UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2019~~2020

ORor

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission ~~file number~~File Number: 000-54691

PHILLIPS EDISON & COMPANY, INC.

(Exact ~~Name~~name of ~~Registrant~~registrant as ~~Specified~~specified in ~~Its Charter)~~its charter)



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)

(513) 554-1110

(Registrant’s ~~Telephone Number, Including Area Code)~~telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	None	None

Indicate by check mark whether the ~~Registrant:~~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~~registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the ~~Registrant~~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~~registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the ~~Registrant~~registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	þ	Smaller reporting company	¨

		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the ~~Registrant~~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~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

~~Securities registered pursuant to Section 12(b) of the Act:~~



~~Title of each class~~	~~Trading Symbol~~	~~Name of each exchange on which registered~~
~~None~~	~~None~~	~~None~~

As of August ~~1, 2019,~~3, 2020, there were ~~283.5~~290.5 million outstanding shares of common stock of the Registrant.

PHILLIPS EDISON & COMPANY, INC.

FORM 10-Q

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION			2

ITEM 1.	FINANCIAL STATEMENTS ~~(UNAUDITED)~~(CONDENSED AND UNAUDITED)	2

	CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, ~~2019~~2020 AND DECEMBER 31, ~~2018~~2019	2

	CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~(LOSS) INCOME~~LOSS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, ~~2019~~2020 AND ~~2018~~2019	3

	CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, ~~2019~~2020 AND ~~2018~~2019	4

	CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, ~~2019~~2020 AND ~~2018~~2019	65

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	87

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2720

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4341

ITEM 4.	CONTROLS AND PROCEDURES	4341

PART II. OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	4342

ITEM 1A.	~~ITEM 1.~~RISK FACTORS	~~LEGAL PROCEEDINGS~~	4342

~~ITEM 1A.~~	~~RISK FACTORS~~	43

~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~	44

~~ITEM 5.~~	~~OTHER INFORMATION~~	44

ITEM 6.	EXHIBITS	45

SIGNATURES		46

w PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, ~~2019~~2020 AND DECEMBER 31, ~~2018~~2019

~~(Unaudited)~~(Condensed and Unaudited)

(In thousands, except per share amounts)


	June 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
ASSETS
Investment in real estate:
Land and improvements	$	1,595,005		$	1,598,063		$	1,544,975		$	1,552,562
Building and improvements	3,241,923			3,250,420			3,206,224			3,196,762
In-place lease assets	460,994			464,721			441,067			442,729
Above-market lease assets	66,740			67,140			65,863			65,946
Total investment in real estate assets	5,364,662			5,380,344			5,258,129			5,257,999
Accumulated depreciation and amortization	(667,037		)	(565,507		)	(841,154		)	(731,560		)
Net investment in real estate assets	4,697,625			4,814,837			4,416,975			4,526,439
Investment in unconsolidated joint ventures	42,418			45,651			41,545			42,854
Total investment in real estate assets, net	4,740,043			4,860,488			4,458,520			4,569,293
Cash and cash equivalents	17,772			16,791			53,262			17,820
Restricted cash	34,784			67,513			26,068			77,288
Accounts receivable – affiliates	3,409			5,125
Corporate intangible asset, net	4,401			14,054
Goodwill	29,066			29,066			29,066			29,066
Other assets, net	131,101			153,076			135,274			128,690
Real estate investment and other assets held for sale	15,877			17,364			—			6,038
Total assets	$	4,976,453		$	5,163,477		$	4,702,190		$	4,828,195

LIABILITIES AND EQUITY
Liabilities:
Debt obligations, net	$	2,423,405		$	2,438,826		$	2,320,719		$	2,354,099
Below-market lease liabilities, net	125,041			131,559			105,857			112,319
Earn-out liability	32,000			39,500			22,000			32,000
Derivative liabilities							65,376			20,974
Deferred income	14,899			14,025			15,659			15,955
Accounts payable and other liabilities	138,780			126,074			85,110			124,054
Liabilities of real estate investment held for sale	302			596
Total liabilities	2,734,427			2,750,580			2,614,721			2,659,401
Commitments and contingencies (Note 10)	—			—
Commitments and contingencies (Note 8)							—			—
Equity:
Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued
and outstanding at June 30, 2019 and December 31, 2018, respectively	—			—
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 283,770 and 279,803
shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively	2,838			2,798
Additional paid-in capital	2,718,871			2,674,871
Accumulated other comprehensive (loss) income (“AOCI”)	(20,538		)	12,362
Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and
outstanding at June 30, 2020 and December 31, 2019							—			—
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 290,465 and 289,047
shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively							2,905			2,890
Additional paid-in capital (“APIC”)							2,795,434			2,779,130
Accumulated other comprehensive loss (“AOCI”)							(60,075		)	(20,762		)
Accumulated deficit	(830,358		)	(692,045		)	(991,939		)	(947,252		)
Total stockholders’ equity	1,870,813			1,997,986			1,746,325			1,814,006
Noncontrolling interests	371,213			414,911			341,144			354,788
Total equity	2,242,026			2,412,897			2,087,469			2,168,794
Total liabilities and equity	$	4,976,453		$	5,163,477		$	4,702,190		$	4,828,195

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~(LOSS) INCOME~~LOSS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, ~~2019~~2020 AND ~~2018~~2019

~~(Unaudited)~~(Condensed and Unaudited)

(In thousands, except per share amounts)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Revenues:
Rental income	$	129,030		$	94,410		$	257,890		$	188,296		$	115,654		$	129,030		$	244,120		$	257,890
Fees and management income	3,051			9,137			6,312			17,849			2,760			3,051			4,925			6,312
Other property income	500			626			1,148			1,227			626			500			1,518			1,148
Total revenues	132,581			104,173			265,350			207,372			119,040			132,581			250,563			265,350
Expenses:
Operating Expenses:
Property operating	20,933			16,901			43,799			35,016			19,629			20,933			41,391			43,799
Real estate taxes	17,930			13,326			35,278			26,473			16,453			17,930			33,565			35,278
General and administrative	13,540			13,450			26,750			23,911			9,806			13,540			20,546			26,750
Depreciation and amortization	59,554			46,385			120,543			92,812			56,370			59,554			112,597			120,543
Impairment of real estate assets	25,199			10,939			38,916			10,939			—			25,199			—			38,916
Total expenses	137,156			101,001			265,286			189,151
Total operating expenses													102,258			137,156			208,099			265,286
Other:
Interest expense, net	(25,758		)	(17,051		)	(50,842		)	(33,830		)	(22,154		)	(25,758		)	(44,929		)	(50,842		)
(Loss) gain on disposal of property, net	(1,266		)	985			5,855			985			(541		)	(1,266		)	(2,118		)	5,855
Other impairment charges	(9,661		)	—			(9,661		)	—
Other (expense) income, net	(912		)	(1,182		)	6,624			(1,289		)	(500		)	(10,573		)	9,369			(3,037		)
Net loss	(42,172		)	(14,076		)	(47,960		)	(15,913		)
Net loss attributable to noncontrolling interests	5,602			2,725			6,195			2,962
Net loss attributable to stockholders	$	(36,570	)	$	(11,351	)	$	(41,765	)	$	(12,951	)
Net (loss) income													(6,413		)	(42,172		)	4,786			(47,960		)
Net loss (income) attributable to noncontrolling interests													825			5,602			(605		)	6,195
Net (loss) income attributable to stockholders													$	(5,588	)	$	(36,570	)	$	4,181		$	(41,765	)
Earnings per common share:
Net loss per share attributable to stockholders - basic and diluted (See Note 13)	$	(0.13	)	$	(0.06	)	$	(0.15	)	$	(0.07	)
Net (loss) income per share attributable to stockholders - basic and diluted (Note 10)													$	(0.02	)	$	(0.13	)	$	0.01		$	(0.15	)

Comprehensive (loss) income:
Net loss	$	(42,172	)	$	(14,076	)	$	(47,960	)	$	(15,913	)
Other comprehensive (loss) income:
Comprehensive loss
Net (loss) income													$	(6,413	)	$	(42,172	)	$	4,786		$	(47,960	)
Other comprehensive loss:
Change in unrealized value on interest rate swaps	(23,645		)	4,855			(38,006		)	18,343			(1,747		)	(23,645		)	(45,111		)	(38,006		)
Comprehensive (loss) income	(65,817		)	(9,221		)	(85,966		)	2,430
Net loss attributable to noncontrolling interests	5,602			2,725			6,195			2,962
Comprehensive loss (income) attributable to noncontrolling interests	3,168			1,782			5,106			(584		)
Comprehensive (loss) income attributable to stockholders	$	(57,047	)	$	(4,714	)	$	(74,665	)	$	4,808
Comprehensive loss													(8,160		)	(65,817		)	(40,325		)	(85,966		)
Net loss (income) attributable to noncontrolling interests													825			5,602			(605		)	6,195
Other comprehensive loss attributable to noncontrolling interests													224			3,168			5,798			5,106
Comprehensive loss attributable to stockholders													$	(7,111	)	$	(57,047	)	$	(35,132	)	$	(74,665	)

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, ~~2019~~2020 AND ~~2018~~2019

~~(Unaudited)~~(Condensed and Unaudited)

(In thousands, except per share amounts)


	Three Months Ended June 30, 2019 and 2018																											Three Months Ended June 30, 2020 and 2019
	Common Stock					Additional Paid-In Capital				AOCI				Accumulated Deficit			Total Stockholders’ Equity				Noncontrolling Interests				Total Equity			Common Stock					APIC			AOCI			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Shares		Amount										Shares				Total Stockholders’ Equity			Amount													APIC			AOCI			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at April 1, 2018	186,027		$	1,860		Additional Paid-In Capital			$	AOCI	1,638,176			Accumulated Deficit	$	27,381		$	(634,164	)	Noncontrolling Interests			$	Total Equity			1,033,253		$	428,019		$	1,461,272
Balance at April 1, 2019																												281,549		$	2,815		$	2,693,946		$	(61	)	$	(745,740	)	$	1,950,960		$	398,225		$	2,349,185
Dividend reinvestment plan (“DRIP”)																												1,558		15			17,225			—			—			17,240			—			17,240
Share repurchases	(3,830	)	(38		)	(42,099		)		—				—			(42,137		)		—				(42,137		)	(541	)	(5		)	(5,989		)	—			—			(5,994		)	—			(5,994		)
Dividend reinvestment plan (“DRIP”)	1,102		11			12,124				—				—			12,135				—				12,135
Change in unrealized value on interest rate swaps	—		—			—				3,912				—			3,912				943				4,855			—		—			—			(20,477		)	—			(20,477		)	(3,168		)	(23,645		)
Common distributions declared, $0.17 per share	—		—			—				—				(31,158		)	(31,158		)		—				(31,158		)	—		—			—			—			(48,048		)	(48,048		)	—			(48,048		)
Distributions to noncontrolling interests	—		—			—				—				—			—				(7,308		)		(7,308		)	—		—			—			—			—			—			(7,061		)	(7,061		)
Share-based compensation expense	5		—			401				—				—			401				1,300				1,701
Other	—		—			(12		)		—				—			(12		)		—				(12		)
Net loss	—		—			—				—				(11,351		)	(11,351		)		(2,725		)		(14,076		)
Balance at June 30, 2018	183,304		$	1,833		$	1,608,590			$	31,293			$	(676,673	)	$	965,043			$	420,229			$	1,385,272

Balance at April 1, 2019	281,549		$	2,815		$	2,693,946			$	(61	)		$	(745,740	)	$	1,950,960			$	398,225			$	2,349,185
Share repurchases	(541	)	(5		)	(5,989		)		—				—			(5,994		)		—				(5,994		)
DRIP	1,558		15			17,225				—				—			17,240				—				17,240
Change in unrealized value on interest rate swaps	—		—			—				(20,477		)		—			(20,477		)		(3,168		)		(23,645		)
Common distributions declared, $0.17 per share	—		—			—				—				(48,048		)	(48,048		)		—				(48,048		)
Distributions to noncontrolling interests	—		—			—				—				—			—				(7,061		)		(7,061		)
Share-based compensation expense	—		—			630				—				—			630				1,891				2,521
Share-based awards vesting	24		1			(1		)		—				—			—				—				—
Share-based compensation																												24		1			629			—			—			630			1,891			2,521
Conversion of noncontrolling interests	1,180		12			13,060				—				—			13,072				(13,072		)		—			1,180		12			13,060			—			—			13,072			(13,072		)	—
Net loss	—		—			—				—				(36,570		)	(36,570		)		(5,602		)		(42,172		)	—		—			—			—			(36,570		)	(36,570		)	(5,602		)	(42,172		)
Balance at June 30, 2019	283,770		$	2,838		$	2,718,871			$	(20,538	)		$	(830,358	)	$	1,870,813			$	371,213			$	2,242,026		283,770		$	2,838		$	2,718,871		$	(20,538	)	$	(830,358	)	$	1,870,813		$	371,213		$	2,242,026

Balance at April 1, 2020																												290,416		$	2,903		$	2,793,803		$	(58,552	)	$	(986,292	)	$	1,751,862		$	341,944		$	2,093,806
Change in unrealized value on interest rate swaps																												—		—			—			(1,523		)	—			(1,523		)	(224		)	(1,747		)
Share-based compensation																												5		1			1,332			—			—			1,333			808			2,141
Conversion of noncontrolling interests																												50		1			555			—			—			556			(556		)	—
Other																												(6	)	—			(256		)	—			(59		)	(315		)	(3		)	(318		)
Net loss																												—		—			—			—			(5,588		)	(5,588		)	(825		)	(6,413		)
Balance at June 30, 2020																												290,465		$	2,905		$	2,795,434		$	(60,075	)	$	(991,939	)	$	1,746,325		$	341,144		$	2,087,469

~~PHILLIPS EDISON & COMPANY, INC.~~

~~CONSOLIDATED STATEMENTS OF EQUITY~~

~~FOR THE SIX MONTHS ENDED JUNE 30, 2019 AND 2018~~

~~(Unaudited)~~

~~(In thousands, except per share amounts)~~


	Six Months Ended June 30, 2019 and 2018																											Six Months Ended June 30, 2020 and 2019
	Common Stock					Additional Paid-In Capital				AOCI				Accumulated Deficit			Total Stockholders’ Equity				Noncontrolling Interests				Total Equity			Common Stock					APIC			AOCI			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Shares		Amount										Shares				Total Stockholders’ Equity			Amount													APIC			AOCI			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at January 1, 2018	185,233		$	1,852		Additional Paid-In Capital			$	AOCI	1,629,130			Accumulated Deficit	$	16,496		$	(601,238	)	Noncontrolling Interests			$	Total Equity			1,046,240		$	432,442		$	1,478,682
Balance at January 1, 2019																												279,803		$	2,798		$	2,674,871		$	12,362		$	(692,573	)	$	1,997,458		$	414,911		$	2,412,369
DRIP																												3,161		31			34,927			—			—			34,958			—			34,958
Share repurchases	(4,196	)	(42		)	(46,110		)		—				—			(46,152		)		—				(46,152		)	(1,146	)	(11		)	(12,663		)	—			—			(12,674		)	—			(12,674		)
DRIP	2,262		23			24,876				—				—			24,899				—				24,899
Change in unrealized value on interest rate swaps	—		—			—				14,797				—			14,797				3,546				18,343			—		—			—			(32,900		)	—			(32,900		)	(5,106		)	(38,006		)
Common distributions declared, $0.34 per share	—		—			—				—				(62,484		)	(62,484		)		—				(62,484		)	—		—			—			—			(96,020		)	(96,020		)	—			(96,020		)
Distributions to noncontrolling interests	—		—			—				—				—			—				(14,097		)		(14,097		)	—		—			—			—			—			—			(14,228		)	(14,228		)
Share-based compensation expense	5		—			719				—				—			719				1,300				2,019
Other	—		—			(25		)		—				—			(25		)		—				(25		)
Net loss	—		—			—				—				(12,951		)	(12,951		)		(2,962		)		(15,913		)
Balance at June 30, 2018	183,304		$	1,833		$	1,608,590			$	31,293			$	(676,673	)	$	965,043			$	420,229			$	1,385,272

Balance at December 31, 2018	279,803		$	2,798		$	2,674,871			$	12,362			$	(692,045	)	$	1,997,986			$	414,911			$	2,412,897
Adoption of new accounting pronouncement (see Note 3)	—		—			—				—				(528		)	(528		)		—				(528		)
Balance at January 1, 2019	279,803		$	2,798		$	2,674,871			$	12,362			$	(692,573	)	$	1,997,458			$	414,911			$	2,412,369
Share repurchases	(1,146	)	(11		)	(12,663		)		—				—			(12,674		)		—				(12,674		)
DRIP	3,161		31			34,927				—				—			34,958				—				34,958
Change in unrealized value on interest rate swaps	—		—			—				(32,900		)		—			(32,900		)		(5,106		)		(38,006		)
Common distributions declared, $0.34 per share	—		—			—				—				(96,020		)	(96,020		)		—				(96,020		)
Distributions to noncontrolling interests	—		—			—				—				—			—				(14,228		)		(14,228		)
Share-based compensation expense	—		—			1,063				—				—			1,063				2,730				3,793
Share-based awards vesting	82		1			(1		)		—				—			—				—				—
Share-based awards retained for taxes	(18	)	—			(206		)		—				—			(206		)		—				(206		)
Share-based compensation																												64		1			856			—			—			857			2,730			3,587
Conversion of noncontrolling interests	1,888		19			20,880				—				—			20,899				(20,899		)		—			1,888		19			20,880			—			—			20,899			(20,899		)	—
Net loss	—		—			—				—				(41,765		)	(41,765		)		(6,195		)		(47,960		)	—		—			—			—			(41,765		)	(41,765		)	(6,195		)	(47,960		)
Balance at June 30, 2019	283,770		$	2,838		$	2,718,871			$	(20,538	)		$	(830,358	)	$	1,870,813			$	371,213			$	2,242,026		283,770		$	2,838		$	2,718,871		$	(20,538	)	$	(830,358	)	$	1,870,813		$	371,213		$	2,242,026

Balance at January 1, 2020																												289,047		$	2,890		$	2,779,130		$	(20,762	)	$	(947,252	)	$	1,814,006		$	354,788		$	2,168,794
DRIP																												1,436		14			15,926			—			—			15,940			—			15,940
Share repurchases																												(288	)	(3		)	(2,697		)	—			—			(2,700		)	—			(2,700		)
Change in unrealized value on interest rate swaps																												—		—			—			(39,313		)	—			(39,313		)	(5,798		)	(45,111		)
Common distributions declared, $0.17 per share																												—		—			—			—			(48,809		)	(48,809		)	—			(48,809		)
Distributions to noncontrolling interests																												—		—			—			—			—			—			(7,105		)	(7,105		)
Share-based compensation																												108		2			1,472			—			—			1,474			518			1,992
Conversion of noncontrolling interests																												168		2			1,859			—			—			1,861			(1,861		)	—
Other																												(6	)	—			(256		)	—			(59		)	(315		)	(3		)	(318		)
Net income																												—		—			—			—			4,181			4,181			605			4,786
Balance at June 30, 2020																												290,465		$	2,905		$	2,795,434		$	(60,075	)	$	(991,939	)	$	1,746,325		$	341,144		$	2,087,469

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, ~~2019~~2020 AND ~~2018~~2019

~~(Unaudited)~~(Condensed and Unaudited)

(In thousands)

Six Months Ended June 30,
   2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (47,960 ) $ (15,913 )
Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization of real estate assets 117,170
84,216
Impairment of real estate assets 38,916
10,939
Depreciation and amortization of corporate assets 3,373
7,672
Amortization of deferred financing expenses 2,522
2,401
Net amortization of above- and below-market leases (2,224 ) (1,990 )
Gain on disposal of property, net (5,855 ) (877 )
Change in fair value of earn-out liability (7,500 ) 1,500
Straight-line rent (4,456 ) (2,471 )
Share-based compensation expense 3,793
1,994
Equity in net loss of unconsolidated joint ventures 976
—
Other impairment charges 9,661
—
Other 5,211
229
Changes in operating assets and liabilities:

Other assets, net (1,553 ) (702 )
Accounts payable and other liabilities (12,005 ) (9,186 )
Net cash provided by operating activities 100,069

77,812
CASH FLOWS FROM INVESTING ACTIVITIES:

Real estate acquisitions (49,880 ) (9,222 )
Capital expenditures (27,221 ) (17,346 )
Proceeds from sale of real estate 47,857
13,300
Return of investment in unconsolidated joint ventures 2,257
—
Net cash used in investing activities (26,987 ) (13,268 )
CASH FLOWS FROM FINANCING ACTIVITIES:

Net change in credit facility (73,359 ) (15,000 )
Proceeds from mortgages and loans payable 60,000
65,000
Payments on outstanding indebtedness (4,835 ) (20,542 )
Distributions paid, net of DRIP (60,787 ) (37,819 )
Distributions to noncontrolling interests (13,841 ) (14,096 )
Repurchases of common stock (11,802 ) (44,494 )
Other (206 ) —
Net cash used in financing activities (104,830 ) (66,951 )
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (31,748 ) (2,407 )
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:

Beginning of period 84,304
27,445
End of period $ 52,556
$ 25,038

RECONCILIATION TO CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents $ 17,772
$ 8,310
Restricted cash 34,784
16,728
Cash, cash equivalents, and restricted cash at end of period $ 52,556
$ 25,038



	Six Months Ended June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	4,786		$	(47,960	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of real estate assets	109,709			117,170
Impairment of real estate assets	—			38,916
Depreciation and amortization of corporate assets	2,888			3,373
Net amortization of above- and below-market leases	(1,583		)	(2,224		)
Amortization of deferred financing expenses	2,495			2,522
Amortization of debt and derivative adjustments	1,884			4,482
Loss (gain) on disposal of property, net	2,118			(5,855		)
Change in fair value of earn-out liability	(10,000		)	(7,500		)
Straight-line rent	(1,331		)	(4,456		)
Share-based compensation	1,992			3,793
Other impairment charges	—			9,661
Other	1,239			1,705
Changes in operating assets and liabilities:
Other assets, net	(12,821		)	(1,553		)
Accounts payable and other liabilities	(11,470		)	(12,005		)
Net cash provided by operating activities	89,906			100,069
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions	(4,343		)	(49,880		)
Capital expenditures	(28,540		)	(27,221		)
Proceeds from sale of real estate	25,778			47,857
Return of investment in unconsolidated joint ventures	639			2,257
Net cash used in investing activities	(6,466		)	(26,987		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in credit facility	—			(73,359		)
Proceeds from mortgages and loans payable	—			60,000
Payments on mortgages and loans payable	(35,200		)	(4,835		)
Distributions paid, net of DRIP	(49,083		)	(60,787		)
Distributions to noncontrolling interests	(9,406		)	(13,841		)
Repurchases of common stock	(5,211		)	(11,802		)
Other	(318		)	(206		)
Net cash used in financing activities	(99,218		)	(104,830		)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(15,778		)	(31,748		)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning of period	95,108			84,304
End of period	$	79,330		$	52,556

RECONCILIATION TO CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents	$	53,262		$	17,772
Restricted cash	26,068			34,784
Cash, cash equivalents, and restricted cash at end of period	$	79,330		$	52,556

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, ~~2019~~2020 AND ~~2018~~2019

~~(Unaudited)~~(Condensed and Unaudited)

(In thousands)


	2019		2018			2020			2019
SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES:	SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES:					SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid for interest	$	44,169	$	32,422		$	40,980		$	44,169
Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities						551			1,444
Accrued capital expenditures	2,960		2,428			2,884			2,960
Change in distributions payable	275		(235		)	(16,214		)	275
Change in distributions payable - noncontrolling interests	387		2			(2,301		)	387
Change in accrued share repurchase obligation	872		1,658			(2,511		)	872
Distributions reinvested	34,958		24,899			15,940			34,958

See notes to consolidated financial statements.

Phillips Edison & Company, Inc.

Notes to Consolidated Financial Statements

~~(Unaudited)~~(Condensed and Unaudited)

1. ORGANIZATION

Phillips Edison & Company, Inc. (“we,” the “Company,” “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 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, grocery-anchored, neighborhood and community shopping centers that have a mix of creditworthy national, regional, and local retailers that sell necessity-based goods and services in strong demographic markets throughout the United States. In addition to managing our own ~~properties,~~shopping centers, our third-party investment management business provides comprehensive real estate and asset management services to ~~(i) Phillips Edison Grocery Center REIT III, Inc. (“PECO III”), a non-traded publicly registered REIT; (ii)~~ three institutional joint ~~ventures;~~ventures, in which we have a partial ownership interest, and ~~(iii)~~ one private fund (collectively, the “Managed Funds”).

~~In November 2018,~~As of June 30, 2020, we ~~completed a merger (the “Merger”) with Phillips Edison Grocery Center REIT II, Inc. (“REIT II”), a~~

~~public non-traded REIT that was advised and managed by us, in a 100% stock-for-stock transaction valued at approximately~~

~~$1.9 billion. As a result of the Merger,~~wholly-owned 284 real estate properties. Additionally, we ~~acquired 86 properties and~~owned a 20% equity interest in Necessity Retail Partners (“NRP” ~~or the “NRP joint venture”~~), a joint venture that owned ~~13 properties. For~~seven properties; a ~~more detailed discussion, see Note 4.~~

~~In November 2018, through our direct or indirect subsidiaries, we entered into a joint venture with The Northwestern~~

Mutual Life Insurance Company (“Northwestern Mutual”). At formation, we contributed or sold 17 grocery-anchored shopping centers with a fair value of approximately $359 million to the new joint venture,15% interest in Grocery Retail Partners I LLC (“GRP I” ~~or the “GRP I~~), a joint ~~venture”). GRP I also assumed~~venture that owned 17 properties; and a ~~portfolio loan from us as part of this transaction. In exchange, we received a 15% ownership~~10% interest in Grocery Retail Partners II LLC (“GRP ~~I and cash of $161.8 million. For~~II”), a ~~more detailed discussion, see Note 6.~~

~~As of June 30, 2019, we wholly-owned fee simple interests in 298 real estate~~joint venture that owned three properties. ~~In addition, we owned a 20% equity interest in NRP and a 15% interest in GRP I, as described previously.~~

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Set forth below is a summary of the significant accounting estimates and policies that management believes are important to the preparation of our 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, recoverable amounts of receivables, and other fair value measurement assessments required for the preparation of the consolidated financial statements. As a result, these estimates are subject to a degree of uncertainty.

~~Other than those noted below, there~~During the first quarter of 2020, a novel coronavirus (“COVID-19”) began spreading globally, with the outbreak being classified as a pandemic by the World Health Organization on March 11, 2020. Because of the adverse economic conditions that exist as a result of the impacts of the COVID-19 pandemic, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change significantly. Specifically as it relates to our business, the current economic situation resulted in temporary tenant closures at our shopping centers, often as a result of “stay-at-home” government mandates which limited travel and movement of the general public to essential activities only and required all non-essential businesses to close.

Temporary closures of tenant spaces at our centers peaked in April and have significantly decreased as states have reduced or removed restrictions on business operations and the travel and movement of the general public. Certain tenants remain temporarily closed, have since closed after reopening, are limiting the number of customers allowed in their locations, or have modified their operations in other ways that may impact their profitability, either as a result of government mandates or self-elected efforts to reduce the spread of COVID-19. Some states and localities have temporarily reinstated certain mandates in response to increasing reported cases of COVID-19. These actions could result in increased permanent store closings and could reduce the demand for leasing space in our shopping centers and result in a decline in occupancy and rental revenues in our real estate portfolio. All of this activity impacts our estimates around the collectability of revenue and valuation of real estate assets, goodwill and other intangible assets, and certain liabilities, among others.

There were no changes to our significant accounting policies during the six months ended June 30, ~~2019.~~2020. For a full summary of our accounting policies, refer to our ~~2018~~2019 Annual Report on Form 10-K filed with the SEC on March ~~13, 2019.~~11, 2020.

