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 ~~June 30, 2022~~March 31, 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 ~~116.7~~117.3 million shares of the registrant’s Common Stock, $0.01 par value per share, outstanding as of ~~July 29, 2022.~~April 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 ~~JUNE 30~~M ARCH 31 , ~~2022~~202 3 AND DECEMBER 31, 20212	2
		CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME FOR THE THREE ~~THREE AND~~ ~~SIX~~MONTHS ENDED MARCH 31, 2023 ~~JUNE~~ 3 0 ~~, 2022~~ AND 20212	3
		CONSOLIDATED STATEMENTS OF EQUITY FOR THE THREE ~~AND~~ ~~SIX~~ MONTHS ENDED ~~JUNE~~MARCH 31, 2023 3 0 ~~, 2022~~ AND 20212	4
		CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE ~~SIX~~THREE MONTHS ENDED ~~JUNE~~MARCH 31, 2023 3 0 ~~, 2022~~ AND 20212	65
		NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, 2022~~
	NOTE 1	ORGANIZATION	87
	NOTE 2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	87
	NOTE 3	LEASES	98
	NOTE 4	REAL ESTATE ACTIVITY	109
	NOTE 5	OTHER ASSETS, NET	1110
	NOTE 6	DEBT OBLIGATIONS	11
	NOTE 7	DERIVATIVES AND HEDGING ACTIVITIES	1211
	NOTE 8	COMMITMENTS AND CONTINGENCIES	1312
	NOTE 9	EQUITY	13
	NOTE 10	EARNINGS PER SHARE	1514
	NOTE 11	RELATED PARTY TRANSACTIONS	1614
	NOTE 12	FAIR VALUE MEASUREMENTS	1615
	NOTE 13	SUBSEQUENT EVENTS	1817
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	1918
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3833
ITEM 4.		CONTROLS AND PROCEDURES	3833

PART II.
ITEM 1.		LEGAL PROCEEDINGS	3833
ITEM 1A.		RISK FACTORS	3833
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	3934
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES	3934
ITEM 4.		MINE SAFETY DISCLOSURES	3934
ITEM 5.		OTHER INFORMATION	3934
ITEM 6.		EXHIBITS	4035
		SIGNATURES	4136


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									1


w PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

AS OF ~~JUNE 30, 2022~~MARCH 31, 2023 AND DECEMBER 31, ~~2021~~2022

(Condensed and Unaudited)

(In thousands, except per share amounts)


		June 30, 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	$	1,623,203	$	1,586,993	Land and improvements	$	1,701,404	$	1,674,133
Building and improvements	Building and improvements	3,487,920		3,355,433		Building and improvements	3,639,646		3,572,146
In-place lease assets	In-place lease assets	465,417		452,504		In-place lease assets	478,477		471,507
Above-market lease assets	Above-market lease assets	70,842		68,736		Above-market lease assets	72,524		71,954
Total investment in real estate assets	Total investment in real estate assets	5,647,382		5,463,666		Total investment in real estate assets	5,892,051		5,789,740
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(1,216,331)		(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	4,431,051		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	28,096		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	4,459,147		4,384,566		Total investment in real estate assets, net	4,545,511		4,500,198
Cash and cash equivalents	Cash and cash equivalents	24,657		92,585		Cash and cash equivalents	6,405		5,478
Restricted cash	Restricted cash	19,030		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	162,712		138,050		Other assets, net	200,373		188,879
Real estate investments and other assets held for sale		—		1,557
Total assets	Total assets	$	4,694,612	$	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	$	1,877,107	$	1,891,722	Debt obligations, net	$	1,967,252	$	1,896,594
Below-market lease liabilities, net	Below-market lease liabilities, net	108,323		107,526		Below-market lease liabilities, net	111,007		109,799
Earn-out liability		—		52,436
Derivative liabilities		52		24,096
Accounts payable and other liabilities						Accounts payable and other liabilities	111,471		113,185
Deferred income	Deferred income	21,629		19,145		Deferred income	24,243		18,481
Accounts payable and other liabilities		92,856		97,229
Liabilities of real estate investments held for sale		—		288
Total liabilities	Total liabilities	2,099,967		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 June 30, 2022 and December 31, 2021		—		—
Common stock, $0.01 par value per share, 1,000,000 shares authorized, 115,782 shares issued and outstanding at June 30, 2022; 650,000 shares authorized, 19,550 shares issued and outstanding at December 31, 2021		1,157		196
Class B common stock, $0.01 par value per share, zero shares authorized, issued, and outstanding at June 30, 2022; 350,000 shares authorized, 93,665 shares issued and outstanding at December 31, 2021		—		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”)	3,341,646		3,264,038		Additional paid-in capital (“APIC”)	3,382,368		3,383,978
Accumulated other comprehensive income (loss) (“AOCI”)		8,571		(24,819)
Accumulated other comprehensive income (“AOCI”)						Accumulated other comprehensive income (“AOCI”)	15,181		21,003
Accumulated deficit	Accumulated deficit	(1,129,151)		(1,090,837)		Accumulated deficit	(1,186,074)		(1,169,665)
Total stockholders’ equity	Total stockholders’ equity	2,222,223		2,149,514		Total stockholders’ equity	2,212,647		2,236,487
Noncontrolling interests	Noncontrolling interests	372,422		326,812		Noncontrolling interests	360,294		360,946
Total equity	Total equity	2,594,645		2,476,326		Total equity	2,572,941		2,597,433
Total liabilities and equity	Total liabilities and equity	$	4,694,612	$	4,668,768	Total liabilities and equity	$	4,786,914	$	4,735,492

See notes to consolidated financial statements.


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									2

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE ~~AND SIX~~ MONTHS ENDED ~~JUNE 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~

(Condensed and Unaudited)

(In thousands, except per share amounts)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Revenues:	Revenues:									Revenues:
Rental income	Rental income	$	137,230	$	130,335	$	275,978	$	257,958	Rental income		$	147,728	$	138,748
Fees and management income	Fees and management income	4,781		2,374		7,242		4,660		Fees and management income		2,478		2,461
Other property income	Other property income	505		361		1,459		833		Other property income		858		954
Total revenues	Total revenues	142,516		133,070		284,679		263,451		Total revenues		151,064		142,163
Operating Expenses:	Operating Expenses:									Operating Expenses:
Property operating	Property operating	22,852		21,974		46,172		44,176		Property operating		25,062		23,320
Real estate taxes	Real estate taxes	16,473		16,814		33,964		33,387		Real estate taxes		18,056		17,491
General and administrative	General and administrative	11,376		11,937		22,908		21,278		General and administrative		11,533		11,532
Depreciation and amortization	Depreciation and amortization	60,769		56,587		117,995		111,928		Depreciation and amortization		58,498		57,226
Impairment of real estate assets		—		1,056		—		6,056
Total operating expenses	Total operating expenses	111,470		108,368		221,039		216,825		Total operating expenses		113,149		109,569
Other:	Other:									Other:
Interest expense, net	Interest expense, net	(17,127)		(19,132)		(35,326)		(39,195)		Interest expense, net		(19,466)		(18,199)
Gain on disposal of property, net	Gain on disposal of property, net	2,793		3,744		4,161		17,585		Gain on disposal of property, net		942		1,368
Other expense, net	Other expense, net	(1,457)		(2,924)		(5,822)		(18,509)		Other expense, net		(755)		(4,365)
Net income	Net income	15,255		6,390		26,653		6,507		Net income		18,636		11,398
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(1,727)		(796)		(3,046)		(810)		Net income attributable to noncontrolling interests		(2,017)		(1,319)
Net income attributable to stockholders	Net income attributable to stockholders	$	13,528	$	5,594	$	23,607	$	5,697	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)	$	0.12	$	0.06	$	0.21	$	0.06	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	$	15,255	$	6,390	$	26,653	$	6,507	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	9,834		3,373		37,407		15,493		Change in unrealized value on interest rate swaps		(6,499)		27,573
Comprehensive income	Comprehensive income	25,089		9,763		64,060		22,000		Comprehensive income		12,137		38,971
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(1,727)		(796)		(3,046)		(810)		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	(1,535)		(400)		(4,237)		(1,909)		Change in unrealized value on interest rate swaps attributable to noncontrolling interests		704		(2,702)
Reallocation of comprehensive income (loss) upon conversion of noncontrolling interests		432		(10)		220		(10)
Reallocation of comprehensive loss upon conversion of noncontrolling interests										Reallocation of comprehensive loss upon conversion of noncontrolling interests		(27)		(212)
Comprehensive income attributable to stockholders	Comprehensive income attributable to stockholders	$	22,259	$	8,557	$	56,997	$	19,271	Comprehensive income attributable to stockholders		$	10,797	$	34,738

See notes to consolidated financial statements.


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									3

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED ~~JUNE 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~

(Condensed and Unaudited)

(In thousands, except per share amounts)


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

Balance at April 1, 2022		113,819	$	1,138	—	$	—	$	3,276,151			$	(160)	$	(1,111,673)				$	2,165,456		$	372,213			$	2,537,669
Issuance of common stock, net		1,860	18		—	—		62,947				—		—					62,965			—				62,965
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
Conversion of Class B common stock																												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	—	—		—	—		—				8,299		—					8,299			1,535				9,834		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	—	—		—	—		—				—		(31,006)					(31,006)			—				(31,006)		Common distributions declared, $0.27 per share	—		—		—	—		—		—		(30,915)		(30,915)		—		(30,915)
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—		—	—		—				—		—					—			(4,113)				(4,113)		Distributions to noncontrolling interests	—		—		—	—		—		—		—		—		(4,104)		(4,104)
Share-based compensation	Share-based compensation	31	—		—	—		1,008				—		—					1,008			3,033				4,041		Share-based compensation	71		1		—	—		467		—		—		468		2,678		3,146
Conversion of noncontrolling interests	Conversion of noncontrolling interests	72	1		—	—		2,417				—		—					2,418			(2,418)				—		Conversion of noncontrolling interests	533		5		—	—		11,646		(212)		—		11,439		(11,439)		—
Reallocation of operating partnership interests		—	—		—	—		(877)				432		—					(445)			445				—
Settlement of earn-out liability																												Settlement of earn-out liability	—		—		—	—		—		—		—		—		54,245		54,245
Net income	Net income	—	—		—	—		—				—		13,528					13,528			1,727				15,255		Net income	—		—		—	—		—		—		10,079		10,079		1,319		11,398
Balance at June 30, 2022		115,782	$	1,157	—	$	—	$	3,341,646			$	8,571	$	(1,129,151)				$	2,222,223		$	372,422			$	2,594,645
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 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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									4

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF ~~EQUITY~~CASH FLOWS

FOR THE ~~SIX~~THREE MONTHS ENDED ~~JUNE 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~

(Condensed and Unaudited)

