UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, ~~2022~~2023

☐ 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)


(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

Common stock, par value $0.01 per share

PECO

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	☑	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 ~~113.9~~117.3 million shares of the registrant’s Common Stock, $0.01 par value per share, outstanding as of April ~~29, 2022.~~26, 2023.

PHILLIPS EDISON & COMPANY, INC. FORM 10-Q


TABLE OF CONTENTS

PART I.
ITEM 1.		FINANCIAL STATEMENTS (CONDENSED AND UNAUDITED)	2
		CONSOLIDATED BALANCE SHEETS AS OF M ARCH 31 ~~2022~~, 202 3 AND DECEMBER 31, 20212	2
		CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, ~~2022~~2023 AND 20212	3
		CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE MONTHS ENDED MARCH 31,~~, 202~~2 2023 AND 20212	4
		CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 3 1 ~~, 202~~2 31, 2023 AND 20212	5
		NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2022~~
	NOTE 1	ORGANIZATION	7
	NOTE 2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	7
	NOTE 3	LEASES	8
	NOTE 4	REAL ESTATE ACTIVITY	9
	NOTE 5	OTHER ASSETS, NET	10
	NOTE 6	DEBT OBLIGATIONS	11
	NOTE 7	DERIVATIVES AND HEDGING ACTIVITIES	11
	NOTE 8	COMMITMENTS AND CONTINGENCIES	12
	NOTE 9	EQUITY	1213
	NOTE 10	EARNINGS PER SHARE	14
	NOTE 11	RELATED PARTY TRANSACTIONS	14
	NOTE 12	FAIR VALUE MEASUREMENTS	15
	NOTE 13	SUBSEQUENT EVENTS	17
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 4.		CONTROLS AND PROCEDURES	33

PART II.
ITEM 1.		LEGAL PROCEEDINGS	33
ITEM 1A.		RISK FACTORS	3433
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	34
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES	34
ITEM 4.		MINE SAFETY DISCLOSURES	34
ITEM 5.		OTHER INFORMATION	34
ITEM 6.		EXHIBITS	35
		SIGNATURES	36


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									1


w PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, ~~2022~~2023 AND DECEMBER 31, ~~2021~~2022

(Condensed and Unaudited)

(In thousands, except per share amounts)


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Investment in real estate:	Investment in real estate:					Investment in real estate:
Land and improvements	Land and improvements	$	1,611,991	$	1,586,993	Land and improvements	$	1,701,404	$	1,674,133
Building and improvements	Building and improvements	3,423,548		3,355,433		Building and improvements	3,639,646		3,572,146
In-place lease assets	In-place lease assets	460,127		452,504		In-place lease assets	478,477		471,507
Above-market lease assets	Above-market lease assets	69,187		68,736		Above-market lease assets	72,524		71,954
Total investment in real estate assets	Total investment in real estate assets	5,564,853		5,463,666		Total investment in real estate assets	5,892,051		5,789,740
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(1,161,965)		(1,110,426)		Accumulated depreciation and amortization	(1,373,124)		(1,316,743)
Net investment in real estate assets	Net investment in real estate assets	4,402,888		4,353,240		Net investment in real estate assets	4,518,927		4,472,997
Investment in unconsolidated joint ventures	Investment in unconsolidated joint ventures	30,491		31,326		Investment in unconsolidated joint ventures	26,584		27,201
Total investment in real estate assets, net	Total investment in real estate assets, net	4,433,379		4,384,566		Total investment in real estate assets, net	4,545,511		4,500,198
Cash and cash equivalents	Cash and cash equivalents	5,063		92,585		Cash and cash equivalents	6,405		5,478
Restricted cash	Restricted cash	12,406		22,944		Restricted cash	5,559		11,871
Goodwill	Goodwill	29,066		29,066		Goodwill	29,066		29,066
Other assets, net	Other assets, net	153,720		138,050		Other assets, net	200,373		188,879
Real estate investments and other assets held for sale		6,547		1,557
Total assets	Total assets	$	4,640,181	$	4,668,768	Total assets	$	4,786,914	$	4,735,492

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Liabilities:	Liabilities:					Liabilities:
Debt obligations, net	Debt obligations, net	$	1,876,208	$	1,891,722	Debt obligations, net	$	1,967,252	$	1,896,594
Below-market lease liabilities, net	Below-market lease liabilities, net	107,869		107,526		Below-market lease liabilities, net	111,007		109,799
Earn-out liability		—		52,436
Derivative liabilities		2,217		24,096
Accounts payable and other liabilities						Accounts payable and other liabilities	111,471		113,185
Deferred income	Deferred income	21,941		19,145		Deferred income	24,243		18,481
Accounts payable and other liabilities		94,079		97,229
Liabilities of real estate investments held for sale		198		288
Total liabilities	Total liabilities	2,102,512		2,192,442		Total liabilities	2,213,973		2,138,059
Commitments and contingencies (see Note 8)	Commitments and contingencies (see Note 8)	—		—		Commitments and contingencies (see Note 8)	—		—
Equity:	Equity:					Equity:
Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and
outstanding at March 31, 2022 and December 31, 2021		—		—
Common stock, $0.01 par value per share, 650,000 shares authorized, 113,819 and 19,550
shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		1,138		196
Class B common stock, $0.01 par value per share, 350,000 shares authorized, zero and 93,665
shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		—		936
Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at March 31, 2023 and December 31, 2022						Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at March 31, 2023 and December 31, 2022	—		—
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 117,259 and 117,126 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Common stock, $0.01 par value per share, 1,000,000 shares authorized, 117,259 and 117,126 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	1,172		1,171
Additional paid-in capital (“APIC”)	Additional paid-in capital (“APIC”)	3,276,151		3,264,038		Additional paid-in capital (“APIC”)	3,382,368		3,383,978
Accumulated other comprehensive loss (“AOCI”)		(160)		(24,819)
Accumulated other comprehensive income (“AOCI”)						Accumulated other comprehensive income (“AOCI”)	15,181		21,003
Accumulated deficit	Accumulated deficit	(1,111,673)		(1,090,837)		Accumulated deficit	(1,186,074)		(1,169,665)
Total stockholders’ equity	Total stockholders’ equity	2,165,456		2,149,514		Total stockholders’ equity	2,212,647		2,236,487
Noncontrolling interests	Noncontrolling interests	372,213		326,812		Noncontrolling interests	360,294		360,946
Total equity	Total equity	2,537,669		2,476,326		Total equity	2,572,941		2,597,433
Total liabilities and equity	Total liabilities and equity	$	4,640,181	$	4,668,768	Total liabilities and equity	$	4,786,914	$	4,735,492

See notes to consolidated financial statements.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									2

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, ~~2022~~2023 AND ~~2021~~2022

(Condensed and Unaudited)

(In thousands, except per share amounts)


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
Revenues:	Revenues:						Revenues:
Rental income	Rental income		$	138,748	$	127,623	Rental income		$	147,728	$	138,748
Fees and management income	Fees and management income		2,461		2,286		Fees and management income		2,478		2,461
Other property income	Other property income		954		472		Other property income		858		954
Total revenues	Total revenues		142,163		130,381		Total revenues		151,064		142,163
Operating Expenses:	Operating Expenses:						Operating Expenses:
Property operating	Property operating		23,320		22,202		Property operating		25,062		23,320
Real estate taxes	Real estate taxes		17,491		16,573		Real estate taxes		18,056		17,491
General and administrative	General and administrative		11,532		9,341		General and administrative		11,533		11,532
Depreciation and amortization	Depreciation and amortization		57,226		55,341		Depreciation and amortization		58,498		57,226
Impairment of real estate assets			—		5,000
Total operating expenses	Total operating expenses		109,569		108,457		Total operating expenses		113,149		109,569
Other:	Other:						Other:
Interest expense, net	Interest expense, net		(18,199)		(20,063)		Interest expense, net		(19,466)		(18,199)
Gain on disposal of property, net	Gain on disposal of property, net		1,368		13,841		Gain on disposal of property, net		942		1,368
Other expense, net	Other expense, net		(4,365)		(15,585)		Other expense, net		(755)		(4,365)
Net income	Net income		11,398		117		Net income		18,636		11,398
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests		(1,319)		(14)		Net income attributable to noncontrolling interests		(2,017)		(1,319)
Net income attributable to stockholders	Net income attributable to stockholders		$	10,079	$	103	Net income attributable to stockholders		$	16,619	$	10,079
Earnings per share of common stock:	Earnings per share of common stock:						Earnings per share of common stock:
Net income per share attributable to stockholders - basic and diluted (see Note 10)	Net income per share attributable to stockholders - basic and diluted (see Note 10)		$	0.09	$	0.00	Net income per share attributable to stockholders - basic and diluted (see Note 10)		$	0.14	$	0.09

Comprehensive income:	Comprehensive income:						Comprehensive income:
Net income	Net income		$	11,398	$	117	Net income		$	18,636	$	11,398
Other comprehensive income:
Other comprehensive (loss) income:							Other comprehensive (loss) income:
Change in unrealized value on interest rate swaps	Change in unrealized value on interest rate swaps		27,573		12,120		Change in unrealized value on interest rate swaps		(6,499)		27,573
Comprehensive income	Comprehensive income		38,971		12,237		Comprehensive income		12,137		38,971
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests		(1,319)		(14)		Net income attributable to noncontrolling interests		(2,017)		(1,319)
Change in unrealized value on interest rate swaps attributable to noncontrolling interests	Change in unrealized value on interest rate swaps attributable to noncontrolling interests		(2,702)		(1,509)		Change in unrealized value on interest rate swaps attributable to noncontrolling interests		704		(2,702)
Reallocation of comprehensive loss upon conversion of noncontrolling interests	Reallocation of comprehensive loss upon conversion of noncontrolling interests		(212)		$	—	Reallocation of comprehensive loss upon conversion of noncontrolling interests		(27)		(212)
Comprehensive income attributable to stockholders	Comprehensive income attributable to stockholders		$	34,738	$	10,714	Comprehensive income attributable to stockholders		$	10,797	$	34,738

See notes to consolidated financial statements.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									3

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, ~~2022~~2023 AND ~~2021~~2022

(Condensed and Unaudited)

(In thousands, except per share amounts)


		Three Months Ended March 31, 2022 and 2021																									Three Months Ended March 31, 2023 and 2022
		Common Stock			Class B Common Stock			APIC				AOCI		Accumulated Deficit				Total Stockholders’ Equity		Noncontrolling Interests				Total Equity			Common Stock						Class B Common Stock					APIC			AOCI		Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
		Shares	Amount		Shares	Amount
Balance at January 1, 2021		—	$	—	93,279	$	2,798			$	2,739,358					$	(52,306)					$	(999,491)					$	1,690,359		$	325,570		$	2,015,929
Dividend reinvestment plan (“DRIP”)		—	—		280	8		7,360				—		—				7,368		—				7,368
Share repurchases		—	—		(24)	—		(123)				—		—				(123)		—				(123)
Change in unrealized value on interest rate swaps		—	—		—	—		—				10,611		—				10,611		1,509				12,120
Common distributions declared, $0.255 per share		—	—		—	—		—				—		(23,767)				(23,767)		—				(23,767)
Distributions to noncontrolling interests		—	—		—	—		—				—		—				—		(3,319)				(3,319)
Share-based compensation		—	—		47	1		325				—		—				326		784				1,110
Other		—	—		—	—		(29)				—		—				(29)		—				(29)
Net income		—	—		—	—		—				—		103				103		14				117
Balance at March 31, 2021		—	$	—	93,582	$	2,807	$	2,746,891			$	(41,695)	$	(1,023,155)			$	1,684,848	$	324,558			$	2,009,406
																											Shares			Amount			Shares			Amount		APIC			AOCI		Accumulated Deficit			Total Stockholders’ Equity			Noncontrolling Interests			Total Equity
Balance at January 1, 2022	Balance at January 1, 2022	19,550	$	196	93,665	$	936	$	3,264,038			$	(24,819)	$	(1,090,837)			$	2,149,514	$	326,812			$	2,476,326	Balance at January 1, 2022	19,550			$	196		93,665			$	936
Conversion of Class B common stock	Conversion of Class B common stock	93,665	936		(93,665)	(936)		—				—		—				—		—				—		Conversion of Class B common stock	93,665			936			(93,665)			(936)				—					—			—			—			—	—
Change in unrealized value on interest rate swaps	Change in unrealized value on interest rate swaps	—	—		—	—		—				24,871		—				24,871		2,702				27,573		Change in unrealized value on interest rate swaps	—			—			—			—		—			24,871		—			24,871			2,702			27,573
Common distributions declared, $0.27 per share	Common distributions declared, $0.27 per share	—	—		—	—		—				—		(30,915)				(30,915)		—				(30,915)		Common distributions declared, $0.27 per share	—			—			—			—		—			—		(30,915)			(30,915)			—			(30,915)
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—		—	—		—				—		—				—		(4,104)				(4,104)		Distributions to noncontrolling interests	—			—			—			—		—			—		—			—			(4,104)			(4,104)
Share-based compensation	Share-based compensation	71	1		—	—		467				—		—				468		2,678				3,146		Share-based compensation	71			1			—			—		467			—		—			468			2,678			3,146
Conversion of noncontrolling interests	Conversion of noncontrolling interests	533	5		—	—		17,313				—		—				17,318		(17,318)				—		Conversion of noncontrolling interests	533			5			—			—		11,646			(212)		—			11,439			(11,439)			—
Reallocation of operating partnership interests		—	—		—	—		(5,667)				(212)		—				(5,879)		5,879				—
Settlement of earn-out liability	Settlement of earn-out liability	—	—		—	—		—				—		—				—		54,245				54,245		Settlement of earn-out liability	—			—			—			—		—			—		—			—			54,245			54,245
Net income	Net income	—	—		—	—		—				—		10,079				10,079		1,319				11,398		Net income	—			—			—			—		—			—		10,079			10,079			1,319			11,398
Balance at March 31, 2022	Balance at March 31, 2022	113,819	$	1,138	—	$	—	$	3,276,151			$	(160)	$	(1,111,673)			$	2,165,456	$	372,213			$	2,537,669	Balance at March 31, 2022	113,819			$	1,138		—			$	—	$	3,276,151		$	(160)	$	(1,111,673)		$	2,165,456		$	372,213		$	2,537,669

Balance at January 1, 2023																										Balance at January 1, 2023	117,126			$	1,171		—			$	—	$	3,383,978		$	21,003	$	(1,169,665)		$	2,236,487		$	360,946		$	2,597,433
Change in unrealized value on interest rate swaps																										Change in unrealized value on interest rate swaps	—			—			—			—		—			(5,795)		—			(5,795)			(704)			(6,499)
Common distributions declared, $0.2799 per share																										Common distributions declared, $0.2799 per share	—			—			—			—		—			—		(33,028)			(33,028)			—			(33,028)
Distributions to noncontrolling interests																										Distributions to noncontrolling interests	—			—			—			—		—			—		—			—			(4,073)			(4,073)
Share-based compensation																										Share-based compensation	133			1			—			—		(1,610)			—		—			(1,609)			2,081			472
Conversion of noncontrolling interests																										Conversion of noncontrolling interests	—			—			—			—		—			(27)		—			(27)			27			—
Net income																										Net income	—			—			—			—		—			—		16,619			16,619			2,017			18,636
Balance at March 31, 2023																										Balance at March 31, 2023	117,259			$	1,172		—			$	—	$	3,382,368		$	15,181	$	(1,186,074)		$	2,212,647		$	360,294		$	2,572,941

See notes to consolidated financial statements.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									4

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, ~~2022~~2023 AND ~~2021~~2022

(Condensed and Unaudited)

