Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September June 30, 20172021
OR
¨☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file numberFile Number: 000-54691
cik0001476204-20210630_g1.jpg
PHILLIPS EDISON GROCERY CENTER REIT I, INC.  & COMPANY, INC.
(Exact name of registrant as specified in its charter)
(Exact Name of Registrant as Specified in Its Charter)

Maryland27-1106076
(State or Other Jurisdictionother jurisdiction of
Incorporation incorporation or Organization)
organization)
(I.R.S. Employer
Identification No.)

11501 Northlake Drive,
Cincinnati, Ohio
45249
(Address of Principal Executive Offices)principal executive offices)(Zip Code)code)
(513) 554-1110
(Registrant’s Telephone Number, Including Area Code)

(513) 554-1110
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports required
Securities registered pursuant to be filed by Section 13 or 15(d)12(b) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No   ¨Act:
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per sharePECONasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☑No  ☐ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)Yes☑No  ☐  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.    (Check one):
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
☐☐☑☐☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes☐No  ☑
There were 19.6 million shares of the registrant’s Common Stock, $0.01 par value per share, and 93.7 million shares of Class B stock, $0.01 par value per share, outstanding as of July 30, 2021.

Table of Contents
PHILLIPS EDISON & COMPANY, INC. FORM 10-Q
TABLE OF CONTENTS
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OTHER INFORMATION
47
48
49
Large Accelerated Filer¨Accelerated Filer¨
Non-Accelerated Filer
þ (Do not check if a smaller reporting company)
Smaller reporting company¨
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ
As of October 31, 2017, there were 184.5 million outstanding shares of common stock of Phillips Edison Grocery Center REIT I, Inc.



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS









PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
1
Table of Contents
wPART I.I FINANCIAL INFORMATION
2
Item 1.
Financial Statements (Unaudited)
2
Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016

2
Consolidated Statements of Operations and Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2017 and 2016
3
Consolidated Statements of Equity for the Nine Months Ended September 30, 2017 and 2016
4
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016
5
Notes to Consolidated Financial Statements
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
19
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
31
Item 4.
Controls and Procedures
32
PART II. OTHER INFORMATION
32
Item 1.
Legal Proceedings
32
Item 1A.
Risk Factors
32
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
36
Item 3.
Defaults Upon Senior Securities
37
Item 4.
Mine Safety Disclosures
37
Item 5.
Other Information
37
Item 6.
Exhibits
38
SIGNATURES
39



PART I.      FINANCIAL INFORMATION
ItemITEM 1. Financial StatementsFINANCIAL STATEMENTS



PHILLIPS EDISON GROCERY CENTER REIT I,& COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBERJUNE 30, 20172021 AND DECEMBER 31, 20162020
(Unaudited)(Condensed and Unaudited)
(In thousands, except per share amounts)
  June 30, 2021December 31, 2020
ASSETS    
Investment in real estate:    
Land and improvements$1,529,803 $1,549,362 
Building and improvements3,184,601 3,237,986 
In-place lease assets434,499 441,683 
Above-market lease assets64,795 66,106 
Total investment in real estate assets5,213,698 5,295,137 
Accumulated depreciation and amortization(1,021,456)(941,413)
Net investment in real estate assets4,192,242 4,353,724 
Investment in unconsolidated joint ventures32,746 37,366 
Total investment in real estate assets, net4,224,988 4,391,090 
Cash and cash equivalents22,205 104,296 
Restricted cash89,196 27,641 
Goodwill29,066 29,066 
Other assets, net126,056 126,470 
Real estate investments and other assets held for sale14,261 0 
Total assets$4,505,772 $4,678,563 
LIABILITIES AND EQUITY    
Liabilities:    
Debt obligations, net$2,228,232 $2,292,605 
Below-market lease liabilities, net93,949 101,746 
Earn-out liability40,000 22,000 
Derivative liabilities39,929 54,759 
Deferred income18,978 14,581 
Accounts payable and other liabilities88,436 176,943 
Liabilities of real estate investments held for sale860 0 
Total liabilities2,510,384 2,662,634 
Commitments and contingencies (Note 8)0 0 
Equity:    
Preferred stock, $0.01 par value per share, 10,000 shares authorized, 0 shares issued and    
outstanding at June 30, 2021 and December 31, 20200 0 
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 93,640 and 93,279    
shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively2,808 2,798 
Additional paid-in capital (“APIC”)2,749,680 2,739,358 
Accumulated other comprehensive loss (“AOCI”)(38,732)(52,306)
Accumulated deficit(1,041,617)(999,491)
Total stockholders’ equity1,672,139 1,690,359 
Noncontrolling interests323,249 325,570 
Total equity1,995,388 2,015,929 
Total liabilities and equity$4,505,772 $4,678,563 
  September 30, 2017 December 31, 2016
ASSETS     
Investment in real estate:     
Land and improvements$838,078
 $796,192
Building and improvements1,640,052
 1,532,888
Acquired in-place lease assets226,033
 212,916
Acquired above-market lease assets43,021
 42,009
Total investment in real estate assets2,747,184
 2,584,005
Accumulated depreciation and amortization(418,544) (334,348)
Total investment in real estate assets, net2,328,640
 2,249,657
Cash and cash equivalents7,189
 8,224
Restricted cash6,025
 41,722
Other assets, net102,541
 80,585
Real estate investment and other assets held for sale4,863
 —
Total assets$2,449,258
 $2,380,188
    
LIABILITIES AND EQUITY  
   
Liabilities:  
   
Mortgages and loans payable, net$1,224,779
 $1,056,156
Acquired below-market lease liabilities, net of accumulated amortization of $24,790 and $20,255, respectively42,080
 43,032
Accounts payable – affiliates4,567
 4,571
Accounts payable and other liabilities69,007
 51,642
Liabilities of real estate investment held for sale233
 —
Total liabilities1,340,666
 1,155,401
Commitments and contingencies (Note 7)—
 —
Equity:  
   
Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at     
September 30, 2017 and December 31, 2016, respectively—
 —
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 184,140 and 185,062 shares issued     
and outstanding at September 30, 2017 and December 31, 2016, respectively1,841
 1,851
Additional paid-in capital1,617,717
 1,627,098
Accumulated other comprehensive income11,175
 10,587
Accumulated deficit(539,840) (438,155)
Total stockholders’ equity1,090,893
 1,201,381
Noncontrolling interests17,699
 23,406
Total equity1,108,592
 1,224,787
Total liabilities and equity$2,449,258
 $2,380,188


See notes to consolidated financial statements.










PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
2
Table of Contents
PHILLIPS EDISON GROCERY CENTER REIT I,& COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) INCOME
FOR THE THREE AND NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172021 AND 20162020
(Unaudited)(Condensed and Unaudited)
(In thousands, except per share amounts)
Three Months Ended June 30,Six Months Ended June 30,
  2021202020212020
Revenues:
Rental income$130,335 $115,654 $257,958 $244,120 
Fees and management income2,374 2,760 4,660 4,925 
Other property income361 626 833 1,518 
Total revenues133,070 119,040 263,451 250,563 
Operating Expenses:
Property operating21,974 19,629 44,176 41,391 
Real estate taxes16,814 16,453 33,387 33,565 
General and administrative11,937 9,806 21,278 20,546 
Depreciation and amortization56,587 56,370 111,928 112,597 
Impairment of real estate assets1,056 0 6,056 0 
Total operating expenses108,368 102,258 216,825 208,099 
Other:
Interest expense, net(19,132)(22,154)(39,195)(44,929)
Gain (loss) on disposal of property, net3,744 (541)17,585 (2,118)
Other (expense) income, net(2,924)(500)(18,509)9,369 
Net income (loss)6,390 (6,413)6,507 4,786 
Net (income) loss attributable to noncontrolling interests(796)825 (810)(605)
Net income (loss) attributable to stockholders$5,594 $(5,588)$5,697 $4,181 
Earnings per common share:
Net income (loss) per share attributable to stockholders - basic and
    diluted (Note 10)
$0.06 $(0.06)$0.06 $0.04 
Comprehensive income (loss):
Net income (loss)$6,390 $(6,413)$6,507 $4,786 
Other comprehensive income (loss):
Change in unrealized value on interest rate swaps3,373 (1,747)15,493 (45,111)
Comprehensive income (loss)9,763 (8,160)22,000 (40,325)
Net (income) loss attributable to noncontrolling interests(796)825 (810)(605)
Change in unrealized value on interest rate swaps attributable to
noncontrolling interests		(400)224 (1,909)5,798 
Reallocation of comprehensive loss upon conversion of noncontrolling
interests		(10)0 (10)0 
Comprehensive income (loss) attributable to stockholders$8,557 $(7,111)$19,271 $(35,132)
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Revenues:         
Rental income$53,165
 $48,828
 $157,425
 $143,023
Tenant recovery income17,052
 16,199
 50,442
 47,652
Other property income407
 243
 911
 730
Total revenues70,624
 65,270

208,778

191,405
Expenses:  
   
    
Property operating10,882
 10,030
 32,611
 29,978
Real estate taxes10,723
 9,104
 31,136
 27,745
General and administrative8,712

7,722
 25,438
 23,736
Termination of affiliate arrangements5,454
 —
 5,454
 —
Acquisition expenses202

870
 466
 2,392
Depreciation and amortization28,650

26,583
 84,481
 78,266
Total expenses64,623

54,309

179,586

162,117
Other:  
   
    
Interest expense, net(10,646)
(8,504) (28,537) (23,837)
Transaction expenses(3,737) —
 (9,760) —
Other income (expense), net6

33
 642
 (125)
Net (loss) income(8,376)
2,490

(8,463)
5,326
Net loss (income) attributable to noncontrolling interests144
 (26) 144
 (83)
Net (loss) income attributable to stockholders$(8,232)
$2,464
 $(8,319) $5,243
Earnings per common share:  
   
    
Net (loss) income per share attributable to stockholders - basic and diluted$(0.04)
$0.01

$(0.05)
$0.03
Weighted-average common shares outstanding:       
Basic183,843
 184,639
 183,402
 183,471
Diluted183,843
 187,428
 183,402
 186,260
        
Comprehensive (loss) income:  
   
    
Net (loss) income$(8,376) $2,490
 $(8,463) $5,326
Other comprehensive (loss) income:  
   
    
Unrealized (loss) gain on derivatives(179) 1,950
 (1,944) (9,597)
Reclassification of derivative loss to interest expense228
 888
 1,203
 2,762
Comprehensive (loss) income(8,327) 5,328
 (9,204) (1,509)
Comprehensive loss (income) attributable to noncontrolling interests144
 (26) 144
 (83)
Comprehensive (loss) income attributable to stockholders$(8,183) $5,302
 $(9,060) $(1,592)


See notes to consolidated financial statements.










PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
3
Table of Contents
PHILLIPS EDISON GROCERY CENTER REIT I,& COMPANY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE NINETHREE MONTHS ENDEDSEPTEMBER JUNE 30, 20172021 AND 20162020
(Unaudited)(Condensed and Unaudited)
(In thousands, except per share amounts)
Three Months Ended June 30, 2021 and 2020
  Common StockAPICAOCIAccumulated DeficitTotal Stockholders’ EquityNoncontrolling InterestsTotal Equity
  SharesAmount
Balance at April 1, 202096,805 $2,903 $2,793,803 $(58,552)$(986,292)$1,751,862 $341,944 $2,093,806 
Change in unrealized value on interest
    rate swaps		— — — (1,523)— (1,523)(224)(1,747)
Share-based compensation2 1 1,332 — — 1,333 808 2,141 
Conversion of noncontrolling interests17 1 555 — — 556 (556)— 
Other(2)— (256)— (59)(315)(3)(318)
Net loss— — — — (5,588)(5,588)(825)(6,413)
Balance at June 30, 202096,822 $2,905 $2,795,434 $(60,075)$(991,939)$1,746,325 $341,144 $2,087,469 
Balance at April 1, 202193,582 $2,807 $2,746,891 $(41,695)$(1,023,155)$1,684,848 $324,558 $2,009,406 
Change in unrealized value on interest
    rate swaps		— — — 2,973 — 2,973 400 3,373 
Common distributions declared, $0.255
    per share
— — — — (24,056)(24,056)— (24,056)
Distributions to noncontrolling interests— — — — — — (3,460)(3,460)
Share-based compensation30 1 2,102 — — 2,103 1,632 3,735 
Conversion of noncontrolling interests28 — 743 — — 743 (743)— 
Reallocation of operating partnership
    interests		— — (56)(10)— (66)66 — 
Net income— — — — 5,594 5,594 796 6,390 
Balance at June 30, 202193,640 $2,808 $2,749,680 $(38,732)$(1,041,617)$1,672,139 $323,249 $1,995,388 









PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
4
Table of Contents
  Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interest Total Equity
  Shares Amount      
Balance at January 1, 2016181,308
 $1,813
 $1,588,541
 $22
 $(323,761) $1,266,615
 $25,177
 $1,291,792
Share repurchases(752) (7) (7,273) —
 —
 (7,280) —
 (7,280)
Dividend reinvestment plan (“DRIP”)4,387
 44
 44,687
 —
 —
 44,731
 —
 44,731
Common distributions declared, $0.50 per share—
 —
 —
 —
 (92,107) (92,107) —
 (92,107)
Share-based compensation—
 —
 10
 —
 —
 10
 —
 10
Change in unrealized loss on interest rate swaps—
 —
 —
 (6,835) —
 (6,835) —
 (6,835)
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (1,409) (1,409)
Net income—
 —
 —
 —
 5,243
 5,243
 83
 5,326
Balance at September 30, 2016184,943
 $1,850
 $1,625,965
 $(6,813) $(410,625) $1,210,377
 $23,851
 $1,234,228
                
Balance at December 31, 2016, as reported185,062
 $1,851
 $1,627,098
 $10,587
 $(438,155) $1,201,381
 $23,406
 $1,224,787
Adoption of new accounting pronouncement (see Note 8)—
 —
 —
 1,329
 (1,329) —
 —
 —
Balance at January 1, 2017, as adjusted185,062

1,851

1,627,098

11,916

(439,484)
1,201,381

23,406

1,224,787
Share repurchases(4,471) (45) (45,557) —
 —
 (45,602) —
 (45,602)
DRIP3,546
 35
 36,136
 —
 —
 36,171
 —
 36,171
Common distributions declared, $0.50 per share—
 —
 —
 —
 (92,037) (92,037) —
 (92,037)
Share-based compensation3
 —
 40
 —
 —
 40
 —
 40
Change in unrealized loss on interest rate swaps—
 —
 —
 (741) —
 (741) —
 (741)
Distributions to noncontrolling interests—
 —
 —
 —
 —
 —
 (1,384) (1,384)
Redemption of noncontrolling interest—
 —
 —
 —
 —
 —
 (4,179) (4,179)
Net loss—
 —
 —
 —
 (8,319) (8,319) (144) (8,463)
Balance at September 30, 2017184,140
 $1,841
 $1,617,717
 $11,175
 $(539,840) $1,090,893
 $17,699
 $1,108,592
PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(Condensed and Unaudited)
(In thousands, except per share amounts)
Six Months Ended June 30, 2021 and 2020
  Common StockAPICAOCIAccumulated DeficitTotal Stockholders’ EquityNoncontrolling InterestsTotal Equity
  SharesAmount
Balance at January 1, 202096,349 $2,890 $2,779,130 $(20,762)$(947,252)$1,814,006 $354,788 $2,168,794 
Dividend Reinvestment Plan (“DRIP”)479 14 15,926 — — 15,940 — 15,940 
Share repurchases(96)(3)(2,697)— — (2,700)— (2,700)
Change in unrealized value on interest
    rate swaps		— — — (39,313)— (39,313)(5,798)(45,111)
Common distributions declared, $0.503
    per share
— — — — (48,809)(48,809)— (48,809)
Distributions to noncontrolling interests— — — — — — (7,105)(7,105)
Share-based compensation36 2 1,472 — — 1,474 518 1,992 
Conversion of noncontrolling interests56 2 1,859 — — 1,861 (1,861)— 
Other(2)— (256)(59)(315)(3)(318)
Net income— — — — 4,181 4,181 605 4,786 
Balance at June 30, 202096,822 $2,905 $2,795,434 $(60,075)$(991,939)$1,746,325 $341,144 $2,087,469 
Balance at January 1, 202193,279 $2,798 $2,739,358 $(52,306)$(999,491)$1,690,359 $325,570 $2,015,929 
DRIP280 8 7,360 — — 7,368 — 7,368 
Share repurchases(24)0 (123)— — (123)— (123)
Change in unrealized value on interest
    rate swaps		— — — 13,584 — 13,584 1,909 15,493 
Common distributions declared, $0.510
    per share
— — — — (47,823)(47,823)— (47,823)
Distributions to noncontrolling interests— — — — — — (6,779)(6,779)
Share-based compensation77 2 2,427 — — 2,429 2,416 4,845 
Conversion of noncontrolling interests28 0 743 — — 743 (743)— 
Reallocation of operating partnership
    interests		— — (56)(10)— (66)66 — 
Other0 — (29)— 0 (29)0 (29)
Net income— — — — 5,697 5,697 810 6,507 
Balance at June 30, 202193,640 $2,808 $2,749,680 $(38,732)$(1,041,617)$1,672,139 $323,249 $1,995,388 


See notes to consolidated financial statements.










PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
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PHILLIPS EDISON GROCERY CENTER REIT I,& COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINESIX MONTHS ENDEDSEPTEMBER JUNE 30, 20172021 AND 20162020
(Unaudited)(Condensed and Unaudited)
(In thousands)
Six Months Ended June 30,
  20212020
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income$6,507 $4,786 
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization of real estate assets109,995 109,709 
Impairment of real estate assets6,056 0 
Depreciation and amortization of corporate assets1,933 2,888 
Net amortization of above- and below-market leases(1,725)(1,583)
Amortization of deferred financing expenses2,448 2,495 
Amortization of debt and derivative adjustments739 1,884 
(Gain) loss on disposal of property, net(17,585)2,118 
Change in fair value of earn-out liability18,000 (10,000)
Straight-line rent(4,400)(1,331)
Share-based compensation4,845 1,992 
Return on investment in unconsolidated joint ventures1,533 32 
Other(519)1,239 
Changes in operating assets and liabilities:    
Other assets, net900 (12,853)
Accounts payable and other liabilities1,170 (11,470)
Net cash provided by operating activities129,897 89,906 
CASH FLOWS FROM INVESTING ACTIVITIES:    
Real estate acquisitions(40,459)(4,343)
Capital expenditures(30,230)(28,540)
Proceeds from sale of real estate119,638 25,778 
Investment in third parties(3,000)0 
Return of investment in unconsolidated joint ventures3,888 639 
Net cash provided by (used in) investing activities49,837 (6,466)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from revolving credit facility9,000 255,000 
Payments on revolving credit facility(9,000)(255,000)
Payments on mortgages and loans payable(66,237)(35,200)
Distributions paid, net of DRIP(48,308)(49,083)
Distributions to noncontrolling interests(7,931)(9,406)
Repurchases of common stock(77,765)(5,211)
Other(29)(318)
Net cash used in financing activities(200,270)(99,218)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH(20,536)(15,778)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:    
Beginning of period131,937 95,108 
End of period$111,401 $79,330 
RECONCILIATION TO CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents$22,205 $53,262 
Restricted cash89,196 26,068 
Cash, cash equivalents, and restricted cash at end of period$111,401 $79,330 








PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
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  2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net (loss) income$(8,463) $5,326
Adjustments to reconcile net (loss) income to net cash provided by operating activities:  
   
Depreciation and amortization83,200
 76,293
Net amortization of above- and below-market leases(972) (936)
Amortization of deferred financing expense3,572
 3,757
Net (gain) loss on write-off of unamortized capitalized leasing commissions, market debt adjustments,   
and deferred financing expense(372) 59
Straight-line rental income(2,913) (2,793)
Other(555) 130
Changes in operating assets and liabilities:  
   
Other assets(12,193) (4,339)
Accounts payable – affiliates1
 (1,206)
Accounts payable and other liabilities6,217
 8,888
Net cash provided by operating activities67,522

85,179
CASH FLOWS FROM INVESTING ACTIVITIES:  
   
Real estate acquisitions(111,740) (132,266)
Capital expenditures(22,505) (16,936)
Proceeds from sale of real estate37,037
 —
Change in restricted cash(203) 394
Net cash used in investing activities(97,411) (148,808)
CASH FLOWS FROM FINANCING ACTIVITIES:  
   
Net change in credit facility202,000
 (23,531)
Proceeds from mortgages and loans payable—
 230,000
Payments on mortgages and loans payable(64,287) (103,622)
Payments of deferred financing expenses(2,510) (2,461)
Distributions paid, net of DRIP(56,226) (47,535)
Distributions to noncontrolling interests(1,262) (1,260)
Repurchases of common stock(44,682) (7,280)
Redemption of noncontrolling interests(4,179) —
Net cash provided by financing activities28,854
 44,311
NET DECREASE IN CASH AND CASH EQUIVALENTS(1,035) (19,318)
CASH AND CASH EQUIVALENTS:  
   
Beginning of period8,224
 40,680
End of period$7,189
 $21,362
    
SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES:  
Cash paid for interest$26,461
 $22,234
Fair value of assumed debt30,832
 —
Accrued capital expenditures3,560
 1,834
Change in distributions payable(360) (159)
Change in distributions payable - noncontrolling interests122
 149
Change in accrued share repurchase obligation920
 —
Distributions reinvested36,171
 44,731
Like-kind exchange of real estate:   
   Utilization of restricted cash held for acquisitions(35,900) —
PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(Condensed and Unaudited)
(In thousands)
Six Months Ended June 30,
  20212020
SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid for interest$36,845 $40,980 
Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities239 551 
Accrued capital expenditures6,053 2,884 
Change in distributions payable(7,853)(16,214)
Change in distributions payable - noncontrolling interests(1,152)(2,301)
Change in accrued share repurchase obligation(77,642)(2,511)
Distributions reinvested7,368 15,940 

See notes to consolidated financial statements.










PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
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Phillips Edison Grocery Center REIT I,& Company, Inc.
Notes to Consolidated Financial Statements
(Unaudited)(Condensed and Unaudited)
As of and for the period ended June 30, 2021

1. ORGANIZATION
1. ORGANIZATION
Phillips Edison Grocery Center REIT I,& Company, Inc. (“we,” the “Company,” “PECO,” “our,” or “us”) was formed as a Maryland corporation in October 2009. Substantially all of our business is conducted through Phillips Edison Grocery Center Operating Partnership I, L.P., (the “Operating Partnership”), a Delaware limited partnership formed in December 2009. We are a limited partner of the Operating Partnership, and our wholly ownedwholly-owned subsidiary, Phillips Edison Grocery Center OP GP I LLC, is the sole general partner of the Operating Partnership.
We investare a real estate investment trust (“REIT”) that invests primarily in well-occupied,omni-channel grocery-anchored neighborhood and community shopping centers that have a mix of creditworthy national, regional, and regionallocal retailers that sell necessity-based goods and services in strong demographic markets throughout the United States. In addition to managing our own shopping centers, our third-party investment management business provides comprehensive real estate and asset management services to two unconsolidated institutional joint ventures, in which we have a partial ownership interest, and one private fund (collectively, the “Managed Funds”) as of June 30, 2021.
As of SeptemberJune 30, 2017,2021, we wholly-owned 272 real estate properties. Additionally, we owned a 14% interest in Grocery Retail Partners I LLC (“GRP I”), a joint venture that owned 20 properties, and a 20% equity interest in Necessity Retail Partners (“NRP”), a joint venture that owned 2 properties.
On June 18, 2021, our advisor was Phillips Edison NTR LLCstockholders 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-Q disclosure gives effect to the Recapitalization and references to “shares” and per share metrics refer to our common stock and Class B common stock, collectively.
On July 2, 2021, our board of directors (the “Board”) approved an amendment to our articles of incorporation to effect a one-for-three reverse stock split. Concurrent with the reverse split, the Operating Partnership enacted a one-for-three reverse split of its outstanding Operating Partnership units (“PE-NTR”OP units”). Unless otherwise indicated, the information in this Form 10-Q gives effect to the reverse stock and OP unit splits (Note 9).
On July 19, 2021, we closed our underwritten initial public offering (“underwritten IPO”), through which was directly or indirectly owned by Phillips Edison Limited Partnershipwe offered 17.0 million shares of a new class of common stock, $0.01 par value per share, at an initial price of $28.00 per share, pursuant to a registration statement filed with the U.S. Securities and Exchange Commission (“Phillips Edison sponsor” or “PELP”SEC”) on Form S-11 (File No. 333-255846), as amended. These shares are listed on the Nasdaq Global Select Market under the trading symbol “PECO”. UnderThe underwriters have since exercised a 30-day option to purchase additional shares of common stock to cover overallotments, and, accordingly, on August 2, 2021 we settled the termssale of an additional 2.55 million shares, with gross proceeds to us of $71.4 million.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Set forth below is a summary of the advisory agreement between PE-NTRsignificant accounting estimates and us, PE-NTR was responsible forpolicies that management believes are important to the managementpreparation of our day-to-day activities and the implementation of our investment strategy.
As of September 30, 2017, we owned fee simple interests in 159 real estate properties acquired from third parties unaffiliated with us or PE-NTR.
On October 4, 2017, we completed a transaction to acquire certain real estate assets, the captive insurance company, and the third-party asset management business of our Phillips Edison sponsor in a stock and cash transaction (“PELP transaction”). Upon completion of the PELP transaction, our relationship with PE-NTR was terminated. For a more detailed discussion, see Notes 3 and 11.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
condensed consolidated interim financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by management. For example, significant estimates and assumptions have been made with respect to the useful lives of assets;assets, remaining hold period of assets, recoverable amounts of receivables;receivables, and other fair value measurement assessments required for the preparation of the consolidated interim financial statements. As a result, these estimates are subject to a degree of uncertainty.
Other than those noted below, thereBeginning in 2020, the coronavirus (“COVID-19”) pandemic has caused significant disruption to our operations. All temporarily closed tenants have since been permitted to reopen; however, certain of our tenants have permanently closed. We have backfilled a number of these spaces, and continue to work on backfilling any remaining vacancies. The continuing economic impacts of the COVID-19 pandemic could result in increased permanent store closures, reduce the demand for leasing space in our shopping centers, and/or result in a decline in occupancy and rental revenues in our real estate portfolio. Because of the adverse economic conditions that have occurred as a result of the impacts of the COVID-19 pandemic and any remaining uncertainty related to the pandemic, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change significantly. All of this activity impacts our estimates around the collectibility of revenue and valuation of real estate assets, goodwill and other intangible assets, and certain liabilities, among others.








PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
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There were no changes to our significant accounting policies during the ninesix months ended SeptemberJune 30, 2017.2021, except for those discussed below. For a full summary of our accounting policies, refer to our 20162020 Annual Report on Form 10-K as originally filed with the SEC on March 9, 2017.12, 2021.
Basis of Presentation and Principles of Consolidation—The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report on Form 10-Q should refer to theour audited consolidated financial statements of Phillips Edison Grocery Center REIT I, Inc. for the year ended December 31, 2016,2020, which are included in our 20162020 Annual Report on Form 10-K. In the opinion of management, all normal and recurring adjustments necessary for the fair presentation of the unaudited consolidated financial statements for the periods presented have been included in this Quarterly Report. Our results of operations for the three and ninesix months ended SeptemberJune 30, 2017,2021 are not necessarily indicative of the operating results expected for the full year.
The accompanying consolidated financial statements include our accounts and those of our majority-owned subsidiaries. All intercompany balances and transactions are eliminated upon consolidation.
Held for Sale EntitiesUnderwritten IPO Costs—We consider assetsDeferred underwritten IPO costs are currently recorded as Other Assets, Net on our consolidated balance sheets as of June 30, 2021, and will be offset against underwritten IPO proceeds and reclassified as a component of APIC on the consolidated balance sheets upon the consummation of the offering. Costs incurred that were related to our underwritten IPO activities but were not directly related to our equity raise were not capitalized and are included as transaction costs, currently in Other (Expense) Income, Net on our consolidated statements of operations and comprehensive income (loss) (“consolidated statements of operations”).
Income Taxes—Our consolidated financial statements include the operations of wholly-owned subsidiaries that have jointly elected to be heldtreated as Taxable REIT Subsidiaries and are subject to U.S. federal, state, and local income taxes at regular corporate tax rates. We recognized an insignificant amount of federal, state, and local income tax expense for sale when management believes thatthe three and six months ended June 30, 2021 and 2020, and we retain a sale is probable within a year. This generally occurs when a sales contract is executed with no substantive contingencies and the prospective buyer has significant funds at risk. Assets thatfull valuation allowance for our deferred tax asset. All income tax amounts are classified as held for sale are recorded at the lowerincluded in Other (Expense) Income, Net on our consolidated statements of their carrying amount or fair value less cost to sell.operations.