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

Six Months Ended June 30, 2022 and 2021
   Common Stock Class B Common Stock APIC AOCI Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interests Total Equity
   Shares Amount Shares Amount
Balance at January 1, 2021 — $ — 93,279 $ 2,798 $ 2,739,358 $ (52,306) $ (999,491) $ 1,690,359 $ 325,570 $ 2,015,929
Dividend reinvestment plan (“DRIP”) — — 280 8 7,360 — — 7,368 — 7,368
Share repurchases — — (24) — (123) — — (123) — (123)
Change in unrealized value on interest
    rate swaps — — — — — 13,584 — 13,584 1,909 15,493
Common distributions declared, $0.51
    per share
— — — — — — (47,823) (47,823) — (47,823)
Distributions to noncontrolling interests — — — — — — — — (6,779) (6,779)
Share-based compensation — — 77 2 2,427 — — 2,429 2,416 4,845
Conversion of noncontrolling interests — — 28 — 743 — — 743 (743) —
Reallocation of operating partnership
    interests — — — — (56) (10) — (66) 66 —
Other — — — — (29) — — (29) — (29)
Net income — — — — — — 5,697 5,697 810 6,507
Balance at June 30, 2021 — $ — 93,640 $ 2,808 $ 2,749,680 $ (38,732) $ (1,041,617) $ 1,672,139 $ 323,249 $ 1,995,388
Balance at January 1, 2022 19,550 $ 196 93,665 $ 936 $ 3,264,038 $ (24,819) $ (1,090,837) $ 2,149,514 $ 326,812 $ 2,476,326
Conversion of Class B common stock 93,665 936 (93,665) (936) — — — — — —
Issuance of common stock, net 1,860 18 — — 62,947 — — 62,965 — 62,965
Change in unrealized value on interest
    rate swaps — — — — — 33,170 — 33,170 4,237 37,407
Common distributions declared, $0.54
    per share
— — — — — — (61,921) (61,921) — (61,921)
Distributions to noncontrolling interests — — — — — — — — (8,217) (8,217)
Share-based compensation 102 1 — — 1,475 — — 1,476 5,711 7,187
Conversion of noncontrolling interests 605 6 — — 19,730 — — 19,736 (19,736) —
Reallocation of operating partnership
    interests — — — — (6,544) 220 — (6,324) 6,324 —
Settlement of earn-out liability — — — — — — — — 54,245 54,245
Net income — — — — — — 23,607 23,607 3,046 26,653
Balance at June 30, 2022 115,782 $ 1,157 — $ — $ 3,341,646 $ 8,571 $ (1,129,151) $ 2,222,223 $ 372,422 $ 2,594,645


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

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

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


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

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Condensed and Unaudited)

(In thousands)


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

See notes to consolidated financial statements.


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									5

~~PHILLIPS EDISON & COMPANY, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021~~

~~(Condensed and Unaudited)~~

~~(In thousands)~~

Six Months Ended June 30,
   2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 26,653 $ 6,507
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of real estate assets 116,169 109,995
Impairment of real estate assets — 6,056
Depreciation and amortization of corporate assets 1,826 1,933
Net amortization of above- and below-market leases (2,080) (1,725)
Amortization of deferred financing expenses 1,622 2,448
Amortization of debt and derivative adjustments 1,207 739
Gain on disposal of property, net (4,161) (17,585)
Change in fair value of earn-out liability 1,809 18,000
Straight-line rent (5,146) (4,400)
Share-based compensation 7,187 4,845
Return on investment in unconsolidated joint ventures 1,242 1,533
Other (100) (519)
Changes in operating assets and liabilities:
Other assets, net (4,200) 900
Accounts payable and other liabilities 471 1,170
Net cash provided by operating activities 142,499 129,897
CASH FLOWS FROM INVESTING ACTIVITIES:
Real estate acquisitions (170,186) (40,459)
Capital expenditures (42,946) (30,230)
Proceeds from sale of real estate, net 27,077 119,638
Investment in third parties — (3,000)
Return of investment in unconsolidated joint ventures 3,162 3,888
Investment in marketable securities (3,000) —
Net cash (used in) provided by investing activities (185,893) 49,837
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facility 197,000 9,000
Payments on revolving credit facility (149,000) (9,000)
Payments on mortgages and loans payable (68,557) (66,237)
Distributions paid, net of DRIP (61,979) (48,308)
Distributions to noncontrolling interests (8,877) (7,931)
Proceeds from issuance of common stock, net of costs 62,965 —
Repurchases of Class B common stock — (77,765)
Other — (29)
Net cash used in financing activities (28,448) (200,270)
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH (71,842) (20,536)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning of period 115,529 131,937
End of period $ 43,687 $ 111,401
RECONCILIATION TO CONSOLIDATED BALANCE SHEETS:
Cash and cash equivalents $ 24,657 $ 22,205
Restricted cash 19,030 89,196
Cash, cash equivalents, and restricted cash at end of period $ 43,687 $ 111,401


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									6

~~PHILLIPS EDISON & COMPANY, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)~~

~~FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021~~

~~(Condensed and Unaudited)~~

~~(In thousands)~~

Six Months Ended June 30,
2022 2021
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 34,130 $ 36,845
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:
Settlement of earn-out liability 54,245 —
Right-of-use (“ROU”) assets obtained in exchange for new lease liabilities — 239
Accrued capital expenditures 4,800 6,053
Change in distributions payable (58) (7,853)
Change in distributions payable - noncontrolling interests (660) (1,152)
Change in accrued share repurchase obligation — (77,642)
Distributions reinvested — 7,368

~~See notes to consolidated financial statements.~~


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									7

Phillips Edison & Company, Inc.

Notes to Consolidated Financial Statements

(Condensed and Unaudited)
~~As of and for the period ended June 30, 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 ~~June 30, 2022.~~March 31, 2023.

As of ~~June 30, 2022,~~March 31, 2023, we wholly-owned ~~269~~275 real estate properties. Additionally, we owned a 14% interest in ~~Grocery Retail Partners~~GRP I, ~~LLC (“GRP I”),~~which owned 20 properties.

NRP—As of March 31, 2023, we owned a 20% equity interest in NRP. NRP was initially formed in March 2016 pursuant to the terms of a joint venture ~~that owned 20 properties.~~

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 sold the final property in ~~our~~the joint venture ~~with Necessity Retail Partners (“NRP”),~~as a result of the planned expiration in ~~which~~2023. With the monetization of the joint venture, we ~~own a 20% interest. During~~exceeded the targeted return and as such were paid compensation of $0.1 million and $0.2 million during the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~we recognized income of $2.5 million and $2.7 million,~~ respectively, ~~related to NRP’s achievement of certain performance targets,~~ which is ~~included~~recorded in Fees and Management Income in our consolidated statements of operations and comprehensive income (“consolidated statements of operations”).

~~Underwritten Initial Public Offering~~—On July 19, 2021, we closed our underwritten initial public offering (“underwritten IPO”), through which we issued 19.6 million shares, including the underwriters’ overallotment election, of a new class of common stock, $0.01 par value per share, at an initial price to the public of $28.00 per share. As a result of the underwritten IPO, we received gross proceeds of $547.4 million.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Set forth below is a summary of the significant accounting estimates and 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 ~~six~~three months ended ~~June 30, 2022,~~March 31, 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 ~~and six~~ months ended ~~June 30, 2022~~March 31, 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).


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									8

•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 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. 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. We no longer have Class B common stock authorized for issue.

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 ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ 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.

Newly Adopted Accounting Pronouncements—There were no newly adopted accounting pronouncements during the ~~six~~three months ended ~~June 30, 2022~~March 31, 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 June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Rental income related to fixed lease payments(1)	Rental income related to fixed lease payments(1)	$	103,163	$	94,485	$	204,673	$	189,451	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)	29,431		27,454		62,898		58,855		Rental income related to variable lease payments(1)(2)		35,763		33,467
Straight-line rent amortization(3)	Straight-line rent amortization(3)	3,170		2,893		4,865		4,262		Straight-line rent amortization(3)		2,443		1,695
Amortization of lease assets	Amortization of lease assets	1,062		877		2,054		1,704		Amortization of lease assets		1,216		992
Lease buyout income	Lease buyout income	177		1,781		2,141		2,578		Lease buyout income		355		1,964
Adjustments for collectibility(4)	Adjustments for collectibility(4)	227		2,845		(653)		1,108		Adjustments for collectibility(4)		(913)		(880)
Total rental income	Total rental income	$	137,230	$	130,335	$	275,978	$	257,958	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)Includes revenue adjustments to straight-line rent for tenants considered non-creditworthy.

(4)Includes general reserves as well as adjustments for tenants considered non-creditworthy for which we are recording revenue on a cash basis, per Accounting Standards Codification (“ASC”) Topic 842, Leases.

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of ~~June 30, 2022,~~March 31, 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		$	205,120
2023		395,127
Remaining 2023				Remaining 2023	$	326,815
2024	2024	343,818		2024	403,547
2025	2025	287,289		2025	346,840
2026	2026	222,902		2026	281,485
2027				2027	216,408
Thereafter	Thereafter	572,366		Thereafter	539,314
Total	Total	$	2,026,622	Total	$	2,114,409

No single tenant comprised 10% or more of our aggregate annualized base rent (“ABR”) as of ~~June 30, 2022.~~March 31, 2023. As of ~~June 30, 2022,~~March 31, 2023, our wholly-owned real estate investments in Florida and California represented ~~11.9%~~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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									98


4. REAL ESTATE ACTIVITY

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


		Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Number of properties acquired	Number of properties acquired	4		2		Number of properties acquired	4		3
Number of outparcels acquired(1)		1		3
Contract price	Contract price	$	169,342	$	40,190	Contract price	$	78,650	$	100,400
Total price of acquisitions(2)		170,186		40,459
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 ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ were allocated as follows (in thousands):


		June 30, 2022		June 30, 2021			March 31, 2023		March 31, 2022
ASSETS	ASSETS					ASSETS
Land and improvements	Land and improvements	$	44,191	$	23,914	Land and improvements	$	25,079	$	30,274
Building and improvements	Building and improvements	116,087		13,990		Building and improvements	49,853		65,028
In-place lease assets	In-place lease assets	14,346		4,155		In-place lease assets	592		8,557
Above-market lease assets	Above-market lease assets	2,362		52		Above-market lease assets	7,111		708
Below-market debt						Below-market debt	443		—
Total assets	Total assets	176,986		42,111		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	6,800		1,652		Below-market lease liabilities	4,028		3,127
Total liabilities	Total liabilities	6,800		1,652		Total liabilities	13,647		3,127

Net assets acquired	Net assets acquired	$	170,186	$	40,459	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 ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ are as follows (in years):


		June 30, 2022	June 30, 2021		March 31, 2023	March 31, 2022
Acquired in-place leases	Acquired in-place leases	15	7	Acquired in-place leases	12	14
Acquired above-market leases	Acquired above-market leases	8	5	Acquired above-market leases	8	6
Acquired below-market leases	Acquired below-market leases	16	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):

Six Months Ended June 30,
2022 2021
Number of properties sold(1)
3 13
Number of outparcels sold(2)
2 1
Contract Price $ 28,342 $ 125,247
Proceeds from sale of real estate, net(3)
27,077 119,638
Gain on sale of property, net(4)
4,161 18,713


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

~~(2)~~During the six months ended June 30, 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.