(In thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	Net income	$	11,398	$	117	Net income	$	18,636	$	11,398
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate assets	Depreciation and amortization of real estate assets	56,321		54,341		Depreciation and amortization of real estate assets	57,953		56,321
Impairment of real estate assets		—		5,000

Depreciation and amortization of corporate assets	Depreciation and amortization of corporate assets	905		1,000		Depreciation and amortization of corporate assets	545		905
Net amortization of above- and below-market leases	Net amortization of above- and below-market leases	(1,002)		(838)		Net amortization of above- and below-market leases	(1,228)		(1,002)
Amortization of deferred financing expenses	Amortization of deferred financing expenses	801		1,227		Amortization of deferred financing expenses	894		801
Amortization of debt and derivative adjustments	Amortization of debt and derivative adjustments	586		354		Amortization of debt and derivative adjustments	667		586
Gain on disposal of property, net	Gain on disposal of property, net	(1,368)		(13,841)		Gain on disposal of property, net	(942)		(1,368)
Change in fair value of earn-out liability	Change in fair value of earn-out liability	1,809		16,000		Change in fair value of earn-out liability	—		1,809
Straight-line rent	Straight-line rent	(1,818)		(1,424)		Straight-line rent	(2,566)		(1,818)
Share-based compensation	Share-based compensation	3,146		1,110		Share-based compensation	472		3,146
Return on investment in unconsolidated joint ventures	Return on investment in unconsolidated joint ventures	—		1,546		Return on investment in unconsolidated joint ventures	11		—
Other	Other	487		(567)		Other	(350)		487
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Other assets, net	Other assets, net	(10,978)		(10,787)		Other assets, net	(16,715)		(10,978)
Accounts payable and other liabilities	Accounts payable and other liabilities	(66)		(4,487)		Accounts payable and other liabilities	5,386		(66)
Net cash provided by operating activities	Net cash provided by operating activities	60,221		48,751		Net cash provided by operating activities	62,763		60,221
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions	Real estate acquisitions	(101,440)		(39,850)		Real estate acquisitions	(69,431)		(101,440)
Capital expenditures	Capital expenditures	(18,608)		(13,537)		Capital expenditures	(23,878)		(18,608)
Proceeds from sale of real estate, net	Proceeds from sale of real estate, net	12,770		58,356		Proceeds from sale of real estate, net	1,091		12,770
Investment in third parties		—		(3,000)
Return of investment in unconsolidated joint ventures	Return of investment in unconsolidated joint ventures	781		2,721		Return of investment in unconsolidated joint ventures	606		781
Net cash (used in) provided by investing activities		(106,497)		4,690
Insurance proceeds for property damage claims						Insurance proceeds for property damage claims	194		—
Net cash used in investing activities						Net cash used in investing activities	(91,418)		(106,497)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility	Proceeds from revolving credit facility	102,000		—		Proceeds from revolving credit facility	162,000		102,000
Payments on revolving credit facility	Payments on revolving credit facility	(56,000)		—		Payments on revolving credit facility	(76,000)		(56,000)
Payments on mortgages and loans payable	Payments on mortgages and loans payable	(62,515)		(16,505)		Payments on mortgages and loans payable	(25,477)		(62,515)
Distributions paid, net of DRIP		(30,926)		(24,296)
Distributions paid						Distributions paid	(33,276)		(30,926)
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(4,343)		(4,530)		Distributions to noncontrolling interests	(3,977)		(4,343)
Repurchases of Class B common stock		—		(77,765)
Other		—		(29)
Net cash used in financing activities		(51,784)		(123,125)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	23,270		(51,784)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(98,060)		(69,684)		NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(5,385)		(98,060)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:	CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:					CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning of period	Beginning of period	115,529		131,937		Beginning of period	17,349		115,529
End of period	End of period	$	17,469	$	62,253	End of period	$	11,964	$	17,469

RECONCILIATION TO CONSOLIDATED BALANCE SHEETS:	RECONCILIATION TO CONSOLIDATED BALANCE SHEETS:					RECONCILIATION TO CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents	Cash and cash equivalents	$	5,063	$	20,258	Cash and cash equivalents	$	6,405	$	5,063
Restricted cash	Restricted cash	12,406		41,995		Restricted cash	5,559		12,406
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	17,469	$	62,253	Cash, cash equivalents, and restricted cash at end of period	$	11,964	$	17,469


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									5

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE THREE MONTHS ENDED MARCH 31, ~~2022~~2023 AND ~~2021~~2022

(Condensed and Unaudited)

(In thousands)


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:					SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	Cash paid for interest	$	14,849	$	18,891	Cash paid for interest	$	15,166	$	14,849
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:	SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:					SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:
Settlement of earn-out liability	Settlement of earn-out liability	54,245		—		Settlement of earn-out liability	—		54,245
Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities	Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities	—		194		Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities	888		—
Accrued capital expenditures	Accrued capital expenditures	6,486		3,442		Accrued capital expenditures	7,570		6,486
Assumed debt obligations, net						Assumed debt obligations, net	9,619		—
Assumed below-market debt						Assumed below-market debt	443		—
Change in distributions payable	Change in distributions payable	(11)		(7,897)		Change in distributions payable	(248)		(11)
Change in distributions payable - noncontrolling interests	Change in distributions payable - noncontrolling interests	(239)		(1,211)		Change in distributions payable - noncontrolling interests	96		(239)
Change in accrued share repurchase obligation		—		(77,642)
Distributions reinvested		—		7,368

See notes to consolidated financial statements.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									6

Phillips Edison & Company, Inc.

Notes to Consolidated Financial Statements

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


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 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 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 two unconsolidated institutional joint ventures, Grocery Retail Partners I LLC (“GRP I”) and Necessity Retail Partners (“NRP”), in which we have a partial ownership ~~interest,~~interests, and one private fund (collectively, the “Managed Funds”) as of March 31, ~~2022.~~2023.

As of March 31, ~~2022,~~2023, we wholly-owned ~~269~~275 real estate properties. Additionally, we owned a 14% interest in ~~Grocery Retail Partners~~GRP I, ~~LLC (“GRP I”), a joint venture that~~which owned 20 ~~properties, and~~properties.

NRP—As of March 31, 2023, we owned a 20% equity interest in ~~Necessity Retail Partners (“NRP”),~~NRP. NRP was initially formed in March 2016 pursuant to the terms of a joint venture ~~that owned 1 property.~~

~~Underwritten Initial Public Offering—On July 19, 2021,~~agreement between Phillips Edison Grocery Center REIT II, Inc. and an affiliate of TPG Real Estate and is set to expire seven years after the date of the joint venture contribution agreement unless otherwise extended by the members. In May 2022, we ~~closed our underwritten initial public offering (“underwritten IPO”), through which we issued 19.6 million shares, including~~sold the ~~underwriters’ overallotment election, of a new class of common stock, $0.01 par value per share, at an initial price to~~final property in the ~~public of $28.00 per share. As~~joint venture as a result of the ~~underwritten IPO,~~planned expiration in 2023. With the monetization of the joint venture, we ~~received gross proceeds~~exceeded the targeted return and as such were paid compensation of ~~$547.4 million.~~$0.1 million and $0.2 million during the three months ended March 31, 2023 and 2022, respectively, which is recorded in Fees and Management Income in our consolidated statements of operations and comprehensive income (“consolidated statements of operations”).


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 periods 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.

There were no changes to our significant accounting policies during the three months ended March 31, ~~2022,~~2023, except for those discussed below. For a full summary of our significant accounting policies, refer to our ~~2021~~2022 Annual Report on Form 10-K, filed with the ~~SEC~~U.S. Securities and Exchange Commission (“SEC”) on February ~~16, 2022.~~21, 2023.

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, ~~2021,~~2022, which are included in our ~~2021~~2022 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 months ended March 31, ~~2022~~2023 are not necessarily indicative of the operating results expected for the full year.

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

~~The basis of presentation of our shares of common stock is described as follows:~~

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

•Recapitalization—On June 18, 2021, our stockholders approved an amendment to our charter (the “Articles of Amendment”) that effected a 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


~~PHILLIPS EDISON & COMPANY~~ ~~MARCH 31, 2022 FORM 10-Q~~									7

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

Income Taxes—Our consolidated financial statements include the operations of wholly-owned subsidiaries that have jointly elected to be treated as taxable REIT subsidiary entities and are subject to U.S. federal, state, and local income taxes at regular corporate tax rates. We recognized an insignificant amount of federal, state, and local income tax expense for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, and we retain a full valuation allowance for our net deferred tax asset. All income tax amounts are included in Other Expense, Net on our consolidated statements of ~~operations and comprehensive income (“consolidated statements of operations”).~~operations.

Newly Adopted Accounting Pronouncements—There were no newly adopted accounting pronouncements during the three months ended March 31, ~~2022~~2023 that impacted the Company.


PHILLIPS EDISON & COMPANY MARCH 31, 2023 FORM 10-Q									7

Reclassifications—Certain prior period amounts have been reclassified to conform to current year presentation in the consolidated statements of equity. The reallocation of operating partnership interests is now reflected within Conversion of Noncontrolling Interests, as opposed to being presented as a separate financial statement line item. There was no impact to the Company’s financial position as a result of this reclassification.


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 (in thousands):


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
Rental income related to fixed lease payments(1)	Rental income related to fixed lease payments(1)		$	101,510	$	94,966	Rental income related to fixed lease payments(1)		$	108,864	$	101,510
Rental income related to variable lease payments(1)(2)	Rental income related to variable lease payments(1)(2)		33,467		31,401		Rental income related to variable lease payments(1)(2)		35,763		33,467
Straight-line rent amortization(3)	Straight-line rent amortization(3)		1,695		1,369		Straight-line rent amortization(3)		2,443		1,695
Amortization of lease assets	Amortization of lease assets		992		827		Amortization of lease assets		1,216		992
Lease buyout income	Lease buyout income		1,964		797		Lease buyout income		355		1,964
Adjustments for collectibility(4)	Adjustments for collectibility(4)		(880)		(1,737)		Adjustments for collectibility(4)		(913)		(880)
Total rental income	Total rental income		$	138,748	$	127,623	Total rental income		$	147,728	$	138,748

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

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

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

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

For the three months ended March 31, 2022 and 2021, we had net favorable changes to general reserves of $0.2 million and $2.3 million, respectively. Additionally, we had net unfavorable adjustments of $1.1 million and $4.0 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis.

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of March 31, ~~2022,~~2023, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements and tenants who have been moved to the cash basis of accounting for revenue recognition purposes, are as follows (in thousands):


Year	Year	Amount		Year	Amount
Remaining 2022		$	303,902
2023		374,916
Remaining 2023				Remaining 2023	$	326,815
2024	2024	322,431		2024	403,547
2025	2025	266,544		2025	346,840
2026	2026	201,848		2026	281,485
2027				2027	216,408
Thereafter	Thereafter	513,911		Thereafter	539,314
Total	Total	$	1,983,552	Total	$	2,114,409

No single tenant comprised 10% or more of our aggregate annualized base rent (“ABR”) as of March 31, ~~2022.~~2023. As of March 31, ~~2022,~~2023, our wholly-owned real estate investments in Florida and California represented ~~12.0%~~12.2% and ~~10.7%~~10.9% of our ABR, respectively. As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse weather or economic events in the Florida (see “Hurricane Ian” in Note 4) and California real estate markets.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									8


4. REAL ESTATE ACTIVITY

Acquisitions—The following table summarizes our real estate acquisition activity (dollars in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Number of properties acquired	Number of properties acquired	3		2		Number of properties acquired	4		3
Number of outparcels acquired(1)		—		2
Contract price	Contract price	$	100,400	$	39,605	Contract price	$	78,650	$	100,400
Total price of acquisitions(2)		101,440		39,850
Total price of acquisitions(1)						Total price of acquisitions(1)	69,431		101,440

(1)~~Outparcels acquired are adjacent to shopping centers that we own.~~

~~(2)~~Total price of acquisitions includes closing costs less credits and ~~credits.~~assumed debt obligations.

The aggregate purchase price of the assets acquired during the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 were allocated as follows (in thousands):


		March 31, 2022		March 31, 2021			March 31, 2023		March 31, 2022
ASSETS	ASSETS					ASSETS
Land and improvements	Land and improvements	$	30,274	$	23,305	Land and improvements	$	25,079	$	30,274
Building and improvements	Building and improvements	65,028		13,990		Building and improvements	49,853		65,028
In-place lease assets	In-place lease assets	8,557		4,155		In-place lease assets	592		8,557
Above-market lease assets	Above-market lease assets	708		52		Above-market lease assets	7,111		708
Below-market debt						Below-market debt	443		—
Total assets	Total assets	104,567		41,502		Total assets	83,078		104,567

LIABILITIES	LIABILITIES					LIABILITIES
Debt obligations, net						Debt obligations, net	9,619		—
Below-market lease liabilities	Below-market lease liabilities	3,127		1,652		Below-market lease liabilities	4,028		3,127
Total liabilities	Total liabilities	3,127		1,652		Total liabilities	13,647		3,127

Net assets acquired	Net assets acquired	$	101,440	$	39,850	Net assets acquired	$	69,431	$	101,440

The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles and below-market debt acquired during the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 are as follows (in years):


		March 31, 2022	March 31, 2021		March 31, 2023	March 31, 2022
Acquired in-place leases	Acquired in-place leases	14	7	Acquired in-place leases	12	14
Acquired above-market leases	Acquired above-market leases	6	5	Acquired above-market leases	8	6
Acquired below-market leases	Acquired below-market leases	24	6	Acquired below-market leases	18	24
Assumed below-market debt				Assumed below-market debt	2	—

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

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


	Three Months Ended March 31,
	2023		2022
Number of properties sold	—		2
Contract price	$	—	$	13,325
Proceeds from sale of real estate, net(1)(2)	1,091		12,770
Gain on disposal of property, net(2)	942		1,368

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

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

~~(3)~~(2)~~During~~Activity for the three months ended March 31, ~~2021, Gain on Disposal of Property, Net on the consolidated statements of operations includes miscellaneous write-off activity, which is not included in gain on sale of property, net, presented above.~~2023 was primarily related to land acquired from us by local authorities.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									9

~~Property Held~~Hurricane Ian - On September 28, 2022, Hurricane Ian struck the southeast United States and caused various amounts of damage to our properties located in the region. Based on our estimates at March 31, 2023, we expect to collect insurance proceeds of $1.0 million (net of deductibles and self-insurance of $1.7 million) equal to the replacement cost of the damaged properties. During 2022, we recorded gross cumulative accelerated depreciation of $2.7 million, which was reduced by expected insurance recoveries, for ~~Sale~~—damages sustained to the properties. We also recognized a receivable for estimated insurance recoveries in excess of the deductible. As of March 31, ~~2022~~2023, we have received no insurance recoveries and ~~December 31, 2021, 1 property was classified as held for sale. A property classified as held for sale~~have a receivable balance of $1.0 million, which is under contract to sell, with no substantive contingencies, and the prospective buyer had significant funds at risk. A summary of assets and liabilities for the properties held for sale as of March 31, 2022 and December 31, 2021 is below (in thousands):recorded in Other Assets, Net on our consolidated balance sheets.

