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Item 2. Management’s Discussion and Analysis

2022-05-05 compared with 2021-11-04 · 250 added, 497 removed, 337 unchanged (69% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our accompanying consolidated financial statements and notes thereto.

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

The following discussion and analysis should be read in conjunction with our accompanying consolidated financial statements and notes thereto and the more detailed information contained in our 2021 Annual Report on Form 10-K, filed with the SEC on February 16, 2022.

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

Financial Statements”.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-Q (this “Report”) of Phillips Edison & Company, Inc.

Certain statements contained in this Quarterly Report on Form 10-Q of Phillips Edison & Company, Inc.

(“we,” the “Company,” “our,” or “us”) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995 (collectively with the Securities Act and the Exchange Act, the “Acts”).

These forward-looking statements are based on current expectations, estimates, and projections about the industry and markets in which we operate, and beliefs of, and assumptions made by, management of our company and involve uncertainties that could significantly affect our financial results.

We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in the Acts.

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Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the SEC.

Such statements include, but are not limited to, (a) statements about our 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 view on forward trends;

Such statements include, but are not limited to:

(a) statements about our plans, strategies, initiatives, and prospects;

(b) statements about the COVID-19 pandemic;

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

(vii) increases in our borrowing costs as a result of changes in interest rates and other factors, including the potential phasing out of LIBOR after 2021;

(vii) increases in our borrowing costs as a result of changes in interest rates and other factors;

(viii) potential liability for environmental matters;

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(xiv) loss of key executives;

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

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

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

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

(xix) our ability to re-lease our properties on the same or better terms, or at all, in the event of non-renewal or in the event we exercise our right to replace an existing tenant;

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

(xxi) the pace of recovery following the COVID-19 pandemic given 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 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.

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

(xvi) the economic, political, and social impact of, and uncertainty relating to, the COVID-19 pandemic;

(xvii) our ability to re-lease our properties on the same or better terms, or at all, in the event of non-renewal or in the event we exercise our right to replace an existing tenant;

(xviii) the loss or bankruptcy of our tenants;

(xix) to the extent we are seeking to dispose of properties, our ability to do so at attractive prices or at all;

and (xx) the impact of inflation on us and on our tenants.

Additional important factors that could cause actual results to differ are described in the filings made from time to time by the Company with the SEC and include the risk factors and other risks and uncertainties described in our 2021 Annual Report on Form 10-K, filed with the SEC on February 16, 2022, as updated from time to time in our periodic and/or current reports filed with the SEC, which are accessible on the SEC’s website at www.sec.gov.

Therefore, such statements are not intended to be a guarantee of our performance in future periods.

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

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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

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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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Other REITs may use different methodologies for calculating similar non-GAAP measures, and accordingly, our non-GAAP measures may not be comparable to other REITs.

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

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

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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 September 30, 2021 multiplied by twelve months.

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

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

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High occupancy is an indicator of demand for our spaces, which generally provides us with greater leverage during lease negotiations.

• Underwritten incremental yield—This reflects the yield we target to generate from a project upon expected stabilization and is calculated as the estimated incremental NOI for a project at stabilization divided by its estimated net project investment.

• Underwritten incremental unlevered yield—This reflects the yield we target to generate from a project upon expected stabilization and is calculated as the estimated incremental NOI for a project at stabilization divided by its estimated net project investment.

The estimated incremental NOI is the difference between the estimated annualized NOI we target to generate by project upon stabilization and the estimated annualized NOI without the planned improvements.

Underwritten incremental yield does not include peripheral impacts, such as lease rollover risk or the impact on the long term value of the property upon sale or disposition.

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 NOI at stabilization.

Underwritten incremental unlevered yield does not include peripheral impacts, such as lease rollover risk or the impact on the long term value of the property upon sale or disposition.

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

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

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

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

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

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A high recovery rate is an indicator of our ability to recover certain property operating expenses and capital costs from our Neighbors.

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

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

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

See “Non-GAAP Measures” below for further discussion on the following metrics.

• Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (“Adjusted EBITDA re ”)—To arrive at Adjusted EBITDA re , we adjust EBITDA re , as defined below, to exclude certain recurring and non-recurring items including, but not limited to:

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(iii) amortization of basis differences in our investments in our unconsolidated joint ventures;

and (iv) transaction and acquisition expenses.

(iv) transaction and acquisition expenses;

and (v) realized performance income.

We use EBITDA re and Adjusted EBITDA re as additional measures of operating performance which allow us to compare earnings independent of capital structure and evaluate debt leverage and fixed cost coverage.

• Core Funds From Operations (“Core FFO”)—To arrive at Core FFO, we adjust Nareit FFO attributable to stockholders and OP unit holders, as defined below, to exclude certain recurring and non-recurring items including, but not limited to:

• Core Funds From Operations (“FFO”)—To arrive at Core FFO, we adjust Nareit FFO Attributable to Stockholders and OP Unit Holders, as defined below, to exclude certain recurring and non-recurring items including, but not limited to:

(i) depreciation and amortization of corporate assets;

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(iii) amortization of unconsolidated joint venture basis differences;

(iv) gains or losses on the extinguishment or

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modification of debt, (v) other impairment charges;

and (vi) transaction and acquisition expenses.

(iv) gains or losses on the extinguishment or modification of debt and other;

(v) other impairment charges;

(vi) transaction and acquisition expenses;

and (vii) realized performance income.

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

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

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

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MARCH 31, 2022 FORM 10-Q

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

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

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

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

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

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

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NOI provides insight about our financial and operating performance because it provides a performance measure of the revenues and expenses directly involved in owning and operating real estate assets and provides a perspective not immediately apparent from net income (loss).

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

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

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

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

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

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

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

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.

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 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 (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.

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.

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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.

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.

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:

Originally Reported Current (1)

Q2 2020 86 % 93 %

Q3 2020 94 % 97 %

Q4 2020 95 % 97 %

Q1 2021 95 % 98 %

Q2 2021 98 % 99 %

Q3 2021 N/A 99 %

(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.

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.

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 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 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 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

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

Our portfolio primarily consists of neighborhood centers anchored by the #1 or #2 grocer tenants by sales within their respective formats by trade area.

Our Neighbors are a mix of national, regional, and local retailers that primarily provide necessity-based goods and services.

As of March 31, 2022, we owned equity interests in 290 shopping centers, including 269 wholly-owned shopping centers and 21 shopping centers owned through two unconsolidated joint ventures, which comprised approximately 33.1 million square feet in 31 states.

In addition to managing our shopping centers, our third-party investment management business provides comprehensive real estate management services to the Managed Funds.

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

March 31, 2022 March 31, 2021

Number of properties 269 278

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% ABR from omni-channel grocery-anchored shopping centers 97.3 % 96.4 %

Leased % of rentable square feet:

Leased occupancy %:

Total portfolio spaces 96.2 % 94.8 %

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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 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

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

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

March 31, 2022

Joint Venture Ownership Percentage Number of Properties ABR GLA

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Necessity Retail Partners 20% 1 2,270 116

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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:

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

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

Conversely, we may experience rental rate decline when occupancy at our centers is low or during periods of economic recession, as the leverage during new and renewal lease negotiations may shift to prospective and existing Neighbors.

See “Part I, Item 2.

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

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

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MARCH 31, 2022 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 September 30, 2021:

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

The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ventures, by Neighbor type as of March 31, 2022:

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

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MARCH 31, 2022 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 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):

We estimate that approximately 72% of our ABR, including the pro rata portion attributable to properties owned through our unconsolidated joint ventures, is generated from Neighbors providing necessity-based goods and services.

