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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_______________________
FORM 8-K
_______________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 9, 2018
_______________________
https://cdn.kscope.io/e4a96b3b96202ba4737e139c42ae06fa-pecohorizontallogoblue.jpg
Phillips Edison & Company, Inc.
(Exact name of registrant as specified in its charter)
_______________________

Maryland
000-54691
27-1106076
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)

11501 Northlake Drive
Cincinnati, Ohio 45249
(Address of principal executive offices, including zip code)

(513) 554-1110
(Registrant’s telephone number, including area code)

_______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
¨     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). ¨

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨













Item 2.02.   Results of Operations and Financial Condition.
Item 7.01. Regulation FD Disclosure.
On May 9, 2018, Phillips Edison & Company, Inc. (the “Company”) issued a press release announcing its results for the first quarter ended March 31, 2018. A copy of that press release as well as the supplemental information contained in the Company's First Quarter 2018 Results Presentation are attached hereto as Exhibits 99.1 and 99.2 and incorporated herein by reference. The Company will provide a stockholder update presentation on Thursday, May 10, 2018, at 1:00 p.m. Eastern Time, during which management will discuss the quarter-end results and provide commentary on business performance. The conference call can be accessed by dialing (888) 346-2646 (domestic) or (412) 317-5249 (international). A live webcast of the presentation can be accessed by visiting https://services.choruscall.com/links/peco180510.html. A replay of the webcast will be available approximately one hour after the conclusion of the live webcast by visiting http://investors.phillipsedison. com/event.
The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, are being furnished to the Securities and Exchange Commission (“SEC”), and shall not be deemed to be “filed” with the SEC for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and shall not be deemed to be incorporated by reference into any other filing with the SEC.
Item  9.01.   Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number
 
Description of Exhibit
 
 






































SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. 
 
 
 
 
PHILLIPS EDISON & COMPANY, INC.
 
 
 
Dated: May 9, 2018
By:
/s/ Jennifer L. Robison
 
 
Jennifer L. Robison
 
 
Chief Accounting Officer (Principal Accounting Officer)


Exhibit


Exhibit 99.1

Phillips Edison & Company Reports First Quarter 2018 Results;
Increases Estimated Value per Share to $11.05

Record Number of Leases Executed and Strong Leasing Spreads During the Quarter Illustrate Strength in Grocery-Anchored Real Estate

CINCINNATI, OH, May 9, 2018 - Phillips Edison & Company, an internally-managed real estate investment trust (REIT) and one of the nation’s largest owners and operators of grocery-anchored shopping centers, reported its results for the quarter ended March 31, 2018 and increased its estimated value per share to $11.05 as of March 31, 2018.

First Quarter 2018 Highlights (vs. First Quarter 2017)
•
Acquired one grocery-anchored shopping center for a total cost of $8.4 million
•
Net loss totaled $1.8 million
•
Funds from operations (FFO) per diluted share increased 20.0% to $0.18
•
FFO totaled 104% of regular distributions made during the quarter
•
Modified funds from operations (MFFO) per diluted share increased 20.0% to $0.18
•
Pro forma same-center net operating income (NOI)*, which reflects adjustments for the Phillips Edison Limited Partnership (PELP) acquisition in October 2017, increased 4.3% to $61.3 million
•
Net debt to total enterprise value was 41.9% at quarter-end
•
Outstanding debt had a weighted-average interest rate of 3.4% and 87.1% was fixed-rate debt
*Please see 'Pro Forma Same-Center Results' under Portfolio Results for additional disclosure

Estimated Value per Share Update
•
On May 9, 2018, the company’s board of directors increased the estimated value per share of its common stock to $11.05 as of March 31, 2018, based on the range of $10.35 to $11.75 provided by Duff & Phelps, an independent third-party valuation firm.

Management Commentary
“During the first quarter of 2018, we executed a record number of leases and realized 20.3% comparable spreads on new leases, both of which are strong indicators of the healthy fundamentals in our grocery-anchored portfolio,” said Jeff Edison, Chairman and Chief Executive Officer of Phillips Edison & Company. “The quarter also demonstrated the accretive integration of PELP’s 76 shopping centers and investment management business, which we acquired last October, with a 20% increase in MFFO per diluted share.”
“Our continued strong performance led our board to increase the estimated value of our common stock to $11.05 per share despite the challenging retail environment. We believe the current disparity between the public and private market valuations in retail real estate is unsupported as the operating fundamentals of our centers remain strong. We are confident that our best-in-class platform will continue to add value and drive growth at our grocery-anchored centers.”

First Quarter Ended March 31, 2018 Financial Results
Net (Loss) Income
For the first quarter of 2018, net loss totaled $1.8 million compared to net income of $1.1 million for the first quarter of 2017. Net loss was primarily driven by increased depreciation and amortization as a result of owning an additional 84 properties when compared to March 31, 2017.





Funds from Operations (FFO) as Defined by the National Association of Real Estate Investment Trusts (NAREIT)
For the first quarter of 2018, FFO attributable to stockholders and convertible noncontrolling interests increased 40.4% to $40.4 million, or $0.18 per diluted share, from $28.8 million, or $0.15 per diluted share, during the first quarter of 2017. The improvement in FFO was driven by an increase in net operating income generated by additional properties owned, $8.7 million of fee income for asset management and property management services generated by the investment management business acquired in the PELP transaction, and a 4.3% increase in pro forma same-center NOI.

