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Item 1. Financial Statements

2024-10-25 compared with 2024-07-26 · 150 added, 127 removed, 470 unchanged (37% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2024 AND DECEMBER 31, 2023

AS OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

(Condensed and Unaudited)

(In thousands, except per share amounts)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Investment in real estate:

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Commitments and contingencies (see Note 8)

Preferred stock, $ 0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at June 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value per share, 1,000,000 shares authorized, 122,408 and 122,024 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Preferred stock, $ 0.01 par value per share, 10,000 shares authorized, zero shares issued and outstanding at September 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value per share, 1,000,000 shares authorized, 122,615 and 122,024 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital (“APIC”) 3,558,407 3,546,838

Accumulated other comprehensive income (“AOCI”)

11,356 10,523

Accumulated deficit ( 1,312,303 ) ( 1,248,273 )

5 unchanged sentences

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Condensed and Unaudited)

(In thousands, except per share amounts)

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

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

2024 2023 2024 2023

21 unchanged sentences

Net income $ 12,903 $ 13,729 $ 49,515 $ 48,574

Other comprehensive (loss) income:

Other comprehensive loss:

Change in unrealized value on interest rate swaps ( 10,505 ) ( 1,424 ) ( 9,596 ) ( 1,361 )

2 unchanged sentences

Change in unrealized value on interest rate swaps attributable to noncontrolling interests 1,059 155 967 147

Reallocation of comprehensive income upon conversion of noncontrolling interests 6 28 16 1

Reallocation of comprehensive (loss) income upon conversion of noncontrolling interests ( 3 ) 56 13 57

Comprehensive income attributable to stockholders $ 2,153 $ 11,032 $ 35,927 $ 42,158

1 unchanged sentence

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Condensed and Unaudited)

(In thousands, except per share amounts)

Three Months Ended June 30, 2024 and 2023

Three Months Ended September 30, 2024 and 2023

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

Shares Amount

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

Balance at July 1, 2023 117,443 $ 1,174 $ 3,387,764 $ 21,059 $ ( 1,204,714 ) $ 2,205,283 $ 356,465 $ 2,561,748

Issuance of common stock 1,991 20 70,833 — — 70,853 — 70,853

Offering costs, discounts, and commissions — — ( 854 ) — — ( 854 ) — ( 854 )

Change in unrealized value on interest rate swaps — — — ( 1,269 ) — ( 1,269 ) ( 155 ) ( 1,424 )

5 unchanged sentences

Net income — — — — 12,245 12,245 1,484 13,729

Balance at June 30, 2023 117,443 $ 1,174 $ 3,387,764 $ 21,059 $ ( 1,204,714 ) $ 2,205,283 $ 356,465 $ 2,561,748

Balance at April 1, 2024 122,323 $ 1,223 $ 3,551,678 $ 13,144 $ ( 1,266,541 ) $ 2,299,504 $ 337,894 $ 2,637,398

Balance at September 30, 2023 119,578 $ 1,195 $ 3,461,981 $ 19,846 $ ( 1,226,379 ) $ 2,256,643 $ 350,849 $ 2,607,492

Balance at July 1, 2024 122,408 $ 1,224 $ 3,554,309 $ 11,356 $ ( 1,287,271 ) $ 2,279,618 $ 335,782 $ 2,615,400

Change in unrealized value on interest rate swaps — — — ( 9,446 ) — ( 9,446 ) ( 1,059 ) ( 10,505 )

5 unchanged sentences

Net income — — — — 11,602 11,602 1,301 12,903

Balance at June 30, 2024 122,408 $ 1,224 $ 3,554,309 $ 11,356 $ ( 1,287,271 ) $ 2,279,618 $ 335,782 $ 2,615,400

Balance at September 30, 2024 122,615 $ 1,226 $ 3,558,407 $ 1,907 $ ( 1,312,303 ) $ 2,249,237 $ 329,821 $ 2,579,058

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Condensed and Unaudited)

(In thousands, except per share amounts)

Six Months Ended June 30, 2024 and 2023

Nine Months Ended September 30, 2024 and 2023

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

1 unchanged sentence

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

Issuance of common stock 1,991 20 70,833 — — 70,853 — 70,853

Offering costs, discounts, and commissions — — ( 854 ) — — ( 854 ) — ( 854 )

Change in unrealized value on interest rate swaps — — — ( 1,214 ) — ( 1,214 ) ( 147 ) ( 1,361 )

5 unchanged sentences

Net income — — — — 43,315 43,315 5,259 48,574

Balance at June 30, 2023 117,443 $ 1,174 $ 3,387,764 $ 21,059 $ ( 1,204,714 ) $ 2,205,283 $ 356,465 $ 2,561,748

Balance at September 30, 2023 119,578 $ 1,195 $ 3,461,981 $ 19,846 $ ( 1,226,379 ) $ 2,256,643 $ 350,849 $ 2,607,492

Balance at January 1, 2024 122,024 $ 1,220 $ 3,546,838 $ 10,523 $ ( 1,248,273 ) $ 2,310,308 $ 343,043 $ 2,653,351

7 unchanged sentences

Net income — — — — 44,543 44,543 4,972 49,515

Balance at June 30, 2024 122,408 $ 1,224 $ 3,554,309 $ 11,356 $ ( 1,287,271 ) $ 2,279,618 $ 335,782 $ 2,615,400

Balance at September 30, 2024 122,615 $ 1,226 $ 3,558,407 $ 1,907 $ ( 1,312,303 ) $ 2,249,237 $ 329,821 $ 2,579,058

See notes to consolidated financial statements.

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Condensed and Unaudited)

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

6 unchanged sentences

Amortization of debt and derivative adjustments 2,453 2,143

Loss on extinguishment or modification of debt, net 1,230 367

Loss (gain) on disposal of property, net 34 ( 1,070 )

Impairment of investment in third parties — 3,000

Straight-line rent ( 6,588 ) ( 8,089 )

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(Payments) proceeds from sale of real estate, net ( 26 ) 7,143

Investment in unconsolidated joint ventures ( 3,626 ) —

Return of investment in unconsolidated joint ventures 1,513 1,582

5 unchanged sentences

Payments on revolving credit facility ( 517,000 ) ( 293,000 )

Proceeds from notes payable 341,698 —

Proceeds from notes and loans payable 683,108 58,000

Payments on mortgages and loans payable ( 407,745 ) ( 100,479 )

1 unchanged sentence

Distributions to noncontrolling interests ( 12,409 ) ( 11,938 )

Proceeds from issuance of common stock — 70,853

Payment of offering costs — ( 854 )

Net cash provided by (used in) financing activities

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PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

PHILLIPS EDISON & COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

(Condensed and Unaudited)

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

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PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

Phillips Edison & Company, Inc.

7 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, 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 June 30, 2024.

In addition to managing our own shopping centers, our third-party investment management business provides comprehensive real estate and asset management services to three unconsolidated institutional joint ventures, Grocery Retail Partners I LLC (“GRP I”), Necessity Retail Venture LLC (“NRV”), and Necessity Retail Partners (“NRP”), in which we have partial ownership interests, and one private fund (collectively, the “Managed Funds”) as of September 30, 2024.

In July 2024, through a subsidiary, we entered into a joint venture agreement with an affiliate of Cohen & Steers Income Opportunities REIT, Inc.

(“Cohen & Steers”) targeting $ 300 million in total equity.

We contributed $ 3.2 million for the purchase of one property at formation of the new joint venture, Necessity Retail Venture LLC (“NRV” or the “NRV joint venture”), in exchange for a 20 % ownership interest in NRV.

We contributed $ 3.2 million for the purchase of one property at formation of the new joint venture, NRV, in exchange for a 20 % ownership interest in NRV.

Cohen & Steers acquired an 80 % ownership interest in NRV by contributing $ 12.9 million for the purchase of the one property.

In May 2024, we issued $ 350 million of 5.750 % senior notes due 2034 at an issue price of 98.576 % in an underwritten offering (“2024 Bond Offering”).

The notes are fully and unconditionally guaranteed by us.

As of June 30, 2024, we wholly-owned 286 real estate properties.

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

In May 2024, we issued $ 350 million of 5.750 % senior notes due 2034 at an issue price of 98.576 % in an underwritten offering.

In September 2024, we issued $ 350 million of 4.950 % senior notes due 2035 at an issue price of 98.458 % in an underwritten offering.

The 2024 senior note issuances are fully and unconditionally guaranteed by us.

As of September 30, 2024, we wholly-owned 290 real estate properties.

Additionally, we owned a 14 % interest in GRP I, which owned 20 properties, and a 20 % ownership interest in NRV, which owned one property.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

There were no changes to our significant accounting policies during the six months ended June 30, 2024, except for those discussed below.

There were no changes to our significant accounting policies during the nine months ended September 30, 2024, except for those discussed below.

For a full summary of our significant accounting policies, refer to our 2023 Annual Report on Form 10-K, filed with the U.S.

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

Our results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the operating results expected for the full year.

Our results of operations for the three and nine months ended September 30, 2024 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).

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

We recognized federal, state, and local income tax expense of $ 0.5 million and $ 0.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 0.6 million and $ 0.2 million for the six months ended June 30, 2024 and 2023, respectively.

We recognized federal, state, and local income tax expense of $ 0.4 million and $ 0.1 million for the three months ended September 30, 2024 and 2023, respectively, and $ 1.0 million and $ 0.4 million for the nine months ended September 30, 2024 and 2023, respectively.

We retained a full valuation allowance for our net deferred tax asset as of December 31, 2023.

During the second quarter of 2024, we concluded that it was more likely than not that a significant portion of our net deferred tax asset will be realized.

We reached this conclusion as certain of our taxable REIT subsidiary entities reported positive cumulative pre-tax earnings in recent years, and are projected to generate future pre-tax earnings.

We have released $ 0.5 million of the valuation allowance for the three and six months ended June 30, 2024.

Income tax expense for the quarter ended June 30, 2024 was reduced by an amount equal to the amount of the valuation allowance

During the second quarter of 2024, we concluded that it was more likely than not that a significant

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

released during the quarter ended June 30, 2024.

SEPTEMBER 30, 2024 FORM 10-Q

portion of our net deferred tax asset will be realized.

We reached this conclusion as certain of our taxable REIT subsidiary entities reported positive cumulative pre-tax earnings in recent years, and are projected to generate future pre-tax earnings.

We released $ 0.3 million of the valuation allowance for the three months ended September 30, 2024 and we released $ 0.8 million of the valuation allowance for the nine months ended September 30, 2024.

Income tax expense for the three and nine months ended September 30, 2024 was reduced by an amount equal to the amount of the valuation allowance released during the three and nine months ended September 30, 2024.

We anticipate that there will be a small valuation allowance at December 31, 2024 for certain state net operating losses that we do not believe will be realized.

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

Recently Issued or Adopted Accounting Pronouncements —There were no recently issued or adopted accounting pronouncements during the six months ended June 30, 2024 that impacted the Company.

Recently Issued or Adopted Accounting Pronouncements —There were no recently issued or adopted accounting pronouncements during the nine months ended September 30, 2024 that impacted the Company.

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

Loss on Extinguishment or Modification of Debt, Net has been presented as a separate line item instead of within Other in the consolidated statements of cash flows.

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.

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

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

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

2024 2023 2024 2023

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

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of June 30, 2024, assuming no new or renegotiated leases or option extensions on lease agreements, and including the impact of rent abatements and tenants who have been moved to the cash basis of accounting for revenue recognition purposes, are as follows (in thousands):

Approximate future fixed contractual lease payments to be received under non-cancelable operating leases in effect as of September 30, 2024, 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 2024 $ 115,593

1 unchanged sentence

Total $ 2,340,030

No single tenant comprised 10% or more of our aggregate annualized base rent (“ABR”) as of June 30, 2024.

As of June 30, 2024, our wholly-owned real estate investments in Florida and California represented 12.3 % and 10.8 % of our ABR, respectively.

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

No single tenant comprised 10% or more of our aggregate annualized base rent (“ABR”) as of September 30, 2024.

As of September 30, 2024, 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 natural or economic events in the Florida and California real estate markets.

In late September and early October 2024, Hurricanes Helene and Milton 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 analyzing the damages sustained to the properties, these are currently estimated to be approximately $ 2 million.

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

REAL ESTATE ACTIVITY

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

Six Months Ended June 30,

Nine Months Ended September 30,

Number of properties acquired 8 5

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

(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.

(2) During the nine months ended September 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.

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

The aggregate purchase price of the assets acquired during the six months ended June 30, 2024 and 2023 were allocated as follows (in thousands):

June 30, 2024 June 30, 2023

The aggregate purchase price of the assets acquired during the nine months ended September 30, 2024 and 2023 were allocated as follows (in thousands):

September 30, 2024 September 30, 2023

Land and improvements $ 68,403 $ 29,084

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Net assets acquired $ 205,002 $ 83,073

The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles and below-market debt acquired during the six months ended June 30, 2024 and 2023 are as follows (in years):

June 30, 2024 June 30, 2023

The weighted-average amortization periods for in-place, above-market, and below-market lease intangibles and below-market debt acquired during the nine months ended September 30, 2024 and 2023 are as follows (in years):

September 30, 2024 September 30, 2023

Acquired in-place leases 12 11

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Assumed below-market debt — 2

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.

Property Dispositions —We sold no properties during the nine months ended September 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 nine months ended September 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 $ 1.1 million which was primarily due to land acquired from us by local authorities.

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

OTHER ASSETS, NET

The following is a summary of Other Assets, Net outstanding as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

The following is a summary of Other Assets, Net outstanding as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Other assets, net:

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(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 $ 3.1 million and $ 1.9 million of general reserves for uncollectible amounts as of June 30, 2024 and December 31, 2023, respectively.

Receivables that were removed for tenants considered to be non-creditworthy were $ 6.6 million and $ 6.0 million as of June 30, 2024 and December 31, 2023, respectively.

(3) Net of $ 5.2 million and $ 4.6 million of receivables removed as of June 30, 2024 and December 31, 2023, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.

(2) Net of $ 3.0 million and $ 1.9 million of general reserves for uncollectible amounts as of September 30, 2024 and December 31, 2023, respectively.

Receivables that were removed for tenants considered to be non-creditworthy were $ 7.6 million and $ 6.0 million as of September 30, 2024 and December 31, 2023, respectively.

(3) Net of $ 5.1 million and $ 4.6 million of receivables removed as of September 30, 2024 and December 31, 2023, respectively, related to straight-line rent for tenants previously or currently considered to be non-creditworthy.

DEBT OBLIGATIONS

The following is a summary of the outstanding principal balances and interest rates, which includes the effect of derivative financial instruments, for our debt obligations as of June 30, 2024 and December 31, 2023 (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 September 30, 2024 and December 31, 2023 (dollars in thousands):

Interest Rate (1)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Revolving credit facility SOFR + 0.9 %

5 unchanged sentences

Senior unsecured notes due 2034 5.750 % 350,000 —

Senior unsecured notes due 2035 4.950 % 350,000 —

Secured loan facilities 3.4 % - 3.5 %

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Weighted-average interest rate (3)

(1) Interest rates are as of June 30, 2024.

(1) Interest rates are as of September 30, 2024.

(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 June 30, 2024 and December 31, 2023 (see Notes 7 and 12).

(3) Includes the effects of derivative financial instruments that were effective as of September 30, 2024 and December 31, 2023 (see Notes 7 and 12).

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

2024 Debt Activity— 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.

In May 2024, we utilized proceeds from the 2024 Bond Offering to pay down $ 202 million of our revolving credit facility and $ 135 million of our $ 240 million term loan that is set to mature in November 2025.

Debt Allocation — The allocation of total debt between fixed-rate and variable-rate as well as between secured and unsecured, excluding market debt adjustments, discount on senior notes, and deferred financing expenses, net, and including the effects of derivative financial instruments as of June 30, 2024 and December 31, 2023 is summarized below (in thousands):

June 30, 2024 December 31, 2023

SEPTEMBER 30, 2024 FORM 10-Q

2024 Debt Activity— During the nine months ended September 30, 2024, we repaid $ 27.5 million in mortgage debt.

In May 2024, we issued $ 350 million of 5.750 % senior notes due 2034 at an issue price of 98.576 % in an underwritten offering.

The offering resulted in gross proceeds of $ 345.0 million, which were used to pay down $ 202 million of our revolving credit facility and $ 135 million of our $ 240 million term loan that was set to mature in November 2025.

In September 2024, we issued $ 350 million of 4.950 % senior notes due 2035 at an issue price of 98.458 % in an underwritten offering.

The offering resulted in gross proceeds of $ 344.6 million, which were used to pay down $ 90 million of our revolving credit facility and $ 140 million of our $ 240 million term loan that is set to mature in July 2026.

Additionally, we paid in full our $ 105 million term loan that was set to mature in November 2025.

The 2024 senior note issuances are fully and unconditionally guaranteed by us.

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, 2024 and December 31, 2023 is summarized below (in thousands):

September 30, 2024 December 31, 2023

As to interest rate (1) :

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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 June 30, 2024, $ 700 million in variable-rate debt is hedged to a fixed rate for a weighted-average period of 1 year (see Notes 7 and 12).

As of September 30, 2024, $ 475 million in variable-rate debt is hedged to a fixed rate for a weighted-average period of 1.5 years (see Notes 7 and 12).

