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, 2016 181,308
$ 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, 2016 184,943
$ 1,850
$ 1,625,965
$ (6,813 ) $ (410,625 ) $ 1,210,377
$ 23,851
$ 1,234,228

Balance at December 31, 2016, as reported 185,062
$ 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 adjusted 185,062

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 )
DRIP 3,546
35
36,136
—
—
36,171
—
36,171
Common distributions declared, $0.50 per share —
—
—
—
(92,037 ) (92,037 ) —
(92,037 )
Share-based compensation 3
—
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, 2017 184,140
$ 1,841
$ 1,617,717
$ 11,175
$ (539,840 ) $ 1,090,893
$ 17,699
$ 1,108,592


PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q									5

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

(Condensed and Unaudited)

(In thousands)


	Three Months Ended March 31,
	2022		2021
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	14,849	$	18,891
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:
Settlement of earn-out liability	54,245		—
Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities	—		194
Accrued capital expenditures	6,486		3,442
Change in distributions payable	(11)		(7,897)
Change in distributions payable - noncontrolling interests	(239)		(1,211)
Change in accrued share repurchase obligation	—		(77,642)
Distributions reinvested	—		7,368

See notes to consolidated financial statements.

~~PHILLIPS EDISON GROCERY CENTER REIT I, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~FOR THE~~ ~~NINE MONTHS ENDEDSEPTEMBER 30, 2017~~ ~~AND~~ ~~2016~~

~~(Unaudited)~~

~~(In thousands)~~

   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 amortization 83,200
76,293
Net amortization of above- and below-market leases (972 ) (936 )
Amortization of deferred financing expense 3,572
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 – affiliates 1
(1,206 )
Accounts payable and other liabilities 6,217
8,888
Net cash provided by operating activities 67,522

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 estate 37,037
—
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 facility 202,000
(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 activities 28,854
44,311
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,035 ) (19,318 )
CASH AND CASH EQUIVALENTS:

Beginning of period 8,224
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 debt 30,832
—
Accrued capital expenditures 3,560
1,834
Change in distributions payable (360 ) (159 )
Change in distributions payable - noncontrolling interests 122
149
Change in accrued share repurchase obligation 920
—
Distributions reinvested 36,171
44,731
Like-kind exchange of real estate:
   Utilization of restricted cash held for acquisitions (35,900 ) —


PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q									6

~~See notes to consolidated financial statements.~~

Phillips Edison ~~Grocery Center REIT I,~~& Company, Inc.

Notes to Consolidated Financial Statements

~~(Unaudited)~~(Condensed and Unaudited)
As of and for the period ended March 31, 2022

~~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 owned~~wholly-owned subsidiary, Phillips Edison Grocery Center OP GP I LLC, is the sole general partner of the Operating Partnership.

We ~~invest~~are 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 ~~regional~~local 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 March 31, 2022.

As of ~~September 30, 2017,~~March 31, 2022, we wholly-owned 269 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 1 property.

Underwritten Initial Public Offering—On July 19, 2021, we closed our ~~advisor was Phillips Edison NTR LLC~~underwritten initial public offering (“~~PE-NTR”~~underwritten IPO”), through which ~~was directly or indirectly owned by Phillips Edison Limited Partnership (“Phillips Edison sponsor” or “PELP”). Under~~we issued 19.6 million shares, including the ~~terms~~underwriters’ overallotment election, of a new class of common stock, $0.01 par value per share, at an initial price to the public of $28.00 per share. As a result of the ~~advisory agreement between PE-NTR~~underwritten IPO, we received gross proceeds of $547.4 million.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Set forth below is a summary of the significant accounting estimates and ~~us, PE-NTR was responsible for~~policies that management believes are important to the ~~management~~preparation 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 periods 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, there have been~~There were no changes to our significant accounting policies during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2022, except for those discussed below. For a full summary of our significant accounting policies, refer to our ~~2016~~2021 Annual Report on Form 10-K, filed with the SEC on ~~March 9, 2017.~~February 16, 2022.

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 ~~the~~our audited consolidated financial statements ~~of Phillips Edison Grocery Center REIT I, Inc.~~ for the year ended December 31, ~~2016,~~2021, which are included in our ~~2016~~2021 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 nine~~ months ended ~~September 30, 2017,~~March 31, 2022 are not necessarily indicative of the operating results expected for the full year.

The accompanying consolidated financial statements include our accounts and ~~those~~the accounts of the Operating Partnership and its wholly-owned subsidiaries (over which we exercise financial and operating control). The financial statements of the Operating Partnership are prepared using accounting policies consistent with our ~~majority-owned subsidiaries.~~accounting policies. All intercompany balances and transactions are eliminated upon consolidation.

~~Held for Sale Entities—We consider assets~~The basis of presentation of our shares of common stock is described as follows:

•Reverse Stock Split—On July 2, 2021, our board of directors (the “Board”) approved an amendment to ~~be held for sale when management believes~~our charter 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 (“OP units”). Unless otherwise indicated, the information in this Form 10-Q gives effect to the reverse stock and OP unit splits (see Note 9).

•Recapitalization—On June 18, 2021, our stockholders approved an amendment to our charter (the “Articles of Amendment”) that effected 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 that are classified as held for sale are recordedchange of each share of our common stock outstanding at the ~~lower~~time the amendment became effective into one share of ~~their carrying amount or fair value less cost to sell.~~a newly created class of Class B common stock (the “Recapitalization”). The

~~Newly Adopted and Recently Issued Accounting Pronouncements~~

~~The following table provides a brief description of recently issued accounting pronouncements that could have a material effect on our financial statements:~~

~~Standard~~

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

~~Description~~

~~Date of Adoption~~

~~Effect 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, 2018~~

We 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, 2018~~

Upon 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, 2018~~

We 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, 2019~~

We 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, 2018~~

Our 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.7

Articles of Amendment became effective on July 2, 2021. Unless otherwise indicated, all information in this Form 10-Q gives effect to the Recapitalization and references to “shares” and per share metrics refer to our common stock and Class B common stock, collectively. Our Class B common stock automatically converted into our publicly traded common stock on January 18, 2022 (see Note 9). Prior to the conversion, we have presented common stock and Class B common stock as separate classes within our consolidated balance sheets and consolidated statements of equity.