Modified Funds from Operations (MFFO)
For the first quarter of 2018, MFFO increased 46.9% to $42.2 million, or $0.18 per diluted share, compared to $28.7 million, or $0.15 per diluted share, during the same year-ago quarter. The increase in MFFO was directly correlated to the increase in FFO.

Pro Forma Same-Center Results*
For the first quarter of 2018, pro forma same-center NOI increased 4.3% to $61.3 million compared to $58.8 million during the first quarter of 2017. The improvement was driven by a $0.21 increase in minimum rent per square foot on the company’s pro forma portfolio, as well as a $1.4 million decrease in operating expenses versus the comparable period.
Pro-forma same-center leased occupancy totaled 93.8% compared to 93.9% as of March 31, 2017.
*For purposes of evaluating same-center NOI on a comparative basis, and in light of the acquisition of PELP in October 2017, the company is presenting pro forma same-center NOI, which includes all properties that were owned and operational for the entire portion of both comparable reporting periods for both Phillips Edison & Company and PELP. As such, contributing to pro forma same-center NOI were 226 properties.

First Quarter Ended March 31, 2018 Portfolio Results
Portfolio Statistics
At quarter-end, the portfolio consisted of 237 properties, totaling approximately 26.4 million square feet located in 32 states. This compares to 154 properties, totaling approximately 16.8 million square feet located in 28 states as of March 31, 2017.
Leased portfolio occupancy totaled 93.6% compared to 93.9% as of December 31, 2017.

Leasing Activity
During the first quarter of 2018, a record 192 leases (new, renewal and options) were executed totaling approximately 821,000 square feet. This compares to 132 leases (new, renewal and options) executed totaling 557,000 square feet during the first quarter of 2017.
Comparable rent spreads during the quarter, which compare the percentage increase (or decrease) of new or renewal leases to the expiring lease of a unit that was occupied within the past 12 months, were 20.3% for new leases and 10.7% for renewal leases, excluding options.

Acquisition Activity
One grocery-anchored shopping center was acquired for a total cost of $8.4 million during the first quarter of 2018. The property, located in Leesburg, Florida, outside Orlando, is anchored by Publix and totals approximately 135,000 square feet.

Investment Management Business
During the first quarter of 2018, the company generated $8.7 million of fee income for asset management and property management services rendered.
At quarter-end, the company had approximately $2.1 billion of third-party assets under management, which included Phillips Edison Grocery Center REIT II, Inc., Phillips Edison Grocery Center REIT III, Inc., and Necessity Retail Partners (a joint venture between Phillips Edison Grocery Center REIT II, Inc. and TPG).





Phillips Edison Grocery Center REIT III
Phillips Edison Grocery Center REIT III, Inc., Phillips Edison & Company’s third sponsored non-traded REIT, raised $56.8 million in a private offering of common stock. Additionally, on May 8, 2018, Phillips Edison Grocery Center REIT III had its registration statement pertaining to an initial public offering declared effective by the Securities and Exchange Commission and will offer up to an aggregate of $1.7 billion in common stock.

Balance Sheet Highlights at March 31, 2018
At quarter-end, the company had $474.4 million of borrowing capacity available on its $500 million revolving credit facility. During the quarter, the company executed a delayed draw on its five-year term facility to pay down the revolving credit facility.
Net debt to total enterprise value was 41.9% at March 31, 2018. Please see the Net Debt to Total Enterprise Value table for additional disclosure.
At quarter-end, the company's outstanding debt had a weighted-average interest rate of 3.4%, a weighted-average maturity of 5.2 years, and 87.1% of its total debt was fixed-rate debt. This compared to a weighted-average interest rate of 3.4%, a weighted average maturity of 5.5 years, and 88.5% fixed-rate debt at December 31, 2017.

Estimated Value Per Share
Effective May 9, 2018, the company’s board of directors increased the estimated value per share of its common stock to $11.05 as of March 31, 2018.
Duff & Phelps was engaged to provide a calculation of the range in estimated value per share of the company’s common stock as of March 31, 2018. Duff & Phelps prepared a valuation report based substantially on its estimate of the “as is” market values of the company’s portfolio, adjusted to reflect balance sheet assets and liabilities, and the estimated value of in-place contracts of the third-party asset management business provided by the company’s management as of March 31, 2018, before calculating a range of estimated per share values based on the number of outstanding shares of common stock and operating partnership units (OP units) as of quarter end. These calculations produced an estimated value per share in the range of $10.35 to $11.75.
For a full description of the assumptions and methodologies used to determine the estimated value per share, see the Form 10-Q for the quarter ended March 31, 2018 to be filed with the SEC, which will be accessible on the SEC’s website at www.sec.gov.

First Quarter 2018 Distributions
Gross distributions of $38.3 million were paid to common shareholders and OP unit holders during the first quarter of 2018, including $12.8 million reinvested through the distribution reinvestment plan, for net cash distributions of $25.5 million.
During the quarter, FFO was $40.4 million, which totaled 104% of the company's gross distributions.
Subsequent to quarter-end, the company's board of directors authorized distributions for June 2018, July 2018, and August 2018 in the amount of $0.05583344 per share to the shareholders of record at the close of business on June 15, 2018, July 16, 2018, and August 15, 2018, respectively. OP unit holders will receive distributions at the same rate, subject to required withholding.