~~(3)~~Total proceeds from sale of real estate, net includes closing costs ~~and~~less credits.

~~(4)~~(2)~~During~~Activity for the ~~six~~three months ended June 30, 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.March 31, 2023 was primarily related to land acquired from us by local authorities.


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									109

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 damages sustained to the properties. We also recognized a receivable for estimated insurance recoveries in excess of the deductible. As of March 31, 2023, we have received no insurance recoveries and have a receivable balance of $1.0 million, which is recorded in Other Assets, Net on our consolidated balance sheets.


5. OTHER ASSETS, NET

The following is a summary of Other Assets, Net outstanding as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, excluding amounts related to assets classified as held for sale (in thousands):


		June 30, 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	$	46,592	$	44,968	Deferred leasing commissions and costs	$	50,253	$	49,687
Deferred financing expenses(1)	Deferred financing expenses(1)	8,985		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	27,219		24,823		Office equipment, including capital lease assets, and other	23,132		23,051
Corporate intangible assets	Corporate intangible assets	6,705		6,706		Corporate intangible assets	6,692		6,692
Total depreciable and amortizable assets	Total depreciable and amortizable assets	89,501		81,395		Total depreciable and amortizable assets	89,146		88,414
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(44,848)		(41,236)		Accumulated depreciation and amortization	(48,407)		(47,483)
Net depreciable and amortizable assets	Net depreciable and amortizable assets	44,653		40,159		Net depreciable and amortizable assets	40,739		40,931
Accounts receivable, net(2)	Accounts receivable, net(2)	34,499		36,762		Accounts receivable, net(2)	43,471		37,274
Accounts receivable - affiliates	Accounts receivable - affiliates	630		711		Accounts receivable - affiliates	1,470		513
Deferred rent receivable, net(3)	Deferred rent receivable, net(3)	45,068		40,212		Deferred rent receivable, net(3)	54,729		52,141
Derivative assets	Derivative assets	12,698		—		Derivative assets	19,200		25,853
Prepaid expenses and other	Prepaid expenses and other	14,540		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	7,624		5,551		Investment in marketable securities	8,219		7,792
Total other assets, net	Total other assets, net	$	162,712	$	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 ~~$3.9~~$2.8 million and ~~$3.5~~$3.0 million of general reserves for uncollectible amounts as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. Receivables that were removed for tenants considered to be non-creditworthy were ~~$7.5~~$5.9 million and ~~$9.2~~$6.2 million as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

(3)Net of ~~$5.1~~$4.0 million and ~~$4.7~~$4.2 million of receivables removed as of ~~June 30, 2022~~March 31, 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, 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 ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (dollars in thousands):


		Interest Rate(1)	June 30, 2022			December 31, 2021				Interest Rate(1)	March 31, 2023			December 31, 2022
Revolving credit facility	Revolving credit facility	SOFR + 1.2%	$	48,000		$	—		Revolving credit facility	SOFR + 1.1%	$	165,000		$	79,000
Term loans(2)	Term loans(2)	2.5% - 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%	146,419			213,316			Mortgages	3.5% - 6.4%	117,549			133,199
Finance lease liability	Finance lease liability		690			766			Finance lease liability		529			585
Discount on notes payable	Discount on notes payable		(7,343)			(7,680)			Discount on notes payable		(6,828)			(7,001)
Assumed market debt adjustments, net	Assumed market debt adjustments, net		(1,472)			(1,530)			Assumed market debt adjustments, net		(1,512)			(1,226)
Deferred financing expenses, net	Deferred financing expenses, net		(9,187)			(13,150)			Deferred financing expenses, net		(7,486)			(7,963)
Total	Total		$	1,877,107		$	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 ~~June 30, 2022.~~March 31, 2023.

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


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									11

~~2022~~2023 Debt Activity—In May 2022, we amended our credit facility agreement (the “Amendment”) to, among other things, increase the total amount available under our unsecured revolving credit facility from $500 million to $800 million. The unsecured 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 the satisfaction of certain conditions. The unsecured revolving credit facility is scheduled to mature in January 2026, extendable at our option to January 2027. In addition to expanding the borrowing capacity, the Amendment replaces the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) as the benchmark interest rate for the unsecured revolving credit facility and the two $240 million senior unsecured term loan tranches, maturing in November 2025 and July 2026.

During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, we ~~executed early repayments of $64.1~~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 ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 is summarized below (in thousands):


		June 30, 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)	$	1,647,109	$	1,889,082	Fixed-rate debt(1)	$	1,618,078	$	1,633,784
Variable-rate debt	Variable-rate debt	248,000		25,000		Variable-rate debt	365,000		279,000
Total	Total	$	1,895,109	$	1,914,082	Total	$	1,983,078	$	1,912,784
As to collateralization:	As to collateralization:					As to collateralization:
Unsecured debt	Unsecured debt	$	1,353,000	$	1,305,000	Unsecured debt	$	1,470,000	$	1,384,000
Secured debt	Secured debt	542,109		609,082		Secured debt	513,078		528,784
Total	Total	$	1,895,109	$	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 ~~June 30, 2022, $755.0~~March 31, 2023, $755 million in ~~variable rate~~variable-rate debt is hedged to a fixed rate for a weighted-average period of ~~2.1 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 ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt. Amounts reported in AOCI related to these derivatives will be reclassified to Interest Expense, Net as interest payments are made on the variable-rate debt. During the next twelve months, we estimate that an additional ~~$6.9~~$15.5 million will be reclassified from AOCI as a decrease to Interest Expense, Net.


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									12

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 ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (dollars in thousands):


		June 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Count	Count	4		5		Count	5		4
Notional amount(1)	Notional amount(1)	$	755,000	$	930,000	Notional amount(1)	$	755,000	$	755,000
Fixed LIBOR(1)		1.3% - 2.9%		1.3% - 2.9%
Fixed SOFR						Fixed SOFR	1.2% - 3.4%		1.2% - 2.8%
Maturity date	Maturity date	2023-2025		2022 - 2025		Maturity date	2023-2026		2023-2025
Weighted-average term (in years)	Weighted-average term (in years)	2.1		1.9		Weighted-average term (in years)	2.1		1.6

(1)In May 2022, we replaced LIBOR with SOFR as the benchmark interest rate for the two $240 million senior unsecured term loan tranches, maturing in November 2025 and July 2026. In accordance with ASC Topic 848, ~~Reference Rate Reform, we elected not to dedesignate our LIBOR denominated~~ Notional amount includes only interest rate swaps ~~related to this hedged debt.~~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 June 30, Six Months Ended June 30,
   2022 2021 2022 2021
Amount of gain (loss) recognized in
   Other Comprehensive Income
$ 7,080 $ (1,451) $ 29,979 $ 5,814
Amount of loss reclassified from AOCI
   into Interest Expense, Net
2,754 4,824 7,428 9,679


	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 ~~June 30, 2022,~~March 31, 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 $0.1 million.~~and approximated $0.2 million, are recorded in Accounts Payable and Other Liabilities on our consolidated balance sheets. As of ~~June 30, 2022,~~March 31, 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 ~~$0.1~~$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 our GRP I joint 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 ~~June 30, 2022,~~March 31, 2023, we had 4four letters of credit outstanding totaling approximately ~~$11.2~~$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~~ ~~JUNE 30, 2022 FORM 10-Q~~									13

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. During the three months ended ~~June 30,~~March 31, 2023 and 2022, ~~we issued 1.9 million~~no shares of our common stock were issued under the ATM ~~program for net proceeds of $63.0 million, after approximately $0.6 million in commissions.~~program. As of ~~June 30, 2022, $186.3~~March 31, 2023, $159.9 million of common stock remained available for issuance under the ATM program.

In July 2022, we issued an additional 0.8 million shares of our common stock under the ATM program for net proceeds of $26.2 million, after approximately $0.3 million in commissions. We received a weighted-average price of $34.23 per share for the 2.6 million shares of common stock sold under the ATM program through July 2022.

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

Class B Common Stock—On June 18, 2021, our stockholders approved ~~Articles~~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. We no longer have Class B common stock authorized for issue.

~~Underwritten IPO~~—On July 19, 2021, we completed an underwritten IPO and issued 17.0 million shares of common stock at an offering price to the public of $28.00 per share. We used a portion of the net proceeds to reduce our leverage and used the remaining amount to fund external growth with property acquisitions and for other general corporate uses. As part of the underwritten IPO, underwriters were granted an option exercisable within 30 days from July 14, 2021 to purchase up to an additional 2.6 million shares of common stock at the underwritten IPO price, less underwriting discounts and commissions. On July 29, 2021, the underwriters exercised their option. The underwritten IPO, including the underwriters’ overallotment election, resulted in gross proceeds of $547.4 million.

Distributions—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 ~~June 30, 2022~~March 31, 2023 were as follows (dollars in thousands, excluding per share amounts):

Month Date of Record Date Distribution Paid Monthly Distribution Rate Cash Distribution
June 6/15/2022 7/1/2022 $ 0.09 $ 11,595
July 7/15/2022 8/1/2022 0.09 11,768

On August 3, 2022, our Board authorized a distribution for August 2022 of $0.09 per share to the stockholders of record at the close of business on August 15, 2022. 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 ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, we had approximately ~~14.6~~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 ~~June 30, 2022~~March 31, 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).


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									14

The table below is a summary of our OP unit activity for the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (dollars and shares in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021
OP units converted into shares of
common stock(1)
72 28 605 28
Distributions paid on OP units(2)
$ 4,113 $ 3,460 $ 8,217 $ 6,779


	Three Months Ended March 31,
		2023		2022
OP units converted into shares of common stock(1)		—		533
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 and cash flows.~~equity.

~~Dividend Reinvestment Plan and~~ Share Repurchase ~~Programs~~Program—~~On August 4, 2021, as a result of our underwritten IPO, our Board approved the termination of the DRIP and the original share repurchase program.~~

On August 3, 2022, our Board approved a new share repurchase program of up to ~~$250.0~~$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 been made to date under this program.


