## Table 0 ##
NOTE 9—COMMITMENTS AND CONTINGENCIES We are sometimes involved in lawsuits, warranty claims, and environmental matters arising in the ordinary course of business.
Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.
We are currently a party to various legal proceedings.
We accrue a liability for litigation if an unfavorable outcome is probable and the amount of loss can be reasonably estimated.
If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, we accrue the best estimate within the range; however, if no amount within the range is a better estimate than any other amount, the minimum within the range is accrued.
Legal fees related to litigation are expensed as incurred.
Other than as described below, we do not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on our financial position or overall trends in results of operations; however, litigation is subject to inherent uncertainties.
Also under our leases, tenants are typically obligated to indemnify us from and against all liabilities, costs and expenses imposed upon or asserted against us (1) as owner of the properties due to certain matters relating to the operation of the properties by the tenant, and (2) where appropriate, due to certain matters relating to the ownership of the properties prior to their acquisition by us.
We reserve for estimated losses, if any, associated with warranties given to a buyer at the time real estate is sold or other potential liabilities relating to that sale, taking any insurance policies into account.
These warranties may extend up to ten years and require significant judgment.
If changes in facts and circumstances indicate that warranty reserves are understated, we will accrue additional reserves at such time a liability has been incurred and the costs can be reasonably estimated.
Warranty reserves are released once the legal liability period has expired or all related work has been substantially completed.
Any increases to our estimated warranty losses would usually result in a decrease in net income.
We are self-insured for general liability costs up to predetermined retained amounts per claim, and we believe that we maintain adequate accruals to cover our retained liability.
We currently do not maintain third party stop-loss insurance policies to cover liability costs in excess of predetermined retained amounts.
Our accrual for self-insurance liability is determined by management and is based on claims filed and an estimate of claims incurred but not yet reported.
Management considers a number of factors, including third-party actuarial analysis, previous experience in our portfolio, and future increases in costs of claims, when making these determinations.
If our liability costs exceed these accruals, it will reduce our net income.
At December 31, 2015 and 2014, our reserves for warranties and general liability costs were $7.7 million and $7.2 million, respectively, and are included in “accounts payable and accrued expenses” in our consolidated balance sheets.
Any potential losses which exceed our estimates would result in a decrease in our net income.
During 2015 and 2014, we made payments from these reserves of $1.8 million and $1.4 million, respectively.
Although we consider the reserve to be adequate, there can be no assurance that the reserve will prove to be adequate over-time to cover losses due to the difference between the assumptions used to estimate the reserve and actual losses.
At December 31, 2015, we had letters of credit outstanding of approximately $13.0 million which are collateral for existing indebtedness and other obligations of the Trust.
As of December 31, 2015 in connection with capital improvement, development, and redevelopment projects, the Trust has contractual obligations of approximately $381.1 million.
ITEM 6.
SELECTED FINANCIAL DATA The following table includes certain financial information on a consolidated historical basis.
You should read this section in conjunction with “Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8.
Financial Statements and Supplementary Data.
”
## Table 1 ##
As of December 31,
## Table 2 ##
(1) Property operating income is a non-GAAP measure that consists of rental income, other property income and mortgage interest income, less rental expenses and real estate taxes.
This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure.
Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP.
The reconciliation of operating income to property operating income is as follows:
Funds From Operations Funds from operations (“FFO”) is a supplemental non-GAAP financial measure of real estate companies’ operating performance.
The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as follows: net income, computed in accordance with U. S.  GAAP, plus real estate related depreciation and amortization and excluding extraordinary items and gains and losses on the sale of real estate, and impairment write-downs of depreciable real estate.
We compute FFO in accordance with the NAREIT definition, and we have historically reported our FFO available for common shareholders in addition to our net income and net cash provided by operating activities.
It should be noted that FFO: ?
does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income); ?
should not be considered an alternative to net income as an indication of our performance; and ?
is not necessarily indicative of cash flow as a measure of liquidity or ability to fund cash needs, including the payment of dividends.
We consider FFO available for common shareholders a meaningful, additional measure of operating performance primarily because it excludes the assumption that the value of the real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation.
We use FFO primarily as one of several means of assessing our operating performance in comparison with other REITs.
Comparison of our presentation of FFO to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs.
An increase or decrease in FFO available for common shareholders does not necessarily result in an increase or decrease in aggregate distributions because our Board of Trustees is not required to increase distributions on a quarterly basis unless necessary for us to maintain REIT status.
However, we must distribute at least 90% of our taxable income to remain qualified as a REIT.