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


5. OTHER ASSETS, NET

The following is a summary of Other Assets, Net outstanding as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, excluding amounts related to assets classified as held for sale (in thousands):


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Other assets, net:	Other assets, net:					Other assets, net:
Deferred leasing commissions and costs	Deferred leasing commissions and costs	$	45,688	$	44,968	Deferred leasing commissions and costs	$	50,253	$	49,687
Deferred financing expenses(1)	Deferred financing expenses(1)	4,898		4,898		Deferred financing expenses(1)	9,069		8,984
Office equipment, including capital lease assets, and other	Office equipment, including capital lease assets, and other	25,833		24,823		Office equipment, including capital lease assets, and other	23,132		23,051
Corporate intangible assets	Corporate intangible assets	6,690		6,706		Corporate intangible assets	6,692		6,692
Total depreciable and amortizable assets	Total depreciable and amortizable assets	83,109		81,395		Total depreciable and amortizable assets	89,146		88,414
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(42,867)		(41,236)		Accumulated depreciation and amortization	(48,407)		(47,483)
Net depreciable and amortizable assets	Net depreciable and amortizable assets	40,242		40,159		Net depreciable and amortizable assets	40,739		40,931
Accounts receivable, net(2)	Accounts receivable, net(2)	39,002		36,762		Accounts receivable, net(2)	43,471		37,274
Accounts receivable - affiliates	Accounts receivable - affiliates	638		711		Accounts receivable - affiliates	1,470		513
Deferred rent receivable, net(3)	Deferred rent receivable, net(3)	41,756		40,212		Deferred rent receivable, net(3)	54,729		52,141
Derivative assets	Derivative assets	5,365		—		Derivative assets	19,200		25,853
Prepaid expenses and other	Prepaid expenses and other	18,528		11,655		Prepaid expenses and other	22,745		14,575
Investment in third parties	Investment in third parties	3,000		3,000		Investment in third parties	9,800		9,800
Investment in marketable securities	Investment in marketable securities	5,189		5,551		Investment in marketable securities	8,219		7,792
Total other assets, net	Total other assets, net	$	153,720	$	138,050	Total other assets, net	$	200,373	$	188,879

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

(2)Net of ~~$4.1~~$2.8 million and ~~$3.5~~$3.0 million of general reserves for uncollectible amounts as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively. Receivables that were removed for tenants considered to be non-creditworthy were ~~$7.3~~$5.9 million and ~~$9.2~~$6.2 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(3)Net of ~~$5.8~~$4.0 million and ~~$4.7~~$4.2 million of receivables removed as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									10


6. DEBT OBLIGATIONS

The following is a summary of the outstanding principal balances and interest rates, which ~~include~~includes the effect of derivative financial instruments, for our debt obligations as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 (dollars in thousands):


		Interest Rate(1)	March 31, 2022			December 31, 2021				Interest Rate(1)	March 31, 2023			December 31, 2022
Revolving credit facility	Revolving credit facility	LIBOR + 1.1%	$	46,000		$	—		Revolving credit facility	SOFR + 1.1%	$	165,000		$	79,000
Term loans(2)	Term loans(2)	1.6% - 4.2%	955,000			955,000			Term loans(2)	2.5% - 6.0%	955,000			955,000
Senior unsecured notes due 2031	Senior unsecured notes due 2031	2.6%	350,000			350,000			Senior unsecured notes due 2031	2.6%	350,000			350,000
Secured loan facilities	Secured loan facilities	3.4% - 3.5%	395,000			395,000			Secured loan facilities	3.4% - 3.5%	395,000			395,000
Mortgages	Mortgages	3.5% - 6.4%	150,805			213,316			Mortgages	3.5% - 6.4%	117,549			133,199
Finance lease liability	Finance lease liability		762			766			Finance lease liability		529			585
Discount on notes payable	Discount on notes payable		(7,512)			(7,680)			Discount on notes payable		(6,828)			(7,001)
Assumed market debt adjustments, net	Assumed market debt adjustments, net		(1,546)			(1,530)			Assumed market debt adjustments, net		(1,512)			(1,226)
Deferred financing expenses, net	Deferred financing expenses, net		(12,301)			(13,150)			Deferred financing expenses, net		(7,486)			(7,963)
Total	Total		$	1,876,208		$	1,891,722		Total		$	1,967,252		$	1,896,594

Weighted-average interest rate(3)	Weighted-average interest rate(3)		3.2		%	3.3		%	Weighted-average interest rate(3)		3.8		%	3.6		%

(1)Interest rates are as of March 31, ~~2022.~~2023.

(2)Our term loans carry an interest rate of ~~LIBOR~~the Secured Overnight Financing Rate (“SOFR”) plus a spread. While most of the rates are fixed through the use of swaps, ~~there is~~ a portion of these loans ~~that~~ are not subject to a swap, and thus are still indexed to ~~LIBOR.~~SOFR.

(3)Includes the effects of derivative financial instruments that were effective as of March 31, 2023 and December 31, 2022 (see Notes 7 and 12).

~~2022~~2023 Debt Activity—During the three months ended March 31, ~~2022,~~2023, we ~~executed early repayments of $61.0~~repaid $25.4 million in mortgage debt.

Debt Allocation—The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments, discount on senior notes, and deferred financing expenses, net, and including the effects of derivative financial instruments as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 is summarized below (in thousands):


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
As to interest rate:	As to interest rate:					As to interest rate:
Fixed-rate debt(1)	Fixed-rate debt(1)	$	1,826,567	$	1,889,082	Fixed-rate debt(1)	$	1,618,078	$	1,633,784
Variable-rate debt	Variable-rate debt	71,000		25,000		Variable-rate debt	365,000		279,000
Total	Total	$	1,897,567	$	1,914,082	Total	$	1,983,078	$	1,912,784
As to collateralization:	As to collateralization:					As to collateralization:
Unsecured debt	Unsecured debt	$	1,351,000	$	1,305,000	Unsecured debt	$	1,470,000	$	1,384,000
Secured debt	Secured debt	546,567		609,082		Secured debt	513,078		528,784
Total	Total	$	1,897,567	$	1,914,082	Total	$	1,983,078	$	1,912,784

(1)Fixed-rate debt includes, and variable-rate debt excludes, the portion of such debt that has been hedged by interest rate derivatives. As of March 31, ~~2022, $930.0~~2023, $755 million in ~~variable rate~~variable-rate debt is hedged to a fixed rate for a weighted-average period of ~~1.9 years.~~1.3 years (see Notes 7 and 12).


7. DERIVATIVES AND HEDGING ACTIVITIES

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


PHILLIPS EDISON & COMPANY MARCH 31, 2023 FORM 10-Q									11

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

The changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in AOCI and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three


~~PHILLIPS EDISON & COMPANY~~ ~~MARCH 31, 2022 FORM 10-Q~~									11

months ended March 31, ~~2022~~2023 and ~~2021,~~2022, such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt. Amounts reported in AOCI related to these derivatives will be reclassified to Interest Expense, Net as interest payments are made on the variable-rate debt. During the next twelve months, we estimate that an additional ~~$3.2~~$15.5 million will be reclassified from AOCI as ~~an increase~~a decrease to Interest Expense, Net.

On March 15, 2023, we entered into an interest rate swap which has a notional amount of $200 million and swaps SOFR for a fixed rate of approximately 3.36% effective September 15, 2023 and maturing September 1, 2026.

The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 (dollars in thousands):


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Count	Count	5		5		Count	5		4
Notional amount(1)	Notional amount(1)	$	930,000	$	930,000	Notional amount(1)	$	755,000	$	755,000
Fixed LIBOR		1.3% - 2.9%		1.3% - 2.9%
Fixed SOFR						Fixed SOFR	1.2% - 3.4%		1.2% - 2.8%
Maturity date	Maturity date	2022-2025		2022 - 2025		Maturity date	2023-2026		2023-2025
Weighted-average term (in years)	Weighted-average term (in years)	1.6		1.9		Weighted-average term (in years)	2.1		1.6

(1) Notional amount includes only interest rate swaps that were effective as of March 31, 2023 and December 31, 2022.

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

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


	Three Months Ended March 31,
		2023		2022
Amount of (loss) gain recognized in Other Comprehensive (Loss) Income		$	(1,952)	$	22,899
Amount of (gain) loss reclassified from AOCI into Interest Expense, Net		(4,547)		4,674

Credit-risk-related Contingent Features—We have agreements with our derivative counterparties that contain provisions where, if we default, or are capable of being declared in default, on any of our indebtedness, we could also be declared to be in default on our derivative obligations. As of March 31, ~~2022,~~2023, the fair value of our derivatives in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk related to these agreements ~~was approximately $2.2 million.~~and approximated $0.2 million, are recorded in Accounts Payable and Other Liabilities on our consolidated balance sheets. As of March 31, ~~2022,~~2023, we had not posted any collateral related to these agreements and were not in breach of any agreement provisions. If we had breached any of these provisions, we could have been required to settle our obligations under the agreements at their termination value of ~~$2.2~~$0.2 million.


8. COMMITMENTS AND CONTINGENCIES

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

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

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

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


PHILLIPS EDISON & COMPANY MARCH 31, 2023 FORM 10-Q									12

As of March 31, ~~2022,~~2023, we had 4four letters of credit outstanding totaling approximately ~~$9.0~~$12.5 million to provide security for our obligations under Silver Rock’s insurance and reinsurance contracts.


9. EQUITY

General—The holders of common stock are entitled to 1one vote per share on all matters voted on by stockholders, including one vote per nominee in the election of ~~the Board.~~our Board of Directors (the “Board”). Our charter does not provide for cumulative voting in the election of directors.


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

At-the-Market Offering (“ATM”)—On February 10, 2022, we and the Operating Partnership entered into a sales agreement relating to the potential sale of shares of common stock pursuant to a continuous offering program. In accordance with the terms of the sales agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million from time to time through our sales agents, or, if applicable, as forward sellers. ~~As of~~During the three months ended March 31, 2023 and 2022, ~~we have issued zero shares under the ATM program.~~

~~Reverse Stock Split~~—On July 2, 2021, we effected a one-for-three reverse stock split. Concurrent with the reverse split, the Operating Partnership enacted a one-for-three reverse split of its outstanding OP units. Neither the number of authorized shares nor the par value of the common stock were impacted. As a result of the reverse split, every threeno shares of our common stock ~~or OP units~~ were ~~automatically combined and converted into one~~ issued ~~and outstanding share~~under the ATM program. As of March 31, 2023, $159.9 million of common stock ~~or OP unit rounded to~~remained available for issuance under the ~~nearest 1/100th share. The reverse stock split impacted all common stock and OP units proportionately and had no impact on any stockholder’s percentage ownership of common stock.~~ATM program.

Class B Common Stock—On June 18, 2021, our stockholders approved ~~Articles~~an amendment to our charter (the “Articles of ~~Amendment~~Amendment”) that effected ~~the Recapitalization,~~a change, wherein each share of our common stock outstanding at the time the ~~amendment~~Articles of Amendment became effective was converted into 1one share of a newly created class of Class B common ~~stock.~~stock (the “Recapitalization”).

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

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

~~Underwritten IPO—On July 19, 2021, we completed an underwritten IPO and issued 17.0 million shares of~~ We no longer have Class B common stock at an offering price to the public of $28.00 per share. We used a portion of the net proceeds to reduce our leverage and used the remaining amount to fund external growth with property acquisitions andauthorized for other general corporate uses. As part of the underwritten IPO, underwriters were granted an option exercisable within 30 days from July 14, 2021 to purchase up to an additional 2.6 million shares of common stock at the underwritten IPO price, less underwriting discounts and commissions. On July 29, 2021, the underwriters exercised their option. The underwritten IPO, including the underwriters’ overallotment election, resulted in gross proceeds of $547.4 million.issue.

Distributions—We declared 2023 monthly distributions of $0.0933 per common share and Operating Partnership unit (“OP unit”) for each month beginning January 2023 through April 2023. Distributions paid to stockholders and OP unit holders of record subsequent to March 31, ~~2022~~2023 were as follows (dollars in thousands, excluding per share amounts):

Month Date of Record Date Distribution Paid Monthly Distribution Rate Cash Distribution
March 3/15/2022 4/1/2022 $ 0.09 $ 11,520
April 4/15/2022 5/2/2022 0.09 11,520

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

Month

Date of Record

Date Distribution Paid

Monthly Distribution Rate

Cash Distribution

March

3/15/2023

4/3/2023

0.0933

12,226

April

4/17/2023

5/1/2023

0.0933

12,226

Convertible Noncontrolling Interests—As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we had approximately ~~14.5~~14.3 million and ~~13.4~~14.1 million outstanding non-voting OP units, respectively. Additionally, certain of our outstanding restricted share and performance share awards will result in the issuance of OP units upon vesting in future periods.

Under the terms of the Fourth Amended and Restated Agreement of Limited Partnership, OP unit holders may elect to cause the Operating Partnership to redeem their OP units. The Operating Partnership controls the form of the redemption, and may elect to redeem OP units for shares of our common stock, provided that the OP units have been outstanding for at least one year, or for cash. As the form of redemption for OP units is within our control, the OP units outstanding as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets.

On January 18, 2022, we issued approximately 1.6 million OP units in full settlement of the earn-out liability (see note 12).

The table below is a summary of our OP unit activity for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (dollars and shares in thousands):


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
OP units converted into shares of common stock(1)	OP units converted into shares of common stock(1)		533		—		OP units converted into shares of common stock(1)		—		533
Distributions paid on OP units(2)			$	4,104	$	3,319
Distributions declared on OP units(2)							Distributions declared on OP units(2)		$	4,073	$	4,104

(1)Prior to the Recapitalization, OP units were converted to shares of common stock at a 1:1 ratio. From the Recapitalization through January 18, 2022, OP units were converted into shares of our Class B common stock at a 1:1 ratio. On January 18, 2022, each share of our Class B common stock automatically converted into 1one share of our listed common stock, and going forward, OP units will be converted into shares of our common stock at a 1:1 ratio.

(2)Distributions ~~paid~~declared on OP units are included in Distributions to Noncontrolling Interests on the consolidated statements of ~~equity~~equity.

Share Repurchase Program—On August 3, 2022, our Board approved a new share repurchase program of up to $250 million of common stock. The program may be suspended or discontinued at any time, and ~~cash flows.~~does not obligate us to repurchase any dollar amount or particular number of shares. No share repurchases have been made to date under this program.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									13

~~Estimated Value per Share~~—Prior to our underwritten IPO, on April 29, 2021, our Board increased the estimated value per share (“EVPS”) of our common stock to $31.65 from $26.25 based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2021. We engaged a third-party valuation firm to provide a calculation of the range in EVPS of our common stock as of March 31, 2021, which reflected certain balance sheet assets and liabilities as of that date.

~~Dividend Reinvestment Plan and Share Repurchase Program (“SRP”)—On August 4, 2021, as a result of our underwritten IPO, our Board approved the termination of the DRIP and the SRP.~~


10. EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing Net Income Attributable to Stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity.

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


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021				2023		2022
Numerator:	Numerator:					Numerator:
Net income attributable to stockholders - basic	Net income attributable to stockholders - basic	$	10,079	$	103	Net income attributable to stockholders - basic		$	16,619	$	10,079
Net income attributable to convertible OP units(1)	Net income attributable to convertible OP units(1)	1,319		14		Net income attributable to convertible OP units(1)		2,017		1,319
Net income - diluted	Net income - diluted	$	11,398	$	117	Net income - diluted		$	18,636	$	11,398
Denominator:	Denominator:					Denominator:
Weighted-average shares - basic	Weighted-average shares - basic	113,571		93,490		Weighted-average shares - basic		117,223		113,571
OP units(1)	OP units(1)	14,558		13,354		OP units(1)		14,234		14,558
Dilutive restricted stock awards	Dilutive restricted stock awards	374		151		Dilutive restricted stock awards		486		374
Adjusted weighted-average shares - diluted	Adjusted weighted-average shares - diluted	128,503		106,995		Adjusted weighted-average shares - diluted		131,943		128,503
Earnings per common share:	Earnings per common share:					Earnings per common share:
Basic and diluted income per share	Basic and diluted income per share	$	0.09	$	0.00	Basic and diluted income per share		$	0.14	$	0.09

(1)OP units include units that are convertible into common stock or cash, at the Operating Partnership’s option. The Operating Partnership income or loss attributable to these OP units, which is included as a component of Net Income Attributable to Noncontrolling Interests on the consolidated statements of operations, has been added back in the numerator as these OP units were included in the denominator for all periods presented. OP units are allocated income on a consistent basis with the common stockholder and therefore have no dilutive impact to earnings per share of common stock.


