What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-26 compared with 2024-04-26 · 197 added, 82 removed, 458 unchanged (38% of the section changed)

48 unchanged sentences

PHILLIPS EDISON & COMPANY

MARCH 31, 2024 FORM 10-Q

JUNE 30, 2024 FORM 10-Q

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

49 unchanged sentences

PHILLIPS EDISON & COMPANY

MARCH 31, 2024 FORM 10-Q

JUNE 30, 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 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.

As of June 30, 2024, we owned equity interests in 306 shopping centers, including 286 wholly-owned shopping centers and 20 shopping centers owned through one unconsolidated joint venture, which comprised approximately 34.8 million square feet in 31 states.

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

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

March 31, 2024 March 31, 2023

2024 BOND OFFERING —In May 2024, we completed the 2024 Bond Offering.

The purchase price paid for the 5.750% notes due 2034 was 98.576% of the principal amount, resulting in gross proceeds of $345.0 million.

The notes are fully and unconditionally guaranteed by us.

PORTFOLIO AND LEASING STATISTICS —Below are statistical highlights of our wholly-owned portfolio as of June 30, 2024 and 2023 (dollars and square feet in thousands):

June 30, 2024 June 30, 2023

Number of properties 286 274

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PHILLIPS EDISON & COMPANY

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

JUNE 30, 2024 FORM 10-Q

The following table details information for our unconsolidated joint venture as of June 30, 2024, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands):

June 30, 2024

Joint Venture Ownership Percentage Number of Properties ABR GLA

GRP I 14% 20 $ 32,147 2,213

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:

LEASE EXPIRATIONS —The following chart shows the aggregate scheduled lease expirations for our over 3,000 Neighbors, excluding our Neighbors who are occupying space on a temporary basis, after June 30, 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

MARCH 31, 2024 FORM 10-Q

JUNE 30, 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 March 31, 2024:

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

The following charts present the composition of our portfolio by Neighbor industry as of June 30, 2024:

PHILLIPS EDISON & COMPANY

MARCH 31, 2024 FORM 10-Q

JUNE 30, 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 March 31, 2024 (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 June 30, 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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Trader Joe's 2,727 0.5 % 122 0.4 % 9

Pet Supplies Plus 2,564 0.5 % 161 0.5 % 21

Subway Group 2,501 0.5 % 89 0.3 % 61

H-E-B 2,491 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

H&R Block, Inc.

2,417 0.5 % 95 0.3 % 56

United Parcel Service 2,401 0.5 % 84 0.3 % 67

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2,366 0.5 % 136 0.4 % 28

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

Total $ 158,018 32.1 % 14,868 46.4 % 568

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PHILLIPS EDISON & COMPANY

MARCH 31, 2024 FORM 10-Q

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

JUNE 30, 2024 FORM 10-Q

SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023

Three Months Ended

March 31, Favorable (Unfavorable)

June 30, Favorable (Unfavorable)

(Dollars in thousands) 2024 2023 $ %

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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, 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:

Below are explanations of the significant fluctuations in the results of operations for the three months ended June 30, 2024 and 2023:

Rental Income increased $9.3 million primarily as follows:

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▪ $4.6 million increase primarily due to a $0.45 increase in average minimum rent PSF and a 0.1% 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

▪ $1.3 million decrease due to the impact of lease straight-line rent adjustments;

▪ $0.5 million decrease primarily due to an increase in amounts reserved for Neighbors identified as credit risks;

▪ $0.4 million decrease primarily due to a decrease in tenant recovery income.

• $6.6 million increase primarily related to our acquisition activity, net of dispositions.

Property Operating Expenses increased $2.7 million primarily as follows:

• $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;

• $1.9 million increase from our same-center portfolio and corporate operating activities primarily due to higher compensation and insurance costs and an increase in common area maintenance spending;

• $0.8 million increase primarily due to our acquisition activity, net of dispositions.

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PHILLIPS EDISON & COMPANY

MARCH 31, 2024 FORM 10-Q

JUNE 30, 2024 FORM 10-Q

Interest Expense, Net:

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

• The $2.9 million increase was primarily due to increased interest rates in 2024.

