What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 237 added, 201 removed, 486 unchanged (47% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020

(Condensed and Unaudited)

(In thousands, except per share amounts)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Investment in real estate:

25 unchanged sentences

Preferred stock, $ 0.01 par value per share, 10,000 shares authorized, zero shares issued and

outstanding at June 30, 2021 and December 31, 2020

Common stock, $ 0.01 par value per share, 1,000,000 shares authorized, 93,640 and 93,279

shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

outstanding at September 30, 2021 and December 31, 2020

Common stock, $ 0.01 par value per share, 650,000 shares authorized, 19,550 shares issued and

outstanding at September 30, 2021;

zero shares authorized, issued, and outstanding as of

December 31, 2020 196 —

Class B common stock, $ 0.01 par value per share, 350,000 shares authorized, 93,663 and

93,279 shares issued and outstanding at September 30, 2021 and December 31, 2020,

respectively 936 2,798

Additional paid-in capital (“APIC”) 3,261,585 2,739,358

8 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

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

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Condensed and Unaudited)

(In thousands, except per share amounts)

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

11 unchanged sentences

Interest expense, net ( 18,570 ) ( 20,388 ) ( 57,765 ) ( 65,317 )

Gain (loss) on disposal of property, net 3,744 ( 541 ) 17,585 ( 2,118 )

Gain on disposal of property, net 14,093 10,734 31,678 8,616

Other (expense) income, net ( 7,086 ) 196 ( 25,595 ) 9,565

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

Net (income) loss attributable to noncontrolling interests ( 796 ) 825 ( 810 ) ( 605 )

Net income (loss) attributable to stockholders $ 5,594 $ ( 5,588 ) $ 5,697 $ 4,181

Earnings per common share:

Net income (loss) per share attributable to stockholders - basic and

Net income 16,562 13,430 23,069 18,216

Net income attributable to noncontrolling interests ( 1,929 ) ( 1,646 ) ( 2,739 ) ( 2,251 )

Net income attributable to stockholders $ 14,633 $ 11,784 $ 20,330 $ 15,965

Earnings per share of common stock:

Net income per share attributable to stockholders - basic and

diluted (Note 10)

1 unchanged sentence

Comprehensive income (loss):

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

Net income $ 16,562 $ 13,430 $ 23,069 $ 18,216

Other comprehensive income (loss):

1 unchanged sentence

Comprehensive income (loss) 21,050 18,528 43,050 ( 21,797 )

Net (income) loss attributable to noncontrolling interests ( 796 ) 825 ( 810 ) ( 605 )

Net income attributable to noncontrolling interests ( 1,929 ) ( 1,646 ) ( 2,739 ) ( 2,251 )

Change in unrealized value on interest rate swaps attributable to

5 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Condensed and Unaudited)

(In thousands, except per share amounts)

Three Months Ended June 30, 2021 and 2020

Common Stock APIC AOCI Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interests Total Equity

Shares Amount

Balance at April 1, 2020 96,805 $ 2,903 $ 2,793,803 $ ( 58,552 ) $ ( 986,292 ) $ 1,751,862 $ 341,944 $ 2,093,806

Three Months Ended September 30, 2021 and 2020

Common Stock Class B Common Stock APIC AOCI Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interests Total Equity

Shares Amount Shares Amount

Balance at July 1, 2020 — $ — 96,822 $ 2,905 $ 2,795,434 $ ( 60,075 ) $ ( 991,939 ) $ 1,746,325 $ 341,144 $ 2,087,469

Change in unrealized value on interest

1 unchanged sentence

Share-based compensation — — — — 1,036 — — 1,036 818 1,854

Conversion of noncontrolling interests 17 1 555 — — 556 ( 556 ) —

Other — — — — 185 — ( 379 ) ( 194 ) ( 4 ) ( 198 )

Net loss — — — — ( 5,588 ) ( 5,588 ) ( 825 ) ( 6,413 )

Balance at June 30, 2020 96,822 $ 2,905 $ 2,795,434 $ ( 60,075 ) $ ( 991,939 ) $ 1,746,325 $ 341,144 $ 2,087,469

Balance at April 1, 2021 93,582 $ 2,807 $ 2,746,891 $ ( 41,695 ) $ ( 1,023,155 ) $ 1,684,848 $ 324,558 $ 2,009,406

Net income — — — — — — 11,784 11,784 1,646 13,430

Balance at September 30, 2020 — $ — 96,822 $ 2,905 $ 2,796,655 $ ( 55,630 ) $ ( 980,534 ) $ 1,763,396 $ 344,257 $ 2,107,653

Balance at July 1, 2021 — $ — 93,640 $ 2,808 $ 2,749,680 $ ( 38,732 ) $ ( 1,041,617 ) $ 1,672,139 $ 323,249 $ 1,995,388

Issuance of common stock 19,550 196 — — 547,205 — — 547,401 — 547,401

Offering costs, discounts, and

commissions — — — — ( 39,042 ) — — ( 39,042 ) — ( 39,042 )

Change in unrealized value on interest

4 unchanged sentences

Share-based compensation — — 23 ( 1 ) 1,871 — — 1,870 2,116 3,986

Conversion of noncontrolling interests 28 — 743 — — 743 ( 743 ) —

Reallocation of operating partnership

interests — — ( 56 ) ( 10 ) — ( 66 ) 66 —

Impact of reverse stock split — — — ( 1,871 ) 1,871 — — — — —

Net income — — — — — — 14,633 14,633 1,929 16,562

Balance at June 30, 2021 93,640 $ 2,808 $ 2,749,680 $ ( 38,732 ) $ ( 1,041,617 ) $ 1,672,139 $ 323,249 $ 1,995,388

Balance at September 30, 2021 19,550 $ 196 93,663 $ 936 $ 3,261,585 $ ( 34,806 ) $ ( 1,054,483 ) $ 2,173,428 $ 324,320 $ 2,497,748

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Condensed and Unaudited)

(In thousands, except per share amounts)

Six Months Ended June 30, 2021 and 2020

Common Stock APIC AOCI Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interests Total Equity