Therefore, a significant increase in FFO will generally require an increase in distributions to shareholders although not necessarily on a proportionate basis.
The reconciliation of net income to FFO available for common shareholders is as follows:
## Table 3 ##
For the year ended December 31, 2018 and 2017, dividends on our Series 1 preferred stock are not deducted in the calculation of FFO available to common shareholders, as the related shares are dilutive and included in "weighted average common shares, diluted. "
The weighted average common shares used to compute FFO per diluted common share also includes operating partnership units that were excluded from the computation of diluted EPS.
Conversion of these operating partnership units is dilutive in the computation of FFO per diluted common share but is anti-dilutive for the computation of diluted EPS for the periods presented.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.
In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
Except as disclosed below, the carrying amount of our financial instruments approximates their fair value.
The fair value of our mortgages payable, notes payable and senior notes and debentures is sensitive to fluctuations in interest rates.
Quoted market prices (Level 1) were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis (Level 2) is generally used to estimate the fair value of our mortgages and notes payable.
Considerable judgment is necessary to estimate the fair value of financial instruments.
The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments.
A summary of the carrying amount and fair value of our mortgages payable, notes payable and senior notes and debentures is as follows:
## Table 4 ##
During 2018, we had two interest rate swap agreements with a notional amount of $275.0 million that were measured at fair value on a recurring basis, which expired on November 1, 2018.
The interest rate swap agreements fixed the variable portion of our $275.0 million term loan at 1.72% through November 1, 2018.
The fair values of the interest rate swap agreements were based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs.
The fair value of our swaps at December 31, 2017 was an asset of less than $0.1 million and is included in "prepaid expenses and other assets" on our consolidated balance sheet.
During 2018, we reclassified $0.5 million from other comprehensive income as a decrease to interest expense.
The value of our interest rate swaps increased $2.6 million in 2017 (including $1.8 million reclassified from other comprehensive income as an increase to interest expense).
These changes in value are included in "accumulated other comprehensive income. "
A summary of our financial assets that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:
## Table 5 ##
One of our equity method investees has two interest rate swaps which qualify as cash flow hedges.
During 2018, our share of the change in fair value of the related swaps included in "accumulated other comprehensive (loss) income" was $0.4 million.
NOTE 7—COMMITMENTS AND CONTINGENCIES We are sometimes involved in lawsuits, warranty claims, and environmental matters arising in the ordinary course of business.
Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.
We are currently a party to various legal proceedings.
We accrue a liability for litigation if an unfavorable outcome is probable and the amount of loss can be reasonably estimated.
If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, we accrue the best estimate within the range; however, if no amount within the range is a better estimate than any other amount, the minimum within the range is accrued.
Legal fees related to litigation are expensed as incurred.
Other than as described below, we do not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on our financial position or overall trends in results of operations; however, litigation is subject to inherent uncertainties.
Also under our leases, tenants are typically obligated to indemnify us from and against all liabilities, costs and expenses imposed upon or asserted against us (1) as owner of the properties due to certain matters relating to the operation of the properties by the tenant, and (2) where appropriate, due to certain matters relating to the ownership of the properties prior to their acquisition by us.
In November 2016, we were included as a defendant in a class action lawsuit, in the circuit court for Montgomery County, Maryland, related to predatory towing by a third party company we had retained to provide towing services at several of our properties in Montgomery County, Maryland.
Given the costs and risks of continuing litigation on this matter, we elected to participate in a settlement for which our share was approximately $0.4 million, and was reimbursed by insurance.
The settlement did not cover liability for certain tows that were included in the lawsuit that the defendant class believes cannot be
MASTERCARD INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued) (In thousands, except percent and per share data) On June 24, 2008, MasterCard entered into a settlement agreement (the “American Express Settlement”) with American Express Company (“American Express”) relating to the U. S.  federal antitrust litigation between MasterCard and American Express.
The American Express Settlement ended all existing litigation between MasterCard and American Express.
Under the terms of the American Express Settlement, MasterCard is obligated to make 12 quarterly payments of up to $150,000 per quarter beginning in the third quarter of 2008.
MasterCard’s maximum nominal payments will total $1,800,000.
The amount of each quarterly payment is contingent on the performance of American Express’s U. S.  Global Network Services business.
The quarterly payments will be in an amount equal to 15% of American Express’s U. S.  Global Network Services billings during the quarter, up to a maximum of $150,000 per quarter.
If, however, the payment for any quarter is less than $150,000, the maximum payment for subsequent quarters will be increased by the difference between $150,000 and the lesser amount that was paid in any quarter in which there was a shortfall.
