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What changed in Phillips Edison & Company, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Phillips Edison & Company, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+246 added−246 removedSource: 10-K (2025-02-11) vs 10-K (2024-02-12)

Top changes in Phillips Edison & Company, Inc.'s 2024 10-K

246 paragraphs added · 246 removed · 199 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe are compliant with Nasdaq’s Board Diversity Rule and have three female directors and two directors who are members of underrepresented racial or ethnic minorities. More information about our CRSP is available on our website and in our Corporate Responsibility Report, which are not incorporated by reference and should not be considered part of this Annual Report on Form 10-K.
Biggest changeThe content of our website and other information contained therein, including our Corporate Responsibility Report, are not incorporated by reference herein or in any other filing by the Company with the SEC, and should not be considered part of this Annual Report on Form 10-K.
We believe that smaller centers provide higher growth potential because they enjoy a positive leasing dynamic as: (i) we believe retailer demand is strongest for inline space, which contains less than 10,000 square feet of gross leasable area; (ii) there is less exposure to big box retailers, which we believe have higher risk because they require larger capital expenditures and have fewer leasing opportunities; and (iii) smaller centers typically have lower capital expenditures.
We believe that smaller centers provide higher growth potential because they enjoy a positive leasing dynamic as: (i) we believe retailer demand is strongest for inline space, which contains less than 10,000 square feet of gross leasable area (“GLA”); (ii) there is less exposure to big box retailers, which we believe have higher risk because they require larger capital expenditures and have fewer leasing opportunities; and (iii) smaller centers typically have lower capital expenditures.
Additionally, our investment management platform enables us to source and manage incremental sources of capital through unconsolidated joint ventures, which provide us incremental fee revenue opportunities. • Debt Maturity Profile —We believe we have maintained an appropriately staggered debt maturity profile with no meaningful maturities in 2024, which will position us for long-term growth.
Additionally, our investment management platform enables us to source and manage incremental sources of capital through unconsolidated joint ventures, which provide us incremental fee revenue opportunities. • Debt Maturity Profile—We believe we have maintained an appropriately staggered debt maturity profile with no meaningful maturities in 2025, which will position us for long-term growth.
Additionally, we operate a third-party investment management business providing property management and advisory services to two unconsolidated institutional joint ventures, in which we have partial ownership interests, and one private fund (collectively, the “Managed Funds”). The majority of our revenues are lease revenues derived from our real estate investments.
Additionally, we operate a third-party investment management business providing property management and advisory services to four unconsolidated institutional joint ventures, in which we have partial ownership interests, and one private fund (collectively, the “Managed Funds”). The majority of our revenues are lease revenues derived from our real estate investments.
Balance Sheet Management Positioned for External Growth — Our strategy is to grow our portfolio by pursuing acquisitions in a disciplined manner, while maintaining an attractive leverage profile and flexible balance sheet to preserve our PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 3 investment grade rating.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 3 Balance Sheet Management Positioned for External Growth — Our strategy is to grow our portfolio by pursuing acquisitions in a disciplined manner, while maintaining an attractive leverage profile and flexible balance sheet to preserve our investment grade rating.
We also disclose, and intend to disclose, on our website under “Investors” material nonpublic information to comply with our disclosure obligations under Regulation FD. The contents of our website are not incorporated by reference. PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 6
We also disclose, and intend to disclose, on our website under “Investors” material nonpublic information to comply with our disclosure obligations under Regulation FD. The contents of our website are not incorporated by reference. PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 6
Our portfolio primarily consists of neighborhood centers anchored by the #1 or #2 grocer tenants by sales within their respective formats by trade area. As of December 31, 2023, our portfolio was 97.4% leased. Our tenants, who we refer to as “Neighbors,” are a mix of national, regional, and local retailers that primarily provide necessity-based goods and services.
Our portfolio primarily consists of neighborhood centers anchored by the #1 or #2 grocer tenants by sales within their respective formats by trade area. As of December 31, 2024, our portfolio was 97.7% leased. Our tenants, who we refer to as “Neighbors,” are a mix of national, regional, and local retailers that primarily provide necessity-based goods and services.
We do not distinguish our principal business or group our operations by geography or size for purposes of measuring performance. Accordingly, we have presented our results as a single reportable segment. COMPLIANCE WITH GOVERNMENT REGULATION— Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings, and competitive position.
We do not distinguish our principal business, or group our operations, by geography or size for the purpose of measuring performance. Accordingly, we have presented our results as a single operating and reportable segment. COMPLIANCE WITH GOVERNMENT REGULATION— Compliance with various governmental regulations has an impact on our business, including our capital expenditures, earnings, and competitive position.
As of December 31, 2023, for our wholly-owned shopping centers, 85% of our annualized base rent (“ABR”) was generated from shopping centers anchored by such grocers. Grocery-anchored shopping centers generally have strong foot traffic leading to high demand for leasing Neighbor spaces, which enhances our ability to increase lease revenue.
As of December 31, 2024, for our wholly-owned shopping centers, 84% of our annualized base rent (“ABR”) was generated from shopping centers anchored by such grocers. Grocery-anchored shopping centers generally have strong foot traffic leading to high demand for leasing Neighbor spaces, which enhances our ability to increase lease revenue.
We target investments with attractive going-in yields and growth potential in markets with demographic profiles that support necessity-based retail concepts. • Neighbor-Base —As of December 31, 2023, approximately 70% of our ABR, including the pro rata portion attributable to properties owned through our unconsolidated joint venture, is generated from Neighbors providing necessity-based goods and services.
We target investments with attractive going-in yields and growth potential in markets with demographic profiles that support necessity-based retail concepts. • Neighbor-Base —As of December 31, 2024, approximately 69% 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.
As of December 31, 2023, we are not aware of any environmental conditions or material costs of complying with environmental or other government regulations that would have a material adverse effect on our overall business.
As of December 31, 2024, we were not aware of any environmental conditions or material costs of complying with environmental or other government regulations that would have a material adverse effect on our overall business.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this filing on Form 10-K, together with our consolidated financial statements and accompanying footnotes, for a discussion of material information relevant to an assessment of our financial condition and results of operations (including, to the extent material, the effects that compliance with governmental regulations may have upon our capital expenditures and earnings).
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this filing on Form 10-K, together with our consolidated financial statements and accompanying footnotes, for a discussion of material information relevant to an assessment of our financial condition and results of PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 4 operations (including, to the extent material, the effects that compliance with governmental regulations may have upon our capital expenditures and earnings).
However, it PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 4 is possible that we are not aware of, or may become subject to potential environmental liabilities or material costs of complying with government regulations due to changes in requirements or otherwise that could be material to our business.
However, it is possible that we are not aware of, or may become subject to, potential environmental liabilities or material costs of complying with government regulations due to changes in requirements or otherwise that could be material to our business.
To achieve this, our key areas of focus include: • Engagement and Satisfaction: We empower our associates through personalized coaching and annual stock awards, intended to foster a resilient culture that has earned PECO the title of a Top Place to Work for seven consecutive years by Cincinnati Enquirer.
Some highlights of our PECO Cultural Advantage™ include: • Engagement and Satisfaction: We empower our associates through personalized coaching and annual stock awards, intended to foster a resilient culture that has earned PECO the title of a Top Place to Work for eight consecutive years by Cincinnati Enquirer.
By granting 100% of eligible associates service-based restricted stock units in PECO, we empower and encourage our associates to think and operate like owners, which we believe drives better decision making and strengthens our culture. • Learning and Development: We are committed to continuous learning and the professional development of our associates.
By granting 100% of eligible associates service-based restricted stock units in PECO, we encourage our associates to think and operate like owners, which we believe drives better decision-making and strengthens our culture. • Learning and Development: We are committed to continuous learning and career development that is highly individualized and tailored to meet the unique needs of each associate.
ACCESS TO COMPANY INFORMATION— We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy and Information statements, and all amendments to those reports with the SEC.
Additionally, we maintain two regional offices located in Atlanta, Georgia and Park City, Utah. ACCESS TO COMPANY INFORMATION— We electronically file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy and Information statements, and all amendments to those reports with the SEC.
Our outstanding debt obligations are composed primarily of (i) unsecured debt, including term loans, senior notes, and a revolving credit facility, and (ii) secured mortgage debt. • Investment Grade Ratings —Our current investment grade ratings are Baa3 (Outlook: Stable) with Moody’s Investors Services and BBB- (Outlook: Positive) with S&P Global Ratings.
Our outstanding debt obligations are composed primarily of (i) unsecured debt, including term loans, senior notes, and a revolving credit facility, and (ii) secured mortgage debt. • Investment Grade Ratings —Our current investment grade ratings are Baa2 (Outlook: Stable) with Moody’s Investors Services and BBB (Outlook: Stable) with S&P Global Ratings. • Revolving Credit Facility Availability —As of December 31, 2024, we had available liquidity of $738.9 million under our senior unsecured revolving credit facility.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS— The following table details information for our executive officers as of December 31, 2023: Name Age Title Joined PECO Jeffrey S. Edison 63 Chairman & Chief Executive Officer Co-Founder Devin I. Murphy (1) 63 President 2013 Robert F. Myers (1) 51 Chief Operating Officer & Executive Vice President 2003 John P.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 5 INFORMATION ABOUT OUR EXECUTIVE OFFICERS— The following table details information for our executive officers as of December 31, 2024: Name Age Title Joined PECO Jeffrey S. Edison 64 Chairman & Chief Executive Officer Co-Founder Robert F. Myers 52 President 2003 John P.
In May 2022, we sold the final property in our NRP joint venture. In total, our managed portfolio of wholly-owned shopping centers and those owned through our unconsolidated joint venture comprised approximately 34.4 million square feet located in 31 states.
In total, our managed portfolio of wholly-owned shopping centers and those owned through our unconsolidated joint ventures comprised approximately 35.7 million square feet located in 31 states.
Supported by an experienced executive management team, we maintain a robust system of corporate governance policies, designed to foster an ethical culture committed to the PECO-ECO Promise™ and to driving our goal of creating long-term value. We believe our corporate governance structure closely aligns our interests with those of our stockholders.
Supported by an experienced executive management team, we maintain a robust system of corporate governance policies, designed to foster an ethical culture and drive our goal of creating long-term value for all stakeholders.
We established three associate-led resource groups, PECO Multicultural Opportunities, Resources & Education (“PECO MORE”), PECO Networking Opportunities for Women (“PECO NOW”), and PECO Connect to help further diversity, inclusion, collaboration, and communication throughout the Company.
Our four associate-led resource groups - PECO Multicultural Opportunities, Resources & Education; PECO Networking Opportunities for Women; PECO Impact; and PECO Connect - are designed to help further connection, inclusion, collaboration, community engagement, and communication throughout the Company.
As of December 31, 2023, we wholly-owned 281 shopping centers. Additionally, we owned a 14% interest in Grocery Retail Partners I LLC (“GRP I”), a joint venture with Northwestern Mutual Life Insurance Company, which owned 20 shopping centers. We also owned a 20% equity interest in Necessity Retail Partners (“NRP”), a joint venture with an affiliate of TPG Real Estate.
Additionally, we owned (i) a 14% interest in Grocery Retail Partners I LLC (“GRP I”), a joint venture with The Northwestern Mutual Life Insurance Company (“Northwestern Mutual”), which owned 20 shopping centers, (ii) a 20% equity interest in Necessity Retail Venture LLC (“NRV”), a joint venture with an affiliate of Cohen & Steers Income Opportunities REIT, Inc.
We believe our investment grade balance sheet and our available liquidity of $606.6 million under our senior unsecured revolving credit facility provide us with the financial capacity to pursue external growth initiatives in an accretive and prudently capitalized manner.
We believe our investment grade balance sheet, our senior unsecured revolving credit facility, and our At-the-Market offering (“ATM”) program allow us to access debt and equity capital, further enhancing our financial flexibility and providing us with the financial capacity to pursue external growth initiatives in an accretive and prudently capitalized manner.
Our “Beyond Benefits” wellness program is integral to our Company’s culture and is designed to address our associates’ emotional, physical, and financial well-being. The program includes sponsoring wellness activities and challenges designed to improve the overall health of our associates. • Inclusion and Belonging: At PECO, fostering connection and inclusivity is a core commitment of our culture.
Our “Beyond Benefits” wellness program is integral to our Company’s culture and includes sponsoring wellness activities and challenges designed to improve the overall health of our associates.
PECO’s commitment to continuous learning includes an annual talent management process, workshops on development goal plans, and the PECO Mentor Match program, an internal mentoring program. • Health and Well-Being: We strive to create a workplace that prioritizes the well-being of our associates.
PECO’s commitment to continuous learning includes an annual talent management process; individual development plans aligned to each associate’s career goals, strengths, and areas for growth; flexible learning methods and modalities so that associates can learn in a way that suits them best and at their own pace; and an internal mentoring program. • Health and Well-Being: We strive to create a workplace that prioritizes the health, well-being, and safety of our associates.
Effective January 1, 2024, Robert Myers became President. CORPORATE HEADQUARTERS— Our corporate headquarters, located at 11501 Northlake Drive, Cincinnati, Ohio 45249, is where we conduct a majority of our management, leasing, construction, and investment activities, as well as administrative functions such as accounting and finance. Additionally, we maintain two regional offices located in Atlanta, Georgia and Park City, Utah.
Caulfield 44 Chief Financial Officer, Executive Vice President & Treasurer 2014 Tanya E. Brady 57 General Counsel, Executive Vice President & Secretary 2013 CORPORATE HEADQUARTERS— Our corporate headquarters, located at 11501 Northlake Drive, Cincinnati, Ohio 45249, is where we conduct a majority of our management, leasing, construction, and investment activities, as well as administrative functions such as accounting and finance.
As of December 31, 2023, we had approximately 290 associates located in 20 states across the country, with concentrations in our corporate offices in Cincinnati, Ohio; Park City, Utah; and Atlanta, Georgia. Approximately 51% of our workforce is female and 49% is male.
People & Culture — As of December 31, 2024, we had approximately 300 associates located in 23 states, with the majority located in our corporate headquarters in Cincinnati, Ohio. At PECO, our associates and the culture we foster are vital to how we operate.
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We believe our effective shelf registration statement and At-the-Market offering (“ATM”) program allow us to access equity and debt capital, further enhancing our financial flexibility and external growth potential.
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As of December 31, 2024, we wholly-owned 294 shopping centers.
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CORPORATE RESPONSIBILITY AND SUSTAINABILITY— Our corporate responsibility and sustainability program (“CRSP”), which we also refer to as our “PECO-ECO Promise™”, is designed to align with our corporate mission and strategic initiatives.
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(“Cohen & Steers”), which owned one shopping center, (iii) a 31.25% interest in Neighborhood Grocery Catalyst Fund LLC (“NGCF”), a joint venture with certain investors, including LS BDC Holdings, LLC, a subsidiary of Lafayette Square USA, Inc. and Northwestern Mutual, which owned one property, and (iv) a 20% equity interest in Necessity Retail Partners (“NRP”), a joint venture with an affiliate of TPG Real Estate, which sold its final property in May 2022 and is set to expire in 2025.
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With a mission of “creating great omni-channel grocery-anchored shopping center experiences and improving our communities, one shopping center at a time”, we strive to have a positive impact on all our stakeholders. Our CRSP is overseen by our full Board of Directors (the “Board”) reflecting our comprehensive approach to strong governance. In addition, we have a dedicated director liaison, Ms.
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On January 9, 2025, we amended our senior unsecured revolving credit facility. The amendment increases the aggregate borrowing capacity of the facility to $1 billion and extends the maturity date to January 2029, with options to extend the maturity for two additional six-month periods.
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Silfen, providing oversight to our PECO-ECO Team members based on her significant experience in energy innovation and sustainability. Our PECO-ECO Team is led by our General Counsel, who provides regular updates to the full Board on our CRSP.
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CORPORATE RESPONSIBILITY AND HUMAN CAPITAL— Our Corporate Responsibility and Sustainability (“CRS”) Program is designed to align with our business objective of driving long-term growth and value creation for all stakeholders by generating cash flow, income growth, managing risk, and capital appreciation.
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Our PECO-ECO Promise™ is based on four pillars that are guided by our mission and our goal of driving long-term value creation for our stakeholders: our People and Culture, Environmental Stewardship, Community, and Oversight and Ethics: PEOPLE AND CULTURE— At PECO, our associates are our greatest asset.