Shares Amount

Nine Months Ended September 30, 2021 and 2020

Common Stock Class B Common Stock APIC AOCI Accumulated Deficit Total Stockholders’ Equity Noncontrolling Interests Total Equity

Shares Amount Shares Amount

Balance at January 1, 2020 — $ — 96,349 $ 2,890 $ 2,779,130 $ ( 20,762 ) $ ( 947,252 ) $ 1,814,006 $ 354,788 $ 2,168,794

10 unchanged sentences

Net income — — — — — — 15,965 15,965 2,251 18,216

Balance at June 30, 2020 96,822 $ 2,905 $ 2,795,434 $ ( 60,075 ) $ ( 991,939 ) $ 1,746,325 $ 341,144 $ 2,087,469

Balance at September 30, 2020 — $ — 96,822 $ 2,905 $ 2,796,655 $ ( 55,630 ) $ ( 980,534 ) $ 1,763,396 $ 344,257 $ 2,107,653

Balance at January 1, 2021 — $ — 93,279 $ 2,798 $ 2,739,358 $ ( 52,306 ) $ ( 999,491 ) $ 1,690,359 $ 325,570 $ 2,015,929

Issuance of common stock 19,550 196 — — 547,205 — — 547,401 — 547,401

Offering costs, discounts, and

commissions — — — — ( 39,042 ) — — ( 39,042 ) — ( 39,042 )

DRIP — — 280 8 7,360 — — 7,368 — 7,368

9 unchanged sentences

interests — — — — ( 56 ) ( 10 ) — ( 66 ) 66 —

Impact of reverse stock split — — — ( 1,871 ) 1,871 — — — — —

Other — — — — ( 29 ) — — ( 29 ) — ( 29 )

Net income — — — — — — 20,330 20,330 2,739 23,069

Balance at June 30, 2021 93,640 $ 2,808 $ 2,749,680 $ ( 38,732 ) $ ( 1,041,617 ) $ 1,672,139 $ 323,249 $ 1,995,388

Balance at September 30, 2021 19,550 $ 196 93,663 $ 936 $ 3,261,585 $ ( 34,806 ) $ ( 1,054,483 ) $ 2,173,428 $ 324,320 $ 2,497,748

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Condensed and Unaudited)

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

7 unchanged sentences

Amortization of debt and derivative adjustments 1,133 2,154

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

Gain on disposal of property, net ( 31,678 ) ( 8,616 )

Change in fair value of earn-out liability 23,000 ( 10,000 )

13 unchanged sentences

Return of investment in unconsolidated joint ventures 4,278 1,949

Investment in marketable securities ( 5,514 ) —

Net cash provided by (used in) investing activities 37,835 ( 13,561 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from the issuance of common stock 547,401 —

Payment of offering costs ( 39,042 ) —

Repurchases of Class B stock ( 77,765 ) ( 5,211 )

Proceeds from revolving credit facility 9,000 255,000

Payments on revolving credit facility ( 9,000 ) ( 255,000 )

Proceeds from loans payable 480,000 —

Payments on mortgages and loans payable ( 1,077,422 ) ( 37,778 )

1 unchanged sentence

Distributions to noncontrolling interests ( 11,344 ) ( 9,406 )

Repurchases of common stock ( 77,765 ) ( 5,211 )

Other ( 29 ) ( 516 )

Net cash used in financing activities ( 253,870 ) ( 101,994 )

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 20,536 ) ( 15,778 )

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 17,722 ) 41,690

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:

6 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

(Condensed and Unaudited)

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

SUPPLEMENTAL CASH FLOW DISCLOSURE, INCLUDING NON-CASH INVESTING AND FINANCING ACTIVITIES:

8 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

Phillips Edison & Company, Inc.

1 unchanged sentence

(Condensed and Unaudited)

As of and for the period ended June 30, 2021

As of and for the periods ended September 30, 2021

Phillips Edison & Company, Inc.

3 unchanged sentences

We are a real estate investment trust (“REIT”) that invests primarily in omni-channel grocery-anchored neighborhood and community shopping centers that have a mix of creditworthy national, regional, and local retailers that sell necessity-based goods and services in strong demographic markets throughout the United States.

In addition to managing our own shopping centers, our third-party investment management business provides comprehensive real estate and asset management services to two unconsolidated institutional joint ventures, in which we have a partial ownership interest, and one private fund (collectively, the “Managed Funds”) as of June 30, 2021.

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

As of September 30, 2021, we wholly-owned 267 real estate properties.

Additionally, we owned a 14 % interest in Grocery Retail Partners I LLC (“GRP I”), a joint venture that owned 20 properties, and a 20 % equity interest in Necessity Retail Partners (“NRP”), a joint venture that owned two properties.

1 unchanged sentence

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.

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

On July 2, 2021, our board of directors (the “Board”) approved an amendment to our articles of incorporation to effect a one-for-three reverse stock split.

1 unchanged sentence

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

On July 19, 2021, we closed our underwritten initial public offering (“underwritten IPO”), through which we offered 17.0 million shares of a new class of common stock, $ 0.01 par value per share, at an initial price of $ 28.00 per share, pursuant to a registration statement filed with the U.S.

On July 19, 2021, we closed our underwritten initial public offering (“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 to the public of $ 28.00 per share, pursuant to a registration statement filed with the U.S.

Securities and Exchange Commission (“SEC”) on Form S-11 (File No.

333-255846), as amended.

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

The underwriters have since exercised a 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.

In connection with the underwritten IPO, the underwriters 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 2.6 million shares at a price of $ 28.00 per share.

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

The underwritten IPO, including the underwriters overallotment election, resulted in gross proceeds of $ 547.4 million.

On September 20, 2021, the SEC declared effective our bond offering registration as filed on Form S-3 (File Nos.

333-259059 and 333-259059-01) relating to the offer, from time to time, of an unspecified number of debt securities not to exceed a maximum aggregate offering of $ 1 billion (“Bond Registration”).

In October 2021, in connection with this registration, we settled $ 350 million aggregate principal amount of 2.625 % senior notes (“2021 Bond Offering”) priced at 98.692 % of the principal amount and maturing in November 2031.

The notes are fully and unconditionally guaranteed by us.

