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Item 1. Financial Statements

2023-05-03 compared with 2022-11-03 · 167 added, 292 removed, 404 unchanged (53% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

AS OF MARCH 31, 2023 AND DECEMBER 31, 2022

(Condensed and Unaudited)

(In thousands, except per share amounts)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Investment in real estate:

12 unchanged sentences

Other assets, net 200,373 188,879

Real estate investments and other assets held for sale — 1,557

Total assets $ 4,786,914 $ 4,735,492

2 unchanged sentences

Below-market lease liabilities, net 111,007 109,799

Earn-out liability — 52,436

Derivative liabilities — 24,096

Deferred income 21,586 19,145

Accounts payable and other liabilities 111,471 113,185

Liabilities of real estate investments held for sale — 288

Deferred income 24,243 18,481

Total liabilities 2,213,973 2,138,059

Commitments and contingencies (see Note 8)

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

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 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 September 30, 2022;

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

December 31, 2021

Preferred stock, $ 0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at March 31, 2023 and December 31, 2022

Common stock, $ 0.01 par value per share, 1,000,000 shares authorized, 117,259 and 117,126 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital (“APIC”) 3,382,368 3,383,978

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

Accumulated other comprehensive income (“AOCI”)

15,181 21,003

6 unchanged sentences

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

MARCH 31, 2023 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

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

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Condensed and Unaudited)

(In thousands, except per share amounts)

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

2022 2021 2022 2021

Three Months Ended March 31,

Rental income $ 147,728 $ 138,748

7 unchanged sentences

Depreciation and amortization 58,498 57,226

Impairment of real estate assets — 698 — 6,754

Total operating expenses 113,149 109,569

Interest expense, net ( 19,466 ) ( 18,199 )

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

Gain on disposal of property, net 942 1,368

Other expense, net ( 755 ) ( 4,365 )

3 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 Note 10)

$ 0.14 $ 0.09

1 unchanged sentence

Net income $ 18,636 $ 11,398

Other comprehensive income:

Other comprehensive (loss) income:

Change in unrealized value on interest rate swaps ( 6,499 ) 27,573

2 unchanged sentences

Change in unrealized value on interest rate swaps attributable to noncontrolling interests 704 ( 2,702 )

Reallocation of comprehensive income (loss) upon conversion of noncontrolling interests 57 — 277 ( 10 )

Reallocation of comprehensive loss upon conversion of noncontrolling interests ( 27 ) ( 212 )

Comprehensive income attributable to stockholders $ 10,797 $ 34,738

1 unchanged sentence

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(Condensed and Unaudited)

(In thousands, except per share amounts)

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 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

rate swaps — — — — — 3,926 — 3,926 562 4,488

Common distributions declared, $ 0.255

— — — — — — ( 27,499 ) ( 27,499 ) — ( 27,499 )

Distributions to noncontrolling interests — — — — — — — — ( 3,536 ) ( 3,536 )

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

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

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

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

rate swaps — — — — — 12,495 — 12,495 1,513 14,008

Common distributions declared, $ 0.2733

— — — — — — ( 32,224 ) ( 32,224 ) — ( 32,224 )

Distributions to noncontrolling interests — — — — — — — — ( 3,932 ) ( 3,932 )

Share-based compensation 1 — — — 2,384 — — 2,384 1,784 4,168

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

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

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

SEPTEMBER 30, 2022 FORM 10-Q

MARCH 31, 2023 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Condensed and Unaudited)

(In thousands, except per share amounts)

Nine Months Ended September 30, 2022 and 2021

Three Months Ended March 31, 2023 and 2022

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

1 unchanged sentence

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

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

Share repurchases — — ( 24 ) — ( 123 ) — — ( 123 ) — ( 123 )

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

Change in unrealized value on interest

5 unchanged sentences

Conversion of noncontrolling interests 533 5 — — 11,646 ( 212 ) — 11,439 ( 11,439 ) —

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

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

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

Net income — — — — — — 10,079 10,079 1,319 11,398

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

Balance at January 1, 2023 117,126 $ 1,171 — $ — $ 3,383,978 $ 21,003 $ ( 1,169,665 ) $ 2,236,487 $ 360,946 $ 2,597,433

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

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 — — — — — ( 27 ) — ( 27 ) 27 —

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

Net income — — — — — — 16,619 16,619 2,017 18,636

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

Balance at March 31, 2023 117,259 $ 1,172 — $ — $ 3,382,368 $ 15,181 $ ( 1,186,074 ) $ 2,212,647 $ 360,294 $ 2,572,941

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

MARCH 31, 2023 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Condensed and Unaudited)

