Brixmor Property Group Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and the accompanying notes thereto. Historical results and percentage relationships set forth in the unaudited Condensed Consolidated Financial Statements and accompanying notes, including trends which might appear, should not be taken as indicative of future operations. Executive Summary Our Company Brixmor Property Group Inc. and subsidiaries (collectively, “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 BPG conducts substantially all of its operations and owns substantially all of its assets. 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 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. (“Kroger”), and Dollar Tree Stores, Inc. BPG has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws, commencing with our taxable year ended December 31, 2011, has maintained such requirements through our taxable year ended December 31, 2020, and intends to satisfy such requirements for subsequent taxable years. Our primary objective is to maximize total returns to our stockholders through consistent, sustainable growth in cash flow. Our key strategies to achieve this objective include proactively managing our Portfolio to drive internal growth, pursuing value-enhancing reinvestment opportunities and prudently executing on acquisition and disposition activity, while also maintaining a flexible capital structure positioned for growth. In addition, as we execute on our key strategies, we do so guided by a commitment to operate in a socially responsible manner that allows us to realize our purpose of owning and managing properties that are the centers of the communities we serve. We believe the following set of competitive advantages positions us to successfully execute on our key strategies: • Expansive Retailer Relationships – We believe that the scale of our asset base and our nationwide footprint represent competitive advantages in supporting the growth objectives of the nation’s largest and most successful retailers. We believe that we are one of the largest landlords by GLA to TJX and Kroger, as well as a key landlord to most major grocers and retail category leaders. We believe that our strong relationships with leading retailers afford us unique insight into their strategies and priority access to their expansion plans. • Fully-Integrated Operating Platform – We manage a fully-integrated operating platform, leveraging our national scope and demonstrating our commitment to operating with a strong regional and local presence. We provide our tenants with dedicated service through both our national accounts leasing team based in New York and our network of four regional offices in Atlanta, Chicago, Philadelphia and San Diego, as well as our 11 leasing and property management satellite offices throughout the country. We believe that this structure enables us to obtain critical national market intelligence, while also benefitting from the regional and local expertise of our leasing and operations teams. • Experienced Management – Senior members of our management team are seasoned real estate operators with extensive public company leadership experience. Our management team has deep industry knowledge and well-established relationships with retailers, brokers and vendors through many years of operational and transactional experience, as well as significant capital markets capabilities and expertise in executing value-enhancing reinvestment opportunities. 29 Factors That May Influence Our Future Results We derive our rental income primarily from base rent and expense reimbursements paid by tenants to us under existing leases at each of our properties. Expense reimbursements primarily consist of payments made by tenants to us for 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. Our ability to maintain or increase rental income is primarily dependent on our ability to maintain or increase rental rates, renew expiring leases and/or lease available space. Increases in our property operating expenses, including repairs and maintenance, landscaping, snow removal, security, ground rent related to properties for which we are the lessee, utilities, insurance, real estate taxes and various other costs, to the extent they are not reimbursed by tenants or offset by increases in rental income, will adversely impact our overall performance. 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, 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, 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 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 Highlights 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. 30 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) New, renewal and option leases 396 2,275,255 $ 16.45 $ 4.75 $ 2.06 10.0 % New and renewal leases 361 1,566,061 19.18 6.91 2.99 10.7 % New leases 163 700,175 19.48 14.44 6.45 19.8 % Renewal leases 198 865,886 18.94 0.81 0.20 7.3 % Option leases 35 709,194 10.41 — — 8.0 % 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) New, renewal and option leases 283 1,841,519 $ 13.49 $ 2.83 $ 1.01 6.5 % New and renewal leases 241 1,275,855 14.27 4.09 1.45 5.9 % New leases 75 425,561 13.74 11.04 4.24 19.4 % Renewal leases 166 850,294 14.53 0.61 0.06 3.3 % 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 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 % (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. 