PHILLIPS EDISON & COMPANY, INC.

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

05/05/2022 | 04:42pm EDT
The following discussion and analysis should be read in conjunction with our
accompanying consolidated financial statements and notes thereto and the more
detailed information contained in our 2021 Annual Report on Form 10-K, filed
with the SEC on February 16, 2022. All references to "Notes" throughout this
document refer to the footnotes to the consolidated financial statements in
"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 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"). These forward-looking
statements are based on current expectations, estimates, and projections about
the industry and markets in which we operate, and beliefs of, and assumptions
made by, management of our company and involve uncertainties that could
significantly affect our financial results. 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; (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; (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 concentration of our portfolio in a limited number of industries,
geographies, or investments; (xvi) the economic, political, and social impact
of, and uncertainty relating to, the COVID-19 pandemic; (xvii) 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;
(xviii) the loss or bankruptcy of our tenants; (xix) to the extent we are
seeking to dispose of properties, our ability to do so at attractive prices or
at all; and (xx) the impact of inflation on us and on our tenants. 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 2021 Annual Report on
Form 10-K, filed with the SEC on February 16, 2022, 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. Therefore, such statements are not intended
to be a guarantee of our performance in future periods.

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 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.

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         18

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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 at the end of the period 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 unlevered 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 unlevered 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 unlevered
yields may vary from our underwritten incremental unlevered 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 terms
that is executed for substantially the 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 or cash flows from operations, we utilize non-GAAP
metrics to measure our operational and financial performance. See "Non-GAAP
Measures" below 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; (iv)
transaction and acquisition expenses; and (v) realized performance income. 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 ("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
modification of debt and other; (v) other impairment charges; (vi) transaction
and acquisition expenses; and (vii) realized performance income. 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.

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         19

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

•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 discounts, 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 have been owned and operational for the entirety of each reporting period (i.e., since January 1, 2021).

•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 shopping centers. Our portfolio primarily consists
of neighborhood centers anchored by the #1 or #2 grocer tenants by sales within
their respective formats by trade area. Our Neighbors are a mix of national,
regional, and local retailers that primarily provide necessity-based goods and
services.

As of March 31, 2022, we owned equity interests in 290 shopping centers,
including 269 wholly-owned shopping centers and 21 shopping centers owned
through two unconsolidated joint ventures, which comprised approximately 33.1
million square feet in 31 states. In addition to managing our shopping centers,
our third-party investment management business provides comprehensive real
estate management services to the Managed Funds.

PORTFOLIO AND LEASING STATISTICS-Below are statistical highlights of our wholly-owned portfolio as of March 31, 2022 and 2021 (dollars and square feet in thousands):


                                                                      March 31, 2022          March 31, 2021
Number of properties                                                            269                     278
Number of states                                                                 31                      31
Total square feet                                                            30,813                  31,306
ABR                                                                  $      412,518          $      386,971
% ABR from omni-channel grocery-anchored shopping centers                      97.3  %                 96.4  %
Leased occupancy %:
Total portfolio spaces                                                         96.2  %                 94.8  %
Anchor spaces                                                                  98.1  %                 97.3  %
Inline spaces                                                                  92.6  %                 89.8  %
Average remaining lease term (in years)(1)                                      4.5                     4.6


(1)The average remaining lease term in years excludes future options to extend
the term of the lease.

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         20

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The following table details information for our unconsolidated joint ventures as
of March 31, 2022, which is the basis for determining the prorated information
included in the subsequent tables (dollars and square feet in thousands):

                                                                           March 31, 2022
                                         Ownership
           Joint Venture                Percentage              Number of Properties               ABR                  GLA
Grocery Retail Partners I                   14%                             20                $   30,090                 2,210
Necessity Retail Partners                   20%                              1                     2,270                   116


LEASE EXPIRATIONS-The following chart shows the aggregate scheduled lease
expirations, excluding our Neighbors who are occupying space on a temporary
basis, after March 31, 2022 for each of the next ten years and thereafter for
our wholly-owned properties and the prorated portion of those owned through our
unconsolidated joint ventures:

                [[Image Removed: cik0001476204-20220331_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 "Results of Operations - Leasing Activity" below for further discussion of
leasing activity.

