Phillips Edison & Company(PECO) - 2025 Q2 - Quarterly Report

PART I. Financial Information ITEM 1. Financial Statements (Condensed and Unaudited) This section presents the company's condensed and unaudited consolidated financial statements, including balance sheets, statements of operations and comprehensive income, statements of equity, and statements of cash flows, along with detailed notes providing context and breakdowns of key financial accounts and activities Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Total Assets | $5,269,448 | $5,046,223 | | Total Liabilities | $2,675,226 | $2,412,238 | | Total Equity | $2,594,222 | $2,633,985 | | Net Investment in Real Estate Assets | $4,960,706 | $4,781,456 | | Debt Obligations, net | $2,393,114 | $2,109,543 | Consolidated Statements of Operations and Comprehensive Income This section details the company's financial performance over specific periods, presenting revenues, expenses, and net income, along with comprehensive income components Operating Results (Six Months Ended June 30, in thousands, except per share) | Metric | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :--------- | :--------- | :----------- | | Total Revenues | $356,064 | $322,817 | +10.3% | | Total Operating Expenses | $263,101 | $236,585 | +11.2% | | Net Income | $43,145 | $36,612 | +17.8% | | Net Income Attributable to Stockholders | $39,093 | $32,941 | +18.7% | | EPS (Basic and Diluted) | $0.31 | $0.27 | +14.8% | Operating Results (Three Months Ended June 30, in thousands, except per share) | Metric | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :--------- | :--------- | :----------- | | Total Revenues | $177,753 | $161,515 | +10.1% | | Total Operating Expenses | $134,726 | $119,178 | +13.0% | | Net Income | $14,252 | $16,986 | -16.1% | | Net Income Attributable to Stockholders | $12,784 | $15,271 | -16.3% | | EPS (Basic and Diluted) | $0.10 | $0.12 | -16.7% | Consolidated Statements of Equity This section outlines changes in the company's equity over time, reflecting net income, distributions, and other comprehensive income adjustments - Total equity decreased from $2,633,985 thousand at January 1, 2025, to $2,594,222 thousand at June 30, 2025, primarily due to common distributions declared and changes in unrealized value on interest rate swaps, partially offset by net income[10][12] Key Equity Changes (Six Months Ended June 30, 2025, in thousands) | Item | Amount | | :----------------------------------- | :--------- | | Balance at January 1, 2025 | $2,633,985 | | Change in unrealized value on interest rate swaps | $(2,562) | | Common distributions declared | $(77,486) | | Net income | $43,145 | | Balance at June 30, 2025 | $2,594,222 | Consolidated Statements of Cash Flows This section details the inflows and outflows of cash from operating, investing, and financing activities, providing insight into the company's liquidity Cash Flow Activities (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | Change (YoY) | | :----------------------------------- | :--------- | :--------- | :----------- | | Net cash provided by operating activities | $156,662 | $141,599 | +10.6% | | Net cash used in investing activities | $(329,122) | $(143,236) | -129.8% | | Net cash provided by financing activities | $172,987 | $3,707 | NM (significant increase) | - Investing activities saw a significant increase in cash used, primarily due to higher real estate acquisitions ($268.1 million) and capital expenditures ($59.4 million) in 2025[14][147] Notes to the Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and breakdowns of the figures presented in the financial statements, offering crucial context for understanding the company's financial position and performance Note 1. Organization This note describes the company's business, its focus as a REIT, and its property ownership structure, including wholly-owned and joint venture properties - Phillips Edison & Company, Inc. (PECO) is a REIT focused on omni-channel grocery-anchored shopping centers in the U.S[20] - As of June 30, 2025, PECO wholly-owned 303 properties and held partial interests in 24 properties through three unconsolidated joint ventures[21] - Subsequent to June 30, 2025, NGCF (a joint venture) acquired one property for $24.4 million, with PECO's prorated share being $7.6 million[21] Note 2. Summary of Significant Accounting Policies This note outlines the accounting principles used in preparing the financial statements, confirming adherence to GAAP and the company's single operating segment - The financial statements are prepared in accordance with GAAP for interim financial information; no changes to significant accounting policies occurred during the six months ended June 30, 2025[23][24] - The company operates as a single