~~The following table provides~~Income Taxes—Our consolidated financial statements include the operations of wholly-owned subsidiaries that have jointly elected to be treated as taxable REIT subsidiary entities 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 the three months ended March 31, 2022 and 2021, and we retain a ~~brief description~~full valuation allowance for our deferred tax asset. All income tax amounts are included in Other Expense, Net on our consolidated statements of operations and comprehensive income (“consolidated statements of operations”).

Newly Adopted Accounting Pronouncements—There were no newly adopted accounting pronouncements during the three months ended March 31, 2022 that impacted the Company.


3. LEASES

Lessor—The majority of our leases are largely similar in that the leased asset is retail space within our properties, and ~~their~~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 (in thousands):


	Three Months Ended March 31,
		2022		2021
Rental income related to fixed lease payments(1)		$	101,510	$	94,966
Rental income related to variable lease payments(1)(2)		33,467		31,401
Straight-line rent amortization(3)		1,695		1,369
Amortization of lease assets		992		827
Lease buyout income		1,964		797
Adjustments for collectibility(4)		(880)		(1,737)
Total rental income		$	138,748	$	127,623

(1)Includes rental income related to lease payments before assessing for collectibility.

(2)Variable payments are primarily related to tenant recovery income.

(3)For the three months ended March 31, 2022 and 2021, includes unfavorable revenue adjustments to straight-line rent for tenants considered non-creditworthy of $1.2 million and $0.8 million, respectively.

(4)Includes general reserves as well as adjustments for tenants not considered creditworthy for which we are recording revenue on a cash basis, per Accounting Standards Codification (“ASC”) Topic 842, Leases.

For the three months ended March 31, 2022 and 2021, we had net favorable changes to general reserves of $0.2 million and $2.3 million, respectively. Additionally, we had net unfavorable adjustments of $1.1 million and $4.0 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 March 31, 2022, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements and tenants who have been moved to the cash basis of accounting for revenue recognition purposes, are as follows (in thousands):


Year	Amount
Remaining 2022	$	303,902
2023	374,916
2024	322,431
2025	266,544
2026	201,848
Thereafter	513,911
Total	$	1,983,552

No single tenant comprised 10% or more of our ~~financial statements:~~aggregate annualized base rent (“ABR”) as of March 31, 2022. As of March 31, 2022, our wholly-owned real estate investments in Florida and California represented 12.0% and 10.7% of our ABR, respectively. As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse weather or economic events in the Florida and California real estate markets.

~~Standard~~

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

~~Description~~

~~Date of Adoption~~

~~Effect 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 2017~~

Upon 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, 2017~~

~~For a more detailed discussion of the effect of this adoption on our financial statements, see Note 4.~~8

~~Reclassifications—The following line item on our consolidated statement of cash flows for the nine months ended September 30, 2016, was reclassified:~~

Net (Gain) Loss 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.

~~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 debt 432,091
Mortgages and notes payable 70,837
Cash payments 25,000
Total estimated consideration $ 932,245


⁽¹⁾			~~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.~~4. REAL ESTATE ACTIVITY


⁽²⁾	Acquisitions—The ~~amounts related to debt assumed are shown at face value, but the final amounts will be recorded at fair value.~~

~~Immediately~~ following ~~the closing of the PELP transaction, our shareholders owned approximately 80.6% and former PELP shareholders owned approximately 19.4% 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 committee of our board of directors (“Board”), which had retained independent financial and legal advisors. It was also approved by 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.

The supplemental purchase accounting disclosures required by GAAP relating to the acquisition of PELP have not been presented as the initial accounting for this acquisition was incomplete at the time this Quarterly Report on Form 10-Q was filed with the SEC.

~~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 oftable summarizes our real estate acquisition activity is no longer considered a business combination and is instead classified as an asset acquisition. As a result, most acquisition-related costs that would have been recorded on our consolidated statements of operations(dollars in thousands):


	Three Months Ended March 31,
	2022		2021
Number of properties acquired	3		2
Number of outparcels acquired(1)	—		2
Contract price	$	100,400	$	39,605
Total price of acquisitions(2)	101,440		39,850

(1)Outparcels acquired are ~~capitalized and will be amortized over the life of the related assets. Costs incurred related~~adjacent 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 that we own.

(2)Total price of acquisitions includes closing costs and ~~additional real estate adjacent to previously acquired shopping centers.~~credits.

~~For the nine months ended September 30, 2017 and 2016, we allocated the~~The aggregate purchase price ~~of our acquisitions, including acquisition costs for 2017, to the fair value~~ of the assets acquired during the three months ended March 31, 2022 and ~~liabilities assumed~~2021 were allocated as follows (in thousands):

2017 2016
Land and improvements $ 36,100
$ 47,834
Building and improvements 95,507
74,709
Acquired in-place leases 13,646
12,300
Acquired above-market leases 1,012
2,398
Acquired below-market leases (3,703 ) (6,313 )
Total assets and lease liabilities acquired 142,562
130,928
Less: Fair value of assumed debt at acquisition 30,832
—
Net assets acquired $ 111,730
$ 130,928


	March 31, 2022		March 31, 2021
ASSETS
Land and improvements	$	30,274	$	23,305
Building and improvements	65,028		13,990
In-place lease assets	8,557		4,155
Above-market lease assets	708		52
Total assets	104,567		41,502

LIABILITIES
Below-market lease liabilities	3,127		1,652
Total liabilities	3,127		1,652

Net assets acquired	$	101,440	$	39,850

The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles acquired during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022 and ~~2016,~~2021 are as follows (in years):


	March 31, 2022	March 31, 2021
Acquired in-place leases	14	7
Acquired above-market leases	6	5
Acquired below-market leases	24	6

Property Dispositions—The following table summarizes our real estate disposition activity (dollars in thousands):


	Three Months Ended March 31,
	2022		2021
Number of properties sold	2		6
Number of outparcels sold(1)	—		1
Contract Price	$	13,325	$	60,563
Proceeds from sale of real estate, net(2)	12,770		58,356
Gain on sale of property, net(3)	1,368		14,355

(1)During the three months ended March 31, 2021, the 1 outparcel sale included the only remaining portion of a property we previously owned; therefore, the sale resulted in a reduction in our total property count.

(2)Total proceeds from sale of real estate, net includes closing costs and credits.

(3)During the three months ended March 31, 2021, Gain on Disposal of Property, Net on the consolidated statements of operations includes miscellaneous write-off activity, which is not included in gain on sale of property, net, presented above.