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


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 June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Numerator:	Numerator:									Numerator:
Net income attributable to stockholders - basic	Net income attributable to stockholders - basic	$	13,528	$	5,594	$	23,607	$	5,697	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)	1,727		796		3,046		810		Net income attributable to convertible OP units(1)		2,017		1,319
Net income - diluted	Net income - diluted	$	15,255	$	6,390	$	26,653	$	6,507	Net income - diluted		$	18,636	$	11,398
Denominator:	Denominator:									Denominator:
Weighted-average shares - basic	Weighted-average shares - basic	114,124		93,625		113,850		93,558		Weighted-average shares - basic		117,223		113,571
OP units(1)	OP units(1)	14,551		13,381		14,553		13,368		OP units(1)		14,234		14,558
Dilutive restricted stock awards	Dilutive restricted stock awards	442		169		454		176		Dilutive restricted stock awards		486		374
Adjusted weighted-average shares - diluted	Adjusted weighted-average shares - diluted	129,117		107,175		128,857		107,102		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	$	0.12	$	0.06	$	0.21	$	0.06	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.


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									15


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 June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Recurring fees(1)	Recurring fees(1)	$	995	$	1,103	$	2,070	$	2,228	Recurring fees(1)		$	1,012	$	1,075
Realized performance income(2)	Realized performance income(2)	2,546		—		2,742		—		Realized performance income(2)		75		196
Transactional revenue and reimbursements(3)	Transactional revenue and reimbursements(3)	447		461		841		929		Transactional revenue and reimbursements(3)		542		394
Insurance premiums(4)	Insurance premiums(4)	793		810		1,589		1,503		Insurance premiums(4)		849		796
Total fees and management income	Total fees and management income	$	4,781	$	2,374	$	7,242	$	4,660	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.

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


PHILLIPS EDISON & COMPANY MARCH 31, 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 ~~June 30, 2022,~~March 31, 2023, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately ~~$142.5~~$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— As of ~~June 30, 2022,~~March 31, 2023, we were the limited guarantor of a $175 million mortgage loan secured by GRP I properties. Our guaranty for the GRP I debt is limited to being the non-recourse carveout guarantor and the environmental indemnitor. Further, we are also party to an agreement with GRP I in which any potential liability under such guarantee will be apportioned between us and GRP I based on our respective ownership percentages in the joint venture. We have no liability recorded on our consolidated balance sheets for the guaranty as of ~~June 30, 2022~~March 31, 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, 2023 and December 31, 2022 (in thousands):


	March 31, 2023				December 31, 2022
	Recorded Principal Balance(1)		Fair Value		Recorded Principal Balance(1)		Fair Value
Revolving credit facility	$	165,000	$	165,677	$	79,000	$	79,299
Term loans	949,089		959,281		948,429		959,319
Senior unsecured notes due 2031	343,172		263,277		342,999		257,446
Secured portfolio loan facilities	392,214		343,049		392,093		343,921
Mortgages(2)	117,777		115,763		134,073		132,563
Total	$	1,967,252	$	1,847,047	$	1,896,594	$	1,772,548

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

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


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									1615

~~The following is a summary of borrowings as of June 30, 2022 and December 31, 2021 (in thousands):~~

June 30, 2022 December 31, 2021
Recorded Principal Balance(1)
Fair Value
Recorded Principal Balance(1)
Fair Value
Revolving credit facility $ 48,000 $ 48,000 $ — $ —
Term loans 947,110 955,976 943,127 955,919
Senior unsecured notes due 2031 342,657 271,058 342,320 344,099
Secured portfolio loan facilities 391,852 361,060 391,612 394,356
Mortgages(2)
147,488 147,547 214,663 221,741
Total $ 1,877,107 $ 1,783,641 $ 1,891,722 $ 1,916,115

~~(1)~~As of June 30, 2022 and December 31, 2021, respectively, recorded principal balances include: (i) net deferred financing fees of $9.2 million and $13.2 million; (ii) assumed market debt adjustments of $1.5 million and $1.5 million; and (iii) notes payable discounts of $7.3 million and $7.7 million.

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

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 ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 and the year ended December 31, ~~2021~~2022 were as follows (in thousands):


		June 30, 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)	$	7,624	$	—	$	—	$	5,551	$	—	$	—	Marketable securities(1)	$	8,219	$	—	$	—	$	7,792	$	—	$	—
Derivative assets(1)	Derivative assets(1)	—		12,698		—		—		—		—		Derivative assets(1)	—		19,200		—		—		25,853		—
Derivative liabilities(2)	Derivative liabilities(2)	—		(52)		—		—		(24,096)		—		Derivative liabilities(2)	—		184		—		—		—		—
Earn-out liability		—		—		—		—		(52,436)		—
Nonrecurring	Nonrecurring													Nonrecurring
Impaired real estate assets, net(2)		$	—	$	—	$	—	$	—	$	24,000	$	—
Impaired real estate assets, net(3)														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 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 ~~June 30, 2022~~March 31, 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 ~~June 30, 2022~~March 31, 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. 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


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									17

$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 three months ended June 30, 2022 and $2.0 million in expense for the three months ended June 30, 2021. We recorded expense of $1.8 million and $18.0 million, respectively, for the six months ended June 30, 2022 and June 30, 2021.

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. There were no impairment charges recorded during the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and March 31, 2022. During the three and six months ended June 30, 2021, we impaired assets that were under contract at a disposition price that was less than carrying value, or that had other operational impairment indicators. The valuation technique used for the fair value of all impaired real estate assets was the expected net sales proceeds, which we consider to be a Level 2 input in the fair value hierarchy.

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 June 30, Six Months Ended June 30,
2022 2021 2022 2021
Impairment of real estate assets $ — $ 1,056 $ — $ 6,056
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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									1817

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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									1918

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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									2019

•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 ~~June 30, 2022,~~March 31, 2023, we owned equity interests in ~~289~~295 shopping centers, including ~~269~~275 wholly-owned shopping centers and 20 shopping centers owned through one unconsolidated joint 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 ~~our~~the NRP joint venture ~~with NRP,~~as a result of the planned expiration of the joint venture in ~~which~~2023. With the monetization of the joint venture, we ~~own a 20% interest. During~~exceeded the targeted return and as such were paid compensation of $0.1 million and $0.2 million during the three ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~we recognized income of $2.5 million and $2.7 million,~~ respectively, ~~related to NRP’s achievement of certain performance targets,~~ which is ~~included~~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 ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ (dollars and square feet in thousands):


		June 30, 2022			June 30, 2021				March 31, 2023			March 31, 2022
Number of properties	Number of properties	269			272			Number of properties	275			269
Number of states	Number of states	31			31			Number of states	31			31
Total square feet	Total square feet	30,935			30,778			Total square feet	31,456			30,813
ABR	ABR	$	421,019		$	384,916		ABR	$	445,611		$	412,518
% ABR from omni-channel grocery-anchored shopping centers	% ABR from omni-channel grocery-anchored shopping centers	97.2		%	96.0		%	% ABR from omni-channel grocery-anchored shopping centers	97.2		%	97.3		%
Leased occupancy %:	Leased occupancy %:							Leased occupancy %:
Total portfolio spaces	Total portfolio spaces	96.8		%	94.7		%	Total portfolio spaces	97.5		%	96.2		%
Anchor spaces	Anchor spaces	98.7		%	96.8		%	Anchor spaces	99.3		%	98.1		%
Inline spaces	Inline spaces	93.2		%	90.6		%	Inline spaces	94.3		%	92.6		%
Average remaining lease term (in years)(1)	Average remaining lease term (in years)(1)	4.6			4.5			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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									2120

The following table details information for our unconsolidated joint venture as of ~~June 30, 2022,~~March 31, 2023, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):

June 30, 2022

March 31, 2023

Joint Venture

Ownership Percentage

Number of Properties

ABR

GLA

Joint Venture

Ownership Percentage

Number of Properties

ABR

GLA

GRP I

14%

30,308

2,210

GRP I

14%

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 ~~June 30, 2022~~March 31, 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 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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									2221

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 venture, by Neighbor type as of ~~June 30, 2022:~~March 31, 2023:

The following charts present the composition of our portfolio by Neighbor industry as of ~~June 30, 2022:~~March 31, 2023:


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									2322

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 71% of our ABR, including the pro rata portion attributable to properties owned through our unconsolidated joint venture, is generated from Neighbors providing necessity-based goods and services.

TOP 20 NEIGHBORS—The following table presents our top 20 Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture, as of ~~June 30, 2022~~March 31, 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	$	27,423	6.4	%	3,366	11.1	%	61	Kroger	$	27,830	6.2	%	3,411	11.0	%	62
Publix	Publix	23,623		5.6	%	2,314	7.6	%	57	Publix	25,996		5.8	%	2,510	8.1	%	61
Albertsons	Albertsons	18,232		4.3	%	1,709	5.6	%	31	Albertsons	18,343		4.1	%	1,709	5.5	%	31
Ahold Delhaize	Ahold Delhaize	17,662		4.2	%	1,249	4.1	%	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	7,810		1.8	%	828	2.7	%	12	Giant Eagle	7,384		1.6	%	759	2.4	%	10
Sprouts Farmers Market	Sprouts Farmers Market	6,494		1.5	%	421	1.4	%	14	Sprouts Farmers Market	6,538		1.5	%	422	1.4	%	14
TJX Companies	TJX Companies	6,030		1.4	%	516	1.7	%	18	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	3,454		0.8	%	329	1.1	%	36	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	2,574		0.6	%	100	0.3	%	71	Subway Group	2,498		0.6	%	95	0.3	%	66
Lowe's	Lowe's	2,469		0.6	%	369	1.2	%	4	Lowe's	2,470		0.5	%	369	1.2	%	4
Anytime Fitness, Inc.	Anytime Fitness, Inc.	2,405		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
Office Depot	Office Depot	2,237		0.5	%	179	0.6	%	8	Office Depot	2,237		0.5	%	179	0.6	%	8
Food 4 Less (PAQ)		2,215		0.5	%	118	0.4	%	2
Save Mart		2,174		0.5	%	258	0.9	%	5
Starbucks Corporation		2,136		0.5	%	49	0.2	%	30
Petco Animal Supplies, Inc.		2,136		0.5	%	127	0.4	%	11
United Parcel Service										United Parcel Service	2,230		0.5	%	83	0.3	%	65
Total	Total	$	147,376	34.6	%	14,806	48.8	%	440	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—The COVID-19 pandemic resulted in reduced revenues beginning with the second quarter of 2020 through early 2021. Our collections returned to pre-COVID levels during the second half of 2021 and have continued through the first half of 2022. As of June 30, 2022, our Neighbors currently being accounted for on a cash basis represented approximately 5.0% of portfolio ABR. We believe our collections have stabilized, which will reduce volatility in our earnings during 2022 as compared to 2021.

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 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 the 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 growth or potentially a recession.