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

Three Months Ended March 31,

Three Months Ended June 30,

Interest on unsecured term loans and senior notes, net $ 15,135 $ 11,538

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Non-cash amortization and other 2,105 1,724

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

Interest expense, net

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Weighted-average term (in years) as of end of period 4.8 3.9

(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 March 31,

Three Months Ended June 30,

Transaction and acquisition expenses $ (1,146) $ (1,261)

Federal, state, and local income tax expense (464) (119)

Equity in net (loss) income of unconsolidated investments

Other (loss) income

Other expense, net

$ (1,720) $ (904)

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SUMMARY OF OPERATING ACTIVITIES FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

Six Months Ended

June 30, Favorable (Unfavorable)

(Dollars in thousands) 2024 2023 $ %

Rental income $ 316,354 $ 296,708 $ 19,646 6.6 %

Fees and management income 5,087 5,024 63 1.3 %

Other property income 1,376 1,469 (93) (6.3) %

Total revenues 322,817 303,201 19,616 6.5 %

Operating Expenses:

Property operating 53,933 49,736 (4,197) (8.4) %

Real estate taxes 38,328 36,453 (1,875) (5.1) %

General and administrative 22,946 23,219 273 1.2 %

Depreciation and amortization 121,378 118,165 (3,213) (2.7) %

Total operating expenses 236,585 227,573 (9,012) (4.0) %

Interest expense, net

(46,956) (40,141) (6,815) (17.0) %

(Loss) gain on disposal of property, net

(15) 1,017 (1,032) (101.5) %

Other expense, net

(2,649) (1,659) (990) (59.7) %

36,612 34,845 1,767 5.1 %

Net income attributable to noncontrolling interests

(3,671) (3,775) 104 2.8 %

Net income attributable to stockholders

$ 32,941 $ 31,070 $ 1,871 6.0 %

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 June 30, 2024 and 2023” above.

Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, 2024 and 2023:

Rental Income increased $19.6 million as follows:

• $6.5 million increase related to our same-center portfolio primarily as follows:

▪ $9.3 million increase primarily due to a $0.48 increase in average minimum rent PSF and a 0.3% improvement in average occupancy;

partially offset by

▪ $1.6 million decrease due to the impact of lease straight-line rent adjustments;

▪ $1.7 million decrease primarily due to an increase in amounts reserved for Neighbors identified as credit risks.

• $13.1 million increase primarily related to our acquisition activity, net of dispositions.

Property Operating Expenses increased $4.2 million primarily as follows:

• $2.5 million increase from our same-center portfolio and corporate operating activities primarily due to higher compensation costs and an increase in common area maintenance spending;

• $1.7 million increase primarily due to our acquisition activity, net of dispositions.

Real Estate Tax Expenses:

• The $1.9 million increase in real estate tax expenses is primarily due to our acquisition activity, net of dispositions.

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

Interest Expense, Net:

• The $6.8 million increase was primarily due to higher interest rates in 2024.

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

Six Months Ended June 30,

Interest on unsecured term loans and senior notes, net $ 28,792 $ 22,830

Interest on secured debt 9,000 9,554

Interest on revolving credit facility, net 5,047 4,324

Non-cash amortization and other 4,118 3,442

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

Interest expense, net

$ 46,956 $ 40,141

Weighted-average interest rate as of end of period 4.2 % 3.9 %

Weighted-average term (in years) as of end of period 4.8 3.9

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

Other Expense, Net:

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

Six Months Ended June 30,

Transaction and acquisition expenses $ (2,320) $ (2,599)

Federal, state, and local income tax expense (601) (237)

Equity in net income of unconsolidated investments

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PHILLIPS EDISON & COMPANY

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) :

JUNE 30, 2024 FORM 10-Q

LEASING ACTIVITY —Below is a summary of leasing activity for our wholly-owned properties for the three months ended June 30, 2024 and 2023 (1) :

Total Deals Inline Deals

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ABR (in thousands) $ 18,947 $ 18,451 $ 9,398 $ 9,803

ABR PSF (all leases) $ 14.72 $ 14.39 $ 28.05 $ 25.62

ABR PSF prior to renewals (all leases) $ 13.24 $ 13.05 $ 23.79 $ 21.91

Percentage increase in ABR PSF (comparable leases only) 12.7 % 10.2 % 17.9 % 16.9 %

Cost PSF of executing renewals and options $ 0.18 $ 0.44 $ 0.65 $ 1.26

Number of comparable leases (2)

147 143 143 139

Comparable rent spread (2)

20.5 % 17.7 % 19.7 % 18.9 %

Weighted-average lease term (in years) 5.7 5.0 4.5 4.3

Portfolio retention rate 88.7 % 93.8 % 84.8 % 86.3 %

(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

JUNE 30, 2024 FORM 10-Q

Below is a summary of leasing activity for our wholly-owned properties for the six months ended June 30, 2024 and 2023 (1) :