operating and reportable segment: Real Estate Properties[27] Note 3. Leases This note details the company's lease classifications, rental income components, and future fixed contractual lease payment obligations - All company leases are classified as operating leases[29] Rental Income (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Rental income related to fixed lease payments | $130,485 | $120,199 | $258,020 | $238,282 | | Rental income related to variable lease payments | $40,131 | $35,084 | $81,852 | $73,261 | | Total rental income | $173,467 | $158,286 | $347,650 | $316,354 | - Future fixed contractual lease payments total $2,511,994 thousand as of June 30, 2025. Florida, California, and Texas represent 11.7%, 11.1%, and 10.4% of ABR, respectively[29] Note 4. Real Estate Activity This note summarizes the company's real estate acquisition and disposition activities, including the number of properties, total prices, and proceeds from sales Real Estate Acquisition Activity (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Number of properties acquired | 10 | 4 | | Total price of acquisitions | $268,108 | $116,211 | Real Estate Disposition Activity (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Number of properties sold | 1 | 0 | | Proceeds (payments) from sale of real estate, net | $6,438 | $(8) | | Gain (loss) on disposal of property, net | $5,543 | $(15) | - In 2025, one property was sold for $24.9 million, with $17.4 million provided as secured financing[32] Note 5. Other Assets, Net This note provides a breakdown of other assets, including deferred financing expenses and secured loan receivables Other Assets, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Total other assets, net | $236,756 | $195,328 | | Deferred financing expenses | $16,346 | $9,037 | | Secured loan receivable | $17,395 | — | Note 6. Debt Obligations This note details the company's debt structure, including total obligations, interest rates, and changes in financing facilities Debt Obligations Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Debt obligations, net | $2,393,114 | $2,109,543 | | Weighted-average interest rate | 4.4% | 4.3% | | Fixed-rate debt | $2,301,390 | $1,987,586 | | Variable-rate debt | $120,750 | $149,750 | | Unsecured debt | $1,995,750 | $1,674,750 | | Secured debt | $426,390 | $462,586 | - In June 2025, $350 million of 5.250% senior notes due 2032 were issued, with proceeds used to pay down the revolving credit facility[35] - The senior unsecured revolving credit facility was amended in January 2025, increasing borrowing capacity to $1 billion and extending maturity to January 2029[36] Note 7. Derivatives and Hedging Activities This note explains the company's use of interest rate swaps for cash flow hedging and their impact on future interest expense - The company uses interest rate swaps as cash flow hedges to manage variable interest rate risk on debt[38][39] Interest Rate Swaps (Cash Flow Hedges) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Count | 3 | 3 | | Notional amount (in thousands) | $475,000 | $475,000 | | Fixed SOFR | 2.8% - 3.4% | 2.8% - 3.4% | | Weighted-average term (in years) | 0.8 | 1.3 | - An estimated $2.0 million will be reclassified from AOCI as a decrease to Interest Expense, Net, over the next twelve months[40] Note 8. Commitments and Contingencies This note addresses the company's involvement in legal proceedings, environmental matters, and outstanding letters of credit, assessing their potential financial impact - The company is involved in various claims and litigation, but does not expect a material adverse effect on financial statements, as many are covered by insurance[42] - Environmental matters are managed through indemnification and environmental liability insurance, with no material adverse effects currently anticipated[43][44] - As of June 30, 2025, four letters of credit totaling approximately $26.2 million were outstanding to secure obligations under the captive insurance company, Silver Rock Insurance, Inc[46] Note 9. Equity This note details equity-related activities, including available common stock under the ATM program, monthly distributions, OP unit conversions, and the share repurchase program - As of June 30, 2025, approximately $177 million of common stock remained available for issuance under the At-the-Market (ATM) program; no shares were issued under this program during the three and six months ended June 30, 2025 and 2024[49] - Monthly distributions of $0.1025 per common share and Operating Partnership (OP) unit were declared and paid from January to June 2025[50] OP Unit Activity (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | OP units converted into shares of common stock | 406 | 252 | | Distributions declared on OP units | $8,227 | $8,355 | - The company has a Board-approved share repurchase program of up to $250 million, but no repurchases have been made to date[52] Note 10. Earnings Per Share This note provides the calculation of basic and diluted earnings per share, clarifying the treatment of OP units in the denominator EPS Calculation (Six Months Ended June 30, in thousands, except per share) | Metric | 2025 | 2024 | | :----------------------------------- | :--------- | :--------- | | Net income attributable to stockholders - basic | $39,093 | $32,941 | | Weighted-average shares - basic | 125,381 | 122,306 | | Basic and diluted income per share | $0.31 | $0.27 | - OP units are included in the diluted EPS denominator but have no dilutive impact on earnings per share of common stock[53] Note 11. Related Party Transactions This note discloses fees and management income from managed funds, tax protection agreements, and limited guarantees for mortgage loans Fees and Management Income from Managed Funds (in thousands) | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Recurring fees | $2,276 | $1,998 | | Transactional revenue and reimbursements | $1,374 | $1,300 | | Insurance premiums | $2,449 | $1,789 | | Total fees and management income | $6,099 | $5,087 | - The company is party to tax protection agreements with certain partners, including executive officers, with a potential 'make-whole amount' of approximately $115.2 million as of June 30, 2025[54] - The company is a limited guarantor for $173.8 million, $47.5 million, and $17.9 million in mortgage loans secured by GRP I, NRV, and NGCF properties, respectively[55] Note 12. Fair Value Measurements This note describes the valuation methodologies and inputs used for real estate investments, senior unsecured notes, and derivative instruments, confirming no impairment charges - Real estate investments are valued using Level 3 inputs (e.g., discount rates, capitalization rates), while senior unsecured notes use Level 1 quoted prices[57][58] - Derivative instruments (interest rate swaps) are measured at fair value on a recurring basis using Level 2 inputs, with credit valuation adjustments utilizing Level 3 inputs deemed not significant[60][63] - No real estate asset impairment charges were recorded during the three and six months ended June 30, 2025 and 2024[64] Note 13. Reportable Segments This note confirms the company operates as a single reportable segment, 'Real Estate Properties,' with revenue primarily from operating lease contracts and no single dominant tenant - The company operates as a single operating and reportable segment, 'Real Estate Properties,' as determined by the Chief Operating Decision Maker (CODM)[67] - Revenue is primarily derived from operating lease contracts, including tenant reimbursements for common area maintenance, insurance, and real estate taxes[68] - No single tenant comprised 10% or more of aggregate ABR for the periods presented[68] Note 14. Subsequent Events This note confirms that no events requiring recognition or disclosure have occurred subsequent to the reporting period, beyond those already mentioned - No events requiring recognition or disclosure have occurred subsequent to June 30, 2025, other than those already disclosed[71] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a comprehensive analysis of the company's financial performance, liquidity, and capital resources, detailing operating results, leasing activities, non-GAAP financial measures, and capital management strategies for the periods presented Cautionary Note Regarding Forward-Looking Statements This note advises that the report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially[74] - Key risks include changes in economic climates, local market conditions, tenant financial stability, borrowing costs, environmental matters, and the ability to maintain REIT qualification[74] Key Performance Indicators and Defined Terms This section outlines the financial and nonfinancial key performance indicators used to measure the company's performance, including definitions of non-GAAP measures - The company uses financial and nonfinancial KPIs to measure performance, grouped into portfolio, leasing, and financial performance metrics[76][78] - Non-GAAP measures are used as supplemental information and should not be considered alternatives to GAAP measures[77] - Key definitions include ABR, Leased Occupancy, Comparable rent spread, Portfolio retention rate, Adjusted EBITDAre, Core FFO, Nareit FFO, and Same-Center[82][86] Overview This section provides a general description of Phillips Edison & Company as a REIT specializing in grocery-anchored shopping centers, including portfolio statistics and tenant composition - Phillips Edison & Company is a REIT specializing in grocery-anchored