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, ~~2020~~2021

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: 000-54691

PHILLIPS EDISON & COMPANY, INC.

(Exact name of registrant as specified in its charter)



Maryland						27-1106076
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)



11501 Northlake Drive, Cincinnati, Ohio						45249
(Address of principal executive offices)						(Zip ~~Code)~~code)

~~(513) 554-1110~~


(513) 554-1110
(Registrant’s 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~~Common stock, par value $0.01 per share

~~None~~PECO

~~None~~Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.	Yes	☑	No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)	Yes	☑	No ☐

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☐

☑

☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).	Yes	☐	No ☑

There were 19.6 million shares of the registrant’s Common Stock, $0.01 par value per share, and 93.7 million shares of Class B stock, $0.01 par value per share, outstanding as of July 30, 2021.

Table of Contents

PHILLIPS EDISON & COMPANY, INC. FORM 10-Q


TABLE OF CONTENTS

~~Large accelerated filer~~ PART I.			¨	~~Accelerated filer~~	¨

~~Non-accelerated filer~~	þ	~~Smaller reporting company~~	¨

		~~Emerging growth company~~	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes~~ ¨ No þ

~~As of August 3, 2020, there were 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~~

ITEM 1.			FINANCIAL STATEMENTS (CONDENSED AND UNAUDITED)		2

	CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, ~~2020~~2021 AND DECEMBER 31, ~~2019~~2020		2

	CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE ~~LOSS~~INCOME (LOSS) FOR THE ~~THREE AND~~ SIX MONTHS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020		3

	CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE AND SIX MONTHS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020		4

	CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020		56

	NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2021
		NOTE 1		7ORGANIZATION		8
		NOTE 2		SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES		8
		NOTE 3		LEASES		10
		NOTE 4		REAL ESTATE ACTIVITY		11
		NOTE 5		OTHER ASSETS, NET		12
		NOTE 6		DEBT OBLIGATIONS		13
		NOTE 7		DERIVATIVES AND HEDGING ACTIVITIES		13
		NOTE 8		COMMITMENTS AND CONTINGENCIES		14
		NOTE 9		EQUITY		14
		NOTE 10		EARNINGS PER SHARE		16
		NOTE 11		REVENUE RECOGNITION AND RELATED PARTY TRANSACTIONS		17
		NOTE 12		FAIR VALUE MEASUREMENTS		17
		NOTE 13		SUBSEQUENT EVENTS		19
ITEM 2.				MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		20

ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		4143

ITEM 4.			CONTROLS AND PROCEDURES		4144

PART II. ~~OTHER INFORMATION~~

ITEM 1.			LEGAL PROCEEDINGS		4244

ITEM 1A.			RISK FACTORS		4244
ITEM 2.
~~ITEM 6.~~	~~EXHIBITS~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		4547
ITEM 5.				OTHER INFORMATION		47
~~SIGNATURES~~ITEM 6.				EXHIBITS		4648
				SIGNATURES		49


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									1

Table of Contents



wPART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, ~~2020~~2021 AND DECEMBER 31, ~~2019~~2020

(Condensed and Unaudited)

(In thousands, except per share amounts)


	June 30, 2021		December 31, 2020
ASSETS
Investment in real estate:
Land and improvements	$	1,529,803	$	1,549,362
Building and improvements	3,184,601		3,237,986
In-place lease assets	434,499		441,683
Above-market lease assets	64,795		66,106
Total investment in real estate assets	5,213,698		5,295,137
Accumulated depreciation and amortization	(1,021,456)		(941,413)
Net investment in real estate assets	4,192,242		4,353,724
Investment in unconsolidated joint ventures	32,746		37,366
Total investment in real estate assets, net	4,224,988		4,391,090
Cash and cash equivalents	22,205		104,296
Restricted cash	89,196		27,641
Goodwill	29,066		29,066
Other assets, net	126,056		126,470
Real estate investments and other assets held for sale	14,261		0
Total assets	$	4,505,772	$	4,678,563

LIABILITIES AND EQUITY
Liabilities:
Debt obligations, net	$	2,228,232	$	2,292,605
Below-market lease liabilities, net	93,949		101,746
Earn-out liability	40,000		22,000
Derivative liabilities	39,929		54,759
Deferred income	18,978		14,581
Accounts payable and other liabilities	88,436		176,943
Liabilities of real estate investments held for sale	860		0
Total liabilities	2,510,384		2,662,634
Commitments and contingencies (Note 8)	0		0
Equity:
Preferred stock, $0.01 par value per share, 10,000 shares authorized, 0 shares issued and
outstanding at June 30, 2021 and December 31, 2020	0		0
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 93,640 and 93,279
shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	2,808		2,798
Additional paid-in capital (“APIC”)	2,749,680		2,739,358
Accumulated other comprehensive loss (“AOCI”)	(38,732)		(52,306)
Accumulated deficit	(1,041,617)		(999,491)
Total stockholders’ equity	1,672,139		1,690,359
Noncontrolling interests	323,249		325,570
Total equity	1,995,388		2,015,929
Total liabilities and equity	$	4,505,772	$	4,678,563

   June 30, 2020 December 31, 2019
ASSETS
Investment in real estate:
Land and improvements $ 1,544,975
$ 1,552,562
Building and improvements 3,206,224
3,196,762
In-place lease assets 441,067
442,729
Above-market lease assets 65,863
65,946
Total investment in real estate assets 5,258,129
5,257,999
Accumulated depreciation and amortization (841,154 ) (731,560 )
Net investment in real estate assets 4,416,975
4,526,439
Investment in unconsolidated joint ventures 41,545
42,854
Total investment in real estate assets, net 4,458,520
4,569,293
Cash and cash equivalents 53,262
17,820
Restricted cash 26,068
77,288
Goodwill 29,066
29,066
Other assets, net 135,274
128,690
Real estate investment and other assets held for sale —
6,038
Total assets $ 4,702,190
$ 4,828,195

LIABILITIES AND EQUITY

Liabilities:

Debt obligations, net $ 2,320,719
$ 2,354,099
Below-market lease liabilities, net 105,857
112,319
Earn-out liability 22,000
32,000
Derivative liabilities 65,376
20,974
Deferred income 15,659
15,955
Accounts payable and other liabilities 85,110
124,054
Total liabilities 2,614,721
2,659,401
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, 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 (991,939 ) (947,252 )
Total stockholders’ equity 1,746,325
1,814,006
Noncontrolling interests 341,144
354,788
Total equity 2,087,469
2,168,794
Total liabilities and equity $ 4,702,190
$ 4,828,195

See notes to consolidated financial statements.


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									2

Table of Contents

PHILLIPS EDISON & COMPANY, INC.

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

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(Condensed and Unaudited)

(In thousands, except per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues:
Rental income	$	130,335	$	115,654	$	257,958	$	244,120
Fees and management income	2,374		2,760		4,660		4,925
Other property income	361		626		833		1,518
Total revenues	133,070		119,040		263,451		250,563
Operating Expenses:
Property operating	21,974		19,629		44,176		41,391
Real estate taxes	16,814		16,453		33,387		33,565
General and administrative	11,937		9,806		21,278		20,546
Depreciation and amortization	56,587		56,370		111,928		112,597
Impairment of real estate assets	1,056		0		6,056		0
Total operating expenses	108,368		102,258		216,825		208,099
Other:
Interest expense, net	(19,132)		(22,154)		(39,195)		(44,929)
Gain (loss) on disposal of property, net	3,744		(541)		17,585		(2,118)
Other (expense) income, net	(2,924)		(500)		(18,509)		9,369
Net income (loss)	6,390		(6,413)		6,507		4,786
Net (income) loss attributable to noncontrolling interests	(796)		825		(810)		(605)
Net income (loss) attributable to stockholders	$	5,594	$	(5,588)	$	5,697	$	4,181
Earnings per common share:
Net income (loss) per share attributable to stockholders - basic and diluted (Note 10)	$	0.06	$	(0.06)	$	0.06	$	0.04

Comprehensive income (loss):
Net income (loss)	$	6,390	$	(6,413)	$	6,507	$	4,786
Other comprehensive income (loss):
Change in unrealized value on interest rate swaps	3,373		(1,747)		15,493		(45,111)
Comprehensive income (loss)	9,763		(8,160)		22,000		(40,325)
Net (income) loss attributable to noncontrolling interests	(796)		825		(810)		(605)
Change in unrealized value on interest rate swaps attributable to noncontrolling interests	(400)		224		(1,909)		5,798
Reallocation of comprehensive loss upon conversion of noncontrolling interests	(10)		0		(10)		0
Comprehensive income (loss) attributable to stockholders	$	8,557	$	(7,111)	$	19,271	$	(35,132)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Revenues:
Rental income $ 115,654
$ 129,030
$ 244,120
$ 257,890
Fees and management income 2,760
3,051
4,925
6,312
Other property income 626
500
1,518
1,148
Total revenues 119,040
132,581
250,563
265,350
Operating Expenses:
Property operating 19,629
20,933
41,391
43,799
Real estate taxes 16,453
17,930
33,565
35,278
General and administrative 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
Total operating expenses 102,258
137,156
208,099
265,286
Other:
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 )
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) income per share attributable to stockholders - basic and diluted (Note 10) $ (0.02 ) $ (0.13 ) $ 0.01
$ (0.15 )

Comprehensive loss
Net (loss) income $ (6,413 ) $ (42,172 ) $ 4,786
$ (47,960 )
Other comprehensive loss:
Change in unrealized value on interest rate swaps (1,747 ) (23,645 ) (45,111 ) (38,006 )
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 JUNE 30, 2021 FORM 10-Q									3

Table of Contents

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE ~~AND SIX~~ MONTHS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(Condensed and Unaudited)

(In thousands, except per share amounts)


	Three Months Ended June 30, 2021 and 2020
	Common Stock			APIC		AOCI		Accumulated Deficit		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
	Shares	Amount
Balance at April 1, 2020	96,805	$	2,903	$	2,793,803	$	(58,552)	$	(986,292)	$	1,751,862	$	341,944	$	2,093,806
Change in unrealized value on interest rate swaps	—	—		—		(1,523)		—		(1,523)		(224)		(1,747)
Share-based compensation	2	1		1,332		—		—		1,333		808		2,141
Conversion of noncontrolling interests	17	1		555		—		—		556		(556)		—
Other	(2)	—		(256)		—		(59)		(315)		(3)		(318)
Net loss	—	—		—		—		(5,588)		(5,588)		(825)		(6,413)
Balance at June 30, 2020	96,822	$	2,905	$	2,795,434	$	(60,075)	$	(991,939)	$	1,746,325	$	341,144	$	2,087,469