2017 2016
Acquired in-place leases 13 12
Acquired above-market leases 7 6
Acquired below-market leases 19 22


PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q									9

Property Held for Sale—As of ~~September 30, 2017, one~~March 31, 2022 and December 31, 2021, 1 property was classified as held for sale. A property classified as held for sale ~~as it was~~is under contract to sell, with no substantive contingencies, and the prospective buyer had significant funds at risk. ~~On October 26, 2017, we sold this property for $6.5 million and intend on deferring the gain through an IRC Section 1031 like-kind exchange by purchasing another property.~~ A summary of assets and liabilities for the ~~property~~properties held for sale as of ~~September 30, 2017,~~March 31, 2022 and December 31, 2021 is below (in thousands):


	March 31, 2022		December 31, 2021
ASSETS
Total investment in real estate assets, net	$	6,332	$	1,554
Other assets, net	215		3
Total assets	$	6,547	$	1,557
LIABILITIES
Below-market lease liabilities, net	$	114	$	284
Accounts payable and other liabilities	84		4
Total liabilities	$	198	$	288


5. OTHER ASSETS, NET

September 30, 2017
ASSETS
Total investment in real estate assets, net $ 4,459
Accounts receivable, net 300
Other assets, net 104
Total assets $ 4,863

LIABILITIES
Liabilities:
Acquired below-market lease liabilities, net of accumulated amortization of $38 $ 82
Accounts payable – affiliates 5
Accounts payable and other liabilities 146
Total liabilities $ 233

~~5. 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 Payable~~—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.

The following is a summary of ~~borrowings~~Other Assets, Net outstanding as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016 (dollars in~~2021, excluding amounts related to assets classified as held for sale (in thousands):


	March 31, 2022		December 31, 2021
Other assets, net:
Deferred leasing commissions and costs	$	45,688	$	44,968
Deferred financing expenses(1)	4,898		4,898
Office equipment, including capital lease assets, and other	25,833		24,823
Corporate intangible assets	6,690		6,706
Total depreciable and amortizable assets	83,109		81,395
Accumulated depreciation and amortization	(42,867)		(41,236)
Net depreciable and amortizable assets	40,242		40,159
Accounts receivable, net(2)	39,002		36,762
Accounts receivable - affiliates	638		711
Deferred rent receivable, net(3)	41,756		40,212
Derivative assets	5,365		—
Prepaid expenses and other	18,528		11,655
Investment in third parties	3,000		3,000
Investment in marketable securities	5,189		5,551
Total other assets, net	$	153,720	$	138,050

(1)Deferred financing expenses per the above table are related to our revolving credit facility, and as such we have elected to classify them as an asset rather than as a contra-liability.

(2)Net of $4.1 million and $3.5 million of general reserves for uncollectible amounts as of March 31, 2022 and December 31, 2021, respectively. Receivables that were removed for tenants considered to be non-creditworthy were $7.3 million and $9.2 million as of March 31, 2022 and December 31, 2021, respectively.

(3)Net of $5.8 million and $4.7 million of receivables removed as of March 31, 2022 and December 31, 2021, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.

September 30, 2017 December 31, 2016
Fair value $ 1,226,748
$ 1,056,990
Recorded value⁽¹⁾
1,232,190
1,065,180


⁽¹⁾PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q			~~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.~~						10

~~Derivative Instruments~~—As of September 30, 2017 and December 31, 2016, 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.

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 820, 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 September 30, 2017 and December 31, 2016, 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 measurements of our derivative assets and liabilities as 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 note 108
262

~~6. MORTGAGES AND LOANS PAYABLE~~


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 ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016 (in~~2021 (dollars in thousands):


	Interest Rate(1)	March 31, 2022			December 31, 2021
Revolving credit facility	LIBOR + 1.1%	$	46,000		$	—
Term loans(2)	1.6% - 4.2%	955,000			955,000
Senior unsecured notes due 2031	2.6%	350,000			350,000
Secured loan facilities	3.4% - 3.5%	395,000			395,000
Mortgages	3.5% - 6.4%	150,805			213,316
Finance lease liability		762			766
Discount on notes payable		(7,512)			(7,680)
Assumed market debt adjustments, net		(1,546)			(1,530)
Deferred financing expenses, net		(12,301)			(13,150)
Total		$	1,876,208		$	1,891,722

Weighted-average interest rate(3)		3.2		%	3.3		%

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 2021 2.49%-2.80% 125,000
125,000
Term loan due 2023 3.03% 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⁾	~~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.


⁽³⁾	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.~~

(1)Interest rates are as of March 31, 2022.

⁽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.

~~As of September 30, 2017 and December 31, 2016, the weighted-average~~(2)Our term loans carry an interest rate ~~for all~~ of ~~our mortgages~~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 ~~loans payable was 3.1%~~thus are still indexed to LIBOR.

(3)Includes the effects of derivative financial instruments (see Notes 7 and ~~3.0%, respectively.~~12).

2022 Debt Activity—During the three months ended March 31, 2022, we executed early repayments of $61.0 million in mortgage debt.

Debt Allocation—The allocation of total debt between ~~fixed~~fixed-rate and variable-rate ~~and~~as well as between secured and unsecured, excluding market debt adjustments, discount on senior notes, and deferred financing ~~costs,~~expenses, net, and including the effects of derivative financial instruments as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016,~~2021 is summarized below (in thousands):


	March 31, 2022		December 31, 2021
As to interest rate:
Fixed-rate debt(1)	$	1,826,567	$	1,889,082
Variable-rate debt	71,000		25,000
Total	$	1,897,567	$	1,914,082
As to collateralization:
Unsecured debt	$	1,351,000	$	1,305,000
Secured debt	546,567		609,082
Total	$	1,897,567	$	1,914,082

(1)Fixed-rate debt includes, and variable-rate debt excludes, the portion of such debt that has been hedged by interest rate derivatives. As of March 31, 2022, $930.0 million in variable rate debt is hedged to a fixed rate for a weighted-average of 1.9 years.


