What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-04-26 compared with 2023-11-01 · 94 added, 231 removed, 446 unchanged (42% of the section changed)

48 unchanged sentences

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

MARCH 31, 2024 FORM 10-Q

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

49 unchanged sentences

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

MARCH 31, 2024 FORM 10-Q

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

17 unchanged sentences

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

As of September 30, 2023, we owned equity interests in 295 shopping centers, including 275 wholly-owned shopping centers and 20 shopping centers owned through one unconsolidated joint venture, which comprised approximately 33.6 million square feet in 31 states.

As of March 31, 2024, we owned equity interests in 304 shopping centers, including 284 wholly-owned shopping centers and 20 shopping centers owned through one unconsolidated joint venture, which comprised approximately 34.6 million square feet in 31 states.

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

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

With the monetization of the joint venture, we exceeded the targeted return and as such were paid compensation of $0.1 million and $2.7 million during the nine months ended September 30, 2023 and 2022, respectively, which is recorded in Fees and Management Income in our consolidated statements of operations.

We received no compensation during the three months ended September 30, 2023 and 2022.

PORTFOLIO AND LEASING STATISTICS —Below are statistical highlights of our wholly-owned portfolio as of September 30, 2023 and 2022 (dollars and square feet in thousands):

September 30, 2023 September 30, 2022

PORTFOLIO AND LEASING STATISTICS —Below are statistical highlights of our wholly-owned portfolio as of March 31, 2024 and 2023 (dollars and square feet in thousands):

March 31, 2024 March 31, 2023

Number of properties 284 275

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PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

The following table details information for our unconsolidated joint venture as of September 30, 2023, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):

September 30, 2023

MARCH 31, 2024 FORM 10-Q

The following table details information for our unconsolidated joint venture as of March 31, 2024, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):

March 31, 2024

Joint Venture Ownership Percentage Number of Properties ABR GLA

GRP I 14% 20 $ 31,891 2,213

LEASE EXPIRATIONS —The following chart shows the aggregate scheduled lease expirations, excluding our Neighbors who are occupying space on a temporary basis, after September 30, 2023 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture:

LEASE EXPIRATIONS —The following chart shows the aggregate scheduled lease expirations for our over 3000 Neighbors, excluding our Neighbors who are occupying space on a temporary basis, after March 31, 2024 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture:

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

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PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

MARCH 31, 2024 FORM 10-Q

PORTFOLIO TENANCY —We define national Neighbors as those Neighbors that operate in at least three states.

Regional Neighbors are defined as those Neighbors that have at least three locations in fewer than three states.

The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture, by Neighbor type as of September 30, 2023:

The following charts present the composition of our portfolio by Neighbor industry as of September 30, 2023:

The following charts present the composition of our portfolio by Neighbor industry as of March 31, 2024:

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

MARCH 31, 2024 FORM 10-Q

NECESSITY-BASED GOODS AND SERVICES —We define “necessity-based goods and services” as goods and services that are indispensable, necessary, or common for day-to-day living, or that tend to be inelastic (i.e., those for which the demand does not change based on a consumer’s income level).

We estimate that approximately 70% of our ABR, including the pro rata portion attributable to properties owned through our unconsolidated joint venture, is generated from Neighbors providing necessity-based goods and services.

TOP 20 NEIGHBORS —The following table presents our top 20 Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture, as of September 30, 2023 (dollars and square feet in thousands):

TOP 20 NEIGHBORS —The following table presents our top 20 Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture, as of March 31, 2024 (dollars and square feet in thousands):

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

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Dollar Tree 4,034 0.8 % 386 1.2 % 39

SUPERVALU 3,410 0.7 % 336 1.1 % 5

UNFI (SuperValu) 3,476 0.7 % 336 1.1 % 5

Starbucks Corporation 3,280 0.7 % 70 0.2 % 35

Trader Joe's 2,727 0.6 % 122 0.4 % 9

H-E-B 2,492 0.5 % 164 0.5 % 2

Lowe's 2,469 0.5 % 369 1.2 % 4

Subway Group 2,442 0.5 % 87 0.3 % 60

Pet Supplies Plus 2,423 0.5 % 156 0.5 % 20

United Parcel Service 2,354 0.5 % 83 0.3 % 66

Anytime Fitness, Inc.