Total Deals Inline Deals

2024 2023 2024 2023

Number of leases 177 192 163 186

Square footage (in thousands) 667 550 382 424

ABR (in thousands) $ 15,192 $ 11,858 $ 11,229 $ 10,349

ABR PSF $ 22.76 $ 21.56 $ 29.40 $ 24.42

ABR PSF prior to renewals $ 14.78 $ 15.70 $ 24.94 $ 22.33

Percentage increase in ABR PSF 10.3 % 10.6 % 15.7 % 15.0 %

Cost PSF of executing new leases $ 33.44 $ 31.22 $ 43.64 $ 35.62

Number of comparable leases 84 63 77 62

Comparable rent spread 31.9 % 26.1 % 34.3 % 26.2 %

Weighted-average lease term (in years) 8.7 8.1 8.3 7.1

Renewals and options:

Number of leases 345 356 306 324

Square footage (in thousands) 2,339 2,083 636 707

ABR (in thousands) $ 36,089 $ 32,362 $ 18,069 $ 18,131

ABR PSF (all leases) $ 15.43 $ 15.53 $ 28.43 $ 25.64

ABR PSF prior to renewals (all leases) $ 13.93 $ 14.07 $ 24.33 $ 22.10

Percentage increase in ABR PSF (comparable leases only) 11.4 % 10.4 % 16.6 % 16.0 %

Cost PSF of executing renewals and options $ 0.21 $ 0.48 $ 0.72 $ 1.22

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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 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.

For the three and six months ended June 30, 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

MARCH 31, 2024 FORM 10-Q

JUNE 30, 2024 FORM 10-Q

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

Three Months Ended March 31, Favorable (Unfavorable)

2024 2023 $ Change % Change

Three Months Ended June 30, Favorable (Unfavorable) Six Months Ended June 30, Favorable (Unfavorable)

Change 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 March 31,

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

2024 2023 2024 2023

$ 16,986 $ 16,209 $ 36,612 $ 34,845

Adjusted to exclude:

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Lease buyout income

(205) (74) (451) (429)

General and administrative expenses

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Loss (gain) on disposal of property, net

10 (75) 15 (1,017)

Other expense, net

1,720 904 2,649 1,659

Property operating expenses related to fees and management income 319 711 1,345 1,026

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

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

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

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Our Nareit FFO and Core FFO, as presented, may not be comparable to amounts calculated by other REITs.

PHILLIPS EDISON & COMPANY

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 March 31,

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

2024 2023 2024 2023

Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders

2 unchanged sentences

Loss (gain) on disposal of property, net

10 (75) 15 (1,017)

Adjustments related to unconsolidated joint ventures 661 645 1,310 1,343

4 unchanged sentences

Transaction and acquisition expenses 1,146 1,261 2,320 2,599

Gain on extinguishment or modification of debt and other, net (1) (9) (1) (9)

Amortization of unconsolidated joint venture basis differences 2 7 5 8

7 unchanged sentences

PHILLIPS EDISON & COMPANY

MARCH 31, 2024 FORM 10-Q

JUNE 30, 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 March 31, Year Ended December 31,

Three Months Ended June 30, Six Months Ended June 30, Year Ended December 31,

2024 2023 2024 2023 2023

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Realized performance income (1)

— — — (75) (75)

Adjusted EBITDA re

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

• proceeds from any ATM offering activities;

• proceeds from any equity offering activities;

• proceeds received from the disposition of properties;

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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

During the three months ended June 30, 2024, no

PHILLIPS EDISON & COMPANY

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.

JUNE 30, 2024 FORM 10-Q

shares of our common stock were issued under this ATM program.

During the six months ended June 30, 2024, we issued approximately 46,000 shares of our common stock at a gross weighted average price of $37.05 per share under this ATM program for net proceeds of $1.7 million, after approximately $17,000 in commissions.

During the three and six months ended June 30, 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

During the three and six months ended June 30, 2024, we issued no shares of our common stock under this ATM program.

As of June 30, 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 June 30, 2024 and December 31, 2023 (dollars in thousands):

June 30, 2024 December 31, 2023

Total debt obligations, gross $ 2,065,786 $ 1,986,735

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

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 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.

In May 2024, we completed the 2024 Bond Offering.