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         21

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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 unconsolidated joint
ventures, by Neighbor type as of March 31, 2022:

[[Image Removed: cik0001476204-20220331_g3.jpg]][[Image Removed: cik0001476204-20220331_g4.jpg]]

The following charts present the composition of our portfolio by Neighbor industry as of March 31, 2022:

[[Image Removed: cik0001476204-20220331_g5.jpg]][[Image Removed: cik0001476204-20220331_g6.jpg]]

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         22

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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 unconsolidated joint ventures, is generated from
Neighbors providing necessity-based goods and services.

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 unconsolidated joint ventures, as of March 31, 2022 (dollars
and square feet in thousands):

                                                                                                               % of Leased
Neighbor(1)                               ABR                % of ABR             Leased Square Feet           Square Feet           Number of Locations(2)
Kroger                                $  27,411                     6.6  %               3,366                       11.2  %                     61
Publix                                   23,621                     5.7  %               2,314                        7.7  %                     57
Albertsons                               18,215                     4.4  %               1,709                        5.7  %                     31
Ahold Delhaize                           17,662                     4.2  %               1,249                        4.2  %                     23
Walmart                                   8,933                     2.1  %               1,770                        5.9  %                     13
Giant Eagle                               7,732                     1.9  %                 828                        2.8  %                     12
Sprouts Farmers Market                    6,494                     1.6  %                 421                        1.4  %                     14
TJX Companies                             5,500                     1.3  %                 465                        1.6  %                     16
Raley's                                   3,884                     0.9  %                 253                        0.8  %                      4
Dollar Tree                               3,265                     0.8  %                 329                        1.1  %                     35
SUPERVALU                                 3,244                     0.8  %                 336                        1.1  %                      5
Subway Group                              2,516                     0.6  %                  99                        0.3  %                     70
Lowe's                                    2,469                     0.6  %                 369                        1.3  %                      4
Anytime Fitness, Inc.                     2,366                     0.6  %                 150                        0.5  %                     31
Kohl's Corporation                        2,241                     0.5  %                 365                        1.2  %                      4
Food 4 Less (PAQ)                         2,215                     0.5  %                 119                        0.4  %                      2
Save Mart                                 2,174                     0.5  %                 258                        0.9  %                      5
Petco Animal Supplies, Inc.               2,136                     0.5  %                 127                        0.4  %                     11
Franchise Group, Inc.                     2,084                     0.5  %                 145                        0.5  %                     24
United Parcel Service                     2,013                     0.5  %                  79                        0.3  %                     62
Total                                 $ 146,175                    35.1  %              14,751                       49.3  %                    484

(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
continued through early 2021. Our collections returned to pre-COVID levels
during the second half of 2021 and have continued through the first quarter of
2022. We believe our collections have stabilized, which will reduce volatility
in our earnings during 2022 as compared to 2021.

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         23

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SUMMARY OF OPERATING ACTIVITIES FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND
2021

                                                         Three Months Ended                      Favorable (Unfavorable)
                                                              March 31,                                   Change
(Dollars in thousands)                                 2022               2021                   $                     %(1)
Revenues:
Rental income                                      $ 138,748          $ 127,623          $       11,125                    8.7  %
Fees and management income                             2,461              2,286                     175                    7.7  %
Other property income                                    954                472                     482                  102.1  %
Total revenues                                       142,163            130,381                  11,782                    9.0  %
Operating Expenses:
Property operating                                    23,320             22,202                  (1,118)                  (5.0) %
Real estate taxes                                     17,491             16,573                    (918)                  (5.5) %
General and administrative                            11,532              9,341                  (2,191)                 (23.5) %
Depreciation and amortization                         57,226             55,341                  (1,885)                  (3.4) %
Impairment of real estate assets                           -              5,000                   5,000                        NM
Total operating expenses                             109,569            108,457                  (1,112)                  (1.0) %

Other:

Interest expense, net                                (18,199)           (20,063)                  1,864                    9.3  %
Gain on disposal of property, net                      1,368             13,841                 (12,473)                 (90.1) %
Other expense, net                                    (4,365)           (15,585)                 11,220                   72.0  %
Net income                                            11,398                117                  11,281                        NM
Net income attributable to noncontrolling
interests                                             (1,319)               (14)                 (1,305)                       NM
Net income attributable to stockholders            $  10,079          $     103          $        9,976                        NM


