SUSTAINABILITY REPORT. Grocery Focused. RETAILER Centered.

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1 SUSTAINABILITY REPORT Grocery Focused. RETAILER Centered.

2 TABLE OF CONTENTS About Phillips Edison & Company 1 A Note From Our CEO 2 Our Partners in Sustainability 3 Leading the Way in Sustainable Building Practices 4 Waste/Recycling 6 Lighting 6 Case Study 7 Water Conservation Systems 8 Solar Panels 8 Alternative Transportation 9 Partnership with Energy Star 9 LEED Certification 10 Looking Ahead 12

3 ABOUT PHILLIPS EDISON & COMPANY Grocery Focused. Retailer Centered. Phillips Edison & Company has refined our experience in purchasing and operating grocery-anchored shopping centers for more than 25 years. The result is a rapidly growing nationwide portfolio of more than 340 properties. Today, we continue to strengthen our portfolio by focusing on what we do best, and by doing more of it. The imperative is clear, as all sides recognize the need for, and benefits of, greater sustainability. Tenants and investors are paying closer attention to building performance data and business practices, and they are expecting increased operational efficiencies and NOI. Retailers are responding to the growing pressure from consumers, shareholders and competitors to improve their corporate responsibility programs and demonstrate results. Our sustainability mission as a retail landlord is twofold: be good stewards of the environment, and do so in a way that makes business sense and adds value to our shopping center portfolio. 1

4 A note from our CEO We are committed to becoming industry leaders in energy efficiency, alternative power sources, recycling, and other initiatives that will help us preserve and protect the environment. Jeff Edison, Chief Executive Officer Phillips Edison & Company is committed to making a difference in the communities our grocery-anchored shopping centers serve. We are committed to becoming industry leaders in energy efficiency, alternative power sources, sustainable design, recycling, and other initiatives that will help us preserve and protect the environment. Our Sustainability Team includes property management, construction and redevelopment associates who are researching and implementing energy-efficient and eco-friendly programs at our properties across the country. In addition to our active promotion of the principles of reduce, reuse and recycle, our team is focused on the rapid growth of multiple programs, from water conservation to high-efficiency mechanical and electrical systems. Our team is currently focused on exploring a variety of exciting new green initiatives, such as: Establishing a third-party solar energy program to expand the use of alternative energy Utilizing LED technology in parking lots, pylon signage, under-canopy lighting and other appropriate areas Training all regional property managers in the application of effective green technologies Implementing sustainable design/construction initiatives 2

5 OUR PARTNERS IN SUSTAINABILITY As part of our Green Options initiative, we have established strategic partnerships with leading solutions providers across the country. Our Approach to Sustainability Sustainability is not merely a buzzword but something we embrace across our entire organization, whether it is training or giving back to the communities we serve. Our team includes project managers with sustainability training and certifications, including LEED-certified project managers, a certified energy manager and active committee members for the ICSC RetailGreen Conference. 3

6 Leading the way in sustainable building practices We are proud of our track record of investing in high-efficiency systems and eco-friendly design practices when building or renovating properties across the country. 20I0 SINCE OVER 8,000 EXISTING INTERIOR T-12 LIGHTS HAVE BEEN REPLACED WITH HIGHER- EFFICIENCY T-8, T-5 AND LED LIGHTS. PECO HAS USED LEDs OR HIGH-EFFICIENCY BULBS ON ALL NEW OR RETROFIT EXTERIOR LIGHTING PROJECTS. PECO HAS REPLACED OVER 7.5 MILLION SF OF ROOF WITH WHITE REFLECTIVE ROOFING MATERIAL. We re finding that you can t underestimate the power of simplicity in driving retail sustainability. Several of our simpler efforts have been creating significant impact as we scale them throughout our portfolio. 20I0 PECO HAS INSTALLED/REPLACED OVER SINCE 5,500 TONS OF HVAC UNITS WITH HIGHER-EFFICIENCY UNITS. 4