MasterCard assumes American Express will achieve these financial hurdles.
MasterCard recorded the present value of $1,800,000, at a 5.75% discount rate, or $1,649,345 for the year ended December 31, 2008.
In 2003, MasterCard entered into a settlement agreement (the “U.
S.  Merchant Lawsuit Settlement”) related to the U. S.  merchant lawsuit described under the caption “U.
S.  Merchant and Consumer Litigations” in Note 20 (Legal and Regulatory Proceedings) and contract disputes with certain customers.
Under the terms of the U. S.  Merchant Lawsuit Settlement, the Company was required to pay $125,000 in 2003 and $100,000 annually each December from 2004 through 2012.
In addition, in 2003, several other lawsuits were initiated by merchants who opted not to participate in the plaintiff class in the U. S.  merchant lawsuit.
The “opt-out” merchant lawsuits were not covered by the terms of the U. S.  Merchant Lawsuit Settlement and all have been individually settled.
We recorded liabilities for certain litigation settlements in prior periods.
Total liabilities for litigation settlements changed from December 31, 2006, as follows:

<table><tr><td></td><td colspan="4">December 31, 2015</td><td colspan="4">December 31, 2014</td></tr><tr><td></td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Total</td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Total</td></tr><tr><td></td><td colspan="8">(In thousands)</td></tr><tr><td>Interest rate swaps</td><td>$—</td><td>$4,110</td><td>$—</td><td>$4,110</td><td>$—</td><td>$3,515</td><td>$—</td><td>$3,515</td></tr></table>
<table><tr><td rowspan="3"></td><td colspan="5">Year Ended December 31,</td></tr><tr><td>2018</td><td>2017</td><td>2016</td><td>2015</td><td>2014</td></tr><tr><td colspan="5">(In thousands, except per share data and ratios)</td></tr><tr><td>Operating Data:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Rental income</td><td>$895,698</td><td>$841,461</td><td>$786,583</td><td>$727,812</td><td>$666,322</td></tr><tr><td>Property operating income-1</td><td>$627,566</td><td>$584,619</td><td>$547,979</td><td>$510,595</td><td>$474,167</td></tr><tr><td>Operating income</td><td>$349,721</td><td>$332,288</td><td>$320,995</td><td>$300,154</td><td>$271,037</td></tr><tr><td>Income from continuing operations</td><td>$237,111</td><td>$219,948</td><td>$226,425</td><td>$190,094</td><td>$167,888</td></tr><tr><td>Gain on sale of real estate and change in control of interests, net</td><td>$11,915</td><td>$77,922</td><td>$32,458</td><td>$28,330</td><td>$4,401</td></tr><tr><td>Net income</td><td>$249,026</td><td>$297,870</td><td>$258,883</td><td>$218,424</td><td>$172,289</td></tr><tr><td>Net income available for common shareholders</td><td>$233,865</td><td>$287,456</td><td>$249,369</td><td>$209,678</td><td>$163,994</td></tr><tr><td>Net cash provided by operating activities</td><td>$516,688</td><td>$458,828</td><td>$427,672</td><td>$371,808</td><td>$349,415</td></tr><tr><td>Net cash used in investing activities</td><td>$-192,247</td><td>$-837,922</td><td>$-590,221</td><td>$-355,353</td><td>$-410,225</td></tr><tr><td>Net cash (used in) provided by financing activities</td><td>$-241,309</td><td>$369,445</td><td>$168,838</td><td>$-42,188</td><td>$5,699</td></tr><tr><td>Earnings per common share, basic:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net income available to common shareholders</td><td>$3.18</td><td>$3.97</td><td>$3.51</td><td>$3.04</td><td>$2.42</td></tr><tr><td>Weighted average number of common shares, basic</td><td>73,274</td><td>72,117</td><td>70,877</td><td>68,797</td><td>67,322</td></tr><tr><td>Earnings per common share, diluted:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Net income available to common shareholders</td><td>$3.18</td><td>$3.97</td><td>$3.50</td><td>$3.03</td><td>$2.41</td></tr><tr><td>Weighted average number of common shares, diluted</td><td>73,302</td><td>72,233</td><td>71,049</td><td>68,981</td><td>67,492</td></tr><tr><td>Dividends declared per common share</td><td>$4.04</td><td>$3.96</td><td>$3.84</td><td>$3.62</td><td>$3.30</td></tr><tr><td>Other Data:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Funds from operations available to common shareholders-2</td><td>$461,777</td><td>$419,977</td><td>$406,359</td><td>$352,857</td><td>$327,597</td></tr><tr><td>EBITDAre-3</td><td>$595,558</td><td>$549,107</td><td>$515,151</td><td>$478,734</td><td>$445,888</td></tr><tr><td>Ratio of EBITDAre to combined fixed charges and preferred share dividends-3(4)</td><td>4.2x</td><td>3.9x</td><td>4.5x</td><td>3.6x</td><td>3.5x</td></tr></table>