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To achieve this alignment, our CRS Program is based on four pillars - our People & Culture, Environmental Management, Community, and Oversight & Ethics - with each pillar focused on its interdependent strategy of (i) driving our PECO Cultural Advantage™ (described below), (ii) maximizing resource efficiencies and mitigating the impact of environmental risks, (iii) executing on our corporate mission of “creating great omni-channel grocery-anchored shopping center experiences and improving our communities, one shopping center at a time,” and (iv) committing to strong corporate governance.
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We believe in fostering a work environment where every team member feels valued, respected, and empowered.
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Our CRS Program is overseen by our Board of Directors through our Nominating and Governance (“N&G”) Committee, and we regularly review the program’s strategies and goals with our directors. More information about our CRS strategies, goals, and performance is available on our website at www.phillipsedison.com, including in our 2023 Corporate Responsibility Report.
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Established in 2007, PECO University is a hub for learning and development of our associates, encompassing our online learning platform, PECO U online, leadership development, mentoring programs, and more.
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Our unique culture - which we refer to as our “PECO Cultural Advantage”™ - is carefully curated through the following approach: cultivating an ownership mindset where teamwork and innovative thinking are highly valued; promoting transparency and open communication throughout our Company; caring about the health and well-being of our associates; investing in the growth and development of our associates; fostering a supportive and inclusive environment; and recognizing the hard work of our associates.
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Our senior leadership team is 18% female and 82% male, while manager roles and above are approximately 39% female and 61% male. For the year ended December 31, 2023, our overall turnover rate was 8%, with 6% voluntary turnover, compared to our previous three year overall turnover average of 13%, with 10% voluntary turnover.
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In 2024, PECO earned a designation as one of the “Healthiest Employers of Ohio” for a fifth consecutive year and earned a place on the Healthiest100™ in America for the second consecutive year. • Inclusion and Belonging: At PECO, fostering connection and inclusivity is a core commitment of our culture.
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ENVIRONMENTAL STEWARDSHIP— Environmental stewardship is an important component of our commitment to sustainability, encapsulated in our PECO-ECO Promise™. We recognize that sustainable practices are not only beneficial for the environment but also important for our business success and contributing to the well-being of the communities we operate in.
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Environmental Management — Our environmental management strategy focuses on maximizing resource efficiencies and mitigating the impact of environmental risks and related issues through the following key initiatives: Scope 1 and Scope 2 Greenhouse Gas (“GHG”) emissions reduction; resource efficiency; water conservation; waste management; building certifications; renewable energy; data management; and climate risk assessment.
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A key component of our sustainable practices is focused on improving operational efficiencies and resource reductions within our portfolio. Our initiatives include calculating our Scope 1 and Scope 2 GHG emissions, participating in the Global Real Estate Sustainability Benchmark ("GRESB") Real Estate Assessment, pursuing energy efficiency, developing on-site solar projects, and installing electric vehicle (“EV”) charging stations.
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For example, in 2024, we reduced our market-based Scope 1 and 2 GHG emissions by 31% versus our 2020 baseline, which has improved our resource efficiencies at our properties.
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We are also focused on attaining sustainable property certifications, implementing water conservation measures, and managing waste effectively.
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Community — Through our mission of “creating great omni-channel grocery-anchored shopping center experiences and improving our communities, one shopping center at a time”, our centers are integral to the local communities they serve by supporting local entrepreneurs and small business owners; connecting residents to essential and necessity-based goods, services, and amenities; enhancing the communities through development and redevelopment projects; and creating economic impact for the local townships and municipalities through jobs and taxes.
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We are proud to highlight the milestones below, as of December 31, 2023, in our ongoing sustainability journey: • Exterior Lighting: Completed the retrofit of 98.1% of our wholly-owned portfolio to LED parking lot lighting, moving closer to our goal of retrofitting 100% of our portfolio by 2025. • Renewable Energy: Installed 14 solar array systems to date. • Water Conservation: Conserved over 62 million gallons of water in 2023 (through September) through the implementation of xeriscaping and our “Smart Water Control Program”, generating cost savings of over $200,000. • EV Charging Stations: Installed EV chargers at 17.7% of our eligible properties to date. • Waste Management: Achieved a waste diversion rate of approximately 26.0% at properties with a landlord-controlled waste program. • Building Certifications: Secured WELL Health-Safety recertification for our company headquarters in Cincinnati, Ohio and Institute of Real Estate Management Certified Sustainable Property Certifications at 163 properties in 2023, bringing the total number of properties with certifications to 172.
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As of December 31, 2024, approximately 69% of our ABR was generated from Neighbors providing necessity-based goods and services to the local communities.
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COMMUNITY— Through our mission of “creating great omni-channel grocery-anchored shopping center experiences and improving our communities, one shopping center at a time”, we strive to actively engage with our Neighbors and the local communities that we serve. Our focus is on being Locally Smart ™ and understanding the unique needs of each community.
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Oversight & Ethics — We believe that strong governance practices promote long-term value creation for our stakeholders by fostering a culture of integrity and ethical conduct for our associates; building and maintaining a relationship of trust and respect with our Neighbors, investors, vendors, and the communities that we serve; guiding decision-making through sound and ethical business practices; safeguarding the interest of our stockholders and other stakeholders through comprehensive internal control frameworks with independent oversight and review; assessing enterprise risk management and mitigation strategies for material risks on a regular basis; providing transparency in our reporting and stakeholder disclosures; and prioritizing regular engagement with our stakeholders.
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This commitment to our communities extends to its physical spaces, with initiatives like Front Row to Go ® providing convenient curbside pickup for our local shoppers, and a retailer mix that offers storefront windows and drive-through stores for additional convenience for local shoppers.
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PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 5 Our community commitment is also evident in our initiatives like our PECO Community Partnership, an award-winning, associate-led program that encourages community involvement and connects our associates to causes they care about.
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In 2023, PECO Community Partnership sponsored 15 community service events and contributed over 440 service hours, including a volunteer day in partnership with Keep Cincinnati Beautiful at Green Man Park where 69 associates participated in a park cleanup and revitalization project. PECO's partnership with communities also extends to disaster relief efforts, exemplified by our Incident Response Team.
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This team provides support to Neighbors and communities impacted by disasters, such as Hurricane Idalia in August 2023, as part of PECO's commitment to being there for its Neighbors and communities during challenging times. OVERSIGHT AND ETHICS— Our governance framework guides our decision-making and accountability.
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Notable features include: (i) each of our directors is subject to election annually, and our charter prevents us from classifying our Board unless we receive prior stockholder approval; (ii) we have opted out of the business combination and control share acquisition statutes in the Maryland General Corporation Law; (iii) we do not have a stockholder rights plan; (iv) we have a Stock Ownership Policy that requires each non-associate director, our CEO, and each other named executive officer to own a certain amount of our equity; and (v) our bylaws provide that our stockholders may alter or replace our bylaws upon the affirmative vote of a majority of the votes entitled to be cast.
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We operate under the oversight of our Board, which is comprised of nine directors, seven of whom meet the independence criteria set forth by the Nasdaq Global Select Market (“Nasdaq”) and U.S. Securities and Exchange Commission (“SEC”) rules. Our Audit, Nominating and Governance (“N&G”), and Compensation Committees are comprised solely of independent directors who complete annual self-assessments.
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Our Board has adopted Corporate Governance Guidelines that, among other things, establish criteria and expectations for our directors, and our N&G Committee has responsibility for annually evaluating our Board and each of its committees. We are cognizant of “overboarding” and none of our directors serve on more than two other public company boards.
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Caulfield 43 Chief Financial Officer, Executive Vice President & Treasurer 2014 Tanya E. Brady 56 General Counsel, Executive Vice President & Secretary 2013 (1) Devin Murphy stepped down as President effective December 31, 2023 and became Managing Director of Investment Management effective January 1, 2024 through his retirement date of June 30, 2024.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeCovenants in our loan agreements may restrict our operations and adversely affect our financial condition and ability to make distributions to our stockholders. When providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt.
Biggest changeWhen providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt. Our loan agreements may contain covenants that limit our ability to further mortgage a property or discontinue insurance coverage.
Risks Related to Our Indebtedness and Liquidity We have substantial indebtedness, and we may need to incur additional indebtedness, including recourse debt, in the future, which could adversely affect our business, financial condition, and ability to make distributions to our stockholders.
Risks Related to Our Indebtedness and Liquidity We have substantial indebtedness, and we may need to incur additional indebtedness, including recourse debt, in the future, which could adversely affect our business, financial condition, and ability to make distributions to our stockholders.
We intend to evaluate distributions throughout 2024, and it is possible that stockholders may not receive distributions equivalent to those previously paid by us for various reasons, including: (i) we may not have enough cash to pay such distributions due to changes in our cash requirements, indebtedness, capital spending plans, operating cash flows, or financial position; (ii) decisions on whether, when, and in what amounts to make any future distributions will remain at all times entirely at the discretion of the Board, which reserves the right to change our distribution practices at any time and for any reason; (iii) our Board may elect to retain cash for investment purposes, working capital reserves, or other purposes, or to maintain or improve our credit ratings; and (iv) the amount of distributions that our subsidiaries may distribute to us may be subject to restrictions imposed by state law, state regulators, and/or the terms of any current or future indebtedness that these subsidiaries may incur.
We intend to evaluate distributions throughout 2025, and it is possible that stockholders may not receive distributions equivalent to those previously paid by us for various reasons, including: (i) we may not have enough cash to pay such distributions due to changes in our cash requirements, indebtedness, capital spending plans, operating cash flows, or financial position; (ii) decisions on whether, when, and in what amounts to make any future distributions will remain at all times entirely at the discretion of the Board, which reserves the right to change our distribution practices at any time and for any reason; (iii) our Board may elect to retain cash for investment purposes, working capital reserves, or other purposes, or to maintain or improve our credit ratings; and (iv) the amount of distributions that our subsidiaries may distribute to us may be subject to restrictions imposed by state law, state regulators, and/or the terms of any current or future indebtedness that these subsidiaries may incur.
These subjective assessments have a direct effect on our net income because recording an impairment charge results in an immediate negative adjustment to net income, which may be material. During the year ended December 31, 2023, we incurred no impairment charges. We will continue to evaluate the risk profile of each asset and may potentially recognize impairments in future quarters.
These subjective assessments have a direct effect on our net income because recording an impairment charge results in an immediate negative adjustment to net income, which may be material. During the year ended December 31, 2024, we incurred no impairment charges. We will continue to evaluate the risk profile of each asset and may potentially recognize impairments in future quarters.
Further, the criteria used in these ratings systems may change frequently, and we cannot guarantee that we will be able to score well as criteria change. We supplement our participation in ratings systems with corporate disclosure of our ESG activities, but many investors and other stakeholders may look for disclosures that we do not provide.
Further, the criteria used in these ratings systems may change frequently, and we cannot guarantee that we will be able to score well as criteria change. We supplement our participation in ratings systems with corporate disclosure of our Corporate Responsibility activities, but many investors and other stakeholders may look for disclosures that we do not provide.
Changes in our disposition strategy or changes in the marketplace may PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 9 alter the holding period of an asset or asset group, which may result in an impairment loss and such loss may be material to our financial condition or operating performance.
Changes in our disposition strategy or changes in the marketplace may alter the holding period of an asset or asset group, which may result in an impairment loss and such loss may be material to PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 9 our financial condition or operating performance.
Risks Related to Our Business and Operations • Our revenues and cash flows will be affected by the success and economic viability of our anchor Neighbors. • A significant percentage of our revenues is derived from non-anchor Neighbors, and our net income and ability to make distributions to stockholders may be adversely affected if these Neighbors are not successful. • We may be unable to sell shopping centers when desired, at an attractive price, or at all, and the sale of a property could cause significant tax payments. • We face competition and other risks in pursuing acquisition opportunities that could increase the cost of such acquisitions and/or limit our ability to grow, and we may not be able to generate expected returns or successfully integrate completed acquisitions into our existing operations. • We share ownership of our unconsolidated joint ventures and do not have exclusive decision-making power, and as such, we are unable to ensure that our objectives will be pursued. • Our real estate assets may decline in value and be subject to significant impairment losses, which may reduce our net income. • We actively reinvest in our portfolio in the form of development and redevelopment projects, which have inherent risks that could adversely affect our financial condition, cash flows, and results of operations. • The continued shift in retail sales towards e-commerce may adversely affect our financial condition, cash flows, and results of operations. • Actual incremental unlevered yields for our development and redevelopment projects may vary from our underwritten incremental unlevered yield range. • Pandemics, epidemics, or other health crises may have a negative effect on our and our Neighbors’ businesses, financial condition, results of operations, cash flows, and liquidity.
Risks Related to Our Business and Operations • Our revenues and cash flows will be affected by the success and economic viability of our anchor Neighbors. • A significant percentage of our revenues is derived from non-anchor Neighbors, and our net income and ability to make distributions to stockholders may be adversely affected if these Neighbors are not successful. • We may be unable to sell shopping centers when desired, at an attractive price, or at all, and the sale of a property could cause significant tax payments. • We face competition and other risks in pursuing acquisition opportunities that could increase the cost of such acquisitions and/or limit our ability to grow, and we may not be able to generate expected returns or successfully integrate completed acquisitions into our existing operations. • We share ownership of our unconsolidated joint ventures and do not have exclusive decision-making power, and as such, we are unable to ensure that our objectives will be pursued. • Our real estate assets may decline in value and be subject to significant impairment losses, which may reduce our net income. • We actively reinvest in our portfolio in the form of development and redevelopment projects, which have inherent risks that could adversely affect our financial condition, cash flows, and results of operations. • The continued shift in retail sales towards e-commerce may adversely affect our financial condition, cash flows, and results of operations. • Actual incremental unlevered yields for our development and redevelopment projects may vary from our underwritten incremental unlevered yield range. • Pandemics, epidemics, or other health crises may have a negative effect on our and our Neighbors’ businesses, financial condition, results of operations, cash flows, and liquidity. • We use artificial intelligence technologies in our business, and the use of these technologies involve technological and legal risk.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 8 We may be unable to sell shopping centers when desired, at an attractive price, or at all, and the sale of a property could cause significant tax payments.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 8 We may be unable to sell shopping centers when desired, at an attractive price, or at all, and the sale of a property could cause significant tax payments.
These and other factors could adversely affect our financial condition, cash flows, and results of operations. PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 10 The continued shift in retail sales towards e-commerce may adversely affect our financial condition, cash flows, and results of operations.
These and other factors could adversely affect our financial condition, cash flows, and results of operations. PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 10 The continued shift in retail sales towards e-commerce may adversely affect our financial condition, cash flows, and results of operations.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 7 Risks Related to Our Business and Operations Our revenues and cash flows will be affected by the success and economic viability of our anchor Neighbors.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 7 Risks Related to Our Business and Operations Our revenues and cash flows will be affected by the success and economic viability of our anchor Neighbors.
In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect the share price of our common stock or result in fluctuations in the price or trading volume of shares of our common stock, including: • the annual yield from distributions on shares of our common stock as compared to yields on other financial instruments; PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 19 • equity issuances by us, or future sales of substantial amounts of shares of our common stock by our existing or future stockholders, or the perception that such issuances or future sales may occur; • increases in market interest rates or a decrease in our distributions to stockholders that lead purchasers of shares of our common stock to demand a higher yield; • changes in market valuations of similar companies; • fluctuations in stock market prices and volumes; • additions or departures of key management personnel; • our operating performance and the performance of other similar companies; • actual or anticipated differences in our quarterly operating results; • changes in expectations of future financial performance or changes in estimates of securities analysts; • publication of research reports about us or our industry by securities analysts; • failure to qualify as a REIT; • adverse market reaction to any indebtedness we incur in the future; • strategic decisions by us or our competitors, such as acquisitions, divestments, spin offs, joint ventures, strategic investments, or changes in business strategy; • the passage of legislation or other regulatory developments that adversely affect us or our industry; • speculation in the press or investment community; • changes in our earnings; • failure to satisfy the listing requirements of Nasdaq; • failure to comply with the requirements of the Sarbanes-Oxley Act; • actions by institutional stockholders; • changes in accounting principles; and • general market conditions, including factors unrelated to our performance.
