Brixmor Property Group Inc. 10-Q

Item 1. Financial Statements BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except share information) September 30, 2020 December 31, 2019 Assets Real estate Land $ 1,754,708 $ 1,767,029 Buildings and improvements 8,432,594 8,356,571 10,187,302 10,123,600 Accumulated depreciation and amortization ( 2,623,144 ) ( 2,481,250 ) Real estate, net 7,564,158 7,642,350 Cash and cash equivalents 609,812 19,097 Restricted cash 1,408 2,426 Marketable securities 19,987 18,054 Receivables, net 246,295 234,246 Deferred charges and prepaid expenses, net 146,911 143,973 Real estate assets held for sale — 22,171 Other assets 51,590 60,179 Total assets $ 8,640,161 $ 8,142,496 Liabilities Debt obligations, net $ 5,481,660 $ 4,861,185 Accounts payable, accrued expenses and other liabilities 444,610 537,454 Total liabilities 5,926,270 5,398,639 Commitments and contingencies (Note 15) — — Equity Common stock, $ 0.01 par value; authorized 3,000,000,000 shares; 305,609,203 and 305,334,144 shares issued and 296,482,211 and 297,857,267 shares outstanding 2,965 2,979 Additional paid-in capital 3,210,579 3,230,625 Accumulated other comprehensive loss ( 31,197 ) ( 9,543 ) Distributions in excess of net income ( 468,456 ) ( 480,204 ) Total equity 2,713,891 2,743,857 Total liabilities and equity $ 8,640,161 $ 8,142,496 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 W BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenues Rental income $ 253,799 $ 292,732 $ 781,635 $ 873,424 Other revenues 136 233 2,221 1,685 Total revenues 253,935 292,965 783,856 875,109 Operating expenses Operating costs 24,794 29,573 80,286 90,138 Real estate taxes 42,124 43,688 126,796 130,203 Depreciation and amortization 87,488 82,837 251,334 249,825 Impairment of real estate assets 5,746 8,170 16,306 17,468 General and administrative 27,748 24,550 74,781 75,168 Total operating expenses 187,900 188,818 549,503 562,802 Other income (expense) Dividends and interest 109 128 335 575 Interest expense ( 50,991 ) ( 47,698 ) ( 148,197 ) ( 142,839 ) Gain on sale of real estate assets 13,621 25,621 23,218 46,266 Loss on extinguishment of debt, net ( 50 ) ( 943 ) ( 10,441 ) ( 1,620 ) Other ( 780 ) ( 401 ) ( 2,499 ) ( 1,975 ) Total other expense ( 38,091 ) ( 23,293 ) ( 137,584 ) ( 99,593 ) Net income $ 27,944 $ 80,854 $ 96,769 $ 212,714 Net income per common share: Basic $ 0.09 $ 0.27 $ 0.32 $ 0.71 Diluted $ 0.09 $ 0.27 $ 0.32 $ 0.71 Weighted average shares: Basic 296,562 298,031 296,982 298,257 Diluted 296,862 298,879 297,317 298,927 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited, in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income $ 27,944 $ 80,854 $ 96,769 $ 212,714 Other comprehensive income (loss) Change in unrealized gain (loss) on interest rate swaps, net (Note 6) 2,928 ( 5,332 ) ( 21,785 ) ( 29,373 ) Change in unrealized gain (loss) on marketable securities ( 64 ) 12 131 193 Total other comprehensive income (loss) 2,864 ( 5,320 ) ( 21,654 ) ( 29,180 ) Comprehensive income $ 30,808 $ 75,534 $ 75,115 $ 183,534 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited, in thousands, except per share data) Common Stock Number Amount Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Distributions in Excess of Net Income Total Beginning balance, January 1, 2019 298,489 $ 2,985 $ 3,233,329 $ 15,973 $ ( 416,188 ) $ 2,836,099 ASC 842 cumulative adjustment — — — — ( 1,974 ) ( 1,974 ) Common stock dividends ($ 0.28 per common share) — — — — ( 83,839 ) ( 83,839 ) Equity based compensation expense — — 2,641 — — 2,641 Other comprehensive loss — — — ( 9,925 ) — ( 9,925 ) Issuance of common stock and OP Units 158 2 — — — 2 Repurchases of common stock ( 660 ) ( 7 ) ( 11,579 ) — — ( 11,586 ) Share-based awards retained for taxes — — ( 1,547 ) — — ( 1,547 ) Net income — — — — 62,900 62,900 Ending balance, March 31, 2019 297,987 2,980 3,222,844 6,048 ( 439,101 ) 2,792,771 Common stock dividends ($ 0.28 per common share) — — — — ( 83,827 ) ( 83,827 ) Equity based compensation expense — — 3,353 — — 3,353 Other comprehensive loss — — — ( 13,935 ) — ( 13,935 ) Issuance of common stock and OP Units 34 — — — — — Repurchases of common stock ( 175 ) ( 2 ) ( 2,975 ) — — ( 2,977 ) Share-based awards retained for taxes — — ( 164 ) — — ( 164 ) Net income — — — — 68,960 68,960 Ending balance, June 30, 2019 297,846 2,978 3,223,058 ( 7,887 ) ( 453,968 ) 2,764,181 Common stock dividends ($ 0.28 per common share) — — — — ( 83,825 ) ( 83,825 ) Equity based compensation expense — — 3,473 — — 3,473 Other comprehensive loss — — — ( 5,320 ) — ( 5,320 ) Net income — — — — 80,854 80,854 Ending balance, September 30, 2019 297,846 $ 2,978 $ 3,226,531 $ ( 13,207 ) $ ( 456,939 ) $ 2,759,363 Beginning balance, January 1, 2020 297,857 $ 2,979 $ 3,230,625 $ ( 9,543 ) $ ( 480,204 ) $ 2,743,857 Common stock dividends ($ 0.285 per common share) — — — — ( 85,018 ) ( 85,018 ) Equity based compensation expense — — 2,842 — — 2,842 Other comprehensive loss — — — ( 23,699 ) — ( 23,699 ) Issuance of common stock and OP Units 242 2 — — — 2 Repurchases of common stock ( 1,650 ) ( 17 ) ( 24,990 ) — — ( 25,007 ) Share-based awards retained for taxes — — ( 3,405 ) — — ( 3,405 ) Net income — — — — 59,781 59,781 Ending balance, March 31, 2020 296,449 2,964 3,205,072 ( 33,242 ) ( 505,441 ) 2,669,353 Common stock dividends — — — — ( 3 ) ( 3 ) Equity based compensation expense — — 2,162 — — 2,162 Other comprehensive loss — — — ( 819 ) — ( 819 ) Issuance of common stock and OP Units 32 1 — — — 1 Share-based awards retained for taxes — — ( 118 ) — — ( 118 ) Net income — — — — 9,044 9,044 Ending balance, June 30, 2020 296,481 2,965 3,207,116 ( 34,061 ) ( 496,400 ) 2,679,620 Equity based compensation expense — — 3,468 — — 3,468 Other comprehensive income — — — 2,864 — 2,864 Issuance of common stock and OP Units 1 — — — — — Share-based awards retained for taxes — — ( 5 ) — — ( 5 ) Net income — — — — 27,944 27,944 Ending balance, September 30, 2020 296,482 $ 2,965 $ 3,210,579 $ ( 31,197 ) $ ( 468,456 ) $ 2,713,891 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Nine Months Ended September 30, 2020 2019 Operating activities: Net income $ 96,769 $ 212,714 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 251,334 249,825 (Accretion) amortization of debt premium and discount, net ( 424 ) 1,053 Deferred financing cost amortization 5,550 5,299 Accretion of above- and below-market leases, net ( 12,351 ) ( 14,125 ) Tenant inducement amortization and other 2,696 2,694 Impairment of real estate assets 16,306 17,468 Gain on sale of real estate assets ( 23,218 ) ( 46,266 ) Equity based compensation 7,807 8,847 Loss on extinguishment of debt, net 10,441 1,620 Changes in operating assets and liabilities: Receivables, net ( 15,907 ) ( 13,532 ) Deferred charges and prepaid expenses ( 22,797 ) ( 30,138 ) Other assets ( 298 ) ( 74 ) Accounts payable, accrued expenses and other liabilities 7,724 4,548 Net cash provided by operating activities 323,632 399,933 Investing activities: Improvements to and investments in real estate assets ( 217,940 ) ( 282,211 ) Acquisitions of real estate assets ( 3,425 ) ( 79,634 ) Proceeds from sales of real estate assets 82,922 239,838 Purchase of marketable securities ( 19,944 ) ( 36,045 ) Proceeds from sale of marketable securities 18,133 47,509 Net cash used in investing activities ( 140,254 ) ( 110,543 ) Financing activities: Repayment of secured debt obligations ( 7,000 ) — Repayment of borrowings under unsecured revolving credit facility ( 653,000 ) ( 541,000 ) Proceeds from borrowings under unsecured revolving credit facility 646,000 235,000 Proceeds from unsecured notes 820,396 771,623 Repayment of borrowings under unsecured term loans and notes ( 183,151 ) ( 500,000 ) Deferred financing and debt extinguishment costs ( 17,994 ) ( 6,689 ) Distributions to common stockholders ( 170,397 ) ( 251,334 ) Repurchases of common shares ( 25,007 ) ( 14,563 ) Repurchases of common shares in conjunction with equity award plans ( 3,528 ) ( 1,711 ) Net cash provided by (used in) financing activities 406,319 ( 308,674 ) Net change in cash, cash equivalents and restricted cash 589,697 ( 19,284 ) Cash, cash equivalents and restricted cash at beginning of period 21,523 50,765 Cash, cash equivalents and restricted cash at end of period $ 611,220 $ 31,481 Reconciliation to consolidated balance sheets: Cash and cash equivalents $ 609,812 $ 29,072 Restricted cash 1,408 2,409 Cash, cash equivalents and restricted cash at end of period $ 611,220 $ 31,481 Supplemental disclosure of cash flow information: Cash paid for interest, net of amount capitalized of $ 3,333 and $ 2,401 $ 135,006 $ 134,507 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except unit information) September 30, 2020 December 31, 2019 Assets Real estate Land $ 1,754,708 $ 1,767,029 Buildings and improvements 8,432,594 8,356,571 10,187,302 10,123,600 Accumulated depreciation and amortization ( 2,623,144 ) ( 2,481,250 ) Real estate, net 7,564,158 7,642,350 Cash and cash equivalents 599,798 19,081 Restricted cash 1,408 2,426 Marketable securities 19,987 18,054 Receivables, net 246,295 234,246 Deferred charges and prepaid expenses, net 146,911 143,973 Real estate assets held for sale — 22,171 Other assets 51,590 60,179 Total assets $ 8,630,147 $ 8,142,480 Liabilities Debt obligations, net $ 5,481,660 $ 4,861,185 Accounts payable, accrued expenses and other liabilities 444,610 537,454 Total liabilities 5,926,270 5,398,639 Commitments and contingencies (Note 15) — — Capital Partnership common units; 305,609,203 and 305,334,144 units issued and 296,482,211 and 297,857,267 units outstanding 2,735,075 