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 three

September 30, 2017 December 31, 2016
As to interest rate:⁽¹⁾

Fixed-rate debt $ 836,480
$ 615,721
Variable-rate debt 391,969
444,969
Total $ 1,228,449
$ 1,060,690
As to collateralization:
Unsecured debt $ 1,033,969
$ 831,969
Secured debt 194,480
228,721
Total $ 1,228,449
$ 1,060,690


⁽¹⁾PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q			~~Includes the effects of derivative financial instruments (see Notes 5 and 8).~~						11

~~Upon completion~~

months ended March 31, 2022 and 2021, 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 $3.2 million will be reclassified from AOCI as an increase to Interest Expense, Net.

The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of March 31, 2022 and December 31, 2021 (dollars in thousands):


	March 31, 2022		December 31, 2021
Count	5		5
Notional amount	$	930,000	$	930,000
Fixed LIBOR	1.3% - 2.9%		1.3% - 2.9%
Maturity date	2022-2025		2022 - 2025
Weighted-average term (in years)	1.6		1.9

The table below details the nature of the ~~PELP transaction,~~gain and loss recognized on interest rate derivatives designated as cash flow hedges 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~~consolidated statements of operations (in thousands):


	Three Months Ended March 31,
		2022		2021
Amount of gain recognized in Other Comprehensive Income		$	22,899	$	7,265
Amount of loss reclassified from AOCI into Interest Expense, Net		4,674		4,855

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 March 31, 2022, 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 $2.2 million. As of March 31, 2022, 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 $2.2 million.

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.~~8. COMMITMENTS AND CONTINGENCIES


⁽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 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. ~~Generally,~~Depending on the nature of the environmental matter, the seller of the property, ~~the~~a tenant of the property, and/or another third party ismay 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 certain 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 this estimate, and such premiums may be reimbursed by tenants pursuant to specific lease terms.

~~8. DERIVATIVES AND HEDGING ACTIVITIES~~As of March 31, 2022, we had 4 letters of credit outstanding totaling approximately $9.0 million to provide security for our obligations under Silver Rock’s insurance and reinsurance contracts.

~~In September 2017,~~


9. EQUITY

General—The holders of common stock are entitled to 1 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.


PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q									12

At-the-Market Offering (“ATM”)—On February 10, 2022, we ~~adopted ASU 2017-12,~~ ~~Derivatives~~ and ~~Hedging (Topic 815): Targeted Improvements~~the Operating Partnership entered into a sales agreement relating to ~~Accounting for Hedging Activities. This update amended existing guidance in order~~the potential sale of shares of common stock pursuant 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.

continuous offering program. In accordance with the ~~modified retrospective transition method required by ASU 2017-12, the Company recognized the cumulative effect~~terms of the ~~change, representing~~sales agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million from time to time through our sales agents, or, if applicable, as forward sellers. As of March 31, 2022, we have issued zero shares under the ~~reversal~~ATM program.

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 ~~$1.3~~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 impacted all common stock and OP units proportionately and had no impact on any stockholder’s percentage ownership of common stock.

Class B Common Stock—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 1 share of a newly created class of Class B common stock.

Our Class B common stock was identical to our common stock, except that it was not listed on a national securities exchange. Per the terms of the Recapitalization, on January 18, 2022, each share of our Class B common stock automatically converted into 1 share of our listed common stock.

On May 5, 2022, we filed Articles Supplementary to our charter with the Maryland State Department of Assessments and Taxation in order to reclassify and designate all of the 350 million ~~cumulative ineffectiveness gain~~authorized shares of our Class B common stock, $0.01 par value per share, all of which were unissued at such time, as shares of our common stock, $0.01 par value per share.

Underwritten IPO—On July 19, 2021, we completed an underwritten IPO and issued 17.0 million shares of common stock at an offering price to the public of $28.00 per share. We used a portion of the net proceeds to reduce our leverage and used 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 2.6 million shares of common stock at the underwritten IPO price, less underwriting discounts and commissions. On July 29, 2021, the underwriters exercised their option. The underwritten IPO, including the underwriters’ overallotment election, resulted in gross proceeds of $547.4 million.

Distributions—Distributions paid to stockholders and OP unit holders of record subsequent to March 31, 2022 were as follows (dollars in thousands, excluding per share amounts):

Month

Date of Record

Date Distribution Paid

Monthly Distribution Rate

Cash Distribution

March

3/15/2022

4/1/2022

0.09

11,520

April

4/15/2022

5/2/2022

0.09

11,520

On May 4, 2022, our Board authorized 2022 distributions for May, June, and July of $0.09 per share to the stockholders of record at the close of business on May 16, 2022, June 15, 2022, and July 15, 2022, respectively. OP unit holders will receive distributions at the same rate as common stockholders, subject to certain withholdings.

Convertible Noncontrolling Interests—As of March 31, 2022 and 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~~2021, we had approximately 14.5 million and 13.4 million outstanding OP units, respectively. Additionally, 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,~~outstanding restricted share 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 thatperformance share awards will result in the ~~receipt or payment~~issuance of OP units upon vesting in future ~~known~~periods.

Under the terms of the Fourth Amended and ~~uncertain cash amounts,~~Restated Agreement of Limited Partnership, OP unit holders may elect to cause the ~~value~~Operating Partnership to redeem their OP units. The Operating Partnership controls the form of ~~which are determined by interest rates. Our derivative financial instruments are used~~the redemption, and may elect to ~~manage differences in the amount, timing, and duration~~redeem OP units for shares of our ~~known~~common stock, provided that the OP units have been outstanding for at least one year, or ~~expected cash receipts~~for cash. As the form of redemption for OP units is within our control, the OP units outstanding as of March 31, 2022 and December 31, 2021 are classified as Noncontrolling Interests within permanent equity on our ~~known or expected cash payments principally related to our investments and borrowings.~~consolidated balance sheets.

~~Cash Flow Hedges of Interest Rate Risk~~

~~Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty~~On January 18, 2022, we issued approximately 1.6 million OP units in ~~exchange for our making fixed-rate payments over the life~~full settlement of the ~~agreements without exchange of the underlying notional amount.~~earn-out liability (see note 12).