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 unconsolidated joint ventures, as of March 31, 2022 (dollars and square feet in thousands):

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

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Publix 23,621 5.7 % 2,314 7.7 % 57

Albertsons 18,215 4.4 % 1,709 5.7 % 31

Ahold Delhaize 17,662 4.2 % 1,249 4.2 % 23

Albertsons-Safeway 16,804 4.3 % 1,599 5.4 % 29

Walmart 8,933 2.1 % 1,770 5.9 % 13

Giant Eagle 7,732 1.9 % 828 2.8 % 12

TJX Companies 5,205 1.3 % 445 1.5 % 16

Sprouts Farmers Market 6,494 1.6 % 421 1.4 % 14

TJX Companies 5,500 1.3 % 465 1.6 % 16

Raley's 3,884 0.9 % 253 0.8 % 4

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Subway Group 2,516 0.6 % 99 0.3 % 70

Lowe's 2,469 0.6 % 369 1.3 % 4

Anytime Fitness, Inc.

2,366 0.6 % 150 0.5 % 31

Schnucks 2,545 0.6 % 249 0.8 % 4

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

Kohl's Corporation 2,241 0.5 % 365 1.2 % 4

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2,136 0.5 % 127 0.4 % 11

Big Y 2,022 0.5 % 115 0.4 % 3

Franchise Group, Inc.

2,084 0.5 % 145 0.5 % 24

United Parcel Service 2,013 0.5 % 79 0.3 % 62

Total $ 146,175 35.1 % 14,751 49.3 % 484

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RESULTS OF OPERATIONS

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.

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

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

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 continued through early 2021.

Our collections returned to pre-COVID levels during the second half of 2021 and have continued through the first quarter of 2022.

We believe our collections have stabilized, which will reduce volatility in our earnings during 2022 as compared to 2021.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

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

MARCH 31, 2022 FORM 10-Q

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

Three Months Ended

September 30, Favorable (Unfavorable)

March 31, Favorable (Unfavorable)

(Dollars in thousands) 2022 2021 $ % (1)

Rental income $ 138,748 $ 127,623 $ 11,125 8.7 %

Fee and management income 2,435 2,581 (146) (5.7) %

Fees and management income 2,461 2,286 175 7.7 %

Other property income 954 472 482 102.1 %

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Operating Expenses:

Property operating expenses 21,608 20,835 (773) (3.7) %

Real estate tax expenses 16,375 17,282 907 5.2 %

General and administrative expenses 11,627 9,595 (2,032) (21.2) %

Property operating 23,320 22,202 (1,118) (5.0) %

Real estate taxes 17,491 16,573 (918) (5.5) %

General and administrative 11,532 9,341 (2,191) (23.5) %

Depreciation and amortization 57,226 55,341 (1,885) (3.4) %

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1,368 13,841 (12,473) (90.1) %

Other (expense) income, net

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

Other expense, net

(4,365) (15,585) 11,220 72.0 %

11,398 117 11,281 NM

Net income attributable to noncontrolling interests

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

(1,319) (14) (1,305) NM

Net income attributable to stockholders

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

$ 10,079 $ 103 $ 9,976 NM

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

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We define our same-center portfolio as the 256 properties that were owned and operational prior to January 1, 2021.

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:

▪ $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 $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.

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

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 $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 September 30,

Interest on revolving credit facility, net $ 237 $ 260

Interest on term loans, net 8,913 11,195

Interest on secured debt 6,049 7,308

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 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) $ —

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 (92) 388

Other (expense) income, net

$ (7,086) $ 196

PHILLIPS EDISON & COMPANY

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)

Rental income $ 386,784 $ 367,418 $ 19,366 5.3 %

Fee and management income 7,095 7,506 (411) (5.5) %

Other property income 1,906 2,334 (428) (18.3) %

Total revenues 395,785 377,258 18,527 4.9 %

Operating Expenses:

We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing to real estate asset activity occurring after December 31, 2020, which includes 25 properties disposed of and twelve properties acquired.

