What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-11-04 compared with 2021-08-05 · 283 added, 277 removed, 551 unchanged (50% of the section changed)

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All references to “Notes” throughout this document refer to the footnotes to the consolidated financial statements in “Part I, Item 1.

Financial Information”.

Financial Statements”.

See also “Cautionary Note Regarding Forward-Looking Statements” below.

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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.

(b) statements about the COVID-19 pandemic, including its duration and potential or expected impact on our tenants, our business, and our view on forward trends;

and (d) 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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(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;

(xxi) the pace of recovery following the COVID-19 pandemic given its unpredictable nature and impact on macroeconomic conditions;

(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.

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 any subsequently filed Quarterly Reports on Form 10-Q, 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 do not consider our non-GAAP measures to be alternatives to measures required in accordance with GAAP.

Certain non-GAAP measures should not be viewed as an alternative measure of our financial performance as they may not reflect the operations of our entire portfolio, and they may not reflect the impact of general and administrative expenses, depreciation and amortization, interest expense, other income (expense), or the level of capital expenditures and leasing costs necessary

PHILLIPS EDISON & COMPANY

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.

SEPTEMBER 30, 2021 FORM 10-Q

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.

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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 June 30, 2021 multiplied by twelve months.

• ABR—We use ABR to refer to the monthly contractual base rent as of September 30, 2021 multiplied by twelve months.

• ABR per Square Foot (“PSF”)—This metric is calculated by dividing ABR by leased GLA.

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• 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.

• Comparable rent spread—This metric is calculated as the percentage increase or decrease in first-year ABR (excluding any free rent or escalations) on new or renewal leases (excluding options) where the lease was considered a comparable lease.

This metric provides an indication of our ability to generate revenue growth through leasing activity.

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PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

modification of debt, (v) other impairment charges;

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It provides insight into our leverage rate based on earnings and is not impacted by fluctuations in our equity price.

• Net Debt to Total Enterprise Value—This ratio is calculated by dividing net debt by total enterprise value.

• Net Debt to Total Enterprise Value—This ratio is calculated by dividing net debt by total enterprise value, as defined below.

It provides insight into our capital structure and usage of debt.

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

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 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).

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 (see 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.

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

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 NASDAQ under the trading symbol “PECO”.

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

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

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.

2021 BOND OFFERING —In October 2021, in connection with our Bond Registration, we settled the 2021 Bond Offering priced at 98.692% of the principal amount and maturing in November 2031.

This offering resulted in gross proceeds of $345.4 million.

The notes are fully and unconditionally guaranteed by us.

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.

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.

All statistics and financial results included in this COVID-19 Strategy section are approximate and include the prorated portion attributable to properties owned through our joint ventures.

Our management team determined the recovery of our portfolio was dependent on the execution of key actions, including guiding our Neighbors toward returning to monthly rent payments, recovering missed charges, and monitoring for credit risk.

Our actions in conjunction with the resiliency of our tenant mix has led to improved collections from the second quarter of 2020.

Further, we believe our collections have returned to levels consistent with those prior to the onset of the pandemic.

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:

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Q1 2021 95 % 98 %

Q2 2021 98 % 99 %

Q3 2021 N/A 99 %

(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 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, 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.

(1) Collections include those received through October 20, 2021.

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 decided to negotiate relief for a small subset of our Neighbors, including rent deferrals.

As of October 20, 2021, we have $4.2 million of outstanding payment plans with our Neighbors of which approximately 28% are scheduled to be received by December 31, 2021.

As of October 20, 2021, the weighted-average term over which we expect to receive remaining amounts owed on executed payment plans is approximately eleven months.

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.

We have been closely monitoring the status of our Neighbors to identify those who potentially pose a credit risk in order to appropriately account for the impact to revenue and in order to quickly take action when a Neighbor is ultimately unable to remain in a space.

Despite seeing improvements in collections for current and past due amounts during 2021, the negative impact the pandemic has had on our Neighbors continues to be considered in our evaluation of Neighbors who potentially pose a credit risk.

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 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 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.