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Depreciation and amortization of real estate assets 57,953 56,321

Impairment of real estate assets — 6,754

Depreciation and amortization of corporate assets 545 905

18 unchanged sentences

Proceeds from sale of real estate, net 1,091 12,770

Investment in third parties — ( 3,000 )

Return of investment in unconsolidated joint ventures 606 781

Investment in marketable securities ( 3,000 ) ( 5,514 )

Net cash (used in) provided by investing activities

Insurance proceeds for property damage claims 194 —

Net cash used in investing activities

( 91,418 ) ( 106,497 )

2 unchanged sentences

Payments on revolving credit facility ( 76,000 ) ( 56,000 )

Proceeds from loans payable — 480,000

Payments on mortgages and loans payable ( 25,477 ) ( 62,515 )

Distributions paid, net of DRIP ( 94,118 ) ( 75,669 )

Distributions paid ( 33,276 ) ( 30,926 )

Distributions to noncontrolling interests ( 3,977 ) ( 4,343 )

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 )

Other — ( 29 )

Net cash used in financing activities

Net cash provided by (used in) financing activities

23,270 ( 51,784 )

9 unchanged sentences

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

MARCH 31, 2023 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022

(Condensed and Unaudited)

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

4 unchanged sentences

Accrued capital expenditures 7,570 6,486

Assumed debt obligations, net 9,619 —

Assumed below-market debt 443 —

Change in distributions payable ( 248 ) ( 11 )

Change in distributions payable - noncontrolling interests 96 ( 239 )

Change in accrued share repurchase obligation — ( 77,642 )

Distributions reinvested — 7,368

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

MARCH 31, 2023 FORM 10-Q

Phillips Edison & Company, Inc.

1 unchanged sentence

(Condensed and Unaudited)

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 September 30, 2022.

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.

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.

As a result of the underwritten IPO, we received gross proceeds of $ 547.4 million.

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, Grocery Retail Partners I LLC (“GRP I”) and Necessity Retail Partners (“NRP”), in which we have partial ownership interests, and one private fund (collectively, the “Managed Funds”) as of March 31, 2023.

As of March 31, 2023, we wholly-owned 275 real estate properties.

Additionally, we owned a 14 % interest in GRP I, which owned 20 properties.

NRP —As of March 31, 2023, we owned a 20 % equity interest in NRP.

NRP was initially formed in March 2016 pursuant to the terms of a joint venture agreement between Phillips Edison Grocery Center REIT II, Inc.

and an affiliate of TPG Real Estate and is set to expire seven years after the date of the joint venture contribution agreement unless otherwise extended by the members.

In May 2022, we sold the final property in the joint venture as a result of the planned expiration in 2023.

With the monetization of the joint venture, we exceeded the targeted return and as such were paid compensation of $ 0.1 million and $ 0.2 million during the three months ended March 31, 2023 and 2022, respectively, which is recorded in Fees and Management Income in our consolidated statements of operations and comprehensive income (“consolidated statements of operations”).

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 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 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.

Basis of Presentation and Principles of Consolidation —The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X.

There were no changes to our significant accounting policies during the three months ended March 31, 2023, except for those discussed below.

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

Securities and Exchange Commission (“SEC”) on February 21, 2023.

Basis of Presentation and Principles of Consolidation —The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

1 unchanged sentence

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 nine months ended September 30, 2022 are not necessarily indicative of the operating results expected for the full year.

Our results of operations for the three months ended March 31, 2023 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).

1 unchanged sentence

All intercompany balances and transactions are eliminated upon consolidation.

The basis of presentation of our shares of common stock is described as follows:

• 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-

PHILLIPS EDISON & COMPANY

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”).

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.

Our Class B common stock automatically converted into our publicly traded common stock on January 18, 2022 (see Note 9).

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 and nine months ended September 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 months ended March 31, 2023 and 2022, 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 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.

Newly Adopted Accounting Pronouncements —There were no newly adopted accounting pronouncements during the three months ended March 31, 2023 that impacted the Company.

PHILLIPS EDISON & COMPANY

MARCH 31, 2023 FORM 10-Q

Reclassifications —Certain prior period amounts have been reclassified to conform to current year presentation in the consolidated statements of equity.

The reallocation of operating partnership interests is now reflected within Conversion of Noncontrolling Interests, as opposed to being presented as a separate financial statement line item.

There was no impact to the Company’s financial position as a result of this reclassification.