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Food 4 Less (PAQ) 2,305 0.5 % 118 0.4 % 2

Pet Supplies Plus 2,253 0.5 % 148 0.5 % 19

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

United Parcel Service 2,237 0.5 % 80 0.3 % 64

Office Depot 2,237 0.5 % 179 0.6 % 8

Total $ 156,420 32.3 % 14,776 46.6 % 508

9 unchanged sentences

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

MARCH 31, 2024 FORM 10-Q

SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

Three Months Ended

September 30, Favorable (Unfavorable)

March 31, Favorable (Unfavorable)

(Dollars in thousands) 2024 2023 $ %

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(23,335) (19,466) (3,869) (19.9) %

Gain (loss) on disposal of property, net 53 (10) 63 NM

(Loss) gain on disposal of property, net (5) 942 (947) (100.5) %

Other expense, net

5 unchanged sentences

$ 17,670 $ 16,619 $ 1,051 6.3 %

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

Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities.

We define our same-center portfolio as the 270 properties that were owned and operational prior to January 1, 2023.

We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing primarily to real estate asset activity occurring after December 31, 2021, which includes five properties disposed of and twelve properties acquired.

Below are explanations of the significant fluctuations in the results of operations for the three months ended September 30, 2023 and 2022:

We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing primarily to real estate asset activity occurring after December 31, 2022, which includes one property disposed of and thirteen properties acquired.

Below are explanations of the significant fluctuations in the results of operations for the three months ended March 31, 2024 and 2023:

Rental Income increased $10.3 million primarily as follows:

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▪ $4.6 million increase primarily due to a $0.50 increase in average minimum rent PSF and a 0.6% improvement in average occupancy;

▪ $1.6 million increase primarily due to an increase in recoverable income attributed to an increase in insurance costs, common area maintenance spending, and real estate taxes as well as a 1.2% improvement in average occupancy;

partially offset by

▪ $1.9 million decrease primarily due to collections in 2022 of amounts previously reserved.

Collections continue to be stable in 2023 as we have fewer Neighbors identified as a credit risk in 2023 as compared to 2022.

• $3.7 million increase primarily related to our acquisition activity, net of dispositions.

Property Operating Expenses increased $1.2 million primarily as follows:

• $0.6 million increase from our same-center portfolio and corporate operating activities primarily due to higher insurance costs;

• $0.6 million increase primarily due to our acquisition activity, net of dispositions.

Real Estate Tax Expenses:

• The $1.0 million increase in real estate tax expenses is primarily due to higher 2023 tax assessments and our acquisition activity, net of dispositions.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

Interest Expense, Net:

• The $4.0 million increase was primarily due to higher interest rates in 2023.

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

Three Months Ended September 30,

Interest on unsecured term loans and senior notes, net $ 12,216 $ 10,492

Interest on secured debt 4,536 5,080

Interest on revolving credit facility, net 2,212 443

Non-cash amortization and other 2,183 1,558

Loss (gain) on extinguishment or modification of debt and other, net (1)

Interest expense, net

$ 21,522 $ 17,569

Weighted-average interest rate as of end of period 4.1 % 3.3 %

Weighted-average term (in years) as of end of period 4.2 4.6

(1) Includes defeasance fees related to early repayments of debt.

Other Expense, Net:

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

Three Months Ended September 30,

Transaction and acquisition expenses $ (580) $ (3,740)

Impairment of investment in third parties (see Note 11) (3,000) —

Federal, state, and local income tax expense (120) (179)

Equity in net income of unconsolidated joint ventures

Other (1,298) (26)

Other expense, net

$ (4,883) $ (3,916)

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

SUMMARY OF OPERATING ACTIVITIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

Nine Months Ended

September 30, Favorable (Unfavorable)

(Dollars in thousands) 2023 2022 $ %

Rental income $ 446,274 $ 418,835 $ 27,439 6.6 %

Fees and management income 7,192 9,323 (2,131) (22.9) %

Other property income 2,209 2,175 34 1.6 %

Total revenues 455,675 430,333 25,342 5.9 %

Operating Expenses:

