EDGAR 10-K Filing

Company CIK: 34903
Filing Year: 2023
Filename: 34903_10-K_2023_0000034903-23-000020.json

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ITEM 1. BUSINESS
ITEM 1. BUSINESS
General
Federal Realty Investment Trust (the "Parent Company" or the "Trust") is an equity real estate investment trust ("REIT"). Federal Realty OP LP (the "Operating Partnership") is the entity through which the Trust conducts substantially all of its operations and owns substantially off of its assets. The Trust owns 100% of the limited liability company interest of, is sole
member of, and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which in turn, is the sole general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership.The Parent Company specializes in the ownership, management, and redevelopment of high quality retail and mixed-use properties located primarily in communities where we believe retail demand exceeds supply, in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As of December 31, 2022, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 103 predominantly retail real estate projects comprising approximately 25.8 million square feet. In total, the real estate projects were 94.5% leased and 92.8% occupied at December 31, 2022. Our revenue is primarily generated from lease agreements with tenants. We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for 55 consecutive years.
We were founded in 1962 as a REIT under the laws of the District of Columbia and re-formed as a REIT in the state of Maryland in 1999. In January of 2022, we consummated the UPREIT reorganization described in the Explanatory Note at the beginning of this Annual Report. We operate in a manner intended to qualify as a REIT for tax purposes pursuant to provisions of the Internal Revenue Code of 1986, as amended (the “Code”). Our principal executive offices are located at 909 Rose Avenue, North Bethesda, Maryland 20852. Our telephone number is (301) 998-8100. Our website address is www.federalrealty.com. The information contained on our website is not a part of this report and is not incorporated herein by reference.
Business Objectives and Strategies
Our primary business objective is to own, manage, acquire and redevelop a portfolio of high quality retail focused properties that will:
•provide increasing cash flow for distribution to shareholders;
•generate higher internal growth than the shopping center industry over the long term;
•provide potential for capital appreciation; and
•protect investor capital.
Our portfolio includes, and we continue to acquire and redevelop, high quality retail in many formats ranging from regional, community and neighborhood shopping centers that often are anchored by grocery stores to mixed-use properties that are typically centered around a retail component but also include office, residential and/or hotel components.
Operating Strategies
We continuously evaluate and assess our operating strategies to ensure they are effective and put us in the best position to address changes in the market. We actively manage our properties to maximize rents and maintain occupancy levels by attracting and retaining a strong and diverse base of tenants and replacing less relevant, weaker, underperforming tenants with stronger ones. Our properties are generally located in some of the most densely populated and affluent areas of the country. These strong demographics help our tenants generate higher sales, which has generally enabled us to maintain higher occupancy rates, charge higher rental rates, and maintain steady rent growth, all of which increase the value of our portfolio. Our operating strategies also include:
•increasing rental rates through the renewal of expiring leases or the leasing of space to new tenants at higher rental rates while limiting vacancy and down-time;
•maintaining a diversified tenant base, thereby limiting exposure to any one tenant’s financial or operating difficulties;
•monitoring the merchandising mix of our tenant base to achieve a balance of strong national and regional tenants with local specialty tenants;
•minimizing overhead and operating costs;
•monitoring the physical appearance of our properties and the construction quality, condition and design of the buildings and other improvements located on our properties to maximize our ability to attract customers and thereby generate higher rents and occupancy rates;
•managing our properties to take into account their impact on climate change and their resilience in the face of climate change;
•developing local and regional market expertise in order to capitalize on market and retailing trends;
•leveraging the contacts and experience of our management team to build and maintain long-term relationships with tenants;
•providing exceptional customer service; and
•creating an experience at many of our properties that is identifiable, unique and serves the surrounding communities to help insulate these properties and the tenants at these properties from the impact of on-line retailing.
Investing Strategies
Our investment strategy is to deploy capital at risk-adjusted rates of return that exceed our long-term weighted average cost of capital in projects that have potential for future income growth and increased value. Our investments primarily fall into one of the following four categories:
•renovating, expanding, reconfiguring and/or retenanting our existing properties to take advantage of under-utilized land or existing square footage to increase revenue;
•renovating or expanding tenant spaces for tenants capable of producing higher sales, and therefore, paying higher rents;
•acquiring quality retail and mixed-use properties located in densely populated and/or affluent areas where barriers to entry for further development are high, and that have possibilities for enhancing operating performance and creating value through renovation, expansion, reconfiguration and/or retenanting; and
•developing the retail portions of mixed-use properties and developing or otherwise investing in non-retail portions of mixed-use properties we already own in order to capitalize on the overall value created in these properties.
Investment Criteria
When we evaluate potential redevelopment, retenanting, expansion, acquisition and development opportunities, we consider such factors as:
•the expected returns in relation to our short and long-term cost of capital as well as the anticipated risk we will face in achieving the expected returns;
•the anticipated growth rate of operating income generated by the property;
•the ability to increase the long-term value of the property through redevelopment and retenanting;
•the tenant mix at the property, tenant sales performance and the creditworthiness of those tenants;
•the geographic area in which the property is located, including the population density, household incomes, education levels, as well as the population and income trends in that geographic area. This may from time to time include the evaluation of new markets;
•competitive conditions in the vicinity of the property, including gross leasable area (GLA) per capita, competition for tenants and the ability of others to create competing properties through redevelopment, new construction or renovation;
•access to and visibility of the property from existing roadways and the potential for new, widened or realigned, roadways within the property’s trade area, which may affect access and commuting and shopping patterns;
•the level and success of our existing investments in the market area;
•the current market value of the land, buildings and other improvements and the potential for increasing those market values; and
•the physical condition of the land, buildings and other improvements, including the structural and environmental condition.
Financing Strategies
Our financing strategies are designed to enable us to maintain an investment grade balance sheet while retaining sufficient flexibility to fund our operating and investing activities in the most cost-efficient way possible. Our financing strategies include:
•maintaining a prudent level of overall leverage and an appropriate pool of unencumbered properties that is sufficient to support our unsecured borrowings;
•managing our exposure to variable-rate debt;
•maintaining sufficient levels of cash and available line of credit to fund operating and investing needs on a short-term basis;
•taking advantage of market opportunities to refinance existing debt, reduce interest costs and manage our debt maturity schedule so that a significant portion of our debt relative to our size does not mature in any one year;
•selling properties that have limited growth potential or are not a strategic fit within our overall portfolio and redeploying the proceeds to redevelop, renovate, retenant and/or expand our existing properties, acquire new properties or reduce debt; and
•utilizing the most advantageous long-term source of capital available to us to finance redevelopment and acquisition opportunities, which may include:
◦the sale of our equity or debt securities through public offerings, including our at-the-market ("ATM") equity program in which we may from time to time offer and sell common shares including through forward sales contracts, or private placements,
◦the incurrence of indebtedness through unsecured or secured borrowings,
◦the issuance of units in our operating partnership (generally issued in exchange for a tax deferred contribution of property); these units typically receive the same distributions as our common shares and the holders of these units have the right to exchange their units for cash or common shares at our option, or
◦the use of joint venture arrangements.
Human Capital
At February 3, 2023, we had 314 full-time employees and 8 part-time employees. None of our employees are represented by a collective bargaining unit. We believe that our relationship with our employees is good.
Diversity and Inclusion
We are an Equal Opportunity/Affirmative action employer, and strive to maintain a workplace that is free from discrimination on the basis of race, color, religion, sex, sexual orientation, nationality, disability, or protected Veteran status.
Health, Safety, and Wellness
We are committed to the health, safety, and wellness of our employees, and foster an environment that allows our people to succeed while balancing work and life. We provide our employees with access to health and wellness programs, which includes benefits that support both physical and mental health. We have also transitioned to a hybrid work model.
Compensation and Benefits
We provide competitive pay and benefits including health, dental, vision, short and long-term disability, life insurance and a 401(k) retirement program, as well as a generous paid time off program that includes vacation, sick, and personal leave. In addition to our equity awards program, we also offer a quarterly recognition program, as well as rewarding employees with spot bonuses for stellar performance or going above and beyond the base requirements of their job description.
Talent Development
Employees have access to a variety of different training courses, books, book summaries and audio books, and an array of source materials covering a myriad of different business and soft skills training subjects. Additionally, we provide reimbursement for tuition and professional licensures.
Community Involvement
Giving back to the community is an integral part of who we are and what we do. We provide ample ways to give back through programs at our properties or charitable endeavors and volunteer opportunities that also serve as team building exercises for our employees.
Tax Status
We elected to be taxed as a REIT under the federal income tax laws when we filed our 1962 tax return. As a REIT, we are generally not subject to federal income tax on taxable income that we distribute to our shareholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including the requirement to generally distribute at least 90% of taxable income each year. We will be subject to federal income tax on our taxable income (including, for our taxable years ending on or prior to December 31, 2018, any applicable alternative minimum tax) at regular corporate rates if we fail to qualify as a REIT for tax purposes in any taxable year, or to the extent we distribute less than 100% of our taxable income. We will also generally not qualify for treatment as a REIT for federal income tax purposes for four years following the year during which qualification is lost. Even if we qualify as a REIT for federal income tax purposes, we may be subject to certain state and local income and franchise taxes and to federal income and excise taxes on our undistributed taxable income.
We have elected to treat certain of our subsidiaries as taxable REIT subsidiaries, which we refer to as a TRS. In general, a TRS may engage in any real estate business and certain non-real estate businesses, subject to certain limitations under the Code. A TRS is subject to federal and state income taxes. Our TRS activities have not been material.
General Economic Conditions and the COVID-19 Pandemic
The economy continues to face several challenges including higher levels of inflation, rising interest rates, global supply chain bottlenecks and shortages, workforce shortages, a potential recession, and ongoing impacts of COVID-19. We continue to monitor and address these risks; however, the extent of the future effects on our business, results of operations, cash flows, and growth strategies is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty.
Governmental Regulations Affecting Our Properties
We and our properties are subject to a variety of federal, state and local environmental, health, safety and similar laws. Please see Item 1A. "Risk Factors - Risk Factors Related to our REIT Status and Other Laws and Regulations" for further discussion of potential material effects of our compliance with government regulation, including environmental regulations and the rules governing REITs.
The application of these laws to a specific property that we own depends on a variety of property-specific circumstances, including the current and former uses of the property, the building materials used at the property and the physical layout of the property. Under certain environmental laws, we, as the owner or operator of properties currently or previously owned, may be required to investigate and clean up certain hazardous or toxic substances, asbestos-containing materials, or petroleum product releases at the property, we may be held liable for property damage and for investigation and clean up costs incurred in connection with the contamination, and we may be liable under common law to third parties for damages and injuries resulting from environmental contamination emanating from the real estate. Such costs or liabilities could exceed the value of the affected real estate. The presence of contamination or the failure to remediate contamination may adversely affect our ability to sell or lease real estate or to borrow using the real estate as collateral.
Neither existing environmental, health, safety and similar laws nor the costs of our compliance with these laws has had a material adverse effect on our financial condition or results of operations, and management does not believe they will in the future. In addition, we have not incurred, and do not expect to incur, any material costs or liabilities due to environmental contamination at properties we currently own or have owned in the past. However, we cannot predict the impact of new or changed laws or regulations on properties we currently own or may acquire in the future. We have no current plans for substantial capital expenditures with respect to compliance with environmental, health, safety and similar laws and we carry environmental insurance which covers a number of environmental risks for most of our properties.
Energy and Emissions Regulations Affecting Our Properties
Some jurisdictions in which we own property have enacted or may enact legislation that requires use of only certain types of energy sources, limits energy usage on site, or limits allowable emissions from buildings with fines or other costs being imposed for exceeding those limits. This type of legislation typically includes an extended period of time from adoption to implementation to allow property owners ample opportunity to make investments and take other actions to comply with the legislation. Any investments we believe we will need to make to comply with laws that have been passed to date are being included as part of our ordinary capital improvement planning process for our properties. We also address the potential effects of these types of laws in our energy reduction and energy efficient efforts that are described in more detail in Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Corporate Responsibility." These types of laws have not had a material adverse effect on our financial condition or results of operations and management does not believe they will have a material adverse effect in the future. We cannot, however, predict the impact of new or changed laws or regulations on properties we currently own or may acquire in the future
Competition
Numerous commercial developers and real estate companies compete with us with respect to the leasing and the acquisition of properties. Some of these competitors may possess greater capital resources than we do, although we do not believe that any single competitor or group of competitors in any of the primary markets where our properties are located are dominant in that market. This competition may:
•reduce the number of properties available for acquisition;
•increase the cost of properties available for acquisition;
•interfere with our ability to attract and retain tenants, leading to increased vacancy rates and/or reduced rents; and
•adversely affect our ability to minimize expenses of operation.
Retailers at our properties also face increasing competition from online retailers, outlet stores, discount shopping clubs, superstores, and other forms of sales and marketing of goods and services, such as direct mail. This competition could contribute to lease defaults and insolvency of tenants.
Available Information
Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) are available free of charge through the Investors section of our website at www.federalrealty.com as soon as reasonably practicable after we electronically file the material with, or furnish the material to, the Securities and Exchange Commission, or the SEC.
Our Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics applicable to our Chief Executive Officer and senior financial officers, Whistleblower Policy, organizational documents and the charters of our audit committee, compensation and human capital committee and nominating and corporate governance committee are all available in the Corporate Governance section of the Investors section of our website.
Amendments to the Code of Ethics or Code of Business Conduct or waivers that apply to any of our executive officers or our senior financial officers will be disclosed in the Corporate Governance section of our website as well.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. Also, documents that we “incorporate by reference” into this Annual Report on Form 10-K, including documents that we subsequently file with the SEC will contain forward-looking statements. When we refer to forward-looking statements or information, sometimes we use words such as “may,” “will,” “could,” “should,” “plans,” “intends,” “expects,” “believes,” “estimates,” “anticipates” and “continues.” In particular, the below risk factors describe forward-looking information. The risk factors describe risks that may affect these statements but are not all-inclusive, particularly with respect to possible future events. Many things can happen that can cause actual results to be different from those we describe. These factors include, but are not limited to the following:
Risk Factors Related to our Real Estate Investments and Operations
Revenue from our properties may be reduced or limited if the retail operations of our tenants are not successful.
Revenue from our properties depends primarily on the ability of our tenants to pay the full amount of rent and other charges due under their leases on a timely basis. Some of our leases provide for the payment, in addition to base rent, of additional rent above the base amount according to a specified percentage of the gross sales generated by the tenants and generally provide for reimbursement of real estate taxes and expenses of operating the property. Economic, legal, and/or competitive conditions, as well as COVID-19, may impact the success of our tenants’ retail operations and therefore the amount of rent and expense reimbursements we receive from our tenants. Any reduction in our tenants' abilities to pay base rent, percentage rent, or other charges on a timely basis, including the closing of stores prior to the end of the lease term or the filing by any of our tenants for bankruptcy protection, will adversely affect our financial condition and results of operations. In the event of default by a tenant, we may experience delays and unexpected costs in enforcing our rights as landlord under lease terms, which may also adversely affect our financial condition and results of operations.
Our net income depends on the success and continued presence of our “anchor” tenants.
Our net income could be adversely affected in the event of a downturn in the business, or the bankruptcy or insolvency, of any anchor store or anchor tenant. Anchor tenants generally occupy large amounts of square footage, pay a significant portion of the total rents at a property and contribute to the success of other tenants by drawing significant numbers of customers to a property. The closing of one or more anchor stores at a property could adversely affect that property and result in lease terminations by, or reductions in rent from, other tenants whose leases may permit termination or rent reduction in those circumstances or whose own operations may suffer as a result. Over the past several years, we have seen higher levels of anchor turnover and closings in some markets, which has caused an oversupply of larger retail spaces. Therefore, tenant demand for certain of our anchor spaces may decrease and as a result, we may see an increase in vacancy and/or a decrease in rents for those spaces that could have a negative impact to our net income. As of December 31, 2022, our anchor tenant space is 96.9% leased and 95.6% occupied.
A shift in retail shopping from brick and mortar stores to online shopping may have an adverse impact on our cash flow, financial condition and results of operations.
Many retailers operating brick and mortar stores have made online sales a vital piece of their business. The shift to online shopping may cause declines in brick and mortar sales generated by certain of our tenants and may cause certain of our tenants to reduce the size or number of their retail locations in the future. This risk is partially mitigated by our strategy of maintaining a diverse portfolio of retail properties. The trend of retailers utilizing brick and mortar locations for ‘showroom’ and on-line sales distribution purposes (particularly at shopping centers in densely populated areas like ours) may further mitigate this risk. However, there can be no assurance that our shopping centers will not be further impacted by the shift to online shopping. As a result, our cash flow, financial condition, and results of operations could be adversely affected.
We have properties that are geographically concentrated, and adverse economic or real estate market declines in these areas could have a material adverse effect on us.
As of December 31, 2022, our tenants operated in 12 states and the District of Columbia. Any adverse situation that disproportionately affects the the markets where our properties are concentrated may have a magnified adverse effect on our portfolio. Refer to “Properties” (Item 2 of this Annual Report on Form 10-K) for additional discussion of the geographic concentration. Real estate markets are subject to economic downturns, as they have been in the past, and we cannot predict how economic conditions will impact this market in both the short and long term.
Declines in the economy or a decline in the real estate market in these states could hurt our financial performance and the value of our properties. Factors that may negatively affect economic conditions in these states include:
•business layoffs or downsizing;
•industry slowdowns;
•elevated levels of inflation over an extended period of time;
•increasing interest rates;
•increased business restrictions due to health crises;
•relocations of businesses;
•changing demographics;
•increased telecommuting and use of alternative work places;
•infrastructure quality;
•any oversupply of, or reduced demand for, real estate;
•concessions or reduced rental rates under new leases for properties where tenants defaulted; and
•increased operating costs including insurance premiums and real estate taxes.
We may be unable to collect balances due from tenants that file for bankruptcy protection.
If a tenant or lease guarantor files for bankruptcy, we may not be able to collect all pre-petition amounts owed by that party. In addition, a tenant that files for bankruptcy protection may terminate our lease in which event we would have a general unsecured claim that would likely be for less than the full amount owed to us for the remainder of the lease term, which could adversely affect our financial condition and results of operations.
We may experience difficulty or delay in renewing leases or re-leasing space.
We derive most of our revenue directly or indirectly from rent received from our tenants. We are subject to the risks that, upon expiration or termination of leases, whether by their terms, as a result of a tenant bankruptcy, general economic conditions or otherwise, leases for space in our properties may not be renewed, space may not be re-leased, or the terms of renewal or re-lease, including the cost of required renovations or concessions to tenants, may be less favorable than current lease terms and may include decreases in rental rates. As a result, our net income could be reduced.
Our development activities have inherent risks.
The ground-up development of improvements on real property, as opposed to the renovation and redevelopment of existing improvements, presents substantial risks. We generally do not look to acquire raw land for future development; however, we do intend to complete the development and construction of future phases of projects we already own. We may undertake development of these and other projects on our own or bring in third parties if it is justifiable on a risk-adjusted return basis. We may also choose to delay completion of a project if market conditions do not allow an appropriate return. If conditions arise and we are not able or decide not to complete a project or if the expected cash flows of our project do not exceed the book value, an impairment of the project may be required. If additional phases of any of our existing projects or if any new projects are not successful, it may adversely affect our financial condition and results of operations.