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									2423

SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED ~~JUNE 30,~~MARCH 31, 2023 AND 2022 ~~AND 2021~~


		Three Months Ended June 30,				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	$	137,230	$	130,335	$	6,895	5.3	%	Rental income	$	147,728	$	138,748	$	8,980	6.5	%
Fees and management income	Fees and management income	4,781		2,374		2,407		101.4	%	Fees and management income	2,478		2,461		17		0.7	%
Other property income	Other property income	505		361		144		39.9	%	Other property income	858		954		(96)		(10.1)	%
Total revenues	Total revenues	142,516		133,070		9,446		7.1	%	Total revenues	151,064		142,163		8,901		6.3	%
Operating Expenses:	Operating Expenses:									Operating Expenses:
Property operating	Property operating	22,852		21,974		(878)		(4.0)	%	Property operating	25,062		23,320		(1,742)		(7.5)	%
Real estate taxes	Real estate taxes	16,473		16,814		341		2.0	%	Real estate taxes	18,056		17,491		(565)		(3.2)	%
General and administrative	General and administrative	11,376		11,937		561		4.7	%	General and administrative	11,533		11,532		(1)		—	%
Depreciation and amortization	Depreciation and amortization	60,769		56,587		(4,182)		(7.4)	%	Depreciation and amortization	58,498		57,226		(1,272)		(2.2)	%
Impairment of real estate assets		—		1,056		1,056		NM

Total operating expenses	Total operating expenses	111,470		108,368		(3,102)		(2.9)	%	Total operating expenses	113,149		109,569		(3,580)		(3.3)	%
Other:	Other:									Other:
Interest expense, net	Interest expense, net	(17,127)		(19,132)		2,005		10.5	%	Interest expense, net	(19,466)		(18,199)		(1,267)		(7.0)	%
Gain on disposal of property, net	Gain on disposal of property, net	2,793		3,744		(951)		(25.4)	%	Gain on disposal of property, net	942		1,368		(426)		(31.1)	%
Other expense, net	Other expense, net	(1,457)		(2,924)		1,467		50.2	%	Other expense, net	(755)		(4,365)		3,610		82.7	%
Net income	Net income	15,255		6,390		8,865		138.7	%	Net income	18,636		11,398		7,238		63.5	%
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(1,727)		(796)		(931)		(117.0)	%	Net income attributable to noncontrolling interests	(2,017)		(1,319)		(698)		(52.9)	%
Net income attributable to stockholders	Net income attributable to stockholders	$	13,528	$	5,594	$	7,934	141.8	%	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 ~~255~~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 264 properties disposed of and 1311 properties acquired. Below are explanations of the significant fluctuations in the results of operations for the three months ended ~~June 30, 2022~~March 31, 2023 and ~~2021:~~2022:

Rental Income increased ~~$6.9~~$9.0 million primarily as follows:

•$~~2.2~~4.7 million increase primarily related to our same-center portfolio as follows:

▪$~~3.1~~4.9 million increase primarily due to a ~~$0.37~~$0.39 increase in average minimum rent PSF and a ~~1.6%~~1.0% improvement in average ~~occupancy owing largely~~occupancy;

▪$1.2 million increase primarily due to ~~the strength~~lower reserves as a result of ~~our leasing results during 2021;~~a decrease in Neighbors we have identified as a credit risk; and

▪$1.4 million increase owing largely to an increase in recoverable income attributable to the 1.6% improvement in average occupancy and lower reserves for common area maintenance as compared to 2021; offset by

▪~~$2.2~~1.6 million decrease primarily due to the stabilization of collections in 2022 compared to the recovery of prior year income in 2021 and the reversal of reserves for uncollectibility from 2020 resulting from the recovery of our portfolio in the wake of the COVID-19 pandemic.lower lease buyout income.

•$~~4.7~~4.3 million increase primarily related to our acquisition ~~and disposition activity.~~

~~Fees and Management Income:~~

•~~The $2.4 million increase in fees and management income was primarily due to the achievement~~activity, net of ~~certain performance targets related to our joint venture with NRP.~~dispositions.

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

•~~The $0.9~~$1.2 million increase ~~in property operating expenses was largely related to~~from our same-center portfolio and corporate operating activities primarily ~~as follows:~~

▪~~$1.2 million increase~~due to increases in recoverable expenses attributed to higher common area maintenance costs and compensation expense, as compared to ~~2021; offset by~~2022; and

▪•$~~0.5~~0.6 million increase primarily due to our acquisition activity, net of dispositions.

Real Estate Tax Expenses:

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

General and Administrative Expenses were consistent from 2022 to 2023, with the 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 ~~compensation expenses due to decreases in performance-based compensation, as compared to 2021.~~premiums for directors and officers insurance.


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									2524

~~Real Estate Tax Expenses:~~

•~~The $0.3 million decrease in real estate tax expenses is primarily due to the impact of favorable real estate tax reassessments and appeals.~~

~~General and Administrative Expenses decreased $0.6 million primarily as follows:~~

•~~$1.6 million decrease in compensation expense owing largely to a decrease in performance- and service-based compensation of approximately $0.8 million and $0.4 million, respectively; and~~

•~~$0.3 million decrease primarily due to lower third-party consultant and custodial costs; offset by~~

•~~$1.0 million increase primarily due to increases in technology-related costs and travel and conference expenses; and~~

•~~$0.5 million increase primarily due to an increase in directors and officers insurance as a result of our becoming a publicly traded company.~~

~~Depreciation and Amortization:~~

•~~The $4.2 million increase in depreciation and amortization is primarily due to the execution of our acquisition strategy and investment in improvements to our Neighbor spaces.~~

~~Impairment of Real Estate Assets:~~

•~~The $1.1 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 ~~$2.0~~$1.3 million ~~decrease~~increase was primarily due to ~~net repayments of~~increased debt outstanding and interest rates in ~~2021,~~2023 partially offset by ~~higher average interest rates in 2022.~~lower loss on extinguishment or modification of debt. Interest Expense, Net was comprised of the following (dollars in thousands):


		Three Months Ended June 30,							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	$	9,512		$	10,573		Interest on unsecured term loans and senior notes, net	$	11,292		$	9,916
Interest on secured debt	Interest on secured debt	5,147			6,246			Interest on secured debt	4,888			5,531
Interest on revolving credit facility, net	Interest on revolving credit facility, net	521			207			Interest on revolving credit facility, net	1,568			247
Non-cash amortization and other	Non-cash amortization and other	1,818			1,687			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)	129			419			Loss on extinguishment or modification of debt and other, net(1)	—			900
Interest expense, net	Interest expense, net	$	17,127		$	19,132		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		%	2.9		%	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	4.9			3.7			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 ~~$1.0~~$0.4 million decrease was primarily related to ~~the sale of one property and two outparcels~~land acquired by local authorities with a net gain of ~~$2.8~~$0.9 million during the three months ended ~~June 30, 2022,~~March 31, 2023, as compared to the sale of ~~seven~~two properties ~~(in addition to other property-related miscellaneous disposals and write-offs)~~ with a net gain of ~~$3.7~~$1.4 million during the three months ended ~~June 30, 2021~~March 31, 2022 (see Note 4).

Other Expense, Net:

•The ~~$1.5~~$3.6 million decrease was primarily related to ~~a 2021 charge in connection with~~ the ~~change in~~settlement of the ~~fair value of our~~ earn-out liability ~~which was settled~~ in January 2022, ~~combined with~~ an increase ~~from equity~~ in ~~income of~~the value in our ~~unconsolidated joint ventures, partially offset by an increase~~marketable securities, and a decrease in transaction and acquisition ~~expenses owing largely to the amortization of the restricted stock units awarded at the time of our underwritten IPO and a decrease in the value of our investment in marketable securities.~~expenses. Other Expense, Net was comprised of the following (in thousands):


		Three Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Increase in fair value of earn-out liability (see Note 12)		$	—	$	(2,000)
Equity in net income of unconsolidated joint ventures		1,228		87
Transaction and acquisition expenses	Transaction and acquisition expenses	(2,035)		(934)		Transaction and acquisition expenses	$	(1,338)	$	(2,045)
Federal, state, and local income tax expense	Federal, state, and local income tax expense	(97)		(165)		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	(553)		88		Other	611		(360)
Other expense, net	Other expense, net	$	(1,457)	$	(2,924)	Other expense, net	$	(755)	$	(4,365)


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									2625

~~SUMMARY OF OPERATING ACTIVITIES FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021~~

Six Months Ended
June 30, Favorable (Unfavorable)
Change
(Dollars in thousands) 2022 2021 $
%(1)
Revenues:
Rental income $ 275,978 $ 257,958 $ 18,020 7.0 %
Fee and management income 7,242 4,660 2,582 55.4 %
Other property income 1,459 833 626 75.2 %
Total revenues 284,679 263,451 21,228 8.1 %
Operating Expenses:
Property operating 46,172 44,176 (1,996) (4.5) %
Real estate taxes 33,964 33,387 (577) (1.7) %
General and administrative 22,908 21,278 (1,630) (7.7) %
Depreciation and amortization 117,995 111,928 (6,067) (5.4) %
Impairment of real estate assets — 6,056 6,056 NM
Total operating expenses 221,039 216,825 (4,214) (1.9) %
Other:
Interest expense, net (35,326) (39,195) 3,869 9.9 %
Gain on disposal of property, net 4,161 17,585 (13,424) (76.3) %
Other expense, net (5,822) (18,509) 12,687 68.5 %
Net income 26,653 6,507 20,146 NM
Net income attributable to noncontrolling interests (3,046) (810) (2,236) NM
Net income attributable to stockholders $ 23,607 $ 5,697 $ 17,910 NM

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

For details surrounding our basis for analyzing significant fluctuations in our results of operations as well as definitions related to our portfolio of real estate assets, please see “Summary of Operating Activities for the Three Months Ended June 30, 2022 and 2021” above. Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, 2022 and 2021:

~~Rental Income increased $18.0 million as follows:~~

•~~$10.5 million increase related to our same-center portfolio primarily as follows:~~

▪~~$9.0 million increase primarily due to a $0.37 increase in average minimum rent per square foot and a 1.4% improvement in average occupancy; and~~

▪$3.1 million increase owing largely to an increase in recoverable income attributed to an increase in common area maintenance spending and lower reserves for common area maintenance, as compared to 2021, and the 1.4% improvement in average occupancy; offset by

▪$1.7 million decrease primarily due to the stabilization of collections in 2022 compared to the recovery of prior year income in 2021 and the reversal of reserves for uncollectibility from 2020 resulting from the recovery of our portfolio in the wake of the COVID-19 pandemic.

•~~$7.6 million increase primarily related to our acquisition and disposition activity.~~

~~Fees and management income:~~

•~~The $2.6 million increase in fees and management income was primarily due to the achievement of certain performance targets related to our joint venture with NRP.~~

~~Property Operating Expenses increased $2.0 million primarily as follows:~~

•~~$1.4 million increase related to our same-center portfolio and corporate operating activities as follows:~~

▪~~$1.9 million increase attributable to higher common area maintenance costs, as compared to 2021; and~~

▪~~$0.6 million increase primarily due to higher insurance expenses attributed to higher market rates and an increase in claims and claim development; offset by~~

▪~~$0.4 million decrease in compensation expenses due to decreases in performance-based compensation, as compared to 2021.~~

•~~$0.5 million increase primarily due to our acquisition activity.~~

~~Real Estate Tax Expenses:~~

•~~The $0.6 million increase in real estate tax expenses is primarily due to our acquisition activity.~~


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									27

~~General and Administrative Expenses increased $1.6 million primarily as follows:~~

•~~$1.2 million increase primarily due to an increase in directors and officers insurance as a result of our becoming a publicly traded company; and~~

•~~$1.0 million increase primarily due to increases in overhead attributed to technology-related costs and travel and conference expenses; offset by~~

•~~$0.5 million decrease in compensation expense owing largely to lower performance-based compensation.~~

~~Depreciation and Amortization:~~

•~~The $6.1 million increase in depreciation and amortization is primarily due to the execution of our acquisition strategy and investment in improvements to our Neighbor spaces.~~

~~Impairment of Real Estate Assets:~~

•~~The $6.1 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 $3.9 million decrease was primarily due to net repayments of debt outstanding in 2021, partially offset by higher average interest rates in 2022. Interest Expense, Net was comprised of the following (dollars in thousands):

Six Months Ended June 30,
2022 2021
Interest on unsecured term loans and senior notes, net $ 19,428 $ 21,206
Interest on secured debt 10,678 13,026
Interest on revolving credit facility, net 768 435
Non-cash amortization and other 3,423 3,418
Loss on extinguishment or modification of debt and other, net(1)
1,029 1,110
Interest expense, net $ 35,326 $ 39,195
Weighted-average interest rate as of end of period 3.2 % 2.9 %
Weighted-average term (in years) as of end of period 4.9 3.7

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

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

•~~The $13.4 million decrease~~was primarily related to the sale of three properties and two outparcels with a net gain of $4.2 million during the six months ended June 30, 2022, as compared to the sale of 13 properties and one outparcel (as well as other property-related miscellaneous disposals and write-offs) with a net gain of $17.6 million during the six months ended June 30, 2021 (see Note 4).


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									28

~~Other Expense, Net:~~

•The $12.7 million decrease was primarily related to a 2021 charge in connection with the change in the fair value of our earn-out liability, which was settled in January 2022, combined with an increase from equity in income of our unconsolidated joint ventures, partially offset by an increase in transaction and acquisition expenses owing largely to the amortization of the restricted stock units awarded at the time of our underwritten IPO and a decrease in the value of our investment in marketable securities. Other Expense, Net was comprised of the following (in thousands):

Six Months Ended June 30,
2022 2021
Increase in fair value of earn-out liability (see Note 12) $ (1,809) $ (18,000)
Equity in net income of unconsolidated joint ventures 1,174 801
Transaction and acquisition expenses (4,080) (1,075)
Federal, state, and local income tax expense (194) (331)
Other (913) 96
Other expense, net $ (5,822) $ (18,509)

LEASING ACTIVITY—Below is a summary of leasing activity for our wholly-owned properties for the three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~(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	105			124			98			121			Number of leases	98			92			95			88
Square footage (in thousands)	Square footage (in thousands)	404			341			225			278			Square footage (in thousands)	264			257			191			186
ABR (in thousands)	ABR (in thousands)	$	7,479		$	6,338		$	5,479		$	5,816		ABR (in thousands)	$	6,149		$	4,941		$	5,001		$	4,321
ABR PSF	ABR PSF	$	18.51		$	18.57		$	24.40		$	20.94		ABR PSF	$	23.27		$	19.25		$	26.17		$	23.21
Cost PSF of executing new leases	Cost PSF of executing new leases	$	35.10		$	31.01		$	35.18		$	29.30		Cost PSF of executing new leases	$	34.90		$	28.90		$	39.08		$	33.40
Number of comparable leases	Number of comparable leases	38			57			37			55			Number of comparable leases	30			34			30			33
Comparable rent spread	Comparable rent spread	39.0		%	18.5		%	24.5		%	19.0		%	Comparable rent spread	27.4		%	34.0		%	27.4		%	27.4		%
Weighted-average lease term (in years)	Weighted-average lease term (in years)	9.0			7.2			7.6			6.8			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	160			174			141			159			Number of leases	165			152			154			146
Square footage (in thousands)	Square footage (in thousands)	1,225			1,049			290			333			Square footage (in thousands)	801			519			324			323
ABR (in thousands)	ABR (in thousands)	$	15,132		$	12,895		$	7,290		$	7,306		ABR (in thousands)	$	13,911		$	9,247		$	8,328		$	7,302
ABR PSF	ABR PSF	$	12.35		$	12.30		$	25.17		$	21.95		ABR PSF	$	17.36		$	17.81		$	25.67		$	22.60
ABR PSF prior to renewals	ABR PSF prior to renewals	$	11.49		$	11.55		$	22.46		$	20.08		ABR PSF prior to renewals	$	15.70		$	16.02		$	22.33		$	19.95
Percentage increase in ABR PSF	Percentage increase in ABR PSF	7.5		%	6.5		%	12.1		%	9.3		%	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)~~	$	0.55		$	0.89		$	0.75		$	1.11		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)	120			155			118			148			Number of comparable leases~~(3)~~(2)	126			128			124			126
Comparable rent spread~~(3)~~(2)	Comparable rent spread~~(3)~~(2)	14.4		%	8.0		%	13.4		%	9.4		%	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)	5.5			5.4			4.2			4.0			Weighted-average lease term (in years)	4.9			4.3			4.4			3.9
Portfolio retention rate	Portfolio retention rate	92.1		%	85.5		%	85.3		%	79.5		%	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.~~


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									29

~~Below is a summary of leasing activity for our wholly-owned properties for the six months ended June 30, 2022 and 2021(1)~~:

Total Deals Inline Deals
2022 2021 2022 2021
New leases:
Number of leases 197 277 186 268
Square footage (in thousands) 661 808 411 619
ABR (in thousands) $ 12,421 $ 14,458 $ 9,800 $ 12,421
ABR PSF $ 18.80 $ 17.89 $ 23.86 $ 20.06
Cost PSF of executing new leases $ 32.69 $ 28.51 $ 34.37 $ 28.00
Number of comparable leases 72 127 70 125
Comparable rent spread 36.6 % 15.3 % 25.8 % 15.3 %
Weighted-average lease term (in years) 8.1 7.7 7.5 6.5
Renewals and options:
Number of leases 312 337 287 306
Square footage (in thousands) 1,744 2,027 613 645
ABR (in thousands) $ 24,379 $ 24,367 $ 14,592 $ 14,375
ABR PSF $ 13.98 $ 12.02 $ 23.81 $ 22.30
ABR PSF prior to renewals $ 12.84 $ 11.27 $ 21.14 $ 20.54
Percentage increase in ABR PSF 8.8 % 6.6 % 12.7 % 8.6 %
Cost PSF of executing renewals and options(2)
$ 0.58 $ 0.71 $ 0.81 $ 1.34
Number of comparable leases(3)
248 291 244 281
Comparable rent spread(3)
14.6 % 8.0 % 14.0 % 8.7 %
Weighted-average lease term (in years) 5.1 4.9 4.0 4.0
Portfolio retention rate 90.6 % 87.2 % 81.6 % 79.9 %

~~(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 ~~and six~~ months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ Same-Center NOI represents the NOI for the ~~255~~263 properties that were wholly-owned and operational for the entire portion of 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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									3026

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


		Three Months Ended June 30,				Favorable (Unfavorable)				Six Months Ended June 30,				Favorable (Unfavorable)					Three Months Ended March 31,	Favorable (Unfavorable)
		2022		2021		$ Change		% Change		2022		2021		$ Change		% Change				2023		2022		$ Change		% Change
Revenues:	Revenues:																	Revenues:
Rental income(1)	Rental income(1)	$	94,169	$	89,516	$	4,653			$	188,562	$	179,141	$	9,421			Rental income(1)		$	103,750	$	98,829	$	4,921
Tenant recovery income	Tenant recovery income	28,375		26,818		1,557				59,772		56,921		2,851				Tenant recovery income		33,916		33,163		753
Reserves for uncollectibility(2)	Reserves for uncollectibility(2)	256		2,783		(2,527)				(515)		1,221		(1,736)				Reserves for uncollectibility(2)		(919)		(838)		(81)
Other property income	Other property income	439		286		153				1,186		751		435				Other property income		801		900		(99)
Total revenues	Total revenues	123,239		119,403		3,836		3.2	%	249,005		238,034		10,971		4.6	%	Total revenues		137,548		132,054		5,494		4.2	%
Operating expenses:	Operating expenses:																	Operating expenses:
Property operating expenses	Property operating expenses	18,337		17,043		(1,294)				38,105		35,756		(2,349)				Property operating expenses		21,585		20,707		(878)
Real estate taxes	Real estate taxes	15,213		16,331		1,118				31,650		32,341		691				Real estate taxes		17,347		17,299		(48)
Total operating expenses	Total operating expenses	33,550		33,374		(176)		(0.5)	%	69,755		68,097		(1,658)		(2.4)	%	Total operating expenses		38,932		38,006		(926)		(2.4)	%
Total Same-Center NOI	Total Same-Center NOI	$	89,689	$	86,029	$	3,660	4.3	%	$	179,250	$	169,937	$	9,313	5.5	%	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 June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Net income	Net income	$	15,255	$	6,390	$	26,653	$	6,507	Net income		$	18,636	$	11,398
Adjusted to exclude:	Adjusted to exclude:									Adjusted to exclude:
Fees and management income	Fees and management income	(4,781)		(2,374)		(7,242)		(4,660)		Fees and management income		(2,478)		(2,461)
Straight-line rental income(1)	Straight-line rental income(1)	(3,319)		(2,970)		(5,128)		(4,392)		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	(1,078)		(887)		(2,080)		(1,725)		Net amortization of above- and below-market leases		(1,228)		(1,002)
Lease buyout income	Lease buyout income	(176)		(1,781)		(2,141)		(2,578)		Lease buyout income		(355)		(1,965)
General and administrative expenses	General and administrative expenses	11,376		11,937		22,908		21,278		General and administrative expenses		11,533		11,532
Depreciation and amortization	Depreciation and amortization	60,769		56,587		117,995		111,928		Depreciation and amortization		58,498		57,226
Impairment of real estate assets		—		1,056		—		6,056

Interest expense, net	Interest expense, net	17,127		19,132		35,326		39,195		Interest expense, net		19,466		18,199
Gain on disposal of property, net	Gain on disposal of property, net	(2,793)		(3,744)		(4,161)		(17,585)		Gain on disposal of property, net		(942)		(1,368)
Other expense, net	Other expense, net	1,457		2,924		5,822		18,509		Other expense, net		755		4,365
Property operating expenses related to fees and management income	Property operating expenses related to fees and management income	1,287		1,306		2,357		2,122		Property operating expenses related to fees and management income		315		1,070
NOI for real estate investments	NOI for real estate investments	95,124		87,576		190,309		174,655		NOI for real estate investments		101,620		95,185
Less: Non-same-center NOI(2)	Less: Non-same-center NOI(2)	(5,435)		(1,547)		(11,059)		(4,718)		Less: Non-same-center NOI(2)		(3,004)		(1,137)
Total Same-Center NOI	Total Same-Center NOI	$	89,689	$	86,029	$	179,250	$	169,937	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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									3127

