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PHILLIPS EDISON & COMPANY, INC.

(PECO)
  Report
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Phillips Edison mpany : Nareit REITworld November 2022 Investor Presentation

11/10/2022 EST

Nareit REITworld - November 2022

Investor Presentation

Grocery Centered.

Community Focused.

Safe Harbor and Non-GAAP Disclosures

PECO's Safe Harbor Statement

Certain statements contained in this presentation ("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 of this presentation. 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;

  1. 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;
  1. 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.

Non-GAAP Disclosure: Same-Center Net Operating Income ("NOI")

We present Same-Center NOI as a supplemental measure of our performance. We calculate NOI as total operating revenues, adjusted to exclude non-cash revenue items, less property operating expenses and real estate taxes. We believe Same-Center NOI provides useful information to our investors 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). Because Same-Center NOI excludes the change in NOI from shopping centers acquired or disposed of outside the reporting periods, it highlights operating trends such as occupancy levels, rental rates, and operating costs on shopping centers that were operational for both comparable periods. Other REITs may use different methodologies for calculating Same-Center NOI, and accordingly, our Same-Center NOI may not be comparable to other REITs. 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 shopping centers that could materially impact our results from operations. We also present Same-Center NOI (Adjusted for Transactions), which is Same-Center NOI presented as if the PELP Transaction (1) and the Merger (2) had occurred on January 1 of the earliest comparable period in each presentation. This perspective allows us to evaluate Same-Center NOI growth over each comparable period. Same-Center NOI (Adjusted for Transactions) is not necessarily indicative of what actual Same-Center NOI and growth would have been if the PELP Transaction and the Merger had occurred on January 1 of the earliest comparable period in each presentation.

Non-GAAP Disclosure: Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate ("EBITDAre") and Adjusted EBITDAre

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. Adjusted EBITDAre is an additional performance measure used by us as EBITDAre includes certain non-comparable items that affect our performance over time. To arrive at Adjusted EBITDAre, we exclude certain recurring and non- recurring items from EBITDAre, 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, 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.

Grocery Centered. Community Focused.

2

PECO at a Glance(1)

Founded

Nasdaq

ABR from

Properties

Total GLA

Leased

Grocery Centers

31M

1991

PECO

97%

270

97.1%

Square Feet

We create great omni-channel

Grocery Centered.

We are an experienced owner and

grocery-anchored shopping

operator exclusively focused on

experiences and improve our

Community Focused.

grocery-anchoredneighborhood

communities one center at a time.

shopping centers.

Management

Total Enterprise

ABR from

ABR from #1 or

Dividend

Renewal

Necessity-Based

#2 Grocery

Ownership

Value

Neighbors

Anchor by Sales

Yield

Spread

8%

$5.6B

71%

86%

3.4%

15.5%

1. As of September 30, 2022

Grocery Centered. Community Focused.

3

Our Focused and Differentiated Strategy

Exclusively Focused on Omni-ChannelGrocery-Anchored Neighborhood Shopping Centers

Key Elements of Our Strategy

  • #1 or #2 Grocery Anchor by Sales (86% of ABR)
  • 97% of ABR from Omni-Channel Grocery- Anchored Centers
  • Right-SizedCenters with Strategic Neighborhood Locations in Growing Markets
  • Ecommerce Resistant: 71% ABR Necessity-Based Goods and Services
  • Last Mile Solution for Necessity-Based and Essential Retailers
  • Targeted Trade Areas Where Leading Grocers and Small Shop Neighbors Are Successful

Cycle-Tested and Resilient

  • 97.1% record-high portfolio leased occupancy with continued strong Neighbor demand
  • Experienced, cycle-tested management team
  • Strong-creditNeighbors and diversified mix
  • Lack of big box exposure in PECO's portfolio
  • Lack of distressed retailers in PECO's portfolio

Format Drives Results - PECO is Operating from a Position of Strength

Data as of September 30, 2022

Grocery Centered. Community Focused.

4

Grocery-Anchored Centers Benefit from Trends that Provide Strong Tailwinds

Necessity-Based

  • Consumer staple goods and services that are indispensable for day-to-day living
    • 71% of PECO ABR from necessity- based goods and services retailers (1)
  • Recession-resistantacross multiple cycles
  • Highly resilient with minimal exposure to distressed retailers; only 0.7% of occupancy loss in 2020

High Traffic

  • U.S. consumers visit grocery stores 1.6 times per week (2)
  • Approximately 23,000 average total trips per week to each PECO center(3)
  • We believe strong foot traffic benefits inline Neighbor sales and enhances our ability to increase rents

Omni-Channel

  • PECO centers are a critical component of our Neighbors' omni-channel strategies and provide an attractive last-mile solution
    • ~95% of portfolio with Front Row To GoTM curbside pick-up program (4)
    • ~ 90% of PECO grocers offer BOPIS option (Buy Online, Pick-Up In Store)(4)
  • Economics of e-grocery delivery remain unattractive
  1. % of ABR as of September 30, 2022
  2. The Food Marketing Institute: U.S. Grocery Shopper Trends 2022
  3. According to Placer.ai, twelve months ended September 30, 2022
  4. Estimate as of September 30, 2022

Grocery Centered. Community Focused.

5

Disclaimer

Phillips Edison & Co. Inc. published this content on 10 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 November 2022 18:11:05 UTC.


ę Publicnow 2022
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Financials (USD)
Sales 2022 559 M - -
Net income 2022 43,1 M - -
Net Debt 2022 1 875 M - -
P/E ratio 2022 92,5x
Yield 2022 3,29%
Capitalization 3 826 M 3 826 M -
EV / Sales 2022 10,2x
EV / Sales 2023 9,79x
Nbr of Employees 290
Free-Float 99,6%
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Number of Analysts 9
Last Close Price 32,68 $
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Managers and Directors
Jeffrey S. Edison Chairman & Chief Executive Officer
Devin Ignatius Murphy President
John P. Caulfield Vice President-Treasury & Investor Relations
Kevin McCann Chief Information Officer
Robert F. Myers Senior Manager-Leasing