(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 256 properties that were
owned and operational prior to January 1, 2021. 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, 2020,
which includes 25 properties disposed of and twelve properties acquired. Below
are explanations of the significant fluctuations in the results of operations
for the three months ended March 31, 2022 and 2021:

Rental Income increased $11.1 million primarily as follows:

•$8.3 million increase related to our same-center portfolio as follows:


?$6.0 million increase primarily due to a $0.37 increase in average minimum rent
PSF and a 1.3% improvement in average occupancy owing largely to the strength of
our leasing results during 2021;

?$1.7 million increase owing largely to an increase in recoverable income attributed to an increase in real estate taxes and common area maintenance spending, as compared to 2021, as well as a 1.3% improvement in average occupancy; and

?$0.6 million increase primarily due to the continued stabilization of collections from our Neighbors which resulted in a decrease in Neighbors we have identified as a credit risk and lower general reserves.

•$2.9 million increase primarily related to improving the quality of our portfolio through our acquisition and disposition activity.

Property Operating Expenses:

•The $1.1 million increase in property operating expenses was largely related to our same-center portfolio and corporate operating activities primarily as follows:

?$0.7 million increase in recoverable expenses attributed to higher common area maintenance costs, as compared to 2021; and

?$0.5 million increase primarily due to higher insurance expenses attributed to higher market rates and an increase in claims and claim development.

Real Estate Tax Expenses:

•The $0.9 million increase in real estate tax expenses is primarily due to higher real estate tax assessments on the value of our portfolio.

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         24

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General and Administrative Expenses increased $2.2 million primarily as follows:


•$1.1 million increase in compensation expense owing largely to an increase in
performance- and service-based compensation of approximately $0.4 million and
$0.3 million, respectively;

•$0.7 million increase primarily due to an increase in directors and officers insurance as a result of our underwritten IPO; and


•$0.3 million increase primarily due to costs related to the conversion of our
Class B common stock to common stock and other compliance related expenses owing
largely to our common stock being listed on a publicly traded market.

Depreciation and Amortization:

•The $1.9 million increase in depreciation and amortization is primarily due to the execution of our growth strategy and investment in improvements to our Neighbor spaces.

Impairment of Real Estate Assets:

•The $5.0 million decrease in impairment of real estate assets was due to assets that were sold during 2021 at a disposition price that was less than the carrying value.

Interest Expense, Net:


•The $1.9 million decrease during the three months ended March 31, 2022 as
compared to the same period in 2021 was primarily due to: (i) early repayments
of debt outstanding in 2021; partially offset by (ii) higher average interest
rates; and (iii) the issuance of $350 million aggregate principal amount of
2.625% senior notes in October 2021. Interest Expense, Net was comprised of the
following (dollars in thousands):

                                                                       

Three Months Ended March 31,

                                                                        2022                     2021

Interest on unsecured term loans and senior notes, net $

    9,916       $         10,633
Interest on secured debt                                                       5,531                  6,780
Interest on revolving credit facility, net                                       247                    228
Non-cash amortization and other                                                1,605                  1,731
Loss on extinguishment or modification of debt and other, net                    900                    691
Interest expense, net                                           $           

18,199 $ 20,063


Weighted-average interest rate as of end of period                            3.2  %                3.0   %
Weighted-average term (in years) as of end of period                             5.1                    3.8


Gain on Disposal of Property, Net:


•The $12.5 million decrease was primarily related to the sale of two properties
with a net gain of $1.4 million during the three months ended March 31, 2022, as
compared to the sale of six properties and one outparcel with a net gain of
$13.8 million during the three months ended March 31, 2021 (see Note 4).