7 It all adds up: WHITE ROOFS $ 82,500 TOTAL ANNUAL ENERGY SAVINGS REDUCTION OF 75,000 TONS OF EMISSIONS = 15,843 FEWER CARS ON THE ROAD 70,995 ACRES OF TREES PLANTED ENERGY USAGE OF 7,920 HOUSEHOLDS $ EXTERIOR LIGHTING OF 4,621,250 KWH ANNUALLY = 686 FEWER CARS THE ROAD 554,550REDUCTION TOTAL ENERGY ANNUAL SAVINGS FOR 52 PROPERTIES 3,074 ACRES OF TREES PLANTED ENERGY USAGE OF 343 HOUSEHOLDS $ HVAC UPGRADES OF 8,190,600 KWH ANNUALLY = 1,216 FEWER CARS THE ROAD 5,449 ACRES 99I,I00REDUCTION OF TREES PLANTED TOTAL SAVINGS ENERGY USAGE OF 608 HOUSEHOLDS INTERIOR LIGHTING $ 390,288 TOTAL SAVINGS REDUCTION OF 2,737,760 KWH ANNUALLY = 406 FEWER CARS ON THE ROAD 1,821 ACRES OF TREES PLANTED ENERGY USAGE OF 203 HOUSEHOLDS 2016 ANNUAL ESTIMATED SAVINGS TO OUR TENANTS TOTAL= $ 2,0I8,438 5

8 Waste/Recycling As owners of properties throughout the country, we hold ourselves to higher-than-industry standards when it comes to managing the waste that is created at our centers. Recycling has had the largest impact on the overall sustainability of our portfolio. It requires a low capital expense, can be implemented at every center and generates results immediately. Phillips Edison & Company has changed the office environment to encourage recycling by our associates. Desks have been equipped with separate recycling bins, and new software is being used to help the different departments use as little paper as possible. Lighting Lighting is a major source of energy consumption across our portfolio and, therefore, offers substantial opportunity for improved efficiency. Inefficient bulbs not only consume more power directly but also produce more heat, which requires additional energy to be used by HVAC systems for cooling. We plan to upgrade parking lot lamps, wall packs, and pylon signage with LED bulbs or other highefficiency lamps at centers annually to reduce energy usage and operational costs. We ve completed approximately 55 retrofits to date. One of our biggest and most energy-efficient projects was at the Village at Glynn Place in Brunswick, GA. One-hundred (and counting) of our 340 shopping centers recycle more than 163,272 yards of waste annually, which equates to over 13,900 tons. That is the weight of 5,560 adult elephants. On average, about 40 percent of waste and construction material is diverted from landfills. We're aiming to increase the percentage of waste and construction material diverted from landfills to 90 percent over the next few years. We are constantly holding ourselves to the standard we have set to become a more green company. APPROXIMATE TONS RECYCLED I3,900=5,560 PECO uses LEDs or high-efficiency bulbs on all new and retrofit exterior lighting projects for increased visibility and energy savings. HVAC Since 2010, PECO has installed or replaced over 5,500 tons of HVAC units with higher-efficiency units. The upgrades have saved more than $990,000 per year, making HVAC the second-largest contributor to energy savings (after lighting). As an example, by installing SEER 16 rated HVAC units versus SEER 14 rated HVAC units, the SEER 16 HVAC units reduce total energy consumption by over 14 percent. 6

9 CASE STUDY WATER CONSERVATION Four Phillips Edison & Company properties partnered with Weathermatic, a leading provider of water-conserving technology, on a water conservation project. The program helped to maximize our landscaping while saving millions of gallons of water. A SUSTAINABLE PROJECT MONTHLY SAVINGS OF $ I5,939 IN 4-MONTH TEST WATER SAVED 7,227,042 GALLONS IN 4-MONTH TEST THE PROGRAM WILL BE ROLLED OUT AT MULTIPLE PECO PROPERTIES IN

10 Water conservation systems We re working to tightly control and eliminate irrigation where we can, especially in states such as California and Georgia, which are under water conservation directives. We ve installed irrigation control systems at 25 Phillips Edison centers. In other cases we re implementing xeriscaping removing non-native plants and adding native species that require no or very little water, such as cacti and yucca, in addition to rock gardens. Low-flow fixtures reduce water usage between 20 to 75 percent per fixture. Solar Panels Solar technology continues to improve and offers a functional alternative to traditional energy sources. Phillips Edison & Company has continued to improve our energy portfolio by using renewable energy through photovoltaic solar panels. Through a strategic partnership with Vis Solis, solar panels at our properties have generated over 550,000 kwh of electricity. This is equivalent to saving more than 46,000 trees and supplying a fourperson household with over 137 years of electricity. Phillips Edison & Company has partnered with Blue Sky Utility, a well-developed solar company, to equip nine of our California centers with their solar program. We plan to expand the program to all of our California properties in the future. 8