DERIVATIVES AND HEDGING ACTIVITIES

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

During the six months ended June 30, 2024 and 2023, such derivatives were used to hedge the variable cash flows associated with certain variable-rate debt.

During the nine months ended September 30, 2024 and 2023, 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.

1 unchanged sentence

In January 2024, we entered into an interest rate swap which has a notional amount of $ 150 million and swaps SOFR for a fixed rate of approximately 3.45 % effective September 2024 and maturing December 2025.

The following is a summary of our interest rate swaps that were designated as cash flow hedges of interest rate risk as of June 30, 2024 and December 31, 2023 (dollars in thousands):

June 30, 2024 December 31, 2023

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

September 30, 2024 December 31, 2023

Notional amount $ 475,000 $ 700,000

$ 700,000 $ 700,000

Fixed SOFR 2.8 % - 3.4 %

2 unchanged sentences

Weighted-average term (in years) 1.5 1.5

(1) Notional amount excludes interest rate swaps that were not effective as of June 30, 2024 and December 31, 2023.

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

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

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

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

2024 2023 2024 2023

Amount of gain recognized in Other Comprehensive

Amount of (loss) gain recognized in Other

Comprehensive Income

$ ( 6,031 ) $ 4,367 $ 3,947 $ 14,477

2 unchanged sentences

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

As of June 30, 2024, 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 September 30, 2024, there were no derivatives with a fair value in a net liability position, which would include accrued interest but exclude any adjustment for nonperformance risk related to these agreements.

COMMITMENTS AND CONTINGENCIES

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

As of June 30, 2024, we had four letters of credit outstanding totaling approximately $ 21.4 million to provide security for our obligations under Silver Rock’s insurance and reinsurance contracts.

As of September 30, 2024, we had three letters of credit outstanding totaling approximately $ 21.1 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”).

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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 June 30, 2024, no 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.

During the three months ended September 30, 2024, no shares of our common stock were issued under this ATM program.

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

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.

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.

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

As of September 30, 2024, approximately $ 250 million of common stock remained available for issuance under the current ATM program.

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

Distributions —In 2024, we declared and paid monthly distributions of $ 0.0975 per common share and Operating Partnership unit (“OP unit”), or $ 1.17 annualized, for each month beginning January 2024 through June 2024.

Distributions paid to stockholders and OP unit holders of record subsequent to June 30, 2024 were as follows (dollars in thousands, excluding per share amounts):

SEPTEMBER 30, 2024 FORM 10-Q

Distributions —For each month beginning January 2024 through August 2024, we declared and paid monthly distributions of $ 0.0975 per common share and Operating Partnership unit (“OP unit”).

In September 2024, the Board authorized a 5.1 % increase of our monthly distribution rate to $ 0.1025 per common share and OP unit, and we declared a monthly distribution of $ 0.1025 per common share and OP unit for September 2024.

Distributions paid to stockholders and OP unit holders of record subsequent to September 30, 2024 were as follows (dollars in thousands, excluding per share amounts):

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

June 6/17/2024 7/2/2024 $ 0.0975 $ 13,237

Convertible Noncontrolling Interests —As of June 30, 2024 and December 31, 2023, we had approximately 13.7 million and 13.8 million outstanding non-voting OP units, respectively.

September 9/16/2024 10/1/2024 $ 0.1025 $ 13,932

Convertible Noncontrolling Interests —As of September 30, 2024 and December 31, 2023, we had approximately 13.6 million and 13.8 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.

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

As the form of redemption for OP units is within our control, the OP units outstanding as of June 30, 2024 and December 31, 2023 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets.

The table below is a summary of our OP unit activity for the three and six months ended June 30, 2024 and 2023 (dollars and shares in thousands):

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

As the form of redemption for OP units is within our control, the OP units outstanding as of September 30, 2024 and December 31, 2023 are classified as Noncontrolling Interests within permanent equity on our consolidated balance sheets.

The table below is a summary of our OP unit activity for the three and nine months ended September 30, 2024 and 2023 (dollars and shares in thousands):

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

2024 2023 2024 2023

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

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

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

2024 2023 2024 2023

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(1) OP units include units that are convertible into common stock or cash, at the Operating Partnership’s option.

The Operating Partnership income or loss attributable to these OP units, which is included as a component of Net Income Attributable to Noncontrolling Interests on the consolidated statements of operations, has been added back in the numerator as these OP units were included in the denominator for all periods presented.

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

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 FORM 10-Q

all periods presented.