Basis of Presentation and Principles of Consolidation—The accompanying 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 our audited consolidated financial statements for the year ended December 31, ~~2018,~~2019, which are included in our ~~2018~~2019 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 six months ended June 30, ~~2019,~~2020 are not necessarily indicative of the operating results expected for the full year.

The accompanying consolidated financial statements include our accounts and those of our majority-owned subsidiaries. All intercompany balances and transactions are eliminated upon consolidation.

Leases—~~We are party to a number of lease agreements, both as a lessor as well as a lessee of various types of assets.~~

~~Lessor—The majority of our revenue is lease revenue derived from our real estate assets, which is accounted for under Accounting Standards Codification (“ASC”) Topic 842,~~ ~~Leases~~ (“ASC 842”). We adopted the accounting guidance contained within ASC 842 on January 1, 2019, the effective date of the standard for public companies. We record lease and lease-related revenue as Rental Income on the consolidated statements of operations and comprehensive (loss) income, also referred to herein as our “consolidated statements of operations”, in accordance with ASC 842.

We enter into leases primarily as a lessor as part of our real estate operations, and leases represent the majority of our revenue. We lease space in our properties generally in the form of operating leases. Our leases typically provide for reimbursements from tenants for common area maintenance, insurance, and real estate tax expenses. Common area maintenance reimbursements can be fixed, with revenue earned on a straight-line basis over the term of the lease, or variable, with revenue recognized as services are performed for which we will be reimbursed.

The terms and expirations of our operating leases with our tenants are generally similar. The majority of leases for inline (non-anchor) tenants have terms that range from 2 to 10 years, and the majority of leases for anchor tenants range from 3 to 13 years. In both cases, the full term of the lease prior to our acquisition or assumption of the lease will generally be longer, however, we are measuring the commencement date for these purposes as being the date that we acquired or assumed the lease, excluding option periods.

The lease agreements frequently contain fixed-price renewal options to extend the terms of leases and other terms and conditions as negotiated. In calculating the term of our leases, we consider whether these options are reasonably certain to be exercised. Our determination involves a combination of contract-, asset-, entity-, and market-based factors and involves considerable judgment. We retain substantially all of the risks and benefits of ownership of the real estate assets leased to tenants. Currently, our tenants have no options to purchase at the end of the lease term, although in a small number of leases, a tenant, usually the anchor tenant, may have the right of first refusal to purchase one of our properties if we elect to sell the center.

Beginning January 1, 2019, we evaluate whether a lease is an operating, sales-type, or direct financing lease using the criteria established in ASC 842. Leases will be considered either sales-type or direct financing leases if any of the following criteria are met:

~~if the lease transfers ownership of the underlying asset to the lessee by the end of the term;~~

~~if the lease grants the lessee an option to purchase the underlying asset that is reasonably certain to be exercised;~~

~~if the lease term is for the major part of the remaining economic life of the underlying asset; or~~

~~if the present value of the sum of the lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset.~~

We utilize substantial judgment in determining the fair value of the leased asset, the economic life of the leased asset, and the relevant borrowing rate in performing our lease classification analysis. If none of the criteria listed above are met, the lease is classified as an operating lease. Currently all of our leases are classified as operating leases, and we expect that the majority, if not all, of our leases will continue to be classified as operating leases based upon our typical lease terms.

We commence revenue recognition on our leases based on a number of factors. In most cases, revenue recognition under a lease begins when the lessee takes possession of or controls the physical use of the leased asset. The determination of when revenue recognition under a lease begins, as well as the nature of the leased asset, is dependent upon our assessment of who is the owner, for accounting purposes, of any related tenant improvements. If we are the owner, for accounting purposes, of the tenant improvements, then the leased asset is the finished space, and revenue recognition begins when the lessee takes possession of the finished space, typically when the improvements are substantially complete.

If we conclude that we are not the owner, for accounting purposes, of the tenant improvements (i.e., the lessee is the owner), then the leased asset is the unimproved space and any tenant allowances funded under the lease are treated as lease incentives, which reduce revenue recognized over the term of the lease. In these circumstances, we begin revenue recognition when the lessee takes possession of the unimproved space to construct their own improvements. We consider a number of different factors in evaluating whether the lessee or we are the owner of the tenant improvements for accounting purposes. These factors include:

~~whether the lease stipulates how and on what a tenant improvement allowance may be spent;~~

~~whether the tenant or landlord retains legal title to the improvements;~~

~~the uniqueness of the improvements;~~

~~the expected economic life of the tenant improvements relative to the length of the lease; and~~

~~who constructs or directs the construction of the improvements.~~

The majority of our leases provide for fixed rental escalations, and we recognize rental income on a straight-line basis over the term of each lease in such instances. The difference between rental income earned on a straight-line basis and the cash rent due under the provisions of the lease agreements is recorded as deferred rent receivable and is included as a component of Other Assets, Net. Due to the impact of the straight-line adjustments, rental income generally will be greater than the cash collected in the early years and will be less than the cash collected in the later years of a lease.

Reimbursements from tenants for recoverable real estate taxes and operating expenses that are fixed per the terms of the applicable lease agreements are recorded on a straight-line basis, as described above. The majority of our lease agreements with tenants, however, provide for tenant reimbursements that are variable depending upon the applicable expenses incurred. These reimbursements are accrued as revenue in the period in which the applicable expenses are incurred. We make certain assumptions and judgments in estimating the reimbursements at the end of each reporting period. We do not expect the actual results to materially differ from the estimated reimbursements. Both fixed and variable tenant reimbursements are recorded as Rental Income in the consolidated statements of operations. In certain cases, the lease agreement may stipulate that a tenant make a direct payment for real estate taxes to the relevant taxing authorities. In these cases, beginning on January 1, 2019, we no longer record any revenue or expense related to these tenant expenditures. Although we expect such cases to be rare, in the event that a direct-paying tenant failed to make their required payment to the taxing authorities, we would potentially be liable for such amounts, although they are not recorded as a liability in our consolidated balance sheets per the requirements of ASC 842. We have made a policy election to exclude amounts collected from customers for all sales tax and other similar taxes from the transaction price in our recognition of lease revenue.

Additionally, we record an immaterial amount of variable revenue in the form of percentage rental income. Our policy for percentage rental income is to defer recognition of contingent rental income until the specified target (i.e., breakpoint) that triggers the contingent rental income is achieved.

In some instances, as part of our negotiations, we may offer lease incentives to our tenants. These incentives usually take the form of payments made to or on behalf of the tenant, and such incentives will be deducted from the lease payment and recorded on a straight-line basis over the term of the new lease.

We record lease termination income if there is a signed termination agreement, all of the conditions of the agreement have been met, collectability is reasonably assured and the tenant is no longer occupying the property. Upon early lease termination, we provide for losses related to unrecovered tenant-specific intangibles and other assets. We record lease termination income as Rental Income in the consolidated statements of operations.

~~Historically, we periodically reviewed the collectability of outstanding receivables. Following the adoption of ASC 842, as of January 1, 2019, lease~~Lease receivables are reviewed continually to determine whether or not it is ~~likely~~probable that we will realize all amounts ~~receivable~~owed to us for each of our tenants (i.e., whether a tenant is deemed to be a credit risk). If we determine that the tenant is not a credit risk, no reserve or reduction of revenue is recorded, except in the case of disputed charges. If we determine that the

tenant is a credit risk, revenue for that tenant is recorded on a cash basis, including any amounts relating to straight-line rent receivables and/or receivables for recoverable expenses. ~~Under ASC 842,~~The COVID-19 pandemic has increased the ~~aforementioned adjustments as well as any reserve for disputed charges are recorded as~~uncertainty of collecting rents from a ~~reduction of Rental Income rather than in Property Operating, where our reserves were previously recorded, on the consolidated statements of operations.~~

~~Lessee—We enter into leases as a lessee as part~~number of our ~~real estate operations~~tenants. For the three and six months ended June 30, 2020, we had $12.0 million and $14.8 million, respectively, in revenue that will not be recognized until cash is collected or the tenant resumes payment and is considered creditworthy.

In our efforts to maximize collections in the near term while also supporting our tenants as they operate through this pandemic, we have begun negotiating rent relief primarily in the form of ~~ground leases of land~~payment plans and deferrals on rent and recovery charges, which allow for ~~certain properties, and as part of our corporate operations~~changes in the ~~form~~timing of office space and office equipment leases. Ground leases typically have initial terms of 15-40 years with one or more options to renew for additional terms of 3-5 years, and may include options that grant us, aspayments, but not the lessee, the right to terminate the lease, without penalty, in advance of the full lease term. Our office space leases generally have terms of less than ten years with no renewal options. Office equipment leases typically have terms ranging from 3-5 years with options to extend the term for a year or less, but contain minimal termination rights. In calculating the term of our leases, we consider whether we are reasonably certain to exercise renewal and/or termination options. Our determination involves a combination of contract-, asset-, entity-, and market-based factors and involves considerable judgment.

Currently, neither our operating leases nor our finance leases have residual value guarantees or other restrictions or covenants, but a small number may contain nonlease components which have been deemed not material. Beginning January 1, 2019, we evaluate whether a lease is a finance or operating lease using the criteria established in ASC 842. The criteria we use to determine whether a lease is a finance lease are the same as those we use to determine whether a lease is sales-type lease as a lessor. If none of the finance lease criteria is met, we classify the lease as an operating lease.

We record right-of-use (“ROU”) assets and liabilities in the consolidated balance sheets based upon the terms and conditions of the applicable lease agreement. We use discount rates to calculate the present value of lease payments when determining lease classification and measuring our lease liability. We use the rate implicit in the lease as our discount rate unless that rate cannot be readily determined, in which case we consider various factors to select an appropriate discount rate. This requires the application of judgment, and we consider the length of the lease as well as the length and securitization of our outstanding debt agreements in selecting an appropriate rate. Refer to Note 3 for further detail.

~~Revenue Recognition—In addition to our lease-related revenue, we also earn fee revenues by providing services to the Managed Funds. These fees are accounted for within the scope of ASC Topic 606,~~ ~~Revenue from Contracts with Customers~~ (“ASC 606”), and are recorded as Fees and Management Income on the consolidated statements of operations. We provide services to the Managed Funds, all of which are considered related parties. These services primarily include asset acquisition and disposition services, asset management, operating and leasing of properties, construction management, and other general and administrative responsibilities. These services are currently provided under various combinations of advisory agreements, property management agreements, and other service agreements (the “Management Agreements”). The wide variety of duties within the Management Agreements makes determining the performance obligations within the contracts a matter of judgment. We have concluded that each of the separately disclosed fee types in the below table represents a separate performance obligation within the Management Agreements.

~~The table below shows the most significant of these fee types in the Management Agreements:~~



~~Fee~~	~~Performance Obligation Satisfied~~	~~Form and Timing of Payment~~	~~Description~~
~~Asset Management~~	~~Over time~~	~~In cash and/or ownership units, monthly~~	~~Because each increment of service is distinct, although substantially the same, revenue is recognized at the end of each reporting period based upon asset base and the applicable rate.~~
~~Property Management~~	~~Over time~~	~~In cash, monthly~~	~~Because each increment of service is distinct, although substantially the same, revenue is recognized at the end of each month based on a percentage of the properties’ cash receipts.~~
~~Leasing Commissions~~	~~Point in time (upon close of a transaction)~~	~~In cash, upon completion~~	~~Revenue is recognized in an amount equal to the fees charged by unaffiliated persons rendering comparable services in the same geographic location.~~
~~Construction Management~~	~~Point in time (upon close of a project)~~	~~In cash, upon completion~~	~~Revenue is recognized in an amount equal to the fees charged by unaffiliated persons rendering comparable services in the same geographic location.~~
~~Acquisition/Disposition~~	~~Point in time (upon close of a transaction)~~	~~In cash, upon close of the transaction~~	~~Revenue is recognized based on a percentage of the purchase price or disposition price of the property acquired or sold.~~

Due to the nature of the services being provided under our Management Agreements, each performance obligation has a variable component. Therefore, when we determine the transaction price for the contracts, we are required to constrain our estimate to an amount that is not probable of significant revenue reversal. For most of these fee types, such as acquisition fees and leasing commissions, compensation only occurs if a transaction takes place and thetotal amount of ~~compensation is dependent upon the terms of the transaction. For our property and asset management fees,~~consideration due to us under the ~~large~~lease. In a limited number ~~and broad range~~ of ~~possible consideration amounts, we calculate the amount earned at the end of each month.~~

In addition to the fees listed above, certain of our Management Agreements include the potential for additional revenues if certain market conditions are in place or certain events take place. We have not recognized revenue related to these fees, nor will we until it is no longer highly probable that there would be a material reversal of revenue.

Additionally, effective January 1, 2018, sales or transfers to non-customers of non-financial assets or in substance non-financial assets that do not meet the definition of a business are accounted for within the scope of ASC Topic 610-20, ~~Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets~~ (“ASC 610-20”). Generally, our sales of real estate would be considered a sale of a non-financial asset as defined by ASC 610-20. Under ASC 610-20, if we determine we do not have a controlling financial interest in the entity that holds the asset and the arrangement meets the criteria to be accounted for as a contract, we would de-recognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. Further,instances, we may defer a tax gain through an Internal Revenue Code (the “Code”) Section 1031 like-kind exchange by purchasing another property within a specified time period. For additional information regarding gain on sale of assets, referalso agree to ~~Note 5.~~waive certain charges due to us under the lease. During the three months ended June 30, 2020, our negotiated rent relief was minimal.

Income Taxes—Our consolidated financial statements include the operations of wholly owned subsidiaries that have jointly elected to be treated as Taxable REIT Subsidiaries ~~(“TRS”)~~ and are subject to U.S. federal, state, and local income taxes at regular corporate tax rates. During the three and six months ended June 30, ~~2019 and 2018, no~~2020, an insignificant amount of federal income tax ~~expense or~~ benefit was reported, and we recorded a full valuation allowance for our net deferred tax asset. We recorded no income tax expense or benefit for the three and six months ended June 30, 2019. We recognized an ~~immaterial~~insignificant amount of state and local income tax expense ~~which is~~for the three and six months ended June 30, 2020 and 2019. All income tax amounts are included in Other (Expense) Income, Net on the consolidated statements of ~~operations.~~operations and comprehensive loss (“consolidated statements of operations”).

Recently Issued and Newly Adopted Accounting Pronouncements—In response to the COVID-19 pandemic, the Financial Accounting Standards Board (“FASB”) issued interpretive guidance addressing the accounting treatment for lease concessions attributable to the pandemic. Under this guidance, entities may elect to account for such lease concessions consistent with how they would be accounted for under ASC Topic 842, Leases, (“ASC 842”) if the enforceable rights and obligations for the lease concessions already existed within the lease agreement, regardless of whether such enforceable rights and obligations are explicitly outlined within the lease. This accounting treatment may only be applied if (1) the lease concessions were granted as a direct result of the pandemic, and (2) the total cash flows under the modified lease are less than or substantially the same as the cash flows under the original lease agreement. As a result, entities that make this election will not have to analyze each lease to determine whether enforceable rights and obligations for concessions exist within the contract, and may elect not to account for these concessions as lease modifications within the scope of ASC 842.

Some concessions will provide a deferral of payments, which may affect the timing of cash receipts without substantively impacting the total consideration per the original lease agreement. The ~~following table provides a brief description of recent accounting pronouncements~~FASB has stated that ~~could have a material effect on our consolidated financial statements:~~there are multiple acceptable methods to account for deferrals under the interpretive guidance:

Account for the concession as if no changes to the lease contract were made, increasing the lease receivable as payments accrue and continuing to recognize income; or



~~Standard~~	~~Description~~	~~Date of Adoption~~	~~Effect on the Consolidated Financial Statements or Other Significant Matters~~
~~Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326):~~ ~~Measurement of Credit Losses on Financial Instruments~~ ~~ASU 2018-19, Financial Instruments - Credit Losses (Topic 326): Codification Improvements~~ ~~ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief~~	The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. It clarifies that receivables arising from operating leases are not within the scope of Topic 326. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842. It also allows election of the fair value option on certain financial instruments. This update is effective for public entities in fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted after December 15, 2018.	~~January 1, 2020~~	We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements. The majority of our financial instruments result from operating leasing transactions, which are not within the scope of this standard.
~~ASU 2018-13, Fair Value Measurement (Topic 820)~~	This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of the Financial Accounting Standards Board’s disclosure framework project. It is effective for annual and interim reporting periods beginning after December 15, 2019, but early adoption is permitted.	~~January 1, 2020~~	~~We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements, which is expected to only impact fair value measurement disclosures.~~
~~ASU 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities~~	This ASU amends two aspects of the related-party guidance in ASC 810: (1) adds an elective private-company scope exception to the variable interest entity guidance for entities under common control and (2) indirect interests held through related parties in common control arrangements should be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests. For entities other than private companies, the amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. All entities are required to apply the amendments in this update retrospectively with a cumulative effect adjustment to retained earnings at the beginning of the earliest period presented. Early adoption is permitted.	~~January 1, 2020~~	~~We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements.~~
~~ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~	This ASU amends a variety of topics, improving certain aspects of previously issued ASUs, including ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The amendment is effective for fiscal years beginning after December 15, 2019, but early adoption is permitted.	~~January 1, 2020~~	~~We are currently evaluating the impact the adoption of this standard will have on our consolidated financial statements.~~

Account for deferred lease payments as variable lease payments.

We have elected not to account for any qualifying lease concessions granted as a result of the COVID-19 pandemic as lease modifications and will account for any qualifying concessions granted as if no changes to the lease contract were made. This will result in an increase to the related lease receivable as payments accrue while we continue to recognize rental income. We will, however, assess the impact of any such concessions on estimated collectability of the related lease payments and will reflect any adjustments as necessary as an offset to Rental Income on the consolidated statements of operations.

The following table provides a brief description of newly adopted accounting pronouncements and their effect on our consolidated financial statements:



Standard	Description	Date of Adoption	Effect on the Financial Statements or Other Significant Matters
~~ASU 2016-02, Leases~~Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic ~~842)~~326): Measurement of Credit Losses on Financial Instruments ASU ~~2018-01, Leases~~2018-19, Financial Instruments - Credit Losses (Topic ~~842)~~326): ~~Land Easement Practical Expedient for Transition to Topic 842~~Codification Improvements ASU ~~2018-10,~~2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief ASU 2019-11, Codification Improvements to Topic ~~842, Leases~~ ~~ASU 2018-11, Leases (Topic 842): Targeted Improvements~~326, Financial Instruments - Credit Losses ASU ~~2018-20,~~2020-02, Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842)~~: Narrow-Scope Improvements for Lessors~~ ~~ASU 2019-01, Leases (Topic 842): Codification Improvements~~	~~These updates amended existing guidance by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.~~	~~January 1, 2019~~	We adopted this standard on January 1, 2019 and a modified retrospective transition approach was required. We determined that the adoption had a material impact on our consolidated financial statements; please refer to Note 3 for additional details. ~~We elected to utilize the following optional practical expedients upon adoption:~~ ~~- Package of practical expedients which permits us not to reassess our prior conclusions about lease identification, lease classification, and initial direct costs.~~ ~~- Practical expedient permitting us not to assess whether existing, expired, or current land easements either are or contain a lease.~~ - Practical expedient which permits us as a lessor not to separate non-lease components, such as common area maintenance reimbursements, from the associated lease component, provided that the timing and pattern of transfer of the services are substantially the same. Because of our decision to elect this practical expedient, we will no longer present our Rental Income and Tenant Recovery Income amounts separately on our consolidated statements of operations, and have reclassified Tenant Recovery Income amounts to Rental Income for all periods presented on the consolidated statements of operations. - Practical expedient which permits us not to record a right of use asset or lease liability related to leases of twelve months or fewer, but instead allows us to record expense related to any such leases as it is incurred.
~~ASU 2018-07, Compensation - Stock Compensation~~ ~~(Topic 718):~~ ~~Improvements to Non-employee Share-Based Payment Accounting~~	The amendments in this update ~~expanded~~replaced the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. It clarified that receivables arising from operating leases are not within the scope of Accounting Standards Codification (“ASC”) Topic ~~718:~~ ~~Compensation - Stock Compensation~~ ~~to include share-base payment transactions~~326. Instead, impairment of receivables arising from operating leases will be accounted for ~~acquiring goods and services from non-employees, except for specific guidance~~in accordance with Topic 842. It also allowed election of the fair value option on ~~inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period).~~ certain financial instruments.	January 1, ~~2019~~2020	The adoption of this standard did not have a material impact on our consolidated financial statements. The majority of our financial instruments result from operating lease transactions, which are not within the scope of this standard.
ASU ~~2018-16, Derivatives and Hedging~~2018-17, Consolidation (Topic ~~815)~~810): ~~Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark~~Targeted Improvements to Related Party Guidance for Variable Interest ~~Rate for Hedge Accounting Purposes~~Entities	This ~~update permitted use~~ASU amended two aspects of the ~~OIS rate based on~~related-party guidance in Topic 810: (1) added an elective private-company scope exception to the ~~SOFR as a US benchmark~~variable interest ~~rate for hedge accounting purposes under Topic 815. The purpose of this was to facilitate the LIBOR to SOFR transition and provide sufficient lead time~~entity guidance for entities under common control and (2) indirect interests held through related parties in common control arrangements will be considered on a proportional basis for determining whether fees paid to ~~prepare for changes to interest rate risk hedging strategies for both risk management~~decision makers and ~~hedge accounting purposes.~~service providers are variable interests.	January 1, ~~2019~~2020	The adoption of this standard did not have a material impact on our consolidated financial statements.
ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments	This ASU amended a variety of topics, improving certain aspects of previously issued ASUs, including ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.	January 1, 2020	The adoption of this standard did not have a material impact on our consolidated financial statements.
ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting	This ASU contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur.	March 12, 2020	We have elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

Reclassifications—The following line item on our consolidated balance sheet as of December 31, 2019 was reclassified to conform to current year presentation:

Corporate Intangible Assets, Net was included in Other Assets, Net.

The following line items on our consolidated ~~statements~~statement of ~~operations~~cash flows for the ~~three and~~ six months ended June 30, ~~2018,~~2019 were reclassified to conform to current year presentation:

~~Tenant Recovery~~Amortization of Debt and Derivative Adjustments was ~~combined with Rental Income,~~listed on a separate line from Other Cash Flows from Operating Activities; and

~~Other Expense, Net previously included activity from property disposals, and this is now presented as (Loss) Gain on Disposal of Property, Net.~~

~~The following line items on our consolidated statements of cash flows for the~~ ~~six months ended June 30, 2018, were reclassified to conform to current year presentation:~~

~~Accounts Receivable - Affiliates was combined with Other Assets, Net;~~

~~Accounts Payable - Affiliates was combined with Accounts Payable and Other Liabilities; and~~

Equity in Net Loss ~~on Write-off~~ of ~~Unamortized Capitalized Leasing Commissions, Market Debt Adjustments, and~~

~~Deferred Financing Expenses were reclassified to Other.~~Unconsolidated Joint Ventures was included in Other Cash Flows from Operating Activities.

3. LEASES

~~Standard Adoption—Effective January 1, 2019, we adopted ASU 2016-02,~~ ~~Leases. This standard was adopted in conjunction with the related updates, ASU 2018-01,~~ ~~Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842; ASU 2018-10, Codification Improvements to Topic 842, Leases; ASU 2018-11,~~ ~~Leases (Topic 842): Targeted Improvements; and ASU 2018-20,~~ ~~Leases (Topic 842): Narrow-Scope Improvements for Lessors~~, collectively “ASC 842,” using a modified-retrospective approach, as required. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019.

The adoption of ASC 842 resulted in a $0.5 million adjustment to the current year’s opening balance in Accumulated Deficit on the consolidated balance sheets as a result of recognizing ROU assets and lease liabilities as well as adjustments to our collectability reserve. Beginning in January 1, 2019, due to the new standard’s narrowed definition of initial direct costs, we now expense significant lease origination costs as incurred, which were previously capitalized as initial direct costs and amortized to expense over the lease term. We capitalized $6.2 million of internal costs for the year ended December 31, 2018, some of which we will continue to capitalize in accordance with the standard. During the six months ended June 30, 2019, the amounts capitalized were $1.9 million, compared to $2.9 million during the six months ended June 30, 2018. Amounts that were capitalized prior to the adoption of ASC 842 will continue to be amortized over their remaining lives.

Additionally, ASC 842 requires that lessors exclude from variable payments all costs paid by a lessee directly to a third party. For the year ended December 31, 2018, $8.0 million in real estate tax payments made by tenants directly to third parties was recorded by us as both Tenant Recovery Income and Real Estate Taxes. This amount was approximately $1.3 million and $2.7 million for the three and six months ended June 30, 2018, respectively. Beginning January 1, 2019, such amounts are no longer recognized by us. As the recorded expense was completely offset by the tenant recovery income recorded, this has no net impact to earnings.

Beginning January 1, 2019, operating lease receivables are accounted for under ASC 842, which requires us to recognize changes in the collectability assessment for an operating lease as an adjustment to lease income. For the year ended December 31, 2018, $2.9 million of expense was recorded as Property Operating on our consolidated statements of operations, which would have been recorded as a reduction to Rental Income under the new standard. For the three and six months ended June 30, 2019, the total amount recorded as a reduction to Rental Income as a result of collectability reserves was $0.1 million and $0.7 million, respectively.

Lessor—The majority of our leases are largely similar in that the leased asset is retail space within our properties, and the lease agreements generally contain similar provisions and features, without substantial variations. All of our leases are currently classified as operating leases. Lease income related to our operating leases was as follows for the three and six months ended June 30, 2020 and 2019 (dollars in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Rental income related to fixed lease payments	$	97,276		$	98,841		$	195,510		$	196,354
Rental income related to variable lease payments	30,659			28,951			62,497			59,478
Amortization of lease assets	786			1,080			1,565			2,198
Lease buyout income	214			223			308			456
Adjustments for collectability⁽¹⁾	(13,281		)	(65		)	(15,760		)	(596		)
Total rental income	$	115,654		$	129,030		$	244,120		$	257,890


⁽¹⁾	Contains general reserves as well as revenue adjustments for tenants deemed to be non-creditworthy.

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of June 30, ~~2019,~~2020, assuming no new or renegotiated leases or option extensions on lease agreements, are as follows (in thousands):


Year	Amount		Amount
Remaining 2019	$	191,571
2020	360,997
Remaining 2020			$	191,883
2021	316,521		353,229
2022	274,713		316,888
2023	223,940		268,211
2024 and thereafter	636,772
2024			212,229
Thereafter			569,201
Total	$	2,004,514	$	1,911,641

As of June 30, 2020, executed payment plans and rent concessions related to the COVID-19 pandemic were not material.

No single tenant comprised 10% or more of our aggregate annualized base rent (“ABR”) as of June 30, ~~2019.~~2020. As of June 30, ~~2019,~~2020, our real estate investments in Florida and California represented 12.3% and ~~10.0%~~10.6% of our ABR, respectively. As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse weather or economic ~~or weather developments~~events, including the impact of the COVID-19 pandemic, in the Florida and California real estate markets.

Lessee—As a lessee, we recognized additional operating lease liabilities of $6.2 million with corresponding ROU assets of $6.0 million, and the difference between them was recorded as an adjustment to Accumulated Deficit on the consolidated balance sheets. On adoption of ASC 842, these asset and liability amounts represented the present value of the remaining fixed minimum rental payments under current leasing standards for existing leases, adjusted as appropriate for amounts written off in transition to the new guidance. The initial measurement of a ROU asset may differ from the initial measurement of the corresponding lease liability due to initial direct costs, prepaid lease payments, and lease incentives.

