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Item 1. Financial Statements

2022-08-05 compared with 2022-05-05 · 211 added, 153 removed, 466 unchanged (44% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2022 AND DECEMBER 31, 2021

AS OF JUNE 30, 2022 AND DECEMBER 31, 2021

(Condensed and Unaudited)

(In thousands, except per share amounts)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Investment in real estate:

25 unchanged sentences

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

outstanding at March 31, 2022 and December 31, 2021

Common stock, $ 0.01 par value per share, 650,000 shares authorized, 113,819 and 19,550

shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Class B common stock, $ 0.01 par value per share, 350,000 shares authorized, zero and 93,665

shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

outstanding at June 30, 2022 and December 31, 2021

Common stock, $ 0.01 par value per share, 1,000,000 shares authorized, 115,782 shares issued

and outstanding at June 30, 2022;

650,000 shares authorized, 19,550 shares issued and outstanding at December 31, 2021

Class B common stock, $ 0.01 par value per share, zero shares authorized, issued, and outstanding

at June 30, 2022;

350,000 shares authorized, 93,665 shares issued and outstanding at

December 31, 2021

Additional paid-in capital (“APIC”) 3,341,646 3,264,038

Accumulated other comprehensive loss (“AOCI”)

Accumulated other comprehensive income (loss) (“AOCI”)

8,571 ( 24,819 )

6 unchanged sentences

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

JUNE 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

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

(Condensed and Unaudited)

(In thousands, except per share amounts)

Three Months Ended March 31,

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

2022 2021 2022 2021

Rental income $ 137,230 $ 130,335 $ 275,978 $ 257,958

16 unchanged sentences

Earnings per share of common stock:

Net income per share attributable to stockholders - basic and diluted (see Note 10)

Net income per share attributable to stockholders - basic and diluted (see

$ 0.12 $ 0.06 $ 0.21 $ 0.06

6 unchanged sentences

Change in unrealized value on interest rate swaps attributable to noncontrolling interests ( 1,535 ) ( 400 ) ( 4,237 ) ( 1,909 )

Reallocation of comprehensive loss upon conversion of noncontrolling interests ( 212 ) $ —

Reallocation of comprehensive income (loss) upon conversion of noncontrolling interests 432 ( 10 ) 220 ( 10 )

Comprehensive income attributable to stockholders $ 22,259 $ 8,557 $ 56,997 $ 19,271

1 unchanged sentence

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

JUNE 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands, except per share amounts)

Three Months Ended March 31, 2022 and 2021

Three Months Ended June 30, 2022 and 2021

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

Shares Amount Shares Amount

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

Change in unrealized value on interest

rate swaps — — — — — 2,973 — 2,973 400 3,373

Common distributions declared, $ 0.255

— — — — — — ( 24,056 ) ( 24,056 ) — ( 24,056 )

Distributions to noncontrolling interests — — — — — — — — ( 3,460 ) ( 3,460 )

Share-based compensation — — 30 1 2,102 — — 2,103 1,632 3,735

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

Reallocation of operating partnership

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

Net income — — — — — — 5,594 5,594 796 6,390

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

Balance at April 1, 2022 113,819 $ 1,138 — $ — $ 3,276,151 $ ( 160 ) $ ( 1,111,673 ) $ 2,165,456 $ 372,213 $ 2,537,669

Issuance of common stock, net 1,860 18 — — 62,947 — — 62,965 — 62,965

Change in unrealized value on interest

rate swaps — — — — — 8,299 — 8,299 1,535 9,834

Common distributions declared, $ 0.27

— — — — — — ( 31,006 ) ( 31,006 ) — ( 31,006 )

Distributions to noncontrolling interests — — — — — — — — ( 4,113 ) ( 4,113 )

Share-based compensation 31 — — — 1,008 — — 1,008 3,033 4,041

Conversion of noncontrolling interests 72 1 — — 2,417 — — 2,418 ( 2,418 ) —

Reallocation of operating partnership

interests — — — — ( 877 ) 432 — ( 445 ) 445 —

Net income — — — — — — 13,528 13,528 1,727 15,255

Balance at June 30, 2022 115,782 $ 1,157 — $ — $ 3,341,646 $ 8,571 $ ( 1,129,151 ) $ 2,222,223 $ 372,422 $ 2,594,645

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands, except per share amounts)