Newly Adopted and Recently Issued Accounting Pronouncements
The following table provides a brief description—On January 7, 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-01 to amend the scope of recently issuedthe guidance in ASU 2020-04 on facilitation of the effects of reference rate reform on financial reporting. Specifically, the amendments in ASU 2021-01 clarify that certain optional expedients and exceptions in Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform for contract modifications and hedge accounting pronouncementsapply to derivatives that couldare affected by the discounting transition. We adopted ASU 2021-01 upon its issuance and the adoption of this standard did not have a material effectimpact on our consolidated financial statements:
statements.
StandardDescriptionDate of AdoptionEffect on the Financial Statements or Other Significant Matters
Accounting Standards Update “ASU” 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20)This update amends existing guidance in order to provide consistency in accounting for the derecognition of a business or nonprofit activity. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted.January 1, 2018We will adopt this standard concurrently with ASU 2014-09, listed below. We expect the adoption will impact our transactions that are subject to the amendments, which, although expected to be infrequent, would include a partial sale of real estate or contribution of a nonfinancial asset to form a joint venture.
ASU 2016-18, Statement of Cash Flows (Topic 230)This update amends existing guidance in order to clarify the classification and presentation of restricted cash on the statement of cash flows. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted.January 1, 2018Upon adoption, we will include amounts generally described as restricted cash within the beginning-of-period and end-of-period total amounts on the statement of cash flows rather than within an activity on the statement of cash flows.
ASU 2016-15, Statement of Cash Flows (Topic 230)This update addresses the presentation of eight specific cash receipts and cash payments on the statement of cash flows. It is effective for annual reporting periods beginning after December 15, 2017, but early adoption is permitted.January 1, 2018We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. Of the eight specific cash receipts and cash payments listed within this guidance, we believe only two would be applicable to our business as it stands currently: debt prepayment or debt extinguishment costs and proceeds from settlement of insurance claims. We will continue to evaluate the impact that adoption of the standard will have on our presentation of these and any other applicable cash receipts and cash payments.
ASU 2016-02, Leases (Topic 842)This update amends existing guidance by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual reporting periods beginning after December 15, 2018, but early adoption is permitted.January 1, 2019We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. We have identified areas within our accounting policies we believe could be impacted by the new standard. We expect to have a change in presentation on our consolidated statement of operations with regards to Tenant Recovery Income, which includes reimbursement amounts we receive from tenants for operating expenses such as real estate taxes, insurance, and other common area maintenance. Additionally, this standard impacts the lessor’s ability to capitalize certain costs related to the leasing of vacant space, which will result in a reduction in the amount of execution costs currently being capitalized in connection with leasing activities.
ASU 2014-09, Revenue from Contracts with Customers (Topic 606)This update outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU 2014-09 specifically references contracts with customers, it also applies to certain other transactions such as the sale of real estate or equipment. Expanded quantitative and qualitative disclosures are also required for contracts subject to ASU 2014-09. In 2015, the Financial Accounting Standard Board (“FASB”) provided for a one-year deferral of the effective date for ASU 2014-09, making it effective for annual reporting periods beginning after December 15, 2017.January 1, 2018Our revenue-producing contracts are primarily leases that are not within the scope of this standard. As a result, we do not expect the adoption of this standard to have a material impact on our rental or reimbursement revenue. We currently plan to adopt this guidance on a modified retrospective basis.


The following table provides a brief description of newly adopted accounting pronouncements and their effect on our financial statements:
StandardDescriptionDate of AdoptionEffect on the Financial Statements or Other Significant Matters
ASU 2017-12, Derivatives and Hedging (Topic 815)This update amended existing guidance in order to better align a company’s financial reporting for hedging activities with the economic objectives of those activities.September 2017Upon adoption, we included a disclosure related to the effect of our hedging activities on our consolidated statements of operations. This disclosure also eliminated the periodic measurement and recognition of hedging ineffectiveness. We adopted this guidance on a modified retrospective basis and applied an adjustment to Accumulated Other Comprehensive Income with a corresponding adjustment to the opening balance of Accumulated Deficit as of the beginning of 2017. For a more detailed discussion of this adoption, see Note 8.
ASU 2017-01, Business Combinations
(Topic 805)		This update amended existing guidance in order to clarify when an integrated set of assets and activities is considered a business.January 1, 2017For a more detailed discussion of the effect of this adoption on our financial statements, see Note 4.
Reclassifications—The following line itemitems on our consolidated statement of cash flows for the ninesix months ended SeptemberJune 30, 2016,2020 were reclassified to conform to current year presentation:
•Return on Investment in Unconsolidated Joint Ventures was reclassified:listed on a separate line from Other Assets, Net; and
•Net (Gain) LossChange in Credit Facility was separated into two lines, Proceeds from Revolving Credit Facility and Payments on Write-off of Unamortized Capitalized Leasing Commissions, Market Debt Adjustments, and Deferred Financing Expense was separately disclosed due to significance in the current period. In the previous period these amounts were included in Other.Revolving Credit Facility.

3. PELP ACQUISITION
On October 4, 2017, we completed the PELP transaction. Under the terms of this transaction, the following consideration was given in exchange for the contribution of PELP’s ownership interests in 76 shopping centers, its captive insurance company, and its third-party asset management business (in thousands):

 Amount
Value of Operating Partnership units (“OP units”) issued(1)
$404,317
Debt assumed(2):

Corporate debt432,091
Mortgages and notes payable70,837
Cash payments25,000
Total estimated consideration$932,245







(1)PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
We issued 39.6 million OP units, excluding 5.1 million OP units and Class B units outstanding prior to the acquisition date, with an estimated value per unit of $10.20 at the time of the transaction.9
Table of Contents
3. LEASES
Lessor—The majority of our leases are largely similar in that the leased asset is retail space within our properties, and the lease agreements generally contain similar provisions and features, without substantial variations. All of our leases are currently classified as operating leases. Lease income related to our operating leases was as follows for the three and six months ended June 30, 2021 and 2020 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Rental income related to fixed lease
    payments(1)
$94,485 $95,036 $189,451 $191,063 
Rental income related to variable
    lease payments(1)(2)
27,454 30,659 58,855 62,497 
Straight-line rent amortization(3)
2,893 (978)4,262 1,331 
Amortization of lease assets877 786 1,704 1,565 
Lease buyout income1,781 214 2,578 308 
Adjustments for collectibility(4)
2,845 (10,063)1,108 (12,644)
Total rental income$130,335 $115,654 $257,958 $244,120 
(1)Includes rental income related to lease payments before assessing for collectibility.
(2)Variable payments are primarily related to tenant recovery income.
(3)Includes favorable revenue adjustments to straight-line rent for tenants previously considered non-creditworthy during the three months ended June 30, 2021 of $0.4 million, and unfavorable adjustments for non-creditworthy tenants during the six months ended June 30, 2021 of $0.4 million. Includes unfavorable adjustments for the three and six months ended June 30, 2020 of $3.2 million, and $3.1 million, respectively.
(4)Includes general reserves as well as adjustments for tenants not considered creditworthy and thus for which we are recording revenue on a cash basis, per ASC Topic 842, Leases (“ASC 842”).
For the three and six months ended June 30, 2021, we had net favorable changes to general reserves of $1.9 million and $4.1 million, respectively. Additionally, we had $1.0 million in net collections on receivables that were previously deemed unlikely to be collected for tenants not considered creditworthy for the three months ended June 30, 2021, and $3.0 million in net unfavorable revenue adjustments for non-creditworthy tenants for the six months ended June 30, 2021.
For the three and six months ended June 30, 2020, we had net general reserve increases of $1.3 million and $0.9 million, respectively. Additionally, we had net unfavorable adjustments of $8.8 million and $11.7 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis.
Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of June 30, 2021, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements, payment plans, and tenants who have been moved to the cash basis of accounting for revenue recognition purposes are as follows (in thousands):
YearAmount
Remaining 2021$191,000 
2022363,187 
2023317,301 
2024263,155 
2025209,307 
Thereafter514,528 
Total$1,858,478 
In response to the COVID-19 pandemic, we executed payment plans with our tenants. As of June 30, 2021, we had $5.4 million of outstanding payment plans with our tenants, which represented approximately 2.1% of rental income during the six months ended June 30, 2021. During the three months ended June 30, 2021, we had recorded an immaterial amount of rent abatements related to 2021 missed charges. During the six months ended June 30, 2021, we recorded approximately $0.5 million of rent abatements related to missed 2021 charges, which represented less than 1% of rental income for the six months ended June 30, 2021.
No single tenant comprised 7% or more of our aggregate annualized base rent (“ABR”) as of June 30, 2021. As of June 30, 2021, our wholly-owned real estate investments in Florida and California represented 12.6% and 10.1% of our ABR, respectively. As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse weather or economic events, including the impact of the COVID-19 pandemic, in the Florida and California real estate markets.








(2)PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
The amounts related to debt assumed are shown at face value, but the final amounts will be recorded at fair value.10
Immediately following the closing
Table of Contents
Lessee—Lease assets and liabilities, grouped by balance sheet line where they are recorded, consisted of the PELP transaction,following as of June 30, 2021 and December 31, 2020 (in thousands):
Balance Sheet InformationBalance Sheet LocationJune 30, 2021December 31, 2020
ROU assets, net - operating leasesInvestment in Real Estate$4,003 $3,867 
ROU assets, net - operating and finance leasesOther Assets, Net1,190 1,438 
Operating lease liabilityAccounts Payable and Other Liabilities5,619 5,731 
Finance lease liabilityDebt Obligations, Net127 164 

4. REAL ESTATE ACTIVITY
Property Sales—The following table summarizes our shareholders owned approximately 80.6%real estate disposition activity (dollars in thousands):
Six Months Ended June 30,
20212020
Number of properties sold(1)
13 4 
Number of outparcels sold(2)(3)
1 0 
Proceeds from sale of real estate$119,638 $25,778 
Gain (loss) on sale of properties, net(4)
18,713 (1,436)
(1)We retained an outparcel for one property sold during the six months ended June 30, 2021, and former PELP shareholders owned approximately 19.4%therefore the sale did not result in a reduction in our total property count.
(2)One outparcel sold during the six months ended June 30, 2021 was the only remaining portion of the combined company.
The terms of the transaction also include an earn-out structure with an opportunity for an additional 12.5 million OP units to be issued if certain milestones are achieved related to a liquidity event for our shareholders and reaching certain fundraising targets in Phillips Edison Grocery Center REIT III, Inc., of which PELP was a co-sponsor.
The PELP transaction was approved by the independent special committeeone of our board of directors (“Board”), which had retained independent financialproperties, and legal advisors. It was also approved bytherefore the sale resulted in a reduction in our shareholders, as well as PELP’s partners. For additional information, please see the Current Report on Form 8-K filed with the SEC on October 11, 2017, and the Definitive Proxy Statement filed with the SEC on July 6, 2017.total property count.
The supplemental purchase accounting disclosures required by GAAP relating(3)In addition to the acquisitionone outparcel sold during the six months ended June 30, 2021, a tenant at one of PELP haveour properties exercised a bargain purchase option to acquire a parcel of land that we previously owned. This generated minimal proceeds for us.
(4)The gain (loss) on sale of properties, net does not been presented asinclude miscellaneous write-off activity, which is also recorded in Gain (Loss) on Disposal of Property, Net on the initial accountingconsolidated statements of operations.
Subsequent to June 30, 2021, we sold 2 properties for this acquisition was incomplete at the time this Quarterly Report on Form 10-Q was filed with the SEC.

$16.0 million.

4. REAL ESTATE ACQUISITIONS AND DISPOSITIONS
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This update amended existing guidance in order to clarify when an integrated set of assets and activities is considered a business. We adopted ASU 2017-01 on January 1, 2017, and applied it prospectively. Under this new guidance, most ofAcquisitions—The following table summarizes our real estate acquisition activity is no longer considered a business combination(dollars in thousands):
Six Months Ended June 30,
20212020
Number of properties acquired2 0 
Number of outparcels acquired(1)
3 2
Total acquisition price$40,459 $4,343 
(1)Outparcels acquired are adjacent to shopping centers that we own.
The fair value and is insteadweighted-average useful life at acquisition for lease intangibles acquired are as follows (dollars in thousands, weighted-average useful life in years):
Six Months Ended June 30, 2021
Fair ValueWeighted-Average Useful Life
In-place leases$4,155 7
Above-market leases52 5
Below-market leases(1,652)6








PHILLIPS EDISON & COMPANY
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Property Held for Sale—As of June 30, 2021, 2 properties were classified as an asset acquisition.held for sale. As a result, most acquisition-related costs that would have been recorded on our consolidated statements of operations are capitalized and will be amortized over the life of the related assets. Costs incurred related to properties that were not ultimately acquired were recorded as Acquisition Expenses on our consolidated statements of operations. As of September 30, 2017, none of our real estate acquisitions in 2017 met the definition of a business; therefore, we accounted for all as asset acquisitions.
During the nine months ended September 30, 2017, we acquired six grocery-anchored shopping centers. Our first quarter acquisition closed out the Internal Revenue Service Code (“IRC”) reverse Section 1031 like-kind exchange outstanding as of December 31, 2016. During the nine months ended September 30, 2016, we acquired three grocery-anchored shopping centers and additional real estate adjacent to previously acquired shopping centers.
For the nine months ended September 30, 2017 and 2016, we allocated the purchase price of our acquisitions, including acquisition costs2020, no properties were classified as held for 2017, to the fair value of the assets acquired and liabilities assumed as follows (in thousands):
 2017 2016
Land and improvements$36,100
 $47,834
Building and improvements95,507
 74,709
Acquired in-place leases13,646
 12,300
Acquired above-market leases1,012
 2,398
Acquired below-market leases(3,703) (6,313)
Total assets and lease liabilities acquired142,562
 130,928
Less: Fair value of assumed debt at acquisition30,832
 —
Net assets acquired$111,730
 $130,928
The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles acquired during the nine months ended September 30, 2017 and 2016, are as follows (in years):
 2017 2016
Acquired in-place leases13 12
Acquired above-market leases7 6
Acquired below-market leases19 22


Property Held for Sale—As of September 30, 2017, one property wassale. Properties classified as held for sale as it wasof June 30, 2021 were under contract to sell, with no substantive contingencies, and the prospective buyerbuyers had significant funds at risk. On October 26, 2017, we sold this propertyrisk as of the reporting date. Subsequent to June 30, 2021, both of our held for $6.5 million and intend on deferring the gain through an IRC Section 1031 like-kind exchange by purchasing another property.sale properties were sold. A summary of assets and liabilities for the propertyproperties held for sale as of SeptemberJune 30, 2017,2021 is below (in thousands):
June 30, 2021
ASSETS
Total investment in real estate assets, net$13,807 
Other assets, net454 
Total assets$14,261 
LIABILITIES
Below-market lease liabilities, net$379 
Accounts payable and other liabilities481 
Total liabilities$860 

5. OTHER ASSETS, NET
The following is a summary of Other Assets, Net outstanding as of June 30, 2021 and December 31, 2020, excluding amounts related to assets held for sale (in thousands):
June 30, 2021December 31, 2020
Other assets, net:
Deferred leasing commissions and costs$44,428 $41,664 
Deferred financing expenses(1)
13,971 13,971 
Office equipment, ROU assets, and other22,699 21,578 
Corporate intangible assets6,804 6,804 
Total depreciable and amortizable assets87,902 84,017 
Accumulated depreciation and amortization(50,014)(45,975)
Net depreciable and amortizable assets37,888 38,042 
Accounts receivable, net(2)
37,151 46,893 
Accounts receivable - affiliates522 543 
Deferred rent receivable, net(3)
35,760 32,298 
Prepaid expenses and other11,735 8,694 
Investment in third parties3,000 0 
Total other assets, net$126,056 $126,470 
(1)Deferred financing expenses per the above table are related to our revolving line of credit and as such we have elected to classify them as an asset rather than as a contra-liability.
(2)Net of $7.4 million and $8.9 million of general reserves for uncollectible amounts as of June 30, 2021 and December 31, 2020, respectively. Receivables that were removed for tenants considered to be non-creditworthy were $16.2 million and $22.8 million as of June 30, 2021 and December 31, 2020, respectively.
(3)Net of $4.7 million and $4.4 million of adjustments as of June 30, 2021 and December 31, 2020, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.









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 September 30, 2017
ASSETS 
Total investment in real estate assets, net$4,459
Accounts receivable, net300
Other assets, net104
Total assets$4,863
  
LIABILITIES 
Liabilities: 
Acquired below-market lease liabilities, net of accumulated amortization of $38$82
Accounts payable – affiliates5
Accounts payable and other liabilities146
Total liabilities$233
Table of Contents

6. DEBT OBLIGATIONS
The following is a summary of the outstanding principal balances and interest rates, which include the effect of derivative financial instruments, for our debt obligations as of June 30, 2021 and December 31, 2020 (dollars in thousands):
5. FAIR VALUE MEASUREMENTS
   
Interest Rate(1)
June 30, 2021December 31, 2020
Revolving credit facilityLIBOR + 1.4%$0 $0 
Term loans(2)
1.3% - 4.6%1,622,500 1,622,500 
Secured loan facilities3.4% - 3.5%395,000 395,000 
Mortgages3.5% - 7.2%223,868 290,022 
Finance lease liability127 164 
Assumed market debt adjustments, net(1,553)(1,543)
Deferred financing expenses, net(11,710)(13,538)
Total  $2,228,232 $2,292,605 
Weighted-average interest rate2.9 %3.1 %
(1)Interest rates are as of June 30, 2021.
(2)Our term loans carry an interest rate of LIBOR plus a spread. While most of the rates are fixed through the use of swaps, there is a portion of these loans that are not subject to a swap, and thus are still indexed to LIBOR.
Debt Activity—On July 2, 2021, we entered into a new $980 million credit facility comprised of a $500 million senior unsecured revolving credit facility and two $240 million senior unsecured term loan tranches (the “Refinancing”). In connection with the Refinancing, we paid off the $472.5 million term loan due in 2025. The revolving credit facility will mature in January 2026, and the two senior unsecured term loan tranches will mature in November 2025 and July 2026, respectively.
On July 20, 2021, we used proceeds from the underwritten IPO to retire our $375 million term loan maturing in 2022.
Debt Allocation—The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments and deferred financing expenses, net, and including the effects of derivative financial instruments (see Notes 7 and 12) as of June 30, 2021 and December 31, 2020 is summarized below (in thousands):
   June 30, 2021December 31, 2020
As to interest rate:
Fixed-rate debt$1,548,995 $1,727,186
Variable-rate debt692,500 580,500
Total$2,241,495 $2,307,686
As to collateralization:
Unsecured debt$1,622,500 $1,622,500
Secured debt618,995 685,186
Total  $2,241,495 $2,307,686

7. DERIVATIVES AND HEDGING ACTIVITIES
Risk Management Objective of Using Derivatives—We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposure to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our debt funding, and through the use of derivative financial instruments. Specifically, we enter into interest rate swaps to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our investments and borrowings.
Cash Flow Hedges of Interest Rate Risk—Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in AOCI and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the six months ended June 30, 2021 and 2020, such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt. Amounts reported in AOCI related to these derivatives will be reclassified to Interest Expense, Net as interest payments are made on the variable-rate debt. During the next twelve months, we estimate that an additional $18.2 million will be reclassified from AOCI as an increase to Interest Expense, Net.








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The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of June 30, 2021 and December 31, 2020 (dollars in thousands):
June 30, 2021December 31, 2020
Count5 6 
Notional amount$930,000 $1,042,000 
Fixed LIBOR1.3% - 2.9%1.3% - 2.9%
Maturity date2022 - 20252021 - 2025
We assumed 5 hedges with a notional amount of $570 million as a part of a merger. The fair value of the five hedges assumed was $14.7 million and is amortized over the remaining lives of the respective hedges and recorded in Interest Expense, Net in the consolidated statements of operations. The net unamortized amount remaining as of June 30, 2021 and December 31, 2020 was $4.3 million and $5.0 million, respectively.
The table below details the nature of the gain and loss recognized on interest rate derivatives designated as cash flow hedges in the consolidated statements of operations (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
  2021202020212020
Amount of (loss) gain recognized in
 Other Comprehensive Income (Loss)
$(1,451)$(6,614)$5,814 $(51,530)
Amount of loss reclassified from AOCI
 into interest expense
4,824 4,867 9,679 6,419 
Credit-risk-related Contingent Features—We have agreements with our derivative counterparties that contain provisions where, if we default, or are capable of being declared in default, on any of our indebtedness, we could also be declared to be in default on our derivative obligations. As of June 30, 2021, the fair value of our derivatives in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk related to these agreements, was approximately $39.9 million. As of June 30, 2021, we had not posted any collateral related to these agreements and were not in breach of any agreement provisions. If we had breached any of these provisions, we could have been required to settle our obligations under the agreements at their termination value of $39.9 million.

8. COMMITMENTS AND CONTINGENCIES
Litigation—We are involved in various claims and litigation matters arising in the ordinary course of business, some of which involve claims for damages. Many of these matters are covered by insurance, although they may nevertheless be subject to deductibles or retentions. Although the ultimate liability for these matters cannot be determined, based upon information currently available, we believe the resolution of such claims and litigation will not have a material adverse effect on our consolidated financial statements.
Environmental Matters—In connection with the ownership and operation of real estate, we may potentially be liable for costs and damages related to environmental matters. In addition, we may own or acquire certain properties that are subject to environmental remediation. Depending on the nature of the environmental matter, the seller of the property, a tenant of the property, and/or another third party may be responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify us against future remediation costs. We also carry environmental liability insurance on our properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which we may be liable. We are not aware of any environmental matters which we believe are reasonably likely to have a material effect on our consolidated financial statements.
Captive Insurance—Our captive insurance company, Silver Rock Insurance, Inc. (“Silver Rock”) provides general liability insurance, wind, reinsurance, and other coverage to us and our related-party joint ventures. We capitalize Silver Rock in accordance with applicable regulatory requirements.
Silver Rock established annual premiums based on the past loss experience of the insured properties. An independent third party was engaged to perform an actuarial estimate of projected future claims, related deductibles, and projected future expenses necessary to fund associated risk management programs. Premiums paid to Silver Rock may be adjusted based on these estimates, and such premiums may be reimbursed by tenants pursuant to specific lease terms.
As of June 30, 2021, we had four letters of credit outstanding totaling approximately $9.0 million to provide security for our obligations under Silver Rock’s insurance and reinsurance contracts.

9. EQUITY
General—The holders of common stock are entitled to one vote per share on all matters voted on by stockholders, including one vote per nominee in the election of the Board. Our charter does not provide for cumulative voting in the election of directors.








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Reverse Stock Split—On July 2, 2021, we effected a one-for-three reverse stock split. Concurrent with the reverse split, the Operating Partnership enacted a one-for-three reverse split of its outstanding OP units. Neither the number of authorized shares nor the par value of the common stock were impacted. As a result of the reverse split, every three shares of our common stock or OP units were automatically combined and converted into one issued and outstanding share of common stock or OP unit rounded to the nearest 1/100th share. The reverse stock split impacts all common stock and OP units proportionately and had no impact on any stockholder’s percentage ownership of common stock.
In connection with the reverse stock split, the number of shares of common stock and OP units underlying the outstanding share-based awards was also proportionately reduced. All references to shares of common stock, number of OP units, and per share data for all periods presented in our consolidated financial statements and notes have been adjusted to reflect the reverse split on a retroactive basis.
Class B Common Stock—Our stockholders approved 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.
Our Class B common stock is identical to our common stock, except that (i) we do not intend to list our Class B common stock on a national securities exchange, and (ii) upon the six month anniversary of the listing of our common stock for trading on a national securities exchange, or January 15, 2022 (or such earlier date or dates as may be approved by our Board in certain circumstances with respect to all or any portion of the outstanding shares of our Class B common stock), each share of our Class B common stock will automatically, and without any stockholder action, convert into one share of our listed common stock.
Underwritten IPO—On July 19, 2021, we completed an underwritten IPO and issued 17.0 million shares of common stock at an offering price of $28.00 per share. We used a portion of the net proceeds to reduce our leverage and expect to use the remaining amount to fund external growth with property acquisitions and for other general corporate uses. As part of the underwritten IPO, underwriters were granted an option exercisable within 30 days from July 14, 2021 to purchase up to an additional 2.55 million shares of common stock at the underwritten IPO price, less underwriting discounts and commissions. On July 29, 2021, the underwriters exercised their option.
Distributions—Distributions paid to stockholders and OP unit holders of record subsequent to June 30, 2021 were as follows (dollars in thousands, excluding per share amounts):
MonthDate of RecordMonthly Distribution RateDate Distribution PaidCash Distribution
June 20216/15/2021$0.085 7/1/2021$9,063 
July 20217/15/20210.085 8/2/20219,065 
On August 4, 2021, our Board authorized distributions to the stockholders of record at the close of business on August 16, 2021, equal to a monthly amount of $0.085 per share of common stock. OP unit holders will receive distributions at the same rate as common stockholders.
Convertible Noncontrolling Interests—As of June 30, 2021 and December 31, 2020, we had approximately 13.4 million and 13.3 million outstanding OP units, respectively. Additionally, certain of our outstanding restricted share and performance share awards will result in the issuance of OP units upon vesting in future periods.
Under the terms of the Fourth Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”), OP unit holders may elect to exchange their OP units. The Operating Partnership controls the form of the redemption, and may elect to exchange OP units either for shares of our common stock, provided that the OP units have been outstanding for at least one year, or for cash. As the form of redemption for OP units is within our control, the OP units outstanding as of June 30, 2021 and December 31, 2020 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets.
The table below is a summary of our OP unit activity for the three and six months ended June 30, 2021 and 2020 (dollars and shares in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
OP units converted into shares of our
   common stock(1)
28 17 28 56 
Distributions paid on OP units(2)
$3,460 $0 $6,779 $7,105 
(1)OP units are converted into shares of our common stock at a 1:1 ratio.
(2)Distributions paid on OP units are included in Distributions to Noncontrolling Interests on the consolidated statements of equity.








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Underwritten IPO Grants—In connection with our underwritten IPO, we issued a total of 0.5 million RSUs and restricted stock awards in the form of time-based stock compensation awards. The shares have a grant price of $28.00 per share and, with the exception of one individual whose award is subject to accelerated vesting provisions, 50% of the shares will vest after 18 months and the remaining 50% will vest after 36 months.
Estimated Value per Share—Prior to our underwritten IPO, on April 29, 2021, our Board increased the estimated value per share (“EVPS”) of our common stock to $31.65 based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2021. We engaged a third-party valuation firm to provide a calculation of the range in EVPS of our common stock as of March 31, 2021, which reflected certain balance sheet assets and liabilities as of that date. Previously, our EVPS was $26.25, based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2020.
Dividend Reinvestment Plan and Share Repurchase Program (“SRP”)—On August 4, 2021, as a result of our underwritten IPO, our Board approved the termination of the DRIP and the SRP. The DRIP has been suspended since April 2021. The SRP, which was limited to repurchases resulting from the death, qualifying disability, or the declaration of incompetence (“DDI”) of stockholders, has been suspended since March 2021, and the SRP for standard repurchases had been suspended since August 2019.