Property operating 74,010 69,261 (4,749) (6.9) %

Real estate taxes 55,481 52,005 (3,476) (6.7) %

General and administrative 33,604 33,751 147 0.4 %

Depreciation and amortization 176,871 178,008 1,137 0.6 %

Total operating expenses 339,966 333,025 (6,941) (2.1) %

Interest expense, net

(61,663) (52,895) (8,768) (16.6) %

Gain on disposal of property, net

1,070 4,151 (3,081) (74.2) %

Other expense, net

(6,542) (9,738) 3,196 32.8 %

48,574 38,826 9,748 25.1 %

Net income attributable to noncontrolling interests

(5,259) (4,181) (1,078) (25.8) %

Net income attributable to stockholders

$ 43,315 $ 34,645 $ 8,670 25.0 %

For details surrounding our basis for analyzing significant fluctuations in our results of operations as well as definitions related to our portfolio of real estate assets, please see “Summary of Operating Activities for the Three Months Ended September 30, 2023 and 2022” above.

Below are explanations of the significant fluctuations in the results of operations for the nine months ended September 30, 2023 and 2022:

Rental Income increased $27.4 million as follows:

• $14.8 million increase related to our same-center portfolio primarily as follows:

▪ $12.6 million increase primarily due to a $0.40 increase in average minimum rent PSF and a 1.1% improvement in average occupancy;

▪ $5.9 million increase primarily due to an increase in recoverable income attributed to an increase in real estate taxes, common area maintenance spending, and insurance costs as well as a 1.1% improvement in average occupancy;

▪ $0.8 million increase primarily due to an increase in recoverable income attributed to an increase in common area maintenance spending as well as a 0.6% improvement in average occupancy;

partially offset by

▪ $1.9 million decrease primarily due to collections in 2022 of amounts previously reserved.

Collections continue to be stable in 2023 as we have fewer Neighbors identified as a credit risk in 2023 as compared to 2022;

▪ $1.3 million decrease primarily due to lower lease buyout income.

▪ $1.2 million decrease primarily due to an increase in amounts reserved for Neighbors identified as credit risks.

• $6.5 million increase primarily related to our acquisition activity, net of dispositions.

Fees and Management Income:

• The $2.1 million decrease in fees and management income was primarily due to $0.1 million realized performance income in 2023 as compared to $2.7 million in 2022 for the achievement of certain performance targets related to our NRP joint venture.

Property Operating Expenses increased $1.5 million primarily as follows:

• $2.9 million increase from our same-center portfolio and corporate operating activities primarily due to increases in recoverable expenses attributed to higher common area maintenance spending, along with higher insurance costs;

• $0.6 million increase from our same-center portfolio and corporate operating activities primarily due to an increase in recoverable expenses attributed to common area maintenance costs;

• $0.9 million increase primarily due to our acquisition activity, net of dispositions.

Real Estate Tax Expenses:

• The $3.5 million increase in real estate tax expenses is primarily due to our acquisition activity, net of dispositions, and less appeal settlement income than 2022.

• The $0.8 million increase in real estate tax expenses is primarily due to our acquisition activity, net of dispositions.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

MARCH 31, 2024 FORM 10-Q

Interest Expense, Net:

• The $8.8 million increase was primarily due to higher interest rates in 2023 partially offset by lower loss on extinguishment or modification of debt.

• The $3.9 million increase was primarily due to increased interest rates and debt outstanding in 2024.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Interest on unsecured term loans and senior notes, net $ 13,657 $ 11,292

2 unchanged sentences

Non-cash amortization and other 2,013 1,718

Loss on extinguishment or modification of debt and other, net (1)

Interest expense, net

2 unchanged sentences

Weighted-average term (in years) as of end of period 3.6 4.1

(1) Includes defeasance fees related to early repayments of debt.

Gain on Disposal of Property, Net:

• The $3.1 million decrease was primarily related to the sale of land acquired by local authorities, as well as the sale of one property and two outparcels with a net gain of $1.1 million during the nine months ended September 30, 2023, as compared to the sale of three properties and three outparcels with a net gain of $4.2 million during the nine months ended September 30, 2022 (see Note 4).