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 earnings in the period that 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 and June 30, 2017, was adjusted 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~~table below is a summary of our ~~interest rate swaps that were designated as cash flow hedges of interest rate risk as of September 30, 2017~~OP unit activity for the three months ended March 31, 2022 and ~~December 31, 2016, which includes an interest rate swap with a notional amount of $255 million that we entered into in October 2016~~2021 (dollars and ~~became effective in July 2017 (notional amount~~shares in thousands):


	Three Months Ended March 31,
		2022		2021
OP units converted into shares of common stock(1)		533		—
Distributions paid on OP units(2)		$	4,104	$	3,319

Count Notional Amount Fixed LIBOR Maturity Date
4 $642,000 1.2% - 1.5% 2019-2023
(1)Prior to the Recapitalization, OP units were converted to shares of common stock at a 1:1 ratio. From the Recapitalization through January 18, 2022, OP units were converted into shares of our Class B common stock at a 1:1 ratio. On January 18, 2022, each share of our Class B common stock automatically converted into 1 share of our listed common stock, and going forward, OP units will be converted into shares of our common stock at a 1:1 ratio.

~~The table below details the location of the gain or loss recognized~~(2)Distributions paid on ~~interest rate derivatives designated as cash flow hedges~~OP units are included in Distributions to Noncontrolling Interests on the consolidated statements of ~~operations~~equity and ~~comprehensive (loss) income for the three and nine months ended September 30, 2017 and 2016 (in thousands):~~cash flows.

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~~


PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q									13

~~We have agreements with~~Estimated Value per Share—Prior to our ~~derivative counterparties that contain provisions where, if we either default or are capable of being declared in default~~underwritten IPO, 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,~~April 29, 2021, our Board increased the estimated value per share (“EVPS”) of our common stock to ~~$11.00~~$31.65 from $26.25 based substantially on the estimated market value of our portfolio of real estate properties and our ~~recently acquired~~ third-party ~~asset~~investment management business as of ~~October 5, 2017, the first full business day after the closing of the PELP transaction.~~March 31, 2021. We engaged a third-party valuation firm to provide a calculation of the range in ~~estimated value per share~~EVPS of our common stock as of ~~October 5, 2017,~~March 31, 2021, which reflected certain ~~pro forma~~ balance sheet assets and liabilities as of that date. ~~For~~

Dividend Reinvestment Plan and Share Repurchase Program (“SRP”)—On August 4, 2021, as a ~~description~~result of our underwritten IPO, our Board approved the termination of the ~~methodology~~DRIP and assumptions used to determine the estimated value per share, see the Current Report on Form 8-K filed with the SEC 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~~—We have adopted a DRIP 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

~~were no longer issued for asset management services subsequent to September 19, 2017. Upon closing of the transaction, all outstanding Class B units were vested 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 distributions that have been paid on these OP units are included in Distributions to Noncontrolling Interests on the consolidated statements of equity.

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⁾			~~Upon closing of the PELP transaction, all outstanding Class B units were converted to OP units.~~10. EARNINGS PER SHARE

~~10. EARNINGS PER SHARE~~

~~We use the two-class method of computing~~Basic 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~~Net Income Attributable to ~~common stockholders~~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~~share 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 shares 183,843
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 shares 183,843
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


	Three Months Ended March 31,
	2022		2021
Numerator:
Net income attributable to stockholders - basic	$	10,079	$	103
Net income attributable to convertible OP units(1)	1,319		14
Net income - diluted	$	11,398	$	117
Denominator:
Weighted-average shares - basic	113,571		93,490
OP units(1)	14,558		13,354
Dilutive restricted stock awards	374		151
Adjusted weighted-average shares - diluted	128,503		106,995
Earnings per common share:
Basic and diluted income per share	$	0.09	$	0.00

~~As of September 30, 2017, approximately 2.4 million~~ (1)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 servicesinclude units 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~~are convertible into common stock or ~~approximately 0.1%~~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 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. OP units are allocated income on a consistent basis with the common stockholder and therefore have no dilutive impact to earnings per share of common stock.


11. 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 March 31,
		2022		2021
Recurring fees(1)		$	1,271	$	1,125
Transactional revenue and reimbursements(2)		394		468
Insurance premiums(3)		796		693
Total fees and management income		$	2,461	$	2,286

(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.


PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q									14

Tax Protection Agreement—Through our ~~outstanding common stock issued during~~Operating Partnership, we are currently party to a tax protection agreement (the “2017 TPA”) with certain partners that contributed property to 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~~Operating Partnership on October 4, 2017, among them certain of our ~~relationship~~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 ~~PE-NTR~~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 March 31, 2022, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $143.3 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 believe we will either (i) continue to own and operate the protected properties or (ii) be able to successfully complete tax-deferred exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (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 March 31, 2022, the outstanding loan balance related to our NRP joint venture was $15.3 million. As of March 31, 2022, 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 ~~Property Manager was terminated.~~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 March 31, 2022 and December 31, 2021.


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, are 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.

Debt Obligations—We estimate the fair value of our revolving credit facility, term loans, secured portfolio of loans, and mortgages 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. We estimate the fair value of our senior unsecured notes by using quoted prices in active markets, which are considered Level 1 inputs.

The following is a summary of borrowings as of March 31, 2022 and December 31, 2021 (in thousands):


	March 31, 2022				December 31, 2021
	Recorded Principal Balance(1)		Fair Value		Recorded Principal Balance(1)		Fair Value
Revolving credit facility	$	46,000	$	46,017	$	—	$	—
Term loans	943,949		955,934		943,127		955,919
Senior unsecured notes due 2031	342,488		307,339		342,320		344,099
Secured portfolio loan facilities	391,732		390,898		391,612		394,356
Mortgages(2)	152,039		157,036		214,663		221,741
Total	$	1,876,208	$	1,857,224	$	1,891,722	$	1,916,115

(1)As of March 31, 2022 and December 31, 2021, respectively, recorded principal balances include: (i) net deferred financing fees of $12.3 million and $13.2 million; (ii) assumed market debt adjustments of $1.5 million and $1.5 million; and (iii) notes payable discounts of $7.5 million and $7.7 million.

(2)Our finance lease liability is included in the mortgages line item, as presented.


PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q									15

Recurring and Nonrecurring Fair Value Measurements—Our marketable securities, 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 three months ended March 31, 2022 and the year ended December 31, 2021 were as follows (in thousands):


	March 31, 2022						December 31, 2021
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Recurring
Marketable securities	$	5,189	$	—	$	—	$	5,551	$	—	$	—
Derivative assets(1)	—		5,365		—		—		—		—
Derivative liabilities(2)	—		(2,217)		—		—		(24,096)		—
Earn-out liability	—		—		—		—		(52,436)		—
Nonrecurring
Impaired real estate assets, net(3)	$	—	$	—	$	—	$	—	$	24,000	$	—

(1)We recordderivative assets in Other Assets, Net on our consolidated balance sheets.