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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Rental income related to fixed lease

Three Months Ended March 31,

Rental income related to fixed lease payments (1)

$ 108,864 $ 101,510

Rental income related to variable

lease payments (1)(2)

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

35,763 33,467

Straight-line rent amortization (3)

3,752 2,365 8,617 6,627

Amortization of lease assets 1,216 992

7 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 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):

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of March 31, 2023, 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 2023 $ 326,815

1 unchanged sentence

Total $ 2,114,409

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

No single tenant comprised 10% or more of our aggregate annualized base rent (“ABR”) as of March 31, 2023.

As of March 31, 2023, our wholly-owned real estate investments in Florida and California represented 12.2 % and 10.9 % 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 (see “Hurricane Ian” in Note 4) and California real estate markets.

PHILLIPS EDISON & COMPANY

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).

MARCH 31, 2023 FORM 10-Q

REAL ESTATE ACTIVITY

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

Nine Months Ended September 30,

Three Months Ended March 31,

Number of properties acquired 4 3

Number of outparcels acquired (1)

Contract price $ 78,650 $ 100,400

1 unchanged sentence

69,431 101,440

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

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

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

(1) Total price of acquisitions includes closing costs less credits and assumed debt obligations.

The aggregate purchase price of the assets acquired during the three months ended March 31, 2023 and 2022 were allocated as follows (in thousands):

March 31, 2023 March 31, 2022

Land and improvements $ 25,079 $ 30,274

2 unchanged sentences

Above-market lease assets 7,111 708

Below-market debt 443 —

Total assets 83,078 104,567

Debt obligations, net 9,619 —

Below-market lease liabilities 4,028 3,127

1 unchanged sentence

Net assets acquired $ 69,431 $ 101,440

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

The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles and below-market debt acquired during the three months ended March 31, 2023 and 2022 are as follows (in years):

March 31, 2023 March 31, 2022

Acquired in-place leases 12 14

1 unchanged sentence

Acquired below-market leases 18 24

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

Assumed below-market debt 2 —

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

Nine Months Ended September 30,

Three Months Ended March 31,

Number of properties sold — 2

Number of outparcels sold (2)(3)

Contract price $ — $ 13,325

Proceeds from sale of real estate, net (1)(2)

27,286 180,340

Gain on sale of property, net (5)

(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.

(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.

Gain on disposal of property, net (2)

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

(2) Activity for the three months ended March 31, 2023 was primarily related to land acquired from us by local authorities.

PHILLIPS EDISON & COMPANY

MARCH 31, 2023 FORM 10-Q

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.

Based on our estimates at March 31, 2023, we expect to collect insurance proceeds of $ 1.0 million (net of deductibles and self-insurance of $ 1.7 million) equal to the replacement cost of the damaged properties.

During 2022, we recorded gross cumulative accelerated depreciation of $ 2.7 million, which was reduced by expected insurance recoveries, for damages sustained to the properties.

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

As of March 31, 2023, we have received no insurance recoveries and have a receivable balance of $ 1.0 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 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

The following is a summary of Other Assets, Net outstanding as of March 31, 2023 and December 31, 2022, excluding amounts related to assets classified as held for sale (in thousands):

March 31, 2023 December 31, 2022

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 $ 3.7 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.

(2) Net of $ 2.8 million and $ 3.0 million of general reserves for uncollectible amounts as of March 31, 2023 and December 31, 2022, respectively.

Receivables that were removed for tenants considered to be non-creditworthy were $ 5.9 million and $ 6.2 million as of March 31, 2023 and December 31, 2022, respectively.

(3) Net of $ 4.0 million and $ 4.2 million of receivables removed as of March 31, 2023 and December 31, 2022, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.

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SEPTEMBER 30, 2022 FORM 10-Q

MARCH 31, 2023 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 September 30, 2022 and December 31, 2021 (dollars in thousands):

The following is a summary of the outstanding principal balances and interest rates, which includes the effect of derivative financial instruments, for our debt obligations as of March 31, 2023 and December 31, 2022 (dollars in thousands):

Interest Rate (1)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Revolving credit facility SOFR + 1.1 %

$ 165,000 $ 79,000

Term loans (2)

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Weighted-average interest rate (3)

(1) Interest rates are as of September 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— 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.

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

(1) Interest rates are as of March 31, 2023.

(2) Our term loans carry an interest rate of the Secured Overnight Financing Rate (“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 SOFR.

(3) Includes the effects of derivative financial instruments that were effective as of March 31, 2023 and December 31, 2022 (see Notes 7 and 12).