Six Months Ended June 30, 2022 and 2021

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

Shares Amount Shares Amount

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

7 unchanged sentences

Share-based compensation — — 77 2 2,427 — — 2,429 2,416 4,845

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

Reallocation of operating partnership

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

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

Net income — — — — — — 5,697 5,697 810 6,507

Balance at March 31, 2021 — $ — 93,582 $ 2,807 $ 2,746,891 $ ( 41,695 ) $ ( 1,023,155 ) $ 1,684,848 $ 324,558 $ 2,009,406

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

Balance at January 1, 2022 19,550 $ 196 93,665 $ 936 $ 3,264,038 $ ( 24,819 ) $ ( 1,090,837 ) $ 2,149,514 $ 326,812 $ 2,476,326

Conversion of Class B common stock 93,665 936 ( 93,665 ) ( 936 ) — — — — — —

Issuance of common stock, net 1,860 18 — — 62,947 — — 62,965 — 62,965

Change in unrealized value on interest

9 unchanged sentences

Net income — — — — — — 23,607 23,607 3,046 26,653

Balance at March 31, 2022 113,819 $ 1,138 — $ — $ 3,276,151 $ ( 160 ) $ ( 1,111,673 ) $ 2,165,456 $ 372,213 $ 2,537,669

Balance at June 30, 2022 115,782 $ 1,157 — $ — $ 3,341,646 $ 8,571 $ ( 1,129,151 ) $ 2,222,223 $ 372,422 $ 2,594,645

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

JUNE 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

25 unchanged sentences

Return of investment in unconsolidated joint ventures 3,162 3,888

Investment in marketable securities ( 3,000 ) —

Net cash (used in) provided by investing activities

6 unchanged sentences

Distributions to noncontrolling interests ( 8,877 ) ( 7,931 )

Proceeds from issuance of common stock, net of costs 62,965 —

Repurchases of Class B common stock — ( 77,765 )

12 unchanged sentences

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

JUNE 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

10 unchanged sentences

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

JUNE 30, 2022 FORM 10-Q

Phillips Edison & Company, Inc.

1 unchanged sentence

(Condensed and Unaudited)

As of and for the period ended March 31, 2022

As of and for the period ended June 30, 2022

Phillips Edison & Company, Inc.

3 unchanged sentences

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

In addition to managing our own shopping centers, our third-party investment management business provides comprehensive real estate and asset management services to two unconsolidated institutional joint ventures, in which we have a partial ownership interest, and one private fund (collectively, the “Managed Funds”) as of March 31, 2022.

As of March 31, 2022, we wholly-owned 269 real estate properties.

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

As of June 30, 2022, we wholly-owned 269 real estate properties.

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

In May 2022, we sold the final property in our joint venture with Necessity Retail Partners (“NRP”), in which we own a 20 % interest.

During the three and six months ended June 30, 2022, we recognized income of $ 2.5 million and $ 2.7 million, respectively, related to NRP’s achievement of certain performance targets, which is included in Fees and Management Income in our consolidated statements of operations and comprehensive income (“consolidated statements of operations”).

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

5 unchanged sentences

As a result, these estimates are subject to a degree of uncertainty.

There were no changes to our significant accounting policies during the three months ended March 31, 2022, except for those discussed below.

There were no changes to our significant accounting policies during the six months ended June 30, 2022, except for those discussed below.

For a full summary of our significant accounting policies, refer to our 2021 Annual Report on Form 10-K, filed with the SEC on February 16, 2022.

3 unchanged sentences

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

Our results of operations for the three months ended March 31, 2022 are not necessarily indicative of the operating results expected for the full year.

Our results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results expected for the full year.

The accompanying consolidated financial statements include our accounts and the accounts of the Operating Partnership and its wholly-owned subsidiaries (over which we exercise financial and operating control).

5 unchanged sentences

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

• Recapitalization—On June 18, 2021, our stockholders approved an amendment to our charter (the “Articles of Amendment”) that effected a change of each share of our common stock outstanding at the time the amendment became effective into one share of a newly created class of Class B common stock (the “Recapitalization”).

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

Articles of Amendment became effective on July 2, 2021.

JUNE 30, 2022 FORM 10-Q

The Articles of Amendment became effective on July 2, 2021.

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

1 unchanged sentence

Prior to the conversion, we have presented common stock and Class B common stock as separate classes within our consolidated balance sheets and consolidated statements of equity.