(2)We record derivative liabilities in Derivative Liabilities on our consolidated balance sheets.

(3)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.

Marketable Securities—We estimate the fair value of marketable securities using Level 1 inputs. We utilize unadjusted quoted prices for identical assets in active markets that we have the ability to access.

Derivative Instruments—As of March 31, 2022 and December 31, 2021, we had interest rate swaps that fixed LIBOR on portions of our unsecured term loan 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 March 31, 2022 and December 31, 2021, 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 ~~now~~ have ~~an internalized management structure.~~

~~Advisory Agreement—On September 1, 2017,~~determined that our derivative valuations 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 changestheir entirety are classified in ~~the PE-NTR Agreement. Subsequent to September 30, 2017, upon closing~~Level 2 of the fair value hierarchy.

Earn-out—As part of our acquisition of Phillips Edison Limited Partnership (“PELP”) in 2017, an earn-out structure was established which gave PELP ~~transaction,~~ the ~~PE-NTR~~

~~Agreement was terminated. As a result~~opportunity to earn additional OP units based upon the potential achievement of ~~purchasing PELP’s third-party asset management business, we will no longer incur the fees listed below.~~

~~Pursuant~~certain performance targets subsequent to the ~~PE-NTR Agreement, PE-NTR~~acquisition. After the expiration of certain provisions in 2019, PELP was ~~entitled~~eligible to ~~specified fees~~earn a minimum of 1.0 million and a maximum of approximately 1.7 million OP units as contingent consideration based on the timing and valuation of a liquidity event 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~~PECO. Certain of ~~real estate investments subject~~these performance targets were tied to the ~~Board’s supervision. Expenditures were reimbursed to PE-NTR~~post-underwritten IPO trading price of our common stock. The number of OP units awarded varied 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 offeringhighest volume weighted average price ~~for a~~per share of our common stock asover any 30 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 was greater than or equal to $33.60, PELP would receive approximately 1.7 million OP units;

•if the liquidity event price per share was less than $33.60 but greater than or equal to $26.40, PELP would receive a number 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~~equal to (i) 1.0 million plus (ii) the ~~same rate as distributions were paid to common stockholders. Subsequent to September 30, 2017, upon closing~~product 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~~(A) approximately 0.7 million and ~~0.4~~(B) the quotient obtained by dividing the liquidity event price per share in excess of $26.40 by $7.20; or

•if the liquidity event price per share was less than $26.40, PELP would receive 1.0 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.OP units.

Prior to ~~September 1, 2017, ARC also received~~ the ~~acquisition fee, asset management subordinated participation, and disposition fee, as well as distributions~~second quarter of 2021, we estimated the fair value of this liability on ~~Class B and OP units. For~~ a ~~more detailed discussion~~quarterly basis using the Monte Carlo method. Following our underwritten IPO, the only remaining variable for calculating final amounts to be paid under the earn-out agreement was the liquidity event price per share. On January 11, 2022, at the end of the ~~termination~~180-day period following our underwritten IPO commencement, we finalized the fair value of ~~our relationship~~the earn-out liability and issued approximately 1.6 million OP units in full settlement of the liability with ~~ARC, see Note 9.~~a value of $54.2 million. We recorded expense of $1.8 million and $16.0 million,

~~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⁾PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q			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.						16

respectively, for the three months ended March 31, 2022 and March 31, 2021 related to changes in the fair value of the earn-out liability in Other Expense, Net in the consolidated statements of operations.

Real Estate Asset Impairment—Our real estate assets are measured and 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 months ended March 31, 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 months ended March 31, 2022.

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 book 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 record an impairment charge based on the fair value determined in 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 the 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.

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.

We recorded the following expense upon impairment of real estate assets (in thousands):


	Three Months Ended March 31,
		2022		2021
Impairment of real estate assets		$	—	$	5,000


13. SUBSEQUENT EVENTS

In preparing the condensed and unaudited consolidated financial statements, we have evaluated subsequent events through the date of filing of this report on Form 10-Q for recognition and/or disclosure purposes. Based on this evaluation, we have determined that there were no events that have occurred that require recognition or disclosure, other than certain events and transactions that have been disclosed elsewhere in these consolidated financial statements.


⁽²⁾PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q			~~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.~~17


⁽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 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):

   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):

Year Amount
Remaining 2017 $ 53,743
2018 205,462
2019 182,579
2020 160,034
2021 134,587
2022 and thereafter 453,701
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~~ITEM 2. ~~Management’s Discussion~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and ~~Analysis of~~analysis should be read in conjunction with our accompanying consolidated financial statements and notes thereto and the more detailed information contained in our 2021 Annual Report on Form 10-K, filed with the SEC on February 16, 2022. All references to “Notes” throughout this document refer to the footnotes to the consolidated financial statements in “Item 1. Financial ~~Condition and Results of Operations~~

~~Cautionary~~Statements”. See also “Cautionary Note Regarding Forward-Looking ~~Statements~~Statements” below.


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q 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”). These forward-looking statements are based on current expectations, estimates, and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, management of our company and involve uncertainties that could significantly affect our financial results. We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in 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 ~~our~~the 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 ~~accuracy~~COVID-19 pandemic; (c) statements about our underwritten incremental yields; and (d) statements about our future results of ~~any such forward-looking~~operations, capital expenditures, and liquidity. Such statements ~~contained~~are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: (i) changes in ~~this Quarterly Report on Form 10-Q,~~national, regional, or local economic climates; (ii) local market conditions, including an oversupply of space in, or a reduction in demand for, properties similar to those in our portfolio; (iii) vacancies, changes in market rental rates, and ~~we do not intend~~the need to ~~publicly update~~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 ~~revise any forward-looking statements, whether~~extend our indebtedness as it becomes due; (vii) increases in our borrowing costs as a result of ~~new information, future events, or otherwise.~~