In addition to the risks associated with real estate investment in general, as described elsewhere and the specific risks above, the risks associated with our remaining development activities include:
•contractor changes may delay the completion of development projects and increase overall costs;
•significant time lag between commencement and stabilization subjects us to greater risks due to fluctuations in the general economy;
•delivery of residential product into uncertain residential environments may result in lower rents or longer time periods to reach economic stabilization;
•substantial amount of our investment is related to infrastructure and the overall value of the project may be negatively impacted if we do not complete subsequent phases;
•failure or inability to obtain construction or permanent financing on favorable terms;
•expenditure of money and time on projects that may never be completed;
•difficulty securing key anchor or other tenants may impact occupancy rates and projected revenue;
•inability to achieve projected rental rates or anticipated pace of lease-up;
•higher than estimated construction or operating costs, including labor and material costs; and
•possible delay in completion of a project because of a number of factors, including COVID-19, supply chain disruptions and shortages, inflation, weather, labor disruptions, construction delays or delays in receipt of zoning or other regulatory approvals, acts of terror or other acts of violence, or acts of God (such as fires, earthquakes or floods).
Redevelopments and acquisitions may fail to perform as expected.
Our investment strategy includes the redevelopment and acquisition of high quality, retail focused properties in densely populated areas with high average household incomes and significant barriers to adding competitive retail supply. The redevelopment and acquisition of properties entail risks that include the following, any of which could adversely affect our results of operations and our ability to meet our obligations:
•our estimate of the costs to improve, reposition or redevelop a property may prove to be too low, or the time we estimate to complete the improvement, repositioning or redevelopment may be too short. As a result, the property may fail to achieve the returns we have projected, either temporarily or for a longer period;
•we may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the properties we identify;
•we may not be able to integrate an acquisition into our existing operations successfully;
•properties we redevelop or acquire may fail to achieve the occupancy or rental rates we project, within the time frames we project, at the time we make the decision to invest, which may result in the properties’ failure to achieve the returns we projected;
•our pre-acquisition evaluation of the physical condition of each new investment may not detect certain defects or identify necessary repairs until after the property is acquired, which could significantly increase our total acquisition costs or decrease cash flow from the property; and
•our investigation of a property or building prior to our acquisition, and any representations we may receive from the seller of such building or property, may fail to reveal various liabilities, which could reduce the cash flow from the property or increase our acquisition cost.
Our performance and value are subject to general risks associated with the real estate industry.
Our economic performance and the value of our real estate assets, and consequently, the value of our investments, are subject to the risk that if our properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay distributions to our shareholders will be adversely affected. As a real estate company, we are susceptible to the following real estate industry risks:
•economic downturns in general, or in the areas where our properties are located;
•adverse changes in local real estate market conditions, such as an oversupply or reduction in demand;
•changes in tenant preferences that reduce the attractiveness of our properties to tenants;
•zoning or regulatory restrictions;
•decreases in market rental rates;
•weather conditions that may increase or decrease energy costs and other weather-related expenses;
•costs associated with the need to periodically repair, renovate and re-lease space; and
•increases in the cost of adequate maintenance, insurance and other operating costs, including real estate taxes, associated with one or more properties, which may occur even when circumstances such as market factors and competition cause a reduction in revenues from one or more properties, although real estate taxes typically do not increase upon a reduction in such revenues.
Each of these risks could result in decreases in market rental rates and increases in vacancy rates, which could adversely affect our financial condition and results of operation.
Many real estate costs are fixed, even if income from our properties decreases.
Our financial results depend primarily on leasing space in our properties to tenants on terms favorable to us. Costs associated with real estate investment, such as real estate taxes, insurance and maintenance costs, generally are not reduced even when a property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the property. As a result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to rent our properties on favorable terms. Under those circumstances, we might not be able to enforce our rights as landlord without delays and may incur substantial legal costs. Additionally, new properties that we may acquire or redevelop may not produce
any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating expenses and debt service associated with such new properties until they are fully occupied.
Competition may limit our ability to purchase new properties and generate sufficient income from tenants.
Numerous commercial developers and real estate companies compete with us in seeking tenants for our existing properties and properties for acquisition. This competition may:
•reduce properties available for acquisition;
•increase the cost of properties available for acquisition;
•reduce rents payable to us;
•interfere with our ability to attract and retain tenants;
•lead to increased vacancy rates at our properties; and
•adversely affect our ability to minimize expenses of operation.
Retailers at our properties also face increasing competition from online retailers, outlet stores, discount shopping clubs and other forms of sales and marketing of goods, such as direct mail. This competition could contribute to lease defaults and insolvency of tenants. If we are unable to continue to attract appropriate retail tenants to our properties, or to purchase new properties in our geographic markets, it could materially affect our ability to generate net income, service our debt and make distributions to our shareholders.
We may be unable to sell properties when appropriate because real estate investments are illiquid.
Real estate investments generally cannot be sold quickly. In addition, there are some limitations under federal income tax laws applicable to real estate and to REITs in particular that may limit our ability to sell our assets. We may not be able to alter our portfolio promptly in response to changes in economic or other conditions including being unable to sell a property at a return we believe is appropriate due to the economic environment. Our inability to respond quickly to adverse changes in the performance of our investments could have an adverse effect on our ability to meet our obligations and make distributions to our shareholders.
We may have limited flexibility in dealing with our jointly owned investments.
Our organizational documents do not limit the amount of funds that we may invest in properties and assets owned jointly with other persons or entities. As of December 31, 2022, we held 20 predominantly retail real estate projects jointly with other persons in addition to properties owned in a “downREIT” structure. Additionally, as of December 31, 2022, we owned an interest in the hotel component of Assembly Row. We may make additional joint investments in the future. Our existing and future joint investments may subject us to special risks, including the possibility that our partners or co-investors might become bankrupt, that those partners or co-investors might have economic or other business interests or goals which are unlike or incompatible with our business interests or goals, that those partners or co-investors might be in a position to take action contrary to our suggestions or instructions, or in opposition to our policies or objectives, and that disputes may develop with our joint venture partners over decisions affecting the property or the joint venture, which may result in litigation or arbitration or some other form of dispute resolution. Although as of December 31, 2022, we held the controlling interests in all of our existing co-investments (except the hotel investment discussed above, the investment in the La Alameda shopping center acquired in 2017, the investment in the Chandler Festival and Chandler Gateway shopping centers acquired in 2022 (see Note 3 to the consolidated financial statements), and our Escondido Promenade shopping center (as discussed in Note 3 to the consolidated financial statements), we generally must obtain the consent of the co-investor or meet defined criteria to sell or to finance these properties. Joint ownership gives a third party the opportunity to influence the return we can achieve on some of our investments and may adversely affect our ability to make distributions to our shareholders. We may also be liable for the actions of our co-investors.
Our insurance coverage on our properties may be inadequate.
We currently carry comprehensive insurance on all of our properties, including insurance for liability, fire, flood, earthquake, environmental matters, rental loss and acts of terrorism. All of these policies contain coverage limitations. We believe these coverages are of the types and amounts customarily obtained for or by an owner of similar types of real property assets located in the areas where our properties are located. We intend to obtain similar insurance coverage on subsequently acquired properties.
The availability of insurance coverage may decrease and the prices for insurance may increase as a consequence of significant losses incurred by the insurance industry and other factors outside our control. As a result, we may be unable to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices. In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts, pandemics, and toxic mold, or, if
offered, the expense of obtaining these types of insurance may not be justified. We therefore may cease to have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available. If an uninsured loss or a loss in excess of our insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property, but still remain obligated for any mortgage debt or other financial obligations related to the property. We cannot guarantee that material losses in excess of insurance proceeds will not occur in the future. If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property. Also, due to inflation, changes in codes and ordinances, environmental considerations and other factors, it may not be feasible to use insurance proceeds to replace a building after it has been damaged or destroyed. Further, we may be unable to collect insurance proceeds if our insurers are unable to pay or contest a claim. Events such as these could adversely affect our results of operations and our ability to meet our obligations, including distributions to our shareholders.
Natural disasters, climate change and health crises, including the COVID-19 pandemic, could have an adverse impact on our cash flow and operating results.
Climate change may add to the unpredictability and frequency of natural disasters and severe weather conditions and create additional uncertainty as to future trends and exposures. Certain of our operations are located in areas that are subject to natural disasters and severe weather conditions such as hurricanes, earthquakes, droughts, snow storms, floods and fires. The impact of climate change or the occurrence of natural disasters can delay new development projects, increase investment costs to repair or replace damaged properties, increase operating costs, create additional investment costs to make improvements to existing properties to comply with climate change regulations, increase future property insurance costs, and negatively impact the tenant demand for space. If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from these events, our earnings, liquidity or capital resources could be adversely affected.
In addition, our business is subject to risks related to the effects of public health crises, epidemics and pandemics, including the
COVID-19 pandemic. Such events could:
•inhibit global, national and local economic activity;
•drive inflation, adversely affect trading activity in securities markets, which could negatively impact the trading prices of our common shares and debt securities and our ability to access the securities markets as a source of liquidity;
•adversely affect our tenants’ financial condition by limiting foot traffic and staffing at their businesses, which could affect their ability to pay rent and willingness to make new leasing commitments;
•reduce our cash flow, which could impact our ability to pay dividends at the current rate and in the current format or at all or to service our debt;
•temporarily or permanently reduce the demand for retail or office space;
•interfere with our business operations by requiring our personnel to work remotely;
•increase the frequency of cyber-attacks;
•disrupt supply chains that could be important in our development and redevelopment activities;
•result in labor shortages;
•interfere with potential purchases and sales of properties;
•impact our ability to pay dividends at the current rate and in the current format or at all; and
•have other direct and indirect effects that are difficult to predict.
Such risks depend upon the nature and severity of the public health concern, as well as the extent and duration of government-mandated orders and personal decisions to limit travel, economic activity and personal interaction, none of which can be predicted with confidence. In particular, we cannot predict the impact of stay-at-home and other government orders instituted in response to the COVID-19 pandemic, which vary by jurisdiction, or the pandemics' short and long term economic effects, each of which could have a material adverse effect on our business.
An increased focus on metrics and reporting related to corporate responsibility, specifically related to environmental, social and governance ("ESG") factors, may impose additional costs and expose us to new risks.
Investors and other stakeholders have become more focused on understanding how companies address a variety of ESG factors. Many of those investors and shareholders look to ESG rating systems, or disclosure frameworks that have been developed by third party groups to allow comparisons between companies on ESG factors as they evaluate investment decisions as well as to company disclosures.
Although we participate in many of these ratings systems, or disclosure frameworks, and generally score relatively well in those in which we do participate, we do not participate in, and would not necessarily score well in, all of the available ratings systems. Further, the criteria used in these ratings systems change frequently, and we cannot guaranty that we will be able to score well as criteria change. We supplement our participation in ratings systems with corporate disclosures of our ESG activities but many investors and stakeholders may look for specific disclosures that we do not provide. Failure to participate in
certain of the third party ratings systems, failure to score well in those ratings systems or failure to provide certain ESG disclosures could result in reputational harm when investors or others compare us against similar companies in our industry and could cause certain investors to be unwilling to invest in our stock which could adversely impact our ability to raise capital.
For more information about the Trust's Corporate Responsibility initiatives, see Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Corporate Responsibility."
Risk Factors Related to our Funding Strategies and Capital Structure
The amount of debt we have and the restrictions imposed by that debt could adversely affect our business and financial condition.
As of December 31, 2022, we had approximately $4.3 billion of debt outstanding. Of that outstanding debt, approximately $322.3 million was secured by all or a portion of 7 of our real estate projects. As of December 31, 2022, approximately 86.2% of our debt is fixed rate or is fixed via interest rate swap agreements, which includes all of our property secured debt and our unsecured senior notes. Our organizational documents do not limit the level or amount of debt that we may incur. The amount of our debt outstanding from time to time could have important consequences to our shareholders. For example, it could:
•require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, property acquisitions, redevelopments and other appropriate business opportunities that may arise in the future;
•limit our ability to make distributions on our outstanding common shares and preferred shares;
•make it difficult to satisfy our debt service requirements;
•require us to dedicate increased amounts of our cash flow from operations to payments on debt upon refinancing or on our variable rate, unhedged debt, if interest rates rise;
•limit our flexibility in planning for, or reacting to, changes in our business and the factors that affect the profitability of our business;
•limit our ability to obtain any additional debt or equity financing we may need in the future for working capital, debt refinancing, capital expenditures, acquisitions, redevelopments or other general corporate purposes or to obtain such financing on favorable terms; and/or
•limit our flexibility in conducting our business, which may place us at a disadvantage compared to competitors with less debt or debt with less restrictive terms.
Our ability to make scheduled principal payments of, to pay interest on, or to refinance our indebtedness will depend primarily on our future performance, which to a certain extent is subject to economic, financial, competitive and other factors beyond our control. There can be no assurance that our business will continue to generate sufficient cash flow from operations in the future to service our debt or meet our other cash needs. If we are unable to generate this cash flow from our business, we may be required to refinance all or a portion of our existing debt, sell assets or obtain additional financing to meet our debt obligations and other cash needs, including the payment of dividends required to maintain our status as a real estate investment trust. We cannot assure you that any such refinancing, sale of assets or additional financing would be possible on terms that we would find acceptable.
We are obligated to comply with financial and other covenants pursuant to our debt obligations that could restrict our operating activities, and the failure to comply with such covenants could result in defaults that accelerate payment under our debt agreements.
Our revolving credit facility, unsecured term loan, and certain series of notes include financial covenants that may limit our operating activities in the future. We are also required to comply with additional covenants that include, among other things, provisions:
•relating to the maintenance of property securing a mortgage;
•restricting our ability to pledge assets or create liens;
•restricting our ability to incur additional debt;
•restricting our ability to amend or modify existing leases at properties securing a mortgage;
•restricting our ability to enter into transactions with affiliates; and
•restricting our ability to consolidate, merge or sell all or substantially all of our assets.
As of December 31, 2022, we were in compliance with all of our default related financial covenants. If we were to breach any of our default related debt covenants, including the covenants listed above, and did not cure the breach within any applicable cure period, our lenders could require us to repay the debt immediately, and, if the debt is secured, could immediately begin proceedings to take possession of the property securing the loan. Many of our debt arrangements, including our public notes and our revolving credit facility, are cross-defaulted, which means that the lenders under those debt arrangements can put us in
default and require immediate repayment of their debt if we breach and fail to cure a default under certain of our other debt obligations. As a result, any default under our debt covenants could have an adverse effect on our financial condition, our results of operations, our ability to meet our obligations and the market value of our shares.
Adverse changes in our credit rating could affect our borrowing capacity and borrowing terms.
Our credit worthiness is rated by nationally recognized credit rating agencies. The credit ratings assigned are based on our operating performance, liquidity and leverage ratios, financial condition and prospects, and other factors viewed by the credit rating agencies as relevant to our industry and the economic outlook in general. Our credit rating can affect the amount of capital we access, as well as the terms of certain existing and future financing we obtain. Since we depend on debt financing to fund the growth of our business, an adverse change in our credit rating, including actual changes in outlook, or even the initiation of review of our credit rating that could result in an adverse change, could have a material adverse effect on us.
Our ability to grow will be limited if we cannot obtain additional capital.
Our growth strategy is focused on the development and redevelopment of properties we already own and the acquisition of additional properties. We believe that it will be difficult to fund our expected growth with cash from operating activities because, in addition to other requirements, we are generally required to distribute to our shareholders at least 90% of our taxable income each year to continue to qualify as a REIT for federal income tax purposes. As a result, we must rely primarily upon the availability of debt or equity capital, which may or may not be available on favorable terms or at all. Debt could include the sale of debt securities and mortgage loans from third parties. If economic conditions and conditions in the capital markets are not favorable at the time we need to raise capital, we may need to obtain capital on less favorable terms. Additionally, we cannot guarantee that additional financing, refinancing or other capital will be available in the amounts we desire or on favorable terms. Our access to debt or equity capital depends on a number of factors, including the market’s perception of our growth potential and risk profile, our ability to pay dividends, and our current and potential future earnings. Depending on the outcome of these factors as well as the impact of the economic environment, we could experience delay or difficulty in implementing our growth strategy on satisfactory terms, or be unable to implement this strategy.
Rising interest rates could adversely affect our cash flow and the market price of our outstanding debt and preferred shares.
Of our $4.3 billion of debt outstanding as of December 31, 2022, approximately $655.1 million bears interest at a variable rate, of which, $600.0 million is our unsecured term loan that bears interest at a variable rate of SOFR plus 85 basis points plus 0.10%, and $55.1 million in mortgages payable that bear interest at a variable rate of LIBOR plus 195 basis points and are effectively fixed through two interest rate swap agreements. We also have a $1.25 billion revolving credit facility, on which no balance was outstanding at December 31, 2022, that bears interest at SOFR plus 77.5 basis points, plus 0.10%. We may borrow additional funds at variable interest rates in the future. Increases in interest rates would increase the interest expense on our variable rate debt and reduce our cash flow, which could adversely affect our ability to service our debt and meet our other obligations and also could reduce the amount we are able to distribute to our shareholders. We may enter into additional hedging arrangements or other transactions for all or a portion of our variable rate debt to limit our exposure to rising interest rates. However, the amounts we are required to pay under variable rate debt to which hedging or similar arrangements relate may increase in the event of non-performance by the counterparties to any such hedging arrangements. In addition, an increase in market interest rates may lead purchasers of our debt securities and preferred shares to demand a higher annual yield, which could adversely affect the market price of our outstanding debt securities and preferred shares and the cost and/or timing of refinancing or issuing additional debt securities or preferred shares.
Risk Factors Related to our REIT Status and Other Laws and Regulations
Environmental laws and regulations could reduce the value or profitability of our properties.
All real property and the operations conducted on real property are subject to federal, state and local laws, ordinances and regulations relating to hazardous materials, environmental protection and human health and safety. Under various federal, state and local laws, ordinances and regulations, we and our tenants may be responsible for the disposal or treatment of hazardous or toxic substances released on or in properties we own or operate, as well as certain other potential costs relating to hazardous or toxic substances (including governmental fines and injuries to persons and property). This liability may be imposed whether or not we knew about, or were responsible for, the presence of hazardous or toxic substances. Further, the presence of contamination on our properties or the failure to properly remediate contamination at any of our properties may adversely affect our ability to sell or lease those properties or to borrow funds by using those properties as collateral. The costs or liabilities could exceed the value of the affected real estate. We are not aware of any environmental condition with respect to any of our
properties that management believes would have a material adverse effect on our business, assets or results of operations taken as a whole.
In addition, changes in government legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties and could also require us to spend more on our development or redevelopment projects without a corresponding increase in revenues, which may adversely affect our financial condition, results of operations and cash flows.
The Americans with Disabilities Act of 1990 could require us to take remedial steps with respect to existing or newly acquired properties.
Our existing properties, as well as properties we may acquire, as commercial facilities, are required to comply with Title III of the Americans with Disabilities Act of 1990. Investigation of a property may reveal non-compliance with this Act. The requirements of this Act, or of other federal, state or local laws or regulations, also may change in the future and restrict further renovations of our properties with respect to access for disabled persons. Future compliance with this Act may require expensive changes to the properties.
The revenues generated by our tenants could be negatively affected by various federal, state and local laws to which they are subject.
We and our tenants are subject to a wide range of federal, state and local laws and regulations, such as local licensing requirements, consumer protection laws and state and local fire, life-safety and similar requirements that affect the use of the properties. The leases typically require that each tenant comply with all laws and regulations. Failure to comply could result in fines by governmental authorities, awards of damages to private litigants, or restrictions on the ability to conduct business on such properties. Non-compliance of this sort could reduce our revenues from a tenant, could require us to pay penalties or fines relating to any non-compliance, and could adversely affect our ability to sell or lease a property.
Failure to qualify as a REIT for federal income tax purposes would cause the Parent Company to be taxed as a corporation, which would substantially reduce funds available for payment of distributions.
We believe that we are organized and qualified as a REIT for federal income tax purposes and currently intend to operate in a manner that will allow us to continue to qualify as a REIT under the Code. However, we cannot assure you that we will remain qualified as such in the future.