Below are explanations of the significant fluctuations in the results of operations for the three months ended March 31, 2022 and 2021:

Rental Income increased $11.1 million primarily as follows:

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

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

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

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

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

Property Operating Expenses:

Real estate tax expenses 49,762 50,847 1,085 2.1 %

General and administrative expenses 32,905 30,141 (2,764) (9.2) %

Depreciation and amortization 165,829 168,692 2,863 1.7 %

Impairment of real estate assets 6,754 — (6,754) NM

Total operating expenses 321,034 311,906 (9,128) (2.9) %

Interest expense, net

(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 September 30, 2021 and 2020 section above.

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:

• $23.0 million increase related to our same-center portfolio primarily as follows:

▪ $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;

▪ $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.

Property Operating Expenses increased $3.6 million primarily as follows:

• $4.0 million increase related to our same-center portfolio and corporate operating activities as follows:

▪ $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;

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

▪ $0.7 million increase in recoverable expenses attributed to higher common area maintenance costs, as compared to 2021;

▪ $0.5 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.

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;

• The $0.9 million increase in real estate tax expenses is primarily due to higher real estate tax assessments on the value of our portfolio.

PHILLIPS EDISON & COMPANY

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.

MARCH 31, 2022 FORM 10-Q

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

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

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

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

Depreciation and Amortization:

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

Impairment of Real Estate Assets:

• The $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.

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

Interest Expense, Net:

• The $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 $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.

• The $1.9 million decrease during the three months ended March 31, 2022 as compared to the same period in 2021 was primarily due to:

(i) early repayments of debt outstanding in 2021;

partially offset by (ii) higher average interest rates;

and (iii) the issuance of $350 million aggregate principal amount of 2.625% senior notes in October 2021.

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

Nine Months Ended September 30,

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

Interest on term loans, net 30,119 35,611

Three Months Ended March 31,

Interest on unsecured term loans and senior notes, net $ 9,916 $ 10,633

Interest on secured debt 5,531 6,780

Loss on extinguishment or modification of debt, net

Interest on revolving credit facility, net 247 228

Non-cash amortization and other 1,605 1,731

Loss on extinguishment or modification of debt and other, net 900 691

Interest expense, net

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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 $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):

Nine Months Ended September 30,

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

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

Other Expense, Net:

• The $11.2 million decrease was primarily related to a lower charge in connection with the change in the fair value of our earn-out liability, which was settled in January 2022, partially offset by an increase in transaction and acquisition expenses owing largely to restricted stock units awarded at the time of our underwritten IPO.

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

Three Months Ended March 31,

Change in fair value of earn-out liability (see Note 12) $ (1,809) $ (16,000)

Equity in net (loss) income of unconsolidated joint ventures

Transaction and acquisition expenses (2,045) (141)

Equity in income (loss) of unconsolidated joint ventures

Federal, state, and local income tax expense (97) (166)

Other (expense) income, net

$ (25,595) $ 9,565

PHILLIPS EDISON & COMPANY

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

2021 2020 2021 2020

Number of leases 140 111 133 110

Square footage (in thousands) 551 302 312 287

ABR (in thousands) $ 9,172 $ 5,181 $ 6,749 $ 5,023

ABR per square foot $ 16.63 $ 17.15 $ 21.64 $ 17.49

Cost per square foot of executing new leases $ 24.11 $ 27.25 $ 31.15 $ 26.01

Number of comparable leases 57 34 56 34

Comparable rent spread 14.1 % 8.2 % 14.1 % 8.2 %

Weighted-average lease term (in years) 8.6 6.6 6.2 6.3

Renewals and options:

Number of leases 128 119 110 101

Square footage (in thousands) 854 1,035 211 244

ABR (in thousands) $ 11,082 $ 12,473 $ 5,377 $ 4,993

ABR per square foot $ 12.98 $ 12.06 $ 25.53 $ 20.45

ABR per square foot prior to renewals $ 12.30 $ 11.56 $ 22.85 $ 19.16

Percentage increase in ABR per square foot 5.5 % 4.3 % 11.7 % 6.7 %

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

$ 0.22 $ 0.60 $ 0.86 $ 1.39

Number of comparable leases (3)

Comparable rent spread (3)

Other (360) 8

Other expense, net

$ (4,365) $ (15,585)