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 June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021		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	$	15,255	$	6,390	$	26,653	$	6,507	Net income		$	18,636	$	11,398
Adjustments:	Adjustments:									Adjustments:
Depreciation and amortization of real estate assets	Depreciation and amortization of real estate assets	59,849		55,654		116,169		109,995		Depreciation and amortization of real estate assets		57,953		56,320
Impairment of real estate assets		—		1,056		—		6,056

Gain on disposal of property, net	Gain on disposal of property, net	(2,793)		(3,744)		(4,161)		(17,585)		Gain on disposal of property, net		(942)		(1,368)
Adjustments related to unconsolidated joint ventures	Adjustments related to unconsolidated joint ventures	(1,186)		537		(481)		(100)		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	$	71,125	$	59,893	$	138,180	$	104,873	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	$	71,125	$	59,893	$	138,180	$	104,873	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	920		933		1,826		1,933		Depreciation and amortization of corporate assets		545		906
Change in fair value of earn-out liability	Change in fair value of earn-out liability	—		2,000		1,809		18,000		Change in fair value of earn-out liability		—		1,809
Transaction and acquisition expenses	Transaction and acquisition expenses	2,035		934		4,080		1,075		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	129		419		1,029		1,110		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	175		79		219		825		Amortization of unconsolidated joint venture basis differences		1		44
Realized performance income(1)	Realized performance income(1)	(2,546)		—		(2,742)		—		Realized performance income(1)		(75)		(196)
Core FFO		$	71,838	$	64,258	$	144,401	$	127,816
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	Weighted-average shares of common stock outstanding - diluted	129,117		107,175		128,857		107,102		Weighted-average shares of common stock outstanding - diluted		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	$	0.55	$	0.56	$	1.07	$	0.98	Nareit FFO attributable to stockholders and OP unit holders per share - diluted		$	0.58	$	0.52
Core FFO per share - diluted		$	0.56	$	0.60	$	1.12	$	1.19
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)Realized performance income includes fees received related to the achievement of certain performance targets in our NRP joint venture.


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									3228

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 June 30,				Six Months Ended June 30,				Year Ended December 31,			Three Months Ended March 31,			Year Ended December 31,
		2022		2021		2022		2021		2021				2023		2022		2022
Calculation of EBITDAre	Calculation of EBITDAre											Calculation of EBITDAre
Net income	Net income	$	15,255	$	6,390	$	26,653	$	6,507	$	17,233	Net income		$	18,636	$	11,398	$	54,529
Adjustments:	Adjustments:											Adjustments:
Depreciation and amortization	Depreciation and amortization	60,769		56,587		117,995		111,928		221,433		Depreciation and amortization		58,498		57,226		236,224
Interest expense, net	Interest expense, net	17,127		19,132		35,326		39,195		76,371		Interest expense, net		19,466		18,199		71,196
Gain on disposal of property, net	Gain on disposal of property, net	(2,793)		(3,744)		(4,161)		(17,585)		(30,421)		Gain on disposal of property, net		(942)		(1,368)		(7,517)
Impairment of real estate assets	Impairment of real estate assets	—		1,056		—		6,056		6,754		Impairment of real estate assets		—		—		322
Federal, state, and local tax expense	Federal, state, and local tax expense	97		165		194		331		327		Federal, state, and local tax expense		118		97		806
Adjustments related to unconsolidated joint ventures	Adjustments related to unconsolidated joint ventures	(885)		(535)		134		597		1,431		Adjustments related to unconsolidated joint ventures		966		1,019		1,987
EBITDAre	EBITDAre	$	89,570	$	79,051	$	176,141	$	147,029	$	293,128	EBITDAre		$	96,742	$	86,571	$	357,547
Calculation of Adjusted EBITDAre	Calculation of Adjusted EBITDAre											Calculation of Adjusted EBITDAre
EBITDAre	EBITDAre	$	89,570	$	79,051	$	176,141	$	147,029	$	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	—		2,000		1,809		18,000		30,436		Change in fair value of earn-out liability		—		1,809		1,809
Transaction and acquisition expenses	Transaction and acquisition expenses	2,035��		934		4,080		1,075		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	175		79		219		825		1,167		Amortization of unconsolidated joint venture basis differences		1		44		220
Realized performance income(1)	Realized performance income(1)	(2,546)		—		(2,742)		—		(675)		Realized performance income(1)		(75)		(196)		(2,742)
Adjusted EBITDAre	Adjusted EBITDAre	$	89,234	$	82,064	$	179,507	$	166,929	$	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.


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									33

~~IMPACT OF THE UNDERWRITTEN IPO~~ATM Program—On July 19, 2021, we closed our underwritten IPO, from which we received gross proceeds of $547.4 million. The underwritten IPO has allowed us access to forms 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 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 ~~June 30,~~March 31, 2023 and 2022, weno shares


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

were issued ~~1.9 million shares of our common stock~~ under the ATM ~~program for net proceeds of $63.0 million, after approximately $0.6 million in commissions.~~program. As of ~~June 30, 2022, $186.3~~March 31, 2023, $159.9 million of common stock remained available for issuance under the ATM program. In July 2022, we issued an additional 0.8 million shares of our common stock under the ATM program for net proceeds of $26.2 million, after approximately $0.3 million in commissions. We received a weighted-average price of $34.23 per share for the 2.6 million shares of commons stock sold under the ATM program through July 2022.

DEBT—The following table summarizes information about our debt as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (dollars in thousands):


		June 30, 2022			December 31, 2021				March 31, 2023			December 31, 2022
Total debt obligations, gross	Total debt obligations, gross	$	1,895,109		$	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)	4.9			5.2			Weighted-average term (in years)	4.1			4.4

Revolving credit facility capacity(1)	Revolving credit facility capacity(1)	$	800,000		$	500,000		Revolving credit facility capacity(1)	$	800,000		$	800,000
Revolving credit facility availability(2)	Revolving credit facility availability(2)	740,706			489,329			Revolving credit facility availability(2)	622,229			709,385

(1)The revolving credit facility matures in January 2026, extendable at our option to January 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 the satisfaction of certain conditions.

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

In May 2022, we amended our credit facility agreement to, among other things, increase the total amount available under our unsecured revolving credit facility from $500 million to $800 million. The unsecured 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 the satisfaction of certain conditions. The unsecured revolving credit facility is scheduled to mature in January 2026, extendable at our option to January 2027. In addition to expanding the borrowing capacity, the Amendment replaces LIBOR with SOFR as the benchmark interest rate for the unsecured revolving credit facility and the two $240 million senior unsecured term loan tranches, maturing in November 2025 and July 2026.

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 ~~June 30, 2022,~~March 31, 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.


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									34

FINANCIAL LEVERAGE RATIOS—We believe our net debt to Adjusted EBITDAre, net debt to total enterprise value, and debt covenant compliance as of ~~June 30, 2022~~March 31, 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 ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (in thousands):


		June 30, 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	$	1,919,467	$	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	25,072		93,109		Less: Cash and cash equivalents	6,784		5,740
Total net debt	Total net debt	$	1,894,395	$	1,848,395	Total net debt	$	2,000,652	$	1,931,402

Enterprise value:	Enterprise value:					Enterprise value:
Net debt	Net debt	$	1,894,395	$	1,848,395	Net debt	$	2,000,652	$	1,931,402
Total equity market capitalization(1)(2)	Total equity market capitalization(1)(2)	4,354,726		4,182,996		Total equity market capitalization(1)(2)	4,291,389		4,178,204
Total enterprise value	Total enterprise value	$	6,249,121	$	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 ~~130.3~~131.6 million and ~~126.6~~131.2 million diluted shares as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, and the closing market price per share of ~~$33.41~~$32.62 and ~~$33.04~~$31.84 as of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

(2)Fully diluted shares include common stock and OP ~~units as of June 30, 2022 and Class B common stock, common stock, and OP units as of December 31, 2021.~~units.


PHILLIPS EDISON & COMPANY MARCH 31, 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 ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (dollars in thousands):


		June 30, 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	$	1,894,395	$	1,848,395	Net debt	$	2,000,652	$	1,931,402
Adjusted EBITDAre - annualized(1)	Adjusted EBITDAre - annualized(1)	341,997		329,419		Adjusted EBITDAre - annualized(1)	375,118		367,385
Net debt to Adjusted EBITDAre - annualized	Net debt to Adjusted EBITDAre - annualized	5.5x		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	$	1,894,395	$	1,848,395	Net debt	$	2,000,652	$	1,931,402
Total enterprise value	Total enterprise value	6,249,121		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.


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									35

During the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ we had capital spend of ~~$42.9~~$23.9 million and ~~$30.2~~$18.6 million, respectively. Below is a summary of our capital spending activity, excluding leasing commissions, on a cash basis (in thousands):


		Six Months Ended June 30,					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	$	4,822	$	3,101	Capital improvements	$	3,709	$	1,797
Tenant improvements	Tenant improvements	11,924		9,557		Tenant improvements	6,419		7,260
Redevelopment and development	Redevelopment and development	22,590		15,658		Redevelopment and development	11,977		7,994
Total capital expenditures for real estate	Total capital expenditures for real estate	39,336		28,316		Total capital expenditures for real estate	22,105		17,051
Corporate asset capital expenditures	Corporate asset capital expenditures	2,085		1,007		Corporate asset capital expenditures	365		918
Capitalized indirect costs(1)	Capitalized indirect costs(1)	1,525		907		Capitalized indirect costs(1)	1,214		639
Total capital spending activity(2)	Total capital spending activity(2)	$	42,946	$	30,230	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 ~~$59.5~~$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):


		Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Number of properties acquired	Number of properties acquired	4		2		Number of properties acquired	4		3
Number of outparcels acquired(1)		1		3
Contract price	Contract price	$	169,342	$	40,190	Contract price	$	78,650	$	100,400
Total price of acquisitions(2)		170,186		40,459
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, 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):


		Six Months Ended June 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Number of properties sold~~(1)~~	Number of properties sold~~(1)~~	3		13		Number of properties sold~~(1)~~	—		2
Number of outparcels sold(2)		2		1

Contract price	Contract price	$	28,342	$	125,247	Contract price	$	—	$	13,325
Proceeds from sale of real estate, net~~(3)~~(2)	Proceeds from sale of real estate, net~~(3)~~(2)	27,077		119,638		Proceeds from sale of real estate, net~~(3)~~(2)	1,091		12,770
Gain on sale of property, net(4)		4,161		18,713
Gain on disposal of property, net(2)						Gain on disposal of property, net(2)	942		1,368

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

~~(2)~~During the six months ended June 30, 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.