Balance at April 1, 2021	93,582	$	2,807	$	2,746,891	$	(41,695)	$	(1,023,155)	$	1,684,848	$	324,558	$	2,009,406
Change in unrealized value on interest rate swaps	—	—		—		2,973		—		2,973		400		3,373
Common distributions declared, $0.255 per share	—	—		—		—		(24,056)		(24,056)		—		(24,056)
Distributions to noncontrolling interests	—	—		—		—		—		—		(3,460)		(3,460)
Share-based compensation	30	1		2,102		—		—		2,103		1,632		3,735
Conversion of noncontrolling interests	28	—		743		—		—		743		(743)		—
Reallocation of operating partnership interests	—	—		(56)		(10)		—		(66)		66		—
Net income	—	—		—		—		5,594		5,594		796		6,390
Balance at June 30, 2021	93,640	$	2,808	$	2,749,680	$	(38,732)	$	(1,041,617)	$	1,672,139	$	323,249	$	1,995,388


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									4

Table of Contents

Three Months Ended June 30, 2020 and 2019
   Common Stock APIC AOCI Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interests Total Equity
   Shares Amount
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 (541 ) (5 ) (5,989 ) —
—
(5,994 ) —
(5,994 )
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 24
1
629
—
—
630
1,891
2,521
Conversion of noncontrolling interests 1,180
12
13,060
—
—
13,072
(13,072 ) —
Net loss —
—
—
—
(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

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, 2021 AND 2020

Six Months Ended June 30, 2020 and 2019
   Common Stock APIC AOCI Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interests Total Equity
   Shares Amount
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 (1,146 ) (11 ) (12,663 ) —
—
(12,674 ) —
(12,674 )
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 64
1
856
—
—
857
2,730
3,587
Conversion of noncontrolling interests 1,888
19
20,880
—
—
20,899
(20,899 ) —
Net loss —
—
—
—
(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

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
(Condensed and Unaudited)

(In thousands, except per share amounts)


	Six Months Ended June 30, 2021 and 2020
	Common Stock			APIC		AOCI		Accumulated Deficit		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
	Shares	Amount
Balance at January 1, 2020	96,349	$	2,890	$	2,779,130	$	(20,762)	$	(947,252)	$	1,814,006	$	354,788	$	2,168,794
Dividend Reinvestment Plan (“DRIP”)	479	14		15,926		—		—		15,940		—		15,940
Share repurchases	(96)	(3)		(2,697)		—		—		(2,700)		—		(2,700)
Change in unrealized value on interest rate swaps	—	—		—		(39,313)		—		(39,313)		(5,798)		(45,111)
Common distributions declared, $0.503 per share	—	—		—		—		(48,809)		(48,809)		—		(48,809)
Distributions to noncontrolling interests	—	—		—		—		—		—		(7,105)		(7,105)
Share-based compensation	36	2		1,472		—		—		1,474		518		1,992
Conversion of noncontrolling interests	56	2		1,859		—		—		1,861		(1,861)		—
Other	(2)	—		(256)				(59)		(315)		(3)		(318)
Net income	—	—		—		—		4,181		4,181		605		4,786
Balance at June 30, 2020	96,822	$	2,905	$	2,795,434	$	(60,075)	$	(991,939)	$	1,746,325	$	341,144	$	2,087,469

Balance at January 1, 2021	93,279	$	2,798	$	2,739,358	$	(52,306)	$	(999,491)	$	1,690,359	$	325,570	$	2,015,929
DRIP	280	8		7,360		—		—		7,368		—		7,368
Share repurchases	(24)	0		(123)		—		—		(123)		—		(123)
Change in unrealized value on interest rate swaps	—	—		—		13,584		—		13,584		1,909		15,493
Common distributions declared, $0.510 per share	—	—		—		—		(47,823)		(47,823)		—		(47,823)
Distributions to noncontrolling interests	—	—		—		—		—		—		(6,779)		(6,779)
Share-based compensation	77	2		2,427		—		—		2,429		2,416		4,845
Conversion of noncontrolling interests	28	0		743		—		—		743		(743)		—
Reallocation of operating partnership interests	—	—		(56)		(10)		—		(66)		66		—
Other	0	—		(29)		—		0		(29)		0		(29)
Net income	—	—		—		—		5,697		5,697		810		6,507
Balance at June 30, 2021	93,640	$	2,808	$	2,749,680	$	(38,732)	$	(1,041,617)	$	1,672,139	$	323,249	$	1,995,388

See notes to consolidated financial statements.


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									5

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PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(Condensed and Unaudited)

(In thousands)


	Six Months Ended June 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	6,507	$	4,786
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate assets	109,995		109,709
Impairment of real estate assets	6,056		0
Depreciation and amortization of corporate assets	1,933		2,888
Net amortization of above- and below-market leases	(1,725)		(1,583)
Amortization of deferred financing expenses	2,448		2,495
Amortization of debt and derivative adjustments	739		1,884
(Gain) loss on disposal of property, net	(17,585)		2,118
Change in fair value of earn-out liability	18,000		(10,000)
Straight-line rent	(4,400)		(1,331)
Share-based compensation	4,845		1,992
Return on investment in unconsolidated joint ventures	1,533		32
Other	(519)		1,239
Changes in operating assets and liabilities:
Other assets, net	900		(12,853)
Accounts payable and other liabilities	1,170		(11,470)
Net cash provided by operating activities	129,897		89,906
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions	(40,459)		(4,343)
Capital expenditures	(30,230)		(28,540)
Proceeds from sale of real estate	119,638		25,778
Investment in third parties	(3,000)		0
Return of investment in unconsolidated joint ventures	3,888		639
Net cash provided by (used in) investing activities	49,837		(6,466)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility	9,000		255,000
Payments on revolving credit facility	(9,000)		(255,000)
Payments on mortgages and loans payable	(66,237)		(35,200)
Distributions paid, net of DRIP	(48,308)		(49,083)
Distributions to noncontrolling interests	(7,931)		(9,406)
Repurchases of common stock	(77,765)		(5,211)
Other	(29)		(318)
Net cash used in financing activities	(200,270)		(99,218)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(20,536)		(15,778)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning of period	131,937		95,108
End of period	$	111,401	$	79,330

RECONCILIATION TO CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents	$	22,205	$	53,262
Restricted cash	89,196		26,068
Cash, cash equivalents, and restricted cash at end of period	$	111,401	$	79,330


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									6

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

Table of Contents

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE SIX MONTHS ENDED JUNE 30, ~~2020~~2021 AND ~~2019~~2020

(Condensed and Unaudited)

(In thousands)


							Six Months Ended June 30,
	2020			2019			2021		2020
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	$	40,980		$	44,169	Cash paid for interest	$	36,845	$	40,980
Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities	551			1,444		Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities	239		551
Accrued capital expenditures	2,884			2,960		Accrued capital expenditures	6,053		2,884
Change in distributions payable	(16,214		)	275		Change in distributions payable	(7,853)		(16,214)
Change in distributions payable - noncontrolling interests	(2,301		)	387		Change in distributions payable - noncontrolling interests	(1,152)		(2,301)
Change in accrued share repurchase obligation	(2,511		)	872		Change in accrued share repurchase obligation	(77,642)		(2,511)
Distributions reinvested	15,940			34,958		Distributions reinvested	7,368		15,940

See notes to consolidated financial statements.


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Phillips Edison & Company, Inc.

Notes to Consolidated Financial Statements

(Condensed and Unaudited)
As of and for the period ended June 30, 2021



1. ORGANIZATION

Phillips Edison & Company, Inc. (“we,” the “Company,” “PECO,” “our,” or “us”) was formed as a Maryland corporation in October 2009. Substantially all of our business is conducted through Phillips Edison Grocery Center Operating Partnership I, L.P., (the “Operating Partnership”), a Delaware limited partnership formed in December 2009. We are a limited partner of the Operating Partnership, and our ~~wholly owned~~wholly-owned subsidiary, Phillips Edison Grocery Center OP GP I LLC, is the sole general partner of the Operating Partnership.

We are a real estate investment trust (“REIT”) that invests primarily in ~~well-occupied,~~omni-channel grocery-anchored neighborhood and community shopping centers that have a mix of creditworthy national, regional, and local retailers that sell necessity-based goods and services in strong demographic markets throughout the United States. In addition to managing our own shopping centers, our third-party investment management business provides comprehensive real estate and asset management services to ~~three~~two unconsolidated institutional joint ventures, in which we have a partial ownership interest, and one private fund (collectively, the “Managed Funds”). as of June 30, 2021.

As of June 30, ~~2020,~~2021, we wholly-owned ~~284~~272 real estate properties. Additionally, we owned a 14% interest in Grocery Retail Partners I LLC (“GRP I”), a joint venture that owned 20 properties, and a 20% equity interest in Necessity Retail Partners (“NRP”), a joint venture that owned ~~seven properties;~~2 properties.

On June 18, 2021, our stockholders approved an amendment to our charter (the “Articles of Amendment”) that effected a ~~15% interest~~change of each share of our common stock outstanding at the time the amendment became effective into one share of a newly created class of Class B common stock (the “Recapitalization”). The Articles of Amendment became effective upon filing with, and acceptance by, the State Department of Assessments and Taxation of Maryland on July 2, 2021. Unless otherwise indicated, all information in ~~Grocery Retail Partners I LLC~~this Form 10-Q disclosure gives effect to the Recapitalization and references to “shares” and per share metrics refer to our common stock and Class B common stock, collectively.

On July 2, 2021, our board of directors (the “Board”) approved an amendment to our articles of incorporation to effect a one-for-three reverse stock split. Concurrent with the reverse split, the Operating Partnership enacted a one-for-three reverse split of its outstanding Operating Partnership units (“~~GRP I”~~OP units”). Unless otherwise indicated, the information in this Form 10-Q gives effect to the reverse stock and OP unit splits (Note 9).