Other Expense, Net:


•The $11.2 million decrease was primarily related to a lower charge in
connection with the change in the fair value of our earn-out liability, which
was settled in January 2022, partially offset by an increase in transaction and
acquisition expenses owing largely to restricted stock units awarded at the time
of our underwritten IPO. Other Expense, Net was comprised of the following (in
thousands):

                                                                     Three Months Ended March 31,
                                                                      2022                   2021

Change in fair value of earn-out liability (see Note 12) $ (1,809) $ (16,000) Equity in net (loss) income of unconsolidated joint ventures

               (54)                 714
Transaction and acquisition expenses                                    (2,045)                (141)
Federal, state, and local income tax expense                               (97)                (166)
Other                                                                     (360)                   8
Other expense, net                                              $       (4,365)         $   (15,585)


                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         25

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LEASING ACTIVITY-Below is a summary of leasing activity for our wholly-owned properties for the three months ended March 31, 2022 and 2021(1):

                                                           Total Deals                 Inline Deals
                                                       2022          2021           2022          2021
New leases:
Number of leases                                         92            153            88           147
Square footage (in thousands)                           257            467           186           341
ABR (in thousands)                                  $ 4,941       $  8,120       $ 4,321       $ 6,605
ABR PSF                                             $ 19.25       $  17.39       $ 23.21       $ 19.34
Cost PSF of executing new leases                    $ 28.90       $  29.00       $ 33.40       $ 29.65
Number of comparable leases                              34             70            33            70
Comparable rent spread                                 34.0  %        12.4  %       27.4  %       12.4  %
Weighted-average lease term (in years)                  6.8            8.0           7.5           6.2
Renewals and options:
Number of leases                                        152            163           146           147
Square footage (in thousands)                           519            978           323           312
ABR (in thousands)                                  $ 9,247       $ 11,472       $ 7,302       $ 7,069
ABR PSF                                             $ 17.81       $  11.73       $ 22.60       $ 22.67
ABR PSF prior to renewals                           $ 16.02       $  10.97       $ 19.95       $ 21.02
Percentage increase in ABR PSF                         11.2  %         6.9  %       13.3  %        7.8  %
Cost PSF of executing renewals and options(2)       $  0.63       $   0.51       $  0.88       $  1.58
Number of comparable leases(3)                          128            136           126           133
Comparable rent spread(3)                              14.7  %         8.0  %       14.5  %        7.9  %
Weighted-average lease term (in years)                  4.3            3.9           3.9           4.0
Portfolio retention rate                               89.7  %        88.8  %       77.6  %       80.3  %

(1)PSF 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 PSF 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 "Key Performance Indicators and Defined Terms" above for additional information related to the following non-GAAP measures.


SAME-CENTER NOI-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 months ended
March 31, 2022 and 2021, Same-Center NOI represents the NOI for the 256
properties that were wholly-owned and operational for the entire portion of both
comparable reporting periods.

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

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         26

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

                                                                    Three Months Ended March 31,              Favorable (Unfavorable)
                                                                                                              2022                 2021             $ Change               % Change
Revenues:
Rental income(1)                                                                                        $      94,626          $  89,824          $    4,802
Tenant recovery income                                                                                         31,481             30,172               1,309
Reserves for uncollectibility(2)                                                                                 (770)            (1,546)                776
Other property income                                                                                             747                462                 285
Total revenues                                                                                                126,084            118,912               7,172                      6.0  %
Operating expenses:
Property operating expenses                                                                                    19,813             18,751              (1,062)
Real estate taxes                                                                                              16,457             16,033                (424)
Total operating expenses                                                                                       36,270             34,784              (1,486)                    (4.3) %
Total Same-Center NOI                                                                                   $      89,814          $  84,128          $    5,686                      6.8  %


(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
                                                                             March 31,
                                                                                  2022                2021
Net income                                                                    $   11,398          $      117
Adjusted to exclude:
Fees and management income                                                        (2,461)             (2,286)
Straight-line rental income(1)                                                    (1,809)             (1,422)
Net amortization of above- and below-market leases                                (1,002)               (838)
Lease buyout income                                                               (1,965)               (797)
General and administrative expenses                                               11,532               9,341
Depreciation and amortization                                                     57,226              55,341
Impairment of real estate assets                                                       -               5,000
Interest expense, net                                                             18,199              20,063
Gain on disposal of property, net                                                 (1,368)            (13,841)
Other expense, net                                                                 4,365              15,585

Property operating expenses related to fees and management income

        1,070                 816
NOI for real estate investments                                                   95,185              87,079
Less: Non-same-center NOI(2)                                                      (5,371)             (2,951)
Total Same-Center NOI                                                         $   89,814          $   84,128

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

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.