Weighted-average lease term (in years) 5.4 4.8 4.6 4.2

Portfolio retention rate 91.2 % 90.4 % 80.4 % 74.9 %

(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

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) :

MARCH 31, 2022 FORM 10-Q

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

Total Deals Inline Deals

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ABR (in thousands) $ 4,941 $ 8,120 $ 4,321 $ 6,605

ABR per square foot $ 17.38 $ 15.63 $ 20.59 $ 17.62

Cost per square foot of executing new leases $ 27.52 $ 23.25 $ 30.05 $ 25.89

ABR PSF $ 19.25 $ 17.39 $ 23.21 $ 19.34

Cost PSF of executing new leases $ 28.90 $ 29.00 $ 33.40 $ 29.65

Number of comparable leases 34 70 33 70

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ABR (in thousands) $ 9,247 $ 11,472 $ 7,302 $ 7,069

ABR per square foot $ 12.31 $ 11.33 $ 23.10 $ 20.64

ABR per square foot prior to renewals $ 11.58 $ 10.74 $ 21.11 $ 18.94

Percentage increase in ABR per square foot 6.3 % 5.4 % 9.4 % 9.0 %

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

ABR PSF $ 17.81 $ 11.73 $ 22.60 $ 22.67

ABR PSF prior to renewals $ 16.02 $ 10.97 $ 19.95 $ 21.02

Percentage increase in ABR PSF 11.2 % 6.9 % 13.3 % 7.8 %

Cost PSF of executing renewals and options (2)

$ 0.63 $ 0.51 $ 0.88 $ 1.58

5 unchanged sentences

Portfolio retention rate 89.7 % 88.8 % 77.6 % 80.3 %

(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.

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

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

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

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NON-GAAP MEASURES

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 a discussion related to the following non-GAAP measures.

SAME-CENTER NET OPERATING INCOME —Same-Center NOI is presented as a supplemental measure of our performance, as it highlights operating trends such as occupancy levels, rental rates, and operating costs for our Same-Center portfolio.

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

SAME-CENTER NOI —Same-Center NOI is presented as a supplemental measure of our performance, as it highlights operating trends such as occupancy levels, rental rates, and operating costs for our Same-Center portfolio.

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

For the three and 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.

For the three months ended March 31, 2022 and 2021, Same-Center NOI represents the NOI for the 256 properties that were wholly-owned and operational for the entire portion of both comparable reporting periods.

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

PHILLIPS EDISON & COMPANY

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

Change 2021 2020 $ Change % Change

MARCH 31, 2022 FORM 10-Q

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

Three Months Ended March 31, Favorable (Unfavorable)

2022 2021 $ Change % Change

Rental income (1)

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

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

2021 2020 2021 2020

Three Months Ended March 31,

$ 11,398 $ 117

9 unchanged sentences

General and administrative expenses

11,627 9,595 32,905 30,141

Depreciation and amortization

2 unchanged sentences

Interest expense, net 18,199 20,063

18,570 20,388 57,765 65,317

Gain on disposal of property, net

(1,368) (13,841)

Other expense (income), net

7,086 (196) 25,595 (9,565)

Property operating expenses related to fees

and management income 1,489 1,058 3,611 2,586

Other expense, net

Property operating expenses related to fees and management income 1,070 816

NOI for real estate investments 95,185 87,079

6 unchanged sentences

Core FFO is an additional financial performance measure used by us as Nareit FFO includes certain non-comparable items that affect our performance over time.

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

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

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

Nareit FFO, Nareit FFO Attributable to Stockholders and OP Unit Holders, and Core FFO should not be considered alternatives to net income (loss) under GAAP, as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions.