Lease assets and liabilities, grouped by balance sheet line where they are recorded, consisted of the following as of June 30, 2020 and December 31, 2019 (in thousands):

June 30, 2019
Assets
Investment in Real Estate:
ROU asset - operating leases $ 4,707
Less: accumulated amortization (217 )
Total in Investment in Real Estate 4,490
Other Assets:
ROU asset - operating leases 2,540
ROU asset - finance leases 705
Less: accumulated amortization (595 )
Total in Other Assets 2,650
Total ROU lease assets⁽¹⁾
$ 7,140

Liabilities
Accounts Payable and Other Liabilities:
Operating lease liability $ 6,790
Debt Obligations, Net:
Finance lease liability 581
Total lease liabilities⁽¹⁾
$ 7,371



Balance Sheet Information	Balance Sheet Location	June 30, 2020		December 31, 2019
ROU assets, net - operating leases⁽¹⁾	Investment in Real Estate	$	3,924	$	7,613
ROU assets, net - operating and finance leases	Other Assets, Net	2,198		2,111
Operating lease liability	Accounts Payable and Other Liabilities	6,030		9,453
Finance lease liability	Debt Obligations, Net	312		443

⁽¹⁾

~~As of~~During the six months ended June 30, ~~2019~~2020, one of our acquisitions was land upon which one of our shopping centers is situated that was previously subject to a ground lease in which the ~~weighted average remaining~~lessor controlled an option requiring us to purchase the land subject to the lease. Our valuation of the ROU asset and lease ~~term was approximately~~ ~~2.4~~ ~~years~~liability as of December 31, 2019 for ~~finance leases~~this ground lease reflected the assumption that the lessor would exercise this option and ~~18.3~~ ~~years for operating leases. The weighted average discount rate was~~ ~~3.54%~~ ~~for finance leases and~~ ~~4.07%~~ ~~for operating leases.~~that we would purchase the underlying land asset.

~~Below are the amounts recorded in our consolidated statements of operations related to our ROU assets and lease liabilities by lease type (in thousands):~~

Three Months Ended Six Months Ended
June 30, 2019 June 30, 2019
Statements of operations information:
Finance lease cost:
Amortization of ROU assets $ 64
$ 128
Interest on lease liabilities 4
9
Operating lease costs 449
797
Short term lease expense 376
767

~~Below are the amounts recorded in our consolidated statements of cash flows related to our leases by type (in thousands):~~

Six Months Ended
June 30, 2019
Statements of cash flows information:
Operating cash flows used for operating leases $ (620 )
Financing cash flows used for finance leases (122 )
ROU assets obtained in exchange for new lease liabilities 1,444

~~Future undiscounted payments for fixed lease charges by lease type as of June 30, 2019, are as follows (in thousands):~~

Undiscounted
Operating Finance
Remaining 2019 $ 745
$ 148
2020 1,174
295
2021 723
98
2022 684
26
2023 529
20
Thereafter 6,419
15
Total undiscounted cash flows from leases 10,274
602
Total lease liabilities recorded at present value 6,790
581
Difference between undiscounted cash flows and present value of lease liabilities $ 3,484
$ 21

4. ~~MERGER WITH REIT II~~REAL ESTATE ACTIVITY

~~In November 2018, we acquired 86 properties as part of the Merger with REIT II. Under the terms of the Merger, at the time of closing, the~~Property Sales—The following ~~consideration was given~~table summarizes our real estate disposition activity (dollars in ~~exchange for REIT II common stock (in~~ thousands):

Amount
Fair value of PECO common stock issued⁽¹⁾
$ 1,054,745
Fair value of REIT II debt:
Corporate debt 719,181
Mortgages and notes payable 102,727
Derecognition of REIT II management contracts, net⁽²⁾
30,428
Transaction costs 11,587
Total consideration and debt activity 1,918,668
Less: debt assumed 464,462
Total consideration $ 1,454,206



	Six Months Ended June 30,
	2020			2019
Number of properties sold⁽¹⁾	4			6
Number of outparcels sold	—			1
Proceeds from sale of real estate	$	25,778		$	47,857
(Loss) gain on sale of properties, net⁽²⁾	(1,436		)	6,627


⁽¹⁾	~~The~~We retained certain outparcels of land associated with one of our property dispositions during the six months ended June 30, 2020, and as a result, this property is still included in our total ~~number of shares of common stock issued was~~ ~~95.5 million~~.property count.


⁽²⁾	~~Previously a component of Other Assets, Net.~~

To complete the Merger, we issued 2.04 shares of our common stock in exchange for each issued and outstanding share of REIT II common stock, which was equivalent to $22.54 based on our most recent estimated value per share (“EVPS”), as of the date of the transaction, of $11.05. The exchange ratio was based on a thorough review of the relative valuation of each entity, including factoring in our investment management business as well as each company’s transaction costs.

Upon completion of the Merger, our continuing stockholders owned approximately 71% of the issued and outstanding shares of the Company on a fully diluted basis (determined as if each Operating Partnership unit (“OP unit”) were exchanged for one share of our common stock) and former REIT II stockholders owned approximately 29% of the issued and outstanding shares of the Company on a fully diluted basis (determined as if each OP unit were exchanged for one share of our common stock).

~~Assets Acquired and Liabilities Assumed—After consideration of all applicable factors pursuant to the business combination accounting rules under ASC 805,~~ ~~Business Combinations~~ (“ASC 805”), including the application of a screen test to evaluate if substantially all the fair value of the acquired properties is concentrated in a single asset or group of similar assets, we concluded that the Merger qualified as an asset acquisition.

Additionally, prior to the close of the Merger, all of REIT II’s real properties were managed and leased by us, under the terms of various management agreements. As we had contractual relationships with REIT II, we considered the provisions of ASC 805 regarding the settlement of pre-existing relationships. This guidance provides that a transaction that in effect settles pre-existing relationships between the acquirer and acquiree should be evaluated under the guidance set forth in ASC 805 for possible gain/loss recognition.

In applying the relevant guidance to the settlement of our contractual relationships with REIT II, we noted that the provisions of the various agreements provided both parties to each of the agreements with substantial termination rights. The agreements permitted either party to terminate without cause or penalty upon prior written notice within a specified number of days’ notice. Therefore, we determined that the termination of the agreements did not result in a settlement gain or loss under the relevant guidance, and thus no gain or loss was recorded in the consolidated financial statements.

Prior to the consummation of the Merger, we did, however, have an existing intangible asset related to our acquisition of certain REIT II management contracts. Because this relationship was internalized as part of the Merger, we derecognized the carrying value of these intangible assets upon completion of the Merger and have included the derecognized contract value of $30.4 million in our calculation of total consideration in the table above.

As of December 31, 2018, we capitalized approximately $11.6 million in costs related to the Merger. The following table summarizes the final purchase price allocation based on a valuation report prepared by a third-party valuation specialist that was subject to management’s review and approval (in thousands):

Amount
Assets:
Land and improvements $ 561,100
Building and improvements 1,198,884
Intangible lease assets 197,384
Fair value of unconsolidated joint venture 16,470
Cash and cash equivalents 354
Restricted cash 5,159
Accounts receivable and other assets 33,045
Total assets acquired 2,012,396
Liabilities:
Debt assumed 464,462
Intangible lease liabilities 60,421
Accounts payable and other liabilities 33,307
Total liabilities assumed 558,190
Net assets acquired $ 1,454,206

The allocation of the purchase price is based on management’s assessment, which requires a significant amount of judgment and represents management’s best estimate of the fair value as of the acquisition date.

~~5. REAL ESTATE ACTIVITY~~

~~Acquisitions—The following table summarizes our real estate acquisitions during the six months ended June 30, 2019 and 2018 (dollars in thousands):~~

Property Name Location Anchor Tenant Acquisition Date Purchase Price Leased % of Rentable Square Feet at Acquisition
Murray Landing Outparcel Columbia, SC N/A 5/16/2019 $ 295
N/A
Naperville Crossings Naperville, IL ALDI 4/26/2019 49,585
88.0%
Shoppes of Lake Village Leesburg, FL Publix 2/26/2018 8,423
71.3%

The fair value and weighted-average useful life at acquisition for lease intangibles acquired as part of the above acquisitions are as follows (dollars in thousands, weighted-average useful life in years):

Six Months Ended
June 30, 2019 June 30, 2018
Fair Value Weighted-Average Useful Life Fair Value Weighted-Average Useful Life
In-place lease assets $ 4,736
11 $ 946
6
Above-market lease assets 825
8 74
3
Below-market lease liabilities (2,097 ) 16 (457 ) 16

~~Property Sales—The following table summarizes our property sales activity (dollars in thousands):~~

Six Months Ended
June 30,
2019 2018
Number of properties sold 6
2
Number of outparcels sold 1
—
Proceeds from sale of real estate $ 47,857
$ 13,300
Gain on sale of properties, net⁽¹⁾
6,627
985


⁽¹⁾	The (loss) gain on sale of properties, net does not include miscellaneous write-off activity, which is also recorded in (Loss) Gain on Disposal of Property, Net on the consolidated statements of operations.

~~Property Held for Sale—As of~~Subsequent to June 30, ~~2019, two properties were classified as held~~2020, we sold one property for sale. For information regarding the disposition of held for sale property, refer to Note 16. As of December 31, 2018, we had two properties that were classified as held for sale, and both were sold in the first quarter of 2019. Properties classified as held for sale as of June 30, 2019 and December 31, 2018, were under contract to sell, with no substantive contingencies, and the prospective buyers had significant funds at risk as of the respective reporting date. A summary of assets and liabilities for the properties held for sale as of June 30, 2019 and December 31, 2018, is below (in thousands):

June 30, 2019 December 31, 2018
ASSETS
Total investment in real estate assets, net $ 15,555
$ 16,889
Other assets, net 322
475
Total assets $ 15,877
$ 17,364
LIABILITIES
Below-market lease liabilities, net $ 117
$ 208
Accounts payable and other liabilities 185
388
Total liabilities $ 302
$ 596
$8.5 million.

Impairment of Real Estate Assets—During the three and six months ended June 30, 2020, we did not recognize any impairment charges. During the three and six months ended June 30, 2019, we recognized impairment charges totaling $25.2 million and $38.9 million, respectively. ~~During the three and six months ended June 30, 2018, we recognized an impairment charge totaling $10.9 million.~~ The impairments were associated with certain anticipated property dispositions where the net book value exceeded the estimated fair value. Our estimated fair value was based upon the contracted price to sell or the marketed price for disposition, less estimated costs to sell. We ~~have~~ applied reasonable estimates and judgments in determining the amount of impairment recognized.

Acquisitions—During the six months ended June 30, 2020, we acquired two parcels of land for a total of $4.3 million, both of which are either underneath or adjacent to shopping centers that we own. During the six months ended June 30, 2019, we acquired one property and one outparcel for a total of $49.9 million.

For the six months ended June 30, 2020, our acquisitions did not have any lease intangibles. The fair value and weighted-average useful life at acquisition for lease intangibles acquired as part of acquisitions in the six months ended June 30, 2019 are as follows (dollars in thousands, weighted-average useful life in years):



	Six Months Ended June 30, 2019
	Fair Value			Weighted-Average Useful Life
In-place leases	$	4,736		11
Above-market leases	825			8
Below-market leases	(2,097		)	16

~~6. INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES~~

We co-invest with third parties in joint ventures that own multiple properties. As a result of the Merger in November 2018, we acquired a 20% interest in the NRP joint venture. In November 2018, we also entered into an agreement (the “Joint Venture Agreement”) with Northwestern Mutual to create the GRP I joint venture. Under the terms of the Joint Venture Agreement, we contributed or sold all of our ownership interests in 17 grocery-anchored shopping centers to the GRP I joint venture.

The following table details our investment balances in these unconsolidated joint ventures, which are accounted for using the equity method of accounting and are considered to be related parties to us as of June 30, 2019 and December 31, 2018 (dollars in thousands):

June 30, 2019 December 31, 2018
NRP GRP I NRP GRP I
Ownership percentage 20 % 15 % 20 %
15 %
Number of properties 13
17
13

17
Investment balance $ 14,454
$ 27,964
$ 16,198
$ 29,453
Unamortized basis adjustments⁽¹⁾
5,317
—
6,026
—


⁽¹⁾	~~Our investment in NRP differs from our proportionate share of the entity’s underlying net assets due to basis differences initially recorded at~~ ~~$6.2 million~~ ~~arising from the Merger and recording the investment at fair value.~~

The following table summarizes the operating information of the unconsolidated joint ventures and their impact on our consolidated statements of operations and consolidated statements of equity. We did not have any investments in unconsolidated joint ventures during the three and six months ended June 30, 2018 (in thousands):

Three Months Ended Six Months Ended
June 30, 2019 June 30, 2019
NRP GRP I NRP GRP I
Loss from unconsolidated joint ventures, net $ 114
$ 52
$ 202
$ 65
Amortization of basis adjustments⁽¹⁾
354
—
709
—
Distributions 551
509
833
1,424


⁽¹⁾	~~These amounts are amortized starting at the date of the Merger and recorded as an offset to earnings from the NRP joint venture in Other Expense, Net on our consolidated statements of operations.~~

7.5. OTHER ASSETS, NET

The following is a summary of Other Assets, Net outstanding as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, excluding amounts related to assets classified as held for sale (in thousands):


	June 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Other assets, net:
Deferred leasing commissions and costs	$	35,518		$	32,957		$	40,172		$	38,738
Deferred financing expenses	13,971			13,971			13,971			13,971
Office equipment, ROU assets, and other	18,016			14,315			21,222			19,430
Corporate intangible assets							4,883			4,883
Total depreciable and amortizable assets	67,505			61,243			80,248			77,022
Accumulated depreciation and amortization	(28,603		)	(24,382		)	(40,706		)	(35,055		)
Net depreciable and amortizable assets	38,902			36,861			39,542			41,967
Accounts receivable, net	50,681			56,104
Accounts receivable, net⁽¹⁾							53,265			46,125
Accounts receivable - affiliates							935			728
Deferred rent receivable, net	25,778			21,261			30,542			29,291
Derivative asset	5,324			29,708
Investment in affiliates	700			700
Prepaids and other	9,716			8,442
Derivative assets							—			2,728
Prepaid expenses and other							10,990			7,851
Total other assets, net	$	131,101		$	153,076		$	135,274		$	128,690


⁽¹⁾	Net of $5.7 million and $6.9 million of general reserves for uncollectible amounts, excluding $19.4 million and $6.9 million in receivables that were removed for tenants considered to be non-creditworthy as of June 30, 2020 and December 31, 2019, respectively.

8.6. DEBT OBLIGATIONS

The following is a summary of the outstanding principal balances and interest rates, which include the effect of derivative financial instruments, onfor our debt obligations as of June 30, ~~2019~~2020 and December 31, ~~2018~~2019 (dollars in thousands):


	Interest Rate⁽¹⁾	June 30, 2019			December 31, 2018			Interest Rate⁽¹⁾	June 30, 2020			December 31, 2019
Revolving credit facility⁽²⁾	LIBOR + 1.40%	$	—		$	73,359		LIBOR + 1.4%	$	—		$	—
Term loans(3)	2.06%-4.59%	1,918,410			1,858,410			2.58% - 4.59%	1,622,500			1,652,500
Secured portfolio loan facility	3.52%	195,000			195,000
Secured loan facilities								3.35% - 3.52%	395,000			395,000
Mortgages	3.45%-7.91%	329,404			334,117			3.45% - 7.91%	319,654			324,578
Finance lease liability		581			552				312			443
Assumed market debt adjustments, net		(3,841		)	(4,571		)		(1,352		)	(1,218		)
Deferred financing expenses, net		(16,149		)	(18,041		)		(15,395		)	(17,204		)
Total		$	2,423,405		$	2,438,826			$	2,320,719		$	2,354,099


⁽¹⁾	Interest rates are as of June 30, ~~2019~~2020.

⁽²⁾

We had $255.0 million of gross borrowings and payments under our revolving credit facility during the six months endedJune 30, 2020. The gross borrowings and payments under our revolving credit facility were $105.6 million and $179.0 million, respectively, during the six months ended June 30, 2019. ~~The gross borrowings and payments under our revolving credit facility were~~ ~~$151.0 million~~ ~~and~~ ~~$166.0 million, respectively, during the~~ ~~six months endedJune 30, 2018~~.


⁽³⁾	Our term loans carry an interest rate of LIBOR plus a spread. While a majority of the rates are fixed through the use of swaps, some of these rates are not fixed through a swap, and thus are still indexed to LIBOR.

In ~~May 2019,~~January 2020, we ~~executed a $60~~made the final $30 million ~~delayed draw feature~~ payment on ~~one of~~ our term ~~loans. We used~~loan maturing in 2021. Following this payment, the ~~proceeds from this draw~~next term loan maturity is in April 2022.

In April 2020, we borrowed $200 million on our revolving credit facility to ~~pay~~meet our operating needs for a sustained period due to the COVID-19 pandemic. In June 2020, we paid down the outstanding balance on our ~~revolver balance.~~

Asrevolving credit facility. Our debt is subject to certain covenants, and as of June 30, ~~2019 and December 31, 2018,~~2020, we were in compliance with the ~~weighted-average interest rate, including the effect of derivative financial instruments, for all~~restrictive covenants of our outstanding debt ~~obligations was 3.5%.~~obligations.

The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments and deferred financing expenses, net, as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, is summarized below (in thousands):


	June 30, 2019		December 31, 2018		June 30, 2020			December 31, 2019
As to interest rate:⁽¹⁾
Fixed-rate debt	$	2,111,985	$	2,216,669	$	1,756,966		$	2,122,021
Variable-rate debt	331,410		244,769		580,500			250,500
Total	$	2,443,395	$	2,461,438	$	2,337,466		$	2,372,521
As to collateralization:
Unsecured debt	$	1,918,410	$	1,931,769	$	1,622,500		$	1,652,500
Secured debt	524,985		529,669		714,966			720,021
Total	$	2,443,395	$	2,461,438	$	2,337,466		$	2,372,521

Weighed-average interest rate⁽¹⁾					3.1		%	3.4		%


⁽¹⁾	Includes the effects of derivative financial instruments (see Notes 97 and 1512).

9.7. DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives—We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposure to a wide variety of business and operational risks through management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our debt funding, and through the use of derivative financial instruments. Specifically, we enter into interest rate swaps to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our investments and borrowings.

Cash Flow Hedges of Interest Rate Risk—Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in AOCI and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, 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 ~~$3.5~~$19.7 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 June 30, ~~2019~~2020 and December 31, ~~2018~~2019 (notional amounts in thousands):


	June 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Count	11		12		6		9
Notional amount	$	1,587,000	$	1,687,000	$	1,042,000	$	1,402,000
Fixed LIBOR	0.7% - 2.9%		0.7% - 2.9%		1.3% - 2.9%		0.8% - 2.9%
Maturity date	2019 - 2025		2019 - 2025		2021 - 2025		2020 - 2025

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

Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Amount of (loss) gain recognized in other comprehensive income on derivatives⁽¹⁾
$ (22,348 ) $ 5,608
$ (35,205 ) $ 19,047
Amount of gain reclassified from AOCI into interest expense⁽¹⁾
(1,297 ) (753 ) (2,801 ) (704 )



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Amount of (loss) recognized in other comprehensive income on derivatives	$	(6,614	)	$	(22,348	)	$	(51,530	)	$	(35,205	)
Amount of loss (gain) reclassified from AOCI into interest expense	4,867			(1,297		)	6,419			(2,801		)


⁽¹⁾	~~Changes in value are solely driven from changes in LIBOR futures as a result of various economic factors.~~

Credit-risk-related Contingent Features—We have agreements with our derivative counterparties that contain provisions where, if we default, or are capable of being declared in default, on any of our indebtedness, we could also be declared to be in default on our derivative obligations. As of June 30, ~~2019,~~2020, 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 ~~$21.0~~$65.4 million. As of June 30, ~~2019,~~2020, 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 ~~$21.0~~$65.4 million.

~~10.~~8. COMMITMENTS AND CONTINGENCIES

Litigation—We are involved in various claims and litigation matters arising in the ordinary course of business, some of which involve claims for damages. Many of these matters are covered by insurance, although they may nevertheless be subject to deductibles or retentions. Although the ultimate liability for these matters cannot be determined, based upon information currently available, we believe the resolution of such claims and litigation will not have a material adverse effect on our consolidated financial statements.

Environmental Matters—In connection with the ownership and operation of real estate, we may potentially be liable for costs and damages related to environmental matters. In addition, we may own or acquire certain properties that are subject to environmental remediation. Depending on the nature of the environmental matter, the seller of the property, a tenant of the property, and/or another third party may be responsible for environmental remediation costs related to a property. Additionally, in connection with the purchase of certain properties, the respective sellers and/or tenants may agree to indemnify us against future remediation costs. We also carry environmental liability insurance on our properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which we may be liable. We are not aware of any environmental matters which we believe are reasonably likely to have a material effect on our consolidated financial statements.

Captive Insurance—Our captive insurance company, Silver Rock Insurance, Inc. (“Silver Rock”) provides general liability insurance, wind, reinsurance, and other coverage to us and our related-party joint ventures. We capitalize Silver Rock in accordance with applicable regulatory requirements.

Silver Rock established annual premiums based on the past loss experience of the insured properties. An independent third party was engaged to perform an actuarial estimate of projected future claims, related deductibles, and projected future expenses necessary to fund associated risk management programs. Premiums paid to Silver Rock may be adjusted based on these estimates, and such premiums may be reimbursed by tenants pursuant to specific lease terms.

As of June 30, 2020, we had four cash collateralized letters of credit outstanding totaling approximately $8.0 million to provide security for our obligations under Silver Rock’s insurance and reinsurance contracts.

COVID-19—As of June 30, 2020, we were not aware of any significant liabilities or obligations to waive rent that we have incurred under force majeure or co-tenancy clauses in tenant leases.

~~11.~~9. EQUITY

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

On May ~~8, 2019,~~6, 2020, our Board ~~increased~~decreased the estimated value per share (“EVPS”) of our common stock to $8.75 based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2020. The decrease was primarily driven by the negative impact of the COVID-19 pandemic on PECO’s non-grocery tenants resulting from social distancing and stay-at-home guidelines and the uncertainty of the duration and full effect on the overall economy. We engaged a third-party valuation firm to provide a calculation of the range in EVPS of our common stock toas of March 31, 2020, which reflected certain balance sheet assets and liabilities as of that date. Previously, our EVPS was $11.10, based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2019. We engaged a third-party valuation firm to provide a calculation of the range in EVPS of our common stock as of March 31, 2019, which reflected certain balance sheet assets and liabilities as of that date. Previously, on May 9, 2018, our Board increased the EVPS of our common stock to $11.05 from $11.00 based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2018.

~~Shares of our common stock are issued under the DRIP, as discussed below, at the same price as the EVPS in effect at the time of issuance.~~

Dividend Reinvestment Plan—The DRIP allows stockholders to invest distributions in additional shares of our common stock, subject to certain limits. Stockholders who elect to participate in the DRIP may choose to invest all or a portion of their cash distributions in shares of our common stock at a price equal to our most recent ~~estimated value per share.~~EVPS.

Stockholders who elect to participate in the DRIP, and who are subject to U.S. federal income taxation laws, will incur a tax liability on an amount equal to the fair value on the relevant distribution date of the shares of our common stock purchased with reinvested distributions, even though such stockholders have elected not to receive the distributions in cash.

On March 27, 2020, the DRIP was temporarily suspended and remains suspended as of June 30, 2020. The March 2020 distribution was paid all in cash on April 1, 2020.

Distributions—On March 27, 2020, our Board temporarily suspended stockholder distributions, effective after the payment of the March 2020 distribution on April 1, 2020, as a result of the uncertainty surrounding the COVID-19 pandemic, including the impact that the pandemic and the measures taken by governmental authorities and tenants in response to the pandemic are expected to continue to have on our shopping centers and our financial condition, liquidity sources, and capital needs.

Share Repurchase Program (“SRP”)—~~Our~~The SRP provides an opportunity for stockholders to have shares of common stock repurchased, subject to certain restrictions and limitations. The Board reserves the right, in its sole discretion, at any time and from time to time, to reject any request for repurchase.

Due to the funding limits, no proceeds were available for standard share repurchases during the six months ended June 30, 2019. Repurchase requests in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence” were completed in full. In July 2019, approximately 1.2 million shares of our common stock were repurchased under the SRP.

On August 7, 2019, the Board suspended the SRP with respect to standard repurchases. ~~We will continue~~The SRP for death, qualifying disability, or determination of incompetence was also suspended, effective March 27, 2020. Both the SRP with respect to ~~fulfill~~standard repurchases ~~sought upon a stockholder's~~and the SRP for death, ~~“qualifying~~qualifying disability,” or ~~“determination~~determination of ~~incompetence” in accordance with the terms~~incompetence remain suspended as of ~~the amended SRP, adopted on August 7, 2019 and described in Part II, Item 5 of this Quarterly Report on Form 10-Q.~~June 30, 2020.

Convertible Noncontrolling Interests—Under the terms of the Fourth Amended and Restated Agreement of Limited Partnership ~~Agreement,~~ (the “Partnership Agreement”), Operating Partnership unit (“OP ~~unit~~unit”) holders may elect to exchange OP units. The Operating Partnership controls the form of the redemption, and may elect to exchange OP units for shares of our common stock, provided that the OP units have been outstanding for at least one ~~year.~~year, or for cash. As the form of redemption for OP units is within our control, the OP units outstanding as of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets. The distributions that have been paid on OP units are included in Distributions to Noncontrolling Interests on the consolidated statements of equity. During the six months ended June 30, 2020 and 2019, 0.2 million and 1.9 million OP units were converted into shares of our common stock at a 1:1 ~~ratio.~~ratio, respectively. There were approximately 42.7 ~~million and 44.5~~ million OP units outstanding as of June 30, ~~2019~~2020 and December 31, ~~2018, respectively.~~

~~Nonconvertible Noncontrolling Interests—In addition to partnership units of the Operating Partnership, Noncontrolling Interests also includes a 25% ownership share of one~~2019. Additionally, certain of our ~~subsidiaries who provides advisory services, which was not significant to our results.~~outstanding time- and performance-based equity awards will result in the issuance of shares or OP units upon vesting in future periods.

~~12. COMPENSATION~~

Awards to employees under our Amended and Restated 2010 Long-Term Incentive Plan are typically granted and vest during the first quarter of each year. We also grant restricted stock to our independent directors under our Amended and Restated 2010 Independent Director Stock Plan, which vest based upon the completion of a service period. Certain of our executives have made the election to receive OP units in lieu of shares of common stock upon vesting of their award grants. All share-based compensation awards, regardless of the form of payout upon vesting, are presented in the following table, which summarizes our stock-based award activity (number of units in thousands):

Six Months Ended
June 30, 2019

Restricted
Stock Awards

Performance
Stock Awards⁽¹⁾

Phantom
Stock Units

Weighted-Average Grant-Date Fair Value⁽²⁾
Nonvested at December 31, 2018 808
199
998
$ 10.60
Granted 464
1,275
—
11.05
Vested (196 ) —
—
10.99
Forfeited (26 ) —
(12 ) 10.76
Nonvested at June 30, 2019 1,050
1,474
986
$ 10.80

⁽¹⁾

Certain performance-based awards granted during the period contain terms which dictate that the number of award units to be issued will vary based upon actual performance compared to target performance. The number of shares deemed to be issued per this table reflect our probability-weighted estimate of the number of shares that will vest based upon current and expected company performance. The maximum number of award units to be issued under all outstanding grants, excluding phantom stock units as they are settled in cash, was ~~4.0 million~~ ~~and~~ ~~1.2 million~~ ~~as of~~ ~~June 30, 2019~~ ~~and~~ ~~December 31, 2018, respectively.~~


⁽²⁾	~~On an annual basis, we engage an independent third-party valuation advisory consulting firm to estimate the EVPS of our common stock.~~

On March 12, 2019, the Compensation Committee of the Company’s Board of Directors (the “Committee”) approved a new form of award agreement under the Company’s Amended and Restated 2010 Long-Term Incentive Plan for performance-based long term incentive units (“Performance LTIP Units”) and made one-time grants of Performance LTIP Units to certain of our executives. Any amounts earned under the Performance LTIP Unit award agreements will be issued in the form of LTIP Units, which represent OP units that are structured as a profits interest in the Operating Partnership. Dividends will accrue on the Performance LTIP Units until the measurement date, subject to a quarterly distribution of 10% of the regular quarterly distributions.