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         27

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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 March 31,

                                                                               2022                   2021

Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders Net income

                                                              $        11,398          $       117
Adjustments:
Depreciation and amortization of real estate assets                              56,320               54,341
Impairment of real estate assets                                                      -                5,000
Gain on disposal of property, net                                                (1,368)             (13,841)
Adjustments related to unconsolidated joint ventures                                705                 (637)
Nareit FFO attributable to stockholders and OP unit holders             $        67,055          $    44,980
Calculation of Core FFO
Nareit FFO attributable to stockholders and OP unit holders             $        67,055          $    44,980
Adjustments:
Depreciation and amortization of corporate assets                                   906                1,000
Change in fair value of earn-out liability                                        1,809               16,000
Transaction and acquisition expenses                                              2,045                  141
Loss on extinguishment or modification of debt and other, net                       900                  691
Amortization of unconsolidated joint venture basis differences                       44                  746
Realized performance income                                                        (196)                   -
Core FFO                                                                $   

72,563 $ 63,558

Nareit FFO Attributable to Stockholders and OP Unit Holders/Core FFO per diluted share Weighted-average shares of common stock outstanding - diluted(1)

                128,503              106,995

Nareit FFO attributable to stockholders and OP unit holders per share - diluted

                                                                 $          0.52          $      0.42
Core FFO per share - diluted                                            $   

0.56 $ 0.59



(1)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
months ended March 31, 2022 and 2021, and, accordingly, their impact was
included in the weighted-average shares of common stock used in their respective
per share calculations.


                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         28

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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 March 31,                   Year Ended December 31,
                                                            2022                  2021                                                   2021
Calculation of EBITDAre
Net income                                           $        11,398          $     117                                              $  17,233
Adjustments:
Depreciation and amortization                                 57,226             55,341                                                221,433
Interest expense, net                                         18,199             20,063                                                 76,371
Gain on disposal of property, net                             (1,368)           (13,841)                                               (30,421)
Impairment of real estate assets                                   -              5,000                                                  6,754
Federal, state, and local tax expense                             97                166                                                    327
Adjustments related to unconsolidated joint ventures           1,019              1,132                                                  1,431
EBITDAre                                             $        86,571          $  67,978                                              $ 293,128
Calculation of Adjusted EBITDAre
EBITDAre                                             $        86,571          $  67,978                                              $ 293,128

Adjustments:

Change in fair value of earn-out liability                     1,809             16,000                                                 30,436
Transaction and acquisition expenses                           2,045                141                                                  5,363
Amortization of unconsolidated joint venture basis
differences                                                       44                746                                                  1,167
Realized performance income                                     (196)                 -                                                   (675)
Adjusted EBITDAre                                    $        90,273          $  84,865                                              $ 329,419



LIQUIDITY AND CAPITAL RESOURCES

GENERAL-Aside from standard operating expenses, we expect our principal cash demands to be for:

•investments in real estate;

•cash distributions to stockholders;

•redevelopment and repositioning projects;

•capital expenditures and leasing costs; and

•principal and interest payments on our outstanding indebtedness.

We expect our primary sources of liquidity to be:

•operating cash flows;

•proceeds received from the disposition of properties;

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

•proceeds from any ATM offering activities;

•distributions received from our unconsolidated joint ventures; and

•available, unrestricted cash and cash equivalents.

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

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         29

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IMPACT OF THE UNDERWRITTEN IPO-On July 19, 2021, we closed our underwritten IPO,
from which we received gross proceeds of $547.4 million. The underwritten IPO
has allowed us access to forms of capital not previously available to us as
follows:

•In October 2021, we settled the registered offering of $350 million aggregate
principal amount of 2.625% senior notes, which resulted in gross proceeds of
$345.4 million.

•In February 2022, we filed an automatically effective shelf registration
statement on Form S-3 providing for the public offering and sale, from time to
time, by us of our preferred stock, common stock, debt securities, depository
shares, warrants, right, units, and guarantees of debt securities and by the
Operating Partnership of its debt securities, in each case in unlimited amounts.