2 unchanged sentences

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

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

September 30, Nine Months Ended

September 30,

2021 2020 (1)

Calculation of Nareit FFO Attributable to Stockholders and

OP Unit Holders

Three Months Ended March 31,

Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders

$ 11,398 $ 117

4 unchanged sentences

Adjustments related to unconsolidated joint ventures 705 (637)

Nareit FFO attributable to stockholders and OP unit

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

Nareit FFO attributable to stockholders and OP unit holders $ 67,055 $ 44,980

Calculation of Core FFO

Nareit FFO attributable to stockholders and OP unit

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

Nareit FFO attributable to stockholders and OP unit holders $ 67,055 $ 44,980

Depreciation and amortization of corporate assets 906 1,000

Change in fair value of earn-out liability 1,809 16,000

Amortization of unconsolidated joint venture

basis differences 80 546 905 1,267

Transaction and acquisition expenses 2,045 141

Loss on extinguishment or modification of debt, net

1,674 — 2,784 73

Loss on extinguishment or modification of debt and other, net

Amortization of unconsolidated joint venture basis differences 44 746

Realized performance income (196) —

Core FFO $ 72,563 $ 63,558

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

Nareit FFO Attributable to Stockholders and OP Unit Holders/Core FFO per diluted share

Weighted-average shares of common stock outstanding - diluted (1)

128,503 106,995

Nareit FFO attributable to stockholders and OP unit holders per share - diluted $ 0.52 $ 0.42

Core FFO per share - diluted $ 0.56 $ 0.59

(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.

(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 months ended March 31, 2022 and 2021, and, accordingly, their impact was included in the weighted-average shares of common stock used in their respective per share calculations.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

MARCH 31, 2022 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 September 30, Nine Months Ended September 30, Year Ended December 31,

Three Months Ended March 31, Year Ended December 31,

2022 2021 2021

7 unchanged sentences

Federal, state, and local tax expense 97 166 327

Adjustments related to unconsolidated

joint ventures 1,107 594 1,704 3,162 3,355

Adjustments related to unconsolidated joint ventures 1,019 1,132 1,431

$ 86,571 $ 67,978 $ 293,128

3 unchanged sentences

Transaction and acquisition expenses 2,045 141 5,363

Amortization of unconsolidated joint

venture basis differences 80 546 905 1,267 1,883

Other impairment charges — — — — 359

Amortization of unconsolidated joint venture basis differences 44 746 1,167

Realized performance income (196) — (675)

Adjusted EBITDA re

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

• cash distributions to stockholders;

• investments in real estate;

• capital expenditures and leasing costs;

• cash distributions to stockholders;

• redevelopment and repositioning projects;

• capital expenditures and leasing costs;

• principal and interest payments on our outstanding indebtedness.

We expect our primary sources of liquidity to be:

• net proceeds from our underwritten IPO;

• operating cash flows;

• proceeds received from the disposition of properties;

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

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

• proceeds from any ATM offering activities;

• distributions received from our unconsolidated joint ventures;

• available, unrestricted cash and cash equivalents.

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

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

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2021 FORM 10-Q

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

MARCH 31, 2022 FORM 10-Q

IMPACT OF THE UNDERWRITTEN IPO —On July 19, 2021, we closed our underwritten IPO, from which we received gross proceeds of $547.4 million.

The underwritten IPO has allowed us access to forms of capital not previously available to us as follows:

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

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

• In connection with our February 2022 Form S-3 filing, we commenced the ATM through which we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million.

We will continue to evaluate the market for conditions favorable for using the ATM.

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

March 31, 2022 December 31, 2021

Total debt obligations, gross $ 1,897,567 $ 1,914,082

5 unchanged sentences

444,947 489,329

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

(1) The revolving credit facility matures in January 2026 and includes additional options to extend the maturity to January 2027 with its execution being subject to compliance with certain terms included in the loan agreement.

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

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.