Following our underwritten IPO, we are presenting common stock and Class B common stock as separate classes within our consolidated balance sheets and consolidated statements of equity.

Any references to “common stock” in this 10-Q refer to our Nasdaq-listed shares sold through the underwritten IPO, whereas Class B common stock refers to the newly-created class of common stock that is not listed.

This applies to all historical periods presented herein.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

however, certain of our tenants have permanently closed.

We have backfilled a number of these spaces, and continue to work on backfilling any remaining vacancies.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

backfilled a number of these spaces and continue to work on backfilling any remaining vacancies.

The continuing economic impacts of the COVID-19 pandemic could result in increased permanent store closures, reduce the demand for leasing space in our shopping centers, and/or result in a decline in occupancy and rental revenues in our real estate portfolio.

1 unchanged sentence

All of this activity impacts our estimates around the collectibility of revenue and valuation of real estate assets, goodwill and other intangible assets, and certain liabilities, among others.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

There were no changes to our significant accounting policies during the six months ended June 30, 2021, except for those discussed below.

There were no changes to our significant accounting policies during the nine months ended September 30, 2021, except for those discussed below.

For a full summary of our accounting policies, refer to our 2020 Annual Report on Form 10-K as originally filed with the SEC on March 12, 2021.

3 unchanged sentences

In the opinion of management, all normal and recurring adjustments necessary for the fair presentation of the unaudited consolidated financial statements for the periods presented have been included in this Quarterly Report.

Our results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the operating results expected for the full year.

Our results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the operating results expected for the full year.

The accompanying consolidated financial statements include our accounts and those of our majority-owned subsidiaries.

All intercompany balances and transactions are eliminated upon consolidation.

Underwritten IPO Costs —Deferred underwritten IPO costs are currently recorded as Other Assets, Net on our consolidated balance sheets as of June 30, 2021, and will be offset against underwritten IPO proceeds and reclassified as a component of APIC on the consolidated balance sheets upon the consummation of the offering.

Underwritten IPO Costs —Underwritten IPO costs are offset against underwritten IPO proceeds and included as a component of APIC on the consolidated balance sheets.

Costs incurred that were related to our underwritten IPO activities but were not directly related to our equity raise were not capitalized and are included as transaction costs, currently in Other (Expense) Income, Net on our consolidated statements of operations and comprehensive income (loss) (“consolidated statements of operations”).

As of September 30, 2021, we had underwritten IPO costs of approximately $ 39.0 million, and we incurred costs related to our underwritten IPO but not directly related to our equity raise of approximately $ 1.0 million.

Income Taxes —Our consolidated financial statements include the operations of wholly-owned subsidiaries that have jointly elected to be treated as Taxable REIT Subsidiaries and are subject to U.S.

federal, state, and local income taxes at regular corporate tax rates.

We recognized an insignificant amount of federal, state, and local income tax expense for the three and six months ended June 30, 2021 and 2020, and we retain a full valuation allowance for our deferred tax asset.

We recognized an insignificant amount of federal, state, and local income tax expense for the three and nine months ended September 30, 2021 and 2020, and we retain a full valuation allowance for our deferred tax asset.

All income tax amounts are included in Other (Expense) Income, Net on our consolidated statements of operations.

2 unchanged sentences

We adopted ASU 2021-01 upon its issuance and the adoption of this standard did not have a material impact on our consolidated financial statements.

Reclassifications —The following line items on our consolidated statement of cash flows for the six months ended June 30, 2020 were reclassified to conform to current year presentation:

Reclassifications —The following line items on our consolidated statement of cash flows for the nine months ended September 30, 2020 were reclassified to conform to current year presentation:

• Return on Investment in Unconsolidated Joint Ventures was listed on a separate line from Other Assets, Net;

1 unchanged sentence

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

Lessor —The majority of our leases are largely similar in that the leased asset is retail space within our properties, and the lease agreements generally contain similar provisions and features, without substantial variations.

All of our leases are currently classified as operating leases.

Lease income related to our operating leases was as follows for the three and six months ended June 30, 2021 and 2020 (in thousands):

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

Lease income related to our operating leases was as follows for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Rental income related to fixed lease

Rental income related to fixed

lease payments (1)

$ 95,080 $ 94,511 $ 284,531 $ 285,572

11 unchanged sentences

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

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

Includes unfavorable adjustments for the three and six months ended June 30, 2020 of $ 3.2 million, and $ 3.1 million, respectively.

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

For the three and six months ended June 30, 2021, we had net favorable changes to general reserves of $ 1.9 million and $ 4.1 million, respectively.

Additionally, we had $ 1.0 million in net collections on receivables that were previously deemed unlikely to be collected for tenants not considered creditworthy for the three months ended June 30, 2021, and $ 3.0 million in net unfavorable revenue adjustments for non-creditworthy tenants for the six months ended June 30, 2021.

For the three and six months ended June 30, 2020, we had net general reserve increases of $ 1.3 million and $ 0.9 million, respectively.

(3) For the three and nine months ended September 30, 2021, includes unfavorable revenue adjustments to straight-line rent for tenants considered non-creditworthy of $ 0.2 million and $ 0.6 million, respectively.

Includes favorable adjustments for the three months ended September 30, 2020 of $ 0.3 million, and unfavorable adjustments of $ 2.9 million for the nine months ended September 30, 2020.

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

For the three and nine months ended September 30, 2021, we had net favorable changes to general reserves of $ 0.5 million and $ 4.6 million, respectively.

Additionally, we had net unfavorable adjustments of $ 0.5 million and $ 3.5 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis.

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of June 30, 2021, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements, payment plans, and tenants who have been moved to the cash basis of accounting for revenue recognition purposes are as follows (in thousands):

For the three and nine months ended September 30, 2020, we had net unfavorable adjustments of $ 0.8 million and $ 1.7 million, respectively, related to general reserve collections.

Additionally, we had net unfavorable adjustments of $ 5.5 million and $ 17.2 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis.

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of September 30, 2021, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements, payment plans, and tenants who have been moved to the cash basis of accounting for revenue recognition purposes are as follows (in thousands):

Remaining 2021 $ 95,360

2 unchanged sentences

In response to the COVID-19 pandemic, we executed payment plans with our tenants.