In addition to the risks listed in this “Risk Factors” section, a number of factors could negatively affect the share price of our common stock or result in fluctuations in the price or trading volume of shares of our common stock, including: • the annual yield from distributions on shares of our common stock as compared to yields on other financial instruments; • equity issuances by us, or future sales of substantial amounts of shares of our common stock by our existing or future stockholders, or the perception that such issuances or future sales may occur; • increases in market interest rates or a decrease in our distributions to stockholders that lead purchasers of shares of our common stock to demand a higher yield; • changes in market valuations of similar companies; • fluctuations in stock market prices and volumes; • additions or departures of key management personnel; • our operating performance and the performance of other similar companies; • actual or anticipated differences in our quarterly operating results; • changes in expectations of future financial performance or changes in estimates of securities analysts; • publication of research reports about us or our industry by securities analysts; • failure to qualify as a REIT; • adverse market reaction to any indebtedness we incur in the future; • strategic decisions by us or our competitors, such as acquisitions, divestments, spin offs, joint ventures, strategic investments, or changes in business strategy; • the passage of legislation or other regulatory developments that adversely affect us or our industry; • speculation in the press or investment community; • changes in our earnings; • failure to satisfy the listing requirements of Nasdaq; • failure to comply with the requirements of the Sarbanes-Oxley Act; • actions by institutional stockholders; • changes in accounting principles; and • general market conditions, including factors unrelated to our performance.
Our business, and the businesses of our Neighbors, could be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic, epidemic, or other health crisis, like the COVID-19 pandemic, especially if there is a negative impact to customers’ willingness or ability to frequent our Neighbors’ businesses.
Our business, and the businesses of our Neighbors, could be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic, epidemic, or other health crisis, especially if there is a negative impact to customers’ willingness or ability to frequent our Neighbors’ businesses.
We have obtained, and may continue to obtain, lines of credit, and other long-term financing that are secured by our shopping centers and other assets. On December 31, 2023, we had indebtedness of $2.0 billion comprised of $1.5 billion in unsecured debt, $0.4 billion in outstanding secured loan facilities, and $0.1 billion in mortgage loans and finance lease obligations.
We have obtained, and may continue to obtain, lines of credit, and other long-term financing that are secured by our shopping centers and other assets. On December 31, 2024, we had indebtedness of $2.1 billion comprised of $1.7 billion in unsecured debt, $0.4 billion in outstanding secured loan facilities, and $0.1 billion in mortgage loans and finance lease obligations.
When evaluating investment decisions, many investors and shareholders look not only at company ESG disclosures, but also to ESG rating systems that have been developed by third-party groups to allow comparisons between companies.
When evaluating investment decisions, many investors and shareholders look not only at company Corporate Responsibility disclosures, but also to rating systems that have been developed by third-party groups to allow comparisons between companies.
Our portfolio is predominantly comprised of omni-channel neighborhood grocery-anchored shopping centers, and during the year ended December 31, 2023, our holdings in Florida and California accounted for 12.2% and 10.9%, respectively, of our ABR (including our wholly-owned portfolio as well as the prorated portion of shopping centers owned through our joint ventures).
Our portfolio is predominantly comprised of omni-channel neighborhood grocery-anchored shopping centers, and during the year ended December 31, 2024, our holdings in Florida, California, and Texas accounted for 12.2%, 10.6%, and 10.1%, respectively, of our ABR (including our wholly-owned portfolio as well as the prorated portion of shopping centers owned through our joint ventures).
In addition, unconsolidated joint venture arrangements may decrease our ability to manage risk and implicate additional risks, such as: (i) potentially inferior financial capacity, diverging business goals and strategies and the need for our venture partners’ continued cooperation; (ii) the joint venture partners might become bankrupt, suffer a deterioration in their creditworthiness, or fail to fund their share of required capital contributions; (iii) our inability to take actions with respect to the unconsolidated joint ventures’ activities that we believe are favorable to us if our institutional joint venture partners do not agree; (iv) our inability to control the legal entities that have title to the real estate associated with the joint ventures; (v) our lenders may not be easily able to sell our joint venture assets and investments or may view them less favorably as collateral, which could negatively affect our liquidity and capital resources; (vi) our institutional joint venture partners can take actions that we may not be able to anticipate or prevent, which could result in negative impacts on our debt and equity; and (vii) our institutional joint venture partners’ business decisions or other actions or omissions may result in harm to our reputation or adversely affect the value of our investments.
In addition, unconsolidated joint venture arrangements may decrease our ability to manage risk and implicate additional risks, such as: (i) potentially inferior financial capacity, diverging business goals and strategies and the need for our venture partners’ continued cooperation; (ii) the joint venture partners might become bankrupt, suffer a deterioration in their creditworthiness, or fail to fund their share of required capital contributions; (iii) our inability to take actions with respect to the unconsolidated joint ventures’ activities that we believe are favorable to us if our institutional joint venture partners do not agree; (iv) our inability to control the legal entities that have title to the real estate associated with the joint ventures; (v) our institutional joint venture partners can take actions that we may not be able to anticipate or prevent, which could result in negative impacts on our investment in the joint venture; and (vi) our institutional joint venture partners’ business decisions or other actions or omissions may result in harm to our reputation or adversely affect the value of our investments.
Failure to participate in certain of the third-party ratings systems, failure to score well in those ratings systems, failure to provide certain ESG disclosures, or unfavorable comparisons in these areas to other companies, could result in reputational harm when investors or others compare us against similar companies in our industry, could result in investor engagement on our ESG initiatives and PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 11 disclosures or increased costs relating to ESG initiatives, and could cause certain investors to be unwilling to invest in our stock, which could adversely impact our ability to raise capital.
Failure to participate in certain of the third-party ratings systems, failure to score well in those ratings systems, failure to provide certain Corporate Responsibility disclosures, failure to successfully navigate competing policymaker and stakeholder expectations on Corporate PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 11 Responsibility, or unfavorable comparisons in these areas to other companies, could result in reputational harm when investors or others compare us against similar companies in our industry, could result in investor engagement on our Corporate Responsibility initiatives and disclosures or increased costs relating to Corporate Responsibility initiatives, and could cause certain investors to be unwilling to invest in our stock, which could adversely impact our ability to raise capital.
Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock.
Ineffective internal control over financial reporting and disclosure controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the per share trading price of our common stock. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Although a significant amount of our outstanding debt has fixed interest rates, we borrow funds at variable interest rates under our credit facilities and term loans. As of December 31, 2023, 22.4% of our outstanding debt was variable rate debt.
Although a significant amount of our outstanding debt has fixed interest rates, we borrow funds at variable interest rates under our credit facilities and term loans. As of December 31, 2024, 7.0% of our outstanding debt was variable rate debt.
As of December 31, 2023, 28 of our 281 wholly-owned shopping centers, four outparcels, and the land under which one of our properties is located, comprising approximately 10.5% of our ABR, are subject to the protection described in clause (i) above, and the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to such protection is approximately $122.7 million.
As of December 31, 2024, 28 of our 294 wholly-owned shopping centers, four outparcels, and the land under which one of our properties is located, comprising approximately 10.2% of our ABR, are subject to the protection described in clause (i) above, and the potential “make-whole amount” on the estimated aggregate amount of built-in gain subject to such protection is approximately $117.9 million.
These and other provisions of our charter, bylaws, and Maryland law could have the effect of delaying, deferring, or preventing a change in control, including an extraordinary transaction (such as a merger, tender offer, or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 14 These and other provisions of our charter, bylaws, and Maryland law could have the effect of delaying, deferring, or preventing a change in control, including an extraordinary transaction (such as a merger, tender offer, or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.
Although we believe that our portfolio is in substantial compliance with U.S. federal, state, and local environmental laws and regulations regarding hazardous or toxic substances, and that there is no material contamination that we would be responsible for addressing, this belief is based on limited evaluation and testing.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 18 Although we believe that our portfolio is in substantial compliance with U.S. federal, state, and local environmental laws and regulations regarding hazardous or toxic substances, and that there is no material contamination that we would be responsible for addressing, this belief is based on limited evaluation and testing.
Terrorist activities or violence occurring at our properties also PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 17 may directly affect their value through damage, destruction, or loss. Insurance for such acts may be unavailable or cost more, which could result in an increase to our operating expenses and adversely affect our results of operations.
Terrorist activities or violence occurring at our properties also may directly affect their value through damage, destruction, or loss. Insurance for such acts may be unavailable or cost more, which could result in an increase to our operating expenses and adversely affect our results of operations.
We are required to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, and are required to have our independent registered public accounting firm attest to the same, as required by Section 404 of the Sarbanes-Oxley Act of 2002.
We are required to perform system and PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 21 process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, and are required to have our independent registered public accounting firm attest to the same, as required by Section 404 of the Sarbanes-Oxley Act of 2002.
Currently, we are a limited guarantor on a mortgage loan for our unconsolidated joint venture. Our guarantee is limited to being the non-recourse carveout guarantor and the environmental indemnitor.
Currently, we are a limited guarantor on mortgage loans for certain of our unconsolidated joint ventures. Our guarantee is limited to being the non-recourse carveout guarantor and the environmental indemnitor.
Our property taxes could increase due to property tax rate changes or reassessment, which could impact our cash flow. Even if we qualify as a REIT for U.S. federal income tax purposes, we are required to pay state and local property taxes on our shopping centers.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 15 Our property taxes could increase due to property tax rate changes or reassessment, which could impact our cash flow. Even if we qualify as a REIT for U.S. federal income tax purposes, we are required to pay state and local property taxes on our shopping centers.
While we attempt to acquire shopping centers that are already in compliance with the ADA or place the burden of compliance on the seller or other third party, such as a Neighbor, we cannot assure stockholders that we will be able to acquire shopping centers or allocate responsibilities in this manner.
While we attempt to acquire shopping centers that are already in compliance with the ADA or place the burden of compliance on the seller or other third party, such as a Neighbor, we cannot PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 19 assure stockholders that we will be able to acquire shopping centers or allocate responsibilities in this manner.
We believe that our organization and method of operation has enabled and will continue to enable us to meet the PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 14 requirements for qualification and taxation as a REIT for U.S. federal income tax purposes. However, we cannot assure you that we will qualify as such.
We believe that our organization and method of operation has enabled and will continue to enable us to meet the requirements for qualification and taxation as a REIT for U.S. federal income tax purposes. However, we cannot assure you that we will qualify as such.
In addition to our own IT PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 18 systems, we also depend on third parties to provide IT services relating to several key business functions, such as administration, accounting, communications, document management and storage, human resources, payroll, tax, investor relations, and certain finance functions.
In addition to our own IT systems, we also depend on third parties to provide IT services relating to several key business functions, such as administration, accounting, communications, document management and storage, human resources, payroll, tax, investor relations, and certain finance functions.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 20 If we pay distributions from sources other than our cash flows from operations, we may not be able to sustain our distribution rate, we may have fewer funds available for investment in shopping centers and other assets, and our stockholders’ overall returns may be reduced.
If we pay distributions from sources other than our cash flows from operations, we may not be able to sustain our distribution rate, we may have fewer funds available for investment in shopping centers and other assets, and our stockholders’ overall returns may be reduced.
In October 2021, we issued $350 million aggregate principal amount of 2.625% senior notes, and in the future, we may attempt to increase our capital resources by offering additional debt or equity securities (or causing our operating partnership to issue debt or equity securities), including medium term notes, senior or subordinated notes, and additional classes of preferred or common stock.
In the future, we may attempt to increase our capital resources by offering additional debt or equity securities (or causing our operating partnership to issue debt or equity securities), including medium term notes, senior or subordinated notes, and additional classes of preferred or common stock.
We must also ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, U.S. government securities, and qualified real estate assets, including certain mortgage loans and mortgage-backed securities.
We must also ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, U.S. government securities, and qualified real estate assets, including certain mortgage loans and mortgage-backed PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 16 securities.
The issuance of a substantial number of shares of our common stock in the public market, or upon exchange of common units of limited partnership interest in our OP units, or the perception that such issuances might occur, could adversely affect the market price of our common stock.
The issuance of a substantial number of shares of our common stock in the public market, or upon exchange of common units of limited partnership interest PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 20 in our OP units, or the perception that such issuances might occur, could adversely affect the market price of our common stock.
We will monitor the amount of the PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 15 dividend and other income from our TRS entities and will take actions intended to keep this income, and any other non-qualifying income, within the limitations of the REIT income tests.
We will monitor the amount of the dividend and other income from our TRS entities and will take actions intended to keep this income, and any other non-qualifying income, within the limitations of the REIT income tests.
However, to the extent that we engage in such activities through a TRS, the income associated with such activities will be PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 16 subject to a corporate income tax.
However, to the extent that we engage in such activities through a TRS, the income associated with such activities will be subject to a corporate income tax.
An increased focus on metrics and reporting related to ESG factors may impose additional costs and expose us to new risks. Investors and other stakeholders have become more focused on understanding how companies address a variety of ESG factors.
Increased scrutiny on metrics and reporting related to Environmental, Social and Governance factors may impose additional costs and expose us to new risks. Investors and other stakeholders are often focused on understanding how companies address a variety of Corporate Responsibility factors.
The 2021 TPA generally has the following terms: (i) the 2021 TPA will severally provide to Mr. Edison, Mr. Murphy, and Mr. Myers the same protection provided under the 2017 TPA until 2031, so long as (a) Mr. Edison, Mr. Murphy, or Mr.
Murphy, and Mr. Myers the same protection provided under the 2017 TPA until 2031, so long as (a) Mr. Edison, Mr. Murphy, or Mr.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 13 We and the Operating Partnership entered into an additional tax protection agreement (the “2021 TPA”) on July 19, 2021 with Mr. Edison, Mr. Murphy, and Mr. Myers, which will become effective upon the expiration of the 2017 TPA.
We and the Operating Partnership entered into an additional tax protection agreement (the “2021 TPA”) on July 19, 2021 with Mr. Edison, Devin I. Murphy, and Mr. Myers, which will become effective upon the expiration of the 2017 TPA. The 2021 TPA generally has the following terms: (i) the 2021 TPA will severally provide to Mr. Edison, Mr.
Mortgage debt and other property-level debt that we may incur may also limit our ability to transfer properties from one subsidiary to another. These or other limitations would decrease our operating flexibility and our ability to achieve our operating objectives, which may adversely affect our financial condition and ability to make distributions to our stockholders.
These or other limitations would decrease our operating flexibility and our ability to achieve our operating objectives, which may adversely affect our financial condition and ability to make distributions to our stockholders.
As of December 31, 2023, we would have directly or indirectly controlled approximately 89.3% of the OP units. Furthermore, as of December 31, 2023, Mr. Edison had voting control over approximately 6.9% of the OP units (considering OP units owned by us), and therefore could have influence over votes on change of control transactions.
Edison had voting control over approximately 6.4% of the OP units (considering OP units owned by us), and therefore could have influence over votes on change of control transactions.
An increase in market capitalization rates or a decline in NOI may cause a reduction in the value of shopping centers identified for sale, which would have an adverse effect on the PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 12 amount of cash generated.
Sales proceeds are then used to fund the construction of developments, redevelopments, expansions, and acquisitions, and to repay debt. An increase in market capitalization rates or a decline in NOI may cause a reduction in the value of shopping centers identified for sale, which would have an adverse effect on the amount of cash generated.
We and our stockholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation, or administrative interpretation. If our assets are deemed to be plan assets, we may be exposed to liabilities under Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the IRC.
We and our stockholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation, or administrative interpretation.
Our loan agreements may contain covenants that limit our ability to further mortgage a property or discontinue insurance coverage. In addition, loan agreements may limit our ability to enter into or terminate certain operating or lease agreements related to a property.
In addition, loan agreements may limit our ability to enter into or terminate certain operating or lease agreements related to a property. Mortgage debt and other property-level debt that we may incur may also limit our ability to transfer properties from one subsidiary to another.
Removed
In addition, the SEC is currently evaluating rulemaking that is likely to impose additional ESG disclosure and other requirements on us.
Added
Additionally, the regulatory environment may create conflicting pressures as policymakers in some jurisdictions advocate for laws to constrain consideration of Corporate Responsibility matters in certain circumstances. Additional actions may be taken by both proponents and opponents of Corporate Responsibility matters.