For the three and nine months ended September 30, 2021, we had $0.6 million and $4.2 million, respectively, in net unfavorable monthly revenue adjustments for Neighbors who are being accounted for on a cash basis.

For the three and nine months ended September 30, 2020, we had $5.3 million and $20.3 million, respectively, in net unfavorable monthly revenue adjustments for Neighbors who were being accounted for on a cash basis.

As of September 30, 2021, our Neighbors currently being accounted for on a cash basis represented approximately 8% of our total Neighbor spaces, or approximately 7.3% of portfolio ABR.

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

When considering the ABR associated with Neighbors who are currently on a cash basis of accounting, 79% of this ABR is represented by Neighbors who are actively making payments.

Additionally, certain of our Neighbors have entered into bankruptcy proceedings.

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 less than 1% of our total portfolio ABR as of June 30, 2021.

Additionally, certain of our Neighbors entered into bankruptcy proceedings.

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

Certain of our Neighbors have been unable to remain in their spaces as a result of the factors previously noted.

Certain of our Neighbors were unable to remain in their spaces as a result of the factors previously noted.

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 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

For the three and nine months ended September 30, 2021, our wholly-owned portfolio retention rate was 91.2% and 88.3%, respectively.

Additionally, for the three and nine months ended September 30, 2021, for our wholly-owned portfolio, we executed 140 and 417 new leases, respectively, each an increase as compared to the same period a year ago.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

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

September 30, 2021 September 30, 2020

Number of properties 267 283

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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 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

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

September 30, 2021

Joint Venture Ownership Percentage Number of Properties ABR GLA

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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:

SEPTEMBER 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 September 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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PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 30, 2021 FORM 10-Q

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 June 30, 2021:

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

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

PHILLIPS EDISON & COMPANY

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).

SEPTEMBER 30, 2021 FORM 10-Q

NECESSITY-BASED GOODS AND SERVICES —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 72% 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.

Additionally, within these categories, we estimate that approximately 50% of our ABR is from retail and service businesses generally deemed essential under most state and local mandates issued in response to the COVID-19 pandemic.

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

June 30, 2021

Essential/Necessity Retail and Services:

Grocery 35.4 %

Medical/pharmacy 2.7 %

Dollar stores 2.2 %

Pet supply 1.9 %

Hardware/automotive 1.7 %

Wine, beer, and liquor 1.4 %

Other essential 2.7 %

Total Essential/Necessity-based retail and services (1)

Other Necessity:

Quick service - restaurant 9.7 %

Beauty and hair care 4.9 %

Health care services 4.0 %

Other necessity 3.5 %

Total ABR from other Necessity 22.1 %

Total ABR from Necessity-based goods and services 72.5 %

Other Retail Stores:

Soft goods (2)

Full service - restaurant 6.4 %

Fitness and lifestyle services (3)

Other retail (4)

Total ABR from other retail and services 27.5 %

Total ABR 100.0 %

(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.

(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.

PHILLIPS EDISON & COMPANY

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):

Additionally, within Necessity-based goods and services, we estimate that approximately 50% of our ABR is from retail and service businesses generally deemed essential under most state and local mandates issued in response to the COVID-19 pandemic, including those that may have temporarily closed at various points during the 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.

TOP TWENTY NEIGHBORS —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 September 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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Schnucks 2,545 0.6 % 249 0.8 % 4

Southeastern Grocers 2,514 0.6 % 281 1.0 % 7

Lowe's 2,470 0.6 % 369 1.3 % 4

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2,130 0.5 % 127 0.4 % 11

Big Y 2,022 0.5 % 115 0.4 % 3

Total $ 141,523 36.2 % 14,541 49.4 % 406

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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 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.

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

Although we have seen improved collections of current and past due rent amounts during 2021, the total impact of such collections and estimates around collectibility on revenue is still volatile at this time.

The duration of the pandemic and mitigating measures, and the resulting economic impact, has caused some of our Neighbors to permanently vacate their spaces and/or not renew their leases, and we may have difficulty leasing these spaces on the same or better terms or at all, and/or incur additional costs to lease vacant spaces, which may reduce our occupancy rates in the future and ultimately reduce our revenue.