During the three months ended June 30, 2019 and 2018, the expense for all stock-based awards, including phantom stock units, was $3.3 million and $3.1 million, respectively. During the six months ended June 30, 2019 and 2018, the expense was $5.3 million and $4.7 million, respectively. We had $22.6 million of unrecognized compensation costs related to these awards that we expect to recognize over a weighted average period of approximately 4.3 years. The fair value at the vesting date for stock-based awards that vested during the six months ended June 30, 2019 was $2.2 million.

~~13.~~10. EARNINGS PER SHARE

We use the two-class method of computing earnings per share (“EPS”), which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two-class method, basic EPS is computed by dividing Net ~~Loss~~(Loss) Income Attributable to Stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity.

OP units held by limited partners other than us are considered to be participating securities because they contain non-forfeitable rights to dividends or dividend equivalents, and have the potential to be exchanged for an equal number of shares of our common stock in accordance with the terms of the ~~Fourth Amended and Restated Agreement~~the Partnership Agreement.

In previous periods, we issued certain share-based awards to employees which are tied to the value of ~~Limited Partnership~~our EVPS, but that are paid in cash upon vesting. We have a small number of ~~the Operating Partnership. Phantom stock units~~these awards that remain outstanding, however, they are not considered to be participating securities as they are not convertible into common ~~stock.~~stock, and as such are not included as a component of our basic or diluted EPS calculation.

The impact of outstanding OP units on basic and diluted EPS has been calculated using the two-class method whereby earnings are allocated to the OP units based on dividends declared and the OP units’ participation rights in undistributed earnings. The effects of the two-class method on basic and diluted EPS were immaterial to the consolidated financial statements as of June 30, ~~2019~~2020 and ~~2018.~~2019.

The following table provides a reconciliation of the numerator and denominator of the earnings per share calculations (in thousands, except per share amounts):


	Three Months Ended						Six Months Ended
	June 30,						June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020		2019
Numerator:
Net loss attributable to stockholders - basic	$	(36,570	)	$	(11,351	)	$	(41,765	)	$	(12,951	)
Net loss attributable to convertible OP units⁽¹⁾	(5,643		)	(2,756		)	(6,426		)	(3,090		)
Net loss - diluted	$	(42,213	)	$	(14,107	)	$	(48,191	)	$	(16,041	)
Net (loss) income attributable to stockholders - basic													$	(5,588	)	$	(36,570	)	$	4,181	$	(41,765	)
Net (loss) income attributable to convertible OP units⁽¹⁾													(825		)	(5,643		)	605		(6,426		)
Net (loss) income - diluted													$	(6,413	)	$	(42,213	)	$	4,786	$	(48,191	)
Denominator:
Weighted-average shares - basic	283,010			184,450			282,148			185,171			290,464			283,010			290,209		282,148
OP units⁽¹⁾	43,288			44,453			43,640			44,453			42,743			43,288			42,818		43,640
Dilutive restricted stock awards													—			—			393		—
Adjusted weighted-average shares - diluted	326,298			228,903			325,788			229,624			333,207			326,298			333,420		325,788
Earnings per common share:
Basic and diluted	$	(0.13	)	$	(0.06	)	$	(0.15	)	$	(0.07	)
Basic and diluted (loss) income per share													$	(0.02	)	$	(0.13	)	$	0.01	$	(0.15	)

⁽¹⁾ OP units include units that are convertible into common stock or cash, at the Operating Partnership’s option. The Operating Partnership income or loss attributable to these OP units, which is included as a component of Net Loss (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 years presented.

Approximately ~~2.5~~1.1 million time-based and ~~1.0~~2.7 million performance-based unvested ~~restricted~~ stock awards were outstanding as of June 30, ~~2019~~2020. Approximately 1.1 million time-based and ~~2018, respectively.~~1.5 million performance-based unvested stock awards were outstanding as of June 30, 2019. These securities were anti-dilutive for the three months ended June 30, 2020 and asthe three

and six months ended June 30, 2019. As a result, their impact was excluded from the weighted-average common shares used to calculate diluted ~~EPS.~~EPS for those periods.

~~14.~~11. REVENUE RECOGNITION AND RELATED PARTY TRANSACTIONS

Revenue—Summarized below are amounts included in ~~Fee~~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 Six Months Ended
June 30, 2019 June 30, 2019
PECO III Joint Ventures
Other Parties⁽¹⁾
Total PECO III Joint Ventures
Other Parties⁽¹⁾
Total
Recurring fees⁽²⁾
$ 228
$ 1,352
$ 59
$ 1,639
$ 422
$ 2,681
$ 118
$ 3,221
Transactional revenue and
reimbursements⁽³⁾
204
621
2
827
1,016
1,026
7
2,049
Insurance premiums 21
72
492
585
24
72
946
1,042
Total fees and management
income
$ 453
$ 2,045
$ 553
$ 3,051
$ 1,462
$ 3,779
$ 1,071
$ 6,312



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Recurring fees⁽¹⁾	$	1,182	$	1,639	$	2,398	$	3,221
Transactional revenue and reimbursements⁽²⁾	960		827		1,390		2,049
Insurance premiums⁽³⁾	618		585		1,137		1,042
Total fees and management income	$	2,760	$	3,051	$	4,925	$	6,312


⁽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 from other parties includes amounts from third parties not affiliated with ~~us in the amount of~~ ~~$0.5 million~~ ~~and~~ ~~$1.0 million~~ ~~for the~~ ~~three and six~~ ~~months ended~~ ~~June 30, 2019~~.


⁽²⁾	~~Recurring fees include asset management fees and property management fees.~~us.


⁽³⁾	~~Transaction revenue includes items such as leasing commissions, construction management fees, and acquisition fees.~~

Three Months Ended Six Months Ended
June 30, 2018 June 30, 2018

REIT II⁽¹⁾
PECO III and Joint Ventures
Other Parties⁽²⁾
Total
REIT II⁽¹⁾
PECO III and Joint Ventures
Other Parties⁽²⁾
Total
Recurring fees $ 5,189
$ 581
$ 77
$ 5,847
$ 10,333
$ 1,139
$ 152
$ 11,624
Transactional revenue and
reimbursements
2,240
515
(11 ) 2,744
3,951
1,184
20
5,155
Insurance premiums 109
—
437
546
189
—
881
1,070
Total fees and management
income
$ 7,538
$ 1,096
$ 503
$ 9,137
$ 14,473
$ 2,323
$ 1,053
$ 17,849


⁽¹⁾	~~All amounts earned from REIT II were earned prior to the close of the Merger in November 2018, and ceased upon its acquisition by us.~~


⁽²⁾	~~Recurring fees and other revenue from other parties includes amounts from third parties not affiliated with us in the amount of~~ ~~$0.5 million~~ ~~and~~ ~~$0.9 million~~ ~~for the~~ ~~three and six~~ ~~months ended~~ ~~June 30, 2018~~.

~~Organization and Offering Costs~~—Under the terms of one of our Management Agreements, we have incurred organization and offering costs related to PECO III’s private placement and public offering since 2017. In June 2019, PECO III’s Board of Directors approved the suspension of the public offering, effective June 14, 2019. In connection with the suspension, we reduced our organization and offering cost receivable to the contractually obligated amount a~~s of~~ ~~June 30, 2019, which resulted in a reduction of $2.3 million to Accounts Receivable - Affiliates on our consolidated balance sheets.~~ ~~As of~~ ~~June 30, 2019 and December 31, 2018, we had receivables for organization and offering costs of~~ ~~$2.5 million and $4.5 million, respectively, which were recorded in Accounts Receivable - Affiliates on our consolidated balance sheets.~~

In addition to organization and offering costs, we have receivables related to Management Agreements from related parties of $0.9 million and $0.6 million as of June 30, 2019 and December 31, 2018, respectively. These amounts were recorded in Accounts Receivable - Affiliates on the consolidated balance sheets.

~~Other Related Party Matters~~—Griffin Capital Company, LLC (“Griffin sponsor”) owns a 25% interest, and we own a 75% interest, in the PECO III advisor. A portion of organization and offering costs was incurred by the Griffin sponsor. In connection with the suspension of PECO III’s public offering, we have reduced our organization and offering cost payable to the contractually obligated amount as of June 30, 2019, which resulted in a $0.4 million reduction to Accounts Payable and Other Liabilities on our consolidated balance sheets. This reduction, coupled with the $2.3 million reduction to Accounts Receivable - Affiliates, resulted in a net increase in expense of $1.9 million recorded in Other Impairment Charges in our consolidated statements of operations. As such, of the receivable we have from PECO III, $0.9 million and $1.2 million were reimbursable to the Griffin sponsor as of June 30, 2019 and December 31, 2018, respectively, and were recorded in Accounts Payable and Other Liabilities on the consolidated balance sheets.

PECO Air L.L.C. (“PECO Air”), an entity in which Mr. Edison, our Chairman, Chief Executive Officer, and President, owns a 50% interest, owns an airplane that we use for business purposes in the course of our operations. We paid approximately $0.2 million to PECO Air for use of its airplane for the three months ended June 30, 2019 and 2018. ForDuring the six months ended June 30, 2019, we recognized a net charge of $1.9 million in Other Expense, Net on our consolidated statements of operations. The charge was related to a reduction in our related party accounts receivable and ~~2018,~~organization and offering costs payable for amounts incurred in connection with the Phillips Edison Grocery Center REIT III, Inc. (“REIT III”) public offering. Remaining accounts receivable and organization and offering costs payable that were outstanding as of June 30, 2019 related to REIT III were settled when we ~~paid $0.5 million and $0.4 million, respectively.~~merged with REIT III in October 2019.

Other Related Party Matters—We are the limited guarantor for up to ~~$200~~$190 million, capped at $50 million in most instances, of debt for our NRP joint venture. ~~Our guarantee is~~We are also the limited ~~to being the non-recourse carveout~~ guarantor ~~and the environmental indemnitor. Additionally, as a part~~ of ~~the GRP I joint venture, GRP I assumed from us~~ a $175 million mortgage loan for ~~which we assumed the obligation of limited guarantor.~~GRP I. Our ~~guarantee~~guaranty in both cases is limited to being the non-recourse carveout guarantor and the environmental indemnitor. We ~~entered into~~are also party to a separate agreement with ~~Northwestern Mutual~~our joint venture partner in which ~~we agree to apportion~~ any potential liability under ~~this~~our guaranty for GRP I will be apportioned between us and ~~them~~our joint venture partner based on our respective ownership ~~percentages.~~percentages in GRP I. We have no liability recorded on our consolidated balance sheets for either guaranty as of June 30, 2020 and December 31, 2019.

~~15.~~12. FAIR VALUE MEASUREMENTS

The following describes the methods we use to estimate the fair value of our financial and nonfinancial assets and liabilities:

Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, and Accounts Payable—We consider the carrying values of these financial instruments to approximate fair value because of the short period of time between origination of the instruments and their expected realization.

Real Estate Investments—The purchase prices of the investment properties, including related lease intangible assets and liabilities, were allocated at estimated fair value based on Level 3 inputs, such as discount rates, capitalization rates, comparable sales, replacement costs, income and expense growth rates, and current market rents and allowances as determined by management.

Debt Obligations—We estimate the fair value of our debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by our lenders using Level 3 inputs. The discount rates used approximate current lending rates for loans or groups of loans with similar maturities and credit quality, assuming the debt is outstanding through maturity and considering the debt’s collateral (if applicable). We have utilized market information, as available, or present value techniques to estimate the amounts required to be disclosed.

The following is a summary of borrowings as of June 30, ~~2019~~2020 and December 31, ~~2018~~2019 (in thousands):

June 30, 2019 December 31, 2018
Fair value $ 2,467,023
$ 2,467,317
Recorded value⁽¹⁾
2,439,554
2,456,867



	June 30, 2020				December 31, 2019
	Recorded Principal Balance⁽¹⁾		Fair Value		Recorded Principal Balance⁽¹⁾		Fair Value
Term loans	$	1,608,378	$	1,595,050	$	1,636,470	$	1,656,765
Secured portfolio loan facilities	390,890		391,157		390,780		399,054
Mortgages⁽²⁾	321,451		328,611		326,849		337,614
Total	$	2,320,719	$	2,314,818	$	2,354,099	$	2,393,433

⁽¹⁾

Recorded ~~value does not~~principal balances include net deferred financing expenses of $~~16.1~~15.4 million and $~~18.0~~17.2 million as of June 30, ~~2019~~2020 and December 31, ~~2018~~2019, respectively. Recorded principal balances also include assumed market debt adjustments of $1.4 million and $1.2 million as of June 30, 2020 and December 31, 2019, respectively. There are deferred financing expenses related to our revolving credit facility that are in an asset position and thus are not included in these balances.


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

Recurring and Nonrecurring Fair Value Measurements—Our earn-out liability and interest rate swaps are measured and recognized at fair value on a recurring basis, while certain real estate assets and liabilities are measured and recognized at fair value as needed. ~~The fair~~Fair value measurements that occurred as of and during the six months ended June 30, ~~2019,~~2020 and ~~during~~ the year ended December 31, ~~2018,~~2019, were as follows (in thousands):


	June 30, 2019								December 31, 2018								June 30, 2020								December 31, 2019
	Level 1		Level 2			Level 3			Level 1		Level 2			Level 3			Level 1		Level 2			Level 3			Level 1		Level 2			Level 3
Recurring
Derivative assets⁽¹⁾	$	—	$	5,324		$	—		$	—	$	29,708		$	—		$	—	$	—		$	—		$	—	$	2,728		$	—
Derivative liability⁽¹⁾	—		(21,007		)	—			—		(3,633		)	—
Derivative liabilities⁽¹⁾																	—		(65,376		)	—			—		(20,974		)	—
Earn-out liability	—		—			(32,000		)	—		—			(39,500		)	—		—			(22,000		)	—		—			(32,000		)
Nonrecurring
Impaired real estate assets, net⁽²⁾	—		120,510			—			—		71,991			—			—		—			—			—		280,593			—
Impaired corporate intangible asset, net(3)	—		—			4,401			—		—			—			—		—			—			—		—			4,401


⁽¹⁾	We record derivative assets in Other Assets, Net and derivative liabilities in ~~Accounts Payable and Other~~Derivative Liabilities on our consolidated balance sheets.


⁽²⁾	The carrying value of impaired real estate assets may have subsequently increased or decreased after the measurement date due to capital improvements, depreciation, or sale.


⁽³⁾	The carrying value of our impaired corporate intangible asset, net, which consists of in-place management contracts, subsequently decreased after the measurement date due to amortization as well as through derecognition as part of the merger with REIT III.

Derivative Instruments—As of June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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 June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, 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.

Earn-out—~~In connection with the PELP transaction, the Company entered into a contribution agreement (the “Contribution Agreement”~~As part of our acquisition of Phillips Edison Limited Partnership (“PELP”), ~~dated as of May 18, 2017, with the Operating Partnership and the contributors listed therein. The Contribution Agreement established~~ an earn-out structure bywas established which gave PELP ~~was given~~ the opportunity to earn ~~a maximum of 12.5 million~~ additional OP units ifbased upon the potential achievement of certain ~~milestones related~~performance targets subsequent to ~~(i) fundraising~~the acquisition. After the expiration of certain provisions in ~~the investment management business, and (ii)~~2019, PELP is now eligible to earn up to five million OP units based on the timing and valuation ~~related to~~of a liquidity event for PECO, were achieved by certain dates. The liquidity event earn-out provisions provided, in relevant part, that the contributors would have the right to receive a minimum of three million and a maximum of five million OP units as contingent consideration if a “liquidity event” (as defined in the Contribution Agreement) was successfully achieved by the Company bywhich can occur no later than December 31, ~~2019. On March 12, 2019,~~2021 in order for the ~~Company entered into an amendment~~performance targets to ~~the Contribution Agreement (“Amendment”). Pursuant to~~be achieved per the terms of the Amendment, the initial liquidity earn-out term has been extended by two years through December 31, 2021 and the threshold for the maximum payout of five million OP units has been raised to $11.20 per share from $10.20 per share.agreement.

We estimate the fair value of this liability on a quarterly basis using ~~weighted-average probabilities of likely outcomes. These estimates require~~the Monte Carlo method. This method requires us to make ~~various~~ assumptions about future ~~share prices,~~dividend yields, volatility, and timing and pricing of liquidity events, ~~equity raise projections, and other items that~~which are unobservable and are

considered Level 3 inputs in the fair value hierarchy. A change in these inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date. In calculating the fair value of this liability as of June 30, 2020, we have determined that the most likely range of potential outcomes includes a possibility of no additional OP units issued as well as up to ~~five million out~~a maximum of ~~the maximum 12.5~~five million units being issued.

Changes in the fair value of the earn-out liability have been and will continue to be recognized in earnings. The following table presents a reconciliation of the change in the earn-out liability measured at fair value on a recurring basis using Level 3 inputs and recognized as Other (Expense) Income, Net in the consolidated statements of operations (in thousands):

Earn-Out Liability
Balance at December 31, 2018 $ 39,500
Change in fair value recognized in Other Income (Expense), Net (7,500 )
Balance at June 30, 2019 $ 32,000



	Earn-Out Liability
Balance at December 31, 2019	$	32,000
Change in fair value recognized in Other (Expense) Income, Net	(10,000		)
Balance at June 30, 2020	$	22,000

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 and six months ended June 30, 2019, ~~and 2018,~~ we impaired assets that were under contract or actively marketed for sale 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. We determined that valuation~~proceeds, which we consider to ~~fall under~~be a Level 2 ofinput in the fair value hierarchy. There were no impairment charges recorded during the three and six months ended June 30, 2020.

On a quarterly basis, we employ a multi-step approach to assess our real estate assets for possible impairment and record any impairment charges identified. The first step is the identification of potential triggering events, such as significant decreases in occupancy or the presence of large dark or vacant spaces. If we observe any of these indicators for a shopping center, we then perform an additional screen test consisting of a years-to-recover analysis to determine if we will recover the net book value of the property over its remaining economic life based upon net operating income as forecasted for the current year. In the event that the results of this first step indicate a triggering event for a center, we proceed to the second step, utilizing an undiscounted cash flow model for the center to identify potential impairment. If the undiscounted cash flows are less than the net book value of the center as of the balance sheet date, we proceed to the third step. In performing the third step, we utilize market data such as capitalization rates and sales price per square foot on comparable recent real estate transactions to estimate fair value of the real estate assets. We also utilize expected net sales proceeds to estimate the fair value of any centers that are actively being marketed for sale. If the estimated fair value of the property is less than the recorded net book value at the balance sheet date, we record an impairment charge.

In addition to these procedures, we also review undeveloped or unimproved land parcels that we own for evidence of impairment and record any impairment charges as necessary. Primary impairment triggers for these land parcels are changes to our plans or intentions with regards to such properties, or planned dispositions at prices that are less than the current carrying values.

Our quarterly impairment procedures have not been altered by the COVID-19 pandemic, as we believe key impairment indicators such as temporary store closings and large dark or vacant spaces will continue to be identified in our review. We have utilized forecasts that incorporate estimated decreases in net operating income (“NOI”) and cash flows as a result of the COVID-19 pandemic in performing our review procedures for the three and six months ended June 30, 2020. However, it is possible that we could experience unanticipated changes in assumptions that are employed in our impairment review which could impact our cash flows and fair value conclusions. Such unanticipated changes relative to our expectations may include but are not limited to: increases or decreases in the duration or permanence of tenant closures, increases or decreases in collectability reserves and write-offs, additional capital required to fill vacancies, extended lease-up periods, future closings of large tenants, changes in macroeconomic assumptions such as rate of inflation and capitalization rates, and changes to the estimated timing of disposition of the properties under review.

We recorded the following expense ~~as a result~~upon impairment of ~~the impaired~~ real estate assets (in thousands):

Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Impairment of real estate assets $ 25,199
$ 10,939
$ 38,916
$ 10,939



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Impairment of real estate assets	$	—	$	25,199	$	—	$	38,916

Corporate Intangible Asset Impairment—In connection with ~~the~~our acquisition of PELP, ~~transaction,~~ we acquired a corporate intangible asset consisting of in-place management contracts. We evaluate our corporate intangible asset for impairment when a triggering event occurs, or circumstances change, that indicate the carrying value may not be recoverable. ~~For the three months ended~~In June ~~30,~~ 2019, the suspension of the ~~PECO~~REIT III public offering constituted a triggering event for further review of the corporate intangible asset’s fair value compared to its carrying value.

We ~~estimate~~estimated the fair value of the corporate intangible asset using a discounted cash flow model, leveraging certain Level 3 inputs. The evaluation of corporate intangible assets for potential impairment ~~requires~~required management to exercise significant judgment and to make certain assumptions. The assumptions utilized in the evaluation ~~include~~included future cash flows and a discount rate. For ~~our most recent impairment test for~~ the corporate intangible asset during the three months ended June ~~30,~~ 2019, we used a discount rate of 19% in our discounted cash flow model.

Based on this analysis, we concluded the carrying value exceeded the estimated fair value of the corporate intangible asset, and an impairment charge of $7.8 million was recorded in Other ~~Impairment Charges~~(Expense) Income, Net on the consolidated statements of ~~operations. As a result~~operations in the second quarter of ~~this impairment, the estimated remaining future amortization of the management contracts is as follows: $0.7 million in 2019, $1.4 million in 2020, $1.4 million in 2021, and $0.9 million in 2022.~~2019.

~~16.~~13. SUBSEQUENT EVENTS

~~Distributions—Distributions paid to stockholders~~In preparing the condensed and ~~OP unit holders~~unaudited consolidated financial statements, we have evaluated subsequent events through the filing of ~~record subsequent to June 30, 2019,~~this report on Form 10-Q for recognition and/or disclosure purposes. Based on this evaluation, we have determined that there were ~~as follows (in thousands, except distribution rate):~~

Month Date of Record Distribution Rate Date Distribution Paid Gross Amount of Distribution Paid Distribution Reinvested through the DRIP Net Cash Distribution
June 6/15/2019 $0.05583344 7/1/2019 $ 18,101
$ 5,571
$ 12,530
July 7/15/2019 $0.05583344 8/1/2019 18,118
5,412
12,706

~~In August 2019, our Board authorized distributions for September, October,~~no events that have occurred that require recognition or disclosure, other than certain events and November 2019 to the stockholders of record at the close of business on September 16, 2019, October 15, 2019, and November 15, 2019, respectively, equal to a monthly amount of $0.05583344 per share of common stock. The distributions for August 2019 were previously authorized by our Board and are expected to be paid on September 3, 2019. OP unit holders will receive distributions at the same rate as common stockholders. ~~We pay distributions to stockholders and OP unit holders based on monthly record dates. We expect to pay~~transactions that have been disclosed elsewhere in these ~~distributions on the first business day after the end of each month.~~

~~Property Sales—Subsequent to June 30, 2019, we sold the following real estate property, which was classified as held for~~

~~sale as of June 30, 2019 (dollars in thousands):~~

Property Name Location Anchor Tenant Square Footage Disposition Date Sale Price
Winery Square Fairfield, CA Food Maxx 118,370 7/19/2019 $ 14,250

consolidated financial statements.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

All references to “Notes” throughout this document refer to the footnotes to the consolidated financial statements in Part I, Item 1. Financial Statements.

Cautionary Note Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q (this “Report”) of Phillips Edison & Company, Inc. (“we,” the “Company,” “our,” or “us”) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), ~~and~~ Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)., and the Private Securities Litigation Reform Act of 1995. 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.~~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 U.S. Securities and Exchange Commission (“SEC”). Such statements include, ~~in particular,~~but are not limited to, statements about our focus, plans, strategies, initiatives, and ~~prospects,~~prospects; statements about the COVID-19 pandemic, including its duration and potential or expected impact on our tenants, our business, and our estimated value per share; statements about the duration or extent of the suspension of our distributions, share repurchase program, and dividend reinvestment program; and statements about our future results of operations, capital expenditures, and liquidity. Such statements are subject to ~~certain risks and uncertainties, including~~ known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or ~~anticipated. These risks include,~~anticipated, including, without limitation, (i) changes in national, regional, or local economic climates; (ii) local market conditions, including an oversupply of space in, or a reduction in demand for, properties similar to those in our portfolio; (iii) vacancies, changes in market rental rates, and the need to periodically repair, renovate, and re-let space; (iv) changes in interest rates and the availability of permanent mortgage financing; (v) competition from other available properties and the attractiveness of properties in our portfolio to our tenants; (vi) the financial stability of tenants, including the ability of tenants to pay rent; (vii) changes in tax, real estate, environmental, and zoning laws; (viii) the concentration of our portfolio in a limited number of industries, geographies, or investments; ~~and~~ (ix) ~~any~~the effects of the COVID-19 pandemic, including on the demand for consumer goods and services and levels of consumer confidence in the safety of visiting shopping centers as a result of the COVID-19 pandemic; (x) the measures taken by federal, state, and local government agencies and tenants in response to the COVID-19 pandemic, including mandatory business shutdowns, stay-at-home orders and social distancing guidelines; (xi) the impact of the COVID-19 pandemic on our tenants and their ability to pay rent on time or at all, or to renew their leases and, in the case of non-renewal, our ability to re-lease the space at the same or more favorable terms or at all; (xii) the length and severity of the COVID-19 pandemic in the United States; (xiii) the pace of recovery following the COVID-19 pandemic given the current severe economic contraction and increase in unemployment rates; (xiv) our ability to implement cost containment strategies; (xv) our and our tenants’ ability to obtain loans under the CARES Act or similar state programs; (xvi) our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due; (xvii) to the extent we were seeking to dispose of properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices; (xviii) the impact of the COVID-19 pandemic on our business, results of operations, financial condition, and liquidity; and (xix) supply chain disruptions due to the COVID-19 pandemic. Additional important factors that could cause actual results to differ are described in the filings made from time to time by the Company with the SEC and include the risk factors and other risks ~~included~~and uncertainties described in ~~this Quarterly Report on Form 10-Q. Therefore, such statements are not intended to be a guarantee of~~ our ~~performance in future periods.~~

~~See Part I, Item 1A. Risk Factors of our 2018~~2019 Annual Report on Form 10-K, filed with the SEC on March ~~13, 2019~~12, 2020, and ~~Part II, Item 1A. Risk Factors~~those included in this ~~Quarterly~~ Report, ~~on Form 10-Q for a discussion of some of the risks and uncertainties, although not all of the risks and uncertainties, that could cause actual results~~in each case 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.

Except as required by law, we do not undertake any obligation to update or revise any forward-looking ~~statements contained in this Form 10-Q.~~statement, whether as a result of new information, future events, or otherwise.

Overview

We are an internally-managed REIT and one of the nation’s largest owners and operators of grocery-anchored shopping centers. The majority of our ~~revenues are~~revenue is lease ~~revenues~~revenue derived from our real estate investments. Additionally, we operate an investment management business providing property management and advisory services to approximately ~~$725~~$570 million of third-party assets. This business provides comprehensive real estate and asset management services to ~~(i) PECO III,~~the Managed Funds.

COVID-19 Strategy—During the first quarter of 2020, the COVID-19 pandemic began spreading globally, with the outbreak being classified as a ~~non-traded publicly registered REIT; (ii) three institutional joint ventures; and (iii) one private fund (collectively,~~pandemic by the ~~“Managed Funds”).~~

In November 2018, through our direct or indirect subsidiaries, we entered into a joint venture with Northwestern Mutual. At formation, we contributed or sold 17 grocery-anchored shopping centers with a fair value of approximately $359 million to the new joint venture, GRP I. GRP I also assumed a portfolio loan from us as part of this transaction. In exchange, we received a 15% ownership interest in GRP I and cash of $161.8 million. For a more detailed discussion, see Note 6.