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:

Fixed-rate debt $ 1,540,714 $ 1,727,186

Variable-rate debt 175,000 580,500

Total $ 1,715,714 $ 2,307,686

As to collateralization:

Unsecured debt $ 1,105,000 $ 1,622,500

Secured debt 610,714 685,186

Total $ 1,715,714 $ 2,307,686

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

Term loans $ — $ — $ 150,000 $ 475,000 $ 240,000 $ 240,000 $ 1,105,000

Secured debt 1,803 84,926 42,942 28,124 27,877 424,925 610,597

Total $ 1,803 $ 84,926 $ 192,942 $ 503,124 $ 267,877 $ 664,925 $ 1,715,597

PHILLIPS EDISON & COMPANY

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

The 2.625% senior notes issued by the Operating Partnership pursuant to an effective registration statement in October 2021 were, and debt securities of the Operating Partnership registered under our automatically effective shelf registration statement on Form S-3 filed in February 2022 will be, fully and unconditionally guaranteed by us.

At March 31, 2022, the Operating Partnership had issued and outstanding its 2.625% senior notes.

The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the 2.625% senior notes are fully and unconditionally guaranteed by us on a senior basis.

As a result of the amendments to SEC Rule 3-10 of Regulation S-X, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that:

(i) the subsidiary obligor is consolidated into the parent company’s consolidated financial statements;

(ii) the parent guarantee is “full and unconditional”;

and (iii) subject to certain exceptions as set forth below, the alternative disclosure required by Rule 13-01 of Regulation S-X is provided, which includes narrative disclosure and summarized financial information.

We meet the conditions of this requirement and thus, are not presenting separate financial statements.

Furthermore, as permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the summarized financial information for the Operating Partnership because the assets, liabilities, and results of operations of the Operating Partnership are not materially different than the corresponding in our consolidated financial statements, and management believes such summarized financial information would be repetitive and would not provide incremental value to investors.

FINANCIAL LEVERAGE RATIOS —We believe our net debt to Adjusted EBITDA re , net debt to total enterprise value, and debt covenant compliance as of March 31, 2022 allow us access to future borrowings as needed in the near term.

The following table presents our calculation of net debt and total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our unconsolidated joint ventures, as of March 31, 2022 and December 31, 2021 (in thousands):

March 31, 2022 December 31, 2021

Total debt, excluding discounts, market adjustments, and deferred

financing expenses $ 1,924,988 $ 1,941,504

Cash and cash equivalents 5,507 93,109

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Net debt $ 1,919,481 $ 1,848,395

Total equity value (1)

Total equity market capitalization (1)(2)

4,414,266 4,182,996

Total enterprise value $ 6,333,747 $ 6,031,391

(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

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

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

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

March 31, 2022 December 31, 2021

Net debt to Adjusted EBITDA re - annualized :

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(1) Adjusted EBITDA re is based on a trailing twelve month period.

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.

See “Non-GAAP Measures - EBITDA re and Adjusted EBITDA re ” above for a reconciliation to Net Income.

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

During the 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.

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

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

Nine Months Ended September 30,

During the three months ended March 31, 2022 and 2021, we had capital spend of $18.6 million and $13.5 million, respectively.

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

Three Months Ended March 31,

Capital expenditures for real estate:

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

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

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

PHILLIPS EDISON & COMPANY

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” 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.

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

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

Our underwritten incremental unlevered yields on development and redevelopment projects are expected to range between 10%-12%.

Our current in process projects represent an estimated total investment of $48.3 million.

See “Key Performance Indicators and Defined Terms” above for further information.

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

We expect to continue to make strategic acquisitions during the remainder of 2022.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Number of properties acquired 3 2

Number of outparcels acquired (1)

Total acquisition price $ 88,954 $ 23,014

Contract price $ 100,400 $ 39,605

Total price of acquisitions (2)

101,440 39,850

(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.

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

(2) Total price of acquisitions includes closing costs and credits.

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

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

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

Nine Months Ended September 30,

Three Months Ended March 31,

Number of properties sold 2 6

Number of outparcels sold (1)

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

Contract price $ 13,325 $ 60,563

Proceeds from sale of real estate, net (2)

12,770 58,356

Gain on sale of property, net (3)

(1) 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 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

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

Cash distributions to common stockholders Core FFO (1)

Distributions reinvested through the DRIP

(1) See “Item 2.

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.

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.