11. RELATED PARTY TRANSACTIONS

Revenue—We have entered into agreements with the Managed Funds related to certain advisory, management, and administrative services we provide to their real estate assets in exchange for fees and reimbursement of certain expenses. Summarized below are amounts included in Fees and Management Income. The revenue includes the fees and reimbursements earned by us from the Managed Funds and other revenues that are not in the scope of ASC Topic 606, Revenue from Contracts with Customers, but that are included in this table for the purpose of disclosing all related party revenues (in thousands):


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
Recurring fees(1)	Recurring fees(1)		$	1,271	$	1,125	Recurring fees(1)		$	1,012	$	1,075
Transactional revenue and reimbursements(2)			394		468
Insurance premiums(3)			796		693
Realized performance income(2)							Realized performance income(2)		75		196
Transactional revenue and reimbursements(3)							Transactional revenue and reimbursements(3)		542		394
Insurance premiums(4)							Insurance premiums(4)		849		796
Total fees and management income	Total fees and management income		$	2,461	$	2,286	Total fees and management income		$	2,478	$	2,461

(1)Recurring fees include asset management fees and property management fees.

(2)Realized performance income includes fees received related to the achievement of certain performance targets in our NRP joint venture.

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

~~(3)~~(4)Insurance premium income includes amounts for reinsurance from third parties not affiliated with us.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									14

Tax Protection Agreement—Through our Operating Partnership, we are currently party to a tax protection agreement (the “2017 TPA”) with certain partners that contributed property to our Operating Partnership on October 4, 2017, among them certain of our executive officers, including Jeffrey S. Edison, our Chairman and Chief Executive Officer, under which the Operating Partnership ~~has~~ agreed to indemnify such partners for tax liabilities that could accrue to them personally related to our potential disposition of certain properties within our portfolio. The 2017 TPA will expire on October 4, 2027. On July 19, 2021, we entered into an additional tax protection agreement (the “2021 TPA”) with certain of our executive officers, including Mr. Edison. The 2021 TPA carries a term of four years and will become effective upon the expiration of the 2017 TPA. As of March 31, ~~2022,~~2023, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately ~~$143.3~~$147.8 million. The protection provided under the terms of the 2021 TPA will expire in 2031. We have not recorded any liability related to the 2017 TPA or the 2021 TPA on our consolidated balance sheets for any periods presented, nor recognized any expense since the inception of the 2017 TPA, owing to the fact that any potential liability under the agreements is controlled by us and we believe we will either (i) continue to own and operate the protected properties or (ii) be able to successfully complete tax-deferred exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (unless there is a change in applicable law) or complete other tax-efficient transactions to avoid any liability under the agreements.

Other Related Party Matters—~~We are the limited guarantor for up to $190 million, capped at $50 million in most instances, of debt for our NRP joint venture.~~ As of March 31, ~~2022, the outstanding loan balance related to our NRP joint venture was $15.3 million. As of March 31, 2022,~~2023, we were ~~also~~ the limited guarantor of a $175 million mortgage loan secured by GRP I properties. Our guaranty for ~~both~~ the ~~NRP and~~ GRP I debt is limited to being the non-recourse carveout guarantor and the environmental indemnitor. Further, ~~in both cases,~~ we are also party to an agreement with ~~our institutional joint venture partners~~GRP I in which any potential liability under such ~~guarantees~~guarantee will be apportioned between us and ~~our applicable joint venture partner~~GRP I based on our respective ownership percentages in the ~~applicable~~ joint venture. We have no liability recorded on our consolidated balance sheets for ~~either~~the guaranty as of March 31, ~~2022~~2023 and December 31, ~~2021.~~2022.


12. FAIR VALUE MEASUREMENTS

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

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

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

Debt Obligations—We estimate the fair value of our revolving credit facility, term loans, secured portfolio of loans, and mortgages by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by our lenders using Level 3 inputs. The discount rates used approximate current lending rates for loans or groups of loans with similar maturities and credit quality, assuming the debt is outstanding through maturity and considering the debt’s collateral (if applicable). We have utilized market information, as available, or present value techniques to estimate the amounts required to be disclosed. We estimate the fair value of our senior unsecured notes by using quoted prices in active markets, which are considered Level 1 inputs.

The following is a summary of borrowings as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


		March 31, 2022				December 31, 2021					March 31, 2023				December 31, 2022
		Recorded Principal Balance(1)		Fair Value		Recorded Principal Balance(1)		Fair Value			Recorded Principal Balance(1)		Fair Value		Recorded Principal Balance(1)		Fair Value
Revolving credit facility	Revolving credit facility	$	46,000	$	46,017	$	—	$	—	Revolving credit facility	$	165,000	$	165,677	$	79,000	$	79,299
Term loans	Term loans	943,949		955,934		943,127		955,919		Term loans	949,089		959,281		948,429		959,319
Senior unsecured notes due 2031	Senior unsecured notes due 2031	342,488		307,339		342,320		344,099		Senior unsecured notes due 2031	343,172		263,277		342,999		257,446
Secured portfolio loan facilities	Secured portfolio loan facilities	391,732		390,898		391,612		394,356		Secured portfolio loan facilities	392,214		343,049		392,093		343,921
Mortgages(2)	Mortgages(2)	152,039		157,036		214,663		221,741		Mortgages(2)	117,777		115,763		134,073		132,563
Total	Total	$	1,876,208	$	1,857,224	$	1,891,722	$	1,916,115	Total	$	1,967,252	$	1,847,047	$	1,896,594	$	1,772,548

(1)As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, recorded principal balances include: (i) net deferred financing fees of ~~$12.3~~$7.5 million and ~~$13.2~~$8.0 million; (ii) assumed market debt adjustments of $1.5 million and ~~$1.5~~$1.2 million; and (iii) notes payable discounts of ~~$7.5~~$6.8 million and ~~$7.7~~$7.0 million.

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


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									15

Recurring and Nonrecurring Fair Value Measurements—Our marketable securities ~~earn-out liability,~~ and interest rate swaps are measured and recognized at fair value on a recurring basis, while certain real estate assets and liabilities are measured and recognized at fair value as needed. Fair value measurements that occurred as of and during the three months ended March 31, ~~2022~~2023 and the year ended December 31, ~~2021~~2022 were as follows (in thousands):


		March 31, 2022						December 31, 2021							March 31, 2023						December 31, 2022
		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3			Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Recurring	Recurring													Recurring
Marketable securities(1)	Marketable securities(1)	$	5,189	$	—	$	—	$	5,551	$	—	$	—	Marketable securities(1)	$	8,219	$	—	$	—	$	7,792	$	—	$	—
Derivative assets(1)	Derivative assets(1)	—		5,365		—		—		—		—		Derivative assets(1)	—		19,200		—		—		25,853		—
Derivative liabilities(2)	Derivative liabilities(2)	—		(2,217)		—		—		(24,096)		—		Derivative liabilities(2)	—		184		—		—		—		—
Earn-out liability		—		—		—		—		(52,436)		—
Nonrecurring	Nonrecurring													Nonrecurring
Impaired real estate assets, net(3)	Impaired real estate assets, net(3)	$	—	$	—	$	—	$	—	$	24,000	$	—	Impaired real estate assets, net(3)	$	—	$	—	$	—	$	—	$	5,225	$	—

(1)We record marketable securities and derivative assets in Other Assets, Net on our consolidated balance sheets.

(2)We record derivative liabilities in ~~Derivative~~Accounts Payable and Other Liabilities on our consolidated balance sheets.

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

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

Derivative Instruments—As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we had interest rate swaps that fixed ~~LIBOR~~SOFR on portions of our unsecured term loan facilities.

All interest rate swap agreements are measured at fair value on a recurring basis. The valuation of these instruments is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

To comply with the provisions of ASC Topic 820, Fair Value Measurement, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although we determined that the significant inputs used to value our derivatives fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our counterparties and our own credit risk utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties. However, as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives. As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

~~Earn-out~~—As part of our acquisition of Phillips Edison Limited Partnership (“PELP”) in 2017, an earn-out structure was established which gave PELP the opportunity to earn additional OP units based upon the potential achievement of certain performance targets subsequent to the acquisition. After the expiration of certain provisions in 2019, PELP was eligible to earn a minimum of 1.0 million and a maximum of approximately 1.7 million OP units as contingent consideration based on the timing and valuation of a liquidity event for PECO. Certain of these performance targets were tied to the post-underwritten IPO trading price of our common stock. The number of OP units awarded varied based on the highest volume weighted average price per share of our common stock over any 30 consecutive trading day period during the 180 days following the underwritten IPO commencement (the “liquidity event price per share”):

•~~if the liquidity event price per share was greater than or equal to $33.60, PELP would receive approximately 1.7 million OP units;~~

•if the liquidity event price per share was less than $33.60 but greater than or equal to $26.40, PELP would receive a number of OP units equal to (i) 1.0 million plus (ii) the product of (A) approximately 0.7 million and (B) the quotient obtained by dividing the liquidity event price per share in excess of $26.40 by $7.20; or

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

Prior to the second quarter of 2021, we estimated the fair value of this liability on a quarterly basis using the Monte Carlo method. Following our underwritten IPO, the only remaining variable for calculating final amounts to be paid under the earn-out agreement was the liquidity event price per share. On January 11, 2022, at the end of the 180-day period following our underwritten IPO commencement, we finalized the fair value of the earn-out liability and issued approximately 1.6 million OP units in full settlement of the liability with a value of $54.2 million. We recorded expense of $1.8 million and $16.0 million,


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

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

Real Estate Asset Impairment—Our real estate assets are measured and recognized at fair value, less costs to sell for held-for-sale properties, on a nonrecurring basis dependent upon when we determine an impairment has occurred. During the three months ended March 31, 2021, we impaired assets that were under contract at a disposition price that was less than carrying value, or that had other operational impairment indicators. The valuation technique used for the fair value of all impaired real estate assets was the expected net sales proceeds, which we consider to be a Level 2 input in the fair value hierarchy. There were no impairment charges recorded during the three months ended March 31, 2023 and March 31, 2022.

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

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


PHILLIPS EDISON & COMPANY MARCH 31, 2023 FORM 10-Q									16

Earn-out—As part of our acquisition of Phillips Edison Limited Partnership (“PELP”) in 2017, an earn-out structure was established which gave PELP the opportunity to earn additional OP units based upon the potential achievement of certain performance targets subsequent to the acquisition. On January 11, 2022, we finalized the fair value of the earn-out liability based on our share price and issued approximately 1.6 million OP units in full settlement of the liability with a value of $54.2 million. Changes in the fair value of the earn-out liability were recorded to Other Expense, Net in the consolidated statements of operations. We recorded no expense for the ~~following~~three months ended March 31, 2023 and $1.8 million in expense ~~upon impairment of real estate assets (in thousands):~~

Three Months Ended March 31,
2022 2021
Impairment of real estate assets $ — $ 5,000
for the three months ended March 31, 2022.


13. SUBSEQUENT EVENTS

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


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									17

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

The following discussion and analysis should be read in conjunction with our accompanying consolidated financial statements and notes thereto and the more detailed information contained in our ~~2021~~2022 Annual Report on Form 10-K, filed with the SEC on February ~~16, 2022.~~21, 2023. All references to “Notes” throughout this document refer to the footnotes to the consolidated financial statements in “Item 1. Financial Statements”. See also “Cautionary Note Regarding Forward-Looking Statements” below.


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q of Phillips Edison & Company, Inc. (“we,” the “Company,” “our,” or “us”) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995 (collectively with the Securities Act and the Exchange Act, the “Acts”). These forward-looking statements are based on current expectations, estimates, and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, management of our company and involve uncertainties that could significantly affect our financial results. We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Acts. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “can,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “possible,” “initiatives,” “focus,” “seek,” “objective,” “goal,” “strategy,” “plan,” “potential,” “potentially,” “preparing,” “projected,” “future,” “long-term,” “once,” “should,” “could,” “would,” “might,” “uncertainty,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the SEC. Such statements include, but are not limited to: (a) statements about our plans, strategies, initiatives, and prospects; (b) statements about ~~the COVID-19 pandemic; (c) statements about~~ our underwritten incremental yields; and ~~(d)~~(c) statements about our future results of operations, capital expenditures, and liquidity. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation: (i) changes in national, regional, or local economic climates; (ii) local market conditions, including an oversupply of space in, or a reduction in demand for, properties similar to those in our portfolio; (iii) vacancies, changes in market rental rates, and the need to periodically repair, renovate, and re-let space; (iv) competition from other available shopping centers and the attractiveness of properties in our portfolio to our tenants; (v) the financial stability of our tenants, including, without limitation, their ability to pay rent; (vi) our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due; (vii) increases in our borrowing costs as a result of changes in interest rates and other factors; (viii) potential liability for environmental matters; (ix) damage to our properties from catastrophic weather and other natural events, and the physical effects of climate change; (x) our ability and willingness to maintain our qualification as a REIT in light of economic, market, legal, tax, and other considerations; (xi) changes in tax, real estate, environmental, and zoning laws; (xii) information technology security breaches; (xiii) our corporate responsibility initiatives; (xiv) loss of key executives; (xv) the concentration of our portfolio in a limited number of industries, geographies, or investments; (xvi) the economic, political, and social impact of, and uncertainty relating to, ~~the COVID-19 pandemic;~~pandemics or other health crises; (xvii) our ability to re-lease our properties on the same or better terms, or at all, in the event of non-renewal or in the event we exercise our right to replace an existing tenant; (xviii) the loss or bankruptcy of our tenants; (xix) to the extent we are seeking to dispose of properties, our ability to do so at attractive prices or at all; and (xx) the impact of inflation on us and on our tenants. Additional important factors that could cause actual results to differ are described in the filings made from time to time by the Company with the SEC and include the risk factors and other risks and uncertainties described in our ~~2021~~2022 Annual Report on Form 10-K, filed with the SEC on February ~~16, 2022,~~21, 2023, as updated from time to time in our periodic and/or current reports filed with the SEC, which are accessible on the SEC’s website at www.sec.gov. Therefore, such statements are not intended to be a guarantee of our performance in future periods.

Except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.


KEY PERFORMANCE INDICATORS AND DEFINED TERMS

We use certain key performance indicators (“KPIs”), which include both financial and nonfinancial metrics, to measure the performance of our operations. We believe these KPIs, as well as the core concepts and terms defined below, allow our Board, management, and investors to analyze trends around our business strategy, financial condition, and results of operations in a manner that is focused on items unique to the retail real estate industry.

We do not consider our non-GAAP measures to be alternatives to measures required in accordance with GAAP. Certain non-GAAP measures should not be viewed as an alternative measure of our financial performance as they may not reflect the operations of our entire portfolio, and they may not reflect the impact of general and administrative expenses, depreciation and amortization, interest expense, other income (expense), or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our shopping centers that could materially impact our results from operations. Additionally, certain non-GAAP measures should not be considered as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions, and may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate our business in the manner currently contemplated. Accordingly, non-GAAP measures should be reviewed in connection with other GAAP measurements and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Other REITs may use different methodologies for calculating similar non-GAAP measures, and accordingly, our non-GAAP measures may not be comparable to other REITs.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									18

Our KPIs and terminology can be grouped into three key areas:

PORTFOLIO—Portfolio metrics help management to gauge the health of our centers overall and individually.