2023 Debt Activity— During the three months ended March 31, 2023, we repaid $ 25.4 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, 2023 and December 31, 2022 is summarized below (in thousands):

March 31, 2023 December 31, 2022

As to interest rate:

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

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SEPTEMBER 30, 2022 FORM 10-Q

As of March 31, 2023, $ 755 million in variable-rate debt is hedged to a fixed rate for a weighted-average period of 1.3 years (see Notes 7 and 12).

DERIVATIVES AND HEDGING ACTIVITIES

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

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MARCH 31, 2023 FORM 10-Q

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

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

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

During the three months ended March 31, 2023 and 2022, 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 $ 15.5 million will be reclassified from AOCI as a decrease to Interest Expense, Net.

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

On March 15, 2023, we entered into an interest rate swap which has a notional amount of $ 200 million and swaps SOFR for a fixed rate of approximately 3.36 % effective September 15, 2023 and maturing September 1, 2026.

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, 2023 and December 31, 2022 (dollars in thousands):

March 31, 2023 December 31, 2022

Notional amount (1)

Fixed interest rate 1.2 % - 2.1 %

$ 755,000 $ 755,000

Fixed SOFR 1.2 % - 3.4 %

1.2 % - 2.8 %

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Weighted-average term (in years) 2.1 1.6

(1) Notional amount includes only interest rate swaps that were effective as of March 31, 2023 and December 31, 2022.

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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Amount of gain (loss) recognized in

Other Comprehensive Income

Three Months Ended March 31,

Amount of (loss) gain recognized in Other Comprehensive (Loss) Income

$ ( 1,952 ) $ 22,899

Amount of (gain) loss reclassified from

AOCI into Interest Expense, Net

Amount of (gain) loss reclassified from AOCI into Interest Expense, Net

( 4,547 ) 4,674

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 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.

As of March 31, 2023, 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 and approximated $ 0.2 million, are recorded in Accounts Payable and Other Liabilities on our consolidated balance sheets.

As of March 31, 2023, 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 $ 0.2 million.

COMMITMENTS AND CONTINGENCIES

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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

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2022 FORM 10-Q

to environmental remediation.

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

1 unchanged sentence

We also carry environmental liability insurance on our properties that provides limited coverage for any remediation liability and/or pollution liability for third-party bodily injury and/or property damage claims for which we may be liable.

We are not aware of any environmental matters which we believe are reasonably likely to have a material effect on our consolidated financial statements.

We are not currently aware of any environmental matters that we believe are reasonably likely to have a material adverse effect on our consolidated financial statements.

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

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We capitalize Silver Rock in accordance with applicable regulatory requirements.

Silver Rock established annual premiums based on the past loss experience of the insured properties.

Silver Rock establishes annual premiums based on the past loss experience of the insured properties.

An independent third party was engaged to perform an actuarial estimate of projected future claims, related deductibles, and projected future expenses necessary to fund associated risk management programs.

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 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.

PHILLIPS EDISON & COMPANY

MARCH 31, 2023 FORM 10-Q

As of March 31, 2023, we had four letters of credit outstanding totaling approximately $ 12.5 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 our Board of Directors (the “Board”).

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

1 unchanged sentence

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 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.

Concurrent with the reverse split, the Operating Partnership enacted a one-for-three reverse split of its outstanding OP units.

Neither the number of authorized shares nor the par value of the common stock were impacted.

As a result of the reverse split, every three shares of our common stock or OP units were automatically combined and converted into one issued and outstanding share of common stock or OP unit rounded to the nearest 1/100th share.

The reverse stock split impacted all common stock and OP units proportionately and had no impact on any stockholder’s percentage ownership of common stock.

Class B Common Stock —On June 18, 2021, our stockholders approved Articles of Amendment that effected the Recapitalization, wherein each share of our common stock outstanding at the time the amendment became effective was converted into one share of a newly created class of Class B common stock.

Our Class B common stock was identical to our common stock, except that it was not listed on a national securities exchange.

During the three months ended March 31, 2023 and 2022, no shares of our common stock were issued under the ATM program.

As of March 31, 2023, $ 159.9 million of common stock remained available for issuance under the ATM program.

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

Per the terms of the Recapitalization, on January 18, 2022, each share of our Class B common stock automatically converted into one share of our listed common stock.

1 unchanged sentence

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.

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

As part of the underwritten IPO, underwriters were granted an option exercisable within 30 days from July 14, 2021 to purchase up to an additional 2.6 million shares of common stock at the underwritten IPO price, less underwriting discounts and commissions.

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

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

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):

Distributions —We declared 2023 monthly distributions of $ 0.0933 per common share and Operating Partnership unit (“OP unit”) for each month beginning January 2023 through April 2023.

