What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-02 compared with 2021-05-03 · 199 added, 132 removed, 189 unchanged (64% of the section changed)

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Brixmor Operating Partnership LP and subsidiaries (collectively, the “Operating Partnership”) is the entity through which BPG conducts substantially all of its operations and owns substantially all of its assets.

BPG 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.

BPG owns 100% of the limited liability company interests of BPG Subsidiary LLC (“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.

Unless stated otherwise or the context otherwise requires, “we,” “our,” and “us” mean BPG and the Operating Partnership, collectively.

We believe we own and operate 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 March 31, 2021, our portfolio was comprised of 389 shopping centers (the “Portfolio”) totaling approximately 68 million square feet of GLA.

Our high-quality national Portfolio is primarily located within established trade areas in the top 50 Metropolitan Statistical Areas (“MSAs”) in the U.S., and our shopping centers are primarily anchored by non-discretionary and value-oriented retailers, as well as consumer-oriented service providers.

As of March 31, 2021, our three largest tenants by annualized base rent (“ABR”) were The TJX Companies, Inc.

As of June 30, 2021, our portfolio was comprised of 389 shopping centers (the “Portfolio”) totaling approximately 68 million square feet of GLA.

Our high-quality national Portfolio is primarily located within established trade areas in the top 50 Metropolitan Statistical Areas in the U.S., and our shopping centers are primarily anchored by non-discretionary and value-oriented retailers, as well as consumer-oriented service providers.

As of June 30, 2021, our three largest tenants by annualized base rent (“ABR”) were The TJX Companies, Inc.

(“TJX”), The Kroger Co.

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See “ Forward-Looking Statements ” included elsewhere in this Quarterly Report on Form 10-Q for the factors that could affect our rental income and/or property operating expenses.

As discussed below and in “Part II - Item 1A.

Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q, the COVID-19 pandemic has had, and is expected to continue to have, a significant impact on our business.

As discussed below, the COVID-19 pandemic has had, and is expected to continue to have, a significant impact on our business.

Impacts on Business from 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 our business, our tenants, the real estate market, the financial markets and the global economy.

The effects of COVID-19, including related government restrictions, border closings, quarantines, “shelter-in-place” orders and “social distancing” guidelines, have forced many of our tenants to close stores, reduce hours or significantly limit service, and resulted in a dramatic increase in national unemployment and a significant economic contraction in 2020.

Since we cannot estimate when the COVID-19 pandemic and the responsive measures to combat it will end, we cannot estimate the ultimate operational and financial impact of COVID-19 on our business.

The effects of COVID-19, including related government restrictions, border closings, quarantines, “shelter-in-place” orders and “social distancing” guidelines, forced many of our tenants to temporarily close stores, reduce hours or significantly limit service, and resulted in a dramatic increase in national unemployment and a significant economic contraction in 2020.

Since we cannot estimate when the COVID-19 pandemic and the responsive measures to combat it will end and to what extent certain restrictions, though currently lifted, may later be reinstated, we cannot estimate the ultimate operational and financial impact of COVID-19 on our business.

The degree to which COVID-19 impacts our operating results in the future will depend on the factors discussed in “ Forward-Looking Statements ” included elsewhere in this Quarterly Report on Form 10-Q and in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2020.

Approximately 70% of our shopping centers are anchored by grocery stores.

Grocery stores and other essential tenants have remained open throughout this time and many have experienced stable or increased sales, which we believe will help to partially mitigate the adverse impact of COVID-19 on our business.

In addition, we have encouraged our tenants whose businesses have been impacted by COVID-19 to explore their eligibility for benefits under government assistance programs intended to provide financial support to affected businesses.

COVID-19 significantly impacted our operations during 2020, and the following operating trends, combined with macroeconomic trends such as significantly increased unemployment and changes in consumer spending, lead us to believe that our operating results for the remainder of 2021 will continue to be adversely affected by COVID-19.

The following table presents information related to rent collection and store closures:

As of April 27, 2021

First Quarter 2021

Rent Collected Portfolio Composition By ABR Percent of ABR

Currently Closed

Essential retailers (1)

99 % 34 % 0 %

Hybrid retailers (2)

93 % 25 % 2 %

Other retailers or services (3)

91 % 41 % 3 %

Total 94 % 2 %

(1) Businesses deemed essential for day-to-day living.

(2) Businesses deemed essential for day-to-day living, but operating in a moderated capacity, and businesses deemed essential for day-to-day living in many, but not all jurisdictions.

(3) Businesses deemed non-essential for day-to-day living.

• Timing of rental payments:

Certain tenants experiencing economic difficulties during the 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.

Grocery stores and other essential tenants remained open throughout the pandemic and many have experienced stable or increased sales, which has helped and we believe will continue to help to partially mitigate the adverse impact of COVID-19 on our business.

As of July 27, 2021, we have collected 93% of second, third and fourth quarter 2020 base rent, 95% of first quarter 2021 base rent, and 97% of second quarter 2021 base rent.

Certain tenants experiencing economic difficulties during the pandemic have sought rent relief from us, 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.

Rent deferrals have significantly increased our Receivables, net.

We are in ongoing discussions with our tenants regarding rent that has not yet been collected or addressed through executed deferral or abatement agreements.

• Leasing activity:

While lease execution velocity notably slowed in the second quarter of 2020, it has since recovered to levels similar to those experienced in prior periods.

During 2020, we took various steps to mitigate the impact of COVID-19 on our liquidity, including the deferral of approximately $130.0 million of capital expenditures originally anticipated in 2020.