Qualification as a REIT involves the application of highly technical and complex Code provisions and applicable income tax regulations that have been issued under the Code. Certain facts and circumstances not entirely within our control may affect our ability to qualify as a REIT. For example, in order to qualify as a REIT, at least 95% of our gross income in any year must be derived from qualifying rents and certain other income. Satisfying this requirement could be difficult, for example, if defaults by tenants were to reduce the amount of income from qualifying rents. As a REIT, we must generally make annual distributions to shareholders of at least 90% of our taxable income. In addition, new legislation, new regulations, new administrative interpretations or new court decisions may significantly change the tax laws with respect to qualification as a REIT or the federal income tax consequences of such qualification. Any modification in the tax treatment of REITs could have a significant adverse impact to our net income.
If we fail to qualify as a REIT:
•we would not be allowed a deduction for distributions to shareholders in computing taxable income;
•we would be subject to federal income tax at regular corporate rates;
•unless we are entitled to relief under specific statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified;
•we could be required to pay significant income taxes, which would substantially reduce the funds available for investment or for distribution to our shareholders for each year in which we failed or were not permitted to qualify; and
•we would no longer be required by law to make any distributions to our shareholders.
To maintain our status as a REIT, we limit the amount of shares any one shareholder of the Parent Company can own.
The Code imposes certain limitations on the ownership of the stock of a REIT. For example, not more than 50% in value of our outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code) during the last half of any taxable year. To protect our REIT status, the Parent Company's declaration of trust prohibits any one shareholder from owning (actually or constructively) more than 9.8% in value of the outstanding common shares or of any class or series of outstanding preferred shares. The constructive ownership rules are complex. Shares of the Parent Company's capital
stock owned, actually or constructively, by a group of related individuals and/or entities may be treated as constructively owned by one of those individuals or entities. As a result, the acquisition of less than 9.8% in value of the outstanding common shares and/or a class or series of preferred shares (or the acquisition of an interest in an entity that owns common shares or preferred shares) by an individual or entity could cause that individual or entity (or another) to own constructively more than 9.8% in value of the outstanding capital stock. If that happens, either the transfer of ownership would be void or the shares would be transferred to a charitable trust and then sold to someone who can own those shares without violating the 9.8% ownership limit.
The Board of Trustees may waive these restrictions on a case-by-case basis. In addition, the Board of Trustees and two-thirds of our shareholders eligible to vote at a shareholder meeting may remove these restrictions if they determine it is no longer in our best interests for the Parent Company to attempt to qualify, or to continue to qualify, as a REIT. The 9.8% ownership restrictions may delay, defer or prevent a transaction or a change of our control that might involve a premium price for the common shares or otherwise be in the shareholders’ best interest.
Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process, and by the Internal Revenue Service (“IRS”) and the U.S. Department of the Treasury (“Treasury”). Changes to the tax laws or interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materially and adversely affect us and our investors. No prediction can be made as to the likelihood of passage of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders. Accordingly, such new legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify to be taxed as a REIT and/or the U.S. federal income tax consequences to us and our investors of such qualification.
Certain tax and anti-takeover provisions of the Parent Company's declaration of trust and bylaws, and certain restrictions in the Partnership's limited partnership agreement, may inhibit a change of our control.
Certain provisions contained in the Parent Company's declaration of trust and bylaws and the Maryland General Corporation Law, as applicable to Maryland REITs, may discourage a third party from making a tender offer or acquisition proposal to us. If this were to happen, it could delay, deter or prevent a change in control or the removal of existing management. These provisions also may delay or prevent the shareholders from receiving a premium for their common shares over then-prevailing market prices. These provisions include:
•the REIT ownership limit described above;
•authorization of the issuance of our preferred shares with powers, preferences or rights to be determined by the Board of Trustees;
•special meetings of our shareholders may be called only by the chairman of the board, the chief executive officer, the president, by one-third of the trustees or by shareholders possessing no less than 25% of all the votes entitled to be cast at the meeting;
•the Board of Trustees, without a shareholder vote, can classify or reclassify unissued shares of beneficial interest, including the reclassification of common shares into preferred shares and vice-versa;
•a two-thirds shareholder vote is required to approve some amendments to the declaration of trust; and
•advance-notice requirements for proposals to be presented at shareholder meetings.
In addition, if we elect to be governed by it in the future, the Maryland Control Share Acquisition Law could delay or prevent a change in control. Under Maryland law, unless a REIT elects not to be subject to this law, “control shares” acquired in a “control share acquisition” have no voting rights except to the extent approved by shareholders by a vote of two-thirds of the votes entitled to be cast on the matter, excluding shares owned by the acquirer and by officers or trustees who are employees of the REIT. “Control shares” are voting shares that would entitle the acquirer to exercise voting power in electing trustees within specified ranges of voting power. A “control share acquisition” means the acquisition of control shares, with some exceptions.
The Parent Company's bylaws state that the Maryland control share acquisition law will not apply to any acquisition by any person of our common shares. This bylaw provision may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares, by a vote of a majority of the shareholders entitled to vote, and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.
In addition, certain provisions in the Partnership’s limited partnership agreement (the “Partnership Agreement”) may delay or make more difficult unsolicited acquisitions of us or changes in our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some shareholders might consider such proposals, if made, desirable. These provisions also make it more difficult for third parties to alter the management structure of the Partnership without the concurrence of our Board of Trustees. These provisions include, among others:
•redemption rights of limited partners and certain assignees of units of limited partnership interest ("OP Units");
•transfer restrictions on OP Units and restrictions on admissions of partners;
•a requirement that the General Partner may not be removed as the general partner of the Partnership without its consent;
•the ability of the General Partner to issue preferred partnership interests in the Partnership with terms that it may determine, without the approval or consent of any Limited Partner; and
•restrictions on the ability of the General Partner, the Partnership or the Parent Company to transfer its interests in the Partnership or otherwise engage in certain extraordinary transactions, including, among others, certain mergers, business combinations, sales of all or substantially all of their assets and recapitalizations.
We may be required to incur additional debt to qualify as a REIT.
As a REIT, we must generally make annual distributions to shareholders of at least 90% of our taxable income. We are subject to income tax on amounts of undistributed taxable income and net capital gain. In addition, we would be subject to a 4% excise tax if we fail to distribute sufficient income to meet a minimum distribution test based on our ordinary income, capital gain and aggregate undistributed income from prior years. We intend to make distributions to shareholders to comply with the Code’s distribution provisions and to avoid federal income and excise tax. We may need to borrow funds to meet our distribution requirements because:
•our income may not be matched by our related expenses at the time the income is considered received for purposes of determining taxable income; and
•non-deductible capital expenditures, creation of reserves, or debt service requirements may reduce available cash but not taxable income.
In these circumstances, we might have to borrow funds on terms we might otherwise find unfavorable and we may have to borrow funds even if our management believes the market conditions make borrowing financially unattractive. Current tax law also allows us to pay a portion of our distributions in shares instead of cash.
General Risk Factors
The market value of our debt and equity securities is subject to various factors that may cause significant fluctuations or volatility.
As with other publicly traded securities, the market price of our debt and equity securities depends on various factors, which may change from time to time and/or may be unrelated to our financial condition, operating performance or prospects that may cause significant fluctuations or volatility in such prices. These factors include, among others:
•general economic and financial market conditions;
•level and trend of interest rates;
•our ability to access the capital markets to raise additional capital;
•the issuance of additional equity or debt securities;
•changes in our funds from operations (“FFO”) or earnings estimates;
•changes in our credit or analyst ratings;
•our financial condition and performance;
•market perception of our business compared to other REITs; and
•market perception of REITs, in general, compared to other investment alternatives.
We cannot assure you we will continue to pay dividends in the current composition or at historical rates.
Our ability to continue to pay dividends on our common shares at historical rates or to increase our common share dividend rate, and our ability to pay preferred share dividends and service our debt securities, will depend on a number of factors, including, among others, the following:
•our financial condition and results of future operations;
•the performance by our tenants under their contractual lease agreements;
•the terms of our loan covenants; and
•our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates.
If we do not maintain or increase, or if we change the composition of the dividend on our common shares, it could have an adverse effect on the market price of our common shares and other securities. Any preferred shares we may offer in the future may have a fixed dividend rate that would not increase with any increases in the dividend rate of our common shares. Conversely, payment of dividends on our common shares may be subject to payment in full of the dividends on any preferred shares and payment of interest on any debt securities we may offer.
The Parent Company is a holding company with no direct operations, and it will rely on funds received from the Partnership to pay its obligations and make distributions to its shareholders.
The Parent Company is a holding company and expects to conduct substantially all of its operations through the Partnership. The Parent Company will not have, apart from an interest in the Partnership, any independent operations. As a result, the Parent Company will rely on distributions from the Partnership to make any distributions we declare on our common shares. The Parent Company will also rely on distributions from the Partnership to meet its obligations, including any tax liability on taxable income allocated to the Parent Company from the Partnership. Through its ownership and control of the General Partner, the Parent Company exercises exclusive control over the Partnership, including the authority to cause the Partnership to make distributions, subject to certain limited approval and voting rights of the Partnership’s Limited Partners as described in the Partnership Agreement. In addition, because the Parent Company is a holding company, your claims as shareholders are structurally subordinated to all existing and future liabilities and obligations to preferred equity holders of the Partnership and its subsidiaries. Therefore, in the event of a bankruptcy, insolvency, liquidation or reorganization of the Partnership or its subsidiaries, assets of the Partnership or the applicable subsidiary will be available to satisfy any claims of our shareholders only after such liabilities and obligations have been satisfied in full.
We currently own 100% of the OP Units issued by the Partnership and are its sole Limited Partner. However, in connection with our future acquisition activities or otherwise, we may issue additional OP Units to third parties and admit additional Limited Partners. Such issuances would reduce the Parent Company’s percentage ownership in the Partnership.
Loss of our key management could adversely affect performance and the value of our common shares.
We are dependent on the efforts of our key management. Although we believe qualified replacements could be found for any departures of key executives, the loss of their services could adversely affect our performance and the value of our common shares.
We may adjust our business policies without shareholder approval.
We may modify our approach to investment, financing, borrowing, and other operating strategies without shareholder approval. A change in the approach to any of these items could adversely affect our financial condition and results of operations, and the market price of our securities.
Our current business plan focuses on our investment in high quality retail based properties that are typically neighborhood and community shopping centers or mixed-use properties, principally through redevelopments and acquisitions. If this business plan is not successful, it could have a material adverse effect on our financial condition and results of operations.
Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this Annual Report on Form 10-K. Except as may be required by law, we make no promise to update any of the forward-looking statements as a result of new information, future events or otherwise. You should carefully review the above risks and the risk factors.
We face risks relating to cyber attacks that could cause loss of confidential information and other business disruptions.
We rely extensively on information technology systems to process transactions and manage our business, and our business is at risk from and may be impacted by cyber attacks. These could include attempts to gain unauthorized access to our data and computer systems as well as attacks on third party's information technology systems that we rely on to provide important information technology services relating to key business functions, such as payroll. Attacks can be both individual and/or highly organized attempts by very sophisticated hacking organizations. We employ a number of measures to prevent, detect and mitigate these threats, which include password encryption, multi-factor authentication, frequent password change events, firewall detection systems, anti-virus software in-place, frequent backups, a redundant data system for core applications and penetration testing; however, there is no guarantee such efforts will be successful in preventing a cyber attack. A cyber attack could compromise the confidential information of our employees, tenants and vendors. A successful attack could disrupt and otherwise adversely affect our business operations.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. PROPERTIES
General
As of December 31, 2022, we owned or had a majority ownership interest in community and neighborhood shopping centers and mixed-used properties which are operated as 103 predominantly retail real estate projects comprising approximately 25.8 million square feet. These properties are located primarily in densely populated and affluent communities in strategic metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida. No single commercial or residential property accounted for over 10% of our 2022 total revenue. We believe that our properties are adequately covered by commercial general liability, fire, flood, earthquake, terrorism and business interruption insurance provided by reputable companies, with commercially reasonable exclusions, deductibles and limits.
Tenant Diversification
As of December 31, 2022, we had approximately 3,300 commercial leases and 3,000 residential leases, with tenants ranging from sole proprietors to major national and international retailers. No one tenant or affiliated group of tenants accounted for more than 2.8% of our annualized base rent as of December 31, 2022. As a result of our tenant diversification, we believe our exposure to any one bankruptcy filing has not been and will not be significant, however, multiple filings by a number of tenants could have a significant impact.
Geographic Diversification
Our 103 real estate projects are located in 12 states and the District of Columbia. The following table shows the number of projects, the gross leasable area (“GLA”) of commercial space and the percentage of total portfolio gross leasable area of commercial space in each state as of December 31, 2022.
State Number of
Projects Gross Leasable
Area Percentage
of Gross
Leasable
Area
(In square feet)
California (1) 21 6,385,000 24.7 %
Maryland 17 4,346,000 16.8 %
Virginia 19 4,094,000 15.9 %
Pennsylvania 10 1,996,000 7.7 %
Massachusetts 7 2,184,000 8.5 %
New Jersey 7 1,891,000 7.3 %
Florida 4 1,281,000 5.0 %
New York 7 1,236,000 4.8 %
Illinois 4 799,000 3.1 %
Arizona 2 947,000 3.7 %
Connecticut 3 358,000 1.4 %
Michigan 1 215,000 0.8 %
District of Columbia 1 78,000 0.3 %
Total 103 25,810,000 100.0 %
(1) Includes our 77.7% pro-rata share of Escondido Promenade, see Note 3 to the consolidated financial statements for additional information.
Leases, Lease Terms and Lease Expirations
Our leases are classified as operating leases and typically are structured to require the monthly payment of minimum rents in advance, subject to periodic increases during the term of the lease, percentage rents based on the level of sales achieved by tenants, and reimbursement of a majority of on-site operating expenses and real estate taxes. These features in our leases generally reduce our exposure to higher costs and allow us to participate in improved tenant sales.
Commercial property leases generally range from three to ten years; however, certain leases, primarily with anchor tenants, may be longer. Many of our leases contain tenant options that enable the tenant to extend the term of the lease at expiration at pre-established rental rates that often include fixed rent increases, consumer price index adjustments or other market rate adjustments from the prior base rent. Leases on residential units are generally for a period of one year or less and, in 2022, represented approximately 9.7% of total rental income.
The following table sets forth the schedule of lease expirations for our commercial leases in place as of December 31, 2022 for each of the 10 years beginning with 2023 and after 2032 in the aggregate assuming that none of the tenants exercise future renewal options. Annualized base rents reflect in-place contractual rents as of December 31, 2022.
Year of Lease Expiration Leased
Square
Footage
Expiring Percentage of
Leased Square
Footage
Expiring Annualized
Base Rent
Represented by
Expiring Leases Percentage of Annualized Base Rent Represented by Expiring Leases
2023 1,600,000 7 % $ 50,078,000 7 %
2024 3,288,000 14 % 93,999,000 13 %
2025 3,392,000 14 % 90,135,000 12 %
2026 2,221,000 9 % 71,066,000 10 %
2027 2,987,000 12 % 100,035,000 14 %
2028 2,549,000 11 % 74,476,000 10 %
2029 1,707,000 7 % 57,460,000 8 %
2030 985,000 4 % 29,051,000 4 %
2031 1,042,000 4 % 35,049,000 5 %
2032 2,081,000 9 % 68,078,000 9 %
Thereafter 2,090,000 9 % 57,455,000 8 %
Total 23,942,000 100 % $ 726,882,000 100 %
During 2022, we signed leases for a total of 2,048,000 square feet of retail space including 1,985,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 6% on a cash basis. New leases for comparable spaces were signed for 757,000 square feet at an average rental increase of 8% on a cash basis. Renewals for comparable spaces were signed for 1,228,000 square feet at an average rental increase of 4% on a cash basis. Tenant improvements and incentives for comparable spaces were $31.65 per square foot, of which, $75.12 per square foot was for new leases and $4.86 per square foot was for renewals in 2022.
During 2021, we signed leases for a total of 2,193,000 square feet of retail space including 2,093,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 7% on a cash basis. New leases for comparable spaces were signed for 1,144,000 square feet at an average rental increase of 10% on a cash basis. Renewals for comparable spaces were signed for 949,000 square feet at an average rental increase of 3% on a cash basis. Tenant improvements and incentives for comparable spaces were $37.57 per square foot, of which, $65.92 per square foot was for new leases and $3.41 per square foot was for renewals in 2021.
The rental increases associated with comparable spaces generally include all leases signed for retail space in arms-length transactions reflecting market leverage between landlords and tenants during the period. The comparison between the rent for expiring leases and new leases is determined by including contractual rent on the expiring lease, including percentage rent, and the comparable annual rent and in some instances, projections of percentage rent, to be paid on the new lease. In atypical circumstances, management may exercise judgment as to how to most effectively reflect the comparability of rents reported in the calculation. The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. Rent abatement and short term rent restructuring agreements that are a result of COVID-19 impacts are not included in this calculation. Tenant improvements and incentives include the total dollars committed for the improvement (fit out) of a space as it relates to a specific lease. Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent building improvements. Costs related to tenant improvements require judgement by management in determining what are costs specific to the tenant and not deferred maintenance on the space.
Historically, we have executed comparable space leases for 1.4 to 2.0 million square feet of retail space each year and expect the volume for 2023 will be in line with these historical averages. Although we expect overall positive increases in annual rent for comparable spaces, changes in annual rent for any individual lease or combinations of individual leases reported in any particular period may be positive or negative and we can provide no assurance that the annual rents on comparable space leases will continue to increase at historical levels, if at all.
The leases signed in 2022 generally become effective over the following two years though some may not become effective until 2025 and beyond. Further, there is risk that some new tenants will not ultimately take possession of their space and that tenants for both new and renewal leases may not pay all of their contractual rent due to operating, financing or other matters. However,
our historical increases in rental rates do provide information about the tenant/landlord relationship and the potential increase we may achieve in rental income over time.
Retail and Residential Properties
The following table sets forth information concerning all real estate projects in which we owned an equity interest, had a leasehold interest, or otherwise controlled and are consolidated as of December 31, 2022. Except as otherwise noted, we are the sole owner of our real estate projects. Principal tenants are the largest tenants in the project based on square feet leased or are tenants important to a project’s success due to their ability to attract retail customers.
