What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-05 compared with 2021-05-04 · 433 added, 205 removed, 395 unchanged (62% of the section changed)

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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 focus, plans, strategies, initiatives, and prospects;

Such statements include, but are not limited to, (a) statements about our plans, strategies, initiatives, and prospects;

(b) statements about the COVID-19 pandemic, including its duration and potential or expected impact on our tenants, our business, and our estimated value per share;

(d) statements about our underwritten incremental yields;

and (e) statements about our future results of operations, capital expenditures, and liquidity (including any potential listing).

and (e) 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:

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(iii) vacancies, changes in market rental rates, and the need to periodically repair, renovate, and re-let space;

(iv) changes in interest rates and the availability of permanent mortgage financing;

(v) competition from other available properties and the attractiveness of properties in our portfolio to our tenants;

(vi) the financial stability of tenants, including the ability of tenants to pay rent;

(vii) changes in tax, real estate, environmental, and zoning laws;

(viii) the concentration of our portfolio in a limited number of industries, geographies, or investments;

(ix) the effects of the COVID-19 pandemic, including on the demand for consumer goods and services and levels of consumer confidence in the safety of visiting shopping centers as a result of the COVID-19 pandemic;

(x) the measures taken by federal, state, and local government agencies and tenants in response to the COVID-19 pandemic, including mandatory business shutdowns, “stay-at-home” orders and social distancing guidelines;

(xi) the impact of the COVID-19 pandemic on our tenants and their ability to pay rent on time or at all, or to renew their leases and, in the case of non-renewal, our ability to re-lease the space at the same or more favorable terms or at all;

(xii) the length and severity of the COVID-19 pandemic in the United States;

(xiii) the pace of recovery following the COVID-19 pandemic given the current severe economic contraction and increase in unemployment rates;

(xiv) our ability to implement cost containment strategies;

(xv) our and our tenants’ ability to obtain loans under government programs;

(xvi) our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due;

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

(xviii) the impact of the COVID-19 pandemic on our business, results of operations, financial condition, and liquidity;

and (xix) supply chain disruptions due to the COVID-19 pandemic.

Additional important factors that could cause actual results to differ are described in the filings made from time to time by the Company with the SEC and include the risk factors and other risks and uncertainties described in our 2020 Annual Report on Form 10-K, filed with the SEC on March 12, 2021, and those included in this Report, in each case 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.

(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, including the potential phasing out of LIBOR after 2021;

(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 measures taken by federal, state, and local government agencies and tenants in response to the COVID-19 pandemic, including mandatory business shutdowns, “stay-at-home” orders and social distancing guidelines, the duration of any such measures and the extent to which the revenues of our tenants recover following the lifting of such restrictions;

(xvi) the effectiveness or lack of effectiveness of governmental relief in providing assistance to individuals and businesses adversely impacted by the COVID-19 pandemic, including our tenants;

(xvii) the effects of the COVID-19 pandemic, including on the demand for consumer goods and services and levels of consumer confidence in the safety of visiting shopping centers as a result of the COVID-19 pandemic;

(xviii) the impact of the COVID-19 pandemic on our tenants and their ability and willingness to renew their leases upon expiration;

(xix) 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;

(xx) the loss or bankruptcy of our tenants, particularly in light of the adverse impact to the financial health of many retailers and service providers that has occurred and continues to occur as a result of the COVID-19 pandemic;

(xxi) the pace of recovery following the COVID-19 pandemic given the current severe economic contraction and increase in unemployment rates;

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

and (xxiii) our ability to implement cost containment strategies.

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 2020 Annual Report on Form 10-K, as originally filed with the SEC on March 12, 2021, and those included in this Report, in each case 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.

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.

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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 real estate industry.

We do not consider our non-GAAP measures included as KPIs to be alternatives to measures calculated 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 properties that could materially impact our results from operations.

We do not consider our non-GAAP measures to be alternatives to measures required in accordance with GAAP.

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JUNE 30, 2021 FORM 10-Q

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.

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• 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 as of March 31, 2021, multiplied by twelve months.

• ABR—We use ABR to refer to the monthly contractual base rent as of June 30, 2021 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.

• 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”) to lease.

• 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.

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

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

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

• Comparable rent spread—This metric is calculated as being 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.

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• 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 (a) total square feet of retained Neighbors with current period lease expirations by (b) the square feet of leases expiring during the period.

• Portfolio retention rate—This metric is calculated by dividing (i) 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 (a) total recovery income by (b) total recoverable expenses during the period.

• 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.

FINANCIAL PERFORMANCE —In addition to financial metrics calculated in accordance with GAAP, such as net income, we utilize non-GAAP metrics to measure our operational and financial performance.

See the section within this Item 2 titled Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures for further discussion on the following metrics.

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We use EBITDA re and Adjusted EBITDA re 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 (“Core FFO”)—To arrive at Core FFO, we adjust FFO attributable to stockholders and OP unit holders, as defined below, to exclude certain recurring and non-recurring items including, but not limited to:

• Core Funds From Operations (“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;

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(iii) amortization of unconsolidated joint venture basis differences;

(iv) gains or losses on the extinguishment or modification of debt, (v) other impairment charges;

(iv) gains or losses on the extinguishment or

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

modification of debt, (v) other impairment charges;

and (vi) transaction and acquisition expenses.

We believe FFO provides insight into our operating performance as it excludes certain items that are not indicative of such performance.

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).

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Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDA re on the same basis.

• FFO—Nareit defines FFO as net income (loss) computed in accordance with GAAP, excluding:

• Equity Market Capitalization—We calculate equity market capitalization as the total dollar value of all outstanding shares.

• Nareit FFO—Nareit defines 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;

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and (iv) adjustments for unconsolidated partnerships and joint ventures, calculated to reflect FFO on the same basis.

We calculate FFO Attributable to Stockholders and OP Unit Holders in a manner consistent with the Nareit definition.

We calculate Nareit FFO in a manner consistent with the Nareit definition.

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

• Net Debt to Adjusted EBITDA re —This ratio is calculated by dividing net debt by Adjusted EBITDA re (included on an annualized basis within the calculation).

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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, 2020).

We are an internally-managed REIT and one of the nation’s largest owners and operators of grocery-anchored neighborhood shopping centers.

• Same-Center—We use this term to refer to a property, or portfolio of properties, that has been owned and operational for the entirety of each reporting period (i.e., since January 1, 2020).

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

We are a REIT and one of the nation’s largest owners and operators of omni-channel grocery-anchored neighborhood and community shopping centers.

The majority of our revenue is lease revenue derived from our real estate investments.

Additionally, we operate an investment management business providing property management and advisory services to over $460 million of third-party institutional joint ventures.

Additionally, we operate an investment management business providing property management and advisory services to over $460 million of unconsolidated joint ventures.

This business provides comprehensive real estate and asset management services to the Managed Funds.

As of March 31, 2021, we wholly-owned 278 real estate properties.

Additionally, we owned a 20% interest in NRP, a joint venture that owned two properties, and a 14% interest in GRP I, a joint venture that owned 20 properties.

Liquidity Alternative Review Process —On March 25, 2021, our Board announced that we are reviewing alternatives in order to provide liquidity to our shareholders.

In connection with the review process, the DRIP has been suspended, beginning with the distribution payable April 1, 2021.

Additionally, the Fourth Amended SRP, which is currently limited to repurchases resulting from stockholder DDI, has been suspended.

The SRP for both standard and DDI requests will remain suspended until further notice.

As of June 30, 2021, we wholly-owned 272 real estate properties.