~~In November 2018, we completed the Merger with REIT II, a public non-traded REIT that was advised and managed by us, in a 100% stock-for-stock transaction valued at approximately $1.9 billion.~~World Health Organization on March 11, 2020. As a result of the ~~Merger,~~pandemic, many state governments issued “stay-at-home” mandates that generally limited travel and movement of the general public to essential activities only and required all non-essential businesses to close. The following initiatives were enacted in response to the pandemic and remain in effect as of the date of this filing (unless otherwise noted):

We temporarily suspended stockholder distributions (see Note 9 for more detail);

We suspended the SRP for death, qualifying disability, or determination of incompetence, while our standard SRP remains suspended;

Our Compensation Committee approved a temporary 25% reduction to the base salary of our chief executive officer; a temporary 10% reduction to the base salaries of our president, chief operating officer, chief financial officer, and general counsel; and a temporary 10% reduction to board members’ base compensation for the 2020-2021 term;

We have implemented expense reductions at the property and corporate levels, including the temporary reductions in executive salaries and director compensation, and reductions to our workforce and travel costs;

Our capital investments have been prioritized to support the reopening of our neighbors and new leasing activity, or deferred if possible; and

We borrowed $200 million on our revolving credit facility in April 2020 to ensure that we ~~acquired 86~~were able to meet our operating needs for a sustained period. Our rent and recovery collections during the second quarter, combined with the above initiatives, sufficiently funded our short-term operating needs and allowed us to repay in full the outstanding balance on our revolving credit facility in June 2020.

In May 2020, many state governments began lifting, in whole or in part, the “stay-at-home” mandates, effectively removing or lessening the limitations on travel and allowing many businesses to reopen in full or limited capacity. Some states and localities have temporarily reinstated certain mandates in response to increasing reported cases of COVID-19. The impact these measures and the resulting consumer behavior are having on our portfolio has evolved throughout the second quarter, and we expect that it will continue to do so. Our management team has determined the following are key indicators of recovery for our portfolio and is executing a strategy to guide our tenants (which we refer to as a “neighbor” or our “neighbors”) through these phases (all statistics are approximate; ABR, Gross Leasable Area or “GLA”, and rent and recovery collections include the prorated portion attributable to properties owned through our joint ventures):

Assisting Neighbors in Reopening—Our wholly-owned properties and those owned through our joint ventures contained approximately 5,600 occupied neighbor spaces as of August 10, 2020. At the peak of the pandemic-related closure activity, temporary closures reached 37% of all neighbor spaces, totaling 27% of our ABR and 22% of our GLA; of the neighbor spaces that temporarily closed, 88%, totaling 89% of our ABR and 90% of our GLA, have since reopened. We believe that the best way to ensure that we receive monthly payment of rent and other amounts due is to first have neighbors open and operating.

In order to facilitate communication with our neighbors, we launched PECO Connect^TM,a ~~20% equity interest~~webpage designed to provide resources, information, and tools to assist our neighbors in ~~NRP,~~reopening as states lift “stay-at-home” requirements and other restrictions. Resources made available through PECO Connect include, but are not limited to: the implementation of our Front Row To-Go^TM program; a ~~joint venture~~digital tool kit providing various marketing options, industry guides, and blueprints to facilitate effective communication between our neighbors and their customers; educational videos and webinars to help neighbors prepare for and adjust to the consumer environment as businesses reopen; a neighbor rewards program; and DashComm^®, our proprietary internal communications platform designed to deliver important updates and information to our neighbors as well as to facilitate our responses to neighbor questions and concerns.

Returning to Monthly Payments—We continue to work with our neighbors to resume normal monthly rent payments. Our efforts have included raising awareness of the benefits available through the Coronavirus Aid, Relief, and Economic Security Act, including the Paycheck Protection Program and Health Care Enhancement Act (collectively, the “CARES Act”) and other small business programs. The CARES Act was intended to provide economic relief and stimulus to taxpayers and businesses in order to mitigate the economic impact of the pandemic, and provided an estimated $2.7 trillion to combat the COVID-19 pandemic and stimulate the economy through the provision of government loans and grants to affected individuals and businesses.

As more of our neighbors continue to reopen, we are seeing our collections improve as a result. The table below shows the improvement since April, the month in which we began to see decreased collections resulting from the COVID-19 pandemic and related neighbor impacts:



		% of Rent and Recoveries Collected⁽¹⁾
Month	% of ABR Open⁽¹⁾	All Neighbor Spaces	Grocer Neighbor Spaces
April 2020	75%	84%	100%
May 2020	91%	86%	100%
June 2020	97%	89%	100%
July 2020	98%	90%	99%

⁽¹⁾

Collections for April, May, June, and July 2020 include any amounts billed for those respective months that were received through August 10, 2020. For other statistics, April, May, June, and July 2020 are approximate as of April 30, 2020, May 31, 2020, June 30, 2020, and July 31, 2020, respectively. The total number of neighbor spaces that are or were temporarily closed in connection with COVID-19 is approximately 2,100.

As of August 10, 2020, 97% of total neighbor spaces, or 98% of our portfolio ABR, was open.

Establishing Payment Plans—We believe substantially all neighbors, including those that ~~owned 13 properties. For~~were required to temporarily close under governmental mandates, are contractually obligated to continue with their rent payments as documented in our lease agreements with them. We further believe that it is best to begin negotiation of relief only once a neighbor has reopened, and we have continued to see payments made toward rent and recovery charges owed during the second quarter. As of August 10, 2020, we have executed relief agreements for approximately 240 neighbor spaces, primarily in the form of short-term payment plans without a reduction in amounts owed to us. These relief agreements totaled approximately $3.8 million, or 1.0% of portfolio ABR, and the weighted-average term over which we expect to receive payment on executed payment plans is less than twelve months. We are in negotiations with additional neighbors, which we believe will lead to more ~~detailed discussion, see Note 4.~~neighbors repaying their past due charges. We will continue to work with neighbors on establishing plans to repay past due amounts, and will monitor the impact of such payment plans on our results of operations in future quarters.

Collecting on Payment Plans—The final measure of recovery for our portfolio is to collect the past due amounts under the terms negotiated with our neighbors. Whether we are ultimately able to collect these amounts will be determined

by a number of factors, many of which are outside our control, especially the impact of the COVID-19 pandemic on the overall economy and each of our neighbors.

Portfolio and Leasing Statistics—Below are statistical highlights of our wholly-owned portfolio:



	~~Total Portfolio as of~~ June 30, ~~2019~~ 2020
Number of properties	~~298~~284
Number of states	3231
Total square feet (in thousands)	~~33,526~~31,787
Leased % of rentable square feet	~~94.6~~95.6	%
Average remaining lease term (in years)⁽¹⁾	~~4.8~~4.6
% ABR from grocery-anchored properties	97.0	%


⁽¹⁾	The average remaining lease term in years excludes future options to extend the term of the lease.

The following table ~~summarizes the portfolio~~details information ~~of the~~for our joint ventures, ~~and our ownership percentage~~which is the basis for determining the prorated information included in the subsequent tables as of June 30, ~~2019~~2020 (dollars and square feet in thousands):


	June 30, 2019					June 30, 2020
Joint Venture	Ownership Percentage	Number of Properties	ABR⁽¹⁾		GLA⁽²⁾	Ownership Percentage	Number of Properties	ABR⁽¹⁾		GLA⁽²⁾
Necessity Retail Partners	20%	13	$	18,384	1,391	20%	7	$	11,962	851
Grocery Retail Partners I	15%	17	24,538		1,908	15%	17	24,926		1,905
Grocery Retail Partners II						10%	3	3,858		312


⁽¹⁾	We calculate ~~annualized base rent (“ABR”)~~ABR as monthly contractual rent as of June 30, ~~2019~~2020, multiplied by 12 months.


⁽²⁾	~~Gross leasable area (“GLA”)~~GLA is defined as the portion of the total square feet of a building that is available for ~~tenant~~ leasing.

Lease Expirations—The following chart shows, on an aggregate basis, all of the scheduled lease expirations after June 30, ~~2019,~~2020 for each of the next ten years and thereafter for our ~~298~~wholly-owned properties and the prorated portion of those owned through our joint ~~ventures.~~ventures:

Our ability to create rental rate growth generally depends on our leverage during new and renewal lease negotiations with prospective and existing neighbors, which typically occurs when occupancy at our centers is high or during periods of economic growth and recovery. Conversely, we may experience rental rate decline when occupancy at our centers is low or during periods of economic recession, as the leverage during new and renewal lease negotiations may shift to prospective and existing neighbors.

Most of our grocery neighbors have remained open throughout the COVID-19 pandemic, and many other neighbor spaces were allowed to remain open, though their sales may have been impacted by social distancing and “stay-at-home” mandates. The ~~chart shows~~number of our neighbor spaces that temporarily closed as a result of the ~~leased square feet~~COVID-19 pandemic peaked in April 2020 and ~~ABR represented by~~has significantly decreased as states began to lift in full or in part “stay-at-home” mandates in May 2020. Certain neighbors remain temporarily closed, have since closed after reopening, are limiting the ~~applicable lease expiration year:~~number of customers allowed in their locations, or have modified their operations in other ways that may impact their profitability, either as a result of government mandates or self-elected efforts to reduce the spread of COVID-19. Some states and localities have temporarily reinstated certain mandates in response to increasing reported cases of COVID-19. These actions could result in increased permanent store closings and could reduce the demand for leasing space in our shopping centers and result in a decline in average rental rates on expiring leases. As of June 30, 2020, our average rental rates on new leases have exceeded the average rental rates on expiring leases and our occupancy remained flat as compared to December 31, 2019. We anticipate increased volatility in new and renewal rental rates until the business environment becomes more stable.

~~Additionally,~~For our wholly-owned properties and the prorated share of those owned through our joint ventures, subsequent to June 30, ~~2019,~~2020, we renewed approximately ~~0.6~~0.3 million total square feet and ~~$4.1~~$3.5 million of total ABR of ~~the expiring leases, inclusive of our pro rata share related to our joint ventures.~~

~~Based on current market base rental rates, we continue to believe we will achieve an overall positive increase in our average ABR for~~future expiring leases. ~~However, changes in base rental income associated with individual signed leases on comparable spaces may be positive or negative, and we can provide no assurance that~~This includes six anchor lease renewals, some of which were pursuant to the ~~base rents on new leases will continue~~exercise of an option to ~~increase from current levels.~~extend the lease.

See ~~Item 2.~~the section below titled Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations -

Leasing Activity for further discussion of leasing activity.

Portfolio Tenancy—Prior to the acquisition of a property, we assess the suitability of the grocery-anchor tenant and other tenants in light of our investment objectives, namely, preserving capital and providing stable cash flows for distributions. Generally, we assess the strength of the tenant by consideration of company factors, such as its financial strength and market share in the geographic area of the property, as well as location-specific factors, such as the store’s sales, local competition, and demographics. When assessing the tenancy of the non-anchor space at the property, we consider the tenant mix at each property in light of our portfolio, the proportion of national and national-franchise tenants, the creditworthiness of specific

tenants, and the timing of lease expirations. When evaluating non-national tenancy, we attempt to obtain credit enhancements to leases, which typically come in the form of deposits and/or guarantees from one or more individuals.

We define national ~~tenants~~neighbors as those ~~tenants~~neighbors that operate in at least three states. Regional ~~tenants~~neighbors are defined as those ~~tenants~~neighbors that have at least three ~~locations.~~locations in fewer than three states. The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, by ~~tenant~~neighbor type as of June 30, ~~2019:~~2020:

The following charts present the composition of our portfolio by ~~tenant~~neighbor industry as of June 30, ~~2019:~~2020:

We estimate that approximately 51% of our ABR, including the pro rata portion attributable to our properties owned through our joint ventures, is from retail and service businesses generally deemed essential under most state and local mandates issued in response to the COVID-19 pandemic. The composition of our portfolio as a percentage of ABR is as follows:



	June 30, 2020
Essential Retail and Services:
Grocery	35.5	%
Banks	2.4	%
Dollar stores	2.2	%
Pet supply	2.2	%
Medical	1.9	%
Hardware/Automotive	1.6	%
Wine, beer, and liquor	1.4	%
Pharmacy	1.0	%
Other essential	2.9	%
Total essential retail and services⁽¹⁾	51.1	%
Restaurants:
Quick service	9.5	%
Full service	5.8	%
Total restaurants	15.3	%
Other Retail and Services:
Services	16.2	%
Soft goods	12.9	%
Fitness	3.3	%
Entertainment	1.2	%
Total other retail and services	33.6	%
Total ABR	100.0	%


⁽¹⁾	Includes neighbors that we believe are considered to be essential retail and service businesses but that may have temporarily closed due to decreases in foot traffic and customer patronage as a result of “stay-at-home” mandates and social distancing guidelines implemented in response to the COVID-19 pandemic.

The following table presents our top twenty ~~tenants,~~neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, ~~grouped according to parent company, by ABR,~~ as of June 30, ~~2019~~2020 (dollars and square feet in thousands):


	June 30, 2019								June 30, 2020
Tenant	ABR		% of ABR		Leased Square Feet	% of Leased Square Feet		Number of Locations⁽¹⁾
Neighbor⁽¹⁾									ABR		% of ABR		Leased Square Feet	% of Leased Square Feet		Number of Locations⁽²⁾
Kroger	$	27,227	6.9	%	3,549	11.0	%	69	$	26,837	6.8	%	3,466	11.2	%	66
Publix	21,986		5.5	%	2,231	6.9	%	58	22,022		5.6	%	2,241	7.3	%	56
Ahold Delhaize									17,496		4.5	%	1,278	4.1	%	25
Albertsons-Safeway	17,018		4.3	%	1,680	5.2	%	32	16,104		4.1	%	1,629	5.3	%	31
Ahold Delhaize	16,798		4.2	%	1,262	3.9	%	25
Walmart	10,451		2.6	%	1,956	6.1	%	16	8,932		2.3	%	1,770	5.7	%	13
Giant Eagle	9,163		2.3	%	900	2.8	%	13	8,117		2.1	%	823	2.7	%	12
Sprouts Farmers Market	4,343		1.1	%	304	0.9	%	10	4,885		1.2	%	334	1.1	%	11
TJX Companies									4,727		1.2	%	428	1.4	%	15
Dollar Tree	4,189		1.1	%	469	1.5	%	47	4,023		1.0	%	437	1.4	%	44
Raley's	3,897		1.0	%	262	0.8	%	5	3,884		1.0	%	253	0.8	%	4
Subway	3,142		0.8	%	133	0.4	%	99
SUPERVALU	3,122		0.8	%	400	1.2	%	9	3,402		0.9	%	370	1.2	%	7
Subway Group									3,057		0.8	%	126	0.4	%	91
Schnuck's	2,953		0.7	%	328	1.0	%	5	3,025		0.8	%	328	1.1	%	5
Save Mart	2,868		0.7	%	359	1.1	%	7	2,619		0.7	%	309	1.0	%	6
Southeastern Grocers	2,799		0.7	%	331	1.0	%	8	2,599		0.7	%	291	0.9	%	8
Anytime Fitness	2,720		0.7	%	182	0.6	%	39
Anytime Fitness, Inc.									2,590		0.7	%	173	0.6	%	37
Lowe's	2,407		0.6	%	371	1.2	%	4	2,407		0.6	%	371	1.2	%	4
Kohl's	2,215		0.6	%	365	1.1	%	4
Kohl's Corporation									2,255		0.6	%	365	1.2	%	4
Food 4 Less (PAQ)	2,124		0.5	%	118	0.4	%	2	2,215		0.6	%	119	0.4	%	2
Walgreens	2,117		0.5	%	106	0.3	%	8
H&R Block	2,090		0.5	%	115	0.4	%	63
Petco Animal Supplies, Inc.									2,104		0.5	%	127	0.4	%	11
	$	143,629	36.1	%	15,421	47.8	%	523	$	143,300	36.7	%	15,238	49.4	%	452


⁽¹⁾	Neighbors are grouped by parent company and may represent multiple subsidiaries and banners.


⁽²⁾	Number of locations excludes auxiliary leases with grocery anchors such as fuel stations, pharmacies, and liquor stores. Additionally, in the event that a parent company has multiple subsidiaries or banners in a single shopping center, those subsidiaries are included as one location.

Results of Operations

~~Due to the timing~~Impact of the ~~closing of the Merger with REIT II, there is no financial data included related to the acquired properties in~~COVID-19 Pandemic

The COVID-19 pandemic did not significantly impact our results of operations ~~prior~~for the first quarter of 2020. In the second quarter, we noted significant impacts to ~~its closing~~rental income, including our collectability reserves. While our overall collections in the second quarter were lower than previous periods, we have seen steady improvement in each month since April, which corresponds with the number of neighbors who have reopened their business. At the same time, the COVID-19 pandemic has increased the uncertainty of collecting rents from a number of our neighbors. For neighbors with a higher degree of uncertainty, we may not record revenue for amounts billed until the cash is received. Based on ~~November 16, 2018.~~our analysis, no individual neighbor category was deemed to be entirely non-creditworthy. We continue to perform our analysis by examining each individual neighbor. For the three and six months ended June 30, 2020, we had $12.0 million and $14.8 million, respectively, in revenue that will not be recognized until cash is collected or the neighbor resumes payment and is considered creditworthy. As of June 30, 2020, this represented approximately 8% of out of nearly 5,100 total neighbors. This has resulted in reduced revenues for the quarter, and our estimates around collectability will likely continue to create volatility in our earnings at least in the short term. A portion of these neighbors may eventually vacate their space, and we may see a decline in occupancy in future quarters. The ~~variances~~duration of any decline will depend on many factors and cannot be estimated at this time.

In our efforts to ~~2018~~maximize collections in the near term while also supporting our neighbors as they operate through this pandemic, we have begun negotiating rent relief primarily in the form of payment plans and deferrals on rent and recovery charges, which allow for changes in the timing of payments, but not the total amount of consideration due to us under the lease. In a limited number of instances, we may also agree to waive certain charges due to us under the lease. During the three months ended June 30, 2020, our negotiated rent relief was minimal. As more neighbors resume paying their full monthly charges, we will enter into additional discussions on how to recover outstanding amounts. The ultimate impact on revenue in the future cannot be determined at this time, but may ultimately be the result of negotiated rental revenue reductions and changes in the timing of cash payments, which may or may not be material.

The negative economic impact of the COVID-19 pandemic has placed significant financial strain on certain businesses, leading to uncertainty in their ability to continue operations. As such, we have received notification of entry into bankruptcy proceedings from several of our neighbors, representing an exposure of only 1.1% of our total ABR. However, some of these neighbors may assume their leases during the course of the bankruptcy proceedings, which would further lower our exposure. We have included our assessment of the impact of these bankruptcies in our estimate of rent collectability, which impacted recorded revenue, as noted previously.

The ongoing impact of the COVID-19 pandemic and the resulting economic downturn will likely continue to be significant to our results of operations for the remainder of 2020 and potentially beyond as a result of a number of factors outside of our control. These factors include, but are ~~primarily~~not limited to, overall economic conditions on both a macro and micro level, including consumer demand as well as retailer demand for space within our shopping centers; the impact of social distancing guidelines, recommendations from governmental authorities, and consumer shopping preferences; the nature and effectiveness of any economic stimulus or relief measures; and the impact of all of the factors above, including other potentially unknown factors, on our neighbors’ ability to continue paying rent and related charges on time or at all and neighbors’ willingness to renew their leases on the ~~Merger unless otherwise stated.~~same terms or at all. The impact of these factors, some of which have already been realized, could include reduced revenue from neighbor concessions, increased collectability reserves, decreased recovery rates on expenses, and other unforeseen impacts that may arise in the course of operating during these circumstances. See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview for our observation of neighbor impacts through August 10, 2020.

The duration of the pandemic and mitigating measures, and their economic impact, has caused some of our current neighbors to permanently vacate their spaces and/or not renew their leases, and we may have difficulty leasing these spaces on the same or better terms or at all, and/or incur additional costs to lease vacant spaces. Extended periods of vacancy or reduced revenues may trigger impairments of our real estate assets. Additionally, these factors may impact disposition activity by decreasing demand and negatively impacting capitalization rates. Our disposition and acquisition activity was reduced as a result of the pandemic during the second quarter.

We believe that our investment focus on grocery-anchored shopping centers that provide daily necessities will help lessen the negative effect of the pandemic on our business compared to non-grocery anchored shopping centers. We are closely monitoring the occupancy, operating performance, and neighbor sales results at our centers, including those neighbors operating with reduced hours or under government-imposed restrictions. We took action to maximize our financial flexibility by implementing expense reductions at the property and corporate level; prioritizing capital projects to support the reopening of our neighbors and new leasing activity, or deferring if possible; and suspending monthly distributions and share repurchases.

Summary of Operating Activities for the Three Months Ended June 30, ~~2019~~2020 and ~~2018~~2019


	Three Months Ended						Favorable (Unfavorable)
	June 30,						Change					Three Months Ended June 30,						Favorable (Unfavorable) Change
(Dollars in thousands)	2019			2018			$			%		2020			2019			$			%
Operating Data:
Total revenues	$	132,581		$	104,173		$	28,408		27.3	%
Revenues:
Rental income												$	115,654		$	129,030		(13,376		)	(10.4	)%
Fee and management income												2,760			3,051			(291		)	(9.5	)%
Other property income												626			500			126			25.2	%
Operating Expenses:
Property operating expenses	(20,933		)	(16,901		)	(4,032		)	(23.9	)%	(19,629		)	(20,933		)	1,304			6.2	%
Real estate tax expenses	(17,930		)	(13,326		)	(4,604		)	(34.5	)%	(16,453		)	(17,930		)	1,477			8.2	%
General and administrative expenses	(13,540		)	(13,450		)	(90		)	(0.7	)%	(9,806		)	(13,540		)	3,734			27.6	%
Depreciation and amortization	(59,554		)	(46,385		)	(13,169		)	(28.4	)%	(56,370		)	(59,554		)	3,184			5.3	%
Impairment of real estate assets	(25,199		)	(10,939		)	(14,260		)	(130.4	)%	—			(25,199		)	25,199			NM
Other:
Interest expense, net	(25,758		)	(17,051		)	(8,707		)	(51.1	)%	(22,154		)	(25,758		)	3,604			14.0	%
(Loss) gain on disposal of property, net	(1,266		)	985			(2,251		)	NM
Other impairment charges	(9,661		)	—			(9,661		)	NM
Loss on disposal of property, net												(541		)	(1,266		)	725			57.3	%
Other expense, net	(912		)	(1,182		)	270			22.8	%	(500		)	(10,573		)	10,073			95.3	%
Net loss	(42,172		)	(14,076		)	(28,096		)	NM		(6,413		)	(42,172		)	35,759			84.8	%
Net loss attributable to noncontrolling interests	5,602			2,725			2,877			105.6	%	825			5,602			(4,777		)	(85.3	)%
Net loss attributable to stockholders	$	(36,570	)	$	(11,351	)	$	(25,219	)	NM		$	(5,588	)	$	(36,570	)	$	30,982		84.7	%

Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities. We define our same-center portfolio as the 278 properties that were owned and operational prior to January 1, 2019. We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing to real estate asset activity occurring after December 31, 2018, which includes 25 properties disposed of and five properties acquired. Below are explanations of the significant fluctuations in ~~our~~the results of operations for the three months ended June 30, ~~2019~~2020 and ~~2018:~~2019:

~~Total Revenues increased $28.4~~Rental Income decreased $13.4 million as follows:

$~~35.7~~8.5 milliondecrease related to our same-center portfolio. We have identified an increased number of neighbors as a credit risk, largely due to the COVID-19 pandemic and its economic impact. As a result, we saw a decrease to rental income of $12.1 million ~~increase~~ related to revenue that will not be recognized until cash is collected or the ~~Merger with REIT II,~~neighbor resumes payment and is considered creditworthy, including $~~43.2 million~~ ~~from the properties acquired, partially offset by a reduction of~~ ~~$7.5~~3.1 million in ~~management fee revenue previously received from~~straight-line rent reversals for the ~~acquired properties;~~related leases. This impact offsets an improvement of

$~~1.4~~1.9 million ~~increase~~ primarily ~~related~~due to ~~fee and management income received from the joint ventures included as Managed Funds;~~

~~$0.7 million~~ ~~increase related to properties acquired before January 1, 2018, primarily driven by a~~ ~~$0.22~~an increase in average minimum rent per square foot and average occupancy, as ~~compared to the~~well as a ~~three months ended June 30, 2018~~$2.8 million;

~~$8.1 million~~increase ~~decrease related to our net disposition of properties since January 1, 2018, outside of the Merger with REIT II, which includes~~ 17 ~~properties sold or contributed to GRP I and~~ 14 ~~properties sold to third parties, net of~~ 6 ~~properties acquired;~~in recovery income; and

$~~1.3~~4.9 milliondecrease ~~decrease~~primarily related to ~~the change in presentation~~our net disposition of real estate tax payments paid directly by tenants. The adoption of ASC 842, which requires lessors to exclude from variable payments all costs paid by a lessee directly to a third party, precludes our recognition of real estate tax payments made by tenants directly to third parties as recoverable revenue or expense. As such, we recognized no applicable real estate tax revenue for these direct payments during the ~~three months ended June 30, 2019~~20~~. As the recorded revenue in prior periods was completely offset by the recorded expense, this has no net impact to earnings.~~ properties.

Property Operating ~~increased~~Expenses decreased $~~4.0~~1.3 million as follows:

$~~4.4~~0.8 million ~~increase~~decrease related to ~~the properties acquired in the Merger with REIT II;~~our net disposition of 20 properties; and

$~~0.2~~0.5 milliondecrease related to our same-center ~~portfolio;~~portfolio and corporate operating activities, including $1.6 million of reduced compensation in connection with our expense reduction initiatives and performance compensation, partially offset by higher insurance costs.

Real Estate Tax Expenses decreased $1.5 million primarily as follows:

$0.9 milliondecrease related to our same-center portfolio, primarily as a result of successful real estate tax appeals; and

$~~0.2~~0.5 milliondecrease related to our net ~~disposal and corporate activity.~~disposition of 20 properties.

~~Real Estate Taxes increased $4.6~~General and Administrative Expenses:

The $3.7 milliondecrease in general and administrative expenses was primarily related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to compensation.

Depreciation and Amortization decreased $3.2 million primarily as follows:

$~~6.3~~2.3 million ~~increase~~decrease related to ~~the properties acquired in the Merger with REIT II;~~our net disposition of 20 properties; and

$~~0.4~~0.9 million ~~increase~~decrease related to our same-center ~~portfolio;~~

~~$0.8 million~~ ~~decrease related to our net disposal activity;~~portfolio and

~~$1.3 million~~ ~~decrease related to the change in presentation of real estate tax payments paid directly by tenants~~ corporate operating activities, primarily due to ~~the adoption of ASC 842.~~intangible assets becoming fully amortized by December 31, 2019.

Impairment of Real Estate Assets:

Our ~~increase~~decrease in impairment of real estate assets of $~~14.3~~25.2 million iswas primarily due to reduced disposition activity. Our impairments during the three months ended June 30, 2019 were related to assets under contract or actively marketed for sale at a disposition price that was less than the carrying ~~value. Upon~~value, the proceeds from which were used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes. We continue to sell non-core assets and may potentially recognize impairments in future quarters, but our anticipated disposition ~~we intend~~activity will likely be delayed or reduced due to ~~use~~current market conditions as a result of the ~~funds to execute our initiatives to recycle capital into higher quality assets, invest in our existing properties through redevelopment, and reduce our leverage.~~COVID-19 pandemic.