Property, City, State, Zip Code Year Completed Year Acquired Square Feet(1) /Apartment Units Average Base Rent Per Square Foot(2) Percentage Leased(3) Principal Tenant(s)
Arizona
Camelback Colonnade
Phoenix, AZ 85016(4) 1977, 2019 2021 642,000 $18.14 89% Fry's Food & Drug
Floor & Décor
Marshalls
Nordstrom Last Chance
Best Buy
Chandler Festival
Chandler, AZ 85224(5)(6) 2000 2022 355,000 $17.24 95% Ross Dress for Less
Nordstrom Rack
TJ Maxx
Ulta
Chandler Gateway
Chandler, AZ 85226(5)(6) 2001 2022 262,000 $11.10 100% Walmart
Hobby Lobby
Petco
Hilton Village
Scottsdale, AZ 85250(4)(7) 1982, 1989 2021/2022 305,000 33.87 90% CVS
Houston's
California
Azalea
South Gate, CA 90280(4)(6) 2014 2017 223,000 $28.48 100% Marshalls
Ross Dress for Less
Ulta
Michaels
Bell Gardens
Bell Gardens, CA 90201(4)(6)(7) 1990, 2003, 2006 2017/2018 330,000 $23.58 98% Food 4 Less
Marshalls
Ross Dress for Less
Bob's Discount Furniture
Colorado Blvd
Pasadena, CA 91103(7) 1905-1988 1998 42,000 $60.04 100% Banana Republic
True Food Kitchen
Crow Canyon Commons
San Ramon, CA 94583 1980, 1998,
2006 2005/2007 243,000 $29.55 100% Sprouts
Total Wine & More
Rite Aid
Alamo Ace Hardware
East Bay Bridge
Emeryville & Oakland, CA 94608 1994-2001,
2011, 2012 2012 440,000 $19.71 100% Pak-N-Save
Home Depot
Target
Nordstrom Rack
Escondido Promenade
Escondido, CA 92029(8) 1987 1996/2010 231,000 $29.37 99% TJ Maxx
Dick's Sporting Goods
Ross Dress For Less
Bob's Discount Furniture
Fourth Street
Berkeley, CA 94710(4) 1948, 1975 2017 71,000 $32.59 81% CB2
Ingram Book Group
Bellwether Coffee
Freedom Plaza
Los Angeles, CA 90002(4)(7) 2020 2018 114,000 $30.71 97% Smart & Final
Nike
Blink Fitness
Ross Dress For Less
Grossmont Center
La Mesa, CA 91942(4) 1961, 1963, 1982-1983, 2002 2021 932,000 $14.17 98% Target
Walmart
Macy's
CVS
Hastings Ranch Plaza
Pasadena, CA 91107(7) 1958, 1984, 2006, 2007 2017 273,000 $8.59 100% Marshalls
HomeGoods
CVS
Sears
Hollywood Blvd
Hollywood, CA 90028 1929, 1991 1999 181,000 $36.55 86% Target
Marshalls
L.A. Fitness
Kings Court
Los Gatos, CA 95032(7)(9) 1960 1998 81,000 $42.31 100% Lunardi's
CVS
La Alameda
Walnut Park, CA 90255(5)(6)(7) 2008 2017 245,000 $27.08 95% Marshalls
Ross Dress For Less
CVS
Petco
Old Town Center
Los Gatos, CA 95030 1962, 1998 1997 98,000 $42.99 95% Anthropologie
Sephora
Teleferic Barcelona
Property, City, State, Zip Code Year Completed Year Acquired Square Feet(1) /Apartment Units Average Base Rent Per Square Foot(2) Percentage Leased(3) Principal Tenant(s)
Olivo at Mission Hills
Mission Hills, CA 91345(4) 2018 2017 155,000 $33.26 100% Target
24 Hour Fitness
Ross Dress for Less
Plaza Del Sol
South El Monte, CA 91733(4) 2009 2017 48,000 $24.22 96% Marshalls
Plaza El Segundo / The Point
El Segundo, CA 90245 (6) 2006-2007, 2016 2011/2013 501,000 $48.03 85% Whole Foods
Nordstrom Rack
HomeGoods
Dick's Sporting Goods
Multiple Restaurants
San Antonio Center
Mountain View, CA 94040(7)(9) 1958,
1964-1965,
1974-1975,
1995-1997 2015/2019 213,000 $16.70 99% Trader Joe's
Walmart
24 Hour Fitness
Santana Row
San Jose, CA 95128(7)(11) 2002, 2009, 2016, 2020 1997 1,206,000 $56.56 99% Crate & Barrel
Container Store
H&M Best Buy
Splunk
Net App
Multiple Restaurants
Santana Row Residential
San Jose, CA 95128 2003-2006,
2011, 2014 1997/2012 662 units N/A 96%
Sylmar Towne Center
Sylmar, CA 91342(4) 1973 2017 148,000 $17.57 93% Food 4 Less
CVS
Third Street Promenade
Santa Monica, CA 90401 1888-2000 1996-2000 207,000 $72.02 74% adidas
Madewell
Patagonia
Multiple Restaurants
Westgate Center
San Jose, CA 95129 1960-1966 2004 648,000 $19.68 91% Target
Nordstrom Rack
Nike Factory
TJ Maxx
Connecticut
Bristol Plaza
Bristol, CT 06010 1959 1995 264,000 $14.24 82% Stop & Shop
TJ Maxx
Burlington
Darien Commons
Darien, CT 06820 1920-2009 2013/2018 59,000 $42.94 89% Equinox
Walgreens
Darien Commons Residential
Darien, CT 06820 2022 2013/2018 59 units N/A 75%
Greenwich Avenue
Greenwich Avenue, CT 06830 1968 1995 35,000 $96.19 100% Saks Fifth Avenue
District of Columbia
Friendship Center
Washington, DC 20015 1998 2001 78,000 $33.73 100% Marshalls
DSW
Maggiano's
Florida
CocoWalk
Coconut Grove, FL 33133(4)(12) 1990/1994,
1922-1973,
2018-2021 2015-2017 273,000 $45.17 100% Cinepolis Theaters
Youfit Health Club
Multiple Restaurants
Del Mar Village
Boca Raton, FL 33433 1982, 1994
& 2007 2008/2014 187,000 $23.44 97% Winn Dixie
CVS
L.A. Fitness
The Shops at Pembroke Gardens
Pembroke Pines, FL 33027 2007 2022 391,000 $30.66 92% DSW
Old Navy
Nike Factory
Barnes & Noble
Tower Shops
Davie, FL 33324 1989, 2017 2011/2014 430,000 $27.06 100% Trader Joe's
TJ Maxx
Ross Dress for Less
Best Buy
Ulta
Illinois
Crossroads
Highland Park, IL 60035 1959 1993 168,000 $23.48 91% L.A. Fitness
Ulta
Binny's
Ferguson's Bath, Kitchen, & Lighting Gallery
Finley Square
Downers Grove, IL 60515 1974 1995 281,000 $17.13 92% Bed, Bath & Beyond
Buy Buy Baby
Michaels Portillo's
Property, City, State, Zip Code Year Completed Year Acquired Square Feet(1) /Apartment Units Average Base Rent Per Square Foot(2) Percentage Leased(3) Principal Tenant(s)
Garden Market
Western Springs, IL 60558 1958 1994 139,000 $13.92 96% Mariano's Fresh Market
Walgreens
Riverpoint Center
Chicago, IL 60614 1989, 2012 2017 211,000 $21.21 93% Jewel Osco
Marshalls
Old Navy
Maryland
Bethesda Row
Bethesda, MD 20814(7) 1945-1991
2001, 2008 1993-2006/
2008/2010 529,000 $56.39 95% Giant Food
Apple
Equinox
Anthropologie
Multiple Restaurants
Bethesda Row Residential
Bethesda, MD 20814 2008 1993 180 units N/A 96%
Congressional Plaza
Rockville, MD 20852(4) 1965 1965 324,000 $41.60 91% The Fresh Market
Buy Buy Baby
Ulta
Barnes & Noble
Container Store
Congressional Plaza Residential
Rockville, MD 20852(4) 2003, 2016 1965 194 units N/A 98%
Courthouse Center
Rockville, MD 20852 1975 1997 38,000 $25.61 69%
Federal Plaza
Rockville, MD 20852 1970 1989 249,000 $38.25 93% Trader Joe's
TJ Maxx
Micro Center
Ross Dress for Less
Gaithersburg Square
Gaithersburg, MD 20878 1966 1993 208,000 $31.11 95% Marshalls Ross Dress For Less
Ashley Furniture HomeStore
CVS
Governor Plaza
Glen Burnie, MD 21961 1963 1985 243,000 $20.44 99% Aldi
Dick's Sporting Goods
Ross Dress for Less
Petco
Laurel
Laurel, MD 20707 1956 1986 364,000 $23.71 99% Giant Food
Marshalls
L.A. Fitness
HomeGoods
Montrose Crossing
Rockville, MD 20852 1960-1979,
1996, 2011 2011/2013 368,000 $33.72 100% Giant Food
Marshalls
Home Depot Design Center
Old Navy
Burlington
Perring Plaza
Baltimore, MD 21134 1963 1985 398,000 $19.04 71% Shoppers Food Warehouse
Home Depot
Micro Center
Pike & Rose
North Bethesda, MD 20852(11) 1963, 2014, 2018, 2020 1982/2007/
2012 667,000 $42.68 100% Porsche
Uniqlo
REI
H&M
L.L. Bean Multiple Restaurants
Pike & Rose Residential
North Bethesda, MD 20852 2014, 2016, 2018 1982/2007 765 units N/A 97%
Plaza Del Mercado
Silver Spring, MD 20906 1969 2004 116,000 $33.15 96% Aldi
CVS
L.A. Fitness
Quince Orchard
Gaithersburg, MD 20877(7) 1975 1993 270,000 $26.14 84% Aldi
HomeGoods
L.A. Fitness
Staples
THE AVENUE at White Marsh
Baltimore, MD 21236(9) 1997 2007 315,000 $27.59 88% AMC
Ulta
Old Navy
Nike
The Shoppes at Nottingham Square
Baltimore, MD 21236 2005-2006 2007 33,000 $51.91 100%
White Marsh Other
Baltimore, MD 21236 1985 2007 56,000 $33.44 87%
White Marsh Plaza
Baltimore, MD 21236 1987 2007 80,000 $23.62 100% Giant Food
Property, City, State, Zip Code Year Completed Year Acquired Square Feet(1) /Apartment Units Average Base Rent Per Square Foot(2) Percentage Leased(3) Principal Tenant(s)
Wildwood
Bethesda, MD 20814 1958 1969 88,000 $103.94 100% Balducci's
CVS
Multiple Restaurants
Massachusetts
Assembly Row/
Assembly Square Marketplace
Somerville, MA 02145(11) 2005, 2014, 2018, 2021 2005-2011/
2013 1,178,000 $35.30 99% Trader Joe's
TJ Maxx
AMC
Nike
PUMA
Multiple Restaurants
Assembly Row Residential
Somerville, MA 02145 2018, 2021 2005-2011 947 units N/A 94%
Campus Plaza
Bridgewater, MA 02324 1970 2004 114,000 $16.83 85% Roche Bros.
Burlington
Chelsea Commons
Chelsea, MA 02150(6) 1962,1969,
2008 2006-2008 222,000 $12.94 100% Home Depot
Planet Fitness
CVS
Dedham Plaza
Dedham, MA 02026 1959 1993/2016/
2019 249,000 $18.14 92% Star Market
Planet Fitness
Linden Square
Wellesley, MA 02481 1960, 2008 2006 224,000 $50.56 97% Roche Bros.
CVS
7 units N/A 100%
North Dartmouth
North Dartmouth, MA 02747 2004 2006 48,000 $17.22 100% Stop & Shop
Queen Anne Plaza
Norwell, MA 02061 1967 1994 149,000 $20.42 99% Big Y Foods
TJ Maxx
HomeGoods
Michigan
Gratiot Plaza
Roseville, MI 48066 1964 1973 215,000 $12.82 100% Kroger
Bed, Bath & Beyond
Best Buy
DSW
New Jersey
Brick Plaza
Brick Township, NJ 08723(7) 1958 1989 407,000 $21.85 95% Trader Joe's
AMC
HomeGoods
Ulta Burlington
Brook 35
Sea Grit, NJ 08750(4)(6)(9) 1986, 2004 2014 98,000 $41.89 92% Banana Republic
Gap
Williams-Sonoma
Ellisburg
Cherry Hill, NJ 08034 1959 1992 260,000 $18.20 99% Whole Foods
Buy Buy Baby
RH Outlet
Hoboken
Hoboken, NJ 07030(4)(6)(13) 1887-2006 2019/2020/2022 171,000 $57.04 98% CVS
New York Sports Club
Sephora
Multiple Restaurants
129 units N/A 100%
Mercer Mall
Lawrenceville, NJ 08648(7) 1975 2003/2017 551,000 $26.68 89% Shop Rite
Nike
Ross Dress for Less
Nordstrom Rack
REI
Tesla
The Grove at Shrewsbury
Shrewsbury, NJ 07702(4)(6)(9) 1988, 1993
& 2007 2014 193,000 $49.05 100% Lululemon
Anthropologie
Pottery Barn
Williams-Sonoma
Troy Hills
Parsippany-Troy, NJ 07054 1966 1980 211,000 $23.02 99% Target
L.A. Fitness Michaels
New York
Fresh Meadows
Queens, NY 11365 1949 1997 408,000 $39.23 96% Island of Gold
AMC
Kohl's
Michaels
Georgetowne Shopping Center
Brooklyn, NY 11234 1969, 2006, 2015 2019 147,000 $41.49 87% Foodway
Five Below
IHOP
Greenlawn Plaza
Greenlawn, NY 11743 1975, 2004 2006 103,000 $19.80 92% Greenlawn Farms
Tuesday Morning
Planet Fitness
Property, City, State, Zip Code Year Completed Year Acquired Square Feet(1) /Apartment Units Average Base Rent Per Square Foot(2) Percentage Leased(3) Principal Tenant(s)
Hauppauge
Hauppauge, NY 11788 1963 1998 134,000 $33.63 86% Shop Rite
Huntington
Huntington, NY 11746 1962 1988/2007/ 2015 116,000 $26.85 90% Petsmart
Michaels
Ulta
Huntington Square
East Northport, NY 11731(7) 1980, 2007 2010 75,000 $30.76 91% Barnes & Noble
Melville Mall
Huntington, NY 11747(7) 1974 2006 253,000 $29.75 100% Uncle Giuseppe's Marketplace
Marshalls
Dick's Sporting Goods
Macy's Backstage
Public Lands
Pennsylvania
Andorra
Philadelphia, PA 19128 1953 1988 270,000 $14.82 88% Acme Markets
TJ Maxx Kohl's
L.A. Fitness
Five Below
Bala Cynwyd
Bala Cynwyd, PA 19004 1955 1993 174,000 $37.51 94% Acme Markets
Michaels
L.A. Fitness
Bala Cynwyd Residential
Bala Cynwyd, PA 19004 2020 1993 87 units N/A 99%
Flourtown
Flourtown, PA 19031 1957 1980 156,000 $22.58 96% Giant Food
Movie Tavern
Lancaster
Lancaster, PA 17601(7) 1958 1980 126,000 $19.01 99% Giant Food
AutoZone
Langhorne Square
Levittown, PA 19056 1966 1985 223,000 $18.68 100% Redner's Warehouse Markets
Marshalls
Planet Fitness
Lawrence Park
Broomall, PA 19008 1972 1980/2017 356,000 $23.57 97% Acme Markets
TJ Maxx
HomeGoods
Barnes & Noble
Lankenau Medical Center
Northeast
Philadelphia, PA 19114 1959 1983 214,000 $21.57 80% Marshalls
Ulta
Skechers
Crunch Fitness
Town Center of New Britain
New Britain, PA 18901 1969 2006 124,000 $10.08 93% Giant Food
Rite Aid
Dollar Tree
Willow Grove
Willow Grove, PA 19090 1953 1984 105,000 $22.37 98% Marshalls
Five Below
Wynnewood
Wynnewood, PA 19096 1948 1996 248,000 $29.27 97% Giant Food
Old Navy
DSW
9 units N/A 100%
Virginia
29th Place
Charlottesville, VA 22091 1975-2001 2007 169,000 $20.35 100% Lidl HomeGoods
DSW
Staples
Barcroft Plaza
Falls Church, VA 22041 1963, 1972, 1990, & 2000 2006/2007/ 2016 113,000 $28.80 98% Harris Teeter
Barracks Road
Charlottesville, VA 22905 1958 1985 497,000 $27.77 96% Harris Teeter
Kroger
Anthropologie
Bed, Bath & Beyond
Old Navy
Ulta
Birch & Broad
Falls Church, VA 22046 1960/1962 1967/1972 144,000 $37.94 99% Giant Food
CVS
Staples
Chesterbrook
McLean, VA 22101(4) 1967 2021 90,000 $26.67 76% Safeway
Starbucks
Fairfax Junction
Fairfax, VA 22030(9) 1981, 1986, 2000 2019/2020 124,000 $24.92 91% Aldi
CVS
Planet Fitness
Graham Park Plaza
Falls Church, VA 22042 1971 1983 132,000 $40.71 90% Giant Food
Property, City, State, Zip Code Year Completed Year Acquired Square Feet(1) /Apartment Units Average Base Rent Per Square Foot(2) Percentage Leased(3) Principal Tenant(s)
Idylwood Plaza
Falls Church, VA 22030 1991 1994 73,000 $48.07 88% Whole Foods
Kingstowne Towne Center
Kingstowne, VA 22315 1996, 2001, 2006 2022 410,000 $26.99 98% Giant Food
Safeway
TJ Maxx
HomeGoods
Five Below
Ross Dress for Less
Mount Vernon/South Valley/
7770 Richmond Hwy
Alexandria, VA 22306(9) 1966,
1972,1987
& 2001 2003/2006 565,000 $19.90 97% Shoppers Food Warehouse
TJ Maxx
Home Depot
Old Navy
Petsmart
Old Keene Mill
Springfield, VA 22152 1968 1976 91,000 $39.41 95% Whole Foods
Walgreens
Planet Fitness
Pan Am
Fairfax, VA 22031 1979 1993 228,000 $25.71 95% Safeway
Micro Center
CVS
Michaels
Pike 7 Plaza
Vienna, VA 22180 1968 1997/2015 172,000 $49.74 100% TJ Maxx
DSW
Ulta
Tower Shopping Center
Springfield, VA 22150 1960 1998 111,000 $27.55 87% L.A. Mart
Talbots
Total Wine & More
Twinbrooke Shopping Centre
Fairfax, VA 22032 1977 2021 101,000 $26.40 92% Safeway
Walgreens
Tyson's Station
Falls Church, VA 22043 1954 1978 48,000 $49.47 91% Trader Joe's
Village at Shirlington
Arlington, VA 22206(7) 1940,
2006-2009 1995 266,000 $40.07 85% Harris Teeter
CVS AMC
Carlyle Grand Café
Westpost (formerly known as Pentagon Row)
Arlington, VA 22202 2001-2002 1998/2010 297,000 $33.49 99% Harris Teeter
Target
TJ Maxx
DSW
Ulta
Willow Lawn
Richmond, VA 23230 1957 1983 463,000 $21.85 96% Kroger
Old Navy
Ross Dress For Less
Gold's Gym
Dick's Sporting Goods
Total - Commercial (10) 25,810,000 $30.36 94%
Total -Residential 3,039 units 96%
_____________________
(1)Represents the GLA of the commercial portion of the property. Some of our properties include office space which is included in this square footage.
(2)Average base rent per square foot is calculated as the aggregate, annualized in-place contractual (defined as cash basis excluding rent abatements) minimum rent for all occupied spaces divided by the aggregate GLA of all occupied spaces. Average base rent is for commercial spaces only.
(3)Percentage leased is expressed as a percentage of rentable commercial square feet occupied or subject to a lease. Residential percentage leased is expressed as a percentage of units occupied or subject to a lease.
(4)We own the controlling interest in this property.
(5)We own a noncontrolling interest in this property.
(6)All or a portion of this property is encumbered by a mortgage loan.
(7)All or a portion of this property is owned pursuant to a ground lease.
(8)We own a 77.7% TIC interest in this property. GLA disclosed represents our 77.7% share. See Note 3 to the consolidated financial statements for additional information.
(9)We own all or a portion of this property in a “downREIT” partnership, of which a wholly owned subsidiary of the Trust is the sole general partner, with third party partners holding operating partnership units.
(10)Aggregate information is calculated on a GLA weighted-average basis, excluding Chandler Festival, Chandler Gateway, and La Alameda,, which are all unconsolidated properties at December 31, 2022.
(11)Portion of property is currently under development. See further discussion in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
(12)This property includes interests in four nearby buildings.