On July 19, 2021, we closed our underwritten initial public offering (“underwritten IPO”), through which we offered 17.0 million shares of a ~~joint venture that owned 17 properties;~~new class of common stock, $0.01 par value per share, at an initial price of $28.00 per share, pursuant to a registration statement filed with the U.S. Securities and Exchange Commission (“SEC”) on Form S-11 (File No. 333-255846), as amended. These shares are listed on the Nasdaq Global Select Market under the trading symbol “PECO”. The underwriters have since exercised a ~~10% interest in Grocery Retail Partners II LLC (“GRP II”), a joint venture that owned three properties.~~30-day option to purchase additional shares of common stock to cover overallotments, and, accordingly, on August 2, 2021 we settled the sale of an additional 2.55 million shares, with gross proceeds to us of $71.4 million.



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 condensed consolidated interim financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations and require the application of significant judgment by management. For example, significant estimates and assumptions have been made with respect to the useful lives of assets, remaining hold period of assets, recoverable amounts of receivables, and other fair value measurement assessments required for the preparation of the consolidated interim financial statements. As a result, these estimates are subject to a degree of uncertainty.

~~During~~Beginning in 2020, the ~~first quarter of 2020, a novel~~ coronavirus (“COVID-19”) ~~began spreading globally, with~~pandemic has caused significant disruption to our operations. All temporarily closed tenants have since been permitted to reopen; however, certain of our tenants have permanently closed. We have backfilled a number of these spaces, and continue to work on backfilling any remaining vacancies. The continuing economic impacts of the ~~outbreak being classified as~~COVID-19 pandemic could result in increased permanent store closures, reduce the demand for leasing space in our shopping centers, and/or result in a ~~pandemic by the World Health Organization on March 11, 2020.~~decline in occupancy and rental revenues in our real estate portfolio. Because of the adverse economic conditions that ~~exist~~have occurred as a result of the impacts of the COVID-19 pandemic and any remaining uncertainty related to the pandemic, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change significantly. 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~~collectibility of revenue and valuation of real estate assets, goodwill and other intangible assets, and certain liabilities, among others.


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									8

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There were no changes to our significant accounting policies during the six months ended June 30, ~~2020.~~2021, except for those discussed below. For a full summary of our accounting policies, refer to our ~~2019~~2020 Annual Report on Form 10-K as originally filed with the SEC on March ~~11, 2020.~~12, 2021.

Basis of Presentation and Principles of Consolidation—The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Readers of this Quarterly Report on Form 10-Q should refer to our audited consolidated financial statements for the year ended December 31, ~~2019,~~2020, which are included in our ~~2019~~2020 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, ~~2020~~2021 are not necessarily indicative of the operating results expected for the full year.

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

~~Leases~~Underwritten IPO Costs—~~Lease receivables~~Deferred underwritten IPO costs are ~~reviewed continually to determine whether or not it is probable that we will realize all amounts owed to us for each~~currently recorded as Other Assets, Net on our consolidated balance sheets as 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. The COVID-19 pandemic has increased the uncertainty of collecting rents from a number of our tenants. For the three and six months ended June 30, ~~2020, we had $12.0 million~~2021, and ~~$14.8 million, respectively,~~will be offset against underwritten IPO proceeds and reclassified as a component of APIC on the consolidated balance sheets upon the consummation of the offering. Costs incurred that were related to our underwritten IPO activities but were not directly related to our equity raise were not capitalized and are included as transaction costs, currently in ~~revenue that will not be recognized until cash is collected or the tenant resumes payment~~Other (Expense) Income, Net on our consolidated statements of operations and ~~is considered creditworthy.~~comprehensive income (loss) (“consolidated statements of operations”).

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 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.

Income Taxes—Our consolidated financial statements include the operations of ~~wholly owned~~wholly-owned subsidiaries that have jointly elected to be treated as Taxable REIT Subsidiaries 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, 2020, an insignificant amount of federal income tax 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 insignificant amount of federal, state, and local income tax expense for the three and six months ended June 30, 2021 and 2020, and ~~2019.~~we retain a full valuation allowance for our deferred tax asset. All income tax amounts are included in Other (Expense) Income, Net on ~~the~~our consolidated statements of ~~operations and comprehensive loss (“consolidated statements of operations”).~~operations.

Recently Issued ~~and Newly Adopted~~ Accounting Pronouncements—~~In response to the COVID-19 pandemic,~~On January 7, 2021, the Financial Accounting Standards Board (“FASB”) issued ~~interpretive guidance addressing the accounting treatment for lease concessions attributable~~Accounting Standards Update (“ASU”) 2021-01 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 withinamend 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 FASB has stated that 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~~

~~Account for deferred lease payments as variable lease payments.~~

~~We have elected not to account for any qualifying lease concessions granted as a result~~guidance in ASU 2020-04 on facilitation of the ~~COVID-19 pandemic as lease~~effects of reference rate reform on financial reporting. Specifically, the amendments in ASU 2021-01 clarify that certain optional expedients and exceptions in Accounting Standards Codification (“ASC”) Topic 848, Reference Rate Reform for contract modifications and ~~will account for any qualifying concessions granted as if no changes~~hedge accounting apply to derivatives that are affected by the ~~lease contract were made. This will result in an increase to~~discounting transition. We adopted ASU 2021-01 upon its issuance and the ~~related lease receivable as payments accrue while we continue to recognize rental income. We will, however, assess the~~adoption of this standard did not have a material 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:~~

statements.



~~Standard~~	~~Description~~	~~Date of Adoption~~	~~Effect on the 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~~ ~~ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses~~ ~~ASU 2020-02, Financial Instruments - Credit Losses (Topic 326) and Leases (Topic 842)~~	The amendments in this update 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 326. Instead, impairment of receivables arising from operating leases will be accounted for in accordance with Topic 842. It also allowed election of the fair value option on certain financial instruments.	~~January 1, 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 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities~~	This ASU amended two aspects of the related-party guidance in Topic 810: (1) added 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 will be considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.	~~January 1, 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 statement of cash flows for the six months ended June 30, ~~2019~~2020 were reclassified to conform to current year presentation:

~~Amortization of Debt and Derivative Adjustments~~•Return on Investment in Unconsolidated Joint Ventures was listed on a separate line from Other ~~Cash Flows~~Assets, Net; and

•Net Change in Credit Facility was separated into two lines, Proceeds from ~~Operating Activities;~~Revolving Credit Facility and Payments on Revolving Credit Facility.

~~Equity in Net Loss of Unconsolidated Joint Ventures was included in Other Cash Flows from Operating Activities.~~


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3. LEASES

Lessor—The majority of our leases are largely similar in that the leased asset is retail space within our properties, and the lease agreements generally contain similar provisions and features, without substantial variations. All of our leases are currently classified as operating leases. Lease income related to our operating leases was as follows for the three and six months ended June 30, 2021 and 2020 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Rental income related to fixed lease payments(1)	$	94,485	$	95,036	$	189,451	$	191,063
Rental income related to variable lease payments(1)(2)	27,454		30,659		58,855		62,497
Straight-line rent amortization(3)	2,893		(978)		4,262		1,331
Amortization of lease assets	877		786		1,704		1,565
Lease buyout income	1,781		214		2,578		308
Adjustments for collectibility(4)	2,845		(10,063)		1,108		(12,644)
Total rental income	$	130,335	$	115,654	$	257,958	$	244,120

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

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

(3)Includes favorable revenue adjustments to straight-line rent for tenants previously considered non-creditworthy during the three months ended June 30, 2021 of $0.4 million, and ~~2019 (dollars~~unfavorable adjustments for non-creditworthy tenants during the six months ended June 30, 2021 of $0.4 million. Includes unfavorable adjustments for the three and six months ended June 30, 2020 of $3.2 million, and $3.1 million, respectively.

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

For the three and six months ended June 30, 2021, we had net favorable changes to general reserves of $1.9 million and $4.1 million, respectively. Additionally, we had $1.0 million in ~~thousands):~~

net collections on receivables that were previously deemed unlikely to be collected for tenants not considered creditworthy for the three months ended June 30, 2021, and $3.0 million in net unfavorable revenue adjustments for non-creditworthy tenants for the six months ended June 30, 2021.

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
For the three and six months ended June 30, 2020, we had net general reserve increases of $1.3 million and $0.9 million, respectively. Additionally, we had net unfavorable adjustments of $8.8 million and $11.7 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis.


⁽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, ~~2020,~~2021, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements, payment plans, and tenants who have been moved to the cash basis of accounting for revenue recognition purposes are as follows (in thousands):


Year	Amount		Year	Amount
Remaining 2020	$	191,883
2021	353,229
Remaining 2021			Remaining 2021	$	191,000
2022	316,888		2022	363,187
2023	268,211		2023	317,301
2024	212,229		2024	263,155
2025			2025	209,307
Thereafter	569,201		Thereafter	514,528
Total	$	1,911,641	Total	$	1,858,478

•The ~~$10.1~~$4.3 million~~decrease~~ change was ~~largely due~~primarily related to the sale of seven properties with a net gain (in addition to other ~~impairment charges~~property-related miscellaneous disposals and write-offs) of ~~$9.7~~$3.7 million ~~in connection with the REIT III public offering recognized~~ during the three months ended June 30, ~~2019, which included~~2021, as compared to the sale of one property (as well as other property-related miscellaneous disposals and write-offs) with a ~~$7.8~~net loss of $0.5 million ~~impairment~~ during the three months ended June 30, 2020 (see Note 4).