As of June 30, 2021, we had $ 5.4 million of outstanding payment plans with our tenants, which represented approximately 2.1 % of rental income during the six months ended June 30, 2021.

During the three months ended June 30, 2021, we had recorded an immaterial amount of rent abatements related to 2021 missed charges.

During the six months ended June 30, 2021, we recorded approximately $ 0.5 million of rent abatements related to missed 2021 charges, which represented less than 1 % of rental income for the six months ended June 30, 2021.

No single tenant comprised 7% or more of our aggregate annualized base rent (“ABR”) as of June 30, 2021.

As of June 30, 2021, our wholly-owned real estate investments in Florida and California represented 12.6 % and 10.1 % of our ABR, respectively.

As of September 30, 2021, we had $ 4.1 million of outstanding payment plans with our tenants and we expect to receive remaining amounts owed to us from these plans over a weighted-average term of approximately eleven months.

No single tenant comprised 7 % or more of our aggregate annualized base rent (“ABR”) as of September 30, 2021.

As of September 30, 2021, our wholly-owned real estate investments in Florida and California represented 12.4 % and 10.1 % of our ABR, respectively.

As a result, the geographic concentration of our portfolio makes it particularly susceptible to adverse weather or economic events, including the impact of the COVID-19 pandemic, in the Florida and California real estate markets.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

Lessee — Lease assets and liabilities, grouped by balance sheet line where they are recorded, consisted of the following as of June 30, 2021 and December 31, 2020 (in thousands):

Balance Sheet Information Balance Sheet Location June 30, 2021 December 31, 2020

SEPTEMBER 30, 2021 FORM 10-Q

Lessee — Lease assets and liabilities, grouped by balance sheet line where they are recorded, consisted of the following as of September 30, 2021 and December 31, 2020 (in thousands):

Balance Sheet Information Balance Sheet Location September 30, 2021 December 31, 2020

ROU assets, net - operating leases Investment in Real Estate $ 3,975 $ 3,867

ROU assets, net - operating and finance leases Other Assets, Net 1,080 1,438

Operating lease liability Accounts Payable and Other Liabilities 5,619 5,731

Operating lease liability Accounts Payable and Other

Liabilities 5,468 5,731

Finance lease liability Debt Obligations, Net 117 164

1 unchanged sentence

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

Six Months Ended June 30,

Nine Months Ended September 30,

Number of properties sold (1)

1 unchanged sentence

Proceeds from sale of real estate $ 180,340 $ 48,276

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

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.

Gain on sale of properties, net (4)

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

(2) During the nine months ended September 30, 2021, our outparcel sales included:

(i) the only remaining portion of one of our properties;

therefore, resulting in a reduction in our total property count;

and (ii) an undeveloped parcel of land, as well as an outparcel adjacent to one of our centers, neither of which resulted in a reduction in our total property count.

(3) In addition to the three outparcels sold during the nine months ended September 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 properties, 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.

Subsequent to June 30, 2021, we sold two properties for $ 16.0 million.

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

Subsequent to September 30, 2021, we sold one property for $ 4.4 million.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Number of properties acquired 4 1

3 unchanged sentences

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

Six Months Ended June 30, 2021

Fair Value Weighted-Average Useful Life

Nine Months Ended

September 30, 2021 September 30, 2020

Fair Value Weighted-Average Useful Life Fair Value Weighted-Average Useful Life

In-place leases $ 8,728 10 $ 1,682 16

1 unchanged sentence

Below-market leases ( 7,250 ) 17 ( 1,882 ) 26

Subsequent to September 30, 2021, we purchased two properties for $ 91.2 million.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

Property Held for Sale —As of June 30, 2021, two properties were classified as held for sale.

SEPTEMBER 30, 2021 FORM 10-Q

Property Held for Sale —As of September 30, 2021, three properties were classified as held for sale.

As of December 31, 2020, no properties were classified as held for sale.

Properties classified as held for sale as of June 30, 2021 were under contract to sell, with no substantive contingencies, and the prospective buyers had significant funds at risk as of the reporting date.

Subsequent to June 30, 2021, both of our held for sale properties were sold.

A summary of assets and liabilities for the properties held for sale as of June 30, 2021 is below (in thousands):

June 30, 2021

Properties classified as held for sale as of September 30, 2021 were under contract to sell, with no substantive contingencies, and the prospective buyers had significant funds at risk as of the reporting date.

Subsequent to September 30, 2021, we sold one of our held for sale properties.

A summary of assets and liabilities for the properties held for sale as of September 30, 2021 is below (in thousands):

September 30, 2021

Total investment in real estate assets, net $ 16,109

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OTHER ASSETS, NET

The following is a summary of Other Assets, Net outstanding as of June 30, 2021 and December 31, 2020, excluding amounts related to assets held for sale (in thousands):

June 30, 2021 December 31, 2020

The following is a summary of Other Assets, Net outstanding as of September 30, 2021 and December 31, 2020, excluding amounts related to assets held for sale (in thousands):

September 30, 2021 December 31, 2020

Other assets, net:

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Deferred financing expenses (1)

13,971 13,971

Office equipment, ROU assets, and other 23,418 21,578

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Investment in third parties 3,000 —

Investment in marketable securities 5,357 —

Total other assets, net $ 139,451 $ 126,470

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

(2) Net of $ 7.4 million and $ 8.9 million of general reserves for uncollectible amounts as of June 30, 2021 and December 31, 2020, respectively.

Receivables that were removed for tenants considered to be non-creditworthy were $ 16.2 million and $ 22.8 million as of June 30, 2021 and December 31, 2020, respectively.

(3) Net of $ 4.7 million and $ 4.4 million of adjustments as of June 30, 2021 and December 31, 2020, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.

(2) Net of $ 6.3 million and $ 8.9 million of general reserves for uncollectible amounts as of September 30, 2021 and December 31, 2020, respectively.

Receivables that were removed for tenants considered to be non-creditworthy were $ 12.5 million and $ 22.8 million as of September 30, 2021 and December 31, 2020, respectively.