Removed
Sales proceeds are then used to fund the construction of developments, redevelopments, expansions, and acquisitions, and to repay debt.
Added
We use artificial intelligence technologies in our business, and the use of these technologies involve technological and legal risk. We currently use artificial intelligence (“AI”) and automated decision-making technologies (collectively, “AI Technologies”), including generative AI Technologies (i.e., AI Technologies that can produce and output new content, software code, data and information) in certain internal business practices.
Added
Technological advances in AI are rapidly evolving, and along with this rapid evolution comes risks and challenges that could negatively impact our business. AI Technologies may create incomplete, inaccurate, or misleading outputs or other discriminatory or unexpected results or behaviors, such as hallucinatory behavior that can generate irrelevant, nonsensical, or factually incorrect results.
Added
While we take measures designed to ensure the accuracy of such AI-generated content, those measures may not always be successful. Accordingly, reliance on these models could lead us to make impaired decisions that could result in adverse consequences to us, including legal liability, reputational and competitive harm, and Neighbor loss.
Added
Additionally, sensitive or otherwise confidential information could be leaked, disclosed, or revealed in connection with the use of AI Technologies by our employees, vendors, contractors, and where an AI model processes personal information and makes connections with that data, it may disclose sensitive, proprietary, or confidential information generated by the model.
Added
Furthermore, bad actors may utilize AI Technologies to obtain sensitive or confidential information of our business. Uncertainty in the regulatory environment relating to AI Technologies may hinder our ability to use such technologies in our business or require us to change our business practices, which could decrease any benefits from using AI Technologies and negatively impact our business.
Added
Additionally, we may need to expend additional resources to modify and maintain our use of AI Technologies to comply with applicable law, and failure to do so may lead to regulatory fines or penalties.
Added
Additionally, changes to our credit ratings could affect our ability to access debt capital, as well as the terms of certain existing and future debt financing we may obtain.
Added
As we depend, in part, on debt financing to fund the growth of our business and to execute our strategy, an adverse change in our credit rating, including changes in our credit outlook, or the initiation of a PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 12 review of our credit rating that could result in an adverse change, could have a material adverse effect on us.
Added
Our creditworthiness is rated by nationally recognized credit rating agencies. The credit ratings assigned are based on our operating performance, liquidity and leverage ratios, financial condition and prospects, and other factors viewed by the credit rating agencies as relevant to our industry and the general economic outlook. Furthermore, our unsecured credit facilities are priced, in part, on our credit rating.
Added
A downgrade of our credit rating could lead to a higher credit spread component within the applicable interest rate for those debt agreements and result in higher interest expense. Covenants in our loan agreements may restrict our operations and adversely affect our financial condition and ability to make distributions to our stockholders.
Added
As of December 31, 2024, we would have directly or indirectly controlled approximately 90.6% of the OP units. PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 13 Furthermore, as of December 31, 2024, Mr.
Added
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 17 If our assets are deemed to be plan assets, we may be exposed to liabilities under Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the IRC.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Board oversees our cybersecurity program and is periodically briefed by management, including the CIO, on cybersecurity risks and initiatives. In addition, management updates the Board as necessary regarding any significant cybersecurity incidents.
Biggest changeThe Audit Committee oversees our cybersecurity program and is periodically briefed by management, including the CIO, on cybersecurity risks and initiatives. In addition, management updates the Board, through the Audit Committee, as necessary regarding any significant cybersecurity incidents.
The CIO works closely with members of PECO's cybersecurity team, who have years of experience working in cybersecurity, possessing industry certifications such as Certified Information Systems Security Professional (“CISSP”) and Security+, and pursuing advanced degrees and studies in the field. Cybersecurity team members participate in recurring cybersecurity team meetings with the CIO and provide monthly executive leadership updates.
The CIO works closely with members of PECO's cybersecurity team, who have years of experience working in cybersecurity, possessing industry certifications such as Certified Information Systems Security Professional (“CISSP”) and Security+, and pursuing advanced degrees and studies in the field. Cybersecurity team members participate in recurring cybersecurity team meetings with the CIO and provide periodic executive leadership updates.
See “Item 1A. Risk Factors – Risks Related to Business Continuity”. PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 22
See “Item 1A. Risk Factors – Risks Related to Business Continuity”. PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 22

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFor additional portfolio information, refer to “Schedule III - Real Estate Assets and Accumulated Depreciation” (dollars and square feet in thousands): State ABR (1) % ABR ABR/Leased Square Foot GLA (2) % GLA % Leased Number of Properties Florida $ 58,036 12.2 % $ 14.57 4,088 12.6 % 97.4 % 51 California 51,936 10.9 % 21.52 2,504 7.7 % 96.4 % 26 Texas 43,072 9.1 % 18.21 2,474 7.6 % 95.6 % 20 Georgia 40,979 8.6 % 13.75 3,028 9.3 % 98.4 % 31 Illinois 28,540 6.0 % 16.71 1,804 5.6 % 94.6 % 16 Ohio 25,316 5.3 % 11.04 2,336 7.2 % 98.2 % 19 Colorado 24,850 5.2 % 18.41 1,408 4.3 % 95.9 % 12 Virginia 22,724 4.8 % 17.15 1,359 4.2 % 97.5 % 13 Minnesota 19,688 4.1 % 15.55 1,325 4.1 % 95.5 % 13 Massachusetts 16,944 3.6 % 15.22 1,146 3.5 % 97.1 % 9 Nevada 14,824 3.1 % 24.30 623 1.9 % 97.9 % 5 Pennsylvania 12,264 2.6 % 12.45 1,001 3.1 % 98.4 % 6 Wisconsin 11,990 2.5 % 11.47 1,057 3.3 % 98.9 % 9 Arizona 10,741 2.3 % 14.81 735 2.3 % 98.6 % 6 South Carolina 10,086 2.1 % 11.81 863 2.7 % 99.0 % 8 Maryland 9,568 2.0 % 21.01 463 1.4 % 98.4 % 4 North Carolina 8,409 1.8 % 12.91 658 2.0 % 99.0 % 10 Tennessee 8,132 1.7 % 10.20 802 2.5 % 99.4 % 5 Indiana 7,261 1.5 % 8.85 832 2.6 % 98.6 % 5 Kentucky 6,849 1.5 % 11.18 616 1.9 % 99.5 % 4 Michigan 6,772 1.4 % 9.59 724 2.2 % 97.6 % 5 New Mexico 6,044 1.3 % 15.02 404 1.2 % 99.6 % 3 Connecticut 5,982 1.3 % 14.35 421 1.3 % 99.0 % 4 Oregon 4,765 1.0 % 16.14 316 1.0 % 93.4 % 4 Kansas 4,684 1.0 % 12.53 374 1.2 % 100.0 % 3 New Jersey 4,245 0.9 % 25.05 169 0.5 % 100.0 % 1 Washington 2,886 0.6 % 16.69 173 0.5 % 100.0 % 2 Iowa 2,822 0.6 % 8.00 360 1.1 % 98.1 % 3 Missouri 2,589 0.5 % 11.89 222 0.7 % 98.2 % 2 New York 1,823 0.4 % 11.58 163 0.5 % 96.3 % 1 Utah 461 0.1 % 31.70 15 — % 100.0 % 1 Total $ 475,282 100.0 % $ 15.03 32,463 100.0 % 97.4 % 301 (1) We calculate ABR as monthly contractual base rent as of December 31, 2023 multiplied by twelve months.
Biggest changeFor additional portfolio information, refer to “Schedule III - Real Estate Assets and Accumulated Depreciation” (dollars and square feet in thousands): State ABR (1) % ABR ABR/Leased Square Foot GLA (2) % GLA % Leased Number of Properties Florida $ 62,739 12.2 % $ 15.48 4,162 12.4 % 97.4 % 53 California 54,764 10.6 % 22.17 2,504 7.4 % 98.6 % 26 Texas 52,203 10.1 % 19.27 2,766 8.2 % 97.9 % 24 Georgia 44,951 8.7 % 14.34 3,183 9.5 % 98.5 % 32 Illinois 30,362 5.9 % 16.69 1,934 5.7 % 94.1 % 17 Ohio 28,824 5.6 % 11.48 2,584 7.7 % 97.1 % 20 Colorado 28,528 5.5 % 19.66 1,480 4.4 % 98.0 % 14 Virginia 22,809 4.4 % 17.25 1,358 4.0 % 97.4 % 13 Minnesota 22,619 4.4 % 16.64 1,392 4.1 % 97.7 % 14 Massachusetts 17,658 3.4 % 15.66 1,148 3.4 % 98.2 % 9 Nevada 14,558 2.8 % 23.68 623 1.9 % 98.6 % 5 Pennsylvania 12,665 2.5 % 12.79 1,000 3.0 % 99.1 % 6 Wisconsin 12,157 2.4 % 11.70 1,057 3.1 % 98.3 % 9 Arizona 11,508 2.2 % 15.56 750 2.2 % 98.5 % 7 South Carolina 10,615 2.1 % 12.29 870 2.6 % 99.3 % 8 Maryland 10,037 1.9 % 21.78 463 1.4 % 99.6 % 4 North Carolina 8,497 1.6 % 13.59 659 2.0 % 94.9 % 10 Connecticut 8,418 1.6 % 16.95 522 1.6 % 95.1 % 5 Tennessee 8,290 1.6 % 10.38 802 2.4 % 99.6 % 5 Indiana 7,419 1.5 % 9.11 832 2.5 % 97.8 % 5 Kentucky 7,087 1.4 % 11.55 616 1.8 % 99.6 % 4 Michigan 6,919 1.3 % 9.92 724 2.2 % 96.4 % 5 New Mexico 6,035 1.2 % 15.27 404 1.2 % 97.9 % 3 Oregon 5,084 1.0 % 16.83 316 0.9 % 95.6 % 4 Kansas 4,844 0.9 % 12.96 374 1.1 % 100.0 % 3 New Jersey 4,352 0.8 % 25.68 169 0.5 % 100.0 % 1 Washington 3,480 0.7 % 20.13 173 0.5 % 100.0 % 2 Missouri 2,902 0.6 % 13.16 246 0.7 % 89.7 % 3 Iowa 2,851 0.6 % 8.19 360 1.1 % 96.8 % 3 New York 1,827 0.4 % 11.80 163 0.5 % 94.7 % 1 Utah 461 0.1 % 31.70 15 — % 100.0 % 1 Total $ 515,463 100.0 % $ 15.69 33,649 100.0 % 97.7 % 316 (1) We calculate ABR as monthly contractual base rent as of December 31, 2024 multiplied by twelve months.
LEASE EXPIRATIONS —The following chart shows the aggregate scheduled lease expirations for our over 3,000 Neighbors, excluding our Neighbors who are occupying space on a temporary basis, after December 31, 2023 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 venture: 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.
LEASE EXPIRATIONS —The following chart shows the aggregate scheduled lease expirations for our over 3,000 Neighbors, excluding our Neighbors who are occupying space on a temporary basis, after December 31, 2024 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: 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.
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 venture, by Neighbor type as of December 31, 2023: The following charts present the composition of our portfolio by Neighbor industry as of December 31, 2023: PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 25 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).
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 December 31, 2024: The following charts present the composition of our portfolio by Neighbor industry as of December 31, 2024: PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 25 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 70% of our ABR, including the pro rata portion attributable to properties owned through our unconsolidated joint venture, is generated from Neighbors providing necessity-based goods and services.
We estimate that approximately 69% 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.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 24 For our wholly-owned properties and those owned through our unconsolidated joint venture, during the 2024 fiscal year, we have a total of 670 leases expiring, representing 2.8 million square feet of GLA.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 24 For our wholly-owned properties and those owned through our unconsolidated joint ventures, during the 2025 fiscal year, we have a total of 643 leases expiring, representing 2.9 million square feet of GLA.
(2) Gross leasable area (“GLA”) is defined as the total occupied and unoccupied square footage of a building that is available for Neighbors to lease.
(2) GLA is defined as the total occupied and unoccupied square footage of a building that is available for Neighbors to lease.
While we cannot predict what rental rates we will achieve in 2024 as we renew or replace these expiring leases, the comparable rent spread of new leases signed during 2023 was 25.2%, and the comparable rent spread for lease renewals executed in 2023 was 16.2%.
While we cannot predict what rental rates we will achieve in 2025 as we renew or replace these expiring leases, the comparable rent spread of new leases signed during 2024 was 35.7%, and the comparable rent spread for lease renewals executed in 2024 was 19.4%.
Further, during the fiscal year 2023, our occupancy remained high, ending the year at 97.4%, indicating continued demand for leasing spaces at our centers. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview - Leasing Activity” of this filing on Form 10-K for further discussion of leasing activity.
Further, during the 2024 fiscal year, our occupancy improved 30 basis points to 97.7%, indicating continued demand for leasing spaces at our centers. See “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview - Leasing Activity” of this filing on Form 10-K for further discussion of leasing activity.
For our wholly-owned properties, during the 2024 fiscal year, we have 635 leases expiring, representing 2.8 million square feet of GLA. For our wholly-owned properties, the expiring leases have an ABR of $15.07 per square foot.
For our wholly-owned properties, during the 2025 fiscal year, we have 594 leases expiring, representing 2.8 million square feet of GLA. For our wholly-owned properties, the expiring leases have an ABR of $14.72 per square foot.
PROPERTIES REAL ESTATE INVESTMENTS —The following table details information for our wholly-owned properties and those owned through our unconsolidated joint venture as of December 31, 2023, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands): Ownership Percentage Number of Properties ABR GLA Wholly-owned properties 100% 281 $ 470,819 32,153 GRP I 14% 20 31,908 2,213 The following table presents information regarding the geographic location of our properties, including wholly-owned and the prorated portion of those owned through our unconsolidated joint venture, by ABR as of December 31, 2023.
PROPERTIES REAL ESTATE INVESTMENTS —The following table details information for our wholly-owned properties and those owned through our unconsolidated joint ventures as of December 31, 2024, which is the basis for determining the prorated information included in the subsequent tables (dollars and square feet in thousands): Ownership Percentage Number of Properties ABR GLA Wholly-owned properties 100% 294 $ 509,998 33,300 GRP I 14% 20 32,723 2,213 NRV 20% 1 2,796 121 NGCF 31% 1 1,042 49 The following table presents information regarding the geographic location of our properties, including wholly-owned and the prorated portion of those owned through our unconsolidated joint ventures, by ABR as of December 31, 2024.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 23 TOP TEN CITIES —The following table presents the top ten city markets by ABR of our wholly-owned properties as of December 31, 2023 (dollars in thousands): City ABR (1) % ABR Atlanta $ 33,644 7.1 % Chicago 26,067 5.5 % Dallas 24,709 5.2 % Sacramento 20,986 4.5 % Minneapolis 18,439 3.9 % Denver 17,731 3.8 % Washington, D.C. 14,915 3.2 % Las Vegas 14,824 3.1 % Houston 14,609 3.1 % Tampa 13,791 2.9 % Total $ 199,715 42.3 % (1) We calculate ABR as monthly contractual base rent as of December 31, 2023 multiplied by twelve months.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 23 TOP TEN CITIES —The following table presents the top ten city markets by ABR of our wholly-owned properties as of December 31, 2024 (dollars in thousands): City ABR (1) % ABR Atlanta $ 37,741 7.4 % Chicago 27,996 5.5 % Dallas 25,337 5.0 % Sacramento 22,443 4.4 % Minneapolis 21,158 4.2 % Houston 21,109 4.1 % Denver 20,425 4.0 % Washington, D.C. 15,062 3.0 % Las Vegas 14,558 2.9 % Tampa 14,358 2.8 % Total $ 220,187 43.3 % (1) We calculate ABR as monthly contractual base rent as of December 31, 2024 multiplied by twelve months.