(13)This property includes 40 buildings primarily along Washington Street and 14th Street in Hoboken, New Jersey.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
We are involved from time-to-time in various legal and regulatory proceedings that arise in the ordinary course of our business, including, but not limited to, commercial disputes, environmental matters, and litigation in connection with transactions such as acquisitions and divestitures. We believe that our current proceedings will not have a material adverse effect on our financial condition, liquidity or results of operations. See Note 7 to the Consolidated Financial Statements for further discussions.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR OUR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common shares trade on the New York Stock Exchange under the symbol “FRT.” Listed below are the high and low sales prices of our common shares as reported on the New York Stock Exchange and the dividends declared for each of the periods indicated.
Price Per Share Dividends
Declared
Per Share
High Low
Fourth quarter $ 112.34 $ 87.79 $ 1.080
Third quarter $ 113.61 $ 86.43 $ 1.080
Second quarter $ 128.13 $ 92.02 $ 1.070
First quarter $ 140.51 $ 113.10 $ 1.070
Fourth quarter $ 138.40 $ 117.48 $ 1.070
Third quarter $ 123.43 $ 111.21 $ 1.070
Second quarter $ 125.00 $ 101.45 $ 1.060
First quarter $ 110.66 $ 81.85 $ 1.060
On February 3, 2023, there were 2,157 holders of record of our common shares.
Our ongoing operations generally will not be subject to federal income taxes as long as we maintain our REIT status and distribute to shareholders at least 100% of our taxable income. Under the Code, REITs are subject to numerous organizational and operational requirements, including the requirement to generally distribute at least 90% of taxable income.
Future distributions will be at the discretion of our Board of Trustees and will depend on our actual net income available for common shareholders, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and such other factors as the Board of Trustees deems relevant. We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our regular annual dividend rate for 55 consecutive years.
Our total annual dividends paid per common share for 2022 and 2021 were $4.29 per share and $4.25 per share, respectively. The annual dividend amounts are different from dividends as calculated for federal income tax purposes. Distributions to the extent of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to a shareholder as ordinary dividend income. Distributions in excess of current and accumulated earnings and profits will be treated as a nontaxable reduction of the shareholder’s basis in such shareholder’s shares, to the extent thereof, and thereafter as taxable capital gain. Distributions that are treated as a reduction of the shareholder’s basis in its shares will have the effect of increasing the amount of gain, or reducing the amount of loss, recognized upon the sale of the shareholder’s shares. No assurances can be given regarding what portion, if any, of distributions in 2023 or subsequent years will constitute a return of capital for federal income tax purposes. During a year in which a REIT earns a net long-term capital gain, the REIT can elect under Section 857(b)(3) of the Code to designate a portion of dividends paid to shareholders as capital gain dividends. If this election is made, then the capital gain dividends are generally taxable to the shareholder as long-term capital gains.
The following table reflects the income tax status of distributions per share paid to common shareholders:
Year Ended
December 31,
2022 2021
Ordinary dividend $ 3.518 $ 3.358
Capital gain 0.772 0.680
Return of capital - 0.212
$ 4.290 $ 4.250
Distributions on our 5.417% Series 1 Cumulative Convertible Preferred Shares were paid at the rate of $1.354 per share per annum commencing on the issuance date of March 8, 2007. Distributions on our 5.0% Series C Cumulative Redeemable
Preferred Shares were paid at the rate of $1.250 per depositary share per annum, commencing on the issuance date of September 29, 2017. We do not believe that the preferential rights available to the holders of interest in our preferred shares or the financial covenants contained in our debt agreements had or will have an adverse effect on our ability to pay dividends in the normal course of business to our common shareholders or to distribute amounts necessary to maintain our qualification as a REIT.
Total Stockholder Return Performance
The following performance graph compares the cumulative total shareholder return on Federal Realty's common shares with the S&P 500 Index and the index of equity real estate investment trusts prepared by the National Association of Real Estate Investment Trusts ("NAREIT") for the five fiscal years commencing December 31, 2017, and ending December 31, 2022, assuming an investment of $100 and the reinvestment of all dividends into additional common shares during the holding period. Equity real estate investment trusts are defined as those that derive more than 75% of their income from equity investments in real estate assets. The FTSE NAREIT Equity REIT Total Return Index includes all tax qualified real estate investment trusts listed on the NYSE, NYSE MKT, or the NASDAQ National Market. Stock performance for the past five years is not necessarily indicative of future results.
Recent Sales of Unregistered Shares
Under the terms of various operating partnership agreements of certain of our affiliated limited partnerships, the interest of limited partners in those limited partnerships may be redeemed, subject to certain conditions, for cash or an equivalent number of our common shares, at our option. During the three months ended December 31, 2022, we did not issue any common shares in connection with the redemption of downREIT operating partnership units. Any equity securities sold by us during 2022 that were not registered have been previously reported in a Quarterly Report on Form 10-Q.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During 2022, 5,871 restricted common shares were forfeited by former employees.
From time to time, we could be deemed to have repurchased shares as a result of shares withheld for tax purposes upon a stock compensation related vesting event.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. RESERVED
None.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on February 10, 2022.
Forward-Looking Statements
Certain statements in this section or elsewhere in this report may be deemed “forward-looking statements”. See “Item 1A. Risk Factors” in this report for important information regarding these forward-looking statements and certain risk and uncertainties that may affect us. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing in “Item 8. Financial Statements and Supplementary Data” of this report.
Overview
Federal Realty Investment Trust (the "Parent Company" or the "Trust") is an equity real estate investment trust ("REIT"). Federal Realty OP LP (the "Operating Partnership") is the entity through which the Trust conducts substantially all of its operations and owns substantially all of its assets. The Trust owns 100% of the limited liability company interest of, is sole member of, and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which in turn, is the sole general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership. The Parent Company specializes in the ownership, management, and redevelopment of high quality retail and mixed-use properties located primarily in communities where we believe demand exceeds supply, in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida. As of December 31, 2022, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 103 predominantly retail real estate projects comprising approximately 25.8 million square feet. In total, the real estate projects were 94.5% leased and 92.8% occupied at December 31, 2022. We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for 55 consecutive years.
Impacts of COVID-19 Pandemic and General Economic Conditions
Given the ongoing workforce shortages, global supply chain bottlenecks and shortages, and high inflation, we continue to monitor and address risks related to the COVID-19 pandemic and the general state of the economy. While improving, our cash flow and results of operations in the year ended December 31, 2022 continued to be negatively impacted largely due to vacancy levels remaining above historical levels. Although virtually all of our leases required the tenants to pay rent even while they were not operating, we entered into numerous agreements to abate, defer, and/or restructure tenant rent payments for varying periods of time, all with the objective of collecting as much cash as reasonably possible and maintaining occupancy to the maximum extent. We believe those actions positioned many of our tenants to be able to return to payment of contractual rent as soon as possible after the initial impacts from the pandemic started to subside.
During 2022, we have continued to see improvements in overall cash collections from tenants with collection rates nearing pre-pandemic levels. We have also taken multiple steps over the past two years to strengthen our financial position, maximize liquidity, and to provide maximum flexibility during these uncertain times, including maintaining levels of cash in excess of the cash balances we have historically maintained. On October 5, 2022, we amended our revolving credit facility increasing the borrowing capacity from $1.0 billion to $1.25 billion and extending the maturity date to April 5, 2027, plus two six-month extensions at our option. Additionally, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.75 billion. We also amended our unsecured term loan borrowing an additional $300.0 million. As of December 31, 2022, there is no outstanding balance on our $1.25 billion revolving credit facility, and we have cash and cash equivalents of $85.6 million.
Additional discussion of the impact of current economic conditions and the COVID-19 pandemic on our results and long-term operations can be found throughout Item 7 and Item 1A. Risk Factors.
Corporate Responsibility
We actively endeavor to operate and develop our properties in a sustainable, responsible, and effective manner with the objective being to drive long-term growth and aid in value creation for our shareholders, tenants, employees, and local communities. We have aligned our program and efforts with the United Nations Sustainable Development Goals, as described in our ESG Policy and our 2021 Corporate Responsibility Report, which are provided only for informational purposes on our website and not incorporated by reference herein.
Our development activities have been heavily focused on owning, developing and operating properties that are certified under the U.S. Green Building Council’s® (“USGBC”) Leadership in Energy and Environmental Design™ (LEED®) rating system which serves as a third-party verification that a building or community was designed and built to mitigate its environmental footprint. We currently have 19 LEED certified buildings and our Pike & Rose project has achieved LEED for Neighborhood Development Stage 3 Gold certification. The COVID-19 pandemic has also increased our focus on owning, developing and operating healthier buildings. To that end, our new corporate headquarters space at our 909 Rose Avenue building has earned a Fitwel certification developed by the U.S. Centers for Disease Control and Prevention (CDC) together with the General Services Administration (GSA). This certification assesses a building’s impact on seven distinct categories related to overall health and well-being.
We are also committed to implementing sustainable business practices at our operating properties that focus on energy efficiency, water conservation and waste minimization and have established greenhouse gas (GHG) emissions reduction targets in accordance with the Science-Based Targets initiative as well as energy reduction targets. To achieve these targets, we are actively addressing energy efficiency projects on site such as upgrading to LED lighting, procuring green energy, reducing electric consumption, and increasing our onsite solar generation capacity. We have installed on-site solar systems at 25 of our properties with a capacity of 14 MW with more projects actively in progress. We also installed electric vehicle car charging stations in numerous properties throughout our portfolio. We currently have over 300 charging stations in operation with more under construction.
We also understand that we face risks presented by climate change and are working to evaluate our risk exposure. In our 2021 Sustainability report, we provided a disclosure pursuant to the Task Force on Climate Related Financial Disclosure and we intend to provide that disclosure annually.
We are also highly committed to our employees and fostering a work environment that promotes growth, development and personal well-being. Our four core values are accountability, excellence, innovation and integrity and we seek to attract and retain talented professionals who embrace those values. All of our efforts with respect to corporate responsibility are overseen by our Board of Trustees.
Critical Accounting Policies and Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as “GAAP”, requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management’s best judgment, after considering past and current events and economic conditions. In addition, information relied upon by management in preparing such estimates includes internally generated financial and operating information, external market information, when available, and when necessary, information obtained from consultations with third party experts. Actual results could differ from these estimates. A discussion of possible risks which may affect these estimates is included in “Item 1A. Risk Factors” of this report. Management considers an accounting estimate to be critical if changes in the estimate could have a material impact on our consolidated results of operations or financial condition.
Our significant accounting policies are more fully described in Note 2 to the consolidated financial statements; however, the most critical accounting policies, which are most important to the portrayal of our financial condition and results of operations, and involve the use of complex estimates and significant assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows:
Collectibility of Lease Income
Our leases with our tenants are classified as operating leases. When collection of substantially all lease payments during the lease term is considered probable, the lease qualifies for accrual accounting. When collection of substantially all lease payments during the lease term is not considered probable, total lease revenue is limited to the lesser of revenue recognized under accrual accounting or cash received. Determining the probability of collection of substantially all lease payments during a lease term requires significant judgment. This determination is impacted by numerous factors including our assessment of the tenant’s credit worthiness, economic conditions, tenant sales productivity in that location, historical experience with the tenant and tenants operating in the same industry, future prospects for the tenant and the industry in which it operates, and the length of the lease term. If leases currently classified as probable are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income. For example, in the event that our collectibility determinations were not accurate and we were required to write off additional receivables equaling 1% of rental income, our rental income and net income would decrease by $10.7 million. If leases currently classified as not probable are subsequently changed to probable, any lease receivables (including straight-line rent receivables) are re-instated with a corresponding increase to rental income.
Our collection of rents has continued to improve, including collecting rents related to prior periods. As a result, our collectibility related adjustments for the year ended December 31, 2022 resulted in an increase to rental income of $4.1 million, as compared to a $24.0 million decrease to rental income during the year ended December 31, 2021, which reflected lower levels of cash collections and elevated levels of rent abatements and disputes directly related to COVID-19. As of December 31, 2022 and 2021, the revenue from approximately 31% and 34% of our tenants (based on total commercial leases), respectively, is being recognized on a cash basis. As of December 31, 2022 and 2021, our straight-line rent receivables balance was $126.6 million and $110.7 million, respectively, and is included in "accounts and notes receivable, net" on our consolidated balance sheet.
As of December 31, 2022, we executed rent deferral agreements related to the COVID-19 pandemic representing approximately $48 million of rent. We have subsequently collected approximately $35 million of those amounts previously deferred.
Other revenue recognition policies
When we enter into a transaction to sell a property or a portion of a property, we evaluate the recognition of the sale under ASC 610-20, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets." In accordance with ASC 610-20, we apply the guidance in ASC 606, "Revenue from Contracts with Customers," to determine whether and when control transfers and how to measure the associated gain or loss. We determine the transaction price based on the consideration we expect to receive. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of a gain recognized will not occur. We analyze the risk of a significant gain reversal and if necessary limit the amount of variable consideration recognized in order to mitigate this risk. The estimation of variable consideration requires us to make assumptions and apply significant judgment. The existence and amount of variable consideration can vary significantly among transactions. Historically, our property sales have had variable consideration of less than 1% of total expected consideration; however, we had one transaction in 2019 where the variable consideration was approximately $45.5 million.
Real Estate Acquisitions
Upon acquisition of operating real estate properties, we estimate the fair value of assets and liabilities acquired including land, building, improvements, leasing costs, intangibles such as acquired leases, assumed debt, and current assets and liabilities, if any. Based on these estimates, we allocate the purchase price to the applicable assets and liabilities. We utilize methods similar to those used by independent appraisers in estimating the fair value of acquired assets and liabilities. The value allocated to acquired leases is amortized over the related lease term and reflected as rental income in the statement of operations. We consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below market renewal option and include such renewal options in the calculation of in-place lease value when we consider these to be bargain renewal options. If the value of below market lease intangibles includes renewal option periods, we include such renewal periods in the amortization period utilized. If a tenant vacates its space prior to contractual termination of its lease, the unamortized balance of any acquired lease value is written off to rental income.
During 2022, we acquired properties included in our consolidated financial statements with a total purchase price of $443.1 million. $1.9 million, or less than 1% of the total purchase price was allocated to above market lease assets and $38.7 million, or 9% was allocated to below market lease liabilities. If the amounts allocated in 2022 to below market lease liabilities and building assets were each reduced by 5% of the total purchase price, annual below market lease liability amortization increasing rental income would decrease by approximately $2.1 million (using the weighted average life of below market liabilities at each respective acquired property) and annual depreciation expense would decrease by approximately $0.6 million (using a depreciable life of 35 years).
Long-Lived Assets and Impairment
There are estimates and assumptions made by management in preparing the consolidated financial statements for which the actual results will be determined over long periods of time. This includes the recoverability of long-lived assets, including our properties that have been acquired or redeveloped and our investment in certain joint ventures. Management’s evaluation of impairment includes review for possible indicators of impairment as well as, in certain circumstances, undiscounted and discounted cash flow analysis. Since most of our investments in real estate are wholly-owned or controlled assets which are held for use, a property with impairment indicators is first tested for impairment by comparing the undiscounted cash flows, taking into account the anticipated hold period, including residual value, to the current net book value of the property. If the undiscounted cash flows are less than the net book value, the property is written down to expected fair value.
The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for space by tenants and rental rates over long periods. Because our properties typically have a long life, the assumptions used to estimate the future recoverability of book value requires significant management judgment. We are also required to estimate the anticipated hold period. A change in the expected holding period from a long term hold to a short term would cause a significant change in the undiscounted cash flows and could result in an impairment charge. Actual results could be significantly different from the estimates. These estimates have a direct impact on net income, because recording an impairment charge results in a negative adjustment to net income.
Recently Adopted and Recently Issued Accounting Pronouncements
See Note 2 to the consolidated financial statements.
2022 Acquisitions, Dispositions, and Other Transactions
During the year ended December 31, 2022, we acquired the following properties:
Date Acquired Property City/State Gross Leasable Area (GLA) Gross Value
(in square feet) (in millions)
April 20, 2022 &
July 27, 2022 Kingstowne Towne Center Kingstowne, Virginia 410,000 $ 200.0 (1)
July 18, 2022 Hilton Village (office building) Scottsdale, Arizona 212,000 $ 53.6 (2)
July 27, 2022 The Shops at Pembroke Gardens Pembroke Pines, Florida 391,000 $ 180.5 (3)
November 18, 2022 Hoboken (301 Washington St.) Hoboken, New Jersey N/A $ 9.0 (4)
(1)Approximately $11.3 million and $0.3 million of net assets were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $20.2 million of net assets acquired were allocated to other liabilities for "below market leases."
(2)This building is adjacent to, and will be operated as part of our Hilton Village property. The land is controlled under a long-term ground lease that expires on September 30, 2075, for which we have recorded a $6.5 million "operating lease right of use asset" (net of a $0.8 million above market liability) and a $7.3 million "operating lease liability." Approximately $8.9 million of net assets acquired were allocated to other assets for "acquired lease costs" and $0.1 million of net assets acquired were allocated to other liabilities for "below market leases."
(3)Approximately $16.3 million and $1.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $18.4 million of net assets acquired were allocated to other liabilities for "below market leases."
(4)This property, that we own a 90% ownership interest in, was acquired through our Hoboken joint venture, and is in the beginning stages of redevelopment.
On October 6, 2022, we acquired a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers for a combined price of $58.9 million. On the date of acquisition, the properties had combined mortgage debt of $76.1 million, of which, our share is approximately $36.2 million. Approximately $8.0 million and $2.0 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $17.1 million of net assets acquired were allocated to other liabilities for "below market leases." Additional information on the properties is listed below:
Property City/State Gross Leasable Area (GLA) Purchase Price
(our share)
(in square feet) (in millions)
Chandler Festival Chandler, Arizona 355,000 $ 40.8
Chandler Gateway Chandler, Arizona 262,000 $ 18.1
During the year ended December 31, 2022, we sold two residential properties (one included an adjacent retail pad), one retail property, one parcel of land, and one portion of a property for sales prices totaling $136.2 million, resulting in net gains totaling approximately $84.1 million.
Other Transactions
On July 13, 2022, we acquired the 21.8% redeemable noncontrolling interest in the partnership that owns our Plaza El Segundo shopping center for $23.6 million, bringing our ownership interest to 100%.
On August 25, 2022, we entered into a tenancy in common ("TIC") agreement with our partner in the partnership that owned Escondido Promenade. As a result, the Company owns a 77.7% TIC interest, and our former partner owns the remaining 22.3% interest. While the Company controlled and consolidated Escondido Promenade under the previous partnership arrangement, control is shared under the TIC agreement. The transaction is considered a transfer of our previous controlling partner interest in exchange for a non-controlling TIC interest. Accordingly, we deconsolidated the entity and recorded our TIC interest at fair value as an equity method investment. We recognized a $70.4 million "gain on deconsolidation of VIE" on our consolidated statements of operations, which is the difference between the net carrying value of the deconsolidated entity and the fair value of our TIC interest. As of August 25, 2022, the fair value of our investment in the entity was $110.0 million, and is included in "investment in partnerships" on our consolidated balance sheet as of December 31, 2022. As a part of this transaction, we made a $3.5 million loan to our co-owner, which is included in "accounts and notes receivable, net" on our consolidated balance sheet at December 31, 2022. In addition, we entered into a purchase option agreement to acquire the TIC interest from our co-owner, which was secured through an option payment of $1.5 million, and allows us to exercise our option at any time between February 1, 2023 and March 15, 2023.
2022 Significant Debt and Equity Transactions
On February 14, 2022, we replaced our existing at-the-market (“ATM”) equity program with a new ATM equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $500.0 million. Our ATM equity program also allows shares to be sold through forward sales contracts. We intend to use the net proceeds from ATM equity program issuances to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay indebtedness and/or for general corporate purposes.