31 Acquisition Activity • 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 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 June 30, 2021 to the Three Months Ended June 30, 2020 Revenues (in thousands) Three Months Ended June 30, 2021 2020 $ Change Revenues Rental income $ 286,933 $ 247,434 $ 39,499 Other revenues 91 186 (95) Total revenues $ 287,024 $ 247,620 $ 39,404 Rental income 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 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. 32 Operating Expenses (in thousands) Three Months Ended June 30, 2021 2020 $ Change Operating expenses Operating costs $ 28,755 $ 25,136 $ 3,619 Real estate taxes 42,257 41,808 449 Depreciation and amortization 81,212 80,829 383 Impairment of real estate assets 431 5,962 (5,531) General and administrative 26,461 24,436 2,025 Total operating expenses $ 179,116 $ 178,171 $ 945 Operating costs 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 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 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 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 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. 33 Other Income and Expenses (in thousands) Three Months Ended June 30, 2021 2020 $ Change Other income (expense) Dividends and interest $ 104 $ 102 $ 2 Interest expense (49,689) (49,852) 163 Gain on sale of real estate assets 32,603 692 31,911 Loss on extinguishment of debt, net (32) (10,386) 10,354 Other (466) (961) 495 Total other expense $ (17,480) $ (60,405) $ 42,925 Dividends and interest Dividends and interest remained generally consistent for the three months ended June 30, 2021 as compared to the corresponding period in 2020. Interest expense 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 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 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. Other 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 Revenues 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 34 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. 35 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. 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, five shopping centers and one partial shopping center were disposed of resulting in aggregate gain of $8.2 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. 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. Other 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. 36 Liquidity and Capital Resources We anticipate that our cash flows from the sources listed below will provide adequate capital for the next 12 months and beyond for all anticipated uses, including all scheduled payments on our outstanding debt, current and anticipated tenant and other capital improvements, stockholder distributions to maintain our qualification as a REIT and other obligations associated with conducting our business. Our primary expected sources and uses of capital are as follows: Sources • cash and cash equivalent balances; • operating cash flow; • available borrowings under the Unsecured Credit Facility; • dispositions; • issuance of long-term debt; and • issuance of equity securities. Uses • maintenance capital expenditures; • leasing capital expenditures; • debt repayments; • dividend/distribution payments • value-enhancing reinvestment capital expenditures; • acquisitions; and • repurchases of equity securities. We believe our capital structure provides us with the financial flexibility and capacity to fund our current capital needs as well as future growth opportunities. We have access to multiple forms of capital, including secured property level debt, unsecured corporate level debt, preferred equity, and common equity, which will allow us to efficiently execute on our strategic and operational objectives. We currently have investment grade credit ratings from all three major credit rating agencies. 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 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 June 30, 2021. See Item 7A. “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 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. 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. 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 37 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 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 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 . Six Months Ended June 30, 2021 2020 Net cash provided by operating activities $ 274,862 $ 179,564 Net cash used in investing activities (101,036) (116,021) Net cash provided by (used in) financing activities (138,527) 234,925 Brixmor Operating Partnership LP Six Months Ended June 30, 2021 2020 Net cash provided by operating activities $ 274,862 $ 179,564 Net cash used in investing activities (101,036) (116,021) Net cash provided by (used in) financing activities (138,527) 224,927 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 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 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. 38 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. Leasing related capital expenditures represent tenant specific costs incurred to lease space, including tenant improvements and tenant allowances. In addition, we evaluate our Portfolio on an ongoing basis to identify value-enhancing reinvestment opportunities. 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 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, 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 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 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 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; 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 We present the non-GAAP performance measures set forth below. 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 39 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. Investors are cautioned that items excluded from these non-GAAP performance measures are relevant to understanding and addressing financial performance. Funds From Operations NAREIT FFO (defined hereafter) is a supplemental, non-GAAP performance measure utilized to evaluate the operating and financial performance of real estate companies. The National Association of Real Estate Investment Trusts (“NAREIT”) defines funds from operations (“FFO”) as net income (loss), calculated in accordance with GAAP, excluding (i) depreciation and amortization related to real estate, (ii) gains and losses from the sale of certain real estate assets, (iii) gains and losses from change in control, (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity and (v) after adjustments for unconsolidated joint ventures calculated to reflect FFO on the same basis. 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 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 Depreciation and amortization related to real estate 80,368 79,768 162,823 161,788 Gain on sale of real estate assets (32,603) (692) (38,367) (9,597) Impairment of real estate assets 431 5,962 1,898 10,560 NAREIT FFO $ 138,624 $ 94,082 $ 269,153 $ 231,576 NAREIT FFO per diluted share $ 0.46 $ 0.32 $ 0.90 $ 0.78 Weighted average diluted shares outstanding 298,277 296,773 298,222 297,485 Same Property Net Operating Income Same property net operating income (“NOI”) is a supplemental, non-GAAP performance measure utilized to evaluate the operating performance of real estate companies. Same property NOI is calculated (using properties owned for the entirety of both periods and excluding properties under development and completed new development properties which have been stabilized for less than one year) as total property revenues (base rent, expense reimbursements, adjustments for revenues deemed uncollectible, ancillary and other rental income, percentage rents and other revenues) less direct property operating expenses (operating costs and real estate taxes). Same property NOI excludes (i) corporate level expenses (including general and administrative), (ii) lease termination fees, (iii) straight-line rental income, net, (iv) accretion of below-market leases, net of amortization of above-market leases and tenant inducements, (v) straight-line ground rent expense, and (vi) income (expense) associated with our captive insurance company. 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. 40 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 — Percent billed 88.0 % 89.0 % (1.0 %) 88.0 % 89.2 % (1.2 %) Percent leased 91.1 % 92.2 % (1.1 %) 91.2 % 92.3 % (1.1 %) Revenues Rental income $ 268,703 $ 239,153 $ 29,550 $ 528,150 $ 501,279 $ 26,871 Other revenues 91 186 (95) 3,376 2,064 1,312 268,794 239,339 29,455 531,526 503,343 28,183 Operating expenses Operating costs (27,748) (24,077) (3,671) (57,498) (52,383) (5,115) Real estate taxes (41,059) (39,611) (1,448) (81,942) (79,856) (2,086) (68,807) (63,688) (5,119) (139,440) (132,239) (7,201) Same property NOI $ 199,987 $ 175,651 $ 24,336 $ 392,086 $ 371,104 $ 20,982 The following table provides a reconciliation of net income to same property NOI for the periods presented (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Net income $ 90,428 $ 9,044 $ 142,799 $ 68,825 Adjustments: Non-same property NOI (5,222) (6,586) (14,002) (17,627) Lease termination fees (4,073) (1,746) (5,457) (3,134) Straight-line rental income, net (3,404) 6,422 (5,676) 8,559 Accretion of below-market leases, net of amortization of above-market leases and tenant inducements (3,368) (3,150) (4,352) (6,521) Straight-line ground rent expense 42 35 88 70 Depreciation and amortization 81,212 80,829 164,632 163,846 Impairment of real estate assets 431 5,962 1,898 10,560 General and administrative 26,461 24,436 51,106 47,033 Total other expense 17,480 60,405 61,050 99,493 Same property NOI $ 199,987 $ 175,651 $ 392,086 $ 371,104 Inflation 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. In addition, we believe that many of our existing rental rates are below current market rates for comparable space and that upon renewal or re-leasing, such rates may be increased to be consistent with, or closer to, current market rates. With respect to our outstanding indebtedness, we periodically evaluate our exposure to interest rate fluctuations, and may continue to enter into interest rate protection agreements which mitigate, but do not eliminate, the impact of changes in interest rates on our variable rate loans. 41 Item 3 . Quantitative and Qualitative Disclosures about Market Risk There have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in Item 7A of Part II of our annual report on Form 10-K for the year ended December 31, 2020.