On May 5, 2022, we filed Articles Supplementary to our charter with the Maryland State Department of Assessments and Taxation in order to reclassify and designate all of the 350 million authorized shares of our Class B common stock, $ 0.01 par value per share, all of which were unissued at such time, as shares of our common stock, $ 0.01 par value per share.

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

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

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

We recognized an insignificant amount of federal, state, and local income tax expense for the three months ended March 31, 2022 and 2021, and we retain a full valuation allowance for our deferred tax asset.

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

Newly Adopted Accounting Pronouncements —There were no newly adopted accounting pronouncements during the three months ended March 31, 2022 that impacted the Company.

We recognized an insignificant amount of federal, state, and local income tax expense for the three and six months ended June 30, 2022 and 2021, and we retain a full valuation allowance for our net deferred tax asset.

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

Newly Adopted Accounting Pronouncements —There were no newly adopted accounting pronouncements during the six months ended June 30, 2022 that impacted the Company.

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

1 unchanged sentence

Lease income related to our operating leases was as follows (in thousands):

Three Months Ended March 31,

Rental income related to fixed lease payments (1)

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

2022 2021 2022 2021

Rental income related to variable lease payments (1)(2)

Rental income related to fixed lease

$ 103,163 $ 94,485 $ 204,673 $ 189,451

Rental income related to variable

lease payments (1)(2)

29,431 27,454 62,898 58,855

Straight-line rent amortization (3)

3,170 2,893 4,865 4,262

Amortization of lease assets 1,062 877 2,054 1,704

5 unchanged sentences

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

(3) For the three months ended March 31, 2022 and 2021, includes unfavorable revenue adjustments to straight-line rent for tenants considered non-creditworthy of $ 1.2 million and $ 0.8 million, respectively.

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

For the three months ended March 31, 2022 and 2021, we had net favorable changes to general reserves of $ 0.2 million and $ 2.3 million, respectively.

Additionally, we had net unfavorable adjustments of $ 1.1 million and $ 4.0 million, respectively, related to monthly revenue for tenants that we deemed non-creditworthy and for which we were recording revenue on a cash basis.

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of March 31, 2022, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements and tenants who have been moved to the cash basis of accounting for revenue recognition purposes, are as follows (in thousands):

(3) Includes revenue adjustments to straight-line rent for tenants considered non-creditworthy.

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

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of June 30, 2022, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements and tenants who have been moved to the cash basis of accounting for revenue recognition purposes, are as follows (in thousands):

Remaining 2022 $ 205,120

1 unchanged sentence

Total $ 2,026,622

No single tenant comprised 10% or more of our aggregate annualized base rent (“ABR”) as of March 31, 2022.

As of March 31, 2022, our wholly-owned real estate investments in Florida and California represented 12.0 % and 10.7 % of our ABR, respectively.

No single tenant comprised 10% or more of our aggregate annualized base rent (“ABR”) as of June 30, 2022.

As of June 30, 2022, our wholly-owned real estate investments in Florida and California represented 11.9 % and 10.7 % of our ABR, respectively.

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

JUNE 30, 2022 FORM 10-Q

REAL ESTATE ACTIVITY

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

Three Months Ended March 31,

Six Months Ended June 30,

Number of properties acquired 4 2

5 unchanged sentences

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

The aggregate purchase price of the assets acquired during the three months ended March 31, 2022 and 2021 were allocated as follows (in thousands):

March 31, 2022 March 31, 2021

The aggregate purchase price of the assets acquired during the six months ended June 30, 2022 and 2021 were allocated as follows (in thousands):

June 30, 2022 June 30, 2021

Land and improvements $ 44,191 $ 23,914

6 unchanged sentences

Net assets acquired $ 170,186 $ 40,459

The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles acquired during the three months ended March 31, 2022 and 2021 are as follows (in years):

March 31, 2022 March 31, 2021

The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles acquired during the six months ended June 30, 2022 and 2021 are as follows (in years):

June 30, 2022 June 30, 2021

Acquired in-place leases 15 7

2 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

Number of properties sold (1)

4 unchanged sentences

Gain on sale of property, net (4)

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

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

(2) During the six months ended June 30, 2021, the one outparcel sale included the only remaining portion of a property we previously owned;

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

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

(4) During the six months ended June 30, 2021, Gain on Disposal of Property, Net on the consolidated statements of operations includes miscellaneous write-off activity, which is not included in gain on sale of property, net, presented above.