Other Expense, Net:

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

Nine Months Ended September 30,

Three Months Ended March 31,

Transaction and acquisition expenses $ (1,174) $ (1,338)

Impairment of investment in third parties (see Note 11) (3,000) —

Federal, state, and local income tax expense (137) (118)

Equity in net income of unconsolidated joint ventures

Increase in fair value of earn-out liability (see Note 12) — (1,809)

Other (316) (939)

Equity in net income of unconsolidated investments

Other income 353 611

Other expense, net

1 unchanged sentence

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

LEASING ACTIVITY —Below is a summary of leasing activity for our wholly-owned properties for the three months ended September 30, 2023 and 2022 (1) :

Total Deals Inline Deals

2023 2022 2023 2022

Number of leases 82 99 78 97

Square footage (in thousands) 279 240 166 201

ABR (in thousands) $ 5,676 $ 5,417 $ 4,473 $ 4,990

ABR PSF $ 20.36 $ 22.57 $ 26.86 $ 24.78

Cost PSF of executing new leases $ 29.01 $ 41.02 $ 36.92 $ 43.30

Number of comparable leases 43 41 42 41

Comparable rent spread 26.3 % 21.3 % 25.3 % 21.3 %

Weighted-average lease term (in years) 10.3 7.5 7.1 7.0

Renewals and options:

Number of leases 149 141 138 124

Square footage (in thousands) 660 921 328 307

ABR (in thousands) $ 12,657 $ 13,591 $ 8,688 $ 7,408

ABR PSF $ 19.17 $ 14.76 $ 26.47 $ 24.12

ABR PSF prior to renewals $ 17.21 $ 13.55 $ 22.84 $ 21.26

Percentage increase in ABR PSF 11.4 % 9.0 % 15.9 % 13.4 %

Cost PSF of executing renewals and options $ 0.41 $ 0.56 $ 0.82 $ 1.66

Number of comparable leases (2)

109 104 107 102

Comparable rent spread (2)

16.9 % 15.5 % 17.2 % 15.3 %

Weighted-average lease term (in years) 4.6 4.2 4.3 4.5

Portfolio retention rate 93.1 % 88.5 % 87.5 % 79.9 %

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

(2) Excludes exercise of options.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

Below is a summary of leasing activity for our wholly-owned properties for the nine months ended September 30, 2023 and 2022 (1) :

MARCH 31, 2024 FORM 10-Q

LEASING ACTIVITY —Below is a summary of leasing activity for our wholly-owned properties for the three months ended March 31, 2024 and 2023 (1) :

Total Deals Inline Deals

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

For the three and nine months ended September 30, 2023 and 2022, Same-Center NOI represents the NOI for the 262 properties that were wholly-owned and operational for the entire portion of all comparable reporting periods.

For the three months ended March 31, 2024 and 2023, Same-Center NOI represents the NOI for the 270 properties that were wholly-owned and operational for the entire portion of all comparable reporting periods.

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

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

MARCH 31, 2024 FORM 10-Q

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

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

Change 2023 2022 $ Change % Change

Three Months Ended March 31, Favorable (Unfavorable)

2024 2023 $ Change % Change

Rental income (1)

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

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

2023 2022 2023 2022

Three Months Ended March 31,

$ 19,626 $ 18,636

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Lease buyout income

(587) (221) (1,016) (2,362)

General and administrative expenses

3 unchanged sentences

Interest expense, net 23,335 19,466

(Gain) loss on disposal of property, net

(53) 10 (1,070) (4,151)

Loss (gain) on disposal of property, net

Other expense, net

4,883 3,916 6,542 9,738

Property operating expenses related to fees and management income 1,026 315

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Total Same-Center NOI $ 106,743 $ 102,888

Period-end Same-Center Leased Occupancy % 97.5 % 97.6 %

(1) Includes straight-line rent adjustments for Neighbors for whom revenue is being recorded on a cash basis.