Other Expense, Net:

•The $2.4 million increase was largely due to the change in the fair value of our earn-out liability as a ~~corporate intangible asset and a~~ ~~$1.9 million~~ ~~impairment~~result of ~~organization and offering costs.~~ general improving market conditions. Other Expense, Net was comprised of the following (dollars in thousands):


	Three Months Ended June 30,
	2021		2020
Change in fair value of earn-out liability	$	(2,000)	$	—
Equity in net income (loss) of unconsolidated joint ventures	87		(359)
Transaction and acquisition expenses	(934)		(14)
Federal, state, and local income tax expense	(165)		(180)
Other	88		53
Other expense, net	$	(2,924)	$	(500)


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

Table of Contents

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, 2021 AND 2020


	Six Months Ended June 30,				Favorable (Unfavorable) Change
(Dollars in thousands)	2021		2020		$		%(1)
Revenues:
Rental income	$	257,958	$	244,120	$	13,838	5.7	%
Fee and management income	4,660		4,925		(265)		(5.4)	%
Other property income	833		1,518		(685)		(45.1)	%
Total revenues	263,451		250,563		12,888		5.1	%
Operating Expenses:
Property operating expenses	44,176		41,391		(2,785)		(6.7)	%
Real estate tax expenses	33,387		33,565		178		0.5	%
General and administrative expenses	21,278		20,546		(732)		(3.6)	%
Depreciation and amortization	111,928		112,597		669		0.6	%
Impairment of real estate assets	6,056		—		(6,056)		NM
Total operating expenses	216,825		208,099		(8,726)		(4.2)	%
Other:
Interest expense, net	(39,195)		(44,929)		5,734		12.8	%
Gain (loss) on disposal of property, net	17,585		(2,118)		19,703		NM
Other (expense) income, net	(18,509)		9,369		(27,878)		NM
Net income	6,507		4,786		1,721		36.0	%
Net income attributable to noncontrolling interests	(810)		(605)		(205)		(33.9)	%
Net income attributable to stockholders	$	5,697	$	4,181	$	1,516	36.3	%

~~Summary of Operating Activities for the Six Months Ended June 30, 2020~~(1)Line items that result in a percent change that exceed certain limitations are considered not meaningful (“NM”) 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 %
indicated as such.

For details surrounding our basis for analyzing significant fluctuations in our results of operations as well as definitions related to our portfolio of real estate assets, please see the Summary of Operating Activities for the Three Months Ended June 30, ~~2020~~2021 and ~~2019~~2020 section above. Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, ~~2020~~2021 and ~~2019:~~2020:

Rental Income ~~decreased~~increased $13.8 million as follows:

•$~~5.4~~15.3 million~~decrease~~ increase related to our same-center ~~portfolio. We have identified an increased number~~portfolio primarily as follows:

▪$15.7 million increase primarily due to stronger collections in 2021 as compared with lower collections in 2020, the increase owing largely to the ongoing recovery of ~~neighbors as a credit risk, largely due to~~our portfolio in the wake of the COVID-19 pandemic and its economic ~~impact. As a result, we saw~~impact, including a decrease in Neighbors we have identified as a credit risk as well as collections on charges that were uncollected in 2020; and

▪$0.2 million decrease primarily due to ~~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~~a 0.8% decrease in ~~straight-line rent reversals for the related leases. This offsets an improvement of~~ ~~$4.2 million~~ ~~primarily related to increases~~average economic occupancy, partially offset by a $0.55 increase in average minimum rent per square ~~foot and average occupancy, as well as a~~ ~~$5.2 millionincrease~~ ~~in recovery income; and~~

foot.

•$~~8.4~~1.5 milliondecrease primarily related to our net disposition of 2015 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~~increased $2.8 million primarily as follows:

•$~~1.6~~2.9 million~~decrease~~ ~~related to our~~ ~~net disposition~~ of 20 ~~properties; and~~

~~$0.8 milliondecrease~~ increase related to our same-center portfolio and corporate operating activities ~~including~~ as follows:

▪$~~2.0~~2.4 million ~~of reduced~~ increase owing largely to lower expense for performance-based 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~~during 2020 as a result of ~~successful real estate tax appeals.~~the COVID-19 pandemic, as compared to 2021;

▪$0.6 million increase in insurance expenses owing to higher market rates and an increase in claims and claim development; and

▪ $0.1 million decrease primarily due to net reductions of controllable expenses at our properties.

•$0.2 million decrease related to our net disposition of 15 properties.

General and Administrative ~~Expenses:~~Expenses increased $0.7 million as follows:

•$4.3 million increase owing largely to lower expense for performance-based compensation during 2020 as a result of the COVID-19 pandemic, as compared to 2021;

~~The~~ •$~~6.2~~1.6 milliondecrease ~~in general~~ primarily due to lower third-party consultant and ~~administrative expenses was primarily~~custodial costs;

•$2.0 million decrease related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to ~~compensation.~~

~~Depreciation~~overhead costs at our corporate offices, as well as decreased travel and ~~Amortization decreased $7.9 million primarily as follows:~~related costs.

~~$4.6 milliondecrease~~ ~~related to our~~ ~~net disposition~~


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									31

Table of 20 ~~properties; and~~Contents

~~$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~~$6.1 million increase 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~~that are actively being marketed for sale at a disposition price that was less than the carrying ~~value, the proceeds~~value. Proceeds from ~~which were~~dispositions will be used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes. We continue to sell non-core assets and may potentially recognize impairments in future ~~quarters, but our anticipated disposition activity will likely be delayed or reduced due to current market conditions as a result of the COVID-19 pandemic.~~

quarters.

Interest Expense, Net:

•The ~~$5.9~~$5.7 milliondecrease ~~was largely due to repricing activities in~~ ~~2019~~ ~~as well as the decrease in LIBOR~~ during the six months ended June 30, ~~2020~~2021 as compared to the same period in ~~2019~~.2020 was due to: (i) lower borrowings as a result of early repayments of debt; (ii) the repayment of our draw on the revolver during the second quarter of 2020; and (iii) lower interest rates due to the decrease in LIBOR and expiring interest rate swaps. Interest Expense, Net was comprised of the following (dollars in thousands):


	Six Months Ended June 30,
	2021			2020
Interest on revolving credit facility, net	$	435		$	1,195
Interest on term loans, net	21,206			24,416
Interest on secured debt	13,026			14,665
Loss on extinguishment of debt	1,110			73
Non-cash amortization and other	3,418			4,580
Interest expense, net	$	39,195		$	44,929

Weighted-average interest rate as of end of period	2.9		%	3.1		%
Weighted-average term (in years) as of end of period	3.7			4.5

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

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

•The ~~$8.0~~$19.7 million changewas primarily related to the sale of ~~four~~thirteen properties and one outparcel (in addition to other miscellaneous property-related disposals and write-offs) with a net ~~loss~~ ~~and associated write-offs~~gain of ~~$2.1~~$17.6 million during the six months ended June 30, ~~2020~~,2021, as compared to the sale of ~~six~~four properties (as well as other property-related miscellaneous disposals and write-offs) with a net ~~gain~~loss of ~~$5.9~~$2.1 million during the six months ended June 30, ~~2019~~2020 (see Note 4)4).

Other (Expense) Income, ~~(Expense),~~ Net:

•The ~~$12.4~~$27.9 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, 2019, which included a~~ ~~$7.8 million~~ ~~impairment of a corporate intangible asset and a~~ ~~$1.9 million~~ ~~impairment of organization and offering costs, and~~ the change in the fair value of our earn-out ~~liability.~~ liability as a result of general improving market conditions. Other (Expense) Income, ~~(Expense),~~ Net was comprised of the following ~~(dollars in~~(in thousands):


	Six Months Ended June 30,
	2021		2020
Change in fair value of earn-out liability	$	(18,000)	$	10,000
Equity in income (loss) of unconsolidated joint ventures	801		(639)
Transaction and acquisition expenses	(1,075)		(59)
Federal, state, and local income tax expense	(331)		(209)
Other	96		276
Other (expense) income, net	$	(18,509)	$	9,369


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									32

Table of Contents

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~~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 neighbor mix, size of the leased space, and lease term. Leases with national and regional neighbors generally require a higher cost per square foot to execute than those with local neighbors. However, generally such 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, ~~2020~~2021 and ~~2019:~~

2020(1):


	Total Deals⁽¹⁾						Inline Deals⁽¹⁾⁽²⁾							Total Deals						Inline Deals
	2020			2019			2020			2019				2021			2020			2021			2020
New leases:													New leases:
Number of leases	61			100			58			96			Number of leases	124			61			121			58
Square footage (in thousands)	197			393			159			227			Square footage (in thousands)	341			197			278			159
ABR (in thousands)	$	3,034		$	5,467		$	2,801		$	4,017		ABR (in thousands)	$	6,338		$	3,034		$	5,816		$	2,801
ABR per square foot	$	15.38		$	13.91		$	17.59		$	17.67		ABR per square foot	$	18.57		$	15.38		$	20.94		$	17.59
Cost per square foot of executing new leases⁽³⁾	$	19.48		$	25.68		$	23.35		$	30.54
Number of comparable leases⁽⁴⁾	20			33			19			33
Comparable rent spread⁽⁵⁾	15.5		%	10.5		%	15.9		%	10.5		%
Weighted average lease term (in years)	6.1			8.1			7.2			7.0
Cost per square foot of executing new leases													Cost per square foot of executing new leases	$	31.01		$	19.48		$	29.30		$	23.35
Number of comparable leases													Number of comparable leases	57			20			55			19
Comparable rent spread													Comparable rent spread	18.5		%	15.5		%	19.0		%	15.9		%
Weighted-average lease term (in years)													Weighted-average lease term (in years)	7.2			6.1			6.8			7.2
Renewals and options:													Renewals and options:
Number of leases	108			159			95			148			Number of leases	174			108			159			95
Square footage (in thousands)	975			716			209			309			Square footage (in thousands)	1,049			975			333			209
ABR (in thousands)	$	8,942		$	9,579		$	4,141		$	6,759		ABR (in thousands)	$	12,895		$	8,942		$	7,306		$	4,141
ABR per square foot	$	9.17		$	13.39		$	19.81		$	21.87		ABR per square foot	$	12.30		$	9.17		$	21.95		$	19.81
ABR per square foot prior to renewals	$	8.73		$	12.15		$	18.40		$	19.73		ABR per square foot prior to renewals	$	11.55		$	8.73		$	20.08		$	18.40
Percentage increase in ABR per square foot	5.0		%	10.2		%	7.7		%	10.9		%	Percentage increase in ABR per square foot	6.5		%	5.0		%	9.3		%	7.7		%
Cost per square foot of executing renewals and options	$	1.62		$	2.59		$	3.69		$	4.29		Cost per square foot of executing renewals and options	$	3.01		$	1.62		$	4.60		$	3.69
Number of comparable leases⁽⁴⁾	87			122			84			117
Comparable rent spread⁽⁵⁾	7.1		%	10.8		%	9.0		%	11.0		%
Weighted average lease term (in years)	5.4			4.8			3.5			4.4
Portfolio retention rate⁽⁶⁾	88.2		%	87.1		%	70.3		%	76.2		%
Number of comparable leases(2)													Number of comparable leases(2)	155			87			148			84
Comparable rent spread(2)													Comparable rent spread(2)	8.0		%	7.1		%	9.4		%	9.0		%
Weighted-average lease term (in years)													Weighted-average lease term (in years)	5.4			5.4			4.0			3.5
Portfolio retention rate													Portfolio retention rate	85.5		%	88.2		%	79.5		%	70.3		%

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

(2)Excludes exercise of options.


