvements are not successful, or if retailers or consumers perceive that shopping at other venues (including e-commerce) is more convenient, cost-effective, or otherwise more compelling, our financial condition, cash flows, and results of operations could be adversely affected.”see in full comparison
Full comparison: every changed paragraph (95)
Summary of Risk Factors
An investment in our common stock involves risks. You should carefully consider the risks summarized here and described more fully below.
Our financial performance depends on the stability and success of our Neighbors, and the loss, failure, departure or bankruptcy of significant Neighbors – including major anchor stores – or a high volume of smaller Neighbors, could adversely affect our revenues, occupancy, and results of operations.
Our anchor Neighbors (generally those occupying 10,000 square feet or more) pay a significant portion of the total rent at a property and draw customer traffic to other stores. If a major anchor Neighbor ceases or downsizes operations – whether due to bankruptcy, insolvency, business downturn, lease default, or a decision not to renew its lease – we would lose a primary income source and traffic driver. This could also trigger co-tenancy provisions in other Neighbors’ leases allowing them to pay reduced rent or terminate their leases, further eroding our rental income. If an anchor “goes dark” (stops operating but continues to pay rent), the lack of an active anchor can significantly diminish shopper traffic, impairing sales for other Neighbors. Re-leasing a vacated anchor space can be challenging and costly because anchor spaces may require substantial capital investments or reconfiguration (for example, subdividing into smaller units) to attract new Neighbors, and prolonged downtime is likely during this repositioning. In some cases, an anchor’s lease may allow it to assign or transfer the space to a new retailer not originally anticipated, which could change the center’s draw and potentially reduce foot traffic, or give other Neighbors the right to renegotiate or exit their leases.
A significant portion of our revenue comes from non-anchor Neighbors, some of which may have more limited financial resources than anchor Neighbors and could be vulnerable in an adverse economic climate. If a large number of these smaller Neighbors experience financial distress, default on their leases, or choose to close their businesses, our occupancy levels and rental income would decline. We may need to offer rent concessions, reduced rental rates, or fund additional tenant improvements and inducements to attract or retain replacement Neighbors, which would increase our costs and reduce cash flows. Competitive pressures – including from other shopping centers or e-commerce alternatives – can make it difficult to backfill vacant space on favorable terms, leading to extended vacancies or the acceptance of lower-paying or less creditworthy Neighbors. High vacancy or a suboptimal tenant mix at a given property can also diminish the property’s overall resale value.
In addition, certain lease provisions can restrict our re-leasing flexibility. Some Neighbors have exclusive-use rights preventing us from leasing other space in the center to competitors or to users of certain product categories. These clauses can limit the pool of replacement tenants for a vacant unit (especially if the departed tenant had such protection or if existing Neighbors hold exclusive rights that constrain new leases), potentially resulting in longer vacancy periods or the need to accept a less optimal tenant at a lower rent. Similarly, co-tenancy clauses may reduce what remaining Neighbors are obligated to pay (or allow them to terminate their leases) until we satisfy certain conditions (such as securing a replacement anchor or achieving a specified occupancy threshold), prolonging the financial impact of an anchor loss.
Furthermore, if Neighbors file for bankruptcy, they may exercise their legal right to reject leases, resulting in termination of rental obligations and leaving us with vacant space and unrecoverable past due rent. Our claims for unpaid rent in a tenant’s bankruptcy are typically general unsecured claims, for which recovery, if any, is usually limited and obtained only after lengthy proceedings. A bankruptcy by a major Neighbor (or multiple Neighbors) with locations across several of our centers could abruptly eliminate significant rental streams, and we may incur legal and re-leasing expenses while trying to mitigate the loss. Even in cases of a single-store bankruptcy, we may face delays and costs re-leasing that space, and any gap in occupancy reduces property revenue.
If our Neighbors – whether large anchors or smaller shop tenants – fail to perform, downsize, or depart our centers in significant numbers, our rental income and occupancy rates would decline, we could incur substantial costs to attract new tenants or adapt our properties, and the value of our shopping centers could be negatively affected. Any such developments could have a material adverse effect on our business, financial condition, cash flows, and results of operations, including our ability to service debt and make distributions to stockholders.
•Our revenues and cash flows will be affected by the success and economic viability of our anchor Neighbors.
•A significant percentage of our revenues is derived from non-anchor Neighbors, and our net income and ability to make distributions to stockholders may be adversely affected if these Neighbors are not successful.
•We may be unable to sell shopping centers when desired, at an attractive price, or at all, and the sale of a property could cause significant tax payments.
•We face competition and other risks in pursuing acquisition opportunities that could increase the cost of such acquisitions and/or limit our ability to grow, and we may not be able to generate expected returns or successfully integrate completed acquisitions into our existing operations.
•We share ownership of our unconsolidated joint ventures and do not have exclusive decision-making power, and as such, we are unable to ensure that our objectives will be pursued.
•Our real estate assets may decline in value and be subject to significant impairment losses, which may reduce our net income.
•We actively reinvest in our portfolio in the form of development and redevelopment projects, which have inherent risks that could adversely affect our financial condition, cash flows, and results of operations.
•The continued shift in retail sales towards e-commerce may adversely affect our financial condition, cash flows, and results of operations.
•Actual incremental unlevered yields for our development and redevelopment projects may vary from our underwritten incremental unlevered yield range.
•Pandemics, epidemics, or other health crises may have a negative effect on our and our Neighbors’ businesses, financial condition, results of operations, cash flows, and liquidity.
•We use artificial intelligence technologies in our business, and the use of these technologies involve technological and legal risk.
Risks Related to Our Indebtedness and Liquidity
•We have substantial indebtedness, and we may need to incur additional indebtedness, including recourse debt, in the future, which could adversely affect our business, financial condition, and ability to make distributions to our stockholders.
Risks Related to Our Corporate Structure and Organization
•We and our consolidated subsidiary, the Operating Partnership, entered into tax protection agreements with certain protected partners, which may limit the Operating Partnership’s ability to sell or otherwise dispose of certain shopping centers and may require the Operating Partnership to maintain certain debt levels that otherwise would not be required to operate its business.
Risks Related to Our REIT Status and Other Tax Risks
•Failure to qualify as a REIT would cause us to be taxed as a regular C corporation, which would substantially reduce funds available for distributions to stockholders.