(1) During the three months ended March 31, 2021, the one outparcel sale included the only remaining portion of a property we previously owned;

therefore, the sale resulted in a reduction in our total property count.

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

(3) During the three months ended March 31, 2021, Gain on Disposal of Property, Net on the consolidated statements of operations includes miscellaneous write-off activity, which is not included in gain on sale of property, net, presented above.

DISTRIBUTIONS —We paid 2022 monthly distributions of $0.09 per share, or $1.08 annualized, for the months of January, February, March, and April.

On May 4, 2022, our Board authorized 2022 distributions for May, June, and July of $0.09 per share to the stockholders of record at the close of business on May 16, 2022, June 15, 2022, and July 15, 2022, respectively.

OP unit holders will receive distributions at the same rate as common stockholders, subject to certain withholdings.

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

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.

PHILLIPS EDISON & COMPANY

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.

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

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

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 $ Change % Change

Net cash provided by operating activities

Net cash provided by (used in) investing activities 37,835 (13,561) 51,396 NM

$ 60,221 $ 48,751 $ 11,470 23.5 %

Net cash (used in) provided by investing activities

(106,497) 4,690 (111,187) NM

Net cash used in financing activities

(51,784) (123,125) 71,341 (57.9) %

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

• Property operations and working capital —Most of our operating cash comes from rental and tenant recovery income and is offset by property operating expenses, real estate taxes, and general and administrative costs.

During the 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.

The increase in property operations was primarily due to a $5.7 million, or 6.8%, improvement in same center NOI as compared to the same period in 2021, and the execution of our external growth strategy.

During the three months ended March 31, 2022, we had a net cash outlay of $11.0 million from changes in working capital as compared to a net cash outlay of $15.3 million during the same period in 2021.

This change was primarily driven by the timing of real estate tax payments and higher accrued interest in connection with the registered offering of $350 million aggregate principal amount of 2.625% senior notes, partially offset by higher bonus payments and lower prepaid rent.

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

Our fee and management income was $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 $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 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.

Our fee and management income was $2.5 million for the three months ended March 31, 2022, which increased $0.2 million as compared to the same period in 2021.

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

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

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

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

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

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.

During the three months ended March 31, 2022, we paid $18.6 million for capital expenditures, an increase of $5.1 million over the same period in 2021, primarily due to an increase in tenant improvements owing largely to our leasing volume during 2022 and 2021.

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

During the three months ended March 31, 2021, we had a return of investment in unconsolidated joint ventures of $2.7 million.

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

• 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

SEPTEMBER 30, 2021 FORM 10-Q

CONTRACTUAL COMMITMENTS AND CONTINGENCIES

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

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

We are presenting 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 contractual obligations as of September 30, 2021 (in thousands):

Payments Due by Period

Total 2021 2022 2023 2024 2025 Thereafter

Debt obligations - principal

$ 1,715,597 $ 1,803 $ 84,926 $ 192,942 $ 503,124 $ 267,877 $ 664,925

Debt obligations - interest

227,429 14,145 54,242 50,221 37,535 24,687 46,599

Operating lease obligations 8,504 215 823 672 546 317 5,931

Finance lease obligations 121 12 45 40 24 — —

Total $ 1,951,651 $ 16,175 $ 140,036 $ 243,875 $ 541,229 $ 292,881 $ 717,455

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

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

As of 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.

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

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

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

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

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

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

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

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

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

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

During the three months ended March 31, 2021, we had net payments of $16.5 million, primarily as a result of early repayments of mortgage loans.

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

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

CRITICAL ACCOUNTING ESTIMATES

“Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates” of our 2021 Annual Report on Form 10-K, filed with the SEC on February 16, 2022, contains a description of our critical accounting estimates, including those relating to the valuation of real estate assets and rental income.

There have been no significant changes to our critical accounting policies during 2022.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in “Part II, Item 7A.

Quantitative and Qualitative Disclosures about Market Risk” of our 2021 Annual Report on Form 10-K filed with the SEC on February 16, 2022.

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