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

Property Held for Sale —As of March 31, 2022 and December 31, 2021, one property was classified as held for sale.

A property classified as held for sale is under contract to sell, with no substantive contingencies, and the prospective buyer had significant funds at risk.

A summary of assets and liabilities for the properties held for sale as of March 31, 2022 and December 31, 2021 is below (in thousands):

March 31, 2022 December 31, 2021

Total investment in real estate assets, net $ 6,332 $ 1,554

Other assets, net 215 3

Total assets $ 6,547 $ 1,557

Below-market lease liabilities, net $ 114 $ 284

Accounts payable and other liabilities 84 4

Total liabilities $ 198 $ 288

JUNE 30, 2022 FORM 10-Q

OTHER ASSETS, NET

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

March 31, 2022 December 31, 2021

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

June 30, 2022 December 31, 2021

Other assets, net:

17 unchanged sentences

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

(2) Net of $ 4.1 million and $ 3.5 million of general reserves for uncollectible amounts as of March 31, 2022 and December 31, 2021, respectively.

Receivables that were removed for tenants considered to be non-creditworthy were $ 7.3 million and $ 9.2 million as of March 31, 2022 and December 31, 2021, respectively.

(3) Net of $ 5.8 million and $ 4.7 million of receivables removed as of March 31, 2022 and December 31, 2021, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

(2) Net of $ 3.9 million and $ 3.5 million of general reserves for uncollectible amounts as of June 30, 2022 and December 31, 2021, respectively.

Receivables that were removed for tenants considered to be non-creditworthy were $ 7.5 million and $ 9.2 million as of June 30, 2022 and December 31, 2021, respectively.

(3) Net of $ 5.1 million and $ 4.7 million of receivables removed as of June 30, 2022 and December 31, 2021, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.

DEBT OBLIGATIONS

The following is a summary of the outstanding principal balances and interest rates, which include the effect of derivative financial instruments, for our debt obligations as of March 31, 2022 and December 31, 2021 (dollars in thousands):

The following is a summary of the outstanding principal balances and interest rates, which include the effect of derivative financial instruments, for our debt obligations as of June 30, 2022 and December 31, 2021 (dollars in thousands):

Interest Rate (1)

March 31, 2022 December 31, 2021

Revolving credit facility LIBOR + 1.1 %

June 30, 2022 December 31, 2021

Revolving credit facility SOFR + 1.2 %

Term loans (2)

12 unchanged sentences

Weighted-average interest rate (3)

(1) Interest rates are as of March 31, 2022.

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

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

(1) Interest rates are as of June 30, 2022.

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

While most of the rates are fixed through the use of swaps, a portion of these loans are not subject to a swap, and thus are still indexed to LIBOR or SOFR, as applicable.

(3) Includes the effects of derivative financial instruments (see Notes 7 and 12).

2022 Debt Activity— During the three months ended March 31, 2022, we executed early repayments of $ 61.0 million in mortgage debt.

Debt Allocation — The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments, discount on senior notes, and deferred financing expenses, net, and including the effects of derivative financial instruments as of March 31, 2022 and December 31, 2021 is summarized below (in thousands):

March 31, 2022 December 31, 2021

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

2022 Debt Activity— In May 2022, we amended our credit facility agreement (the “Amendment”) to, among other things, increase the total amount available under our unsecured revolving credit facility from $ 500 million to $ 800 million.

The unsecured revolving credit facility also includes an accordion feature that permits us to increase our aggregate borrowing capacity thereunder to up to $ 1 billion, subject to the satisfaction of certain conditions.

The unsecured revolving credit facility is scheduled to mature in January 2026, extendable at our option to January 2027.

In addition to expanding the borrowing capacity, the Amendment replaces the London Interbank Offered Rate (“LIBOR”) with the Secured Overnight Financing Rate (“SOFR”) as the benchmark interest rate for the unsecured revolving credit facility and the two $ 240 million senior unsecured term loan tranches, maturing in November 2025 and July 2026.

During the six months ended June 30, 2022, we executed early repayments of $ 64.1 million in mortgage debt.

Debt Allocation — The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments, discount on senior notes, and deferred financing expenses, net, and including the effects of derivative financial instruments as of June 30, 2022 and December 31, 2021 is summarized below (in thousands):

June 30, 2022 December 31, 2021

As to interest rate:

8 unchanged sentences

(1) Fixed-rate debt includes, and variable-rate debt excludes, the portion of such debt that has been hedged by interest rate derivatives.