Share Repurchase Program (SRP)
During the first quarter of 2018, approximately 366,000 shares of common stock, totaling $4.0 million, were repurchased.
Subsequent to the quarter end, in April 2018, approximately 3.4 million shares of common stock, totaling $37.4 million, were repurchased at $11.00 per share under the SRP. Standard repurchase requests surpassed the funding limits under the SRP resulting in the company processing standard requests on a pro rata basis.
The company will continue to fulfill repurchases sought upon a stockholder’s death, “qualifying disability,” or “determination of incompetence” in accordance with the terms of the SRP.
Due to the program’s funding limits, the company does not expect funding to be available for standard repurchases for the remainder of 2018. Cash available for standard repurchases on any particular date under the SRP is generally limited to the proceeds from the dividend reinvestment plan during the preceding four quarters, less amounts already used for repurchases during the same time period.





Stockholder Update Call
Chairman and Chief Executive Officer Jeff Edison, Chief Financial Officer Devin Murphy, and Executive Vice President Mark Addy will host a live presentation addressing the company’s results on Thursday, May 10, 2018 at 1:00 p.m. Eastern Time.

Following management’s prepared remarks, there will be a question and answer session. Investors are encouraged to submit questions in advance of the presentation by emailing them to InvestorRelations@phillipsedison.com. Additionally, questions may be submitted via the webcast interface during the live presentation.

Interested parties will be able to access the presentation online or by telephone. If dialing in, please call the conference telephone number five minutes prior to the start time as an operator will register your name and organization. Participants should ask to join the Phillips Edison & Company call.

Date: Thursday, May 10, 2018
Time: 1:00 p.m. Eastern Time
Webcast link: https://services.choruscall.com/links/peco180510.html
U.S. listen-only: (888) 346-2646
International listen-only: (412) 317-5249

A webcast replay will be available approximately one hour after the conclusion of the presentation in the Events & Presentations section of the Phillips Edison & Company website at http://investors.phillipsedison.com/event.

For investor-related updates on Phillips Edison, please visit http://www.phillipsedison.com/investors.

For more information on the company’s quarterly results, please refer to the company’s Form 10-Q for the quarter ended March 31, 2018, which will be filed with the SEC and available on the SEC’s website at www.sec.gov.

Non-GAAP Disclosures
Pro Forma Same-Center Net Operating Income
Same-Center NOI represents the NOI for the properties that were owned and operational for the entire portion of both comparable reporting periods. For purposes of evaluating Same-Center NOI on a comparative basis, and in light of the company’s acquisition of 76 shopping centers and the investment management business from PELP, the company is presenting Pro Forma Same-Center NOI, which is Same-Center NOI on a pro forma basis as if the transaction had occurred on January 1, 2017. This perspective allows the company to evaluate Same-Center NOI growth over a comparable period. Pro Forma Same-Center NOI is not necessarily indicative of what actual Same-Center NOI and growth would have been if the PELP transaction had occurred on January 1, 2017, nor does it purport to represent Same-Center NOI and growth for future periods.
Pro Forma Same-Center NOI highlights operating trends such as occupancy rates, rental rates, and operating costs on properties that were operational for both comparable periods. Other REITs may use different methodologies for calculating Same-Center NOI, and accordingly, Pro Forma Same-Center NOI may not be comparable to other REITs.
Pro Forma Same-Center NOI should not be viewed as an alternative measure of the company’s financial performance since it does not reflect the operations of the company’s entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition expenses, depreciation and amortization, interest expense, other income, or the level of capital expenditures and leasing costs necessary to maintain the operating performance of company properties that could materially impact its results from operations.




Funds from Operations and Modified Funds from Operations
FFO is a non-GAAP performance financial measure that is widely recognized as a measure of REIT operating performance. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) attributable to common stockholders computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for impairment losses on depreciable 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. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. The company calculates FFO Attributable to Stockholders and Convertible Noncontrolling Interests in a manner consistent with the NAREIT definition, with an additional adjustment made for noncontrolling interests that are not convertible into common stock.
MFFO is an additional performance financial measure used by the company as FFO includes certain non-comparable items that affect the company’s performance over time. MFFO excludes the following items:
•
acquisition and transaction expenses;
•
straight-line rent amounts, both income and expense;
•
amortization of above- or below-market intangible lease assets and liabilities;
•
amortization of discounts and premiums on debt investments;
•
gains or losses from the early extinguishment of debt;
•
gains or losses on the extinguishment of derivatives, except where the trading of such instruments is a fundamental attribute of company operations;
•
gains or losses related to fair value adjustments for derivatives not qualifying for hedge accounting; and
•
adjustments related to the above items for joint ventures and noncontrolling interests and unconsolidated entities in the application of equity accounting.
The company believes that MFFO is helpful in assisting management and investors with the assessment of the sustainability of operating performance in future periods. The company believes it is more reflective of its core operating performance and provides an additional measure to compare its performance across reporting periods on a consistent basis by excluding items that may cause short-term fluctuations in net income (loss) but have no impact on cash flows.
FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and MFFO should not be considered alternatives to net income (loss) or income (loss) from continuing operations under GAAP, as an indication of liquidity, nor as an indication of funds available to cover the company’s cash needs, including its ability to fund distributions. MFFO may not be a useful measure of the impact of long-term operating performance on value if the company does not continue to operate its business plan in the manner currently contemplated.
Accordingly, FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and MFFO 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. The company’s FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and MFFO, as presented, may not be comparable to amounts calculated by other REITs.