~~Any such forward-looking statements are subject to risks, uncertainties,~~changes in interest rates and other ~~factors~~factors; (viii) potential liability for environmental matters; (ix) damage to our properties from catastrophic weather and ~~are based on~~other natural events, and the physical effects of climate change; (x) our ability and willingness to maintain our qualification as a REIT in light of economic, market, legal, tax, and other considerations; (xi) changes in tax, real estate, environmental, and zoning laws; (xii) information technology security breaches; (xiii) our corporate responsibility initiatives; (xiv) loss of key executives; (xv) the concentration of our portfolio in a limited number of ~~assumptions involving judgments with respect~~industries, geographies, or investments; (xvi) the economic, political, and social impact of, and uncertainty relating 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,~~COVID-19 pandemic; (xvii) our ability to ~~accurately anticipate results expressed~~re-lease our properties on the same or better terms, or at all, in ~~such forward-looking statements, including~~the event of non-renewal or in the event we exercise our right to replace an existing tenant; (xviii) the loss or bankruptcy of our tenants; (xix) to the extent we are seeking to dispose of properties, our ability to ~~generate positive cash flow~~do so at attractive prices or at all; and (xx) the impact of inflation on us and on our tenants. Additional important factors that could cause actual results to differ are described in the filings made from ~~operations, make distributions~~time to ~~stockholders,~~time by the Company with the SEC and ~~maintain~~include the ~~value of~~risk factors and other risks and uncertainties described in 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~~2021 Annual Report on Form 10-K, filed with the SEC on ~~March 9, 2017, for a discussion of some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause actual results~~February 16, 2022, as updated from time to ~~differ materially from those presented~~time in our ~~forward-looking statements.~~ periodic and/or current reports filed with the SEC, which are accessible on the SEC’s website at www.sec.gov. Therefore, such statements are not intended to be a guarantee of our performance in future periods.

Except as required by law, we do not undertake any obligation to update or revise any forward-looking ~~statements contained~~statement, 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 factors~~a manner that ~~could cause actual results~~is focused on items unique to ~~differ materially from~~ the ~~forward-looking statements are disclosed in Item 1A. Risk Factors, in Part II and Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Form 10-Q.~~

~~Overview~~

~~Organization~~

~~Phillips Edison Grocery Center REIT I, Inc. is a public non-traded real estate investment trust (“REIT”) that invests in~~ retail real estate ~~properties. Our primary focus is on grocery-anchored neighborhood~~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 ~~community~~they may not reflect the impact of general and administrative 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 shopping centers that ~~meet~~could materially 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 ~~day-to-day needs~~impact of ~~residents~~long-term operating performance on value if we do not continue to operate our business in the ~~surrounding trade areas.~~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.

~~On October 4, 2017, we completed the PELP transaction. For a more detailed discussion of this transaction, see Note 3 to the consolidated financial statements.~~

~~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 MARCH 31, 2022 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.~~						18



Maryland						27-1106076
(State or ~~Other Jurisdiction~~other 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)


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 ☐


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 ☑


TABLE OF CONTENTS

PART I.
ITEM 1.				FINANCIAL STATEMENTS (CONDENSED AND UNAUDITED)	2
				CONSOLIDATED BALANCE SHEETS AS OF M ARCH 31, 2022 AND DECEMBER 31, 2021	2
				CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021	3
				CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE MONTHS ENDED MARCH 31 , 202 2 AND 2021	4
				CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 3 1 , 202 2 AND 2021	5
				NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2022
			NOTE 1	ORGANIZATION	7
			NOTE 2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	7
			NOTE 3	LEASES	8
			NOTE 4	REAL ESTATE ACTIVITY	9
			NOTE 5	OTHER ASSETS, NET	10
			NOTE 6	DEBT OBLIGATIONS	11
			NOTE 7	DERIVATIVES AND HEDGING ACTIVITIES	11
			NOTE 8	COMMITMENTS AND CONTINGENCIES	12
			NOTE 9	EQUITY	12
			NOTE 10	EARNINGS PER SHARE	14
			NOTE 11	RELATED PARTY TRANSACTIONS	14
			NOTE 12	FAIR VALUE MEASUREMENTS	15
			NOTE 13	SUBSEQUENT EVENTS	17
ITEM 2.				MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 3.				QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4.				CONTROLS AND PROCEDURES	33

PART II.
ITEM 1.				LEGAL PROCEEDINGS	33
ITEM 1A.				RISK FACTORS	34
ITEM 2.				UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	34
ITEM 3.				DEFAULTS UPON SENIOR SECURITIES	34
ITEM 4.				MINE SAFETY DISCLOSURES	34
ITEM 5.				OTHER INFORMATION	34
ITEM 6.				EXHIBITS	35
				SIGNATURES	36


~~Large Accelerated Filer~~			¨	~~Accelerated Filer~~	¨

~~Non-Accelerated Filer~~	þ ~~(Do not check if a smaller reporting company)~~	~~Smaller reporting company~~	¨

~~Emerging growth company~~	¨



(513) 554-1110
(Registrant’s telephone number, including area code)


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



	September 30, 2017			December 31, 2016
ASSETS
Investment in real estate:
Land and improvements	$	838,078		$	796,192
Building and improvements	1,640,052			1,532,888
Acquired in-place lease assets	226,033			212,916
Acquired above-market lease assets	43,021			42,009
Total investment in real estate assets	2,747,184			2,584,005
Accumulated depreciation and amortization	(418,544		)	(334,348		)
Total investment in real estate assets, net	2,328,640			2,249,657
Cash and cash equivalents	7,189			8,224
Restricted cash	6,025			41,722
Other assets, net	102,541			80,585
Real estate investment and other assets held for sale	4,863			—
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, respectively	42,080			43,032
Accounts payable – affiliates	4,567			4,571
Accounts payable and other liabilities	69,007			51,642
Liabilities of real estate investment held for sale	233			—
Total liabilities	1,340,666			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, respectively	1,841			1,851
Additional paid-in capital	1,617,717			1,627,098
Accumulated other comprehensive income	11,175			10,587
Accumulated deficit	(539,840		)	(438,155		)
Total stockholders’ equity	1,090,893			1,201,381
Noncontrolling interests	17,699			23,406
Total equity	1,108,592			1,224,787
Total liabilities and equity	$	2,449,258		$	2,380,188