<table><tr><td rowspan="3"></td><td colspan="5">As of December 31,</td></tr><tr><td>2018</td><td>2017</td><td>2016</td><td>2015</td><td>2014</td></tr><tr><td colspan="5">(In thousands)</td></tr><tr><td>Balance Sheet Data:</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Real estate, at cost</td><td>$7,819,472</td><td>$7,635,061</td><td>$6,759,073</td><td>$6,064,406</td><td>$5,608,998</td></tr><tr><td>Total assets</td><td>$6,289,644</td><td>$6,275,755</td><td>$5,423,279</td><td>$4,896,559</td><td>$4,534,237</td></tr><tr><td>Total debt</td><td>$3,229,204</td><td>$3,284,766</td><td>$2,798,452</td><td>$2,627,216</td><td>$2,397,043</td></tr><tr><td>Total shareholders’ equity</td><td>$2,467,330</td><td>$2,391,514</td><td>$2,075,835</td><td>$1,781,931</td><td>$1,692,556</td></tr><tr><td>Number of common shares outstanding</td><td>74,250</td><td>73,091</td><td>71,996</td><td>69,493</td><td>68,606</td></tr></table>
<table><tr><td></td><td colspan="3">Year Ended December 31,</td></tr><tr><td></td><td>2018</td><td>2017</td><td>2016</td></tr><tr><td></td><td colspan="3">(In thousands, except per share data)</td></tr><tr><td>Net income</td><td>$249,026</td><td>$297,870</td><td>$258,883</td></tr><tr><td>Net income attributable to noncontrolling interests</td><td>-7,119</td><td>-7,956</td><td>-8,973</td></tr><tr><td>Gain on sale of real estate and change in control of interests, net</td><td>-11,915</td><td>-77,632</td><td>-31,133</td></tr><tr><td>Depreciation and amortization of real estate assets</td><td>213,098</td><td>188,719</td><td>169,198</td></tr><tr><td>Amortization of initial direct costs of leases</td><td>24,603</td><td>19,124</td><td>16,875</td></tr><tr><td>Funds from operations</td><td>467,693</td><td>420,125</td><td>404,850</td></tr><tr><td>Dividends on preferred shares -1</td><td>-7,500</td><td>-1,917</td><td>-541</td></tr><tr><td>Income attributable to operating partnership units</td><td>3,053</td><td>3,143</td><td>3,145</td></tr><tr><td>Income attributable to unvested shares</td><td>-1,469</td><td>-1,374</td><td>-1,095</td></tr><tr><td>Funds from operations available for common shareholders -2</td><td>$461,777</td><td>$419,977</td><td>$406,359</td></tr><tr><td>Weighted average number of common shares, diluted -1</td><td>74,153</td><td>73,122</td><td>71,869</td></tr><tr><td>Funds from operations available for common shareholders, per diluted share -2</td><td>$6.23</td><td>$5.74</td><td>$5.65</td></tr></table>
<table><tr><td rowspan="3"></td><td colspan="2">December 31, 2018</td><td colspan="2">December 31, 2017</td></tr><tr><td>CarryingValue</td><td>Fair Value</td><td>CarryingValue</td><td>Fair Value</td></tr><tr><td colspan="4">(In thousands)</td></tr><tr><td>Mortgages and notes payable</td><td>$753,406</td><td>$751,361</td><td>$811,770</td><td>$824,419</td></tr><tr><td>Senior notes and debentures</td><td>$2,404,279</td><td>$2,371,392</td><td>$2,401,440</td><td>$2,498,445</td></tr></table>
<table><tr><td></td><td colspan="4">December 31, 2018</td><td colspan="4">December 31, 2017</td></tr><tr><td></td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Total</td><td>Level 1</td><td>Level 2</td><td>Level 3</td><td>Total</td></tr><tr><td></td><td colspan="8">(In thousands)</td></tr><tr><td>Interest rate swaps</td><td>$—</td><td>$—</td><td>$—</td><td>$—</td><td>$—</td><td>$22</td><td>$—</td><td>$22</td></tr></table>

Question: What's the growth rate of rental income in 2018? (in %)
Answer: 0.06446