•Anchor space—We define an anchor space as a space greater than or equal to 10,000 square feet of gross leasable area (“GLA”).

•ABR—We use ABR to refer to the monthly contractual base rent at the end of the period multiplied by twelve months.

•ABR Per Square Foot (“PSF”)—This metric is calculated by dividing ABR by leased GLA. Increases in ABR PSF can be an indication of our ability to create rental rate growth in our centers, as well as an indication of demand for our spaces, which generally provides us with greater leverage during lease negotiations.

•GLA—We use GLA to refer to the total occupied and unoccupied square footage of a building that is available for tenants (whom we refer to as a “Neighbor” or our “Neighbors”) or other retailers to lease.

•Inline space—We define an inline space as a space containing less than 10,000 square feet of GLA.

•Leased Occupancy—This metric is calculated as the percentage of total GLA for which a lease has been signed regardless of whether the lease has commenced or the Neighbor has taken possession. High occupancy is an indicator of demand for our spaces, which generally provides us with greater leverage during lease negotiations.

•Underwritten incremental unlevered yield—This reflects the yield we target to generate from a project upon expected stabilization and is calculated as the estimated incremental NOI for a project at stabilization divided by its estimated net project investment. The estimated incremental NOI is the difference between the estimated annualized NOI we target to generate by a project upon stabilization and the estimated annualized NOI without the planned improvements. Underwritten incremental unlevered yield does not include peripheral impacts, such as lease rollover risk or the impact on the ~~long term~~long-term value of the property upon sale or disposition. Actual incremental unlevered yields may vary from our underwritten incremental unlevered yield range based on the actual total cost to complete a project and its actual incremental NOI at stabilization.

LEASING—Leasing is a key driver of growth for our company.

•Comparable lease—We use this term to refer to a lease with consistent terms that is executed for substantially the same space that has been vacant less than twelve months.

•Comparable rent spread—This metric is calculated as the percentage increase or decrease in first-year ABR (excluding any free rent or escalations) on new or renewal leases (excluding options) where the lease was considered a comparable lease. This metric provides an indication of our ability to generate revenue growth through leasing activity.

•Cost of executing new leases—We use this term to refer to certain costs associated with new leasing, namely, leasing commissions, tenant improvement costs, and tenant concessions.

•Portfolio retention rate—This metric is calculated by dividing (i) the total square feet of retained Neighbors with current period lease expirations by (ii) the total square feet of leases expiring during the period. The portfolio retention rate provides insight into our ability to retain Neighbors at our shopping centers as their leases approach expiration. Generally, the costs to retain an existing Neighbor are lower than costs to replace with a new Neighbor.

•Recovery rate—This metric is calculated by dividing (i) total recovery income by (ii) total recoverable expenses during the period. A high recovery rate is an indicator of our ability to recover certain property operating expenses and capital costs from our Neighbors.

FINANCIAL PERFORMANCE—In addition to financial metrics calculated in accordance with GAAP, such as net income or cash flows from operations, we utilize non-GAAP metrics to measure our operational and financial performance. See “Non-GAAP Measures” below for further discussion on the following metrics.

•Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (“Adjusted EBITDAre”)—To arrive at Adjusted EBITDAre, we adjust EBITDAre, as defined below, to exclude certain recurring and non-recurring items 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; (iv) transaction and acquisition expenses; and (v) realized performance income. We use EBITDAre and Adjusted EBITDAre as additional measures of operating performance which allow us to compare earnings independent of capital structure and evaluate debt leverage and fixed cost coverage.

•Core Funds From Operations Attributable to Stockholders and OP Unit Holders (“Core FFO”)—To arrive at Core FFO, we adjust Nareit FFO, ~~Attributable to Stockholders and OP Unit Holders,~~ as defined below, to exclude certain recurring and non-recurring items including, but not limited to: (i) depreciation and amortization of corporate assets; (ii) changes in the fair value of the earn-out liability; (iii) amortization of unconsolidated joint venture basis differences; (iv) gains or losses on the extinguishment or modification of debt and other; (v) other impairment charges; (vi) transaction and acquisition expenses; and (vii) realized performance income. We believe Nareit FFO provides insight into our operating performance as it excludes certain items that are not indicative of such performance. Core FFO provides further insight into the sustainability of our 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).

•EBITDAre—The National Association of Real Estate Investment Trusts (“Nareit”) defines EBITDAre as net income (loss) computed in accordance with GAAP before: (i) interest expense; (ii) income tax expense; (iii) depreciation and amortization; (iv) gains or losses from disposition of depreciable property; and (v) impairment write-downs of depreciable property. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDAre on the same basis.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									19

•Equity Market Capitalization—We calculate equity market capitalization as the total dollar value of all outstanding shares using the closing price for the applicable date.

•Nareit ~~FFO—~~FFO Attributable to Stockholders and OP Unit Holders (“Nareit FFO”) —Nareit defines ~~FFO~~Funds From Operations (“FFO”) as net income (loss) computed in accordance with GAAP, excluding: (i) gains (or losses) from sales of property and gains (or losses) from change in control; (ii) depreciation and amortization related to real estate; (iii) impairment losses on real estate and impairments of in-substance real estate investments in investees that are driven by measurable decreases in the fair value of the depreciable real estate held by the unconsolidated partnerships and joint ventures; and (iv) adjustments for unconsolidated partnerships and joint ventures, calculated to reflect FFO on the same basis. We calculate Nareit FFO in a manner consistent with the Nareit definition.

•Net Debt—We calculate net debt as total debt, excluding discounts, market adjustments, and deferred financing expenses, less cash and cash equivalents.

•Net Debt to Adjusted EBITDAre—This ratio is calculated by dividing net debt by Adjusted EBITDAre (included on an annualized basis within the calculation). It provides insight into our leverage rate based on earnings and is not impacted by fluctuations in our equity price.

•Net Debt to Total Enterprise Value—This ratio is calculated by dividing net debt by total enterprise value, as defined below. It provides insight into our capital structure and usage of debt.

•NOI—We calculate NOI as total operating revenues, adjusted to exclude non-cash revenue items, less property operating expenses and real estate taxes. NOI provides insight 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).

•Same-Center—We use this term to refer to a property, or portfolio of properties, that have been owned and operational for the entirety of each reporting period (i.e., since January 1, ~~2021)~~2022).

•Total Enterprise Value—We calculate total enterprise value as our net debt plus our equity market capitalization on a fully diluted basis.


OVERVIEW

We are a REIT and one of the nation’s largest owners and operators of omni-channel grocery-anchored shopping centers. Our portfolio primarily consists of neighborhood centers anchored by the #1 or #2 grocer tenants by sales within their respective formats by trade area. Our Neighbors are a mix of national, regional, and local retailers that primarily provide necessity-based goods and services.

As of March 31, ~~2022,~~2023, we owned equity interests in ~~290~~295 shopping centers, including ~~269~~275 wholly-owned shopping centers and 2120 shopping centers owned through ~~two~~one unconsolidated joint ~~ventures,~~venture, which comprised approximately ~~33.1~~33.7 million square feet in 31 states. In addition to managing our shopping centers, our third-party investment management business provides comprehensive real estate management services to the Managed Funds.

In May 2022, we sold the final property in the NRP joint venture as a result of the planned expiration of the joint venture in 2023. With the monetization of the joint venture, we exceeded the targeted return and as such were paid compensation of $0.1 million and $0.2 million during the three months ended March 31, 2023 and 2022, respectively, which is recorded in Fees and Management Income in our consolidated statements of operations.

PORTFOLIO AND LEASING STATISTICS—Below are statistical highlights of our wholly-owned portfolio as of March 31, ~~2022~~2023 and ~~2021~~2022 (dollars and square feet in thousands):


		March 31, 2022			March 31, 2021				March 31, 2023			March 31, 2022
Number of properties	Number of properties	269			278			Number of properties	275			269
Number of states	Number of states	31			31			Number of states	31			31
Total square feet	Total square feet	30,813			31,306			Total square feet	31,456			30,813
ABR	ABR	$	412,518		$	386,971		ABR	$	445,611		$	412,518
% ABR from omni-channel grocery-anchored shopping centers	% ABR from omni-channel grocery-anchored shopping centers	97.3		%	96.4		%	% ABR from omni-channel grocery-anchored shopping centers	97.2		%	97.3		%
Leased occupancy %:	Leased occupancy %:							Leased occupancy %:
Total portfolio spaces	Total portfolio spaces	96.2		%	94.8		%	Total portfolio spaces	97.5		%	96.2		%
Anchor spaces	Anchor spaces	98.1		%	97.3		%	Anchor spaces	99.3		%	98.1		%
Inline spaces	Inline spaces	92.6		%	89.8		%	Inline spaces	94.3		%	92.6		%
Average remaining lease term (in years)(1)	Average remaining lease term (in years)(1)	4.5			4.6			Average remaining lease term (in years)(1)	4.5			4.5

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


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									20

The following table details information for our unconsolidated joint ~~ventures~~venture as of March 31, ~~2022,~~2023, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):

March 31, 2022
Joint Venture Ownership Percentage Number of Properties ABR GLA
Grocery Retail Partners I 14% 20 $ 30,090 2,210
Necessity Retail Partners 20% 1 2,270 116


	March 31, 2023
Joint Venture	Ownership Percentage	Number of Properties	ABR		GLA
GRP I	14%	20	$	30,996	2,213

LEASE EXPIRATIONS—The following chart shows the aggregate scheduled lease expirations, excluding our Neighbors who are occupying space on a temporary basis, after March 31, ~~2022~~2023 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ~~ventures:~~venture:

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

See “Results of Operations - Leasing Activity” below for further discussion of leasing activity.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									21

PORTFOLIO TENANCY—We define national Neighbors as those Neighbors that operate in at least three states. Regional Neighbors are defined as those Neighbors that have at least three locations in fewer than three states. The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ~~ventures,~~venture, by Neighbor type as of March 31, ~~2022:~~2023:

The following charts present the composition of our portfolio by Neighbor industry as of March 31, ~~2022:~~2023:


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									22

NECESSITY-BASED GOODS AND SERVICES—We define ~~“Necessity-based~~“necessity-based goods and services” as goods and services that are indispensable, necessary, or common for day-to-day living, or that tend to be inelastic (i.e., those for which the demand does not change based on a consumer’s income level). We estimate that approximately ~~72%~~71% of our ABR, including the pro rata portion attributable to properties owned through our unconsolidated joint ~~ventures,~~venture, is generated from Neighbors providing necessity-based goods and services.

TOP ~~TWENTY~~20 NEIGHBORS—The following table presents our top ~~twenty~~20 Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ~~ventures,~~venture, as of March 31, ~~2022~~2023 (dollars and square feet in thousands):


Neighbor(1)	Neighbor(1)	ABR		% of ABR		Leased Square Feet	% of Leased Square Feet		Number of Locations(2)	Neighbor(1)	ABR		% of ABR		Leased Square Feet	% of Leased Square Feet		Number of Locations(2)
Kroger	Kroger	$	27,411	6.6	%	3,366	11.2	%	61	Kroger	$	27,830	6.2	%	3,411	11.0	%	62
Publix	Publix	23,621		5.7	%	2,314	7.7	%	57	Publix	25,996		5.8	%	2,510	8.1	%	61
Albertsons	Albertsons	18,215		4.4	%	1,709	5.7	%	31	Albertsons	18,343		4.1	%	1,709	5.5	%	31
Ahold Delhaize	Ahold Delhaize	17,662		4.2	%	1,249	4.2	%	23	Ahold Delhaize	17,738		3.9	%	1,249	4.0	%	23
Walmart	Walmart	8,933		2.1	%	1,770	5.9	%	13	Walmart	8,971		2.0	%	1,770	5.7	%	13
Giant Eagle	Giant Eagle	7,732		1.9	%	828	2.8	%	12	Giant Eagle	7,384		1.6	%	759	2.4	%	10
Sprouts Farmers Market	Sprouts Farmers Market	6,494		1.6	%	421	1.4	%	14	Sprouts Farmers Market	6,538		1.5	%	422	1.4	%	14
TJX Companies	TJX Companies	5,500		1.3	%	465	1.6	%	16	TJX Companies	6,137		1.4	%	516	1.7	%	18
Raley's	Raley's	3,884		0.9	%	253	0.8	%	4	Raley's	4,592		1.0	%	288	0.9	%	5
Dollar Tree	Dollar Tree	3,265		0.8	%	329	1.1	%	35	Dollar Tree	3,641		0.8	%	343	1.1	%	36
SUPERVALU	SUPERVALU	3,244		0.8	%	336	1.1	%	5	SUPERVALU	3,280		0.7	%	336	1.1	%	5
Subway Group	Subway Group	2,516		0.6	%	99	0.3	%	70	Subway Group	2,498		0.6	%	95	0.3	%	66
Lowe's	Lowe's	2,469		0.6	%	369	1.3	%	4	Lowe's	2,470		0.5	%	369	1.2	%	4
Anytime Fitness, Inc.	Anytime Fitness, Inc.	2,366		0.6	%	150	0.5	%	31	Anytime Fitness, Inc.	2,458		0.5	%	146	0.5	%	30
Starbucks Corporation										Starbucks Corporation	2,448		0.5	%	57	0.2	%	32
Food 4 Less (PAQ)										Food 4 Less (PAQ)	2,305		0.5	%	119	0.4	%	2
Pet Supplies Plus										Pet Supplies Plus	2,253		0.5	%	148	0.5	%	19
Kohl's Corporation	Kohl's Corporation	2,241		0.5	%	365	1.2	%	4	Kohl's Corporation	2,241		0.5	%	365	1.2	%	4
Food 4 Less (PAQ)		2,215		0.5	%	119	0.4	%	2
Save Mart		2,174		0.5	%	258	0.9	%	5
Petco Animal Supplies, Inc.		2,136		0.5	%	127	0.4	%	11
Franchise Group, Inc.		2,084		0.5	%	145	0.5	%	24
Office Depot										Office Depot	2,237		0.5	%	179	0.6	%	8
United Parcel Service	United Parcel Service	2,013		0.5	%	79	0.3	%	62	United Parcel Service	2,230		0.5	%	83	0.3	%	65
Total	Total	$	146,175	35.1	%	14,751	49.3	%	484	Total	$	151,590	33.6	%	14,874	48.1	%	508

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

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


RESULTS OF OPERATIONS

KNOWN TRENDS AND UNCERTAINTIES ~~OF THE COVID-19 PANDEMIC~~—Due to changing economic conditions, rising interest rates, labor shortages, and supply chain limitations, there has been an increase in wages and costs for materials. The ~~COVID-19 pandemic resulted~~resulting increased inflation may negatively impact some of our Neighbors and increase our operating and construction costs. Substantially all of our leases contain provisions designed to mitigate the adverse effect of inflation, including requirements for Neighbors to pay their allocable share of operating expenses that includes common area maintenance, utilities, real estate taxes, insurance, and certain capital expenditures. Additionally, many of our leases are for terms of less than ten years, which allows us to target increased rents to current market rates upon renewal.