10. EARNINGS PER SHARE
We use the two-class method of computing earnings per share (“EPS”), which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing Net Income (Loss) Attributable to Stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity. EPS reflects earnings per common share prior to the Recapitalization.
OP units held by limited partners other than us are considered to be participating securities because they contain non-forfeitable rights to dividends or dividend equivalents, and have the potential to be exchanged for an equal number of shares of our common stock in accordance with the terms of the Partnership Agreement.
The impact of these outstanding OP units on basic and diluted EPS has been calculated using the two-class method whereby earnings are allocated to the OP units based on dividends declared and the OP units’ participation rights in undistributed earnings. The effects of the two-class method on basic and diluted EPS were immaterial to the consolidated financial statements during the three and six months ended June 30, 2021 and 2020.
The following table provides a reconciliation of the numerator and denominator of the earnings per share calculations, restated for prior periods to display the effect of the reverse split, and excluding the effects of the Recapitalization as it occurred after June 30, 2021 (in thousands, except per share amounts):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Numerator:
Net income (loss) attributable to stockholders - basic$5,594 $(5,588)$5,697 $4,181 
Net income (loss) attributable to convertible OP units(1)
796 (825)810 605 
Net income (loss) - diluted$6,390 $(6,413)$6,507 $4,786 
Denominator:
Weighted-average shares - basic93,625 96,821 93,558 96,736 
OP units(1)
13,381 14,248 13,368 14,273 
Dilutive restricted stock awards169 0 176 131 
Adjusted weighted-average shares - diluted107,175 111,069 107,102 111,140 
Earnings per common share:
Basic and diluted income (loss) per share$0.06 $(0.06)$0.06 $0.04 
(1)OP units include units that are convertible into common stock or cash, at the Operating Partnership’s option. The Operating Partnership income or loss attributable to these OP units, which is included as a component of Net (Income) Loss Attributable to Noncontrolling Interests on the consolidated statements of operations, has been added back in the numerator as these OP units were included in the denominator for all periods presented.
Approximately 0.4 million time-based and 0.9 million performance-based unvested stock awards were outstanding as of June 30, 2020. These securities were anti-dilutive for the three months ended June 30, 2020. As a result, their impact was excluded from the weighted-average common shares used to calculate diluted EPS for that period.









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11. REVENUE RECOGNITION AND RELATED PARTY TRANSACTIONS
Revenue—We have entered into agreements with the Managed Funds related to certain advisory, management, and administrative services we provide to their real estate assets in exchange for fees and reimbursement of certain expenses. Summarized below are amounts included in Fees and Management Income. The revenue includes the fees and reimbursements earned by us from the Managed Funds, and other revenues that are not in the scope of ASC Topic 606, Revenue from Contracts with Customers, but that are included in this table for the purpose of disclosing all related party revenues (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Recurring fees(1)
$1,103 $1,182 $2,228 $2,398 
Transactional revenue and
    reimbursements(2)
461 960 929 1,390 
Insurance premiums(3)
810 618 1,503 1,137 
Total fees and management income$2,374 $2,760 $4,660 $4,925 
(1)Recurring fees include asset management fees and property management fees.
(2)Transactional revenue includes items such as leasing commissions, construction management fees, and acquisition fees.
(3)Insurance premium income includes amounts for reinsurance from third parties not affiliated with us.
Tax Protection Agreement—Through our Operating Partnership, we are currently party to a tax protection agreement (the “2017 TPA”) with certain partners that contributed property to our Operating Partnership on October 4, 2017, among them certain of our executive officers, including Jeffrey S. Edison, our Chairman and Chief Executive Officer, under which the Operating Partnership has agreed to indemnify such partners for tax liabilities that could accrue to them personally related to our potential disposition of certain properties within our portfolio. The 2017 TPA will expire on October 4, 2027. On July 19, 2021, we entered into an additional tax protection agreement (the “2021 TPA”) with certain of our executive officers, including Mr. Edison. The 2021 TPA carries a term of four years and will become effective upon the expiration of the 2017 TPA. As of June 30, 2021, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $152.6 million. The protection provided under the terms of the 2021 TPA will expire in 2031. We have not recorded any liability related to the 2017 TPA or the 2021 TPA on our consolidated balance sheets for any periods presented, nor recognized any expense since the inception of the 2017 TPA, owing to the fact that any potential liability under the agreements is controlled by us and we will either (i) continue to own and operate the protected properties or (ii) be able to successfully complete Section 1031 Exchanges (unless there is a change in applicable law) or complete other tax-efficient transactions to avoid any liability under the agreements.
Other Related Party Matters—We are the limited guarantor for up to $190 million, capped at $50 million in most instances, of debt for our NRP joint venture. As of June 30, 2021, the outstanding loan balance related to our NRP joint venture was $32.1 million. As of June 30, 2021, we were also the limited guarantor of a $175 million mortgage loan secured by GRP I properties. Our guaranty for both the NRP and GRP I debt is limited to being the non-recourse carveout guarantor and the environmental indemnitor. Further, in both cases, we are also party to an agreement with our institutional joint venture partners in which any potential liability under such guarantees will be apportioned between us and our applicable joint venture partner based on our respective ownership percentages in the applicable joint venture. We have no liability recorded on our consolidated balance sheets for either guaranty as of June 30, 2021 and December 31, 2020.
Additionally, during 2021, we made a cash investment of $3.0 million into a third-party company in exchange for preferred shares of their stock. As part of the investment agreement, the third-party company committed to enter into leases at two of our properties. As of August 5, 2021, we had entered into two leases under the terms of the investment agreement, both of which carry a term of 10 years, over which period we expect to receive contractual rents of $2.6 million in total for both leases.

12. FAIR VALUE MEASUREMENTS
The following describes the methods we use to estimate the fair value of our financial and nonfinancial assets and liabilities:
Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, and Accounts Payable—We consider the carrying values of these financial instruments to approximate fair value because of the short period of time between origination of the instruments and their expected realization.
Real Estate Investments—The purchase prices of the investment properties, including related lease intangible assets and liabilities, were allocated at estimated fair value based on Level 3 inputs, such as discount rates, capitalization rates, comparable sales, replacement costs, income and expense growth rates, and current market rents and allowances as determined by management.
Mortgages and Loans PayableDebt Obligations—We estimate the fair value of our debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by our lenders using Level 3 inputs. The discount rates used approximate current lending rates for loans or groups of loans with similar maturities and credit quality, assuming the debt is outstanding through maturity and considering the debt’s collateral (if applicable). We have utilized market information, as available, or present value techniques to estimate the amounts required to be disclosed.








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The following is a summary of borrowings as of SeptemberJune 30, 20172021 and December 31, 2016 (dollars in2020 (in thousands):
  September 30, 2017 December 31, 2016
Fair value $1,226,748
 $1,056,990
Recorded value(1)
 1,232,190
 1,065,180
June 30, 2021December 31, 2020
Recorded Principal Balance(1)
Fair Value
Recorded Principal Balance(1)
Fair Value
Term loans$1,612,031 $1,631,088 $1,610,204 $1,621,902 
Secured portfolio loan facilities391,371 411,209 391,131 404,715 
Mortgages(2)
224,830 234,766 291,270 303,647 
Total$2,228,232 $2,277,063 $2,292,605 $2,330,264 
(1)
Recorded value does not include deferred financing costs of $7.4 million and $9.0 million as of September 30, 2017 and December 31, 2016, respectively.
Derivative Instruments—As(1)Recorded principal balances include net deferred financing expenses of September$11.7 million and $13.5 million as of June 30, 20172021 and December 31, 2016,2020, respectively. Recorded principal balances also include assumed market debt adjustments of $1.6 million and $1.5 million as of June 30, 2021 and December 31, 2020, respectively. We have recorded deferred financing expenses related to our revolving credit facility, which are not included in these balances, in Other Assets, Net on our consolidated balance sheets.
(2)Our finance lease liability is included in the mortgages line item, as presented.
Recurring and Nonrecurring Fair Value Measurements—Our earn-out liability and interest rate swaps are measured and recognized at fair value on a recurring basis, while certain real estate assets and liabilities are measured and recognized at fair value as needed. Fair value measurements that occurred as of and during the six months ended June 30, 2021 and the year ended December 31, 2020, were as follows (in thousands):
June 30, 2021December 31, 2020
Level 1Level 2Level 3Level 1Level 2Level 3
Recurring
Derivative liabilities(1)
$— $(39,929)$— $— $(54,759)$— 
Earn-out liability— — (40,000)— — (22,000)
Nonrecurring
Impaired real estate assets, net(2)
$— $22,850 $— $— $19,350 $— 
Impaired corporate ROU asset, net— — — — 537 — 
(1)We record derivative liabilities in Derivative Liabilities on our consolidated balance sheets.
(2)The carrying value of impaired real estate assets may have subsequently increased or decreased after the measurement date due to capital improvements, depreciation, or sale.
Derivative Instruments—As of June 30, 2021 and December 31, 2020, we had interest rate swaps that fixed LIBOR on portions of our unsecured term loan facilities (“Term Loans”). For a more detailed discussion of these cash flow hedges, see Note 8. As of September 30, 2017 and December 31, 2016, we were also party to an interest rate swap that fixed the variable interest rate on $10.8 million and $11.0 million, respectively, of one of our mortgage notes. The change in fair value of this instrument is recorded in Other Income (Expense), Net on the consolidated statements of operations and was not material for the three and nine months ended September 30, 2017 and 2016.facilities.
All interest rate swap agreements are measured at fair value on a recurring basis. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses


observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
To comply with the provisions of ASC Topic 820,Fair Value Measurement, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Although we determined that the significant inputs used to value our derivatives fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our counterparties and our own credit risk utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties. However, as of SeptemberJune 30, 20172021 and December 31, 2016,2020, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
We record derivative assets in Other Assets, Net and derivative liabilities in Accounts Payable and Other Liabilities on our consolidated balance sheets. The fair value measurementsEarn-out—As part of our derivative assetsacquisition of PELP in 2017, an earn-out structure was established which gave PELP the opportunity to earn additional OP units based upon the potential achievement of certain performance targets subsequent to the acquisition. After the expiration of certain provisions in 2019, PELP is now eligible to earn a minimum of 1.0 million and liabilitiesa maximum of approximately 1.7 million OP units as contingent consideration based upon the timing and valuation of September 30, 2017 and December 31, 2016, were as follows (in thousands):
  September 30, 2017 December 31, 2016
Derivative asset:   
Interest rate swaps designated as hedging instruments - Term Loans$11,175
 $11,916
Derivative liability:   
Interest rate swap not designated as hedging instrument - mortgage note108
 262

6. MORTGAGES AND LOANS PAYABLE
The following is a summaryliquidity event for PECO. Certain of these performance targets are tied to the outstanding principal balancespost-underwritten IPO trading price of our debt obligations ascommon stock. The number of SeptemberOP units awarded will vary based on the highest volume weighted average price per share of our common stock over any 30 2017 and December 31, 2016 (in thousands)consecutive trading day period during the 180 days following the underwritten IPO commencement (the “liquidity event price per share”):
•if the liquidity event price per share is greater than or equal to $33.60, PELP will receive approximately 1.7 million OP units;

   
Interest Rate(1)
 September 30, 2017 December 31, 2016
Revolving credit facility(2)(3)
2.54% $378,969
 $176,969
Term loan due 2019(3)
2.46% 100,000
 100,000
Term loan due 2020(3)
2.65% 175,000
 175,000
Term loan due 20212.49%-2.80% 125,000
 125,000
Term loan due 20233.03% 255,000
 255,000
Mortgages payable(4)
3.73%-7.91% 194,480
 228,721
Assumed market debt adjustments, net(5) 
  3,741
 4,490
Deferred financing costs, net(6)
  (7,411) (9,024)
Total    $1,224,779
 $1,056,156







(1)PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
Includes the effects of derivative financial instruments (see Notes 5 and 8) as of September 30, 2017.
(2)
The gross borrowings and payments under our revolving credit facility were $295 million and $93 million, respectively, during the nine months ended September 30, 2017. The revolving credit facility had a capacity of $500 million as of September 30, 2017 and December 31, 2016.18
(3)
Table of Contents
In October 2017, the maturity date of the revolving credit facility was extended to October 2021, with additional options to extend the maturity to October 2022. The term loans have options to extend their maturities to 2021. A maturity date extension for the term loans requires the payment of an extension fee of 0.15% of the outstanding principal amount of the corresponding tranche.
(4)
Due to the non-recourse nature of our fixed-rate mortgages, the assets and liabilities of the properties securing such mortgages are neither available to pay the debts of the consolidated property-holding limited liability companies, nor do they constitute obligations of such consolidated limited liability companies as of September 30, 2017 and December 31, 2016.
(5)
Net of accumulated amortization of $3.8 million and $6.1 million as of September 30, 2017 and December 31, 2016, respectively.


•if the liquidity event price per share is less than $33.60 but greater than or equal to $26.40, PELP will receive a number of OP units equal to (i) 1.0 million plus (ii) the product of (A) approximately 0.7 million and (B) the quotient obtained by dividing the liquidity event price per share in excess of $26.40 by $7.20; or
(6)
Deferred financing costs shown are related to our Term Loans and mortgages payable and are net of accumulated amortization of $4.8 million and $3.9 million as of September 30, 2017 and December 31, 2016, respectively. Deferred financing costs related to the revolving credit facility, which are included in Other Assets, Net, were $0.4 million and $2.2 million as of September 30, 2017 and December 31, 2016, respectively, and are net of accumulated amortization of $8.5 million and $6.7 million, respectively.
•if the liquidity event price per share is less than $26.40, PELP will receive 1.0 million OP units.
Prior to the second quarter of 2021, we estimated the fair value of the earn-out liability on a quarterly basis using the Monte Carlo method. As of SeptemberJune 30, 20172021, our underwritten IPO process had commenced and December 31, 2016,thus the weighted-average interest rateonly remaining variable for allcalculating final amounts to be paid under the earn-out agreement was the liquidity event price per share. Therefore, we estimated the fair value of the liability related to the earn-out using a probability-weighted model to estimate the liquidity event price per share. In calculating the fair value of this liability as of June 30, 2021, we have determined that 1.0 million OP units have been earned and the most likely range of potential outcomes includes a possibility of no additional OP units issued as well as up to a maximum of approximately 0.667 million units being issued.
For the three months ended June 30, 2021, we recorded expense of $2.0 million related to the change in fair value of the earn-out liability. There was 0 change to the fair value of our mortgages and loans payable was 3.1% and 3.0%, respectively.
The allocation of total debt between fixed and variable-rate and between secured and unsecured, excluding market debt adjustments and deferred financing costs, as of September 30, 2017 and December 31, 2016, is summarized below (in thousands):
   
September 30, 2017 December 31, 2016
As to interest rate:(1)
   
Fixed-rate debt$836,480
 $615,721
Variable-rate debt391,969
 444,969
Total$1,228,449
 $1,060,690
As to collateralization:   
Unsecured debt$1,033,969
 $831,969
Secured debt194,480
 228,721
Total  $1,228,449
 $1,060,690
(1)
Includes the effects of derivative financial instruments (see Notes 5 and 8).
Upon completion of the PELP transaction, in order to increase the availability on our revolving credit facility and refinance the corporate debt assumed from the PELP transaction, we entered into the following new credit agreements (in thousands):
 Interest Rate Principal Balance
Term loan due April 2022(1)(2)(3)
LIBOR + 1.30% $310,000
Term loan due October 2024(1)(3)
LIBOR + 1.75% 175,000
Loan facility due November 2026(4)
3.55% 175,000
Loan facility due November 2027(4)
3.52% 195,000
(1)
The term loan interest rate spreads may vary based on our leverage ratio. The spreads presented were those in effect when we executed the loan agreements.
(2)
The term loan maturing in 2022 has a delayed draw feature for a total capacity of $375 million.
(3)
On October 27, 2017, we entered into two interest rate swap agreements with a total notional amount of $350 million on the term loans maturing in 2022 and 2024. These interest rate swaps were effective November 1, 2017.
(4)
The loan facility maturing in 2026 is secured by 16 properties. The loan facility maturing in 2027 is secured by separate mortgages on 14 properties.
As of September 30, 2017, approximately $12.6 million in deferred financing costs, which are included in Other Assets, Net on our consolidated balance sheet, were related to these refinancings.

7. COMMITMENTS AND CONTINGENCIES
Litigation
We are involved in various claims and litigation matters arising in the ordinary course of business, some of which involve claims for damages. Many of these matters are covered by insurance, although they may nevertheless be subject to deductibles or retentions. Although the ultimateearn-out liability for these matters cannot be determined, based upon information currently available, we believe the resolutionthree months ended June 30, 2020. We recorded expense of such claims$18.0 million and litigation will not have a material adverse effect on our consolidated financial statements.
Environmental Matters
In connection withincome of $10.0 million, respectively, for the ownershipsix months ended June 30, 2021 and operation of real estate, we may potentially be liable for costs and damagesJune 30, 2020 related to environmental matters. In addition, we may own or acquire certain properties that are subject to environmental remediation. Generally, the seller of the property, the tenant of the property, and/or another third party is responsible for environmental


remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify us against future remediation costs. We also carry environmental liability insurance on our properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which we may be liable. We are not aware of any environmental matters which we believe are reasonably likely to have a material effect on our consolidated financial statements.

8. DERIVATIVES AND HEDGING ACTIVITIES
In September 2017, we adopted ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This update amended existing guidance in order to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. It requires us to disclose the effect of our hedging activities on our consolidated statements of operations and eliminated the periodic measurement and recognition of hedging ineffectiveness.
In accordance with the modified retrospective transition method required by ASU 2017-12, the Company recognized the cumulative effect of the change, representing the reversal of the $1.3 million cumulative ineffectiveness gain as of December 31, 2016, in the opening balance of Accumulated Other Comprehensive Income (“AOCI”) with a corresponding adjustment to the opening balance of Accumulated Deficit as of the beginning of 2017.
Risk Management Objective of Using Derivatives
We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposure to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into interest rate swaps to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our investments and borrowings.
Cash Flow Hedges of Interest Rate Risk
Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The changes in the fair value of derivatives designated, and that qualify, as cash flow hedges is recorded in AOCI and is subsequently reclassified into earningsthe earn-out liability. The increase in the period thatfair value of the hedged forecasted transaction affects earnings. During the nine months ended September 30, 2017 and 2016, such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt. The ineffectiveness previously reported in earnings for the quarters ended March 31, 2017 andliability as of June 30, 2017,2021 was adjustedattributable to reflect application of the provisions of ASU 2017-12 as of the beginning of 2017 (as discussed above). This adjustment was not material.
Amounts reported in AOCI related to these derivatives will be reclassified to Interest Expense, Net as interest payments are made on the variable-rate debt. During the next twelve months, we estimate that an additional $0.6 million will be reclassified from Other Comprehensive (Loss) Income as a decrease to Interest Expense, Net.


The following is a summarycommencement of our interest rate swaps that were designatedunderwritten IPO as cash flow hedges of interest rate riskwell as of September 30, 2017 and December 31, 2016, which includes an interest rate swap with a notional amount of $255 million that we entered intoimproved market conditions in October 2016 and became effective2021. The change in July 2017 (notional amountfair value for each period has been recognized in thousands):
Count Notional Amount Fixed LIBOR Maturity Date
4 $642,000 1.2% - 1.5% 2019-2023
The table below details the location of the gain or loss recognized on interest rate derivatives designated as cash flow hedgesOther (Expense) Income, Net in the consolidated statements of operationsoperations.
Real Estate Asset Impairment—Our real estate assets are measured and comprehensive (loss)recognized at fair value, less costs to sell for held-for-sale properties, on a nonrecurring basis dependent upon when we determine an impairment has occurred. During the three and six months ended June 30, 2021, we impaired assets that were under contract at a disposition price that was less than carrying value, or that had other operational impairment indicators. The valuation technique used for the fair value of all impaired real estate assets was the expected net sales proceeds, which we consider to be a Level 2 input in the fair value hierarchy. There were no impairment charges recorded during the three and six months ended June 30, 2020.
On a quarterly basis, we employ a multi-step approach to assess our real estate assets for possible impairment and record any impairment charges identified. The first step is the identification of potential triggering events, such as significant decreases in occupancy or the presence of large dark or vacant spaces. If we observe any of these indicators for a shopping center, we then perform an additional screen test consisting of a years-to-recover analysis to determine if we will recover the net carrying value of the property over its remaining economic life based upon net operating income (“NOI”) as forecasted for the current year. In the event that the results of this first step indicate a triggering event for a center, we proceed to the second step, utilizing an undiscounted cash flow model for the center to identify potential impairment. If the undiscounted cash flows are less than the net book value of the center as of the balance sheet date, we proceed to the third step. In performing the third step, we utilize market data such as capitalization rates and sales price per square foot on comparable recent real estate transactions to estimate fair value of the real estate assets. We also utilize expected net sales proceeds to estimate the fair value of any centers that are actively being marketed for sale. If the estimated fair value of the property is less than the recorded net book value at the balance sheet date, we record an impairment charge.
In addition to these procedures, we also review undeveloped or unimproved land parcels that we own for evidence of impairment and record any impairment charges as necessary. Primary impairment triggers for these land parcels are changes to our plans or intentions with regards to such properties, or planned dispositions at prices that are less than the current carrying values.
Our quarterly impairment procedures have not been altered by the COVID-19 pandemic, as we believe key impairment indicators such as temporary store closings and large dark or vacant spaces will continue to be identified in our review. We have utilized forecasts that incorporate estimated decreases in NOI and cash flows as a result of the COVID-19 pandemic in performing our review procedures for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020. However, it is possible that we could experience unanticipated changes in assumptions that are employed in our impairment review which could impact our cash flows and fair value conclusions. Such unanticipated changes relative to our expectations may include but are not limited to: increases or decreases in the duration or permanence of tenant closures, increases or decreases in collectibility reserves and write-offs, additional capital required to fill vacancies, extended lease-up periods, future closings of large tenants, changes in macroeconomic assumptions such as rate of inflation and capitalization rates, and changes to the estimated timing of disposition of the properties under review.
We recorded the following expense upon impairment of real estate assets (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Impairment of real estate assets$1,056 $0 $6,056 $0 

13. SUBSEQUENT EVENTS
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Amount of (loss) gain recognized in OCI on derivative$(179) $1,306
 $(1,944) $(9,584)
Amount of loss reclassified from AOCI into interest expense(228) (888) (1,203) (2,762)
Credit-risk-related Contingent Features
WeIn preparing the condensed and unaudited consolidated financial statements, we have agreements with our derivative counterparties that contain provisions where, if we either default or are capableevaluated subsequent events through the filing of being declared in default on any of our indebtedness, we could also be declared to be in default on our derivative obligations. As of September 30, 2017, the fair value of our derivatives in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk related to these agreements, was approximately $0.1 million. As of September 30, 2017, we had not posted any collateral related to these agreements and were not in breach of any agreement provisions. If we had breached any of these provisions, we could have been required to settle our obligations under the agreements at their termination value of $0.1 million.

9. EQUITY
On November 8, 2017, our Board increased the estimated value per share of our common stock to $11.00 based substantially on the estimated market value of our portfolio of real estate properties and our recently acquired third-party asset management business as of October 5, 2017, the first full business day after the closing of the PELP transaction. We engaged a third-party valuation firm to provide a calculation of the range in estimated value per share of our common stock as of October 5, 2017, which reflected certain pro forma balance sheet assets and liabilities as of that date. For a description of the methodology and assumptions used to determine the estimated value per share, see the Current Reportthis report on Form 8-K filed with the SEC10-Q for recognition and/or disclosure purposes. Based on November 9, 2017. Prior to November 8, 2017, the estimated value per share was $10.20 based substantially on the estimated market value of our portfolio of real estate properties as of March 31, 2017.
Dividend Reinvestment Plan—Wethis evaluation, we have adopted a DRIPdetermined that allows stockholders to invest distributions in additional shares of our common stock. For the nine months ended September 30, 2017 and 2016, shares were issued under the DRIP at a price of $10.20 per share. In connection with the May announcement of the PELP transaction (see Note 3), the DRIP was suspended during May 2017; therefore, all DRIP participants received their May distribution, which was payable in June, in cash rather than in stock. The DRIP plan resumed in June 2017, with distributions payable in July 2017.
Share Repurchase Program—Our share repurchase program (“SRP”) provides an opportunity for stockholders to have shares of common stock repurchased, subject to certain restrictions and limitations. The cash available for repurchases on any particular date will generally be limited to the proceeds from the DRIP during the preceding four fiscal quarters, less amounts already used for repurchases since the beginning of that period. The Board reserves the right, in its sole discretion, at any time and from time to time, to reject any request for repurchase. In connection with the May announcement of the PELP transaction, the SRP was suspended during May 2017 and resumed in June 2017.
During the nine months ended September 30, 2017, repurchase requests surpassed the funding limits under the SRP. Due to the program’s funding limits, no funds will be available for the remainder of 2017. When we are unable to fulfill all repurchase requests in any month, we will honor requests on a pro rata basis to the extent possible. As of September 30, 2017, we had 9.8 million shares of unfulfilled repurchase requests, which will be treated as requests for repurchase during future months until satisfied or withdrawn. We continue to fulfill repurchases sought upon a stockholder’s death, “qualifying disability,” or “determination of incompetence” in accordance with the terms of the SRP.
Class B and Operating Partnership Units—The Operating Partnership issued limited partnership units that were designated as Class B units for asset management services provided by PE-NTR. In connection with the PELP transaction, Class B units


there were no longer issued for asset management services subsequent to September 19, 2017. Upon closing of the transaction, all outstanding Class B units were vestedevents that have occurred that require recognition or disclosure, other than certain events and will be converted to OP units.
OP units may be exchanged at the election of the holder for cash or, at the option of the Operating Partnership, for shares of our common stock, under the terms of the Third Amended and Restated Agreement of Limited Partnership, provided, however, that the OP units have been outstanding for at least one year. As the form of the redemptions for the OP units is within our control, the OP units outstanding as of September 30, 2017 and December 31, 2016, are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets. Additionally, the cumulative distributionstransactions that have been paid ondisclosed elsewhere in these OP units are included in Distributions to Noncontrolling Interests on the consolidated statements of equity.financial statements.
In September 2017, we entered into an agreement with American Realty Capital II Advisors, LLC (“ARC”) to terminate all remaining contractual and economic relationships between us and ARC. In exchange for a payment of $9.6 million, ARC sold their OP units, unvested Class B Units, and their special limited partnership interests back to us, terminating all fee-sharing arrangements between ARC and PE-NTR. The 417,801 OP unit repurchase was recorded at a value of $4.2 million on the consolidated statement of equity. The $5.4 million value of the unvested Class B units, special limited partnership interests, and value of fee-sharing arrangements is recorded on the consolidated statement of operations.

Below is a summary of our number of outstanding OP units and unvested Class B units as of September 30, 2017 and December 31, 2016 (in thousands):

  September 30, 2017 December 31, 2016
OP units 2,367
 2,785
Class B units(1)
 2,710
 2,610






(1)PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
Upon closing of the PELP transaction, all outstanding Class B units were converted to OP units.

10. EARNINGS PER SHARE
We use the two-class method of computing earnings per share (“EPS”), which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing the income available to common stockholders by the weighted-average
number of shares of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity.
Class B units and OP units held by limited partners other than us are considered to be participating securities because they contain non-forfeitable rights to dividends or dividend equivalents and they have the potential to be exchanged for shares of our common stock in accordance with the terms of the Partnership Agreement. The impact of these Class B units and OP units on basic and diluted EPS has been calculated using the two-class method whereby earnings are allocated to the Class B units and OP units based on dividends declared and the units’ participation rights in undistributed earnings. The effects of the two-class method on basic and diluted EPS were immaterial to the consolidated financial statements for the three and nine months ended September 30, 2017 and 2016.
Since the OP units are fully vested, they were treated as potentially dilutive in the diluted earnings per share computations for the three and nine months ended September 30, 2017 and 2016. There were 2.7 million and 2.5 million Class B units outstanding as of September 30, 2017 and 2016, respectively, that remained unvested and, therefore, were not included in the diluted earnings per share computations. Upon closing of the PELP transaction, all outstanding Class B units were converted to OP units.


The following table provides a reconciliation of the numerator and denominator of the earnings per unit calculations for the three and nine months ended September 30, 2017 and 2016 (in thousands, except per share amounts):
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
Numerator for basic and diluted earnings per share:       
Net (loss) income attributable to stockholders$(8,232) $2,464
 $(8,319) $5,243
Denominator:       
Denominator for basic earnings per share - weighted-average shares183,843
 184,639
 183,402
 183,471
Effect of dilutive OP units—

2,785
 —
 2,785
Effect of restricted stock awards—
 4
 —
 4
Denominator for diluted earnings per share - adjusted weighted-average shares183,843
 187,428
 183,402
 186,260
Earnings per common share:       
Net (loss) income attributable to stockholders - basic and diluted$(0.04) $0.01
 $(0.05) $0.03
As of September 30, 2017, approximately 2.4 million OP units and 17,200 restricted stock awards were outstanding. For the three and nine months ended September 30, 2017, these securities were anti-dilutive and, as a result, were excluded from the weighted average common shares used to calculate diluted EPS.