Additionally, we owned a 14% interest in GRP I, a joint venture that owned 20 properties, and a 20% interest in NRP, a joint venture that owned two properties.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

RECAPITALIZATION —On June 18, 2021, our stockholders approved Articles of Amendment that effected the Recapitalization, wherein each share of our common stock outstanding at the time the amendment became effective was converted into one share of a newly created class of Class B common stock.

The Articles of Amendment became effective upon filing with, and acceptance by, the State Department of Assessments and Taxation of Maryland on July 2, 2021.

Unless otherwise indicated, all information in this Form 10-Q disclosure gives effect to the Recapitalization and references to “shares” and per share metrics refer to our common stock and Class B common stock, collectively (Note 9).

REVERSE STOCK SPLIT —On July 2, 2021, our Board approved an amendment to our articles of incorporation to effect a one-for-three reverse stock split.

Concurrent with the reverse split, the Operating Partnership enacted a one-for-three reverse split of its outstanding OP units.

Unless otherwise indicated, the information in this Form 10-Q gives effect to the reverse stock and OP unit splits (Note 9).

UNDERWRITTEN INITIAL PUBLIC OFFERING —On July 19, 2021, we closed our underwritten IPO, through which we offered 17.0 million shares of a new class of common stock, $0.01 par value per share, at an initial price of $28.00 per share, pursuant to a registration statement filed with the SEC on Form S-11 (File No.

333-255846), as amended.

These shares are listed on the Nasdaq Global Select Market under the trading symbol “PECO”.

The underwriters have since exercised a 30-day option to purchase additional shares of common stock to cover overallotments, and, accordingly, on August 2, 2021 we settled the sale of an additional 2.55 million shares, with gross proceeds to us of $71.4 million.

On August 4, 2021, as a result of our underwritten IPO, our Board approved the termination of the DRIP and the SRP.

The DRIP has been suspended since April 2021.

The SRP, which was limited to repurchases resulting from the DDI of stockholders, has been suspended since March 2021, and the SRP for standard repurchases had been suspended since August 2019.

COVID-19 STRATEGY —During 2020, as a result of the COVID-19 pandemic, many state governments issued “stay-at-home” mandates that generally limited travel and movement of the general public to essential activities only and required all non-essential businesses to close.

In response to the pandemic, we enacted several initiatives including:

(1) the implementation of expense reduction initiatives at the property and corporate levels, including reductions to our workforce and travel costs;

(2) the reprioritization of our capital investments to support the reopening of our Neighbors and new leasing activity, or deferment of such capital expenditures if possible;

(3) temporary reductions in compensation for certain of our executives and our Board;

and (4) the temporary suspension of dividends, the DRIP, and the SRP.

At the peak of the pandemic-related closure activity, temporary closures reached 37% of all Neighbor spaces, totaling 27% of our ABR and 22% of our GLA.

All temporarily closed Neighbors have since been permitted to reopen;

however, a portion of our Neighbors have permanently closed, and we are working to backfill these spaces.

We continue to closely monitor the occupancy, operating performance, and Neighbor sales results at our centers, including any Neighbors operating with reduced hours or under government-imposed restrictions.

Our management team has determined the following are the key actions for recovery in our portfolio (all statistics are approximate and include the prorated portion attributable to properties owned through our joint ventures):

Our management team determined the following were the key actions for recovery in our portfolio (all statistics are approximate and include the prorated portion attributable to properties owned through our joint ventures):

• Returning to Monthly Payments —We continue to work with our Neighbors to resume normal monthly rent payments, and our efforts have included raising awareness of the benefits available through numerous governmental relief programs.

We have seen our collections continue to improve from the second quarter of 2020.

The following table

summarizes our collections by quarter, as they were originally reported as well as updated for payments received subsequent to the month billed:

The following table summarizes our collections by quarter, as they were originally reported as well as updated for payments received subsequent to the month billed:

Originally Reported Current (1)

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Q4 2020 95 % 97 %

Q1 2021 95 % 98 %

Q2 2021 N/A 98 %

(1) Including collections received through April 20, 2021.

As of April 20, 2021, approximately 79% of our Neighbor spaces are paying their rent in full.

(1) Including collections received through July 20, 2021.

As of July 20, 2021, approximately 95% of our Neighbor spaces are paying their rent in full.

• Recovering Missed Rent Charges —We believe substantially all Neighbors, including those that were required to temporarily close under governmental mandates, are contractually obligated to continue with their rent payments as documented in our lease agreements with them.

However, we may negotiate relief for our Neighbors in the form of rent deferrals or abatements.

As of April 20, 2021, we have $5.4 million of outstanding payment plans with our Neighbors, and we had recorded rent abatements of approximately $4.4 million during 2021.

These payment plans and rent abatements represented 1.4% and 1.1% of portfolio ABR, respectively, and the weighted-average term over which we expect to receive remaining amounts owed on executed payment plans is approximately 13 months.

However, we decided to negotiate relief for a small subset of our Neighbors in the form of rent deferrals or abatements.

As of July 20, 2021, we have $5.3 million of outstanding payment plans with our Neighbors, and we had recorded rent abatements of approximately $0.7 million during 2021, related to 2021 missed rental income.

These payment plans and rent abatements represented approximately 2.0% and 0.3% of portfolio rental income for the six months ended June 30, 2021, respectively.

As of July 20, 2021, approximately 54% of payments are scheduled to be received by December 31, 2021 for all executed payment plans, and the weighted-average term over which we expect to receive remaining amounts owed on executed payment plans is approximately twelve months.

We are still actively pursuing past due amounts under the terms negotiated with our Neighbors.

For our entire portfolio, inclusive of our prorated share of properties owned through joint ventures, 43% of missed monthly charges billed during the first quarter of 2021 have been collected subsequent to the month billed and 5% have been waived, as of April 20, 2021.

For our entire portfolio, inclusive of our prorated share of properties owned through joint ventures, 69% of the missed monthly charges billed during the first and second quarters of 2021 have since been collected, and 5% have been waived, as of July 20, 2021, bringing both Q1 and Q2 2021 collections to 98%.

We will continue to work with Neighbors on establishing plans to repay past due amounts, and will monitor the impact of such payment plans on our results of operations in future quarters.

We cannot guarantee that we will ultimately be able to collect these amounts.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

• Monitoring for Credit Risk —The COVID-19 pandemic and resulting economic downturn has increased the uncertainty of collecting rents from a number of our Neighbors.

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For Neighbors with a higher degree of uncertainty as to their creditworthiness, we may not record revenue for amounts billed until the cash is received.

Based on our analysis, no individual Neighbor category has been accounted for entirely on a cash basis as of March 31, 2021;

Based on our analysis, no individual Neighbor category has been accounted for entirely on a cash basis as of June 30, 2021 or throughout the pandemic;

however, we continue to evaluate each Neighbor individually to determine if they should be accounted for on a cash basis.

For the three months ended March 31, 2021 and 2020, inclusive of the prorated portion attributable to properties owned through our joint ventures, we had $4.9 million and $2.9 million, respectively, in unfavorable monthly revenue adjustments for Neighbors who are being accounted for on a cash basis.

As of March 31, 2021, our Neighbors currently being accounted for on a cash basis represented approximately 10% of our total Neighbor spaces, which represented 8.4% of portfolio ABR.

For the three months ended June 30, 2021, inclusive of the prorated portion attributable to properties owned through our joint ventures, we had $1.3 million in net favorable monthly revenue adjustments for Neighbors who are being accounted for on a cash basis.

For the six months ended June 30, 2021, we had $3.6 million in net unfavorable monthly revenue adjustments for Neighbors who are being accounted for on a cash basis.