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PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

MARCH 31, 2024 FORM 10-Q

The following table presents our calculation of Nareit FFO and Core FFO (in thousands, except per share amounts):

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

2023 2022 2023 2022

Three Months Ended March 31,

Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders

1 unchanged sentence

Depreciation and amortization of real estate assets 59,776 57,953

(Gain) loss on disposal of property, net

(53) 10 (1,070) (4,151)

Loss (gain) on disposal of property, net

Adjustments related to unconsolidated joint ventures 649 698

3 unchanged sentences

Depreciation and amortization of corporate assets 430 545

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

Impairment of investment in third parties 3,000 — 3,000 —

Transaction and acquisition expenses 1,174 1,338

Loss (gain) on extinguishment or modification of debt and

other, net 375 (4) 366 1,025

Amortization of unconsolidated joint venture basis differences 3 1

Realized performance income (1)

— — (75) (2,742)

Core FFO attributable to stockholders and OP unit holders $ 81,663 $ 78,154

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PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

MARCH 31, 2024 FORM 10-Q

EBITDA re AND ADJUSTED EBITDA re —We use EBITDA re and Adjusted EBITDA re as additional measures of operating performance which allow us to compare earnings independent of capital structure, determine debt service and fixed cost coverage, and measure enterprise value.

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

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

Three Months Ended March 31, Year Ended December 31,

2024 2023 2023

3 unchanged sentences

Interest expense, net 23,335 19,466 84,232

(Gain) loss on disposal of property, net (53) 10 (1,070) (4,151) (7,517)

Impairment of real estate assets — — — — 322

Loss (gain) on disposal of property, net

5 (942) (1,110)

Federal, state, and local tax expense 137 118 438

4 unchanged sentences

Impairment of investment in third parties — — 3,000

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

Transaction and acquisition expenses 1,174 1,338 5,675

1 unchanged sentence

Realized performance income (1)

— — (75) (2,742) (2,742)

Adjusted EBITDA re

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

ATM Program —In February 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 could 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 March 31, 2024, we issued approximately 46,000 shares of our common stock at a gross weighted average price of $37.05 per share under this

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

ATM Program —In 2022, we commenced the ATM program through which we may offer and sell shares of our common stock having an aggregate offering price of up to $250 million.

During the three and nine months ended September 30, 2023, we issued 2.0 million shares of our common stock under the ATM program for net proceeds of $70.1 million, after approximately $0.7 million in commissions.

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, 2023, approximately $89.0 million of common stock remained available for issuance under the ATM program.

DEBT —The following table summarizes information about our debt as of September 30, 2023 and December 31, 2022 (dollars in thousands):

September 30, 2023 December 31, 2022

MARCH 31, 2024 FORM 10-Q

ATM program for net proceeds of $1.7 million, after approximately $17,000 in commissions.

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

In February 2024, we and the Operating Partnership entered into a new sales agreement relating to the potential sale of shares of common stock pursuant to a continuous offering program, which replaced the previous agreement.

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.

No shares were issued under the current ATM program during the three months ended March 31, 2024.

As of March 31, 2024, approximately $250 million of common stock remained available for issuance under the current ATM program.

DEBT —The following table summarizes information about our debt as of March 31, 2024 and December 31, 2023 (dollars in thousands):

March 31, 2024 December 31, 2023

Total debt obligations, gross $ 2,031,701 $ 1,986,735

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

On July 31, 2023, we amended three senior unsecured term loans with a total notional amount of $475.0 million scheduled to mature during 2024.

The amended three senior unsecured term loans have a total notional amount of $484.8 million.

The $161.8 million unsecured term loan is priced at SOFR plus 1.35% and is scheduled to mature on January 31, 2026 extendable with two one-year options to 2028.

The $158.0 million and $165.0 million unsecured term loans are priced at SOFR plus 1.35% and mature on January 31, 2027.

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

At September 30, 2023, the Operating Partnership had issued and outstanding its 2.625% senior notes.

At March 31, 2024, the Operating Partnership had issued and outstanding its 2.625% senior notes.

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

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

FINANCIAL LEVERAGE RATIOS —We believe our net debt to Adjusted EBITDA re , net debt to total enterprise value, and debt covenant compliance as of September 30, 2023 allow us access to future borrowings as needed in the near term.