TOP TWENTY NEIGHBORS —The following table presents our top 20 Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint venture, as of December 31, 2023 (dollars and square feet in thousands): Neighbor (1) ABR % of ABR Leased Square Feet % of Leased Square Feet Number of Locations (2) Kroger $ 28,459 6.0 % 3,474 11.0 % 63 Publix 26,570 5.6 % 2,519 8.0 % 61 Albertsons 19,361 4.1 % 1,777 5.6 % 32 Ahold Delhaize 17,829 3.8 % 1,249 3.9 % 23 Walmart 8,971 1.9 % 1,770 5.6 % 13 Giant Eagle 7,384 1.6 % 759 2.4 % 10 Sprouts Farmers Market 6,663 1.4 % 421 1.3 % 14 TJX Companies 6,262 1.3 % 516 1.6 % 18 Raley's 4,599 1.0 % 288 0.9 % 5 Dollar Tree 3,859 0.7 % 369 1.2 % 37 UNFI (SuperValu) 3,476 0.7 % 336 1.1 % 5 Starbucks Corporation 2,983 0.5 % 64 0.2 % 35 Trader Joe's 2,727 0.5 % 122 0.4 % 9 H-E-B 2,492 0.5 % 164 0.5 % 2 Lowe's 2,469 0.5 % 369 1.2 % 4 Subway Group 2,448 0.5 % 88 0.3 % 61 Anytime Fitness, Inc. 2,430 0.5 % 140 0.4 % 29 Food 4 Less (PAQ) 2,305 0.5 % 118 0.4 % 2 United Parcel Service 2,304 0.5 % 82 0.3 % 65 H&R Block, Inc. 2,284 0.5 % 97 0.3 % 56 Total $ 155,875 32.6 % 14,722 46.6 % 544 (1) Neighbors are grouped by parent company and may represent multiple subsidiaries and banners.
TOP 20 NEIGHBORS —The following table presents our top 20 Neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our unconsolidated joint ventures, as of December 31, 2024 (dollars and square feet in thousands): Neighbor (1) ABR % of ABR Leased Square Feet % of Leased Square Feet Number of Locations (2) Kroger $ 29,112 5.7 % 3,546 10.8 % 64 Publix 26,623 5.2 % 2,520 7.7 % 61 Albertsons 19,734 3.8 % 1,780 5.4 % 32 Ahold Delhaize 17,905 3.5 % 1,249 3.8 % 23 Walmart 8,823 1.7 % 1,770 5.4 % 13 Giant Eagle 7,390 1.4 % 759 2.3 % 10 TJX Companies 7,147 1.4 % 597 1.8 % 20 Sprouts Farmers Market 6,732 1.2 % 421 1.3 % 14 Raley's 4,607 0.9 % 288 0.9 % 5 Dollar Tree 4,552 0.8 % 424 1.3 % 42 Starbucks Corporation 3,528 0.7 % 73 0.2 % 38 Big Y 3,487 0.7 % 167 0.5 % 3 UNFI (SuperValu) 3,476 0.7 % 336 1.0 % 5 Trader Joe's 2,798 0.5 % 122 0.4 % 9 Subway Group 2,785 0.5 % 96 0.3 % 65 Planet Fitness 2,766 0.5 % 214 0.7 % 10 Pet Supplies Plus 2,688 0.5 % 169 0.5 % 22 United Parcel Service 2,585 0.5 % 88 0.3 % 71 H&R Block, Inc. 2,532 0.5 % 98 0.3 % 58 Great Clips, Inc. 2,519 0.5 % 86 0.3 % 75 Total $ 161,789 31.2 % 14,803 45.2 % 640 (1) Neighbors are grouped by parent company and may represent multiple subsidiaries and banners.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeWe declared and paid monthly distributions of $0.0975 per share, or $1.17 annualized, for each month beginning September 2023 through December 2023. The December 2023 and January 2024 distributions of $0.0975 per share were paid on January 2, 2024 and February 1, 2024, respectively. Holders of ownership units of Phillips Edison Grocery Center Operating Partnership I, L.P.
Biggest changeWe declared and paid monthly distributions of $0.1025 per share, or $1.23 annualized, for each month beginning September 2024 through December 2024. The December 2024 and January 2025 distributions of $0.1025 per common share and OP unit were paid on January 3, 2025 and February 4, 2025, respectively.
The tax characterization of our distributions declared for the years ended December 31, 2023 and 2022 was as follows: 2023 2022 Common stock: Ordinary dividends 75.9 % 77.4 % Non-dividend distributions 24.0 % 22.6 % Capital gain distributions (1) 0.1 % — % Total distributions per share of common stock 100.0 % 100.0 % (1) Pursuant to U.S.
The tax characterization of our distributions declared for the years ended December 31, 2024 and 2023 was as follows: 2024 2023 Common stock: Ordinary dividends 77.4 % 75.9 % Non-dividend distributions 22.6 % 24.0 % Capital gain distributions (1) — % 0.1 % Total distributions per share of common stock 100.0 % 100.0 % (1) Pursuant to U.S.
(the "Operating Partnership") ("OP units") will receive distributions at the same rate as common stockholders, subject to any applicable withholding. The timing and amount of distributions are determined by our Board and is influenced in part by our intention to comply with REIT requirements of the Internal Revenue Code of 1986, as amended (the “IRC”).
(the "Operating Partnership") ("OP units") will receive distributions at the same rate as common stockholders, subject to any applicable withholding. The timing and amount of distributions are determined by our Board of Directors (the “Board”) and are influenced in part by our intention to comply with REIT requirements of the Internal Revenue Code of 1986, as amended (the “IRC”).
We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partners who received the shares of common stock. SHARE REPURCHASE PROGRAM —On August 3, 2022, our Board approved a new share repurchase program of up to $250 million of common stock.
We relied on the exemption under Section 4(a)(2) based upon factual representations received from the limited partners who received the shares of common stock. SHARE REPURCHASE PROGRAM —In August 2022, our Board approved a share repurchase program of up to $250 million of common stock.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 27 The table below summarizes repurchases of our common stock made during the three months ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan or Program (in thousands) October 1, 2023 - October 31, 2023 — $— — $250,000 November 1, 2023 - November 30, 2023 — — — 250,000 December 1, 2023 to December 31, 2023 (1) 21,649 36.48 — 250,000 (1) Represents common shares surrendered to us to satisfy statutory minimum tax withholding obligations associated with the vesting of restricted stock awards under our equity-based compensation plan.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 27 The table below summarizes repurchases of our common stock made during the three months ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan or Program (in thousands) October 1, 2024 - October 31, 2024 — $— — $250,000 November 1, 2024 - November 30, 2024 — — — 250,000 December 1, 2024 to December 31, 2024 (1) 1,571 37.88 — 250,000 (1) Represents common shares surrendered to us to satisfy statutory minimum tax withholding obligations associated with the vesting of restricted stock awards under our equity-based compensation plan.
UNREGISTERED SALE OF SECURITIES —During the year ended December 31, 2023, we issued an aggregate of approximately 517,000 shares of common stock in redemption of approximately 517,000 OP units. These shares of common stock were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
UNREGISTERED SALE OF SECURITIES —During the year ended December 31, 2024, we issued an aggregate of approximately 1,053,000 shares of common stock in redemption of approximately 1,053,000 OP units. These shares of common stock were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
Ticker / Index 7/15/2021 12/31/2021 6/30/2022 12/31/2022 6/30/2023 12/31/2023 PECO $ 100 $ 120 $ 124 $ 120 $ 131 $ 142 S&P 500 100 110 88 90 105 114 FTSE Nareit All Equity REITs 100 113 90 85 90 97 FTSE Nareit Equity Shopping Centers 100 114 93 100 101 112
Ticker / Index 7/15/2021 12/31/2021 12/31/2022 12/31/2023 6/30/2024 12/31/2024 PECO $ 100 $ 120 $ 120 $ 142 $ 130 $ 151 S&P 500 100 110 90 114 131 142 FTSE Nareit All Equity REITs 100 113 85 97 97 106 FTSE Nareit Equity Shopping Centers 100 114 100 112 109 131
As a REIT, we have made, and intend to continue to make, distributions each taxable year equal to at least 90% of our taxable income (excluding capital gains and computed without regard to the dividends paid deduction).
As a REIT, we have made, and intend to continue to make, distributions each taxable year equal to at least 90% of our taxable income (excluding capital gains and computed without regard to the dividends paid deduction). Holders of ownership units of Phillips Edison Grocery Center Operating Partnership I, L.P.
In 2023, we declared and paid monthly distributions of $0.0933 per share, or $1.12 annualized, for each month beginning January 2023 through August 2023. On September 1, 2023, our Board of Directors (the “Board”) authorized a 4.5% increase of our monthly distribution rate to $0.0975 per common share.
In 2024, we declared and paid monthly distributions of $0.0975 per common share and OP unit, or $1.17 annualized, for each month beginning January 2024 through August 2024. In September 2024, our Board authorized a 5.1% increase of our monthly distribution rate to $0.1025 per common share and OP unit.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION —Pursuant to our underwritten initial public offering (“underwritten IPO”) on July 19, 2021, our common stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “PECO.” As of February 5, 2024, we had approximately 122.2 million shares of common stock outstanding, held by approximately 8,000 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION —Our common stock is traded on the Nasdaq Global Select Market (“Nasdaq”) under the ticker symbol “PECO.” As of February 3, 2025, we had approximately 125.2 million shares of common stock outstanding, held by approximately 7,000 stockholders of record.
In 2022, we declared and paid monthly distributions of $0.09 per share, or $1.08 annualized, for each month beginning January 2022 through August 2022. We declared and paid monthly distributions of $0.0933 per share, or $1.12 annualized, an increase of 3.7%, for each month beginning September 2022 through December 2022.
In 2023, we declared and paid monthly distributions of $0.0933 per common share and OP unit, or $1.12 annualized, for each month beginning January 2023 through August 2023. We declared and paid monthly distributions of $0.0975 per common share and OP unit, or $1.17 annualized, an increase of 4.5%, for each month beginning September 2023 through December 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeInterest Expense, Net was comprised of the following (dollars in thousands): Year Ended December 31, 2023 2022 Interest on unsecured term loans and senior notes, net $ 48,803 $ 40,975 Interest on secured debt 18,614 20,768 Interest on revolving credit facility, net 8,785 2,069 Non-cash amortization and other 7,662 6,359 Loss on extinguishment or modification of debt and other, net (1) 368 1,025 Interest expense, net $ 84,232 $ 71,196 Weighted-average interest rate as of end of year 4.2 % 3.6 % Weighted-average term (in years) as of end of year 3.9 4.4 (1) Includes defeasance fees related to early repayments of debt.
Biggest changeInterest Expense, Net was comprised of the following (dollars in thousands): Year Ended December 31, 2024 2023 Interest on unsecured term loans and senior notes, net $ 63,808 $ 48,803 Interest on secured debt 17,413 18,614 Interest on revolving credit facility, net 6,354 8,785 Non-cash amortization and other 8,125 7,662 Loss on extinguishment or modification of debt and other, net (1) 1,290 368 Interest expense, net $ 96,990 $ 84,232 Weighted-average interest rate as of end of year 4.3 % 4.2 % Weighted-average term (in years) as of end of year 5.6 3.9 (1) Includes defeasance fees related to early repayments of debt Other Expense, Net: • Other Expense, Net was comprised of the following (in thousands): Year Ended December 31, 2024 2023 Transaction and acquisition expenses $ (4,993) $ (5,675) Impairment of investment in third parties (see Note 15) — (3,000) Federal, state, and local income tax expense (1,821) (438) Equity in net income of unconsolidated investments 86 372 Other income 996 1,429 Other expense, net $ (5,732) $ (7,312) SUMMARY OF OPERATING ACTIVITIES FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 For a discussion of the year-to-year comparisons in the results of operations for the years ended December 31, 2023 and 2022, see “ Part II, Item 7.
Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDA re on the same basis. • 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 Attributable to Stockholders and OP Unit Holders (“Nareit FFO”)—Nareit defines Funds From Operations (“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.
Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDA re on the same basis. • Equity Market Capitalization—We calculate equity market capitalization as the total dollar value of all outstanding shares and OP Units using the closing price for the applicable date. • Nareit FFO Attributable to Stockholders and OP Unit Holders (“Nareit FFO”)—Nareit defines Funds From Operations (“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.
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 the last two reporting periods (i.e., since January 1, 2022). • Total Enterprise Value—We calculate total enterprise value as our net debt plus our equity market capitalization on a fully diluted basis.
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 the last two reporting periods (i.e., since January 1, 2023). • Total Enterprise Value—We calculate total enterprise value as our net debt plus our equity market capitalization on a fully diluted basis.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 29 • 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.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 29 • 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.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 40 OTHER CONTRACTUAL COMMITMENTS AND CONTINGENCIES AND OFF BALANCE SHEET ARRANGEMENTS —We enter into leases as a lessee as part of our real estate operations in the form of ground leases of land for certain properties, and as part of our corporate operations in the form of office space and office equipment leases.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 40 OTHER CONTRACTUAL COMMITMENTS AND CONTINGENCIES AND OFF BALANCE SHEET ARRANGEMENTS —We enter into leases as a lessee as part of our real estate operations in the form of ground leases of land for certain properties, and as part of our corporate operations in the form of office space and office equipment leases.
We anticipate that obligations related to capital improvements, as well as redevelopment and development, in 2024 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.
We anticipate that obligations related to capital improvements, as well as redevelopment and development, in 2025 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 debt activity during the year ended December 31, 2023 was as follows: • On July 31, 2023, we amended three senior unsecured term loans with a total notional amount of $475 million scheduled to mature during 2024. The three senior unsecured term loans, as amended, have a total notional amount of $484.8 million.
Our debt activity during the year ended December 31, 2023 was as follows: • In July 2023, we amended three senior unsecured term loans with a total notional amount of $475 million scheduled to mature during 2024. The three senior unsecured term loans, as amended, have a total notional amount of $484.8 million.
We expect our primary sources of liquidity to be: • operating cash flows; • borrowings from our unsecured revolving credit facility and proceeds from debt financings; • proceeds from any ATM offering activities; • proceeds received from the disposition of properties; and • available, unrestricted cash and cash equivalents.
We expect our primary sources of liquidity to be: • operating cash flows; • borrowings from our unsecured revolving credit facility and proceeds from debt financings; • proceeds from any equity offering activities; • proceeds received from the disposition of properties; and • available, unrestricted cash and cash equivalents.
FINANCIAL LEVERAGE RATIOS —We believe our net debt to Adjusted EBITDA re , net debt to total enterprise value, and debt covenant compliance as of December 31, 2023 allow us access to future borrowings as needed in the near term.
FINANCIAL LEVERAGE RATIOS —We believe our net debt to Adjusted EBITDA re , net debt to total enterprise value, and debt covenant compliance as of December 31, 2024 allow us access to future borrowings as needed in the near term.
Our unsecured senior notes due 2031 are also subject to customary financial covenants, including a leverage ratio of 65% or less, and require the fixed-charge ratio to be 150% or greater.
Our unsecured senior notes due 2031, 2034, and 2035 are also subject to customary financial covenants, including a leverage ratio of 65% or less, and require the fixed-charge ratio to be 150% or greater.
As of December 31, 2023, we were in compliance with the restrictive covenants of our outstanding debt obligations and we expect to continue to meet the requirements of these covenants over the next twelve months.
As of December 31, 2024, we were in compliance with the restrictive covenants of our outstanding debt obligations, and we expect to continue to meet the requirements of these covenants over the next twelve months.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of our 2022 Annual Report on Form 10-K, filed with the SEC on February 21, 2023. NON-GAAP MEASURES See “Key Performance Indicators and Defined Terms” above for additional information related to the following non-GAAP measures.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of our 2023 Annual Report on Form 10-K, filed with the SEC on February 12, 2024. NON-GAAP MEASURES See “Key Performance Indicators and Defined Terms” above for additional information related to the following non-GAAP measures.
Our underwritten incremental unlevered yields on development and redevelopment projects are expected to average between 9%-12%. Our current in process projects represent an estimated total investment of $33.7 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.
Our underwritten incremental unlevered yields on development and redevelopment projects are expected to range between 9%-12%. Our current in process projects represent an estimated total investment of $41.3 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.
We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders. SHARE REPURCHASE PROGRAM —On August 3, 2022, our Board approved a new share repurchase program of up to $250 million of common stock.
We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders. SHARE REPURCHASE PROGRAM —In August 2022, our Board approved a share repurchase program of up to $250 million of common stock.
The $161.8 million unsecured term loan is priced based on a leverage grid, which is currently at the Secured Overnight Financing Rate (“SOFR”) plus 1.35% and is scheduled to mature on January 31, 2026 extendable with two one-year options to 2028.