For the three and six months ended June 30, 2020, inclusive of the prorated portion attributable to properties owned through our joint ventures, we had $12.1 million and $15.0 million, respectively, in net unfavorable monthly revenue adjustments for Neighbors who are being accounted for on a cash basis.

As of June 30, 2021, our Neighbors currently being accounted for on a cash basis represented approximately 8% of our total Neighbor spaces, or approximately 7.4% of portfolio ABR.

Further, many of our Neighbors who are on a cash basis of accounting are actively making payments toward their outstanding balances.

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While some of these cases have already been resolved, with the assumption or rejection of the lease already reflected in our results, in some cases these claims have yet to be resolved, and as such, the potential fallout is not yet reflected in our occupancy rate or ABR metrics.

We believe that Neighbors in the bankruptcy process represent an exposure of approximately 1% of our total portfolio ABR as of March 31, 2021.

We believe that Neighbors in the bankruptcy process represent an exposure of less than 1% of our total portfolio ABR as of June 30, 2021.

We have included our assessment of the impact of these bankruptcies in our estimate of rent collectibility, which impacted recorded revenue, as noted previously.

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Despite this fallout, our leasing activity has been strong as demand for space in our centers remains high, allowing us to re-lease these spaces to Neighbors who may increase our concentration of necessity-based and omni-channel retailers.

For the three months ended March 31, 2021, our portfolio retention rate was 88.8%, and we executed 153 new leases, an increase as compared to the same period a year ago.

Portfolio and Leasing Statistics —Below are statistical highlights of our wholly-owned portfolio as of March 31, 2021 and 2020 (dollars and square feet in thousands):

March 31, 2021 March 31, 2020

For the three and six months ended June 30, 2021, our wholly-owned portfolio retention rate was 85.5% and 87.2%, respectively.

Additionally, for the three and six months ended June 30, 2021, for our wholly-owned portfolio, we executed 124 and 277 new leases, respectively, each an increase as compared to the same period a year ago.

PORTFOLIO AND LEASING STATISTICS —Below are statistical highlights of our wholly-owned portfolio as of June 30, 2021 and 2020 (dollars and square feet in thousands):

June 30, 2021 June 30, 2020

Number of properties 272 284

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ABR $ 384,916 $ 385,696

% ABR from grocery-anchored properties 96.4 % 97.0 %

% ABR from omni-channel grocery-anchored shopping centers 96.0 % 97.0 %

Leased % of rentable square feet:

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

The following table details information for our joint ventures as of March 31, 2021, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):

March 31, 2021

The following table details information for our joint ventures as of June 30, 2021, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):

June 30, 2021

Joint Venture Ownership Percentage Number of Properties ABR GLA

Necessity Retail Partners 20% 2 $ 3,845 228

Grocery Retail Partners I 14% 20 $ 29,339 2,211

Lease Expirations —The following chart shows the aggregate scheduled lease expirations, excluding our Neighbors who are occupying space on a temporary basis, after March 31, 2021 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our joint ventures:

Necessity Retail Partners 20% 2 3,989 228

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

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, 2021 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our joint ventures:

Our ability to create rental rate growth generally depends on our leverage during new and renewal lease negotiations with prospective and existing Neighbors, which typically occurs when occupancy at our centers is high or during periods of economic growth and recovery.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Leasing Activity” of this filing on Form 10-Q for further discussion of leasing activity.

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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 joint ventures, by Neighbor type as of March 31, 2021:

The following charts present the composition of our portfolio by Neighbor industry as of March 31, 2021:

We define “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., the demand for which does not change based on a consumer’s income level).

The following charts present the composition of our portfolio by Neighbor industry as of June 30, 2021:

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JUNE 30, 2021 FORM 10-Q

We define “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 73% of our ABR, including the pro rata portion attributable to properties owned through our joint ventures, is from Neighbors providing necessity-based goods and services.

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The composition of our portfolio as a percentage of ABR is as follows:

March 31, 2021

June 30, 2021

Essential/Necessity Retail and Services:

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

The following table presents our top twenty Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, as of March 31, 2021 (dollars and square feet in thousands):

(2) Includes ABR contributions of 2% from each of apparel/shoes/accessories, department stores, and home furnishings Neighbors.

(3) Includes ABR contribution of 3% from fitness Neighbors.

(4) Includes ABR contribution of 1% from entertainment Neighbors.

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JUNE 30, 2021 FORM 10-Q

The following table presents our top twenty Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, as of June 30, 2021 (dollars and square feet in thousands):

ABR % of ABR Leased Square Feet % of Leased Square Feet Number of Locations (2)

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Sprouts Farmers Market 5,000 1.3 % 334 1.1 % 11

Dollar Tree 3,954 1.0 % 406 1.4 % 42

Raley's 3,884 1.0 % 253 0.9 % 4

Dollar Tree 3,628 0.9 % 370 1.3 % 39

SUPERVALU 3,209 0.8 % 336 1.1 % 5

Subway Group 2,731 0.7 % 111 0.4 % 79

Schnucks 2,785 0.7 % 329 1.1 % 5

Anytime Fitness, Inc.

2,623 0.7 % 171 0.6 % 35

Save Mart 2,618 0.7 % 309 1.0 % 6

Schnucks 2,545 0.7 % 249 0.8 % 4

Southeastern Grocers 2,514 0.6 % 281 1.0 % 7

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Food 4 Less (PAQ) 2,215 0.6 % 119 0.4 % 2

Save Mart 2,174 0.6 % 258 0.9 % 5

Petco Animal Supplies, Inc.

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RESULTS OF OPERATIONS

Known Trends and Uncertainties of the COVID-19 Pandemic

The COVID-19 pandemic has resulted in reduced revenues beginning with the second quarter of 2020 and continuing through the first quarter of 2021, and our estimates around collectibility will likely continue to create volatility in our earnings.

KNOWN TRENDS AND UNCERTAINTIES OF THE COVID-19 PANDEMIC —The COVID-19 pandemic has resulted in reduced revenues beginning with the second quarter of 2020 and continuing through the second quarter of 2021, and our estimates around collectibility will likely continue to create volatility in our earnings.

The total impact on revenue in the future cannot be determined at this time.

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Extended periods of vacancy or reduced revenues may trigger impairments of our real estate assets.

Additionally, these factors have impacted disposition activity by decreasing demand and negatively impacting capitalization rates.

The magnitude and duration of the COVID-19 pandemic and its impact on our results of operations in the near term and potentially beyond are uncertain as a result of a number of factors outside of our control.

These factors include, but are not limited to:

overall economic conditions on both a macro and micro level, including consumer demand as well as retailer demand for space within our shopping centers;

the impact of social distancing guidelines, recommendations from governmental authorities, and consumer shopping preferences;

the nature and effectiveness of any economic stimulus or relief measures;

the timing of availability and distribution of vaccines to the general public and the resulting vaccination rates;

and the impact of all of the factors above, including other potentially unknown factors, on our Neighbors’ ability to continue paying rent and related charges on time or at all and Neighbors’ willingness to renew their leases on the same terms or at all.

The impact of these factors, some of which have already been realized, could include reduced revenue from Neighbor concessions, increased collectibility reserves, decreased recovery rates on expenses, and other unforeseen impacts that may arise in the course of operating during these circumstances.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview” for our observation of Neighbor impacts through April 20, 2021.

We believe that our investment focus on grocery-anchored shopping centers that provide daily necessities has helped and will continue to help lessen the negative effect of the pandemic on our business compared to non-grocery anchored shopping centers.