shopping centers, owning equity interests in 327 centers (303 wholly-owned) across 31 states as of June 30, 2025[83][84] Wholly-Owned Portfolio Statistics (June 30) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Number of properties | 303 | 286 | | Total square feet (in thousands) | 33,979 | 32,594 | | ABR (in thousands) | $531,544 | $487,536 | | Leased occupancy % (Total portfolio) | 97.4% | 97.5% | | Leased occupancy % (Anchor spaces) | 98.9% | 98.8% | | Leased occupancy % (Inline spaces) | 94.8% | 95.1% | - Approximately 70% of ABR is generated from necessity-based goods and services. Top 20 Neighbors by ABR include Kroger (5.6%), Publix (4.9%), and Albertsons (3.7%)[97][98] Results of Operations This section analyzes the company's financial performance, detailing revenue and expense trends, and the impact of acquisitions, redevelopments, and leasing activities on net income - Adverse economic conditions, including slower growth, potential recession, and elevated inflation, could negatively impact the company and its tenants, despite lease provisions designed to mitigate inflation effects[99] Summary of Operating Activities (Three Months Ended June 30) This summary details the company's operating performance for the three months ended June 30, highlighting changes in revenues, expenses, and net income Operating Results (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :--------- | :--------- | :--------- | :--------- | | Total Revenues | $177,753 | $161,515 | $16,238 | +10.1% | | Total Operating Expenses | $134,726 | $119,178 | $(15,548) | -13.0% | | Net Income | $14,252 | $16,986 | $(2,734) | -16.1% | - Rental income increased by $15.2 million, driven by $11.4 million from net acquisition activity and $3.8 million from the same-center portfolio, which saw a $0.43 increase in average minimum rent PSF[101][103] - General and administrative expenses rose by $1.8 million due to growth initiatives, including increased headcount and performance-based compensation[102] - Depreciation and amortization increased by $10.0 million due to net acquisition activity and redevelopment projects[104] Summary of Operating Activities (Six Months Ended June 30) This summary details the company's operating performance for the six months ended June 30, highlighting changes in revenues, expenses, and net income Operating Results (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :--------- | :--------- | :--------- | :--------- | | Total Revenues | $356,064 | $322,817 | $33,247 | +10.3% | | Total Operating Expenses | $263,101 | $236,585 | $(26,516) | -11.2% | | Net Income | $43,145 | $36,612 | $6,533 | +17.8% | - Rental income increased by $31.3 million, with $19.6 million from net acquisition activity and $11.7 million from the same-center portfolio, driven by a $0.44 increase in average minimum rent PSF[108][109] - Depreciation and amortization increased by $15.1 million due to net acquisition activity and redevelopment[110] - Interest expense, net, increased by $6.4 million due to increased debt outstanding[110] Leasing Activity This section reviews the company's leasing performance, including comparable rent spreads for new leases and renewals, and the portfolio retention rate Leasing Activity Highlights (Wholly-Owned Properties) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | New leases - Comparable rent spread | 34.6% | 34.4% | 31.8% | 31.9% | | Renewals & options - Comparable rent spread | 19.1% | 20.5% | 19.9% | 18.7% | | Portfolio retention rate | 93.6% | 88.7% | 92.4% | 88.2% | - The portfolio retention rate improved significantly for both the three-month (93.6% vs 88.7%) and six-month (92.4% vs 88.2%) periods ended June 30, 2025, compared to 2024[111][112] Non-GAAP Measures This section presents and reconciles non-GAAP financial measures such as Same-Center NOI, Nareit FFO, Core FFO, EBITDAre, and Adjusted EBITDAre, used to evaluate operational performance - The company uses non-GAAP measures like Same-Center NOI, Nareit FFO, Core FFO, EBITDAre, and Adjusted EBITDAre to assess operational and financial performance, which are not alternatives to GAAP measures[113][119][123] Same-Center NOI This section analyzes the Same-Center Net Operating Income, a key non-GAAP metric, and its growth drivers for the reported periods Same-Center NOI (in thousands) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Same-Center NOI | $114,462 | $109,824 | $229,556 | $220,553 | | % Change | 4.2% | | 4.1% | | | Period-end Same-Center Leased Occupancy % | 97.6% | 97.5% | 97.6% | 97.5% | - Same-Center NOI increased by 4.2% and 4.1% for the three and six months ended June 30, 2025, respectively, driven by higher rental and tenant recovery income[117] Nareit FFO and Core FFO This section presents Nareit FFO and Core FFO, key