Distributions paid to stockholders and OP unit holders of record subsequent to March 31, 2023 were as follows (dollars in thousands, excluding per share amounts):

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

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 September 30, 2022 and December 31, 2021, we had approximately 14.0 million and 13.4 million outstanding OP units, respectively.

March 3/15/2023 4/3/2023 $ 0.0933 $ 12,226

April 4/17/2023 5/1/2023 0.0933 12,226

Convertible Noncontrolling Interests —As of March 31, 2023 and December 31, 2022, we had approximately 14.3 million and 14.1 million outstanding non-voting 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 September 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 March 31, 2023 and December 31, 2022 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 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

OP units converted into shares of

common stock (1)

528 — 1,133 28

Distributions paid on OP units (2)

The table below is a summary of our OP unit activity for the three months ended March 31, 2023 and 2022 (dollars and shares in thousands):

Three Months Ended March 31,

OP units converted into shares of common stock (1)

Distributions declared on OP units (2)

$ 4,073 $ 4,104

2 unchanged sentences

On January 18, 2022, each share of our Class B common stock automatically converted into one share of our listed common stock, and going forward, OP units will be converted into shares of our common stock at a 1 :1 ratio.

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

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.

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

Share Repurchase Program —On August 3, 2022, our Board approved a new share repurchase program of up to $ 250 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.

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2023 FORM 10-Q

EARNINGS PER SHARE

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

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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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Net income attributable to stockholders - basic

1 unchanged sentence

Net income attributable to convertible OP units (1)

1,135 1,929 4,181 2,739

Net income - diluted

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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 September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Recurring fees (1)

1 unchanged sentence

Realized performance income (2)

Transactional revenue and

reimbursements (3)

306 573 1,147 1,502

Transactional revenue and reimbursements (3)

Insurance premiums (4)

832 822 2,421 2,325

Total fees and management income $ 2,478 $ 2,461

1 unchanged sentence

(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.

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

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

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MARCH 31, 2023 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.

Edison, our Chairman and Chief Executive Officer, under which the Operating Partnership has agreed to indemnify such partners for tax liabilities that could accrue to them personally related to our potential disposition of certain properties within our portfolio.

Edison, our Chairman and Chief Executive Officer, under which the Operating Partnership agreed to indemnify such partners for tax liabilities that could accrue to them personally related to our potential disposition of certain properties within our portfolio.

The 2017 TPA will expire on October 4, 2027.

1 unchanged sentence

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

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.

As of March 31, 2023, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $ 147.8 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.

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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.

Other Related Party Matters — As of March 31, 2023, 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 September 30, 2022 and December 31, 2021.

We have no liability recorded on our consolidated balance sheets for the guaranty as of March 31, 2023 and December 31, 2022.

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.

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

September 30, 2022 December 31, 2021

The following is a summary of borrowings as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023 December 31, 2022

Recorded Principal Balance (1)

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Total $ 1,967,252 $ 1,847,047 $ 1,896,594 $ 1,772,548

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

(1) As of March 31, 2023 and December 31, 2022, respectively, recorded principal balances include:

(i) net deferred financing fees of $ 7.5 million and $ 8.0 million;

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

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

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

September 30, 2022 December 31, 2021

PHILLIPS EDISON & COMPANY

MARCH 31, 2023 FORM 10-Q

Recurring and Nonrecurring Fair Value Measurements —Our marketable securities 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, 2023 and the year ended December 31, 2022 were as follows (in thousands):

March 31, 2023 December 31, 2022

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

Marketable securities (1)

$ 8,219 $ — $ — $ 7,792 $ — $ —

Derivative assets (1)

1 unchanged sentence

Derivative liabilities (2)

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

— 184 — — — —

Impaired real estate assets, net (3)

$ — $ — $ — $ — $ 5,225 $ —

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

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

(2) We record derivative liabilities in Accounts Payable and Other Liabilities on our consolidated balance sheets.

(3) 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.

1 unchanged sentence

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

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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.

Derivative Instruments— As of March 31, 2023 and December 31, 2022, we had interest rate swaps that fixed SOFR 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 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.

However, as of March 31, 2023 and December 31, 2022, 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 $ 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 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 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.

There were no impairment charges recorded during the three months ended March 31, 2023 and 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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Primary impairment triggers for these land parcels are changes to our plans or intentions with regards to such properties, or planned dispositions at prices that are less than the current carrying values.

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

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

2022 2021 2022 2021

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2023 FORM 10-Q

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 March 31, 2023 and $ 1.8 million in expense for the three months ended March 31, 2022.

SUBSEQUENT EVENTS

2 unchanged sentences

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MARCH 31, 2023 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