•If the Operating Partnership fails to qualify as a partnership for U.S. federal income tax purposes, we would fail to qualify as a REIT and would suffer adverse consequences.
•Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or liquidate otherwise attractive investments.
Risks Related to Business Continuity
•We and our Neighbors face risks relating to cybersecurity attacks, which could cause loss of confidential information and other disruptions to business operations, and compliance with new laws and regulations regarding cybersecurity and privacy may result in substantial costs and may decrease cash available for distributions.
Risks Related to Our Common Stock
•The market price and trading volume of shares of our common stock may be volatile.
•The number of shares of our common stock available for future issuance or sale could adversely affect the market price of our common stock.
Risks Related to Our Business and Operations
Our revenues and cash flows will be affected by the success and economic viability of our anchor Neighbors.
Anchor Neighbors (a Neighbor occupying 10,000 or more square feet) occupy large stores in our shopping centers, pay a significant portion of the total rent at a property, and contribute to the success of other Neighbors by attracting shoppers to the property. Our revenues and cash flows may be adversely affected by the loss of revenues and additional costs in the event a significant anchor Neighbor: (i) becomes bankrupt or insolvent; (ii) experiences a downturn in its business; (iii) defaults on its lease; (iv) decides not to renew its lease as it expires; (v) renews its lease at lower rental rates and/or requires tenant improvements; or (vi) renews its lease but reduces its store size, which results in down-time and additional tenant improvement costs to us to re-lease the space. Some anchors have the right to vacate their space and may prevent us from re-tenanting by continuing to comply and pay rent in accordance with their lease agreement. Vacated anchor space, including space owned by the anchor, can reduce rental revenues generated by the shopping center in other spaces because of the loss of the departed anchor's customer drawing power. In the event that we are unable to re-lease the vacated space to a new anchor Neighbor in such situations, we may incur additional expenses in order to re-model the space to be able to re-lease the space to more than one Neighbor.
If a significant Neighbor vacates a property, co-tenancy clauses in select lease contracts may allow other Neighbors to modify or terminate their rent or lease obligations. Co-tenancy clauses have several variants: (i) they may allow a Neighbor to postpone a store opening if certain other Neighbors fail to open their stores; (ii) they may allow a Neighbor to close its store prior to lease expiration if another Neighbor closes its store prior to lease expiration; or (iii) they may allow a Neighbor to pay reduced levels of rent until a certain number of Neighbors open their stores within the same shopping center.
The leases of some anchor Neighbors may permit the anchor Neighbor to transfer its lease to another retailer. The transfer to a new anchor Neighbor could cause customer traffic in the shopping center to decrease and thereby reduce the potential income generated by that shopping center. A lease transfer to a new anchor Neighbor could also allow other Neighbors to make reduced rental payments or to terminate their leases.
A significant percentage of our revenues is derived from non-anchor Neighbors, and our net income and ability to make distributions to stockholders may be adversely affected if these Neighbors are not successful.
A significant percentage of our revenues is derived from non-anchor Neighbors, some of which may be more vulnerable to negative economic conditions as they typically have more limited resources than anchor Neighbors. Significant Neighbor distress across our portfolio could adversely affect our financial condition, results of operations, and cash flows, and our ability to service our debt and make distributions to our stockholders. A property may incur vacancies either by the expiration of a Neighbor lease, the continued default of a Neighbor under its lease, or the early termination of a lease by a Neighbor. In order to maintain occupancy, we may have to offer inducements, such as free rent and tenant improvements, to compete for the right type or mix of non-anchor Neighbors in our shopping centers. In addition, if we are unable to attract additional or replacement Neighbors, the resale value of the property could be diminished, even below our acquisition costs, because the market value of a particular property depends principally upon the value of the cash flows generated by the leases associated with that property.
We face considerable competition in the leasing market and may be unable to renew leases or re-lease space as leases expire. Consequently, we may be required to make rent or other concessions and/or incur significant capital expenditures to retain and attract Neighbors, which could adversely affect our financial condition, cash flows, and results of operations.
There are numerous shopping venues, including other shopping centers and e-commerce, that compete with our portfolio in attracting and retaining retailers. This competition may hinder our ability to attract and retain Neighbors, leading to increased vacancy rates, reduced rents, and/or increased capital investments. For leases that renew, rental rates upon renewal may be lower than current rates. For those leases that do not renew, we may not be able to promptly re-lease the space on favorable terms or with reasonable capital investments, or at all. In these situations, our financial condition, cash flows, and results of operations could be adversely affected.
We may be unable to collect balances due from Neighbors in bankruptcy.
The bankruptcy or insolvency of a significant Neighbor or a number of smaller Neighbors may adversely affect our financial condition, cash flows and results of operations, and our ability to pay distributions to our stockholders. Generally, under bankruptcy law, a debtor Neighbor has the legal right to reject any or all of their leases and close related stores. If the Neighbor rejects the lease, we will have a claim against the Neighbor’s bankruptcy estate. Although rent owing for the period between filing for bankruptcy and rejection of the lease may be afforded administrative expense priority and paid in full, pre-bankruptcy arrears and amounts owing under the remaining term of the lease will be afforded general unsecured claim status (absent collateral securing the claim). General unsecured claims are the last claims paid in a bankruptcy, and, therefore, funds may not be available to pay such claims in full. Moreover, amounts owing under the remaining term of the lease will be capped. As a result, it is likely that we would recover substantially less than the full value of any unsecured claims we hold. Additionally, we may incur significant expense to recover our claim and to re-lease the vacated space. In the event that a Neighbor with a significant number of leases in our shopping centers files bankruptcy and rejects its leases, we may experience a significant reduction in our revenues and may not be able to collect all pre-petition amounts owed by the bankrupt Neighbor.
We may be restricted from leasing space to certain retailers.
Some of our leases contain provisions that give a specific retailer the exclusive right to sell particular types of goods or services within that shopping center. These provisions may limit the number and types of prospective retailers to which we are able to lease space in a particular shopping center, which may result in increased costs to find a permissible retailer and decreased revenues if one or more spaces sit vacant or we have to accept lower rental rates or a less qualified retailer to fill the space.