As of April 27, 2021, we have approximately $310.0 million in cash and cash equivalents and restricted cash, approximately $1.2 billion of remaining availability under the Revolving Facility, and no debt maturities until 2022.

We expect the significance of the COVID-19 pandemic and the resulting economic contraction on our financial and operational results to be dictated by, among other things, the scope, severity and duration of the pandemic, the speed and effectiveness of vaccine and treatment developments and their deployment, public adoption rates of COVID-19 vaccines, potential mutations of COVID-19, including SARS-CoV-2 and the response thereto, the direct and indirect economic effects of the pandemic and containment measures, and potential sustained changes in consumer behavior.

Adverse developments related to these conditions could increase the number of tenants that are unable to meet their lease obligations to us, close their stores, and/or file for bankruptcy protection, and could limit the demand for space from new tenants.

Therefore, there can be no assurances that we will not experience declines in revenues, net income or funds from operations, which could be material.

See “Part II – Item 1A.

Risk Factors” included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Leasing Highlights

As of March 31, 2021, billed and leased occupancy were 87.8% and 90.8%, respectively, as compared to 89.1% and 92.2%, respectively, as of March 31, 2020.

The following table summarizes our executed leasing activity for the three months ended March 31, 2021 and 2020 (dollars in thousands, except for per square foot (“PSF”) amounts):

For the Three Months Ended March 31, 2021

As of June 30, 2021, billed and leased occupancy were 88.1% and 91.1%, respectively, as compared to 88.9% and 92.1%, respectively, as of June 30, 2020.

The following table summarizes our executed leasing activity for the three months ended June 30, 2021 and 2020 (dollars in thousands, except for per square foot (“PSF”) amounts):

For the Three Months Ended June 30, 2021

Leases GLA New ABR PSF Tenant Improvements and Allowances PSF Third Party Leasing Commissions PSF Rent Spread (1)

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Option leases 35 709,194 10.41 — — 8.0 %

For the Three Months Ended March 31, 2020

For the Three Months Ended June 30, 2020

Leases GLA New ABR PSF Tenant Improvements and Allowances PSF Third Party Leasing Commissions PSF Rent Spread (1)

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Option leases 42 565,664 11.75 — — 7.8 %

(1) Based on comparable leases only, which consist of new leases signed on units that were occupied within the prior 12 months and renewal leases signed with the same tenant in all or a portion of the same location or that include the expansion into space that was occupied within the prior 12 months.

(1) Based on comparable leases only, which consist of new leases signed on units that were occupied within the prior 12 months and renewal or option leases signed with the same tenant in all or a portion of the same location or that include the expansion into space that was occupied within the prior 12 months.

Excludes leases executed for terms of less than one year.

ABR PSF includes the GLA of lessee-owned leasehold improvements.

The following table summarizes our executed leasing activity for the six months ended June 30, 2021 and 2020 (dollars in thousands, except for per PSF amounts):

For the Six Months Ended June 30, 2021

Leases GLA New ABR PSF Tenant Improvements and Allowances PSF Third Party Leasing Commissions PSF Rent Spread (1)

New, renewal and option leases 788 4,405,303 $ 16.57 $ 4.68 $ 1.84 8.3 %

New and renewal leases 716 2,975,631 18.99 6.92 2.72 8.9 %

New leases 303 1,354,680 18.31 14.41 5.83 20.0 %

Renewal leases 413 1,620,951 19.56 0.67 0.13 5.4 %

Option leases 72 1,429,672 11.53 — — 6.8 %

For the Six Months Ended June 30, 2020

Leases GLA New ABR PSF Tenant Improvements and Allowances PSF Third Party Leasing Commissions PSF Rent Spread (1)

New, renewal and option leases 617 4,188,834 $ 13.66 $ 3.74 $ 1.14 8.1 %

New and renewal leases 518 2,686,485 14.88 5.80 1.77 8.2 %

New leases 178 1,012,215 14.96 14.19 4.59 22.2 %

Renewal leases 340 1,674,270 14.84 0.73 0.07 4.5 %

Option leases 99 1,502,349 11.46 0.07 — 7.8 %

Excludes leases executed for terms of less than one year.

ABR PSF includes the GLA of lessee-owned leasehold improvements.

Acquisition Activity

• During the three months ended March 31, 2021, we acquired one outparcel and two land parcels for an aggregate purchase price of $3.8 million, including transaction costs.

• During the three months ended March 31, 2020, we acquired one land parcel for $2.0 million, including transaction costs.

• During the six months ended June 30, 2021, we acquired two shopping centers, one outparcel and two land parcels for an aggregate purchase price of $66.7 million, including transaction costs and closing credits.

• During the six months ended June 30, 2020, we acquired one land parcel for $2.0 million, including transaction costs.

Disposition Activity

• During the three months ended March 31, 2021, we disposed of four shopping centers and four partial shopping centers for aggregate net proceeds of $31.8 million resulting in aggregate gain of $5.8 million and aggregate impairment of $1.5 million.

• During the three months ended March 31, 2020, we disposed of three shopping centers and two partial shopping centers for aggregate net proceeds of $40.5 million resulting in aggregate gain of $7.5 million and aggregate impairment of less than $0.1 million.

In addition, during the three months ended March 31, 2020, we received aggregate net proceeds of $0.9 million and resolved contingencies of $0.5 million from previously disposed assets resulting in aggregate gain of $1.4 million.