•In connection with our February 2022 Form S-3 filing, we commenced the ATM
through which we may offer and sell shares of our common stock having an
aggregate offering price of up to $250 million. We will continue to evaluate the
market for conditions favorable for using the ATM.

DEBT-The following table summarizes information about our debt as of March 31, 2022 and December 31, 2021 (dollars in thousands):


                                              March 31, 2022       December 31, 2021
Total debt obligations, gross                $    1,897,567       $       

1,914,082

Weighted-average interest rate                          3.2  %                  3.3  %
Weighted-average term (in years)                        5.1                 

5.2

Revolving credit facility capacity(1) $ 500,000 $ 500,000 Revolving credit facility availability(2)

           444,947                 

489,329



(1)The revolving credit facility matures in January 2026 and includes additional
options to extend the maturity to January 2027 with its execution being subject
to compliance with certain terms included in the loan agreement.

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


The 2.625% senior notes issued by the Operating Partnership pursuant to an
effective registration statement in October 2021 were, and debt securities of
the Operating Partnership registered under our automatically effective shelf
registration statement on Form S-3 filed in February 2022 will be, fully and
unconditionally guaranteed by us. At March 31, 2022, the Operating Partnership
had issued and outstanding its 2.625% senior notes. The obligations of the
Operating Partnership to pay principal, premiums, if any, and interest on the
2.625% senior notes are fully and unconditionally guaranteed by us on a senior
basis. As a result of the amendments to SEC Rule 3-10 of Regulation S-X,
subsidiary issuers of obligations guaranteed by the parent are not required to
provide separate financial statements, provided that: (i) the subsidiary obligor
is consolidated into the parent company's consolidated financial statements;
(ii) the parent guarantee is "full and unconditional"; and (iii) subject to
certain exceptions as set forth below, the alternative disclosure required by
Rule 13-01 of Regulation S-X is provided, which includes narrative disclosure
and summarized financial information. We meet the conditions of this requirement
and thus, are not presenting separate financial statements. Furthermore, as
permitted under Rule 13-01(a)(4)(vi) of Regulation S-X, we have excluded the
summarized financial information for the Operating Partnership because the
assets, liabilities, and results of operations of the Operating Partnership are
not materially different than the corresponding in our consolidated financial
statements, and management believes such summarized financial information would
be repetitive and would not provide incremental value to investors.

FINANCIAL LEVERAGE RATIOS-We believe our net debt to Adjusted EBITDAre, net debt
to total enterprise value, and debt covenant compliance as of March 31, 2022
allow us access to future borrowings as needed in the near term. The following
table presents our calculation of net debt and total enterprise value, inclusive
of our prorated portion of net debt and cash and cash equivalents owned through
our unconsolidated joint ventures, as of March 31, 2022 and December 31, 2021
(in thousands):

                                                                    March 31, 2022           December 31, 2021
Net debt:
Total debt, excluding discounts, market adjustments, and deferred
  financing expenses                                              $     1,924,988          $        1,941,504
Less: Cash and cash equivalents                                             5,507                      93,109
Total net debt                                                    $     1,919,481          $        1,848,395

Enterprise value:
Net debt                                                          $     1,919,481          $        1,848,395
Total equity market capitalization(1)(2)                                4,414,266                   4,182,996
Total enterprise value                                            $     6,333,747          $        6,031,391


(1)Total equity market capitalization is calculated as diluted shares multiplied
by the closing market price per share, which includes 128.4 million and 126.6
million diluted shares as of March 31, 2022 and December 31, 2021, respectively,
and the closing market price per share of $34.39 and $33.04 as of March 31, 2022
and December 31, 2021, respectively.

(2)Fully diluted shares include common stock and OP units as of March 31, 2022
and Class B common stock, common stock, and OP units as of December 31, 2021.