Interest Expense, Net:

•The $~~8.7~~3.6 million ~~increase~~decrease was largely due to repricing activities in ~~$464.5 million~~2019 ~~of debt assumed and new debt entered into~~as well as the decrease in ~~connection with~~LIBOR during the ~~Merger.~~three months ended June 30, 2020 as compared to the same period in 2019. Interest ~~expense, net~~Expense, Net was comprised of the following (dollars in thousands):


	Three Months Ended
	June 30,						Three Months Ended June 30,
	2019			2018			2020			2019
Interest on revolving credit facility, net	$	566		$	544		$	979		$	566
Interest on term loans, net	15,851			9,579			11,685			15,851
Interest on secured debt	5,767			6,074			7,316			5,767
Amortization of deferred financing expenses, assumed market debt and derivative adjustments, net	3,480			854
Other	94			—
Non-cash amortization and other							2,174			3,574
Interest expense, net	$	25,758		$	17,051		$	22,154		$	25,758

Weighted-average interest rate as of end of period	3.5		%	3.5		%	3.1		%	3.5		%
Weighted-average term (in years) as of end of period	4.7			4.9			4.5			4.7

~~(Loss) Gain on Disposal of Property,~~Other Expense, Net:

The $~~2.3~~10.1 milliondecrease was largely due to other impairment charges of $9.7 million ~~change was related to a net loss~~in connection with the REIT III public offering recognized ~~from the sale of~~ ~~three~~ ~~properties~~ during the three months ended June 30, 2019, which included a $7.8 million impairment of a corporate intangible asset and a $1.9 million impairment of organization and offering costs. Other Expense, Net was comprised of the following (dollars in thousands):



	Three Months Ended June 30,
	2020			2019
Equity in loss of unconsolidated joint ventures	$	(359	)	$	(520	)
Transaction and acquisition expenses	(14		)	(188		)
Federal, state, and local income tax expense	(180		)	(341		)
Other impairment charges	—			(9,661		)
Other	53			137
Other expense, net	$	(500	)	$	(10,573	)

Summary of Operating Activities for the Six Months Ended June 30, 2020 and 2019



	Six Months Ended June 30,						Favorable (Unfavorable) Change
(Dollars in thousands)	2020			2019			$			%
Revenues:
Rental income	$	244,120		$	257,890		$	(13,770	)	(5.3	)%
Fee and management income	4,925			6,312			(1,387		)	(22.0	)%
Other property income	1,518			1,148			370			32.2	%
Operating Expenses:
Property operating expenses	(41,391		)	(43,799		)	2,408			5.5	%
Real estate tax expenses	(33,565		)	(35,278		)	1,713			4.9	%
General and administrative expenses	(20,546		)	(26,750		)	6,204			23.2	%
Depreciation and amortization	(112,597		)	(120,543		)	7,946			6.6	%
Impairment of real estate assets	—			(38,916		)	38,916			NM
Other:
Interest expense, net	(44,929		)	(50,842		)	5,913			11.6	%
(Loss) gain on disposal of property, net	(2,118		)	5,855			(7,973		)	(136.2	)%
Other income (expense), net	9,369			(3,037		)	12,406			NM
Net income (loss)	4,786			(47,960		)	52,746			110.0	%
Net (income) loss attributable to noncontrolling interests	(605		)	6,195			(6,800		)	(109.8	)%
Net income (loss) attributable to stockholders	$	4,181		$	(41,765	)	$	45,946		110.0	%

For details surrounding our basis for analyzing significant fluctuations in our results of operations as well as definitions related to our portfolio of real estate assets, please see the Summary of Operating Activities for the Three Months Ended June 30, 2020 and 2019 section above. Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, 2020 and 2019:

Rental Income decreased $13.8 million as follows:

$5.4 milliondecrease related to our same-center portfolio. We have identified an increased number of neighbors as a credit risk, largely due to the COVID-19 pandemic and its economic impact. As a result, we saw a decrease to rental income of $14.3 million related to revenue that will not be recognized until cash is collected or the neighbor resumes payment and is considered creditworthy, including $3.1 million in straight-line rent reversals for the related leases. This offsets an improvement of $4.2 million primarily related to increases in average minimum rent per square foot and average occupancy, as well as a $5.2 millionincrease in recovery income; and

$8.4 milliondecrease primarily related to our net disposition of 20 properties.

Fee and Management Income:

The $1.4 milliondecrease in fee and management income is primarily due to fees no longer received from REIT III following its acquisition by us in October 2019 and a decrease in fees received from NRP, primarily due to property dispositions.

Property Operating Expenses decreased $2.4 million as follows:

$1.6 milliondecrease related to our net disposition of 20 properties; and

$0.8 milliondecrease related to our same-center portfolio and corporate operating activities, including $2.0 million of reduced compensation in connection with our expense reduction initiatives and performance compensation, partially offset by higher insurance costs.

Real Estate Tax Expenses decreased$1.7 million as follows:

$1.1 milliondecrease related to our net disposition of 20 properties; and

$0.6 milliondecrease related to our same-center portfolio primarily as a result of successful real estate tax appeals.

General and Administrative Expenses:

The $6.2 milliondecrease in general and administrative expenses was primarily related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to compensation.

Depreciation and Amortization decreased $7.9 million primarily as follows:

$4.6 milliondecrease related to our net disposition of 20 properties; and

$3.4 milliondecrease related to our same-center portfolio and corporate operating activities, primarily due to intangible lease assets becoming fully amortized by December 31, 2019.

Impairment of Real Estate Assets:

The decrease in impairment of real estate assets of $38.9 million was primarily due to reduced disposition activity. Our impairments during the six months ended June 30, 2019 were related to assets under contract or actively marketed for sale at a disposition price that was less than the carrying value, the proceeds from which were used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes. We continue to sell non-core assets and may potentially recognize impairments in future quarters, but our anticipated disposition activity will likely be delayed or reduced due to current market conditions as a result of the COVID-19 pandemic.

Interest Expense, Net:

The $5.9 milliondecrease was largely due to repricing activities in 2019 as well as the decrease in LIBOR during the six months ended June 30, 2020as compared to ~~a net gain recognized from~~the same period in 2019. Interest Expense, Net was comprised of the following (dollars in thousands):



	Six Months Ended June 30,
	2020			2019
Interest on revolving credit facility, net	$	1,195		$	1,421
Interest on term loans, net	24,416			30,704
Interest on secured debt	14,665			11,539
Non-cash amortization and other	4,653			7,178
Interest expense, net	$	44,929		$	50,842

Weighted-average interest rate as of end of period	3.1		%	3.5		%
Weighted-average term (in years) as of end of period	4.5			4.7

(Loss) Gain on the Disposal of Property, Net:

The $8.0 million change was primarily related to the sale of ~~two~~four properties with a net loss and associated write-offs of $2.1 million during the six months ended June 30, 2020, as compared to the sale of six properties with a net gain of $5.9 million during the six months ended June 30, 2019 (see Note 4).

Other Income (Expense), Net:

The $12.4 million change was largely due to other impairment charges of $9.7 million in connection with the REIT III public offering during the three months ended June 30, ~~2018~~2019.

~~Other Impairment Charges:~~

~~Other impairment charges of$9.7 million~~ ~~are due to the suspension of the PECO III public offering. This~~, which included a $7.8 million impairment of a corporate intangible asset and a $1.9 million impairment of organization and offering costs, ~~(see Notes~~ 14and 15).

~~Other Expense, Net decreased $0.3 million as follows:~~

~~$0.9 million~~ ~~expense, net during~~ the ~~three months ended June 30, 2019~~ ~~was primarily attributable to:~~


▪	~~$0.5 million~~ ~~expense from our unconsolidated joint ventures, primarily due to the amortization of basis adjustments as a result of our Merger with REIT II; and~~


▪	~~$0.3 million~~ ~~expense related to state and local income taxes.~~

~~$1.2 million~~ ~~expense, net during the~~ ~~three months ended June 30, 2018~~ ~~was primarily attributable to a~~ ~~$1.5 million~~ ~~expense related to an increase~~change in the fair value of our earn-out ~~liability (see Note~~liability. 15Other Income (Expense), Net).

~~Summary of Operating Activities for the Six Months Ended June 30, 2019 and 2018~~

Six Months Ended Favorable (Unfavorable)
June 30, Change
(Dollars in thousands) 2019 2018 $ %
Operating Data:
Total revenues $ 265,350
$ 207,372
$ 57,978
28.0 %
Property operating expenses (43,799 ) (35,016 ) (8,783 ) (25.1 )%
Real estate tax expenses (35,278 ) (26,473 ) (8,805 ) (33.3 )%
General and administrative expenses (26,750 ) (23,911 ) (2,839 ) (11.9 )%
Depreciation and amortization (120,543 ) (92,812 ) (27,731 ) (29.9 )%
Impairment of real estate assets (38,916 ) (10,939 ) (27,977 ) NM
Interest expense, net (50,842 ) (33,830 ) (17,012 ) (50.3 )%
Gain on disposal of property, net 5,855
985
4,870
NM
Other impairment charges (9,661 ) —
(9,661 ) NM
Other income (expense), net 6,624
(1,289 ) 7,913
NM
Net loss (47,960 ) (15,913 ) (32,047 ) NM
Net loss attributable to noncontrolling interests 6,195
2,962
3,233
109.1 %
Net loss attributable to stockholders $ (41,765 ) $ (12,951 ) $ (28,814 ) NM

~~Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, 2019 and 2018:~~

~~Total Revenues increased $58.0 million as follows:~~

~~$73.4 million~~ ~~increase related to the Merger with REIT II, including~~ ~~$87.9 million~~ ~~from the properties acquired, partially offset by a reduction of~~ ~~$14.5 million~~ ~~in management fee revenue previously received from the acquired properties;~~

~~$2.9 million~~ ~~increase primarily related to fee and management income received from the joint ventures included as Managed Funds;~~

~~$1.5 million~~ ~~increase related to properties acquired before January 1, 2018, primarily driven by a~~ ~~$0.20~~ ~~increase in average minimum rent per square foot as compared to the~~ ~~six months ended June 30, 2018~~;

~~$16.4 million~~ ~~decrease related to our net disposition of properties since January 1, 2018, outside of the Merger with REIT II. This includes~~ 17 ~~properties sold or contributed to GRP I and~~ 14 ~~properties sold to third parties, net of~~ 6 ~~properties acquired; and~~

~~$3.4 milliondecrease related to the adoption of ASC 842 (see our Summary of Operating Activities for theThree Months Ended June 30, 2019~~ ~~and~~ ~~2018), which included a~~ ~~$2.7 million~~ ~~decrease related to the change in presentation of real estate tax payments paid directly by tenants, and a~~ ~~$0.7 million~~ ~~decrease related to the change in presentation of our assessment of lease collectability.~~

~~Property Operating increased $8.8 million primarily as follows:~~

~~$9.6 million~~ ~~increase related to the properties acquired in the Merger with REIT II;~~

~~$0.7 million~~ ~~decrease related to our same-center portfolio; and~~

~~$0.2 million~~ ~~decrease related to our net disposal and corporate activity.~~

~~Real Estate Taxes increased $8.8 million as follows:~~

~~$12.8 million~~ ~~increase related to the properties acquired in the Merger with REIT II;~~

~~$0.6 million~~ ~~increase related to our same-center portfolio;~~

~~$1.9 million~~ ~~decrease related to our net disposal activity; and~~

~~$2.7 million~~ ~~decrease related to the change in presentation of real estate tax payments paid directly by tenants due to the adoption of ASC 842.~~

~~General and Administrative Expenses:~~

~~The~~ ~~$2.8 millionincrease~~ in general and administrative expenses was driven by the Merger with REIT II, primarily related to overhead costs such as compensation and benefits, accounting fees, and IT-related costs which are no longer reimbursable from REIT II as it is no longer an unconsolidated Managed Fund.

~~Impairment of Real Estate Assets:~~

~~Our increase in impairment of real estate assets of~~ ~~$28.0 million~~ ~~is related to assets under contract or actively marketed for sale at a disposition price that was less than the carrying value. Upon disposition, we intend to use the~~

~~funds to execute our initiatives to recycle capital into higher quality assets, invest in our existing properties through redevelopment, and reduce our leverage.~~

~~Interest Expense, Net:~~

~~•The~~ ~~$17.0 millionincrease~~ ~~was largely due to~~ ~~$464.5 million~~ ~~of debt assumed and new debt entered into in connection with the Merger. Interest expense, net~~ was comprised of the following (dollars in thousands):

Six Months Ended
June 30,
2019 2018
Interest on revolving credit facility, net $ 1,421
$ 811
Interest on term loans, net 30,704
18,872
Interest on secured debt 11,539
12,337
Amortization of deferred financing expenses, assumed market debt and derivative adjustments, net 7,004
1,810
Other 174
—
Interest expense, net $ 50,842
$ 33,830

Weighted-average interest rate as of end of period 3.5 % 3.5 %
Weighted-average term (in years) as of end of period 4.7
4.9

~~Gain on Disposal of Property, Net:~~

~~The~~ ~~$4.9 millionincrease~~ ~~was related to the sale of~~ ~~six~~ ~~properties during the~~ ~~six months ended June 30, 2019, as compared to the sale of~~ ~~two~~ ~~properties during the~~ ~~six months ended June 30, 2018~~ ~~(see Note~~ 5).

~~Other Impairment Charges:~~

~~Other impairment charges of~~ ~~$9.7 million~~ ~~are due to the suspension of the PECO III public offering. This included a~~ ~~$7.8 million~~ ~~impairment of a corporate intangible asset and a~~ ~~$1.9 million~~ ~~impairment of organization and offering costs (see Notes~~ 14 ~~and~~ 15).

~~Other Income (Expense), Net increased $7.9 million as follows:~~

~~$6.6 million~~ ~~income, net during the~~ ~~six months ended June 30, 2019~~ ~~was primarily attributable to:~~


▪	~~$7.5 million~~ ~~income related to the change in fair value of our earn-out liability (see Note~~ 15);


▪	~~$0.5 million~~ ~~income related to other non-recurring income associated with property acquisitions;~~


▪	~~$1.0 million~~ ~~expense from our unconsolidated joint ventures, primarily due to the amortization of basis adjustments as a result of our Merger with REIT II; and~~


▪	~~$0.3 million~~ ~~expense related to state and local income taxes.~~

~~$1.3 million~~ ~~expense, net during the~~ ~~six months ended June 30, 2018~~ ~~was primarily attributable to a~~ ~~$1.5 million~~ ~~expense related to an increase in the fair value of our earn-out liability.~~



	Six Months Ended June 30,
	2020			2019
Change in fair value of earn-out liability	$	10,000		$	7,500
Equity in loss of unconsolidated joint ventures	(639		)	(976		)
Transaction and acquisition expenses	(59		)	(276		)
Federal, state, and local income tax expense	(209		)	(341		)
Other impairment charges	—			(9,661		)
Other	276			717
Other income (expense), net	$	9,369		$	(3,037	)

Leasing Activity—The volume of our leasing activity slowed as a result of the COVID-19 pandemic during the second quarter. The average rent per square foot and cost of executing leases fluctuates based on the ~~tenant~~neighbor mix, size of the leased space, and lease term. Leases with national and regional ~~tenants~~neighbors generally require a higher cost per square foot to execute than those with local ~~tenants.~~neighbors. However, generally such ~~tenants~~national and regional neighbors will also pay higher rates for a longer term.

Below is a summary of leasing activity for our wholly-owned properties for the three months ended June 30, ~~2019~~2020 and ~~2018~~⁽¹⁾:2019:


	Total Deals						Inline Deals⁽²⁾						Total Deals⁽¹⁾						Inline Deals⁽¹⁾⁽²⁾
	2019			2018⁽³⁾			2019			2018⁽³⁾			2020			2019			2020			2019
New leases:
Number of leases	100			44			96			42			61			100			58			96
Square footage (in thousands)	393			119			227			93			197			393			159			227
First-year base rental revenue (in thousands)	$	5,467		$	1,905		$	4,017		$	1,679
Average rent per square foot (“PSF”)	$	13.91		$	16.04		$	17.67		$	17.98
Average cost PSF of executing new leases⁽⁴⁾	$	25.68		$	23.92		$	30.54		$	23.84
ABR (in thousands)													$	3,034		$	5,467		$	2,801		$	4,017
ABR per square foot													$	15.38		$	13.91		$	17.59		$	17.67
Cost per square foot of executing new leases⁽³⁾													$	19.48		$	25.68		$	23.35		$	30.54
Number of comparable leases⁽⁵⁾⁽⁴⁾	33			12			33			11			20			33			19			33
Comparable rent spread⁽⁶⁾⁽⁵⁾	10.5		%	15.1		%	10.5		%	4.3		%	15.5		%	10.5		%	15.9		%	10.5		%
Weighted average lease term (in years)	8.1			6.0			7.0			5.5			6.1			8.1			7.2			7.0
Renewals and options:
Number of leases	159			134			148			124			108			159			95			148
Square footage (in thousands)	716			650			309			290			975			716			209			309
First-year base rental revenue (in thousands)	$	9,579		$	8,203		$	6,759		$	4,980
Average rent PSF	$	13.39		$	12.62		$	21.87		$	17.16
Average rent PSF prior to renewals	$	12.15		$	11.74		$	19.73		$	15.61
Percentage increase in average rent PSF	10.2		%	7.3		%	10.9		%	9.7		%
Average cost PSF of executing renewals and options	$	2.59		$	2.45		$	4.29		$	3.62
ABR (in thousands)													$	8,942		$	9,579		$	4,141		$	6,759
ABR per square foot													$	9.17		$	13.39		$	19.81		$	21.87
ABR per square foot prior to renewals													$	8.73		$	12.15		$	18.40		$	19.73
Percentage increase in ABR per square foot													5.0		%	10.2		%	7.7		%	10.9		%
Cost per square foot of executing renewals and options													$	1.62		$	2.59		$	3.69		$	4.29
Number of comparable leases(4)	122			98			117			95			87			122			84			117
Comparable rent spread(5)	10.8		%	7.9		%	11.0		%	9.8		%	7.1		%	10.8		%	9.0		%	11.0		%
Weighted average lease term (in years)	4.8			5.0			4.4			4.6			5.4			4.8			3.5			4.4
Portfolio retention rate⁽⁷⁾⁽⁶⁾	87.1		%	94.9		%	76.2		%	89.2		%	88.2		%	87.1		%	70.3		%	76.2		%


⁽¹⁾	Per square foot amounts may not recalculate exactly based on other amounts presented within the table due to rounding.


⁽²⁾	We consider an inline deal to be a lease for less than 10,000 square feet of GLA.


⁽³⁾	~~Leasing activity in 2018 does not include activity for the REIT II properties, as they were acquired in the Merger on~~ ~~November 16, 2018~~.


⁽⁴⁾	The cost of executing new leases, renewals, and options includes leasing commissions, tenant improvement costs, landlord work, and tenant concessions. The costs associated with landlord work are excluded for repositioning and redevelopment projects, ~~are excluded,~~ if any.


⁽⁵⁾⁽⁴⁾	A comparable lease is a lease that is executed for the exact same space (location and square feet) in which a ~~tenant~~neighbor was previously located. For a lease to be considered comparable, it must have been executed within 365 days from the earlier of legal possession or the day the prior ~~tenant~~neighbor physically vacated the space.


⁽⁶⁾⁽⁵⁾	The comparable rent spread compares the percentage increase (or decrease) of new or renewal leases (excluding options) to the expiring lease of a unit that was occupied within the past 12twelve months.


⁽⁷⁾⁽⁶⁾	The portfolio retention rate is calculated by dividing (a) total square feet of retained ~~tenants~~neighbors with current period lease expirations by (b) the square feet of leases expiring during the period.

Below is a summary of leasing activity for our wholly-owned properties for the six months ended June 30, ~~2019~~2020 and ~~2018~~2019⁽¹⁾:


	Total Deals						Inline Deals						Total Deals						Inline Deals
	2019			2018			2019			2018			2020			2019			2020			2019
New leases:
Number of leases	207			118			199			113			148			207			135			199
Square footage (in thousands)	716			363			479			264			579			716			339			479
First-year base rental revenue (in thousands)	$	10,345		$	5,141		$	8,184		$	4,440
Average rent PSF	$	14.44		$	14.15		$	17.07		$	16.84
Average cost PSF of executing new leases	$	26.51		$	24.48		$	29.10		$	24.74
ABR (in thousands)													$	8,597		$	10,345		$	6,015		$	8,184
ABR per square foot													$	14.84		$	14.44		$	17.72		$	17.07
Cost per square foot of executing new leases													$	21.16		$	26.51		$	25.78		$	29.10
Number of comparable leases	73			33			71			31			45			73			44			71
Comparable rent spread	14.6		%	18.1		%	13.0		%	10.2		%	10.8		%	14.6		%	10.7		%	13.0		%
Weighted average lease term (in years)	7.6			6.8			6.7			6.7			8.2			7.6			6.8			6.7
Renewals and options:
Number of leases	322			251			300			229			235			322			208			300
Square footage (in thousands)	1,404			1,224			635			489			1,714			1,404			458			635
First-year base rental revenue (in thousands)	$	20,129		$	15,829		$	13,865		$	9,024
Average rent PSF	$	14.34		$	12.93		$	21.83		$	18.44
Average rent PSF prior to renewals	$	13.12		$	11.95		$	19.52		$	16.65
Percentage increase in average rent PSF	9.3		%	8.2		%	11.9		%	10.6		%
Average cost PSF of executing renewals and options	$	2.91		$	2.76		$	4.68		$	4.02
ABR (in thousands)													$	18,662		$	20,129		$	9,505		$	13,865
ABR per square foot													$	10.89		$	14.34		$	20.75		$	21.83
ABR per square foot prior to renewals													$	10.24		$	13.12		$	18.83		$	19.52
Percentage increase in ABR per square foot													6.7		%	9.3		%	12.2		%	11.9		%
Cost per square foot of executing renewals and options													$	3.41		$	2.91		$	4.36		$	4.68
Number of comparable leases	252			185			244			177			176			252			170			244
Comparable rent spread	11.6		%	9.4		%	12.4		%	11.6		%	9.2		%	11.6		%	11.8		%	12.4		%
Weighted average lease term (in years)	4.8			4.9			4.6			4.8			5.0			4.8			3.7			4.6
Portfolio retention rate	85.5		%	91.6		%	78.4		%	82.9		%	79.5		%	85.5		%	68.6		%	78.4		%


⁽¹⁾	See the footnotes to the summary of leasing activity table for the three months ended June 30, 2020 and 2019 for more detail regarding certain items throughout this table.

Additionally, subsequent to June 30, 2020, through July 31, we executed a total of 44 new leases.

Non-GAAP Measures

~~Pro Forma~~ Same-Center Net Operating Income ~~(“NOI”)~~—We present Same-Center NOI as a supplemental measure of our performance. We define NOI as total operating revenues, adjusted to exclude non-cash revenue items, less property operating expenses and real estate taxes. For the three and six months ended June 30, 2020 and 2019, Same-Center NOI represents the NOI for the 278 properties that were ~~owned~~wholly-owned and operational for the entire portion of both comparable reporting periods. ~~For purposes of evaluating~~We believe Same-Center NOI onprovides useful information to our investors about our financial and operating performance because it provides a ~~comparative basis, we are presenting Pro Forma~~performance measure of the revenues and expenses directly involved in owning and operating real estate assets and provides a perspective not immediately apparent from net income (loss). Because Same-Center NOI ~~which is Same-Center~~excludes the change in NOI on a pro forma basis as if the Merger had occurred on January 1, 2018. This perspective allows us to evaluate Same-Center NOI growth over a comparable period. As of June 30, 2019, we had 291 same-center properties, including 85 same-centerfrom properties acquired ~~in the Merger. Pro Forma Same-Center NOI is not necessarily indicative~~or disposed of ~~what actual Same-Center NOI growth would have been if the Merger had occurred on January 1,~~after December 31, 2018, ~~nor does~~ it ~~purport to represent Same-Center NOI growth for future periods.~~

~~Pro Forma Same-Center NOI~~ highlights operating trends such as occupancy ~~rates,~~levels, rental rates, and operating costs on properties that were operational for both comparable periods. Other REITs may use different methodologies for calculating Same-Center NOI, and accordingly, our ~~Pro Forma~~ Same-Center NOI may not be comparable to other REITs.

~~Pro Forma~~ Same-Center NOI should not be viewed as an alternative measure of our financial performance ~~since~~as it does not reflect the operations of our entire portfolio, nor does it reflect the impact of general and administrative expenses, ~~acquisition expenses,~~ depreciation and amortization, interest expense, other income (expense), or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties that could materially impact our results from operations.

The table below compares ~~Pro Forma~~ Same-Center NOI (dollars in thousands):

Three Months Ended Favorable Six Months Ended Favorable
June 30, (Unfavorable) June 30, (Unfavorable)
2019
2018⁽¹⁾

$
Change
% Change 2019
2018⁽¹⁾
$ Change % Change
Revenues:
Rental income⁽²⁾
$ 92,448
$ 92,072
$ 376
$ 184,159

$ 182,928
$ 1,231

Tenant recovery income 28,452
29,908
(1,456 ) 58,346

61,541
(3,195 )
Other property income 458
508
(50 ) 1,079

1,195
(116 )
Total revenues 121,358
122,488
(1,130 ) (0.9 )% 243,584
245,664
(2,080 ) (0.8 )%
Operating expenses:
Property operating expenses 16,859

18,211
1,352
35,575

38,466
2,891

Real estate taxes 17,488

18,585
1,097
34,209

36,871
2,662

Total operating expenses 34,347
36,796
2,449
6.7 % 69,784
75,337
5,553
7.4 %
Total Pro Forma Same-Center NOI $ 87,011
$ 85,692
$ 1,319
1.5 % $ 173,800
$ 170,327
$ 3,473
2.0 %


⁽¹⁾	Adjusted for the same-center operating results of the Merger prior to the transaction for these periods. For additional information and details about the operating results of the Merger included herein, refer to the REIT II Same-Center NOI table below.


⁽²⁾	Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income. In accordance with ASC 842, revenue amounts deemed uncollectible are included in rental income for ~~2019~~ ~~and property operating expense in~~ ~~2018~~.