Some of our shopping centers have a low tax basis, which may result in a taxable gain on sale. We intend to utilize tax-deferred exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (the “IRC”) to mitigate taxable income (“Section 1031 Exchanges”); however, there can be no assurance that we will identify exchangereplacement shopping centers that meet our investment objectives for acquisitions. In the event that we do not utilize Section 1031 Exchanges, we may be required to distribute the gain proceeds to stockholders or pay income tax, which may reduce our cash flows available to fund our commitments and distributions to stockholders. Moreover, it is possible that future legislation could be enacted that could modify or repeal the laws with respect to Section 1031 Exchanges, which could make it more difficult or impossible for us to dispose of shopping centers on a tax-deferred basis.
We actively reinvest in our portfolio in the form ofOur development and redevelopment projects,projects which haveinvolve inherent risks thatand may not achieve their underwritten returns, which could adversely affect our financial condition, cash flows, and results of operations.
We actively pursue opportunities to develop outparcels and redevelop existing properties; however, these activities require various government and other approvals, and any delay or failure in obtaining necessary entitlements can significantly postpone or even prevent a project, jeopardizing our ability to recover our investment. Development and redevelopment projects are subject to numerous risks, including (i) difficulties in leasing new or renovated spaces on the expected timeline or at projected rental rates (resulting in occupancy levels or rents that may be insufficient to make the project profitable); (ii) cost overruns and construction delays that cause actual project costs to exceed original estimates and reduce expected returns; (iii) the potential abandonment of projects mid-stream due to adverse market conditions, which would result in the loss of our invested capital; and (iv) strain on our personnel and capital resources from managing a large pipeline of projects, which could impair our ability to complete developments on schedule and on budget, further pressuring investment returns. Moreover, fluctuations in the level of our development activity can impact our results of operations by limiting the amount of internal overhead costs we are able to capitalize. External economic factors — such as inflationary cost pressures, rising interest rates, increases in the cost of construction materials due to tariffs or trade disputes, supply chain disruptions, and labor shortages — can exacerbate many of these challenges by driving costs higher or causing additional delays. As a result of these factors, the actual incremental unlevered yields (i.e., the return on our investment at project stabilization, excluding financing effects) for development and redevelopment projects may fall short of our underwritten incremental unlevered yield targets, which are based solely on our estimates, using data available to us in our development and redevelopment underwriting processes. The total cost to complete a project might ultimately be substantially higher than initially budgeted, and the incremental net operating income realized at stabilization can be lower than anticipated, due to a number of factors, including slower lease-up, lower-than-expected rental rates or occupancy, inability to collect anticipated rents, or Neighbors (tenants) vacating or defaulting (for example, through bankruptcy). If we fail to successfully reinvest in our portfolio through development and redevelopment or if our projects encounter significant delays, cost overruns, or fail to achieve the anticipated financial performance, our business, financial condition, cash flows, and results of operations could be adversely affected.
We actively pursue opportunities for outparcel development and existing property redevelopment. Development and redevelopment activities require various government and other approvals for entitlements and any delay in or failure to receive such approvals may significantly delay this process or prevent us from recovering our investment. We are subject to other risks associated with these activities, including the following:
•we may be unable to lease developments and redevelopments to full occupancy on a timely basis;
•the occupancy rates and rents of a completed project may not be sufficient to make the project profitable;
•actual costs of a project may exceed original estimates, possibly making the project unprofitable;
•delays in the development or construction process may increase our costs;
•construction cost increases may reduce investment returns on development and redevelopment opportunities;
•we may abandon redevelopment opportunities and lose our investment due to adverse market conditions;
•the size of our development and redevelopment pipeline may strain our labor or capital capacity to complete projects within targeted timelines and may reduce our investment returns;
•a reduction in the demand for new retail space may reduce our future development and redevelopment activities, which in turn may reduce our net operating income; and/or
•changes in the level of future development activity may adversely impact our results from operations by reducing the amount of internal general overhead costs that may be capitalized.
Inflationary pressures, rising interest rates, supply chain disruptions, and labor shortages may exacerbate certain of these risks. If we fail to reinvest in our portfolio or maintain its attractiveness to retailers and consumers, if our capital improvements are not successful, or if retailers or consumers perceive that shopping at other venues (including e-commerce) is more convenient, cost-effective, or otherwise more compelling, our financial condition, cash flows, and results of operations could be adversely affected.
Our portfolio is predominantly comprised of omni-channel neighborhood grocery-anchored shopping centers, and during the year ended December 31, 2024,2025, our holdings in Florida, California,Florida and TexasCalifornia accounted for 12.2%, 10.6%,12.3% and 10.1%,10.5%, respectively, of our ABR (including our wholly-owned portfolio as well as the prorated portion of shopping centers owned through our joint ventures). Therefore, our performance is subject to risks associated with owning and operating neighborhood omni-channel grocery-anchored shopping centers, and may be further subject to additional risk as a result of the geographic concentration noted above. Such risks include, but are not limited to: (i) changes in national, regional, and local economic climates or demographics; (ii) competition from other available shopping centers and e-commerce, and the attractiveness of our shopping centers to our Neighbors; (iii) increased competition for real estate assets targeted by our investment strategies; (iv) adverse local conditions, such as oversupply or reduction in demand for similar shopping centers in an area and changes in real estate zoning laws that may reduce the desirability of real estate in an area; (v) vacancies, changes in market rental rates, and the need to periodically repair, renovate, and re-lease space; (vi) ongoing disruption and/or consolidation in the retail sector; (vii) increases in operating costs, due to inflation or otherwise, including common area expenses, utilities, insurance, and real estate taxes, which are relatively inflexible and generally do not decrease if revenue or occupancy decreases; (viii) increases in the costs to repair, renovate, and re-lease space; (ix) changes in interest rates and the availability of financing, which may render the sale or refinance of a property or loan difficult or unattractive; (x) earthquakes, tornadoes, hurricanes, droughts, wildfires, or other weather and climate-related events and natural disasters, civil unrest, terrorist acts, or acts of war, which may result in uninsured or underinsured losses; (xi) epidemics, pandemics, or other widespread outbreaks or resulting public fear that disrupt the businesses of our Neighbors causing them to fail to pay rent on time or at all; and (xii) changes in laws and governmental regulations, including those governing usage, zoning, the environment, and taxes. Such risks also include, but are not limited to, those that could impact the financial stability of our Neighbors, including their ability to pay rent and expense reimbursements, such as supply chain disruptions and constraints, inflationary pressures throughout the supply chain, including those due to tariffs, labor shortages andshortages, inflationary pressures on wages, increases in retail theft, changes in consumer demand due to macroeconomic conditions or otherwise, and other risks and uncertainties described elsewhere in this "Risk Factors" section. These and other factors could adversely affect our financial condition, cash flows, and results of operations.