PHILLIPS EDISON & COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2018 AND DECEMBER 31, 2017
(Unaudited)
(In thousands, except per share amounts)
  
March 31, 2018
 
December 31, 2017
ASSETS
  
 
  
Investment in real estate:
  
 
  
Land and improvements
$
1,125,816

 
$
1,121,590

Building and improvements
2,274,876

 
2,263,400

Acquired in-place lease assets
314,378

 
313,432

Acquired above-market lease assets
53,597

 
53,524

Total investment in real estate assets
3,768,667

 
3,751,946

Accumulated depreciation and amortization
(504,912
)
 
(462,025
)
Total investment in real estate assets, net
3,263,755

 
3,289,921

Cash and cash equivalents
14,690

 
5,716

Restricted cash
17,279

 
21,729

Account receivable - affiliates
6,935

 
6,102

Corporate intangible assets, net
52,200

 
55,100

Goodwill
29,066

 
29,066

Other assets, net
135,102

 
118,448

Total assets
$
3,519,027

 
$
3,526,082

 
 
 
 
LIABILITIES AND EQUITY
  

 
  

Liabilities:
  

 
  

Debt obligations, net
$
1,834,829

 
$
1,806,998

Acquired below-market lease liabilities, net of accumulated amortization
 
 
 
of $29,946 and $27,388, respectively
88,523

 
90,624

Accounts payable – affiliates
1,733

 
1,359

Accounts payable and other liabilities
132,670

 
148,419

Total liabilities
2,057,755

 
2,047,400

Commitments and contingencies
—

 
—

Equity:
  

 
  

Preferred stock, $0.01 par value per share, 10,000 shares authorized, zero shares issued and
  
 
  
outstanding at March 31, 2018 and December 31, 2017, respectively
—

 
—

Common stock, $0.01 par value per share, 1,000,000 shares authorized, 186,027 and 185,233 
  
 
  
shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
1,860

 
1,852

Additional paid-in capital
1,638,176

 
1,629,130

Accumulated other comprehensive income
27,381

 
16,496

Accumulated deficit
(634,164
)
 
(601,238
)
Total stockholders’ equity
1,033,253

 
1,046,240

Noncontrolling interests
428,019

 
432,442

Total equity
1,461,272

 
1,478,682

Total liabilities and equity
$
3,519,027

 
$
3,526,082





PHILLIPS EDISON & COMPANY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017
(Unaudited)
(In thousands, except per share amounts)
  
Three Months Ended March 31,
  
2018
 
2017
Revenues:
 
 
 
Rental income
$
71,449

 
$
51,093

Tenant recovery income
22,437

 
16,936

Fees and management income
8,712

 
—

Other property income
601

 
274

Total revenues
103,199


68,303

Expenses:
 
 
 
Property operating
18,115

 
11,432

Real estate taxes
13,147

 
10,258

General and administrative
10,461

 
7,830

Depreciation and amortization
46,427

 
27,624

Total expenses
88,150


57,144

Other:
 
 
 
Interest expense, net
(16,779
)
 
(8,390
)
Other expense, net
(107
)
 
(1,635
)
Net (loss) income
(1,837
)

1,134

Net loss (income) attributable to noncontrolling interests
237

 
(28
)
Net (loss) income attributable to stockholders
$
(1,600
)
 
$
1,106

Earnings per common share:
 
 
 
Net (loss) income per share attributable to stockholders - basic and diluted
$
(0.01
)

$
0.01

Weighted-average common shares outstanding:
 
 
 
Basic
185,899

 
183,230

Diluted
230,352

 
186,022

 
 
 
 
Comprehensive income:
 
 
 
Net (loss) income
$
(1,837
)
 
$
1,134

Other comprehensive income:
 
 
 
Change in unrealized gain on interest rate swaps
13,488

 
1,816

Comprehensive income
11,651

 
2,950

Net loss (income) attributable to noncontrolling interests
237

 
(28
)
Other comprehensive income attributable to noncontrolling interests
(2,603
)
 
—

Comprehensive income attributable to stockholders
$
9,285

 
$
2,922





The table below compares Pro Forma Same-Center NOI for the three months ended March 31, 2018 and 2017 (in thousands):
 
 
Three Months Ended March 31,
 
Favorable (Unfavorable) Change
 
 
2018
 
2017(1)
 
$
 
%
Revenues:
 
 
 
 
 
 
 
 
Rental income(2)
 
$
65,453

 
$
64,521

 
$
932

 
 
Tenant recovery income
 
21,181

 
21,127

 
54

 
 
Other property income
 
570

 
474

 
96

 
 
Total revenues
 
87,204

 
86,122

 
1,082

 
1.3
%
Operating expenses:
 
 
 
 
 
 
 
 
Property operating expenses
 
13,630

 
14,609

 
979

 
 
Real estate taxes
 
12,298

 
12,752

 
454

 
 
Total operating expenses
 
25,928

 
27,361

 
1,433

 
5.2
%
Total Same-center NOI
 
$
61,276

 
$
58,761

 
$
2,515

 
4.3
%
(1) 
Adjusted for PELP same-center operating results prior to the transaction for these periods. For additional information and details about PELP operating results included herein, refer to the PELP Same-Center NOI table on the following page.
(2) 
Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income.