11. RELATED PARTY TRANSACTIONS
Economic Dependency—During the three and nine months ended September 30, 2017 and 2016, we were dependent on PE-NTR, Phillips Edison & Company Ltd. (the “Property Manager”), and their respective affiliates for certain services that were essential to us, including asset acquisition and disposition decisions, asset management, operating and leasing of our properties, and other general and administrative responsibilities.
As of September 30, 2017 and December 31, 2016, PE-NTR owned 176,509 shares of our common stock, or approximately 0.1% of our outstanding common stock issued during our initial public offering period. PE-NTR was not able to sell any of those shares while serving as our advisor.
Upon closing of the PELP transaction on October 4, 2017, our relationship with PE-NTR and the Property Manager was terminated. As a result, we now have an internalized management structure.
Advisory Agreement—On September 1, 2017, in connection with the termination of ARC’s and PE-NTR’s fee-sharing arrangements (see Note 9), we entered into an amended and restated advisory agreement (the “PE-NTR Agreement”). Under the PE-NTR Agreement, all fees payable to PE-NTR were decreased by 15%. Other than the foregoing, there were no material changes in the PE-NTR Agreement. Subsequent to September 30, 2017, upon closing of the PELP transaction, the PE-NTR
Agreement was terminated. As a result of purchasing PELP’s third-party asset management business, we will no longer incur the fees listed below.
Pursuant to the PE-NTR Agreement, PE-NTR was entitled to specified fees for certain services, including managing our day-to-day activities and implementing our investment strategy. PE-NTR managed our day-to-day affairs and our portfolio of real estate investments subject to the Board’s supervision. Expenditures were reimbursed to PE-NTR based on amounts incurred on our behalf.
Acquisition Fee—During the three and nine months ended September 30, 2017 and 2016, we paid PE-NTR under the PE-NTR Agreement an acquisition fee related to services provided in connection with the selection and purchase or origination of real estate and real estate-related investments. The acquisition fee was equal to 0.85%, or 1.0% prior to September 1, 2017, of the cost of investments we acquired or originated, including any debt attributable to such investments.
Due Diligence Fee—During the three and nine months ended September 30, 2017 and 2016, we reimbursed PE-NTR for expenses incurred related to selecting, evaluating, and acquiring assets on our behalf, including certain personnel costs.
Asset Management Fee and Subordinated Participation—During the three and nine months ended September 30, 2017 and 2016, the asset management compensation was equal to 0.85%, or 1.0% prior to September 1, 2017, of the cost of our assets. Prior to September 20, 2017, the asset management compensation was paid 80% in cash and 20% in Class B units of the Operating Partnership. The cash portion was paid on a monthly basis in arrears at the rate of 0.05667% multiplied by the cost of


our assets as of the last day of the preceding monthly period. All asset management fees incurred between September 20, 2017 and the closing of the PELP transaction were paid 100% in cash.
We paid an asset management subordinated participation by issuing a number of restricted operating partnership units designated as Class B units to PE-NTR, equal to: (i) the product of (x) the cost of our assets multiplied by (y) 0.0425%, or 0.05% prior to September 1, 2017, divided by (ii) the most recent primary offering price for a share of our common stock as of the last day of such calendar quarter less any selling commissions and dealer manager fees that would have been payable in connection with that offering.
PE-NTR was entitled to receive distributions on the Class B units (and OP units converted from previously issued and vested Class B units) at the same rate as distributions were paid to common stockholders. Subsequent to September 30, 2017, upon closing of the PELP transaction, all outstanding Class B units were converted to OP units. During the nine months ended September 30, 2017 and 2016, the Operating Partnership issued 0.6 million and 0.4 million Class B units, respectively, to PE-NTR and ARC under the PE-NTR Agreement for asset management services performed by PE-NTR.
Disposition Fee—During the three and nine months ended September 30, 2017 and 2016, we paid PE-NTR for substantial assistance by PE-NTR, or its affiliates, 1.7%, or 2.0% prior to September 1, 2017, of the contract sales price of each property or other investment sold. The conflicts committee of our Board determined whether PE-NTR or its affiliates had provided substantial assistance to us in connection with the sale of an asset. Substantial assistance in connection with the sale of a property included preparation of an investment package for the property (including an investment analysis, rent rolls, tenant information regarding credit, a property title report, an environmental report, a structural report, and exhibits) or such other substantial services performed by PE-NTR or its affiliates in connection with a sale. However, if we sold an asset to an affiliate, our organizational documents prohibited us from paying a disposition fee to PE-NTR or its affiliates.
Prior to September 1, 2017, ARC also received the acquisition fee, asset management subordinated participation, and disposition fee, as well as distributions on Class B and OP units. For a more detailed discussion of the termination of our relationship with ARC, see Note 9.
General and Administrative Expenses—As of September 30, 2017 and December 31, 2016, we owed PE-NTR and their affiliates approximately $117,000 and $43,000, respectively, for general and administrative expenses paid on our behalf.
Summarized below are the fees earned by and the expenses reimbursable to PE-NTR and ARC for the three and nine months ended September 30, 2017 and 2016. As of September 1, 2017, pursuant to the termination of our relationship with ARC, they were no longer entitled to these fees and reimbursements. This table includes any related amounts unpaid as of September 30, 2017 and December 31, 2016, except for unpaid general and administrative expenses, which we disclose above (in thousands):
  Three Months Ended Nine Months Ended Unpaid Amount as of
  September 30, September 30, September 30, December 31,
  2017 2016 2017 2016 2017 2016
Acquisition fees(1)
$294
 $367
 $1,344
 $1,307
 $—
 $—
Due diligence fees(1)
370
 73
 583
 228
 1
 29
Asset management fees(2)
5,071
 4,852
 15,388
 14,182
 1,529
 1,687
OP units distribution(3)
448
 470
 1,373
 1,398
 145
 158
Class B units distribution(4)
482
 408
 1,393
 1,144
 130
 148
Disposition fees—
 —
 19
 —
 —
 —
Total$6,665
 $6,170
 $20,100
 $18,259
 $1,805
 $2,022
(1)
Prior to January 1, 2017, acquisition and due diligence fees were recorded on our consolidated statements of operations. The majority of these costs are now capitalized and allocated to the related investment in real estate assets on the consolidated balance sheet based on the acquisition-date fair values of the respective assets and liability acquired.19
(2)
Asset management fees are presented in General and Administrative on the consolidated statements of operations.
(3)
The distributions paid to holders of OP units are presented as Distributions to Noncontrolling Interests on the consolidated statements of equity.
(4)
The distributions paid to holders of unvested Class B units are presented in General and Administrative on the consolidated statements of operations.
Property Manager—During the three and nine months ended September 30, 2017 and 2016, all
Table of our real properties were managed and leased by the Property Manager, which was wholly owned by our Phillips Edison sponsor. The Property Manager also manages real properties owned by Phillips Edison affiliates and other third parties.
Effective October 4, 2017, our agreement with the Property Manager was terminated. As a result, we will no longer incur the fees listed below.
Property Management Fee—We paid to the Property Manager a monthly property management fee of 4% of the monthly gross cash receipts from the properties it managed.


Leasing Commissions—In addition to the property management fee, if the Property Manager provided leasing services with respect to a property, we paid the Property Manager leasing fees in an amount equal to the leasing fees charged by unaffiliated persons rendering comparable services based on national market rates. The Property Manager was paid a leasing fee in connection with a tenant’s exercise of an option to extend an existing lease, and the leasing fees payable to the Property Manager could have been increased by up to 50% if the Property Manager engaged a co-broker to lease a particular vacancy.
Construction Management Fee—If we engaged the Property Manager to provide construction management services with respect to a particular property, we paid a construction management fee in an amount that was usual and customary for comparable services rendered to similar projects in the geographic market of the property.
Expenses and Reimbursements—The Property Manager hired, directed, and established policies for employees who had direct responsibility for the operations of each real property it managed, which could have included, but was not limited to, on-site managers and building and maintenance personnel. Certain employees of the Property Manager may have been employed on a part-time basis and may have also been employed by PE-NTR or certain of its affiliates. The Property Manager also directed the purchase of equipment and supplies and supervised all maintenance activity. We reimbursed the costs and expenses incurred by the Property Manager on our behalf, including employee compensation, legal, travel, and other out-of-pocket expenses that were directly related to the management of specific properties and corporate matters, as well as fees and expenses of third-party accountants.
Summarized below are the fees earned by and the expenses reimbursable to the Property Manager for the three and nine months ended September 30, 2017 and 2016, and any related amounts unpaid as of September 30, 2017 and December 31, 2016 (in thousands):
Contents
  Three Months Ended Nine Months Ended Unpaid Amount as of
  September 30, September 30, September 30, December 31,
  2017 2016 2017 2016 2017 2016
Property management fees(1)
$2,717
 $2,457
 $7,986
 $7,456
 $888
 $840
Leasing commissions(2)
1,677
 1,828
 6,077
 5,570
 314
 705
Construction management fees(2)
683
 251
 1,367
 664
 327
 165
Other fees and reimbursements(3)
2,409
 1,499
 6,030
 4,064
 1,116
 796
Total$7,486
 $6,035
 $21,460
 $17,754
 $2,645
 $2,506
(1)
The property management fees are included in Property Operating on the consolidated statements of operations.
(2)
Leasing commissions paid for leases with terms less than one year are expensed immediately and included in Depreciation and Amortization on the consolidated statements of operations. Leasing commissions paid for leases with terms greater than one year, and construction management fees, are capitalized and amortized over the life of the related leases or assets.
(3)
Other fees and reimbursements are included in Property Operating, General and Administrative, and Transaction Expenses on the consolidated statements of operations based on the nature of the expense.

12. OPERATING LEASES
The terms and expirations of our operating leases with our tenants vary. The lease agreements frequently contain options to extend the terms of leases and other terms and conditions as negotiated. We retain substantially all of the risks and benefits of ownership of the real estate assets leased to tenants.


Approximate future rental income to be received under non-cancelable operating leases in effect as of September 30, 2017, assuming no new or renegotiated leases or option extensions on lease agreements, was as follows (in thousands):
YearAmount
Remaining 2017$53,743
2018205,462
2019182,579
2020160,034
2021134,587
2022 and thereafter453,701
Total$1,190,106
No single tenant comprised 10% or more of our aggregate annualized base rent as of September 30, 2017. As of September 30, 2017, our real estate investments in Florida represented 12.8% of our ABR. As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse economic developments in the Florida real estate market.

13. SUBSEQUENT EVENTS
Distributions to Stockholders
Distributions equal to a daily amount of $0.00183562 per share of common stock or OP unit outstanding were paid subsequent to September 30, 2017, to the stockholders and OP unit holders of record from September 1, 2017, through October 31, 2017, as follows (in thousands):
Distribution Period Date Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through the DRIP Net Cash Distribution
September 1, 2017, through September 30, 2017 10/2/2017 $10,145
 $4,301
 $5,844
October 1, 2017, through October 31, 2017 11/1/2017 12,541
 4,415
 8,126
In November 2017 our Board authorized distributions to the stockholders and OP unit holders of record at the close of business each day in the period commencing December 1, 2017 through December 31, 2017, equal to a daily amount of $0.00183562 per share of common stock or OP unit. They also authorized distributions for January 2018 and February 2018 to the stockholders and OP unit holders of record at the close of business on January 16, 2018 and February 15, 2018, respectively, equal to a monthly amount of $0.05583344 per share of common stock or OP unit. The monthly distribution rate will result in the same annual distribution amount as the current, daily distribution rate.
Acquisitions
Subsequent to September 30, 2017, we acquired the following properties (dollars in thousands):
Property Name Location Anchor Tenant Acquisition Date Contractual Purchase Price Square Footage Leased % of Rentable Square Feet at Acquisition
Winter Springs Town Center Winter Springs, FL Publix 10/20/2017 $24,870 118,735 91.9%
Flynn Crossing Center Alpharetta, GA Publix 10/26/2017 $23,691 95,002 96.0%

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our accompanying consolidated financial statements and notes thereto. All references to “Notes” throughout this document refer to the footnotes to the consolidated financial statements in “Part I, Item 2.        Management’s Discussion and Analysis of1. Financial Condition and Results of Operations
CautionaryInformation”. See also “Cautionary Note Regarding Forward-Looking StatementsStatements” below.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q (this “Report”) of Phillips Edison Grocery Center REIT I,& 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”), and 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”). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in those acts. Such statements include, in particular, statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, including known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Therefore, such statements are not


intended to be a guarantee of our performance in future periods.the Acts. Such forward-looking statements generally can generally be identified by ourthe use of forward-looking terminology such as “may,” “will,” “can,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “possible,” “initiatives,” “focus,” “seek,” “objective,” “goal,” “strategy,” “plan,” “potential,” “potentially,” “preparing,” “projected,” “future,” “long-term,” “once,” “should,” “could,” “would,” “might,” “uncertainty,” 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. We make no representations or warranties (express or implied)Such statements include, but are not limited to, (a) statements about our plans, strategies, initiatives, and prospects; (b) statements about the accuracyCOVID-19 pandemic, including its duration and potential or expected impact on our tenants, our business, and our estimated value per share; (c) statements about our distributions, share repurchase program, and dividend reinvestment plan; (d) statements about our underwritten incremental yields; and (e) statements about our future results of any such forward-looking statements contained in this Quarterly Report on Form 10-Q,operations, capital expenditures, and we do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
Any such forward-lookingliquidity. Such statements are subject to risks, uncertainties,known and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual conditions, our ability to accurately anticipate results expressed in such forward-looking statements, including our ability to generate positive cash flow from operations, make distributions to stockholders, and maintain the value of our real estate properties, may be significantly hindered.
See Item 1A. Risk Factors, in Part II of this Form 10-Q and Item 1A. Risk Factors, in Part I of our 2016 Annual Report on Form 10-K, filed with the SEC on March 9, 2017, for a discussion of some of theunknown risks and uncertainties, although not all of the risks and uncertainties, thatwhich could cause actual results to differ materially from those presentedprojected 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 forward-looking statements. 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, including the potential phasing out of LIBOR after 2021; (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 measures taken by federal, state, and local government agencies and tenants in response to the COVID-19 pandemic, including mandatory business shutdowns, “stay-at-home” orders and social distancing guidelines, the duration of any such measures and the extent to which the revenues of our tenants recover following the lifting of such restrictions; (xvi) the effectiveness or lack of effectiveness of governmental relief in providing assistance to individuals and businesses adversely impacted by the COVID-19 pandemic, including our tenants; (xvii) the effects of the COVID-19 pandemic, including on the demand for consumer goods and services and levels of consumer confidence in the safety of visiting shopping centers as a result of the COVID-19 pandemic; (xviii) the impact of the COVID-19 pandemic on our tenants and their ability and willingness to renew their leases upon expiration; (xix) 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; (xx) the loss or bankruptcy of our tenants, particularly in light of the adverse impact to the financial health of many retailers and service providers that has occurred and continues to occur as a result of the COVID-19 pandemic; (xxi) the pace of recovery following the COVID-19 pandemic given the current severe economic contraction and increase in unemployment rates; (xxii) to the extent we were seeking to dispose of properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices or at all; and (xxiii) our ability to implement cost containment strategies. 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 2020 Annual Report on Form 10-K, as originally filed with the SEC on March 12, 2021, and those included in this Report, in each case 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.
Except as required by law, we do not undertake any obligation to update or revise any forward-looking statements containedstatement, whether as a result of new information, future events, or otherwise.

KEY PERFORMANCE INDICATORS AND DEFINED TERMS
We use certain key performance indicators (“KPIs”), which include both financial and nonfinancial metrics, to measure the performance of our operations. We believe these KPIs, as well as the core concepts and terms defined below, allow our Board, management, and investors to analyze trends around our business strategy, financial condition, and results of operations in this Form 10-Q. Important factorsa manner that is focused on items unique to the retail real estate industry.
We do not consider our non-GAAP measures to be alternatives to measures required in accordance with GAAP. Certain non-GAAP measures should not be viewed as an alternative measure of our financial performance as they may not reflect the operations of our entire portfolio, and they may not reflect the impact of general and administrative expenses, depreciation








PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
20
Table of Contents
and amortization, interest expense, other income (expense), or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our shopping centers that could causematerially impact our results from operations. Additionally, certain non-GAAP measures should not be considered as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions, and may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate our business in the manner currently contemplated. Accordingly, non-GAAP measures should be reviewed in connection with other GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Other REITs may use different methodologies for calculating similar non-GAAP measures, and accordingly, our non-GAAP measures may not be comparable to other REITs.
Our KPIs and terminology can be grouped into three key areas:
PORTFOLIO—Portfolio metrics help management to gauge the health of our centers overall and individually.
•Anchor space—We define an anchor space as a space greater than or equal to 10,000 square feet of gross leasable area (“GLA”).
•ABR—We use ABR to refer to the monthly contractual base rent as of June 30, 2021 multiplied by twelve months.
•ABR per Square Foot (“PSF”)—This metric is calculated by dividing ABR by leased GLA. Increases in ABR PSF can be an indication of our ability to create rental rate growth in our centers, as well as an indication of demand for our spaces, which generally provides us with greater leverage during lease negotiations.
•GLA—We use GLA to refer to the total occupied and unoccupied square footage of a building that is available for tenants (whom we refer to as a “Neighbor” or our “Neighbors”) or other retailers to lease.
•Inline space—We define an inline space as a space containing less than 10,000 square feet of GLA.
•Leased Occupancy—This metric is calculated as the percentage of total GLA for which a lease has been signed regardless of whether the lease has commenced or the Neighbor has taken possession. High occupancy is an indicator of demand for our spaces, which generally provides us with greater leverage during lease negotiations.
•Underwritten incremental yield—This reflects the yield we target to generate from a project upon expected stabilization and is calculated as the estimated incremental 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 project upon stabilization and the estimated annualized NOI without the planned improvements. Underwritten incremental yield does not include peripheral impacts, such as lease rollover risk or the impact on the long term value of the property upon sale or disposition. Actual incremental yields may vary from our underwritten incremental yield range based on the actual resultstotal cost to differ materiallycomplete a project and its actual incremental NOI at stabilization.

LEASING—Leasing is a key driver of growth for our company.
•Comparable lease—We use this term to refer to a lease with consistent structure that is executed for substantially the exact same space that has been vacant less than twelve months.
•Comparable rent spread—This metric is calculated as being the percentage increase or decrease in first-year ABR (excluding any free rent or escalations) on new or renewal leases (excluding options) where the lease was considered a comparable lease. This metric provides an indication of our ability to generate revenue growth through leasing activity.
•Cost of executing new leases—We use this term to refer to certain costs associated with new leasing, namely, leasing commissions, tenant improvement costs, and tenant concessions.
•Portfolio retention rate—This metric is calculated by dividing (i) total square feet of retained Neighbors with current period lease expirations by (ii) the total square feet of leases expiring during the period. The portfolio retention rate provides insight into our ability to retain Neighbors at our shopping centers as their leases approach expiration. Generally, the costs to retain an existing Neighbor are lower than costs to replace with a new Neighbor.
•Recovery rate—This metric is calculated by dividing (i) total recovery income by (ii) total recoverable expenses during the period. A high recovery rate is an indicator of our ability to recover certain property operating expenses and capital costs from our Neighbors.
FINANCIAL PERFORMANCE—In addition to financial metrics calculated in accordance with GAAP, such as net income, we utilize non-GAAP metrics to measure our operational and financial performance. See the forward-looking statements are disclosed insection within this Item 1A. Risk Factors, in Part II and Item 2.2 titled Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q.- Non-GAAP Measures for further discussion on the following metrics.

Overview
Organization
Phillips Edison Grocery Center REIT I, Inc. is a public non-traded real estate investment trust•Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (“REIT”Adjusted EBITDAre”) that invests in retail real estate properties. Our primary focus is on grocery-anchored neighborhood—To arrive at Adjusted EBITDAre, we adjust EBITDAre, as defined below, to exclude certain recurring and community shopping centers that meet the day-to-day needs of residentsnon-recurring items including, but not limited to: (i) changes in the surrounding trade areas.fair value of the earn-out liability; (ii) other impairment charges; (iii) amortization of basis differences in our investments in our unconsolidated joint ventures; and (iv) transaction and acquisition expenses. 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.
On October 4, 2017,•Core Funds From Operations (“Core FFO”)—To arrive at Core FFO, we completedadjust Nareit FFO attributable to stockholders and OP unit holders, 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 PELP transaction. For a more detailed discussionfair value of this transaction, see Note 3 to the consolidated financial statements.earn-out liability; (iii) amortization of unconsolidated joint venture basis differences; (iv) gains or losses on the extinguishment or
Portfolio

Below are statistical highlights of our portfolio:

   Total Portfolio as of Properties Acquired in PELP Transaction Pro Forma Portfolio
   September 30, 2017 October 4, 2017 October 4, 2017
Number of properties 159
 76
 235
Number of states 28
 25
 32
Total square feet (in thousands) 17,415
 8,721
 26,136
Leased % of rentable square feet 96.4% 90.3% 94.4%
Average remaining lease term (in years)(1)
 5.3
 4.4
 5.0






(1)PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
As of September 30, 2017. The average remaining lease term in years excludes future options to extend the term of the lease.


Lease Expirations
The following table lists, on an aggregate basis, all of the scheduled lease expirations after September 30, 2017, for each of the next ten years and thereafter for our 159 shopping centers. The table shows the leased square feet and annualized base rent (“ABR”) represented by the applicable lease expirations (dollars and square feet in thousands):
Year Number of Leases Expiring Leased Square Feet Expiring % of Leased Square Feet Expiring 
ABR(1)
 % of Total Portfolio ABR
Remaining 2017(2)
 104
 274
 1.6% $3,577
 1.7%
2018 332
 1,227
 7.3% 17,857
 8.4%
2019 415
 2,031
 12.1% 26,936
 12.7%
2020 349
 1,827
 10.9% 23,828
 11.3%
2021 349
 2,073
 12.4% 24,691
 11.7%
2022 306
 2,123
 12.7% 23,560
 11.1%
2023 138
 1,924
 11.5% 22,892
 10.8%
2024 149
 1,271
 7.6% 13,709
 6.5%
2025 114
 700
 4.2% 11,200
 5.3%
2026 119
 974
 5.8% 14,295
 6.8%
Thereafter 218
 2,356
 13.9% 29,098
 13.7%
  2,593
 16,780
 100.0% $211,643
 100.0%
(1)
We calculate ABR as monthly contractual rent as of September 30, 2017, multiplied by 12 months.21
(2)
Table of Contents
Subsequent to September 30, 2017, of the 2,593 leases expiring we renewed 24 leases, which accounts for 164,196 total square feet and total ABR of $2.2 million.
Portfolio Tenancy
The following table presentsmodification of debt, (v) other impairment charges; and (vi) transaction and acquisition expenses. 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 compositionsustainability of our portfoliooperating performance and provides an additional measure to compare our performance across reporting periods on a consistent basis by tenant type as of September 30, 2017 (dollars and square feet in thousands):
Tenant Type ABR % of ABR Leased Square Feet % of Leased Square Feet
Grocery anchor $84,879
 40.1% 8,829
 52.6%
National and regional(1)
 80,255
 37.9% 5,448
 32.5%
Local 46,509
 22.0% 2,503
 14.9%
   $211,643
 100.0% 16,780
 100.0%
(1)
We define national tenants as those that operate in at least three states. Regional tenants are defined as those that have at least three locations.
The following table presents the composition of our portfolio by tenant industry as of September 30, 2017 (dollars and square feet in thousands):
Tenant Industry ABR % of ABR Leased Square Feet % of Leased Square Feet
Grocery $84,879
 40.1% 8,829
 52.6%
Service 48,933
 23.1% 2,549
 15.2%
Retail 47,059
 22.2% 3,962
 23.6%
Restaurants 30,772
 14.6% 1,440
 8.6%
   $211,643
 100.0% 16,780
 100.0%


The following table presents our grocery anchor tenants, grouped according to parent company, by leased square feet as of September 30, 2017 (dollars and square feet in thousands):
Tenant   ABR % of ABR Leased Square Feet % of Leased Square Feet 
Number of Locations(1)
Kroger $19,567
 9.2% 2,377
 14.1% 41
Publix Super Markets 15,514
 7.3% 1,503
 9.0% 32
Ahold Delhaize 8,383
 4.0% 555
 3.3% 10
Albertsons Companies 7,744
 3.7% 756
 4.5% 13
Giant Eagle 5,435
 2.6% 560
 3.3% 7
Walmart 5,197
 2.5% 1,121
 6.7% 9
Raley's Supermarkets 3,422
 1.6% 193
 1.2% 3
SuperValu 2,382
 1.1% 273
 1.6% 4
Sprouts Farmers Market 2,281
 1.1% 195
 1.1% 6
Southeastern Grocers 1,545
 0.7% 147
 0.9% 3
Schnuck Markets 1,459
 0.7% 121
 0.7% 2
Coborn's 1,388
 0.7% 108
 0.6% 2
BJ’s Wholesale Club 1,223
 0.6% 115
 0.7% 1
H.E. Butt Grocery Company 1,210
 0.6% 81
 0.5% 1
Big Y Foods 1,091
 0.4% 65
 0.4% 1
PAQ 1,046
 0.5% 59
 0.4% 1
Trader Joe's 934
 0.4% 55
 0.3% 4
McKeever Enterprises 844
 0.4% 68
 0.4% 1
Save Mart Supermarkets 843
 0.4% 102
 0.6% 2
The Fresh Market 841
 0.4% 59
 0.4% 3
Pete's Fresh Market 579
 0.3% 72
 0.4% 1
U R M Stores 574
 0.3% 51
 0.3% 1
Hy-Vee Food Stores 527
 0.2% 127
 0.8% 2
Fresh Thyme Farmers Market 450
 0.2% 30
 0.2% 1
Marc’s 400
 0.2% 36
 0.2% 1
  $84,879
 40.1% 8,829
 52.6% 152
(1)
Number of locations excludes (a) auxiliary leases with grocery anchors such as fuel stations, pharmacies, and liquor stores, (b) four locations where we do not own the portion of the shopping center that contains the grocery anchor, and (c) four locations that have non-grocery anchors. Number of locations also includes one shopping center that has two grocery anchors.



Results of Operations
In conjunction with the closing of the PELP transaction on October 4, 2017, we expect our operations to change significantly. As a result of acquiring the third-party asset management business of PELP, we will earn fee and management income for certain services provided to Phillips Edison Grocery Center REIT II, Inc. and other funds, and incur expenses related to managing their day-to-day activities and implementing their investment strategy. Furthermore, following the termination of the PE-NTR Agreement, we will no longer pay fees to an advisor, including asset management fees. The acquisition of 76 real estate assets from PELP through this transaction substantially increased the size of our portfolio. Consequently, we expect our operating revenues to increase over the short- and long-term.
Summary of Operating Activities for the Three Months Ended September 30, 2017 and 2016
      Favorable (Unfavorable) Change
(In thousands, except per share amounts) 2017 2016 $ %
Operating Data:        
Total revenues $70,624
 $65,270
 $5,354
 8.2 %
Property operating expenses (10,882) (10,030) (852) (8.5)%
Real estate tax expenses (10,723) (9,104) (1,619) (17.8)%
General and administrative expenses (8,712) (7,722) (990) (12.8)%
Termination of affiliate arrangements (5,454) —
 (5,454) NM
Acquisition expenses (202) (870) 668
 76.8 %
Depreciation and amortization (28,650) (26,583) (2,067) (7.8)%
Interest expense, net (10,646) (8,504) (2,142) (25.2)%
Transaction expenses (3,737) —
 (3,737) NM
Other income, net 6
 33
 (27) 81.8 %
Net (loss) income (8,376) 2,490
 (10,866) NM
Net loss (income) attributable to noncontrolling interests 144
 (26) 170
 NM
Net (loss) income attributable to stockholders $(8,232) $2,464
 $(10,696) NM
      
  
Net (loss) income per share—basic and diluted $(0.04) $0.01
 $(0.05) 

Below are explanations of the significantexcluding items that may cause short-term fluctuations in the resultsnet income (loss).
•EBITDAre—The National Association of operationsReal Estate Investment Trusts (“Nareit”) defines EBITDAre as net income (loss) computed in accordance with GAAP before: (i) interest expense; (ii) income tax expense; (iii) depreciation and amortization; (iv) gains or losses from disposition of depreciable property; and (v) impairment write-downs of depreciable property. Adjustments for the three months ended September 30, 2017unconsolidated partnerships and 2016:
Total revenues—Of the $5.4 million increase in total revenues, $5.2 million was attributedjoint ventures are calculated to non-same-center properties, which are the properties acquired or disposed of after December 31, 2015, and those considered redevelopment properties. Of the $5.2 million increase, $6.7 million was related to acquisitions, offset by a decrease of $1.5 million related to redevelopment and disposed properties. There are nine properties being repositioned in the market and such repositioning is expected to have a significant impact on property operating income. As such, these properties have been classified as redevelopment and have been excluded from our same-center pool. The remaining increase in revenues was the result of a $0.2 million increase among same-center properties, which are the 137 properties that were owned and operational for the entire portion of both comparable reporting periods. The increase in same-center revenue was primarily driven by a $0.17 increase in minimum rent per square foot and a 0.7% increase in occupancy since September 30, 2016.
Property operating expenses—These expenses include (i) operating and maintenance expense, which consists of property-related costs including repairs and maintenance costs, landscaping, snow removal, utilities, property insurance costs, security, and various other property-related expenses; (ii) bad debt expense; and (iii) property management fees and expenses. The $0.9 million increase in property operating expenses primarily resulted from owning more properties for the entire three months ended September 30, 2017, than the comparable 2016 period.
Real estate tax expenses—The $1.6 million increase in real estate tax expenses was primarily due to having more properties in our portfolio for the entire three months ended September 30, 2017, than the comparable 2016 period.
General and administrative expenses—The $1.0 million increase in general and administrative expenses included a $0.6 million increase in third-party legal and consulting fees, as well as costs associated with distributing our Proxy. It also included a $0.3 million increase in asset management fees related to owning more properties for the entire three months ended September 30, 2017, than the comparable 2016 period.