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PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

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

SEPTEMBER 30, 2021 FORM 10-Q

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

Three Months Ended

June 30, Favorable (Unfavorable)

September 30, Favorable (Unfavorable)

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

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Interest expense, net

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

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

(18,570) (20,388) 1,818 8.9 %

Gain on disposal of property, net

14,093 10,734 3,359 31.3 %

Other (expense) income, net

(7,086) 196 (7,282) NM

16,562 13,430 3,132 23.3 %

Net income attributable to noncontrolling interests

(1,929) (1,646) (283) (17.2) %

Net income attributable to stockholders

$ 14,633 $ 11,784 $ 2,849 24.2 %

(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 same-center portfolio as the 261 properties that were owned and operational prior to January 1, 2020.

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 June 30, 2021 and 2020:

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 26 properties disposed of and six properties acquired.

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

Rental Income increased $5.5 million as follows:

• $7.9 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.

▪ $5.6 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;

▪ $2.2 million increase primarily due to a $0.53 increase in average minimum rent per square foot, partially offset by a 0.8% decline in average occupancy.

• $2.4 million decrease primarily related to our net disposition of 20 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;

Property Operating Expenses increased $0.8 million primarily as follows:

• $1.1 million increase related to our same-center portfolio and corporate operating activities as follows:

▪ $0.6 million increase owing largely to lower performance-based compensation in 2020 as a result of the COVID-19 pandemic, as compared to 2021;

▪ $0.5 million increase in insurance expenses primarily due to higher market rates and an increase in claims and claim development.

• $0.4 million decrease related to our net disposition of 20 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.

Real Estate Tax Expenses:

• The $0.9 million decrease in real estate tax expenses is primarily due to successful tax appeals and favorable assessments at our centers, as well as our net disposition of 20 properties.

General and Administrative Expenses increased $2.0 million primarily as follows:

• $1.5 million increase owing largely to lower expense for performance-based compensation in 2020 as a result of the COVID-19 pandemic, as compared to 2021;

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.

SEPTEMBER 30, 2021 FORM 10-Q

• $0.5 million increase primarily due to an increase in directors and officers insurance costs as a result of our underwritten IPO.

Depreciation and Amortization decreased $2.2 million as follows:

• $1.2 million decrease related to our net disposition of 20 properties;

• $1.0 million decrease related to our same-center portfolio and corporate operating activities, primarily due to intangible assets becoming fully amortized.

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.

• The $1.8 million decrease during the three months ended September 30, 2021 as compared to the same period in 2020 was due to lower outstanding debt as a result of repayments.

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

Three Months Ended June 30,

Three Months Ended September 30,

Interest on revolving credit facility, net $ 237 $ 260

1 unchanged sentence

Interest on secured debt 6,049 7,308

Loss on extinguishment of debt 419 —

Loss on extinguishment or modification of debt, net

Non-cash amortization and other 1,697 1,625

Interest expense, net

$ 18,570 $ 20,388

Weighted-average interest rate as of end of period 3.3 % 3.1 %

Weighted-average term (in years) as of end of period 4.2 4.3

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,

Gain on Disposal of Property, Net:

• The $3.4 million increase was primarily related to the sale of seven properties and two outparcels with a net gain (in addition to other property-related miscellaneous disposals and write-offs) of $14.1 million during the three months ended September 30, 2021, as compared to the sale of two properties (as well as other property-related miscellaneous disposals and write-offs) with a net gain of $10.7 million during the three months ended September 30, 2020 (see Note 4).

Other (Expense) Income, Net:

• The $7.3 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, as well as an increase in transaction and acquisition expenses as a result of restricted stock units awarded in connection with our underwritten IPO.