During 2022, we settled the remaining forward sales agreements entered into during 2021 by issuing 2,203,655 common shares for net proceeds of $259.4 million, and consequently, we have no outstanding open forward sales agreements as of December 31, 2022. For the year ended December 31, 2022, we issued 430,473 common shares at a weighted average price per share of $111.49 for net cash proceeds of $47.4 million including paying $0.5 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. As of December 31, 2022, we had the capacity to issue up to $452.0 million in common shares under our ATM equity program.
On June 29, 2022, we repaid the $16.1 million mortgage loan on one of the buildings at our Hoboken property, at par.
On October 5, 2022, we amended our revolving credit facility, increasing the borrowing capacity from $1.0 billion to $1.25 billion, extending the maturity date to April 5, 2027, plus two six-month extension options, transitioning the interest rate provisions from LIBOR to the secured overnight financing rate ("SOFR"), and adjusting the spread for SOFR based loans. Our SOFR based loans bear interest at Daily Simple SOFR or Term SOFR as defined in the credit agreement plus 0.10% plus a spread, based on our credit rating. The current spread is 77.5 basis points. In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.75 billion. On October 5, 2022, we also amended our unsecured term loan and borrowed an additional $300.0 million, bringing the total outstanding to $600.0 million. The term loan amendment also transitioned the interest rate provisions from LIBOR to SOFR. This SOFR based loan bears interest at Term SOFR as defined in the agreement, plus 0.10%, plus an 85 basis point spread, based on our current credit rating. The net proceeds from the term loan were used to repay the $267.0 million outstanding balance on the revolving credit facility and for general corporate purposes.
2023 Acquisition
On January 31, 2023, we acquired the 180,000 square foot portion of Huntington Square shopping center that was not previously owned, as well as the fee interest in the land underneath the portion of the shopping center which we control under a long-term ground lease for $35.5 million.
Capitalized Costs
Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-construction costs, real estate taxes, insurance, and construction costs and salaries and related costs of personnel directly involved, are capitalized. We capitalized external and internal costs related to both development and redevelopment activities of $278 million and $11 million, respectively, for 2022 and $356 million and $10 million, respectively, for 2021. We capitalized external and internal costs related to other property improvements of $111 million and $4 million, respectively, for 2022 and $64 million and $4 million, respectively, for 2021. We capitalized external and internal costs related to leasing activities of $18 million and $4 million, respectively, for 2022 and $19 million and $3 million, respectively, for 2021. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $10 million, $3 million, and $4 million, respectively, for 2022 and $10 million, $3 million, and $3 million, respectively, for 2021. Total capitalized costs were $425 million for 2022 and $456 million for 2021, respectively.
Corporate Reorganization
In January 2022, we completed a reorganization into an umbrella partnership real estate investment trust, or "UPREIT." For additional information on our UPREIT reorganization, please see our Current Reports on Form 8-K filed with the SEC on January 3, 2022 and January 5, 2022, as well our 2021 Annual Report on Form 10-K filed on February 10, 2022. Immediately following the reorganization, the Parent Company had the same consolidated assets and liabilities as Federal Realty Investment Trust immediately before the reorganization. The Parent Company exercises exclusive control over the General Partner and does not have assets or liabilities other than its investment in the Operating Partnership. As a result, the UPREIT reorganization represented a merger of entities under common control in accordance with accounting principles generally accepted in the United States ("GAAP"). Accordingly, the accompanying consolidated financial statements including the notes thereto, are presented as if the UPREIT reorganization had occurred at the earliest period presented.
Outlook
Our long-term growth strategy is focused on growth in earnings, funds from operations, and cash flows primarily through a combination of the following:
•growth in our comparable property portfolio,
•growth in our portfolio from property redevelopments and expansions, and
•expansion of our portfolio through property acquisitions.
While the general economic effects of the elevated levels of inflation, rising interest rates, and the COVID-19 pandemic are impacting us in the short-term, our long-term focus has not changed. Our comparable property growth is primarily driven by increases in rental rates on new leases and lease renewals, changes in portfolio occupancy, and the redevelopment of those assets. Over the long-term, the infill nature and strong demographics of our properties provide a strategic advantage allowing us to maintain relatively high occupancy and generally increase rental rates. We believe the locations and nature of our centers and diverse tenant base partially mitigates any potential negative changes in the economic environment. However, any significant reduction in our tenants' abilities to pay base rent, percentage rent or other charges, will adversely affect our financial condition and results of operations. We seek to maintain a mix of strong national, regional, and local retailers. At December 31, 2022, no single tenant accounted for more than 2.8% of annualized base rent.
The effects of the current economic conditions, the COVID-19 pandemic, and inflation continue to negatively impact our business with the largest current impacts being lower occupancy, supply chain disruptions, and higher interest costs. At December 31, 2022, our commercial space is 92.8% occupied, which is below historical levels largely due to tenant failures as a result of the pandemic. This lower occupancy will adversely impact our results until we can release the space and then commences paying rent, as well as limit future vacancies. We are, however, experiencing strong demand for our commercial space as evidenced by the 2.0 million square feet of comparable space leasing we've completed in 2022, and the 1.7% spread between our leased rate of 94.5% and our occupied rate of 92.8%. Our percentage of contractual rent actually collected has continued to increase since the low point in April 2020, including some tenants paying past due amounts. We continue to see impacts of overall supply chain disruptions affecting the broader economy, including significantly longer lead times, limited availability, and increased costs for certain construction and other materials that support our development and redevelopment activities. If disruptions continue to worsen, they could result in extended timeframes and/or increased costs for completion of our projects and tenant build-outs, which could delay the commencement of rent payments under new leases. Similarly, if our
tenants experience significant disruptions in supply chains supporting their own products, or staffing issues due to labor shortages, their ability to pay rent may be adversely affected. We continue to monitor these macroeconomic developments and are working with our tenants and our vendors to limit the overall impact to our business.
The duration and severity of the economic impact from the current economic environment and the COVID-19 pandemic will depend on future developments, which are highly uncertain and cannot be predicted, however, we seek to position the Trust to continue to participate in the resulting economic recovery.
We continue to have several development projects in process being delivered as follows:
•Phase III of Assembly Row includes 277,000 square feet of office space, 56,000 square feet of retail space, and 500 residential units. As of December 31, 2022, Phase III is substantially complete, with expected final costs between $475 million and $485 million.
•Phase III at Pike & Rose includes a 212,000 square foot office building (which includes 7,000 square feet of ground floor retail space and approximately 45,000 square feet is our new corporate headquarters). As of December 31, 2022, Phase III is substantially complete, with final estimated costs between $130 million and $135 million.
•Phase IV at Pike & Rose is a 276,000 square foot office building (which includes 10,000 square feet of ground floor retail space). Approximately 157,000 square feet of the office space is pre-leased to two tenants. The building is expected to cost between $185 million and $200 million, and begin delivering in late 2023.
•The first phase of construction on Santana West includes an eight story 376,000 square foot office building, which is expected to cost between $300 million and $315 million.
•Throughout the portfolio, we currently have redevelopment projects underway with a projected total cost of approximately $228 million that we expect to stabilize over the next several years.
The above includes our best estimates based on information currently known, however, the completion of construction, final costs, and the timing of leasing and openings may be further impacted by the current environment including the duration and severity of the economic impacts of COVID-19, supply chain disruptions, broader economic conditions, and inflation.
The development of future phases of Assembly Row, Pike & Rose and Santana Row will be pursued opportunistically based on, among other things, market conditions, tenant demand, and our evaluation of whether those phases will generate an appropriate financial return.
We continue to review acquisition opportunities that complement our portfolio and provide long-term growth opportunities. Initially, some of our acquisitions do not contribute significantly to earnings growth; however, we believe they provide long-term re-leasing growth, redevelopment opportunities, and other strategic opportunities. Any growth from acquisitions is contingent on our ability to find properties that meet our qualitative standards at prices that meet our financial hurdles. Changes in interest rates may affect our success in achieving earnings growth through acquisitions by affecting both the price that must be paid to acquire a property, as well as our ability to economically finance the property acquisition. Generally, our acquisitions are initially financed by available cash and/or borrowings under our revolving credit facility which may be repaid later with funds raised through the issuance of new equity or new long-term debt. We may also finance our acquisitions through the issuance of common shares, preferred shares, or units in the Operating Partnership, as well as through assumed mortgages and property sales.
At December 31, 2022, the leasable square feet in our properties was 94.5% leased and 92.8% occupied. The leased rate is higher than the occupied rate due to leased spaces that are being redeveloped or improved or that are awaiting permits and, therefore, are not yet ready to be occupied. Our occupancy and leased rates are subject to variability over time due to factors including acquisitions, the timing of the start and stabilization of our redevelopment projects, lease expirations and tenant closings and bankruptcies.
Comparable Properties
Throughout this section, we have provided certain information on a “comparable property” basis. Information provided on a comparable property basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties that are currently under development or are being repositioned for significant redevelopment and investment. For the year ended December 31, 2022 and the comparison of 2022 and 2021, all or a portion of 91 properties, were considered comparable properties and seven were considered non-comparable properties. For the year ended December 31, 2022, one property was moved from comparable properties to non-comparable properties, one property was moved from non-comparable properties to comparable properties, three properties were removed from comparable properties, as they were sold, and one property was removed from comparable properties, as it was deconsolidated, compared to the designations as of December 31, 2021. While there is judgment surrounding changes in designations, we typically move non-comparable properties to comparable properties once they have stabilized, which is typically considered 90% physical
occupancy or when the growth expected from the redevelopment has been included in the comparable periods. We typically remove properties from comparable properties when the repositioning of the asset has commenced and has or is expected to have a significant impact to property operating income within the calendar year. Acquisitions are moved to comparable properties once we have owned the property for the entirety of comparable periods and the property is not under development or being repositioned for significant redevelopment and investment. Comparable property information replaces our previous same center designations.
YEAR ENDED DECEMBER 31, 2022 COMPARED TO YEAR ENDED DECEMBER 31, 2021
Change
2022 2021 Dollars %
(Dollar amounts in thousands)
Rental income $ 1,073,292 $ 948,842 $ 124,450 13.1 %
Mortgage interest income 1,086 2,382 (1,296) (54.4) %
Total property revenue 1,074,378 951,224 123,154 12.9 %
Rental expenses 228,958 198,121 30,837 15.6 %
Real estate taxes 127,824 118,496 9,328 7.9 %
Total property expenses 356,782 316,617 40,165 12.7 %
Property operating income (1)
717,596 634,607 82,989 13.1 %
General and administrative expense (52,636) (49,856) (2,780) 5.6 %
Depreciation and amortization (302,409) (279,976) (22,433) 8.0 %
Gain on deconsolidation of VIE 70,374 - 70,374 100.0 %
Gain on sale of real estate and change in control of interest 93,483 89,950 3,533 3.9 %
Operating income 526,408 394,725 131,683 33.4 %
Other interest income 1,072 809 263 32.5 %
Interest expense (136,989) (127,698) (9,291) 7.3 %
Income from partnerships 5,170 1,245 3,925 315.3 %
Total other, net (130,747) (125,644) (5,103) 4.1 %
Net income 395,661 269,081 126,580 47.0 %
Net income attributable to noncontrolling interests (10,170) (7,583) (2,587) 34.1 %
Net income attributable to the Trust $ 385,491 $ 261,498 $ 123,993 47.4 %
(1) Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations to the previous period and we consider it be a significant measure. We believe that property operating income is useful to investors in measuring the operating performance of our property portfolio because the definition excludes various items included in operating income that do not relate to, or are not indicative of, the operating performance of our properties, such as general and administrative expenses and depreciation and amortization, and allows us to isolate disparities in operating income caused by acquisitions, dispositions, and stabilization of properties. Property operating income may, therefore, provide a more consistent metric for comparing the operating performance of our real estate between periods. 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 for 2022 and 2021 is as follows:
2022 2021
(in thousands)
Operating income $ 526,408 $ 394,725
General and administrative 52,636 49,856
Depreciation and amortization 302,409 279,976
Gain on deconsolidation of VIE (70,374) -
Gain on sale of real estate and change in control of interest (93,483) (89,950)
Property operating income $ 717,596 $ 634,607
Property Revenues
Total property revenue increased $123.2 million, or 12.9%, to $1.1 billion in 2022 compared to $951.2 million in 2021. The percentage occupied at our shopping centers was 92.8% at December 31, 2022 compared to 91.1% at December 31, 2021. The most significant driver of the increase in property revenues is the ongoing recovery from the initial impacts of COVID-19
during 2022, as compared to 2021, when COVID-19 related restrictions were still in effect for a portion of the year. Changes in the components of property revenue are discussed below.
Rental Income
Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased $124.5 million, or 13.1%, to $1.1 billion in 2022 compared to $948.8 million in 2021 due primarily to the following:
•an increase of $39.8 million from 2021 and 2022 acquisitions,
•an increase of $36.3 million from comparable properties primarily related to higher percentage rent, parking income, and specialty leasing of $10.7 million primarily the result of the gradual lifting of COVID-19 closures and restrictions during 2021, higher rental rates of $9.9 million, higher average occupancy of approximately $8.3 million, a $5.7 million increase in CAM recoveries on higher CAM costs, and a $3.2 million increase in tenant recoveries, partially offset by lower net termination fees and legal fee income of $2.5 million,
•an increase of $30.6 million from non-comparable properties primarily driven by the opening of Phase III at Assembly Row in 2021, redevelopment related occupancy increases at CocoWalk, and the 2021 and 2022 openings at the Phase III office building at Pike & Rose, partially offset by redevelopment related occupancy decreases at Huntington Shopping Center,
•a $28.0 million decrease in collectibility related impacts across all properties primarily due to higher collection rates and lower rent abatements in 2022 as tenants continue to recover from the initial impacts of COVID-19, and
•an increase of $4.2 million from improving demand at our Pike & Rose hotel,
partially offset by
•a decrease of $11.4 million from property sales.
Mortgage Interest Income
Mortgage interest income decreased $1.3 million, or 54.4%, to $1.1 million in 2022 compared to $2.4 million in 2021 primarily due to the repayment of $31.1 million of mortgage notes receivable in May 2021.
Property Expenses
Total property expenses increased $40.2 million, or 12.7%, to $356.8 million in 2022 compared to $316.6 million in 2021. Changes in the components of property expenses are discussed below.
Rental Expenses
Rental expenses increased $30.8 million, or 15.6%, to $229.0 million in 2022 compared to $198.1 million in 2021. This increase is primarily due to the following:
•an increase of $12.2 million from comparable properties due primarily to higher repairs and maintenance costs, utilities, and management fees, as 2021 had lower costs as a result of COVID-19 impacts, as well as inflationary impacts in 2022 and higher insurance costs,
•an increase of $7.7 million from 2021 and 2022 acquisitions,
•an increase of $6.9 million from non-comparable properties due primarily to the 2021 openings of Phase III at Assembly Row, the Phase III office building at Pike & Rose, and CocoWalk, as well as increased costs associated with the redevelopment of Huntington Shopping Center, and
•an increase of $5.3 million from higher operating costs at our Pike & Rose hotel largely due to lifting of COVID-19 restrictions,
partially offset by
•a decrease of $1.5 million from our property sales.
As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income increased to 21.3% for the year ended December 31, 2022 from 20.9% for the year ended December 31, 2021.
Real Estate Taxes
Real estate tax expense increased $9.3 million, or 7.9% to $127.8 million in 2022 compared to $118.5 million in 2021 due primarily to the following:
•an increase of $5.6 million from 2021 and 2022 acquisitions,
•an increase of $2.6 million from non-comparable properties due primarily to the opening of Phase III at Assembly Row, and
•an increase of $2.1 million from comparable properties primarily due to a true-up in 2021 of prior year supplemental taxes at one of our properties and higher assessments,
partially offset by
•a decrease of $0.8 million from our property sales.
Property Operating Income
Property operating income increased $83.0 million, or 13.1%, to $717.6 million in 2022 compared to $634.6 million in 2021. This increase is primarily driven by the ongoing recovery from the initial impacts of COVID-19, which resulted in lower collectibility related adjustments and higher percentage rent, specialty leasing, and parking income, compared to 2021 during which COVID-19 related restrictions were gradually being lifted. Also contributing to the increase were property acquisitions, higher occupancy and rental rates at comparable properties, and the opening of Phase III at Assembly Row in 2021, partially offset by property sales.
Other Operating
General and Administrative Expense
General and administrative expense increased $2.8 million, or 5.6%, to $52.6 million in 2022 from $49.9 million in 2021. This increase is due primarily to higher personnel related costs.
Depreciation and Amortization
Depreciation and amortization expense increased $22.4 million, or 8.0%, to $302.4 million in 2022 from $280.0 million in 2021. This increase is due primarily to property acquisitions, the openings of Phase III at Assembly Row, the Phase III office building at Pike & Rose, and CocoWalk, partially offset by the net impact of accelerated depreciation related to 2021 and 2022 redevelopment activities and 2021 property sales.
Gain on Deconsolidation of VIE
The $70.4 million gain on deconsolidation of VIE for the year ended December 31, 2022 is the result of the deconsolidation of Escondido Promenade in connection with the execution of the related August 25, 2022 TIC agreement (see Note 3 for additional information).
Gain on Sale of Real Estate and Change in Control of Interest
The $93.5 million gain on sale of real estate for the year ended December 31, 2022 is due primarily to a net gain of $84.1 million from the sale of two residential properties (including an adjacent retail pad), one retail property, and one parcel of land (see Note 3 for additional information), and a $9.3 million gain related to the reduction of our liability for estimated condemnation and transaction costs associated with the sale under threat of condemnation in December 2019 at San Antonio Center (see Note 7 for additional information).
The $90.0 million gain on sale of real estate for the year ended December 31, 2021 is due to the sale of two properties and portions of three properties, as well as the $2.1 million gain relating to the acquisition of the previously unconsolidated Pike & Rose hotel joint venture (see Note 3 to the consolidated financial statements for additional information).
Operating Income
Operating income increased $131.7 million, or 33.4%, to $526.4 million in 2022 compared to $394.7 million in 2021. This increase is primarily due to the gain on the deconsolidation of a VIE, and the ongoing recovery from the impacts of COVID-19 restrictions, which resulted in lower collectibility related adjustments and higher percentage rent, specialty leasing, and parking income, compared to 2021 during which COVID-19 related restrictions were gradually being lifted. Also contributing to the increase were property acquisitions, higher occupancy and rental rates at comparable properties, and the opening of Phase III at Assembly Row in 2021, partially offset by property sales and higher personnel related costs.
Other
Interest Expense
Interest expense increased $9.3 million, or 7.3%, to $137.0 million in 2022 compared to $127.7 million in 2021. This increase is due primarily to the following:
•an increase of $5.6 million due to a higher overall weighted average borrowing rate, and
•a decrease of $4.0 million in capitalized interest,
partially offset by
•a decrease of $0.2 million due to lower weighted average borrowings.
Gross interest costs were $155.7 million and $150.3 million in 2022 and 2021, respectively. Capitalized interest was $18.7 million and $22.6 million in 2022 and 2021, respectively.
Income from Partnerships
Income from partnerships increased $3.9 million or 315.3% to $5.2 million in 2022 compared to $1.2 million in 2021. This increase is due primarily to improved operating results at our Assembly Row hotel joint venture and our restaurant joint ventures, largely the result of the easing of COVID-19 closures and restrictions and the forgiveness of certain loans for some of our restaurants joint ventures and at our Assembly Row hotel joint venture.
Net income attributable to noncontrolling interests
Net income attributable to noncontrolling interests increased $2.6 million, or 34.1%, to $10.2 million in 2022 compared to $7.6 million in 2021. The increase is primarily due to 2021 acquisitions and higher income at our properties with third party partners.
Discussions of year-to-year comparisons between 2021 and 2020 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on February 10, 2022.
Liquidity and Capital Resources
Due to the nature of our business and strategy, we typically generate significant amounts of cash from operations which is largely paid to our common and preferred shareholders in the form of dividends because as a REIT, the Trust is generally required to make annual distributions to shareholders of at least 90% of our taxable income (cash dividends paid in 2022 were approximately $349.0 million). Remaining cash flow from operations after dividend payments is used to fund recurring and non-recurring capital projects (such as tenant improvements and redevelopments), and regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities). We maintain a $1.25 billion revolving credit facility to fund short term cash flow needs and also look to the public and private debt and equity markets, joint venture relationships, and property dispositions to fund capital expenditures on a long-term basis.
During 2022, we have continued to see improvements in overall cash collections from tenants with collection rates nearing pre-pandemic levels. We have also taken multiple steps over the past two years to strengthen our financial position, maximize liquidity, and to provide maximum flexibility during these uncertain times. On October 5, 2022, we amended our revolving credit facility increasing the borrowing capacity from $1.0 billion to $1.25 billion and extending the maturity date to April 5, 2027, plus two six-month extensions at our option. Additionally, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.75 billion. We also amended our unsecured term loan, borrowing an additional $300.0 million.
As of December 31, 2022, there is no balance outstanding on our $1.25 billion unsecured revolving credit facility and we had cash and cash equivalents of $85.6 million. For the year ended 2022, the weighted average amount of borrowings outstanding on our revolving credit facility was $80.3 million, and the weighted average interest rate, before amortization of debt fees, was 3.2%. We also have the capacity to issue up to $452.0 million in common shares under the ATM program. We have $275.0 million of debt maturing in 2023.
Our overall capital requirements during 2023 will be impacted by the overall economic environment including impacts of inflation, supply chain issues, and a potential recession, as well as acquisition opportunities and the level and general timing of our redevelopment and development activities. We currently have development and redevelopment projects in various stages of construction with remaining costs of $274 million. We expect to incur the majority of those costs in the next two years. We expect overall capital costs to be at levels consistent with 2022 or slightly reduced as we complete current redevelopment
projects, prepare vacant space for new tenants, and complete the current phase and start on the next phase of our larger mixed use development projects.
We believe cash flow from operations, the cash on our balance sheet, and our $1.25 billion revolving credit facility will allow us to continue to operate our business in the short-term. Given our ability to access the capital markets, we also expect debt or equity to be available to us, although newly issued debt would likely be at higher interest rates than we currently have outstanding. We also have the ability to delay the timing of certain development and redevelopment projects as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy. We expect these sources of liquidity and opportunities for operating flexibility to allow us to meet our financial obligations over the long term. While we have seen significant improvements from the initial negative impacts of the COVID-19 pandemic, it, along with the overall state of the economy continues to affect our overall business, and we expect it will continue to negatively impact our business in the short term. However, we intend to operate with and to maintain our long term commitment to a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-grade debt ratings.
Summary of Cash Flows
Year Ended December 31,
2022 2021
(In thousands)
Net cash provided by operating activities $ 516,769 $ 471,352
Net cash used in investing activities (785,998) (660,118)
Net cash provided by (used in) financing activities 190,414 (452,967)
Decrease in cash and cash equivalents (78,815) (641,733)
Cash, cash equivalents, and restricted cash, beginning of year 175,163 816,896
Cash, cash equivalents, and restricted cash, end of year $ 96,348 $ 175,163
Net cash provided by operating activities increased $45.4 million to $516.8 million during 2022 from $471.4 million during 2021. The increase was primarily attributable to higher net income before non-cash items and gains on sale of real estate, partially offset by the timing of collections of real estate tax reconciliation billings during 2021 and the timing of payments.
Net cash used in investing activities increased $125.9 million to $786.0 million during 2022 from $660.1 million during 2021. The increase was primarily attributable to:
•a $72.0 million increase in acquisition of real estate primarily due to 2022 property acquisitions (see Note 3 to the consolidated financial statements for additional information), as compared to 2021 property acquisitions,
•the $31.1 million payoff of two mortgage notes receivable in May 2021,
•a $20.0 million increase in investment in partnerships, resulting from the 2022 acquisition of a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers (see Note 3 to the consolidated financial statements for additional information), and
•$18.0 million for net costs paid in 2022 relating to the partial sale under threat of condemnation at San Antonio Center in 2019,
partially offset by
•a $23.8 million decrease in net capital expenditures.
Net cash used in financing activities decreased $643.4 million to $190.4 million provided during 2022 from $453.0 million used during 2021. The decrease was primarily attributable to:
•$298.6 million in net proceeds from our unsecured term loan in October 2022,
•a $258.2 million decrease in repayment of mortgages, finance leases, and notes payable primarily due to the $16.1 million mortgage loan repayment on one of the buildings at our Hoboken property in June 2022, as compared to the $140.9 million net repayments of four mortgage loans in 2021, the $100.0 million partial repayment of our $400.0 term loan which was amended in April 2021, and the $31.5 million repayment of the mortgage loan related to the Pike & Rose hotel in January 2021, and
•$134.3 million increase in net proceeds from the issuance of common shares under our ATM equity program for net proceeds of $306.8 million and $172.7 million, respectively, during 2022 and 2021,
partially offset by,
•a $27.6 million increase in distributions to and redemptions of noncontrolling interests primarily related to our acquisition of the redeemable noncontrolling interest in the partnership that owns the Plaza El Segundo shopping center for $23.6 million, and
•an $11.6 million increase in dividends paid to shareholders due to an increase in the common share dividend rate and an increase in the number of common shares outstanding.
Cash Requirements
The following table provides a summary of material cash requirements comprising our fixed, noncancelable obligations as of December 31, 2022:
Cash Requirements by Period
Total Next Twelve Months Greater than Twelve Months
(In thousands)
Fixed and variable rate debt (principal only) (1) $ 4,344,474 $ 278,893 4,065,581
Fixed and variable rate debt - our share of unconsolidated real estate partnerships (principal only)(2) 64,183 20,248 43,935
Lease obligations (minimum rental payments) (3)(4) 358,276 65,488 292,788
Redevelopments/capital expenditure contracts 262,081 244,096 17,985
Real estate commitments (5) 11,091 - 11,091
Total estimated cash requirements $ 5,040,105 $ 608,725 $ 4,431,380
_____________________
(1)The weighted average interest rate on our fixed and variable rate debt is 3.7% as of December 31, 2022.
(2)The weighted average interest rate on the fixed and variable rate debt related to our unconsolidated real estate partnerships is 4.05% as of December 31, 2022.
(3)This includes minimum rental payments related to both finance and operating leases.
(4)Lease obligations in the next twelve months include the $55 million fixed purchase price option for Mercer Mall as discussed in Note 7 to the consolidated financial statements.
(5)This includes the liability related to the sale under threat of condemnation at San Antonio Center as further discussed in Note 7 to the consolidated financial statements.
In addition to the amounts set forth in the table above and other liquidity requirements previously discussed, the following potential commitments exist:
(a)Under the terms of the Congressional Plaza partnership agreement, a minority partner has the right to require us and the other minority partner to purchase its 26.63% interest in Congressional Plaza at the interest’s then-current fair market value. If the other minority partner defaults in their obligation, we must purchase the full interest. Based on management’s current estimate of fair market value as of December 31, 2022, our estimated liability upon exercise of the put option would range from approximately $62 million to $65 million.
(b)Under the terms of various other partnership agreements, the partners have the right to exchange their operating partnership units for cash or the same number of our common shares, at our option. As of December 31, 2022, a total of 644,554 downREIT operating partnership units are outstanding.
(c)The other member in The Grove at Shrewsbury and Brook 35 has the right to require us to purchase all of its approximately 4.1% interest in The Grove at Shrewsbury and approximately 6.5% interest in Brook 35 at the interests' then-current fair market value. Based on management's current estimate of fair market value as of December 31, 2022, our estimated maximum liability upon exercise of the put option would range from $6 million to $7 million.
(d)Effective September 18, 2023, the other member in Hoboken has the right to require us to purchase all of its 10% ownership interest at the interest's then-current fair market value. Based on management's current estimate of fair market value as of December 31, 2022, our estimated maximum liability upon exercise of the put option would range from $8 million to $9 million.
(e)Effective June 14, 2026, the other member in Camelback Colonnade and Hilton Village has the right to require us to purchase all of its 2.0% ownership interest at the interest's then-current fair market value. Based on management's current
estimate of fair value as of December 31, 2022, our estimated maximum liability upon exercise of the put option would range from $4 million to $5 million.
(f)Effective October 6, 2027, the other member in the partnership that owns equity method investments in Chandler Festival and Chandler Gateway has the right to require us to purchase its 2.5% net ownership interest. Based on management's current estimate of fair value as of December 31, 2022, our estimated maximum liability upon exercise of the put option would range from $1 million and $2 million.
(g)Effective June 1, 2029, the other member in Grossmont Center has the right to require us to purchase all of its 40.0% ownership interest at the interest's then-current fair market value. Based on management's current estimate of fair value as of December 31, 2022, our estimated maximum liability upon exercise of the put option would range from $68 million to $73 million.
(h)At December 31, 2022, we had letters of credit outstanding of approximately $6.7 million.
Off-Balance Sheet Arrangements
At December 31, 2022, we have four real estate related equity method investments with total debt outstanding of $154.1 million, of which our share is $63.8 million. Our investment in these ventures at December 31, 2022 was $34.0 million.
Other than the items disclosed in the Cash Requirements table, we have no off-balance sheet arrangements as of December 31, 2022 that are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements, or capital resources.
Debt Financing Arrangements
The following is a summary of our total debt outstanding as of December 31, 2022:
Description of Debt Original
Debt
Issued Principal Balance as of December 31, 2022 Stated Interest Rate as of December 31, 2022 Maturity Date
(Dollars in thousands)
Mortgages payable
Secured fixed rate
Azalea Acquired $ 40,000 3.73 % November 1, 2025
Bell Gardens Acquired 11,835 4.06 % August 1, 2026
Plaza El Segundo 125,000 125,000 3.83 % June 5, 2027
The Grove at Shrewsbury (East) 43,600 43,600 3.77 % September 1, 2027
Brook 35 11,500 11,500 4.65 % July 1, 2029
Hoboken (24 Buildings) (1) 56,450 55,060 LIBOR + 1.95% December 15, 2029
Various Hoboken (14 Buildings) Acquired 30,876 Various (2) Various through 2029
Chelsea Acquired 4,446 5.36 % January 15, 2031
Subtotal 322,317
Net unamortized debt issuance costs and premium (1,702)
Total mortgages payable, net 320,615
Notes payable
Term Loan (3)(5) 600,000 600,000 SOFR + 0.85% April 16, 2024
Revolving credit facility (3)(4)(5) 1,250,000 - SOFR + 0.775% April 5, 2027
Various 7,239 2,957 Various (6) Various through 2059
Subtotal 602,957
Net unamortized debt issuance costs (1,880)
Total notes payable, net 601,077
Senior notes and debentures
Unsecured fixed rate
2.75% notes 275,000 275,000 2.75 % June 1, 2023
3.95% notes 600,000 600,000 3.95 % January 15, 2024
1.25% notes 400,000 400,000 1.25 % February 15, 2026
7.48% debentures 50,000 29,200 7.48 % August 15, 2026
3.25% notes 475,000 475,000 3.25 % July 15, 2027
6.82% medium term notes 40,000 40,000 6.82 % August 1, 2027
3.20% notes 400,000 400,000 3.20 % June 15, 2029
3.50% notes 400,000 400,000 3.50 % June 1, 2030
4.50% notes 550,000 550,000 4.50 % December 1, 2044
3.625% notes 250,000 250,000 3.625 % August 1, 2046
Subtotal 3,419,200
Net unamortized debt issuance costs and premium (11,499)
Total senior notes and debentures, net 3,407,701
Total debt, net $ 4,329,393
_____________________
(1)On November 26, 2019, we entered into two interest rate swap agreements that fix the interest rate on the mortgage loan at 3.67%.
(2)The interest rates on these mortgages range from 3.91% to 5.00%.
(3)Our revolving credit facility SOFR loans bear interest at Daily Simple SOFR or Term SOFR as defined in the credit agreement and our term loan bears interest at Term SOFR, plus 0.10%, plus a spread, based on our current credit rating.
(4)The maximum amount drawn under our revolving credit facility during 2022 was $330.0 million and the weighted average effective interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was 3.2%.
(5)The Operating Partnership is the obligor under our revolving credit facility, term loan, and senior notes and debentures.
(6)The interest rates on these notes payable range from 3.00% to 11.31%.
Our revolving credit facility, unsecured term loan, and other debt agreements include financial and other covenants that may limit our operating activities in the future. As of December 31, 2022, we were in compliance with all financial and other covenants related to our revolving credit facility, term loan, and senior notes. Additionally, we were in compliance with all of the financial and other covenants that could trigger a loan default on our mortgage loans. If we were to breach any of these financial and other covenants and did not cure the breach within an applicable cure period, our lenders could require us to repay the debt immediately and, if the debt is secured, could immediately begin proceedings to take possession of the property securing the loan. Many of our debt arrangements, including our public notes and our revolving credit facility, are cross-defaulted, which means that the lenders under those debt arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a default under certain of our other debt obligations. As a result, any default under our debt covenants could have an adverse effect on our financial condition, our results of operations, our ability to meet our obligations and the market value of our shares. Our organizational documents do not limit the level or amount of debt that we may incur.
The following is a summary of our scheduled principal repayments as of December 31, 2022:
Unsecured Secured Total
(In thousands)
2023 $ 275,755 $ 3,138 $ 278,893
2024 1,200,671 (1) 3,299 1,203,970
2025 418 47,630 48,048
2026 429,276 26,240 455,516
2027 515,037 (2) 178,278 693,315
Thereafter 1,601,000 63,732 1,664,732
$ 4,022,157 $ 322,317 $ 4,344,474 (3)
_____________________
(1)Our $600.0 million term loan matures on April 16, 2024, plus two one-year extensions, at our option.
(2)Our $1.25 billion revolving credit facility matures on April 5, 2027, plus two six-month extensions, at our option. As of December 31, 2022, there was no outstanding balance under this credit facility.
(3)The total debt maturities differ from the total reported on the consolidated balance sheet due to the unamortized net debt issuance costs and premium/discount on mortgage loans, notes payable, and senior notes as of December 31, 2022.
Interest Rate Hedging
We may use derivative instruments to manage exposure to variable interest rate risk. We generally enter into interest rate swaps to manage our exposure to variable interest rate risk and treasury locks to manage the risk of interest rates rising prior to the issuance of debt. We enter into derivative instruments that qualify as cash flow hedges and do not enter into derivative instruments for speculative purposes.
Interest rate swaps associated with cash flow hedges are recorded at fair value on a recurring basis. Effectiveness of cash flow hedges is assessed both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recorded in other comprehensive income (loss) which is included in "accumulated other comprehensive loss" on the balance sheet and statement of shareholders' equity. Cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. In addition, the default risk of the counterparty is evaluated by monitoring the credit worthiness of the counterparty which includes reviewing debt ratings and financial performance. If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recognized in earnings in the period affected.
As of December 31, 2022, we have two interest rate swap agreements that effectively fix the interest rate on a mortgage payable associated with our Hoboken portfolio at 3.67%. Our Assembly Row hotel joint venture is also a party to two interest rate swap agreements that effectively fix their debt at 5.206%. All swaps were designated and qualify as cash flow hedges. Hedge ineffectiveness has not impacted our earnings in 2022, 2021 and 2020.
REIT Qualification
We intend to maintain our qualification as a REIT under Section 856(c) of the Code. As a REIT, we generally will not be subject to corporate federal income taxes on income we distribute to our shareholders as long as we satisfy certain technical requirements of the Code, including the requirement to distribute at least 90% of our taxable income to our shareholders.
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 gains and losses on the sale of real estate or changes in control, net of tax, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. 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. However, we must distribute at least 90% of our annual 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:
Year Ended December 31,
2022 2021 2020
(In thousands, except per share data)
Net income $ 395,661 $ 269,081 $ 135,888
Net income attributable to noncontrolling interests (10,170) (7,583) (4,182)
Gain on deconsolidation of a VIE (70,374) - -
Gain on sale of real estate and change in control of interests, net (93,483) (89,892) (91,922)
Impairment charge, net - - 50,728
Depreciation and amortization of real estate assets 266,741 243,711 228,850
Amortization of initial direct costs of leases 27,268 26,051 20,415
Funds from operations 515,643 441,368 339,777
Dividends on preferred shares (1) (7,500) (8,042) (8,042)
Income attributable to operating partnership units 2,810 2,998 3,151
Income attributable to unvested shares (1,797) (1,581) (1,037)
Funds from operations available for common shareholders (2) $ 509,156 $ 434,743 $ 333,849
Weighted average number of common shares, diluted (1)(2)(3) 80,603 78,072 76,261
Funds from operations available for common shareholders, per diluted share (2) $ 6.32 $ 5.57 $ 4.38
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(1)For the year ended December 31, 2022, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."
(2)For the year ended December 31, 2020, FFO available for common shareholders includes an $11.2 million charge related to early extinguishment of debt. If this charge was excluded, our FFO available for common shareholders for 2020 would have been $345.0 million, and FFO available for common shareholders, per diluted share would have been $4.52.
(3)The weighted average common shares used to compute FFO per diluted common share includes downREIT 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 2021 and 2020.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our use of financial instruments, such as debt instruments, subjects us to market risk which may affect our future earnings and cash flows, as well as the fair value of our assets. Market risk generally refers to the risk of loss from changes in interest rates and market prices. We manage our market risk by attempting to match anticipated inflow of cash from our operating, investing and financing activities with anticipated outflow of cash to fund debt payments, dividends to common and preferred shareholders, investments, capital expenditures and other cash requirements.
We may enter into certain types of derivative financial instruments to further reduce interest rate risk. We use interest rate protection and swap agreements, for example, to convert some of our variable rate debt to a fixed-rate basis or to hedge anticipated financing transactions. We use derivatives for hedging purposes rather than speculation and do not enter into financial instruments for trading purposes.
Interest Rate Risk
The following discusses the effect of hypothetical changes in market rates of interest on interest expense for our variable rate debt and on the fair value of our total outstanding debt, including our fixed-rate debt. Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our debt. Quoted market prices were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis 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. This analysis does not purport to take into account all of the factors that may affect our debt, such as the effect that a changing interest rate environment could have on the overall level of economic activity or the action that our management might take to reduce our exposure to the change. This analysis assumes no change in our financial structure.
Fixed Interest Rate Debt
The majority of our outstanding debt obligations (maturing at various times through 2059) have fixed interest rates which limit the risk of fluctuating interest rates. However, interest rate fluctuations may affect the fair value of our fixed rate debt instruments. At December 31, 2022, we had $3.7 billion of fixed-rate debt outstanding, including $55.1 million in mortgage payables that are effectively fixed by two interest rate swap agreements. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at December 31, 2022 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately $164.6 million. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at December 31, 2022 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately $184.6 million.
Variable Interest Rate Debt
Generally, we believe that our primary interest rate risk is due to fluctuations in interest rates on our outstanding variable rate debt. At December 31, 2022, we had $600.0 million of variable rate debt outstanding (the principal balance on our unsecured term loan). Based upon this amount of variable rate debt and the specific terms, if market interest rates increased 1.0%, our annual interest expense would increase approximately $6.0 million with a corresponding decrease in our net income and cash flows for the year. Conversely, if market interest rates decreased 1.0%, our annual interest expense would decrease by approximately $6.0 million with a corresponding increase in our net income and cash flows for the year.