⁽¹⁾PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q			~~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.~~33


⁽³⁾	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, if any.


⁽⁴⁾	A comparable lease is a lease that is executed for the exact same space (location and square feet) in which a 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 neighbor physically vacated the space.


⁽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 twelve months.~~


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

Table of Contents

Below is a summary of leasing activity for our wholly-owned properties for the six months ended June 30, ~~2020~~2021 and ~~2019~~^2020(1):


	Total Deals						Inline Deals
	2021			2020			2021			2020
New leases:
Number of leases	277			148			268			135
Square footage (in thousands)	808			579			619			339
ABR (in thousands)	$	14,458		$	8,597		$	12,421		$	6,015
ABR per square foot	$	17.89		$	14.84		$	20.06		$	17.72
Cost per square foot of executing new leases	$	28.51		$	21.16		$	28.00		$	25.78
Number of comparable leases	127			45			125			44
Comparable rent spread	15.3		%	10.8		%	15.3		%	10.7		%
Weighted-average lease term (in years)	7.7			8.2			6.5			6.8
Renewals and options:
Number of leases	337			235			306			208
Square footage (in thousands)	2,027			1,714			645			458
ABR (in thousands)	$	24,367		$	18,662		$	14,375		$	9,505
ABR per square foot	$	12.02		$	10.89		$	22.30		$	20.75
ABR per square foot prior to renewals	$	11.27		$	10.24		$	20.54		$	18.83
Percentage increase in ABR per square foot	6.6		%	6.7		%	8.6		%	12.2		%
Cost per square foot of executing renewals and options	$	2.19		$	3.41		$	4.08		$	4.36
Number of comparable leases(2)	291			176			281			170
Comparable rent spread(2)	8.0		%	9.2		%	8.7		%	11.8		%
Weighted-average lease term (in years)	4.9			5.0			4.0			3.7
Portfolio retention rate	87.2		%	79.5		%	79.9		%	68.6		%

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

(2)Excludes exercise of options.

Total Deals Inline Deals
2020 2019 2020 2019
New leases:
Number of leases 148
207
135
199
Square footage (in thousands) 579
716
339
479
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 45
73
44
71
Comparable rent spread 10.8 % 14.6 % 10.7 % 13.0 %
Weighted average lease term (in years) 8.2
7.6
6.8
6.7
Renewals and options:
Number of leases 235
322
208
300
Square footage (in thousands) 1,714
1,404
458
635
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 176
252
170
244
Comparable rent spread 9.2 % 11.6 % 11.8 % 12.4 %
Weighted average lease term (in years) 5.0
4.8
3.7
4.6
Portfolio retention rate 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.~~NON-GAAP MEASURES

~~Additionally, subsequent~~See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators and Defined Terms”of this filing on Form 10-Q for a discussion related to ~~June 30, 2020, through July 31, we executed a total of 44 new leases.~~the following non-GAAP measures.

~~Non-GAAP Measures~~

~~Same-Center Net Operating Income~~SAME-CENTER NET OPERATING INCOME—~~We present~~ Same-Center NOI is presented as a supplemental measure of our ~~performance. We define NOI~~performance, 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 wholly-owned and operational for the entire portion of both comparable reporting periods. We believe Same-Center NOI provides useful information to our investors about our financial and operating performance because it provides a performance measure of the revenues and expenses directly involved in owning and operating real estate assets and provides a perspective not immediately apparent from net income (loss). Because Same-Center NOI excludes the change in NOI from properties acquired or disposed of after December 31, 2018, it highlights operating trends such as occupancy levels, rental rates, and operating costs ~~on properties that were operational~~ for ~~both comparable periods.~~our Same-Center portfolio. Other REITs may use different methodologies for calculating Same-Center NOI, and accordingly, our Same-Center NOI may not be comparable to other REITs. For the three and six months ended June 30, 2021 and 2020, Same-Center NOI represents the NOI for the 268 properties that were wholly-owned and operational for the entire portion of both comparable periods.

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

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

Three Months Ended
June 30, Favorable
(Unfavorable) Six Months Ended June 30, Favorable (Unfavorable)
2020 2019
$
Change

%
Change
2020 2019
$
Change

%
Change
Revenues:
Rental income⁽¹⁾
$ 84,506
$ 90,089
$ (5,583 ) $ 175,422

$ 179,696
$ (4,274 )
Tenant recovery income 28,067
27,277
790
58,372

56,005
2,367

Other property income 591
447
144
1,465

1,059
406

Total revenues 113,164
117,813
(4,649 ) (3.9 )% 235,259
236,760
(1,501 ) (0.6 )%
Operating expenses:
Property operating expenses 16,728

16,140
(588 ) 34,971

34,213
(758 )
Real estate taxes 16,164

17,001
837
33,284

33,383
99

Total operating expenses 32,892
33,141
249
0.8 % 68,255
67,596
(659 ) (1.0 )%
Total Same-Center NOI $ 80,272
$ 84,672
$ (4,400 ) (5.2 )% $ 167,004
$ 169,164
$ (2,160 ) (1.3 )%


⁽¹⁾PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q			~~Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income.~~						34

Table of Contents

The table below presents our Same-Center NOI ~~Reconciliation~~for the current period and the comparable prior period (dollars in thousands):


	Three Months Ended June 30,				Favorable (Unfavorable)				Six Months Ended June 30,				Favorable (Unfavorable)
	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
Revenues:
Rental income(1)	$	91,305	$	90,814	$	491			$	182,599	$	182,852	$	(253)
Tenant recovery income	27,250		30,197		(2,947)				57,851		60,980		(3,129)
Reserves for uncollectibility(2)	2,889		(9,706)		12,595				1,261		(12,129)		13,390
Other property income	284		600		(316)				756		1,465		(709)
Total revenues	121,728		111,905		9,823		8.8	%	242,467		233,168		9,299		4.0	%
Operating expenses:
Property operating expenses	17,504		16,495		(1,009)				36,614		34,562		(2,052)
Real estate taxes	16,519		16,038		(481)				32,749		33,182		433
Total operating expenses	34,023		32,533		(1,490)		(4.6)	%	69,363		67,744		(1,619)		(2.4)	%
Total Same-Center NOI	$	87,705	$	79,372	$	8,333	10.5	%	$	173,104	$	165,424	$	7,680	4.6	%

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

(2)Includes billings that will not be recognized as revenue until cash is collected or the Neighbor resumes regular payments and/or we deem it appropriate to resume recording revenue on an accrual basis, rather than on a cash basis.

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,
	2021		2020		2021		2020
Net income (loss)	$	6,390	$	(6,413)	$	6,507	$	4,786
Adjusted to exclude:
Fees and management income	(2,374)		(2,760)		(4,660)		(4,925)
Straight-line rental (income) expense(1)	(2,970)		948		(4,392)		(1,364)
Net amortization of above- and below-market leases	(887)		(795)		(1,725)		(1,583)
Lease buyout income	(1,781)		(214)		(2,578)		(308)
General and administrative expenses	11,937		9,806		21,278		20,546
Depreciation and amortization	56,587		56,370		111,928		112,597
Impairment of real estate assets	1,056		—		6,056		—
Interest expense, net	19,132		22,154		39,195		44,929
(Gain) loss on disposal of property, net	(3,744)		541		(17,585)		2,118
Other expense (income), net	2,924		500		18,509		(9,369)
Property operating expenses related to fees and management income	1,306		891		2,122		1,528
NOI for real estate investments	87,576		81,028		174,655		168,955
Less: Non-same-center NOI(2)	129		(1,656)		(1,551)		(3,531)
Total Same-Center NOI	$	87,705	$	79,372	$	173,104	$	165,424

(1)Includes straight-line rent adjustments for Neighbors for whom revenue is being recorded on a cash basis.

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

Three Months Ended 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 Core~~NAREIT FFO AND CORE FFO—Nareit FFO is a non-GAAP financial performance ~~financial~~ measure that is widely recognized as a measure of REIT operating performance. The National Association of Real Estate Investment Trusts (“Nareit”) defines FFO as net income (loss) 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 definition, with an additional adjustment made for noncontrolling interests that are not convertible into common stock.

Core FFO is an additional financial performance ~~financial~~ measure used by us as Nareit FFO includes certain non-comparable items that affect our performance over time. ~~We believe that~~ Core FFO is helpful in assisting management and investors with ~~the assessment of~~assessing the sustainability of our operating performance in future periods. ~~We believe it is more reflective~~


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									35

Table 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 CoreContents

Nareit FFO, ~~we adjust FFO attributable to stockholders and convertible noncontrolling interests to exclude certain recurring and non-recurring items~~

including, but 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 the extinguishment or modification of debt, other impairment charges, and transaction and acquisition expenses.

~~FFO,~~Nareit FFO Attributable to Stockholders and ~~Convertible Noncontrolling Interests,~~OP Unit Holders, and 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. 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, Nareit FFO, Nareit FFO Attributable to Stockholders and ~~Convertible Noncontrolling Interests,~~OP Unit Holders, and 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 Nareit FFO, Nareit FFO Attributable to Stockholders and ~~Convertible Noncontrolling Interests,~~OP Unit Holders, and Core FFO, as presented, may not be comparable to amounts calculated by other REITs.