2,753,385 Accumulated other comprehensive loss ( 31,198 ) ( 9,544 ) Total capital 2,703,877 2,743,841 Total liabilities and capital $ 8,630,147 $ 8,142,480 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Revenues Rental income $ 253,799 $ 292,732 $ 781,635 $ 873,424 Other revenues 136 233 2,221 1,685 Total revenues 253,935 292,965 783,856 875,109 Operating expenses Operating costs 24,794 29,573 80,286 90,138 Real estate taxes 42,124 43,688 126,796 130,203 Depreciation and amortization 87,488 82,837 251,334 249,825 Impairment of real estate assets 5,746 8,170 16,306 17,468 General and administrative 27,748 24,550 74,781 75,168 Total operating expenses 187,900 188,818 549,503 562,802 Other income (expense) Dividends and interest 109 128 335 575 Interest expense ( 50,991 ) ( 47,698 ) ( 148,197 ) ( 142,839 ) Gain on sale of real estate assets 13,621 25,621 23,218 46,266 Loss on extinguishment of debt, net ( 50 ) ( 943 ) ( 10,441 ) ( 1,620 ) Other ( 780 ) ( 401 ) ( 2,499 ) ( 1,975 ) Total other expense ( 38,091 ) ( 23,293 ) ( 137,584 ) ( 99,593 ) Net income $ 27,944 $ 80,854 $ 96,769 $ 212,714 Net income per common unit: Basic $ 0.09 $ 0.27 $ 0.32 $ 0.71 Diluted $ 0.09 $ 0.27 $ 0.32 $ 0.71 Weighted average units: Basic 296,562 298,031 296,982 298,257 Diluted 296,862 298,879 297,317 298,927 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited, in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Net income $ 27,944 $ 80,854 $ 96,769 $ 212,714 Other comprehensive income (loss) Change in unrealized gain (loss) on interest rate swaps, net (Note 6) 2,928 ( 5,332 ) ( 21,785 ) ( 29,373 ) Change in unrealized gain (loss) on marketable securities ( 64 ) 11 131 191 Total other comprehensive income (loss) 2,864 ( 5,321 ) ( 21,654 ) ( 29,182 ) Comprehensive income $ 30,808 $ 75,533 $ 75,115 $ 183,532 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 8 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Unaudited, in thousands) Partnership Common Units Accumulated Other Comprehensive Income (Loss) Total Beginning balance, January 1, 2019 $ 2,819,770 $ 15,983 $ 2,835,753 ASC 842 cumulative adjustment ( 1,974 ) — ( 1,974 ) Distributions to partners ( 83,964 ) — ( 83,964 ) Equity based compensation expense 2,641 — 2,641 Other comprehensive loss — ( 9,925 ) ( 9,925 ) Issuance of OP Units 2 — 2 Repurchases of OP Units ( 11,586 ) — ( 11,586 ) Share-based awards retained for taxes ( 1,547 ) — ( 1,547 ) Net income 62,900 — 62,900 Ending balance, March 31, 2019 2,786,242 6,058 2,792,300 Distributions to partners ( 83,597 ) — ( 83,597 ) Equity based compensation expense 3,353 — 3,353 Other comprehensive loss — ( 13,936 ) ( 13,936 ) Issuance of OP Units — — — Repurchases of OP Units ( 2,977 ) — ( 2,977 ) Share-based awards retained for taxes ( 164 ) — ( 164 ) Net income 68,960 — 68,960 Ending balance, June 30, 2019 2,771,817 ( 7,878 ) 2,763,939 Distributions to partners ( 83,823 ) — ( 83,823 ) Equity based compensation expense 3,473 — 3,473 Other comprehensive loss — ( 5,321 ) ( 5,321 ) Net income 80,854 — 80,854 Ending balance, September 30, 2019 $ 2,772,321 $ ( 13,199 ) $ 2,759,122 Beginning balance, January 1, 2020 $ 2,753,385 $ ( 9,544 ) $ 2,743,841 Distributions to partners ( 85,017 ) — ( 85,017 ) Equity based compensation expense 2,842 — 2,842 Other comprehensive loss — ( 23,699 ) ( 23,699 ) Issuance of OP Units 2 — 2 Repurchases of OP Units ( 25,007 ) — ( 25,007 ) Share-based awards retained for taxes ( 3,405 ) — ( 3,405 ) Net income 59,781 — 59,781 Ending balance, March 31, 2020 2,702,581 ( 33,243 ) 2,669,338 Distributions to partners ( 10,002 ) — ( 10,002 ) Equity based compensation expense 2,162 — 2,162 Other comprehensive loss — ( 819 ) ( 819 ) Issuance of OP Units 1 — 1 Share-based awards retained for taxes ( 118 ) — ( 118 ) Net income 9,044 — 9,044 Ending balance, June 30, 2020 2,703,668 ( 34,062 ) 2,669,606 Equity based compensation expense 3,468 — 3,468 Other comprehensive income — 2,864 2,864 Issuance of OP Units — — — Share-based awards retained for taxes ( 5 ) — ( 5 ) Net income 27,944 — 27,944 Ending balance, September 30, 2020 $ 2,735,075 $ ( 31,198 ) $ 2,703,877 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 9 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Nine Months Ended September 30, 2020 2019 Operating activities: Net income $ 96,769 $ 212,714 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 251,334 249,825 (Accretion) amortization of debt premium and discount, net ( 424 ) 1,053 Deferred financing cost amortization 5,550 5,299 Accretion of above- and below-market leases, net ( 12,351 ) ( 14,125 ) Tenant inducement amortization and other 2,696 2,694 Impairment of real estate assets 16,306 17,468 Gain on sale of real estate assets ( 23,218 ) ( 46,266 ) Equity based compensation 7,807 8,847 Loss on extinguishment of debt, net 10,441 1,620 Changes in operating assets and liabilities: Receivables, net ( 15,907 ) ( 13,532 ) Deferred charges and prepaid expenses ( 22,797 ) ( 30,138 ) Other assets ( 298 ) ( 74 ) Accounts payable, accrued expenses and other liabilities 7,724 4,548 Net cash provided by operating activities 323,632 399,933 Investing activities: Improvements to and investments in real estate assets ( 217,940 ) ( 282,211 ) Acquisitions of real estate assets ( 3,425 ) ( 79,634 ) Proceeds from sales of real estate assets 82,922 239,838 Purchase of marketable securities ( 19,944 ) ( 36,042 ) Proceeds from sale of marketable securities 18,133 47,509 Net cash used in investing activities ( 140,254 ) ( 110,540 ) Financing activities: Repayment of secured debt obligations ( 7,000 ) — Repayment of borrowings under unsecured revolving credit facility ( 653,000 ) ( 541,000 ) Proceeds from borrowings under unsecured revolving credit facility 646,000 235,000 Proceeds from unsecured notes 820,396 771,623 Repayment of borrowings under unsecured term loans and notes ( 183,151 ) ( 500,000 ) Deferred financing and debt extinguishment costs ( 17,994 ) ( 6,689 ) Partner distributions and repurchases of OP Units ( 208,930 ) ( 267,503 ) Net cash provided by (used in) financing activities 396,321 ( 308,569 ) Net change in cash, cash equivalents and restricted cash 579,699 ( 19,176 ) Cash, cash equivalents and restricted cash at beginning of period 21,507 50,639 Cash, cash equivalents and restricted cash at end of period $ 601,206 $ 31,463 Reconciliation to consolidated balance sheets: Cash and cash equivalents $ 599,798 $ 29,054 Restricted cash 1,408 2,409 Cash, cash equivalents and restricted cash at end of period $ 601,206 $ 31,463 Supplemental disclosure of cash flow information: Cash paid for interest, net of amount capitalized of $ 3,333 and $ 2,401 $ 135,006 $ 134,507 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 10 BRIXMOR PROPERTY GROUP INC. AND BRIXMOR OPERATING PARTNERSHIP LP NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, dollars in thousands, unless otherwise stated) 1. Nature of Business and Financial Statement Presentation Description of Business Brixmor Property Group Inc. and subsidiaries (collectively, the “Parent Company” or “BPG”) is an internally-managed real estate investment trust (“REIT”). Brixmor Operating Partnership LP and subsidiaries (collectively, the “Operating Partnership”) is the entity through which the Parent Company conducts substantially all of its operations and owns substantially all of its assets. The Parent Company owns 100 % of the common stock of BPG Subsidiary Inc. (“BPG Sub”), which, in turn, is the sole member of Brixmor OP GP LLC (the “General Partner”), the sole general partner of the Operating Partnership. The Parent Company engages in the ownership, management, leasing, acquisition, disposition and redevelopment of retail shopping centers through the Operating Partnership, and has no other material assets or liabilities other than through its investment in the Operating Partnership. The Parent Company, the Operating Partnership and their controlled subsidiaries on a consolidated basis (collectively, the “Company” or “Brixmor”) believes it owns and operates one of the largest open-air retail portfolios by gross leasable area (“GLA”) in the United States (“U.S.”), comprised primarily of community and neighborhood shopping centers. As of September 30, 2020, the Company’s portfolio was comprised of 395 shopping centers (the “Portfolio”) totaling approximately 69 million square feet of GLA. The Company’s high-quality national Portfolio is primarily located within established trade areas in the top 50 Metropolitan Statistical Areas in the U.S., and its shopping centers are primarily anchored by non-discretionary and value-oriented retailers, as well as consumer-oriented service providers. The Company does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company has a single reportable segment for disclosure purposes in accordance with U.S. generally accepted accounting principles (“GAAP”). Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the unaudited Condensed Consolidated Financial Statements for the periods presented have been included. The operating results for the periods presented are not necessarily indicative of the results that may be expected for a full fiscal year. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2019 and accompanying notes included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 10, 2020. Principles of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Parent Company, the Operating Partnership, each of their wholly owned subsidiaries and all other entities in which they have a controlling financial interest. All intercompany transactions have been eliminated. Revenue Recognition and Receivables The Company enters into agreements with tenants which convey the right to control the use of identified space at its shopping centers in exchange for rental revenue. These agreements meet the criteria for recognition as leases under Accounting Standards Codification (“ASC”) 842, Leases . Rental revenue is recognized on a straight-line basis over the terms of the related leases. The cumulative difference between rental revenue recognized on the Company’s unaudited Condensed Consolidated Statements of Operations and contractual payment terms is recognized as deferred rent and included in Receivables, net on the accompanying unaudited Condensed Consolidated Balance Sheets. The Company commences recognizing rental revenue based on the date it makes the underlying asset available for use by the tenant. Leases also typically provide for the reimbursement of property operating expenses, including common area expenses, utilities, insurance and real estate taxes by the lessee and are recognized in the period the applicable expenditures are incurred. 11 The Company periodically evaluates the collectability of its receivables related to rental revenue, straight-line rent, expense reimbursements and those attributable to other revenue generating activities. The Company analyzes individual tenant receivables and considers tenant credit-worthiness, the length of time a receivable has been outstanding, and current economic trends when evaluating collectability. Any receivables that are deemed to be uncollectible are recognized as a reduction to Rental income on the Company’s unaudited Condensed Consolidated Statements of Operations. The Company has made certain elections regarding the treatment of rent deferrals and abatements resulting from COVID-19. See Note 9 for additional information regarding the treatment and impact of COVID-19 rent deferrals and abatements on the Company’s unaudited Condensed Consolidated Financial Statements. Income Taxes Brixmor Property Group Inc. has elected to qualify as a REIT in accordance with the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a REIT, Brixmor Property Group Inc. must meet several organizational and operational requirements, including a requirement that it currently distribute to its stockholders at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. Management intends to satisfy these requirements and maintain Brixmor Property Group Inc.’s REIT status. As a REIT, Brixmor Property Group Inc. generally will not be subject to U.S. federal income tax, provided that distributions to its stockholders equal at least the amount of its REIT taxable income as defined under the Code. Brixmor Property Group Inc. conducts substantially all of its operations through the Operating Partnership which is organized as a limited partnership and treated as a pass-through entity for U.S. federal tax purposes. Therefore, U.S. federal income taxes do not materially impact the unaudited Condensed Consolidated Financial Statements of the Company. If Brixmor Property Group Inc. fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal taxes at regular corporate rates and may not be able to qualify as a REIT for the four subsequent taxable years. Even if Brixmor Property Group Inc. qualifies for taxation as a REIT, Brixmor Property Group Inc. is subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on its undistributed taxable income as well as other income items, as applicable. Brixmor Property Group Inc. has elected to treat certain of its subsidiaries as taxable REIT subsidiaries (each a “TRS”), and Brixmor Property Group Inc. may in the future elect to treat newly formed and/or other existing subsidiaries as TRSs. A TRS may participate in non-real estate related activities and/or perform non-customary services for tenants and is subject to certain limitations under the Code. A TRS is subject to U.S. federal and state income taxes at regular corporate rates. Income taxes related to Brixmor Property Group Inc.’s TRSs do not materially impact the unaudited Condensed Consolidated Financial Statements of the Company. The Company has considered the tax positions taken for the open tax years and has concluded that no provision for income taxes related to uncertain tax positions is required in the Company’s unaudited Condensed Consolidated Financial Statements as of September 30, 2020 and December 31, 2019. Open tax years generally range from 2017 through 2019 but may vary by jurisdiction and issue. The Company recognizes penalties and interest accrued related to unrecognized tax benefits as income tax expense, which is included in Other on the Company’s unaudited Condensed Consolidated Statements of Operations. New Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326). ASU 2016-13 was subsequently amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments-Credit Losses. ASU 2016-13 amends guidance to replace the prior “incurred loss” methodology of recognizing credit losses on financial instruments with a methodology that reflects expected credit losses and requires consideration of a broader range of information. Any unrealized loss on the Company’s financial instruments must be assessed to determine the portion, if any, that is attributable to credit loss and the portion that is due to other factors, such as changes in market interest rates. “Credit loss” refers to any portion of the carrying amount that the Company does not expect to collect over a financial instrument’s contractual life. The Company considers current market conditions and reasonable forecasts of future market conditions to estimate expected credit losses over the life of the financial instrument. Any portion of 12 unrealized losses due to credit loss is recognized through net income and reported in equity as a component of distributions in excess of net income. The portion of unrealized losses due to other factors continues to be recognized through other comprehensive income and reported in accumulated other comprehensive income. In addition, ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of ASC 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with ASC 842. The standard became effective for the Company on January 1, 2020. The Company determined that these changes did not have a material impact on the unaudited Condensed Consolidated Financial Statements of the Company. In October 2018, the FASB issued ASU 2018-16, Derivatives and Hedging (Topic 815). ASU 2018-16 was subsequently amended by ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2018-16 amends guidance to permit the use of the Overnight Index Swap (“OIS”) rate based on the Secured Overnight Financing Rate (“SOFR”) as a U.S. benchmark interest rate for hedge accounting purposes under ASC 815, Derivatives and Hedging . The standard became effective for the Company on January 1, 2019 and a prospective transition approach was required. The Company determined that the adoption of ASU 2018-16 did not have a material impact on the unaudited Condensed Consolidated Financial Statements of the Company. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) . ASU 2018-13 amends certain disclosure requirements regarding the fair value hierarchy of investments in accordance with GAAP, particularly the significant unobservable inputs used to value investments within Level 3 of the fair value hierarchy. The standard became effective for the Company on January 1, 2020. The Company determined that these changes did not have a material impact on the unaudited Condensed Consolidated Financial Statements of the Company. Any other recently issued accounting standards or pronouncements not disclosed above have been excluded as they either are not relevant to the Company, or they are not expected to have a material effect on the unaudited Condensed Consolidated Financial Statements of the Company. 2. Acquisition of Real Estate During the nine months ended September 30, 2020, the Company acquired the following assets: Description (1) Location Month Acquired GLA Aggregate Purchase Price (2) Land adjacent to Shops at Palm Lakes Miami Gardens, FL Feb-20 N/A $ 2,020 Land adjacent to College Plaza Selden, NY Jul-20 N/A 1,405 N/A $ 3,425 (1) No debt was assumed related to the listed acquisitions. (2) Aggregate purchase price includes $ 0.1 million of transaction costs. 13 During the nine months ended September 30, 2019, the Company acquired the following assets, in separate transactions: Description (1) Location Month Acquired GLA Aggregate Purchase Price (2) Land adjacent to Parmer Crossing Austin, TX Apr-19 N/A $ 2,197 Centennial Shopping Center Englewood, CO Apr-19 113,682 18,011 Plymouth Square Shopping Center (3) Conshohocken, PA May-19 235,728 56,909 Leases at Baytown Shopping Center Baytown, TX Jun-19 N/A 2,517 349,410 $ 79,634 (1) No debt was assumed related to any of the listed acquisitions. (2) Aggregate purchase price includes $ 1.2 million of transaction costs. (3) GLA excludes square footage related to the anticipated relocation of the Company's regional office. Total acquired GLA is 288,718 square feet. The aggregate purchase price of the assets acquired during the nine months ended September 30, 2020 and 2019, respectively, has been allocated as follows: Nine Months Ended September 30, Assets 2020 2019 Land $ 3,425 $ 25,953 Buildings — 45,781 Building and tenant improvements — 5,832 Above-market leases (1) — 155 In-place leases (2) — 6,923 Total assets 3,425 84,644 Liabilities Below-market leases (3) — 5,010 Total liabilities — 5,010 Net assets acquired $ 3,425 $ 79,634 (1) The weighted average amortization period at the time of acquisition for above-market leases related to assets acquired during the nine months ended September 30, 2019 was 10.4 years. (2) The weighted average amortization period at the time of acquisition for in-place leases related to assets acquired during the nine months ended September 30, 2019 was 8.8 years. (3) The weighted average amortization period at the time of acquisition for below-market leases related to assets acquired during the nine months ended September 30, 2019 was 24.3 years. 3. Dispositions and Assets Held for Sale During the three months ended September 30, 2020, the Company disposed of three shopping centers, one partial shopping center and one land parcel for aggregate net proceeds of $ 36.2 million resulting in aggregate gain of $ 13.1 million and aggregate impairment of less than $ 0.1 million. In addition, during the three months ended September 30, 2020, the Company received aggregate net proceeds of less than $ 0.1 million and resolved contingencies of $ 0.1 million from previously disposed assets resulting in aggregate gain of $ 0.1 million. During the nine months ended September 30, 2020, the Company disposed of eight shopping centers, three partial shopping centers and one land parcel for aggregate net proceeds of $ 81.9 million resulting in aggregate gain of $ 21.3 million and aggregate impairment of $ 6.0 million. In addition, during the nine months ended September 30, 2020, the Company received aggregate net proceeds of $ 1.0 million and resolved contingencies of $ 0.5 million from previously disposed assets resulting in aggregate gain of $ 1.5 million. During the three months ended September 30, 2019, the Company disposed of 12 shopping centers and one partial shopping center for aggregate net proceeds of $ 144.6 million resulting in aggregate gain of $ 25.5 million and aggregate impairment of $ 8.2 million. In addition, during the three months ended September 30, 2019, the Company received aggregate net proceeds of $ 0.1 million from previously disposed assets resulting in aggregate gain of $ 0.1 million. During the nine months ended September 30, 2019, the Company disposed of 18 shopping centers and four partial shopping centers for aggregate net proceeds of $ 239.4 million resulting in aggregate gain of $ 46.0 million and aggregate impairment of $ 14.4 million. In addition, during the nine months ended September 30, 2019, 14 the Company received aggregate net proceeds of $ 0.4 million from previously disposed assets resulting in aggregate gain of $ 0.3 million. As of September 30, 2020, the Company did no t have any properties held for sale. As of December 31, 2019, the Company had two properties and two partial properties held for sale. The following table presents the assets and liabilities associated with the properties classified as held for sale: Assets September 30, 2020 December 31, 2019 Land $ — $ 3,356 Buildings and improvements — 31,650 Accumulated depreciation and amortization — ( 13,044 ) Real estate, net — 21,962 Other assets — 209 Assets associated with real estate assets held for sale $ — $ 22,171 Liabilities Below-market leases $ — $ 415 Liabilities associated with real estate assets held for sale (1) $ — $ 415 (1) These amounts are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets. There were no discontinued operations for the three and nine months ended September 30, 2020 and 2019 as none of the dispositions represented a strategic shift in the Company’s business that would qualify as discontinued operations. 4. Real Estate The Company’s components of Real estate, net consisted of the following: September 30, 2020 December 31, 2019 Land $ 1,754,708 $ 1,767,029 Buildings and improvements: Buildings and tenant improvements (1) 7,853,233 7,741,607 Lease intangibles (2) 579,361 614,964 10,187,302 10,123,600 Accumulated depreciation and amortization (3) ( 2,623,144 ) ( 2,481,250 ) Total $ 7,564,158 $ 7,642,350 (1) As of September 30, 2020 and December 31, 2019, Buildings and tenant improvements included accrued amounts, net of anticipated insurance proceeds, of $ 32.2 million and $ 46.9 million, respectively. (2) As of September 30, 2020 and December 31, 2019, Lease intangibles consisted of $ 521.7 million and $ 554.9 million, respectively, of in-place leases and $ 57.7 million and $ 60.1 million, respectively, of above-market leases. These intangible assets are amortized over the term of each related lease. (3) As of September 30, 2020 and December 31, 2019, Accumulated depreciation and amortization included $ 515.6 million and $ 533.1 million, respectively, of accumulated amortization related to Lease intangibles. In addition, as of September 30, 2020 and December 31, 2019, the Company had intangible liabilities relating to below-market leases of $ 354.6 million and $ 372.1 million, respectively, and accumulated accretion of $ 263.7 million and $ 267.1 million, respectively. These intangible liabilities are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets. These intangible assets are accreted over the term of each related lease. Below-market lease accretion income, net of above-market lease amortization for the three months ended September 30, 2020 and 2019 was $ 4.1 million and $ 4.5 million, respectively. Below-market lease accretion income, net of above-market lease amortization for the nine months ended September 30, 2020 and 2019 was $ 12.4 million and $ 14.1 million, respectively. These amounts are included in Rental income on the Company’s unaudited Condensed Consolidated Statements of Operations. Amortization expense associated with in-place lease value for the three months ended September 30, 2020 and 2019 was $ 4.5 million and $ 6.7 million, respectively. Amortization expense associated with in-place lease value for the nine months ended September 30, 2020 and 2019 was $ 14.8 million and 15 $ 19.5 million, respectively. These amounts are included in Depreciation and amortization on the Company’s unaudited Condensed Consolidated Statements of Operations. The Company’s estimated below-market lease accretion income, net of above-market lease amortization expense, and in-place lease amortization expense for the next five years are as follows: Year ending December 31, Below-market lease accretion (income), net of above-market lease amortization expense In-place lease amortization expense 2020 (remaining three months) $ ( 3,144 ) $ 3,946 2021 ( 11,290 ) 12,870 2022 ( 9,337 ) 9,003 2023 ( 8,114 ) 6,554 2024 ( 7,601 ) 4,887 5. Impairments On a periodic basis, management assesses whether there are any indicators, including property operating performance, changes in anticipated hold period and general market conditions, including the impact of COVID-19, that the carrying value of the Company’s real estate assets (including any related intangible assets or liabilities) may be impaired. If management determines that the carrying value of a real estate asset is impaired, a loss is recognized to reflect the estimated fair value. The Company recognized the following impairments during the three months ended September 30, 2020: Three Months Ended September 30, 2020 Property Name (1) Location GLA Impairment Charge Northmall Centre Tucson, AZ 165,350 $ 5,721 Chamberlain Plaza (2) Meriden, CT 54,302 25 219,652 $ 5,746 (1) The Company recognized impairment charges based upon a change in the anticipated hold period of these properties and/or offers from third-party buyers in connection with the Company’s capital recycling program. (2) The Company disposed of this property during the three months ended September 30, 2020. The Company recognized the following impairments during the nine months ended September 30, 2020: Nine Months Ended September 30, 2020 Property Name (1) Location GLA Impairment Charge Northmall Centre Tucson, AZ 165,350 $ 5,721 Spring Mall Greenfield, WI 45,920 4,584 30th Street Plaza (2) Canton, OH 145,935 4,449 Chamberlain Plaza (2) Meriden, CT 54,302 1,538 Parcel at Lakes Crossing (2)(3) Muskegon, MI 4,990 14 416,497 $ 16,306 (1) The Company recognized impairment charges based upon a change in the anticipated hold period of these properties and/or offers from third-party buyers primarily in connection with the Company’s capital recycling program. (2) The Company disposed of this property during the nine months ended September 30, 2020. (3) This property was classified as held for sale as of December 31, 2019. 16 The Company recognized the following impairment during the three months ended September 30, 2019: Three Months Ended September 30, 2019 Property Name (1) Location GLA Impairment Charge Parcel at Mansell Crossing (2) Alpharetta, GA 51,615 $ 5,777 Glendale Galleria (2) Glendale, AZ 119,525 2,197 Westview Center (2) Hanover Park, IL 321,382 170 North Hills Village (2) Haltom City, TX 43,299 26 535,821 $ 8,170 (1) The Company recognized impairment charges based upon a change in the anticipated hold period of these properties and/or offers from third-party buyers in connection with the Company’s capital recycling program. (2) The Company disposed of this property during the year ended December 31, 2019. The Company recognized the following impairments during the nine months ended September 30, 2019: Nine Months Ended September 30, 2019 Property Name (1) Location GLA Impairment Charge Westview Center (2) Hanover Park, IL 321,382 $ 6,356 Parcel at Mansell Crossing (2) Alpharetta, GA 51,615 5,777 Brice Park Reynoldsburg, OH 158,565 3,112 Glendale Galleria (2) Glendale, AZ 119,525 2,197 North Hills Village (2) Haltom City, TX 43,299 26 694,386 $ 17,468 (1) The Company recognized impairment charges based upon a change in the anticipated hold period of these properties and/or offers from third-party buyers in connection with the Company’s capital recycling program. (2) The Company disposed of this property during the year ended December 31, 2019. The Company can provide no assurance that material impairment charges with respect to its Portfolio will not occur in future periods. See Note 3 for additional information regarding impairment charges taken in connection with the Company’s dispositions. See Note 8 for additional information regarding the fair value of operating properties that have been impaired. 6. Financial Instruments – Derivatives and Hedging The Company’s use of derivative instruments is intended to manage its exposure to interest rate movements and such instruments are not utilized for speculative purposes. In certain situations, the Company may enter into derivative financial instruments such as interest rate swap and interest rate cap agreements that result in the receipt and/or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Cash Flow Hedges of Interest Rate Risk Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchanging the underlying notional amount. The Company utilizes interest rate swaps to partially hedge the cash flows associated with variable LIBOR based debt. During the nine months ended September 30, 2020 and year ended December 31, 2019, the Company did no t enter into any new interest rate swap agreements. Detail on the Company’s interest rate derivatives designated as cash flow hedges outstanding as of September 30, 2020 and December 31, 2019 is as follows: Number of Instruments Notional Amount September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019 Interest Rate Swaps 7 7 $ 800,000 $ 800,000 The Company has elected to present its interest rate derivatives on its unaudited Condensed Consolidated Balance Sheets on a gross basis as interest rate swap assets and interest rate swap liabilities. Detail on the fair value of the 17 Company’s interest rate derivatives on a gross and net basis as of September 30, 2020 and December 31, 2019 is as follows: Fair Value of Derivative Instruments Interest rate swaps classified as: September 30, 2020 December 31, 2019 Gross derivative assets $ — $ 3,795 Gross derivative liabilities ( 31,439 ) ( 13,449 ) Net derivative liabilities $ ( 31,439 ) $ ( 9,654 ) The gross derivative assets are included in Other assets and the gross derivative liabilities are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets. All of the Company’s outstanding interest rate swap agreements for the periods presented were designated as cash flow hedges of interest rate risk. The fair value of the Company’s interest rate derivatives is determined using market standard valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. These inputs are classified as Level 2 of the fair value hierarchy. The effective portion of changes in the fair value of derivatives designated as cash flow hedges is recognized in other comprehensive income (loss) and is reclassified into earnings as interest expense in the period that the hedged forecasted transaction affects earnings. The effective portion of the Company’s interest rate swaps that was recognized on the Company’s unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2020 and 2019 is as follows: Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Change in unrealized loss on interest rate swaps $ ( 133 ) $ ( 4,125 ) $ ( 27,144 ) $ ( 23,375 ) Amortization (accretion) of interest rate swaps to interest expense 3,061 ( 1,207 ) 5,359 ( 5,998 ) Change in unrealized gain (loss) on interest rate swaps, net $ 2,928 $ ( 5,332 ) $ ( 21,785 ) $ ( 29,373 ) The Company estimates that $ 11.3 million will be reclassified from accumulated other comprehensive loss as an increase to interest expense over the next twelve months. No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Company’s cash flow hedges during the three and nine months ended September 30, 2020 and 2019. Non-Designated (Mark-to-Market) Hedges of Interest Rate Risk The Company does not use derivatives for trading or speculative purposes. As of September 30, 2020 and December 31, 2019, the Company did not have any non-designated hedges. Credit-risk-related Contingent Features The Company has agreements with its derivative counterparties that contain provisions whereby if the Company defaults on certain of its indebtedness and the indebtedness has been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. If the Company were to breach any of the contractual provisions of the derivative contracts, it would be required to settle its obligations under the agreements at their termination value, including accrued interest. 18 7. Debt Obligations As of September 30, 2020 and December 31, 2019, the Company had the following indebtedness outstanding: Carrying Value as of September 30, 2020 December 31, 2019 Stated Interest Rate (1) Scheduled Maturity Date Secured loan Secured loan $ — $ 7,000 N/A N/A Net unamortized premium — 211 Net unamortized debt issuance costs — ( 37 ) Total secured loan, net $ — $ 7,174 Notes payable Unsecured notes (2)(3) $ 4,835,302 $ 4,218,453 1.30 % – 7.97 % 2022 – 2030 Net unamortized premium 31,478 11,078 Net unamortized debt issuance costs ( 27,146 ) ( 23,579 ) Total notes payable, net $ 4,839,634 $ 4,205,952 Unsecured Credit Facility and term loans Unsecured Credit Facility - Revolving Facility $ — $ 7,000 N/A 2023 Unsecured $ 350 Million Term Loan (3) 350,000 350,000 1.41 % 2023 Unsecured $ 300 Million Term Loan (4) 300,000 300,000 1.41 % 2024 Net unamortized debt issuance costs ( 7,974 ) ( 8,941 ) Total Unsecured Credit Facility and term loans $ 642,026 $ 648,059 Total debt obligations, net $ 5,481,660 $ 4,861,185 (1) Stated interest rates as of September 30, 2020 do not include the impact of the Company’s interest rate swap agreements (described below). (2) The weighted average stated interest rate on the Company’s unsecured notes was 3.76 % as of September 30, 2020. (3) Effective November 1, 2016, the Company has in place three interest rate swap agreements that convert the variable interest rate on $ 150.0 million of the Company’s $ 250.0 million Floating Rate Senior Notes due 2022, issued on August 31, 2018 to a fixed, combined interest rate of 1.11 % (plus a spread of 105 basis points) and the Company’s $ 350.0 million term loan agreement, as amended April 29, 2020, (the “$ 350 Million Term Loan”) to a fixed, combined interest rate of 1.11 % (plus a spread of 125 basis points) through July 30, 2021. (4) Effective January 2, 2019, the Company has in place four interest rate swap agreements that convert the variable interest rate on the Company’s $ 300 million term loan agreement, as amended April 29, 2020 (the “$ 300 Million Term Loan”) to a fixed, combined interest rate of 2.61 % (plus a spread of 125 basis points) through July 26, 2024. 2020 Debt Transactions During the nine months ended September 30, 2020, the Company repaid $ 7.0 million, net of borrowings, under the Operating Partnership’s $ 1.25 billion revolving credit facility (the “Revolving Facility”). In June 2020, the Operating Partnership issued $ 500.0 million aggregate principal amount of 4.050 % Senior Notes due 2030 (the “2030 Notes”) at 99.776 % of par, the net proceeds of which were used to complete the Tender Offer (defined below), repay outstanding indebtedness under the Revolving Facility, and for general corporate purposes. The 2030 Notes bear interest at a rate of 4.050 % per annum, payable semi-annually on January 1 and July 1 of each year, commencing January 1, 2021. The 2030 Notes will mature on July 1, 2030. The Operating Partnership may redeem the 2030 Notes prior to maturity, at its option, at any time in whole or from time to time in part, at the applicable redemption price specified in the Indenture with respect to the 2030 Notes. If the 2030 Notes are redeemed on or after April 1, 2030 (three months prior to the maturity date), the redemption price will be equal to 100 % of the principal amount of the 2030 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. The 2030 Notes are the Operating Partnership’s unsecured and unsubordinated obligations and rank equally in right of payment with all of the Operating Partnership’s existing and future senior unsecured and unsubordinated indebtedness. In August 2020, the Operating Partnership issued an additional $ 300.0 million aggregate principal amount of the 2030 Notes at 107.172 % of par, the net proceeds of which were used to repay outstanding indebtedness under the Revolving Facility and for general corporate purposes. The additional notes form a single series with the previously outstanding 2030 Notes. 19 In June 2020, the Operating Partnership commenced a cash tender offer (the “Tender Offer”) for any and all of its outstanding 3.875 % Senior Notes due 2022 (the “2022 Notes”). The Tender Offer expired on June 26, 2020. As a result of the Tender Offer, the Company repurchased notes with a face value of $ 182.5 million on June 29, 2020 and $ 0.7 million on July 1, 2020. Following the repurchase, $ 316.8 million aggregate principal amount of the 2022 Notes remains outstanding. During the nine months ended September 30, 2020, as a result of the Tender Offer and the repayment of its $ 7.0 million secured loan, the Company recognized a $ 10.4 million loss on extinguishment of debt, net. Loss on extinguishment of debt, net includes $ 9.7 million of prepayment fees and $ 0.7 million of accelerated unamortized debt issuance costs and debt discounts, net of premiums. In April 2020, the Operating Partnership amended its senior unsecured credit agreements related to the Revolving Facility and the Operating Partnership’s term loans, changing the covenant calculation reference period to the most recent twelve months for which it reported financial results from the most recent six months for which it reported financial results, annualized. Pursuant to the terms of the Company’s unsecured debt agreements, the Company among other things is subject to the maintenance of various financial covenants. The Company was in compliance with these covenants as of September 30, 2020. Debt Maturities As of September 30, 2020 and December 31, 2019, the Company had accrued interest of $ 44.9 million and $ 36.9 million outstanding, respectively. As of September 30, 2020, scheduled maturities of the Company’s outstanding debt obligations were as follows: Year ending December 31, 2020 (remaining three months) $ — 2021 — 2022 566,849 2023 850,000 2024 800,000 Thereafter 3,268,453 Total debt maturities 5,485,302 Net unamortized premium 31,478 Net unamortized debt issuance costs ( 35,120 ) Total debt obligations, net $ 5,481,660 As of the date the financial statements were issued, the Company did not have any scheduled debt maturities for the next 12 months. 8. Fair Value Disclosures All financial instruments of the Company are reflected in the accompanying unaudited Condensed Consolidated Balance Sheets at amounts which, in management’s judgment, reasonably approximate their fair values, except those instruments listed below: September 30, 2020 December 31, 2019 Carrying Amounts Fair Value Carrying Amounts Fair Value Secured loan $ — $ — $ 7,174 $ 7,306 Notes payable 4,839,634 5,128,018 4,205,952 4,422,513 Unsecured Credit Facility and term loans 642,026 647,968 648,059 658,490 Total debt obligations, net $ 5,481,660 $ 5,775,986 $ 4,861,185 $ 5,088,309 As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy is included in GAAP that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the 20 hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs that are classified within Level 3 of the hierarchy). In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The valuation methodology used to estimate the fair value of the Company’s debt obligations is based on a discounted cash flow analysis, with assumptions that include credit spreads, interest rate curves, estimated property values, loan amounts and maturity dates. Based on these inputs, the Company has determined that the valuations of its debt obligations are classified within Level 3 of the fair value hierarchy. Such fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition. Recurring Fair Value The Company’s marketable securities and interest rate derivatives are measured and recognized at fair value on a recurring basis. The valuations of the Company’s marketable securities are based primarily on publicly traded market values in active markets and are classified within Level 1 or 2 of the fair value hierarchy. See Note 6 for fair value information regarding the Company’s interest rate derivatives. The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured and recognized at fair value on a recurring basis: Fair Value Measurements as of September 30, 2020 Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Marketable securities (1) $ 19,987 $ 891 $ 19,096 $ — Liabilities: Interest rate derivatives $ ( 31,439 ) $ — $ ( 31,439 ) $ — Fair Value Measurements as of December 31, 2019 Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Marketable securities (1) $ 18,054 $ 1,459 $ 16,595 $ — Interest rate derivatives $ 3,795 $ — $ 3,795 $ — Liabilities: Interest rate derivatives $ ( 13,449 ) $ — $ ( 13,449 ) $ — (1) As of September 30, 2020 and December 31, 2019, marketable securities included $ 0.2 million and $ 0.1 million of net unrealized gains, respectively. As of September 30, 2020, the contractual maturities of the Company’s marketable securities are within the next five years. Non-Recurring Fair Value On a periodic basis, management assesses whether there are any indicators, including property operating performance, changes in anticipated hold period and general market conditions, including the impact of COVID-19, that the carrying value of the Company’s real estate assets (including any related intangible assets or liabilities) may be impaired. Fair value is determined by offers from third-party buyers, market comparable data, third party appraisals or discounted cash flow analyses. The cash flows utilized in such analyses are comprised of unobservable inputs which include forecasted rental revenue and expenses based upon market conditions and future expectations. The capitalization rates and discount rates utilized in such analyses are based upon unobservable rates that the 21 Company believes to be within a reasonable range of current market rates for the respective properties. Based on these inputs, the Company has determined that the valuations of these properties are classified within Level 3 of the fair value hierarchy. The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured and recognized at fair value on a non-recurring basis. The table includes information related to properties that were remeasured to fair value as a result of impairment testing during the nine months ended September 30, 2020 and during the year ended December 31, 2019, excluding the properties sold prior to September 30, 2020 and December 31, 2019, respectively: Fair Value Measurements as of September 30, 2020 Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Impairment of Real Estate Assets Assets: Properties (1)(2)(3) $ 18,842 $ — $ — $ 18,842 $ 10,305 Fair Value Measurements as of December 31, 2019 Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Impairment of Real Estate Assets Assets: Properties (4)(5) $ 23,533 $ — $ — $ 23,533 $ 7,983 (1) Excludes properties disposed of prior to September 30, 2020. (2) The carrying value of properties remeasured to fair value based upon offers from third-party buyers during the nine months ended September 30, 2020 includes $ 13.9 million related to Northmall Centre. (3) The carrying value of properties remeasured to fair value based upon a discounted cash flow analysis during the nine months ended September 30, 2020 includes $ 4.9 million related to Spring Mall. The capitalization rate of 8.0 % and discount rate of 8.0 % which were utilized in the discounted cash flow analysis were based upon unobservable rates that the Company believes to be within a reasonable range of current market rates for the investment. (4) Excludes properties disposed of prior to December 31, 2019. (5) The carrying value of properties remeasured to fair value based upon offers from third-party buyers during the year ended December 31, 2019 includes: (i) $ 9.7 million related to Brice Park; (ii) $ 9.1 million related to Mohawk Acres Plaza; (iii) $ 3.4 million related to Lincoln Plaza; and (iv) $ 1.3 million related to a parcel at Lakes Crossing. 9. Revenue Recognition The Company engages in the ownership, management, leasing, acquisition, disposition and redevelopment of retail shopping centers. Revenue is primarily generated through lease agreements and classified as Rental income on the Company’s unaudited Condensed Consolidated Statements of Operations. These agreements include retail shopping center unit leases; ground leases; ancillary leases or agreements, such as agreements with tenants for cellular towers, ATMs, and short-term or seasonal retail (e.g. Halloween or Christmas-related retail); and reciprocal easement agreements. The agreements range in term from less than one year to 25 or more years, with certain agreements containing renewal options. These renewal options range from as little as one month to five or more years. The Company’s retail shopping center leases generally require tenants to pay their proportionate share of property operating expenses such as common area expenses, utilities, insurance and real estate taxes, and certain capital expenditures related to the maintenance of the Company’s properties. Additionally, variable lease payments based on percentage rents are recognized once the required sales data is made available. The Company recognized $ 0.6 million and $ 1.1 million of income based on percentage rents for the three months ended September 30, 2020 and 2019, respectively. The Company recognized $ 3.6 million and $ 6.0 million of income based on percentage rents for the nine months ended September 30, 2020 and 2019, respectively. These amounts are included in Rental income on the Company’s unaudited Condensed Consolidated Statements of Operations. COVID-19 The global outbreak of the novel strain of coronavirus (“COVID-19”) and the public health measures that have been undertaken in response have had a significant adverse impact on the Company’s business, the Company’s tenants and the global economy. The effects of COVID-19, including related government restrictions, border closings, 22 quarantines, “shelter-in-place” orders and “social distancing” guidelines, have forced many of the Company’s tenants to close stores, reduce hours or significantly limit service, and have resulted in a dramatic increase in national unemployment and a significant economic contraction. Certain tenants experiencing economic difficulties during this pandemic have sought rent relief, which has been provided on a case-by-case basis primarily in the form of rent deferrals, and in more limited cases in the form of rent abatements. Under ASC 842, changes to the amount or timing of lease payments subsequent to the original lease execution are generally accounted for as lease modifications. Due to the number of lease contracts that would require analysis