Summary of Operating Activities for the Three Months Ended March 31, 2021 and 2020

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020

Three Months Ended

March 31, Favorable (Unfavorable)

June 30, Favorable (Unfavorable)

(Dollars in thousands) 2021 2020 $ % (1)

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Gain (loss) on disposal of property, net 3,744 (541) 4,285 NM

Other (expense) income, net (15,585) 9,869 (25,454) NM

Net income 117 11,199 (11,082) (99.0) %

Net income attributable to noncontrolling interests (14) (1,430) 1,416 99.0 %

Net income attributable to stockholders $ 103 $ 9,769 $ (9,666) (98.9) %

Other expense, net (2,924) (500) (2,424) NM

Net income (loss) 6,390 (6,413) 12,803 NM

Net (income) loss attributable to noncontrolling interests (796) 825 (1,621) NM

Net income (loss) attributable to stockholders $ 5,594 $ (5,588) $ 11,182 NM

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

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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, 2019, which includes 19 properties disposed of and four properties acquired.

Below are explanations of the significant fluctuations in the results of operations for the three months ended March 31, 2021 and 2020:

Rental Income decreased $0.8 million as follows:

• $0.5 million decrease primarily related to our net disposition of 9 properties;

• $0.3 million decrease related to our same-center portfolio as follows:

▪ $1.3 million decrease largely due to the COVID-19 pandemic and its economic impact including a $1.1 million decrease due to rent abatement and a $0.2 million decrease in connection with Neighbors we have identified as a credit risk, including the impact of straight-line rent adjustments for the related leases;

▪ $0.7 million increase due to lease buyout income owing largely to Neighbors (representing less than 1% of ABR and GLA) who opted not to remain in their space following negative impacts as a result of COVID-19;

Below are explanations of the significant fluctuations in the results of operations for the three months ended June 30, 2021 and 2020:

Rental Income increased $14.7 million as follows:

• $15.5 million increase related to our same-center portfolio primarily as follows:

▪ $16.0 million increase primarily due to stronger collections in 2021 as compared with lower collections in 2020, the increase owing largely to the ongoing recovery of our portfolio in the wake of the COVID-19 pandemic and its economic impact, including a decrease in Neighbors we have identified as a credit risk as well as collections on charges that were uncollected in 2020;

▪ $0.5 million increase primarily due to a $0.57 increase in average minimum rent per square foot, partially offset by a 0.8% decrease in average economic occupancy;

▪ $1.0 million decrease attributable to lower recoveries from a lower recovery rate and lower economic occupancy.

• $0.8 million decrease primarily related to our net disposition of 15 properties.

Property Operating Expenses increased $2.3 million as follows:

• $2.5 million increase related to our same-center portfolio and corporate operating activities, owing largely to lower expense for performance-based compensation during 2020 as a result of the COVID-19 pandemic, as compared to 2021;

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

General and Administrative Expenses increased $2.1 million as follows:

• $3.4 million increase owing largely to lower expense for performance-based compensation during 2020 as a result of the COVID-19 pandemic, as compared to 2021;

• $0.8 million decrease primarily due to lower third-party consultant and custodial costs;

• $0.5 million decrease related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to overhead costs at our corporate offices.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

Impairment of Real Estate Assets:

• The $1.1 million increase in impairment of real estate assets was due to assets that are actively being marketed for sale at a disposition price that was less than the carrying value.

Proceeds from dispositions will be used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes.

We continue to sell non-core assets and may potentially recognize impairments in future quarters.

Interest Expense, Net:

• The $3.0 million decrease during the three months ended June 30, 2021 as compared to the same period in 2020 was due to:

(i) lower borrowings as a result of early repayments of debt;

(ii) the repayment of our draw on the revolver during the second quarter of 2020;

and (iii) lower interest rates due to the decrease in LIBOR and expiring interest rate swaps.

Interest Expense, Net was comprised of the following (dollars in thousands):

Three Months Ended June 30,

Interest on revolving credit facility, net $ 207 $ 979

Interest on term loans, net 10,573 11,685

Interest on secured debt 6,246 7,316

Loss on extinguishment of debt 419 —

Non-cash amortization and other 1,687 2,174

Interest expense, net $ 19,132 $ 22,154

Weighted-average interest rate as of end of period 2.9 % 3.1 %

Weighted-average term (in years) as of end of period 3.7 4.5

Gain (Loss) on Disposal of Property, Net:

• The $4.3 million change was primarily related to the sale of seven properties with a net gain (in addition to other property-related miscellaneous disposals and write-offs) of $3.7 million during the three months ended June 30, 2021, as compared to the sale of one property (as well as other property-related miscellaneous disposals and write-offs) with a net loss of $0.5 million during the three months ended June 30, 2020 (see Note 4).

Other Expense, Net:

• The $2.4 million increase was largely due to the change in the fair value of our earn-out liability as a result of general improving market conditions.

Other Expense, Net was comprised of the following (dollars in thousands):

Three Months Ended June 30,

Change in fair value of earn-out liability $ (2,000) $ —

Equity in net income (loss) of unconsolidated joint ventures

Transaction and acquisition expenses (934) (14)

Federal, state, and local income tax expense (165) (180)

Other expense, net $ (2,924) $ (500)

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SUMMARY OF OPERATING ACTIVITIES FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

Six Months Ended

June 30, Favorable (Unfavorable)

(Dollars in thousands) 2021 2020 $ % (1)

Rental income $ 257,958 $ 244,120 $ 13,838 5.7 %

Fee and management income 4,660 4,925 (265) (5.4) %

Other property income 833 1,518 (685) (45.1) %

Total revenues 263,451 250,563 12,888 5.1 %

Operating Expenses:

Property operating expenses 44,176 41,391 (2,785) (6.7) %

Real estate tax expenses 33,387 33,565 178 0.5 %

General and administrative expenses 21,278 20,546 (732) (3.6) %

• The $1.4 million decrease in general and administrative expenses is primarily related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to overhead costs at our corporate offices, as well as decreased travel and related costs.

Depreciation and amortization 111,928 112,597 669 0.6 %

Impairment of real estate assets 6,056 — (6,056) NM

Total operating expenses 216,825 208,099 (8,726) (4.2) %

Interest expense, net (39,195) (44,929) 5,734 12.8 %

Gain (loss) on disposal of property, net 17,585 (2,118) 19,703 NM

Other (expense) income, net (18,509) 9,369 (27,878) NM

Net income 6,507 4,786 1,721 36.0 %

Net income attributable to noncontrolling interests (810) (605) (205) (33.9) %

Net income attributable to stockholders $ 5,697 $ 4,181 $ 1,516 36.3 %

(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 the Summary of Operating Activities for the Three Months Ended June 30, 2021 and 2020 section above.

Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, 2021 and 2020:

Rental Income increased $13.8 million as follows:

• $15.3 million increase related to our same-center portfolio primarily as follows:

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

▪ $0.2 million decrease primarily due to a 0.8% decrease in average economic occupancy, partially offset by a $0.55 increase in average minimum rent per square foot.

• $1.5 million decrease primarily related to our net disposition of 15 properties.

Property Operating Expenses increased $2.8 million primarily as follows:

• $2.9 million increase related to our same-center portfolio and corporate operating activities as follows:

▪ $2.4 million increase owing largely to lower expense for performance-based compensation during 2020 as a result of the COVID-19 pandemic, as compared to 2021;

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

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

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

General and Administrative Expenses increased $0.7 million as follows:

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

• $1.6 million decrease primarily due to lower third-party consultant and custodial costs;

• $2.0 million decrease related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to overhead costs at our corporate offices, as well as decreased travel and related costs.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

Impairment of Real Estate Assets:

• The $5.0 million increase in impairment of real estate assets was due to an asset under contract at a disposition price that was less than the carrying value, the proceeds from which will be used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes.