In addition to inflation, macroeconomic and geopolitical risks may create challenges that cause current market conditions in ~~reduced revenues beginning with~~ the ~~second quarter~~United States to worsen. The policies implemented to address these risks, including raising interest rates, could result in adverse impacts on the United States economy, including a slowing of 2020 and continued through early 2021. Our collections returned to pre-COVID levels during the second half of 2021 and have continued through the first quarter of 2022. We believe our collections have stabilized, which will reduce volatility in our earnings during 2022 as compared to 2021.growth or potentially a recession.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									23

SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED MARCH 31, ~~2022~~2023 AND ~~2021~~2022


		Three Months Ended March 31,				Favorable (Unfavorable) Change					Three Months Ended March 31,				Favorable (Unfavorable) Change
(Dollars in thousands)	(Dollars in thousands)	2022		2021		$		%(1)		(Dollars in thousands)	2023		2022		$		%
Revenues:	Revenues:									Revenues:
Rental income	Rental income	$	138,748	$	127,623	$	11,125	8.7	%	Rental income	$	147,728	$	138,748	$	8,980	6.5	%
Fees and management income	Fees and management income	2,461		2,286		175		7.7	%	Fees and management income	2,478		2,461		17		0.7	%
Other property income	Other property income	954		472		482		102.1	%	Other property income	858		954		(96)		(10.1)	%
Total revenues	Total revenues	142,163		130,381		11,782		9.0	%	Total revenues	151,064		142,163		8,901		6.3	%
Operating Expenses:	Operating Expenses:									Operating Expenses:
Property operating	Property operating	23,320		22,202		(1,118)		(5.0)	%	Property operating	25,062		23,320		(1,742)		(7.5)	%
Real estate taxes	Real estate taxes	17,491		16,573		(918)		(5.5)	%	Real estate taxes	18,056		17,491		(565)		(3.2)	%
General and administrative	General and administrative	11,532		9,341		(2,191)		(23.5)	%	General and administrative	11,533		11,532		(1)		—	%
Depreciation and amortization	Depreciation and amortization	57,226		55,341		(1,885)		(3.4)	%	Depreciation and amortization	58,498		57,226		(1,272)		(2.2)	%
Impairment of real estate assets		—		5,000		5,000		NM

Total operating expenses	Total operating expenses	109,569		108,457		(1,112)		(1.0)	%	Total operating expenses	113,149		109,569		(3,580)		(3.3)	%
Other:	Other:									Other:
Interest expense, net	Interest expense, net	(18,199)		(20,063)		1,864		9.3	%	Interest expense, net	(19,466)		(18,199)		(1,267)		(7.0)	%
Gain on disposal of property, net	Gain on disposal of property, net	1,368		13,841		(12,473)		(90.1)	%	Gain on disposal of property, net	942		1,368		(426)		(31.1)	%
Other expense, net	Other expense, net	(4,365)		(15,585)		11,220		72.0	%	Other expense, net	(755)		(4,365)		3,610		82.7	%
Net income	Net income	11,398		117		11,281		NM		Net income	18,636		11,398		7,238		63.5	%
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(1,319)		(14)		(1,305)		NM		Net income attributable to noncontrolling interests	(2,017)		(1,319)		(698)		(52.9)	%
Net income attributable to stockholders	Net income attributable to stockholders	$	10,079	$	103	$	9,976	NM		Net income attributable to stockholders	$	16,619	$	10,079	$	6,540	64.9	%

~~(1)Line items that result in a percent change that exceed certain limitations are considered not meaningful (“NM”) and indicated as such.~~

Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities. We define our same-center portfolio as the ~~256~~263 properties that were owned and operational prior to January 1, ~~2021.~~2022. We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing to real estate asset activity occurring after December 31, ~~2020,~~2021, which includes 254 properties disposed of and ~~twelve~~11 properties acquired. Below are explanations of the significant fluctuations in the results of operations for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:

Rental Income increased ~~$11.1~~$9.0 million primarily as follows:

•$~~8.3~~4.7 million increase primarily related to our same-center portfolio as follows:

▪$~~6.0~~4.9 million increase primarily due to a ~~$0.37~~$0.39 increase in average minimum rent PSF and a ~~1.3%~~1.0% improvement in average ~~occupancy owing largely to the strength of our leasing results during 2021;~~occupancy;

▪$1.7 million increase owing largely to an increase in recoverable income attributed to an increase in real estate taxes and common area maintenance spending, as compared to 2021, as well as a 1.3% improvement in average occupancy; and

▪~~$0.6~~1.2 million increase primarily due to ~~the continued stabilization~~lower reserves as a result of ~~collections from our Neighbors which resulted in~~ a decrease in Neighbors we have identified as a credit ~~risk~~risk; and

▪$1.6 million decrease primarily due to lower ~~general reserves.~~lease buyout income.

•$~~2.9~~4.3 million increase primarily related to ~~improving the quality of our portfolio through~~ our acquisition ~~and disposition activity.~~activity, net of dispositions.

Property Operating ~~Expenses:~~Expenses increased $1.7 million primarily as follows:

•~~The $1.1~~$1.2 million increase ~~in property operating expenses was largely related to~~from our same-center portfolio and corporate operating activities primarily ~~as follows:~~

▪~~$0.7 million increase~~due to increases in recoverable expenses attributed to higher common area maintenance costs and compensation expense, as compared to ~~2021;~~2022; and

▪•$~~0.5~~0.6 million increase primarily due to ~~higher insurance expenses attributed to higher market rates and an increase in claims and claim development.~~our acquisition activity, net of dispositions.

Real Estate Tax Expenses:

•The ~~$0.9~~$0.6 million increase in real estate tax expenses is primarily due to ~~higher real estate tax assessments on~~our acquisition activity, net of dispositions.

General and Administrative Expenses were consistent from 2022 to 2023, with the ~~value of our portfolio.~~exception of:

•a $0.5 million increase primarily due to travel and conference expense; and

•a $0.4 million decrease primarily related to savings in premiums for directors and officers insurance.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									24

~~General and Administrative Expenses increased $2.2 million primarily as follows:~~

•~~$1.1 million increase in compensation expense owing largely to an increase in performance- and service-based compensation of approximately $0.4 million and $0.3 million, respectively;~~

•~~$0.7 million increase primarily due to an increase in directors and officers insurance as a result of our underwritten IPO; and~~

•$0.3 million increase primarily due to costs related to the conversion of our Class B common stock to common stock and other compliance related expenses owing largely to our common stock being listed on a publicly traded market.

~~Depreciation and Amortization:~~

•~~The $1.9 million increase in depreciation and amortization is primarily due to the execution of our growth strategy and investment in improvements to our Neighbor spaces.~~

~~Impairment of Real Estate Assets:~~

•~~The $5.0 million decrease in impairment of real estate assets was due to assets that were sold during 2021 at a disposition price that was less than the carrying value.~~

Interest Expense, Net:

•The ~~$1.9~~$1.3 million ~~decrease during the three months ended March 31, 2022 as compared to the same period in 2021~~increase was primarily due ~~to: (i) early repayments of~~to increased debt outstanding and interest rates in ~~2021;~~2023 partially offset by ~~(ii) higher average interest rates; and (iii) the issuance~~lower loss on extinguishment or modification of ~~$350 million aggregate principal amount of 2.625% senior notes in October 2021.~~debt. Interest Expense, Net was comprised of the following (dollars in thousands):


		Three Months Ended March 31,							Three Months Ended March 31,
		2022			2021				2023			2022
Interest on unsecured term loans and senior notes, net	Interest on unsecured term loans and senior notes, net	$	9,916		$	10,633		Interest on unsecured term loans and senior notes, net	$	11,292		$	9,916
Interest on secured debt	Interest on secured debt	5,531			6,780			Interest on secured debt	4,888			5,531
Interest on revolving credit facility, net	Interest on revolving credit facility, net	247			228			Interest on revolving credit facility, net	1,568			247
Non-cash amortization and other	Non-cash amortization and other	1,605			1,731			Non-cash amortization and other	1,718			1,605
Loss on extinguishment or modification of debt and other, net(1)	Loss on extinguishment or modification of debt and other, net(1)	900			691			Loss on extinguishment or modification of debt and other, net(1)	—			900
Interest expense, net	Interest expense, net	$	18,199		$	20,063		Interest expense, net	$	19,466		$	18,199

Weighted-average interest rate as of end of period	Weighted-average interest rate as of end of period	3.2		%	3.0		%	Weighted-average interest rate as of end of period	3.8		%	3.2		%
Weighted-average term (in years) as of end of period	Weighted-average term (in years) as of end of period	5.1			3.8			Weighted-average term (in years) as of end of period	4.1			5.1

(1)Includes defeasance fees related to early repayments of debt.

Gain on Disposal of Property, Net:

•The ~~$12.5~~$0.4 million decrease was primarily related to land acquired by local authorities with a net gain of $0.9 million during the three months ended March 31, 2023, as compared to the sale of two properties with a net gain of $1.4 million during the three months ended March 31, 2022 ~~as compared to the sale of six properties and one outparcel with a net gain of $13.8 million during the three months ended March 31, 2021~~ (see Note 4).

Other Expense, Net:

•The ~~$11.2~~$3.6 million decrease was primarily related to ~~a lower charge in connection with~~ the ~~change in~~settlement of the ~~fair value of our~~ earn-out liability ~~which was settled~~ in January 2022, ~~partially offset by~~ an increase in the value in our marketable securities, and a decrease in transaction and acquisition ~~expenses owing largely to restricted stock units awarded at the time of our underwritten IPO.~~expenses. Other Expense, Net was comprised of the following (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Change in fair value of earn-out liability (see Note 12)		$	(1,809)	$	(16,000)
Equity in net (loss) income of unconsolidated joint ventures		(54)		714
Transaction and acquisition expenses	Transaction and acquisition expenses	(2,045)		(141)		Transaction and acquisition expenses	$	(1,338)	$	(2,045)
Federal, state, and local income tax expense	Federal, state, and local income tax expense	(97)		(166)		Federal, state, and local income tax expense	(118)		(97)
Equity in net income (loss) of unconsolidated joint ventures						Equity in net income (loss) of unconsolidated joint ventures	90		(54)
Increase in fair value of earn-out liability (see Note 12)						Increase in fair value of earn-out liability (see Note 12)	—		(1,809)
Other	Other	(360)		8		Other	611		(360)
Other expense, net	Other expense, net	$	(4,365)	$	(15,585)	Other expense, net	$	(755)	$	(4,365)


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									25

LEASING ACTIVITY—Below is a summary of leasing activity for our wholly-owned properties for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022(1):


		Total Deals						Inline Deals							Total Deals						Inline Deals
		2022			2021			2022			2021				2023			2022			2023			2022
New leases:	New leases:													New leases:
Number of leases	Number of leases	92			153			88			147			Number of leases	98			92			95			88
Square footage (in thousands)	Square footage (in thousands)	257			467			186			341			Square footage (in thousands)	264			257			191			186
ABR (in thousands)	ABR (in thousands)	$	4,941		$	8,120		$	4,321		$	6,605		ABR (in thousands)	$	6,149		$	4,941		$	5,001		$	4,321
ABR PSF	ABR PSF	$	19.25		$	17.39		$	23.21		$	19.34		ABR PSF	$	23.27		$	19.25		$	26.17		$	23.21
Cost PSF of executing new leases	Cost PSF of executing new leases	$	28.90		$	29.00		$	33.40		$	29.65		Cost PSF of executing new leases	$	34.90		$	28.90		$	39.08		$	33.40
Number of comparable leases	Number of comparable leases	34			70			33			70			Number of comparable leases	30			34			30			33
Comparable rent spread	Comparable rent spread	34.0		%	12.4		%	27.4		%	12.4		%	Comparable rent spread	27.4		%	34.0		%	27.4		%	27.4		%
Weighted-average lease term (in years)	Weighted-average lease term (in years)	6.8			8.0			7.5			6.2			Weighted-average lease term (in years)	9.5			6.8			7.0			7.5
Renewals and options:	Renewals and options:													Renewals and options:
Number of leases	Number of leases	152			163			146			147			Number of leases	165			152			154			146
Square footage (in thousands)	Square footage (in thousands)	519			978			323			312			Square footage (in thousands)	801			519			324			323
ABR (in thousands)	ABR (in thousands)	$	9,247		$	11,472		$	7,302		$	7,069		ABR (in thousands)	$	13,911		$	9,247		$	8,328		$	7,302
ABR PSF	ABR PSF	$	17.81		$	11.73		$	22.60		$	22.67		ABR PSF	$	17.36		$	17.81		$	25.67		$	22.60
ABR PSF prior to renewals	ABR PSF prior to renewals	$	16.02		$	10.97		$	19.95		$	21.02		ABR PSF prior to renewals	$	15.70		$	16.02		$	22.33		$	19.95
Percentage increase in ABR PSF	Percentage increase in ABR PSF	11.2		%	6.9		%	13.3		%	7.8		%	Percentage increase in ABR PSF	10.6		%	11.2		%	15.0		%	13.3		%
Cost PSF of executing renewals and options~~(2)~~	Cost PSF of executing renewals and options~~(2)~~	$	0.63		$	0.51		$	0.88		$	1.58		Cost PSF of executing renewals and options~~(2)~~	$	0.54		$	0.63		$	1.17		$	0.88
Number of comparable leases~~(3)~~(2)	Number of comparable leases~~(3)~~(2)	128			136			126			133			Number of comparable leases~~(3)~~(2)	126			128			124			126
Comparable rent spread~~(3)~~(2)	Comparable rent spread~~(3)~~(2)	14.7		%	8.0		%	14.5		%	7.9		%	Comparable rent spread~~(3)~~(2)	16.1		%	14.7		%	17.1		%	14.5		%
Weighted-average lease term (in years)	Weighted-average lease term (in years)	4.3			3.9			3.9			4.0			Weighted-average lease term (in years)	4.9			4.3			4.4			3.9
Portfolio retention rate	Portfolio retention rate	89.7		%	88.8		%	77.6		%	80.3		%	Portfolio retention rate	94.7		%	89.7		%	83.3		%	77.6		%

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

(2)During the third quarter of 2021, we refined our calculation of cost PSF of executing renewals and options to better align with actual costs incurred. Prior period amounts have been adjusted to reflect costs on the same basis.

~~(3)~~Excludes exercise of options.


NON-GAAP MEASURES

See “Key Performance Indicators and Defined Terms” above for additional information related to the following non-GAAP measures.