The $161.8 million unsecured term loan is priced based on a leverage grid, which was the Secured Overnight Financing Rate (“SOFR”) plus 1.35% at issuance, and is scheduled to mature in January 2026 extendable with two one-year options to 2028.
During the year ended December 31, 2023, we issued 4.2 million shares of our common stock at a gross weighted average price of $35.76 per share under the ATM program for net proceeds of $147.6 million, after approximately $1.5 million in commissions. During the three months ended December 31, 2022, no shares were issued under the ATM program.
During the year ended December 31, 2023, we issued 4.2 million shares of our common stock at a gross weighted average price of $35.76 per share under this ATM program for net proceeds of $147.6 million, after approximately $1.5 million in commissions.
During the year ended December 31, 2023, we issued 4.2 million shares of our common stock at a gross weighted average price of $35.76 per share under the ATM program for net proceeds of $147.6 million, after approximately $1.5 million in commissions. During the three months ended December 31, 2022, no shares were issued under the ATM program.
During the year ended December 31, 2023, we issued 4.2 million shares of our common stock at a gross weighted average price of $35.76 per share under this ATM program for net proceeds of $147.6 million, after approximately $1.5 million in commissions.
Currently, neither our operating leases nor our finance leases have residual value guarantees or other restrictions or covenants. We expect to fund these obligations through existing financing or cash flows from operations. As of December 31, 2023, our future contractual obligations as a lessee included operating lease obligations of $0.7 million during 2024, and $7.3 million thereafter.
Currently, neither our operating leases nor our finance leases have residual value guarantees or other restrictions or covenants. We expect to fund these obligations through existing financing or cash flows from operations. As of December 31, 2024, our future contractual obligations as a lessee included operating lease obligations of $0.4 million during 2025, and $6.9 million thereafter.
Highlights of our asset composition and acquisitions are as follows: • 97.2% of our ABR was derived from omni-channel grocery-anchored shopping centers as of December 31, 2023. • Our grocer health ratio, or occupancy cost, remains strong at 2.3% at December 31, 2023, which is favorable compared to the national grocer average occupancy cost. • In 2023, our grocer sales increased 6% year-over-year to $681 per square foot.
Highlights of our asset composition and acquisitions are as follows: • 95.7% of our ABR was derived from omni-channel grocery-anchored shopping centers as of December 31, 2024. • Our grocer health ratio, or occupancy cost, remains strong at 2.3% at December 31, 2024, which is favorable compared to the national grocer average occupancy cost. • In 2024, our grocer sales increased 5% year-over-year to $715 per square foot.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 36 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.
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.
As of December 31, 2023, our debt maturity profile with the respective principal payment obligations is as follows (including the impact of derivatives on weighted-average interest rates and excluding all extension options) (1) : (1) As of December 31, 2023, our outstanding debt had a weighted-average maturity of 4.1 years including all extension options.
As of December 31, 2024, our debt maturity profile with the respective principal payment obligations was as follows (including the impact of derivatives on weighted-average interest rates and excluding all extension options) (1) : (1) As of December 31, 2024, our outstanding debt had a weighted-average maturity of 5.8 years including all extension options.
See “Key Performance Indicators and Defined Terms” above for further information. REAL ESTATE ACQUISITION ACTIVITY —We actively monitor the commercial real estate market for properties that have future growth potential, are located in attractive demographic markets, and support our business objectives. We are currently targeting acquisitions of $200 million - $300 million annually.
See “Key Performance Indicators and Defined Terms” above for further information. REAL ESTATE ACQUISITION ACTIVITY —We actively monitor the commercial real estate market for properties that have future growth potential, are located in attractive demographic markets, and support our business objectives.
Grocer sales per square foot have increased approximately 30% since 2019. • 70.4% of our ABR was derived from Neighbors providing necessity-based goods and services. • The average PECO space, excluding anchors, is approximately 2,300 square feet.
Grocer sales per square foot have increased approximately 37% since 2019. • Approximately 69% of our ABR was derived from Neighbors providing necessity-based goods and services. • The average PECO space, excluding anchors, is approximately 2,400 square feet.
During the year ended December 31, 2023, we had a net cash outlay of $9.4 million from changes in working capital as compared to a net cash outlay of $0.2 million during the same period in 2022.
During the year ended December 31, 2024, we had a net cash inflow of $9.7 million from changes in working capital as compared to a net cash outlay of $9.4 million during the same period in 2023.
Neighbors who represent approximately 2% of our ABR are on our watchlist for review for collectibility as of December 31, 2023. However, not all of our watchlist Neighbors have an open receivable balance with us at December 31, 2023.
Neighbors who represent approximately 2% of our ABR were on our watchlist for review for collectibility as of December 31, 2024. However, not all of our watchlist Neighbors had an open receivable balance with us at December 31, 2024.
The $158 million and $165 million unsecured term loans are priced based on a leverage grid, which is currently at SOFR plus 1.35% and mature on January 31, 2027. • During the year ended December 31, 2023, we repaid $47.3 million in mortgage debt.
The $158 million and $165 million unsecured term loans are priced based on a leverage grid, which was SOFR plus 1.35% at issuance, and mature in January 2027. • During 2023, we repaid $47.3 million in mortgage debt.
Future Debt Obligations —As of December 31, 2023, including the impact of our swap agreements, our future contractual debt obligations were $115.7 million of debt principal and interest payments during 2024, and $2.2 billion of debt principal and interest payments thereafter (see Note 8).
Future Debt Obligations —As of December 31, 2024, including the impact of our swap agreements, our future contractual debt obligations were $129.3 million of debt principal and interest payments during 2025, and $2.5 billion of debt principal and interest payments thereafter (see Note 8).
(2) Amounts reported are net of insurance proceeds of $2.6 million and $2.1 million for property damage claims for the years ended December 31, 2023 and 2022, respectively. We expect our capital expenditures to reach $100 million - $110 million in 2024, which includes $40 million - $50 million related to development and redevelopment projects.
(2) Amounts reported are net of insurance proceeds of $3.2 million and $2.6 million for property damage claims for the years ended December 31, 2024 and 2023, respectively. We expect our capital expenditures to reach $110 million - $120 million in 2025, which includes $45 million - $55 million related to development and redevelopment projects.
FINANCIAL HIGHLIGHTS —Owning, operating, and managing well-occupied omni-channel grocery-anchored real estate is a core part of our business strategy, and as of December 31, 2023, 97.2% of our ABR was derived from omni-channel grocery-anchored shopping centers.
FINANCIAL HIGHLIGHTS —Owning, operating, and managing well-occupied omni-channel grocery-anchored real estate is the core part of our business strategy, and as of December 31, 2024, 95.7% of our ABR was derived from omni-channel grocery-anchored shopping centers.
PORTFOLIO AND LEASING STATISTICS —Below are statistical highlights of our wholly-owned portfolio as of December 31, 2023 and 2022 (dollars and square feet in thousands): 2023 2022 Number of properties 281 271 Number of states 31 31 Total square feet 32,153 31,093 ABR $ 470,819 $ 435,712 % ABR from omni-channel grocery-anchored shopping centers 97.2 % 97.2 % Leased occupancy %: Total portfolio spaces 97.4 % 97.4 % Anchor spaces 98.9 % 99.3 % Inline spaces 94.7 % 93.8 % Average remaining lease term (in years) (1) 4.4 4.5 (1) The average remaining lease term in years excludes future options to extend the term of the lease.
PORTFOLIO AND LEASING STATISTICS —Below are statistical highlights of our wholly-owned portfolio as of December 31, 2024 and 2023 (dollars and square feet in thousands): 2024 2023 Number of properties 294 281 Number of states 31 31 Total square feet 33,300 32,153 ABR $ 509,998 $ 470,819 % ABR from omni-channel grocery-anchored shopping centers 95.7 % 97.2 % Leased occupancy %: Total portfolio spaces 97.7 % 97.4 % Anchor spaces 99.1 % 98.9 % Inline spaces 95.0 % 94.7 % Average remaining lease term (in years) (1) 4.4 4.4 (1) The average remaining lease term in years excludes future options to extend the term of the lease.
During the years ended December 31, 2023 and 2022, we had gross capital spend of $95.3 million and $104.5 million, respectively.
During the years ended December 31, 2024 and 2023, we had gross capital spend of $95.1 million and $95.3 million, respectively.
The following table highlights our property dispositions during the years ended December 31, 2023 and 2022 (dollars in thousands): 2023 2022 Number of properties sold 1 4 Number of outparcels sold 2 4 Contract price $ 6,250 $ 53,987 Proceeds from sale of real estate, net (1)(2) 7,208 52,019 Gain on disposal of property, net (2) 1,110 7,517 (1) Total proceeds from sale of real estate, net includes closing costs less credits.
The following table highlights our property dispositions during the years ended December 31, 2024 and 2023 (dollars in thousands): 2024 2023 Number of properties sold — 1 Number of outparcels sold — 2 Contract price $ — $ 6,250 (Payments) proceeds from sale of real estate, net (1)(2)(3) (17) 7,208 (Loss) gain on disposal of property, net (2)(3) (30) 1,110 (1) Total proceeds from sale of real estate, net includes closing costs less credits.
In 2023, we declared and paid monthly distributions of $0.0933 per share, or $1.12 annualized, for each month beginning January 2023 through August 2023. On September 1, 2023, the Board authorized a 4.5% increase of our monthly distribution rate to $0.0975 per common share.
In 2024, we declared and paid monthly distributions of $0.0975 per common share and OP unit, or $1.17 annualized, for each month beginning January 2024 through August 2024. In September 2024, the Board authorized a 5.1% increase of our monthly distribution rate to $0.1025 per common share and OP unit.
The following table presents our calculation of Nareit FFO and Core FFO for the years ended December 31, 2023, 2022, and 2021 (in thousands, except per share amounts): 2023 2022 2021 Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders Net income $ 63,762 $ 54,529 $ 17,233 Adjustments: Depreciation and amortization of real estate assets 234,260 232,571 217,564 Impairment of real estate assets — 322 6,754 Gain on disposal of property, net (1,110) (7,517) (30,421) Adjustments related to unconsolidated joint ventures 2,636 842 72 Nareit FFO attributable to stockholders and OP unit holders $ 299,548 $ 280,747 $ 211,202 Calculation of Core FFO Attributable to Stockholders and OP Unit Holders Nareit FFO attributable to stockholders and OP unit holders $ 299,548 $ 280,747 $ 211,202 Adjustments: Depreciation and amortization of corporate assets 2,183 3,653 3,869 Change in fair value of earn-out liability — 1,809 30,436 Impairment of investment in third parties 3,000 — — Transaction and acquisition expenses 5,675 10,551 5,363 Loss on extinguishment or modification of debt and other, net 368 1,025 3,592 Amortization of unconsolidated joint venture basis differences 17 220 1,167 Realized performance income (1) (75) (2,742) (675) Core FFO attributable to stockholders and OP unit holders $ 310,716 $ 295,263 $ 254,954 Nareit FFO/Core FFO Attributable to Stockholders and OP Unit Holders per diluted share Weighted-average shares of common stock outstanding - diluted 132,970 130,332 116,672 Nareit FFO attributable to stockholders and OP unit holders per share - diluted $ 2.25 $ 2.15 $ 1.81 Core FFO attributable to stockholders and OP unit holders per share - diluted $ 2.34 $ 2.27 $ 2.19 (1) Realized performance income includes fees received related to the achievement of certain performance targets in our NRP joint venture.
The following table presents our calculation of Nareit FFO and Core FFO for the years ended December 31, 2024, 2023, and 2022 (in thousands, except per share amounts): 2024 2023 2022 Calculation of Nareit FFO Attributable to Stockholders and OP Unit Holders Net income $ 69,696 $ 63,762 $ 54,529 Adjustments: Depreciation and amortization of real estate assets 251,250 234,260 232,571 Impairment of real estate assets — — 322 Loss (gain) on disposal of property, net 30 (1,110) (7,517) Adjustments related to unconsolidated joint ventures 2,795 2,636 842 Nareit FFO attributable to stockholders and OP unit holders $ 323,771 $ 299,548 $ 280,747 Calculation of Core FFO Attributable to Stockholders and OP Unit Holders Nareit FFO attributable to stockholders and OP unit holders $ 323,771 $ 299,548 $ 280,747 Adjustments: Depreciation and amortization of corporate assets 1,766 2,183 3,653 Change in fair value of earn-out liability — — 1,809 Impairment of investment in third parties — 3,000 — Transaction and acquisition expenses 4,993 5,675 10,551 Loss on extinguishment or modification of debt and other, net 1,290 368 1,025 Amortization of unconsolidated joint venture basis differences 13 17 220 Realized performance income (1) — (75) (2,742) Core FFO attributable to stockholders and OP unit holders $ 331,833 $ 310,716 $ 295,263 Nareit FFO/Core FFO Attributable to Stockholders and OP Unit Holders per diluted share Weighted-average shares of common stock outstanding - diluted 136,821 132,970 130,332 Nareit FFO attributable to stockholders and OP unit holders per share - diluted $ 2.37 $ 2.25 $ 2.15 Core FFO attributable to stockholders and OP unit holders per share - diluted $ 2.43 $ 2.34 $ 2.27 (1) Realized performance income includes fees received related to the achievement of certain performance targets in our NRP joint venture.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 38 The following table presents our calculation of EBITDA re and Adjusted EBITDA re for the years ended December 31, 2023, 2022, and 2021 (in thousands): 2023 2022 2021 Calculation of EBITDA re Net income $ 63,762 $ 54,529 $ 17,233 Adjustments: Depreciation and amortization 236,443 236,224 221,433 Interest expense, net 84,232 71,196 76,371 Gain on disposal of property, net (1,110) (7,517) (30,421) Impairment of real estate assets — 322 6,754 Federal, state, and local tax expense 438 806 327 Adjustments related to unconsolidated joint ventures 3,721 1,987 1,431 EBITDA re $ 387,486 $ 357,547 $ 293,128 Calculation of Adjusted EBITDA re EBITDA re $ 387,486 $ 357,547 $ 293,128 Adjustments: Impairment of investment in third parties 3,000 — — Change in fair value of earn-out liability — 1,809 30,436 Transaction and acquisition expenses 5,675 10,551 5,363 Amortization of unconsolidated joint venture basis differences 17 220 1,167 Realized performance income (1) (75) (2,742) (675) Adjusted EBITDA re $ 396,103 $ 367,385 $ 329,419 (1) Realized performance income includes fees received related to the achievement of certain performance targets in our NRP joint venture.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 38 The following table presents our calculation of EBITDA re and Adjusted EBITDA re for the years ended December 31, 2024, 2023, and 2022 (in thousands): 2024 2023 2022 Calculation of EBITDA re Net income $ 69,696 $ 63,762 $ 54,529 Adjustments: Depreciation and amortization 253,016 236,443 236,224 Interest expense, net 96,990 84,232 71,196 Loss (gain) on disposal of property, net 30 (1,110) (7,517) Impairment of real estate assets — — 322 Federal, state, and local tax expense 1,821 438 806 Adjustments related to unconsolidated joint ventures 4,025 3,721 1,987 EBITDA re $ 425,578 $ 387,486 $ 357,547 Calculation of Adjusted EBITDA re EBITDA re $ 425,578 $ 387,486 $ 357,547 Adjustments: Impairment of investment in third parties — 3,000 — Change in fair value of earn-out liability — — 1,809 Transaction and acquisition expenses 4,993 5,675 10,551 Amortization of unconsolidated joint venture basis differences 13 17 220 Realized performance income (1) — (75) (2,742) Adjusted EBITDA re $ 430,584 $ 396,103 $ 367,385 (1) Realized performance income includes fees received related to the achievement of certain performance targets in our NRP joint venture.
Debt Activity —During the years ended December 31, 2023 and 2022, we took steps to appropriately ladder our debt maturities and increase debt amounts available to us for future investment activity.
Debt Activity —During the years ended December 31, 2024 and 2023, we took steps to appropriately ladder and extend our debt maturities and diversify debt sources available to us for future investment activity.