(3) Net of $ 4.8 million and $ 4.4 million of receivables removed as of September 30, 2021 and December 31, 2020, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

DEBT OBLIGATIONS

The following is a summary of the outstanding principal balances and interest rates, which include the effect of derivative financial instruments, for our debt obligations as of June 30, 2021 and December 31, 2020 (dollars in thousands):

The following is a summary of the outstanding principal balances and interest rates, which include the effect of derivative financial instruments, for our debt obligations as of September 30, 2021 and December 31, 2020 (dollars in thousands):

Interest Rate (1)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Revolving credit facility LIBOR + 1.1 %

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Weighted-average interest rate 3.3 % 3.1 %

(1) Interest rates are as of June 30, 2021.

(1) Interest rates are as of September 30, 2021.

(2) Our term loans carry an interest rate of LIBOR plus a spread.

While most of the rates are fixed through the use of swaps, there is a portion of these loans that are not subject to a swap, and thus are still indexed to LIBOR.

Debt Activity —On July 2, 2021, we entered into a new $ 980 million credit facility comprised of a $ 500 million senior unsecured revolving credit facility and two $ 240 million senior unsecured term loan tranches (the “Refinancing”).

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

Debt Activity —In July 2021, we entered into a new $ 980 million credit facility comprised of a $ 500 million senior unsecured revolving credit facility and two $ 240 million senior unsecured term loan tranches (the “Refinancing”).

In connection with the Refinancing, we paid off a $ 472.5 million term loan due in November 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 million term loan maturing in 2022.

Debt Allocation — 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 (in thousands):

June 30, 2021 December 31, 2020

Additionally, we used proceeds from the underwritten IPO to retire a $ 375 million term loan that was set to mature in April 2022.

In August 2021, we paid down $ 150 million of our $ 300 million term loan that was set to mature in November 2023.

In October 2021, in connection with our Bond Registration, we settled $ 350 million aggregate principal amount of 2.625 % senior notes priced at 98.692 % of the principal amount, resulting in gross proceeds of $ 345.4 million and maturing in November 2031.

The notes are fully and unconditionally guaranteed by us.

In October 2021, we paid down the remaining $ 150 million outstanding balance of our $ 300 million term loan that was set to mature in November 2023, as described above.

Debt Allocation — 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 September 30, 2021 and December 31, 2020 is summarized below (in thousands):

September 30, 2021 December 31, 2020

As to interest rate:

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Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments principally related to our investments and borrowings.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

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

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

During the six months ended June 30, 2021 and 2020, such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt.

During the nine months ended September 30, 2021 and 2020, such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt.

Amounts reported in AOCI related to these derivatives will be reclassified to Interest Expense, Net as interest payments are made on the variable-rate debt.

During the next twelve months, we estimate that an additional $ 17.5 million will be reclassified from AOCI as an increase to Interest Expense, Net.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of June 30, 2021 and December 31, 2020 (dollars in thousands):

June 30, 2021 December 31, 2020

The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of September 30, 2021 and December 31, 2020 (dollars in thousands):

September 30, 2021 December 31, 2020

Notional amount $ 930,000 $ 1,042,000

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Maturity date 2022 - 2025 2021 - 2025

We assumed five hedges with a notional amount of $ 570 million as a part of a merger.

Weighted-average term (in years) 2.4 2.8

We assumed five hedges with a notional amount of $ 570 million as a part of a merger in 2018.

The fair value of the five hedges assumed was $ 14.7 million and is amortized over the remaining lives of the respective hedges and recorded in Interest Expense, Net in the consolidated statements of operations.

The net unamortized amount remaining as of June 30, 2021 and December 31, 2020 was $ 4.3 million and $ 5.0 million, respectively.

As of September 30, 2021 and December 31, 2020 there was one remaining hedge with a net unamortized amount remaining of $ 4.0 million and $ 5.0 million, respectively.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Amount of loss reclassified from AOCI

into interest expense

into Interest Expense, Net

4,905 5,143 14,584 11,562

Credit-risk-related Contingent Features —We have agreements with our derivative counterparties that contain provisions where, if we default, or are capable of being declared in default, on any of our indebtedness, we could also be declared to be in default on our derivative obligations.

As of June 30, 2021, the fair value of our derivatives in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk related to these agreements, was approximately $ 39.9 million.

As of June 30, 2021, we had not posted any collateral related to these agreements and were not in breach of any agreement provisions.

As of September 30, 2021, the fair value of our derivatives in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk related to these agreements, was approximately $ 35.8 million.

As of September 30, 2021, we had not posted any collateral related to these agreements and were not in breach of any agreement provisions.

If we had breached any of these provisions, we could have been required to settle our obligations under the agreements at their termination value of $ 35.8 million.

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Premiums paid to Silver Rock may be adjusted based on these estimates, and such premiums may be reimbursed by tenants pursuant to specific lease terms.

As of June 30, 2021, we had four letters of credit outstanding totaling approximately $ 9.0 million to provide security for our obligations under Silver Rock’s insurance and reinsurance contracts.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

As of September 30, 2021, we had four letters of credit outstanding totaling approximately $ 9.0 million to provide security for our obligations under Silver Rock’s insurance and reinsurance contracts.

General —The holders of common stock are entitled to one vote per share on all matters voted on by stockholders, including one vote per nominee in the election of the Board.

Our charter does not provide for cumulative voting in the election of directors.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

Reverse Stock Split —On July 2, 2021, we effected a one-for-three reverse stock split.

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All references to shares of common stock, number of OP units, and per share data for all periods presented in our consolidated financial statements and notes have been adjusted to reflect the reverse split on a retroactive basis.

Class B Common Stock —Our stockholders approved Articles of Amendment that effected a change of each share of our common stock outstanding at the time the amendment became effective into one share of a newly-created class of Class B common stock (the “Recapitalization”).

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

Our Class B common stock is identical to our common stock, except that (i) we do not intend to list our Class B common stock on a national securities exchange, and (ii) upon the six month anniversary of the listing of our common stock for trading on a national securities exchange, or January 15, 2022 (or such earlier date or dates as may be approved by our Board in certain circumstances with respect to all or any portion of the outstanding shares of our Class B common stock), each share of our Class B common stock will automatically, and without any stockholder action, convert into one share of our listed common stock.