Below is a reconciliation of Net (Loss) Income to Owned Real Estate NOI and Pro Forma Same-Center NOI for the three months ended March 31, 2018 and 2017 (in thousands):
 
2018
 
2017
Net (loss) income
$
(1,837
)
 
$
1,134

Adjusted to exclude:
 
 
 
Fees and management income
(8,712
)
 
—

Straight-line rental income
(1,080
)
 
(493
)
Net amortization of above- and below-market leases
(1,007
)
 
(331
)
Lease buyout income
(23
)
 
(27
)
General and administrative expenses
10,461

 
7,830

Depreciation and amortization
46,427

 
27,624

Interest expense, net
16,779

 
8,390

Other
201

 
1,635

Property management allocations to third-party assets under management(1)
3,602

 
—

Owned Real Estate NOI
64,811

 
45,762

Less: NOI from centers excluded from same-center
(3,535
)
 
(208
)
NOI prior to October 4, 2017, from same-center properties acquired in the
   PELP transaction(2)
—

 
13,207

Total Pro Forma Same-Center NOI
$
61,276

 
$
58,761

(1) 
This represents property management expenses allocated to third-party owned properties based on the property management fee that is provided for in the individual management agreements under which the company’s investment management business provides services.
(2) 
See calculation on the following page.

Below is a breakdown of properties:
 
March 31, 2018
Same-center properties(1)
226

Non-same-center properties
11

Total properties
237

(1) 
Property count includes 74 same-center properties acquired in the PELP transaction.





NOI from the PELP properties acquired prior to the PELP transaction was obtained from the accounting records of PELP without adjustment. The accounting records were subject to internal review by the company. The table below provides Same-Center NOI detail for the non-ownership period of PELP, which was the three months ended March 31, 2017.
 
2017
Revenues:
 
Rental income(1)
$
14,766

Tenant recovery income
4,244

Other property income
248

Total revenues
19,258

Operating expenses:
 
Property operating expenses
3,533

Real estate taxes
2,518

Total operating expenses
6,051

Total Same-Center NOI
$
13,207

(1) 
Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income.

The following section presents the company’s calculation of FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and MFFO and provides additional information related to the company’s operations for the three months ended March 31, 2018 and 2017 (in thousands, except per share amounts):
 
2018
 
2017(1)
Calculation of FFO Attributable to Stockholders and Convertible
   Noncontrolling Interests
  
 
  
Net (loss) income
$
(1,837
)
 
$
1,134

Adjustments:
 
 
 
Depreciation and amortization of real estate assets
42,299

 
27,624

FFO attributable to the Company
40,462

 
28,758

Adjustments attributable to noncontrolling interests not convertible
   into common stock
(97
)
 
—

FFO attributable to stockholders and convertible noncontrolling interests
$
40,365

 
$
28,758

Calculation of MFFO
  

 
  

FFO attributable to stockholders and convertible noncontrolling interests
$
40,365

 
$
28,758

Adjustments:
  

 
  

Net amortization of above- and below-market leases
(1,007
)
 
(331
)
Depreciation and amortization of corporate assets
4,128

 
—

Gain on extinguishment of debt, net
—

 
(524
)
Straight-line rent
(1,057
)
 
(493
)
Amortization of market debt adjustment
(272
)
 
(278
)
Other
31

 
1,594

MFFO
$
42,188

 
$
28,726

 
 
 
 
FFO Attributable to Stockholders and Convertible
   Noncontrolling Interests/MFFO per share
 
 
 
Weighted-average common shares outstanding - diluted(2)
230,360

 
186,022

FFO attributable to stockholders and convertible noncontrolling interests
   per share - diluted(2)
$
0.18

 
$
0.15

MFFO per share - diluted
$
0.18

 
$
0.15

(1) 
Certain prior period amounts have been restated to conform with current year presentation.
(2) 
Restricted stock awards were dilutive to FFO Attributable to Stockholders and Convertible Noncontrolling Interests and MFFO for the three months ended March 31, 2018 and 2017, and, accordingly, were included in the weighted-average common shares used to calculate diluted FFO Attributable to Stockholders and Convertible Noncontrolling Interests and MFFO per share.





Net Debt to Total Enterprise Value
The following table presents the company’s calculation of debt to total enterprise value as of March 31, 2018 and December 31, 2017 (dollars in thousands):
 
March 31,
 
December 31,
 
2018
 
2017
Net debt:
 
 
 
Total debt, excluding below-market adjustments and deferred financing costs
$
1,844,879

 
$
1,817,786

Less: Cash and cash equivalents
(14,690
)
 
(5,716
)
Total net debt
$
1,830,189

 
$
1,812,070

Enterprise Value:
 
 
 
Total net debt
$
1,830,189

 
$
1,812,070

Total equity value
2,535,280

 
2,526,557

Total enterprise value
$
4,365,469

 
$
4,338,627

 
 
 
 
Net debt to total enterprise value
41.9
%
 
41.8
%
(1) Total equity value is calculated as the product of the number of diluted shares outstanding and the estimated value per share at the end of the period. There were 230.5 million and 229.7 million diluted shares outstanding as of March 31, 2018 and December 31, 2017, respectively.

About Phillips Edison & Company
Phillips Edison & Company, Inc. (formerly known as Phillips Edison Grocery Center REIT I, Inc.), an internally-managed real estate investment trust (REIT), is one of the nation’s largest owners and operators of grocery-anchored shopping centers. Its diversified portfolio of well-occupied neighborhood shopping centers has a mix of national and regional retailers selling necessity-based goods and services, in strong demographic markets throughout the United States. As of March 31, 2018, the company manages 344 shopping centers - 237 of which it owns directly - comprising approximately 26.4 million square feet located in 32 states. The company’s proven, vertically-integrated operating platform allows it to effectively and efficiently acquire, lease and manage its properties, resulting in a history of strong operating results and great shopping experiences. For more information, please visit www.phillipsedison.com.

Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to the Company’s expectations regarding the performance of its business, its financial results, its liquidity and capital resources, the quality of the Company’s portfolio of grocery-anchored shopping centers and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, such as the risks that retail conditions may adversely affect the company’s base rent and, subsequently, the company’s income, and that the company’s properties consist primarily of retail properties and the company’s performance, therefore, is linked to the market for retail space generally, as well as other risks that are described under the section entitled “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2017, as such factors may be updated from time to time in the Company’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Investors:
Phillips Edison & Company, Inc.
Michael Koehler, 513-338-2743
Director of Investor Relations
InvestorRelations@phillipsedison.com
Source: Phillips Edison & Company, Inc.
###


pecoearningsslidesq12018
First Quarter 2018 Results Presentation Thursday, May 10, 2018

 
Agenda Prepared Remarks R. Mark Addy - Executive Vice President • Intro & Portfolio Update Jeff Edison - Chairman and CEO • Estimated Value per Share Update & Market Commentary Devin Murphy - CFO • Financial Results R. Mark Addy - Executive Vice President • Share Repurchase Program & Liquidity Question and Answer Session www.phillipsedison.com/investors 2

 
Forward-Looking Statement Disclosure This presentation and the corresponding call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to the Company’s expectations regarding the performance of its business, its financial results, its liquidity and capital resources, the quality of the Company’s portfolio of grocery-anchored shopping centers, and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” or the negative version of these words or other comparable words. Such forward- looking statements are subject to various risks and uncertainties, such as the risks that retail conditions may adversely affect our base rent and, subsequently, our income, and that our properties consist primarily of retail properties and our performance, therefore, is linked to the market for retail space generally, as well as other risks that are described under the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as such factors may be updated from time to time in the Company’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this presentation, the corresponding call and in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. www.phillipsedison.com/investors 3

 
Portfolio Highlights March 31, 2018 Total Properties 237 Leading Grocery Anchors 34 States 32 26.4 Square Feet million Leased Occupancy 93.6% Rent from grocer, national and regional tenants 77.2% www.phillipsedison.com/investors 4

 
Q1 2018 Portfolio Results Annualized Base Rent by Tenant Type Annualized Base Rent by Tenant Industry Top 5 Grocers by % of Annualized Base Rent Grocer % of ABR # of Locations Kroger 9.2% 55 Publix Super Markets 6.1% 37 Ahold Delhaize 3.6% 19 Albertsons Companies 3.4% 17 Giant Eagle 2.4% 9 We calculate annualized base rent as monthly contractual rent as of March 31, 2018, multiplied by 12 months. www.phillipsedison.com/investors 5

 
Q1 2018 Highlights First Quarter 2018 Highlights (vs. First Quarter 2017) • Acquired one grocery-anchored shopping center for $8.4 million • Net loss totaled $1.8 million • Pro forma same-center net operating income (NOI)1 increased 4.3% to $61.3 million • Funds from operations (FFO) increased 40.4% ◦ 20.0% increase to $0.18 per diluted share • FFO totaled 104% of regular distributions made during the quarter • Modified funds from operations (MFFO) increased 46.9% ◦ 20.0% increase to $0.18 per diluted share 1) NOI = Net Operating Income; Pro forma NOI reflects adjustments for the PELP acquisition. See Slide 19 for more information. www.phillipsedison.com/investors 6

 
Estimated Value per Share • Duff & Phelps, an independent third-party valuation firm, produced an estimated value per share in the range of $10.35 to $11.75 as of March 31, 2018 • On May 9, 2018, the company’s board of directors established the estimated value per share of its common stock and operating partnership units at $11.05, which is the midpoint of the range Represents a 10.5% increase from original offering price of $10.00 per share Illustrates the successful integration of Phillips Edison Limited Partnership's ⦁ (PELP) assets and investment management business and the continued ⦁ growth of our owned centers Please note that the estimated value per share is not intended to represent an enterprise or liquidation value of our company. It is important to remember that the estimated value per share may not reflect the amount you would obtain if you were to sell your shares or if we liquidated our assets. Further, the estimated value per share is as of a moment in time, and the value of our shares and assets may change over time as a result of several factors including, but not limited to, future acquisitions or dispositions, other developments related to individual assets, and changes in the real estate and capital markets, and we do not undertake to update the estimated value per share to account for any such events. You should not rely on the estimated value per share as being an accurate measure of the then-current value of your shares in making a decision to buy or sell your shares, including whether to participate in our dividend reinvestment plan or our share repurchase program. For a description of the methodology and assumptions used to determine the estimated value per share, see our recent 10-Q filing made with the U.S. Securities and Exchange Commission. www.phillipsedison.com/investors 7

 
Shopping Center Real Estate Market Update • Publicly traded peers continue to trade at a discount to NAV As of April 30, our publicly traded peers were trading at an average discount to NAV of approximately 29%* ⦁ We believe this is a disconnect between the public and private valuations of retail real estate ⦁ • However, retail real estate fundamentals remain strong at the property level Driven by solid Q1 2018 earnings, share prices were up approximately 5% during the first week of earnings ⦁ • Shopping centers in leading markets continue to sell at relatively expensive valuations • We believe this gap between public and private valuations will close over time * SNL Financial. Peers include: BRX, CDR, KIM, KRG, REG, ROIC, RPAI, RPT, WRI www.phillipsedison.com/investors 8