Our related debt maturities at December 31, 2023 including extension options were as follows: 2024 - $28.1 million; 2025 - $277.6 million; 2026 - $241.9 million; 2027 - $704.6 million; 2028 - $179.1 million; 2029 - $0.8 million; 2030 - $200.8 million; and 2031 - $353.4 million.
Our related debt maturities at December 31, 2024 including extension options were as follows: 2025 - $37.6 million; 2026 - $101.9 million; 2027 - $563.6 million; 2028 - $179.1 million; 2029 - $0.8 million; 2030 - $200.8 million; 2031 - $353.4 million; and 2032+ - $700.0 million.
(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.
(2) Includes operating revenues and expenses from non-same-center properties, which includes properties acquired or sold, and corporate activities. PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 37 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.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 37 Nareit FFO 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.
Nareit FFO 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.
As of December 31, 2023, our future contractual finance lease obligations included $0.3 million during 2024. We have an off-balance sheet arrangement that includes being the limited guarantor of a $175 million mortgage loan secured by Grocery Retail Partners I LLC (“GRP I”) properties.
As of December 31, 2024, our future contractual finance lease obligations were not significant. We have an off-balance sheet arrangement that includes being the limited guarantor of a $174.0 million mortgage loan secured by properties owned by our unconsolidated joint venture, Grocery Retail Partners I LLC (“GRP I”).
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 December 31, 2023 and 2022 (in thousands): 2023 2022 Net debt: Total debt, excluding discounts, market adjustments, and deferred financing expenses $ 2,011,093 $ 1,937,142 Less: Cash and cash equivalents 5,074 5,740 Total net debt $ 2,006,019 $ 1,931,402 Enterprise value: Net debt $ 2,006,019 $ 1,931,402 Total equity market capitalization (1)(2) 4,955,480 4,178,204 Total enterprise value $ 6,961,499 $ 6,109,606 (1) Total equity market capitalization is calculated as diluted shares multiplied by the closing market price per share, which includes 135.8 million and 131.2 million diluted shares as of December 31, 2023 and 2022, respectively, and the closing market price per share of $36.48 and $31.84 as of December 31, 2023 and 2022, respectively.
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 December 31, 2024 and 2023 (in thousands): 2024 2023 Net debt: Total debt, excluding discounts, market adjustments, and deferred financing expenses $ 2,166,326 $ 2,011,093 Less: Cash and cash equivalents 5,470 5,074 Total net debt $ 2,160,856 $ 2,006,019 Enterprise value: Net debt $ 2,160,856 $ 2,006,019 Total equity market capitalization (1)(2) 5,175,286 4,955,480 Total enterprise value $ 7,336,142 $ 6,961,499 (1) Total equity market capitalization is calculated as diluted shares multiplied by the closing market price per share, which includes 138.2 million and 135.8 million diluted shares as of December 31, 2024 and 2023, respectively, and the closing market price per share of $37.46 and $36.48 as of December 31, 2024 and 2023, respectively.
The following table highlights our property acquisitions during the years ended December 31, 2023 and 2022 (dollars in thousands): 2023 2022 Number of properties acquired 11 7 Number of outparcels acquired (1) 3 4 Contract price $ 278,480 $ 280,515 Total price of acquisitions (2) 270,262 282,000 (1) Outparcels acquired are adjacent to shopping centers that we own.
The following table highlights our wholly-owned property acquisitions during the years ended December 31, 2024 and 2023 (dollars in thousands): 2024 2023 Number of properties acquired 12 11 Number of outparcels acquired (1)(2) 4 3 Contract price $ 294,002 $ 278,480 Total price of acquisitions (3) 296,268 270,262 (1) Outparcels acquired are adjacent to shopping centers that we own.
CASH FLOW ACTIVITIES —As of December 31, 2023, we had cash and cash equivalents and restricted cash of $8.9 million, a net cash decrease of $8.5 million during the year ended December 31, 2023.
CASH FLOW ACTIVITIES —As of December 31, 2024, we had cash and cash equivalents and restricted cash of $8.6 million, a net cash decrease of $0.2 million during the year ended December 31, 2024.
We no longer have Class B common stock authorized for issue. AT-THE-MARKET OFFERING (“ATM”) —On February 10, 2022, we and the Operating Partnership entered into a sales agreement relating to the potential sale of shares of common stock pursuant to a continuous offering program.
We no longer have Class B common stock authorized for issue. AT-THE-MARKET OFFERING (“ATM”) —In February 2022, we entered into a sales agreement relating to the potential sale of shares of common stock pursuant to a continuous offering program, allowing up to $250 million in offerings.
We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing primarily to real estate asset activity occurring after December 31, 2021, which includes five properties disposed of and 18 properties acquired.
We define our same-center portfolio as the 270 properties that were owned and operational prior to January 1, 2023. We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing primarily to real estate asset activity occurring after December 31, 2022, which includes one property disposed of and 23 properties acquired.
(2) Total price of acquisitions includes closing costs less credits and assumed debt obligations. REAL ESTATE 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.
REAL ESTATE 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.
Below are explanations of the significant fluctuations in the results of operations for the years ended December 31, 2023 and 2022: Rental Income increased $37.0 million as follows: • $19.3 million increase related to our same-center portfolio primarily as follows: ▪ $16.6 million increase primarily due to a $0.41 increase in average minimum rent PSF and a 1.1% improvement in average occupancy; and ▪ $7.3 million increase primarily due to an increase in recoverable income attributed to an increase in real estate taxes, common area maintenance spending, and insurance costs as well as a 1.1% improvement in average occupancy; partially offset by ▪ $2.2 million decrease primarily due to collections in 2022 of amounts previously reserved; and ▪ $1.3 million decrease primarily due to lower lease buyout income. • $17.7 million increase primarily related to our acquisition activity, net of dispositions.
Below are explanations of the significant fluctuations in the results of operations for the years ended December 31, 2024 and 2023: Rental Income increased $50.1 million as follows: • $19.4 million increase related to our same-center portfolio primarily as follows: ▪ $18.4 million increase primarily due to a $0.47 increase in average minimum rent PSF and a 0.1% improvement in average occupancy; and ▪ $4.1 million increase primarily due to an increase in recoverable income attributed to an increase in real estate taxes, common area maintenance spending, and insurance costs as well as a 0.1% improvement in average occupancy; partially offset by ▪ $2.6 million decrease primarily due to the impact of straight-line rent adjustments. • $30.7 million increase primarily related to our net acquisition activity.
As of December 31, 2023, approximately $10.8 million of common stock remained available for issuance under the ATM program.
As of December 31, 2024, approximately $177 million of common stock remained available for issuance under the current ATM program.
The increase in property operations was primarily due to a $16.2 million, or 4.2%, improvement in Same-Center NOI as compared to 2022, and the execution of our acquisition strategy.
The increase in property operations was primarily due to a $15.9 million, or 3.8%, improvement in Same-Center NOI as compared to 2023, and the execution of our acquisition strategy.
The following table presents our calculation of net debt to Adjusted EBITDA re and net debt to total enterprise value as of December 31, 2023 and 2022 (dollars in thousands): 2023 2022 Net debt to Adjusted EBITDA re - annualized: Net debt $ 2,006,019 $ 1,931,402 Adjusted EBITDA re - annualized (1) 396,103 367,385 Net debt to Adjusted EBITDA re - annualized 5.1x 5.3x Net debt to total enterprise value: Net debt $ 2,006,019 $ 1,931,402 Total enterprise value 6,961,499 6,109,606 Net debt to total enterprise value 28.8% 31.6% (1) Adjusted EBITDA re is based on a trailing twelve month period.
The following table presents our calculation of net debt to Adjusted EBITDA re and net debt to total enterprise value as of December 31, 2024 and 2023 (dollars in thousands): 2024 2023 Net debt to Adjusted EBITDA re - annualized: Net debt $ 2,160,856 $ 2,006,019 Adjusted EBITDA re - annualized (1) 430,584 396,103 Net debt to Adjusted EBITDA re - annualized 5.0x 5.1x Net debt to total enterprise value: Net debt $ 2,160,856 $ 2,006,019 Total enterprise value 7,336,142 6,961,499 Net debt to total enterprise value 29.5% 28.8% (1) Adjusted EBITDA re is based on a trailing twelve month period.
Property Operating Expenses increased $6.9 million primarily as follows: • $4.3 million increase from our same-center portfolio and corporate operating activities primarily due to increases in recoverable expenses attributable to higher common area maintenance spending, along with higher insurance and compensation costs; and • $2.6 million increase primarily due to our acquisition activity, net of dispositions.
Property Operating Expenses increased $10.3 million primarily as follows: • $6.0 million increase from our same-center portfolio and corporate operating activities primarily due to higher compensation costs and an increase in common area maintenance spending; and • $4.4 million increase primarily due to our net acquisition activity.
Our Neighbors are a mix of national, regional, and local retailers that primarily provide necessity-based goods and services. As of December 31, 2023, we owned equity interests in 301 shopping centers, including 281 wholly-owned shopping centers and 20 shopping centers owned through one unconsolidated joint venture, which comprised approximately 34.4 million square feet in 31 states.
Our Neighbors are a mix of national, regional, and local retailers that primarily provide necessity-based goods and services. As of December 31, 2024, we owned equity interests in 316 shopping centers, including 294 wholly-owned shopping centers and 22 shopping centers owned through three unconsolidated joint ventures, which comprised approximately 35.7 million square feet in 31 states.
This size is attractive to many retailers, whereas large box format retailers are fewer and demand is thinner. • Acquired eleven properties and three outparcels for a net cash outlay of $270.3 million, adding 1.1 million of GLA to our portfolio.
This size is attractive to many retailers, whereas large box format retailers are fewer and demand is thinner. • For the year ended December 31, 2024, we acquired twelve properties and four outparcels for a net cash outlay of $296.3 million, adding 1.1 million of GLA to our portfolio.
As a REIT, we have made, and intend to continue to make, distributions each taxable year equal to at least 90% of our taxable income (excluding capital gains and computed without regard to the dividends paid deduction).
DISTRIBUTIONS —We elected to be taxed as a REIT for federal income tax purposes commencing with our taxable year ended December 31, 2010. As a REIT, we have made, and intend to continue to make, distributions each taxable year equal to at least 90% of our taxable income (excluding capital gains and computed without regard to the dividends paid deduction).
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 32 • As of December 31, 2023, our outstanding debt had a weighted-average maturity of 3.9 years excluding all extension options.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 32 • Following our activity this year, our outstanding debt had a weighted-average maturity of 5.6 years excluding all extension options as of December 31, 2024.
DEBT —The following table summarizes information about our debt as of December 31, 2023 and 2022 (dollars in thousands): 2023 2022 Total debt obligations, gross $ 1,986,735 $ 1,912,784 Weighted-average interest rate 4.2 % 3.6 % Weighted-average term (in years) 3.9 4.4 Revolving credit facility capacity (1) $ 800,000 $ 800,000 Revolving credit facility availability (2) 606,550 709,385 (1) The revolving credit facility matures in January 2026, extendable at our option to January 2027.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 39 DEBT —The following table summarizes information about our debt as of December 31, 2024 and 2023 (dollars in thousands): 2024 2023 Total debt obligations, gross $ 2,137,336 $ 1,986,735 Weighted-average interest rate 4.3 % 4.2 % Weighted-average term (in years) 5.6 3.9 Revolving credit facility capacity (1) $ 800,000 $ 800,000 Revolving credit facility availability (2) 738,904 606,550 (1) As of December 31, 2024, the revolving credit facility was set to mature in January 2026, extendable at our option to January 2027.
As of December 31, 2023, we had $615.4 million of total liquidity, comprised of $8.9 million of cash, cash equivalents, and restricted cash, plus $606.6 million of borrowing capacity available on our $800 million revolving credit facility.
As of December 31, 2024, we had $747.6 million of total liquidity, comprised of $8.6 million of cash, cash equivalents, and restricted cash, plus $738.9 million of borrowing capacity available on our $800 million revolving credit facility. On January 9, 2025, we amended our senior unsecured revolving credit facility.
INVESTING ACTIVITIES —Our net cash used in investing activities was primarily impacted by the following: • Real estate acquisitions — During the year ended December 31, 2023, our acquisitions resulted in a total cash outlay of $270.3 million, as compared to a total cash outlay of $282.0 million during the same period in 2022. • Capital expenditures — We invest capital into leasing our properties and maintaining or improving the condition of our properties.
INVESTING ACTIVITIES —Our net cash used in investing activities was primarily impacted by the following: • Real estate acquisitions — During the year ended December 31, 2024, our acquisitions resulted in a total cash outlay of $296.3 million, as compared to a total cash outlay of $270.3 million during the same period in 2023. • Investment in unconsolidated joint ventures — During the year ended December 31, 2024, we invested $8.4 million in our new investments in NRV and Neighborhood Grocery Catalyst Fund LLC (“NGCF”). • Capital expenditures — We invest capital into leasing our properties and maintaining or improving the condition of our properties.
During the year ended December 31, 2022, we issued 2.6 million shares of our common stock under the ATM program for net proceeds of $89.2 million. • Distributions to stockholders and OP unit holders — Cash used for distributions to common stockholders and OP unit holders increased by $7.8 million during the year ended December 31, 2023 as compared to the same period in PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 43 2022, primarily due to an increase in shares of common stock outstanding as a result of issuances under the ATM program and our distribution increases in both 2022 and 2023.
During the year ended December 31, 2023, we issued 4.2 million shares of our common stock under the ATM program for net proceeds of $147.6 million. • Distributions to stockholders and OP unit holders — Cash used for distributions to common stockholders and OP unit holders decreased by $2.6 million during the year ended December 31, 2024 as compared to the same period in 2023, primarily due to the timing of the funding for our December 2024 distribution payment partially offset by the increase in shares of common stock outstanding as a result of issuances under our ATM programs and our distribution increases in both 2023 and 2024.
In 2022, we declared and paid monthly distributions of $0.09 per share, or $1.08 annualized, for each month beginning January 2022 through August 2022. We declared and paid monthly distributions of $0.0933 per share, or $1.12 annualized, an increase of 3.7%, for each month beginning September 2022 through December 2022.
In 2023, we declared and paid monthly distributions of $0.0933 per common share and OP unit, or $1.12 annualized, for each month beginning January 2023 through August 2023. We declared and paid monthly distributions of $0.0975 per common share and OP unit, or $1.17 annualized, an increase of 4.5%, for each month beginning September 2023 through December 2023.
During the year ended December 31, 2022, we issued 2.6 million shares of our common stock at a gross weighted average price of $34.23 per share under the ATM program for net proceeds of $89.2 million, after approximately $0.9 million in commissions.
During the three months and year ended December 31, 2024, we issued 1.9 million shares of our common stock at a gross weighted average price of $39.23 under this ATM program for net proceeds of $72.1 million, after approximately $0.7 million in commissions.
During the year ended December 31, 2022, we issued 2.6 million shares of our common stock at a gross weighted average price of $34.23 per share under the ATM program for net proceeds of $89.2 million, after approximately $0.9 million in commissions.