Underwritten IPO —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.

Class B Common Stock —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.

Our Class B common stock is identical to our common stock, except that (i) our Class B common stock is not listed on a national securities exchange, and (ii) upon the six month anniversary of the listing of our common stock for trading on a national securities exchange, or January 15, 2022 (or such earlier date or dates as may be approved by our Board in certain circumstances with respect to all or any portion of the outstanding shares of our Class B common stock), each share of our Class B common stock will automatically, and without any stockholder action, convert into one share of our listed common stock.

Underwritten IPO —On July 19, 2021, we completed an underwritten IPO and issued 17.0 million shares of common stock at an offering price to the public of $ 28.00 per share.

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

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

Distributions —Distributions paid to stockholders and OP unit holders of record subsequent to June 30, 2021 were as follows (dollars in thousands, excluding per share amounts):

The underwritten IPO, including the underwriters overallotment election, resulted in gross proceeds of $ 547.4 million.

Distributions —Distributions paid to stockholders and OP unit holders of record subsequent to September 30, 2021 were as follows (dollars in thousands, excluding per share amounts):

Month Date of Record Monthly Distribution Rate Date Distribution Paid Cash Distribution

June 2021 6/15/2021 $ 0.085 7/1/2021 $ 9,063

July 2021 7/15/2021 0.085 8/2/2021 9,065

On August 4, 2021, our Board authorized distributions to the stockholders of record at the close of business on August 16, 2021, equal to a monthly amount of $0.085 per share of common stock.

September 2021 9/15/2021 $ 0.085 10/1/2021 $ 9,623

October 2021 10/15/2021 0.090 11/1/2021 10,189

On November 3, 2021, our Board authorized distributions for November and December 2021, as well as January 2022, to the stockholders of record at the close of business on November 15, 2021, December 15, 2021, and January 19, 2022, respectively, equal to a monthly amount of $ 0.09 per share of common stock.

OP unit holders will receive distributions at the same rate as common stockholders.

Convertible Noncontrolling Interests —As of June 30, 2021 and December 31, 2020, we had approximately 13.4 million and 13.3 million outstanding OP units, respectively.

Convertible Noncontrolling Interests —As of September 30, 2021 and December 31, 2020, we had approximately 13.4 million and 13.3 million outstanding OP units, respectively.

Additionally, certain of our outstanding restricted share and performance share awards will result in the issuance of OP units upon vesting in future periods.

Under the terms of the Fourth Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”), OP unit holders may elect to exchange their OP units.

The Operating Partnership controls the form of the redemption, and may elect to exchange OP units either for shares of our common stock, provided that the OP units have been outstanding for at least one year, or for cash.

As the form of redemption for OP units is within our control, the OP units outstanding as of June 30, 2021 and December 31, 2020 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets.

The table below is a summary of our OP unit activity for the three and six months ended June 30, 2021 and 2020 (dollars and shares in thousands):

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

The Operating Partnership controls the form of the redemption, and may elect to exchange OP units either for shares of our Class B common stock, provided that the OP units have been outstanding for at least one year, or for cash.

As the form of redemption for OP units is within our control, the OP units outstanding as of September 30, 2021 and December 31, 2020 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

The table below is a summary of our OP unit activity for the three and nine months ended September 30, 2021 and 2020 (dollars and shares in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

OP units converted into shares of our

common stock (1)

OP units converted into shares of

Class B common stock (1)

Distributions paid on OP units (2)

$ 3,536 $ — $ 10,315 $ 7,105

(1) OP units are converted into shares of our common stock at a 1:1 ratio.

(1) OP units are converted into shares of our Class B common stock at a 1 :1 ratio.

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

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

Underwritten IPO Grants —In connection with our underwritten IPO, we issued a total of 0.5 million RSUs and restricted stock awards in the form of time-based stock compensation awards.

Underwritten IPO Grants —In connection with our underwritten IPO, we issued a total of 0.5 million restricted stock units (“RSUs”), inclusive of 0.3 million OP units, and restricted stock awards in the form of time-based stock compensation awards with expenses included within Other (Expense) Income, Net.

The shares have a grant price of $ 28.00 per share and, with the exception of one individual whose award is subject to accelerated vesting provisions, 50 % of the shares will vest after 18 months and the remaining 50 % will vest after 36 months.

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

The DRIP has been suspended since April 2021.

The SRP, which was limited to repurchases resulting from the death, qualifying disability, or the declaration of incompetence (“DDI”) of stockholders, has been suspended since March 2021, and the SRP for standard repurchases had been suspended since August 2019.

EARNINGS PER SHARE

We use the two-class method of computing earnings per share (“EPS”), which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid).

Under the two-class method, basic EPS is computed by dividing Net Income (Loss) Attributable to Stockholders by the weighted-average number of shares of common stock outstanding for the period.

Under the two-class method, basic EPS is computed by dividing Net Income Attributable to Stockholders by the weighted-average number of shares of common stock outstanding for the period.

Diluted EPS reflects the potential dilution that could occur from share equivalent activity.

EPS reflects earnings per common share prior to the Recapitalization.

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

The impact of these outstanding OP units on basic and diluted EPS has been calculated using the two-class method whereby earnings are allocated to the OP units based on dividends declared and the OP units’ participation rights in undistributed earnings.

The effects of the two-class method on basic and diluted EPS were immaterial to the consolidated financial statements during the three and six months ended June 30, 2021 and 2020.

The following table provides a reconciliation of the numerator and denominator of the earnings per share calculations, restated for prior periods to display the effect of the reverse split, and excluding the effects of the Recapitalization as it occurred after June 30, 2021 (in thousands, except per share amounts):

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

The effects of the two-class method on basic and diluted EPS were immaterial to the consolidated financial statements during the three and nine months ended September 30, 2021 and 2020.