	Three Months Ended March 31, 2022 and 2021
	Common Stock			Class B Common Stock			APIC		AOCI		Accumulated Deficit		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
	Shares	Amount		Shares	Amount
Balance at January 1, 2021	—	$	—	93,279	$	2,798	$	2,739,358	$	(52,306)	$	(999,491)	$	1,690,359	$	325,570	$	2,015,929
Dividend reinvestment plan (“DRIP”)	—	—		280	8		7,360		—		—		7,368		—		7,368
Share repurchases	—	—		(24)	—		(123)		—		—		(123)		—		(123)
Change in unrealized value on interest rate swaps	—	—		—	—		—		10,611		—		10,611		1,509		12,120
Common distributions declared, $0.255 per share	—	—		—	—		—		—		(23,767)		(23,767)		—		(23,767)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		—		(3,319)		(3,319)
Share-based compensation	—	—		47	1		325		—		—		326		784		1,110
Other	—	—		—	—		(29)		—		—		(29)		—		(29)
Net income	—	—		—	—		—		—		103		103		14		117
Balance at March 31, 2021	—	$	—	93,582	$	2,807	$	2,746,891	$	(41,695)	$	(1,023,155)	$	1,684,848	$	324,558	$	2,009,406

Balance at January 1, 2022	19,550	$	196	93,665	$	936	$	3,264,038	$	(24,819)	$	(1,090,837)	$	2,149,514	$	326,812	$	2,476,326
Conversion of Class B common stock	93,665	936		(93,665)	(936)		—		—		—		—		—		—
Change in unrealized value on interest rate swaps	—	—		—	—		—		24,871		—		24,871		2,702		27,573
Common distributions declared, $0.27 per share	—	—		—	—		—		—		(30,915)		(30,915)		—		(30,915)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		—		(4,104)		(4,104)
Share-based compensation	71	1		—	—		467		—		—		468		2,678		3,146
Conversion of noncontrolling interests	533	5		—	—		17,313		—		—		17,318		(17,318)		—
Reallocation of operating partnership interests	—	—		—	—		(5,667)		(212)		—		(5,879)		5,879		—
Settlement of earn-out liability	—	—		—	—		—		—		—		—		54,245		54,245
Net income	—	—		—	—		—		—		10,079		10,079		1,319		11,398
Balance at March 31, 2022	113,819	$	1,138	—	$	—	$	3,276,151	$	(160)	$	(1,111,673)	$	2,165,456	$	372,213	$	2,537,669



	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 income	17,052			16,199			50,442			47,652
Other property income	407			243			911			730
Total revenues	70,624			65,270			208,778			191,405
Expenses:
Property operating	10,882			10,030			32,611			29,978
Real estate taxes	10,723			9,104			31,136			27,745
General and administrative	8,712			7,722			25,438			23,736
Termination of affiliate arrangements	5,454			—			5,454			—
Acquisition expenses	202			870			466			2,392
Depreciation and amortization	28,650			26,583			84,481			78,266
Total expenses	64,623			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), net	6			33			642			(125		)
Net (loss) income	(8,376		)	2,490			(8,463		)	5,326
Net loss (income) attributable to noncontrolling interests	144			(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:
Basic	183,843			184,639			183,402			183,471
Diluted	183,843			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 expense	228			888			1,203			2,762
Comprehensive (loss) income	(8,327		)	5,328			(9,204		)	(1,509		)
Comprehensive loss (income) attributable to noncontrolling interests	144			(26		)	144			(83		)
Comprehensive (loss) income attributable to stockholders	$	(8,183	)	$	5,302		$	(9,060	)	$	(1,592	)



	Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interest			Total Equity
	Shares		Amount			Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interest			Total Equity
Balance at January 1, 2016	181,308		$	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, 2016	184,943		$	1,850		$	1,625,965		$	(6,813	)	$	(410,625	)	$	1,210,377		$	23,851		$	1,234,228

Balance at December 31, 2016, as reported	185,062		$	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 adjusted	185,062		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		)
DRIP	3,546		35			36,136			—			—			36,171			—			36,171
Common distributions declared, $0.50 per share	—		—			—			—			(92,037		)	(92,037		)	—			(92,037		)
Share-based compensation	3		—			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, 2017	184,140		$	1,841		$	1,617,717		$	11,175		$	(539,840	)	$	1,090,893		$	17,699		$	1,108,592



	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 amortization	83,200			76,293
Net amortization of above- and below-market leases	(972		)	(936		)
Amortization of deferred financing expense	3,572			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 – affiliates	1			(1,206		)
Accounts payable and other liabilities	6,217			8,888
Net cash provided by operating activities	67,522			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 estate	37,037			—
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 facility	202,000			(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 activities	28,854			44,311
NET DECREASE IN CASH AND CASH EQUIVALENTS	(1,035		)	(19,318		)
CASH AND CASH EQUIVALENTS:
Beginning of period	8,224			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 debt	30,832			—
Accrued capital expenditures	3,560			1,834
Change in distributions payable	(360		)	(159		)
Change in distributions payable - noncontrolling interests	122			149
Change in accrued share repurchase obligation	920			—
Distributions reinvested	36,171			44,731
Like-kind exchange of real estate:
Utilization of restricted cash held for acquisitions	(35,900		)	—



	Amount
Value of Operating Partnership units (“OP units”) issued⁽¹⁾	$	404,317
Debt assumed⁽²⁾:
Corporate debt	432,091
Mortgages and notes payable	70,837
Cash payments	25,000
Total estimated consideration	$	932,245



	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 note	108		262



	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 2021	2.49%-2.80%	125,000			125,000
Term loan due 2023	3.03%	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



	September 30, 2017		December 31, 2016
As to interest rate:⁽¹⁾
Fixed-rate debt	$	836,480	$	615,721
Variable-rate debt	391,969		444,969
Total	$	1,228,449	$	1,060,690
As to collateralization:
Unsecured debt	$	1,033,969	$	831,969
Secured debt	194,480		228,721
Total	$	1,228,449	$	1,060,690



	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



	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



Year	Amount
Remaining 2017	$	53,743
2018	205,462
2019	182,579
2020	160,034
2021	134,587
2022 and thereafter	453,701
Total	$	1,190,106



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



	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



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⁾PHILLIPS EDISON & COMPANY MARCH 31, 2022 FORM 10-Q			~~We calculate ABR as monthly contractual rent as of September 30, 2017, multiplied by 12 months.~~


⁽²⁾			~~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.~~19



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~~•Equity Market Capitalization—We calculate equity market capitalization as ~~those that operate in at least three states. Regional tenants are defined as those that have at least three locations.~~



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	%



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.



							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	)



	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.~~

September 30, 2017

December 31, 2016

Class B units⁽¹⁾