SAME-CENTER NOI—Same-Center NOI is presented as a supplemental measure of our performance, as it highlights operating trends such as occupancy levels, rental rates, and operating costs for our ~~Same-Center~~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 months ended March 31, ~~2022~~2023 and ~~2021,~~2022, Same-Center NOI represents the NOI for the ~~256~~263 properties that were wholly-owned and operational for the entire portion of ~~both~~all comparable reporting 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.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									26

The table below presents our Same-Center NOI (dollars in thousands):


		Three Months Ended March 31,	Favorable (Unfavorable)									Three Months Ended March 31,	Favorable (Unfavorable)
			2022		2021		$ Change		% Change					2023		2022		$ Change		% Change
Revenues:	Revenues:										Revenues:
Rental income(1)	Rental income(1)		$	94,626	$	89,824	$	4,802			Rental income(1)			$	103,750	$	98,829	$	4,921
Tenant recovery income	Tenant recovery income		31,481		30,172		1,309				Tenant recovery income			33,916		33,163		753
Reserves for uncollectibility(2)	Reserves for uncollectibility(2)		(770)		(1,546)		776				Reserves for uncollectibility(2)			(919)		(838)		(81)
Other property income	Other property income		747		462		285				Other property income			801		900		(99)
Total revenues	Total revenues		126,084		118,912		7,172		6.0	%	Total revenues			137,548		132,054		5,494		4.2	%
Operating expenses:	Operating expenses:										Operating expenses:
Property operating expenses	Property operating expenses		19,813		18,751		(1,062)				Property operating expenses			21,585		20,707		(878)
Real estate taxes	Real estate taxes		16,457		16,033		(424)				Real estate taxes			17,347		17,299		(48)
Total operating expenses	Total operating expenses		36,270		34,784		(1,486)		(4.3)	%	Total operating expenses			38,932		38,006		(926)		(2.4)	%
Total Same-Center NOI	Total Same-Center NOI		$	89,814	$	84,128	$	5,686	6.8	%	Total Same-Center NOI			$	98,616	$	94,048	$	4,568	4.9	%

(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~~Same-Center NOI ~~RECONCILIATION~~Reconciliation—Below is a reconciliation of Net Income to NOI and Same-Center NOI (in thousands):


		Three Months Ended March 31,						Three Months Ended March 31,
			2022		2021				2023		2022
Net income	Net income		$	11,398	$	117	Net income		$	18,636	$	11,398
Adjusted to exclude:	Adjusted to exclude:						Adjusted to exclude:
Fees and management income	Fees and management income		(2,461)		(2,286)		Fees and management income		(2,478)		(2,461)
Straight-line rental income(1)	Straight-line rental income(1)		(1,809)		(1,422)		Straight-line rental income(1)		(2,580)		(1,809)
Net amortization of above- and below-market leases	Net amortization of above- and below-market leases		(1,002)		(838)		Net amortization of above- and below-market leases		(1,228)		(1,002)
Lease buyout income	Lease buyout income		(1,965)		(797)		Lease buyout income		(355)		(1,965)
General and administrative expenses	General and administrative expenses		11,532		9,341		General and administrative expenses		11,533		11,532
Depreciation and amortization	Depreciation and amortization		57,226		55,341		Depreciation and amortization		58,498		57,226
Impairment of real estate assets			—		5,000

Interest expense, net	Interest expense, net		18,199		20,063		Interest expense, net		19,466		18,199
Gain on disposal of property, net	Gain on disposal of property, net		(1,368)		(13,841)		Gain on disposal of property, net		(942)		(1,368)
Other expense, net	Other expense, net		4,365		15,585		Other expense, net		755		4,365
Property operating expenses related to fees and management income	Property operating expenses related to fees and management income		1,070		816		Property operating expenses related to fees and management income		315		1,070
NOI for real estate investments	NOI for real estate investments		95,185		87,079		NOI for real estate investments		101,620		95,185
Less: Non-same-center NOI(2)	Less: Non-same-center NOI(2)		(5,371)		(2,951)		Less: Non-same-center NOI(2)		(3,004)		(1,137)
Total Same-Center NOI	Total Same-Center NOI		$	89,814	$	84,128	Total Same-Center NOI		$	98,616	$	94,048

(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.

NAREIT FFO AND CORE FFO—Nareit FFO is a non-GAAP financial performance measure that is widely recognized as a measure of REIT operating performance. Core FFO is an additional financial performance 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 assessing the sustainability of our operating performance in future periods.

Nareit FFO ~~Nareit FFO Attributable to Stockholders and OP Unit Holders,~~ and Core FFO should not be considered alternatives to net income (loss) 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 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 OP Unit Holders,~~ and Core FFO, as presented, may not be comparable to amounts calculated by other REITs.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									27

The following table presents our calculation of Nareit FFO ~~Attributable to Stockholders and OP Unit Holders~~ and Core FFO (in thousands, except per share amounts):


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021				2023		2022
Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders	Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders					Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders
Net income	Net income	$	11,398	$	117	Net income		$	18,636	$	11,398
Adjustments:	Adjustments:					Adjustments:
Depreciation and amortization of real estate assets	Depreciation and amortization of real estate assets	56,320		54,341		Depreciation and amortization of real estate assets		57,953		56,320
Impairment of real estate assets		—		5,000

Gain on disposal of property, net	Gain on disposal of property, net	(1,368)		(13,841)		Gain on disposal of property, net		(942)		(1,368)
Adjustments related to unconsolidated joint ventures	Adjustments related to unconsolidated joint ventures	705		(637)		Adjustments related to unconsolidated joint ventures		698		705
Nareit FFO attributable to stockholders and OP unit holders	Nareit FFO attributable to stockholders and OP unit holders	$	67,055	$	44,980	Nareit FFO attributable to stockholders and OP unit holders		$	76,345	$	67,055
Calculation of Core FFO
Calculation of Core FFO Attributable to Stockholders and OP Unit Holders						Calculation of Core FFO Attributable to Stockholders and OP Unit Holders
Nareit FFO attributable to stockholders and OP unit holders	Nareit FFO attributable to stockholders and OP unit holders	$	67,055	$	44,980	Nareit FFO attributable to stockholders and OP unit holders		$	76,345	$	67,055
Adjustments:	Adjustments:					Adjustments:
Depreciation and amortization of corporate assets	Depreciation and amortization of corporate assets	906		1,000		Depreciation and amortization of corporate assets		545		906
Change in fair value of earn-out liability	Change in fair value of earn-out liability	1,809		16,000		Change in fair value of earn-out liability		—		1,809
Transaction and acquisition expenses	Transaction and acquisition expenses	2,045		141		Transaction and acquisition expenses		1,338		2,045
Loss on extinguishment or modification of debt and other, net	Loss on extinguishment or modification of debt and other, net	900		691		Loss on extinguishment or modification of debt and other, net		—		900
Amortization of unconsolidated joint venture basis differences	Amortization of unconsolidated joint venture basis differences	44		746		Amortization of unconsolidated joint venture basis differences		1		44
Realized performance income(1)	Realized performance income(1)	(196)		—		Realized performance income(1)		(75)		(196)
Core FFO		$	72,563	$	63,558
Core FFO attributable to stockholders and OP unit holders						Core FFO attributable to stockholders and OP unit holders		$	78,154	$	72,563

Nareit FFO Attributable to Stockholders and OP Unit Holders/Core FFO per diluted share
Nareit FFO/Core FFO Attributable to Stockholders and OP Unit Holders per diluted share						Nareit FFO/Core FFO Attributable to Stockholders and OP Unit Holders per diluted share
Weighted-average shares of common stock outstanding - diluted~~(1)~~	Weighted-average shares of common stock outstanding - diluted~~(1)~~	128,503		106,995		Weighted-average shares of common stock outstanding - diluted~~(1)~~		131,943		128,503
Nareit FFO attributable to stockholders and OP unit holders per share - diluted	Nareit FFO attributable to stockholders and OP unit holders per share - diluted	$	0.52	$	0.42	Nareit FFO attributable to stockholders and OP unit holders per share - diluted		$	0.58	$	0.52
Core FFO per share - diluted		$	0.56	$	0.59
Core FFO attributable to stockholders and OP unit holders per share - diluted						Core FFO attributable to stockholders and OP unit holders per share - diluted		$	0.59	$	0.56

(1)~~Restricted stock awards were dilutive~~Realized performance income includes fees received related to ~~Nareit FFO Attributable to Stockholders and OP Unit Holders per share and Core FFO per share for~~ the ~~three months ended March 31, 2022 and 2021, and, accordingly, their impact was included~~achievement of certain performance targets in ~~the weighted-average shares of common stock used in their respective per share calculations.~~

our NRP joint venture.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									28

EBITDAre ~~and~~AND ADJUSTED EBITDAre—We use EBITDAre and Adjusted EBITDAre as additional measures of operating performance which allow us to compare earnings independent of capital structure, determine debt service and fixed cost coverage, and measure enterprise value. Additionally, we believe they are a useful indicator of our ability to support our debt obligations.

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 (in thousands):


		Three Months Ended March 31,				Year Ended December 31,				Three Months Ended March 31,	Year Ended December 31,
		2022		2021			2021				2023		2022		2022
Calculation of EBITDAre	Calculation of EBITDAre								Calculation of EBITDAre
Net income	Net income	$	11,398	$	117		$	17,233	Net income		$	18,636	$	11,398	$	54,529
Adjustments:	Adjustments:								Adjustments:
Depreciation and amortization	Depreciation and amortization	57,226		55,341			221,433		Depreciation and amortization		58,498		57,226		236,224
Interest expense, net	Interest expense, net	18,199		20,063			76,371		Interest expense, net		19,466		18,199		71,196
Gain on disposal of property, net	Gain on disposal of property, net	(1,368)		(13,841)			(30,421)		Gain on disposal of property, net		(942)		(1,368)		(7,517)
Impairment of real estate assets	Impairment of real estate assets	—		5,000			6,754		Impairment of real estate assets		—		—		322
Federal, state, and local tax expense	Federal, state, and local tax expense	97		166			327		Federal, state, and local tax expense		118		97		806
Adjustments related to unconsolidated joint ventures	Adjustments related to unconsolidated joint ventures	1,019		1,132			1,431		Adjustments related to unconsolidated joint ventures		966		1,019		1,987
EBITDAre	EBITDAre	$	86,571	$	67,978		$	293,128	EBITDAre		$	96,742	$	86,571	$	357,547
Calculation of Adjusted EBITDAre	Calculation of Adjusted EBITDAre								Calculation of Adjusted EBITDAre
EBITDAre	EBITDAre	$	86,571	$	67,978		$	293,128	EBITDAre		$	96,742	$	86,571	$	357,547
Adjustments:	Adjustments:								Adjustments:
Change in fair value of earn-out liability	Change in fair value of earn-out liability	1,809		16,000			30,436		Change in fair value of earn-out liability		—		1,809		1,809
Transaction and acquisition expenses	Transaction and acquisition expenses	2,045		141			5,363		Transaction and acquisition expenses		1,338		2,045		10,551
Amortization of unconsolidated joint venture basis differences	Amortization of unconsolidated joint venture basis differences	44		746			1,167		Amortization of unconsolidated joint venture basis differences		1		44		220
Realized performance income(1)	Realized performance income(1)	(196)		—			(675)		Realized performance income(1)		(75)		(196)		(2,742)
Adjusted EBITDAre	Adjusted EBITDAre	$	90,273	$	84,865		$	329,419	Adjusted EBITDAre		$	98,006	$	90,273	$	367,385

(1)Realized performance income includes fees received related to the achievement of certain performance targets in our NRP joint venture.


LIQUIDITY AND CAPITAL RESOURCES

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

•investments in real estate;

•cash distributions to stockholders;

•redevelopment and repositioning projects;

•capital expenditures and leasing costs; and

•principal and interest payments on our outstanding indebtedness.

We expect our primary sources of liquidity to be:

•operating cash flows;

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

•borrowings from our unsecured revolving credit facility and proceeds from debt financings;

•proceeds from any ATM offering activities;

•~~distributions~~proceeds received from ~~our unconsolidated joint ventures;~~the disposition of properties; and

•available, unrestricted cash and cash equivalents.

At this time, we believe our current sources of liquidity are sufficient to meet our short- and long-term cash demands.

ATM Program—In 2022, we commenced the ATM program through which we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million. During the three months ended March 31, 2023 and 2022, no shares


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									29

~~IMPACT OF THE UNDERWRITTEN IPO—On July 19, 2021, we closed our underwritten IPO, from which we received gross proceeds~~were issued under the ATM program. As of ~~$547.4 million. The underwritten IPO has allowed us access to forms~~March 31, 2023, $159.9 million of ~~capital not previously available to us as follows:~~

•~~In October 2021, we settled the registered offering of $350 million aggregate principal amount of 2.625% senior notes, which resulted in gross proceeds of $345.4 million.~~

•~~In February 2022, we filed an automatically effective shelf registration statement on Form S-3 providing for the public offering and sale, from time to time, by us of our preferred stock,~~ common stock ~~debt securities, depository shares, warrants, right, units, and guarantees of debt securities and by the Operating Partnership of its debt securities, in each case in unlimited amounts.~~

•~~In connection with our February 2022 Form S-3 filing, we commenced~~remained available for issuance under the ATM through which we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million. We will continue to evaluate the market for conditions favorable for using the ATM.program.

DEBT—The following table summarizes information about our debt as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 (dollars in thousands):


		March 31, 2022			December 31, 2021				March 31, 2023			December 31, 2022
Total debt obligations, gross	Total debt obligations, gross	$	1,897,567		$	1,914,082		Total debt obligations, gross	$	1,983,078		$	1,912,784
Weighted-average interest rate	Weighted-average interest rate	3.2		%	3.3		%	Weighted-average interest rate	3.8		%	3.6		%
Weighted-average term (in years)	Weighted-average term (in years)	5.1			5.2			Weighted-average term (in years)	4.1			4.4

Revolving credit facility capacity(1)	Revolving credit facility capacity(1)	$	500,000		$	500,000		Revolving credit facility capacity(1)	$	800,000		$	800,000
Revolving credit facility availability(2)	Revolving credit facility availability(2)	444,947			489,329			Revolving credit facility availability(2)	622,229			709,385

(1)The revolving credit facility matures in January 2026, ~~and includes additional options to extend the maturity~~extendable at our option to January ~~2027 with its execution being~~2027. In addition, the revolving credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $1 billion, subject to ~~compliance with~~the satisfaction of certain ~~terms included in the loan agreement.~~conditions.

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

Debt Obligation Guarantees—The 2.625% senior notes issued by the Operating Partnership pursuant to an effective registration statement in October 2021 were, and debt securities of the Operating Partnership registered under our automatically effective shelf registration statement on Form S-3 filed in February 2022 will be, fully and unconditionally guaranteed by us. At March 31, ~~2022,~~2023, the Operating Partnership had issued and outstanding its 2.625% senior notes. The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the 2.625% senior notes are fully and unconditionally guaranteed by us on a senior basis. As a result of the amendments to SEC Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that: (i) the subsidiary obligor is consolidated into the parent company’s consolidated financial statements; (ii) the parent guarantee is “full and unconditional”; and (iii) subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 of Regulation S-X is provided, which includes narrative disclosure and summarized financial information. We meet the conditions of this requirement and thus, are not presenting separate financial statements. Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the summarized financial information for the Operating Partnership because the assets, liabilities, and results of operations of the Operating Partnership are not materially different than the corresponding in our consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.

FINANCIAL LEVERAGE RATIOS—We believe our net debt to Adjusted EBITDAre, net debt to total enterprise value, and debt covenant compliance as of March 31, ~~2022~~2023 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 March 31, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Net debt:	Net debt:					Net debt:
Total debt, excluding discounts, market adjustments, and deferred financing expenses	Total debt, excluding discounts, market adjustments, and deferred financing expenses	$	1,924,988	$	1,941,504	Total debt, excluding discounts, market adjustments, and deferred financing expenses	$	2,007,436	$	1,937,142
Less: Cash and cash equivalents	Less: Cash and cash equivalents	5,507		93,109		Less: Cash and cash equivalents	6,784		5,740
Total net debt	Total net debt	$	1,919,481	$	1,848,395	Total net debt	$	2,000,652	$	1,931,402

Enterprise value:	Enterprise value:					Enterprise value:
Net debt	Net debt	$	1,919,481	$	1,848,395	Net debt	$	2,000,652	$	1,931,402
Total equity market capitalization(1)(2)	Total equity market capitalization(1)(2)	4,414,266		4,182,996		Total equity market capitalization(1)(2)	4,291,389		4,178,204
Total enterprise value	Total enterprise value	$	6,333,747	$	6,031,391	Total enterprise value	$	6,292,041	$	6,109,606

(1)Total equity market capitalization is calculated as diluted shares multiplied by the closing market price per share, which includes ~~128.4~~131.6 million and ~~126.6~~131.2 million diluted shares as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and the closing market price per share of ~~$34.39~~$32.62 and ~~$33.04~~$31.84 as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

(2)Fully diluted shares include common stock and OP ~~units as of March 31, 2022 and Class B common stock, common stock, and OP units as of December 31, 2021.~~units.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									30

The following table presents our calculation of net debt to Adjusted EBITDAre and net debt to total enterprise value as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 (dollars in thousands):


		March 31, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Net debt to Adjusted EBITDAre - annualized:	Net debt to Adjusted EBITDAre - annualized:					Net debt to Adjusted EBITDAre - annualized:
Net debt	Net debt	$	1,919,481	$	1,848,395	Net debt	$	2,000,652	$	1,931,402
Adjusted EBITDAre - annualized(1)	Adjusted EBITDAre - annualized(1)	334,827		329,419		Adjusted EBITDAre - annualized(1)	375,118		367,385
Net debt to Adjusted EBITDAre - annualized	Net debt to Adjusted EBITDAre - annualized	5.7x		5.6x		Net debt to Adjusted EBITDAre - annualized	5.3x		5.3x

Net debt to total enterprise value:	Net debt to total enterprise value:					Net debt to total enterprise value:
Net debt	Net debt	$	1,919,481	$	1,848,395	Net debt	$	2,000,652	$	1,931,402
Total enterprise value	Total enterprise value	6,333,747		6,031,391		Total enterprise value	6,292,041		6,109,606
Net debt to total enterprise value	Net debt to total enterprise value	30.3%		30.6%		Net debt to total enterprise value	31.8%		31.6%

(1)Adjusted EBITDAre is based on a trailing twelve month period. See “Non-GAAP Measures - EBITDAre and Adjusted EBITDAre” above for a reconciliation to Net Income.

