Phillips Edison (PECO) risk factors, FY2025 10-K

Risks Related to Our Business and Operations

1. 01Our financial performance depends on the stability and success of our Neighbors, and the loss, failure, departure or bankruptcy of significant Neighbors – including major anchor stores – or a high volume of smaller Neighbors, could adversely affect our revenues, occupancy, and results of operationsNew
2. 02We 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
3. 03We 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
4. 04We 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
5. 05Our real estate assets may decline in value and be subject to significant impairment losses, which may reduce our net income43% rewritten
6. 06Our development and redevelopment projects involve inherent risks and may not achieve their underwritten returns, which could adversely affect our financial condition, cash flows, and results of operationsNew
7. 07DECEMBER 31, 2025 FORM 10-KNew
8. 08Adverse economic, regulatory, market, and real estate conditions may adversely affect our financial condition, cash flows, and results of operations
9. 09The continued shift in retail sales towards e-commerce may adversely affect our financial condition, cash flows, and results of operations
10. 10Our 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
11. 11Increased scrutiny on Environmental, Social and Governance factors may impose additional costs and expose us to new risks90% rewritten
12. 12We use artificial intelligence technologies in our business, and the use of these technologies involve technological and legal risk33% rewritten

Risks Related to Our Indebtedness and Liquidity

1. 13We 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
2. 14We may not be able to access financing on favorable terms, or at all
3. 15Covenants in our loan agreements may restrict our operations and adversely affect our financial condition and ability to make distributions to our stockholders
4. 16Covenants in certain of our loan agreements specify that certain named individuals must remain a member of management and/or our Board of Directors (the “Board”) or require certain level of management or Board continuity in connection with a fundamental transaction
5. 17Higher market capitalization rates and lower NOI for our shopping centers may adversely impact our ability to sell shopping centers and fund developments and acquisitions, and may dilute earnings
6. 18Increases in interest rates could increase the amount of our interest payments and adversely affect our ability to pay distributions to our stockholders
7. 19Hedging activity may expose us to risks, including the risks that a counterparty will not perform and that the hedge will not yield the economic benefits we anticipate, which may adversely affect our financial condition, cash flows, and results of operations

Risks Related to Our Corporate Structure and Organization

1. 20The Operating Partnership’s limited partnership agreement grants certain rights and protections to the limited partners, which allows them to vote in connection with a change of control transaction that might involve a premium price for shares of our common stock86% rewritten
2. 21Our stockholders have limited control over changes in our policies and operations, which increases the uncertainty and risks our stockholders face
3. 22Our charter, bylaws, and Maryland law contain terms that may discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders21% rewritten
4. 23In addition, the MGCL permits our Board to implement certain takeover defenses without stockholder approvalNew
5. 24Our rights and the rights of our stockholders to recover claims against our officers and directors are limited, which could reduce our stockholders’ and our recovery against them if they cause us to incur losses

Risks Related to Our REIT Status and Other Tax Risks

1. 25Failure to qualify as a REIT would cause us to be taxed as a regular C corporation, which would substantially reduce funds available for distributions to stockholders
2. 26Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flows21% rewritten
3. 27If the Operating Partnership fails to qualify as a partnership for U.S. federal income tax purposes, we would fail to qualify as a REIT and would suffer adverse consequences
4. 28The Operating Partnership has a carryover tax basis on certain of its assets as a result of our acquisition of PELP, and our merger with Phillips Edison Grocery Center REIT II, Inc. (“REIT II”), and the amount that we have to distribute to stockholders therefore may be higher21% rewritten
5. 29Our property taxes could increase due to property tax rate changes or reassessment, which could impact our cash flow
6. 30Our use of taxable REIT subsidiary (“TRS”) entities may jeopardize our REIT qualification and expose us to significant tax liabilitiesNew
7. 31REIT distribution requirements could adversely affect our ability to execute our business plans, including because we may be required to borrow funds to make distributions to stockholders or otherwise depend on external sources of capital to fund such distributions39% rewritten
8. 32more advantageous to reinvest cash in the business or when we do not have funds readily available for distribution. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profitsNew
9. 33Complying with REIT requirements may cause us to forgo otherwise attractive opportunities or liquidate otherwise attractive investments
10. 34The prohibited transactions tax may limit our ability to engage in transactions, including disposition of assets, which would be treated as sales for U.S. federal income tax purposes
11. 35We may recognize substantial amounts of REIT taxable income, which we would be required to distribute to our stockholders, in a year in which we are not profitable under accounting principles generally accepted in the United States (“GAAP”) or other economic measures
12. 36Our qualification as a REIT could be jeopardized as a result of an interest in joint ventures or investment funds
13. 37Distributions paid by REITs do not qualify for the reduced tax rates that apply to other corporate distributions
14. 38Legislative or regulatory tax changes could adversely affect us or our stockholders
15. 39If 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

Risks Related to Business Continuity and Cybersecurity

1. 40Uninsured losses relating to real property or excessively expensive premiums for insurance coverage could adversely affect our cash flows and stockholder returns
2. 41Climate change may adversely affect our business, financial condition, cash flows, and results of operations21% rewritten
3. 42As an owner and/or operator of real estate, we could become subject to liability for environmental violations, regardless of whether we caused such violations, and our efforts to identify environmental liabilities may not be successful30% rewritten

Regulatory and Legal Risks

1. 43Compliance or failure to comply with the ADA, and fire, safety, and other regulations could result in substantial costs and may decrease cash available for stockholder distributions
2. 44We could be subject to legal or regulatory proceedings that may adversely affect our cash flows and results of operations

Risks Related to Our Common Stock

1. 45The market price and trading volume of shares of our common stock may be volatile
2. 46The number of shares of our common stock available for future issuance or sale could adversely affect the market price of our common stock70% rewritten
3. 47Future offerings of debt securities, which would be senior to our common stock upon liquidation, and/or preferred equity securities, which may be senior to our common stock for purposes of dividend distributions or upon liquidation, may adversely affect the market price of our common stock
4. 48If 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
5. 49Our distributions to stockholders may change, which could adversely affect the market price of shares of our common stock
6. 50Increases in market interest rates may result in a decrease in the value of shares of our common stock
7. 51If we fail to maintain an effective system of internal control over financial reporting and disclosure controls, we may not be able to accurately and timely report our financial results