non-GAAP metrics for REITs, providing per-share figures for the reported periods Nareit FFO and Core FFO (Six Months Ended June 30, in thousands, except per share) | Metric | 2025 | 2024 | | :----------------------------------- | :--------- | :--------- | | Nareit FFO attributable to stockholders and OP unit holders | $175,064 | $158,424 | | Core FFO attributable to stockholders and OP unit holders | $178,982 | $161,639 | | Nareit FFO per share - diluted | $1.26 | $1.16 | | Core FFO per share - diluted | $1.29 | $1.18 | EBITDAre and Adjusted EBITDAre This section provides EBITDAre and Adjusted EBITDAre, non-GAAP measures used to evaluate earnings independent of capital structure and debt service coverage EBITDAre and Adjusted EBITDAre (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :--------- | :--------- | | EBITDAre | $230,494 | $207,424 | | Adjusted EBITDAre | $233,637 | $209,749 | - EBITDAre and Adjusted EBITDAre are used to compare earnings independent of capital structure, determine debt service coverage, and measure enterprise value[123] Liquidity and Capital Resources This section discusses the company's ability to meet its financial obligations and fund operations, detailing cash demands, liquidity sources, and capital management strategies - The company's principal cash demands include real estate investments, distributions, redevelopment, capital expenditures, and debt payments[126] - Primary liquidity sources are operating cash flows, borrowings from the unsecured revolving credit facility, equity offerings, property dispositions, and available cash[126] - Current liquidity sources are deemed sufficient to meet short- and long-term cash demands[126] ATM Program This section describes the At-the-Market (ATM) program for common stock issuance and its utilization status - A new At-the-Market (ATM) program was established in February 2024, allowing for the sale of up to $250 million in common stock[129] - As of June 30, 2025, approximately $177 million of common stock remained available under the ATM program; no shares were issued during the three and six months ended June 30, 2025 and 2024[129] Debt This section summarizes the company's debt obligations, including total gross debt, interest rates, and changes to the revolving credit facility Debt Summary (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Total debt obligations, gross | $2,422,140 | $2,137,336 | | Weighted-average interest rate | 4.4% | 4.3% | | Revolving credit facility capacity | $1,000,000 | $800,000 | | Revolving credit facility availability | $962,771 | $738,904 | - In June 2025, $350 million of 5.250% senior notes due 2032 were issued, with proceeds used to pay down the revolving credit facility[130] - The revolving credit facility's borrowing capacity increased to $1 billion and its maturity extended to January 2029[131] Financial Leverage Ratios This section presents key financial leverage ratios, including net debt to Adjusted EBITDAre and total enterprise value, indicating access to future borrowings Financial Leverage Ratios | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :------------------ | | Net debt (in thousands) | $2,454,633 | $2,160,856 | | Total enterprise value (in thousands) | $7,303,626 | $7,336,142 | | Net debt to Adjusted EBITDAre - annualized | 5.4x | 5.0x | | Net debt to total enterprise value | 33.6% | 29.5% | - The company's leverage ratios and debt covenant compliance are believed to provide access to future borrowings[134] Capital Expenditures and Redevelopment Activity This section details the company's capital spending on improvements, tenant enhancements, and redevelopment projects, including expected yields and investment amounts - Gross capital spend for the six months ended June 30, 2025, was $59.4 million, an increase from $30.9 million in 2024[136] Capital Spending Activity (Six Months Ended June 30, in thousands) | Category | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Capital improvements | $10,004 | $4,648 | | Tenant improvements | $15,700 | $13,347 | | Redevelopment and development | $29,798 | $7,348 | | Total capital expenditures for real estate | $55,502 | $25,343 | - Development and redevelopment projects are expected to stabilize within 24 months, targeting underwritten incremental unlevered yields of 9%-12%, with current in-process projects representing an estimated $65.0 million investment[137] Real Estate Acquisition Activity This section summarizes the number and total price of properties acquired during the reported periods Property Acquisitions (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Number of properties acquired | 10 | 4 | | Total price of acquisitions | $268,108 | $116,211 | Real Estate Disposition Activity This section summarizes the number of properties sold, net proceeds, and gains or losses from dispositions during the reported periods Property Dispositions (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Number of properties sold | 1 | 0 | | Proceeds (payments) from sale of real estate, net | $6,438 | $(8) | | Gain (loss) on disposal of property, net | $5,543 | $(15) | Distributions This section details the monthly distributions declared and paid, and the requirement to distribute taxable income to maintain REIT qualification - Monthly distributions of $0.1025 per common share and OP unit were declared and paid from January to June 2025[139] - To maintain REIT qualification, the company must distribute at least 90% of its REIT taxable income annually[140] Cash Flow Activities This section analyzes the net cash provided by operating, investing, and financing activities, highlighting key drivers for changes in cash flows - Net cash provided by operating activities increased by 10.6% to $156.7 million for the six months ended June 30, 2025, driven by a 4.1% improvement in Same-Center NOI[144] - Net cash used in investing activities significantly increased by 129.8% to $(329.1) million, primarily due to higher real estate acquisitions ($268.1 million) and capital expenditures ($59.4 million)[144][147] - Net cash provided by financing activities saw a substantial increase to $173.0 million, mainly due to $273.1 million in net debt borrowings (from the 2025 bond offering) and increased distributions paid[144][147] Critical Accounting Estimates This section confirms that no significant changes have occurred in critical accounting estimates, such as the valuation of real estate assets and rental income, during the current period - No significant changes to critical accounting estimates, such as the valuation of real estate assets and rental income, have occurred during 2025[145] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there have been no material changes to the company's quantitative and qualitative disclosures about market risk since its 2024 Annual Report on Form 10-K - No material changes to market risk disclosures have occurred since the 2024 Annual Report on Form 10-K[146] ITEM 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, and no material changes in internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were effective as of June 30, 2025, at a reasonable assurance level[148] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[149] PART II. Other Information ITEM 1. Legal Proceedings The company is involved in various legal proceedings in the ordinary course of business, but none are expected to have a material impact on its financial condition or results of operations, as they are generally covered by liability insurance - No current legal proceedings are expected to have a material adverse impact on financial statements, as they are covered by insurance[150] ITEM 1A. Risk Factors This section indicates that there have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to risk factors have occurred since the 2024 Annual Report on Form 10-K[151] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended June 30, 2025, the company issued approximately 180,000 shares of common stock in redemption of OP units under a Section 4(a)(2) exemption. The company's $250 million share repurchase program has not seen any repurchases to date - Approximately 180,000 shares of common stock were issued in redemption of OP units during Q2 2025, relying on a Section 4(a)(2) exemption[152] - The company has a $250 million share repurchase program, but no repurchases have been made to date[153] ITEM 3. Defaults Upon Senior Securities This section reports that there have been no defaults upon senior securities - No defaults upon senior securities[154] ITEM 4. Mine Safety Disclosures This section indicates that there are no mine safety disclosures to report - No mine safety disclosures[155] ITEM 5. Other Information This section states that there is no other information to disclose - No other information to disclose[156] ITEM 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, indentures, certifications, and XBRL-related documents - Includes Fifth Articles of Amendment and Restatement, Fifth Amended and Restated Bylaws, Fourth Supplemental Indenture, and various certifications (e.g., Section 302, Section 906)[157] - XBRL (eXtensible Business Reporting Language) documents are also filed[157] Signatures This section provides the official signatures of the company's key executives, certifying the accuracy and completeness of the report - The report was signed by Jeffrey S. Edison (Chairman of the Board and Chief Executive Officer) and John P. Caulfield (Executive Vice President, Chief Financial Officer, and Treasurer) on July 25, 2025[161]