Termination of affiliate arrangements—The $5.5 million expense was primarily related to the redemption of unvested Class B units at the estimated value per sharereflect EBITDAre on the datesame basis.
•Equity Market Capitalization—We calculate equity market capitalization as the total dollar value of termination, that had been earned by our former advisor for historical asset management services (see Note 9 to the consolidated financial statements).all outstanding shares.
Acquisition expenses—The $0.7 million decrease•Nareit FFO—Nareit defines FFO as net income (loss) computed in acquisition expenses was attributed to the implementationaccordance with GAAP, excluding: (i) gains (or losses) from sales of ASU 2017-01 on January 1, 2017, which caused us to capitalize most acquisition-related costs. For a more detailed discussion of this adoption, see Note 4 to the consolidated financial statements.
Depreciationproperty and amortization—The $2.1 million increasegains (or losses) from change in control; (ii) depreciation and amortization included a $2.8 million increase related to owning more propertiesreal estate; (iii) impairment losses on real estate and impairments of in-substance real estate investments in investees that are driven by measurable decreases in the fair value of the depreciable real estate held by the unconsolidated partnerships and joint ventures; and (iv) adjustments for unconsolidated partnerships and joint ventures, calculated to reflect FFO on the entire three months ended September 30, 2017, than the comparable 2016 period. This was offset bysame basis. We calculate Nareit FFO in a $0.4 million decrease due to the disposition of a property in December 2016, as well as a $0.4 million decrease among same-center properties that was primarily attributed to certain intangible lease assets becoming fully amortized.
Interest expense, net—The $2.1 million increase in interest expense was primarily due to additional borrowings since September 2016, offset by a decrease in amortization of loan closing costs due to refinancing certain mortgages in September 2016.
Transaction expenses—The $3.7 million of transaction expenses resulted from costs incurred in connectionmanner consistent with the PELP transaction (see Note 3Nareit definition.
•Net Debt—We calculate net debt as total debt, excluding market adjustments and deferred financing expenses, less cash and cash equivalents.
•Net Debt to Adjusted EBITDAre—This ratio is calculated by dividing net debt by Adjusted EBITDAre (included on an annualized basis within the consolidated financial statements), primarily third-party professional fees, such as accounting, legal, tax, financial advisor,calculation). It provides insight into our leverage rate based on earnings and consulting fees, and fees associated with obtaining debt consents necessary to complete the transaction.

Summary of Operating Activities for the Nine Months Ended September 30, 2017 and 2016
      Favorable (Unfavorable) Change
(In thousands, except per share amounts) 2017 2016 $ %
Operating Data:        
Total revenues $208,778
 $191,405
 $17,373
 9.1 %
Property operating expenses (32,611) (29,978) (2,633) (8.8)%
Real estate tax expenses (31,136) (27,745) (3,391) (12.2)%
General and administrative expenses (25,438) (23,736) (1,702) (7.2)%
Termination of affiliate arrangements (5,454) —
 (5,454) NM
Acquisition expenses (466) (2,392) 1,926
 80.5 %
Depreciation and amortization (84,481) (78,266) (6,215) (7.9)%
Interest expense, net (28,537) (23,837) (4,700) (19.7)%
Transaction expenses (9,760) —
 (9,760) NM
Other income (expense), net 642
 (125) 767
 NM
Net (loss) income (8,463) 5,326
 (13,789) NM
Net loss (income) attributable to noncontrolling interests 144
 (83) 227
 NM
Net (loss) income attributable to stockholders $(8,319) $5,243
 $(13,562) NM
         
Net (loss) income per share—basic and diluted $(0.05) $0.03
 $(0.08) 
Below are explanations of the significantis not impacted by fluctuations in the resultsour equity price.
•Net Debt to Total Enterprise Value—This ratio is calculated by dividing net debt by total enterprise value. It provides insight into our capital structure and usage of operations for the nine months ended September 30, 2017 and 2016:debt.
Total revenues—Of the $17.4 million increase in total revenues, $16.4 million was related to non-same-center properties. Of the $16.4 million increase, $19.3 million was related to acquisitions, offset by a decrease of $2.9 million related to redevelopment and disposed properties. The remaining $1.0 million increase was attributed to same-center properties, which was primarily driven by a $0.17 increase in minimum rent per square foot and a 0.7% increase in occupancy since September 30, 2016.
Property operating expenses—The $2.6 million increase in property operating expenses was primarily related to owning more properties for the nine months ended September 30, 2017, than the comparable 2016 period.
Real estate tax expenses—The $3.4 million increase in real estate tax expenses was due to having more properties in our portfolio for the nine months ended September 30, 2017, than the comparable 2016 period.


General and administrative expenses—The $1.7 million increase in general and administrative expenses was primarily attributed to an increase in asset management fees related to owning more properties for the nine months ended September 30, 2017, than the comparable 2016 period.
Termination of affiliate arrangements—The $5.5 million expense was primarily related to the redemption of unvested Class B units at the estimated value per share on the date of termination, that had been earned by our former advisor for historical asset management services (see Note 9 to the consolidated financial statements).
Acquisition expenses—The $1.9 million decrease in acquisition expenses was attributed to the implementation of ASU 2017-01 on January 1, 2017, which caused us to capitalize most acquisition-related costs. For a more detailed discussion of this adoption, see Note 4 to the consolidated financial statements.
Depreciation and amortization—The $6.2 million increase in depreciation and amortization included an $8.3 million increase related to owning more properties for the nine months ended September 30, 2017, than the comparable 2016 period. This was offset by a $1.2 million decrease due to the disposition of a property in December 2016, as well as a $1.1 million decrease that was primarily attributed to certain intangible lease assets becoming fully amortized.
Interest expense, net—The $4.7 million increase in interest expense was primarily due to additional borrowings since September 2016, offset by a decrease from refinancing certain mortgages and improving the associated interest rate.
Transaction expenses—The $9.8 million of transaction expenses resulted from costs incurred in connection with the PELP transaction (see Note 3 to the consolidated financial statements), primarily third-party professional fees, such as accounting, legal, tax, financial advisor, and consulting fees, and fees associated with obtaining debt consents necessary to complete the transaction.
Other income (expense), net—Other income increased $0.8 million primarily due to gains from the sale of land at two of our properties.

Leasing Activity
The average rent per square foot and cost of executing leases fluctuates based on the tenant mix, size of the space, and lease term. Leases with national and regional tenants generally require a higher cost per square foot than those with local tenants. However, such tenants will also execute leases for a longer term. As we continue to attract more of these national and regional tenants, our costs to lease may increase.
Below is a summary of leasing activity for the three months ended September 30, 2017 and 2016:
  Total Deals 
Inline Deals(1)
  2017 2016 2017 2016
New leases:        
Number of leases 35
 35
 34
 32
Square footage (in thousands) 91
 184
 70
 77
First-year base rental revenue (in thousands) $1,380
 $2,325
 $1,186
 $1,219
Average rent per square foot (“PSF”) $15.24
 $12.62
 $16.92
 $15.87
Average cost PSF of executing new leases(2)(3)
 $21.31
 $19.83
 $19.01
 $29.78
Weighted average lease term (in years) 6.9
 8.5
 5.9
 7.3
Renewals and options:        
Number of leases 84
 93
 79
 86
Square footage (in thousands) 482
 555
 138
 168
First-year base rental revenue (in thousands) $5,285
 $5,806
 $2,959
 $3,367
Average rent PSF 
 $10.96
 $10.46
 $21.42
 $20.06
Average rent PSF prior to renewals $10.24
 $9.65
 $19.24
 $17.78
Percentage increase in average rent PSF 7.0% 8.4% 11.3% 12.9%
Average cost PSF of executing renewals and options(2)(3)
 $2.11
 $1.68
 $4.66
 $3.51
Weighted average lease term (in years) 5.3
 4.9
 5.4
 4.9
Portfolio retention rate(4)
 91.9% 89.2% 87.2% 81.0%
(1)
We consider an inline deal to be a lease for less than 10,000 square feet of gross leasable area (“GLA”).
(2)
The cost of executing new leases, renewals, and options includes leasing commissions, tenant improvement costs, and tenant concessions.


(3)
The costs associated with landlord improvements are excluded for repositioning and redevelopment projects.
(4)
The portfolio retention rate is calculated by dividing (a) total square feet of retained tenants with current period lease expirations by (b) the square feet of leases expiring during the period.
Below is a summary of leasing activity for the nine months ended September 30, 2017 and 2016:
  Total Deals Inline Deals
  2017 2016 2017 2016
New leases:        
Number of leases 127
 124
 123
 118
Square footage (in thousands) 328
 512
 265
 296
First-year base rental revenue (in thousands) $5,563
 $6,756
 $5,040
 $4,808
Average rent PSF $16.97
 $13.20
 $18.99
 $16.22
Average cost PSF of executing new leases $29.00
 $24.10
 $30.43
 $32.16
Weighted average lease term (in years) 7.8
 8.0
 7.2
 7.3
Renewals and options:        
Number of leases 254
 238
 236
 222
Square footage (in thousands) 1,288
 1,313
 465
 435
First-year base rental revenue (in thousands) $17,751
 $14,224
 $10,621
 $9,057
Average rent PSF 
 $13.78
 $10.84
 $22.86
 $20.82
Average rent PSF prior to renewals $12.73
 $9.87
 $20.44
 $18.33
Percentage increase in average rent PSF 8.2% 9.8% 11.8% 13.6%
Average cost PSF of executing renewals and options $2.68
 $2.30
 $5.03
 $4.30
Weighted average lease term (in years) 5.1
 5.3
 5.3
 5.2
Portfolio retention rate 92.9% 89.9% 88.1% 81.9%

Non-GAAP Measures
Same-Center Net Operating Income
•NOI—We present Same-Center Net Operating Income (“Same-Center NOI”) as a supplemental measure of our performance. We define Net Operating Income (“NOI”)calculate NOI as total operating revenues, adjusted to exclude lease buy-out income and non-cash revenue items, less property operating expenses and real estate taxes. Same-Center NOI represents the NOI for the 137 properties that were owned and operational for the entire portion of both comparable reporting periods, except for the nine properties we currently classify as redevelopment. While there is judgment surrounding changes in designations, once a redevelopment property has stabilized, it is typically moved to the same-center pool the following year.
We believe that NOI and Same-Center NOI provide useful information to our investorsprovides insight about our financial and operating performance because eachit provides a performance measure of the revenues and expenses directly involved in owning and operating real estate assets and provides a perspective not immediately apparent from net income (loss). Because Same-Center NOI
•Same-Center—We use this term to refer to a property, or portfolio of properties, that has been owned and operational for the entirety of each reporting period (i.e., since January 1, 2020).
•Total Enterprise Value—We calculate total enterprise value as our net debt plus our equity market capitalization on a fully diluted basis.

OVERVIEW
We are a REIT and one of the nation’s largest owners and operators of omni-channel grocery-anchored neighborhood and community shopping centers. The majority of our revenue is lease revenue derived from our real estate investments. Additionally, we operate an investment management business providing property management and advisory services to over $460 million of unconsolidated joint ventures. This business provides comprehensive real estate and asset management services to the Managed Funds.
As of June 30, 2021, we wholly-owned 272 real estate properties. Additionally, we owned a 14% interest in GRP I, a joint venture that owned 20 properties, and a 20% interest in NRP, a joint venture that owned two properties.








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RECAPITALIZATION—On June 18, 2021, our stockholders approved Articles of Amendment that effected the Recapitalization, wherein each share of our common stock outstanding at the time the amendment became effective was converted into one share of a newly created class of Class B common stock. 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-Q disclosure gives effect to the Recapitalization and references to “shares” and per share metrics refer to our common stock and Class B common stock, collectively (Note 9).
REVERSE STOCK SPLIT—On July 2, 2021, our Board approved an amendment to our articles of incorporation to effect a one-for-three reverse stock split. Concurrent with the reverse split, the Operating Partnership enacted a one-for-three reverse split of its outstanding OP units. Unless otherwise indicated, the information in this Form 10-Q gives effect to the reverse stock and OP unit splits (Note 9).
UNDERWRITTEN INITIAL PUBLIC OFFERING—On July 19, 2021, we closed our underwritten IPO, through which we offered 17.0 million shares of a new class of common stock, $0.01 par value per share, at an initial price of $28.00 per share, pursuant to a registration statement filed with the SEC on Form S-11 (File No. 333-255846), as amended. These shares are listed on the Nasdaq Global Select Market under the trading symbol “PECO”. The underwriters have since exercised a 30-day option to purchase additional shares of common stock to cover overallotments, and, accordingly, on August 2, 2021 we settled the sale of an additional 2.55 million shares, with gross proceeds to us of $71.4 million.
On August 4, 2021, as a result of our underwritten IPO, our Board approved the termination of the DRIP and the SRP. The DRIP has been suspended since April 2021. The SRP, which was limited to repurchases resulting from the DDI of stockholders, has been suspended since March 2021, and the SRP for standard repurchases had been suspended since August 2019.
COVID-19 STRATEGY—During 2020, as a result of the COVID-19 pandemic, many state governments issued “stay-at-home” mandates that generally limited travel and movement of the general public to essential activities only and required all non-essential businesses to close.
Our management team determined the following were the key actions for recovery in our portfolio (all statistics are approximate and include the prorated portion attributable to properties owned through our joint ventures):
•Returning to Monthly Payments—We continue to work with our Neighbors to resume normal monthly rent payments, and our efforts have included raising awareness of the benefits available through numerous governmental relief programs. We have seen our collections continue to improve from the second quarter of 2020. The following table summarizes our collections by quarter, as they were originally reported as well as updated for payments received subsequent to the month billed:
Originally Reported
Current(1)
Q2 202086 %93 %
Q3 202094 %96 %
Q4 202095 %97 %
Q1 202195 %98 %
Q2 2021N/A98 %
(1)Including collections received through July 20, 2021.
As of July 20, 2021, approximately 95% of our Neighbor spaces are paying their rent in full.
•Recovering Missed Rent Charges—We believe substantially all Neighbors, including those that were required to temporarily close under governmental mandates, are contractually obligated to continue with their rent payments as documented in our lease agreements with them. However, we decided to negotiate relief for a small subset of our Neighbors in the form of rent deferrals or abatements. As of July 20, 2021, we have $5.3 million of outstanding payment plans with our Neighbors, and we had recorded rent abatements of approximately $0.7 million during 2021, related to 2021 missed rental income. These payment plans and rent abatements represented approximately 2.0% and 0.3% of portfolio rental income for the six months ended June 30, 2021, respectively. As of July 20, 2021, approximately 54% of payments are scheduled to be received by December 31, 2021 for all executed payment plans, and the weighted-average term over which we expect to receive remaining amounts owed on executed payment plans is approximately twelve months.
We are still actively pursuing past due amounts under the terms negotiated with our Neighbors. For our entire portfolio, inclusive of our prorated share of properties owned through joint ventures, 69% of the missed monthly charges billed during the first and second quarters of 2021 have since been collected, and 5% have been waived, as of July 20, 2021, bringing both Q1 and Q2 2021 collections to 98%. We will continue to work with Neighbors on establishing plans to repay past due amounts, and will monitor the impact of such payment plans on our results of operations in future quarters. We cannot guarantee that we will ultimately be able to collect these amounts.








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•Monitoring for Credit Risk—The COVID-19 pandemic and resulting economic downturn has increased the uncertainty of collecting rents from a number of our Neighbors. We have been closely monitoring the status of our Neighbors to identify those who potentially pose a credit risk in order to appropriately account for the impact to revenue and in order to quickly take action when a Neighbor is ultimately unable to remain in a space.
For Neighbors with a higher degree of uncertainty as to their creditworthiness, we may not record revenue for amounts billed until the cash is received. Based on our analysis, no individual Neighbor category has been accounted for entirely on a cash basis as of June 30, 2021 or throughout the pandemic; however, we continue to evaluate each Neighbor individually to determine if they should be accounted for on a cash basis. For the three months ended June 30, 2021, inclusive of the prorated portion attributable to properties owned through our joint ventures, we had $1.3 million in net favorable monthly revenue adjustments for Neighbors who are being accounted for on a cash basis. For the six months ended June 30, 2021, we had $3.6 million in net unfavorable monthly revenue adjustments for Neighbors who are being accounted for on a cash basis. For the three and six months ended June 30, 2020, inclusive of the prorated portion attributable to properties owned through our joint ventures, we had $12.1 million and $15.0 million, respectively, in net unfavorable monthly revenue adjustments for Neighbors who are being accounted for on a cash basis. As of June 30, 2021, our Neighbors currently being accounted for on a cash basis represented approximately 8% of our total Neighbor spaces, or approximately 7.4% of portfolio ABR. Further, many of our Neighbors who are on a cash basis of accounting are actively making payments toward their outstanding balances. When considering the ABR associated with Neighbors who are currently on a cash basis of accounting, 76% of this ABR is represented by Neighbors who are actively making payments.
Additionally, certain of our Neighbors have entered into bankruptcy proceedings. While some of these cases have already been resolved, with the assumption or rejection of the lease already reflected in our results, in some cases these claims have yet to be resolved, and as such, the potential fallout is not yet reflected in our occupancy rate or ABR metrics. We believe that Neighbors in the bankruptcy process represent an exposure of less than 1% of our total portfolio ABR as of June 30, 2021. We have included our assessment of the impact of these bankruptcies in our estimate of rent collectibility, which impacted recorded revenue, as noted previously.
Certain of our Neighbors have been unable to remain in their spaces as a result of the factors previously noted. Despite this fallout, our leasing activity has been strong as demand for space in our centers remains high, allowing us to re-lease these spaces to Neighbors who may increase our concentration of necessity-based and omni-channel retailers. For the three and six months ended June 30, 2021, our wholly-owned portfolio retention rate was 85.5% and 87.2%, respectively. Additionally, for the three and six months ended June 30, 2021, for our wholly-owned portfolio, we executed 124 and 277 new leases, respectively, each an increase as compared to the same period a year ago.
PORTFOLIO AND LEASING STATISTICS—Below are statistical highlights of our wholly-owned portfolio as of June 30, 2021 and 2020 (dollars and square feet in thousands):
  June 30, 2021June 30, 2020
Number of properties272 284 
Number of states31 31 
Total square feet30,778 31,787 
ABR$384,916 $385,696 
% ABR from omni-channel grocery-anchored shopping centers96.0 %97.0 %
Leased % of rentable square feet:
Total portfolio spaces94.7 %95.6 %
Anchor spaces96.8 %98.3 %
Inline spaces90.6 %90.3 %
Average remaining lease term (in years)(1)
4.5 4.6 
(1)The average remaining lease term in years excludes future options to extend the term of the lease.
The following table details information for our joint ventures as of June 30, 2021, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):
June 30, 2021
Joint VentureOwnership PercentageNumber of PropertiesABRGLA
Grocery Retail Partners I14%20 $29,339 2,211 
Necessity Retail Partners20%2 3,989 228 









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LEASE EXPIRATIONS—The following chart shows the aggregate scheduled lease expirations, excluding our Neighbors who are occupying space on a temporary basis, after June 30, 2021 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our joint ventures:
cik0001476204-20210630_g2.jpg
Our ability to create rental rate growth generally depends on our leverage during new and renewal lease negotiations with prospective and existing Neighbors, which typically occurs when occupancy at our centers is high or during periods of economic growth and recovery. Conversely, we may experience rental rate decline when occupancy at our centers is low or during periods of economic recession, as the leverage during new and renewal lease negotiations may shift to prospective and existing Neighbors.
See “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Leasing Activity” of this filing on Form 10-Q for further discussion of leasing activity.








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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 joint ventures, by Neighbor type as of June 30, 2021:
cik0001476204-20210630_g3.jpgcik0001476204-20210630_g4.jpg

The following charts present the composition of our portfolio by Neighbor industry as of June 30, 2021:
cik0001476204-20210630_g5.jpgcik0001476204-20210630_g6.jpg








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We define “Necessity-based goods and services” as goods and services that are indispensable, necessary, or common for day-to-day living, or that tend to be inelastic (i.e., those for which the demand does not change based on a consumer’s income level). We estimate that approximately 73% of our ABR, including the pro rata portion attributable to properties owned through our joint ventures, is from Neighbors providing necessity-based goods and services. Additionally, within these categories, we estimate that approximately 50% of our ABR is from retail and service businesses generally deemed essential under most state and local mandates issued in response to the COVID-19 pandemic. The composition of our portfolio as a percentage of ABR is as follows:
June 30, 2021
Essential/Necessity Retail and Services:
Grocery35.4 %
Medical/pharmacy2.7 %
Banks2.4 %
Dollar stores2.2 %
Pet supply1.9 %
Hardware/automotive1.7 %
Wine, beer, and liquor1.4 %
Other essential2.7 %
Total Essential/Necessity-based retail and services(1)
50.4 %
Other Necessity:
Quick service - restaurant9.7 %
Beauty and hair care4.9 %
Health care services4.0 %
Other necessity3.5 %
Total ABR from other Necessity22.1 %
Total ABR from Necessity-based goods and services72.5 %
Other Retail Stores:
Soft goods(2)
12.4 %
Full service - restaurant6.4 %
Fitness and lifestyle services(3)
5.2 %
Other retail(4)
3.5 %
Total ABR from other retail and services27.5 %
Total ABR100.0 %
(1)Includes Neighbors that we believe are considered to be essential retail and service businesses but that may have temporarily closed at various points during the COVID-19 pandemic due to decreases in foot traffic and customer patronage as a result of “stay-at-home” mandates and social distancing guidelines implemented in response to the pandemic.
(2)Includes ABR contributions of 2% from each of apparel/shoes/accessories, department stores, and home furnishings Neighbors.
(3)Includes ABR contribution of 3% from fitness Neighbors.
(4)Includes ABR contribution of 1% from entertainment Neighbors.








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The following table presents our top twenty Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, as of June 30, 2021 (dollars and square feet in thousands):
Neighbor(1)
ABR% of ABRLeased Square Feet% of Leased Square Feet
Number of Locations(2)
Kroger$25,804 6.6 %3,244 11.0 %59 
Publix22,032 5.7 %2,241 7.6 %56 
Ahold Delhaize17,323 4.4 %1,240 4.2 %23 
Albertsons-Safeway16,804 4.3 %1,599 5.4 %29 
Walmart8,933 2.3 %1,770 6.0 %13 
Giant Eagle7,293 1.9 %738 2.5 %11 
TJX Companies5,060 1.3 %428 1.5 %15 
Sprouts Farmers Market5,000 1.3 %334 1.1 %11 
Raley's3,884 1.0 %253 0.9 %4 
Dollar Tree3,628 0.9 %370 1.3 %39 
SUPERVALU3,209 0.8 %336 1.1 %5 
Subway Group2,731 0.7 %111 0.4 %79 
Anytime Fitness, Inc.2,623 0.7 %171 0.6 %35 
Schnucks2,545 0.7 %249 0.8 %4 
Southeastern Grocers2,514 0.6 %281 1.0 %7 
Lowe's2,469 0.6 %369 1.3 %4 
Kohl's Corporation2,241 0.6 %365 1.2 %4 
Food 4 Less (PAQ)2,215 0.6 %119 0.4 %2 
Save Mart2,174 0.6 %258 0.9 %5 
Petco Animal Supplies, Inc.2,118 0.5 %127 0.3 %11 
Total$140,600 36.1 %14,603 49.5 %416 
(1)Neighbors are grouped by parent company and may represent multiple subsidiaries and banners.
(2)Number of locations excludes auxiliary leases with grocery anchors such as fuel stations, pharmacies, and liquor stores. Additionally, in the event that a parent company has multiple subsidiaries or banners in a single shopping center, those subsidiaries are included as one location.


RESULTS OF OPERATIONS
KNOWN TRENDS AND UNCERTAINTIES OF THE COVID-19 PANDEMIC—The COVID-19 pandemic has resulted in reduced revenues beginning with the second quarter of 2020 and continuing through the second quarter of 2021, and our estimates around collectibility will likely continue to create volatility in our earnings. The total impact on revenue in the future cannot be determined at this time. The duration of the pandemic and mitigating measures, and the resulting economic impact, has caused some of our Neighbors to permanently vacate their spaces and/or not renew their leases, and we may have difficulty leasing these spaces on the same or better terms or at all, and/or incur additional costs to lease vacant spaces, which may reduce our occupancy rates in the future and ultimately reduce our revenue. Extended periods of vacancy or reduced revenues may trigger impairments of our real estate assets.
We believe that our investment focus on grocery-anchored shopping centers that provide daily necessities has helped and will continue to help lessen the negative effect of the pandemic on our business compared to non-grocery anchored shopping centers.








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SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
Three Months Ended
 June 30,		Favorable (Unfavorable)
 Change
(Dollars in thousands)20212020$
%(1)
Revenues:
Rental income$130,335 $115,654 $14,681 12.7 %
Fee and management income2,374 2,760 (386)(14.0)%
Other property income361 626 (265)(42.3)%
Total revenues133,070 119,040 14,030 11.8 %
Operating Expenses:
Property operating expenses21,974 19,629 (2,345)(11.9)%
Real estate tax expenses16,814 16,453 (361)(2.2)%
General and administrative expenses11,937 9,806 (2,131)(21.7)%
Depreciation and amortization56,587 56,370 (217)(0.4)%
Impairment of real estate assets1,056 — (1,056)NM
Total operating expenses108,368 102,258 (6,110)(6.0)%
Other:
Interest expense, net(19,132)(22,154)3,022 13.6 %
Gain (loss) on disposal of property, net3,744 (541)4,285 NM
Other expense, net(2,924)(500)(2,424)NM
Net income (loss)6,390 (6,413)12,803 NM
Net (income) loss attributable to noncontrolling interests(796)825 (1,621)NM
Net income (loss) attributable to stockholders$5,594 $(5,588)$11,182 NM
(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 268 properties that were owned and operational prior to January 1, 2020. We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing to real estate asset activity occurring after December 31, 2019, which includes 19 properties disposed of and four properties acquired. Below are explanations of the significant fluctuations in the results of operations for the three months ended June 30, 2021 and 2020:
Rental Income increased $14.7 million as follows:
•$15.5 million increase related to our same-center portfolio primarily as follows:
▪$16.0 million increase primarily due to stronger collections in 2021 as compared with lower collections in 2020, the increase owing largely to the ongoing recovery of our portfolio in the wake of the COVID-19 pandemic and its economic impact, including a decrease in Neighbors we have identified as a credit risk as well as collections on charges that were uncollected in 2020;
▪$0.5 million increase primarily due to a $0.57 increase in average minimum rent per square foot, partially offset by a 0.8% decrease in average economic occupancy; and
▪$1.0 million decrease attributable to lower recoveries from a lower recovery rate and lower economic occupancy.
•$0.8 million decrease primarily related to our net disposition of 15 properties.
Property Operating Expenses increased$2.3 million as follows:
•$2.5 million increase related to our same-center portfolio and corporate operating activities, owing largely to lower expense for performance-based compensation during 2020 as a result of the COVID-19 pandemic, as compared to 2021; and
•$0.2 million decrease related to our net disposition of 15 properties.
General and Administrative Expenses increased $2.1 million as follows:
•$3.4 million increase owing largely to lower expense for performance-based compensation during 2020 as a result of the COVID-19 pandemic, as compared to 2021;
•$0.8 million decrease primarily due to lower third-party consultant and custodial costs; and
•$0.5 million decrease related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to overhead costs at our corporate offices.








