Phillips Edison & Company, Inc.PECO

Phillips Edison & Company, Inc. Segments Disclosure

10-KFiled Feb 10, 20263 min read
17. REPORTABLE SEGMENTS
Our principal business is the ownership and operation of community and neighborhood shopping centers. We conduct our operations solely in the United States, and we do not distinguish our principal business, or group our operations, by geography or size for the purpose of measuring performance. We concluded that we have only one operating and reportable segment, Real Estate Properties. Our conclusion was determined on the basis of the way in which our chief operating decision maker (“CODM”) regularly reviews internally reported financial information to analyze financial performance, make decisions, and allocate resources at the consolidated level.
Our Real Estate Properties segment derives a majority of its revenue from the lease contracts it enters into as a lessor, which are all in the form of operating leases. Further, our lease contracts typically provide for reimbursements from tenants for common area maintenance, insurance, and real estate tax expense. No single tenant comprised 10% or more of our aggregate ABR for the years ended December 31, 2025, 2024, and 2023. For a detailed discussion of the accounting policies related to our lease revenue, see Note 2.
Our CODM is Mr. Edison, our Chairman and Chief Executive Officer. Our CODM assesses performance, makes decisions, and allocates operating and capital resources of the Real Estate Properties segment by utilizing net income (loss) on a consolidated basis. Our CODM evaluates net income (loss) by monitoring budget versus actual as well as variance analysis to prior periods to analyze the performance of the segment. Information about the net income (loss) of the Real Estate Properties segment that is regularly reviewed by our CODM, including revenue and significant expenses, was as follows for the years ended December 31, 2025, 2024, and 2023 (in thousands):

202520242023
Revenues:
Rental income$709,186 $647,589 $597,501 
Fees and management income12,751 10,731 9,646 
Other property income4,657 3,072 2,977 
Total revenues726,594 661,392 610,124 
Operating Expenses:
Property operating(1)
123,649 112,633 102,303 
Real estate taxes86,087 77,684 72,816 
Employee-related expenses35,279 28,013 26,870 
Other general and administrative expenses(2)
16,359 17,598 17,496 
Depreciation and amortization266,374 253,016 236,443 
Total operating expenses527,748 488,944 455,928 
Other:
Interest expense, net(3)
(110,338)(96,990)(84,232)
Gain (loss) on disposal of property, net38,790 (30)1,110 
Other expense, net(4,330)(5,732)(7,312)
Net income$122,968 $69,696 $63,762 
Net income attributable to noncontrolling interests(11,665)(7,011)(6,914)
Net income attributable to stockholders$111,303 $62,685 $56,848 
(1)Property operating is primarily made up of common area maintenance, compensation, insurance, and other costs related to the leasing of our real estate properties. Our CODM is not provided with further disaggregation and uses total property operating expenses to manage the business.
(2)Other general and administrative expenses is primarily made up of professional fees, technology and communication expense, and insurance, taxes, and board costs.
(3)Interest income is not a significant component of Interest Expense, Net.
The measure of segment assets regularly reviewed by our CODM is reported on the consolidated balance sheets as Total Assets.
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About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

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