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         30

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The following table presents our calculation of net debt to Adjusted EBITDAre
and net debt to total enterprise value as of March 31, 2022 and December 31,
2021 (dollars in thousands):

                                                                 March 31, 2022                December 31, 2021
Net debt to Adjusted EBITDAre - annualized:
Net debt                                                     $             1,919,481       $                1,848,395
Adjusted EBITDAre - annualized(1)                                            334,827                          329,419
Net debt to Adjusted EBITDAre - annualized                                      5.7x                             5.6x

Net debt to total enterprise value:
Net debt                                                     $             1,919,481       $                1,848,395
Total enterprise value                                                     6,333,747                        6,031,391
Net debt to total enterprise value                                             30.3%                            30.6%


(1)Adjusted EBITDAre is based on a trailing twelve month period. See "Non-GAAP
Measures - EBITDAre and Adjusted EBITDAre" above 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 three months ended March 31, 2022 and 2021, we had capital spend of
$18.6 million and $13.5 million, respectively. Below is a summary of our capital
spending activity, excluding leasing commissions, on a cash basis (in
thousands):

                                                     Three Months Ended March 31,
                                                         2022                      2021
Capital expenditures for real estate:
Capital improvements                         $         1,797                    $    848
Tenant improvements                                    7,260                

3,741

Redevelopment and development                          7,994                

8,098

Total capital expenditures for real estate            17,051                

12,687

Corporate asset capital expenditures                     918                

439

Capitalized indirect costs(1)                            639                

411

Total capital spending activity              $        18,608                

$ 13,537

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

We anticipate that obligations related to capital improvements, as well as redevelopment and development, in 2022 can be met with cash flows from operations, cash flows from dispositions, or borrowings on our unsecured revolving credit facility.


Generally, we expect our development and redevelopment projects to stabilize
within 24 months. Our underwritten incremental unlevered yields on development
and redevelopment projects are expected to range between 10%-12%. Our current in
process projects represent an estimated total investment of $48.3 million.
Actual incremental unlevered yields may vary from our underwritten incremental
unlevered yield range based on the actual total cost to complete a project and
its actual incremental annual NOI at stabilization. See "Key Performance
Indicators and Defined Terms" above for further information.

ACQUISITION ACTIVITY-We are actively monitoring the commercial real estate
market for properties that have future growth potential, are located in
attractive demographic markets, and support our business objectives. We expect
to continue to make strategic acquisitions during the remainder of 2022. The
following table highlights our property acquisitions (dollars in thousands):

                                          Three Months Ended March 31,
                                               2022                    2021
Number of properties acquired                     3                        2
Number of outparcels acquired(1)                  -                        2
Contract price                     $        100,400                 $ 

39,605

Total price of acquisitions(2)              101,440                   

39,850

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

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

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         31

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DISPOSITION ACTIVITY-We continually evaluate our portfolio of assets for
opportunities to make strategic dispositions of assets that no longer meet our
growth and investment objectives or assets that have stabilized in order to
capture their value. The following table highlights our property dispositions
(dollars in thousands):

                                                     Three Months Ended March 31,
                                                          2022                    2021
Number of properties sold                                   2                         6
Number of outparcels sold(1)                                -                         1
Contract price                                $        13,325                  $ 60,563
Proceeds from sale of real estate, net(2)              12,770               

58,356

Gain on sale of property, net(3)                        1,368               

14,355



(1)During the three months ended March 31, 2021, the one outparcel sale included
the only remaining portion of a property we previously owned; therefore, the
sale resulted in a reduction in our total property count.

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

(3)During the three months ended March 31, 2021, Gain on Disposal of Property, Net on the consolidated statements of operations includes miscellaneous write-off activity, which is not included in gain on sale of property, net, presented above.


DISTRIBUTIONS-We paid 2022 monthly distributions of $0.09 per share, or $1.08
annualized, for the months of January, February, March, and April. On May 4,
2022, our Board authorized 2022 distributions for May, June, and July of $0.09
per share to the stockholders of record at the close of business on May 16,
2022, June 15, 2022, and July 15, 2022, respectively. OP unit holders will
receive distributions at the same rate as common stockholders, subject to
certain withholdings.

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.


CASH FLOW ACTIVITIES-As of March 31, 2022, we had cash and cash equivalents and
restricted cash of $17.5 million, a net cash decrease of $98.1 million during
the three months ended March 31, 2022.