Management's Discussion & Analysis (MD&A)
New heading “SUMMARY OF OPERATING ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024”
Removed heading “SUMMARY OF OPERATING ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022”
Largest changes
“KNOWN TRENDS AND UNCERTAINTIES—We continue to operate in a resilient yet evolving retail real estate environment characterized by strong tenant demand, limited new supply, and sustained leasing momentum. Grocery-anchored shopping centers remain defensive, with healthy occupancy, stable foot traffic, and durable tenant performance; however, broader macroeconomic conditions continue to introduce uncertainty. …”see in full comparison
“KNOWN TRENDS AND UNCERTAINTIES—Although certain indicators have suggested that inflation has made downward progress, the economy continues to be impacted by elevated inflation rates and faces further inflation risk. Substantially all of our leases contain provisions designed to mitigate the adverse effect of inflation, including requirements for Neighbors to pay their allocable share of operating expenses that includes common area maintenance, utilities, real estate taxes, insurance, and certain capital expenditures. …”see in full comparison
“SUMMARY OF OPERATING ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024”see in full comparison
“SUMMARY OF OPERATING ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022”see in full comparison
“Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities. We define our same-center portfolio as the 272 properties that were owned for the entirety of both calendar year periods being compared. …”see in full comparison
“Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities. We define our same-center portfolio as the 270 properties that were owned and operational prior to January 1, 2023. …”see in full comparison
Full comparison: every changed paragraph (110)
•Underwritten incremental unlevered yield—This reflects the yield we target to generate from a project upon expected stabilization and is calculated as the estimated incremental net operating income (“NOI”) for a project at stabilization divided by its estimated net project investment. The estimated incremental NOI is the difference between the estimated annualized NOI we target to generate by a project upon stabilization and the estimated annualized NOI without the planned improvements. Underwritten incremental unlevered yield does not include peripheral impacts, such as lease rollover risk or the impact on the long termlong-term value of the property upon sale or disposition. Actual incremental unlevered yields may vary from our underwritten incremental unlevered yield range based on the actual total cost to complete a project and its actual incremental NOI at stabilization.
•Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (“Adjusted EBITDAre”)—To arrive at Adjusted EBITDAre, we adjust EBITDAre, as defined below, to exclude certain recurring and non-recurring items including, but not limited to: (i) changes in the fair value of the earn-out liability; (ii) other impairment charges; (iii) amortizationadjustments ofrelated basis differences into our investments in our unconsolidated joint ventures; (iv) transaction and acquisition expenses; and (v) realized performance income. We use EBITDAre and Adjusted EBITDAre as additional measures of operating performance which allow us to compare earnings independent of capital structure and evaluate debt leverage and fixed cost coverage.
•Core Funds From Operations Attributable to Stockholders and OP Unit Holders (“Core FFO”)—To arrive at Core FFO, we adjust Nareit FFO, as defined below, to exclude certain recurring and non-recurring items including, but not limited to: (i) depreciation and amortization of corporate assets; (ii) changes in the fair value of the earn-out liability; (iii) amortizationadjustments ofrelated to our investments in unconsolidated joint venture basis differencesventures; (iv) gains or losses on the extinguishment or modification of debt and other; (v) other impairment charges; (vi) transaction and acquisition expenses; and (vii) realized performance income. We believe Nareit FFO provides insight into our operating performance as it excludes certain items that are not indicative of such performance. Core FFO provides further insight into the sustainability of our operating performance and provides an additional measure to compare our performance across reporting periods on a consistent basis by excluding items that may cause short-term fluctuations in net income (loss).
•Same-Center—We use this term to refer to a property, or portfolio of properties, that have been owned and operational for the entirety of theboth lastcalendar two reportingyear periods (i.e.,being since January 1, 2023).compared.
BASIS OF PRESENTATION—The basis of presentation of our shares of common stock is described as follows:
•Recapitalization—On June 18, 2021, our stockholders approved an amendment to our charter (the “Articles of Amendment”) that effected a change of each share of our common stock outstanding at the time the amendment became effective into one share of a newly created class of Class B common stock (the “Recapitalization”). The Articles of Amendment became effective upon filing with, and acceptance by, the State Department of Assessments and Taxation of Maryland on July 2, 2021. Unless otherwise indicated, all information in this Form 10-K gives effect to the Recapitalization and references to “shares” and per share metrics refer to our common stock and Class B common stock, collectively. Our Class B common stock automatically converted into our publicly traded common stock on January 18, 2022 (see Note 12). Prior to the conversion, we have presented common stock and Class B common stock as separate classes within our consolidated balance sheets and consolidated statements of equity. On May 5, 2022, we filed Articles Supplementary to our charter with the Maryland State Department of Assessments and Taxation in order to reclassify and designate all of the 350 million authorized shares of our Class B common stock, $0.01 par value per share, all of which were unissued at such time, as shares of our common stock, $0.01 par value per share. We no longer have Class B common stock authorized for issue.
AT-THE-MARKET OFFERING (“ATM”)—In February 2022, we entered into a sales agreement relating to the potential sale of shares of common stock pursuant to a continuous offering program, allowing up to $250 million in offerings. During the year ended December 31, 2024, prior to the entry into the new program described below, we issued approximately 46,000 shares of our common stock at a gross weighted average price of $37.05 per share under this ATM program for net proceeds of $1.7 million, after approximately $17,000 in commissions. During the year ended December 31, 2023, we issued 4.2 million shares of our common stock at a gross weighted average price of $35.76 per share under this ATM program for net proceeds of $147.6 million, after approximately $1.5 million in commissions.
In February 2024, we entered into a new sales agreement relating to the potential sale of shares of common stock pursuant to a continuous offering program, which replaced the previous agreement. In accordance with the terms of the sales agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million from time to time through our sales agents, or, if applicable, as forward sellers. During the three months and year ended December 31, 2024, we issued 1.9 million shares of our common stock at a gross weighted average price of $39.23 under this ATM program for net proceeds of $72.1 million, after approximately $0.7 million in commissions. As of December 31, 2024, approximately $177 million of common stock remained available for issuance under the current ATM program.
FINANCIAL HIGHLIGHTS—Owning, operating, and managing well-occupied omni-channel grocery-anchored real estate is the core part of our business strategy, and as of December 31, 2024,2025, 95.7%95.0% of our ABR was derived from omni-channel grocery-anchored shopping centers. As of December 31, 2024,2025, total leased occupancy improvedremained 30strong basisat points to 97.7%97.3% and inline occupancy improved 3010 basis points to 95.0%,95.1%, when compared to December 31, 2023.2024. Our financial performance highlights during 20242025 are as follows:
•Net income of $69.7$123.0 million, an increase of $5.9$53.3 million from a year ago, primarily due to gains on the disposal of our properties, strong operating performance attributable to our same-center portfolioportfolio, and the impact of our 20242025 acquisition activity.
•Nareit FFO per diluted share increased by $0.17 to $2.54 and Core FFO per diluted share improved by $0.09$0.17 to $2.43,$2.60, primarily due to our strong operating performance.
•Acquired $294.0$356.9 million in wholly-owned assets and $11.6$38.6 million in unconsolidated joint venture assets,assets at our prorata share for a total of $395.5 million in acquisition activity for the year, executing our external growth strategy.
•Declared and paid monthly distributions of $0.1025 per common share and OP unit, or $1.23 annualized, for each month beginning January 2025 through August 2025, and increased monthly distributions to $0.1083 per common share and OP unit, or $1.30 annualized, for the remainder of 2025.
•Declared and paid monthly distributions of $0.0975 per common share and OP unit, or $1.17 annualized, for each month beginning January 2024 through August 2024, and increased monthly distributions to $0.1025 per common share and OP unit, or $1.23 annualized, for the remainder of 2024.
•As of December 31, 2025, for our wholly-owned shopping centers, 95.0% of our ABR was generated from shopping centers anchored by grocers and 83.3% of our ABR was generated from shopping centers anchored by the #1 or #2 grocer by sales within their respective trade area.
•For the year ended December 31, 2025, comparable rent spreads were 30.9% for new leases, 20.7% for renewal leases, and 23.3% combined.
•95.7% of our ABR was derived from omni-channel grocery-anchored shopping centers as of December 31, 2024.
•Our grocer health ratio, or occupancy cost, remains strong at 2.3% at December 31, 2024, which is favorable compared to the national grocer average occupancy cost.
•In 2024, our grocer sales increased 5% year-over-year to $715 per square foot. Grocer sales per square foot have increased approximately 37% since 2019.
•ApproximatelyAt 69%December 31, 2025, approximately 70% of our ABR was derived from Neighbors providing necessity-based goods and services.
•The average PECO space, excluding anchors, is approximately 2,400 square feet. This size is attractive to many retailers, whereas large box format retailers are fewer and demand is thinner.
•For the year ended December 31, 2024, we acquired twelve properties and four outparcels for a net cash outlay of $296.3 million, adding 1.1 million of GLA to our portfolio.
•At December 31, 2025, we reported strong leased portfolio occupancy of 97.3% and same-center leased portfolio occupancy of 97.6% Internal Growth Through Our Integrated Operating Platform—We have focused on improving our occupancyrental income through leasing vacant spaces, increasing lease revenue through rent growth, and executing development and redevelopment opportunities. Highlights of our wholly-owned operational activity as of and for the year ended December 31, 20242025 are as follows:
•LeasedInline occupancy for our wholly-owned portfolio improved 3010 basis points to 97.7% as of December 31, 2024, and inline occupancy improved 30 basis points to 95.0%,95.1%, when compared to December 31, 2023.2024.
•Total ABR PSF for executed new leases improved 3.6% to $22.53, and inline ABR PSF for executed new leases improved 8.4% to $28.16 during the year ended December 31, 2024.
Balance Sheet Management Positioned for External Growth—Our balance sheet has a leverage profile that well-positions us to maintain and improve our investment grade rating, fund distributions to our stockholders, and invest in our targeted acquisitions. As of December 31, 2024,2025, we had $747.6$925.1 million of total liquidity, comprised of $8.6$43.3 million of cash, cash equivalents, and restricted cash, plus $738.9$881.8 million of borrowing capacity available on our $800$1 millionbillion revolving credit facility. OnIn January 9, 2025, we amended our senior unsecured revolving credit facility. The amendment increasesincreased the aggregate borrowing capacity of the facility to $1 billion and extendsextended the maturity date to January 2029, with options to extend the maturity for two additional six-month periods. Our balance sheet management highlights as of and for the year ended December 31, 20242025 are as follows:
•We issued 1.9 million shares of our common stock under our ATM programs for net proceeds of $73.8 million.
•In MayJune 2024,2025, we issued $350 million of 5.750%5.250% senior notes due 20342032 at an issue price of 98.576% in an underwritten offering. In September 2024, we issued $350 million of 4.950% senior notes due 2035 an an issue price of 98.458%99.832% in an underwritten offering. The 20242025 senior notes are fully and unconditionally guaranteed by us. TheseThis issuancesissuance improved the flexibility of our balance sheet by extending our debt maturity profile.
•In December 2025, we repaid the $100 million outstanding term loan balance that was set to mature in July 2026.
•For the year ended December 31, 2025, we disposed of nine properties and one outparcel for net proceeds of $121.7 million which were used for portfolio recycling opportunities.
•Our ratio of net debt to Adjusted EBITDAre was 5.0x5.2x as of December 31, 2024, as compared to 5.1x as of December 31, 20232025 (see “Liquidity and Capital Resources - Financial Leverage Ratios” below for a discussion and calculation).
KNOWN TRENDS AND UNCERTAINTIES—We continue to operate in a resilient yet evolving retail real estate environment characterized by strong tenant demand, limited new supply, and sustained leasing momentum. Grocery-anchored shopping centers remain defensive, with healthy occupancy, stable foot traffic, and durable tenant performance; however, broader macroeconomic conditions continue to introduce uncertainty. Interest rates remain elevated relative to historical norms, and while rate volatility has moderated, higher financing costs may affect acquisition activity, redevelopment yields, and capital-market execution. Inflation has eased but remains uneven across categories, influencing operating expenses, construction costs, and retailer margins. Recently implemented or proposed tariff adjustments have created incremental uncertainty around sourcing and input costs for certain tenants, though to date we have observed minimal disruption to leasing activity or rent‑collection trends. Additionally, ongoing retailer rationalization, including periodic bankruptcy filings and strategic store closures, may create near-term downtime but also provide opportunities to re‑lease space at higher rents. Consumer behavior has remained broadly stable, supported by the essential-needs orientation of our centers; however, pressure on lower-income shoppers and any broader economic slowdown could impact retailer sales performance and, in turn, leasing decisions. We continue to monitor these trends, along with evolving insurance markets, property-tax environments, and regulatory developments, each of which could influence operating results, cash flows, or asset valuations in future periods.
SUMMARY OF OPERATING ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
(1)Line items that result in a percent change that exceed certain limitations are considered not meaningful (“NM”) and indicated as such.
Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities. We define our same-center portfolio as the 272 properties that were owned for the entirety of both calendar year periods being compared. We define our non-same-center portfolio as those properties that were not fully owned in both calendar year periods being compared owing primarily to real estate asset activity occurring after December 31, 2023, which includes nine properties disposed of and 26 properties acquired. Below are explanations of the significant fluctuations in the results of operations for the years ended December 31, 2025 and 2024:
Rental Income increased $61.6 million as follows:
•$20.0 million increase related to our same-center portfolio primarily as follows:
▪$14.6 million increase primarily due to a $0.48 increase in average minimum rent PSF, partially offset by a 0.2% decline in average occupancy; and
▪$6.0 million increase primarily due to an increase in recoverable income attributed to an increase in real estate taxes, common area maintenance spending, and insurance costs.
•$41.6 million increase primarily related to our net acquisition activity.
Fees and Management Income:
•The $2.0 million increase in fees and management income was primarily due to higher insurance premium income through our consolidated captive insurance company and an increase in fees from our unconsolidated joint ventures.
Property Operating Expenses increased $11.0 million primarily as follows:
•$5.1 million increase from our same-center portfolio and corporate operating activities primarily due to higher compensation costs owing largely to increased headcount; and
•$6.0 million increase primarily due to our net acquisition activity.
•The $8.4 million increase in real estate tax expenses was primarily due to our net acquisition activity.
•The $6.0 million increase in general and administrative expenses was primarily due to investment in our growth initiatives, resulting in increased compensation expense owing largely to increased headcount and higher performance-based compensation.
Depreciation and Amortization Expenses:
•The $13.4 million increase in depreciation and amortization was primarily due to our net acquisition activity and the impact of our tear down and redevelopment of certain Publix locations.
•The $13.3 million increase was primarily due to increased debt outstanding in 2025. Interest Expense, Net was comprised of the following (dollars in thousands):
Gain (Loss) on Disposal of Property, Net:
•The $38.8 million increase in gain (loss) on disposal of property, net was due to the disposition of nine properties and one outparcel with a net gain of $38.8 million in 2025, as compared to no sales during the year ended December 31, 2024.
Other Expense, Net:
KNOWN TRENDS AND UNCERTAINTIES—Although certain indicators have suggested that inflation has made downward progress, the economy continues to be impacted by elevated inflation rates and faces further inflation risk. Substantially all of our leases contain provisions designed to mitigate the adverse effect of inflation, including requirements for Neighbors to pay their allocable share of operating expenses that includes common area maintenance, utilities, real estate taxes, insurance, and certain capital expenditures. Additionally, many of our leases are for terms of less than ten years, which allows us to target increased rents to current market rates upon renewal. However, elevated inflation rates, including their impact on operating and construction costs, may nevertheless negatively impact us and some of our Neighbors. Our business and financial results, as well as the results of our Neighbors, could also be adversely impacted by elevated interest rate levels arising from the Federal Reserve’s response to inflation. In addition, slower economic growth and a potential for a recession could have an adverse effect on us and our Neighbors, including negatively impacting consumer sentiment and consumer willingness to spend.
Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities. We define our same-center portfolio as the 270 properties that were owned and operational prior to January 1, 2023. We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing primarily to real estate asset activity occurring after December 31, 2022, which includes one property disposed of and 23 properties acquired. Below are explanations of the significant fluctuations in the results of operations for the years ended December 31, 2024 and 2023:
Rental Income increased $50.1 million as follows:
•$19.4 million increase related to our same-center portfolio primarily as follows:
▪$18.4 million increase primarily due to a $0.47 increase in average minimum rent PSF and a 0.1% improvement in average occupancy; and
▪$4.1 million increase primarily due to an increase in recoverable income attributed to an increase in real estate taxes, common area maintenance spending, and insurance costs as well as a 0.1% improvement in average occupancy; partially offset by
▪$2.6 million decrease primarily due to the impact of straight-line rent adjustments.
What changed in the latest 10-Q
Risk Factors
There have been no material changes to our risk factors and other risks and uncertainties as described in “Part I, Item 1A. Risk Factors” of our 2025 Annual Report on Form 10-K filed with the SEC on February 10, 2026.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “SUMMARY OF OPERATING ACTIVITIES FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025”
Largest changes
“SUMMARY OF OPERATING ACTIVITIES FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025”see in full comparison
ATM Program—In February 2024, we entered into a sales agreement relating to the potential sale of shares of common stock pursuant to a continuous offering program. In accordance with the terms of the sales agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million from time to time through our sales agents, or, if applicable, as forward sellers. During the three and six months ended June 30, 2026, we issued 2.0 million shares of our common stock at a gross weighted average price of $42.06 per share under this ATM program for net proceeds of $85.3 million, after approximately $0.9 million in commissions. At June 30, 2026, we had a receivable of $1.9 million for proceeds received subsequent to June 30, 2026 for shares issued during the three and six months ended June 30, 2026. We issued no shares of our common stock under this ATM program during thesee in full comparisonthree months ended March 31, 2026 and theyear ended December 31, 2025. As ofMarchJune31,30, 2026, approximately$177$91 million of common stock remained available for issuance under the ATM program.
“•The $19.5 million increase in gain (loss) on disposal of property, net was due to the disposition of two properties and one parcel of land with a net gain of $19.4 million during the three months ended June 30, 2026. During the same period in 2025, we sold no properties but we recognized a minimal loss on disposal of property of $0.1 million due to miscellaneous write-off activity and expenses related to previous and future potential dispositions.”see in full comparison
“For details surrounding our basis for analyzing significant fluctuations in our results of operations as well as definitions related to our portfolio of real estate assets, please see “Summary of Operating Activities for the Three Months Ended June 30, 2026 and 2025” above. Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, 2026 and 2025:”see in full comparison
“•The $20.7 million increase in gain on disposal of property, net was due to the disposition of four properties and one parcel of land with a net gain of $26.2 million during the six months ended June 30, 2026, as compared to the disposition of one property with a net gain of $5.5 million during the same period in 2025.”see in full comparison
•Property operations—Most of our operating cash comes from rental and tenant recovery income received less property operating expenses, real estate taxes, and general and administrative costs paid. Property operations during thesee in full comparisonthreesix months endedMarchJune31,30, 2026 were positively impacted byaan$4.1$8.6 million, or3.5%,3.7%, improvement in Same-Center NOI as compared to the same period in 2025. During thethreesix months endedMarchJune31,30, 2026, we had a net cash outlay of$36.4$9.7 million from changes in working capital as compared to a net cash outlay of$27.7$17.4 million during the same period in 2025. This change was primarilydrivenduebytotheatiming of interest payments resultingprepayment fromouraseniorNeighbornoteforissuances.a development project.
Full comparison: every changed paragraph (86)
Certain statements contained in this Quarterly Report on Form 10-Q of Phillips Edison & Company, Inc. (“we,” the “Company,” “our,” or “us”) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995 (collectively with the Securities Act and the Exchange Act, the “Acts”). These forward-looking statements are based on current expectations, estimates, and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, management of our company and involve uncertainties that could significantly affect our financial results. We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Acts. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “seek,” “objective,” “goal,” “strategy,” “plan,” “focus,” “priority,” “should,” “could,” “potential,” “possible,” “look forward,” “optimisticoptimistic,”, “commit,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the SEC. Such statements include, but are not limited to: (a) statements about our plans, strategies, initiatives, and prospects; (b) statements about our underwritten incremental yields; and (c) statements about our future results of operations, capital expenditures, and liquidity. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: (i) changes in national, regional, or local economic climates; (ii) local market conditions, including an oversupply of space in, or a reduction in demand for, properties similar to those in our portfolio; (iii) vacancies, changes in market rental rates, and the need to periodically repair, renovate, and re-let space; (iv) competition from other available shopping centers and the attractiveness of properties in our portfolio to our tenants; (v) the financial stability of our tenants, including, without limitation, their ability to pay rent; (vi) our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due; (vii) increases in our borrowing costs as a result of changes in interest rates and other factors; (viii) potential liability for environmental matters; (ix) damage to our properties from catastrophic weather and other natural events, and the physical effects of climate change; (x) our ability and willingness to maintain our qualification as a REIT in light of economic, market, legal, tax, and other considerations; (xi) changes in tax, real estate, environmental, and zoning laws; (xii) information technology security breaches; (xiii) our corporate responsibility initiatives; (xiv) loss of key executives; (xv) the concentration of our portfolio in a limited number of industries, geographies, or investments; (xvi) the economic, political, and social impact of, and uncertainty relating to, pandemics or other health crises; (xvii) our ability to re-lease our properties on the same or better terms, or at all, in the event of non-renewal or in the event we exercise our right to replace an existing tenant; (xviii) the loss or bankruptcy of our tenants; (xix) to the extent we are seeking to dispose of properties, our ability to do so at attractive prices or at all; and (xx) the impact of heightened geopolitical instability, international conflicts, tariffs, and global trade disruptions on us, our tenants, and consumers, including the impact on inflation, supply chains, and consumer sentiment. Additional important factors that could cause actual results to differ are described in the filings made from time to time by the Company with the SEC and include the risk factors and other risks and uncertainties described in our 2025 Annual Report on Form 10-K, filed with the SEC on February 10, 2026, as updated from time to time in our periodic and/or current reports filed with the SEC, which are accessible on the SEC’s website at www.sec.gov. Therefore, such statements are not intended to be a guarantee of our performance in future periods.
We are a REIT and one of the nation’s largest owners and operators of omni-channel grocery-anchored shopping centers. Our portfolio primarily consists of neighborhood centers anchored by the #1 or #2 grocer tenants by sales within their respective formats by trade area. Our Neighbors are a mix of national, regional, and local retailers that primarily provide necessity-based goods and services.
As of MarchJune 31,30, 2026, we owned equity interests in 326330 shopping centers, including 299302 wholly-owned shopping centers and 2728 shopping centers owned through three unconsolidated joint ventures, which comprised approximately 36.937.4 million square feet in 31 states. In addition to managing our shopping centers, our third-party investment management business provides comprehensive real estate management services to the Managed Funds.
PORTFOLIO AND LEASING STATISTICS—Below are statistical highlights of our wholly-owned portfolio as of MarchJune 31,30, 2026 and 2025 (dollars and square feet in thousands):
The following table details information for our unconsolidated joint ventures as of MarchJune 31,30, 2026, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):
LEASE EXPIRATIONS—The following chart shows the aggregate scheduled lease expirations for our overnearly 3,5004,000 unique Neighbors, excluding our Neighbors who are occupying space on a temporary basis, after MarchJune 31,30, 2026 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ventures:
PORTFOLIO TENANCY—We define national Neighbors as those Neighbors that operate in at least three states. Regional Neighbors are defined as those Neighbors that have at least three locations in fewer than three states. The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ventures, by Neighbor type as of MarchJune 31,30, 2026:
The following charts present the composition of our portfolio by Neighbor industry as of MarchJune 31,30, 2026:
TOP 20 NEIGHBORS—The following table presents our top 20 Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ventures, as of MarchJune 31,30, 2026 (dollars and square feet in thousands):
SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED MARCHJUNE 31,30, 2026 AND 2025
(1)Line items that result in a percent change that exceed certain limitations are considered not meaningful (“NM”) and indicated as such.
Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities. We define our same-center portfolio as the 282280 properties that were owned for the entirety of both calendar year periods being compared. We define our non-same-center portfolio as those properties that were not fully owned in both calendar year periods being compared owing primarily to real estate asset activity occurring after December 31, 2024, which includes eleven13 properties disposed of and 1722 properties acquired. Below are explanations of the significant fluctuations in the results of operations for the three months ended MarchJune 31,30, 2026 and 2025:
▪$1.5 million increase primarily due to lease buyout income; and
▪$1.2 million increase primarily due to an increase in recoverable income attributed to an increase in common area maintenance spending.
•$5.7 million increase primarily related to our net acquisition activity.
Property Operating Expenses increased $3.1 million primarily as follows:
•$2.0 million increase from our same-center portfolio and corporate operating activities primarily due to higher compensation costs and an increase in utilities and common area maintenance spending; and
•$1.1▪$1.2 million increase primarily due to ourthe netimpact acquisitionof activity.straight-line rent adjustments;
▪$0.9 million increase primarily due to an increase in recoverable income attributed to an increase in real estate taxes and common area maintenance spending; and
•$4.2 million increase primarily related to our net acquisition activity.
Property Operating Expenses increased $2.8 million primarily as follows:
•$1.9 million increase from our same-center portfolio and corporate operating activities primarily due to higher compensation costs; and
•$0.9 million increase primarily due to our net acquisition activity.
•The $1.0$1.2 million increase in real estate tax expenses is primarily due to higher real estate tax assessments on the value of our net acquisition activity.portfolio.
Depreciation and Amortization Expenses:
•The $4.4 million decrease in depreciation and amortization was primarily due to the prior year impact of our tear down and redevelopment of certain Publix locations, partially offset by our net acquisition activity.
•The $4.1$1.7 million increase was primarily due to increased debt outstanding and loss on extinguishment of debt in 2026. Interest Expense, Net was comprised of the following (dollars in thousands):
Gain (Loss) on Disposal of Property, Net:
•The $19.5 million increase in gain (loss) on disposal of property, net was due to the disposition of two properties and one parcel of land with a net gain of $19.4 million during the three months ended June 30, 2026. During the same period in 2025, we sold no properties but we recognized a minimal loss on disposal of property of $0.1 million due to miscellaneous write-off activity and expenses related to previous and future potential dispositions.
Other Income (Expense), Net:
•Other Income (Expense), Net was comprised of the following (in thousands):
SUMMARY OF OPERATING ACTIVITIES FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
(1)Line items that result in a percent change that exceed certain limitations are considered not meaningful (“NM”) and indicated as such.
For details surrounding our basis for analyzing significant fluctuations in our results of operations as well as definitions related to our portfolio of real estate assets, please see “Summary of Operating Activities for the Three Months Ended June 30, 2026 and 2025” above. Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, 2026 and 2025:
Rental Income increased $23.1 million as follows:
•$13.2 million increase related to our same-center portfolio primarily as follows:
▪$8.0 million increase primarily due to a $0.54 increase in average minimum rent PSF and a 0.3% improvement in average occupancy;
▪$2.1 million increase primarily due to an increase in recoverable income attributed to an increase in common area maintenance spending and real estate taxes;
▪$1.4 million increase primarily due to lease buyout income;
▪$0.9 million increase primarily due to the impact of straight-line rent adjustments;
▪$0.8 million increase primarily due to a decrease in amounts reserved for Neighbors identified as credit risks; and
•$9.9 million increase primarily related to our net acquisition activity.
Fees and Management Income:
•The $1.4 million increase in fees and management income was primarily due to an increase in fees from the growth in our unconsolidated joint ventures.
Property Operating Expenses increased $5.8 million primarily as follows:
•$3.9 million increase from our same-center portfolio and corporate operating activities primarily due to higher compensation costs and an increase in common area maintenance spending and utilities; and
•$2.0 million increase primarily due to our net acquisition activity.
Real Estate Tax Expenses:
•The $2.2 million increase in real estate tax expenses was primarily due to our net acquisition activity and higher real estate tax assessments on the value of our portfolio.
Depreciation and Amortization Expenses:
•The $4.1 million decrease in depreciation and amortization was primarily due to the prior year impact of our tear down and redevelopment of certain Publix locations, partially offset by our net acquisition activity.
Interest Expense, Net:
•The $5.8 million increase was primarily due to increased debt outstanding and loss on extinguishment of debt in 2026. Interest Expense, Net was comprised of the following (dollars in thousands):
Gain on Disposal of Property, Net:
•The $20.7 million increase in gain on disposal of property, net was due to the disposition of four properties and one parcel of land with a net gain of $26.2 million during the six months ended June 30, 2026, as compared to the disposition of one property with a net gain of $5.5 million during the same period in 2025.
LEASING ACTIVITY—Below is a summary of leasing activity for our wholly-owned properties for the three months ended MarchJune 31,30, 2026 and 2025(1):
(1)PSF amounts may not recalculate exactly based on other amounts presented within the table due to rounding.
(2)Excludes exercise of options.
Below is a summary of leasing activity for our wholly-owned properties for the six months ended June 30, 2026 and 2025(1):
SAME-CENTER NOI—Same-Center NOI is presented as a supplemental measure of our performance, as it highlights operating trends such as occupancy levels, rental rates, and operating costs for our same-center portfolio. Other REITs may use different methodologies for calculating Same-Center NOI, and accordingly, our Same-Center NOI may not be comparable to other REITs. For the three and six months ended MarchJune 31,30, 2026 and 2025, Same-Center NOI represents the NOI for the 282280 properties that were wholly-owned for the entirety of both calendar year periods being compared.
PECO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-05-12 | Fischer Elizabeth |
Grant/award | 2,901 | — | — |
| 2026-05-12 | Quazzo Stephen R |
Grant/award | 2,901 | — | — |
| 2026-05-12 | Silfen Jane |
Grant/award | 2,901 | — | — |
| 2026-05-12 | Strong John A. |
Grant/award | 2,901 | — | — |
| 2026-05-12 | Wood Gregory S. |
Grant/award | 2,901 | — | — |
| 2026-05-12 | Terry Anthony E |
Grant/award | 2,901 | — | — |
| 2026-05-12 | Chao Leslie T |
Grant/award | 2,901 | — | — |
Well-known investors holding PECO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 681,402 | $28.4M | 0.04% | Added 73% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 237,191 | $9.9M | 0.0% | Added 24% |
| Millennium Management (Israel Englander) | 2026-06-30 | 231,934 | $9.7M | 0.01% | Added 98% |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 111,493 | $4.2M | — | Sold out |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 36,228 | $1.5M | 0.0% | Reduced 34% |
| D. E. Shaw & Co. | 2026-06-30 | 12,049 | $501.5K | 0.0% | Reduced 89% |
| Two Sigma Investments | 2026-06-30 | 11,689 | $486.5K | 0.0% | New position |