to determine, on a lease by lease basis, whether such a concession is required to be accounted for as a lease modification, the FASB issued a Staff Q&A on accounting for leases during the COVID-19 pandemic, focused on the application of lease guidance in ASC 842. The Q&A states that it would be acceptable to make a policy election regarding rent concessions resulting from COVID-19, which would not require entities to account for the rent concessions as lease modifications or to determine whether rent concessions were contractually obligated in each original lease. Rent abatements would be recognized as reductions to revenue during the period in which they were granted. Rent deferrals would result in an increase to “Receivables, net” during the deferral period with no impact on rental revenue recognition. Any rent concession that is either unrelated to COVID-19 or substantially increases the total consideration due under the lease does not qualify for consideration under the Q&A. The Company has evaluated the impact of the Q&A and has made the following policy elections: • The Company accounts for COVID-19 rent deferrals and abatements that significantly increase the consideration due under the lease as lease modifications in accordance with ASC 842. As a result, rental revenue recognition is reduced by the amount of the deferral or abatement in the period it was granted and straight-line rental income recognition is updated over the remaining lease term. • The Company does not account for COVID-19 rent deferrals that do not significantly increase the consideration due under the lease as lease modifications. As a result, rental revenue recognition does not change, and Receivables, net increases for the deferred amount. • The Company does not account for COVID-19 rent abatements that do not significantly increase the consideration due under the lease as lease modifications. As a result, rental revenue recognition is reduced by the amount of the abatement in the period it was granted. The following table presents the COVID-19 related deferrals and abatements granted for lease payments due during the three and nine months ended September 30, 2020. Lease payments presented consist of fixed contractual base rent and may include the reimbursement of certain property operating expenses. Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020 Deferrals Abatements Deferrals Abatements Lease payments (lease modifications) $ 1,991 $ 1,686 $ 2,735 $ 1,893 Lease payments (not lease modifications) 18,650 402 32,815 438 $ 20,641 $ 2,088 $ 35,550 $ 2,331 The following table presents the deferrals that were not lease modifications and were included in Receivables, net on the Company's Unaudited Condensed Consolidated Balance Sheets: COVID-19 Deferred Receivable Beginning balance, March 31, 2020 $ — Deferred lease payments (not lease modifications) 14,165 Deferred lease payments deemed uncollectible ( 3,228 ) Deferred lease payments received ( 49 ) Ending balance, June 30, 2020 10,888 Deferred lease payments (not lease modifications) 18,650 Deferred lease payments deemed uncollectible ( 8,742 ) Deferred lease payments received ( 2,318 ) Ending balance, September 30, 2020 $ 18,478 23 10. Leases The Company periodically enters into agreements in which it is the lessee, including ground leases for shopping centers that it operates and office leases for administrative space. The agreements range in term from less than one year to 50 or more years, with certain agreements containing renewal options for up to an additional 100 years. Upon lease execution, the Company recognizes a lease liability and a right-of-use (“ROU”) asset based on the present value of future lease payments over the noncancellable lease term. As of September 30, 2020 the Company is not including any prospective renewal or termination options in its lease liabilities or ROU assets, as the exercise of such options is not reasonably certain. Certain agreements require the Company to pay its proportionate share of property operating expenses such as common area expenses, utilities, insurance and real estate taxes, and certain capital expenditures related to the maintenance of the properties. These payments are not included in the calculation of the lease liability and are presented as variable lease costs. The following tables present additional information pertaining to the Company’s operating leases: Three Months Ended September 30, Nine Months Ended September 30, Supplemental Statements of Operations Information 2020 2019 2020 2019 Operating lease costs $ 1,761 $ 1,705 $ 5,278 $ 5,121 Short-term lease costs 10 9 29 29 Variable lease costs 146 80 380 336 Total lease costs $ 1,917 $ 1,794 $ 5,687 $ 5,486 Nine Months Ended September 30, Supplemental Statements of Cash Flows Information 2020 2019 Operating cash outflows from operating leases $ 5,286 $ 5,226 ROU assets obtained in exchange for operating lease liabilities $ 1,140 $ 44,354 ROU assets written off due to lease modifications $ ( 1,748 ) $ — Operating Lease Liabilities As of September 30, 2020 Future minimum operating lease payments: 2020 (remaining three months) $ 1,762 2021 6,257 2022 6,028 2023 5,339 2024 5,246 Thereafter 30,073 Total future minimum operating lease payments 54,705 Less: imputed interest ( 14,785 ) Operating lease liabilities $ 39,920 Supplemental Balance Sheets Information As of September 30, 2020 As of December 31, 2019 Operating lease liabilities (1)(2) $ 39,920 $ 44,707 ROU assets (1)(3) $ 35,318 $ 39,860 (1) As of September 30, 2020 and December 31, 2019, the weighted average remaining lease term was 12.7 years and 10.9 years, respectively, and the weighted average discount rate was 4.39 % and 4.30 %, respectively. (2) These amounts are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets. (3) These amounts are included in Other assets on the Company’s unaudited Condensed Consolidated Balance Sheets. As of September 30, 2020, there were no material leases that have been executed but not yet commenced. 11. Equity and Capital ATM Program In January 2020, the Company established an at-the-market equity offering program (the “ATM Program”) through which the Company may sell from time to time up to an aggregate of $ 400.0 million of its common stock through sales agents over a three -year period. The ATM Program also provides that the Company may enter into forward contracts for shares of its common stock with forward sellers and forward purchasers. The ATM Program is 24 scheduled to expire on January 9, 2023, unless earlier terminated or extended by the Company, sales agents, forward sellers and forward purchasers. As of September 30, 2020, no shares have been issued under the ATM Program, and as a result, $ 400.0 million of common stock remained available for issuance. Share Repurchase Program In January 2020, the Company established a new share repurchase program (the “Program”) for up to $ 400.0 million of the Company’s common stock. The Program is scheduled to expire on January 9, 2023, unless suspended or extended by the Board of Directors. The Program replaced the Company’s prior share repurchase program (the “Prior Program”), which expired on December 5, 2019. During the nine months ended September 30, 2020, the Company repurchased 1.7 million shares of common stock under the Program at an average price per share of $ 15.14 for a total of $ 25.0 million, excluding commissions. The Company incurred total commissions of less than $ 0.1 million in conjunction with the Program for the nine months ended September 30, 2020. During the nine months ended September 30, 2019, the Company repurchased 0.8 million shares of common stock under the Prior Program at an average price per share of $ 17.43 for a total of $ 14.6 million, excluding commissions. The Company incurred total commissions of less than $ 0.1 million in conjunction with the Prior Program for the nine months ended September 30, 2019. As of September 30, 2020, the Program had $ 375.0 million of available repurchase capacity. Common Stock In connection with the vesting of restricted stock units (“RSUs”) under the Company’s equity-based compensation plan, the Company withholds shares to satisfy tax withholding obligations. During the nine months ended September 30, 2020 and 2019, the Company withheld 0.2 million and 0.1 million shares, respectively. Dividends and Distributions During the three months ended September 30, 2020, the Company did no t declare common stock dividends and OP Unit distributions. During the three months ended September 30, 2019, the Company declared common stock dividends and OP Unit distributions of $ 0.280 per share/unit. As of September 30, 2020 and December 31, 2019, the Company had declared but unpaid common stock dividends and OP Unit distributions of $ 1.8 million and $ 87.2 million, respectively. These amounts are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets. 12. Stock Based Compensation During the year ended December 31, 2013, the Board of Directors approved the 2013 Omnibus Incentive Plan (the “Plan”). The Plan provides for a maximum of 15.0 million shares of the Company’s common stock to be issued for qualified and non-qualified options, stock appreciation rights, restricted stock and RSUs, OP Units, performance awards and other stock-based awards. During the nine months ended September 30, 2020 and the year ended December 31, 2019, the Company granted RSUs to certain employees. The RSUs are divided into multiple tranches, which are all subject to service-based vesting conditions. Certain tranches are also subject to performance-based or market-based criteria, which contain a threshold, target, above target, and maximum number of units which can be earned. The number of units actually earned for each tranche is determined based on performance during a specified performance period. Tranches that only have a service-based component can only earn a target number of units. The aggregate number of RSUs granted, assuming that the target level of performance is achieved, was 0.7 million and 0.8 million for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively, with vesting periods ranging from one to five years . For the performance-based and service-based RSUs granted, fair value is based on the Company’s grant date stock price. For the market-based RSUs granted during the nine months ended September 30, 2020 and the year ended December 31, 2019, the Company calculated the grant date fair values per unit using a Monte Carlo simulation based on the probability of satisfying the market performance hurdles over the remainder of the performance period based on the Company’s historical common stock performance relative to the other companies within the FTSE NAREIT Equity Shopping Centers Index as well as the following significant assumptions: (i) volatility of 20.0 % to 23.0 % and 20.0 % to 21.0 %, respectively; (ii) a weighted average risk-free interest rate of 1.20 % to 1.30 % and 2.55 %, respectively; and (iii) the Company’s weighted average common stock dividend yield of 5.9 % to 6.0 % and 5.6 %, respectively. 25 During the three months ended September 30, 2020 and 2019, the Company recognized $ 3.5 million and $ 3.5 million of equity compensation expense, respectively, of which $ 0.3 million and $ 0.2 million was capitalized, respectively. During the nine months ended September 30, 2020 and 2019, the Company recognized $ 8.5 million and $ 9.5 million of equity compensation expense, respectively, of which $ 0.7 million and $ 0.6 million was capitalized, respectively. These amounts are included in General and administrative expense on the Company’s unaudited Condensed Consolidated Statements of Operations. As of September 30, 2020, the Company had $ 17.1 million of total unrecognized compensation expense related to unvested stock compensation, which is expected to be recognized over a weighted average period of approximately 2.1 years. 26 13. Earnings per Share Basic earnings per share (“EPS”) is calculated by dividing net income attributable to the Company’s common stockholders, including any participating securities, by the weighted average number of shares outstanding for the period. Certain restricted shares issued pursuant to the Company’s share-based compensation program are considered participating securities, as such stockholders have rights to receive non-forfeitable dividends. Fully-diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into shares of common stock. Unvested RSUs are not allocated net losses and/or any excess of dividends declared over net income, as such amounts are allocated entirely to the Company’s common stock. The following table provides a reconciliation of the numerator and denominator of the EPS calculations for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Computation of Basic Earnings Per Share: Net income $ 27,944 $ 80,854 $ 96,769 $ 212,714 Non-forfeitable dividends on unvested restricted shares ( 82 ) ( 176 ) ( 269 ) ( 484 ) Net income attributable to the Company’s common stockholders for basic earnings per share $ 27,862 $ 80,678 $ 96,500 $ 212,230 Weighted average number shares outstanding – basic 296,562 298,031 296,982 298,257 Basic earnings per share attributable to the Company’s common stockholders: Net income per share $ 0.09 $ 0.27 $ 0.32 $ 0.71 Computation of Diluted Earnings Per Share: Net income attributable to the Company’s common stockholders for diluted earnings per share $ 27,862 $ 80,678 $ 96,500 $ 212,230 Weighted average shares outstanding – basic 296,562 298,031 296,982 298,257 Effect of dilutive securities: Equity awards 300 848 335 670 Weighted average shares outstanding – diluted 296,862 298,879 297,317 298,927 Diluted earnings per share attributable to the Company’s common stockholders: Net income per share $ 0.09 $ 0.27 $ 0.32 $ 0.71 27 14. Earnings per Unit Basic earnings per unit is calculated by dividing net income attributable to the Operating Partnership’s common unitholders, including any participating securities, by the weighted average number of partnership common units outstanding for the period. Certain restricted units issued pursuant to the Company’s share-based compensation program are considered participating securities, as such unitholders have rights to receive non-forfeitable dividends. Fully-diluted earnings per unit reflects the potential dilution that could occur if securities or other contracts to issue common units were exercised or converted into common units. Unvested RSUs are not allocated net losses and/or any excess of dividends declared over net income, as such amounts are allocated entirely to the Operating Partnership’s common units. The following table provides a reconciliation of the numerator and denominator of the earnings per unit calculations for the three and nine months ended September 30, 2020 and 2019 (dollars in thousands, except per unit data): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Computation of Basic Earnings Per Unit: Net income $ 27,944 $ 80,854 $ 96,769 $ 212,714 Non-forfeitable dividends on unvested restricted units ( 82 ) ( 176 ) ( 269 ) ( 484 ) Net income attributable to the Operating Partnership’s common units for basic earnings per unit $ 27,862 $ 80,678 $ 96,500 $ 212,230 Weighted average number common units outstanding – basic 296,562 298,031 296,982 298,257 Basic earnings per unit attributable to the Operating Partnership’s common units: Net income per unit $ 0.09 $ 0.27 $ 0.32 $ 0.71 Computation of Diluted Earnings Per Unit: Net income attributable to the Operating Partnership’s common units for diluted earnings per unit $ 27,862 $ 80,678 $ 96,500 $ 212,230 Weighted average common units outstanding – basic 296,562 298,031 296,982 298,257 Effect of dilutive securities: Equity awards 300 848 335 670 Weighted average common units outstanding – diluted 296,862 298,879 297,317 298,927 Diluted earnings per unit attributable to the Operating Partnership’s common units: Net income per unit $ 0.09 $ 0.27 $ 0.32 $ 0.71 28 15. Commitments and Contingencies Legal Matters Except as described below, the Company is not presently involved in any material litigation arising outside the ordinary course of business. However, the Company is involved in routine litigation arising in the ordinary course of business, none of which the Company believes, individually or in the aggregate, taking into account existing reserves, will have a material impact on the Company’s financial condition, operating results or cash flows. As previously disclosed, on August 1, 2019, the Company finalized a settlement with the SEC with respect to matters initially disclosed on February 8, 2016 relating to a review conducted by the Audit Committee of the Company’s Board of Directors into certain accounting matters and the related conduct of certain former Company executives. The Company believes that no additional governmental proceedings relating to these matters will be brought against the Company. The Company understands that the SEC and the U.S. Attorney’s Office for the Southern District of New York are pursuing actions relating to these matters with respect to certain former employees. The Company remains obligated to indemnify these former officers for legal and other professional fees and these amounts are now in excess of the Company’s insurance coverage and are being funded by the Company. Under certain circumstances, the former officers are contractually obligated to reimburse the Company for such amounts advanced. However, it is possible that the Company may not be able to recover any or all of these amounts. Environmental Matters Under various federal, state and local laws, ordinances and regulations, the Company may be or become liable for the costs of removal or remediation of certain hazardous or toxic substances released on or in the Company’s property or disposed of by the Company or its tenants, as well as certain other potential costs which could relate to hazardous or toxic substances (including governmental fines and injuries to persons and property). The Company does not believe that any resulting liability from such matters will have a material impact on the Company’s financial condition, operating results or cash flows. 16. Related-Party Transactions In the ordinary course of conducting its business, the Company enters into agreements with its affiliates in relation to the leasing and management of its real estate assets. As of September 30, 2020 and December 31, 2019, there were no material receivables from or payables to related parties. 17. Subsequent Events In preparing the unaudited Condensed Consolidated Financial Statements, the Company has evaluated events and transactions occurring after September 30, 2020 for recognition and/or disclosure purposes. Based on this evaluation, there were no subsequent events from September 30, 2020 through the date the financial statements were issued other than the following: • On October 30, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.215 per common share for the fourth quarter of 2020. The dividend was temporarily suspended for the second and third quarters of 2020 in response to uncertainties created by the COVID-19 pandemic. The dividend is payable on January 15, 2021 to shareholders of record on January 6, 2021. 29