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Impairment of Real Estate Assets:
•The $1.1 million increase in impairment of real estate assets was due to assets that are actively being marketed for sale at a disposition price that was less than the carrying value. Proceeds from dispositions will be used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes. We continue to sell non-core assets and may potentially recognize impairments in future quarters.
Interest Expense, Net:
•The $3.0 million decrease during the three months ended June 30, 2021 as compared to the same period in 2020 was due to: (i) lower borrowings as a result of early repayments of debt; (ii) the repayment of our draw on the revolver during the second quarter of 2020; and (iii) lower interest rates due to the decrease in LIBOR and expiring interest rate swaps. Interest Expense, Net was comprised of the following (dollars in thousands):
Three Months Ended June 30,
20212020
Interest on revolving credit facility, net$207$979
Interest on term loans, net10,57311,685
Interest on secured debt6,2467,316
Loss on extinguishment of debt419—
Non-cash amortization and other1,6872,174
Interest expense, net$19,132$22,154
Weighted-average interest rate as of end of period2.9 %3.1 %
Weighted-average term (in years) as of end of period3.74.5
Gain (Loss) on Disposal of Property, Net:
•The $4.3 million change was primarily related to the sale of seven properties with a net gain (in addition to other property-related miscellaneous disposals and write-offs) of $3.7 million during the three months ended June 30, 2021, as compared to the sale of one property (as well as other property-related miscellaneous disposals and write-offs) with a net loss of $0.5 million during the three months ended June 30, 2020 (see Note 4).
Other Expense, Net:
•The $2.4 million increase was largely due to the change in the fair value of our earn-out liability as a result of general improving market conditions. Other Expense, Net was comprised of the following (dollars in thousands):
Three Months Ended June 30,
20212020
Change in fair value of earn-out liability$(2,000)$— 
Equity in net income (loss) of unconsolidated joint ventures87 (359)
Transaction and acquisition expenses(934)(14)
Federal, state, and local income tax expense(165)(180)
Other88 53 
Other expense, net$(2,924)$(500)









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SUMMARY OF OPERATING ACTIVITIES FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
Six Months Ended
 June 30,		Favorable (Unfavorable)
 Change
(Dollars in thousands)20212020$
%(1)
Revenues:
Rental income$257,958 $244,120 $13,838 5.7 %
Fee and management income4,660 4,925 (265)(5.4)%
Other property income833 1,518 (685)(45.1)%
Total revenues263,451 250,563 12,888 5.1 %
Operating Expenses:
Property operating expenses44,176 41,391 (2,785)(6.7)%
Real estate tax expenses33,387 33,565 178 0.5 %
General and administrative expenses21,278 20,546 (732)(3.6)%
Depreciation and amortization111,928 112,597 669 0.6 %
Impairment of real estate assets6,056 — (6,056)NM
Total operating expenses216,825 208,099 (8,726)(4.2)%
Other:
Interest expense, net(39,195)(44,929)5,734 12.8 %
Gain (loss) on disposal of property, net17,585 (2,118)19,703 NM
Other (expense) income, net(18,509)9,369 (27,878)NM
Net income6,507 4,786 1,721 36.0 %
Net income attributable to noncontrolling interests(810)(605)(205)(33.9)%
Net income attributable to stockholders$5,697 $4,181 $1,516 36.3 %
(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 the Summary of Operating Activities for the Three Months Ended June 30, 2021 and 2020 section above. Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, 2021 and 2020:
Rental Income increased $13.8 million as follows:
•$15.3 million increase related to our same-center portfolio primarily as follows:
▪$15.7 million increase primarily due to stronger collections in 2021 as compared with lower collections in 2020, the increase owing largely to the ongoing recovery of our portfolio in the wake of the COVID-19 pandemic and its economic impact, including a decrease in Neighbors we have identified as a credit risk as well as collections on charges that were uncollected in 2020; and
▪$0.2 million decrease primarily due to a 0.8% decrease in average economic occupancy, partially offset by a $0.55 increase in average minimum rent per square foot.
•$1.5 million decrease primarily related to our net disposition of 15 properties.
Property Operating Expenses increased $2.8 million primarily as follows:
•$2.9 million increase related to our same-center portfolio and corporate operating activities as follows:
▪$2.4 million increase owing largely to lower expense for performance-based compensation during 2020 as a result of the COVID-19 pandemic, as compared to 2021;
▪$0.6 million increase in insurance expenses owing to higher market rates and an increase in claims and claim development; and
▪ $0.1 million decrease primarily due to net reductions of controllable expenses at our properties.
•$0.2 million decrease related to our net disposition of 15 properties.
General and Administrative Expenses increased $0.7 million as follows:
•$4.3 million increase owing largely to lower expense for performance-based compensation during 2020 as a result of the COVID-19 pandemic, as compared to 2021;
•$1.6 million decrease primarily due to lower third-party consultant and custodial costs;
•$2.0 million decrease related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to overhead costs at our corporate offices, as well as decreased travel and related costs.








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Impairment of Real Estate Assets:
•The $6.1 million increase in impairment of real estate assets was due to assets that are actively being marketed for sale at a disposition price that was less than the carrying value. Proceeds from dispositions will be used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes. We continue to sell non-core assets and may potentially recognize impairments in future quarters.
Interest Expense, Net:
•The $5.7 million decrease during the six months ended June 30, 2021 as compared to the same period in 2020 was due to: (i) lower borrowings as a result of early repayments of debt; (ii) the repayment of our draw on the revolver during the second quarter of 2020; and (iii) lower interest rates due to the decrease in LIBOR and expiring interest rate swaps. Interest Expense, Net was comprised of the following (dollars in thousands):
Six Months Ended June 30,
20212020
Interest on revolving credit facility, net$435$1,195
Interest on term loans, net21,20624,416
Interest on secured debt13,02614,665
Loss on extinguishment of debt1,11073
Non-cash amortization and other3,4184,580
Interest expense, net$39,195$44,929
Weighted-average interest rate as of end of period2.9 %3.1 %
Weighted-average term (in years) as of end of period3.74.5
Gain (Loss) on Disposal of Property, Net:
•The $19.7 million changewas primarily related to the sale of thirteen properties and one outparcel (in addition to other miscellaneous property-related disposals and write-offs) with a net gain of $17.6 million during the six months ended June 30, 2021, as compared to the sale of four properties (as well as other property-related miscellaneous disposals and write-offs) with a net loss of $2.1 million during the six months ended June 30, 2020 (see Note 4).
Other (Expense) Income, Net:
•The $27.9 million change was largely due to the change in the fair value of our earn-out liability as a result of general improving market conditions. Other (Expense) Income, Net was comprised of the following (in thousands):
Six Months Ended June 30,
20212020
Change in fair value of earn-out liability$(18,000)$10,000 
Equity in income (loss) of unconsolidated joint ventures801 (639)
Transaction and acquisition expenses(1,075)(59)
Federal, state, and local income tax expense(331)(209)
Other96 276 
Other (expense) income, net$(18,509)$9,369 









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LEASING ACTIVITY—Below is a summary of leasing activity for our wholly-owned properties for the three months ended June 30, 2021 and 2020(1):
Total DealsInline Deals
2021202020212020
New leases:
Number of leases124 61 121 58 
Square footage (in thousands)341 197 278 159 
ABR (in thousands)$6,338 $3,034 $5,816 $2,801 
ABR per square foot$18.57 $15.38 $20.94 $17.59 
Cost per square foot of executing new leases$31.01 $19.48 $29.30 $23.35 
Number of comparable leases57 20 55 19 
Comparable rent spread18.5 %15.5 %19.0 %15.9 %
Weighted-average lease term (in years)7.2 6.1 6.8 7.2 
Renewals and options:
Number of leases174 108 159 95 
Square footage (in thousands)1,049 975 333 209 
ABR (in thousands)$12,895 $8,942 $7,306 $4,141 
ABR per square foot$12.30 $9.17 $21.95 $19.81 
ABR per square foot prior to renewals$11.55 $8.73 $20.08 $18.40 
Percentage increase in ABR per square foot6.5 %5.0 %9.3 %7.7 %
Cost per square foot of executing renewals and options$3.01 $1.62 $4.60 $3.69 
Number of comparable leases(2)
155 87 148 84 
Comparable rent spread(2)
8.0 %7.1 %9.4 %9.0 %
Weighted-average lease term (in years)5.4 5.4 4.0 3.5 
Portfolio retention rate85.5 %88.2 %79.5 %70.3 %
(1)Per square foot amounts may not recalculate exactly based on other amounts presented within the table due to rounding.
(2)Excludes exercise of options.









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Below is a summary of leasing activity for our wholly-owned properties for the six months ended June 30, 2021 and 2020(1):
Total DealsInline Deals
2021202020212020
New leases:
Number of leases277 148 268 135 
Square footage (in thousands)808 579 619 339 
ABR (in thousands)$14,458 $8,597 $12,421 $6,015 
ABR per square foot$17.89 $14.84 $20.06 $17.72 
Cost per square foot of executing new leases$28.51 $21.16 $28.00 $25.78 
Number of comparable leases127 45 125 44 
Comparable rent spread15.3 %10.8 %15.3 %10.7 %
Weighted-average lease term (in years)7.7 8.2 6.5 6.8 
Renewals and options:
Number of leases337 235 306 208 
Square footage (in thousands)2,027 1,714 645 458 
ABR (in thousands)$24,367 $18,662 $14,375 $9,505 
ABR per square foot$12.02 $10.89 $22.30 $20.75 
ABR per square foot prior to renewals$11.27 $10.24 $20.54 $18.83 
Percentage increase in ABR per square foot6.6 %6.7 %8.6 %12.2 %
Cost per square foot of executing renewals and options$2.19 $3.41 $4.08 $4.36 
Number of comparable leases(2)
291 176 281 170 
Comparable rent spread(2)
8.0 %9.2 %8.7 %11.8 %
Weighted-average lease term (in years)4.9 5.0 4.0 3.7 
Portfolio retention rate87.2 %79.5 %79.9 %68.6 %
(1)    Per square foot amounts may not recalculate exactly based on other amounts presented within the table due to rounding.
(2)Excludes exercise of options.

NON-GAAP MEASURES
See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators and Defined Terms”of this filing on Form 10-Q for a discussion related to the following non-GAAP measures.
SAME-CENTER NET OPERATING INCOME—Same-Center NOI from properties acquired after December 31, 2015, and those considered redevelopment properties,is presented as a supplemental measure of our performance, as it highlights operating trends such as occupancy levels, rental rates, and operating costs on properties that were operational for both comparable periods.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 June 30, 2021 and 2020, Same-Center NOI represents the NOI for the 268 properties that were wholly-owned and operational for the entire portion of both comparable periods.
Same-Center NOI should not be viewed as an alternative measure of our financial performance sinceas it does not reflect the operations of our entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition expenses, depreciation and amortization, interest expense, other income (expense), or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties that could materially impact our results from operations.










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The table below is a comparison ofpresents our Same-Center NOI for the threecurrent period and nine months ended September 30, 2017,the comparable prior period (dollars in thousands):
Three Months Ended June 30,Favorable (Unfavorable)Six Months Ended June 30,Favorable (Unfavorable)
20212020$
Change		%
Change		20212020$ Change% Change
Revenues:
Rental income(1)
$91,305 $90,814 $491 $182,599 $182,852 $(253)
Tenant recovery income27,250 30,197 (2,947)57,851 60,980 (3,129)
Reserves for uncollectibility(2)
2,889 (9,706)12,595 1,261 (12,129)13,390 
Other property income284 600 (316)756 1,465 (709)
Total revenues121,728 111,905 9,823 8.8 %242,467 233,168 9,299 4.0 %
Operating expenses:
Property operating expenses17,504 16,495 (1,009)36,614 34,562 (2,052)
Real estate taxes16,519 16,038 (481)32,749 33,182 433 
Total operating expenses34,023 32,533 (1,490)(4.6)%69,363 67,744 (1,619)(2.4)%
Total Same-Center NOI$87,705 $79,372 $8,333 10.5 %$173,104 $165,424 $7,680 4.6 %
(1)Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income.
(2)Includes billings that will not be recognized as revenue until cash is collected or the Neighbor resumes regular payments and/or we deem it appropriate to the three and nine months ended September 30, 2016 (in thousands):
resume recording revenue on an accrual basis, rather than on a cash basis.
 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 $ Change % Change 2017 2016 $ Change % Change
Revenues:               
Rental income(1)
$42,621
 $41,797
 $824
   $127,588
 $124,664
 $2,924
  
Tenant recovery income13,620
 14,020
 (400)   41,337
 42,583
 (1,246)  
Other property income274
 195
 79
   615
 562
 53
  
Total revenues56,515
 56,012
 503
 0.9% 169,540
 167,809
 1,731
 1.0 %
Operating expenses:               
Property operating expenses8,831
 8,813
 18
   26,563
 26,673
 (110)  
Real estate taxes8,179
 7,909
 270
   24,731
 24,774
 (43)  
Total operating expenses17,010
 16,722
 288
 1.7% 51,294
 51,447
 (153) (0.3)%
Total Same-Center NOI$39,505
 $39,290
 $215
 0.5% $118,246
 $116,362
 $1,884
 1.6 %
(1)
Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income.
SAME-CENTER NOI RECONCILIATION—Below is a reconciliation of Net (loss) incomeIncome to NOI and Same-Center NOI for the three and nine months ended September 30, 2017 and 2016 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Net income (loss)$6,390 $(6,413)$6,507 $4,786 
Adjusted to exclude:
Fees and management income(2,374)(2,760)(4,660)(4,925)
Straight-line rental (income) expense(1)
(2,970)948 (4,392)(1,364)
Net amortization of above- and below-market leases(887)(795)(1,725)(1,583)
Lease buyout income(1,781)(214)(2,578)(308)
General and administrative expenses11,937 9,806 21,278 20,546 
Depreciation and amortization56,587 56,370 111,928 112,597 
Impairment of real estate assets1,056 — 6,056 — 
Interest expense, net19,132 22,154 39,195 44,929 
(Gain) loss on disposal of property, net(3,744)541 (17,585)2,118 
Other expense (income), net2,924 500 18,509 (9,369)
Property operating expenses related to fees
   and management income		1,306 891 2,122 1,528 
NOI for real estate investments87,576 81,028 174,655 168,955 
Less: Non-same-center NOI(2)
129 (1,656)(1,551)(3,531)
Total Same-Center NOI$87,705 $79,372 $173,104 $165,424 
(1)Includes straight-line rent adjustments for Neighbors for whom revenue is being recorded on a cash basis.
(2)Includes operating revenues and expenses from non-same-center properties which includes properties acquired or sold and corporate activities.

 Three Months Ended September 30, Nine Months Ended September 30,
 2017 
2016(1)
 2017 
2016(1)
Net (loss) income$(8,376) $2,490
 $(8,463) $5,326
Adjusted to exclude:    

 

Straight-line rental income(970) (1,067) (2,913) (2,793)
Net amortization of above- and below-market leases(286) (355) (972) (936)
Lease buyout income(9) —
 (1,120) (534)
General and administrative expenses8,712
 7,722
 25,438
 23,736
Termination of affiliate arrangements5,454
 —
 5,454
 —
Acquisition expenses202
 870
 466
 2,392
Depreciation and amortization28,650
 26,583
 84,481
 78,266
Interest expense, net10,646
 8,504
 28,537
 23,837
Transaction expenses3,737
 —
 9,760
 —
Other(6) (33) (642) 125
NOI47,754
 44,714
 140,026
 129,419
Less: NOI from centers excluded from same-center(8,249) (5,424) (21,780) (13,057)
Total Same-Center NOI$39,505
 $39,290
 $118,246
 $116,362
(1)
Certain prior period amounts have been restated to conform with current year presentation.

Funds from Operations and Modified Funds from Operations
Funds from operations (“FFO”)NAREIT FFO AND CORE FFO—Nareit FFO is a non-GAAP financial performance measure that is widely recognized as a measure of REIT operating performance. We use FFO as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) to be net income (loss), computed in accordance with GAAP, adjusted for gains (or losses) from sales of depreciable real estate property (including deemed sales and settlements of pre-existing relationships), plus depreciation and amortization on real estate assets and impairment charges, and after related adjustments for unconsolidated partnerships, joint ventures, and noncontrolling interests. We believe thatCore FFO is helpful to our investors and our management as aan additional financial performance measure of operating performance because, when compared year over year, it reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, development activities, general and administrative expenses, and interest costs, which are not immediately apparent from net income (loss).
Since the definition of FFO was promulgated by NAREIT, GAAP has expanded to include several new accounting pronouncements, such that management and many investors and analysts have considered the presentation of FFO alone to be


insufficient. Accordingly, in addition to FFO, we use modified funds from operations (“MFFO”), which, as definedused by us excludes fromas Nareit FFO the following items:
acquisition and transaction expenses;
straight-line rent amounts, both income and expense;
amortization of above- or below-market intangible lease assets and liabilities;
amortization of discounts and premiums on debt investments;
gains or losses from the early extinguishment of debt;
gains or losses on the extinguishment of derivatives, except where the trading of such instruments is a fundamental attribute ofincludes certain non-comparable items that affect our operations;
gains or losses related to fair value adjustments for derivatives not qualifying for hedge accounting;
adjustments related to the above items for joint ventures, noncontrolling interests, and unconsolidated entities in the application of equity accounting; and
termination of affiliate arrangements.
We believe that MFFOperformance over time. Core FFO is helpful in assisting management and investors with the assessment ofassessing the sustainability of our operating performance in future periods because MFFO excludes acquisition expenses that affect operations only in the period in which the property is acquired. Thus, MFFO provides helpful information relevantperiods.








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Nareit FFO, Nareit FFO Attributable to evaluating our operating performance in periods in which there is no acquisition activity.
Many of the adjustments in arriving at MFFO are not applicable to us. Nevertheless, as explained below, management’s evaluation of our operating performance may also exclude items considered in the calculation of MFFO based on the following economic considerations:
Adjustments for straight-line rentsStockholders and amortization of discountsOP Unit Holders, and premiums on debt investments—GAAP requires rental receipts and discounts and premiums on debt investments to be recognized using various systematic methodologies. This may result in income recognition that could be significantly different than underlying contract terms. By adjusting for these items, MFFO provides useful supplemental information on the realized economic impact of lease terms and debt investments and aligns results with management’s analysis of operating performance. The adjustment to MFFO for straight-line rents, in particular, is made to reflect rent and lease payments from a GAAP accrual basis to a cash basis.
Adjustments for amortization of above- or below-market intangible lease assets—Similar to depreciation and amortization of other real estate-related assets that are excluded fromCore FFO GAAP implicitly assumes that the value of intangibles diminishes ratably over the lease term and should be recognized in revenue. Since real estate values and market lease rates in the aggregate have historically risen or fallen with market conditions, and the intangible value is not adjusted to reflect these changes, management believes that by excluding these charges, MFFO provides useful supplemental information on the performance of the real estate.
Gains or losses related to fair value adjustments for derivatives not qualifying for hedge accounting—This item relates to a fair value adjustment, which is based on the impact of current market fluctuations and underlying assessments of general market conditions and specific performance of the holding, which may not be directly attributable to current operating performance. As these gains or losses relate to underlying long-term assets and liabilities, management believes MFFO provides useful supplemental information by focusing on the changes in core operating fundamentals rather than changes that may reflect anticipated, but unknown, gains or losses.
Adjustment for gains or losses related to early extinguishment of derivatives and debt instruments—These adjustments are not related to continuing operations. By excluding these items, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods and to other real estate operators.
Adjustment for the termination of affiliate arrangements—This adjustment is related to our redemption of Class B units at the estimated value per share on the date of termination, that had been earned by our former advisor for historical asset management services, and is not related to continuing operations. By excluding this item, management believes that MFFO provides supplemental information related to sustainable operations that will be more comparable between other reporting periods and to other real estate operators.
Neither FFO nor MFFO should be considered as an alternativealternatives to net income (loss) or income (loss) from continuing operations under GAAP, nor as an indication of our liquidity, nor is either of these measures indicativeas an indication of funds available to fundcover our cash


needs, including our ability to fund distributions. MFFOCore FFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate our business plan in the manner currently contemplated.
Accordingly, Nareit FFO, Nareit FFO Attributable to Stockholders and MFFOOP Unit Holders, and Core FFO should be reviewed in connection with other GAAP measurements. FFOmeasurements, and MFFO should not be viewed as more prominent measures of performance than our net income (loss) or cash flows from operations prepared in accordance with GAAP. Our Nareit FFO, Nareit FFO Attributable to Stockholders and MFFO,OP Unit Holders, and Core FFO, as presented, may not be comparable to amounts calculated by other REITs.
The following sectiontable presents our calculation of Nareit FFO Attributable to Stockholders and MFFOOP Unit Holders, and provides additional information related to our operations for the three and nine months ended September 30, 2017 and 2016Core FFO (in thousands, except per share amounts):
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders        
Net income (loss)$6,390 $(6,413)$6,507 $4,786 
Adjustments:
Depreciation and amortization of real estate assets55,654 54,892 109,995 109,709 
Impairment of real estate assets1,056 — 6,056 — 
(Gain) loss on disposal of property, net(3,744)541 (17,585)2,118 
Adjustments related to unconsolidated joint ventures537 940 (100)1,594 
Nareit FFO attributable to stockholders and OP unit holders$59,893 $49,960 $104,873 $118,207 
Calculation of Core FFO        
Nareit FFO attributable to stockholders and OP unit holders$59,893 $49,960 $104,873 $118,207 
Adjustments:        
Depreciation and amortization of corporate assets933 1,478 1,933 2,888 
Change in fair value of earn-out liability2,000 — 18,000 (10,000)
Amortization of unconsolidated joint venture
   basis differences		79 254 825 721 
Loss on extinguishment of debt, net419 — 1,110 73 
Transaction and acquisition expenses934 14 1,075 59 
Core FFO$64,258 $51,706 $127,816 $111,948 
Nareit FFO Attributable to Stockholders and OP Unit Holders/Core FFO per Share(1)
Weighted-average common shares outstanding - diluted107,175 111,165 107,102 111,140 
Nareit FFO attributable to stockholders and OP unit holders
   per share - diluted		$0.56 $0.45 $0.98 $1.06 
Core FFO per share - diluted$0.60 $0.47 $1.19 $1.01 
 Three Months Ended September 30, Nine Months Ended September 30,
 2017
2016
2017
2016
Calculation of FFO  
  
  
  
Net (loss) income attributable to stockholders$(8,232) $2,464

$(8,319) $5,243
Adjustments:   
   
Depreciation and amortization of real estate assets28,650
 26,583

84,481
 78,266
Noncontrolling interests(410) (397)
(1,244)
(1,171)
FFO attributable to common stockholders$20,008
 $28,650

$74,918

$82,338
Calculation of MFFO  

  

  

  
FFO$20,008
 $28,650

$74,918

$82,338
Adjustments:  

  

  

  
Acquisition expenses202
 870
 466
 2,392
Net amortization of above- and below-market leases(286) (354) (972) (936)
Gain on extinguishment of debt(43) (184) (567) (79)
Straight-line rental income(970) (1,068) (2,913) (2,793)
Amortization of market debt adjustment(267) (285) (838) (1,631)
Change in fair value of derivatives(30) (98) (153) (66)
Transaction expenses3,737
 —
 9,760
 —
Termination of affiliate arrangements5,454
 —
 5,454
 —
Noncontrolling interests(53) 4
 (90) 47
MFFO attributable to common stockholders$27,752

$27,535

$85,065

$79,272
        
FFO/MFFO per share:       
Weighted-average common shares outstanding - basic183,843
 184,639
 183,402
 183,471
Weighted-average common shares outstanding - diluted(1)
186,502
 187,428
 186,150
 186,260
FFO per share - basic$0.11
 $0.16

$0.41

$0.45
FFO per share - diluted$0.11
 $0.15
 $0.40
 $0.44
MFFO per share - basic and diluted$0.15
 $0.15

$0.46

$0.43
(1)Restricted stock awards were dilutive to Nareit FFO Attributable to Stockholders and OP Unit Holders per share and Core FFO per share for the three and six months ended June 30, 2021 and 2020, and, accordingly, their impact was included in the weighted-average common shares used in their respective per share calculations. For the three months ended June 30, 2020, restricted stock units had an anti-dilutive effect upon the calculation of earnings per share and thus were excluded. For details related to the calculation of earnings per share, see Note 10.    










(1)PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
OP units and restricted stock awards were dilutive to FFO/MFFO for the three and nine months ended September 30, 2017 and 2016, and, accordingly, were included in the weighted average common shares used to calculate diluted FFO/MFFO per share.36

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LiquidityEBITDAre and Capital ResourcesADJUSTED EBITDAre—We use EBITDAre and Adjusted EBITDAre as additional measures of operating performance which allow us to compare earnings independent of capital structure, determine debt service and fixed cost coverage, and measure enterprise value. Additionally, we believe they are a useful indicator of our ability to support our debt obligations.
GeneralEBITDAre and Adjusted EBITDAre should not be considered as alternatives to net income (loss), as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions. Accordingly, EBITDAre and Adjusted EBITDAre should be reviewed in connection with other GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Our EBITDAre and Adjusted EBITDAre, as presented, may not be comparable to amounts calculated by other REITs.
Our principal cash demands, asideThe following table presents our calculation of EBITDAre and Adjusted EBITDAre (in thousands):
Three Months Ended June 30,Six Months Ended June 30,Year Ended December 31,
 20212020202120202020
Calculation of EBITDAre
        
Net income (loss)$6,390 $(6,413)$6,507 $4,786 $5,462 
Adjustments:
Depreciation and amortization56,587 56,370 111,928 112,597 224,679 
Interest expense, net19,132 22,154 39,195 44,929 85,303 
(Gain) loss on disposal of property, net(3,744)541 (17,585)2,118 (6,494)
Impairment of real estate assets1,056 — 6,056 — 2,423 
Federal, state, and local tax expense165 180 331 209 491 
Adjustments related to unconsolidated
   joint ventures		(535)1,391 597 2,568 3,355 
EBITDAre
$79,051 $74,223 $147,029 $167,207 $315,219 
Calculation of Adjusted EBITDAre
        
EBITDAre
$79,051 $74,223 $147,029 $167,207 $315,219 
Adjustments:        
Change in fair value of earn-out liability2,000 — 18,000 (10,000)(10,000)
Transaction and acquisition expenses934 14 1,075 59 539 
Amortization of unconsolidated joint
   venture basis differences		79 254 825 721 1,883 
Other impairment charges— — — — 359 
Adjusted EBITDAre
$82,064 $74,491 $166,929 $157,987 $308,000 


LIQUIDITY AND CAPITAL RESOURCES
GENERAL—Aside from standard operating expenses, are for we expect our principal cash demands to be for:
•cash distributions to stockholders;
•investments in real estate, estate;
•capital expenditures repurchases of common stock, distributions to stockholders, and leasing costs;
•redevelopment and repositioning projects; and
•principal and interest payments on our outstanding indebtedness. indebtedness.
We intendexpect our primary sources of liquidity to usebe:
•net proceeds from our cash on hand, underwritten IPO;
•operating cash flows, and flows;
•proceeds received from the disposition of properties;
•proceeds from equity and debt financings, including borrowings under our unsecured revolving credit facility;
•distributions received from our unconsolidated joint ventures; and
•available, unrestricted cash and cash equivalents.
At this time, we believe our current sources of liquidity, most significantly the net proceeds from our underwritten IPO, our operating cash flows, and borrowing availability on our revolving credit facility, asare sufficient to meet our primary sources of immediateshort- and long-term liquidity. cash demands.