The following table presents our calculation of net debt and total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our unconsolidated joint ventures, as of September 30, 2023 and December 31, 2022 (in thousands):

September 30, 2023 December 31, 2022

FINANCIAL LEVERAGE RATIOS —We believe our net debt to Adjusted EBITDA re , net debt to total enterprise value, and debt covenant compliance as of March 31, 2024 allow us access to future borrowings as needed in the near term.

The following table presents our calculation of net debt and total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our unconsolidated joint ventures, as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

Total debt, excluding discounts, market adjustments, and deferred financing expenses $ 2,056,059 $ 2,011,093

6 unchanged sentences

Total enterprise value $ 6,930,898 $ 6,961,499

(1) Total equity market capitalization is calculated as diluted shares multiplied by the closing market price per share, which includes 133.6 million and 131.2 million diluted shares as of September 30, 2023 and December 31, 2022, respectively, and the closing market price per share of $33.54 and $31.84 as of September 30, 2023 and December 31, 2022, respectively.

(1) Total equity market capitalization is calculated as diluted shares multiplied by the closing market price per share, which includes 136.1 million and 135.8 million diluted shares as of March 31, 2024 and December 31, 2023, respectively, and the closing market price per share of $35.87 and $36.48 as of March 31, 2024 and December 31, 2023, respectively.

(2) Fully diluted shares include common stock and OP units.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

The following table presents our calculation of net debt to Adjusted EBITDA re and net debt to total enterprise value as of September 30, 2023 and December 31, 2022 (dollars in thousands):

September 30, 2023 December 31, 2022

MARCH 31, 2024 FORM 10-Q

The following table presents our calculation of net debt to Adjusted EBITDA re and net debt to total enterprise value as of March 31, 2024 and December 31, 2023 (dollars in thousands):

March 31, 2024 December 31, 2023

Net debt to Adjusted EBITDA re - annualized :

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

During the nine months ended September 30, 2023 and 2022, we had capital spend of $74.3 million.

During the three months ended March 31, 2024 and 2023, we had gross capital spend of $12.9 million and $23.9 million, respectively.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Capital expenditures for real estate:

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

(2) Amounts reported are net of insurance proceeds of $2.3 million for property damage claims for the nine months ended September 30, 2023.

(2) Amounts reported are net of insurance proceeds of $1.9 million and $0.2 million for property damage claims for the three months ended March 31, 2024 and 2023, respectively.

We anticipate that obligations related to capital improvements, as well as redevelopment and development, in 2024 can be met with cash flows from operations, cash flows from dispositions, or borrowings on our unsecured revolving credit facility.

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

Nine Months Ended September 30,

PHILLIPS EDISON & COMPANY

MARCH 31, 2024 FORM 10-Q

Three Months Ended March 31,

Number of properties acquired 2 4

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

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

Subsequent to September 30, 2023, we acquired one property and one outparcel for $19.4 million

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

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

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

Nine Months Ended September 30,

Number of properties sold 1 3

Number of outparcels sold 2 3

Contract price $ 6,250 $ 28,737

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

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 nine months ended September 30, 2023 includes land acquired from us by local authorities.

DISTRIBUTIONS —We declared and paid 2023 monthly distributions of $0.0933 per common share and OP unit, or $1.12 annualized, for each month beginning January 2023 through August 2023.

On September 1, 2023, the Board authorized a 4.5% increase of our monthly distribution rate to $0.0975 per common share and OP unit.

We declared and paid 2023 monthly distributions of $0.0975 per common share and OP unit, or $1.17 annualized, for September 2023 and October 2023.

(2) During the three months ended March 31, 2024, we acquired an outparcel adjacent to a property that is owned by our unconsolidated joint venture, GRP I.

Therefore, the outparcel is an addition to our total property count.

(3) Total price of acquisitions includes closing costs less credits and assumed liabilities.

DISTRIBUTIONS —In 2024, we declared and paid monthly distributions of $0.0975 per common share and OP unit, or $1.17 annualized, for each month beginning January 2024 through March 2024.