During the three months and year ended December 31, 2024, we issued 1.9 million shares of our common stock at a gross weighted average price of $39.23 under this ATM program for net proceeds of $72.1 million, after approximately $0.7 million in commissions.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 33 LEASING ACTIVITY —Below is a summary of leasing activity for our wholly-owned properties for the years ended December 31, 2023 and 2022 (1) : Total Deals Inline Deals 2023 2022 2023 2022 New leases: Number of leases 348 390 334 375 Square footage (in thousands) 1,077 1,230 763 819 ABR (in thousands) $ 23,416 $ 23,750 $ 19,813 $ 19,919 ABR PSF $ 21.75 $ 19.31 $ 25.98 $ 24.33 Cost PSF of executing new leases $ 33.04 $ 36.25 $ 37.22 $ 39.56 Number of comparable leases 137 145 135 143 Comparable rent spread 25.2 % 32.2 % 24.8 % 26.5 % Weighted average lease term (in years) 8.6 8.1 7.2 7.4 Renewals and options: Number of leases 648 611 590 551 Square footage (in thousands) 3,642 3,554 1,360 1,213 ABR (in thousands) $ 58,529 $ 49,625 $ 35,311 $ 29,172 ABR PSF $ 16.07 $ 13.96 $ 25.96 $ 24.04 ABR PSF prior to renewals $ 14.50 $ 12.77 $ 22.44 $ 21.18 Percentage increase in ABR PSF 10.8 % 9.3 % 15.7 % 13.4 % Cost PSF of executing renewals and options $ 0.52 $ 1.89 $ 0.91 $ 1.10 Number of comparable leases (2) 485 472 470 459 Comparable rent spread (2) 16.2 % 14.6 % 17.7 % 15.2 % Weighted average lease term (in years) 5.0 4.9 4.3 4.2 Portfolio retention rate 93.9 % 90.7 % 84.9 % 77.5 % (1) PSF amounts may not recalculate exactly based on other amounts presented within the table due to rounding.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 33 LEASING ACTIVITY —Below is a summary of leasing activity for our wholly-owned properties for the years ended December 31, 2024 and 2023 (1) : Total Deals Inline Deals 2024 2023 2024 2023 New leases: Number of leases 345 348 316 334 Square footage (in thousands) 1,363 1,077 729 763 ABR (in thousands) $ 30,703 $ 23,416 $ 20,541 $ 19,813 ABR PSF $ 22.53 $ 21.75 $ 28.16 $ 25.98 Cost PSF of executing new leases $ 34.01 $ 33.04 $ 41.14 $ 37.22 Number of comparable leases 156 137 143 135 Comparable rent spread 35.7 % 25.2 % 31.4 % 24.8 % Weighted average lease term (in years) 9.4 8.6 7.9 7.2 Renewals and options: Number of leases 676 648 593 590 Square footage (in thousands) 4,631 3,642 1,313 1,360 ABR (in thousands) $ 71,602 $ 58,529 $ 36,561 $ 35,311 ABR PSF (all leases) $ 15.46 $ 16.07 $ 27.84 $ 25.96 ABR PSF prior to renewals (all leases) $ 13.94 $ 14.50 $ 23.87 $ 22.44 Percentage increase in ABR PSF (comparable leases only) 11.3 % 10.8 % 16.6 % 15.7 % Cost PSF of executing renewals and options $ 0.38 $ 0.52 $ 0.67 $ 0.91 Number of comparable leases (2) 504 485 483 470 Comparable rent spread (2) 19.4 % 16.2 % 19.6 % 17.7 % Weighted average lease term (in years) 5.4 5.0 4.4 4.3 Portfolio retention rate 89.0 % 93.9 % 83.0 % 84.9 % (1) PSF amounts may not recalculate exactly based on other amounts presented within the table due to rounding.
Below is a summary of our capital spending activity, excluding leasing commissions, on a cash basis for the years ended December 31, 2023 and 2022 (in thousands): PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 41 2023 2022 Capital expenditures for real estate: Capital improvements $ 22,766 $ 17,828 Tenant improvements 26,663 24,194 Redevelopment and development 38,206 53,671 Total capital expenditures for real estate 87,635 95,693 Corporate asset capital expenditures 963 3,292 Capitalized indirect costs (1) 4,103 3,430 Total capital spending activity (2) $ 92,701 $ 102,415 (1) Amount includes internal salaries and related benefits of personnel who work directly on capital projects as well as capitalized interest expense.
Below is a summary of our capital spending activity, excluding leasing commissions, on a cash basis for the years ended December 31, 2024 and 2023 (in thousands): 2024 2023 Capital expenditures for real estate: Capital improvements $ 21,793 $ 22,766 Tenant improvements 25,184 26,663 Redevelopment and development 39,079 38,206 Total capital expenditures for real estate 86,056 87,635 Corporate asset capital expenditures 813 963 Capitalized indirect costs (1) 4,977 4,103 Total capital spending activity (2) $ 91,846 $ 92,701 (1) Amount includes internal salaries and related benefits of personnel who work directly on capital projects as well as capitalized interest expense.
Highlights of our wholly-owned operational activity as of and for the year ended December 31, 2023 are as follows: • Leased occupancy for our wholly-owned portfolio remained high at 97.4% as of December 31, 2023, and inline occupancy improved 0.9% to 94.7%, when compared to December 31, 2022. • Total ABR PSF for executed new leases improved 12.6% to $21.75, and inline ABR PSF for executed new leases improved 6.8% to $25.98 during the year ended December 31, 2023. • For the year ended December 31, 2023, we completed 13 development and redevelopment projects encompassing a total of 0.2 million square feet with a total investment of $34.1 million. • As of December 31, 2023, we have nine development and redevelopment projects in process, which we estimate will have a total investment of $33.7 million. • Created $2.7 million of incremental ABR in 2023 as a result of development and redevelopment projects completed in 2022.
Highlights of our wholly-owned operational activity as of and for the year ended December 31, 2024 are as follows: • Leased occupancy for our wholly-owned portfolio improved 30 basis points to 97.7% as of December 31, 2024, and inline occupancy improved 30 basis points to 95.0%, when compared to December 31, 2023. • Total ABR PSF for executed new leases improved 3.6% to $22.53, and inline ABR PSF for executed new leases improved 8.4% to $28.16 during the year ended December 31, 2024. • For the year ended December 31, 2024, we completed 15 development and redevelopment projects encompassing a total of 0.3 million square feet with a total investment of $35.8 million. • As of December 31, 2024, we have 14 development and redevelopment projects in process, which we estimate will have a total investment of approximately $41 million. • Created $1.4 million of incremental ABR in 2024 as a result of development and redevelopment projects completed in 2023.
As of December 31, 2023, approximately $10.8 million of common stock remained available for issuance under the ATM program. Subsequent to December 31, 2023, we issued approximately 46,000 additional shares of our common stock at a gross weighted average price of $37.05 per share under the ATM program for net proceeds of $1.7 million, after approximately $17,000 in commissions.
During the year ended December 31, 2024, prior to the entry into the new program described below, we issued approximately 46,000 shares of our common stock at a gross weighted average price of $37.05 per share under this ATM program for net proceeds of $1.7 million, after approximately $17,000 in commissions.
Differentiated and Focused Strategy —We actively monitor the commercial real estate sector for shopping centers that meet our investment objectives. Our effective shelf registration statement and ATM program allow us to access equity and debt capital that we intend to use, in part, to grow our portfolio of assets.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 31 Differentiated and Focused Strategy —We actively monitor the commercial real estate sector for shopping centers that meet our investment objectives. Our access to equity and debt capital allows us, in part, to grow our portfolio of assets.
For the years ended December 31, 2023 and 2022, Same-Center NOI represents the NOI for the 262 properties that were wholly-owned and operational for the entire portion of all comparable reporting 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. For the years ended December 31, 2024 and 2023, Same-Center NOI represents the NOI for the 270 properties that were wholly-owned and operational for the entire portion of all comparable reporting periods.
Additionally, our off-balance sheet arrangements include the notional amount of our interest rate swaps which we use to hedge a portion of our exposure to interest rate fluctuations. Currently, all of our interest rate swaps fix the variable rate interest on our term loan debt. We intend to fund our interest rate swap payments utilizing cash flows from operations.
As of December 31, 2024, NRV had an outstanding debt balance of $23.2 million. Additionally, our off-balance sheet arrangements include the notional amount of our interest rate swaps which we use to hedge a portion of our exposure to interest rate fluctuations. Currently, all of our interest rate swaps fix the variable rate interest on our term loan debt.
Same-Center NOI Reconciliation —Below is a reconciliation of Net Income to NOI and Same-Center NOI for the years ended December 31, 2023 and 2022 (in thousands): 2023 2022 Net income $ 63,762 $ 54,529 Adjusted to exclude: Fees and management income (9,646) (11,541) Straight-line rental income (1) (10,185) (12,265) Net amortization of above- and below-market leases (5,178) (4,324) Lease buyout income (1,222) (2,414) General and administrative expenses 44,366 45,235 Depreciation and amortization 236,443 236,224 Impairment of real estate assets — 322 Interest expense, net 84,232 71,196 Gain on disposal of property, net (1,110) (7,517) Other expense, net 7,312 12,160 Property operating expenses related to fees and management income 2,059 3,046 NOI for real estate investments 410,833 384,651 Less: Non-same-center NOI (2) (14,217) (4,186) Total Same-Center NOI $ 396,616 $ 380,465 (1) Includes straight-line rent adjustments for Neighbors for whom revenue is being recorded on a cash basis.
Same-Center NOI Reconciliation —Below is a reconciliation of Net Income to NOI and Same-Center NOI for the years ended December 31, 2024 and 2023 (in thousands): 2024 2023 Net income $ 69,696 $ 63,762 Adjusted to exclude: Fees and management income (10,731) (9,646) Straight-line rental income (1) (9,646) (10,185) Net amortization of above- and below-market leases (6,587) (5,178) Lease buyout income (867) (1,222) General and administrative expenses 45,611 44,366 Depreciation and amortization 253,016 236,443 Interest expense, net 96,990 84,232 Loss (gain) on disposal of property, net 30 (1,110) Other expense, net 5,732 7,312 Property operating expenses related to fees and management income 3,323 2,059 NOI for real estate investments 446,567 410,833 Less: Non-same-center NOI (2) (16,123) 3,746 Total Same-Center NOI $ 430,444 $ 414,579 Period-end Same-Center Leased Occupancy % 97.8 % 97.8 % (1) Includes straight-line rent adjustments for Neighbors for whom revenue is being recorded on a cash basis.
As of December 31, 2023, total leased occupancy remained high at 97.4% and inline occupancy improved 0.9% to 94.7%, when compared to December 31, 2022.
As of December 31, 2024, total leased occupancy improved 30 basis points to 97.7% and inline occupancy improved 30 basis points to 95.0%, when compared to December 31, 2023.
Further, we are also party to an agreement with our institutional joint venture partner in which any potential liability under such guarantee will be apportioned between us and our joint venture partner based on our respective ownership percentage in the joint venture. As of December 31, 2023, GRP I had an outstanding debt balance of $174.0 million.
Our guaranty for the GRP I debt is limited to being the non-recourse carveout guarantor and the environmental indemnitor. Further, we are also party to an agreement with GRP I in which any potential liability under such guaranty will be apportioned between us and GRP I based on our respective ownership percentage in the joint venture.
We declared and paid monthly distributions of $0.0975 per share, or $1.17 annualized, for each month beginning September 2023 through December 2023. PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 42 The December 2023 and January 2024 distributions of $0.0975 per share were paid on January 2, 2024 and February 1, 2024, respectively.
We declared and paid monthly distributions of $0.1025 per common share and OP unit, or $1.23 annualized, for each month beginning September 2024 through December 2024. The December 2024 and January 2025 distributions of $0.1025 per common share and OP unit were paid on January 3, 2025 and February 4, 2025, respectively.
Unless otherwise indicated, the information in this Form 10-K gives effect to the reverse stock and OP unit splits (see Note 12). • Recapitalization —On June 18, 2021, our stockholders approved an amendment to our charter (the “Articles of Amendment”) that effected a change of each share of our common stock outstanding at the time the amendment became effective into one share of a newly created class of Class B common stock (the “Recapitalization”).
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 30 BASIS OF PRESENTATION —The basis of presentation of our shares of common stock is described as follows: • Recapitalization —On June 18, 2021, our stockholders approved an amendment to our charter (the “Articles of Amendment”) that effected a change of each share of our common stock outstanding at the time the amendment became effective into one share of a newly created class of Class B common stock (the “Recapitalization”).
See “Non-GAAP Measures - EBITDA re and Adjusted EBITDA re” 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.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 41 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.
The three senior unsecured term loans, as amended, have a total notional amount of $484.8 million and are scheduled to mature between 2026 (extendable with two one-year options to 2028) and 2027. • Our current investment grade ratings are Baa3 (Outlook: Stable) with Moody’s Investors Services and BBB- (Outlook: Positive) with S&P Global Ratings. • As of December 31, 2023, our wholly-owned properties were approximately 84% unencumbered. • Our ratio of net debt to Adjusted EBITDA re was 5.1x as of December 31, 2023, as compared to 5.3x as of December 31, 2022 (see “Liquidity and Capital Resources - Financial Leverage Ratios” below for a discussion and calculation).
These issuances improved the flexibility of our balance sheet by extending our debt maturity profile. • Our current investment grade ratings are Baa2 (Outlook: Stable) with Moody’s Investors Services and BBB (Outlook: Stable) with S&P Global Ratings. • As of December 31, 2024, our wholly-owned properties were approximately 86% unencumbered. • Our ratio of net debt to Adjusted EBITDA re was 5.0x as of December 31, 2024, as compared to 5.1x as of December 31, 2023 (see “Liquidity and Capital Resources - Financial Leverage Ratios” below for a discussion and calculation).
Additionally, many of our leases are for terms of less than ten years, which allows us to target increased rents to current market rates upon renewal. In addition to inflation, macroeconomic and geopolitical risks may create challenges that could negatively impact market conditions in the United States.
Additionally, many of our leases are for terms of less than ten years, which allows us to target increased rents to current market rates upon renewal. However, elevated inflation rates, including their impact on operating and construction costs, may nevertheless negatively impact us and some of our Neighbors.
During the three months ended December 31, 2023, we issued 2.2 million shares of our common stock at a gross weighted average price of $35.92 per share under the ATM program for net proceeds of $77.5 million, after approximately $0.8 million in commissions.
During the year ended December 31, 2024, prior to the entry into the new program described below, we issued approximately 46,000 shares of our common stock at a gross weighted average price of $37.05 per share under this ATM program for net proceeds of $1.7 million, after approximately $17,000 in commissions.
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.
PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 36 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.
Our financial performance highlights during 2023 are as follows: • Net income of $63.8 million, an increase of $9.2 million from a year ago, primarily due to strong operating performance attributable to our Same-Center portfolio and the net impact of our 2023 acquisition and disposition activity. • Core FFO per diluted share improved by $0.07 to $2.34, primarily due to our strong operating performance. • Same-Center NOI improved 4.2% to $396.6 million. • Acquired $278.5 million and disposed of $6.3 million of assets, executing our external growth strategy while improving portfolio quality with our dispositions.
Our financial performance highlights during 2024 are as follows: • Net income of $69.7 million, an increase of $5.9 million from a year ago, primarily due to strong operating performance attributable to our same-center portfolio and the impact of our 2024 acquisition activity. • Core FFO per diluted share improved by $0.09 to $2.43, primarily due to our strong operating performance. • Same-Center NOI improved 3.8% to $430.4 million. • Acquired $294.0 million in wholly-owned assets and $11.6 million in unconsolidated joint venture assets, executing our external growth strategy. • Declared and paid monthly distributions of $0.0975 per common share and OP unit, or $1.17 annualized, for each month beginning January 2024 through August 2024, and increased monthly distributions to $0.1025 per common share and OP unit, or $1.23 annualized, for the remainder of 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeCredit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk.
Biggest changeCredit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, PHILLIPS EDISON & COMPANY DECEMBER 31, 2024 FORM 10-K 44 which creates credit risk for us.
We estimate that a one percentage point increase in interest rates on the outstanding balance of our variable-rate debt at December 31, 2023 would result in approximately $4.5 million of additional interest expense annually. The additional interest expense was determined based on the impact of hypothetical interest rates on our borrowing cost and assumes no changes in our capital structure.
We estimate that a one percentage point increase in interest rates on the outstanding balance of our variable-rate debt at December 31, 2024 would result in approximately $1.5 million of additional interest expense annually. The additional interest expense was determined based on the impact of hypothetical interest rates on our borrowing cost and assumes no changes in our capital structure.
As of December 31, 2023, we had not fixed the interest rate on $445.8 million of our unsecured debt through derivative financial instruments, and as a result, we are subject to the potential impact of rising interest rates, which could negatively impact our profitability and cash flows.
As of December 31, 2024, we had not fixed the interest rate on $149.8 million of our unsecured debt through derivative financial instruments, and as a result, we are subject to the potential impact of rising interest rates, which could negatively impact our profitability and cash flows.
The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. PHILLIPS EDISON & COMPANY DECEMBER 31, 2023 FORM 10-K 44 As of December 31, 2023, we had four interest rate swaps that fixed SOFR on $700 million of our unsecured term loan facilities.
The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. As of December 31, 2024, we had three interest rate swaps that fixed SOFR on $475 million of our unsecured term loan facilities.
We seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates.
If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties. Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Index to Consolidated Financial Statements on page F-1 of this report. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Index to Consolidated Financial Statements on page F-1 of this report.

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