Oct 27, 2026 earnings call — Raised full-year guidance and growth update
Company raised full-year guidance; same-center NOI midpoint 3.75% and core FFO per share midpoint growth 6.5%.
Revenue $0.2B (est $0.2B) · EPS $0.49 (est $0.19)
Key quotes
"During the quarter, comparable renewal rent spreads reached a record high 25.2%."
"Year to date through October 26, we have acquired $519 million in assets at PECO's share."
"Pro forma for the closing of the new term loan we have approximately $950 million of total liquidity."
Analyst Q&A 13
deal activity, cap rates, and funding
Q (Haendel St. Juste · Mizuho): Analyst asked about the transaction market now: any change in cap rates, more assets for sale, and how PECO can fund its 2027 investments — on balance sheet, off balance sheet, and the role of dispositions.
A: They said they have been very active: they reviewed 567 deals this year and closed on $519 million so far, with about $250 million awarded or under contract. They said everyday retail averaged about a 6.8 cap rate and their blend is about 6.5, while they recycle stabilized assets (around 7.5% returns) into new assets generating between 9% and 10% unlevered returns. Funding is match-funded with investment management capital, allowing opportunistic disposals but no required sales.
"We have closed on $519 million so far this year, and we have a very strong pipeline where we have either been awarded or under contract on another $250 million." — Robert F. Myers (PRESIDENT)
local tenants and necessity mix
Q (Andrew Reale · BofA): Analyst asked what share of local tenants are necessity-based and how that group is performing — any payment delays or health changes.
A: They said 74% of the rent roll is necessity based even though locals are 26% of ABR, and local tenants are mostly quick service, fast casual, health, wellness, beauty, fitness, and medtail. Management said renewal spreads were strong (25.2% last quarter), retention is 92.2%, health ratios about 10%, and they see no rise in payment issues when merchandising is done right.
"Even though it is 26%, 74% of our rent role is necessity based, it still has the consistency in our local tenants with having quick service, fast casual, health, wellness, beauty, fitness, and medtail." — Robert F. Myers (PRESIDENT)
Kroger expansion and partnership
Q (Michael Griffin): Analyst asked how Kroger’s expansion (up to 100 new centers) could benefit PECO — via redevelopments, retenanting, or ground-up deals.
A: They said Kroger is expanding and reinvesting, and PECO is their number 1 landlord so they have insight and partnership opportunities. They are pursuing ground-up development and are in process of securing land to partner with Kroger; Kroger may do about 40 ground-up locations this year, and PECO expects the Kroger/Giant Eagle moves to strengthen local markets.
"We have walked along side them with some ground up development opportunities we are in the process of securing some ground to partner with them on that front." — Robert F. Myers (PRESIDENT)
new lease pricing and pushback
Q (Caitlin Burrows · Goldman Sachs): Analyst noted new lease spreads ticked down this quarter and asked whether tenants are pushing back on higher rents and for color on the quarter.
A: They said the lower quarter result was a timing issue of which deals closed this quarter and they have consistently posted low to mid-30s new lease spreads. Management said they see no tenant pushback on pricing, expect to finish the year in the 30s on leasing spreads, and highlighted 92.2% retention and health ratios around 10% to 11%.
"Honestly, it was just a timing issue of the deals that were executed in the third quarter." — Robert F. Myers (PRESIDENT)
same-store NOI and Q4 outlook
Q (James Feldman · Wells Fargo): Analyst asked why same-store NOI shows implied moderation in Q4 versus Q3 and whether that changes the long-term 3%–4% target heading into 2027.
A: They said the Q4 moderation is largely timing of recoveries from Q3, not a structural slowdown. They tightened the bad debt guidance to a 60 to 80 basis point range and said they remain confident in delivering long-term same-store targets of 3% to 4% and mid to high single-digit FFO per share growth.
"And as we look to 2027, I think we are feeling really strongly about us being able to continue to deliver on our long-term targets of 3% to 4% on a same store basis." — John Caulfield (CFO)
renewal options and lease terms
Q (Richard Hightower · Barclays): Analyst asked about renewal option features in leases, whether options are changing, and the impact on the business amid strong market rents.
A: They said options are a tenant-friendly term and the market is changing so they are working to limit options when possible. Grocery tenants often lock 50% of ABR with flat or mild options for long periods (next 30 years), while for in-line neighbors they push to negotiate options away or to price options at 15%–20% or better and remove non-monetary constraints.