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

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

CASH FLOW ACTIVITIES —As of September 30, 2023, we had cash and cash equivalents and restricted cash of $8.2 million, a net cash decrease of $9.1 million during the nine months ended September 30, 2023.

CASH FLOW ACTIVITIES —As of March 31, 2024, we had cash and cash equivalents and restricted cash of $10.1 million, a net cash increase of $1.2 million during the three months ended March 31, 2024.

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

Nine Months Ended September 30,

Three Months Ended March 31,

2024 2023 $ Change % Change

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(66,637) (91,418) 24,781 27.1 %

Net cash used in financing activities

Net cash provided by financing activities

4,718 23,270 (18,552) (79.7) %

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• Property operations —Most of our operating cash comes from rental and tenant recovery income received less property operating expenses, real estate taxes, and general and administrative costs paid.

Property operations during the nine months ended September 30, 2023 were positively impacted by a $12.7 million, or 4.5%, improvement in Same-Center NOI as compared to the same period in 2022.

During the nine months ended September 30, 2023, we had a net cash outlay of $7.0 million from changes in working capital as compared to a net cash inflow of $9.3 million during the same period in 2022.

This change was primarily driven by higher receivables for reimbursable Neighbor costs and an increase in real estate tax payments.

Property operations during the three months ended March 31, 2024 were positively impacted by a $3.9 million, or 3.7%, improvement in Same-Center NOI as compared to the same period in 2023.

During the three months ended March 31, 2024, we had a net cash outlay of $16.2 million from changes in working capital as compared to a net cash outlay of $11.3 million during the same period in 2023.

This change was primarily driven by higher Neighbor receivables, including unbilled amounts for annual recoveries, and lower corporate accounts payable balances.

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

• Real estate acquisitions —During the nine months ended September 30, 2023, our acquisitions resulted in a total cash outlay of $83.1 million, as compared to a total cash outlay of $229.9 million during the same period in 2022.

• Real estate dispositions —During the nine months ended September 30, 2023, our dispositions resulted in a net cash inflow of $7.1 million, as compared to a net cash inflow of $27.3 million during the same period in 2022.

• Real estate acquisitions —During the three months ended March 31, 2024, our acquisitions resulted in a total cash outlay of $56.2 million, as compared to a total cash outlay of $69.4 million during the same period in 2023.

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

During the nine months ended September 30, 2023 and 2022, we paid $74.3 million for capital expenditures.

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

• Debt borrowings and payments —During the nine months ended September 30, 2023, we had $39.5 million in net repayment of debt primarily as a result of early repayments of mortgage loans.

During the nine months ended September 30, 2022, we had $25.6 million in net repayment of debt primarily as a result of early repayments of mortgage loans, partially offset by our net borrowings under our revolving credit facility.

During the three months ended March 31, 2024, we paid $12.9 million for capital expenditures, a decrease of $10.9 million over the same period in 2023.

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

• Debt borrowings and payments —During the three months ended March 31, 2024, we had $45.0 million in net borrowings primarily as a result of our borrowings under our revolving credit facility.

During the three months ended March 31, 2023, we had $60.5 million in net borrowings of debt primarily as a result of our borrowings under our revolving credit facility and early repayments of mortgage loans.

• Distributions to stockholders and OP unit holders —Cash used for distributions to common stockholders and OP unit holders increased $3.0 million for the three months ended March 31, 2024 as compared to the same period in 2023, primarily due to an increase in shares of common stock outstanding as a result of issuances under the ATM program and our distribution rate increase.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2023 FORM 10-Q

• Issuance of common stock— During the nine months ended September 30, 2023, we issued 2.0 million shares of our common stock under the ATM program for net proceeds of $70.1 million, after approximately $0.7 million in commissions.

• Distributions to stockholders and OP unit holders —Cash used for distributions to common stockholders and OP unit holders increased $5.3 million for the nine months ended September 30, 2023 as compared to the same period in 2022, primarily due to an increase in distribution rates and an increase in shares of common stock outstanding.

MARCH 31, 2024 FORM 10-Q

CRITICAL ACCOUNTING ESTIMATES

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis