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OFFON

PHILLIPS EDISON & COMPANY, INC.

(PECO)
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PHILLIPS EDISON & COMPANY, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

11/04/2021 | 04:17pm EST
The following discussion and analysis should be read in conjunction with our
accompanying consolidated financial statements and notes thereto. All references
to "Notes" throughout this document refer to the footnotes to the consolidated
financial statements in "Part I, Item 1. Financial Statements". See also
"Cautionary Note Regarding Forward-Looking Statements" below.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS



Certain statements contained in this Quarterly Report on Form 10-Q (this
"Report") of Phillips Edison & Company, Inc. ("we," the "Company," "our," or
"us") other than historical facts may be considered forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the Private Securities Litigation Reform Act
of 1995 (collectively with the Securities Act and the Exchange Act, the "Acts").
We intend for all such forward-looking statements to be covered by the
applicable safe harbor provisions for forward-looking statements contained in
the Acts. Such forward-looking statements generally can be identified by the use
of forward-looking terminology such as "may," "will," "can," "expect," "intend,"
"anticipate," "estimate," "believe," "continue," "possible," "initiatives,"
"focus," "seek," "objective," "goal," "strategy," "plan," "potential,"
"potentially," "preparing," "projected," "future," "long-term," "once,"
"should," "could," "would," "might," "uncertainty," or other similar words.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date this report is filed with the SEC.
Such statements include, but are not limited to, (a) statements about our plans,
strategies, initiatives, and prospects; (b) statements about the COVID-19
pandemic, including its duration and potential or expected impact on our
tenants, our business, and our view on forward trends; (c) statements about our
underwritten incremental yields; and (d) statements about our future results of
operations, capital expenditures, and liquidity. Such statements are subject to
known and unknown risks and uncertainties, which could cause actual results to
differ materially from those projected or anticipated, including, without
limitation: (i) changes in national, regional, or local economic climates; (ii)
local market conditions, including an oversupply of space in, or a reduction in
demand for, properties similar to those in our portfolio; (iii) vacancies,
changes in market rental rates, and the need to periodically repair, renovate,
and re-let space; (iv) competition from other available shopping centers and the
attractiveness of properties in our portfolio to our tenants; (v) the financial
stability of our tenants, including, without limitation, their ability to pay
rent; (vi) our ability to pay down, refinance, restructure, or extend our
indebtedness as it becomes due; (vii) increases in our borrowing costs as a
result of changes in interest rates and other factors, including the potential
phasing out of LIBOR after 2021; (viii) potential liability for environmental
matters; (ix) damage to our properties from catastrophic weather and other
natural events, and the physical effects of climate change; (x) our ability and
willingness to maintain our qualification as a REIT in light of economic,
market, legal, tax, and other considerations; (xi) changes in tax, real estate,
environmental, and zoning laws; (xii) information technology security breaches;
(xiii) our corporate responsibility initiatives; (xiv) loss of key executives;
(xv) the measures taken by federal, state, and local government agencies and
tenants in response to the COVID-19 pandemic, including mandatory business
shutdowns, "stay-at-home" orders and social distancing guidelines, the duration
of any such measures and the extent to which the revenues of our tenants recover
following the lifting of such restrictions; (xvi) the effectiveness or lack of
effectiveness of governmental relief in providing assistance to individuals and
businesses adversely impacted by the COVID-19 pandemic, including our tenants;
(xvii) the effects of the COVID-19 pandemic, including on the demand for
consumer goods and services and levels of consumer confidence in the safety of
visiting shopping centers as a result of the COVID-19 pandemic; (xviii) the
impact of the COVID-19 pandemic on our tenants and their ability and willingness
to renew their leases upon expiration; (xix) our ability to re-lease our
properties on the same or better terms, or at all, in the event of non-renewal
or in the event we exercise our right to replace an existing tenant; (xx) the
loss or bankruptcy of our tenants, particularly in light of the adverse impact
to the financial health of many retailers and service providers that has
occurred and continues to occur as a result of the COVID-19 pandemic; (xxi) the
pace of recovery following the COVID-19 pandemic given its unpredictable nature
and impact on macroeconomic conditions; (xxii) to the extent we were seeking to
dispose of properties in the near term, significantly greater uncertainty
regarding our ability to do so at attractive prices or at all; and (xxiii) our
ability to implement cost containment strategies. Additional important factors
that could cause actual results to differ are described in the filings made from
time to time by the Company with the SEC and include the risk factors and other
risks and uncertainties described in our 2020 Annual Report on Form 10-K, as
originally filed with the SEC on March 12, 2021, and any subsequently filed
Quarterly Reports on Form 10-Q, in each case as updated from time to time in our
periodic and/or current reports filed with the SEC, which are accessible on the
SEC's website at www.sec.gov.
Except as required by law, we do not undertake any obligation to update or
revise any forward-looking statement, whether as a result of new information,
future events, or otherwise.

KEY PERFORMANCE INDICATORS AND DEFINED TERMS



We use certain key performance indicators ("KPIs"), which include both financial
and nonfinancial metrics, to measure the performance of our operations. We
believe these KPIs, as well as the core concepts and terms defined below, allow
our Board, management, and investors to analyze trends around our business
strategy, financial condition, and results of operations in a manner that is
focused on items unique to the retail real estate industry.
We do not consider our non-GAAP measures to be alternatives to measures required
in accordance with GAAP. Certain non-GAAP measures should not be viewed as an
alternative measure of our financial performance as they may not reflect the
operations of our entire portfolio, and they may not 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








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         21

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to maintain the operating performance of our shopping centers that could
materially impact our results from operations. Additionally, certain non-GAAP
measures should not be considered as an indication of our liquidity, nor as an
indication of funds available to cover our cash needs, including our ability to
fund distributions, and may not be a useful measure of the impact of long-term
operating performance on value if we do not continue to operate our business in
the manner currently contemplated. Accordingly, non-GAAP measures should be
reviewed in connection with other GAAP measurements, and should not be viewed as
more prominent measures of performance than net income (loss) or cash flows from
operations prepared in accordance with GAAP. Other REITs may use different
methodologies for calculating similar non-GAAP measures, and accordingly, our
non-GAAP measures may not be comparable to other REITs.
Our KPIs and terminology can be grouped into three key areas:
PORTFOLIO-Portfolio metrics help management to gauge the health of our centers
overall and individually.
•Anchor space-We define an anchor space as a space greater than or equal to
10,000 square feet of gross leasable area ("GLA").
•ABR-We use ABR to refer to the monthly contractual base rent as of
September 30, 2021 multiplied by twelve months.
•ABR per Square Foot ("PSF")-This metric is calculated by dividing ABR by leased
GLA. Increases in ABR PSF can be an indication of our ability to create rental
rate growth in our centers, as well as an indication of demand for our spaces,
which generally provides us with greater leverage during lease negotiations.
•GLA-We use GLA to refer to the total occupied and unoccupied square footage of
a building that is available for tenants (whom we refer to as a "Neighbor" or
our "Neighbors") or other retailers to lease.
•Inline space-We define an inline space as a space containing less than 10,000
square feet of GLA.
•Leased Occupancy-This metric is calculated as the percentage of total GLA for
which a lease has been signed regardless of whether the lease has commenced or
the Neighbor has taken possession. High occupancy is an indicator of demand for
our spaces, which generally provides us with greater leverage during lease
negotiations.
•Underwritten incremental yield-This reflects the yield we target to generate
from a project upon expected stabilization and is calculated as the estimated
incremental NOI for a project at stabilization divided by its estimated net
project investment. The estimated incremental NOI is the difference between the
estimated annualized NOI we target to generate by project upon stabilization and
the estimated annualized NOI without the planned improvements. Underwritten
incremental yield does not include peripheral impacts, such as lease rollover
risk or the impact on the long term value of the property upon sale or
disposition. Actual incremental yields may vary from our underwritten
incremental yield range based on the actual total cost to complete a project and
its actual incremental NOI at stabilization.

LEASING-Leasing is a key driver of growth for our company.
•Comparable lease-We use this term to refer to a lease with consistent structure
that is executed for substantially the exact same space that has been vacant
less than twelve months.
•Comparable rent spread-This metric is calculated as the percentage increase or
decrease in first-year ABR (excluding any free rent or escalations) on new or
renewal leases (excluding options) where the lease was considered a comparable
lease. This metric provides an indication of our ability to generate revenue
growth through leasing activity.
•Cost of executing new leases-We use this term to refer to certain costs
associated with new leasing, namely, leasing commissions, tenant improvement
costs, and tenant concessions.
•Portfolio retention rate-This metric is calculated by dividing (i) total square
feet of retained Neighbors with current period lease expirations by (ii) the
total square feet of leases expiring during the period. The portfolio retention
rate provides insight into our ability to retain Neighbors at our shopping
centers as their leases approach expiration. Generally, the costs to retain an
existing Neighbor are lower than costs to replace with a new Neighbor.
•Recovery rate-This metric is calculated by dividing (i) total recovery income
by (ii) total recoverable expenses during the period. A high recovery rate is an
indicator of our ability to recover certain property operating expenses and
capital costs from our Neighbors.
FINANCIAL PERFORMANCE-In addition to financial metrics calculated in accordance
with GAAP, such as net income, we utilize non-GAAP metrics to measure our
operational and financial performance. See the section within this Item 2 titled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Non-GAAP Measures" for further discussion on the following metrics.
•Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization for
Real Estate ("Adjusted EBITDAre")-To arrive at Adjusted EBITDAre, we adjust
EBITDAre, as defined below, to exclude certain recurring and non-recurring items
including, but not limited to: (i) changes in the fair value of the earn-out
liability; (ii) other impairment charges; (iii) amortization of basis
differences in our investments in our unconsolidated joint ventures; and (iv)
transaction and acquisition expenses. We use EBITDAre and Adjusted EBITDAre as
additional measures of operating performance which allow us to compare earnings
independent of capital structure and evaluate debt leverage and fixed cost
coverage.
•Core Funds From Operations ("Core FFO")-To arrive at Core FFO, we adjust Nareit
FFO attributable to stockholders and OP unit holders, as defined below, to
exclude certain recurring and non-recurring items including, but not limited to:
(i) depreciation and amortization of corporate assets; (ii) changes in the fair
value of the earn-out liability; (iii) amortization of unconsolidated joint
venture basis differences; (iv) gains or losses on the extinguishment or








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         22

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modification of debt, (v) other impairment charges; and (vi) transaction and
acquisition expenses. We believe Nareit FFO provides insight into our operating
performance as it excludes certain items that are not indicative of such
performance. Core FFO provides further insight into the sustainability of our
operating performance and provides an additional measure to compare our
performance across reporting periods on a consistent basis by excluding items
that may cause short-term fluctuations in net income (loss).
•EBITDAre-The National Association of Real Estate Investment Trusts ("Nareit")
defines EBITDAre as net income (loss) computed in accordance with GAAP before:
(i) interest expense; (ii) income tax expense; (iii) depreciation and
amortization; (iv) gains or losses from disposition of depreciable property; and
(v) impairment write-downs of depreciable property. Adjustments for
unconsolidated partnerships and joint ventures are calculated to reflect
EBITDAre on the same basis.
•Equity Market Capitalization-We calculate equity market capitalization as the
total dollar value of all outstanding shares.
•Nareit FFO-Nareit defines FFO as net income (loss) computed in accordance with
GAAP, excluding: (i) gains (or losses) from sales of property and gains (or
losses) from change in control; (ii) depreciation and amortization related to
real estate; (iii) impairment losses on real estate and impairments of
in-substance real estate investments in investees that are driven by measurable
decreases in the fair value of the depreciable real estate held by the
unconsolidated partnerships and joint ventures; and (iv) adjustments for
unconsolidated partnerships and joint ventures, calculated to reflect FFO on the
same basis. We calculate Nareit FFO in a manner consistent with the Nareit
definition.
•Net Debt-We calculate net debt as total debt, excluding market adjustments and
deferred financing expenses, less cash and cash equivalents.
•Net Debt to Adjusted EBITDAre-This ratio is calculated by dividing net debt by
Adjusted EBITDAre (included on an annualized basis within the calculation). It
provides insight into our leverage rate based on earnings and is not impacted by
fluctuations in our equity price.
•Net Debt to Total Enterprise Value-This ratio is calculated by dividing net
debt by total enterprise value, as defined below. It provides insight into our
capital structure and usage of debt.
•NOI-We calculate NOI as total operating revenues, adjusted to exclude non-cash
revenue items, less property operating expenses and real estate taxes. NOI
provides insight about our financial and operating performance because it
provides a performance measure of the revenues and expenses directly involved in
owning and operating real estate assets and provides a perspective not
immediately apparent from net income (loss).
•Same-Center-We use this term to refer to a property, or portfolio of
properties, that has been owned and operational for the entirety of each
reporting period (i.e., since January 1, 2020).
•Total Enterprise Value-We calculate total enterprise value as our net debt plus
our equity market capitalization on a fully diluted basis.

OVERVIEW



We are a REIT and one of the nation's largest owners and operators of
omni-channel grocery-anchored neighborhood and community shopping centers. The
majority of our revenue is lease revenue derived from our real estate
investments. Additionally, we operate an investment management business
providing property management and advisory services to over $460 million of
unconsolidated joint ventures. This business provides comprehensive real estate
and asset management services to the Managed Funds.
As of September 30, 2021, we wholly-owned 267 real estate properties.
Additionally, we owned a 14% interest in GRP I, a joint venture that owned 20
properties, and a 20% interest in NRP, a joint venture that owned two
properties.
RECAPITALIZATION-On June 18, 2021, our stockholders approved Articles of
Amendment that effected the Recapitalization, wherein each share of our common
stock outstanding at the time the amendment became effective was converted into
one share of a newly created class of Class B common stock. The Articles of
Amendment became effective upon filing with, and acceptance by, the State
Department of Assessments and Taxation of Maryland on July 2, 2021. Unless
otherwise indicated, all information in this Form 10-Q gives effect to the
Recapitalization and references to "shares" and per share metrics refer to our
common stock and Class B common stock, collectively (see Note 9).
REVERSE STOCK SPLIT-On July 2, 2021, our Board approved an amendment to our
articles of incorporation to effect a one-for-three reverse stock split.
Concurrent with the reverse split, the Operating Partnership enacted a
one-for-three reverse split of its outstanding OP units. Unless otherwise
indicated, the information in this Form 10-Q gives effect to the reverse stock
and OP unit splits (see Note 9).
UNDERWRITTEN INITIAL PUBLIC OFFERING-On July 19, 2021, we closed our
underwritten IPO, through which we offered 17.0 million shares of a new class of
common stock, $0.01 par value per share, at an initial price to the public of
$28.00 per share, pursuant to a registration statement filed with the SEC on
Form S-11 (File No. 333-255846), as amended. In connection with the underwritten
IPO, the underwriters exercised a 30-day option to purchase additional shares of
common stock to cover overallotments, and, accordingly, on August 2, 2021, we
settled the sale of an additional 2.6 million shares at a price of $28.00 per
share. These shares are listed on NASDAQ under the trading symbol "PECO". The
underwritten IPO, including the underwriters overallotment election, resulted in
gross proceeds of $547.4 million.








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         23

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On August 4, 2021, as a result of our underwritten IPO, our Board approved the
termination of the DRIP and the SRP.
2021 BOND OFFERING-In October 2021, in connection with our Bond Registration, we
settled the 2021 Bond Offering priced at 98.692% of the principal amount and
maturing in November 2031. This offering resulted in gross proceeds of $345.4
million. The notes are fully and unconditionally guaranteed by us.
COVID-19 STRATEGY-During 2020, as a result of the COVID-19 pandemic, many state
governments issued "stay-at-home" mandates that generally limited travel and
movement of the general public to essential activities only and required all
non-essential businesses to close. All statistics and financial results included
in this COVID-19 Strategy section are approximate and include the prorated
portion attributable to properties owned through our joint ventures.
Our management team determined the recovery of our portfolio was dependent on
the execution of key actions, including guiding our Neighbors toward returning
to monthly rent payments, recovering missed charges, and monitoring for credit
risk. Our actions in conjunction with the resiliency of our tenant mix has led
to improved collections from the second quarter of 2020. Further, we believe our
collections have returned to levels consistent with those prior to the onset of
the pandemic. The following table summarizes our collections by quarter, as they
were originally reported as well as updated for payments received subsequent to
the month billed:
             Originally Reported      Current(1)
Q2 2020                     86  %           93  %
Q3 2020                     94  %           97  %
Q4 2020                     95  %           97  %
Q1 2021                     95  %           98  %
Q2 2021                     98  %           99  %
Q3 2021                       N/A           99  %


(1)Collections include those received through October 20, 2021.
We believe substantially all Neighbors, including those that were required to
temporarily close under governmental mandates, are contractually obligated to
continue with their rent payments as documented in our lease agreements with
them. However, we decided to negotiate relief for a small subset of our
Neighbors, including rent deferrals. As of October 20, 2021, we have $4.2
million of outstanding payment plans with our Neighbors of which approximately
28% are scheduled to be received by December 31, 2021. As of October 20, 2021,
the weighted-average term over which we expect to receive remaining amounts owed
on executed payment plans is approximately eleven months. We cannot guarantee
that we will ultimately be able to collect these amounts.
Despite seeing improvements in collections for current and past due amounts
during 2021, the negative impact the pandemic has had on our Neighbors continues
to be considered in our evaluation of Neighbors who potentially pose a credit
risk. For Neighbors with a higher degree of uncertainty as to their
creditworthiness, we may not record revenue for amounts billed until the cash is
received. For the three and nine months ended September 30, 2021, we had $0.6
million and $4.2 million, respectively, in net unfavorable monthly revenue
adjustments for Neighbors who are being accounted for on a cash basis. For the
three and nine months ended September 30, 2020, we had $5.3 million and $20.3
million, respectively, in net unfavorable monthly revenue adjustments for
Neighbors who were being accounted for on a cash basis. As of September 30,
2021, our Neighbors currently being accounted for on a cash basis represented
approximately 8% of our total Neighbor spaces, or approximately 7.3% of
portfolio ABR. Further, many of our Neighbors who are on a cash basis of
accounting are actively making payments toward their outstanding balances. When
considering the ABR associated with Neighbors who are currently on a cash basis
of accounting, 79% of this ABR is represented by Neighbors who are actively
making payments.
Additionally, certain of our Neighbors entered into bankruptcy proceedings. We
believe that Neighbors in the bankruptcy process represent an exposure of less
than 1% of our total portfolio ABR as of September 30, 2021. We have included
our assessment of the impact of these bankruptcies in our estimate of rent
collectibility, which impacted recorded revenue, as noted previously.
Certain of our Neighbors were unable to remain in their spaces as a result of
the factors previously noted. Despite this fallout, our leasing activity has
been strong as demand for space in our centers remains high, allowing us to
re-lease these spaces to Neighbors who may increase our concentration of
necessity-based and omni-channel retailers. For the three and nine months ended
September 30, 2021, our wholly-owned portfolio retention rate was 91.2% and
88.3%, respectively. Additionally, for the three and nine months ended September
30, 2021, for our wholly-owned portfolio, we executed 140 and 417 new leases,
respectively, each an increase as compared to the same period a year ago.








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         24

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PORTFOLIO AND LEASING STATISTICS-Below are statistical highlights of our wholly-owned portfolio as of September 30, 2021 and 2020 (dollars and square feet in thousands):

                                                                      September 30, 2021         September 30, 2020
Number of properties                                                               267                        283
Number of states                                                                    31                         31
Total square feet                                                               30,443                     31,731
ABR                                                                  $         388,272          $         385,375
% ABR from omni-channel grocery-anchored shopping centers                         96.3  %                    97.0  %
Leased % of rentable square feet:
Total portfolio spaces                                                            95.6  %                    95.3  %
Anchor spaces                                                                     97.6  %                    98.3  %
Inline spaces                                                                     91.9  %                    89.5  %
Average remaining lease term (in years)(1)                                         4.6                        4.5


(1)The average remaining lease term in years excludes future options to extend
the term of the lease.
The following table details information for our joint ventures as of
September 30, 2021, which is the basis for determining the prorated information
included in the subsequent tables (dollars and square feet in thousands):
                                                                           

September 30, 2021

           Joint Venture             Ownership Percentage          Number of Properties               ABR                  GLA
Grocery Retail Partners I                    14%                               20                $   29,222                 2,214
Necessity Retail Partners                    20%                                2                     4,004                   228











                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         25

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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, 2021 for each of the next ten years and thereafter
for our wholly-owned properties and the prorated portion of those owned through
our joint ventures:
                [[Image Removed: cik0001476204-20210930_g2.jpg]]
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. Conversely, we may experience
rental rate decline when occupancy at our centers is low or during periods of
economic recession, as the leverage during new and renewal lease negotiations
may shift to prospective and existing Neighbors.
See "Part I, Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations - Results of Operations - Leasing Activity" of this
filing on Form 10-Q for further discussion of leasing activity.








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         26

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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 joint ventures, by Neighbor
type as of September 30, 2021:
[[Image Removed: cik0001476204-20210930_g3.jpg]][[Image Removed: cik0001476204-20210930_g4.jpg]]

The following charts present the composition of our portfolio by Neighbor industry as of September 30, 2021: [[Image Removed: cik0001476204-20210930_g5.jpg]][[Image Removed: cik0001476204-20210930_g6.jpg]]








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         27

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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 72% of our ABR, including the pro rata portion attributable to
properties owned through our joint ventures, is from Neighbors providing
necessity-based goods and services. Additionally, within Necessity-based goods
and services, we estimate that approximately 50% of our ABR is from retail and
service businesses generally deemed essential under most state and local
mandates issued in response to the COVID-19 pandemic, including those that may
have temporarily closed at various points during the pandemic due to decreases
in foot traffic and customer patronage as a result of "stay-at-home" mandates
and social distancing guidelines implemented in response to the pandemic.
TOP TWENTY NEIGHBORS-The following table presents our top twenty Neighbors by
ABR, including our wholly-owned properties and the prorated portion of those
owned through our joint ventures, as of September 30, 2021 (dollars and square
feet in thousands):
                                                                                                                % of Leased
Neighbor(1)                                ABR                % of ABR             Leased Square Feet           Square Feet           Number of Locations(2)
Kroger                                 $  25,830                     6.6  %               3,244                       11.0  %                     59
Publix                                    23,145                     5.9  %               2,304                        7.8  %                     57
Ahold Delhaize                            17,113                     4.4  %               1,204                        4.1  %                     22
Albertsons-Safeway                        16,804                     4.3  %               1,599                        5.4  %                     29
Walmart                                    8,933                     2.3  %               1,770                        6.0  %                     13
Giant Eagle                                7,924                     2.0  %                 828                        2.8  %                     11
TJX Companies                              5,205                     1.3  %                 445                        1.5  %                     16
Sprouts Farmers Market                     5,000                     1.3  %                 334                        1.1  %                     11
Raley's                                    3,884                     1.0  %                 253                        0.9  %                      4
Dollar Tree                                3,448                     0.9  %                 351                        1.2  %                     37
SUPERVALU                                  3,209                     0.8  %                 336                        1.1  %                      5
Subway Group                               2,633                     0.7  %                 106                        0.4  %                     75
Anytime Fitness, Inc.                      2,598                     0.7  %                 166                        0.6  %                     34
Schnucks                                   2,545                     0.6  %                 249                        0.8  %                      4
Lowe's                                     2,470                     0.6  %                 369                        1.3  %                      4
Kohl's Corporation                         2,241                     0.6  %                 365                        1.3  %                      4
Food 4 Less (PAQ)                          2,215                     0.6  %                 118                        0.4  %                      2
Save Mart                                  2,174                     0.6  %                 258                        0.9  %                      5
Petco Animal Supplies, Inc.                2,130                     0.5  %                 127                        0.4  %                     11
Big Y                                      2,022                     0.5  %                 115                        0.4  %                      3
Total                                  $ 141,523                    36.2  %              14,541                       49.4  %                    406


(1)Neighbors are grouped by parent company and may represent multiple
subsidiaries and banners.
(2)Number of locations excludes auxiliary leases with grocery anchors such as
fuel stations, pharmacies, and liquor stores. Additionally, in the event that a
parent company has multiple subsidiaries or banners in a single shopping center,
those subsidiaries are included as one location.


RESULTS OF OPERATIONS



KNOWN TRENDS AND UNCERTAINTIES OF THE COVID-19 PANDEMIC-The COVID-19 pandemic
resulted in reduced revenues beginning with the second quarter of 2020 and
continuing through early 2021, and our estimates around collectibility will
likely continue to create volatility in our earnings. Although we have seen
improved collections of current and past due rent amounts during 2021, the total
impact of such collections and estimates around collectibility on revenue is
still volatile at this time. The duration of the pandemic and mitigating
measures, and the resulting economic impact, has caused some of our Neighbors to
permanently vacate their spaces and/or not renew their leases, and we may have
difficulty leasing these spaces on the same or better terms or at all, and/or
incur additional costs to lease vacant spaces, which may reduce our occupancy
rates in the future and ultimately reduce our revenue. Extended periods of
vacancy or reduced revenues may trigger impairments of our real estate assets.
We believe that our investment focus on grocery-anchored shopping centers that
provide daily necessities has helped and will continue to help lessen the
negative effect of the pandemic on our business compared to non-grocery anchored
shopping centers.








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         28

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SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021
AND 2020
                                                         Three Months Ended                      Favorable (Unfavorable)
                                                            September 30,                                 Change
(Dollars in thousands)                                 2021               2020                  $                     %(1)
Revenues:
Rental income                                      $ 128,826          $ 123,298          $       5,528                    4.5  %
Fee and management income                              2,435              2,581                   (146)                  (5.7) %
Other property income                                  1,073                816                    257                   31.5  %
Total revenues                                       132,334            126,695                  5,639                    4.5  %
Operating Expenses:
Property operating expenses                           21,608             20,835                   (773)                  (3.7) %
Real estate tax expenses                              16,375             17,282                    907                    5.2  %
General and administrative expenses                   11,627              9,595                 (2,032)                 (21.2) %
Depreciation and amortization                         53,901             56,095                  2,194                    3.9  %
Impairment of real estate assets                         698                  -                   (698)                       NM
Total operating expenses                             104,209            103,807                   (402)                  (0.4) %

Other:

Interest expense, net                                (18,570)           (20,388)                 1,818                    8.9  %
Gain on disposal of property, net                     14,093             10,734                  3,359                   31.3  %
Other (expense) income, net                           (7,086)               196                 (7,282)                       NM
Net income                                            16,562             13,430                  3,132                   23.3  %
Net income attributable to noncontrolling
interests                                             (1,929)            (1,646)                  (283)                 (17.2) %
Net income attributable to stockholders            $  14,633          $  11,784          $       2,849                   24.2  %


(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 261 properties that were
owned and operational prior to January 1, 2020. We define our non-same-center
portfolio as those properties that were not fully owned and operational in both
periods owing to real estate asset activity occurring after December 31, 2019,
which includes 26 properties disposed of and six properties acquired. Below are
explanations of the significant fluctuations in the results of operations for
the three months ended September 30, 2021 and 2020:
Rental Income increased $5.5 million as follows:
•$7.9 million increase related to our same-center portfolio primarily as
follows:
?$5.6 million increase primarily due to stronger collections in 2021 as compared
with lower collections in 2020, the increase owing largely to the ongoing
recovery of our portfolio in the wake of the COVID-19 pandemic and its economic
impact, including a decrease in Neighbors we have identified as a credit risk;
and
?$2.2 million increase primarily due to a $0.53 increase in average minimum rent
per square foot, partially offset by a 0.8% decline in average occupancy.
•$2.4 million decrease primarily related to our net disposition of 20
properties.
Property Operating Expenses increased $0.8 million primarily as follows:
•$1.1 million increase related to our same-center portfolio and corporate
operating activities as follows:
?$0.6 million increase owing largely to lower performance-based compensation in
2020 as a result of the COVID-19 pandemic, as compared to 2021; and
?$0.5 million increase in insurance expenses primarily due to higher market
rates and an increase in claims and claim development.
•$0.4 million decrease related to our net disposition of 20 properties.
Real Estate Tax Expenses:
•The $0.9 million decrease in real estate tax expenses is primarily due to
successful tax appeals and favorable assessments at our centers, as well as our
net disposition of 20 properties.
General and Administrative Expenses increased $2.0 million primarily as follows:
•$1.5 million increase owing largely to lower expense for performance-based
compensation in 2020 as a result of the COVID-19 pandemic, as compared to 2021;
and








                                                       PHILLIPS EDISON & COMPANY
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•$0.5 million increase primarily due to an increase in directors and officers
insurance costs as a result of our underwritten IPO.
Depreciation and Amortization decreased $2.2 million as follows:
•$1.2 million decrease related to our net disposition of 20 properties; and
•$1.0 million decrease related to our same-center portfolio and corporate
operating activities, primarily due to intangible assets becoming fully
amortized.
Interest Expense, Net:
•The $1.8 million decrease during the three months ended September 30, 2021 as
compared to the same period in 2020 was due to lower outstanding debt as a
result of repayments. Interest Expense, Net was comprised of the following
(dollars in thousands):
                                                                       

Three Months Ended September 30,

                                                                         2021                      2020
Interest on revolving credit facility, net                       $                 237       $             260
Interest on term loans, net                                                      8,913                  11,195
Interest on secured debt                                                         6,049                   7,308
Loss on extinguishment or modification of debt, net                              1,674                       -
Non-cash amortization and other                                                  1,697                   1,625
Interest expense, net                                            $          

18,570 $ 20,388


Weighted-average interest rate as of end of period                              3.3  %                 3.1   %
Weighted-average term (in years) as of end of period                               4.2                     4.3


Gain on Disposal of Property, Net:
•The $3.4 million increase was primarily related to the sale of seven properties
and two outparcels with a net gain (in addition to other property-related
miscellaneous disposals and write-offs) of $14.1 million during the three months
ended September 30, 2021, as compared to the sale of two properties (as well as
other property-related miscellaneous disposals and write-offs) with a net gain
of $10.7 million during the three months ended September 30, 2020 (see Note 4).
Other (Expense) Income, Net:
•The $7.3 million change was largely due to the change in the fair value of our
earn-out liability as a result of general improving market conditions, as well
as an increase in transaction and acquisition expenses as a result of restricted
stock units awarded in connection with our underwritten IPO. Other (Expense)
Income, Net was comprised of the following (dollars in thousands):
                                                                 Three 

Months Ended September 30,

                                                                     2021                  2020
Change in fair value of earn-out liability                     $      (5,000)         $         -
Transaction and acquisition expenses                                  (1,775)                (152)
Equity in net (loss) income of unconsolidated joint ventures             (54)                 133
Federal, state, and local income tax expense                            (165)                (173)
Other                                                                    (92)                 388
Other (expense) income, net                                    $      (7,086)         $       196











                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         30

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SUMMARY OF OPERATING ACTIVITIES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND
2020
                                                           Nine Months Ended                      Favorable (Unfavorable)
                                                             September 30,                                 Change
(Dollars in thousands)                                  2021               2020                   $                     %(1)
Revenues:
Rental income                                       $ 386,784          $ 367,418          $       19,366                    5.3  %
Fee and management income                               7,095              7,506                    (411)                  (5.5) %
Other property income                                   1,906              2,334                    (428)                 (18.3) %
Total revenues                                        395,785            377,258                  18,527                    4.9  %
Operating Expenses:
Property operating expenses                            65,784             62,226                  (3,558)                  (5.7) %
Real estate tax expenses                               49,762             50,847                   1,085                    2.1  %
General and administrative expenses                    32,905             30,141                  (2,764)                  (9.2) %
Depreciation and amortization                         165,829            168,692                   2,863                    1.7  %
Impairment of real estate assets                        6,754                  -                  (6,754)                       NM
Total operating expenses                              321,034            311,906                  (9,128)                  (2.9) %

Other:

Interest expense, net                                 (57,765)           (65,317)                  7,552                   11.6  %
Gain on disposal of property, net                      31,678              8,616                  23,062                        NM
Other (expense) income, net                           (25,595)             9,565                 (35,160)                       NM
Net income                                             23,069             18,216                   4,853                   26.6  %
Net income attributable to noncontrolling
interests                                              (2,739)            (2,251)                   (488)                 (21.7) %
Net income attributable to stockholders             $  20,330          $  15,965          $        4,365                   27.3  %


(1)Line items that result in a percent change that exceed certain limitations
are considered not meaningful ("NM") and indicated as such.
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 the Summary of Operating Activities for the Three
Months Ended September 30, 2021 and 2020 section above. Below are explanations
of the significant fluctuations in the results of operations for the nine months
ended September 30, 2021 and 2020:
Rental Income increased $19.4 million as follows:
•$23.0 million increase related to our same-center portfolio primarily as
follows:
?$21.2 million increase primarily due to stronger collections in 2021 as
compared with lower collections in 2020, the increase owing largely to the
ongoing recovery of our portfolio in the wake of the COVID-19 pandemic and its
economic impact, including a decrease in Neighbors we have identified as a
credit risk, as well as collections on charges that were uncollected in 2020;
?$4.2 million increase primarily due to a $0.48 increase in average minimum rent
per square foot, partially offset by a 0.9% decline in average occupancy; and
?$2.3 million decrease owing largely to lower recoveries from a lower recovery
rate and lower occupancy.
•$3.6 million decrease primarily related to our net disposition of 20
properties.
Property Operating Expenses increased $3.6 million primarily as follows:
•$4.0 million increase related to our same-center portfolio and corporate
operating activities as follows:
?$2.8 million increase owing largely to lower expense for performance-based
compensation in 2020 as a result of the COVID-19 pandemic, as compared to 2021;
and
?$1.2 million increase primarily due to higher insurance expenses attributed to
higher market rates and an increase in claims and claim development.
•$0.5 million decrease related to our net disposition of 20 properties.
Real Estate Tax Expenses:
•The $1.1 million decrease in real estate tax expenses is primarily due to
successful tax appeals and favorable assessments at our centers, as well as our
net disposition of 20 properties.
General and Administrative Expenses increased $2.8 million primarily as follows:
•$5.8 million increase owing largely to lower expense for performance-based
compensation in 2020 as a result of the COVID-19 pandemic, as compared to 2021;
•$1.7 million decrease primarily due to lower third-party consultant and
custodial costs; and








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         31

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•$1.4 million decrease related to expense reductions taken in 2020 to reduce the
impact of the COVID-19 pandemic, with the majority of these decreases related to
overhead costs at our corporate offices.
Depreciation and Amortization decreased $2.9 million as follows:
•$1.8 million decrease related to our net disposition of 20 properties; and
•$1.1 million decrease related to our same-center portfolio and corporate
operating activities, primarily due to intangible assets becoming fully
amortized.
Impairment of Real Estate Assets:
•The $6.8 million increase in impairment of real estate assets was due to assets
that have sold during 2021 as well as assets that are actively being marketed
for sale at a disposition price that is less than the carrying value.
Interest Expense, Net:
•The $7.6 million decrease during the nine months ended September 30, 2021 as
compared to the same period in 2020 was due to: (i) lower borrowings as a result
of early repayments of debt; (ii) the $200 million draw and subsequent repayment
of our draw on the revolver during the second quarter of 2020; and (iii) lower
average interest rates due to the decrease in LIBOR. Interest Expense, Net was
comprised of the following (dollars in thousands):
                                                                       Nine 

Months Ended September 30,

                                                                         2021                     2020
Interest on revolving credit facility, net                       $                 672       $         1,455
Interest on term loans, net                                                     30,119                35,611
Interest on secured debt                                                        19,075                21,973
Loss on extinguishment or modification of debt, net                              2,784                    73
Non-cash amortization and other                                                  5,115                 6,205
Interest expense, net                                            $          

57,765 $ 65,317


Weighted-average interest rate as of end of period                              3.3  %                3.1  %
Weighted-average term (in years) as of end of period                               4.2                   4.3


Gain on Disposal of Property, Net:
•The $23.1 million increase was primarily related to the sale of 20 properties
and three outparcels (in addition to other miscellaneous property-related
disposals and write-offs) with a net gain of $31.7 million during the nine
months ended September 30, 2021, as compared to the sale of six properties (as
well as other property-related miscellaneous disposals and write-offs) with a
net gain of $8.6 million during the nine months ended September 30, 2020 (see
Note 4).
Other (Expense) Income, Net:
•The $35.2 million change was largely due to the change in the fair value of our
earn-out liability as a result of general improving market conditions, as well
as an increase in transaction and acquisition expenses as a result of restricted
stock units awarded in connection with our underwritten IPO. Other (Expense)
Income, Net was comprised of the following (in thousands):
                                                                    Nine 

Months Ended September 30,

                                                                       2021                    2020
Change in fair value of earn-out liability                     $         (23,000)         $    10,000
Transaction and acquisition expenses                                      (2,850)                (211)
Equity in income (loss) of unconsolidated joint ventures                     747                 (506)
Federal, state, and local income tax expense                                (496)                (382)
Other                                                                          4                  664
Other (expense) income, net                                    $         (25,595)         $     9,565











                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         32

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LEASING ACTIVITY-Below is a summary of leasing activity for our wholly-owned properties for the three months ended September 30, 2021 and 2020(1):

                                                                Total Deals                        Inline Deals
                                                          2021              2020              2021              2020
New leases:
Number of leases                                            140               111               133               110
Square footage (in thousands)                               551               302               312               287
ABR (in thousands)                                     $  9,172          $  5,181          $  6,749          $  5,023
ABR per square foot                                    $  16.63          $  17.15          $  21.64          $  17.49
Cost per square foot of executing new leases           $  24.11          $  27.25          $  31.15          $  26.01
Number of comparable leases                                  57                34                56                34
Comparable rent spread                                     14.1  %            8.2  %           14.1  %            8.2  %
Weighted-average lease term (in years)                      8.6               6.6               6.2               6.3
Renewals and options:
Number of leases                                            128               119               110               101
Square footage (in thousands)                               854             1,035               211               244
ABR (in thousands)                                     $ 11,082          $ 12,473          $  5,377          $  4,993
ABR per square foot                                    $  12.98          $  12.06          $  25.53          $  20.45
ABR per square foot prior to renewals                  $  12.30          $  11.56          $  22.85          $  19.16
Percentage increase in ABR per square foot                  5.5  %            4.3  %           11.7  %            6.7  %
Cost per square foot of executing renewals and
options(2)                                             $   0.22          $   0.60          $   0.86          $   1.39
Number of comparable leases(3)                               97                87                91                82
Comparable rent spread(3)                                   8.9  %            4.1  %           13.1  %            6.4  %
Weighted-average lease term (in years)                      5.4               4.8               4.6               4.2
Portfolio retention rate                                   91.2  %           90.4  %           80.4  %           74.9  %


(1)Per square foot amounts may not recalculate exactly based on other amounts
presented within the table due to rounding.
(2)During the third quarter of 2021, we refined our calculation of cost per
square foot of executing renewals and options to better align with actual costs
incurred. Prior period amounts have been adjusted to reflect costs on the same
basis.
(3)Excludes exercise of options.









                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         33

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Below is a summary of leasing activity for our wholly-owned properties for the nine months ended September 30, 2021 and 2020(1):

                                                                Total Deals                        Inline Deals
                                                          2021              2020              2021              2020
New leases:
Number of leases                                            417               259               401               245
Square footage (in thousands)                             1,360               881               931               627
ABR (in thousands)                                     $ 23,630          $ 13,778          $ 19,171          $ 11,038
ABR per square foot                                    $  17.38          $  15.63          $  20.59          $  17.62
Cost per square foot of executing new leases           $  27.52          $  23.25          $  30.05          $  25.89
Number of comparable leases                                 184                79               181                78
Comparable rent spread                                     14.9  %            9.7  %           14.9  %            9.7  %
Weighted-average lease term (in years)                      8.1               7.7               6.4               6.6
Renewals and options:
Number of leases                                            465               354               416               309
Square footage (in thousands)                             2,880             2,749               855               702
ABR (in thousands)                                     $ 35,449          $ 31,135          $ 19,752          $ 14,498
ABR per square foot                                    $  12.31          $  11.33          $  23.10          $  20.64
ABR per square foot prior to renewals                  $  11.58          $  10.74          $  21.11          $  18.94
Percentage increase in ABR per square foot                  6.3  %            5.4  %            9.4  %            9.0  %
Cost per square foot of executing renewals and
options(2)                                             $   0.56          $   0.72          $   1.22          $   1.18
Number of comparable leases(3)                              388               263               372               252
Comparable rent spread(3)                                   8.2  %            7.4  %            9.8  %            9.9  %
Weighted-average lease term (in years)                      5.0               4.9               4.1               4.0
Portfolio retention rate                                   88.3  %           82.7  %           80.1  %           70.5  %


(1)  Per square foot amounts may not recalculate exactly based on other amounts
presented within the table due to rounding.
(2)During the third quarter of 2021, we refined our calculation of cost per
square foot of executing renewals and options to better align with actual costs
incurred. Prior period amounts have been adjusted to reflect costs on the same
basis.
(3)Excludes exercise of options.

NON-GAAP MEASURES



See "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Key Performance Indicators and Defined Terms" of this
filing on Form 10-Q for a discussion related to the following non-GAAP measures.

SAME-CENTER NET OPERATING INCOME-Same-Center NOI is presented as a supplemental
measure of our performance, as it highlights operating trends such as occupancy
levels, rental rates, and operating costs for our Same-Center portfolio. 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, 2021 and 2020, Same-Center NOI
represents the NOI for the 261 properties that were wholly-owned and operational
for the entire portion of both comparable 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, 2021 FORM 10-Q         34

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The table below presents our Same-Center NOI for the current period and the comparable prior period (dollars in thousands):

                                           Three Months Ended September
                                                       30,                           Favorable (Unfavorable)              Nine Months Ended September 30,                Favorable (Unfavorable)
                                                                                      $                     %
                                              2021              2020                Change               Change               2021                2020               $ Change               % Change
Revenues:
Rental income(1)                          $  91,490          $ 89,188          $       2,302                              $  271,643          $ 269,669          $        1,974
Tenant recovery income                       29,937            31,102                 (1,165)                                 87,025             91,211                  (4,186)
Reserves for uncollectibility(2)                 57            (5,807)                 5,864                                   1,318            (17,817)                 19,135
Other property income                         1,010               765                    245                                   1,740              2,213                    (473)
Total revenues                              122,494           115,248                  7,246                 6.3  %          361,726            345,276                  16,450                   4.8  %
Operating expenses:
Property operating expenses                  17,333            16,439                   (894)                                 53,397             50,448                  (2,949)
Real estate taxes                            16,039            16,793                    754                                  48,452             49,648                   1,196
Total operating expenses                     33,372            33,232                   (140)               (0.4) %          101,849            100,096                  (1,753)                 (1.8) %
Total Same-Center NOI                     $  89,122          $ 82,016          $       7,106                 8.7  %       $  259,877          $ 245,180          $       14,697                   6.0  %


(1)Excludes straight-line rental income, net amortization of above- and
below-market leases, and lease buyout income.
(2)Includes billings that will not be recognized as revenue until cash is
collected or the Neighbor resumes regular payments and/or we deem it appropriate
to resume recording revenue on an accrual basis, rather than on a cash basis.
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,

                                                   2021              2020               2021                2020
Net income                                     $  16,562          $ 13,430          $   23,069          $  18,216
Adjusted to exclude:
Fees and management income                        (2,435)           (2,581)             (7,095)            (7,506)
Straight-line rental income(1)                    (2,476)           (1,800)             (6,868)            (3,164)
Net amortization of above- and below-market
leases                                              (908)             (811)             (2,633)            (2,394)
Lease buyout income                                 (560)             (664)             (3,138)              (972)
General and administrative expenses               11,627             9,595              32,905             30,141
Depreciation and amortization                     53,901            56,095             165,829            168,692
Impairment of real estate assets                     698                 -               6,754                  -
Interest expense, net                             18,570            20,388              57,765             65,317
Gain on disposal of property, net                (14,093)          (10,734)            (31,678)            (8,616)
Other expense (income), net                        7,086              (196)             25,595             (9,565)

Property operating expenses related to fees

  and management income                            1,489             1,058               3,611              2,586
NOI for real estate investments                   89,461            83,780             264,116            252,735
Less: Non-same-center NOI(2)                        (339)           (1,764)             (4,239)            (7,555)
Total Same-Center NOI                          $  89,122          $ 82,016          $  259,877          $ 245,180


(1)Includes straight-line rent adjustments for Neighbors for whom revenue is
being recorded on a cash basis.
(2)Includes operating revenues and expenses from non-same-center properties
which includes properties acquired or sold and corporate activities.

NAREIT FFO AND CORE FFO-Nareit FFO is a non-GAAP financial performance measure
that is widely recognized as a measure of REIT operating performance. Core FFO
is an additional financial performance measure used by us as Nareit FFO includes
certain non-comparable items that affect our performance over time. Core FFO is
helpful in assisting management and investors with assessing the sustainability
of our operating performance in future periods.








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         35

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Nareit FFO, Nareit FFO Attributable to Stockholders and OP Unit Holders, 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. Core FFO may
not be a useful measure of the impact of long-term operating performance on
value if we do not continue to operate our business plan in the manner currently
contemplated.
Accordingly, Nareit FFO, Nareit FFO Attributable to Stockholders and OP Unit
Holders, and Core FFO should be reviewed in connection with other GAAP
measurements, and should not be viewed as more prominent measures of performance
than net income (loss) or cash flows from operations prepared in accordance with
GAAP. Our Nareit FFO, Nareit FFO Attributable to Stockholders and OP Unit
Holders, and Core FFO, as presented, may not be comparable to amounts calculated
by other REITs.
The following table presents our calculation of Nareit FFO Attributable to
Stockholders and OP Unit Holders, and Core FFO (in thousands, except per share
amounts):
                                                            Three Months Ended                     Nine Months Ended
                                                               September 30,                         September 30,
                                                          2021              2020(1)             2021             2020(1)
Calculation of Nareit FFO Attributable to
Stockholders and
  OP Unit Holders
Net income                                            $   16,562          $ 13,430          $  23,069          $  18,216
Adjustments:
Depreciation and amortization of real estate assets       52,984            54,579            162,979            164,288
Impairment of real estate assets                             698                 -              6,754                  -
Gain on disposal of property, net                        (14,093)          (10,734)           (31,678)            (8,616)
Adjustments related to unconsolidated joint ventures         776               166                676              1,760

Nareit FFO attributable to stockholders and OP unit

  holders                                             $   56,927          $ 57,441          $ 161,800          $ 175,648
Calculation of Core FFO
Nareit FFO attributable to stockholders and OP unit
  holders                                             $   56,927          $ 57,441          $ 161,800          $ 175,648
Adjustments:
Depreciation and amortization of corporate assets            917             1,516              2,850              4,404
Change in fair value of earn-out liability                 5,000                 -             23,000            (10,000)

Amortization of unconsolidated joint venture

  basis differences                                           80               546                905              1,267
Transaction and acquisition expenses                       1,775               152              2,850                211
Loss on extinguishment or modification of debt, net        1,674                 -              2,784                 73
Core FFO                                              $   66,373          $ 

59,655 $ 194,189 $ 171,603

Nareit FFO Attributable to Stockholders and OP Unit

  Holders/Core FFO per Share(1)
Weighted-average shares of common stock outstanding -
  diluted                                                122,573           111,188            112,317            111,160

Nareit FFO attributable to stockholders and OP unit

  holders per share - diluted                         $     0.46          $   0.52          $    1.44          $    1.58
Core FFO per share - diluted                          $     0.54          $   0.54          $    1.73          $    1.54


(1)Certain prior period amounts have been reclassified to conform with current
year presentation.
(2)Restricted stock awards were dilutive to Nareit FFO Attributable to
Stockholders and OP Unit Holders per share and Core FFO per share for the three
and nine months ended September 30, 2021 and 2020, and, accordingly, their
impact was included in the weighted-average shares of common stock used in their
respective per share calculations.










                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         36

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EBITDAre and ADJUSTED EBITDAre-We use EBITDAre and Adjusted EBITDAre 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. Additionally, we believe they are a
useful indicator of our ability to support our debt obligations.
EBITDAre and Adjusted EBITDAre should not be considered as alternatives to net
income (loss), as an indication of our liquidity, nor as an indication of funds
available to cover our cash needs, including our ability to fund distributions.
Accordingly, EBITDAre and Adjusted EBITDAre should be reviewed in connection
with other GAAP measurements, and should not be viewed as more prominent
measures of performance than net income (loss) or cash flows from operations
prepared in accordance with GAAP. Our EBITDAre and Adjusted EBITDAre, as
presented, may not be comparable to amounts calculated by other REITs.
The following table presents our calculation of EBITDAre and Adjusted EBITDAre
(in thousands):
                                            Three Months Ended September                                                 Year Ended
                                                        30,                     Nine Months Ended September 30,         December 31,
                                               2021              2020               2021                2020                2020
Calculation of EBITDAre
Net income                                 $  16,562          $ 13,430      

$ 23,069 $ 18,216 $ 5,462 Adjustments: Depreciation and amortization

                 53,901            56,095             165,829            168,692              224,679
Interest expense, net                         18,570            20,388              57,765             65,317               85,303
Gain on disposal of property, net            (14,093)          (10,734)            (31,678)            (8,616)              (6,494)
Impairment of real estate assets                 698                 -               6,754                  -                2,423
Federal, state, and local tax expense            165               173                 496                382                  491

Adjustments related to unconsolidated

  joint ventures                               1,107               594               1,704              3,162                3,355
EBITDAre                                   $  76,910          $ 79,946      

$ 223,939 $ 247,153 $ 315,219 Calculation of Adjusted EBITDAre EBITDAre

                                   $  76,910          $ 79,946      

$ 223,939 $ 247,153 $ 315,219 Adjustments: Change in fair value of earn-out liability 5,000

                 -              23,000            (10,000)             (10,000)
Transaction and acquisition expenses           1,775               152               2,850                211                  539

Amortization of unconsolidated joint

  venture basis differences                       80               546                 905              1,267                1,883
Other impairment charges                           -                 -                   -                  -                  359
Adjusted EBITDAre                          $  83,765          $ 80,644          $  250,694          $ 238,631          $   308,000



LIQUIDITY AND CAPITAL RESOURCES



GENERAL-Aside from standard operating expenses, we expect our principal cash
demands to be for:
•cash distributions to stockholders;
•investments in real estate;
•capital expenditures and leasing costs;
•redevelopment and repositioning projects; and
•principal and interest payments on our outstanding indebtedness.
We expect our primary sources of liquidity to be:
•net proceeds from our underwritten IPO;
•operating cash flows;
•proceeds received from the disposition of properties;
•proceeds from equity and debt financings, including borrowings in connection
with our Bond Registration and those under our unsecured revolving credit
facility;
•distributions received from our unconsolidated joint ventures; and
•available, unrestricted cash and cash equivalents.
At this time, we believe our current sources of liquidity, most significantly
the net proceeds from our underwritten IPO, our operating cash flows, and
borrowing availability on our revolving credit facility, are sufficient to meet
our short- and long-term cash demands.