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


                                            Three Months Ended March 31,
                                              2022                   2021               $ Change               % Change
Net cash provided by operating
activities                             $        60,221          $    48,751          $    11,470                      23.5  %
Net cash (used in) provided by
investing activities                          (106,497)               4,690             (111,187)                          NM
Net cash used in financing activities          (51,784)            (123,125)              71,341                     (57.9) %


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. The increase in
property operations was primarily due to a $5.7 million, or 6.8%, improvement in
same center NOI as compared to the same period in 2021, and the execution of our
external growth strategy. During the three months ended March 31, 2022, we had a
net cash outlay of $11.0 million from changes in working capital as compared to
a net cash outlay of $15.3 million during the same period in 2021. This change
was primarily driven by the timing of real estate tax payments and higher
accrued interest in connection with the registered offering of $350 million
aggregate principal amount of 2.625% senior notes, partially offset by higher
bonus payments and lower prepaid rent.

•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
$2.5 million for the three months ended March 31, 2022, which increased $0.2
million as compared to the same period in 2021.

•Cash paid for interest-During the three months ended March 31, 2022, we paid
$14.8 million for interest, a decrease of $4.0 million over the same period in
2021, primarily due to our debt activity in 2021, including early repayments of
debt outstanding and lower average interest rates as a result of refinancing
activities.

INVESTING ACTIVITIES-Our net cash (used in) provided by investing activities was primarily impacted by the following:


•Real estate acquisitions-During the three months ended March 31, 2022, our
acquisitions resulted in a total cash outlay of $101.4 million, as compared to a
total cash outlay of $39.9 million during the same period in 2021.

•Real estate dispositions-During the three months ended March 31, 2022, our
dispositions resulted in a net cash inflow of $12.8 million, as compared to a
net cash inflow of $58.4 million during the same period in 2021.

                                                       PHILLIPS EDISON & COMPANY
                                                        MARCH 31, 2022 FORM 10-Q         32

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•Capital expenditures-We invest capital into leasing our properties and
maintaining or improving the condition of our properties. During the three
months ended March 31, 2022, we paid $18.6 million for capital expenditures, an
increase of $5.1 million over the same period in 2021, primarily due to an
increase in tenant improvements owing largely to our leasing volume during 2022
and 2021.

•Return of investment in unconsolidated joint ventures-During the three months
ended March 31, 2022, we had a return of investment in unconsolidated joint
ventures of $0.8 million. During the three months ended March 31, 2021, we had a
return of investment in unconsolidated joint ventures of $2.7 million.

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


•Debt borrowings and payments-During the three months ended March 31, 2022, we
had $16.5 million in net repayment of debt primarily as a result of early
repayments of mortgage loans, partially offset by borrowings on our revolving
credit facility. During the three months ended March 31, 2021, we had net
payments of $16.5 million, primarily as a result of early repayments of mortgage
loans.

•Distributions to stockholders and OP unit holders-Cash used for distributions
to common stockholders and OP unit holders increased $6.4 million for the three
months ended March 31, 2022 as compared to the same period in 2021, primarily
due to an increase in shares of common stock outstanding as a result of our
underwritten IPO.

•Share repurchases-Cash outflows for share repurchases decreased by $77.8
million for the three months ended March 31, 2022 as compared to the same period
in 2021, primarily as a result of a tender offer, which was settled in January
2021.


CRITICAL ACCOUNTING ESTIMATES



"Part II, Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations - Critical Accounting Estimates" of our 2021 Annual
Report on Form 10-K, filed with the SEC on February 16, 2022, contains a
description of our critical accounting estimates, including those relating to
the valuation of real estate assets and rental income. There have been no
significant changes to our critical accounting policies during 2022.

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06/03PHILLIPS EDISON & COMPANY TO PRESENT : 2022 Investor Conference
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05/25Phillips Edison & Company, Inc. acquired Centennial Lakes Plaza.
CI
05/24Phillips Edison Receives Green Lease Leaders Gold Recognition
BU
05/23Phillips Edison & Company Reveals Top Shopping Center Trends of 2022
BU
05/20PHILLIPS EDISON & COMPANY, INC. : Entry into a Material Definitive Agreement, Creation of ..
AQ
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