• During the six months ended June 30, 2021, we disposed of six shopping centers and nine partial shopping centers for aggregate net proceeds of $99.7 million resulting in aggregate gain of $38.3 million and aggregate impairment of $1.5 million.

In addition, during the six months ended June 30, 2021, we received aggregate net proceeds of less than $0.1 million from previously disposed assets resulting in aggregate gain of less than $0.1 million.

• During the six months ended June 30, 2020, we disposed of five shopping centers and two partial shopping centers for aggregate net proceeds of $45.7 million resulting in aggregate gain of $8.2 million and aggregate impairment of less than $0.1 million.

In addition, during the six months ended June 30, 2020, we received aggregate net proceeds of $0.9 million and resolved contingencies of $0.5 million from previously disposed assets resulting in aggregate gain of $1.4 million.

Results of Operations

The results of operations discussion is combined for BPG and the Operating Partnership because there are no material differences in the results of operations between the two reporting entities.

Comparison of the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

Comparison of the Three Months Ended June 30, 2021 to the Three Months Ended June 30, 2020

Revenues (in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 $ Change

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Rental income

The decrease in rental income for the three months ended March 31, 2021 of $3.9 million, as compared to the corresponding period in 2020, was due to a $3.2 million decrease in rental income due to net disposition activity and a $0.7 million decrease for the remaining portfolio.

The decrease for the remaining portfolio was due to (i) a $4.8 million decrease in base rent;

(ii) a $2.3 million decrease in accretion of below-market leases, net of amortization of above-market leases and tenant inducements;

(iii) a $0.5 million decrease in expense reimbursements;

and (iv) a $0.1 million decrease in lease termination fees;

partially offset by (v) a $4.5 million increase in straight-line rental income, net;

(vi) a $1.7 million decrease in revenues deemed uncollectible;

(vii) a $0.5 million increase in percentage rents;

and (viii) a $0.3 million increase in ancillary and other rental income.

The decrease in revenues deemed uncollectible and increase in straight-line rental income, net were primarily attributable to the impact of COVID-19 in 2020.

The $4.8 million decrease in base rent for the remaining portfolio was primarily due to COVID-19 rent deferrals accounted for as lease modifications and rent abatements and a decrease in weighted average billed occupancy, partially offset by contractual rent increases and positive rent spreads for new and renewal leases and option exercises of 6.7% during the three months ended March 31, 2021 and 7.2% during the year ended December 31, 2020.

The increase in rental income for the three months ended June 30, 2021 of $39.5 million, as compared to the corresponding period in 2020, was due to a $41.9 million increase for assets owned for the full period, partially offset by a $2.4 million decrease in rental income due to net disposition activity.

The increase for assets owned for the full period was due to (i) a $29.3 million decrease in revenues deemed uncollectible;

(ii) a $9.8 million increase in straight-line rental income, net;

(iii) a $2.3 million increase in lease termination fees;

(iv) a $1.1 million increase in expense reimbursements;

(v) a $1.0 million increase in ancillary and other rental income;

(vi) a $0.4 million increase in percentage rents;

and (vii) a $0.2 million increase in accretion of below-market leases, net of amortization of above-market leases and tenant inducements;

partially offset by (viii) a $2.2 million decrease in base rent.

The decrease in revenues deemed uncollectible was primarily attributable to the impact of COVID-19 reserves in 2020 and recoveries of previously reserved amounts in 2021.

The increase in straight-line rental income, net was primarily attributable to the impact of COVID-19 reserves in 2020.

The $2.2 million decrease in base rent for the remaining portfolio was primarily due to COVID-19 rent deferrals accounted for as lease modifications and rent abatements and a decrease in weighted average billed occupancy, partially offset by contractual rent increases and positive rent spreads for new and renewal leases and option exercises of 8.3% during the six months ended June 30, 2021 and 7.2% during the year ended December 31, 2020.

Other revenues

The increase in other revenues for the three months ended March 31, 2021 of $1.4 million, as compared to the corresponding period in 2020, was primarily due to an increase in tax increment financing income.

The decrease in other revenues for the three months ended June 30, 2021 of $0.1 million, as compared to the corresponding period in 2020, was primarily due to a decrease in energy-efficient lighting rebate income.

Operating Expenses (in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 $ Change

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Operating costs

The increase in operating costs for the three months ended March 31, 2021 of $1.0 million, as compared to the corresponding period in 2020, was primarily due to a $1.4 million increase for assets owned for the full year primarily due to an increase in insurance and repair and maintenance costs, partially offset by a $0.4 million decrease in operating costs due to net disposition activity.

The increase in operating costs for the three months ended June 30, 2021 of $3.6 million, as compared to the corresponding period in 2020, was primarily due to a $3.8 million increase for assets owned for the full period, primarily due to an increase in repair and maintenance, insurance and utility costs, partially offset by a $0.2 million decrease in operating costs due to net disposition activity.

Real estate taxes

Real estate taxes remained generally consistent for the three months ended March 31, 2021 as compared to the corresponding period in 2020.

The increase in real estate taxes for the three months ended June 30, 2021 of $0.4 million, as compared to the corresponding period in 2020, was primarily due to a $1.4 million increase for assets owned for the full period, primarily due to a decrease in favorable adjustments of prior year assessments, partially offset by a $1.0 million decrease in real estate taxes due to net disposition activity.