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UNDERWRITTEN INITIAL PUBLIC OFFERING—On October 4, 2017,July 19, 2021, we completed an underwritten IPO and issued 17.0 million shares of common stock at an offering price of $28.00 per share. We used a portion of the net proceeds to reduce our leverage and expect to use the remaining amount to fund external growth with property acquisitions and for other general corporate uses. As part of the underwritten IPO, underwriters were granted an option exercisable within 30 days from July 14, 2021 to purchase up to an additional 2.55 million shares of common stock at the underwritten IPO price, less underwriting discounts and commissions. On July 29, 2021, the underwriters exercised their option.
DEBT—The following table summarizes information about our debt as of June 30, 2021 and December 31, 2020 (dollars in thousands):
   June 30, 2021December 31, 2020
Total debt obligations, gross$2,241,495 $2,307,686 
Weighted-average interest rate2.9 %3.1 %
Weighted-average term (in years)3.7 4.1 
Revolving credit facility capacity(1)
$500,000 $500,000 
Revolving credit facility availability(2)
489,329 490,404 
(1)In July 2021, we refinanced the revolving credit facility and exercised our option to extend its maturity as noted below.
(2)Net of any outstanding balance and letters of credit.
In July 2021, we took steps to reduce our leverage, lower our cost of debt, and appropriately ladder our debt maturities as follows:
•On July 2, 2021, we completed the PELP transaction. UnderRefinancing. In connection with the terms ofRefinancing, we paid off the agreement,$472.5 million term loan due in 2025. The revolving credit facility will mature in January 2026, and the two senior unsecured term loan tranches will mature in November 2025 and July 2026, respectively.
•On July 20, 2021, we issued 39.6used proceeds from the underwritten IPO to retire our $375.0 million OP units, assumed $501 million of debt,term loan maturing in 2022.
We have been assigned investment grade ratings from Moody’s Investors Service (Baa3) and paidS&P Global Ratings (BBB-) which may allow us access to additional capital markets. We expect to save approximately $25$7.2 million in cash (see Note 3 to the consolidated financial statements).
As of September 30, 2017, we had cash and cash equivalents of $7.2 million, a net cash decrease of $1.0 million during the nine months ended September 30, 2017.


Operating Activities
Our net cash provided by operating activities consists primarily of cash inflows from tenant rental and recovery payments and cash outflows for property operating expenses, real estate taxes, general and administrative expenses, and interest payments.
Our cash flows from operating activities were $67.5 million for the nine months ended September 30, 2017, compared to $85.2 million for the same period in 2016. The decrease primarily resulted from having a net loss, which was due to increased expenses related to the redemption of unvested Class B units at the estimated value per share on the date of termination, that had been earned by our former advisor for historical asset management services (see Note 9 to the consolidated financial statements), and expenses related to the PELP transaction.
Investing Activities
Net cash flows from investing activities are affected by the nature, timing, and extent of improvements to, as well as acquisitions and dispositions of, real estate and real estate-related assets, as we continue to evaluate the market for available properties and may acquire properties when we believe strategic opportunities exist.
Our net cash used in investing activities was $97.4 million for the nine months ended September 30, 2017, compared to $148.8 million for the same period in 2016. The decrease in cash used primarily resulted from the release of $35.9 million from restricted cash due to the completion of a reverse Section 1031 like-kind exchange, which originated from the sale of a property in December 2016.
During the nine months ended September 30, 2017, we acquired six shopping centers for a total cash outlay of $111.7 million. During the same period in 2016, we acquired three shopping centers and additional real estate adjacent to previously acquired shopping centers for a total cash outlay of $132.3 million.
Financing Activities
Net cash flows from financing activities are affected by payments of distributions, share repurchases, principal and other payments associated with our outstanding debt, and borrowings during the period. As our debt obligations mature, we intend to refinance the remaining balance, if possible, or pay off the balances at maturity using proceeds from operations and/or corporate-level debt. Our net cash provided by financing activities was $28.9 million for the nine months ended September 30, 2017, compared to net cash flow provided by financing activities of $44.3 million for the same period in 2016. The decrease in cash provided by financing activities primarily resulted from increased share repurchases in January 2017, as well as increased cash distributionsannually as a result of fewer investors participating in the DRIP. The decrease was also due to the redemption of OP units that had been earned by our former advisor for historical asset management services. These cash flow decreases were partially offset by an increase in net borrowings.
As of September 30, 2017, our debt activity and our investment grade ratings. Further, our weighted-average interest rate was 3.1% as of June 30, 2021, as adjusted to reflect certain material July debt transactions described above.
The allocation of total enterprise value was 39.1%. Debt to total enterprise value is calculateddebt between fixed-rate and variable-rate as net debt (total debt,well as between secured and unsecured, excluding below-marketmarket debt adjustments and deferred financing costs, less cashexpenses, net, and cash equivalents) as a percentageincluding the effects of enterprise value (equity value, calculated as diluted shares outstanding multiplied by the estimated value per share of $10.20derivative financial instruments (see Notes 7 and 12) as of SeptemberJune 30, 2017, plus net debt).2021 and December 31, 2020 is summarized below. We have also presented this allocation as of June 30, 2021 on an adjusted basis to reflect certain material July debt transactions described above (in thousands):
   June 30, 2021
 June 30, 2021
(As Adjusted)
December 31, 2020
As to interest rate:
Fixed-rate debt$1,548,995 $1,548,995 $1,727,186
Variable-rate debt692,500 325,000 580,500
Total$2,241,495 $1,873,995 $2,307,686
As to collateralization:
Unsecured debt$1,622,500 $1,255,000 $1,622,500
Secured debt618,995 618,995 685,186
Total  $2,241,495 $1,873,995 $2,307,686
Our maturity schedule as of June 30, 2021 with respective principal payment obligations, excluding finance lease liabilities, market debt adjustments, and deferred financing expenses, is subjectpresented below on an adjusted basis to reflect certain covenants, as disclosed in our 2016 Annual Report on Form 10-K filed with the SEC on March 9, 2017. Asmaterial July debt transactions described above (in thousands):
20212022202320242025ThereafterTotal
Term loans$— $— $300,000 $475,000 $240,000 $240,000 $1,255,000 
Secured debt10,068 61,171 66,702 28,124 27,877 424,925 618,867 
Total$10,068 $61,171 $366,702 $503,124 $267,877 $664,925 $1,873,867 








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Table of September 30, 2017, we were in compliance with the restrictive covenants of our outstanding debt obligations. Contents
FINANCIAL LEVERAGE RATIOS—We expect to continue to meet the requirements ofbelieve our debt covenants over the short- and long-term. Ourto Adjusted EBITDAre, debt to total enterprise value, and debt covenant compliance as of SeptemberJune 30, 2017,2021 allow us access to future borrowings as needed.needed in the near term. The following table presents our calculation of net debt and total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our unconsolidated joint ventures, as of June 30, 2021 and December 31, 2020 (in thousands):
We have access to a revolving credit facility with a capacity of $500 million and a current interest rate of LIBOR plus 1.3%. As of September 30, 2017, $121.0 million was available for borrowing under
June 30, 2021December 31, 2020
Net debt:
Total debt, excluding market adjustments and deferred financing expenses$2,272,268 $2,345,620 
Less: Cash and cash equivalents22,633 104,952 
Total net debt$2,249,635 $2,240,668 
Enterprise value:
Net debt$2,249,635 $2,240,668 
Total equity value(1)
3,386,803 2,797,234 
Total enterprise value$5,636,438 $5,037,902 
(1)Total equity value is calculated as the revolving credit facility. In October 2017, the maturity date of the revolving credit facility was extended to October 2021, with additional options to extend the maturity to October 2022.
To increase the availability on our revolving credit facility and refinance the corporate debt assumed from the PELP transaction, we entered into two new term loan agreements that have principal balances of $310 million, with a delayed draw feature for a total capacity of $375 million, and $175 million that mature in April 2022 and October 2024, respectively. We also entered into two new secured loan facilities with principal balances of $175 million and $195 million that mature in November 2026 and November 2027, respectively. For more information regarding these loans, see Note 6 to the consolidated financial statements.
We offer an SRP that provides a limited opportunity for stockholders to have sharesnumber of common stock repurchased, subjectshares and OP units outstanding multiplied by the EVPS as of June 30, 2021 and December 31, 2020, respectively. There were 107.0 million diluted shares outstanding with an EVPS of $31.65 as of June 30, 2021 and 106.6 million diluted shares outstanding with an EVPS of $26.25 as of December 31, 2020.
The following table presents our calculation of net debt to certain restrictionsAdjusted EBITDAre and limitations. Fornet debt to total enterprise value as of June 30, 2021 and December 31, 2020 (dollars in thousands):
June 30, 2021December 31, 2020
Net debt to Adjusted EBITDAre - annualized:
Net debt$2,249,635$2,240,668
Adjusted EBITDAre - annualized(1)
316,942308,000
Net debt to Adjusted EBITDAre - annualized
7.1x7.3x
Net debt to total enterprise value
Net debt$2,249,635$2,240,668
Total enterprise value5,636,4385,037,902
Net debt to total enterprise value39.9%44.5%
(1)Adjusted EBITDAre is based on a more detailed discussion of our SRP, see Note 9 to the consolidated financial statements.


Activity related to distributions to our common stockholders for the nine months ended September 30, 2017 and 2016, is as follows (in thousands):
 2017 2016
Gross distributions paid$92,397
 $92,266
Distributions reinvested through the DRIP36,171
 44,731
Net cash distributions$56,226
 $47,535
Net (loss) income attributable to stockholders$(8,319) $5,243
Net cash provided by operating activities$67,522
 $85,179
FFO(1)
$74,918
 $82,338
(1) trailing twelve month period. See “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - Funds from Operations EBITDAre and Modified Funds from Operations,Adjusted EBITDAre” of this filing on Form 10-Q for a reconciliation to Net Income (Loss).
CAPITAL EXPENDITURES AND REDEVELOPMENT ACTIVITY—We make capital expenditures during the definitioncourse of FFO, information regarding why we present FFO,normal operations, including maintenance capital expenditures and tenant improvements, as well as forvalue-enhancing anchor space repositioning and redevelopment, ground-up outparcel development, and other accretive projects.
During the six months ended June 30, 2021 and 2020, we had capital spend of $30.2 million and $28.5 million, respectively. Generally, we expect our development and redevelopment projects to stabilize within 24 months. We anticipate that obligations related to capital improvements as well as redevelopment and development in 2021 can be met with cash flows from operations, cash flows from dispositions, or borrowings on our unsecured revolving line of credit. Below is a reconciliationsummary of our capital spending activity, excluding leasing commissions, on a cash basis (dollars in thousands):
Six Months Ended June 30,
2021   2020
Capital expenditures for real estate(1):
Capital improvements$3,101 $2,142 
Tenant improvements9,557 5,840 
Redevelopment and development15,658 18,659 
Total capital expenditures for real estate28,316 26,641 
Corporate asset capital expenditures1,007 810 
Capitalized indirect costs(1)
907 1,089 
Total capital spending activity$30,230 $28,540 
(1)Amount includes internal salaries and related benefits of personnel who work directly on capital projects as well as capitalized interest expense.
Our underwritten incremental yields on development and redevelopment projects are expected to range between 9% - 11%. Our current in process projects represent an estimated total investment of $36.3 million, and the total underwritten incremental yield range on this estimated investment is approximately 9.5% - 10.5%. Actual incremental yields may vary








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from our underwritten incremental yield range based on the actual total cost to complete a project and its actual incremental annual NOI at stabilization. See “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators and Defined Terms” and “Part II, Item 1A. Risk Factors” of this non-GAAP financial measurefiling on Form 10-Q for further information.
ACQUISITION ACTIVITY—We continually monitor the commercial real estate market for properties that have future growth potential, are located in attractive demographic markets, and support our business objectives. The following table highlights our property acquisitions (dollars in thousands):
Six Months Ended June 30,
20212020
Number of properties acquired2 — 
Number of outparcels acquired(1)
3 2
Total acquisition price$40,459 $4,343 
(1)Outparcels acquired are adjacent to Netshopping centers that we own.
DISPOSITION ACTIVITY—We are actively evaluating our portfolio of assets for opportunities to make strategic dispositions of assets that no longer meet our growth and investment objectives or assets that have stabilized in order to capture their value. We expect to continue to make strategic dispositions during the remainder of 2021. The following table highlights our property dispositions (dollars in thousands):
Six Months Ended June 30,
20212020
Number of properties sold(1)
13 4 
Number of outparcels sold(2)(3)
1 — 
Proceeds from sale of real estate$119,638 $25,778 
Gain (loss) on sale of property, net(4)
18,713 (1,436)
(1)We retained an outparcel for one property sold during the six months ended June 30, 2021, and therefore the sale did not result in a reduction in our total property count.
(2)One outparcel sold during the six months ended June 30, 2021 was the only remaining portion of one of our properties, and therefore the sale resulted in a reduction in our total property count.
(3)In addition to the one outparcel sold during the six months ended June 30, 2021, a tenant at one of our properties exercised a bargain purchase option to acquire a parcel of land that we previously owned. This generated minimal proceeds for us.
(4)The gain (loss) on sale of property, net does not include miscellaneous write-off activity, which is also recorded in Gain (Loss) Incomeon Disposal of Property, Net on the consolidated statements of operations.








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DISTRIBUTIONS—Distributions to our common stockholders and OP unit holders, including key financial metrics for comparison purposes, for the six months ended June 30, 2021 and 2020, are as follows (in thousands):
cik0001476204-20210630_g7.jpg
Cash distributions to OP unit holdersNet cash provided by operating activities
Cash distributions to common stockholders
Core FFO(1)
Distributions reinvested through the DRIP
(1)See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators” for the definition of Core FFO, or information regarding why we present Core FFO. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - Nareit FFO and Core FFO” for a reconciliation of this non-GAAP financial measure to Net Income (Loss).
We paid monthly distributions of $0.085 per share, or $1.02 annualized, for the months of December 2020, and each month beginning January 2021 through July 2021. On August 4, 2021, the Board authorized a monthly and expect to continue paying distributions monthly unless our results of operations, our general financial condition, general economic conditions, or other factors, as determined by our Board, make it imprudent to do so. The timing anddistribution in the amount of distributions is determined by our Board and is influenced in part by our intention$0.085 per share payable on September 1, 2021 to comply with REIT requirementsstockholders of record at the Internal Revenue Code. close of business on August 16, 2021.
To maintain our qualification as a REIT, we must make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain, and which does not necessarily equal net income (loss)or loss as calculated in accordance with GAAP). We generally will not be subject to U.S. federal income tax on the income that we distribute to our stockholders each year due to meeting the REIT qualification requirements. However, we may be subject to certain state and local taxes on our income, property, or net worth and to federal income and excise taxes on our undistributed income.
We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders.

Critical Accounting Policies
Real Estate Acquisition AccountingDRIP AND THE SRP—In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition ofOn August 4, 2021, as a Business. This update amends existing guidance in order to clarify when an integrated set of assets and activities is considered a business. We adopted ASU 2017-01 on January 1, 2017, and applied it prospectively. Under this new guidance, mostresult of our real estate acquisition activity will no longer be considered a business combination and will instead be classified as an asset acquisition. As a result, most acquisition-related costs that would have been recorded onunderwritten IPO, our consolidated statements of operations have been capitalized and will be amortized overBoard approved the lifetermination of the related assets.DRIP and the SRP. The DRIP has been suspended since April 2021. The SRP, which was limited to repurchases resulting from the DDI of stockholders, has been suspended since March 2021, and the SRP for standard repurchases had been suspended since August 2019.
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CASH FLOW ACTIVITIES—As of June 30, 2021, we had cash and cash equivalents and restricted cash of $111.4 million, a net cash decrease of $20.5 million during the six months ended June 30, 2021.
Below is a summary of allour cash flow activity (dollars in thousands):
Six Months Ended June 30,
20212020$ Change% Change
Net cash provided by operating activities$129,897 $89,906 $39,991 44.5 %
Net cash provided by (used in) investing activities49,837 (6,466)56,303 NM
Net cash used in financing activities(200,270)(99,218)(101,052)101.8 %
OPERATING ACTIVITIES—Our net cash provided by operating activities was primarily impacted by the following:
•Property operations and working capital—Most of our critical accounting policies, referoperating cash comes from rental and tenant recovery income and is offset by property operating expenses, real estate taxes, and general and administrative costs. During the six months ended June 30, 2021, we had a net cash inflow of $2.1 million from changes in working capital as compared to a net cash outlay of $24.3 million during the same period in 2020. This change was primarily driven by improved collections on amounts due from Neighbors as well as expense reduction initiatives, and was partially offset by higher leasing commissions. Additionally, we had an increase in returns on our 2016investments in unconsolidated joint ventures.
•Fee and management income—We also generate operating cash from our third-party investment management business, pursuant to various management and advisory agreements between us and the Managed Funds. Our fee and management income was $4.7 million for the six months ended June 30, 2021, a decrease of $0.3 million as compared to the same period in 2020.
•Cash paid for interest—During the six months ended June 30, 2021, we paid $36.8 million for interest, a decrease of $4.1 million over the same period in 2020, largely due to: (i) lower borrowings as a result of early repayments of debt; (ii) the repayment of our draw on the revolver during the second quarter of 2020; and (iii) lower interest rates due to the decrease in LIBOR and expiring interest rate swaps.
INVESTING ACTIVITIES—Our net cash provided by (used in) investing activities was primarily impacted by the following:
•Real estate acquisitions—During the six months ended June 30, 2021, our acquisitions resulted in a total cash outlay of $40.5 million, as compared to a total cash outlay of $4.3 million during the same period in 2020.
•Real estate dispositions—During the six months ended June 30, 2021, our dispositions resulted in a net cash inflow of $119.6 million, as compared to a net cash inflow of $25.8 million during the same period in 2020.
•Capital expenditures—We invest capital into leasing our properties and maintaining or improving the condition of our properties. During the six months ended June 30, 2021, we paid $30.2 million for capital expenditures, an increase of $1.7 million over the same period in 2020, primarily due to the timing of our development and redevelopment projects and reduced spend during the same period period a year ago.
•Return of investment in unconsolidated joint ventures—During the six months ended June 30, 2021, we had a return of investment in unconsolidated joint ventures of $3.9 million, including $2.0 million in connection with NRP primarily as a result of property dispositions. During the six months ended June 30, 2020, we had a return of investment in unconsolidated joint ventures of $0.6 million.
•Investment in third parties—During the six months ended June 30, 2021, we made an investment in a third party business that resulted in a net cash outflow of $3.0 million.
FINANCING ACTIVITIES—Our net cash used in financing activities was primarily impacted by the following:
•Debt borrowings and payments—During the six months ended June 30, 2021, we had $66.2 million in net repayment of debt primarily as a result of early repayments of mortgage loans. During the six months ended June 30, 2020 we had net payments of $35.2 million, primarily as a result of a pay down in January 2020 of $30.0 million on term loan debt maturing in 2021.
•Distributions to stockholders and OP unit holders—Cash used for distributions to common stockholders and OP unit holders decreased $2.3 million for the six months ended June 30, 2021 as compared to the same period in 2020, due to a reduction of the distribution rate.
•Share repurchases—Cash outflows for share repurchases increased by $72.6 million for the six months ended June 30, 2021 as compared to the same period in 2020, primarily as a result of a tender offer, which was settled in January 2021.









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CONTRACTUAL COMMITMENTS AND CONTINGENCIES
We have debt obligations related to both our secured and unsecured debt. In addition, we have operating leases pertaining to office equipment for our business as well as ground leases at certain of our shopping centers. We are presenting our future contractual commitments and contingencies as of June 30, 2021 on an adjusted basis to reflect our material debt transactions occurring in July 2021 (see Note 6 for more details). The table below excludes obligations related to tenant allowances and improvements because such amounts are not fixed or determinable. However, we believe we currently have sufficient financing in place to fund any such amounts as they arise through cash from operations or borrowings. The following table details our pro forma contractual obligations as of June 30, 2021 (in thousands):
   Payments Due by Period
   Total20212022202320242025Thereafter
Debt obligations - principal
   payments(1)
$1,873,867 $10,068 $61,171 $366,702 $503,124 $267,877 $664,925 
Debt obligations - interest
   payments(2)
236,284 27,875 53,942 48,516 36,736 24,323 44,892 
Operating lease obligations8,713 424 823 672 546 317 5,931 
Finance lease obligations134 25 45 40 24 — — 
Total   $2,118,998 $38,392 $115,981 $415,930 $540,430 $292,517 $715,748 
(1)In July 2021, we amended our $500 million revolving credit facility to extend the maturity from October 2021 to January 2026, and lower the interest rate spread from 1.40% over LIBOR to 1.35% over LIBOR. Additionally, the new terms include two six-month maturity extension options. As of June 30, 2021, we have 0 outstanding balance on our revolving credit facility.
(2)Future variable-rate interest payments are based on interest rates as of June 30, 2021, including the impact of our swap agreements.
Our portfolio debt instruments and the unsecured revolving credit facility contain certain covenants and restrictions. The following list provides an update to certain restrictive covenants specific to the unsecured revolving credit facility and unsecured term loans that were deemed significant as a result of our debt activity occurring in July 2021:
•limits the ratio of total debt to total asset value, as defined, to 60% or less with a surge to 65% for a period of four consecutive fiscal quarters following a material acquisition;
•limits the ratio of secured debt to total asset value, as defined, to 35% or less with a surge to 40% for a period of four consecutive fiscal quarters following a material acquisition;
•requires the fixed-charge ratio, as defined, to be 1.5:1 or greater
•limits the ratio of cash dividend payments to Nareit FFO, as defined, to 95%;
•limits the ratio of unsecured debt to unencumbered total asset value, as defined, to 60% or less with a surge to 65% for a period of four consecutive fiscal quarters following a material acquisition;
•requires the unencumbered NOI to interest expense ratio, as defined, to be 1.75:1 or greater; and
•if we were to lose our investment grade rating in the future, the current tangible net worth will be required to exceed the minimum tangible net worth, as defined, at that time.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our 2020 Annual Report on Form 10-K, originally filed with the SEC on March 9, 2017.
Recently Issued Accounting Pronouncements—Refer to Note 212, 2021, contains a description of our consolidated financial statements in this report for discussioncritical accounting policies and estimates, including those relating to real estate acquisitions, rental income, and the valuation of the impact of recently issuedreal estate assets. There have been no significant changes to our critical accounting pronouncements.policies during 2021.


ItemITEM 3. Quantitative and Qualitative Disclosures About Market RiskQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We utilize interest rate swaps in order to hedge a portion of our exposure to interest rate fluctuations through the utilization of interest rate swaps in order to mitigate the risk of this exposure.fluctuations. We do not intend to enter into derivative or interest rate transactions for speculative purposes. Our hedging decisions are determined based upon the facts and circumstances existing at the time of the hedge and may differ from our currently anticipated hedging strategy. Because we use derivative financial instruments to hedge against interest rate fluctuations, we may be exposed to both credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.


As of SeptemberJune 30, 2017,2021, we had fourfive interest rate swaps that fixed the LIBOR on $642$930 million of our unsecured term loan facilities, andfacilities. In July 2021, we were party to an interest rate swap that fixed the variable interest ratepaid down $375 million in unsecured term loan debt using proceeds from our underwritten IPO. Taking into effect our pay down of this unsecured term loan as if such pay down occurred on $10.8 million of one of our secured mortgage notes. We had no other outstanding interest rate swap agreements June 30, 2021 (“as of September 30, 2017.
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fixed the interest rate on $392.0$325 million of our unsecured debt through derivative financial instruments, andinstruments. Further, as of June 30, 2021, we estimate that a result, we are subject to the potential impact of rising interest rates, which could negatively impact our profitability and cash flows. The impact on our results of operations of a one-percentageone percentage point increase in interest rates on the outstanding balance of our variable-ratevariable rate debt at September 30, 2017,(as adjusted) would result in approximately $3.9$3.3 million of additional interest expense annually.
The additional interest expense was determined based on the impact of hypothetical interest rates on our borrowing cost and assumes no changes in our capital structure.
Upon completionstructure, other than the effect of the PELP transaction, we entered into two new variable-rate term loans with principal balances of $310 million and $175 million that mature in April 2022 and October 2024, respectively. On October 27, 2017, we entered into an interest rate swap agreement with a notional amount of $175 million that fixed the interest rate on theunsecured term loan maturing in 2022 at 3.29%. Also on October 27, 2017, we entered into an interest rate swap with a notional amountpay down as described above. For further discussion of $175 million that fixed the interest rate on the term loan maturing in 2024 at 3.93%. Thesecertain quantitative details related to our interest rate swaps, were effective November 1, 2017.see Note 7.
The information presented above does not consider all exposures or positions that could arise inSee “Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk” of our 2020 Annual Report on Form 10-K originally filed with the future. Hence, the information represented herein has limited predictive value. As a result, the ultimate realized gain or lossSEC on March 12, 2021 for more details associated with respectour exposure to interest rate fluctuations will depend on the exposures that arise during the period, the hedging strategies at the time,credit risk and the related interest rates.market risk.
We do not have any foreign operations, and thus we are not exposed to foreign currency fluctuations.
ItemITEM 4. Controls and ProceduresCONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of SeptemberJune 30, 2017.2021. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of SeptemberJune 30, 2017.2021.
Changes in Internal Control Changesover Financial Reporting
During the quarter ended SeptemberJune 30, 2017,2021, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II.     OTHER INFORMATION
wPART II OTHER INFORMATION

ItemITEM 1. Legal ProceedingsLEGAL PROCEEDINGS
WeFrom time to time, we are involved in various claims and litigation matters arisingparty to legal proceedings, which arise in the ordinary course of business, some ofour business. We are not currently involved in any legal proceedings for which involve claims for damages. Many of these matterswe are not covered by our liability insurance although they may nevertheless be subjector the outcome is reasonably likely to deductibles or retentions. Although the ultimate liability for these matters cannot be determined, based upon information currently available, we believe the ultimate resolution of such claims and litigation will not have a material adverse effectimpact on our consolidatedresults of operations or financial statements,condition, nor are we aware of any such legal proceedings contemplated by governmental authorities.