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net income (loss) attributable to stockholders - basic

Net income attributable to stockholders - basic

$ 14,633 $ 11,784 $ 20,330 $ 15,965

Net income (loss) attributable to convertible OP units (1)

Net income attributable to convertible OP units (1)

1,929 1,646 2,739 2,251

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

Net income - diluted $ 16,562 $ 13,430 $ 23,069 $ 18,216

Weighted-average shares - basic (2)

108,997 96,822 98,761 96,765

13,388 14,247 13,371 14,264

Dilutive restricted stock awards 188 119 185 131

Adjusted weighted-average shares - diluted 122,573 111,188 112,317 111,160

Earnings per common share:

Basic and diluted income (loss) per share

Earnings per share of common stock:

Basic and diluted income per share

$ 0.13 $ 0.12 $ 0.21 $ 0.16

(1) OP units include units that are convertible into common stock or cash, at the Operating Partnership’s option.

The Operating Partnership income or loss attributable to these OP units, which is included as a component of Net (Income) Loss Attributable to Noncontrolling Interests on the consolidated statements of operations, has been added back in the numerator as these OP units were included in the denominator for all periods presented.

Approximately 0.4 million time-based and 0.9 million performance-based unvested stock awards were outstanding as of June 30, 2020.

These securities were anti-dilutive for the three months ended June 30, 2020.

As a result, their impact was excluded from the weighted-average common shares used to calculate diluted EPS for that period.

(1) OP units include units that are convertible into Class B common stock or cash, at the Operating Partnership’s option.

The Operating Partnership income or loss attributable to these OP units, which is included as a component of Net Income Attributable to Noncontrolling Interests on the consolidated statements of operations, has been added back in the numerator as these OP units were included in the

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

REVENUE RECOGNITION AND RELATED PARTY TRANSACTIONS

SEPTEMBER 30, 2021 FORM 10-Q

denominator for all periods presented.

OP units are allocated income on a consistent basis with the common stockholder and therefore have no dilutive impact to earnings per share of common stock.

(2) Includes 93.7 million weighted-average shares of Class B common stock and 15.3 million weighted-average shares of common stock.

RELATED PARTY TRANSACTIONS

Revenue —We have entered into agreements with the Managed Funds related to certain advisory, management, and administrative services we provide to their real estate assets in exchange for fees and reimbursement of certain expenses.

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The revenue includes the fees and reimbursements earned by us from the Managed Funds, and other revenues that are not in the scope of ASC Topic 606, Revenue from Contracts with Customers, but that are included in this table for the purpose of disclosing all related party revenues (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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The 2021 TPA carries a term of four years and will become effective upon the expiration of the 2017 TPA.

As of June 30, 2021, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $ 152.6 million .

As of September 30, 2021, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $ 150 million.

The protection provided under the terms of the 2021 TPA will expire in 2031.

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Other Related Party Matters —We are the limited guarantor for up to $ 190 million, capped at $ 50 million in most instances, of debt for our NRP joint venture.

As of June 30, 2021, the outstanding loan balance related to our NRP joint venture was $ 32.1 million.

As of June 30, 2021, we were also the limited guarantor of a $ 175 million mortgage loan secured by GRP I properties.

As of September 30, 2021, the outstanding loan balance related to our NRP joint venture was $ 32.1 million.

As of September 30, 2021, we were also the limited guarantor of a $ 175 million mortgage loan secured by GRP I properties.

Our guaranty for both the NRP and GRP I debt is limited to being the non-recourse carveout guarantor and the environmental indemnitor.

Further, in both cases, we are also party to an agreement with our institutional joint venture partners in which any potential liability under such guarantees will be apportioned between us and our applicable joint venture partner based on our respective ownership percentages in the applicable joint venture.

We have no liability recorded on our consolidated balance sheets for either guaranty as of June 30, 2021 and December 31, 2020.

We have no liability recorded on our consolidated balance sheets for either guaranty as of September 30, 2021 and December 31, 2020.

Additionally, during 2021, we made a cash investment of $ 3.0 million into a third-party company in exchange for preferred shares of their stock.

As part of the investment agreement, the third-party company committed to enter into leases at two of our properties.

As of August 5, 2021, we had entered into two leases under the terms of the investment agreement, both of which carry a term of 10 years, over which period we expect to receive contractual rents of $ 2.6 million in total for both leases.

As of September 30, 2021, we had entered into two leases under the terms of the investment agreement, both of which carry a term of ten years , over which period we expect to receive contractual rents of $ 2.6 million in total for both leases.

FAIR VALUE MEASUREMENTS

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

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

Debt Obligations —We estimate the fair value of our debt by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by our lenders using Level 3 inputs.

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We have utilized market information, as available, or present value techniques to estimate the amounts required to be disclosed.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

The following is a summary of borrowings as of June 30, 2021 and December 31, 2020 (in thousands):

June 30, 2021 December 31, 2020

The following is a summary of borrowings as of September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021 December 31, 2020

Recorded Principal Balance (1)

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Total $ 1,699,417 $ 1,734,284 $ 2,292,605 $ 2,330,264

(1) Recorded principal balances include net deferred financing expenses of $ 11.7 million and $ 13.5 million as of June 30, 2021 and December 31, 2020, respectively.

Recorded principal balances also include assumed market debt adjustments of $ 1.6 million and $ 1.5 million as of June 30, 2021 and December 31, 2020, respectively.

We have recorded deferred financing expenses related to our revolving credit facility, which are not included in these balances, in Other Assets, Net on our consolidated balance sheets.

(1) Recorded principal balances include net deferred financing expenses of $ 14.7 million and $ 13.5 million as of September 30, 2021 and December 31, 2020, respectively.

Recorded principal balances also include assumed market debt adjustments of $ 1.6 million and $ 1.5 million as of September 30, 2021 and December 31, 2020, respectively.

We have recorded deferred financing expenses related to our revolving credit facility, which are not included in these balances, but included in Other Assets, Net on our consolidated balance sheets.

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

Recurring and Nonrecurring Fair Value Measurements —Our earn-out liability and interest rate swaps are measured and recognized at fair value on a recurring basis, while certain real estate assets and liabilities are measured and recognized at fair value as needed.

Fair value measurements that occurred as of and during the six months ended June 30, 2021 and the year ended December 31, 2020, were as follows (in thousands):

June 30, 2021 December 31, 2020

Recurring and Nonrecurring Fair Value Measurements —Our marketable securities, earn-out liability, and interest rate swaps are measured and recognized at fair value on a recurring basis, while certain real estate assets and liabilities are measured and recognized at fair value as needed.

Fair value measurements that occurred as of and during the nine months ended September 30, 2021 and the year ended December 31, 2020, were as follows (in thousands):

September 30, 2021 December 31, 2020

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3

Marketable securities $ 5,357 $ — $ — $ — $ — $ —

Derivative liabilities (1)

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

Derivative Instruments— As of June 30, 2021 and December 31, 2020, we had interest rate swaps that fixed LIBOR on portions of our unsecured term loan facilities.

Marketable Securities— We estimate the fair value of marketable securities using Level 1 inputs.

We utilize unadjusted quoted prices for identical assets in active markets that we have the ability to access.

Derivative Instruments— As of September 30, 2021 and December 31, 2020, we had interest rate swaps that fixed LIBOR on portions of our unsecured term loan facilities.

All interest rate swap agreements are measured at fair value on a recurring basis.

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Although we determined that the significant inputs used to value our derivatives fell within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with our counterparties and our own credit risk utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by us and our counterparties.

However, as of June 30, 2021 and December 31, 2020, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

However, as of September 30, 2021 and December 31, 2020, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

As a result, we have determined that our derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

Earn-out —As part of our acquisition of PELP in 2017, an earn-out structure was established which gave PELP the opportunity to earn additional OP units based upon the potential achievement of certain performance targets subsequent to the acquisition.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

Earn-out —As part of our acquisition of Phillips Edison Limited Partnership (“PELP”) in 2017, an earn-out structure was established which gave PELP the opportunity to earn additional OP units based upon the potential achievement of certain performance targets subsequent to the acquisition.

After the expiration of certain provisions in 2019, PELP is now eligible to earn a minimum of 1.0 million and a maximum of approximately 1.7 million OP units as contingent consideration based upon the timing and valuation of a liquidity event for PECO.

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

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

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

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Prior to the second quarter of 2021, we estimated the fair value of the earn-out liability on a quarterly basis using the Monte Carlo method.

As of June 30, 2021, our underwritten IPO process had commenced and thus the only remaining variable for calculating final amounts to be paid under the earn-out agreement was the liquidity event price per share.

Therefore, we estimated the fair value of the liability related to the earn-out using a probability-weighted model to estimate the liquidity event price per share.

In calculating the fair value of this liability as of June 30, 2021, we have determined that 1.0 million OP units have been earned and the most likely range of potential outcomes includes a possibility of no additional OP units issued as well as up to a maximum of approximately 0.667 million units being issued.

For the three months ended June 30, 2021, we recorded expense of $ 2.0 million related to the change in fair value of the earn-out liability.

There was no change to the fair value of our earn-out liability for the three months ended June 30, 2020.

We recorded expense of $ 18.0 million and income of $ 10.0 million, respectively, for the six months ended June 30, 2021 and June 30, 2020 related to changes in the fair value of the earn-out liability.

The increase in the fair value of the liability as of June 30, 2021 was attributable to the commencement of our underwritten IPO as well as improved market conditions in 2021.

Following our underwritten IPO, the only remaining variable for calculating final amounts to be paid under the earn-out agreement was the liquidity event price per share.

Therefore, as of September 30, 2021, we estimated the fair value of the liability related to the earn-out using a probability-weighted model to estimate the liquidity event price per share.

In calculating the fair value of this liability as of September 30, 2021, we have determined that 1.4 million OP units have been earned with the possibility of up to an additional 0.3 million units being issued.

For the three months ended September 30, 2021, we recorded expense of $ 5.0 million related to the change in fair value of the earn-out liability.

There was no change to the fair value of our earn-out liability for the three months ended September 30, 2020.

We recorded expense of $ 23.0 million and income of $ 10.0 million, respectively, for the nine months ended September 30, 2021 and September 30, 2020 related to changes in the fair value of the earn-out liability.

The increase in the fair value of the liability as of September 30, 2021 was attributable to the commencement of our underwritten IPO as well as improved market conditions in 2021.

The change in fair value for each period has been recognized in Other (Expense) Income, Net in the consolidated statements of operations.

Real Estate Asset Impairment —Our real estate assets are measured and recognized at fair value, less costs to sell for held-for-sale properties, on a nonrecurring basis dependent upon when we determine an impairment has occurred.

During the three and six months ended June 30, 2021, we impaired assets that were under contract at a disposition price that was less than carrying value, or that had other operational impairment indicators.

During the three and nine months ended September 30, 2021, we impaired assets that were under contract at a disposition price that was less than carrying value, or that had other operational impairment indicators.

The valuation technique used for the fair value of all impaired real estate assets was the expected net sales proceeds, which we consider to be a Level 2 input in the fair value hierarchy.

There were no impairment charges recorded during the three and six months ended June 30, 2020.

There were no impairment charges recorded during the three and nine months ended September 30, 2020.

On a quarterly basis, we employ a multi-step approach to assess our real estate assets for possible impairment and record any impairment charges identified.

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Primary impairment triggers for these land parcels are changes to our plans or intentions with regards to such properties, or planned dispositions at prices that are less than the current carrying values.

Our quarterly impairment procedures have not been altered by the COVID-19 pandemic, as we believe key impairment indicators such as temporary store closings and large dark or vacant spaces will continue to be identified in our review.

We have utilized forecasts that incorporate estimated decreases in NOI and cash flows as a result of the COVID-19 pandemic in performing our review procedures for the three and six months ended June 30, 2021 and 2020.

However, it is possible that we could experience unanticipated changes in assumptions that are employed in our impairment review which could impact our cash flows and fair value conclusions.

It is possible that we could experience unanticipated changes in assumptions that are employed in our impairment review which could impact our cash flows and fair value conclusions.

Such unanticipated changes relative to our expectations may include but are not limited to:

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We recorded the following expense upon impairment of real estate assets (in thousands):

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Impairment of real estate assets $ 698 $ — $ 6,754 $ —

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

SUBSEQUENT EVENTS

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PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

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 1. Financial Statements