• The $6.1 million increase in impairment of real estate assets was due to assets that are actively being marketed for sale at a disposition price that was less than the carrying value.

Proceeds from dispositions will be used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes.

We continue to sell non-core assets and may potentially recognize impairments in future quarters.

Interest Expense, Net:

• The $2.7 million decrease during the three months ended March 31, 2021 as compared to the same period in 2020 was largely due to the decrease in LIBOR and expiring interest rate swaps in 2020 and the first quarter of 2021.

• The $5.7 million decrease during the six months ended June 30, 2021 as compared to the same period in 2020 was due to:

(i) lower borrowings as a result of early repayments of debt;

(ii) the repayment of our draw on the revolver during the second quarter of 2020;

and (iii) lower interest rates due to the decrease in LIBOR and expiring interest rate swaps.

Interest Expense, Net was comprised of the following (dollars in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Interest on revolving credit facility, net $ 435 $ 1,195

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Gain (Loss) on Disposal of Property, Net:

• The $15.4 million change was primarily related to the sale of six properties and one outparcel (plus other miscellaneous disposals and write-offs) with a net gain of $13.8 million during the three months ended March 31, 2021, as compared to the sale of three properties with a net loss of $1.6 million during the three months ended March 31, 2020 (see Note 4).

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

Other (Expense) Income, Net:

• The $25.5 million change was largely due to the change in the fair value of our earn-out liability as a result of an increase in the EVPS of our common stock as well as improved market conditions during the first quarter of 2021.

• The $27.9 million change was largely due to the change in the fair value of our earn-out liability as a result of general improving market conditions.

Other (Expense) Income, Net was comprised of the following (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Change in fair value of earn-out liability $ (18,000) $ 10,000

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Other (expense) income, net $ (18,509) $ 9,369

Leasing Activity —Below is a summary of leasing activity for our wholly-owned properties for the three months ended March 31, 2021 and 2020:

Total Deals (1)

Inline Deals (1)

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

LEASING ACTIVITY —Below is a summary of leasing activity for our wholly-owned properties for the three months ended June 30, 2021 and 2020 (1) :

Total Deals Inline Deals

2021 2020 2021 2020

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(2) Excludes exercise of options.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

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

Total Deals Inline Deals

2021 2020 2021 2020

Number of leases 277 148 268 135

Square footage (in thousands) 808 579 619 339

ABR (in thousands) $ 14,458 $ 8,597 $ 12,421 $ 6,015

ABR per square foot $ 17.89 $ 14.84 $ 20.06 $ 17.72

Cost per square foot of executing new leases $ 28.51 $ 21.16 $ 28.00 $ 25.78

Number of comparable leases 127 45 125 44

Comparable rent spread 15.3 % 10.8 % 15.3 % 10.7 %

Weighted-average lease term (in years) 7.7 8.2 6.5 6.8

Renewals and options:

Number of leases 337 235 306 208

Square footage (in thousands) 2,027 1,714 645 458

ABR (in thousands) $ 24,367 $ 18,662 $ 14,375 $ 9,505

ABR per square foot $ 12.02 $ 10.89 $ 22.30 $ 20.75

ABR per square foot prior to renewals $ 11.27 $ 10.24 $ 20.54 $ 18.83

Percentage increase in ABR per square foot 6.6 % 6.7 % 8.6 % 12.2 %

Cost per square foot of executing renewals and options $ 2.19 $ 3.41 $ 4.08 $ 4.36

Number of comparable leases (2)

291 176 281 170

Comparable rent spread (2)

8.0 % 9.2 % 8.7 % 11.8 %

Weighted-average lease term (in years) 4.9 5.0 4.0 3.7

Portfolio retention rate 87.2 % 79.5 % 79.9 % 68.6 %

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

(2) Excludes exercise of options.

NON-GAAP MEASURES

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Other REITs may use different methodologies for calculating Same-Center NOI, and accordingly, our Same-Center NOI may not be comparable to other REITs.

For the three months ended March 31, 2021 and 2020, Same-Center NOI represents the NOI for the 274 properties that were wholly-owned and operational for the entire portion of both comparable periods.

For the three and six months ended June 30, 2021 and 2020, Same-Center NOI represents the NOI for the 268 properties that were wholly-owned and operational for the entire portion of both comparable periods.

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

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

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

Three Months Ended March 31, Favorable (Unfavorable)

2021 2020 $ Change % Change

Three Months Ended June 30, Favorable (Unfavorable) Six Months Ended June 30, Favorable (Unfavorable)

Change 2021 2020 $ Change % Change

Rental income (1)

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

Three Months Ended March 31,

Net income $ 117 $ 11,199

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

2021 2020 2021 2020

Net income (loss) $ 6,390 $ (6,413) $ 6,507 $ 4,786

Adjusted to exclude:

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(2,374) (2,760) (4,660) (4,925)

Straight-line rental income (1)

Straight-line rental (income) expense (1)

(2,970) 948 (4,392) (1,364)

Net amortization of above- and below-market leases

(887) (795) (1,725) (1,583)

Lease buyout income

(1,781) (214) (2,578) (308)

General and administrative expenses

11,937 9,806 21,278 20,546

Depreciation and amortization

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Other expense (income), net 2,924 500 18,509 (9,369)

Property operating expenses related to fees and management income 816 646

Property operating expenses related to fees

and management income 1,306 891 2,122 1,528

NOI for real estate investments 87,576 81,028 174,655 168,955

Non-same-center NOI (2)

129 (1,656) (1,551) (3,531)

Total Same-Center NOI $ 87,705 $ 79,372 $ 173,104 $ 165,424

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

FFO and Core FFO —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 FFO includes certain non-comparable items that affect our performance over time.

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.

Core FFO is helpful in assisting management and investors with assessing the sustainability of our operating performance in future periods.

FFO, 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.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

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

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

Three Months Ended March 31,

Calculation of FFO Attributable to Stockholders and OP Unit Holders

Net income $ 117 $ 11,199

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.

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,

2021 2020 2021 2020

Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders

Net income (loss) $ 6,390 $ (6,413) $ 6,507 $ 4,786

Depreciation and amortization of real estate assets 55,654 54,892 109,995 109,709

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Adjustments related to unconsolidated joint ventures 537 940 (100) 1,594

FFO attributable to stockholders and OP unit holders $ 44,980 $ 68,247

Nareit FFO attributable to stockholders and OP unit holders $ 59,893 $ 49,960 $ 104,873 $ 118,207

Calculation of Core FFO

FFO attributable to stockholders and OP unit holders $ 44,980 $ 68,247

Nareit FFO attributable to stockholders and OP unit holders $ 59,893 $ 49,960 $ 104,873 $ 118,207

Depreciation and amortization of corporate assets 933 1,478 1,933 2,888

Change in fair value of earn-out liability 2,000 — 18,000 (10,000)

Amortization of unconsolidated joint venture basis differences 746 467

Amortization of unconsolidated joint venture

basis differences 79 254 825 721

Loss on extinguishment of debt, net 419 — 1,110 73

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Core FFO $ 64,258 $ 51,706 $ 127,816 $ 111,948

FFO Attributable to Stockholders and OP Unit Holders/Core FFO per Share

Nareit FFO Attributable to Stockholders and OP Unit Holders/Core FFO per Share (1)

Weighted-average common shares outstanding - diluted 107,175 111,165 107,102 111,140

FFO attributable to stockholders and OP unit holders per share - diluted $ 0.14 $ 0.20

Nareit FFO attributable to stockholders and OP unit holders

per share - diluted $ 0.56 $ 0.45 $ 0.98 $ 1.06

Core FFO per share - diluted $ 0.60 $ 0.47 $ 1.19 $ 1.01

EBITDAre and Adjusted EBITDAre —We use EBITDA re and Adjusted EBITDA re 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.