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

Three Months Ended June 30, Six Months Ended June 30,
2020
2019⁽¹⁾
2020
2019⁽¹⁾
Calculation of FFO Attributable to Stockholders and
Convertible Noncontrolling Interests

Net (loss) income $ (6,413 ) $ (42,172 ) $ 4,786
$ (47,960 )
Adjustments:
Depreciation and amortization of real estate assets 54,892
57,828
109,709
117,170
Impairment of real estate assets —
25,199
—
38,916
Loss (gain) on disposal of property, net 541
1,266
2,118
(5,855 )
Adjustments related to unconsolidated joint ventures 940
1,051
1,594
2,106
FFO attributable to the Company 49,960
43,172
118,207

104,377
Adjustments attributable to noncontrolling interests
not convertible into common stock —
(41 ) —
(231 )
FFO attributable to stockholders and convertible
noncontrolling interests $ 49,960
$ 43,131
$ 118,207

$ 104,146
Calculation of Core FFO




FFO attributable to stockholders and convertible
noncontrolling interests $ 49,960
$ 43,131
$ 118,207

$ 104,146
Adjustments:




Depreciation and amortization of corporate assets 1,478
1,726
2,888
3,373
Change in fair value of earn-out liability —
—
(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
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 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


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders
Net income (loss)	$	6,390	$	(6,413)	$	6,507	$	4,786
Adjustments:
Depreciation and amortization of real estate assets	55,654		54,892		109,995		109,709
Impairment of real estate assets	1,056		—		6,056		—
(Gain) loss on disposal of property, net	(3,744)		541		(17,585)		2,118
Adjustments related to unconsolidated joint ventures	537		940		(100)		1,594
Nareit FFO attributable to stockholders and OP unit holders	$	59,893	$	49,960	$	104,873	$	118,207
Calculation of Core FFO
Nareit FFO attributable to stockholders and OP unit holders	$	59,893	$	49,960	$	104,873	$	118,207
Adjustments:
Depreciation and amortization of corporate assets	933		1,478		1,933		2,888
Change in fair value of earn-out liability	2,000		—		18,000		(10,000)
Amortization of unconsolidated joint venture basis differences	79		254		825		721
Loss on extinguishment of debt, net	419		—		1,110		73
Transaction and acquisition expenses	934		14		1,075		59
Core FFO	$	64,258	$	51,706	$	127,816	$	111,948

Nareit FFO Attributable to Stockholders and OP Unit Holders/Core FFO per Share(1)
Weighted-average common shares outstanding - diluted	107,175		111,165		107,102		111,140
Nareit FFO attributable to stockholders and OP unit holders per share - diluted	$	0.56	$	0.45	$	0.98	$	1.06
Core FFO per share - diluted	$	0.60	$	0.47	$	1.19	$	1.01

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


⁽¹⁾PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q			~~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 Core FFO per share for the~~ ~~three and six months ended June 30, 2020 and 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 the calculation of earnings per share, see Note~~ 10. 36

~~Earnings Before Interest, Taxes, Depreciation,~~

Table of Contents

EBITDAre and ~~Amortization for Real Estate (“EBITDAre”) and Adjusted EBITDAre~~ADJUSTED EBITDAre—~~We have included the calculation of EBITDA~~re 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 EBITDA~~re ~~on the same basis.~~

~~Adjusted EBITDA~~re ~~is an additional performance measure used by us as EBITDA~~re ~~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. Additionally, we believe they are a useful indicator of our ability to support our debt obligations.

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)~~thousands):


	Three Months Ended June 30,				Six Months Ended June 30,				Year Ended December 31,
	2021		2020		2021		2020		2020
Calculation of EBITDAre
Net income (loss)	$	6,390	$	(6,413)	$	6,507	$	4,786	$	5,462
Adjustments:
Depreciation and amortization	56,587		56,370		111,928		112,597		224,679
Interest expense, net	19,132		22,154		39,195		44,929		85,303
(Gain) loss on disposal of property, net	(3,744)		541		(17,585)		2,118		(6,494)
Impairment of real estate assets	1,056		—		6,056		—		2,423
Federal, state, and local tax expense	165		180		331		209		491
Adjustments related to unconsolidated joint ventures	(535)		1,391		597		2,568		3,355
EBITDAre	$	79,051	$	74,223	$	147,029	$	167,207	$	315,219
Calculation of Adjusted EBITDAre
EBITDAre	$	79,051	$	74,223	$	147,029	$	167,207	$	315,219
Adjustments:
Change in fair value of earn-out liability	2,000		—		18,000		(10,000)		(10,000)
Transaction and acquisition expenses	934		14		1,075		59		539
Amortization of unconsolidated joint venture basis differences	79		254		825		721		1,883
Other impairment charges	—		—		—		—		359
Adjusted EBITDAre	$	82,064	$	74,491	$	166,929	$	157,987	$	308,000


LIQUIDITY AND CAPITAL RESOURCES

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

•cash distributions to stockholders;

•investments in real estate;

•capital expenditures and leasing costs;

•redevelopment and repositioning projects; and

•principal and interest payments on our outstanding ~~indebtedness;~~

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

~~capital expenditures and leasing costs;~~

~~investments in real estate; and~~

~~redevelopment and repositioning projects.~~indebtedness.

We expect our primary sources of liquidity to be:

•net proceeds from our underwritten IPO;

•operating cash flows;

•proceeds received from the disposition of properties;

•proceeds from equity and debt financings, including borrowings under our unsecured revolving credit facility;

~~proceeds received from the disposition of properties;~~

•distributions received from our unconsolidated joint ventures; and

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

~~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 the net proceeds from our underwritten IPO, our operating cash flows, and borrowing availability on our revolving credit facility, are sufficient to meet our short- and long-term cash demands.

~~Debt~~


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									37

Table of Contents

UNDERWRITTEN INITIAL PUBLIC OFFERING—On July 19, 2021, we completed an underwritten IPO and issued 17.0 million shares of common stock at an offering price of $28.00 per share. We used a portion of the net proceeds to reduce our leverage and expect to use the remaining amount to fund external growth with property acquisitions and for other general corporate uses. As part of the underwritten IPO, underwriters were granted an option exercisable within 30 days from July 14, 2021 to purchase up to an additional 2.55 million shares of common stock at the underwritten IPO price, less underwriting discounts and commissions. On July 29, 2021, the underwriters exercised their option.

DEBT—The following table summarizes information about our debt as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 (dollars in thousands):

June 30, 2020 December 31, 2019
Total debt obligations, gross $ 2,337,466
$ 2,372,521
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
Revolving credit facility availability⁽¹⁾
490,404
489,805
Revolving credit facility maturity⁽²⁾
October 2021
October 2021


	June 30, 2021			December 31, 2020
Total debt obligations, gross	$	2,241,495		$	2,307,686
Weighted-average interest rate	2.9		%	3.1		%
Weighted-average term (in years)	3.7			4.1

Revolving credit facility capacity(1)	$	500,000		$	500,000
Revolving credit facility availability(2)	489,329			490,404

(1)In July 2021, we refinanced the revolving credit facility and exercised our option to extend its maturity as noted below.

(2)Net of any outstanding balance and letters of credit.

In July 2021, we took steps to reduce our leverage, lower our cost of debt, and appropriately ladder our debt maturities as follows:

•On July 2, 2021, we completed the Refinancing. In connection with the Refinancing, we paid off the $472.5 million term loan due in 2025. The revolving credit facility will mature in January 2026, and the two senior unsecured term loan tranches will mature in November 2025 and July 2026, respectively.

•On July 20, 2021, we used proceeds from the underwritten IPO to retire our $375.0 million term loan maturing in 2022.

We have been assigned investment grade ratings from Moody’s Investors Service (Baa3) and S&P Global Ratings (BBB-) which may allow us access to additional capital markets. We expect to save approximately $7.2 million in interest annually as a result of our debt activity and our investment grade ratings. Further, our weighted-average interest rate was 3.1% as of June 30, 2021, as adjusted to reflect certain material July debt transactions described above.

The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments and deferred financing expenses, net, and including the effects of derivative financial instruments (see Notes 7 and 12) as of June 30, 2021 and December 31, 2020 is summarized below. We have also presented this allocation as of June 30, 2021 on an adjusted basis to reflect certain material July debt transactions described above (in thousands):


	June 30, 2021		June 30, 2021 (As Adjusted)		December 31, 2020
As to interest rate:
Fixed-rate debt	$	1,548,995	$	1,548,995	$	1,727,186
Variable-rate debt	692,500		325,000		580,500
Total	$	2,241,495	$	1,873,995	$	2,307,686
As to collateralization:
Unsecured debt	$	1,622,500	$	1,255,000	$	1,622,500
Secured debt	618,995		618,995		685,186
Total	$	2,241,495	$	1,873,995	$	2,307,686

Our maturity schedule as of June 30, 2021 with respective principal payment obligations, excluding finance lease liabilities, market debt adjustments, and deferred financing expenses, is presented below on an adjusted basis to reflect certain material July debt transactions described above (in thousands):


	2021		2022		2023		2024		2025		Thereafter		Total
Term loans	$	—	$	—	$	300,000	$	475,000	$	240,000	$	240,000	$	1,255,000
Secured debt	10,068		61,171		66,702		28,124		27,877		424,925		618,867
Total	$	10,068	$	61,171	$	366,702	$	503,124	$	267,877	$	664,925	$	1,873,867


⁽¹⁾PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q			~~Net of any outstanding balance and letters of credit.~~


⁽²⁾			The revolving credit facility has an additional option to extend the maturity to October 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.38

~~In January 2020, we paid down $30.0 million~~

Table 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.Contents

Our debt is subject to certain covenants, and as of June 30, 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 next twelve months.