As of March 31, 2022, $ 930.0 million in variable rate debt is hedged to a fixed rate for a weighted-average of 1.9 years.

As of June 30, 2022, $ 755.0 million in variable rate debt is hedged to a fixed rate for a weighted-average period of 2.1 years.

DERIVATIVES AND HEDGING ACTIVITIES

6 unchanged sentences

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

During the three

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

months ended March 31, 2022 and 2021, such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt.

During the six months ended June 30, 2022 and 2021, such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt.

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

During the next twelve months, we estimate that an additional $ 3.2 million will be reclassified from AOCI as an increase to Interest Expense, Net.

The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of March 31, 2022 and December 31, 2021 (dollars in thousands):

March 31, 2022 December 31, 2021

During the next twelve months, we estimate that an additional $ 6.9 million will be reclassified from AOCI as a decrease to Interest Expense, Net.

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of June 30, 2022 and December 31, 2021 (dollars in thousands):

June 30, 2022 December 31, 2021

Notional amount $ 755,000 $ 930,000

1 unchanged sentence

1.3 % - 2.9 %

Maturity date 2023-2025 2022 - 2025

Weighted-average term (in years) 2.1 1.9

(1) In May 2022, we replaced LIBOR with SOFR as the benchmark interest rate for the two $ 240 million senior unsecured term loan tranches, maturing in November 2025 and July 2026.

In accordance with ASC Topic 848, Reference Rate Reform , we elected not to dedesignate our LIBOR denominated interest rate swaps related to this hedged debt.

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

Three Months Ended March 31,

Amount of gain recognized in Other Comprehensive Income

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

2022 2021 2022 2021

Amount of loss reclassified from AOCI into Interest Expense, Net

Amount of gain (loss) recognized in

Other Comprehensive Income

$ 7,080 $ ( 1,451 ) $ 29,979 $ 5,814

Amount of loss reclassified from AOCI

into Interest Expense, Net

2,754 4,824 7,428 9,679

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

As of March 31, 2022, the fair value of our derivatives in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk related to these agreements, was approximately $ 2.2 million.

As of March 31, 2022, we had not posted any collateral related to these agreements and were not in breach of any agreement provisions.

As of June 30, 2022, the fair value of our derivatives in a net liability position, which included accrued interest but excluded any adjustment for nonperformance risk related to these agreements, was approximately $ 0.1 million.

As of June 30, 2022, we had not posted any collateral related to these agreements and were not in breach of any agreement provisions.

If we had breached any of these provisions, we could have been required to settle our obligations under the agreements at their termination value of $ 0.1 million.

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Captive Insurance —Our captive insurance company, Silver Rock Insurance, Inc.

(“Silver Rock”), provides general liability insurance, wind, reinsurance, and other coverage to us and certain related-party joint ventures.

(“Silver Rock”), provides general liability insurance, wind, reinsurance, and other coverage to us and our GRP I joint venture.

We capitalize Silver Rock in accordance with applicable regulatory requirements.

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

As of March 31, 2022, we had four letters of credit outstanding totaling approximately $ 9.0 million to provide security for our obligations under Silver Rock’s insurance and reinsurance contracts.

As of June 30, 2022, we had four letters of credit outstanding totaling approximately $ 11.2 million to provide security for our obligations under Silver Rock’s insurance and reinsurance contracts.

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

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PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

JUNE 30, 2022 FORM 10-Q

At-the-Market Offering (“ATM”) —On February 10, 2022, we and the Operating Partnership entered into a sales agreement relating to the potential sale of shares of common stock pursuant to a continuous offering program.

In accordance with the terms of the sales agreement, we may offer and sell shares of our common stock having an aggregate offering price of up to $ 250 million from time to time through our sales agents, or, if applicable, as forward sellers.

As of March 31, 2022, we have issued zero shares under the ATM program.

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

As of June 30, 2022, $ 186.3 million of common stock remained available for issuance under the ATM program.

In July 2022, we issued an additional 0.8 million shares of our common stock under the ATM program for net proceeds of $ 26.2 million, after approximately $ 0.3 million in commissions.

We received a weighted-average price of $ 34.23 per share for the 2.6 million shares of common stock sold under the ATM program through July 2022.