ITEM 1A. RISK FACTORS
The following risk factor supplements the risk factors set forth in our 2020 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 12, 2021. Except to the extent updated below or previously updated, or to the extent additional factual information disclosed elsewhere in our Quarterly Report on Form 10-Q relates to such risk factors (including, without limitation, the matters discussed in “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”), there were no material changes to the risk factors disclosed in “Part I, Item 1A. Risk Factors
For a listing of risk factors associated with investing in us, please see Item 1A. Risk Factors in Part IFactors” of our 20162020 Annual Report on Form 10-K filed with the SEC on March 9, 2017,12, 2021.
The ongoing COVID-19 pandemic has had, and is expected to continue to have, a negative effect on our and our Neighbors’ businesses, financial condition, results of operations, cash flows, and liquidity.
In March 2020, the World Health Organization declared COVID-19 a global pandemic. The COVID-19 pandemic has caused, and is expected to continue to cause, significant disruptions to the United States and global economy and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak is continually evolving and, as additional cases of the virus are identified, many countries, including the United States, reacted by instituting quarantines, restrictions on travel, and/or mandatory closures of businesses. Certain states and cities, including where our properties are located, also reacted by instituting quarantines, restrictions on travel, “shelter-in-place” or “stay-at-home” rules, restrictions on types of businesses that may continue to operate, and/or restrictions on the types of construction projects that may continue. In May 2020, many state and local governments began lifting, in whole or in part, the “stay-at-home” mandates, effectively removing or lessening the limitations on travel and allowing many businesses to reopen in full or limited capacity.
The COVID-19 pandemic has impacted our business and financial performance, and we expect this impact to continue. Our retail and service-based tenants (whom we refer to as a “Neighbor” or our “Neighbors”) depend on in-person interactions with their customers to generate unit-level profitability, and the risk factors listed below:COVID-19 pandemic has decreased, and may continue to decrease, customers’ willingness to frequent, and mandated “shelter-in-place” or “stay-at-home” orders may prevent customers from frequenting our Neighbors’ businesses, which may result in their inability to maintain profitability and make timely rental payments to us under their leases or to otherwise seek lease modifications or to declare bankruptcy. At the peak of the pandemic-related closure activity, for our wholly-owned properties and those owned through our joint ventures, our temporary closures reached approximately 37% of all Neighbor spaces, totaling 27% of our annualized base rent (“ABR”) and 22% of our gross leasable area (“GLA”). All temporarily closed Neighbors have since been permitted to reopen; however, there are








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continuing economic impacts from the COVID-19 pandemic which could result in future store closures or could reduce the demand for leasing space in our shopping centers.
While most of our Neighbors have reopened, we cannot presently determine how many of the Neighbors that remain closed will reopen, or whether a portion of those that have reopened will be required by government mandates to temporarily close again or will encounter financial difficulties that require them to close permanently. We recently transitionedbelieve substantially all Neighbors, including those that were required to temporarily close under governmental mandates, are contractually obligated to continue with their rent payments as documented in our lease agreements with them. However, we believe it is best to begin negotiation of relief only once a self-managed real estate investment trustNeighbor has reopened and made payments toward rent and recovery charges accrued. Inclusive of our prorated share of properties owned through our joint ventures, as of July 20, 2021, we have limited operating experience being self-managed.
Effective October 4, 2017,$5.3 million of outstanding payment plans with our Neighbors, and we transitionedhad recorded rent abatements of approximately $0.7 million during 2021. These payment plans and rent abatements represented approximately 2.0% and 0.3% of portfolio rental income for the six months ended June 30, 2021, respectively. As of July 20, 2021, approximately 54% of payments are scheduled to a self-managed real estate investment trust following the closing of a transaction to acquire certain real estate assetsbe received by December 31, 2021 for all executed payment plans, and the third-party asset management businessweighted-average term over which we expect to receive remaining amounts owed on executed payment plans is approximately twelve months. We are still actively pursuing past due amounts under the terms negotiated with our Neighbors. We are in negotiations with additional Neighbors, which we believe will lead to more Neighbors repaying their past due charges. As of Phillips Edison Limited Partnership (“PELP”)July 20, 2021, we have collected approximately 95% of rent and recoveries billed during the second through fourth quarters of 2020, and approximately 98% of rent and recoveries billed during the first and second quarters of 2021. In the event of any default by a Neighbor under its lease agreement or relief agreement, we may not be able to fully recover, and/or may experience delays in a stockrecovering and cash transaction (“PELP transaction”). While we no longer bearadditional costs in enforcing our rights as landlord to recover, amounts due to us under the coststerms of the various feeslease agreement and/or relief agreement.
Moreover, the ongoing COVID-19 pandemic, restrictions intended to prevent and mitigate its spread, resulting consumer behavior, and the economic slowdown or recession could have additional adverse effects on our business, including with regards to:


expense reimbursements previously paid to our former external advisor•the ability and its affiliates, our expenses now include the compensation and benefitswillingness of our officers, employeesNeighbors to renew their leases upon expiration, our ability to re-lease the properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing Neighbor, and consultants, as well as overhead previously paid by our former external advisor or their affiliates. Our employees now provide us services historically provided by our former external advisor and its affiliates. We are also now subject to potential liabilities that are commonly faced by employers, such as workers' disability and compensation claims, potential labor disputes, and other employee-related liabilities and grievances, andobligations we bearmay incur in connection with the costsreplacement of an existing Neighbor, particularly in light of the establishmentadverse impact to the financial health of many retailers and maintenance of any employee compensation plans. In addition, we have limited experience operating as a self-managed real estate investment trust (“REIT”)service providers that has occurred and we may encounter unforeseen costs, expenses, and difficulties associated with providing those services on a self-advised basis. If we incur unexpected expensescontinues to occur as a result of the COVID-19 pandemic and the significant uncertainty as to when and the conditions under which certain potential Neighbors will be able to operate physical retail locations in the future;
•a potential sustained or permanent increase in online shopping instead of shopping at physical retail properties, thereby reducing demand for space in our self-management,shopping centers and possible related reductions in rent or increased costs to lease space;
•the adverse impact of current economic conditions on the market value of our real estate portfolio and our third-party investment management business, and consequently on the estimated value per share of our common stock;
•the adverse impact of the current economic conditions on our ability to effect a liquidity event at an attractive price or at all in the near term and for a potentially lengthy period of time;
•the financial impact and continued economic uncertainty that could continue to negatively impact our ability to pay distributions to our stockholders and/or to repurchase shares;
•to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices or at all;
•anticipated returns from development and redevelopment projects, which have been prioritized to support the reopening of our Neighbors and new leasing activity, or deferred if possible;
•the broader impact of the severe economic contraction due to the COVID-19 pandemic, the resulting increase in unemployment that has occurred in the short-term and its effect on consumer behavior, and negative consequences that will occur if these trends are not reversed in a timely way;
•state, local, or industry-initiated efforts, such as a rent freeze for Neighbors or a suspension of a landlord’s ability to enforce evictions, which may affect our ability to collect rent or enforce remedies for the failure to pay rent;
•severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which could make it difficult for us to access debt and equity capital on attractive terms, or at all, and impact our ability to fund business operations and activities and repay liabilities on a timely basis;
•our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due, and our potential inability to comply with the financial covenants of our credit facility and other debt agreements, which could result in a default and potential acceleration of indebtedness and impact our ability to make additional borrowings under our credit facility or otherwise in the future; and
•the potential negative impact on the health of our personnel, particularly if a significant number of them and/or key personnel are impacted, and the potential impact of adaptations to our operations in order to protect our personnel, such as remote work arrangements, could introduce operational risk, including but not limited to cybersecurity risks, and could impair our ability to manage our business.
We may in the future choose to pay distributions in shares of our common stock rather than solely in cash, which may result in our stockholders having a tax liability with respect to such distributions that exceeds the amount of cash received, if any.








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While the rapid developments regarding the COVID-19 pandemic preclude any prediction as to its ultimate adverse impact, the current economic, political, and social environment presents material risks and uncertainties with respect to our and our Neighbors’ business, financial condition, results of operations, could be lower than they otherwise would have been. Furthermore, our results of operations following our transitioncash flows, liquidity, and ability to self-management may not be comparable to our results priorsatisfy debt service obligations. Moreover, to the transition.
Mr. Edison,extent any of these risks and uncertainties adversely impact us in the ways described above or his designee, will be nominated tootherwise, they may also have the boardeffect of directors (“Board”) for eachheightening many of the next ten succeedingother risks described under the section entitled “Item 1A. Risk Factors” in our most recent annual meetings, subject to certain terminating events.report on Form 10-K for the year ended December 31, 2020.

Actual incremental yields for our development and redevelopment projects may vary from our underwritten incremental yield range.
As part of our standard development and redevelopment underwriting process, we analyze the PELP transaction, Mr. Edison, or his designee, will be nominated to the Boardyield for each project and establish a range of target yields (“underwritten incremental yields”). Underwritten incremental yields reflect the yield we target to generate from each project upon expected stabilization and are calculated as the estimated incremental 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 from a project upon stabilization and the estimated annualized NOI without the planned improvements. Underwritten incremental yield does not include peripheral impacts, such as lease rollover risk or the impact on the long term value of the ten succeeding annual meetings, subject to certain terminating events, including theproperty upon sale or transferdisposition.
Underwritten incremental yields are based solely on our estimates, using data available to us in our development and redevelopment underwriting processes. The actual total cost to complete a development or redevelopment project may differ substantially from our estimates due to various factors, including unanticipated expenses, delays in the estimated start and/or completion date of more than 35%planned development projects, effects of the partnership units (“OP Units”) ofCOVID-19 pandemic, and other contingencies. In addition, the actual incremental NOI from our planned development and redevelopment activities may differ substantially from our estimates based on numerous other factors, including delays and/or difficulties in leasing and stabilizing a development or redevelopment project, failure to obtain estimated occupancy and rental rates, inability to collect anticipated rental revenues, Neighbor bankruptcies, and unanticipated expenses that we cannot pass on to our Neighbors. Actual incremental yields may vary from our underwritten incremental yield range based on the actual total cost to complete a project and its incremental NOI at stabilization.
We and our consolidated subsidiary, Phillips Edison Grocery Center Operating Partnership I, L. P. (“PECO I OP”L.P. (the “Operating Partnership”) that he beneficially owns. As a result, it is possible that Mr. Edison may continue to be nominated as a director in circumstances when the independent directors would not otherwise have done so.
Mr. Edison shall continue to serve as Chairman of the Board until the third anniversary of the closing of the PELP transaction, subject to, entered into tax protection agreements with certain terminating events.
Our bylaws provide that Mr. Edison will continue to serve as Chairman of the Board until the third anniversary of the closing of the PELP transaction, subject to certain terminating events, including the listing of our common stock on a national securities exchange. As a result, Mr. Edison may continue to serve as Chairman of the Board in circumstances when the independent directors would not otherwise have selected him.
Upon closing of the PELP transaction, the PECO I OP partnership agreement was amended to, among other things, grant certain rights and protections to the limitedprotected partners, which may prevent or delay a change of control transaction that might involve a premium price for our shares of common stock.  
The amended and restated PECO I OP partnership agreement, which, among other things, grants certain rights and protections tolimit the limited partners, including granting limited partners the right to consent to a change of control transaction. Furthermore, Mr. Edison currently has voting control over approximately 9.6% of the OP Units (inclusive of those owned by us) and therefore could have a significant influence over votes on change of control transactions. As part of the PELP transaction, we entered into certain provisions that should reduce the possibility that Mr. Edison or other protected partners (“Tax Protection Agreement”) would have an economic incentive to oppose a change of control transaction that would otherwise be in our best interest, we cannot be certain however that such limited partners would view a change of control transaction as favorably as our stockholders. The Tax Protection Agreement expires after ten years from the closing of the PELP transaction.
We have and will incur substantial expenses related to the PELP transaction and its integration.
We have incurred and will incur substantial expenses in connection with completing the PELP transaction. While we expected to incur a certain level of transaction and integration expenses, factors beyond our control could affect the total amount or the timing of its integration expenses. As a result, the transaction and integration expenses associated with the PELP transaction could, particularly in the near term, exceed the savings that we expect to achieve from the acquisition of the companies contributed under the PELP transaction (“Contributed Companies”) following the closing. If the expenses we incur as a result of the PELP transaction are higher than anticipated, our net income per common share and funds from operations per common share would be adversely affected.
Our future results will suffer if we do not effectively manage our expanded portfolio and operations.
There can be no assurance, however, regarding when or to what extent we will be able to realize the benefits of the PELP transaction, which may be difficult, unpredictable and subject to delays. We will be required to devote significant management attention and resources to integrating our business practices and operations with the Contributed Companies. It is possible that the integration process could result in the distraction of our management, the disruption of our ongoing business or inconsistencies in our operations, services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with operators, vendors and employees or to fully achieve the anticipated benefits of the PELP transaction. There may also be potential unknown or unforeseen liabilities, increased expenses, or delays associated with integrating the Contributed Companies into us.
With the closing of the PELP transaction, we have an expanded portfolio and operations, and likely will continue to expand our operations through additional acquisitions and other strategic transactions, some of which may involve complex challenges.


Our future success will depend, in part, upon our ability to manage expansion opportunities, integrate new operations into our existing business in an efficient and timely manner, successfully monitor our operations, costs, regulatory compliance and service quality and maintain other necessary internal controls. There can be no assurance that our expansion or acquisition opportunities will be successful, or that it will realize our expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits.
We may be unable to retain key employees.
Our success after the PELP transaction closing depends in part upon its ability to retain key employees. Key employees of the Contributed Companies and subsidiaries thereof may depart because of issues relating to the uncertainty and difficulty of integration. Accordingly, no assurance can be given that we will be able to retain key employees.
We may be exposed to risks to which we have not historically been exposed to.
We historically have not had employees. We now have employees following the consummation of the PELP transaction, and as their employer, we will be subject to those potential liabilities that are commonly faced by employers, such as workers disability and compensation claims, potential labor disputes and other employee-related liabilities and grievances. Further, we will bear the costs of the establishment and maintenance of health, retirement and similar benefit plans for our employees.
Following the closing of the PELP transaction, we agreed to honor and fulfill the rights to certain indemnification claims for acts or omissions occurring at or prior to the closing in favor of managers, directors, officers, trustees, agents or fiduciaries of any Contributed Company or subsidiary thereof.
We have agreed to honor and fulfill, following the closing, the rights to indemnification and exculpation from liabilities for acts or omissions occurring at or prior to the closing now existing in favor of a manager, director, officer, trustee, agent or fiduciary of any Contributed Company or subsidiary contained in (i) the organizational documents of the Contributed Companies and their subsidiaries and (ii) all existing indemnification agreements of the Contributed Companies and their subsidiaries. For six years after the closing, we may not amend, modify or repeal the organizational documents of the Contributed Companies and their subsidiaries in any way that would adversely affect such rights. We may incur substantial costs to address such claims and are limited in our ability to modify such indemnification obligations.
The estimated net asset value per common share may decline now or in the future as a result of the PELP transaction.
The estimated net asset value per common share may decline as a result of the PELP transaction for a number of reasons, including if we do not achieve the perceived benefits of the PELP transaction as rapidly or to the extent that is anticipated.
We cannot assure stockholders that we will be able to continue paying distributions at the rate currently paid.
We expect to continue our current distribution practices following the closing of the PELP transaction. Stockholders however, may not receive distributions following the closing of the PELP transaction equivalent to those previously paid by us for various reasons, including the following:
as a result of the PELP transaction and the issuance of OP Units in connection with the PELP transaction, the total amount of cash required for us to pay distributions at our current rate has increased;
we may not have enough cash to pay such distributions due to changes in our cash requirements, indebtedness, capital spending plans, cash flows or financial position or as a result of unknown or unforeseen liabilities incurred in connection with the PELP transaction;
decisions on whether, when and in what amounts to make any future distributions will remain at all times entirely at the discretion of the Board, which reserves the right to change our distribution practices at any time and for any reason; and
we may desire to retain cash to maintain or improve our credit ratings and financial position.
Existing and future stockholders have no contractual or other legal right to distributions that have not been declared.
We may have failed to uncover all liabilities of the Contributed Companies through the due diligence process prior to the PELP transaction, exposing us to potentially large, unanticipated costs.
Prior to completing the PELP transaction, we performed certain due diligence reviews of the business of PELP. Our due diligence review may not have adequately uncovered all of the contingent or undisclosed liabilities we may incur as a consequence of the PELP transaction. Any such liabilities could cause us to experience potentially significant losses, which could materially adversely affect our business, results of operations and financial condition.


The Tax Protection Agreement, during its term, could limit PECO I OP’sOperating Partnership’s ability to sell or otherwise dispose of certain propertiesshopping centers and may require PECO I OPthe Operating Partnership to maintain certain debt levels that otherwise would not be required to operate its business.
We and PECO I OPthe Operating Partnership entered into a Tax Protection Agreementtax protection agreement on October 4, 2017 (the “2017 TPA”) with, among others, Jeffrey S. Edison, our Chairman and Chief Executive Officer, and certain entities controlled by him at the closing of a transaction in May 2017 pursuant to which we internalized our management structure through the acquisition of certain real estate assets and the third party investment management business of Phillips Edison Limited Partnership in exchange for ownership units of the Operating Partnership (“OP units”) and cash. Pursuant to the 2017 TPA, if PECO I OPthe Operating Partnership: (i) sells, exchanges, transfers conveys or otherwise disposes of a Protected Property (as defined in the Tax Protection Agreement)certain shopping centers in a taxable transaction, or undertakes any taxable merger, combination, consolidation or similar transaction (including a transfer of all or substantially all assets), for a period of ten years commencing on the closing (the “Tax Protection Period”)October 4, 2017; or (ii) fails, prior to the expiration of the Tax Protection Period,such period, to maintain certain minimum levels of indebtedness that would be allocable to each Protected Partner (as defined in the Tax Protection Agreement)protected partner for tax purposes or, alternatively,under certain circumstances, fails to offer such Protected Partnerprotected partners the opportunity to guarantee specificcertain types of PECO I OP’sthe Operating Partnership’s indebtedness, in order to enable such Protected Partner to continue to defer certain tax liabilities, PECO I OPthen the Operating Partnership will indemnify each affected Protected Partnerprotected partner, including Mr. Edison, against certain resulting tax liabilities. Our tax indemnification obligations include a tax gross-up. As of June 30, 2021, 36 of our 272 wholly-owned properties, comprising approximately 11.4% of our ABR, are subject to the protection described in clause (i) above, and the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to such protection is approximately $152.6 million.
We and the Operating Partnership entered into an additional tax protection agreement (the “2021 TPA”) on July 19, 2021 with Mr. Edison; Devin I. Murphy, our President; and Robert F. Myers, our Chief Operating Officer and Executive Vice President, which will become effective upon the expiration of the 2017 TPA. The 2021 TPA generally has the following terms: (i) the 2021 TPA will severally provide to Mr. Edison, Mr. Murphy and Mr. Myers the same protection provided under the 2017 TPA until 2031, so long as (a) Mr. Edison, Mr. Murphy or Mr. Myers (or their permitted transferees), as applicable, individually owns at least 65% of the OP units owned by him as of the date of the execution of the 2021 TPA and (b) in the case of Mr. Murphy or Mr. Myers, Mr. Edison individually owns at least 65% of the OP units owned by him as of the date of the execution of the 2021 TPA; and (ii) the 2021 TPA will provide that following the expiration of the four-year tax protection period under the 2021 TPA, for so long as Mr. Edison holds at least $5.0 million in value of OP units, (a) Mr. Edison will have the opportunity to guarantee debt of the Operating Partnership or enter into a “deficit restoration” obligation, and (b) the Operating Partnership will provide reasonable notice to Mr. Edison before effecting a significant transaction reasonably likely to result in the recognition of more than one-third of the built-in gain allocated to Mr. Edison that is protected under the 2017 TPA as of the date that the 2021 TPA is executed, and will consider in good faith any proposal made by Mr. Edison relating to structuring such transaction in a manner to avoid or mitigate adverse tax consequences to him.
Therefore, although it may be in theour stockholders’ best interest for us to cause PECO I OPthe Operating Partnership to sell, exchange, transfer convey or otherwise dispose of one or more of these properties,shopping centers, it may be economically prohibitive for us to do so duringuntil the Tax Protection Periodexpiration of the applicable protection period because of these indemnity obligations. Moreover, these obligations may require us to cause PECO I OPthe Operating Partnership to maintain more or different indebtedness than we would otherwise require for our business. As a result, the Tax Protection Agreement will,tax protection agreements could, during itstheir term, restrict our ability to take actions or make decisions that otherwise would be in our best interests.
If PECO I OP fails to qualify as a partnership for U.S. federal income tax purposes, we would fail to qualify as a REIT and suffer other adverse consequences.
We believe that PECO I OP is organized and will be operated in a manner so as to be treated as a partnership, and not an association or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. As a partnership, PECO I OP will not be subject to U.S. federal income tax on its income. Instead, each








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Table of its partners, including us, will be allocated that partner’s share of PECO I OP’s income. No assurance can be provided, however, that the Internal Revenue Service will not challenge PECO I OP’s status as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the Internal Revenue Service were successful in treating PECO I OP as an association or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, would cease to qualify as a REIT. Also, the failure of PECO I OP to qualify as a partnership would cause it to become subject to U.S. federal corporate income tax, which would reduce significantly the amount of its cash available for debt service and for distribution to its partners, including us.Contents
PECO I OP has a carryover tax basis on certain of its assets as a result of the PELP transaction, and the amount that we have to distribute to Stockholders therefore may be higher.
As a result of the PELP transaction, certain of PECO I OP’s properties have carryover tax bases that are lower than the fair market values of these properties at the time of the acquisition. As a result of this lower aggregate tax basis, PECO I OP will recognize higher taxable gain upon the sale of these assets, and PECO I OP will be entitled to lower depreciation deductions on these assets than if it had purchased these properties in taxable transactions at the time of the acquisition. Such lower depreciation deductions and increased gains on sales allocated to us generally will increase the amount of our required distribution under the REIT rules, and will decrease the portion of any distribution that otherwise would have been treated as a “return of capital” distribution.
We intend to use taxable REIT subsidiaries (“TRSs”), which may cause us to fail to qualify as a REIT.
To qualify as a REIT for federal income tax purposes, we hold, and plan to continue to hold, our non-qualifying REIT assets and conduct our non-qualifying REIT income activities in or through one or more TRSs. A TRS is a corporation other than a REIT in which a REIT directly or indirectly holds stock, and that has made a joint election with such REIT to be treated as a TRS. A TRS also includes any corporation other than a REIT with respect to which a TRS owns securities possessing more than 35% of the total voting power or value of the outstanding securities of such corporation. Other than some activities relating to lodging and health care facilities, a TRS may generally engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT. A TRS is subject to income tax as a regular C corporation.
The net income of our TRSs is not required to be distributed to us and income that is not distributed to us will generally not be subject to the REIT income distribution requirement. However, our TRS may pay dividends. Such dividend income should qualify under the 95%, but not the 75%, gross income test. We will monitor the amount of the dividend and other income from our TRS and will take actions intended to keep this income, and any other non-qualifying income, within the limitations of the REIT income tests. While we expect these actions will prevent a violation of the REIT income tests, we cannot guarantee that such actions will in all cases prevent such a violation.


Our ownership of TRSs will be subject to limitations that could prevent us from growing our management business and our transactions with our TRSs 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.
Overall, (i) for taxable years beginning prior to January 1, 2018, no more than 25% of the value of a REIT’s gross assets, and (ii) for taxable years beginning after December 31, 2017, no more than 20% of the value of a REIT’s gross assets, may consist of interests in TRSs; compliance with this limitation could limit our ability to grow our management business. In addition, the Internal Revenue Code limits the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The Internal Revenue Code also imposes a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. We will monitor the value of investments in our TRSs in order to ensure compliance with TRS ownership limitations and will structure our transactions with our TRSs on terms that we believe are arm’s-length to avoid incurring the 100% excise tax described above. There can be no assurance, however, that we will be able to comply with the TRS ownership limitation or be able to avoid application of the 100% excise tax.

ItemITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
a)None.
b)Not applicable.
c)During the quarter ended September 30, 2017, we repurchased shares as follows (shares in thousands): 
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Period Total Number of Shares Repurchased 
Average Price Paid per Share(1)
 
Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program(2)
 Approximate Dollar Value of Shares Available That May Yet Be Repurchased Under the Program
July 2017 75
 $10.20
 75
 
(3) 
August 2017 46
 10.20
 46
 
(3) 
September 2017 104
 10.20
 104
 
(3) 
(1)
On November 8, 2017, our Board increased the estimated value per share of our common stock to $11.00 based substantially on the estimated market value of our portfolio of real estate properties our recently acquired third-party asset management business as of October 5, 2017, the first full business day after the closing of the PELP transaction. Prior to November 8, 2017, the estimated value per share was $10.20 (see Note 9 to the consolidated financial statements). The repurchase price per share for all stockholders is equal to the estimated value per share on the date of the repurchase.
(2)
We announced the commencement of the share repurchase program (“SRP”) on August 12, 2010, and it was subsequently amended on September 29, 2011, and on April 14, 2016.
(3)
We currently limit the dollar value and number of shares that may yet be repurchased under the SRP, as described below.
Our SRP may provide a limited opportunity for stockholders to haveDuring the three months ended June 30, 2021, we issued 28,000 shares of common stock repurchased, subject to certain restrictions and limitations that are discussed below:in redemption of 28,000 OP units.
During any calendar year, we may repurchase no more than 5%As described in Item 5. “Other Information”, our Board has approved the termination of the weighted-average number of shares outstanding during the prior calendar year.share repurchase program (“SRP”).
We have no obligation to repurchase shares if the repurchase would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.
The cash available for repurchases on any particular date will generally be limited to the proceeds from the DRIP during the preceding four fiscal quarters, less any cash already used for repurchases since the beginning of the same period; however, subject to the limitations described above, we may use other sources of cash at the discretion of the Board. The limitations described above do not apply to shares repurchased due to a stockholder’s death, “qualifying disability,” or “determination of incompetence.”
Only those stockholders who purchased their shares from us or received their shares from us (directly or indirectly) through one or more non-cash transactions may be able to participate in the SRP. In other words, once our shares are transferred for value by a stockholder, the transferee and all subsequent holders of the shares are not eligible to participate in the SRP.
The Board reserves the right, in its sole discretion, at any time and from time to time, to reject any request for repurchase.


Our Board may amend, suspend, or terminate the program upon 30 days’ notice. We may provide notice by including such information (a) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the SEC, or (b) in a separate mailing to the stockholders. In connection with the May announcement of the PELP transaction (see Note 3 to the consolidated financial statements), the SRP was suspended during the month of May and resumed in June.
During the three and nine months ended September 30, 2017, repurchase requests surpassed the funding limits under the SRP. Due to the program’s funding limits, no funds will be available for the remainder of 2017. When we are unable to fulfill all repurchase requests in any month, we will honor requests on a pro rata basis to the extent possible. As of September 30, 2017, we had 9.8 million shares of unfulfilled repurchase requests, which will be treated as requests for repurchase during future months until satisfied or withdrawn. We continue to fulfill repurchases sought upon a stockholder’s death, “qualifying disability,” or “determination of incompetence” in accordance with the terms of the SRP.

Item 3.        Defaults Upon Senior Securities
None.

Item 4.        Mine Safety Disclosures
Not applicable.

ItemITEM 5. Other InformationOTHER INFORMATION
On November 8, 2017,August 4, 2021, as a result of our underwritten IPO, our Board approved the independent directorstermination of the Board unanimously approved Les Chao as their lead independent director.Dividend Reinvestment Plan (“DRIP”) and the SRP. The DRIP has been suspended since April 2021. The SRP, which was limited to repurchases resulting from the death, qualifying disability, or the declaration of incompetence of stockholders, has been suspended since March 2021, and the SRP for standard repurchases had been suspended since August 2019.











PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
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Table of Contents
ItemITEM 6. Exhibits
EXHIBITS
Ex.DescriptionReference
3.1*
3.2Form 8-K, filed July 19, 2021, Exhibit 3.1
10.1DEF14A, filed April 7, 2021, Appendix A
10.2Form S-11/A, filed July 7, 2021, Exhibit 10.4
10.3Form 8-K, filed July 2, 2021, Exhibit 10.1
10.4
3.1
Third Amended and Restated Bylaws of Phillips Edison Grocery Center REIT I, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed October 11, 2017)
10.2
Letter Agreement with Phillips Edison NTR LLC dated September 20, 2017*
10.3
Third Amended and Restated Agreement of Limited Partnership of Phillips Edison Grocery Center Operating Partnership I, L.P. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed October 11, 2017)
10.4
Tax Protection Agreement dated as of October 4, 2017 by and among Phillips Edison Grocery Center REIT I, Inc., Phillips Edison Grocery Center Operating Partnership I, L.P. and each Protected Partner identified as a signatory on Schedule I as amended from time to time (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K, filed October 11, 2017)July 19, 2021, Exhibit 10.1
10.5
10.6
Fifth Amendment dated October 4, 2017 to the $900.0 million Credit Agreement*
10.6.1
Exhibit A to Fifth Amendment dated October 4, 2017 to the $900.0 million Credit Agreement*
10.7
Term Loan Credit Agreement dated October 4, 2017 for $175.0 million*
10.8
Term Loan Credit Agreement dated October 4, 2017 for $375.0 million*

10.9
First Amendment dated October 4, 2017 to the $255.0 million Term Loan*
10.10
Secured Loan Facility dated October 4, 2017 for $175.0 million*
10.11
Form of Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing dated October 23, 2017 Used for $195.0 million Secured Borrowings of 14 Properties Owned by a Subsidiaries of Phillips Edison Grocery Center Operating Partnership I, L.P.*LTIP Listing Equity Grant
Form S-11/A, filed July 7, 2021, Exhibit 10.32
10.6
RMU Cancellation and Exchange Agreement dated October 4, 2017**
Form S-11/A, filed July 7, 2021, Exhibit 10.33
10.7
Executive Severance and Change in Control Plan dated October 4, 2017**
Form S-11/A, filed July 7, 2021, Exhibit 10.34
10.8
Amended and Restated 2010 Long-Term Incentive Plan**
Form S-11/A, filed July 7, 2021, Exhibit 10.35
10.15
31.1		*
10.16
PELP Participation Agreement for Jeffrey Edison dated October 4, 2017**
10.17
PELP Participation Agreement for Devin Murphy dated October 4, 2017**
10.18
PELP Participation Agreement for Robert Myers dated October 4, 2017**
10.19
PELP Participation Agreement for R. Mark Addy dated October 4, 2017**
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*2002
31.2
*
32.1
*
32.2
*
101.1101.INSThe following information fromInline XBRL Instance Document - the Company’s quarterly report on Forminstance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in exhibit 101)
*Filed herewith








PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q for the quarter ended September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive (Loss) Income; (iii) Consolidated Statements of Equity; and (iv) Consolidated Statements of Cash Flows*
48
*Filed herewith.
**Compensation Plan or Benefit filed herewith.
Table of Contents


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PHILLIPS EDISON GROCERY CENTER REIT I,& COMPANY, INC.
Date: November 9, 2017August 5, 2021By:
/s/ Jeffrey S. Edison
Jeffrey S. Edison
Chairman of the Board and Chief Executive Officer (Principal Executive Officer)
(Principal Executive Officer)
Date: August 5, 2021
Date: November 9, 2017By:
/s/ Devin I. MurphyJohn P. Caulfield
Devin I. MurphyJohn P. Caulfield
Chief Financial Officer,
(Principal Senior Vice President and Treasurer (Principal Financial Officer)





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PHILLIPS EDISON & COMPANY
JUNE 30, 2021 FORM 10-Q
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