CAPITAL EXPENDITURES AND REDEVELOPMENT ACTIVITY—We make capital expenditures during the course of normal operations, 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.

During the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, we had capital spend of ~~$18.6~~$23.9 million and ~~$13.5~~$18.6 million, respectively. Below is a summary of our capital spending activity, excluding leasing commissions, on a cash basis (in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Capital expenditures for real estate:	Capital expenditures for real estate:					Capital expenditures for real estate:
Capital improvements	Capital improvements	$	1,797	$	848	Capital improvements	$	3,709	$	1,797
Tenant improvements	Tenant improvements	7,260		3,741		Tenant improvements	6,419		7,260
Redevelopment and development	Redevelopment and development	7,994		8,098		Redevelopment and development	11,977		7,994
Total capital expenditures for real estate	Total capital expenditures for real estate	17,051		12,687		Total capital expenditures for real estate	22,105		17,051
Corporate asset capital expenditures	Corporate asset capital expenditures	918		439		Corporate asset capital expenditures	365		918
Capitalized indirect costs(1)	Capitalized indirect costs(1)	639		411		Capitalized indirect costs(1)	1,214		639
Total capital spending activity(2)	Total capital spending activity(2)	$	18,608	$	13,537	Total capital spending activity(2)	$	23,684	$	18,608

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

(2)Amounts reported are net of insurance proceeds for property damage claims for the three months ended March 31, 2023.

We anticipate that obligations related to capital improvements, as well as redevelopment and development, in ~~2022~~2023 can be met with cash flows from operations, cash flows from dispositions, or borrowings on our unsecured revolving credit facility.

Generally, we expect our development and redevelopment projects to stabilize within 24 months. Our underwritten incremental unlevered yields on development and redevelopment projects are expected to range between ~~10%~~9%-12%. Our current in process projects represent an estimated total investment of ~~$48.3~~$45.7 million. Actual incremental unlevered yields may vary from our underwritten incremental unlevered yield range based on the actual total cost to complete a project and its actual incremental annual NOI at stabilization. See “Key Performance Indicators and Defined Terms” above for further information.

REAL ESTATE ACQUISITION ACTIVITY—We ~~are~~ actively ~~monitoring~~monitor the commercial real estate market for properties that have future growth potential, are located in attractive demographic markets, and support our business objectives. ~~We expect to continue to make strategic acquisitions during the remainder of 2022.~~ The following table highlights our property acquisitions (dollars in thousands):


		Three Months Ended March 31,					Three Months Ended March 31,
		2022		2021			2023		2022
Number of properties acquired	Number of properties acquired	3		2		Number of properties acquired	4		3
Number of outparcels acquired(1)		—		2
Contract price	Contract price	$	100,400	$	39,605	Contract price	$	78,650	$	100,400
Total price of acquisitions(2)		101,440		39,850
Total price of acquisitions(1)						Total price of acquisitions(1)	69,431		101,440

(1)~~Outparcels acquired are adjacent to shopping centers that we own.~~

~~(2)~~Total price of acquisitions includes closing costs less credits and ~~credits.~~assumed debt obligations.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									31

REAL ESTATE DISPOSITION ACTIVITY—We continually evaluate 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. The following table highlights our property dispositions (dollars in thousands):

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


	Three Months Ended March 31,
	2023		2022
Number of properties sold	—		2

Contract price	$	—	$	13,325
Proceeds from sale of real estate, net(1)(2)	1,091		12,770
Gain on disposal of property, net(2)	942		1,368

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

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

DISTRIBUTIONS—We declared and paid ~~2022~~2023 monthly distributions of ~~$0.09~~$0.0933 per share, or ~~$1.08~~$1.12 annualized, for ~~the months of~~each month beginning January February, March, and April. On May 4, 2022, our Board authorized 2022 distributions for May, June, and July of $0.09 per share to the stockholders of record at the close of business on May 16, 2022, June 15, 2022, and July 15, 2022, respectively. OP unit holders will receive distributions at the same rate as common stockholders, subject to certain withholdings.2023 through April 2023.

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 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.

CASH FLOW ACTIVITIES—As of March 31, ~~2022,~~2023, we had cash and cash equivalents and restricted cash of ~~$17.5~~$12.0 million, a net cash decrease of ~~$98.1~~$5.4 million during the three months ended March 31, ~~2022.~~2023.

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

Three Months Ended March 31,
2022 2021 $ Change % Change
Net cash provided by operating activities $ 60,221 $ 48,751 $ 11,470 23.5 %
Net cash (used in) provided by investing activities (106,497) 4,690 (111,187) NM
Net cash used in financing activities (51,784) (123,125) 71,341 (57.9) %


	Three Months Ended March 31,
	2023		2022		$ Change		% Change
Net cash provided by operating activities	$	62,763	$	60,221	$	2,542	4.2	%
Net cash used in investing activities	(91,418)		(106,497)		15,079		(14.2)	%
Net cash provided by (used in) financing activities	23,270		(51,784)		75,054		144.9	%

OPERATING ACTIVITIES—Our net cash provided by operating activities was primarily impacted by the following:

•Property operations ~~and working capital~~—Most of our operating cash comes from rental and tenant recovery income and is offset by property operating expenses, real estate taxes, and general and administrative costs. The increase in property operations was primarily due to a ~~$5.7~~$4.6 million, or ~~6.8%~~4.9%, improvement in ~~same center~~Same-Center NOI as compared to the same period in 2021, and the execution of our external growth strategy. During the three months ended March 31, 2022, we had a net cash outlay of $11.0 million from changes in working capital as compared to a net cash outlay of $15.3 million during the same period in 2021. This change was primarily driven by the timing of real estate tax payments and higher accrued interest in connection with the registered offering of $350 million aggregate principal amount of 2.625% senior notes, partially offset by higher bonus payments and lower prepaid rent.

•~~Fee and management income~~—We also generate operating cash from our third-party investment management business, pursuant to various management and advisory agreements between us and the Managed Funds. Our fee and management income was $2.5 million for the three months ended March 31, 2022, which increased $0.2 million as compared to the same period in 2021.

•~~Cash paid for interest~~—During the three months ended March 31, 2022, we paid $14.8 million for interest, a decrease of $4.0 million over the same period in 2021, primarily due to our debt activity in 2021, including early repayments of debt outstanding and lower average interest rates as a result of refinancing activities.2022.

INVESTING ACTIVITIES—Our net cash ~~(used in) provided by~~used in investing activities was primarily impacted by the following:

•Real estate acquisitions—During the three months ended March 31, ~~2022,~~2023, our acquisitions resulted in a total cash outlay of ~~$101.4~~$69.4 million, as compared to a total cash outlay of ~~$39.9~~$101.4 million during the same period in ~~2021.~~2022.

•Real estate dispositions—During the three months ended March 31, ~~2022,~~2023, our dispositions resulted in a net cash inflow of ~~$12.8~~$1.1 million, as compared to a net cash inflow of ~~$58.4~~$12.8 million during the same period in ~~2021.~~2022.


~~PHILLIPS EDISON & COMPANY~~ ~~MARCH 31, 2022 FORM 10-Q~~									32

•Capital expenditures—We invest capital into leasing our properties and maintaining or improving the condition of our properties. During the three months ended March 31, ~~2022,~~2023, we paid ~~$18.6~~$23.9 million for capital expenditures, an increase of ~~$5.1~~$5.3 million over the same period in ~~2021,~~2022, primarily due to an increase in ~~tenant improvements owing largely to our leasing volume during 2022~~redevelopment and ~~2021.~~

•~~Return of investment in unconsolidated joint ventures~~—During the three months ended March 31, 2022, we had a return of investment in unconsolidated joint ventures of $0.8 million. During the three months ended March 31, 2021, we had a return of investment in unconsolidated joint ventures of $2.7 million.development activities.

FINANCING ACTIVITIES—Our net cash ~~used in~~provided by (used in) financing activities was primarily impacted by the following:

•Debt borrowings and payments—During the three months ended March 31, ~~2022,~~2023, we had ~~$16.5~~$60.5 million in net ~~repayment of debt~~borrowings primarily as a result of ~~early repayments of mortgage loans, partially offset by~~our borrowings onunder our revolving credit facility. During the three months ended March 31, ~~2021,~~2022, we had net payments of $16.5 million primarily as a result of early repayments of mortgage ~~loans.~~

•~~Distributions to stockholders and OP unit holders~~—Cash used for distributions to common stockholders and OP unit holders increased $6.4 million for the three months ended March 31, 2022 as compared to the same period in 2021, primarily due to an increase in shares of common stock outstanding as a result ofloans from cash on hand, partially offset by borrowings on our ~~underwritten IPO.~~

•~~Share repurchases~~—Cash outflows for share repurchases decreased by $77.8 million for the three months ended March 31, 2022 as compared to the same period in 2021, primarily as a result of a tender offer, which was settled in January 2021.revolving credit facility.


PHILLIPS EDISON & COMPANY MARCH 31, 2023 FORM 10-Q									32


CRITICAL ACCOUNTING ESTIMATES

“Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” of our ~~2021~~2022 Annual Report on Form 10-K, filed with the SEC on February ~~16, 2022,~~21, 2023, contains a description of our critical accounting estimates, including those relating to the valuation of real estate assets and rental income. There have been no significant changes to our critical accounting ~~policies~~estimates during ~~2022.~~2023.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in “Part II, Item 7A. Quantitative and Qualitative Disclosures about Market Risk” of our ~~2021~~2022 Annual Report on Form 10-K filed with the SEC on February ~~16, 2022.~~21, 2023.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~Our~~As required by Rule 13a-15(b) and Rule 15d-15(b) under the Exchange Act, our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of March 31, ~~2022.~~2023. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) were effective as of March 31, ~~2022.~~2023, at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the quarter ended March 31, ~~2022,~~2023, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


w PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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


~~PHILLIPS EDISON & COMPANY~~ ~~MARCH 31, 2022 FORM 10-Q~~									33

ITEM 1A. RISK FACTORS

There have been no material changes to our risk factors and other risks and uncertainties as described in “Part I, Item 1A. Risk Factors” of our ~~2021~~2022 Annual Report on Form 10-K filed with the SEC on February ~~16, 2022.~~21, 2023.


PHILLIPS EDISON & COMPANY MARCH 31, 2023 FORM 10-Q									33

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

~~UNREGISTERED SALE OF SECURITIES~~—During the three months ended March 31, 2022, we issued an aggregate of approximately 533,000 shares of common stock in redemption of approximately 533,000 OP units. These shares of common stock were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partners who received the shares of common stock.

SHARE REPURCHASES—~~We do~~On August 3, 2022, our board of directors approved a new share repurchase program of up to $250 million of common stock. The program may be suspended or discontinued at any time, and does not obligate us to repurchase any dollar amount or particular number of shares. No share repurchases have ~~a publicly announced repurchase plan in effect.~~been made to date under this program. The table below summarizes ~~other~~ repurchases of our common stock made during the three months ended March 31, ~~2022:~~2023:

Period Total Number of Shares Repurchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program Approximate Dollar Value of Shares That May Yet Be Repurchased Under the Program
January 2022(1)
28,294 $ 32.91 — N/A
February 2022 — — — N/A
March 2022(1)
1,492 32.02 — N/A


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan or Program (in thousands)
January 1, 2023 - January 31, 2023(1)	44,433	$	33.04	—	$	250,000
February 1, 2023 - February 28, 2023	—	—		—	250,000
March 1, 2023 - March 31, 2023(1)	21,781	33.98		—	250,000

(1)Represents common shares surrendered to us to satisfy statutory minimum tax withholding obligations associated with the vesting of restricted stock awards under our equity-based compensation ~~plan which were repurchased at an aggregate purchase price of approximately $1.0 million (average price of $32.86 per share).~~plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

The information set forth below is included herein for purposes of providing the disclosure required under “Item 5.03 - Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year” of Form 8-K.

On May 5, 2022, we filed Articles Supplementary to our charter with the Maryland State Department of Assessments and Taxation in order to reclassify and designate all of the 350,000,000 authorized shares of our Class B common stock, $0.01 par value per share, all of which were unissued at such time, as shares of our common stock, $0.01 par value per share. The foregoing description is not complete and is subject to, and qualified in its entirety by, the complete text of the Articles Supplementary, which is filed as an exhibit to this Quarterly Report on Form 10-Q and incorporated by reference herein.None.


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									34

ITEM 6. EXHIBITS


Ex.		Description	Reference
3.1	*	F ~~ifth~~Fifth Articles of A m e ~~ndment~~Amendment and ~~Restatement~~Restatement of Phillips Edison & Company, Inc., as ~~amended~~amended	Form 10-Q, filed May 5, 2022, Exhibit 3.1
3.2		Fifth Amended and Restated Bylaws of Phillips Edison & Company, Inc.	Form 8-K, filed July 19, 2021, Exhibit 3.1
~~10.1~~		~~Form of Performance LTIP Unit Award Agreement (2022)~~	~~Form 8-K, filed March 4, 2022, Exhibit 10.1~~
~~10.2~~		~~Form of Performance LTIP Unit Award Agreement (2022 - Murphy)~~	~~Form 8-K, filed March 4, 2022, Exhibit 10.2~~
~~10.3~~		~~Form of Time-Based LTIP Unit Award Agreement (2022)~~	~~Form 8-K, filed March 4, 2022, Exhibit 10.3~~
~~10.4~~		~~Form of Time-Based LTIP Unit Award Agreement (2022 - Murphy)~~	~~Form 8-K, filed March 4, 2022, Exhibit 10.4~~
22.1	*	List of Issuers of Guaranteed Securities
31.1	*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	*	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	*	Certification of Principal Executive Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
32.2	*	Certification of Principal Financial Officer pursuant to 18 U.S.C. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in exhibit 101)

*Filed herewith


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									35

SIGNATURES

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


	PHILLIPS EDISON & COMPANY, INC.

Date: May ~~5, 2022~~3, 2023	By:	/s/ Jeffrey S. Edison
		Jeffrey S. Edison
		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

Date: May ~~5, 2022~~3, 2023	By:	/s/ John P. Caulfield
		John P. Caulfield
		Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer)


PHILLIPS EDISON & COMPANY MARCH 31, ~~2022~~2023 FORM 10-Q									36


Period	Total Number of Shares Repurchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program	Approximate Dollar Value of Shares That May Yet Be Repurchased Under the Program
January 2022(1)	28,294	$	32.91	—	N/A
February 2022	—	—		—	N/A
March 2022(1)	1,492	32.02		—	N/A