~~(3)~~Total proceeds from sale of real estate, net includes closing costs ~~and~~less credits.


~~PHILLIPS EDISON & COMPANY~~ ~~JUNE 30, 2022 FORM 10-Q~~									36

DISTRIBUTIONS—We declared and paid ~~2022~~2023 monthly distributions of ~~$0.09~~$0.0933 per share, or ~~$1.08~~$1.12 annualized, for each month beginning January ~~2022~~2023 through July 2022. On August 3, 2022, our Board authorized a distribution for August 2022 of $0.09 per share to the stockholders of record at the close of business on August 15, 2022. OP unit holders will receive distributions at the same rate as common stockholders, subject to certain withholdings.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 ~~June 30, 2022,~~March 31, 2023, we had cash and cash equivalents and restricted cash of ~~$43.7~~$12.0 million, a net cash decrease of ~~$71.8~~$5.4 million during the ~~six~~three months ended ~~June 30, 2022.~~March 31, 2023.

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

Six Months Ended June 30,
2022 2021 $ Change
% Change(1)
Net cash provided by operating activities $ 142,499 $ 129,897 $ 12,602 9.7 %
Net cash (used in) provided by investing activities (185,893) 49,837 (235,730) NM
Net cash used in financing activities (28,448) (200,270) 171,822 85.8 %

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


	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 ~~$9.3~~$4.6 million, or ~~5.5%~~4.9%, improvement in ~~same center~~Same-Center NOI as compared to the same period in 2021, and the execution of our acquisition strategy. During the six months ended June 30, 2022, we had a net cash outlay of $3.7 million from changes in working capital as compared to a net cash inflow of $2.1 million during the same period in 2021. This change was primarily driven by higher bonus payments, lower receivables collections due to the stabilization of collections in 2022 compared to the recovery of prior year receivables in 2021, and the timing of interest payments, partially offset by the timing of real estate tax payments.

•~~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 $7.2 million for the six months ended June 30, 2022, an increase of $2.6 million as compared to the same period in 2021. The increase in fees and management income was primarily due to our joint venture with NRP from which we recognized income of $2.7 million related to NRP’s achievement of certain performance targets.

•~~Cash paid for interest~~—During the six months ended June 30, 2022, we paid $34.1 million for interest, a decrease of $2.7 million over the same period in 2021, primarily due to our debt activity in 2021, including early repayments of debt outstanding.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 ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, our acquisitions resulted in a total cash outlay of ~~$170.2~~$69.4 million, as compared to a total cash outlay of ~~$40.5~~$101.4 million during the same period in ~~2021.~~2022.

•Real estate dispositions—During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, our dispositions resulted in a net cash inflow of ~~$27.1~~$1.1 million, as compared to a net cash inflow of ~~$119.6~~$12.8 million during the same period in ~~2021.~~2022.

•Capital expenditures—We invest capital into leasing our properties and maintaining or improving the condition of our properties. During the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, we paid ~~$42.9~~$23.9 million for capital expenditures, an increase of ~~$12.7~~$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.~~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 ~~six~~three months ended ~~June 30,~~March 31, 2023, we had $60.5 million in net borrowings primarily as a result of our borrowings under our revolving credit facility. During the three months ended March 31, 2022, we had ~~$20.6~~net payments of $16.5 million ~~in net repayment of debt~~ primarily as a result of early repayments of mortgage loans from cash on hand, partially offset by ~~our net~~ borrowings ~~under~~on our revolving credit facility. ~~During the six months ended June 30, 2021, we had net payments of $66.2 million, primarily as a result of early repayments of mortgage loans.~~


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									3732

•~~Distributions to stockholders and OP unit holders~~—Cash used for distributions to common stockholders and OP unit holders increased $14.6 million for the six months ended June 30, 2022 as compared to the same period in 2021, primarily due to an increase in shares of common stock outstanding as a result of our underwritten IPO.

•~~Issuance of common stock—During the six months ended June 30, 2022, we issued 1.9 million shares of our common stock under the ATM program for net proceeds of $63.0 million, after approximately $0.6 million in commissions.~~

•~~Share repurchases~~—Cash outflows for share repurchases decreased by $77.8 million for the six months ended June 30, 2022 as compared to the same period in 2021, primarily as a result of a tender offer which was settled in January 2021.


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 ~~June 30, 2022.~~March 31, 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 ~~June 30, 2022.~~March 31, 2023, at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the quarter ended ~~June 30, 2022,~~March 31, 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.

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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									3833

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

~~UNREGISTERED SALE OF SECURITIES~~—During the three months ended June 30, 2022, we issued an aggregate of approximately 72,000 shares of common stock in redemption of approximately 72,000 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 did~~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 during the three months ended June 30, 2022.~~been made to date under this program. The table below summarizes ~~other~~ repurchases of our common stock made during the three months ended ~~June 30, 2022:~~March 31, 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
April 2022 — $ — — N/A
May 2022(1)
3,150 34.99 — N/A
June 2022 — — — 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 $0.1 million (average price of $34.99 per share).~~plan.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									3934

ITEM 6. EXHIBITS


Ex.		Description	Reference
3.1		Fifth Articles of Amendment and Restatement of Phillips Edison & Company, Inc., as 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~~		Credit Agreement among Phillips Edison Grocery Center Operating Partnership I, L.P., Phillips Edison & Company, Inc., the lenders party thereto, and PNC Bank, National Association as administrative agent, dated July 2, 2021	~~Form 8-K, filed July 2, 2021, Exhibit 10.1~~
~~10.2~~		First Amendment to the Credit Agreement among Phillips Edison Grocery Center Operating Partnership I, L.P., Phillips Edison & Company, Inc., the lenders party thereto, and PNC Bank, National Association as administrative agent, dated May 20, 2022.	~~Form 8-K, filed May 20, 2022, Exhibit 10.1~~
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 ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									4035

SIGNATURES

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


	PHILLIPS EDISON & COMPANY, INC.

Date: ~~August 4, 2022~~May 3, 2023	By:	/s/ Jeffrey S. Edison
		Jeffrey S. Edison
		Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

Date: ~~August 4, 2022~~May 3, 2023	By:	/s/ John P. Caulfield
		John P. Caulfield
		Executive Vice President, Chief Financial Officer, and Treasurer (Principal Financial Officer)


PHILLIPS EDISON & COMPANY ~~JUNE 30, 2022~~MARCH 31, 2023 FORM 10-Q									4136


	Six Months Ended June 30, 2022 and 2021
	Common Stock			Class B Common Stock			APIC		AOCI		Accumulated Deficit		Total Stockholders’ Equity		Noncontrolling Interests		Total Equity
	Shares	Amount		Shares	Amount
Balance at January 1, 2021	—	$	—	93,279	$	2,798	$	2,739,358	$	(52,306)	$	(999,491)	$	1,690,359	$	325,570	$	2,015,929
Dividend reinvestment plan (“DRIP”)	—	—		280	8		7,360		—		—		7,368		—		7,368
Share repurchases	—	—		(24)	—		(123)		—		—		(123)		—		(123)
Change in unrealized value on interest rate swaps	—	—		—	—		—		13,584		—		13,584		1,909		15,493
Common distributions declared, $0.51 per share	—	—		—	—		—		—		(47,823)		(47,823)		—		(47,823)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		—		(6,779)		(6,779)
Share-based compensation	—	—		77	2		2,427		—		—		2,429		2,416		4,845
Conversion of noncontrolling interests	—	—		28	—		743		—		—		743		(743)		—
Reallocation of operating partnership interests	—	—		—	—		(56)		(10)		—		(66)		66		—
Other	—	—		—	—		(29)		—		—		(29)		—		(29)
Net income	—	—		—	—		—		—		5,697		5,697		810		6,507
Balance at June 30, 2021	—	$	—	93,640	$	2,808	$	2,749,680	$	(38,732)	$	(1,041,617)	$	1,672,139	$	323,249	$	1,995,388

Balance at January 1, 2022	19,550	$	196	93,665	$	936	$	3,264,038	$	(24,819)	$	(1,090,837)	$	2,149,514	$	326,812	$	2,476,326
Conversion of Class B common stock	93,665	936		(93,665)	(936)		—		—		—		—		—		—
Issuance of common stock, net	1,860	18		—	—		62,947		—		—		62,965		—		62,965
Change in unrealized value on interest rate swaps	—	—		—	—		—		33,170		—		33,170		4,237		37,407
Common distributions declared, $0.54 per share	—	—		—	—		—		—		(61,921)		(61,921)		—		(61,921)
Distributions to noncontrolling interests	—	—		—	—		—		—		—		—		(8,217)		(8,217)
Share-based compensation	102	1		—	—		1,475		—		—		1,476		5,711		7,187
Conversion of noncontrolling interests	605	6		—	—		19,730		—		—		19,736		(19,736)		—
Reallocation of operating partnership interests	—	—		—	—		(6,544)		220		—		(6,324)		6,324		—
Settlement of earn-out liability	—	—		—	—		—		—		—		—		54,245		54,245
Net income	—	—		—	—		—		—		23,607		23,607		3,046		26,653
Balance at June 30, 2022	115,782	$	1,157	—	$	—	$	3,341,646	$	8,571	$	(1,129,151)	$	2,222,223	$	372,422	$	2,594,645


	Six Months Ended June 30,				Favorable (Unfavorable) Change
(Dollars in thousands)	2022		2021		$		%(1)
Revenues:
Rental income	$	275,978	$	257,958	$	18,020	7.0	%
Fee and management income	7,242		4,660		2,582		55.4	%
Other property income	1,459		833		626		75.2	%
Total revenues	284,679		263,451		21,228		8.1	%
Operating Expenses:
Property operating	46,172		44,176		(1,996)		(4.5)	%
Real estate taxes	33,964		33,387		(577)		(1.7)	%
General and administrative	22,908		21,278		(1,630)		(7.7)	%
Depreciation and amortization	117,995		111,928		(6,067)		(5.4)	%
Impairment of real estate assets	—		6,056		6,056		NM
Total operating expenses	221,039		216,825		(4,214)		(1.9)	%
Other:
Interest expense, net	(35,326)		(39,195)		3,869		9.9	%
Gain on disposal of property, net	4,161		17,585		(13,424)		(76.3)	%
Other expense, net	(5,822)		(18,509)		12,687		68.5	%
Net income	26,653		6,507		20,146		NM
Net income attributable to noncontrolling interests	(3,046)		(810)		(2,236)		NM
Net income attributable to stockholders	$	23,607	$	5,697	$	17,910	NM


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
April 2022	—	$	—	—	N/A
May 2022(1)	3,150	34.99		—	N/A
June 2022	—	—		—	N/A