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         37

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UNDERWRITTEN INITIAL PUBLIC OFFERING-On July 19, 2021, we closed our
underwritten IPO, through which we offered 17.0 million shares of a new class of
common stock, $0.01 par value per share, at an initial price to the public of
$28.00 per share, pursuant to a registration statement filed with the SEC on
Form S-11 (File No. 333-255846), as amended. In connection with the underwritten
IPO, the underwriters exercised a 30-day option to purchase additional shares of
common stock to cover overallotments, and, accordingly, on August 2, 2021, we
settled the sale of an additional 2.6 million shares at a price of $28.00 per
share. These shares are listed on NASDAQ under the trading symbol "PECO". The
underwritten IPO, including the underwriters overallotment election, resulted in
gross proceeds of $547.4 million.
DEBT-The following table summarizes information about our debt as of
September 30, 2021 and December 31, 2020 (dollars in thousands):
                                              September 30, 2021      December 31, 2020
Total debt obligations, gross                $       1,715,714       $      

2,307,686

Weighted-average interest rate                             3.3  %                  3.1  %
Weighted-average term (in years)                           4.2              

4.1

Revolving credit facility capacity(1) $ 500,000 $

500,000

Revolving credit facility availability(2)              489,329              

490,404



(1)In July 2021, we refinanced the revolving credit facility and exercised our
option to extend its maturity as noted below.
(2)Net of any outstanding balance and letters of credit.
During the nine months ended September 30, 2021, we took steps to reduce our
leverage and appropriately ladder our debt maturities as follows:
•In July 2021, we completed the Refinancing. In connection with the Refinancing,
we paid off a $472.5 million term loan due in November 2025. The revolving
credit facility will mature in January 2026, and the two senior unsecured term
loan tranches will mature in November 2025 and July 2026, respectively.
Additionally, we used proceeds from the underwritten IPO to retire a
$375.0 million term loan that was set to mature in April 2022.
•In August 2021, we executed a $150 million partial pay down on a term loan that
was set to mature in November 2023 utilizing cash on hand.
BOND OFFERING-On September 20, 2021, the SEC declared effective our Bond
Registration. We intend to use net proceeds from any sale of offered securities
to repay outstanding indebtedness and for general corporate purposes, including
funding future investment activity.
In October 2021, we settled the 2021 Bond Offering priced at 98.692% of the
principal amount and maturing in November 2031. This offering resulted in gross
proceeds of $345.4 million. The notes are fully and unconditionally guaranteed
by us. In October 2021, net proceeds from the bond settlement were used, in
part, to pay down the remaining $150 million balance of the term loan debt that
was set to mature in November 2023.
Based on our current borrowings, we expect to save approximately $11.2 million
in interest annually as a result of our debt activity.
The allocation of total debt between fixed-rate and variable-rate as well as
between secured and unsecured, excluding market debt adjustments and deferred
financing expenses, net, and including the effects of derivative financial
instruments (see Notes 7 and 12) as of September 30, 2021 and December 31, 2020
is summarized below (in thousands):
                            September 30, 2021            December 31, 2020
As to interest rate:
Fixed-rate debt            $         1,540,714      $                   1,727,186
Variable-rate debt                     175,000                            580,500
Total                      $         1,715,714      $                   2,307,686
As to collateralization:
Unsecured debt             $         1,105,000      $                   1,622,500
Secured debt                           610,714                            685,186
Total                      $         1,715,714      $                   2,307,686


Our maturity schedule as of September 30, 2021 with respective principal payment
obligations, excluding finance lease liabilities, market debt adjustments, and
deferred financing expenses, is as follows (in thousands):
                 2021          2022          2023           2024           2025         Thereafter         Total
Term loans     $     -      $      -      $ 150,000      $ 475,000      $ 240,000      $  240,000      $ 1,105,000
Secured debt     1,803        84,926         42,942         28,124         27,877         424,925          610,597
Total          $ 1,803      $ 84,926      $ 192,942      $ 503,124      $ 267,877      $  664,925      $ 1,715,597










                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         38

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FINANCIAL LEVERAGE RATIOS-We believe our net debt to Adjusted EBITDAre, net debt
to total enterprise value, and debt covenant compliance as of September 30, 2021
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, 2021 and December 31,
2020 (in thousands):
                                                             September 30,
                                                                  2021               December 31, 2020
Net debt:
Total debt, excluding market adjustments and deferred
financing expenses                                          $   1,746,487          $        2,345,620
Less: Cash and cash equivalents                                    24,855                     104,952
Total net debt                                              $   1,721,632          $        2,240,668

Enterprise value:
Net debt                                                    $   1,721,632          $        2,240,668
Total equity value(1)                                           3,887,303                   2,797,234
Total enterprise value                                      $   5,608,935          $        5,037,902


(1)As of September 30, 2021, total equity value was calculated as the 126.6
million diluted shares multiplied by the closing market price per share of
common stock of $30.71. As of December 31, 2020, prior to the underwritten IPO,
total equity value was calculated as 106.6 million diluted shares multiplied by
the EVPS of $26.25. Diluted shares include shares of common stock and OP units.
The following table presents our calculation of net debt to Adjusted EBITDAre
and net debt to total enterprise value as of September 30, 2021 and December 31,
2020 (dollars in thousands):
                                                                 September 30, 2021                December 31, 2020
Net debt to Adjusted EBITDAre - annualized:
Net debt                                                     $                 1,721,632       $                2,240,668
Adjusted EBITDAre - annualized(1)                                                320,063                          308,000
Net debt to Adjusted EBITDAre - annualized                                          5.4x                             7.3x

Net debt to total enterprise value
Net debt                                                     $                 1,721,632       $                2,240,668
Total enterprise value                                                         5,608,935                        5,037,902
Net debt to total enterprise value                                                 30.7%                            44.5%


(1)Adjusted EBITDAre is based on a trailing twelve month period. See "Part I,
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Non-GAAP Measures - EBITDAre and Adjusted EBITDAre" of this
filing on Form 10-Q for a reconciliation to Net Income.
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, 2021 and 2020, we had capital spend
of $49.3 million and $40.8 million, respectively. Generally, we expect our
development and redevelopment projects to stabilize within 24 months. We
anticipate that obligations related to capital improvements as well as
redevelopment and development in 2021 can be met with cash flows from
operations, cash flows from dispositions, or borrowings on our unsecured
revolving line of credit. Below is a summary of our capital spending activity,
excluding leasing commissions, on a cash basis (dollars in thousands):
                                                                  Nine 

Months Ended September 30,

                                                                     2021                    2020
Capital expenditures for real estate(1):
Capital improvements                                          $          5,900          $     5,580
Tenant improvements                                                     16,350                8,788
Redevelopment and development                                           24,312               23,519
Total capital expenditures for real estate                              46,562               37,887
Corporate asset capital expenditures                                     1,429                1,565
Capitalized indirect costs(1)                                            1,324                1,320
Total capital spending activity                               $         

49,315 $ 40,772



(1)Amount includes internal salaries and related benefits of personnel who work
directly on capital projects as well as capitalized interest expense.
Our underwritten incremental yields on development and redevelopment projects
are expected to range between 9% - 11%. Our current in process projects
represent an estimated total investment of $42.6 million, and the total
underwritten








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         39

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incremental yield range on this estimated investment is approximately 9.5% -
10.5%. Actual incremental yields may vary from our underwritten incremental
yield range based on the actual total cost to complete a project and its actual
incremental annual NOI at stabilization. See "Part I, Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations - Key
Performance Indicators and Defined Terms" of this filing on Form 10-Q for
further information.
ACQUISITION ACTIVITY-We continually 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):
                                           Nine Months Ended September 30,
                                                 2021                      2020
Number of properties acquired                     4                            1
Number of outparcels acquired(1)                  3                            2
Total acquisition price            $         88,954                     $ 23,014


(1)Outparcels acquired are adjacent to shopping centers that we own.
Subsequent to September 30, 2021, we purchased two properties for $91.2 million.
DISPOSITION ACTIVITY-We are actively evaluating 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. We expect to continue to make strategic dispositions during
the remainder of 2021. The following table highlights our property dispositions
(dollars in thousands):
                                            Nine Months Ended September 30,
                                                  2021                      2020
Number of properties sold(1)                       20                           6
Number of outparcels sold(2)(3)                     3                       

-

Proceeds from sale of real estate   $         180,340                    $ 

48,276

Gain on sale of property, net(4)               33,121                       

9,915



(1)We retained an outparcel for one property sold during the nine months ended
September 30, 2021, and therefore the sale did not result in a reduction in our
total property count.
(2)During the nine months ended September 30, 2021, our outparcel sales
included: (i) the only remaining portion of one of our properties; therefore,
resulting in a reduction in our total property count; and (ii) an undeveloped
parcel of land, as well as an outparcel adjacent to one of our centers, neither
of which resulted in a reduction in our total property count.
(3)In addition to the three outparcels sold during the nine months ended
September 30, 2021, a tenant at one of our properties exercised a bargain
purchase option to acquire a parcel of land that we previously owned. This
generated minimal proceeds for us.
(4)The gain on sale of properties, net does not include miscellaneous write-off
activity, which is also recorded in Gain on Disposal of Property, Net on the
consolidated statements of operations.
Subsequent to September 30, 2021, we sold one property for $4.4 million.








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         40

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DISTRIBUTIONS-Distributions to our common stockholders and OP unit holders, including key financial metrics for comparison purposes, for the nine months ended September 30, 2021 and 2020, are as follows (in thousands):

                [[Image Removed: cik0001476204-20210930_g7.jpg]]
   Cash distributions to OP unit holders             Net cash provided by 

operating activities

   Cash distributions to common stockholders         Core FFO(1)

   Distributions reinvested through the DRIP


(1)See "Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Key Performance Indicators" for the definition of Core FFO,
or information regarding why we present Core FFO. See "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP
Measures - Nareit FFO and Core FFO" for a reconciliation of this non-GAAP financial
measure to Net Income.