"Options are definitely 1 of those things that are very tenant friendly. We do not like to give them." — Robert F. Myers (PRESIDENT)
cap rates: grocery vs everyday retail
Q (Caroline · Morgan Stanley): Analyst asked what cap rates and unlevered returns look like for grocery-anchored centers versus everyday retail, and about local tenant mix in everyday retail.
A: They said core grocery-anchored cap rates run about 5.8 to 6.5 while everyday retail is about 6.3 to 7.5, and PECO’s everyday retail has averaged a 6.8 cap rate. They reported unlevered returns of about 9 to 9.5 for grocery and 10 to 11 for everyday retail, and said everyday retail typically starts 60% national/40% local and can move toward roughly 30% local over the hold period.
"Cap rates have been running anywhere between a 5.8 and a 6.5 for what I would consider a core grocery anchored opportunities." — Robert F. Myers (PRESIDENT)
development and redevelopment appetite
Q (Sean Glass · KeyBanc): Analyst asked how large PECO’s ground-up development program could become and whether development can offset compressed acquisition returns.
A: They said this year they will finish about $80 to $85 million in redevelopment and development and are generating returns between 9% and 12% on that work. They have a pipeline they expect to grow over the next 3 years (a couple hundred million), continue to buy outparcels (most $2 million to $4 million) and have completed about 42 similar projects over the last 4 years.
"So this year, we will finish somewhere between $80 and $85 million. Of our redevelopment in development buckets, and we are generating returns between 9-12%." — Robert F. Myers (PRESIDENT)
tenant credit blips and underwriting
Q (Connor Mitchell): Analyst asked if recent tenant credit issues (Wendy’s, Leslie’s) change PECO’s view on tenant mix, underwriting for acquisitions, bad debt assumptions, or watch lists.
A: They said the Wendy’s franchise issue did not impact them and Leslie's represented only 5 basis points of rent across about 6 locations. Management said locals remain strong, diversification is a strength, they have tightened the bad debt range and are not seeing concerning trends in renewals or the pipeline.
"And from Leslie's, I believe it was 5 basis points of rent. I think we had 6 locations." — John Caulfield (CFO)
in-line occupancy change
Q (Jacob · JPMorgan): Analyst asked about a slight 40 basis point decline in in-line leased occupancy and where that metric might be by end of 2027.
A: They said the drop to 95.1% in-line occupancy was purely due to new acquisitions brought online that were in the low 90s occupancy when acquired, not due to underlying portfolio weakness. The explanation was that new assets temporarily lower the blended in-line occupancy until they stabilize.
"It moved to 95.1%, purely because of the new acquisitions we brought online." — Robert F. Myers (PRESIDENT)
Northwestern Mutual funding timing and impact
Q (Eric Borden · BMO): Analyst asked how Northwestern Mutual tranches line up with acquisitions under contract and whether recurring fee income could cause temporary earnings dilution while capital is put to work.
A: They said the capital is staged in 3 tranches to match acquisition timing: the first tranche has closed, the second is expected in December, and the third in January, and the program will total about $800 million when fully funded. Management said the staged closings are matched to the pipeline, they expect lower debt-to-EBITDA at year end, do not anticipate earnings dilution, and raised FFO per share guidance into the mid-6% growth range.
"I think it is set up in 3 tranches. We have closed the first tranche, and I think this second will be in December, and the third will be in January." — Jeffrey S. Edison (CEO·CHAIR)
everyday retail returns and pipeline
Q (Floris Van Dijkum · Ladenburg): Analyst asked about the everyday retail acquisition pipeline and how total returns split between initial yield and NOI growth going forward.
A: They said they have about $300 million in everyday retail across 13 assets, have already pushed occupancy up 250 to 300 basis points, and those assets are delivering an average NOI CAGR above 5%. New leasing spreads are about 40% and renewal spreads above 25%, and they underwrite everyday retail to target 10%-plus returns while scaling toward $1 billion over the next 24 months.
"If you look at from the time that we acquired them to where we are at today, we have seen a lot of success not only in moving occupancy, We have moved occupancy between 250 and 300 basis points already." — Robert F. Myers (PRESIDENT)
outparcel supply and leasing impact
Q (Paulina Alejandra Rojas-Schmidt · Green Street): Analyst asked whether new small parcel buildings on grocery sites are meaningful competition for leasing or just a small addition in most markets.
A: They said these small outparcels are largely a drop in the bucket for the overall market but there is high demand for them and many are leased before construction finishes. Management described these deals as additive, often on existing parking or adjacent land, and they deliver 9% to 12% returns on development.
"And you know, in most cases, it is fully occupied before we complete the construction." — Jeffrey S. Edison (CEO·CHAIR)