 
Q1 2018 Pro Forma Same-Center NOI(1) Results Three Months Ended March 31, (in thousands) 2018 2017 $ Change % Change Revenues: Rental income(2) $ 65,453 $ 64,521 $ 932 Tenant recovery income 21,181 21,127 54 Other property income 570 474 96 Total Revenues 87,204 86,122 1,082 1.3% Operating expenses: Property operating expenses 13,630 14,609 979 Real estate taxes 12,298 12,752 454 Total Expenses 25,928 27,361 1,433 5.2% Total Pro Forma Same-Center NOI $ 61,276 $ 58,761 $ 2,515 4.3% (1) Same-Center represents 226 properties that we owned and operated prior to January 1, 2017, including 74 same-center properties acquired in the PELP transaction. For additional information and details about PELP operating results included herein, as well as a reconciliation from Net Loss to Pro Forma Same-Center NOI, refer to the appendix of this presentation. (2) Excludes Straight-line rental income, Net amortization of above- and below-market leases, and Lease buyout income. www.phillipsedison.com/investors 9

 
Q1 2018 Financials Results Three Months Ended March 31, (in thousands) 2018 2017 $ Change % Change Net (Loss) Income $ (1,837) $ 1,134 $ (2,971) NM Adjustments(1) 42,202 27,624 14,578 52.8% FFO Attributable to Stockholders and Convertible Noncontrolling Interests 40,365 28,758 11,607 40.4% Adjustments(2) 1,823 (32) 1,855 NM MFFO $ 42,188 $ 28,726 $ 13,462 46.9% Diluted FFO Attributable to Stockholders and Convertible Noncontrolling Interests/Share $0.18 $0.15 $0.03 20.0% Diluted MFFO/Share $0.18 $0.15 $0.03 20.0% (1) Adjustments include depreciation and amortization of real estate assets and noncontrolling interest not convertible into common stock. (2) Adjustments include amortization of above- and below market leases, amortization and depreciation of corporate assets, gain on extinguishment of debt, straight-line rent, amortization of market debt adjustment, change in fair value of derivatives, and other. *See Appendix for a complete reconciliation of net (loss) income to FFO and MFFO www.phillipsedison.com/investors 10

 
Debt Profile and Maturity Ladder March 31, 2018 Net Debt to Enterprise Value* 41.9% Weighted-Average Interest Rate 3.4% Weighted-Average Years to Maturity 5.2 Fixed-Rate Debt 87.1% Variable-Rate Debt 12.9% www.phillipsedison.com/investors *See Appendix for a complete calculation of Net debt to enterprise value 11

 
Share Repurchase Program • Repurchased $37.4M in April 2018 Our Share Repurchase Program (SRP) states that the cash available for repurchases on any particular date will generally be limited to the proceeds from the DRIP during the preceding four fiscal quarters, less any cash already used for repurchases since the beginning of the same period. However, in accordance with the SRP, shares will still be repurchased due to a stockholder’s death, “qualifying disability,” or “determination of incompetence.” Repurchases are made at the most recent estimated value per share. www.phillipsedison.com/investors 12

 
Liquidity • The acquisition of PELP was a positive step towards a potential liquidity event • Management is now the Company’s largest stockholder currently owning over 9% of the combined company, with a long term view of increasing shareholder value • Earn-out structure incentivizes future performance - motivation to effect a liquidity event for PECO and achieve certain fundraising targets for REIT III • Our management and board of directors are continually evaluating our liquidity options. We believe that a patient approach is prudent in order to successfully complete a full cycle liquidity event at an attractive price www.phillipsedison.com/investors 13

 
Question and Answer Session If you are logged in to the webcast presentation, you can submit a question by typing it into the text box, and clicking submit. www.phillipsedison.com/investors 14

 
For More Information: InvestorRelations@PhillipsEdison.com www.phillipsedison.com/investors DST: (888) 518-8073 Griffin Capital Securities: (866) 788-8614

 
Appendix

 
Reconciliation of Non-GAAP Financials Same-center NOI represents the NOI for the properties that were owned and operational for the entire portion of both comparable reporting periods, except for the properties we currently classify as redevelopment. For purposes of evaluating Same-center NOI on a comparative basis, and in light of the PELP transaction, we are presenting Pro Forma Same-center NOI, which assumes the PELP properties were acquired on January 1, 2017. This perspective allows us to evaluate Same-center NOI growth over a comparable period. Pro Forma Same-center NOI is not necessarily indicative of what actual Same-center NOI and growth would have been if the PELP transaction had occurred on January 1, 2017, nor does it purport to represent Same-center NOI and growth for future periods. Pro Forma Same-center NOI highlights operating trends such as occupancy rates, rental rates, and operating costs on properties that were operational for both comparable periods. Other REITs may use different methodologies for calculating Same-center NOI, and accordingly, our Pro Forma Same-center NOI may not be comparable to other REITs. Pro Forma Same-center NOI should not be viewed as an alternative measure of our financial performance since it does not reflect the operations of our entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition expenses, depreciation and amortization, interest expense, other income, 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. www.phillipsedison.com/investors 17