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

RELATED PARTY TRANSACTIONS

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

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

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

2024 2023 2024 2023

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

As of June 30, 2024, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $ 122.2 million.

As of September 30, 2024, the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to protection under the agreements is approximately $ 119.7 million.

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

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

Other Related Party Matters — As of June 30, 2024, we were the limited guarantor of a $ 175 million mortgage loan secured by GRP I properties.

Other Related Party Matters — As of September 30, 2024, we were the limited guarantor of a $ 174.0 million mortgage loan secured by GRP I properties.

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

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

We have no liability recorded on our consolidated balance sheets for the guaranty as of June 30, 2024 and December 31, 2023.

Further, we are also party to an agreement with GRP I in which any potential liability under such guaranty 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, 2024 and December 31, 2023.

As of September 30, 2024, we were also the limited guarantor of a $ 23.2 million mortgage loan secured by the NRV property.

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

Further, we are also party to an agreement with NRV in which any potential liability under such guaranty will be apportioned between us and NRV 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, 2024 and December 31, 2023.

FAIR VALUE MEASUREMENTS

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Debt Obligations —We estimate the fair value of our revolving credit facility, term loans, secured portfolio of loans, and mortgages by discounting the future cash flows of each instrument at rates currently offered for similar debt instruments of comparable maturities by our lenders using Level 3 inputs.

The discount rates used approximate current lending rates for loans or groups of loans with similar maturities and credit quality, assuming the debt is outstanding through maturity and considering the debt’s collateral (if applicable).

The discount rates used approximate current lending rates for

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2024 FORM 10-Q

loans or groups of loans with similar maturities and credit quality, assuming the debt is outstanding through maturity and considering the debt’s collateral (if applicable).

We have utilized market information, as available, or present value techniques to estimate the amounts required to be disclosed.

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

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

The following is a summary of borrowings as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

The following is a summary of borrowings as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Recorded Principal Balance (1)

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Senior unsecured notes due 2034 341,764 364,833 — —

Senior unsecured notes due 2035 341,293 343,410 — —

Secured portfolio loan facilities 392,936 367,058 392,575 351,339

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Total $ 2,104,788 $ 2,067,735 $ 1,969,272 $ 1,883,122

(1) As of June 30, 2024 and December 31, 2023, respectively, recorded principal balances include:

(1) As of September 30, 2024 and December 31, 2023, respectively, recorded principal balances include:

(i) net deferred financing fees of $ 6.4 million and $ 10.3 million;

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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 six months ended June 30, 2024 and the year ended December 31, 2023 were as follows (in thousands):

June 30, 2024 December 31, 2023

Fair value measurements that occurred as of and during the nine months ended September 30, 2024 and the year ended December 31, 2023 were as follows (in thousands):

September 30, 2024 December 31, 2023

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

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

(2) The fair values of the derivative assets exclude associated accrued interest receivable of $ 1.5 million and $ 1.7 million as of June 30, 2024 and December 31, 2023, respectively.

(2) The fair values of the derivative assets exclude associated accrued interest receivable of $ 0.6 million and $ 1.7 million as of September 30, 2024 and December 31, 2023, respectively.

Marketable Securities— We estimate the fair value of marketable securities using Level 1 inputs.

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

Derivative Instruments— As of June 30, 2024 and December 31, 2023, we had interest rate swaps that fixed SOFR on portions of our unsecured term loan facilities.

Derivative Instruments— As of September 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023, we have assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and have determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives.

However, as of September 30, 2024 and December 31, 2023, 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.

PHILLIPS EDISON & COMPANY

SEPTEMBER 30, 2024 FORM 10-Q

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

There were no impairment charges recorded during the three and six months ended June 30, 2024 and June 30, 2023.

There were no impairment charges recorded during the three and nine months ended September 30, 2024 and September 30, 2023.

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.

The first step is the identification of potential triggering events, such as significant decreases in occupancy or the presence of large dark or vacant spaces.

If we observe any of these indicators for a shopping center, we then perform an additional screen test consisting of a years-to-recover analysis to determine if we will recover the net book value of the property over its remaining economic life based upon net operating income (“NOI”) as forecasted for the current

PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

In the event that the results of this first step indicate a triggering event for a center, we proceed to the second step, utilizing an undiscounted cash flow model for the center to identify potential impairment.

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PHILLIPS EDISON & COMPANY

JUNE 30, 2024 FORM 10-Q

SEPTEMBER 30, 2024 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