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

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

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

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

Distributions —Distributions paid to stockholders and OP unit holders of record subsequent to March 31, 2022 were as follows (dollars in thousands, excluding per share amounts):

Distributions —Distributions paid to stockholders and OP unit holders of record subsequent to June 30, 2022 were as follows (dollars in thousands, excluding per share amounts):

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

March 3/15/2022 4/1/2022 $ 0.09 $ 11,520

April 4/15/2022 5/2/2022 0.09 11,520

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.

June 6/15/2022 7/1/2022 $ 0.09 $ 11,595

July 7/15/2022 8/1/2022 0.09 11,768

On August 3, 2022, our Board authorized a distribution for August 2022 of $ 0.09 per share to the stockholders of record at the close of business on August 15, 2022.

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

Convertible Noncontrolling Interests —As of March 31, 2022 and December 31, 2021, we had approximately 14.5 million and 13.4 million outstanding OP units, respectively.

Convertible Noncontrolling Interests —As of June 30, 2022 and December 31, 2021, we had approximately 14.6 million and 13.4 million outstanding OP units, respectively.

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

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

As the form of redemption for OP units is within our control, the OP units outstanding as of March 31, 2022 and December 31, 2021 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets.

As the form of redemption for OP units is within our control, the OP units outstanding as of June 30, 2022 and December 31, 2021 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets.

On January 18, 2022, we issued approximately 1.6 million OP units in full settlement of the earn-out liability (see note 12).

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

Three Months Ended March 31,

OP units converted into shares of common stock (1)

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

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

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

2022 2021 2022 2021

OP units converted into shares of

common stock (1)

Distributions paid on OP units (2)

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

Estimated Value per Share —Prior to our underwritten IPO, on April 29, 2021, our Board increased the estimated value per share (“EVPS”) of our common stock to $ 31.65 from $ 26.25 based substantially on the estimated market value of our portfolio of real estate properties and our third-party investment management business as of March 31, 2021.

We engaged a third-party valuation firm to provide a calculation of the range in EVPS of our common stock as of March 31, 2021, which reflected certain balance sheet assets and liabilities as of that date.

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

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

On August 3, 2022, our Board approved a new share repurchase program of up to $ 250.0 million of common stock.

The program may be suspended or discontinued at any time, and does not obligate us to repurchase any dollar amount or particular number of shares.

EARNINGS PER SHARE

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The following table provides a reconciliation of the numerator and denominator of the earnings per share calculations (in thousands, except per share amounts):

Three Months Ended March 31,

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

2022 2021 2022 2021

Net income attributable to stockholders - basic

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Net income attributable to convertible OP units (1)

1,727 796 3,046 810

Net income - diluted

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

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

RELATED PARTY TRANSACTIONS

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Recurring fees (1)

$ 995 $ 1,103 $ 2,070 $ 2,228

Transactional revenue and reimbursements (2)

Realized performance income (2)

2,546 — 2,742 —

Transactional revenue and

reimbursements (3)

447 461 841 929

Insurance premiums (4)

793 810 1,589 1,503

Total fees and management income $ 4,781 $ 2,374 $ 7,242 $ 4,660

(1) Recurring fees include asset management fees and property management fees.

(2) Realized performance income includes fees received related to the achievement of certain performance targets in our NRP joint venture.

(3) Transactional revenue includes items such as leasing commissions, construction management fees, and acquisition fees.

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

Tax Protection Agreement —Through our Operating Partnership, we are currently party to a tax protection agreement (the “2017 TPA”) with certain partners that contributed property to our Operating Partnership on October 4, 2017, among them certain of our executive officers, including Jeffrey S.

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

As of March 31, 2022, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $ 143.3 million.

As of June 30, 2022, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $ 142.5 million.

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

We have not recorded any liability related to the 2017 TPA or the 2021 TPA on our consolidated balance sheets for any periods presented, nor recognized any expense since the inception of the 2017 TPA, owing to the fact that any potential liability under the agreements is controlled by us and we believe we will either (i) continue to own and operate the protected properties or (ii) be able to successfully complete tax-deferred exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (unless there is a change in applicable law) or complete other tax-efficient transactions to avoid any liability under the agreements.

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

As of March 31, 2022, the outstanding loan balance related to our NRP joint venture was $ 15.3 million.

As of March 31, 2022, we were also the limited guarantor of a $ 175 million mortgage loan secured by GRP I properties.

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

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

We have no liability recorded on our consolidated balance sheets for either guaranty as of March 31, 2022 and December 31, 2021.

Other Related Party Matters — As of June 30, 2022, we were the limited guarantor of a $ 175 million mortgage loan secured by GRP I properties.

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

Further, we are also party to an agreement with GRP I in which any potential liability under such guarantee will be apportioned between us and GRP I based on our respective ownership percentages in the joint venture.

We have no liability recorded on our consolidated balance sheets for the guaranty as of June 30, 2022 and December 31, 2021.

FAIR VALUE MEASUREMENTS

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We estimate the fair value of our senior unsecured notes by using quoted prices in active markets, which are considered Level 1 inputs.

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

March 31, 2022 December 31, 2021

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

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

June 30, 2022 December 31, 2021

Recorded Principal Balance (1)

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Total $ 1,877,107 $ 1,783,641 $ 1,891,722 $ 1,916,115

(1) As of March 31, 2022 and December 31, 2021, respectively, recorded principal balances include:

(1) As of June 30, 2022 and December 31, 2021, respectively, recorded principal balances include:

(i) net deferred financing fees of $ 9.2 million and $ 13.2 million;

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

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

Fair value measurements that occurred as of and during the three months ended March 31, 2022 and the year ended December 31, 2021 were as follows (in thousands):

March 31, 2022 December 31, 2021

Fair value measurements that occurred as of and during the six months ended June 30, 2022 and the year ended December 31, 2021 were as follows (in thousands):

June 30, 2022 December 31, 2021

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

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Derivative liabilities — ( 52 ) — — ( 24,096 ) —

— ( 2,217 ) — — ( 24,096 ) —

Earn-out liability — — — — ( 52,436 ) —

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(1) We record derivative assets in Other Assets, Net on our consolidated balance sheets.

(2) We record derivative liabilities in Derivative Liabilities on our consolidated balance sheets.

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

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

Derivative Instruments— As of March 31, 2022 and December 31, 2021, we had interest rate swaps that fixed LIBOR on portions of our unsecured term loan facilities.

Derivative Instruments— As of June 30, 2022 and December 31, 2021, we had interest rate swaps that fixed LIBOR on portions of our unsecured term loan facilities.

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

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

However, as of March 31, 2022 and December 31, 2021, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

However, as of June 30, 2022 and December 31, 2021, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

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

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

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

Certain of these performance targets were tied to the post-underwritten IPO trading price of our common stock.

The number of OP units awarded varied based on the highest volume weighted average price per share of our common stock over any 30 consecutive trading day period during the 180 days following the underwritten IPO commencement (the “liquidity event price per share”):

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

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

• if the liquidity event price per share was less than $ 26.40 , PELP would receive 1.0 million OP units.

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

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

On January 11, 2022, at the end of the 180 -day period following our underwritten IPO commencement, we finalized the fair value of the earn-out liability and issued approximately 1.6 million OP units in full settlement of the liability with a value of $ 54.2 million.

We recorded expense of $ 1.8 million and $ 16.0 million,

On January 11, 2022, we finalized the fair value of the earn-out liability based on our share price and issued approximately 1.6 million OP units in full settlement of the liability with a value of

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

respectively, for the three months ended March 31, 2022 and March 31, 2021 related to changes in the fair value of the earn-out liability in Other Expense, Net in the consolidated statements of operations.

JUNE 30, 2022 FORM 10-Q

$ 54.2 million.

Changes in the fair value of the earn-out liability were recorded to Other Expense, Net in the consolidated statements of operations.

We recorded no expense for the three months ended June 30, 2022 and $ 2.0 million in expense for the three months ended June 30, 2021.

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

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

During the three months ended March 31, 2021, we impaired assets that were under contract at a disposition price that was less than carrying value, or that had other operational impairment indicators.

There were no impairment charges recorded during the three and six months ended June 30, 2022.

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

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

There were no impairment charges recorded during the three months ended March 31, 2022.

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

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Impairment of real estate assets $ — $ 1,056 $ — $ 6,056

3 unchanged sentences

PHILLIPS EDISON & COMPANY

MARCH 31, 2022 FORM 10-Q

JUNE 30, 2022 FORM 10-Q

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

What changed 10-Q

Item 1. Financial Statements