 
Reconciliation of Non-GAAP Financials Below is a reconciliation of Net (Loss) Income to NOI and Same-Center NOI for the three months ended March 31, 2018 and 2017 (in thousands): Three Months Ended March 31, 2018 2017 Net (loss) income $ (1,837) $ 1,134 Adjusted to exclude: Fees and management income (8,712) — Straight-line rental income (1,080) (493) Net amortization of above- and below-market leases (1,007) (331) Lease buyout income (23) (27) General and administrative expenses 10,461 7,830 Depreciation and amortization 46,427 27,624 Interest expense, net 16,779 8,390 Other 201 1,635 Property management allocations to third-party assets under management(1) 3,602 — Owned Real Estate NOI 64,811 45,762 Less: NOI from centers excluded from same-center (3,535) (208) NOI prior to October 4, 2017, from same-center properties acquired in the PELP transaction — 13,207 Total Pro Forma Same-Center NOI $ 61,276 $ 58,761 (1) This represents property management expenses allocated to third-party owned properties based on the property management fee that is provided for in the individual management agreements under which our investment management business provides services. www.phillipsedison.com/investors 18

 
Reconciliation of Non-GAAP Financials NOI from the PELP properties acquired prior to the PELP transaction was obtained from the accounting records of PELP without adjustment. The accounting records were subject to internal review by the company. The table below provides Same-Center NOI detail for the non-ownership period of PELP, which was the three months ended March 31, 2017. 2017 Revenues: Rental income(1) $ 14,766 Tenant recovery income 4,244 Other property income 248 Total revenues 19,258 Operating expenses: Property operating expenses 3,533 Real estate taxes 2,518 Total operating expenses 6,051 Total Same-Center NOI $ 13,207 (1) Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income. www.phillipsedison.com/investors 19

 
Reconciliation of Non-GAAP Financials Funds from Operations and Modified Funds from Operations FFO is a non-GAAP performance financial measure that is widely recognized as a measure of REIT operating performance. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as net income (loss) attributable to common shareholders computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation and amortization, and after adjustments for impairment losses on depreciable 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. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. We calculate FFO Attributable to Stockholders and Convertible Noncontrolling Interests in a manner consistent with the NAREIT definition, with an additional adjustment made for noncontrolling interests that are not convertible into common stock. MFFO is an additional performance financial measure used by us as FFO includes certain non-comparable items that affect our performance over time. MFFO excludes the following items: • acquisition and transaction expenses; • straight-line rent amounts, both income and expense; • amortization of above- or below-market intangible lease assets and liabilities; • amortization of discounts and premiums on debt investments; • gains or losses from the early extinguishment of debt; • gains or losses on the extinguishment of derivatives, except where the trading of such instruments is a fundamental attribute of our operations; • gains or losses related to fair value adjustments for derivatives not qualifying for hedge accounting; and • adjustments related to the above items for joint ventures and noncontrolling interests and unconsolidated entities in the application of equity accounting. We believe that MFFO is helpful in assisting management and investors with the assessment of the sustainability of operating performance in future periods. We believe it is more reflective of our core 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) but have no impact on cash flows. FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and MFFO should not be considered alternatives to net income (loss) or income (loss) from continuing operations 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. MFFO 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, FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and MFFO 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 FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and MFFO, as presented, may not be comparable to amounts calculated by other REITs. www.phillipsedison.com/investors 20

 
Reconciliation of Non-GAAP Financials Three Months Ended March 31, (in thousands, except per share amounts) 2018 2017(1) Calculation of FFO Attributable to Stockholders and Convertible Noncontrolling Interests Net (loss) income $ (1,837) $ 1,134 Adjustments: Depreciation and amortization of real estate assets 42,299 27,624 FFO attributable to the Company 40,462 28,758 Adjustments attributable to noncontrolling interests not convertible into common stock (97) — FFO attributable to stockholders and convertible noncontrolling interests $ 40,365 $ 28,758 Calculation of MFFO FFO attributable to stockholders and convertible noncontrolling interests $ 40,365 $ 28,758 Adjustments: Net amortization of above- and below-market leases (1,007) (331) Depreciation and amortization of corporate assets 4,128 — Gain on extinguishment of debt, net — (524) Straight-line rent (1,057) (493) Amortization of market debt adjustment (272) (278) Other 31 1,594 MFFO $ 42,188 $ 28,726 FFO Attributable to Stockholders and Convertible Noncontrolling Interests/MFFO per share Weighted-average common shares outstanding - diluted(2) 230,360 186,022 FFO attributable to stockholders and convertible noncontrolling interests per share - diluted(2) $ 0.18 $ 0.15 MFFO per share - diluted $ 0.18 $ 0.15 (1) Certain prior period amounts have been restated to conform with current year presentation. (2) OP units and restricted stock awards were dilutive to FFO Attributable to Stockholders and Convertible Noncontrolling Interests and MFFO for the three months ended March 31, 2018 and 2017, and, accordingly, were included in the weighted-average common shares used to calculate diluted FFO Attributable to Stockholders and Convertible Noncontrolling Interests/MFFO per share. www.phillipsedison.com/investors 21

 
Net Debt to Total Enterprise Value The following table presents the company’s calculation of debt to total enterprise value as of March 31, 2018 and December 31, 2017 (dollars in thousands): 2018 2017 Net debt: Total debt, excluding below-market adjustments and deferred financing costs $ 1,844,879 $ 1,817,786 Less: Cash and cash equivalents (14,690) (5,716) Total net debt $ 1,830,189 $ 1,812,070 Enterprise Value: Total net debt $ 1,830,189 $ 1,812,070 Total equity value 2,535,280 2,526,557 Total enterprise value $ 4,365,469 $ 4,338,627 Net debt to total enterprise value 41.9% 41.8% (1) Total equity value is calculated as the product of the number of diluted shares outstanding and the estimated value per share at the end of the period. There were 230.5 million and 229.7 million diluted shares outstanding as of March 31, 2018 and December 31, 2017, respectively. www.phillipsedison.com/investors 22