~~Pro Forma Same-Center Net Operating Income Reconciliation—Below is a reconciliation of Net Loss to NOI for our real estate investments and Pro Forma Same-Center NOI (in thousands):~~

Three Months Ended Six Months Ended
June 30, June 30,

2019 2018 2019 2018
Net loss $ (42,172 ) $ (14,076 ) $ (47,960 )
$ (15,913 )
Adjusted to exclude:

Fees and management income (3,051 ) (9,137 ) (6,312 )
(17,849 )
Straight-line rental income (2,819 ) (1,409 ) (4,532 )
(2,489 )
Net amortization of above- and below-market leases (1,091 ) (983 ) (2,224 )
(1,990 )
Lease buyout income (223 ) (43 ) (456 )
(66 )
General and administrative expenses 13,540
13,450
26,750

23,911
Depreciation and amortization 59,554
46,385
120,543

92,812
Impairment of real estate assets 25,199
10,939
38,916
10,939
Interest expense, net 25,758
17,051
50,842
33,830
Loss (gain) on disposal of property, net 1,266
(985 ) (5,855 ) (985 )
Other impairment charges 9,661
—
9,661
—
Other 912

1,087

(6,624 )
1,100
Property management expense allocations to third-party
assets under management 3,462
4,001
6,725
7,791
NOI for real estate investments 89,996
66,280
179,474
131,091
Less: NOI from centers excluded from same-center (2,985 ) (8,783 ) (5,674 ) (17,290 )
NOI from same-center properties acquired in the Merger, prior to acquisition —
28,195
—
56,526
Total Pro Forma Same-Center NOI $ 87,011
$ 85,692
$ 173,800
$ 170,327

~~Pro Forma Same-Center Properties—Below is a breakdown of our property count, including same-center properties by origin as well as non-same-center properties:~~



	~~Six Months Ended~~
	~~June 30, 2019~~
~~Same-center properties owned since January 1, 2018~~	~~206~~
~~Same-center properties acquired in the Merger~~	85
~~Properties acquired after January 1, 2018~~	7
~~Total properties~~	~~298~~

~~REIT II Same-Center Net Operating Income~~—NOI from the REIT II properties acquired in the Merger, prior to acquisition, was obtained from the accounting records of REIT II without adjustment. The accounting records were subject to internal review by us. The table below provides Same-Center NOI detail for the non-ownership period of REIT II (in thousands):


	Three Months Ended		Six Months Ended		Three Months Ended June 30,				Favorable (Unfavorable)					Six Months Ended June 30,				Favorable (Unfavorable)
	June 30, 2018		June 30, 2018		2020		2019		$ Change			% Change		2020		2019		$ Change			% Change
Revenues:
Rental income⁽¹⁾	$	30,731	$	61,304	$	84,506	$	90,089	$	(5,583	)			$	175,422	$	179,696	$	(4,274	)
Tenant recovery income	10,946		22,821		28,067		27,277		790					58,372		56,005		2,367
Other property income	172		443		591		447		144					1,465		1,059		406
Total revenues	41,849		84,568		113,164		117,813		(4,649		)	(3.9	)%	235,259		236,760		(1,501		)	(0.6	)%
Operating expenses:
Property operating expenses	6,823		14,275		16,728		16,140		(588		)			34,971		34,213		(758		)
Real estate taxes	6,831		13,767		16,164		17,001		837					33,284		33,383		99
Total operating expenses	13,654		28,042		32,892		33,141		249			0.8	%	68,255		67,596		(659		)	(1.0	)%
Total Same-Center NOI	$	28,195	$	56,526	$	80,272	$	84,672	$	(4,400	)	(5.2	)%	$	167,004	$	169,164	$	(2,160	)	(1.3	)%


⁽¹⁾	Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income.

Same-Center NOI Reconciliation—Below is a reconciliation of Net (Loss) Income to NOI for our real estate investments and Same-Center NOI (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019⁽¹⁾			2020			2019⁽¹⁾
Net (loss) income	$	(6,413	)	$	(42,172	)	$	4,786		$	(47,960	)
Adjusted to exclude:
Fees and management income	(2,760		)	(3,051		)	(4,925		)	(6,312		)
Straight-line rental expense (income)⁽²⁾	948			(2,819		)	(1,364		)	(4,532		)
Net amortization of above- and below-market leases	(795		)	(1,091		)	(1,583		)	(2,224		)
Lease buyout income	(214		)	(223		)	(308		)	(456		)
General and administrative expenses	9,806			13,540			20,546			26,750
Depreciation and amortization	56,370			59,554			112,597			120,543
Impairment of real estate assets	—			25,199			—			38,916
Interest expense, net	22,154			25,758			44,929			50,842
Loss (gain) on disposal of property, net	541			1,266			2,118			(5,855		)
Other expense (income), net	500			10,573			(9,369		)	3,037
Property operating expenses related to fees and management income	891			1,531			1,528			2,826
NOI for real estate investments	81,028			88,065			168,955			175,575
Less: Non-same-center NOI⁽³⁾	(756		)	(3,393		)	(1,951		)	(6,411		)
Total Same-Center NOI	$	80,272		$	84,672		$	167,004		$	169,164


⁽¹⁾	Certain prior period amounts have been reclassified to conform with current year presentation.


⁽²⁾	Excludes straight-line rent adjustments for neighbors deemed to be non-creditworthy.


⁽³⁾	Includes operating revenues and expenses from non-same-center properties which includes properties acquired or sold and corporate activities.

Funds from Operations (“FFO”) and ~~Modified Funds from Operations (“MFFO”)~~Core FFO—FFO is a non-GAAP performance financial measure that is widely recognized as a measure of REIT operating performance. The National Association of Real Estate Investment Trusts (“~~NAREIT”~~Nareit”) defines FFO as net income (loss) ~~attributable to common stockholders~~ computed in accordance with GAAP, excluding gains (or losses) from sales of property and gains (or losses) from change in control, plus depreciation and amortization, and after adjustments for impairment losses on real estate and impairments of in-substance real estate investments in investees that are driven by measurable decreases in the fair value of the depreciable real estate held by the unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We calculate FFO Attributable to Stockholders and Convertible Noncontrolling Interests in a manner consistent with the ~~NAREIT~~Nareit definition, with an additional adjustment made for noncontrolling interests that are not convertible into common stock.

~~MFFO~~Core FFO is an additional performance financial measure used by us as FFO includes certain non-comparable items that affect our performance over time. We believe that ~~MFFO~~Core FFO is helpful in assisting management and investors with the assessment of the sustainability of operating performance in future periods. We believe it is more reflective of our core operating performance and provides an additional measure to compare our performance across reporting periods on a consistent basis by excluding items that may cause short-term fluctuations in net income (loss). To arrive at Core FFO, we adjust FFO attributable to stockholders and convertible noncontrolling interests to exclude certain recurring and non-recurring items

including, but ~~have no impact~~not limited to, depreciation and amortization of corporate assets, changes in the fair value of the earn-out liability, amortization of unconsolidated joint venture basis differences, gains or losses on ~~cash flows.~~the extinguishment or modification of debt, other impairment charges, and transaction and acquisition expenses.

FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and ~~MFFO~~Core FFO should not be considered alternatives to net income (loss) or income (loss) from continuing operations under GAAP, as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions. ~~MFFO~~Core FFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate our business plan in the manner currently contemplated.

Accordingly, FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and ~~MFFO~~Core FFO should be reviewed in connection with other GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Our FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and ~~MFFO,~~Core FFO, as presented, may not be comparable to amounts calculated by other REITs.

The following table presents our calculation of FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and ~~MFFO~~Core FFO and provides additional information related to our operations (in thousands, except per share amounts):


	Three Months Ended						Six Months Ended
	June 30,						June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019⁽¹⁾			2020			2019⁽¹⁾
Calculation of FFO Attributable to Stockholders and Convertible Noncontrolling Interests
Net loss	$	(42,172	)	$	(14,076	)	$	(47,960	)	$	(15,913	)
Net (loss) income													$	(6,413	)	$	(42,172	)	$	4,786		$	(47,960	)
Adjustments:
Depreciation and amortization of real estate assets	57,828			42,841			117,170			85,140			54,892			57,828			109,709			117,170
Impairment of real estate assets	25,199			10,939			38,916			10,939			—			25,199			—			38,916
Loss (gain) on disposal of property, net	1,266			(985		)	(5,855		)	(985		)	541			1,266			2,118			(5,855		)
Adjustments related to unconsolidated joint ventures	1,051			—			2,106			—			940			1,051			1,594			2,106
FFO attributable to the Company	43,172			38,719			104,377			79,181			49,960			43,172			118,207			104,377
Adjustments attributable to noncontrolling interests not convertible into common stock	(41		)	(31		)	(231		)	(128		)	—			(41		)	—			(231		)
FFO attributable to stockholders and convertible noncontrolling interests	$	43,131		$	38,688		$	104,146		$	79,053		$	49,960		$	43,131		$	118,207		$	104,146
Calculation of MFFO
Calculation of Core FFO
FFO attributable to stockholders and convertible noncontrolling interests	$	43,131		$	38,688		$	104,146		$	79,053		$	49,960		$	43,131		$	118,207		$	104,146
Adjustments:
Net amortization of above- and below-market leases	(1,091		)	(982		)	(2,224		)	(1,990		)
Depreciation and amortization of corporate assets	1,726			3,544			3,373			7,672			1,478			1,726			2,888			3,373
Straight-line rent	(2,743		)	(1,414		)	(4,456		)	(2,471		)
Amortization of market debt adjustment	2,255			(465		)	4,482			(737		)
Change in fair value of earn-out liability	—			1,500			(7,500		)	1,500			—			—			(10,000		)	(7,500		)
Amortization of unconsolidated joint venture basis differences													254			353			721			697
Loss on extinguishment or modification of debt, net													—			—			73			—
Other impairment charges	9,661			—			9,661			—			—			9,661			—			9,661
Adjustments related to unconsolidated joint ventures	353			—			697			—
Other	188			74			276			104
MFFO	$	53,480		$	40,945		$	108,455		$	83,131
Transaction and acquisition expenses													14			188			59			276
Core FFO													$	51,706		$	55,059		$	111,948		$	110,653

FFO Attributable to Stockholders and Convertible Noncontrolling Interests/MFFO per share
Weighted-average common shares outstanding - diluted⁽¹⁾	326,607			228,909			326,124			229,628
FFO attributable to stockholders and convertible noncontrolling interests per share - diluted⁽¹⁾	$	0.13		$	0.17		$	0.32		$	0.34
MFFO per share - diluted ⁽¹⁾	$	0.16		$	0.18		$	0.33		$	0.36
FFO Attributable to Stockholders and Convertible Noncontrolling Interests per share and Core FFO per share
Weighted-average common shares outstanding - diluted⁽²⁾													333,494			326,607			333,420			326,124
FFO attributable to stockholders and convertible noncontrolling interests per share - diluted													$	0.15		$	0.13		$	0.35		$	0.32
Core FFO per share - diluted													$	0.16		$	0.17		$	0.34		$	0.34


⁽¹⁾	Certain prior period amounts have been reclassified to conform with current year presentation.

⁽²⁾

Restricted stock awards were dilutive to FFO Attributable to Stockholders and Convertible Noncontrolling Interests per share and ~~MFFO~~Core FFO per share for the three and six months ended June 30, ~~2019~~2020 and ~~2018~~2019, and, accordingly, their impact was included in the weighted-average common shares used in their respective per share calculations. For the three months ended June 30, 2020 and for the three and six months ended June 30, 2019, restricted stock awards had an anti-dilutive effect upon the calculation of earnings per share and thus were excluded. For details related to ~~calculate diluted FFO Attributable to Stockholders and Convertible Noncontrolling Interests and MFFO~~the calculation of earnings per ~~share.~~share, see Note 10.

Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (“EBITDAre”) and Adjusted EBITDAre—We have included the calculation of EBITDAre to better align with publicly traded REITs. Additionally, we believe that, as another important earnings metric, it is a useful indicator of our ability to support our debt obligations. Nareit defines EBITDAre as net income (loss) computed in accordance with GAAP before (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) gains or losses from disposition of depreciable property, and (v) impairment write-downs

of depreciable property. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDAre on the same basis.

Adjusted EBITDAre is an additional performance measure used by us as EBITDAre includes certain non-comparable items that affect our performance over time. To arrive at Adjusted EBITDAre, we exclude certain recurring and non-recurring items from EBITDAre, including, but not limited to: (i) changes in the fair value of the earn-out liability; (ii) other impairment charges; (iii) amortization of basis differences in our investments in our unconsolidated joint ventures; and (iv) transaction and acquisition expenses.

We use EBITDAre and Adjusted EBITDAre as additional measures of operating performance which allow us to compare earnings independent of capital structure, determine debt service and fixed cost coverage, and measure enterprise value. EBITDAre and Adjusted EBITDAre should not be considered as alternatives to net income (loss), as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions. Accordingly, EBITDAre and Adjusted EBITDAre should be reviewed in connection with other GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Our EBITDAre and Adjusted EBITDAre, as presented, may not be comparable to amounts calculated by other REITs.

The following table presents our calculation of EBITDAre and Adjusted EBITDAre and provides additional information related to our operations (in thousands, except per share amounts):



	Three Months Ended June 30,						Six Months Ended June 30,						Year Ended
	2020			2019			2020			2019			2019
Calculation of EBITDAre
Net (loss) income	$	(6,413	)	$	(42,172	)	$	4,786		$	(47,960	)	$	(72,826	)
Adjustments:
Depreciation and amortization	56,370			59,554			112,597			120,543			236,870
Interest expense, net	22,154			25,758			44,929			50,842			103,174
Loss (gain) on disposal of property, net	541			1,266			2,118			(5,855		)	(28,170		)
Impairment of real estate assets	—			25,199			—			38,916			87,393
Federal, state, and local tax expense	180			341			209			341			785
Adjustments related to unconsolidated joint ventures	1,391			1,763			2,568			3,529			2,571
EBITDAre	$	74,223		$	71,709		$	167,207		$	160,356		$	329,797
Calculation of Adjusted EBITDAre
EBITDAre	$	74,223		$	71,709		$	167,207		$	160,356		$	329,797
Adjustments:
Change in fair value of earn-out liability	—			—			(10,000		)	(7,500		)	(7,500		)
Other impairment charges	—			9,661			—			9,661			9,661
Transaction and acquisition expenses	14			188			59			276			598
Amortization of unconsolidated joint venture basis differences	254			353			721			697			2,854
Adjusted EBITDAre	$	74,491		$	81,911		$	157,987		$	163,490		$	335,410

Liquidity and Capital Resources

General—Aside from standard operating expenses, we expect our principal cash demands to be for:

principal and interest payments on our outstanding indebtedness;

cash distributions to ~~stockholders;~~stockholders to comply with REIT requirements;

capital expenditures and leasing costs;

investments in real estate; and

redevelopment and repositioning ~~projects;~~

~~repurchases of common stock; and~~

~~principal and interest payments on our outstanding indebtedness.~~

projects.

We expect our primary sources of liquidity to be:

operating cash flows;

proceeds ~~received from dispositions of properties;~~

~~reinvested distributions;~~

~~proceeds~~ from debt financings, including borrowings under our unsecured revolving credit facility;

proceeds received from the disposition of properties;

distributions received from joint ventures; ~~and~~

available, unrestricted cash and cash ~~equivalents.~~equivalents; and

reinvested distributions once distributions to stockholders resume and thus the DRIP is reactivated/reinstated.

Our cash from operations has been reduced, and we anticipate that it may continue to be be negatively impacted, at least in the near term, as a result of the immediate impact of the COVID-19 pandemic as we temporarily experience reduced or delayed cash payments and/or revenue from neighbors. Additionally, our cash from financing activities has been and will continue to be impacted by actions taken to preserve liquidity, as we have suspended our distributions, the DRIP, and the SRP. We are monitoring events closely and managing our cash usage, which also includes prioritizing our capital spending and redevelopment to support the reopening of our neighbors and new leasing activity, or deferring if possible, as well as reducing other property and corporate expenses. At this time, we believe our current sources of liquidity, most significantly our operating cash ~~will provide adequate liquidity~~flows and borrowing availability on our revolving credit facility, are sufficient to ~~fund~~meet our ~~obligations.~~short- and long-term cash demands.

Debt—The following table summarizes information about our debt as of June 30, ~~2019~~2020 and December 31, ~~2018~~2019 (dollars in thousands):


	June 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Total debt obligations, gross⁽¹⁾	$	2,443,395		$	2,461,438		$	2,337,466		$	2,372,521
Weighted average interest rate	3.5		%	3.5		%
Weighted average maturity	4.7			4.9
Weighted average interest rate at end of period							3.1		%	3.4		%
Weighted average term (in years) at end of period							4.5			5.0

Revolving credit facility capacity	$	500,000		$	500,000		$	500,000		$	500,000
Revolving credit facility availability⁽²⁾⁽¹⁾	491,423			426,182			490,404			489,805
Revolving credit facility maturity⁽³⁾⁽²⁾	October 2021			October 2021			October 2021			October 2021


⁽¹⁾	~~Excludes assumed market debt adjustments~~Net of any outstanding balance and ~~deferred financing expenses.~~letters of credit.


⁽²⁾	~~Net of outstanding letters of credit.~~


⁽³⁾	The revolving credit facility has an additional ~~options~~option to extend the maturity to October ~~2022.~~2022, with its execution being subject to compliance with certain terms included in the loan agreement, including the absence of any defaults and the payment of relevant fees.

In January 2020, we paid down $30.0 million of term loan debt maturing in 2021 using proceeds from property dispositions in 2019. Following this repayment, our next term loan maturity is in April 2022. In April 2020, we borrowed $200 million on our revolving credit facility to meet our operating needs for a sustained period due to the COVID-19 pandemic. Our rent and recovery collections during the second quarter, combined with the above initiatives, sufficiently funded our short-term operating needs and allowed us to repay in full the outstanding balance on our revolving credit facility in June 2020.

Our debt is subject to certain covenants, and as of June 30, ~~2019,~~2020, we were in compliance with the restrictive covenants of our outstanding debt obligations. We expect to continue to meet the requirements of our debt covenants over the ~~short- and long-term. Our~~next twelve months.

Financial Leverage Ratios—We believe our debt to Adjusted EBITDAre, debt to total enterprise value, and debt covenant compliance as of June 30, ~~2019,~~2020 allow us access to future borrowings as ~~needed.~~

needed in the near term. The following table presents our calculation of net debt toand total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our joint ventures, as of June 30, ~~2019~~2020 and December 31, ~~2018~~2019 (dollars in thousands):


	June 30, 2019			December 31, 2018			June 30, 2020		December 31, 2019
Net debt:
Total debt, excluding below-market adjustments and deferred financing expenses	$	2,504,389		$	2,522,432
Total debt, excluding market adjustments and deferred financing expenses							$	2,384,553	$	2,421,520
Less: Cash and cash equivalents	18,492			18,186			54,894		18,376
Total net debt	$	2,485,897		$	2,504,246
Net debt							$	2,329,659	$	2,403,144

Enterprise value:
Total net debt	$	2,485,897		$	2,504,246
Net debt							$	2,329,659	$	2,403,144
Total equity value⁽¹⁾	3,627,314			3,583,029			2,914,931		3,682,161
Total enterprise value	$	6,113,211		$	6,087,275		$	5,244,590	$	6,085,305

Net debt to total enterprise value	40.7		%	41.1		%

⁽¹⁾

Total equity value is calculated as the ~~product of the~~ number of ~~diluted~~common shares and OP units outstanding multiplied by the EVPS as of June 30, 2020 and ~~the estimated net asset value per share at the end of the period.~~December 31, 2019, respectively. There were ~~326.8 million~~ ~~and~~ ~~324.6~~333.1 million diluted shares outstanding with an EVPS of $8.75 and 331.7 million diluted shares outstanding with an EVPS of $11.10as of June 30, ~~2019~~2020 and December 31, ~~2018~~2019, respectively.

The following table presents our calculation of net debt to Adjusted EBITDAre and net debt to total enterprise value as of June 30, 2020 and December 31, 2019 (dollars in thousands):



	June 30, 2020			December 31, 2019
Net debt to Adjusted EBITDAre - annualized:
Net debt	$	2,329,659		$	2,403,144
Adjusted EBITDAre - annualized⁽¹⁾	329,907			335,410
Net debt to Adjusted EBITDAre - annualized	7.1		x	7.2		x

Net debt to total enterprise value
Net debt	$	2,329,659		$	2,403,144
Total enterprise value	5,244,590			6,085,305
Net debt to total enterprise value	44.4		%	39.5		%


⁽¹⁾	Adjusted EBITDAre is annualized based on trailing twelve months. See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - EBITDAre and Adjusted EBITDAre for a reconciliation to Net (Loss) Income.

Capital Expenditures and Redevelopment Activity—We make capital expenditures during the course of normal operations, which include maintenance capital expenditures and tenant improvements as well as value-enhancing anchor space repositioning and redevelopment, ground-up outparcel development, and other accretive projects. Our capital investments are being prioritized to support the reopening of our neighbors and new leasing activity, or deferred if possible, in order to maximize our available capital in response to the uncertainty around the duration and negative impact of the COVID-19 pandemic.

During the six months ended June 30, 2020 and 2019, we had ~~cash~~capital spend of $28.5 million and ~~cash equivalents and restricted cash of $52.6~~$27.2 million, ~~a net decrease of $31.7 million~~respectively. Our capital spend during the six months ended June 30, ~~2019.~~

~~Below is a summary of our cash flow activity (dollars in thousands):~~

Six Months Ended
June 30,
2019 2018 $ Change % Change
Net cash provided by operating activities $ 100,069
$ 77,812
$ 22,257
28.6 %
Net cash used in investing activities (26,987 ) (13,268 ) (13,719 ) 103.4 %
Net cash used in financing activities (104,830 ) (66,951 ) (37,879 ) 56.6 %

~~Operating Activities—Our net cash provided by operating activities was primarily impacted by the following:~~

~~Property operations—Most of our operating cash comes from rental income~~2020 included $16.1 million related to development and ~~is offset by property operating expenses, real estate taxes,~~redevelopment projects. We anticipate that obligations related to capital improvements as well as redevelopment and ~~general and administrative costs. Our change in~~development can be met with cash flows from ~~property~~ operations, ~~primarily results~~cash flows from ~~owning a larger portfolio year-over-year~~dispositions, or borrowings on our unsecured revolving line of credit.

Acquisition Activity—We continually monitor the commercial real estate market for properties that have future growth potential, are located in attractive demographic markets, and support our business objectives. Given the uncertainty around the COVID-19 pandemic as ~~a result of~~well as the ~~Merger with REIT II.~~

~~Fee and management income—We also generate operating cash from our third-party investment management business, pursuant~~resulting market conditions, we expect acquisition activity to ~~various management and advisory agreements between us and the Managed Funds. Our fee and management income was~~ ~~$6.3 million~~remain low for the remainder of 2020. During the six months ended June 30, ~~2019, a decrease~~2020, we acquired two parcels of ~~$11.5 million~~land, as ~~compared~~described in Note 4 to the ~~same period in~~ ~~2018~~, primarily due to fee and management income no longer received from the properties acquired in the Merger with REIT II, offset by increased fee and management income as a result of our joint ventures.

~~Cash paid for interest—During the~~ ~~six months endedJune 30, 2019, we paid~~ ~~$44.2 million~~ ~~for interest, an increase of~~ ~~$11.7 million~~ ~~over the same period in~~ ~~2018. This increase was largely due to~~ ~~$464.5 million~~ ~~of debt assumed and new debt entered into in connection with the Merger with REIT II.~~

~~Working capital—During the~~ ~~six months endedJune 30, 2019, the increase in cash used for working capital was primarily driven by higher prepaid expenses, partially offset by higher third party payables as a result of owning a larger portfolio.~~

Accounting for lease costs—The adoption of ASC 842 has caused us to expense as incurred significant lease origination costs which were previously capitalized. Such origination costs are now included as operating expenses and are therefore included as a reduction of our cash flows from operations rather than classified as capital expenditures on theconsolidated financial statements, ~~of cash flows in the current period. As a result of the adoption, we recognized an additional~~ ~~$1.9 million~~ ~~of lease origination costs as operating cash outflows during the~~ ~~six months ended June 30, 2019, as compared to the same period in~~ ~~2018~~.

~~Investing Activities—Our net cash used in investing activities was primarily impacted by the following:~~

~~Real estate acquisitions and dispositions—During the~~ ~~six months endedJune 30, 2019, we acquired~~ ~~one~~ ~~property and~~ ~~one~~ ~~outparcel~~ for a total cash outlay of ~~$49.9 million, as compared to~~ $4.3 million. During the six months ended June 30, 2019, we acquired one property ~~acquisition during the same period in~~ ~~2018~~and one parcel of land for a total cash outlay of $49.9 million.

Disposition and Contribution Activity~~$9.2 million. During~~—We are actively evaluating our portfolio of assets for opportunities to make strategic dispositions of assets that no longer meet our growth and investment objectives or assets that have stabilized in order to capture their value. We expect to continue to make strategic dispositions during 2020, though the ~~six months endedJune 30, 2019, we disposed~~volume will likely be less than anticipated due to the impact of ~~six~~ ~~properties for a net cash inflow of~~ ~~$47.9 million, as compared to~~ ~~two~~the COVID-19 pandemic and the resulting economic downturn. The following table highlights our property dispositions for ~~a net cash inflow of~~ ~~$13.3 million~~ ~~during~~ the ~~same period in~~ ~~2018~~.

~~Capital expenditures—We invest capital into leasing our properties and maintaining or improving the condition of our properties. During the~~ ~~six months endedJune 30, 2019, we paid~~ ~~$27.2 million~~ ~~for capital expenditures, an increase of~~ ~~$9.9 million~~ ~~over the same period in~~ ~~2018~~, primarily driven by tenant improvements due to higher leasing activity, and an increase in building improvements due to our larger portfolio. Additionally, we have invested in other value-added redevelopment and new development in our existing centers.

~~Financing Activities—Net cash used in financing activities was primarily impacted by the following:~~

Debt borrowings and payments—Cash from financing activities is primarily affected by inflows from borrowings and outflows from payments on debt. As our debt obligations mature, we intend to refinance the remaining balance, if possible, or pay off the balances at maturity using proceeds from operations and/or corporate-level debt. During the ~~six months endedJune 30, 2019, our cash from borrowings decreased by~~ ~~$47.7 million~~ ~~as a result of an increase in cash flows received from the sale of properties as well as higher cash flows from operations. In May~~ ~~2019, we executed a~~ ~~$60 million~~ ~~delayed draw feature on one of our term loans, the proceeds of which were used to to pay down our revolving credit facility balance. As of~~ ~~June 30, 2019, we had no outstanding balance on our revolver.~~

~~Distributions to stockholders and OP unit holders—Cash used for distributions to common stockholders and OP unit holders increased~~ ~~$22.7 million~~ ~~for the~~ six months ended June 30, 2020 and 2019~~, as compared to the same period~~ (dollars and square feet in thousands):~~2018~~ ~~primarily due to the increase in the number of common stockholders as a result of the Merger.~~

~~Share repurchases—Our SRP provides an opportunity for stockholders to have shares of common stock repurchased, subject to certain restrictions and limitations (see Note~~ 11~~). Cash outflows for share repurchases decreased by~~ ~~$32.7 million~~ ~~due to the timing of our standard share repurchase in the third quarter of~~ ~~2019~~ ~~as compared to the second quarter of~~ ~~2018~~.



	Six Months Ended June 30,
	2020			2019
Number of properties sold	4			6
Number of outparcels sold	—			1
GLA	336			835
Proceeds from the sale of real estate	$	25,778		$	47,857
(Loss) gain on sale of properties, net⁽¹⁾	(1,436		)	6,627


⁽¹⁾	The (loss) gain on sale of properties, net does not include miscellaneous write-off activity, which is also recorded in (Loss) Gain on Disposal of Property, Net on the consolidated statements of operations.

Distributions—~~Activity related to distributions~~Distributions to our common stockholders and OP unit holders, including key financial metrics for comparison purposes, for the six months ended June 30, 2020 and 2019, ~~and 2018, was~~are as follows (in thousands):



	Cash distributions to OP unit holders			Net cash provided by operating activities

	Cash distributions to common stockholders			Core FFO ~~attributable to stockholders and nonconvertible noncontrolling interests~~⁽¹⁾

	Distributions reinvested through the DRIP



⁽¹⁾	See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - Funds from Operations and ~~Modified~~Core Funds from Operations for the definition of Core FFO, for information regarding why we present Core FFO, ~~as well as~~and for a reconciliation of this non-GAAP financial measure to Net ~~Loss.~~Income (Loss).

WeDuring 2020, we paid distributions monthly of $0.05583344 per share for the months of December 2019 and expect to continue paying distributions monthly (subject to Board authorization) unless our results of operations, our general financial condition, general economic conditions, or other factors, as determined by our Board, make it imprudent to do so.January, February, and March 2020 on a cash basis. The timing and amount of distributions is determined by our Board and is influenced in part by our intention to comply with REIT requirements of the ~~Code.~~Internal Revenue Code, as well as our results of operations, our general financial condition, general economic conditions, and other factors.

To maintain our qualification as a REIT, we must make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain, and which does not necessarily equal net income (loss) as calculated in accordance with GAAP). We generally will not be subject to U.S. federal income tax on the income that we distribute to our stockholders each year due to meeting the REIT qualification requirements. However, we may be subject to certain state and local taxes on our income, property, or net worth and to federal income and excise taxes on our undistributed income.

We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders.

On March 27, 2020, our Board temporarily suspended stockholder distributions, which became effective after the payment of the March 2020 distribution on April 1, 2020. The DRIP was also temporarily suspended, and the March 2020 distribution paid on April 1, 2020 was paid all in cash. In August 2019, our Board suspended the SRP with respect to standard repurchases. On March 27, 2020, our Board suspended the SRP for death, qualifying disability, or determination of incompetence. In determining to suspend the payment of distributions and the operation of the DRIP and the SRP, the Board considered various factors, including the impact that the COVID-19 pandemic and the measures taken by governmental agencies and our neighbors in response to the COVID-19 pandemic are expected to continue to have on our shopping centers and our financial

condition, liquidity sources, and capital needs. The suspension of distributions and share repurchases is expected to be re-evaluated at the November Board meeting.

Cash Flow Activities—As of June 30, 2020, we had cash and cash equivalents and restricted cash of $79.3 million, a net cash decrease of $15.8 million during the six months ended June 30, 2020.

Below is a summary of our cash flow activity for the six months ended June 30, 2020 and 2019 (dollars in thousands):



	Six Months Ended June 30,
	2020			2019			$ Change			% Change
Net cash provided by operating activities	$	89,906		$	100,069		$	(10,163	)	(10.2	)%
Net cash used in investing activities	(6,466		)	(26,987		)	20,521			(76.0	)%
Net cash used in financing activities	(99,218		)	(104,830		)	5,612			(5.4	)%

Operating Activities—Our net cash provided by operating activities was primarily impacted by the following:

Property operations and working capital—Most of our operating cash comes from rental and tenant recovery income and is offset by property operating expenses, real estate taxes, and general and administrative costs. Our change in cash flows from property operations is primarily due to reduced revenue and collections as a result of the COVID-19 pandemic, partially mitigated by expense reduction measures at the property and corporate levels.

Fee and management income—We also generate operating cash from our third-party investment management business, pursuant to various management and advisory agreements between us and the Managed Funds. Our fee and management income was $4.9 million for the six months ended June 30, 2020, a decrease of$1.4 million as compared to the same period in 2019, primarily due to fee and management income no longer received from REIT III following its acquisition by us in October 2019 and a decrease in fees received from NRP largely due to property dispositions.

Cash paid for interest—During the six months endedJune 30, 2020, we paid $41.0 million for interest, a decrease of$3.2 million over the same period in 2019 largely due to lower debt and a decrease in LIBOR as compared to the same period in 2019.

Investing Activities—Our net cash used in investing activities was primarily impacted by the following:

Real estate acquisitions—During the six months endedJune 30, 2020, we acquired two parcels of land, for a total cash outlay of $4.3 million. During the six months ended June 30, 2019, we acquired one property and one parcel of land for a total cash outlay of $49.9 million.

Real estate dispositions—During the six months endedJune 30, 2020, we disposed of four properties for a net cash inflow of $25.8 million, as compared to the disposal of six properties and one outparcel for a net cash inflow of $47.9 million during the same period in 2019.

Capital expenditures—We invest capital into leasing our properties and maintaining or improving the condition of our properties. During the six months endedJune 30, 2020, we paid $28.5 million for capital expenditures, an increase of$1.3 million over the same period in 2019, primarily driven by our investment in value-added redevelopment and new development in our existing centers during the first quarter of 2020. Our capital expenditures were reduced during the second quarter of 2020 as our capital investments have been prioritized to support the reopening of our neighbors and new leasing activity, or deferred if possible, in response to the uncertainty around the duration and negative impact of the COVID-19 pandemic.

Financing Activities—Our net cash used in financing activities was primarily impacted by the following:

Debt borrowings and payments—Cash from financing activities is primarily affected by inflows from borrowings and outflows from payments on debt. As our debt obligations mature, we intend to refinance the remaining balance, if possible, or pay off the balances at maturity using proceeds from operations and/or corporate-level debt. During the six months endedJune 30, 2020, we had $35.2 million in net repayment of debt primarily as a result of a pay down in January 2020 of $30.0 million on term loan debt maturing in 2021. During the six months ended June 30, 2019 we had $18.2 million in net repayment of debt primarily as a result of payments on our revolving credit facility, funded primarily by cash inflows from a 1031 exchange escrow release.

Distributions to stockholders and OP unit holders—Cash used for distributions to common stockholders and OP unit holders decreased$16.1 million for the six months ended June 30, 2020 as compared to the same period in 2019, primarily due to the temporary suspension of stockholder distributions which became effective after the payment of the March 2020 dividend on April 1, 2020.

Share repurchases—Cash outflows for share repurchases decreased by $6.6 million for the six months ended June 30, 2020 as compared to the same period in 2019 due to the suspension of the SRP for death, qualifying disability, or determination of incompetence which became effective March 27, 2020, and the suspension of the SRP with respect to standard repurchases in August 2019.

Critical Accounting Policies and Estimates

Our ~~2018~~2019 Annual Report on Form 10-K, filed with the SEC on March 12, 2020, contains a description of our critical accounting policies and estimates, including those relating to real estate ~~assets, revenue recognition,~~acquisitions, rental income, and the valuation of real estate ~~investments, and related intangible~~ assets. There have been no significant changes to our critical accounting policies during ~~2019, except for the policies related to the accounting for leases as a result~~2020.

Because of the ~~adoption~~adverse economic conditions and uncertainty regarding the negative impacts of ~~ASC 842 as~~the COVID-19 pandemic, it is possible that the estimates and assumptions that have been utilized in the preparation of ~~January 1, 2019, as described in Note~~the consolidated financial statements could change or vary significantly from actual results. Please refer to Notes 2 and ~~Note 3 in~~12 for additional discussion on the ~~accompanying consolidated financial statements.~~potential impact that the COVID-19 pandemic could have on significant accounting estimates as employed per our critical accounting policies.

Impact of Recently Issued Accounting Pronouncements

~~Refer~~In response to the COVID-19 pandemic, the FASB issued interpretive guidance addressing the accounting treatment for lease concessions attributable to the pandemic. Under this guidance, entities may elect to account for such lease concessions consistent with how they would be accounted for under ASC Topic 842, Leases, (“ASC 842”) if the enforceable rights and obligations for the lease concessions already existed within the lease agreement, regardless of whether such enforceable rights and obligations are explicitly outlined within the lease. This accounting treatment may only be applied if (1) the lease concessions were granted as a direct result of the pandemic, and (2) the total cash flows under the modified lease are less than or substantially the same as the cash flows under the original lease agreement. As a result, entities that make this election will not have to analyze each lease to determine whether enforceable rights and obligations for concessions exist within the contract, and may elect not to account for these concessions as lease modifications within the scope of ASC 842.

Account for the concession as if no changes to the lease contract were made, increasing the lease receivable as payments accrue and continuing to recognize income; or

Account for deferred lease payments as variable lease payments.

Please refer to Note 2 for discussion of the impact of other recently issued accounting pronouncements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in Part II, Item 7A of our ~~2018~~2019 Annual Report on Form 10-K filed with the SEC on March ~~13, 2019.~~12, 2020.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of June 30, ~~2019.~~2020. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of June 30, ~~2019.~~2020.

Changes in Internal Control over Financial Reporting

~~During~~Beginning in March, as a result of the ~~quarter~~COVID-19 pandemic, most of our employees began working from home and continued to do so during the three months ended June 30, ~~2019, there~~2020; however, these changes to the working environment did not have a material effect on our internal control over financial reporting. There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

w PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are party to legal proceedings, which arise in the ordinary course of our business. We are not currently involved in any legal proceedings for which we are not covered by our liability insurance or the outcome is reasonably likely to have a material impact on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by governmental authorities.

ITEM 1A. RISK FACTORS

The following risk ~~factor supplements~~factors supplement the risk factors set forth in our ~~2018~~2019 Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March ~~13, 2019:~~12, 2020:

If we ~~continue to~~ pay distributions from sources other than our cash flows from operations, we may not be able to sustain our distribution rate, we may have fewer funds available for investment in properties and other assets, and our stockholders’ overall returns may be reduced.

Our organizational documents permit us to pay distributions from any source without ~~limit~~limitation (other than those ~~limits~~limitations set forth under Maryland law). To the extent we ~~continue to~~ fund distributions from borrowings, we will have fewer funds available for investment in real estate properties and other real estate-related assets, and our stockholders’ overall returns may be reduced.

At times, we may need to borrow funds to pay distributions, which could increase our operating costs. Furthermore, if we cannot cover our distributions with cash flows from operations, we may be unable to sustain our distribution rate. On March 27, 2020, our Board temporarily suspended stockholder distributions, which became effective after the payment of the March 2020 dividend on April 1, 2020. For the six months ended June 30, ~~2019,~~2020, we paid gross distributions to our common stockholders and noncontrolling interests of ~~$109.6~~$74.4 million, including distributions reinvested through the dividend reinvestment plan (“DRIP”) of $15.9 million. For the six months ended June 30, 2020, our net cash provided by operating activities was $89.9 million, which represents an excess of $15.5 million, or 20.8%, of our distributions paid, while our core funds from operations (“Core FFO”) was $111.9 million, which represents an excess of $37.5 million, or 50.4%, of the distributions paid. For the six months ended June 30, 2019, we paid distributions of $109.6 million, including distributions reinvested through the DRIP of $35.0 million. For the six months ended June 30, 2019, our net cash provided by operating activities was $100.1 million, which represents a shortfall of of $9.5 million, or 8.7%, of our distributions paid, while our ~~funds from operations (“FFO”) Attributable to Stockholders and Convertible Noncontrolling Interests were $104.1~~Core FFO was $110.7 million, which represents ~~a shortfall~~an excess of ~~$5.5~~$1.1 million, or ~~5.0%~~1.0%, of ~~the~~our distributions paid. The shortfall was funded by proceeds from borrowings. ~~For~~See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - Funds from Operations and Core Funds from Operations for the ~~six months ended June 30, 2018,~~definition of Core FFO, for information regarding why we ~~paid distributions~~present Core FFO, as well as for a reconciliation of ~~$76.8 million,~~this non-GAAP financial measure to Net Income (Loss).

The outbreak of the COVID-19 pandemic has had, and could continue to have, a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity, and ability to satisfy debt service obligations.

In March 2020, the World Health Organization declared COVID-19 a global pandemic. The COVID-19 pandemic has caused, and could continue to cause, significant disruptions to the United States and global economy and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak is continually evolving and, as additional cases of the virus are identified, many countries, including ~~distributions reinvested~~the United States, reacted by instituting quarantines, restrictions on travel, and/or mandatory closures of businesses. Certain states and cities, including where our properties are located, also reacted by instituting quarantines, restrictions on travel, “shelter-in-place” or “stay-at-home” rules, restrictions on types of business that may continue to operate, and/or restrictions on the types of construction projects that may continue. In May 2020, many state and local governments began lifting, in whole or in part, the “stay-at-home” mandates, effectively removing or lessening the limitations on travel and allowing many businesses to reopen in full or limited capacity. Some states and localities have temporarily reinstated certain mandates in response to increasing reported cases of COVID-19. The impact these measures and the resulting consumer behavior are having on our portfolio evolved throughout the second quarter, and we expect that it will continue to do so.

The COVID-19 pandemic has impacted our business and financial performance, and we expect this impact to continue. Our retail and services tenants depend on in-person interactions with their customers to generate unit-level profitability, and the COVID-19 pandemic has and may continue to decrease customer willingness to frequent, and mandated “shelter-in-place” or “stay-at-home” orders may prevent customers from frequenting, our tenants’ businesses, which may result in their inability to maintain profitability and make timely rental payments to us under their leases or to otherwise seek lease modifications or to declare bankruptcy. We own properties across the United States, including properties in states that have been significantly impacted by the COVID-19 pandemic. We have a higher concentration of annualized base rent (“ABR”) from tenants in certain states significantly impacted by the pandemic, such as Florida, Texas, California, Georgia, and Illinois. Our wholly-owned properties and those owned through our joint ventures contained approximately 5,600 occupied tenant spaces as of August 10, 2020. At the ~~DRIP~~peak of ~~$24.9 million. For~~ the ~~six months ended June 30, 2018,~~pandemic-related closure activity, our ~~net cash provided by operating activities was $77.8 million, which represents a surplus~~temporary closures reached approximately 2,100, or 37% of ~~$1.0 million, or 1.3%,~~all tenant spaces, totaling 27% of our ~~distributions paid, while our FFO was $79.1 million, which represents a surplus of $2.3 million, or 3.0%~~ABR and 22% of our ~~distributions paid.~~gross leasable area (“GLA”); of the tenant spaces that temporarily closed, 88%, totaling 89% of our ABR and 90% of our GLA, have since reopened. Certain tenants remain temporarily closed, have since closed after reopening, are limiting the number of customers allowed in their locations, or have modified their operations in other ways that may impact their profitability, either as a result of government mandates or self-

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~elected efforts to reduce the spread of COVID-19. These actions could result in increased permanent store closings and could reduce the demand for leasing space in our shopping centers and result in a decline in average rental rates on expiring leases.

~~Share Repurchases~~

~~During~~While most of our tenants have reopened, we cannot presently determine how many of the ~~three months ended June 30, 2019, we repurchased shares as follows (shares in thousands):~~

Period Total Number of Shares Redeemed
Average Price Paid per Share⁽¹⁾

Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program⁽²⁾
Approximate Dollar Value of Shares Available That May Yet Be Repurchased Under the Program
April 2019 174 $ 11.05
174
⁽³⁾
May 2019 172 11.10
172
⁽³⁾
June 2019 195 11.10
195
⁽³⁾


⁽¹⁾	~~On May 8, 2019, our Board increased the estimated value per share (“EVPS”) of our common stock to~~ ~~$11.10~~ ~~based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2019. Prior to May 8, 2019, the EVPS was~~ ~~$11.05~~ ~~(see Note~~ 11).


⁽²⁾	~~We announced the commencement of the Share Repurchase Program (“SRP”) in August 2010, and it was subsequently amended in September 2011, April 2016, and August 2019.~~


⁽³⁾	We currently limit the dollar value and number of shares that may yet be repurchased under the SRP, as described in Part II Item 5 of our Annual Report on Form 10-K filed March 13, 2019. In addition, in August 2019, the SRP was suspended with respect to standard share repurchases.

On August 7, 2019, the Board amended the SRP, adopting the Third Amended and Restated Share Repurchase Program (the “Third Amended SRP”). Under the Third Amended SRP, the repurchase price per sharetenants that remain closed will reopen, or whether a portion of those that have reopened will be ~~equal~~required by government mandates to temporarily close again or will encounter financial difficulties that require them to close permanently. We believe substantially all tenants, including those that were required to temporarily close under governmental mandates, are contractually obligated to continue with their rent payments as documented in our lease agreements with them. However, we believe it is best to begin negotiation of relief only once a tenant has reopened, and we received payments made toward rent and recovery charges owed during the ~~lesser~~second quarter. As of ~~$10.00~~August 10, 2020, we have executed relief agreements for approximately 240 tenant spaces, primarily in the form of short-term payment plans without a reduction in amounts owed to us. These relief agreements totaled approximately $3.8 million, or ~~our most recent EVPS. The Third Amended SRP will become effective 30 days after the date~~1.0% of ~~this filing~~portfolio ABR, and the ~~full text~~weighted-average term over which we expect to receive payment on executed payment plans is less than twelve months. We are in negotiations with additional tenants, which we believe will lead to more tenants repaying their past due charges. As of August 10, 2020, we have collected approximately 84%, 86%, 89%, and 90% of rent and recoveries billed for the ~~Third Amended SRP is attached hereto~~months of April, May, June, and July 2020, respectively. In the event of any default by a tenant under its lease agreement or relief agreement, we might not be able to fully recover and/or may experience delays in recovering and additional costs in enforcing our rights as ~~Exhibit 99.1.~~

~~On August 7, 2019, the Board suspended the SRP for standard repurchases. However, we will continue~~landlord to ~~fulfill repurchases sought upon a stockholder's death, “qualifying disability,” or “determination of incompetence” in accordance with~~recover amounts due to us under the terms of the ~~Third Amended SRP.~~

~~During~~lease agreement and/or relief agreement. We currently anticipate the ~~six months ended~~above circumstances to negatively impact our revenues for the third quarter of 2020 and potentially for the remainder of the year. Additionally, certain tenants have declared bankruptcy as a result of the effects of the pandemic. As of June 30, ~~2019,~~2020, we ~~repurchased approximately 1.1 million~~have received notification of entry into bankruptcy proceedings from several of our neighbors, representing an exposure of only 1.1% of our total ABR.

Moreover, the ongoing COVID-19 pandemic, restrictions intended to prevent and mitigate its spread, resulting consumer behavior, and the economic slowdown or recession could have additional adverse effects on our business, including with regards to:

the ability and willingness of our tenants to renew their leases upon expiration, our ability to re-lease the properties on the same or better terms in the event of nonrenewal or in the event we exercise our right to replace an existing tenant, and obligations we may incur in connection with the replacement of an existing tenant, particularly in light of the adverse impact to the financial health of many retailers and service providers that has occurred and continues to occur as a result of the COVID-19 pandemic and the significant uncertainty as to when and the conditions under which potential tenants will be able to operate physical retail locations in the future;

a potential sustained or permanent increase in online shopping instead of shopping at physical retail properties, thereby reducing demand for space in our shopping centers and possible related reductions in rent or increased costs to lease space;

the adverse impact of current economic conditions on the market value of our real estate portfolio and our third-party investment management business, and consequently on the estimated value per share (“EVPS”) of our common stock;

the adverse impact of the current economic conditions on our ability to effect a liquidity event at an attractive price or at all in the near term and for a potentially lengthy period of time;

the financial impact and continued economic uncertainty could continue to negatively impact our ability to pay distributions to our stockholders and/or to repurchase shares;

to the extent we were seeking to sell properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices or at all;

anticipated returns from development and redevelopment projects, which have been prioritized to support the reopening of our tenants and new leasing activity, or deferred if possible;

the broader impact of the severe economic contraction due to the COVID-19 pandemic, the resulting increase in unemployment that has occurred in the short-term and its effect on consumer behavior, and negative consequences that will occur if these trends are not timely reversed;

state, local, or industry-initiated efforts, such as a rent freeze for tenants or a suspension of a landlord’s ability to enforce evictions, which may affect our ability to collect rent or enforce remedies for the failure to pay rent;

severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions, which could make it difficult for us to access debt and equity capital on attractive terms, or at all, and impact our ability to fund business operations and activities and repay liabilities on a timely basis;

our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due, and our potential inability to comply with the financial covenants of our credit facility and other debt agreements, which could result in a default and potential acceleration of indebtedness and impact our ability to make additional borrowings under our credit facility or otherwise in the future; and

the potential negative impact on the health of our personnel, particularly if a significant number of them and/or key personnel are impacted, and the potential impact of adaptations to our operations in order to protect our personnel, such as remote work arrangements, could introduce operational risk, including but not limited to cybersecurity risks, and could impair our ability to manage our business.

We have temporarily suspended stockholder distributions in an effort to preserve cash due to current economic uncertainty and we may choose to do the same in the future. Additionally, we may in the future choose to pay distributions in shares of our common stock ~~under~~rather than solely in cash, which may result in our stockholders having a tax liability with respect to such distributions that exceeds the ~~SRP in connection~~amount of cash received, if any.

While the rapid developments regarding the COVID-19 pandemic preclude any prediction as to its ultimate adverse impact, the current economic, political, and social environment presents material risks and uncertainties with ~~a stockholder’s death, “qualifying disability,” or “determination~~respect to our and our tenants’ business, financial condition, results of ~~incompetence,” which requests were completed in full. Due~~operations, cash flows, liquidity, and ability to satisfy debt service obligations. Moreover, to the ~~program’s funding limits, no funds were available for standard repurchases during~~extent any of these risks and uncertainties adversely impact us in the ~~second quarter~~ways described above or otherwise,

they may also have the effect of 2019. In July 2019, we repurchased approximately 1.2 million shares of our common stock under the SRP. Repurchases in connection with a stockholder’s death, “qualifying disability,” or “determination of incompetence” were completed in full. The remaining repurchase requests that were in good order were fulfilled on a pro rata basis.

~~Unregistered Sales of Equity Securities~~

During the six months ended June 30, 2019, we issued an aggregate of 1.9 million shares of common stock in redemption of 1.9 million Operating Partnership units. These shares of common stock were issued in reliance on an exemption from registration under Section 4(a)(2)heightening many of the ~~Securities Act of 1933, as amended. We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partner who received the shares of common stock.~~

~~ITEM 5. OTHER INFORMATION~~

~~Director Elections~~

On August 7, 2019, the Board increased its size to nine directors, effective November 1, 2019, and appointed Elizabeth Fischer and Jane Silfen each to serve from November 1, 2019 until the 2020 annual meeting of stockholders and until her successor is duly elected and qualified. There are no arrangements or understandings between either of Mses. Fischer or Silfen and any other persons pursuant to which either of them was elected as a director. The Board determined that each of Mses. Fischer and Silfen is independent as defined by the rules of the New York Stock Exchange. Mses. Fischer and Silfen will participate in the compensation program for non-employee directors asrisks described under the ~~heading “Director Compensation”~~section entitled “Item 1A. Risk Factors” in ~~our Proxy Statement filed with the SEC on March 29, 2019.~~

~~Chief Financial Officer~~

As previously disclosed, John P. Caulfield has been promoted to the role of Chief Financial Officer, effective August 15, 2019. In connection with his promotion, Mr. Caulfield and the Company entered into a Participation Agreement dated August 7, 2019, pursuant to which he became a participant in the Company’s Executive Change in Control and Severance Plan. The Participation Agreement is attached hereto as Exhibit 10.1.

~~Share Repurchase Program~~

~~On August 7, 2019, the Board amended the SRP, adopting the Third Amended SRP. Under the Third Amended SRP, the repurchase price per share will be equal to the lesser of $10.00 or~~ our most recent ~~EVPS. The full text of~~annual report on Form 10-K for the Third Amended SRP is attached hereto as Exhibit 99.1 and incorporated by reference herein. In addition, on August 7, 2019, the Board suspended the SRP for standard repurchases. However, we will continue to fulfill repurchases sought upon a stockholder's death, “qualifying disability,” or “determination of incompetence” in accordance with the terms of the Third Amended SRP. The Third Amended SRP and the suspension of standard repurchases will become effective 30 days after the date of this filing.

year ended December 31, 2019.

ITEM 6. EXHIBITS



Ex.	Description
~~4.1~~ 10.1	~~Second Amended and Restated Dividend Reinvestment~~2020 Omnibus Incentive Plan (incorporated by reference to ~~Exhibit 4.1~~Appendix A to the Company’s ~~Current Report~~2020 Proxy Statement filed on ~~Form 10-Q~~Schedule 14A filed ~~May 10, 2019)~~on March 27, 2020)
~~10.1~~	Participation Agreement for John Caulfield dated August 7, 2019*
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002*
~~99.1~~	Phillips Edison & Company, Inc. Third Amended and Restated Share Repurchase Program, dated August 7, 2019*
101.1	The following information from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2019,~~2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive ~~(Loss) Income;~~Loss; (iii) Consolidated Statements of Equity; and (iv) Consolidated Statements of Cash Flows*

*Filed ~~herewith.~~herewith

SIGNATURES

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



	PHILLIPS EDISON & COMPANY, INC.

Date: August ~~12, 2019~~13, 2020	By:	/s/ Jeffrey S. Edison
		Jeffrey S. Edison
		Chairman of the Board and Chief Executive Officer ~~and President~~ (Principal Executive Officer)

Date: August ~~12, 2019~~13, 2020	By:	/s/ ~~Devin I. Murphy~~John P. Caulfield
		~~Devin I. Murphy~~John P. Caulfield
		Chief Financial Officer, Senior Vice President and Treasurer (Principal Financial Officer)



	Six Months Ended
	June 30, 2019
Statements of cash flows information:
Operating cash flows used for operating leases	$	(620	)
Financing cash flows used for finance leases	(122		)
ROU assets obtained in exchange for new lease liabilities	1,444



	Undiscounted
	Operating		Finance
Remaining 2019	$	745	$	148
2020	1,174		295
2021	723		98
2022	684		26
2023	529		20
Thereafter	6,419		15
Total undiscounted cash flows from leases	10,274		602
Total lease liabilities recorded at present value	6,790		581
Difference between undiscounted cash flows and present value of lease liabilities	$	3,484	$	21



	Amount
Fair value of PECO common stock issued⁽¹⁾	$	1,054,745
Fair value of REIT II debt:
Corporate debt	719,181
Mortgages and notes payable	102,727
Derecognition of REIT II management contracts, net⁽²⁾	30,428
Transaction costs	11,587
Total consideration and debt activity	1,918,668
Less: debt assumed	464,462
Total consideration	$	1,454,206



	Amount
Assets:
Land and improvements	$	561,100
Building and improvements	1,198,884
Intangible lease assets	197,384
Fair value of unconsolidated joint venture	16,470
Cash and cash equivalents	354
Restricted cash	5,159
Accounts receivable and other assets	33,045
Total assets acquired	2,012,396
Liabilities:
Debt assumed	464,462
Intangible lease liabilities	60,421
Accounts payable and other liabilities	33,307
Total liabilities assumed	558,190
Net assets acquired	$	1,454,206



	June 30, 2019						December 31, 2018
	NRP			GRP I			NRP			GRP I
Ownership percentage	20		%	15		%	20		%	15		%
Number of properties	13			17			13			17
Investment balance	$	14,454		$	27,964		$	16,198		$	29,453
Unamortized basis adjustments⁽¹⁾	5,317			—			6,026			—



	Six Months Ended
	June 30, 2019
	Restricted Stock Awards		Performance Stock Awards⁽¹⁾	Phantom Stock Units		Weighted-Average Grant-Date Fair Value⁽²⁾
Nonvested at December 31, 2018	808		199	998		$	10.60
Granted	464		1,275	—		11.05
Vested	(196	)	—	—		10.99
Forfeited	(26	)	—	(12	)	10.76
Nonvested at June 30, 2019	1,050		1,474	986		$	10.80



Month	Date of Record	Distribution Rate	Date Distribution Paid	Gross Amount of Distribution Paid		Distribution Reinvested through the DRIP		Net Cash Distribution
June	6/15/2019	$0.05583344	7/1/2019	$	18,101	$	5,571	$	12,530
July	7/15/2019	$0.05583344	8/1/2019	18,118		5,412		12,706



	Three Months Ended				Favorable					Six Months Ended				Favorable
	June 30,				(Unfavorable)					June 30,				(Unfavorable)
	2019		2018⁽¹⁾		$ Change			% Change		2019		2018⁽¹⁾		$ Change			% Change
Revenues:
Rental income⁽²⁾	$	92,448	$	92,072	$	376				$	184,159	$	182,928	$	1,231
Tenant recovery income	28,452		29,908		(1,456		)			58,346		61,541		(3,195		)
Other property income	458		508		(50		)			1,079		1,195		(116		)
Total revenues	121,358		122,488		(1,130		)	(0.9	)%	243,584		245,664		(2,080		)	(0.8	)%
Operating expenses:
Property operating expenses	16,859		18,211		1,352					35,575		38,466		2,891
Real estate taxes	17,488		18,585		1,097					34,209		36,871		2,662
Total operating expenses	34,347		36,796		2,449			6.7	%	69,784		75,337		5,553			7.4	%
Total Pro Forma Same-Center NOI	$	87,011	$	85,692	$	1,319		1.5	%	$	173,800	$	170,327	$	3,473		2.0	%



Period	Total Number of Shares Redeemed	Average Price Paid per Share⁽¹⁾		Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program⁽²⁾	Approximate Dollar Value of Shares Available That May Yet Be Repurchased Under the Program
April 2019	174	$	11.05	174	⁽³⁾
May 2019	172	11.10		172	⁽³⁾
June 2019	195	11.10		195	⁽³⁾