11 Alternative Transportation Everyone knows that motor vehicles powered by fossil fuels are a leading cause of air pollution and resource consumption. That s why we re taking measures to make alternative transportation easier and more feasible for shoppers and employees at our centers. Bicycles are a very clean and economical transportation alternative in many communities. Bike racks are being installed at all of our centers to encourage alternative transportation and drive foot traffic among shoppers who prefer biking over driving. We have bike racks at 50 percent of our centers and aim to add them to our remaining centers over the next three years. In addition to bicycle initiatives, Phillip Edison & Company is equipping our centers with charging stations for electric-powered golf carts and vehicles. We are working with several EV charging station developers across the country to expand our footprint. Partnership with ENERGY STAR We are excited to work with ENERGY STAR, a U.S. EPA program that helps businesses save money and protect our climate through superior energy efficiency. A test program was conducted in 2016 in partnership with the city of Boulder and Xcel Energy to help understand our property s energy performance and to identify opportunities to reduce operating costs through reduction of our Energy Use Intensity (EUI), resulting in a potential savings of $81,000 per year. 9

12 LEED CERTIFICATION Phillips Edison & Company is proud to have been awarded LEED (Leadership in Energy and Environmental Design) Silver certification for commercial interiors at both our Salt Lake City office and Red Maple Village Shopping Center in Tracy, CA. Salt lake city corporate office Achieving LEED Silver certification is an illustration of Phillips Edison s proactive thinking and continued commitment to our associates and the surrounding community. Our Green Options team spent countless hours behind the scenes designing, selecting green products and managing the entire construction process to achieve this certification. Phillips Edison achieved LEED Silver certification for implementing practical and measurable strategies and solutions aimed at achieving high performance in the six LEED categories: Sustainable Sites, Water Efficiency, Energy & Atmosphere, Materials & Resources, Indoor Environmental Quality, and Innovation in Design. The following highlights some of the office s eco-friendly achievements: Building materials with recycled content were used throughout the office building. Lighting and mechanical systems offer comfort by providing natural light, clean air and thermal comfort, and are controlled by motion and sound sensors. Designers focused on reusing existing office furniture materials and decorative glass to provide a pleasant environment within the new first-class office. ENERGY STAR-rated equipment and appliances equal to 77 percent, by rated power, have been installed. Doors were manufactured using Forestry Stewardship Council (FSC)-certified wood. 10

13 Rick Fedrizzi, President, CEO & Founding Chair, U.S. Green Building Council Red maple village Phillips Edison s LEED Silver certification demonstrates tremendous green building leadership. The urgency with USGBC s mission has challenged the industry to move faster and reach further than ever before, and Phillips Edison serves as a prime example with just how much we can accomplish. Red Maple Village, located in Tracy, CA, is Phillips Edison s first LEEDcertified center. The shopping center was first certified in 2011 by the U.S. Green Building Council and given Silver status. Some of Red Maple s green features include the use of low-wattage LED lighting, designated parking for low-emission vehicles, use of low-voc paint, state-of-theart energy management systems, and a self-contained retention pond located on the northwest side of the project that handles the storm water created by the site. 11

14 LOOKING AHEAD Sustainability isn t a one-time project. It s an ongoing commitment that has become part of our company s culture. Technologies and practices will continue to evolve and improve, but we will continue to focus on the following goals as we approach renovation and new construction projects: Equip centers with photovoltaic systems to offset energy costs Use xeriscaping to reduce water usage Install occupancy sensors in all new/renovated restrooms Develop and install a gray-water system to collect and store rainwater for irrigation Use paint products with low VOCs Install T-5 lights or equivalent efficiency options in any interior lighting retrofit project Install LED lights or other energy-efficient alternatives in all new or retrofitted exterior lights Provide a minimum SEER value of 16 for all new HVAC units (Code Minimum SEER is 14 in most U.S. markets) Install white/reflective roofing with minimum R-25 insulation (above code requirements in most U.S. markets) Install vestibules where appropriate to reduce internal temperature fluctuation Require low-flow toilets and sinks in new bathrooms to conserve water Install construction recycling dumpsters to reduce waste Research permeable asphalt systems to control water runoff Continue to volunteer on industry-related boards and committees to learn and improve our knowledge of sustainable building practices 12

15 Phillips Edison & Company will continue to focus on groceryanchored shopping centers, yet we must not lose sight of the larger world around us. For this reason, we will remain dedicated to expanding our Green Options initiatives and finding new ways to care for the environment in ways that also benefit our retailers and business partners. 13

16 Grocery Focused. RETAILER Centered. CINCINNATI Northlake Drive, Cincinnati, OH Phone: Fax: Toll Free: NEW YORK 10 Rockefeller Plaza, Suite 920, New York, NY Phone: Fax: SALT LAKE CITY 222 S. Main Street, Suite 1730, Salt Lake City, UT Phone: Fax: Toll Free: ATLANTA 6 Concourse Parkway, Suite 1440, Atlanta, GA Phone: Fax: Phillipsedison.com Follow us