Depreciation and amortization

The increase in depreciation and amortization for the three months ended March 31, 2021 of $0.4 million, as compared to the corresponding period in 2020, was primarily due to a $1.7 million increase for assets owned for the full year primarily related to value-enhancing reinvestment capital expenditures and tenant write-offs, partially offset by a decrease in depreciation and amortization related to acquired in-place lease intangibles and a $1.3 million decrease in depreciation and amortization due to net disposition activity.

The increase in depreciation and amortization for the three months ended June 30, 2021 of $0.4 million, as compared to the corresponding period in 2020, was primarily due to a $0.9 million increase for assets owned for the full period, primarily related to value-enhancing reinvestment capital expenditures and accelerated depreciation and amortization due to tenant write-offs, partially offset by a decrease in depreciation and amortization related to acquired in-place lease intangibles and a $0.5 million decrease in depreciation and amortization due to net disposition activity.

Impairment of real estate assets

During the three months ended March 31, 2021, aggregate impairment of $1.5 million was recognized on one shopping center as a result of disposition activity.

During the three months ended March 31, 2020, aggregate impairment of $4.6 million was recognized on one partial shopping center as a result of disposition activity and one operating property.

During the three months ended June 30, 2021, aggregate impairment of $0.4 million was recognized on one operating property.

During the three months ended June 30, 2020, aggregate impairment of $6.0 million was recognized on two operating properties.

Impairments recognized were due to changes in anticipated hold periods primarily in connection with our capital recycling program.

General and administrative

The increase in general and administrative costs for the three months ended March 31, 2021 of $2.0 million, as compared to the corresponding period in 2020, was primarily due to an increase in litigation and other non-routine legal expenses and an increase in net compensation costs.

During the three months ended March 31, 2021 and 2020, construction compensation costs of $3.8 million and $3.5 million, respectively, were capitalized to building and improvements and leasing legal costs of $0.4 million and less than $0.1 million, respectively and leasing commission costs of $1.1 million and $1.4 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

The increase in general and administrative costs for the three months ended June 30, 2021 of $2.0 million, as compared to the corresponding period in 2020, was primarily due to an increase in net compensation costs, partially offset by a decrease in litigation and other non-routine legal expenses.

During the three months ended June 30, 2021 and 2020, construction compensation costs of $4.2 million and $3.6 million, respectively, were capitalized to building and improvements and leasing legal costs of $0.3 million and $0.1 million, respectively and leasing commission costs of $1.6 million and $1.2 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Other Income and Expenses (in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 $ Change

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Dividends and interest

Dividends and interest remained generally consistent for the three months ended March 31, 2021 as compared to the corresponding period in 2020.

Dividends and interest remained generally consistent for the three months ended June 30, 2021 as compared to the corresponding period in 2020.

Interest expense

The increase in interest expense for the three months ended March 31, 2021 of $1.6 million, as compared to the corresponding period in 2020, was primarily due to higher weighted average debt obligations as we bolstered liquidity in response to COVID-19.

Interest expense remained generally consistent for the three months ended June 30, 2021 as compared to the corresponding period in 2020.

Gain on sale of real estate assets

During the three months ended March 31, 2021, three shopping centers and four partial shopping centers were disposed of resulting in aggregate gain of $5.8 million.

During the three months ended March 31, 2020, three shopping centers and one partial shopping center were disposed of resulting in aggregate gain of $7.5 million.

During the three months ended June 30, 2021, two shopping centers and five partial shopping centers were disposed of resulting in aggregate gain of $32.6 million.

In addition, during the three months ended June 30, 2021, we received aggregate net proceeds of less than $0.1 million from previously disposed assets resulting in aggregate gain of less than $0.1 million.

During the three months ended June 30, 2020, two shopping centers were disposed of resulting in aggregate gain of $0.7 million.

Loss on extinguishment of debt, net

During the three months ended March 31, 2021, we repaid $350.0 million of an unsecured term loan under our senior unsecured credit facility agreement, as amended April 29, 2020 (the “Unsecured Credit Facility”), resulting in a $1.2 million loss on extinguishment of debt due to the acceleration of unamortized debt issuance costs.

The increase in other income for the three months ended March 31, 2021 of $1.5 million, as compared to the corresponding period in 2020, was primarily due to favorable tax adjustments and legal settlements in the current year.

During the three months ended June 30, 2020, we repurchased $182.5 million of our 3.875% Senior Notes due 2022 through a tender offer, resulting in a $10.4 million loss on extinguishment of debt, net.

Loss on extinguishment of debt, net includes $9.5 million of prepayment fees and $0.9 million of accelerated unamortized debt issuance costs and debt discounts.

The decrease in other expense for the three months ended June 30, 2021 of $0.5 million, as compared to the corresponding period in 2020, was primarily due to a decrease in transaction expenses.

Comparison of the Six Months Ended June 30, 2021 to the Six Months Ended June 30, 2020

Revenues (in thousands)

Six Months Ended June 30,

2021 2020 $ Change

Rental income $ 563,394 $ 527,836 $ 35,558

Other revenues 3,376 2,085 1,291

Total revenues $ 566,770 $ 529,921 $ 36,849

Rental income

The increase in rental income for the six months ended June 30, 2021 of $35.6 million, as compared to the corresponding period in 2020, was due to a $41.1 million increase for assets owned for the full period, partially offset by a $5.5 million decrease in rental income due to net disposition activity.