The purchase price paid for the 5.750% notes due 2034 was 98.576% of the principal amount, resulting in gross proceeds of $345.0 million.

The notes are fully and unconditionally guaranteed by us.

Debt Obligation Guarantees —At June 30, 2024, the Operating Partnership had issued and outstanding its 2.625% and 5.750% senior notes.

The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the 2.625% and 5.750% senior notes are fully and unconditionally guaranteed by us on a senior basis.

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

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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 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

FINANCIAL LEVERAGE RATIOS —We believe our net debt to Adjusted EBITDA re , net debt to total enterprise value, and debt covenant compliance as of June 30, 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 June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

Total debt, excluding discounts, market adjustments, and deferred financing expenses $ 2,090,144 $ 2,011,093

6 unchanged sentences

Total enterprise value $ 6,534,381 $ 6,961,499

(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.

(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 June 30, 2024 and December 31, 2023, respectively, and the closing market price per share of $32.71 and $36.48 as of June 30, 2024 and December 31, 2023, respectively.

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

PHILLIPS EDISON & COMPANY

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

JUNE 30, 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 June 30, 2024 and December 31, 2023 (dollars in thousands):

June 30, 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 three months ended March 31, 2024 and 2023, we had gross capital spend of $12.9 million and $23.9 million, respectively.

During the six months ended June 30, 2024 and 2023, we had gross capital spend of $30.9 million and $47.6 million, respectively.

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

Three Months Ended March 31,

Six Months Ended June 30,

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 $1.9 million and $0.2 million for property damage claims for the three months ended March 31, 2024 and 2023, respectively.

(2) Amounts reported are net of insurance proceeds of $2.8 million and $1.9 million for property damage claims for the six months ended June 30, 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.

4 unchanged sentences

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

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

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

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

PHILLIPS EDISON & COMPANY

MARCH 31, 2024 FORM 10-Q

Three Months Ended March 31,

Six Months Ended June 30,

Number of properties acquired 4 4

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

(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.

(2) During the six months ended June 30, 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.

Subsequent to June 30, 2024, we acquired one property and one outparcel for $11.3 million.

Property Dispositions —We sold no properties during the six months ended June 30, 2024, but we recognized a minimal loss on disposal of property due to miscellaneous write-off activity and expenses related to previous and future potential dispositions.

During the six months ended June 30, 2023, we sold one property and two outparcels at a contract price of $6.3 million, received $7.1 million in proceeds, and recognized a gain on disposal of property of $1.0 million which was primarily due to land acquired from us by local authorities.

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 June 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 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.

CASH FLOW ACTIVITIES —As of June 30, 2024, we had cash and cash equivalents and restricted cash of $10.9 million, a net cash increase of $2.1 million during the six months ended June 30, 2024.

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

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 $ Change % Change

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(143,236) (107,003) (36,233) (33.9) %

Net cash provided by financing activities

Net cash provided by (used in) financing activities

3,707 (30,820) 34,527 112.0 %

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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 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.

Property operations during the six months ended June 30, 2024 were positively impacted by a $5.8 million, or 2.8%, improvement in Same-Center NOI as compared to the same period in 2023.

During the six months ended June 30, 2024, we had a net cash outlay of $17.7 million from changes in working capital as compared to a net cash outlay of $19.6 million during the same period in 2023.

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

• 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.

• Real estate acquisitions —During the six months ended June 30, 2024, our acquisitions resulted in a total cash outlay of $116.2 million, as compared to a total cash outlay of $69.5 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 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.

During the six months ended June 30, 2024, we paid $30.9 million for capital expenditures, a decrease of $16.7 million over the same period in 2023.

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

• Debt borrowings and payments —During the six months ended June 30, 2024, we had $70.7 million in net borrowings primarily as a result of our 2024 Bond Offering, net repayments under our revolving credit facility and our partial pay down of an outstanding term loan.

During the six months ended June 30, 2023, we had $43.5 million in net borrowings of debt primarily as a result of our borrowings under our revolving credit facility and early repayments of mortgage loans.

PHILLIPS EDISON & COMPANY

MARCH 31, 2024 FORM 10-Q

JUNE 30, 2024 FORM 10-Q

• Distributions to stockholders and OP unit holders —Cash used for distributions to common stockholders and OP unit holders decreased $7.3 million for the six months ended June 30, 2024 as compared to the same period in 2023, primarily due to the timing of 2024 distribution payments, partially offset by an increase in shares of common stock outstanding as a result of issuances under the ATM program and our distribution rate increase.

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