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

Three Months Ended September 30,

Change in fair value of earn-out liability $ (5,000) $ —

Equity in net income (loss) of unconsolidated joint ventures

Transaction and acquisition expenses (1,775) (152)

Equity in net (loss) income of unconsolidated joint ventures

Federal, state, and local income tax expense (165) (173)

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

Other (92) 388

Other (expense) income, net

$ (7,086) $ 196

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)

SEPTEMBER 30, 2021 FORM 10-Q

SUMMARY OF OPERATING ACTIVITIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020

Nine Months Ended

September 30, Favorable (Unfavorable)

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

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Interest expense, net

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 %

(57,765) (65,317) 7,552 11.6 %

Gain on disposal of property, net

31,678 8,616 23,062 NM

Other (expense) income, net

(25,595) 9,565 (35,160) NM

23,069 18,216 4,853 26.6 %

Net income attributable to noncontrolling interests

(2,739) (2,251) (488) (21.7) %

Net income attributable to stockholders

$ 20,330 $ 15,965 $ 4,365 27.3 %

(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:

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

Rental Income increased $19.4 million as follows:

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▪ $21.2 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.

▪ $4.2 million increase primarily due to a $0.48 increase in average minimum rent per square foot, partially offset by a 0.9% decline in average occupancy;

▪ $2.3 million decrease owing largely to lower recoveries from a lower recovery rate and lower occupancy.

• $3.6 million decrease primarily related to our net disposition of 20 properties.

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• $4.0 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.

▪ $2.8 million increase owing largely to lower expense for performance-based compensation in 2020 as a result of the COVID-19 pandemic, as compared to 2021;

▪ $1.2 million increase primarily due to higher insurance expenses attributed to higher market rates and an increase in claims and claim development.

• $0.5 million decrease related to our net disposition of 20 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;

Real Estate Tax Expenses:

• The $1.1 million decrease in real estate tax expenses is primarily due to successful tax appeals and favorable assessments at our centers, as well as our net disposition of 20 properties.

General and Administrative Expenses increased $2.8 million primarily as follows:

• $5.8 million increase owing largely to lower expense for performance-based compensation in 2020 as a result of the COVID-19 pandemic, as compared to 2021;

• $1.7 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

SEPTEMBER 30, 2021 FORM 10-Q

• $1.4 million decrease related to expense reductions taken in 2020 to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to overhead costs at our corporate offices.

Depreciation and Amortization decreased $2.9 million as follows:

• $1.8 million decrease related to our net disposition of 20 properties;

• $1.1 million decrease related to our same-center portfolio and corporate operating activities, primarily due to intangible assets becoming fully amortized.

Impairment of Real Estate Assets:

• 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.

• The $6.8 million increase in impairment of real estate assets was due to assets that have sold during 2021 as well as assets that are actively being marketed for sale at a disposition price that is less than the carrying value.

Interest Expense, Net:

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

• The $7.6 million decrease during the nine months ended September 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.

(ii) the $200 million draw and subsequent repayment of our draw on the revolver during the second quarter of 2020;

and (iii) lower average interest rates due to the decrease in LIBOR.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Interest on revolving credit facility, net $ 672 $ 1,455

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Interest on secured debt 19,075 21,973

Loss on extinguishment of debt 1,110 73

Loss on extinguishment or modification of debt, net

Non-cash amortization and other 5,115 6,205

Interest expense, net

$ 57,765 $ 65,317

Weighted-average interest rate as of end of period 3.3 % 3.1 %

Weighted-average term (in years) as of end of period 4.2 4.3

Gain (Loss) on Disposal of Property, Net:

• 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).

Gain on Disposal of Property, Net:

• The $23.1 million increase was primarily related to the sale of 20 properties and three outparcels (in addition to other miscellaneous property-related disposals and write-offs) with a net gain of $31.7 million during the nine months ended September 30, 2021, as compared to the sale of six properties (as well as other property-related miscellaneous disposals and write-offs) with a net gain of $8.6 million during the nine months ended September 30, 2020 (see Note 4).

Other (Expense) Income, Net:

• 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.

• The $35.2 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, as well as an increase in transaction and acquisition expenses as a result of restricted stock units awarded in connection with our underwritten IPO.

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

Six Months Ended June 30,

Nine Months Ended September 30,

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

Equity in income (loss) of unconsolidated joint ventures

Transaction and acquisition expenses (2,850) (211)

Equity in income (loss) of unconsolidated joint ventures

Federal, state, and local income tax expense (496) (382)

Other (expense) income, net

$ (25,595) $ 9,565

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) :

SEPTEMBER 30, 2021 FORM 10-Q

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

Total Deals Inline Deals

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Cost per square foot of executing renewals and options (2)

Number of comparable leases (2)

$ 0.22 $ 0.60 $ 0.86 $ 1.39

Number of comparable leases (3)

Comparable rent spread (3)

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

(2) During the third quarter of 2021, we refined our calculation of cost per square foot of executing renewals and options to better align with actual costs incurred.

Prior period amounts have been adjusted to reflect costs on the same basis.

(3) Excludes exercise of options.

PHILLIPS EDISON & COMPANY

JUNE 30, 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) :

SEPTEMBER 30, 2021 FORM 10-Q

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

Total Deals Inline Deals

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Cost per square foot of executing renewals and options (2)

$ 0.56 $ 0.72 $ 1.22 $ 1.18

Number of comparable leases (3)

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

(2) During the third quarter of 2021, we refined our calculation of cost per square foot of executing renewals and options to better align with actual costs incurred.

Prior period amounts have been adjusted to reflect costs on the same basis.

(3) Excludes exercise of options.

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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 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.

For the three and nine months ended September 30, 2021 and 2020, Same-Center NOI represents the NOI for the 261 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

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

Three Months Ended September 30, Favorable (Unfavorable) Nine Months Ended September 30, Favorable (Unfavorable)

Change 2021 2020 $ Change % Change

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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 June 30, Six Months Ended June 30,

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

2021 2020 2021 2020

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

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

Adjusted to exclude:

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(2,435) (2,581) (7,095) (7,506)

Straight-line rental (income) expense (1)

Straight-line rental income (1)

(2,476) (1,800) (6,868) (3,164)

10 unchanged sentences

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)

Property operating expenses related to fees

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PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 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.

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

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 (1)

Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders

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

2021 2020 (1)

Calculation of Nareit FFO Attributable to Stockholders and

OP Unit Holders

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

Depreciation and amortization of real estate assets 52,984 54,579 162,979 164,288

Impairment of real estate assets 698 — 6,754 —

(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)

Adjustments related to unconsolidated joint ventures 776 166 676 1,760

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

Nareit FFO attributable to stockholders and OP unit

holders $ 56,927 $ 57,441 $ 161,800 $ 175,648

Calculation of Core FFO

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

Nareit FFO attributable to stockholders and OP unit

holders $ 56,927 $ 57,441 $ 161,800 $ 175,648

Depreciation and amortization of corporate assets 917 1,516 2,850 4,404

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basis differences 80 546 905 1,267

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

Transaction and acquisition expenses 1,775 152 2,850 211

Loss on extinguishment or modification of debt, net

1,674 — 2,784 73

Core FFO $ 66,373 $ 59,655 $ 194,189 $ 171,603

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

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

Nareit FFO attributable to stockholders and OP unit holders

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

Nareit FFO Attributable to Stockholders and OP Unit

Holders/Core FFO per Share (1)

Weighted-average shares of common stock outstanding -

diluted 122,573 111,188 112,317 111,160

Nareit FFO attributable to stockholders and OP unit

holders per share - diluted $ 0.46 $ 0.52 $ 1.44 $ 1.58

Core FFO per share - diluted $ 0.54 $ 0.54 $ 1.73 $ 1.54

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

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

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

(1) Certain prior period amounts have been reclassified to conform with current year presentation.

(2) 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 nine months ended September 30, 2021 and 2020, and, accordingly, their impact was included in the weighted-average shares of common stock used in their respective per share calculations.

PHILLIPS EDISON & COMPANY

JUNE 30, 2021 FORM 10-Q

SEPTEMBER 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.