The increase for assets owned for the full period was due to (i) a $31.0 million decrease in revenues deemed uncollectible;

(ii) a $14.2 million increase in straight-line rental income, net;

(iii) a $2.2 million increase in lease termination fees;

(iv) a $1.2 million increase in ancillary and other rental income;

(v) a $0.8 million increase in percentage rents;

and (vi) a $0.7 million increase in expense reimbursements;

partially offset by (vii) a $7.0 million decrease in base rent;

and (viii) a $2.0 million

decrease in accretion of below-market leases, net of amortization of above-market leases and tenant inducements.

The decrease in revenues deemed uncollectible was primarily attributable to the impact of COVID-19 reserves in 2020 and recoveries of previously reserved amounts in 2021.

The increase in straight-line rental income, net was primarily attributable to the impact of COVID-19 reserves in 2020.

The $7.0 million decrease in base rent for the remaining portfolio was primarily due to COVID-19 rent deferrals accounted for as lease modifications and rent abatements and a decrease in weighted average billed occupancy, partially offset by contractual rent increases and positive rent spreads for new and renewal leases and option exercises of 8.3% during the six months ended June 30, 2021 and 7.2% during the year ended December 31, 2020.

Other revenues

The increase in other revenues for the six months ended June 30, 2021 of $1.3 million, as compared to the corresponding period in 2020, was primarily due to an increase in tax increment financing income.

Operating Expenses (in thousands)

Six Months Ended June 30,

2021 2020 $ Change

Operating expenses

Operating costs $ 60,140 $ 55,492 $ 4,648

Real estate taxes 85,145 84,672 473

Depreciation and amortization 164,632 163,846 786

Impairment of real estate assets 1,898 10,560 (8,662)

General and administrative 51,106 47,033 4,073

Total operating expenses $ 362,921 $ 361,603 $ 1,318

Operating costs

The increase in operating costs for the six months ended June 30, 2021 of $4.6 million, as compared to the corresponding period in 2020, was primarily due to a $5.2 million increase for assets owned for the full period, primarily due to an increase in repair and maintenance, insurance and utility costs, partially offset by a $0.6 million decrease in operating costs due to net disposition activity.

Real estate taxes

The increase in real estate taxes for the six months ended June 30, 2021 of $0.5 million, as compared to the corresponding period in 2020, was primarily due to a $2.0 million increase for assets owned for the full period, primarily due to a decrease in favorable adjustments of prior year assessments, partially offset by a $1.5 million decrease in real estate taxes due to net disposition activity.

Depreciation and amortization

The increase in depreciation and amortization for the six months ended June 30, 2021 of $0.8 million, as compared to the corresponding period in 2020, was primarily due to a $2.6 million increase for assets owned for the full period, primarily related to value-enhancing reinvestment capital expenditures and accelerated depreciation and amortization due to tenant write-offs, partially offset by a decrease in depreciation and amortization related to acquired in-place lease intangibles and a $1.8 million decrease in depreciation and amortization due to net disposition activity.

Impairment of real estate assets

During the six months ended June 30, 2021, aggregate impairment of $1.9 million was recognized on one shopping center as a result of disposition activity and one operating property.

During the six months ended June 30, 2020, aggregate impairment of $10.6 million was recognized on one partial shopping center as a result of disposition activity and three operating properties.

Impairments recognized were due to changes in anticipated hold periods primarily in connection with our capital recycling program.

General and administrative

The increase in general and administrative costs for the six months ended June 30, 2021 of $4.1 million, as compared to the corresponding period in 2020, was primarily due to an increase in net compensation costs and legal expenses.

During the six months ended June 30, 2021 and 2020, construction compensation costs of $7.9 million and $7.1 million, respectively, were capitalized to building and improvements and leasing legal costs of $0.8 million and $0.1 million, respectively and leasing commission costs of $2.8 million and $2.6 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Other Income and Expenses (in thousands)

Six Months Ended June 30,

2021 2020 $ Change

Other income (expense)

Dividends and interest $ 191 $ 226 $ (35)

Interest expense (98,683) (97,206) (1,477)

Gain on sale of real estate assets 38,367 9,597 28,770

Loss on extinguishment of debt, net (1,229) (10,391) 9,162

Other 304 (1,719) 2,023

Total other expense $ (61,050) $ (99,493) $ 38,443

Dividends and interest

Dividends and interest remained generally consistent for the six months ended June 30, 2021 as compared to the corresponding period in 2020.

Interest expense

The increase in interest expense for the six months ended June 30, 2021 of $1.5 million, as compared to the corresponding period in 2020, was primarily due to a higher weighted average interest rate due to the refinancing of variable rate debt with fixed rate debt in 2020 and the termination of $250.0 million of interest rate swaps in 2021.

Gain on sale of real estate assets

During the six months ended June 30, 2021, five shopping centers and nine partial shopping centers were disposed of resulting in aggregate gain of $38.3 million.

During the six months ended June 30, 2020, five shopping centers and one partial shopping center were disposed of resulting in aggregate gain of $8.2 million.

Loss on extinguishment of debt, net

During the six months ended June 30, 2021, we repaid $350.0 million of an unsecured term loan under our senior unsecured credit facility agreement, as amended April 29, 2020 (the “Unsecured Credit Facility”), resulting in a $1.2 million loss on extinguishment of debt due to the acceleration of unamortized debt issuance costs.

During the six months ended June 30, 2020, we repurchased $182.5 million of our 3.875% Senior Notes due 2022 through a tender offer and repaid our $7.0 million secured loan, resulting in 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.

The increase in other income for the six months ended June 30, 2021 of $2.0 million, as compared to the corresponding period in 2020, was primarily due to favorable tax adjustments and legal settlements in the current year and a decrease in transaction expenses.

Liquidity and Capital Resources

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We currently have investment grade credit ratings from all three major credit rating agencies.

As of March 31, 2021, we had $1.2 billion of available liquidity under our Revolving Facility and $372.7 million in cash and cash equivalents and restricted cash.

As of June 30, 2021, we had $1.2 billion of available liquidity under the Revolving Facility and $405.4 million in cash and cash equivalents and restricted cash.

We intend to continue to enhance our financial and operational flexibility through the additional extension of the duration of our debt.

As of March 31, 2021, our contractually scheduled debt maturities (excluding extension options) and interest payment obligations (excluding debt premiums and discounts and deferred financing costs) amount to $250.0 million and $186.1 million, respectively, over the next 12 months and $4.9 billion and $933.3 million, respectively, thereafter.

As of March 31, 2021, the weighted average time to maturity is 5.7 years with respect to our $4.9 billion of remaining scheduled debt maturities.

As of June 30, 2021, our contractually scheduled debt maturities (excluding extension options) and interest payment obligations (excluding debt premiums and discounts and deferred financing costs) amount to $250.0 million and $188.6 million, respectively, over the next 12 months and $4.9 billion and $889.5 million, respectively, thereafter.

As of June 30, 2021, the weighted average time to maturity is 5.2 years with respect to our scheduled debt maturities.

These amounts do not assume the issuance of new debt upon maturity of existing debt.

Scheduled interest payments included in these amounts for variable rate loans are presented using rates (including the impact of interest rate swaps) as of March 31, 2021.

Scheduled interest payments included in these amounts for variable rate loans are presented using rates (including the impact of interest rate swaps) as of June 30, 2021.

“Quantitative and Qualitative Disclosures” in our Annual Report on Form 10-K for the year ended December 31, 2020 for a further discussion of these and other factors that could impact interest payments.

As previously discussed under the header “Impacts on Business from COVID-19”, the COVID-19 pandemic has had, and we expect will continue to have, an adverse impact on our liquidity and capital resources.

As previously discussed under the header “Impacts on Business from COVID-19”, the COVID-19 pandemic has had, and may continue to have, an adverse impact on our liquidity and capital resources.

Future decreases in cash flow from operations resulting from rent deferrals or abatements, tenant defaults, or decreases in rental rates or occupancy, would decrease the cash available for the capital uses described above, including the payment of dividends.

During 2020 we took various steps to mitigate the impact of COVID-19 on our liquidity, including the deferral of approximately $130.0 million of capital expenditures originally anticipated in 2020.

In addition, we have no debt maturities until 2022.

However, since we do not know the ultimate severity, scope or duration of the pandemic and the response thereto, and thus cannot predict the impact it will ultimately have on our tenants and on the debt and equity capital markets, we cannot estimate the impact it will have on our liquidity and capital resources.

Specifically, the prolonged impacts of COVID-19 may increase risks related to the pricing and availability of future debt financing.

In addition, a significant decline in our operating performance in the future could impact our ability to incur additional debt, including the remaining capacity on our Revolving Facility, due to the financial covenants applicable to our debt.

In order to continue to qualify as a REIT for federal income tax purposes, we must distribute at least 90% of our REIT taxable income, determined before the deduction for dividends paid and excluding net capital gains, to our stockholders on an annual basis.

Since we do not know the ultimate severity, scope or duration of the pandemic and the response thereto, and thus cannot predict the impact it will ultimately have on our tenants and on the debt and equity capital markets, we cannot estimate the impact it will have on our liquidity and capital resources.

stockholders on an annual basis.

We intend to continue to satisfy this requirement and maintain our REIT status.

Cash dividends paid to common stockholders for the three months ended March 31, 2021 and 2020 were $65.0 million and $85.6 million, respectively.

In response to COVID-19, our Board of Directors temporarily suspended the dividend in the second and third quarters of 2020.

In February 2021, our Board of Directors declared a quarterly cash dividend of $0.215 per common share for the first quarter of 2021.

The dividend was paid on April 15, 2021 to shareholders of record on April 5, 2021.

Cash dividends paid to common stockholders for the six months ended June 30, 2021 and 2020 were $129.1 million and $170.3 million, respectively.

In response to COVID-19, our Board of Directors suspended the dividend in the second and third quarters of 2020.

In the fourth quarter of 2020, our Board of Directors resumed the dividend at a rate of $0.215 per common share.

In April 2021, our Board of Directors declared a quarterly cash dividend of $0.215 per common share for the second quarter of 2021.

The dividend is payable on July 15, 2021 to shareholders of record on July 6, 2021.

Our Board of Directors will reevaluate the dividend on a quarterly basis, taking into account a variety of relevant factors, including REIT taxable income.

The dividend was paid on July 15, 2021 to shareholders of record on July 6, 2021.

In July 2021, our Board of Directors declared a quarterly cash dividend of $0.215 per common share for the third quarter of 2021.

The dividend is payable on October 15, 2021 to shareholders of record on October 5, 2021.

Our Board of Directors will evaluate the dividend on a quarterly basis, taking into account a variety of relevant factors, including REIT taxable income.

Our cash flow activities are summarized as follows (dollars in thousands):

Brixmor Property Group Inc .

Three Months Ended March 31,

Six Months Ended June 30,

Net cash provided by operating activities $ 274,862 $ 179,564

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Brixmor Operating Partnership LP

Three Months Ended March 31,

Six Months Ended June 30,

Net cash provided by operating activities $ 274,862 $ 179,564

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Net cash provided by (used in) financing activities (138,527) 224,927

Cash and cash equivalents and restricted cash for BPG were $372.7 million and $587.1 million as of March 31, 2021 and 2020, respectively.

Cash and cash equivalents and restricted cash for the Operating Partnership were $362.7 million and $587.1 million as of March 31, 2021 and 2020, respectively.

Cash and cash equivalents and restricted cash for BPG were $405.4 million and $320.0 million as of June 30, 2021 and 2020, respectively.

Cash and cash equivalents and restricted cash for the Operating Partnership were $395.4 million and $310.0 million as of June 30, 2021 and 2020, respectively.

Operating Activities

Net cash provided by operating activities primarily consists of cash inflows from tenant rental payments and expense reimbursements and cash outflows for property operating expenses, general and administrative expenses and interest expense.

During the three months ended March 31, 2021, our net cash provided by operating activities increased $15.4 million as compared to the corresponding period in 2020.

The increase is primarily due to (i) an increase from net working capital;

partially offset by (ii) a decrease in net operating income due to net disposition activity;

(iii) an increase in cash outflows for interest expense;

and (iv) an increase in cash outflows for general and administrative expense.

During the six months ended June 30, 2021, our net cash provided by operating activities increased $95.3 million as compared to the corresponding period in 2020.

The increase was primarily due to (i) an increase from net working capital;

(ii) an increase in same property net operating income;

and (iii) an increase in lease termination fees;

partially offset by (iv) a decrease in net operating income due to net disposition activity;

(v) an increase in cash outflows for general and administrative expense;

and (vi) an increase in cash outflows for interest expense.

Investing Activities

Net cash used in investing activities is impacted by the nature, timing and magnitude of acquisition and disposition activity and improvements to and investments in our shopping centers, including capital expenditures associated with our value-enhancing reinvestment efforts.

During the three months ended March 31, 2021, our net cash used in investing activities decreased $12.5 million as compared to the corresponding period in 2020.

The decrease was primarily due to (i) a decrease of $23.9 million in improvements to and investments in real estate assets;

partially offset by (ii) a decrease of $9.6 million in net proceeds from sales of real estate assets;

and (iii) an increase of $1.8 million in acquisitions of real estate assets.

During the six months ended June 30, 2021, our net cash used in investing activities decreased $15.0 million as compared to the corresponding period in 2020.

The decrease was primarily due to (i) an increase of $53.1 million in net proceeds from sales of real estate assets;

(ii) a decrease of $22.9 million in improvements to and investments in real estate assets;

and (iii) a $3.7 million decrease in purchases of marketable securities, net of proceeds from sales;

partially offset by (iv) an increase of $64.7 million in acquisitions of real estate assets.

Improvements to and investments in real estate assets

During the three months ended March 31, 2021 and 2020, we expended $62.8 million and $86.7 million, respectively, on improvements to and investments in real estate assets.

In addition, during the three months ended March 31, 2021 and 2020, insurance proceeds of $2.2 million and $3.6 million, respectively, were received and included in improvements to and investments in real estate assets.

During the six months ended June 30, 2021 and 2020, we expended $135.3 million and $158.1 million, respectively, on improvements to and investments in real estate assets.

In addition, during the six months ended June 30, 2021 and 2020, insurance proceeds of $2.8 million and $3.6 million, respectively, were received and included in improvements to and investments in real estate assets.

Maintenance capital expenditures represent costs to fund major replacements and betterments to our properties.

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Such initiatives are tenant driven and focus on upgrading our centers with strong, best-in-class retailers and enhancing the overall merchandise mix and tenant quality of our Portfolio.

As of March 31, 2021, we had 57 in-process anchor space repositioning, redevelopment and outparcel development projects with an aggregate anticipated cost of $409.2 million, of which $225.1 million had been incurred as of March 31, 2021.

As of June 30, 2021, we had 56 in-process anchor space repositioning, redevelopment and outparcel development projects with an aggregate anticipated cost of $432.9 million, of which $258.0 million had been incurred as of June 30, 2021.

In addition, we have identified a pipeline of future reinvestment projects aggregating approximately $1.0 billion of potential capital investment which we expect to execute over the next several years.

We expect to fund these projects with cash and cash equivalents on hand, proceeds from sales of real estate assets, and/or available liquidity under our Revolving Facility.

We expect to fund these projects with cash and cash equivalents, proceeds from sales of real estate assets, and/or available liquidity under the Revolving Facility.

Acquisitions of and proceeds from sales of real estate assets

We continue to evaluate the market for acquisition opportunities and we may acquire shopping centers when we believe strategic opportunities exist, particularly where we can further concentrate our Portfolio in attractive retail submarkets and optimize the quality and long-term growth rate of our asset base.

During the three months ended March 31, 2021, we acquired one outparcel and two land parcels for an aggregate purchase price of $3.8 million, including transaction costs.

During the three months ended March 31, 2020, we acquired one land parcel for $2.0 million, including transaction costs.

During the six months ended June 30, 2021, we acquired two shopping centers, one outparcel and two land parcels for an aggregate purchase price of $66.7 million, including transaction costs and closing credits.

During the six months ended June 30, 2020, we acquired one land parcel for $2.0 million, including transaction costs.

We may also dispose of properties when we believe value has been maximized, where there is downside risk, or where we have limited ability or desire to build critical mass in a particular submarket.

During the three months ended March 31, 2021, we disposed of four shopping centers and four partial shopping centers for aggregate net proceeds of $31.8 million.

During the three months ended March 31, 2020, we disposed of three shopping centers

and two partial shopping centers for aggregate net proceeds of $40.5 million.

In addition, during the three months ended March 31, 2020, we received aggregate net proceeds of $0.9 million from previously disposed assets.

During the six months ended June 30, 2021, we disposed of six shopping centers and nine partial shopping centers for aggregate net proceeds of $99.7 million.

In addition, during the six months ended June 30, 2021, we received aggregate net proceeds of less than $0.1 million from previously disposed assets.

During the six months ended June 30, 2020, we disposed of five shopping centers and two partial shopping centers for aggregate net proceeds of $45.7 million.

In addition, during the six months ended June 30, 2020, we received aggregate net proceeds of $0.9 million from previously disposed assets.

Financing Activities

Net cash provided by (used in) financing activities is impacted by the nature, timing and magnitude of issuances and repurchases of debt and equity securities, as well as principal payments associated with our outstanding indebtedness and distributions made to our common stockholders.

During the three months ended March 31, 2021, our net cash provided by (used in) financing activities decreased $590.9 million as compared to the corresponding period in 2020.

During the six months ended June 30, 2021, our net cash provided by (used in) financing activities decreased $373.5 million as compared to the corresponding period in 2020.

The decrease was primarily due to (i) a $448.5 million decrease in debt borrowings, net of repayments;

and (ii) a $2.7 million increase in deferred financing and debt extinguishment costs;

partially offset by (iii) a $23.3 million decrease in repurchases of common stock;

and (iv) a $20.6 million decrease in distributions to our common stockholders.

The decrease in debt borrowings is primarily related to amounts drawn on our Revolving Facility in the corresponding period in 2020 in order to bolster liquidity in response to COVID-19.

partially offset by (ii) a $41.3 million decrease in distributions to our common stockholders;

(iii) a $23.1 million decrease in repurchases of common stock;

and (iv) a $10.6 million decrease in deferred financing and debt extinguishment costs.

The decrease in debt borrowings is primarily related to amounts drawn on the Revolving Facility in the corresponding period in 2020 in order to bolster liquidity in response to COVID-19.

Non-GAAP Performance Measures

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These measures should not be considered as alternatives to, or more meaningful than, net income (calculated in accordance with GAAP) or other GAAP financial measures, as an indicator of financial performance and are not alternatives to, or more meaningful than, cash flow from operating activities (calculated in accordance with GAAP) as a measure of liquidity.

Non-GAAP performance measures have limitations as they do not include all items of income and expense that affect operations, and accordingly, should always be considered as supplemental financial results to those calculated in accordance with GAAP.

Our computation of these non-GAAP performance measures may differ in certain respects from the methodology utilized by other REITs and, therefore, may not be comparable to similarly titled measures presented by such other REITs.

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Considering the nature of our business as a real estate owner and operator, we believe that NAREIT FFO is useful to investors in measuring our operating and financial performance because the definition excludes items included in net income that do not relate to or are not indicative of our operating and financial performance, such as depreciation and amortization related to real estate, and items which can make periodic and peer analyses of operating and financial performance more difficult, such as gains and losses from the sale of certain real estate assets and impairment write-downs of certain real estate assets.

Our reconciliation of net income to NAREIT FFO for the three months ended March 31, 2021 and 2020 is as follows (in thousands, except per share amounts):

Three Months Ended March 31,

Our reconciliation of net income to NAREIT FFO for the three and six months ended June 30, 2021 and 2020 is as follows (in thousands, except per share amounts):

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income $ 90,428 $ 9,044 $ 142,799 $ 68,825

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Considering the nature of our business as a real estate owner and operator, we believe that same property NOI is useful to investors in measuring the operating performance of our property portfolio because the definition excludes various items included in net income that do not relate to, or are not indicative of, the operating performance of our properties, such as depreciation and amortization and corporate level expenses (including general and administrative), and because it eliminates disparities in NOI due to the acquisition or disposition of properties or the stabilization of completed new development properties during the period presented and therefore provides a more consistent metric for comparing the operating performance of our real estate between periods.

Comparison of the Three Months Ended March 31, 2021 to the Three Months Ended March 31, 2020

Three Months Ended March 31,

2021 2020 Change

Comparison of the Three and Six Months Ended June 30, 2021 to the Three and Six Months Ended June 30, 2020

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 Change 2021 2020 Change

Number of properties 376 376 — 374 374 —

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The following table provides a reconciliation of net income to same property NOI for the periods presented (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net income $ 90,428 $ 9,044 $ 142,799 $ 68,825

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Same property NOI $ 199,987 $ 175,651 $ 392,086 $ 371,104

For the last several years inflation has been low and has had a minimal impact on the operating performance of our shopping centers;

however, inflation may increase in the future.

Prior to 2021, inflation had been low and had a minimal impact on the operating performance of our shopping centers;

however, inflation has increased in 2021 and may continue to be elevated in the future.

Most of our long-term leases contain provisions designed to mitigate the adverse impact of inflation, including contractual rent escalations and requirements for tenants to pay their proportionate share of property operating expenses, including common area expenses, utilities, insurance and real estate taxes, and certain capital expenditures related to the maintenance of our properties, thereby reducing our exposure to increases in property-level costs resulting from inflation.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis