What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-03 compared with 2022-08-05 · 162 added, 143 removed, 534 unchanged (36% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2022 AND DECEMBER 31, 2021

AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

(Condensed and Unaudited)

(In thousands, except per share amounts)

June 30, 2022 December 31, 2021

September 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 June 30, 2022 and December 31, 2021

outstanding at September 30, 2022 and December 31, 2021

Common stock, $ 0.01 par value per share, 1,000,000 shares authorized, 117,084 shares issued

and outstanding at June 30, 2022;

and outstanding at September 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;

at September 30, 2022;

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

10 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

SEPTEMBER 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands, except per share amounts)

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

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

2022 2021 2022 2021

11 unchanged sentences

Interest expense, net ( 17,569 ) ( 18,570 ) ( 52,895 ) ( 57,765 )

Gain on disposal of property, net 2,793 3,744 4,161 17,585

(Loss) gain on disposal of property, net ( 10 ) 14,093 4,151 31,678

Other expense, net ( 3,916 ) ( 7,086 ) ( 9,738 ) ( 25,595 )

3 unchanged sentences

Earnings per share of common stock:

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

Net income per share attributable to stockholders - basic and

diluted (see Note 10)

$ 0.09 $ 0.13 $ 0.30 $ 0.21

10 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

SEPTEMBER 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands, except per share amounts)

Three Months Ended June 30, 2022 and 2021

Three Months Ended September 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

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

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

Offering costs, discounts, and

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

Change in unrealized value on interest

4 unchanged sentences

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

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

Reallocation of operating partnership

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

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

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

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

Balance at 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

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

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

Issuance of common stock 773 8 — — 26,409 — — 26,417 — 26,417

Offering costs, discounts, and

commissions — — — — ( 348 ) — — ( 348 ) — ( 348 )

Change in unrealized value on interest

5 unchanged sentences

Conversion of noncontrolling interests 528 5 — — 11,547 57 — 11,609 ( 11,609 ) —

Reallocation of operating partnership

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

Net income — — — — — — 11,038 11,038 1,135 12,173

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

Balance at September 30, 2022 117,084 $ 1,170 — $ — $ 3,381,638 $ 21,123 $ ( 1,150,337 ) $ 2,253,594 $ 361,313 $ 2,614,907

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

SEPTEMBER 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands, except per share amounts)

Six Months Ended June 30, 2022 and 2021

Nine Months Ended September 30, 2022 and 2021

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

1 unchanged sentence

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

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

Offering costs, discounts, and

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

Dividend reinvestment plan (“DRIP”) — — 280 8 7,360 — — 7,368 — 7,368

7 unchanged sentences

Conversion of noncontrolling interests — — 28 — 687 ( 10 ) — 677 ( 677 ) —

Reallocation of operating partnership

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

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

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

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

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

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

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

Issuance of common stock 2,633 26 — — 90,098 — — 90,124 — 90,124

Offering costs, discounts, and

commissions — — — — ( 1,090 ) — — ( 1,090 ) — ( 1,090 )

Change in unrealized value on interest

5 unchanged sentences

Conversion of noncontrolling interests 1,133 11 — — 24,733 277 — 25,021 ( 25,021 ) —

Reallocation of operating partnership

interests — — — — ( 6,544 ) 220 — ( 6,324 ) 6,324 —

Settlement of earn-out liability — — — — — — — — 54,245 54,245

Net income — — — — — — 34,645 34,645 4,181 38,826

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

Balance at September 30, 2022 117,084 $ 1,170 — $ — $ 3,381,638 $ 21,123 $ ( 1,150,337 ) $ 2,253,594 $ 361,313 $ 2,614,907

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

SEPTEMBER 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

31 unchanged sentences

Payments on revolving credit facility ( 227,000 ) ( 9,000 )

Proceeds from loans payable — 480,000

Payments on mortgages and loans payable ( 80,628 ) ( 1,077,422 )

1 unchanged sentence

Distributions to noncontrolling interests ( 12,859 ) ( 11,344 )

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

Proceeds from issuance of common stock 90,124 547,401

Payment of offering costs ( 1,090 ) ( 39,042 )

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

12 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

SEPTEMBER 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

10 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

SEPTEMBER 30, 2022 FORM 10-Q

Phillips Edison & Company, Inc.

1 unchanged sentence

(Condensed and Unaudited)

As of and for the period ended June 30, 2022

As of and for the period ended September 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 June 30, 2022.

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

As of September 30, 2022, we wholly-owned 270 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”).

We recognized no income during the three months ended September 30, 2022 and $ 2.7 million in income during the nine months ended September 30, 2022 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 six months ended June 30, 2022, except for those discussed below.

There were no changes to our significant accounting policies during the nine months ended September 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 and six months ended June 30, 2022 are not necessarily indicative of the operating results expected for the full year.

Our results of operations for the three and nine months ended September 30, 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).

3 unchanged sentences

• Reverse Stock Split—On July 2, 2021, our board of directors (the “Board”) approved an amendment to our charter 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 Operating Partnership units (“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).

Concurrent with the reverse split, the Operating Partnership enacted a one-

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

SEPTEMBER 30, 2022 FORM 10-Q

for-three reverse split of its outstanding Operating Partnership units (“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).

• 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”).

7 unchanged sentences

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

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

We recognized an insignificant amount of federal, state, and local income tax expense for the three and nine months ended September 30, 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.

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

Reclassifications —Certain prior year amounts have been reclassified to conform to the current year presentation.

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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

15 unchanged sentences

(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):

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of September 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 $ 102,503

1 unchanged sentence

Total $ 2,058,029

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.

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

As of September 30, 2022, our wholly-owned real estate investments in Florida and California represented 11.7 % and 10.6 % of our

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

SEPTEMBER 30, 2022 FORM 10-Q

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 (See “Hurricane Ian” in Note 4).

REAL ESTATE ACTIVITY

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

Six Months Ended June 30,

Nine Months Ended September 30,

Number of properties acquired 5 4

5 unchanged sentences

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

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

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

September 30, 2022 September 30, 2021

Land and improvements $ 71,564 $ 35,173

6 unchanged sentences

Net assets acquired $ 229,895 $ 88,954

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

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

September 30, 2022 September 30, 2021

Acquired in-place leases 11 10

1 unchanged sentence

Acquired below-market leases 19 17

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

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

Six Months Ended June 30,

Nine Months Ended September 30,

Number of properties sold (1)

4 unchanged sentences

Gain on sale of property, net (5)

(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.

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

(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

JUNE 30, 2022 FORM 10-Q

(5) During the nine months ended September 30, 2021, (Loss) 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.

Hurricane Ian - On September 28, 2022, Hurricane Ian struck the southeast United States and caused various amounts of damage to our properties located in the region.

While we are still in the process of finalizing the damages sustained to the properties, we expect to collect insurance proceeds of $ 1.1 million (net of a deductible of $ 1.9 million) equal to the replacement cost of the damaged property.

As of September 30, 2022, we have recorded gross cumulative accelerated depreciation of $ 3.0 million, which has been reduced by expected insurance recoveries, for damages sustained to the properties.

We have also recognized a receivable for estimated insurance recoveries in excess of the deductible.

As of September 30, 2022, we have received no insurance recoveries and have a receivable balance of $ 1.1 million, which is recorded in Other Assets, Net on our consolidated balance sheets.

OTHER ASSETS, NET

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

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

September 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 $ 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.

(2) Net of $ 3.7 million and $ 3.5 million of general reserves for uncollectible amounts as of September 30, 2022 and December 31, 2021, respectively.

Receivables that were removed for tenants considered to be non-creditworthy were $ 6.3 million and $ 9.2 million as of September 30, 2022 and December 31, 2021, respectively.

(3) Net of $ 4.3 million and $ 4.7 million of receivables removed as of September 30, 2022 and December 31, 2021, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

DEBT OBLIGATIONS

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

Interest Rate (1)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Revolving credit facility SOFR + 1.2 %

13 unchanged sentences

Weighted-average interest rate (3)

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

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

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

1 unchanged sentence

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

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.

2 unchanged sentences

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

In August 2022, we amended two of our interest rate swaps with a total notional amount of $ 430 million to replace LIBOR with SOFR as the benchmark interest rate in conjunction with the Amendment (see Note 7) .

During the nine months ended September 30, 2022, we executed early repayments of $ 74.9 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 September 30, 2022 and December 31, 2021 is summarized below (in thousands):

September 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 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.

As of September 30, 2022, $ 755 million in variable rate debt is hedged to a fixed rate for a weighted-average period of 1.8 years.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

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

During the nine months ended September 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 $ 15.4 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

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 (“ASC 848”), we elected not to dedesignate our LIBOR denominated interest rate swaps related to this hedged debt.

As a result of this change in the benchmark rate of the two senior unsecured term loans, in August 2022, we amended two of our interest rate swaps with a total notional amount of $ 430 million to change the benchmark interest rate from LIBOR to SOFR.

As a result of these amendments, we have elected to apply practical expedients in accordance with ASC 848 related to contract modifications, changes in critical terms, and updates to the designated hedged risks as qualifying changes have been made to applicable debt and derivative contracts.

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

September 30, 2022 December 31, 2021

SOFR Swaps LIBOR Swaps LIBOR Swaps

Notional amount $ 430,000 $ 325,000 $ 930,000

Fixed LIBOR (1)

Fixed interest rate 1.2 % - 2.1 %

2.2 % - 2.9 %

2 unchanged sentences

Weighted-average term (in years) 1.4 2.4 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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

2 unchanged sentences

$ 14,084 $ ( 417 ) $ 44,063 $ 5,397

Amount of loss reclassified from AOCI

into Interest Expense, Net

Amount of (gain) loss reclassified from

AOCI into Interest Expense, Net

( 76 ) 4,905 7,352 14,584

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

As of June 30, 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.

As of September 30, 2022, there were no derivatives with a fair value in a net liability position, which would include accrued interest but exclude any adjustment for nonperformance risk related to these agreements.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

Environmental Matters —In connection with the ownership and operation of real estate, we may potentially be liable for costs and damages related to environmental matters.

In addition, we may own or acquire certain properties that are subject to environmental remediation.

In addition, we may own or acquire certain properties that are subject

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

to environmental remediation.

Depending on the nature of the environmental matter, the seller of the property, a tenant of the property, and/or another third party may be responsible for environmental remediation costs related to a property.

8 unchanged sentences

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 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.

As of September 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.

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

PHILLIPS EDISON & COMPANY

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.

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.

During the three months ended September 30, 2022, we issued 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.

During the nine months ended September 30, 2022, we issued 2.6 million shares of our common stock under the ATM program for net proceeds of $ 89.2 million, after approximately $ 0.9 million in commissions.

As of September 30, 2022, $ 159.9 million of common stock remained available for issuance under the ATM program.

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

13 unchanged sentences

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 June 30, 2022 were as follows (dollars in thousands, excluding per share amounts):

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

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

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

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.

September 9/16/2022 10/3/2022 $ 0.0933 $ 12,202

October 10/17/2022 11/1/2022 0.0933 12,202

On November 2, 2022, our Board authorized a distribution for November and December 2022, as well as January 2023, of $ 0.0933 per share to the stockholders of record at the close of business on November 15, 2022, December 15, 2022, and January 17, 2023, respectively.

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

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.

Convertible Noncontrolling Interests —As of September 30, 2022 and December 31, 2021, we had approximately 14.0 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.

1 unchanged sentence

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 June 30, 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 September 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).

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,

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

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

2022 2021 2022 2021

1 unchanged sentence

common stock (1)

528 — 1,133 28

Distributions paid on OP units (2)

7 unchanged sentences

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.

No share repurchases have been made to date under this program.

EARNINGS PER SHARE

1 unchanged sentence

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

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

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 June 30, Six Months Ended June 30,

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

2022 2021 2022 2021

15 unchanged sentences

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

2 unchanged sentences

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

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

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

2022 2021 2022 2021

2 unchanged sentences

Realized performance income (2)

2,546 — 2,742 —

Transactional revenue and

13 unchanged sentences

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

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.

As of September 30, 2022, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $ 137.9 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 — As of June 30, 2022, we were the limited guarantor of a $ 175 million mortgage loan secured by GRP I properties.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

Other Related Party Matters — As of September 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.

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

FAIR VALUE MEASUREMENTS

6 unchanged sentences

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

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

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

September 30, 2022 December 31, 2021

Recorded Principal Balance (1)

7 unchanged sentences

Total $ 1,872,939 $ 1,737,291 $ 1,891,722 $ 1,916,115

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

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

(i) net deferred financing fees of $ 8.6 million and $ 13.2 million;

3 unchanged sentences

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 six months ended June 30, 2022 and the year ended December 31, 2021 were as follows (in thousands):

June 30, 2022 December 31, 2021

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

September 30, 2022 December 31, 2021

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

10 unchanged sentences

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

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.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

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

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

6 unchanged sentences

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

However, as of June 30, 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 September 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.

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

JUNE 30, 2022 FORM 10-Q

$ 54.2 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 $ 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.

We recorded no expense for the three months ended September 30, 2022 and $ 5.0 million in expense for the three months ended September 30, 2021.

We recorded expense of $ 1.8 million and $ 23.0 million, respectively, for the nine months ended September 30, 2022 and September 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.

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.

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

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

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

9 unchanged sentences

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

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

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

2022 2021 2022 2021

4 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2022 FORM 10-Q

SEPTEMBER 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