~~Financial Leverage Ratios~~FINANCIAL LEVERAGE RATIOS—We believe our debt to Adjusted EBITDAre, debt to total enterprise value, and debt covenant compliance as of June 30, ~~2020~~2021 allow us access to future borrowings as needed in the near term. The following table presents our calculation of net debt and total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our unconsolidated joint ventures, as of June 30, ~~2020~~2021 and December 31, ~~2019 (dollars in~~2020 (in thousands):

June 30, 2020 December 31, 2019
Net debt:
Total debt, excluding market adjustments and deferred financing expenses $ 2,384,553
$ 2,421,520
Less: Cash and cash equivalents 54,894
18,376
Net debt $ 2,329,659
$ 2,403,144

Enterprise value:
Net debt $ 2,329,659
$ 2,403,144
Total equity value⁽¹⁾
2,914,931
3,682,161
Total enterprise value $ 5,244,590
$ 6,085,305

⁽¹⁾

~~Total equity value is calculated as the number of common shares and OP units outstanding multiplied by the EVPS as of June 30, 2020 and December 31, 2019, respectively. There were~~ ~~333.1 million~~ ~~diluted shares outstanding with an EVPS of~~ ~~$8.75~~ ~~and~~ ~~331.7 million~~ ~~diluted shares outstanding with an EVPS of~~ ~~$11.10~~ ~~as of~~ ~~June 30, 2020~~ ~~and~~ ~~December 31, 2019, respectively.~~


	June 30, 2021		December 31, 2020
Net debt:
Total debt, excluding market adjustments and deferred financing expenses	$	2,272,268	$	2,345,620
Less: Cash and cash equivalents	22,633		104,952
Total net debt	$	2,249,635	$	2,240,668

Enterprise value:
Net debt	$	2,249,635	$	2,240,668
Total equity value(1)	3,386,803		2,797,234
Total enterprise value	$	5,636,438	$	5,037,902

(1)Total equity value is calculated as the number of common shares and OP units outstanding multiplied by the EVPS as of June 30, 2021 and December 31, 2020, respectively. There were 107.0 million diluted shares outstanding with an EVPS of $31.65 as of June 30, 2021 and 106.6 million diluted shares outstanding with an EVPS of $26.25 as of December 31, 2020.

The following table presents our calculation of net debt to Adjusted EBITDAre and net debt to total enterprise value as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 (dollars in thousands):


	June 30, 2020			December 31, 2019				June 30, 2021		December 31, 2020
Net debt to Adjusted EBITDAre - annualized:							Net debt to Adjusted EBITDAre - annualized:
Net debt	$	2,329,659		$	2,403,144		Net debt	$	2,249,635	$	2,240,668
Adjusted EBITDAre - annualized⁽¹⁾	329,907			335,410			Adjusted EBITDAre - annualized(1)	316,942		308,000
Net debt to Adjusted EBITDAre - annualized	7.1		x	7.2		x	Net debt to Adjusted EBITDAre - annualized	7.1x		7.3x

Net debt to total enterprise value							Net debt to total enterprise value
Net debt	$	2,329,659		$	2,403,144		Net debt	$	2,249,635	$	2,240,668
Total enterprise value	5,244,590			6,085,305			Total enterprise value	5,636,438		5,037,902
Net debt to total enterprise value	44.4		%	39.5		%	Net debt to total enterprise value	39.9%		44.5%


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

~~Capital Expenditures~~ and ~~Redevelopment Activity~~Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - EBITDAre and Adjusted EBITDAre” of this filing on Form 10-Q for a reconciliation to Net Income (Loss).

CAPITAL EXPENDITURES AND REDEVELOPMENT ACTIVITY—We make capital expenditures during the course of normal operations, ~~which include~~including 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~~2021 and ~~2019,~~2020, we had capital spend of $30.2 million and $28.5 million, ~~and $27.2 million,~~ respectively. ~~Our capital spend during the six months ended June 30, 2020 included $16.1 million related to~~Generally, we expect our development and redevelopment ~~projects.~~projects to stabilize within 24 months. We anticipate that obligations related to capital improvements as well as redevelopment and development in 2021 can be met with cash flows from operations, cash flows from dispositions, or borrowings on our unsecured revolving line of credit. Below is a summary of our capital spending activity, excluding leasing commissions, on a cash basis (dollars in thousands):

~~Acquisition Activity~~


	Six Months Ended June 30,
	2021		2020
Capital expenditures for real estate(1):
Capital improvements	$	3,101	$	2,142
Tenant improvements	9,557		5,840
Redevelopment and development	15,658		18,659
Total capital expenditures for real estate	28,316		26,641
Corporate asset capital expenditures	1,007		810
Capitalized indirect costs(1)	907		1,089
Total capital spending activity	$	30,230	$	28,540

(1)Amount includes internal salaries and related benefits of personnel who work directly on capital projects as well as capitalized interest expense.

Our underwritten incremental yields on development and redevelopment projects are expected to range between 9% - 11%. Our current in process projects represent an estimated total investment of $36.3 million, and the total underwritten incremental yield range on this estimated investment is approximately 9.5% - 10.5%. Actual incremental yields may vary


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									39

Table of Contents

from our underwritten incremental yield range based on the actual total cost to complete a project and its actual incremental annual NOI at stabilization. See “Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators and Defined Terms” and “Part II, Item 1A. Risk Factors” of this filing on Form 10-Q for further information.

ACQUISITION ACTIVITY—We continually monitor the commercial real estate market for properties that have future growth potential, are located in attractive demographic markets, and support our business objectives. ~~Given the uncertainty around the COVID-19 pandemic as well as the resulting market conditions,~~The following table highlights our property acquisitions (dollars in thousands):


	Six Months Ended June 30,
	2021		2020
Number of properties acquired	2		—
Number of outparcels acquired(1)	3		2
Total acquisition price	$	40,459	$	4,343

(1)Outparcels acquired are adjacent to shopping centers that we expect acquisition activity to remain low for the remainder of 2020. During the six months ended June 30, 2020, we acquired two parcels of land, as described in Note 4 to the consolidated financial statements, 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.own.

~~Disposition and Contribution Activity~~DISPOSITION ACTIVITY—We are actively evaluating our portfolio of assets for opportunities to make strategic dispositions of assets that no longer meet our growth and investment objectives or assets that have stabilized in order to capture their value. We expect to continue to make strategic dispositions during ~~2020, though~~ the ~~volume will likely be less than anticipated due to the impact~~remainder of ~~the COVID-19 pandemic and the resulting economic downturn.~~2021. The following table highlights our property dispositions (dollars in thousands):


	Six Months Ended June 30,
	2021		2020
Number of properties sold(1)	13		4
Number of outparcels sold(2)(3)	1		—
Proceeds from sale of real estate	$	119,638	$	25,778
Gain (loss) on sale of property, net(4)	18,713		(1,436)

(1)We retained an outparcel for one property sold during the six months ended June 30, ~~2020~~2021, and ~~2019 (dollars~~therefore the sale did not result in a reduction in our total property count.

(2)One outparcel sold during the six months ended June 30, 2021 was the only remaining portion of one of our properties, and ~~square feet~~therefore the sale resulted in ~~thousands):~~

a reduction in our total property count.

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
(3)In addition to the one outparcel sold during the six months ended June 30, 2021, a tenant at one of our properties exercised a bargain purchase option to acquire a parcel of land that we previously owned. This generated minimal proceeds for us.

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


⁽¹⁾PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q			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.						40

Table of Contents

~~Distributions~~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~~2021 and ~~2019,~~2020, are as follows (in thousands):

Cash distributions to OP unit holders

Net cash provided by operating activities

~~Cash distributions to OP unit holders~~

~~Net cash provided by operating activities~~

Cash distributions to common stockholders

Core FFO⁽¹⁾

Distributions reinvested through the DRIP



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

~~During 2020, we~~We paid monthly distributions ~~monthly~~ of ~~$0.05583344~~$0.085 per share, or $1.02 annualized, for the months of December ~~2019~~2020, and each month beginning January ~~February, and March 2020 on~~2021 through July 2021. On August 4, 2021, the Board authorized a ~~cash basis. The timing and~~monthly distribution in the amount of ~~distributions is determined by our Board and is influenced in part by our intention~~$0.085 per share payable on September 1, 2021 to ~~comply with REIT requirements~~stockholders of record at the ~~Internal Revenue Code, as well as our results~~close of ~~operations, our general financial condition, general economic conditions, and other factors.~~ business on August 16, 2021.

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

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

DRIP AND THE SRP—On ~~March 27, 2020,~~August 4, 2021, as a result of our underwritten IPO, our Board ~~temporarily suspended stockholder distributions, which became effective after~~approved 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 operationtermination of the DRIP and the SRP. The DRIP has been suspended since April 2021. The SRP, which was limited to repurchases resulting from the ~~Board considered various factors, including the impact that the COVID-19 pandemic~~DDI of stockholders, has been suspended since March 2021, 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~~SRP for standard repurchases had been suspended since August 2019.

~~condition, liquidity sources, and capital needs. The suspension~~


PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q									41

Table of ~~distributions and share repurchases is expected to be re-evaluated at the November Board meeting.~~Contents

~~Cash Flow Activities~~CASH FLOW ACTIVITIES—As of June 30, ~~2020,~~2021, we had cash and cash equivalents and restricted cash of ~~$79.3~~$111.4 million, a net cash decrease of ~~$15.8~~$20.5 million during the six months ended June 30, ~~2020.~~2021.

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,												Six Months Ended June 30,
	2020			2019			$ Change			% Change			2021		2020		$ Change		% Change
Net cash provided by operating activities	$	89,906		$	100,069		$	(10,163	)	(10.2	)%	Net cash provided by operating activities	$	129,897	$	89,906	$	39,991	44.5	%
Net cash used in investing activities	(6,466		)	(26,987		)	20,521			(76.0	)%
Net cash provided by (used in) investing activities												Net cash provided by (used in) investing activities	49,837		(6,466)		56,303		NM
Net cash used in financing activities	(99,218		)	(104,830		)	5,612			(5.4	)%	Net cash used in financing activities	(200,270)		(99,218)		(101,052)		101.8	%


Balance Sheet Information	Balance Sheet Location	June 30, 2021		December 31, 2020
ROU assets, net - operating leases	Investment in Real Estate	$	4,003	$	3,867
ROU assets, net - operating and finance leases	Other Assets, Net	1,190		1,438
Operating lease liability	Accounts Payable and Other Liabilities	5,619		5,731
Finance lease liability	Debt Obligations, Net	127		164



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



	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


	Six Months Ended June 30, 2021
	Fair Value		Weighted-Average Useful Life
In-place leases	$	4,155	7
Above-market leases	52		5
Below-market leases	(1,652)		6