While no amounts were outstanding at December 31, 2022, we have a $1.25 billion revolving credit facility that bears interest at a variable rate. If we increase our outstanding balance on the revolving credit facility in the future, additional decreases to future earnings and cash flows could occur.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements and supplementary data are included as a separate section of this Annual Report on Form 10-K commencing on page and are incorporated herein by reference.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Management's Evaluations of Disclosure Controls and Procedures
The Trust and the Operating Partnership maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Trust and the Operating Partnership's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.
Our management, with the participation of the Trust and the Operating Partnership’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Trust and the Operating Partnership’s disclosure controls and procedures as of December 31, 2022. Based on that evaluation, the Trust and the Operating Partnership’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, the Trust and the Operating Partnership’s disclosure controls and procedures were effective at a reasonable assurance level.
Management's Evaluations of Internal Control over Financial Reporting
The Trust and the Operating Partnership’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process designed by, or under the supervision of, the Trust and the Operating Partnership’s principal executive and principal financial officers and effected by our Board of Trustees, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America (GAAP) and includes those policies and procedures that:
•pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and disposition of our assets;
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of management and our Trustees; and
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of any of our assets in circumstances that could have a material adverse effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We assessed the effectiveness of the Trust and the Operating Partnership’s internal control over financial reporting as of December 31, 2022. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on that assessment and criteria, management concluded that the Trust and the Operating Partnership's internal control over financial reporting was effective as of December 31, 2022.
Grant Thornton LLP, the independent registered public accounting firm that audited the Trust and the Operating Partnership's consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the Trust and the Operating Partnership's internal control over financial reporting, which appears on page of this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting during our fourth fiscal quarter of 2022 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.
PART III
Certain information required in Part III is omitted from this Report but is incorporated herein by reference from our Proxy Statement for the 2023 Annual Meeting of Shareholders (as amended or supplemented, the “Proxy Statement”).

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. TRUSTEES, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The tables and narrative in the Proxy Statement identifying our Trustees and Board committees under the caption “Election of Trustees” and “Corporate Governance”, the sections of the Proxy Statement entitled “Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance” and other information included in the Proxy Statement required by this Item 10 are incorporated herein by reference.
We have adopted a Code of Ethics, which is applicable to our Chief Executive Officer and senior financial officers. The Code of Ethics is available in the Corporate Governance section of the Investors section of our website at www.federalrealty.com.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
The sections of the Proxy Statement entitled “Summary Compensation Table,” “Compensation Committee Interlocks and Insider Participation,” “Compensation Committee Report,” “Trustee Compensation” and “Compensation Discussion and Analysis” and other information included in the Proxy Statement required by this Item 11 are incorporated herein by reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The sections of the Proxy Statement entitled “Share Ownership” and “Equity Compensation Plan Information” and other information included in the Proxy Statement required by this Item 12 are incorporated herein by reference.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND TRUSTEE INDEPENDENCE
The sections of the Proxy Statement entitled “Certain Relationship and Related Transactions” and “Independence of Trustees” and other information included in the Proxy Statement required by this Item 13 are incorporated herein by reference.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The sections of the Proxy Statement entitled “Ratification of Independent Registered Public Accounting Firm” and “Relationship with Independent Registered Public Accounting Firm” and other information included in the Proxy Statement required by this Item 14 are incorporated herein by reference.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
Our consolidated financial statements and notes thereto, together with Reports of Independent Registered Public Accounting Firm are included as a separate section of this Annual Report on Form 10-K commencing on page.
(2) Financial Statement Schedules
Our financial statement schedules are included in a separate section of this Annual Report on Form 10-K commencing on page.
(3) Exhibits
(b) The following documents are filed as exhibits are filed as part of, or incorporated by reference info, this report:
EXHIBIT INDEX
Exhibit
No. Description
2.1 Merger Agreement and Plan of Reorganization, dated December 2, 2021, by and among the Predecessor, the Parent Company, and Merger Sub (previously filed as Exhibit 2.1 to the Predecessor's Current Report on Form 8-K filed on December 2, 2021 and incorporated herein by reference) ‡
3.1 Amended and Restated Declaration of Trust of the Parent Company dated January 1, 2022, as amended by the Articles of Amendment of Amended and Restated Declaration of Trust dated January 1, 2022 (previously filed as Exhibit 3.1 to the Trust's Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated herein by reference)
3.2 Amended and Restated Bylaws of the Parent Company dated January 1, 2022 (previously filed as Exhibit 3.3 to our Current Report on Form 8-K filed on January 3, 2022 and incorporated herein by reference)
3.3 Articles of Merger, dated December 8, 2021, by and among Merger Sub and the Predecessor (previously filed as Exhibit 3.4 to the Parent Company's Current Report on Form 8-K filed on January 3, 2022 and incorporated herein by reference)
3.4 Certificate of Limited Partnership of Federal Realty OP LP (previously filed as Exhibit 3.1 to our Current Report on Form 8-K filed on January 5, 2022 and incorporated herein by reference)
3.5 Agreement of Limited Partnership of Federal Realty OP LP, dated as of January 5, 2022, by and between Federal Realty GP LLC and the Parent Company (Previously filed as Exhibit 3.2 to our Current Report on Form 8-K filed on January 5, 2022 and incorporated herein by reference)
4.1 Specimen Common Share certificate (previously filed as Exhibit 4(i) to the Predecessor’s Annual Report on Form 10-K for the year ended December 31, 1999 and incorporated herein by reference)
4.2 † Indenture dated December 1, 1993 related to the Partnership’s 7.48% Debentures due August 15, 2026; and 6.82% Medium Term Notes due August 1, 2027; (previously filed as Exhibit 4(a) to the Predecessor’s Registration Statement on Form S-3, and amended on Form S-3, filed on December 13, 1993 and incorporated herein by reference) ‡
4.3 † Indenture dated September 1, 1998 related to the Partnership’s 2.75% Notes due 2023; 3.95% Notes due 2024; 4.50% Notes due 2044; 2.55% Notes due 2021; 3.625% Notes due 2046; 3.25% Notes due 2027; 3.20% Notes due 2029; 3.50% Notes due 2030; 1.25% Notes due 2026 (previously filed as Exhibit 4(a) to the Predecessor’s Registration Statement on Form S-3 filed on September 17, 1998 and incorporated herein by reference) ‡
4.4 † First Supplemental Indenture, dated as of January 5, 2022, by and between Federal Realty OP LP and U.S. Bank National Association, with respect to the Partnership's Indenture dated December 1, 1993 related to the Partnership's 7.48% Debentures due August 15, 2026 and 6.82% Medium Term Notes due August 1, 2027 (previously filed as Exhibit 4.1 to our Current Report on Form 8-K filed on January 5, 2022 and incorporated herein by reference)
4.5 † First Supplemental Indenture, dated as of January 5, 2022, by and between Federal Realty OP LP and U.S. Bank National Association, with respect to the Partnership's Indenture dated September 1, 1998 related to the Partnership's 2.75% Notes due 2023; 3.95% Notes due 2024; 4.50% Notes due 2044; 2.55% Notes due 2021; 3.625% Notes due 2046; 3.25% Notes due 2027; 3.20% Notes due 2029; 3.50% Notes due 2030; 1.25% Notes due 2026 (previously filed as Exhibit 4.2 to our Current Report on Form 8-K filed on January 5, 2022 and incorporated herein by reference)
4.6 Deposit Agreement, dated as of September 29, 2017, by and among Federal Realty Investment Trust, American Stock Transfer and Trust Company, LLC, as Depositary, and all holders from time to time of Receipt (previously filed as Exhibit 4.1 to the Predecessor's Registration Statement on Form 8-A, filed on September 29, 2017 and incorporated herein by reference)
4.7 Specimen certificate relating to the 5.000% Series C Cumulative Redeemable Preferred Shares of Beneficial Interest (previously filed as Exhibit 4.3 to the Predecessor's Registration Statement on Form 8-A, filed on September 29, 2017 and incorporated herein by reference)
4.8 Description of Securities (previously filed as Exhibit 4.8 to the Predecessor's Annual Report on Form 10-K for the year ended December 31, 2019 and incorporated here by reference)
10.1 * Severance Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 22, 1999 (previously filed as a portion of Exhibit 10 to the Predecessor's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (the "1999 1Q Form 10-Q") and incorporated herein by reference)
10.2 * Executive Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 22, 1999 (previously filed as a portion of Exhibit 10 to the Predecessor's 1999 1Q Form 10-Q and incorporated herein by reference)
Exhibit
No. Description
10.3 * Amendment to Executive Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 16, 2005 (previously filed as Exhibit 10.12 to the Predecessor’s Annual Report on Form 10-K for the year ended December 31, 2004 (the “2004 Form 10-K”) and incorporated herein by reference)
10.4 * Health Coverage Continuation Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 16, 2005 (previously filed as Exhibit 10.26 to the Predecessor's 2004 Form 10-K and incorporated herein by reference)
10.5 * Severance Agreement between Federal Realty Investment Trust and Dawn M. Becker dated April 19, 2000 (previously filed as Exhibit 10.26 to the Predecessor’s 2005 2Q Form 10-Q and incorporated herein by reference)
10.6 * Amendment to Severance Agreement between Federal Realty Investment Trust and Dawn M. Becker dated February 16, 2005 (previously filed as Exhibit 10.27 to the Predecessor's 2004 Form 10-K and incorporated herein by reference)
10.7 Form of Restricted Share Award Agreement for long term vesting and retention awards for shares issued out of the 2010 Plan (previously filed as Exhibit 10.35 to the Predecessor's Annual Report on Form 10-K for the year ended December 31, 2010 (the "2010 Form 10-K") and incorporated herein by reference)
10.8 * Amendment to Severance Agreement between Federal Realty Investment Trust and Donald C. Wood dated January 1, 2009 (previously filed as Exhibit 10.26 to the Predecessor’s Annual Report on Form 10-K for the year ended December 31, 2008 (“the 2008 Form 10-K”) and incorporated herein by reference)
10.9 * Second Amendment to Executive Agreement between Federal Realty Investment Trust and Donald C. Wood dated January 1, 2009 (previously filed as Exhibit 10.27 to the Predecessor’s 2008 Form 10-K and incorporated herein by reference)
10.10 * Amendment to Health Coverage Continuation Agreement between Federal Realty Investment Trust and Donald C. Wood dated January 1, 2009 (previously filed as Exhibit 10.28 to the Predecessor’s 2008 Form 10-K and incorporated herein by reference)
10.11 * Second Amendment to Severance Agreement between Federal Realty Investment Trust and Dawn M. Becker dated January 1, 2009 (previously filed as Exhibit 10.30 to the Predecessor’s 2008 Form 10-K and incorporated herein by reference)
10.12 2010 Performance Incentive Plan (previously filed as Appendix A to the Predecessor’s Definitive Proxy Statement for the 2010 Annual Meeting of Shareholders and incorporated herein by reference)
10.13 Amendment to 2010 Performance Incentive Plan (“the 2010 Plan”) (previously filed as Appendix A to the Predecessor’s Proxy Statement for the 2010 Annual Meeting of Shareholders and incorporated herein by reference)
10.14 Form of Restricted Share Award Agreement for awards made under Federal Realty Investment Trust’s Long-Term Incentive Award Program and the Trust’s Annual Incentive Bonus Program and basic awards with annual vesting for shares issued out of the 2010 Plan (previously filed as Exhibit 10.34 to the Predecessor’s 2010 Form 10-K and incorporated herein by reference)
10.15 Form of Option Award Agreement for awards made under Federal Realty Investment Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.38 to the Predecessor’s 2010 Form 10-K and incorporated herein by reference)
10.16 Form of Option Award Agreement for front loaded awards made under Federal Realty Investment Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.39 to the Predecessor’s 2010 Form 10-K and incorporated herein by reference)
10.17 Form of Option Award Agreement for basic options awarded out of the 2010 Plan (previously filed as Exhibit 10.40 to the Predecessor’s 2010 Form 10-K and incorporated herein by reference)
10.18 Revised Form of Restricted Share Award Agreement for front loaded awards made under Federal Realty Investment Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.35 to the Predecessor's Annual Report on Form 10-K for the year ended December 31, 2012 (the "2012 Form 10-K") and incorporated herein by reference)
10.19 Revised Form of Restricted Share Award Agreement for long-term vesting and retention awards made under Federal Realty Investment Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.36 to the Predecessor's 2012 Form 10-K and incorporated herein by reference)
10.20 Revised Form of Performance Share Award Agreement for shares awarded out of the 2010 Plan (previously filed as Exhibit 10.37 to the Predecessor's 2012 Form 10-K and incorporated herein by reference)
10.21 Revised Form of Restricted Share Award Agreement for awards made under Federal Realty Investment Trust’s Long-Term Incentive Award Program and the Trust’s Annual Incentive Bonus Program and basic awards with annual vesting for shares issued out of the 2010 Plan (previously filed as Exhibit 10.38 to the Predecessor's 2012 Form 10-K and incorporated herein by reference)
Exhibit
No. Description
10.22 Severance Agreement between Federal Realty Investment Trust and Daniel Guglielmone dated August 15, 2016 (previously filed as Exhibit 10.36 to the Predecessor's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 and incorporated herein by reference)
10.23 Amended and Restated Credit Agreement, dated as of July 25, 2019, by and among the Predecessor, each of the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Predecessor's Current Report on Form 8-K, filed on July 29, 2019 and incorporated herein by reference) ‡
10.24 2020 Performance Incentive Plan (previously filed as Appendix B to the Predecessor’s Definitive Proxy Statement for the 2020 Annual Meeting of Shareholders and incorporated herein by reference)
10.25 Term Loan Agreement dated as of May 6, 2020, by and among the Predecessor, as Borrower, the financial institutions party thereto and their permitted assignees under Section 12.6., as Lenders, PNC Bank, National Association, as Administrative Agent, Regions Bank, Truist Bank, and U.S. Bank National Bank Association as Co-Syndication Agents, PNC Capital Markets, LLC, Regions Capital Markets, Suntrust Robinson Humphrey, Inc., and U.S. Bank National Association, as Joint Lead Arrangers and Book Managers (previously filed as Exhibit 10.1 to the Predecessor's Current Report on Form 8-K, filed on May 6, 2020 and incorporated herein by reference) ‡
10.26 First Amendment to the Amended and Restated Credit Agreement, dated as of May 6, 2020, by and among the Predecessor, each of the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.2 to the Predecessor's Current Report on Form 8-K, filed on May 6, 2020, and incorporated herein by reference) ‡
10.27 Form of Restricted Share Award Agreement for awards made under Federal Realty Investment Trust’s Long-Term Incentive Award Program and the Trust’s Annual Incentive Bonus Program and basic awards with annual vesting for shares issued out of the 2020 Plan (previously filed as Exhibit 10.32 to the Predecessor's Annual Report on Form 10-K, filed on February 11, 2021, and incorporated herein by reference)
10.28 Form of Option Award Agreement for awards made under Federal Realty Investment Trust’s Long-Term Incentive Award Program for shares issued out of the 2020 Plan (previously filed as Exhibit 10.33 to the Predecessor's Annual Report on Form 10-K, filed on February 11, 2021, and incorporated herein by reference)
10.29 Form of Restricted Share Award Agreement for long-term vesting and retention awards made under Federal Realty Investment Trust’s Long-Term Incentive Award Program for shares issued out of the 2020 Plan (previously filed as Exhibit 10.34 to the Predecessor's Annual Report on Form 10-K, filed on February 11, 2021, and incorporated herein by reference)
10.30 Form of Performance Share Award Agreement for shares awarded out of the 2020 Plan (previously filed as Exhibit 10.35 to the Predecessor's Annual Report on From 10-K, filed on February 11, 2021, and incorporated herein by reference)
10.31 Form of Option Award Agreement for basic options awarded out of the 2020 Plan (previously filed as Exhibit 10.36 to the Predecessor's Annual Report on Form 10-K, filed on February 11, 2021, and incorporated herein by reference)
10.32 Form of Performance Award Agreement for Jeffrey S. Berkes, dated February 10, 2021 (previously filed as Exhibit 10.1 to the Predecessor’s Current Report on Form 8-K, filed on February 12, 2021, and incorporated herein by reference)
10.33 Amended and Restated Severance Agreement between Federal Realty Investment Trust and Jeffery S. Berkes, dated February 10, 2021 (previously filed as Exhibit 10.2 to the Predecessor's Current Report on Form 8-K, filed on February 12, 2021 and incorporated herein by reference)
10.34 First Amendment to Term Loan Agreement, dated as of April 16, 2021, by and among the Predecessor, as borrower, the Lenders, New Lenders, Departing Lenders (as each such term is defined therein) and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Predecessor's Current Report on From 8-K, filed on April 19, 2021, and incorporated herein by reference) ‡
10.35 Omnibus Assignment, Assumption and Amendment entered into between the Predecessor and the Parent Company (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on January 3, 2022 and incorporated herein by reference)
10.36 Second Amendment to Amended and Restated Credit Agreement and Consent, dated as of January 1, 2022, by and among the Predecessor, as borrower, each of the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (previously filed as Exhibit 10.2 to the Trust’s Current Report on Form 8-K filed on January 3, 2022 and incorporated herein by reference) ‡
10.37 Second Amendment to Term Loan Agreement and Consent, dated as of January 1, 2022, by and among the Predecessor, as borrower, each of the lenders party thereto and PNC Bank, National Association, as administrative agent (previously filed as Exhibit 10.3 to the Trust’s Current Report on Form 8-K filed on January 3, 2022 and incorporated herein by reference) ‡
Exhibit
No. Description
10.38 Second Amended and Restated Credit Agreement, dated as of October 5, 2022, by and among the Partnership, as borrower, each of the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (previously filed as Exhibit 10.1 to the Trust’s Current Report on Form 8-K filed on October 11, 2022 and incorporated herein by reference)
10.39 Third Amendment to Term Loan Agreement, dated as of October 5, 2022, by and among the Partnership, as borrower, each of the lenders party thereto and PNC Bank, National Association, as administrative agent (previously filed as Exhibit 10.2 to the Trust’s Current Report on Form 8-K filed on October 11, 2022 and incorporated herein by reference)
21.1 Subsidiaries of Federal Realty Investment Trust and Federal Realty OP LP (filed herewith)
23.1 Consent of Grant Thornton LLP (filed herewith)
31.1 Rule 13a-14(a) Certification of Chief Executive Officer - Federal Realty Investment Trust (filed herewith)
31.2 Rule 13a-14(a) Certification of Chief Financial Officer - Federal Realty Investment Trust (filed herewith)
31.3 Rule 13a-14(a) Certification of Chief Executive Officer - Federal Realty OP LP (filed herewith)
31.4 Rule 13a-14(a) Certification of Chief Financial Officer - Federal Realty OP LP (filed herewith)
32.1 Section 1350 Certification of Chief Executive Officer - Federal Realty Investment Trust (filed herewith)
32.2 Section 1350 Certification of Chief Financial Officer - Federal Realty Investment Trust (filed herewith)
32.3 Section 1350 Certification of Chief Executive Officer - Federal Realty OP LP (filed herewith)
32.4 Section 1350 Certification of Chief Financial Officer - Federal Realty OP LP (filed herewith)
101 The following materials from this Annual Report on Form 10-K for the year ended December 31, 2022, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Comprehensive Income, (3) the Consolidated Statement of Shareholders’ Equity, (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements that have been detail tagged.
104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
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* Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.
† Pursuant to Regulation S-K Item 601(b)(4)(iii), the Trust and the Partnership by this filing agree, upon request, to furnish to the Securities and Exchange Commission a copy of other instruments defining the rights of holders of long-term debt of the Trust and the Partnership.
‡ In this Exhibit Index, the term "Predecessor" refers to Federal Realty Investment Trust before the effectiveness of our UPREIT conversion as described in our Current Reports on Form 8-K filed on January 3 and 5, 2022. Upon completion of the UPREIT conversion, the Partnership became the successor to the Predecessor's right and obligations under this instrument.