We paid monthly distributions of $0.085 per share, or $1.02 annualized, for the
months of December 2020, and each month beginning January 2021 through September
2021. On September 28, 2021, our Board authorized an increase of 6% on the
monthly distribution in the amount of $0.090 per share, or $1.08 annualized,
which was paid on November 1, 2021. On November 3, 2021, our Board authorized
distributions for November and December 2021, as well as January 2022, to the
stockholders of record at the close of business on November 15, 2021, December
15, 2021, and January 19, 2022, respectively, of $0.09 per share of common
stock. OP unit holders will receive distributions at the same rate as common
stockholders.
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). We generally will not be subject to U.S. federal income
tax on the income that we distribute to our stockholders each year due to
meeting the REIT qualification requirements. However, we may be subject to
certain state and local taxes on our income, property, or net worth and to
federal income and excise taxes on our undistributed income.
We have not established a minimum distribution level, and our charter does not
require that we make distributions to our stockholders.
DRIP AND THE SRP-On August 4, 2021, as a result of our underwritten IPO, our
Board approved the termination of the DRIP and the SRP.








                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         41

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CASH FLOW ACTIVITIES-As of September 30, 2021, we had cash and cash equivalents
and restricted cash of $114.2 million, a net cash decrease of $17.7 million
during the nine months ended September 30, 2021.
Below is a summary of our cash flow activity (dollars in thousands):
                                           Nine Months Ended September 30,
                                              2021                   2020               $ Change               % Change
Net cash provided by operating
activities                             $        198,313          $  157,245          $    41,068                      26.1  %
Net cash provided by (used in)
investing activities                             37,835             (13,561)              51,396                           NM

Net cash used in financing activities (253,870) (101,994)

            (151,876)                    148.9  %


OPERATING ACTIVITIES-Our net cash provided by operating activities was primarily
impacted by the following:
•Property operations and working capital-Most of our operating cash comes from
rental and tenant recovery income and is offset by property operating expenses,
real estate taxes, and general and administrative costs. During the nine months
ended September 30, 2021, we had a net cash inflow of $4.6 million from changes
in working capital as compared to a net cash outlay of $17.6 million during the
same period in 2020. This change was primarily driven by improved collections on
amounts due from Neighbors as well as expense reduction initiatives, and was
partially offset by higher leasing commissions and prepaid expenses.
•Fee and management income-We also generate operating cash from our third-party
investment management business, pursuant to various management and advisory
agreements between us and the Managed Funds. Our fee and management income was
$7.1 million for the nine months ended September 30, 2021, a decrease of $0.4
million as compared to the same period in 2020.
•Cash paid for interest-During the nine months ended September 30, 2021, we paid
$53.5 million for interest, a decrease of $6.4 million over the same period in
2020, largely due to: (i) lower borrowings as a result of early repayments of
debt; (ii) the $200 million draw and subsequent repayment of our draw on the
revolver during the second quarter of 2020; and (iii) lower average interest
rates due to the decrease in LIBOR.
INVESTING ACTIVITIES-Our net cash provided by (used in) investing activities was
primarily impacted by the following:
•Real estate acquisitions-During the nine months ended September 30, 2021, our
acquisitions resulted in a total cash outlay of $89.0 million, as compared to a
total cash outlay of $23.0 million during the same period in 2020.
•Real estate dispositions-During the nine months ended September 30, 2021, our
dispositions resulted in a net cash inflow of $180.3 million, as compared to a
net cash inflow of $48.3 million during the same period in 2020.
•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, 2021, we paid $49.3 million for capital expenditures, an
increase of $8.5 million over the same period in 2020, primarily due to in
increase in tenant improvements owing largely to an increase in leasing volume
as compared to the same period a year ago.
•Return of investment in unconsolidated joint ventures-During the nine months
ended September 30, 2021, we had a return of investment in unconsolidated joint
ventures of $4.3 million, including $2.1 million in connection with NRP
primarily as a result of property dispositions. During the nine months ended
September 30, 2020, we had a return of investment in unconsolidated joint
ventures of $1.9 million.
•Investment in third parties-During the nine months ended September 30, 2021, we
made an investment in a third party business that resulted in a net cash outflow
of $3.0 million.
FINANCING ACTIVITIES-Our net cash used in financing activities was primarily
impacted by the following:
•Underwritten IPO-Upon consummation of our underwritten IPO in July 2021,
including the over-allotment option exercised in full by the underwriters, we
had gross proceeds from the issuance of common stock of $547.4 million, offset
by a cash outflow of $39.0 million for offering costs, discounts, and
commissions during the nine months ended September 30, 2021. We did not issue
any common shares during the nine months ended September 30, 2020.
•Debt borrowings and payments-During the nine months ended September 30, 2021,
we had $597.4 million in net repayment of debt primarily as a result of: (i) a
pay down in July 2021 of a $375 million term loan set to mature in 2022 using
proceeds from our underwritten IPO; (ii) a partial pay down in August 2021 of a
$150 million term loan set to mature in 2023 utilizing cash on hand; and (iii)
early repayments of mortgage loans. During the nine months ended September 30,
2020 we had net payments of $37.8 million, primarily as a result of a pay down
in January 2020 of $30.0 million on term loan debt that was set to mature in
2021.
•Distributions to stockholders and OP unit holders-Cash used for distributions
to common stockholders and OP unit holders increased $28.5 million for the nine
months ended September 30, 2021 as compared to the same period in 2020, due to
an increase in our distribution rate, an increase in common shares outstanding
as a result of our underwritten IPO, and the suspension of our distributions
from April 2020 through September 2020.
•Share repurchases-Cash outflows for share repurchases increased by $72.6
million for the nine months ended September 30, 2021 as compared to the same
period in 2020, primarily as a result of a tender offer, which was settled in
January 2021.









                                                       PHILLIPS EDISON & COMPANY
                                                    SEPTEMBER 30, 2021 FORM 10-Q         42

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CONTRACTUAL COMMITMENTS AND CONTINGENCIES



We have debt obligations related to both our secured and unsecured debt. In
addition, we have operating leases pertaining to office equipment for our
business as well as ground leases at certain of our shopping centers. We are
presenting an update to our future contractual commitments and contingencies as
a result of our material debt transactions occurring in the third quarter of
2021 (see Note 6 for more details). The table below excludes obligations related
to tenant allowances and improvements because such amounts are not fixed or
determinable. However, we believe we currently have sufficient financing in
place to fund any such amounts as they arise through cash from operations or
borrowings. The following table details our contractual obligations as of
September 30, 2021 (in thousands):
                                                                            

Payments Due by Period

                                 Total               2021               2022               2023               2024               2025            

Thereafter

Debt obligations - principal

  payments(1)                $ 1,715,597          $  1,803          $  

84,926 $ 192,942 $ 503,124 $ 267,877 $ 664,925 Debt obligations - interest

  payments(2)                    227,429            14,145             54,242             50,221             37,535             24,687             

46,599

Operating lease obligations        8,504               215                823                672                546                317               

5,931

Finance lease obligations            121                12                 45                 40                 24                  -                   -
Total                        $ 1,951,651          $ 16,175          $ 140,036          $ 243,875          $ 541,229          $ 292,881          $  717,455


(1)In July 2021, we amended our $500 million revolving credit facility to extend
the maturity from October 2021 to January 2026, and lower the interest rate
spread from 1.40% over LIBOR to 1.35% over LIBOR. Additionally, the new terms
include two six-month maturity extension options. As of September 30, 2021, we
have no outstanding balance on our revolving credit facility.
(2)Future variable-rate interest payments are based on interest rates as of
September 30, 2021, including the impact of our swap agreements.
Our portfolio debt instruments and the unsecured revolving credit facility
contain certain covenants and restrictions. The following list provides an
update to certain restrictive covenants specific to the unsecured revolving
credit facility and unsecured term loans that were deemed significant as a
result of our debt activity occurring in July 2021:
•limits the ratio of total debt to total asset value, as defined, to 60% or less
with a surge to 65% for a period of four consecutive fiscal quarters following a
material acquisition;
•limits the ratio of secured debt to total asset value, as defined, to 35% or
less with a surge to 40% for a period of four consecutive fiscal quarters
following a material acquisition;
•requires the fixed-charge ratio, as defined, to be 1.5:1 or greater;
•limits the ratio of cash dividend payments to Nareit FFO, as defined, to 95%;
•limits the ratio of unsecured debt to unencumbered total asset value, as
defined, to 60% or less with a surge to 65% for a period of four consecutive
fiscal quarters following a material acquisition;
•requires the unencumbered NOI to interest expense ratio, as defined, to be
1.75:1 or greater; and
•if we were to lose our investment grade rating in the future, the current
tangible net worth will be required to exceed the minimum tangible net worth, as
defined, at that time.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES



Our 2020 Annual Report on Form 10-K, originally filed with the SEC on March 12,
2021, contains a description of our critical accounting policies and estimates,
including those relating to real estate acquisitions, rental income, and the
valuation of real estate assets. There have been no significant changes to our
critical accounting policies during 2021.

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