PECO Taps Bond Market for $350M to Fuel Retail Growth Strategy

CINCINNATI, OH – February 24, 2026 – By Brian Richardson

Phillips Edison & Company (Nasdaq: PECO), a major force in grocery-anchored retail real estate, announced today that it has priced a significant $350 million public offering of senior unsecured notes. The move signals a robust strategy to fortify its financial position and accelerate growth in a sector that continues to demonstrate remarkable resilience.

The company’s operating partnership priced the notes, which carry a 4.750% interest rate and mature in 2033, at 99.920% of their principal amount. The offering, expected to close on February 26, 2026, provides PECO with a substantial infusion of capital earmarked for a wide range of corporate purposes, from paying down existing debt to acquiring new properties and redeveloping its current assets.

This bond issuance is more than a standard financial transaction; it is a clear indicator of both strong investor appetite for high-quality real estate debt and confidence in PECO's specific business model, which is firmly rooted in the stability of necessity-based shopping centers.

A Strategic Capital Maneuver

The timing and terms of the offering underscore a calculated financial strategy. With the proceeds, PECO intends to address borrowings under its revolving credit facility and other outstanding term loans. This allows the company to replace potentially variable-rate, shorter-term debt with fixed-rate, long-term capital, thereby improving its debt maturity profile and providing greater predictability in its financing costs.

As of the end of 2025, PECO maintained a net debt to annualized adjusted EBITDAre of 5.2x and held an investment-grade credit rating. This new capital injection is expected to help maintain that solid financial footing. The 4.750% coupon is viewed as competitive within the current market, especially when compared to recent debt offerings by its peers. For instance, fellow grocery-anchored REIT Regency Centers recently priced its 2033 notes at a 4.50% coupon, indicating that PECO’s offering is well-aligned with investor expectations for the sector's top players.

The successful pricing, managed by a broad syndicate of leading financial institutions including Wells Fargo Securities, BMO Capital Markets, and BofA Securities, demonstrates Wall Street's belief in the durability of PECO’s income stream and its disciplined approach to financial management.

Fueling a Growth and Modernization Engine

Beyond optimizing its balance sheet, the $350 million in proceeds will serve as a powerful engine for PECO's ambitious growth and modernization plans. The company has outlined a clear strategy to actively manage and expand its portfolio, and this capital is a key enabler.

PECO has set its sights on an aggressive acquisition target of $400 million to $500 million annually. This continues a trend of strong external growth, following the acquisition of nearly $357 million in wholly-owned assets in 2025 and over $300 million in 2024. The new funds will provide the dry powder needed to continue selectively acquiring high-quality, grocery-anchored centers in strong markets across the United States.

In addition to acquisitions, a significant portion of capital is being directed toward enhancing the existing portfolio. PECO has budgeted between $140 million and $160 million for capital expenditures in 2026, with a substantial $70 million to $90 million of that dedicated specifically to development and redevelopment projects. This investment is crucial for modernizing centers, attracting new tenants, and ensuring its properties remain competitive and relevant to the communities they serve. With 20 redevelopment projects already in the pipeline, the company is actively creating value within its current footprint.

This dual approach of acquiring new assets while simultaneously reinvesting in existing ones is part of a dynamic portfolio optimization strategy that also includes the planned disposition of $100 million to $200 million in assets in 2026.

Betting on the Resilience of the Neighborhood Center

PECO's ability to attract favorable terms in the bond market is directly tied to the enduring strength of its chosen asset class: grocery-anchored neighborhood shopping centers. This retail segment has proven to be one of the most stable and recession-resistant categories in all of commercial real estate.

Anchored by essential businesses like Kroger, Publix, and Albertsons, these centers generate consistent, non-discretionary foot traffic. This makes them less susceptible to the economic headwinds and e-commerce pressures that have challenged other forms of retail, such as regional malls. The sector's fundamentals remain robust, supported by limited new construction, which has kept vacancy rates low and given landlords like PECO significant pricing power.

PECO's own portfolio reflects this strength. At the end of 2025, its portfolio was 97.3% occupied, with anchor tenant occupancy reaching an impressive 98.7%. This high level of occupancy translates into reliable rental income and predictable cash flow—qualities highly valued by debt investors.

Wall Street's Confidence and Strong Performance

Investors and analysts have taken note of PECO's consistent execution. The company posted strong fourth-quarter 2025 results that surpassed market expectations, with Core Funds From Operations (FFO) per share growing 7% year-over-year. Same-center Net Operating Income (NOI) also saw a healthy increase of 3.8% for the full year.

This operational excellence has earned the company favorable coverage from the analyst community. The consensus rating on PECO stock is a “Moderate Buy” to “Buy,” with multiple analysts recently raising their price targets. Ladenburg Thalmann, for example, recently increased its target to $42.00 per share, citing the company's strong performance and growth prospects.

Looking ahead, management has projected continued mid-single-digit FFO growth for 2026, signaling confidence in its ability to maintain momentum. This latest bond offering is a critical component of that forward-looking strategy, providing the financial flexibility and strength needed to capitalize on opportunities. By securing long-term capital, Phillips Edison & Company is well-positioned to continue its disciplined expansion and enhance its portfolio, reinforcing its leadership role in the resilient grocery-anchored retail market.