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

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

Three Months Ended September 30, Nine Months Ended September 30, Year Ended December 31,

2021 2020 2021 2020 2020

Calculation of EBITDA re

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

$ 16,562 $ 13,430 $ 23,069 $ 18,216 $ 5,462

Depreciation and amortization 53,901 56,095 165,829 168,692 224,679

Interest expense, net 18,570 20,388 57,765 65,317 85,303

(Gain) loss on disposal of property, net (3,744) 541 (17,585) 2,118 (6,494)

Gain on disposal of property, net

(14,093) (10,734) (31,678) (8,616) (6,494)

Impairment of real estate assets 698 — 6,754 — 2,423

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• proceeds received from the disposition of properties;

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

• proceeds from equity and debt financings, including borrowings in connection with our Bond Registration and those under our unsecured revolving credit facility;

• distributions received from our unconsolidated joint ventures;

2 unchanged sentences

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

SEPTEMBER 30, 2021 FORM 10-Q

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 to the public 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 NASDAQ under the trading symbol “PECO”.

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

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

September 30, 2021 December 31, 2020

Total debt obligations, gross $ 1,715,714 $ 2,307,686

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

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

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

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

During the nine months ended September 30, 2021, we took steps to reduce our leverage and appropriately ladder our debt maturities as follows:

• In July 2021, we completed 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 $375.0 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

Additionally, we used proceeds from the underwritten IPO to retire a $375.0 million term loan that was set to mature in April 2022.

• In August 2021, we executed a $150 million partial pay down on a term loan that was set to mature in November 2023 utilizing cash on hand.

BOND OFFERING —On September 20, 2021, the SEC declared effective our Bond Registration.

We intend to use net proceeds from any sale of offered securities to repay outstanding indebtedness and for general corporate purposes, including funding future investment activity.

In October 2021, we settled the 2021 Bond Offering priced at 98.692% of the principal amount and maturing in November 2031.

This offering resulted in gross proceeds of $345.4 million.

The notes are fully and unconditionally guaranteed by us.

In October 2021, net proceeds from the bond settlement were used, in part, to pay down the remaining $150 million balance of the term loan debt that was set to mature in November 2023.

Based on our current borrowings, we expect to save approximately $11.2 million in interest annually as a result of our debt activity.

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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Total $ 1,715,714 $ 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):

Our maturity schedule as of September 30, 2021 with respective principal payment obligations, excluding finance lease liabilities, market debt adjustments, and deferred financing expenses, is as follows (in thousands):

2021 2022 2023 2024 2025 Thereafter Total

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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

SEPTEMBER 30, 2021 FORM 10-Q

FINANCIAL LEVERAGE RATIOS —We believe our net debt to Adjusted EBITDA re , net debt to total enterprise value, and debt covenant compliance as of September 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 September 30, 2021 and December 31, 2020 (in thousands):

September 30, 2021 December 31, 2020

Total debt, excluding market adjustments and deferred financing expenses $ 1,746,487 $ 2,345,620

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Total enterprise value $ 5,608,935 $ 5,037,902

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

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

The following table presents our calculation of net debt to Adjusted 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

(1) As of September 30, 2021, total equity value was calculated as the 126.6 million diluted shares multiplied by the closing market price per share of common stock of $30.71.

As of December 31, 2020, prior to the underwritten IPO, total equity value was calculated as 106.6 million diluted shares multiplied by the EVPS of $26.25.

Diluted shares include shares of common stock and OP units.

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

September 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 (Loss).

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

During the nine months ended September 30, 2021 and 2020, we had capital spend of $49.3 million and $40.8 million, respectively.

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

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

Six Months Ended June 30,

Nine Months Ended September 30,

Capital expenditures for real estate (1) :

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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

Our current in process projects represent an estimated total investment of $42.6 million, and the total underwritten

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.

SEPTEMBER 30, 2021 FORM 10-Q

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.

See “Part I, Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators and Defined Terms” and “Part II, Item 1A.

Risk Factors” of this filing on Form 10-Q for further information.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Key Performance Indicators and Defined Terms” of this filing on Form 10-Q for further information.

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

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

Six Months Ended June 30,

Nine Months Ended September 30,

Number of properties acquired 4 1

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

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

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.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Number of properties sold (1)

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

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

18,713 (1,436)

(1) We retained an outparcel for one property sold during the six months ended June 30, 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 property, 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 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.

(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.

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):

SEPTEMBER 30, 2021 FORM 10-Q

DISTRIBUTIONS —Distributions to our common stockholders and OP unit holders, including key financial metrics for comparison purposes, for the nine months ended September 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 - 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 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 September 2021.

On September 28, 2021, our Board authorized an increase of 6% on the monthly distribution in the amount of $0.090 per share, or $1.08 annualized, which was paid on November 1, 2021.

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, of $0.09 per share of common stock.

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

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

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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.

SEPTEMBER 30, 2021 FORM 10-Q

CASH FLOW ACTIVITIES —As of September 30, 2021, we had cash and cash equivalents and restricted cash of $114.2 million, a net cash decrease of $17.7 million during the nine months ended September 30, 2021.

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

Six Months Ended June 30,

Nine Months Ended September 30,

2021 2020 $ Change % Change

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• 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 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.

Additionally, we had an increase in returns on our investments in unconsolidated joint ventures.

During the nine months ended September 30, 2021, we had a net cash inflow of $4.6 million from changes in working capital as compared to a net cash outlay of $17.6 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 and prepaid expenses.

• 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 $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:

Our fee and management income was $7.1 million for the nine months ended September 30, 2021, a decrease of $0.4 million as compared to the same period in 2020.

• Cash paid for interest —During the nine months ended September 30, 2021, we paid $53.5 million for interest, a decrease of $6.4 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.

(ii) the $200 million draw and subsequent repayment of our draw on the revolver during the second quarter of 2020;

and (iii) lower average interest rates due to the decrease in LIBOR.

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

• 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.

• Real estate acquisitions —During the nine months ended September 30, 2021, our acquisitions resulted in a total cash outlay of $89.0 million, as compared to a total cash outlay of $23.0 million during the same period in 2020.

• Real estate dispositions —During the nine months ended September 30, 2021, our dispositions resulted in a net cash inflow of $180.3 million, as compared to a net cash inflow of $48.3 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 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.

During the nine months ended September 30, 2021, we paid $49.3 million for capital expenditures, an increase of $8.5 million over the same period in 2020, primarily due to in increase in tenant improvements owing largely to an increase in leasing volume as compared to the same period a year ago.

• Return of investment in unconsolidated joint ventures —During the nine months ended September 30, 2021, we had a return of investment in unconsolidated joint ventures of $4.3 million, including $2.1 million in connection with NRP primarily as a result of property dispositions.

During the nine months ended September 30, 2020, we had a return of investment in unconsolidated joint ventures of $1.9 million.

• Investment in third parties —During the nine months ended September 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 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.

• Underwritten IPO —Upon consummation of our underwritten IPO in July 2021, including the over-allotment option exercised in full by the underwriters, we had gross proceeds from the issuance of common stock of $547.4 million, offset by a cash outflow of $39.0 million for offering costs, discounts, and commissions during the nine months ended September 30, 2021.

We did not issue any common shares during the nine months ended September 30, 2020.

• Debt borrowings and payments —During the nine months ended September 30, 2021, we had $597.4 million in net repayment of debt primarily as a result of:

(i) a pay down in July 2021 of a $375 million term loan set to mature in 2022 using proceeds from our underwritten IPO;

(ii) a partial pay down in August 2021 of a $150 million term loan set to mature in 2023 utilizing cash on hand;

and (iii) early repayments of mortgage loans.

During the nine months ended September 30, 2020 we had net payments of $37.8 million, primarily as a result of a pay down in January 2020 of $30.0 million on term loan debt that was set to mature in 2021.

• Distributions to stockholders and OP unit holders —Cash used for distributions to common stockholders and OP unit holders increased $28.5 million for the nine months ended September 30, 2021 as compared to the same period in 2020, due to an increase in our distribution rate, an increase in common shares outstanding as a result of our underwritten IPO, and the suspension of our distributions from April 2020 through September 2020.

• Share repurchases —Cash outflows for share repurchases increased by $72.6 million for the nine months ended September 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

SEPTEMBER 30, 2021 FORM 10-Q

CONTRACTUAL COMMITMENTS AND CONTINGENCIES

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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).

We are presenting an update to our future contractual commitments and contingencies as a result of our material debt transactions occurring in the third quarter of 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):

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

Payments Due by Period

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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.

As of September 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 September 30, 2021, including the impact of our swap agreements.

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

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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