	June 30, 2020			December 31, 2019				June 30, 2021		December 31, 2020
Other assets, net:							Other assets, net:
Deferred leasing commissions and costs	$	40,172		$	38,738		Deferred leasing commissions and costs	$	44,428	$	41,664
Deferred financing expenses	13,971			13,971
Deferred financing expenses(1)							Deferred financing expenses(1)	13,971		13,971
Office equipment, ROU assets, and other	21,222			19,430			Office equipment, ROU assets, and other	22,699		21,578
Corporate intangible assets	4,883			4,883			Corporate intangible assets	6,804		6,804
Total depreciable and amortizable assets	80,248			77,022			Total depreciable and amortizable assets	87,902		84,017
Accumulated depreciation and amortization	(40,706		)	(35,055		)	Accumulated depreciation and amortization	(50,014)		(45,975)
Net depreciable and amortizable assets	39,542			41,967			Net depreciable and amortizable assets	37,888		38,042
Accounts receivable, net⁽¹⁾	53,265			46,125
Accounts receivable, net(2)							Accounts receivable, net(2)	37,151		46,893
Accounts receivable - affiliates	935			728			Accounts receivable - affiliates	522		543
Deferred rent receivable, net	30,542			29,291
Derivative assets	—			2,728
Deferred rent receivable, net(3)							Deferred rent receivable, net(3)	35,760		32,298
Prepaid expenses and other	10,990			7,851			Prepaid expenses and other	11,735		8,694
Investment in third parties							Investment in third parties	3,000		0
Total other assets, net	$	135,274		$	128,690		Total other assets, net	$	126,056	$	126,470



	Six Months Ended June 30, 2020 and 2019
	Common Stock					APIC			AOCI			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
	Shares		Amount			APIC			AOCI			Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
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	(1,146	)	(11		)	(12,663		)	—			—			(12,674		)	—			(12,674		)
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	64		1			856			—			—			857			2,730			3,587
Conversion of noncontrolling interests	1,888		19			20,880			—			—			20,899			(20,899		)	—
Net loss	—		—			—			—			(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

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


⁽¹⁾			~~During the~~ ~~six~~ ~~months ended~~ ~~June 30, 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 lessor controlled an option requiring us to purchase the land subject to the lease. Our valuation of the ROU asset and lease liability as of December 31, 2019 for this ground lease reflected the assumption that the lessor would exercise this option and that we would purchase the underlying land asset.


⁽¹⁾	~~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 property count.~~


⁽¹⁾PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q			~~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.~~						12


									Interest Rate(1)	June 30, 2021			December 31, 2020
	Interest Rate⁽¹⁾	June 30, 2020			December 31, 2019
Revolving credit facility⁽²⁾	LIBOR + 1.4%	$	—		$	—
Term loans⁽³⁾	2.58% - 4.59%	1,622,500			1,652,500
Revolving credit facility								Revolving credit facility	LIBOR + 1.4%	$	0		$	0
Term loans(2)								Term loans(2)	1.3% - 4.6%	1,622,500			1,622,500
Secured loan facilities	3.35% - 3.52%	395,000			395,000			Secured loan facilities	3.4% - 3.5%	395,000			395,000
Mortgages	3.45% - 7.91%	319,654			324,578			Mortgages	3.5% - 7.2%	223,868			290,022
Finance lease liability		312			443			Finance lease liability		127			164
Assumed market debt adjustments, net		(1,352		)	(1,218		)	Assumed market debt adjustments, net		(1,553)			(1,543)
Deferred financing expenses, net		(15,395		)	(17,204		)	Deferred financing expenses, net		(11,710)			(13,538)
Total		$	2,320,719		$	2,354,099		Total		$	2,228,232		$	2,292,605

Weighted-average interest rate								Weighted-average interest rate		2.9		%	3.1		%


⁽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.



	June 30, 2020			December 31, 2019
As to interest rate:⁽¹⁾
Fixed-rate debt	$	1,756,966		$	2,122,021
Variable-rate debt	580,500			250,500
Total	$	2,337,466		$	2,372,521
As to collateralization:
Unsecured debt	$	1,622,500		$	1,652,500
Secured debt	714,966			720,021
Total	$	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~~ 7 ~~and~~ 12).


⁽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.~~


	June 30, 2021				December 31, 2020
	Recorded Principal Balance(1)		Fair Value		Recorded Principal Balance(1)		Fair Value

Term loans	$	1,612,031	$	1,631,088	$	1,610,204	$	1,621,902
Secured portfolio loan facilities	391,371		411,209		391,131		404,715
Mortgages(2)	224,830		234,766		291,270		303,647
Total	$	2,228,232	$	2,277,063	$	2,292,605	$	2,330,264



	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


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


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


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


⁽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.



	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


	Originally Reported		Current(1)
Q2 2020	86	%	93	%
Q3 2020	94	%	96	%
Q4 2020	95	%	97	%
Q1 2021	95	%	98	%
Q2 2021	N/A		98	%



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


	June 30, 2020						June 30, 2021
Joint Venture	Ownership Percentage	Number of Properties	ABR⁽¹⁾		GLA⁽²⁾	Joint Venture	Ownership Percentage	Number of Properties	ABR		GLA
Grocery Retail Partners I						Grocery Retail Partners I	14%	20	$	29,339	2,211
Necessity Retail Partners	20%	7	$	11,962	851	Necessity Retail Partners	20%	2	3,989		228
Grocery Retail Partners I	15%	17	24,926		1,905
Grocery Retail Partners II	10%	3	3,858		312


⁽¹⁾PHILLIPS EDISON & COMPANY JUNE 30, 2021 FORM 10-Q			~~We calculate ABR as monthly contractual rent as of~~ ~~June 30, 2020, multiplied by 12 months.~~


⁽²⁾			~~GLA is defined as the portion of the total square feet of a building that is available for leasing.~~24



			June 30, ~~2020~~2021
~~Essential~~Essential/Necessity Retail and Services:
Grocery			~~35.5~~35.4		%
~~Banks~~Medical/pharmacy			~~2.4~~2.7		%
~~Dollar stores~~Banks			~~2.2~~2.4		%
~~Pet supply~~Dollar stores			2.2		%
~~Medical~~Pet supply			1.9		%
Hardware/~~Automotive~~automotive			~~1.6~~1.7		%
Wine, beer, and liquor			1.4		%
~~Pharmacy~~			~~1.0~~	%
Other essential	~~2.9~~2.7		%
Total ~~essential~~Essential/Necessity-based retail and services⁽¹⁾			~~51.1~~50.4		%
~~Restaurants:~~Other Necessity:
Quick service - restaurant			~~9.5~~9.7		%
~~Full service~~Beauty and hair care			~~5.8~~4.9		%
~~Total restaurants~~Health care services			~~15.3~~4.0		%
Other ~~Retail and Services:~~necessity			3.5		%
~~Services~~			~~16.2~~	%
~~Soft goods~~	~~12.9~~	%
~~Fitness~~	~~3.3~~	%
~~Entertainment~~	~~1.2~~	%
~~Total other retail and services~~	~~33.6~~	%
Total ABR from other Necessity	~~100.0~~22.1		%


Total ABR from Necessity-based goods and services	72.5	%

Other Retail Stores:
⁽¹⁾Soft goods(2)	~~Includes neighbors that we believe are considered to be essential~~12.4	%
Full service - restaurant	6.4	%
Fitness and lifestyle services(3)	5.2	%
Other retail(4)	3.5	%
Total ABR from other 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.services	27.5	%
Total ABR	100.0	%


Neighbor(1)	ABR		% of ABR		Leased Square Feet	% of Leased Square Feet		Number of Locations(2)
Kroger	$	25,804	6.6	%	3,244	11.0	%	59
Publix	22,032		5.7	%	2,241	7.6	%	56
Ahold Delhaize	17,323		4.4	%	1,240	4.2	%	23
Albertsons-Safeway	16,804		4.3	%	1,599	5.4	%	29
Walmart	8,933		2.3	%	1,770	6.0	%	13
Giant Eagle	7,293		1.9	%	738	2.5	%	11
TJX Companies	5,060		1.3	%	428	1.5	%	15
Sprouts Farmers Market	5,000		1.3	%	334	1.1	%	11
Raley's	3,884		1.0	%	253	0.9	%	4
Dollar Tree	3,628		0.9	%	370	1.3	%	39
SUPERVALU	3,209		0.8	%	336	1.1	%	5
Subway Group	2,731		0.7	%	111	0.4	%	79
Anytime Fitness, Inc.	2,623		0.7	%	171	0.6	%	35
Schnucks	2,545		0.7	%	249	0.8	%	4
Southeastern Grocers	2,514		0.6	%	281	1.0	%	7
Lowe's	2,469		0.6	%	369	1.3	%	4
Kohl's Corporation	2,241		0.6	%	365	1.2	%	4
Food 4 Less (PAQ)	2,215		0.6	%	119	0.4	%	2
Save Mart	2,174		0.6	%	258	0.9	%	5
Petco Animal Supplies, Inc.	2,118		0.5	%	127	0.3	%	11
Total	$	140,600	36.1	%	14,603	49.5	%	416



	June 30, 2020
Neighbor⁽¹⁾	ABR		% of ABR		Leased Square Feet	% of Leased Square Feet		Number of Locations⁽²⁾
Kroger	$	26,837	6.8	%	3,466	11.2	%	66
Publix	22,022		5.6	%	2,241	7.3	%	56
Ahold Delhaize	17,496		4.5	%	1,278	4.1	%	25
Albertsons-Safeway	16,104		4.1	%	1,629	5.3	%	31
Walmart	8,932		2.3	%	1,770	5.7	%	13
Giant Eagle	8,117		2.1	%	823	2.7	%	12
Sprouts Farmers Market	4,885		1.2	%	334	1.1	%	11
TJX Companies	4,727		1.2	%	428	1.4	%	15
Dollar Tree	4,023		1.0	%	437	1.4	%	44
Raley's	3,884		1.0	%	253	0.8	%	4
SUPERVALU	3,402		0.9	%	370	1.2	%	7
Subway Group	3,057		0.8	%	126	0.4	%	91
Schnuck's	3,025		0.8	%	328	1.1	%	5
Save Mart	2,619		0.7	%	309	1.0	%	6
Southeastern Grocers	2,599		0.7	%	291	0.9	%	8
Anytime Fitness, Inc.	2,590		0.7	%	173	0.6	%	37
Lowe's	2,407		0.6	%	371	1.2	%	4
Kohl's Corporation	2,255		0.6	%	365	1.2	%	4
Food 4 Less (PAQ)	2,215		0.6	%	119	0.4	%	2
Petco Animal Supplies, Inc.	2,104		0.5	%	127	0.4	%	11
	$	143,300	36.7	%	15,238	49.4	%	452


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


⁽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.