(1) Restricted stock awards were dilutive to Nareit FFO Attributable to Stockholders and OP Unit Holders per share and Core FFO per share for the three and six months ended June 30, 2021 and 2020, and, accordingly, their impact was included in the weighted-average common shares used in their respective per share calculations.

For the three months ended June 30, 2020, restricted stock units had an anti-dilutive effect upon the calculation of earnings per share and thus were excluded.

For details related to the calculation of earnings per share, see Note 10.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

EBITDA re and ADJUSTED EBITDA re —We use EBITDA re and Adjusted EBITDA re 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.

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The following table presents our calculation of EBITDA re and Adjusted EBITDA re (in thousands):

Three Months Ended March 31, Year Ended

Three Months Ended June 30, Six Months Ended June 30, Year Ended December 31,

2021 2020 2021 2020 2020

Calculation of EBITDA re

Net income $ 117 $ 11,199 $ 5,462

Net income (loss) $ 6,390 $ (6,413) $ 6,507 $ 4,786 $ 5,462

Depreciation and amortization 56,587 56,370 111,928 112,597 224,679

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Federal, state, and local tax expense 165 180 331 209 491

Adjustments related to unconsolidated joint ventures 1,132 1,177 3,355

Adjustments related to unconsolidated

joint ventures (535) 1,391 597 2,568 3,355

$ 79,051 $ 74,223 $ 147,029 $ 167,207 $ 315,219

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Change in fair value of earn-out liability 2,000 — 18,000 (10,000) (10,000)

Other impairment charges — — 359

Amortization of unconsolidated joint venture basis differences 746 467 1,883

Transaction and acquisition expenses 934 14 1,075 59 539

Amortization of unconsolidated joint

venture basis differences 79 254 825 721 1,883

Other impairment charges — — — — 359

Adjusted EBITDA re

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We expect our primary sources of liquidity to be:

• net proceeds from our underwritten IPO;

• operating cash flows;

• proceeds received from the disposition of properties;

• reinvested distributions ;

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

• distributions received from our third-party institutional joint ventures;

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

• distributions received from our unconsolidated joint ventures;

• available, unrestricted cash and cash equivalents.

At this time, we believe our current sources of liquidity, most significantly our operating cash flows and borrowing availability on our revolving credit facility, are sufficient to meet our short- and long-term cash demands.

Debt —The following table summarizes information about our debt as of March 31, 2021 and December 31, 2020 (dollars in thousands):

March 31, 2021 December 31, 2020

At this time, we believe our current sources of liquidity, most significantly the net proceeds from our underwritten IPO, our operating cash flows, and borrowing availability on our revolving credit facility, are sufficient to meet our short- and long-term cash demands.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

UNDERWRITTEN INITIAL PUBLIC OFFERING —On July 19, 2021, we completed an underwritten IPO and issued 17.0 million shares of common stock at an offering price of $28.00 per share.

We used a portion of the net proceeds to reduce our leverage and expect to use the remaining amount to fund external growth with property acquisitions and for other general corporate uses.

As part of the underwritten IPO, underwriters were granted an option exercisable within 30 days from July 14, 2021 to purchase up to an additional 2.55 million shares of common stock at the underwritten IPO price, less underwriting discounts and commissions.

On July 29, 2021, the underwriters exercised their option.

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

June 30, 2021 December 31, 2020

Total debt obligations, gross $ 2,241,495 $ 2,307,686

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489,329 490,404

(1) The revolving credit facility matures in October 2021 and includes an option to extend the maturity to October 2022, with its execution being subject to compliance with certain terms included in the loan agreement, including the absence of any defaults and the payment of relevant fees.

We intend to either exercise our option to extend the maturity or to negotiate under new terms.

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

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

As our debt obligations mature, we intend to refinance or pay off the balances at maturity using proceeds from operations and/or corporate-level debt.

Our debt is subject to certain covenants, and as of March 31, 2021, we were in compliance with the restrictive covenants of our outstanding debt obligations.

We expect to continue to meet the requirements of our debt covenants over the next twelve months.

Financial Leverage Ratios —We believe our debt to Adjusted EBITDA re , debt to total enterprise value, and debt covenant compliance as of March 31, 2021 allow us access to future borrowings as needed in the near term.

The following table presents our calculation of net debt and total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our third-party institutional joint ventures, as of March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021 December 31, 2020

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

• On July 2, 2021, we completed the Refinancing.

In connection with the Refinancing, we paid off the $472.5 million term loan due in 2025.

The revolving credit facility will mature in January 2026, and the two senior unsecured term loan tranches will mature in November 2025 and July 2026, respectively.

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

We have been assigned investment grade ratings from Moody’s Investors Service (Baa3) and S&P Global Ratings (BBB-) which may allow us access to additional capital markets.

We expect to save approximately $7.2 million in interest annually as a result of our debt activity and our investment grade ratings.

Further, our weighted-average interest rate was 3.1% as of June 30, 2021, as adjusted to reflect certain material July debt transactions described above.

The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments and deferred financing expenses, net, and including the effects of derivative financial instruments (see Notes 7 and 12) as of June 30, 2021 and December 31, 2020 is summarized below.

We have also presented this allocation as of June 30, 2021 on an adjusted basis to reflect certain material July debt transactions described above (in thousands):

June 30, 2021 June 30, 2021

(As Adjusted)

December 31, 2020

As to interest rate:

Fixed-rate debt $ 1,548,995 $ 1,548,995 $ 1,727,186

Variable-rate debt 692,500 325,000 580,500

Total $ 2,241,495 $ 1,873,995 $ 2,307,686

As to collateralization:

Unsecured debt $ 1,622,500 $ 1,255,000 $ 1,622,500

Secured debt 618,995 618,995 685,186

Total $ 2,241,495 $ 1,873,995 $ 2,307,686

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

2021 2022 2023 2024 2025 Thereafter Total

Term loans $ — $ — $ 300,000 $ 475,000 $ 240,000 $ 240,000 $ 1,255,000

Secured debt 10,068 61,171 66,702 28,124 27,877 424,925 618,867

Total $ 10,068 $ 61,171 $ 366,702 $ 503,124 $ 267,877 $ 664,925 $ 1,873,867

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

FINANCIAL LEVERAGE RATIOS —We believe our debt to Adjusted EBITDA re , debt to total enterprise value, and debt covenant compliance as of June 30, 2021 allow us access to future borrowings as needed in the near term.

The following table presents our calculation of net debt and total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our unconsolidated joint ventures, as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

Total debt, excluding market adjustments and deferred financing expenses $ 2,272,268 $ 2,345,620

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Total enterprise value $ 5,636,438 $ 5,037,902

(1) Total equity value is calculated as the number of common shares and OP units outstanding multiplied by the EVPS as of March 31, 2021 and December 31, 2020, respectively.

There were 320.9 million diluted shares outstanding with an EVPS of $10.55 as of March 31, 2021 and 319.7 million diluted shares outstanding with an EVPS of $8.75 as of December 31, 2020.

The following table presents our calculation of net debt to Adjusted EBITDA re and net debt to total enterprise value as of March 31, 2021 and December 31, 2020 (dollars in thousands):

March 31, 2021 December 31, 2020

(1) Total equity value is calculated as the number of common shares and OP units outstanding multiplied by the EVPS as of June 30, 2021 and December 31, 2020, respectively.

There were 107.0 million diluted shares outstanding with an EVPS of $31.65 as of June 30, 2021 and 106.6 million diluted shares outstanding with an EVPS of $26.25 as of December 31, 2020.

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

June 30, 2021 December 31, 2020

Net debt to Adjusted EBITDA re - annualized :

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See “Part I, Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - EBITDA re and Adjusted EBITDA re” of this filing on Form 10-Q for a reconciliation to Net Income.

CAPITAL EXPENDITURES AND REDEVELOPMENT ACTIVITY —We make capital expenditures during the course of normal operations, including maintenance capital expenditures and tenant improvements, as well as value-enhancing anchor space repositioning and redevelopment, ground-up outparcel development, and other accretive projects.

During the three months ended March 31, 2021 and 2020, we had capital spend of $13.5 million and $16.0 million, respectively.

During the six months ended June 30, 2021 and 2020, we had capital spend of $30.2 million and $28.5 million, respectively.

Generally, we expect our development and redevelopment projects to stabilize within 24 months.

We anticipate that obligations related to capital improvements as well as redevelopment and development in 2021 can be met with cash flows from operations, cash flows from dispositions, or borrowings on our unsecured revolving line of credit.

Below is a summary of our capital spending activity on a cash basis (dollars in thousands):

Three Months Ended March 31,

Below is a summary of our capital spending activity, excluding leasing commissions, on a cash basis (dollars in thousands):

Six Months Ended June 30,

Capital expenditures for real estate (1) :

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

Our underwritten incremental yields on development and redevelopment projects are expected to range between 8% to 11%.

Our underwritten incremental yields on development and redevelopment projects are expected to range between 9% - 11%.

Our current in process projects represent an estimated total investment of $36.3 million, and the total underwritten incremental yield range on this estimated investment is approximately 9.5% - 10.5%.

Actual incremental yields may vary from our underwritten incremental yield range based on the actual total cost to complete a project and its actual incremental annual NOI at stabilization.

Actual incremental yields may vary

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

from our underwritten incremental yield range based on the actual total cost to complete a project and its actual incremental annual NOI at stabilization.

See “Part I, Item 2.

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ACQUISITION ACTIVITY —We continually monitor the commercial real estate market for properties that have future growth potential, are located in attractive demographic markets, and support our business objectives.

During the three months ended March 31, 2021, we acquired two properties and two parcels of land for a total cash outlay of $39.9 million.

During the three months ended March 31, 2020, we acquired two parcels of land for a total cash outlay of $4.3 million.

See Note 4 to the consolidated financial statements.

The following table highlights our property acquisitions (dollars in thousands):

Six Months Ended June 30,

Number of properties acquired 2 —

Number of outparcels acquired (1)

Total acquisition price $ 40,459 $ 4,343

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

DISPOSITION ACTIVITY —We are actively evaluating our portfolio of assets for opportunities to make strategic dispositions of assets that no longer meet our growth and investment objectives or assets that have stabilized in order to capture their value.

We expect to continue to make strategic dispositions during the remainder of 2021.

The following table highlights our property dispositions (dollars and square feet in thousands):

Three Months Ended March 31,

The following table highlights our property dispositions (dollars in thousands):

Six Months Ended June 30,

Number of properties sold( 1)

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Gain (loss) on sale of property, net (4)

(1) The outparcel sold in the first quarter of 2021 was the only remaining portion of one of our properties, and therefore the sale resulted in a reduction in our total property count.

18,713 (1,436)

(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) One outparcel sold during the six months ended June 30, 2021 was the only remaining portion of one of our properties, and therefore the sale resulted in a reduction in our total property count.

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

This generated minimal proceeds for us.

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

Distributions —Distributions to our common stockholders and OP unit holders, including key financial metrics for comparison purposes, for the three months ended March 31, 2021 and 2020, are as follows (in thousands):

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

DISTRIBUTIONS —Distributions to our common stockholders and OP unit holders, including key financial metrics for comparison purposes, for the six months ended June 30, 2021 and 2020, are as follows (in thousands):

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

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Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators” for the definition of Core FFO, or information regarding why we present Core FFO.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - FFO and Core FFO” for a reconciliation of this non-GAAP financial measure to Net Income.

We paid monthly distributions of $0.02833333 per share, or $0.34 annualized, for the months of December 2020 and January, February, and March 2021.

On April 14, 2021, our Board authorized distributions for May 2021 equal to a monthly amount of $0.02833333 per share of common stock.

The May 2021 distributions were paid on May 3, 2021.

On March 25, 2021, our Board announced that we are reviewing alternatives in order to provide liquidity to our shareholders.

In connection with the review process, the Third Amended and Restated Dividend Reinvestment Plan has been suspended, beginning with the distribution payable on April 1, 2021.

Stockholders will receive their full monthly distribution of $0.02833333 per share in cash until further notice.

The timing and amount of distributions is determined by our Board and is influenced in part by our intention to comply with REIT requirements of the Internal Revenue Code, as well as our results of operations, our general financial condition, general economic conditions, and other factors.

Our Board intends to evaluate distributions on a monthly basis throughout 2021.

To maintain our qualification as a REIT, we must make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain, and which does not necessarily equal net income (loss) as calculated in accordance with GAAP).

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - Nareit FFO and Core FFO” for a reconciliation of this non-GAAP financial measure to Net Income (Loss).

We paid monthly distributions of $0.085 per share, or $1.02 annualized, for the months of December 2020, and each month beginning January 2021 through July 2021.

On August 4, 2021, the Board authorized a monthly distribution in the amount of $0.085 per share payable on September 1, 2021 to stockholders of record at the close of business on August 16, 2021.

We generally will not be subject to U.S.

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

Cash Flow Activities —As of March 31, 2021, we had cash and cash equivalents and restricted cash of $62.3 million, a net cash decrease of $69.7 million during the three months ended March 31, 2021.

DRIP AND THE SRP —On August 4, 2021, as a result of our underwritten IPO, our Board approved the termination of the DRIP and the SRP.

The DRIP has been suspended since April 2021.

The SRP, which was limited to repurchases resulting from the DDI of stockholders, has been suspended since March 2021, and the SRP for standard repurchases had been suspended since August 2019.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

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

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

Three Months Ended March 31,

Six Months Ended June 30,

2021 2020 $ Change % Change

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Net cash provided by (used in) investing activities 49,837 (6,466) 56,303 NM

Net cash used in financing activities (123,125) (43,733) (79,392) NM

Net cash used in financing activities (200,270) (99,218) (101,052) 101.8 %

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.

During the three months ended March 31, 2021, we had a net cash outlay of $15.3 million from changes in working capital as compared to a net cash outlay of $23.4 million during the same period in 2020.

During the six months ended June 30, 2021, we had a net cash inflow of $2.1 million from changes in working capital as compared to a net cash outlay of $24.3 million during the same period in 2020.

This change was primarily driven by improved collections on amounts due from Neighbors as well as expense reduction initiatives, and was partially offset by higher leasing commissions.

1 unchanged sentence

• Fee and management income —We also generate operating cash from our third-party investment management business, pursuant to various management and advisory agreements between us and the Managed Funds.

Our fee and management income was $2.3 million for the three months ended March 31, 2021, an increase of $0.1 million as compared to the same period in 2020.

• Cash paid for interest —During the three months ended March 31, 2021, we paid $18.9 million for interest, a decrease of $1.4 million over the same period in 2020, largely due to a decrease in LIBOR and expiring interest rate swaps.

Our fee and management income was $4.7 million for the six months ended June 30, 2021, a decrease of $0.3 million as compared to the same period in 2020.

• Cash paid for interest —During the six months ended June 30, 2021, we paid $36.8 million for interest, a decrease of $4.1 million over the same period in 2020, largely due to:

(i) lower borrowings as a result of early repayments of debt;

(ii) the repayment of our draw on the revolver during the second quarter of 2020;

and (iii) lower interest rates due to the decrease in LIBOR and expiring interest rate swaps.

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

• Real estate acquisitions —During the three months ended March 31, 2021, our acquisitions resulted in a total cash outlay of $39.9 million, as compared to a total cash outlay of $4.3 million during the same period in 2020.

• Real estate dispositions —During the three months ended March 31, 2021, our dispositions resulted in a net cash inflow of $58.4 million, as compared to a net cash inflow of $17.4 million during the same period in 2020.

• Real estate acquisitions —During the six months ended June 30, 2021, our acquisitions resulted in a total cash outlay of $40.5 million, as compared to a total cash outlay of $4.3 million during the same period in 2020.

• Real estate dispositions —During the six months ended June 30, 2021, our dispositions resulted in a net cash inflow of $119.6 million, as compared to a net cash inflow of $25.8 million during the same period in 2020.

• Capital expenditures —We invest capital into leasing our properties and maintaining or improving the condition of our properties.

During the three months ended March 31, 2021, we paid $13.5 million for capital expenditures, a decrease of $2.4 million over the same period in 2020, primarily due to the timing of our development and redevelopment projects.

• Investment in third parties —During the three months ended March 31, 2021, we made an investment in a third party business that resulted in a net cash outflow of $3.0 million.

During the six months ended June 30, 2021, we paid $30.2 million for capital expenditures, an increase of $1.7 million over the same period in 2020, primarily due to the timing of our development and redevelopment projects and reduced spend during the same period period a year ago.

• Return of investment in unconsolidated joint ventures —During the six months ended June 30, 2021, we had a return of investment in unconsolidated joint ventures of $3.9 million, including $2.0 million in connection with NRP primarily as a result of property dispositions.

During the six months ended June 30, 2020, we had a return of investment in unconsolidated joint ventures of $0.6 million.

• Investment in third parties —During the six months ended June 30, 2021, we made an investment in a third party business that resulted in a net cash outflow of $3.0 million.

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

• Debt borrowings and payments —During the three months ended March 31, 2021, we had $16.5 million in net repayment of debt primarily as a result of early repayments of mortgage loans.

During the three months ended March 31, 2020 we had net borrowings of $1.5 million, largely as a result of drawing $34.0 million on our revolving credit facility, offset by a pay down in January 2020 of $30.0 million on term loan debt maturing in 2021.

• Distributions to stockholders and OP unit holders —Cash used for distributions to common stockholders and OP unit holders decreased $11.1 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily due a reduction of the distribution rate beginning with the December 2020 distribution, which was paid in January 2021, and due to a lower share count as a result of a tender offer.

• Share repurchases —Cash outflows for share repurchases increased by $72.6 million for the three months ended March 31, 2021 as compared to the same period in 2020, primarily as a result of a tender offer, which was settled in January 2021.

In connection with the liquidity alternative review process, the Fourth Amended SRP, which is currently limited to repurchases resulting from DDI of stockholders, has been suspended, and the March 31, 2021 repurchases related to stockholder DDI were not executed.

The SRP for both standard and DDI requests will remain suspended until further notice.

• Debt borrowings and payments —During the six months ended June 30, 2021, we had $66.2 million in net repayment of debt primarily as a result of early repayments of mortgage loans.

During the six months ended June 30, 2020 we had net payments of $35.2 million, primarily as a result of a pay down in January 2020 of $30.0 million on term loan debt maturing in 2021.

• Distributions to stockholders and OP unit holders —Cash used for distributions to common stockholders and OP unit holders decreased $2.3 million for the six months ended June 30, 2021 as compared to the same period in 2020, due to a reduction of the distribution rate.

• Share repurchases —Cash outflows for share repurchases increased by $72.6 million for the six months ended June 30, 2021 as compared to the same period in 2020, primarily as a result of a tender offer, which was settled in January 2021.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

CONTRACTUAL COMMITMENTS AND CONTINGENCIES

We have debt obligations related to both our secured and unsecured debt.

In addition, we have operating leases pertaining to office equipment for our business as well as ground leases at certain of our shopping centers.

We are presenting our future contractual commitments and contingencies as of June 30, 2021 on an adjusted basis to reflect our material debt transactions occurring in July 2021 (see Note 6 for more details).

The table below excludes obligations related to tenant allowances and improvements because such amounts are not fixed or determinable.

However, we believe we currently have sufficient financing in place to fund any such amounts as they arise through cash from operations or borrowings.

The following table details our pro forma contractual obligations as of June 30, 2021 (in thousands):

Payments Due by Period

Total 2021 2022 2023 2024 2025 Thereafter

Debt obligations - principal

$ 1,873,867 $ 10,068 $ 61,171 $ 366,702 $ 503,124 $ 267,877 $ 664,925

Debt obligations - interest

236,284 27,875 53,942 48,516 36,736 24,323 44,892

Operating lease obligations 8,713 424 823 672 546 317 5,931

Finance lease obligations 134 25 45 40 24 — —

Total $ 2,118,998 $ 38,392 $ 115,981 $ 415,930 $ 540,430 $ 292,517 $ 715,748

(1) In July 2021, we amended our $500 million revolving credit facility to extend the maturity from October 2021 to January 2026, and lower the interest rate spread from 1.40% over LIBOR to 1.35% over LIBOR.

Additionally, the new terms include two six-month maturity extension options.

As of June 30, 2021, we have no outstanding balance on our revolving credit facility.

(2) Future variable-rate interest payments are based on interest rates as of June 30, 2021, including the impact of our swap agreements.

Our portfolio debt instruments and the unsecured revolving credit facility contain certain covenants and restrictions.

The following list provides an update to certain restrictive covenants specific to the unsecured revolving credit facility and unsecured term loans that were deemed significant as a result of our debt activity occurring in July 2021:

• limits the ratio of total debt to total asset value, as defined, to 60% or less with a surge to 65% for a period of four consecutive fiscal quarters following a material acquisition;

• limits the ratio of secured debt to total asset value, as defined, to 35% or less with a surge to 40% for a period of four consecutive fiscal quarters following a material acquisition;

• requires the fixed-charge ratio, as defined, to be 1.5:1 or greater

• limits the ratio of cash dividend payments to Nareit FFO, as defined, to 95%;

• limits the ratio of unsecured debt to unencumbered total asset value, as defined, to 60% or less with a surge to 65% for a period of four consecutive fiscal quarters following a material acquisition;

• requires the unencumbered NOI to interest expense ratio, as defined, to be 1.75:1 or greater;

• if we were to lose our investment grade rating in the future, the current tangible net worth will be required to exceed the minimum tangible net worth, as defined, at that time.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our 2020 Annual Report on Form 10-K, filed with the SEC on March 12, 2021, contains a description of our critical accounting policies and estimates, including those relating to real estate acquisitions, rental income, and the valuation of real estate assets.

Our 2020 Annual Report on Form 10-K, originally filed with the SEC on March 12, 2021, contains a description of our critical accounting policies and estimates, including those relating to real estate acquisitions, rental income, and the valuation of real estate assets.

There have been no significant changes to our critical accounting policies during 2021.

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 2020 Annual Report on Form 10-K filed with the SEC on March 12, 2021.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis