Brixmor Property Group Inc. 10-Q

Item 1. Financial Statements BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except share information) September 30, 2021 December 31, 2020 Assets Real estate Land $ 1,736,876 $ 1,740,263 Buildings and improvements 8,507,220 8,423,298 10,244,096 10,163,561 Accumulated depreciation and amortization ( 2,785,227 ) ( 2,659,448 ) Real estate, net 7,458,869 7,504,113 Cash and cash equivalents 397,198 368,675 Restricted cash 7,166 1,412 Marketable securities 20,769 19,548 Receivables, net 229,421 240,323 Deferred charges and prepaid expenses, net 147,014 139,260 Real estate assets held for sale 42,011 18,014 Other assets 48,665 50,802 Total assets $ 8,351,113 $ 8,342,147 Liabilities Debt obligations, net $ 5,163,375 $ 5,167,330 Accounts payable, accrued expenses and other liabilities 495,229 494,116 Total liabilities 5,658,604 5,661,446 Commitments and contingencies (Note 15) — — Equity Common stock, $ 0.01 par value; authorized 3,000,000,000 shares; 306,115,437 and 305,621,403 shares issued and 296,988,445 and 296,494,411 shares outstanding 2,970 2,965 Additional paid-in capital 3,220,183 3,213,990 Accumulated other comprehensive loss ( 17,588 ) ( 28,058 ) Distributions in excess of net income ( 513,056 ) ( 508,196 ) Total equity 2,692,509 2,680,701 Total liabilities and equity $ 8,351,113 $ 8,342,147 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 W BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues Rental income $ 290,013 $ 253,799 $ 853,407 $ 781,635 Other revenues 173 136 3,549 2,221 Total revenues 290,186 253,935 856,956 783,856 Operating expenses Operating costs 32,774 24,794 92,914 80,286 Real estate taxes 39,763 42,124 124,908 126,796 Depreciation and amortization 81,724 87,488 246,356 251,334 Impairment of real estate assets — 5,746 1,898 16,306 General and administrative 25,309 27,748 76,415 74,781 Total operating expenses 179,570 187,900 542,491 549,503 Other income (expense) Dividends and interest 51 109 242 335 Interest expense ( 48,918 ) ( 50,991 ) ( 147,601 ) ( 148,197 ) Gain on sale of real estate assets 11,122 13,621 49,489 23,218 Loss on extinguishment of debt, net ( 27,116 ) ( 50 ) ( 28,345 ) ( 10,441 ) Other 390 ( 780 ) 694 ( 2,499 ) Total other expense ( 64,471 ) ( 38,091 ) ( 125,521 ) ( 137,584 ) Net income $ 46,145 $ 27,944 $ 188,944 $ 96,769 Net income per common share: Basic $ 0.15 $ 0.09 $ 0.63 $ 0.32 Diluted $ 0.15 $ 0.09 $ 0.63 $ 0.32 Weighted average shares: Basic 297,188 296,562 297,165 296,982 Diluted 298,269 296,862 298,209 297,317 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited, in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income $ 46,145 $ 27,944 $ 188,944 $ 96,769 Other comprehensive income (loss) Change in unrealized gain (loss) on interest rate swaps, net (Note 6) 2,141 2,928 10,639 ( 21,785 ) Change in unrealized gain (loss) on marketable securities ( 16 ) ( 64 ) ( 169 ) 131 Total other comprehensive income (loss) 2,125 2,864 10,470 ( 21,654 ) Comprehensive income $ 48,270 $ 30,808 $ 199,414 $ 75,115 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited, in thousands, except per share data) Common Stock Number Amount Additional Paid-in Capital Accumulated Other Comprehensive Loss Distributions in Excess of Net Income Total Beginning balance, January 1, 2020 297,857 $ 2,979 $ 3,230,625 $ ( 9,543 ) $ ( 480,204 ) $ 2,743,857 Common stock dividends ($ 0.285 per common share) — — — — ( 85,018 ) ( 85,018 ) Equity based compensation expense — — 2,842 — — 2,842 Other comprehensive loss — — — ( 23,699 ) — ( 23,699 ) Issuance of common stock 242 2 — — — 2 Repurchases of common stock ( 1,650 ) ( 17 ) ( 24,990 ) — — ( 25,007 ) Share-based awards retained for taxes — — ( 3,405 ) — — ( 3,405 ) Net income — — — — 59,781 59,781 Ending balance, March 31, 2020 296,449 2,964 3,205,072 ( 33,242 ) ( 505,441 ) 2,669,353 Common stock dividends — — — — ( 3 ) ( 3 ) Equity based compensation expense — — 2,162 — — 2,162 Other comprehensive loss — — — ( 819 ) — ( 819 ) Issuance of common stock 32 1 — — — 1 Share-based awards retained for taxes — — ( 118 ) — — ( 118 ) Net income — — — — 9,044 9,044 Ending balance, June 30, 2020 296,481 2,965 3,207,116 ( 34,061 ) ( 496,400 ) 2,679,620 Equity based compensation expense — — 3,468 — — 3,468 Other comprehensive income — — — 2,864 — 2,864 Issuance of common stock 1 — — — — — Share-based awards retained for taxes — — ( 5 ) — — ( 5 ) Net income — — — — 27,944 27,944 Ending balance, September 30, 2020 296,482 $ 2,965 $ 3,210,579 $ ( 31,197 ) $ ( 468,456 ) $ 2,713,891 Beginning balance, January 1, 2021 296,494 $ 2,965 $ 3,213,990 $ ( 28,058 ) $ ( 508,196 ) $ 2,680,701 Common stock dividends ($ 0.215 per common share) — — — — ( 65,120 ) ( 65,120 ) Equity based compensation expense — — 2,792 — — 2,792 Other comprehensive income — — — 5,572 — 5,572 Issuance of common stock 452 4 ( 4 ) — — — Share-based awards retained for taxes — — ( 5,113 ) — — ( 5,113 ) Net income — — — — 52,371 52,371 Ending balance, March 31, 2021 296,946 2,969 3,211,665 ( 22,486 ) ( 520,945 ) 2,671,203 Common stock dividends ($ 0.215 per common share) — — — — ( 64,344 ) ( 64,344 ) Equity based compensation expense — — 4,543 — — 4,543 Other comprehensive income — — — 2,773 — 2,773 Issuance of common stock 32 1 ( 1 ) — — — Share-based awards retained for taxes — — ( 259 ) — — ( 259 ) Net income — — — — 90,428 90,428 Ending balance, June 30, 2021 296,978 2,970 3,215,948 ( 19,713 ) ( 494,861 ) 2,704,344 Common stock dividends ($ 0.215 per common share) — — — — ( 64,340 ) ( 64,340 ) Equity based compensation expense — — 4,331 — — 4,331 Other comprehensive income — — — 2,125 — 2,125 Issuance of common stock 10 — — — — — Share-based awards retained for taxes — — ( 96 ) — — ( 96 ) Net income — — — — 46,145 46,145 Ending balance, September 30, 2021 296,988 $ 2,970 $ 3,220,183 $ ( 17,588 ) $ ( 513,056 ) $ 2,692,509 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 BRIXMOR PROPERTY GROUP INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Nine Months Ended September 30, 2021 2020 Operating activities: Net income $ 188,944 $ 96,769 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 246,356 251,334 Accretion of debt premium and discount, net ( 2,146 ) ( 424 ) Deferred financing cost amortization 5,638 5,550 Accretion of above- and below-market leases, net ( 9,931 ) ( 12,351 ) Tenant inducement amortization and other 3,999 2,696 Impairment of real estate assets 1,898 16,306 Gain on sale of real estate assets ( 49,489 ) ( 23,218 ) Equity based compensation 10,818 7,807 Loss on extinguishment of debt, net 28,345 10,441 Changes in operating assets and liabilities: Receivables, net 8,964 ( 15,907 ) Deferred charges and prepaid expenses ( 26,784 ) ( 22,797 ) Other assets ( 268 ) ( 298 ) Accounts payable, accrued expenses and other liabilities 18,536 7,724 Net cash provided by operating activities 424,880 323,632 Investing activities: Improvements to and investments in real estate assets ( 212,374 ) ( 217,940 ) Acquisitions of real estate assets ( 66,716 ) ( 3,425 ) Proceeds from sales of real estate assets 124,437 82,922 Purchase of marketable securities ( 16,906 ) ( 19,944 ) Proceeds from sale of marketable securities 15,446 18,133 Net cash used in investing activities ( 156,113 ) ( 140,254 ) Financing activities: Repayment of secured debt obligations — ( 7,000 ) Repayment of borrowings under unsecured revolving credit facility — ( 653,000 ) Proceeds from borrowings under unsecured revolving credit facility — 646,000 Proceeds from unsecured notes 847,735 820,396 Repayment of borrowings under unsecured term loans and notes ( 850,000 ) ( 183,151 ) Deferred financing and debt extinguishment costs ( 33,577 ) ( 17,994 ) Distributions to common stockholders ( 193,180 ) ( 170,397 ) Repurchases of common shares — ( 25,007 ) Repurchases of common shares in conjunction with equity award plans ( 5,468 ) ( 3,528 ) Net cash provided by (used in) financing activities ( 234,490 ) 406,319 Net change in cash, cash equivalents and restricted cash 34,277 589,697 Cash, cash equivalents and restricted cash at beginning of period 370,087 21,523 Cash, cash equivalents and restricted cash at end of period $ 404,364 $ 611,220 Reconciliation to consolidated balance sheets: Cash and cash equivalents $ 397,198 $ 609,812 Restricted cash 7,166 1,408 Cash, cash equivalents and restricted cash at end of period $ 404,364 $ 611,220 Supplemental disclosure of cash flow information: Cash paid for interest, net of amount capitalized of $ 2,836 and $ 3,333 $ 145,358 $ 135,006 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 5 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in thousands, except unit information) September 30, 2021 December 31, 2020 Assets Real estate Land $ 1,736,876 $ 1,740,263 Buildings and improvements 8,507,220 8,423,298 10,244,096 10,163,561 Accumulated depreciation and amortization ( 2,785,227 ) ( 2,659,448 ) Real estate, net 7,458,869 7,504,113 Cash and cash equivalents 387,185 358,661 Restricted cash 7,166 1,412 Marketable securities 20,769 19,548 Receivables, net 229,421 240,323 Deferred charges and prepaid expenses, net 147,014 139,260 Real estate assets held for sale 42,011 18,014 Other assets 48,665 50,802 Total assets $ 8,341,100 $ 8,332,133 Liabilities Debt obligations, net $ 5,163,375 $ 5,167,330 Accounts payable, accrued expenses and other liabilities 495,229 494,116 Total liabilities 5,658,604 5,661,446 Commitments and contingencies (Note 15) — — Capital Partnership common units; 306,115,437 and 305,621,403 units issued and 296,988,445 and 296,494,411 units outstanding 2,700,085 2,698,746 Accumulated other comprehensive loss ( 17,589 ) ( 28,059 ) Total capital 2,682,496 2,670,687 Total liabilities and capital $ 8,341,100 $ 8,332,133 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 6 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenues Rental income $ 290,013 $ 253,799 $ 853,407 $ 781,635 Other revenues 173 136 3,549 2,221 Total revenues 290,186 253,935 856,956 783,856 Operating expenses Operating costs 32,774 24,794 92,914 80,286 Real estate taxes 39,763 42,124 124,908 126,796 Depreciation and amortization 81,724 87,488 246,356 251,334 Impairment of real estate assets — 5,746 1,898 16,306 General and administrative 25,309 27,748 76,415 74,781 Total operating expenses 179,570 187,900 542,491 549,503 Other income (expense) Dividends and interest 51 109 242 335 Interest expense ( 48,918 ) ( 50,991 ) ( 147,601 ) ( 148,197 ) Gain on sale of real estate assets 11,122 13,621 49,489 23,218 Loss on extinguishment of debt, net ( 27,116 ) ( 50 ) ( 28,345 ) ( 10,441 ) Other 390 ( 780 ) 694 ( 2,499 ) Total other expense ( 64,471 ) ( 38,091 ) ( 125,521 ) ( 137,584 ) Net income $ 46,145 $ 27,944 $ 188,944 $ 96,769 Net income per common unit: Basic $ 0.15 $ 0.09 $ 0.63 $ 0.32 Diluted $ 0.15 $ 0.09 $ 0.63 $ 0.32 Weighted average units: Basic 297,188 296,562 297,165 296,982 Diluted 298,269 296,862 298,209 297,317 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 7 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited, in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income $ 46,145 $ 27,944 $ 188,944 $ 96,769 Other comprehensive income (loss) Change in unrealized gain (loss) on interest rate swaps, net (Note 6) 2,141 2,928 10,639 ( 21,785 ) Change in unrealized gain (loss) on marketable securities ( 16 ) ( 64 ) ( 169 ) 131 Total other comprehensive income (loss) 2,125 2,864 10,470 ( 21,654 ) Comprehensive income $ 48,270 $ 30,808 $ 199,414 $ 75,115 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 8 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL (Unaudited, in thousands) Partnership Common Units Accumulated Other Comprehensive Loss Total Beginning balance, January 1, 2020 $ 2,753,385 $ ( 9,544 ) $ 2,743,841 Distributions to partners ( 85,017 ) — ( 85,017 ) Equity based compensation expense 2,842 — 2,842 Other comprehensive loss — ( 23,699 ) ( 23,699 ) Issuance of OP Units 2 — 2 Repurchases of OP Units ( 25,007 ) — ( 25,007 ) Share-based awards retained for taxes ( 3,405 ) — ( 3,405 ) Net income 59,781 — 59,781 Ending balance, March 31, 2020 2,702,581 ( 33,243 ) 2,669,338 Distributions to partners ( 10,002 ) — ( 10,002 ) Equity based compensation expense 2,162 — 2,162 Other comprehensive loss — ( 819 ) ( 819 ) Issuance of OP Units 1 — 1 Share-based awards retained for taxes ( 118 ) — ( 118 ) Net income 9,044 — 9,044 Ending balance, June 30, 2020 2,703,668 ( 34,062 ) 2,669,606 Equity based compensation expense 3,468 — 3,468 Other comprehensive income — 2,864 2,864 Issuance of OP Units — — — Share-based awards retained for taxes ( 5 ) — ( 5 ) Net income 27,944 — 27,944 Ending balance, September 30, 2020 $ 2,735,075 $ ( 31,198 ) $ 2,703,877 Beginning balance, January 1, 2021 $ 2,698,746 $ ( 28,059 ) $ 2,670,687 Distributions to partners ( 65,120 ) — ( 65,120 ) Equity based compensation expense 2,792 — 2,792 Other comprehensive income — 5,572 5,572 Issuance of OP Units — — — Share-based awards retained for taxes ( 5,113 ) — ( 5,113 ) Net income 52,371 — 52,371 Ending balance, March 31, 2021 2,683,676 ( 22,487 ) 2,661,189 Distributions to partners ( 64,344 ) — ( 64,344 ) Equity based compensation expense 4,543 — 4,543 Other comprehensive income — 2,773 2,773 Issuance of OP Units — — — Share-based awards retained for taxes ( 259 ) — ( 259 ) Net income 90,428 — 90,428 Ending balance, June 30, 2021 2,714,044 ( 19,714 ) 2,694,330 Distributions to partners ( 64,339 ) — ( 64,339 ) Equity based compensation expense 4,331 — 4,331 Other comprehensive income — 2,125 2,125 Issuance of OP Units — — — Share-based awards retained for taxes ( 96 ) — ( 96 ) Net income 46,145 — 46,145 Ending balance, September 30, 2021 $ 2,700,085 $ ( 17,589 ) $ 2,682,496 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 9 BRIXMOR OPERATING PARTNERSHIP LP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Nine Months Ended September 30, 2021 2020 Operating activities: Net income $ 188,944 $ 96,769 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 246,356 251,334 Accretion of debt premium and discount, net ( 2,146 ) ( 424 ) Deferred financing cost amortization 5,638 5,550 Accretion of above- and below-market leases, net ( 9,931 ) ( 12,351 ) Tenant inducement amortization and other 3,999 2,696 Impairment of real estate assets 1,898 16,306 Gain on sale of real estate assets ( 49,489 ) ( 23,218 ) Equity based compensation 10,818 7,807 Loss on extinguishment of debt, net 28,345 10,441 Changes in operating assets and liabilities: Receivables, net 8,964 ( 15,907 ) Deferred charges and prepaid expenses ( 26,784 ) ( 22,797 ) Other assets ( 268 ) ( 298 ) Accounts payable, accrued expenses and other liabilities 18,536 7,724 Net cash provided by operating activities 424,880 323,632 Investing activities: Improvements to and investments in real estate assets ( 212,374 ) ( 217,940 ) Acquisitions of real estate assets ( 66,716 ) ( 3,425 ) Proceeds from sales of real estate assets 124,437 82,922 Purchase of marketable securities ( 16,906 ) ( 19,944 ) Proceeds from sale of marketable securities 15,446 18,133 Net cash used in investing activities ( 156,113 ) ( 140,254 ) Financing activities: Repayment of secured debt obligations — ( 7,000 ) Repayment of borrowings under unsecured revolving credit facility — ( 653,000 ) Proceeds from borrowings under unsecured revolving credit facility — 646,000 Proceeds from unsecured notes 847,735 820,396 Repayment of borrowings under unsecured term loans and notes ( 850,000 ) ( 183,151 ) Deferred financing and debt extinguishment costs ( 33,577 ) ( 17,994 ) Partner distributions and repurchases of OP Units ( 198,647 ) ( 208,930 ) Net cash provided by (used in) financing activities ( 234,489 ) 396,321 Net change in cash, cash equivalents and restricted cash 34,278 579,699 Cash, cash equivalents and restricted cash at beginning of period 360,073 21,507 Cash, cash equivalents and restricted cash at end of period $ 394,351 $ 601,206 Reconciliation to consolidated balance sheets: Cash and cash equivalents $ 387,185 $ 599,798 Restricted cash 7,166 1,408 Cash, cash equivalents and restricted cash at end of period $ 394,351 $ 601,206 Supplemental disclosure of cash flow information: Cash paid for interest, net of amount capitalized of $ 2,836 and $ 3,333 $ 145,358 $ 135,006 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 10 BRIXMOR PROPERTY GROUP INC. AND BRIXMOR OPERATING PARTNERSHIP LP NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited, dollars in thousands, unless otherwise stated) 1. Nature of Business and Financial Statement Presentation Description of Business Brixmor Property Group Inc. and subsidiaries (collectively, the “Parent Company”) is an internally-managed real estate investment trust (“REIT”). Brixmor Operating Partnership LP and subsidiaries (collectively, the “Operating Partnership”) is the entity through which the Parent Company conducts substantially all of its operations and owns substantially all of its assets. The Parent Company owns 100 % of the 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. The Parent Company engages in the ownership, management, leasing, acquisition, disposition and redevelopment of retail shopping centers through the Operating Partnership, and has no other substantial assets or liabilities other than through its investment in the Operating Partnership. The Parent Company, the Operating Partnership and their controlled subsidiaries on a consolidated basis (collectively, the “Company” or “Brixmor”) believes it owns and operates one of the largest open-air retail portfolios by gross leasable area (“GLA”) in the United States (“U.S.”), comprised primarily of community and neighborhood shopping centers. As of September 30, 2021, the Company’s portfolio was comprised of 386 shopping centers (the “Portfolio”) totaling approximately 68 million square feet of GLA. The Company’s high-quality national Portfolio is primarily located within established trade areas in the top 50 Metropolitan Statistical Areas in the U.S., and its shopping centers are primarily anchored by non-discretionary and value-oriented retailers, as well as consumer-oriented service providers. The Company does not distinguish its principal business or group its operations on a geographical basis for purposes of measuring performance. Accordingly, the Company has a single reportable segment for disclosure purposes in accordance with U.S. generally accepted accounting principles (“GAAP”). Basis of Presentation The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for the fair presentation of the unaudited Condensed Consolidated Financial Statements for the periods presented have been included. The operating results for the periods presented are not necessarily indicative of the results that may be expected for a full fiscal year. These financial statements should be read in conjunction with the financial statements for the year ended December 31, 2020 and accompanying notes included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 11, 2021. Principles of Consolidation The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Parent Company, the Operating Partnership, each of their wholly owned subsidiaries and all other entities in which they have a controlling financial interest. All intercompany transactions have been eliminated. Income Taxes Brixmor Property Group Inc. has elected to qualify as a REIT in accordance with the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a REIT, Brixmor Property Group Inc. must meet several organizational and operational requirements, including a requirement that it distribute at least 90% of its REIT taxable income, determined before the deduction for dividends paid and excluding net capital gains, to its stockholders on an annual basis. Management intends to satisfy these requirements and maintain Brixmor Property Group Inc.’s REIT status. As a REIT, Brixmor Property Group Inc. generally will not be subject to U.S. federal income tax, provided that distributions to its stockholders equal at least the amount of its REIT taxable income as defined under the Code. Brixmor Property Group Inc. conducts substantially all of its operations through the Operating Partnership which is organized as a limited partnership and treated as a pass-through entity for U.S. federal tax purposes. Therefore, U.S. 11 federal income taxes do not materially impact the unaudited Condensed Consolidated Financial Statements of the Company. If Brixmor Property Group Inc. fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal taxes at regular corporate rates and may not be able to qualify as a REIT for the four subsequent taxable years. Even if Brixmor Property Group Inc. qualifies for taxation as a REIT, Brixmor Property Group Inc. is subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on its undistributed taxable income as well as other income items, as applicable. Brixmor Property Group Inc. has elected to treat certain of its subsidiaries as taxable REIT subsidiaries (each a “TRS”), and Brixmor Property Group Inc. may in the future elect to treat newly formed and/or other existing subsidiaries as TRSs. A TRS may participate in non-real estate related activities and/or perform non-customary services for tenants and is subject to certain limitations under the Code. A TRS is subject to U.S. federal, state and local income taxes at regular corporate rates. Income taxes related to Brixmor Property Group Inc.’s TRSs do not materially impact the unaudited Condensed Consolidated Financial Statements of the Company. The Company has considered the tax positions taken for the open tax years and has concluded that no provision for income taxes related to uncertain tax positions is required in the Company’s unaudited Condensed Consolidated Financial Statements as of September 30, 2021 and December 31, 2020. Open tax years generally range from 2018 through 2020 but may vary by jurisdiction and issue. The Company recognizes penalties and interest accrued related to unrecognized tax benefits as income tax expense, which is included in Other on the Company’s unaudited Condensed Consolidated Statements of Operations. New Accounting Pronouncements In October 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-16, Derivatives and Hedging (Topic 815). ASU 2018-16 was subsequently amended by ASU 2020-04, Reference Rate Reform (Topic 848) and ASU 2021-01, Reference Rate Reform (Topic 848). ASU 2018-16 amends guidance to permit the use of the Overnight Index Swap (“OIS”) rate based on the Secured Overnight Financing Rate (“SOFR”) as a U.S. benchmark interest rate for hedge accounting purposes under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging . The standard became effective for the Company on January 1, 2019 and a prospective transition approach was required. The Company determined that the adoption of ASU 2018-16 did not have a material impact on the unaudited Condensed Consolidated Financial Statements of the Company. ASU 2020-04 and ASU 2021-01 contain practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 and ASU 2021-01 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. Any other recently issued accounting standards or pronouncements not disclosed above have been excluded as they either are not relevant to the Company, or they are not expected to have a material effect on the unaudited Condensed Consolidated Financial Statements of the Company. 12 2. Acquisition of Real Estate During the nine months ended September 30, 2021, the Company acquired the following assets, in separate transactions: Description (1) Location Month Acquired GLA Aggregate Purchase Price (2) Land at Ellisville Square (3) Ellisville, MO Jan-21 N/A $ 2,014 Outparcel adjacent to Cobblestone Village St. Augustine, FL Feb-21 5,040 1,520 Land associated with Westgate Plaza Westfield, MA Mar-21 N/A 245 Center of Bonita Springs Bonita Springs, FL Apr-21 281,394 48,061 Champlin Marketplace Champlin, MN Jun-21 91,970 14,876 378,404 $ 66,716 (1) No debt was assumed related to any of the listed acquisitions. (2) Aggregate purchase price includes $ 0.5 million of transaction costs, offset by $ 1.4 million of closing credits. (3) The Company terminated a ground lease and acquired a land parcel. During the nine months ended September 30, 2020, the Company acquired the following assets, in separate transactions: Description (1) Location Month Acquired GLA Aggregate Purchase Price (2) Land adjacent to Shops at Palm Lakes Miami Gardens, FL Feb-20 N/A $ 2,020 Land adjacent to College Plaza Selden, NY Jul-20 N/A 1,405 N/A $ 3,425 (1) No debt was assumed related to any of the listed acquisitions. (2) Aggregate purchase price includes $ 0.1 million of transaction costs. The aggregate purchase price of the assets acquired during the nine months ended September 30, 2021 and 2020, respectively, has been allocated as follows: Nine Months Ended September 30, Assets 2021 2020 Land $ 17,669 $ 3,425 Buildings 38,082 — Building and tenant improvements 7,128 — Above-market leases (1) 149 — In-place leases (2) 5,523 — Total assets acquired $ 68,551 $ 3,425 Liabilities Below-market leases (3) $ 1,835 $ — Total liabilities 1,835 — Net assets acquired $ 66,716 $ 3,425 (1) The weighted average amortization period at the time of acquisition for above-market leases related to assets acquired during the nine months ended September 30, 2021 was 5.1 years. (2) The weighted average amortization period at the time of acquisition for in-place leases related to assets acquired during the nine months ended September 30, 2021 was 10.3 years. (3) The weighted average amortization period at the time of acquisition for below-market leases related to assets acquired during the nine months ended September 30, 2021 was 19.7 years. 3. Dispositions and Assets Held for Sale During the three months ended September 30, 2021, the Company disposed of three shopping centers, five partial shopping centers and one land parcel for aggregate net proceeds of $ 24.7 million resulting in aggregate gain of $ 11.1 million. During the nine months ended September 30, 2021, the Company disposed of nine shopping centers, 14 partial shopping centers and one land parcel for aggregate net proceeds of $ 124.4 million resulting in aggregate 13 gain of $ 49.5 million and aggregate impairment of $ 1.5 million. In addition, during the nine months ended September 30, 2021, the Company 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 September 30, 2020, the Company disposed of three shopping centers, one partial shopping center and one land parcel for aggregate net proceeds of $ 36.2 million resulting in aggregate gain of $ 13.1 million and aggregate impairment of less than $ 0.1 million. In addition, during the three months ended September 30, 2020, the Company received aggregate net proceeds of less than $ 0.1 million and resolved contingencies of $ 0.1 million from previously disposed assets resulting in aggregate gain of $ 0.1 million. During the nine months ended September 30, 2020, the Company disposed of eight shopping centers, three partial shopping centers and one land parcel for aggregate net proceeds of $ 81.9 million resulting in aggregate gain of $ 21.3 million and aggregate impairment of $ 6.0 million. In addition, during the nine months ended September 30, 2020, the Company received aggregate net proceeds of $ 1.0 million and resolved contingencies of $ 0.5 million from previously disposed assets resulting in aggregate gain of $ 1.5 million. As of September 30, 2021, the Company had three properties and four partial properties held for sale. As of December 31, 2020, the Company had two properties and one partial property held for sale. There were no liabilities associated with the properties classified as held for sale. The following table presents the assets associated with the properties classified as held for sale: Assets September 30, 2021 December 31, 2020 Land $ 8,767 $ 5,447 Buildings and improvements 50,315 16,481 Accumulated depreciation and amortization ( 17,775 ) ( 4,693 ) Real estate, net 41,307 17,235 Other assets 704 779 Assets associated with real estate assets held for sale $ 42,011 $ 18,014 There were no discontinued operations for the three and nine months ended September 30, 2021 and 2020 as none of the dispositions represented a strategic shift in the Company’s business that would qualify as discontinued operations. 4. Real Estate The Company’s components of Real estate, net consisted of the following: September 30, 2021 December 31, 2020 Land $ 1,736,876 $ 1,740,263 Buildings and improvements: Buildings and tenant improvements (1) 7,965,787 7,856,850 Lease intangibles (2) 541,433 566,448 10,244,096 10,163,561 Accumulated depreciation and amortization (3) ( 2,785,227 ) ( 2,659,448 ) Total $ 7,458,869 $ 7,504,113 (1) As of September 30, 2021 and December 31, 2020, Buildings and tenant improvements included accrued amounts, net of anticipated insurance proceeds, of $ 41.4 million and $ 33.0 million, respectively. (2) As of September 30, 2021 and December 31, 2020, Lease intangibles consisted of $ 488.1 million and $ 509.3 million, respectively, of in-place leases and $ 53.3 million and $ 57.2 million, respectively, of above-market leases. These intangible assets are amortized over the term of each related lease. (3) As of September 30, 2021 and December 31, 2020, Accumulated depreciation and amortization included $ 489.0 million and $ 507.7 million, respectively, of accumulated amortization related to Lease intangibles. In addition, as of September 30, 2021 and December 31, 2020, the Company had intangible liabilities relating to below-market leases of $ 334.6 million and $ 345.7 million, respectively, and accumulated accretion of $ 259.9 million and $ 260.3 million, respectively. These intangible liabilities are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets. These intangible assets are accreted over the term of each related lease. 14 Below-market lease accretion income, net of above-market lease amortization for the three months ended September 30, 2021 and 2020 was $ 2.8 million and $ 4.1 million, respectively. Below-market lease accretion income, net of above-market lease amortization for the nine months ended September 30, 2021 and 2020 was $ 9.9 million and $ 12.4 million, respectively. These amounts are included in Rental income on the Company’s unaudited Condensed Consolidated Statements of Operations. Amortization expense associated with in-place lease value for the three months ended September 30, 2021 and 2020 was $ 3.9 million and $ 4.5 million, respectively. Amortization expense associated with in-place lease value for the nine months ended September 30, 2021 and 2020 was $ 11.8 million and $ 14.8 million, respectively. These amounts are included in Depreciation and amortization on the Company’s unaudited Condensed Consolidated Statements of Operations. The Company’s estimated below-market lease accretion income, net of above-market lease amortization expense, and in-place lease amortization expense for the next five years are as follows: Year ending December 31, Below-market lease accretion (income), net of above-market lease amortization expense In-place lease amortization expense 2021 (remaining three months) $ ( 2,601 ) $ 3,222 2022 ( 9,071 ) 9,715 2023 ( 7,854 ) 7,308 2024 ( 7,363 ) 5,606 2025 ( 6,177 ) 4,176 5. Impairments Management periodically assesses whether there are any indicators, including property operating performance, changes in anticipated hold period and general market conditions, including the impact of the novel coronavirus (“COVID-19”), that the carrying value of the Company’s real estate assets (including any related intangible assets or liabilities) may be impaired. If management determines that the carrying value of a real estate asset is impaired, a loss is recognized to reflect the estimated fair value. The Company did no t recognize any impairments during the three months ended September 30, 2021. The Company recognized the following impairments during the nine months ended September 30, 2021: Nine Months Ended September 30, 2021 Property Name (1) Location GLA Impairment Charge Albany Plaza (2) Albany, GA 114,169 $ 1,467 Erie Canal Centre DeWitt, NY 123,404 431 237,573 $ 1,898 (1) The Company recognized impairment charges based upon changes in the anticipated hold periods of these properties and/or offers from third-party buyers in connection with the Company’s capital recycling program. (2) The Company disposed of this property during the nine months ended September 30, 2021. The Company recognized the following impairments during the three months ended September 30, 2020: Three Months Ended September 30, 2020 Property Name (1) Location GLA Impairment Charge Northmall Centre Tucson, AZ 165,350 $ 5,721 Chamberlain Plaza (2) Meriden, CT 54,302 25 219,652 $ 5,746 (1) The Company recognized impairment charges based upon changes in the anticipated hold periods of these properties and/or offers from third-party buyers in connection with the Company’s capital recycling program. (2) The Company disposed of this property during the year ended December 31, 2020. 15 The Company recognized the following impairments during the nine months ended September 30, 2020: Nine Months Ended September 30, 2020 Property Name (1) Location GLA Impairment Charge Northmall Centre Tucson, AZ 165,350 $ 5,721 Spring Mall Greenfield, WI 45,920 4,584 30th Street Plaza (2) Canton, OH 145,935 4,449 Chamberlain Plaza (2) Meriden, CT 54,302 1,538 Parcel at Lakes Crossing (3) Muskegon, MI 4,990 14 416,497 $ 16,306 (1) The Company recognized impairment charges based upon changes in the anticipated hold periods of these properties and/or offers from third-party buyers in connection with the Company’s capital recycling program. (2) The Company disposed of this property during the year ended December 31, 2020. (3) The Company disposed of this partial property during the year ended December 31, 2020. The Company can provide no assurance that material impairment charges with respect to its Portfolio will not occur in future periods. See Note 3 for additional information regarding impairment charges taken in connection with the Company’s dispositions. See Note 8 for additional information regarding the fair value of operating properties that have been impaired. 6. Financial Instruments – Derivatives and Hedging The Company’s use of derivative instruments is intended to manage its exposure to interest rate movements and such instruments are not utilized for speculative purposes. In certain situations, the Company may enter into derivative financial instruments such as interest rate swap and interest rate cap agreements that result in the receipt and/or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Cash Flow Hedges of Interest Rate Risk Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchanging the underlying notional amount. The Company utilizes interest rate swaps to partially hedge the cash flows associated with variable LIBOR based debt. During the nine months ended September 30, 2021 and year ended December 31, 2020, the Company did no t enter into any new interest rate swap agreements. During the nine months ended September 30, 2021, interest rate swaps with a notional amount of $ 250.0 million expired and the Company paid $ 1.1 million to terminate interest rate swaps with a notional amount of $ 250.0 million. Detail on the Company’s interest rate derivatives designated as cash flow hedges outstanding as of September 30, 2021 and December 31, 2020 is as follows: Number of Instruments Notional Amount September 30, 2021 December 31, 2020 September 30, 2021 December 31, 2020 Interest Rate Swaps 4 7 $ 300,000 $ 800,000 The Company has elected to present its interest rate derivatives on its unaudited Condensed Consolidated Balance Sheets on a gross basis as interest rate swap assets and interest rate swap liabilities. Detail on the fair value of the Company’s interest rate derivatives on a gross and net basis as of September 30, 2021 and December 31, 2020 is as follows: Fair Value of Derivative Instruments Interest rate swaps classified as: September 30, 2021 December 31, 2020 Gross derivative assets $ — $ — Gross derivative liabilities ( 17,586 ) ( 28,225 ) Net derivative liabilities $ ( 17,586 ) $ ( 28,225 ) The gross derivative assets are included in Other assets and the gross derivative liabilities are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance 16 Sheets. All of the Company’s outstanding interest rate swap agreements for the periods presented were designated as cash flow hedges of interest rate risk. The fair value of the Company’s interest rate derivatives is determined using market standard valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivative, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. These inputs are classified as Level 2 of the fair value hierarchy. The effective portion of changes in the fair value of derivatives designated as cash flow hedges is recognized in other comprehensive income (loss) and is reclassified into earnings as interest expense in the period that the hedged forecasted transaction affects earnings. The effective portion of the Company’s interest rate swaps that was recognized on the Company’s unaudited Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020 is as follows: Derivatives in Cash Flow Hedging Relationships (Interest Rate Swaps) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Change in unrealized gain (loss) on interest rate swaps $ ( 198 ) $ ( 133 ) $ 2,076 $ ( 27,144 ) Amortization of interest rate swaps to interest expense 2,339 3,061 8,563 5,359 Change in unrealized gain (loss) on interest rate swaps, net $ 2,141 $ 2,928 $ 10,639 $ ( 21,785 ) The Company estimates that $ 7.5 million will be reclassified from accumulated other comprehensive loss as an increase to interest expense over the next twelve months. No gain or loss was recognized related to hedge ineffectiveness or to amounts excluded from effectiveness testing on the Company’s cash flow hedges during the three and nine months ended September 30, 2021 and 2020. Non-Designated (Mark-to-Market) Hedges of Interest Rate Risk The Company does not use derivatives for trading or speculative purposes. As of September 30, 2021 and December 31, 2020, the Company did not have any non-designated hedges. Credit-risk-related Contingent Features The Company has agreements with its derivative counterparties that contain provisions whereby if the Company defaults on certain of its indebtedness and the indebtedness has been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. If the Company were to breach any of the contractual provisions of the derivative contracts, it would be required to settle its obligations under such agreements at their termination value, including accrued interest. 17 7. Debt Obligations As of September 30, 2021 and December 31, 2020, the Company had the following indebtedness outstanding: Carrying Value as of September 30, 2021 December 31, 2020 Stated Interest Rate (1) Scheduled Maturity Date Notes payable Unsecured notes (2) $ 4,868,453 $ 4,518,453 1.18 % – 7.97 % 2022 – 2031 Net unamortized premium 27,366 31,390 Net unamortized debt issuance costs ( 28,187 ) ( 25,232 ) Total notes payable, net $ 4,867,632 $ 4,524,611 Unsecured Credit Facility and term loans Unsecured Credit Facility - Revolving Facility $ — $ — 1.19% 2023 Unsecured $ 350 Million Term Loan — 350,000 N/A N/A Unsecured $ 300 Million Term Loan (3) 300,000 300,000 1.34 % 2024 Net unamortized debt issuance costs ( 4,257 ) ( 7,281 ) Total Unsecured Credit Facility and term loans $ 295,743 $ 642,719 Total debt obligations, net $ 5,163,375 $ 5,167,330 (1) Stated interest rates as of September 30, 2021 do not include the impact of the Company’s interest rate swap agreements (described below). (2) The weighted average stated interest rate on the Company’s unsecured notes was 3.56 % as of September 30, 2021. (3) Effective January 2, 2019, the Company has in place four interest rate swap agreements that convert the variable interest rate on the Company’s $ 300.0 million term loan agreement, as amended April 29, 2020 (the “$ 300 Million Term Loan”), to a fixed, combined interest rate of 2.61 % (plus a spread of 125 basis points) through July 26, 2024. 2021 Debt Transactions In August 2021, the Operating Partnership issued $ 500.0 million aggregate principal amount of 2.500 % Senior Notes due 2031 (the “2031 Notes”) at 99.675 % of par. The net proceeds from the issuance of the 2031 Notes were used, along with available cash, to redeem $ 500.0 million principal amount of the Operating Partnership’s 3.250 % Senior Notes due 2023 (the “2023 Notes”), representing all of the outstanding 2023 Notes. The 2031 Notes bear interest at a rate of 2.500 % per annum, payable semi-annually on February 16 and August 16 of each year, commencing February 16, 2022. The 2031 Notes will mature on August 16, 2031. The Operating Partnership may redeem the 2031 Notes prior to maturity, at its option, at any time in whole or from time to time in part, at the applicable redemption price specified in the Indenture with respect to the 2031 Notes. If the 2031 Notes are redeemed on or after May 16, 2031 (three months prior to the maturity date), the redemption price will be equal to 100 % of the principal amount of the 2031 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. The 2031 Notes are the Operating Partnership’s unsecured and unsubordinated obligations and rank equally in right of payment with all of the Operating Partnership’s existing and future senior unsecured and unsubordinated indebtedness. In March 2021, the Operating Partnership issued $ 350.0 million aggregate principal amount of 2.250 % Senior Notes due 2028 (the “2028 Notes”) at 99.817 % of par, the net proceeds of which were used to repay all outstanding indebtedness under the Company’s $ 350.0 million term loan agreement, as amended April 29, 2020 (the “$350 Million Term Loan”). The 2028 Notes bear interest at a rate of 2.250 % per annum, payable semi-annually on April 1 and October 1 of each year, commencing October 1, 2021. The 2028 Notes will mature on April 1, 2028. The Operating Partnership may redeem the 2028 Notes prior to maturity, at its option, at any time in whole or from time to time in part, at the applicable redemption price specified in the Indenture with respect to the 2028 Notes. If the 2028 Notes are redeemed on or after February 1, 2028 (two months prior to the maturity date), the redemption price will be equal to 100 % of the principal amount of the 2028 Notes being redeemed plus accrued and unpaid interest thereon to, but not including, the redemption date. The 2028 Notes are the Operating Partnership’s unsecured and unsubordinated obligations and rank equally in right of payment with all of the Operating Partnership’s existing and future senior unsecured and unsubordinated indebtedness. During the nine months ended September 30, 2021, as a result of the redemption of the 2023 Notes and repayment of the $350 Million Term Loan, the Company recognized a $ 28.3 million loss on extinguishment of debt. Loss on 18 extinguishment of debt includes $ 25.5 million of prepayment fees and $ 2.8 million of accelerated unamortized debt issuance costs and debt discounts. Pursuant to the terms of the Company’s unsecured debt agreements, the Company among other things is subject to the maintenance of various financial covenants. The Company was in compliance with these covenants as of September 30, 2021. Debt Maturities As of September 30, 2021 and December 31, 2020, the Company had accrued interest of $ 46.0 million and $ 47.2 million outstanding, respectively. As of September 30, 2021, scheduled maturities of the Company’s outstanding debt obligations were as follows: Year ending December 31, 2021 (remaining three months) $ — 2022 250,000 2023 — 2024 800,000 2025 700,000 Thereafter 3,418,453 Total debt maturities 5,168,453 Net unamortized premium 27,366 Net unamortized debt issuance costs ( 32,444 ) Total debt obligations, net $ 5,163,375 As of the date the financial statements were issued, the Company’s scheduled debt maturities for the next 12 months were comprised of the Company’s $ 250.0 million Floating Rate Senior Notes due 2022. The Company has sufficient cash and cash equivalents to satisfy these scheduled debt maturities. 8. Fair Value Disclosures All financial instruments of the Company are reflected in the accompanying unaudited Condensed Consolidated Balance Sheets at amounts which, in management’s judgment, reasonably approximate their fair values, except those instruments listed below: September 30, 2021 December 31, 2020 Carrying Amounts Fair Value Carrying Amounts Fair Value Notes payable $ 4,867,632 $ 5,256,444 $ 4,524,611 $ 5,012,523 Unsecured Credit Facility and term loans 295,743 300,670 642,719 651,639 Total debt obligations, net $ 5,163,375 $ 5,557,114 $ 5,167,330 $ 5,664,162 As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy is included in GAAP that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs that are classified within Level 3 of the hierarchy). In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. Based on the above criteria, the Company has determined that the valuations of its debt obligations are classified within Level 3 of the fair value hierarchy. Such fair value estimates are not necessarily indicative of the amounts that would be realized upon disposition. 19 Recurring Fair Value The Company’s marketable securities and interest rate derivatives are measured and recognized at fair value on a recurring basis. The valuations of the Company’s marketable securities are based primarily on publicly traded market values in active markets and are classified within Level 1 or 2 of the fair value hierarchy. See Note 6 for fair value information regarding the Company’s interest rate derivatives. The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured and recognized at fair value on a recurring basis: Fair Value Measurements as of September 30, 2021 Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Marketable securities (1) $ 20,769 $ 6,237 $ 14,532 $ — Liabilities: Interest rate derivatives $ ( 17,586 ) $ — $ ( 17,586 ) $ — Fair Value Measurements as of December 31, 2020 Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Marketable securities (1) $ 19,548 $ 980 $ 18,568 $ — Liabilities: Interest rate derivatives $ ( 28,225 ) $ — $ ( 28,225 ) $ — (1) As of September 30, 2021 and December 31, 2020, marketable securities included less than $ 0.1 million of net unrealized losses and $ 0.2 million of net unrealized gains, respectively. As of September 30, 2021, the contractual maturities of the Company’s marketable securities are within the next five years. Non-Recurring Fair Value On a periodic basis, management assesses whether there are any indicators, including property operating performance, changes in anticipated hold period and general market conditions, including the impact of COVID-19, that the carrying value of the Company’s real estate assets (including any related intangible assets or liabilities) may be impaired. Fair value is determined by offers from third-party buyers, market comparable data, third party appraisals or discounted cash flow analyses. The cash flows utilized in such analyses are comprised of unobservable inputs which include forecasted rental revenue and expenses based upon market conditions and future expectations. The capitalization rates and discount rates utilized in such analyses are based upon unobservable rates that the Company believes to be within a reasonable range of current market rates for the respective properties. Based on these inputs, the Company has determined that the valuations of these properties are classified within Level 3 of the fair value hierarchy. 20 The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured and recognized at fair value on a non-recurring basis. The table includes information related to properties that were remeasured to fair value as a result of impairment testing during the nine months ended September 30, 2021 and during the year ended December 31, 2020, excluding the properties sold prior to September 30, 2021 and December 31, 2020, respectively: Fair Value Measurements as of September 30, 2021 Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Impairment of Real Estate Assets Assets: Properties (1)(2) $ 18,091 $ — $ — $ 18,091 $ 431 Fair Value Measurements as of December 31, 2020 Balance Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Impairment of Real Estate Assets Assets: Properties (3)(4)(5) $ 27,184 $ — $ — $ 27,184 $ 11,544 (1) Excludes properties disposed of prior to September 30, 2021. (2) The carrying value of properties remeasured to fair value based upon offers from third-party buyers during the nine months ended September 30, 2021 includes $ 18.1 million related to Erie Canal Centre. (3) Excludes properties disposed of prior to December 31, 2020. (4) The carrying value of properties remeasured to fair value based upon offers from third-party buyers during the year ended December 31, 2020 includes: (i) $ 14.0 million related to Northmall Centre; and (ii) $ 8.3 million related to The Pines Shopping Center. (5) The carrying value of properties remeasured to fair value based upon a discounted cash flow analysis during the year ended December 31, 2020 includes $ 4.9 million related to Spring Mall. The capitalization rate of 8.0 % and discount rate of 8.0 % which were utilized in the discounted cash flow analysis were based upon unobservable rates that the Company believes to be within a reasonable range of current market rates for the investment. 9. Revenue Recognition The Company engages in the ownership, management, leasing, acquisition, disposition and redevelopment of retail shopping centers. Revenue is primarily generated through lease agreements and classified as Rental income on the Company’s unaudited Condensed Consolidated Statements of Operations. These agreements include retail shopping center unit leases; ground leases; ancillary leases or agreements, such as agreements with tenants for cellular towers, ATMs, and short-term or seasonal retail (e.g. Halloween or Christmas-related retail); and reciprocal easement agreements. The agreements range in term from less than one year to 25 or more years, with certain agreements containing renewal options. These renewal options range from as little as one month to five or more years. The Company’s retail shopping center leases generally require tenants to pay their proportionate share of property operating expenses such as common area expenses, utilities, insurance and real estate taxes, and certain capital expenditures related to the maintenance of the Company’s properties. Additionally, variable lease payments associated with percentage rents are recognized once the required sales data is made available. The Company recognized $ 0.9 million and $ 0.6 million of income based on percentage rents for the three months ended September 30, 2021 and 2020, respectively. The Company recognized $ 4.7 million and $ 3.6 million of income based on percentage rents for the nine months ended September 30, 2021 and 2020, respectively. These amounts are included in Rental income on the Company’s unaudited Condensed Consolidated Statements of Operations. COVID-19 The global outbreak of COVID-19 and the public health measures that have been undertaken in response have had a significant adverse impact on the Company’s business, the Company’s tenants, 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 the Company’s 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. Certain tenants experiencing economic 21 difficulties during the COVID-19 pandemic have sought rent relief, which has been provided on a case-by-case basis primarily in the form of rent deferrals and, in more limited cases, in the form of rent abatements. Under ASC 842, changes to the amount or timing of lease payments subsequent to the original lease execution are generally accounted for as lease modifications. Due to the number of lease contracts that would require analysis to determine, on a lease by lease basis, whether such a concession is required to be accounted for as a lease modification, the FASB issued a Staff Q&A on accounting for leases during the COVID-19 pandemic, focused on the application of lease guidance in ASC 842. The Q&A states that it would be acceptable to make a policy election regarding rent concessions resulting from COVID-19, which would not require entities to account for the rent concessions as lease modifications or to determine whether rent concessions were contractually obligated in each original lease. Rent abatements would be recognized as reductions to revenue during the period in which they were granted. Rent deferrals would result in an increase to “Receivables, net” during the deferral period with no impact on rental revenue recognition. Any rent concession that is either unrelated to COVID-19 or substantially increases the total consideration due under the lease does not qualify for consideration under the Q&A. The Company has evaluated the impact of the Q&A and has made the following policy elections: • The Company accounts for COVID-19 rent deferrals and abatements that significantly increase the consideration due under the lease as lease modifications in accordance with ASC 842. As a result, rental revenue recognition is reduced by the amount of the deferral or abatement in the period it was granted and straight-line rental income recognition is updated over the remaining lease term. • The Company does not account for COVID-19 rent deferrals that do not significantly increase the consideration due under the lease as lease modifications. As a result, rental revenue recognition, including straight-line rental income recognition, does not change, and Receivables, net increases for the deferred amount. • The Company does not account for COVID-19 rent abatements that do not significantly increase the consideration due under the lease as lease modifications. As a result, rental revenue recognition is reduced by the amount of the abatement in the period it was granted and straight-line rental income recognition does not change over the remaining lease term. 22 The following table presents the COVID-19 related deferrals and abatements granted for lease payments due during the three and nine months ended September 30, 2021 and 2020. Lease payments presented consist of fixed contractual base rent and may include the reimbursement of certain property operating expenses. Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 Deferrals Abatements Deferrals Abatements Lease payments (lease modifications) $ 905 $ 174 $ 1,991 $ 1,686 Lease payments (not lease modifications) 2,942 614 18,650 402 $ 3,847 $ 788 $ 20,641 $ 2,088 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Deferrals Abatements Deferrals Abatements Lease payments (lease modifications) $ 1,930 $ 1,758 $ 2,735 $ 1,893 Lease payments (not lease modifications) 11,791 3,587 32,815 438 $ 13,721 $ 5,345 $ 35,550 $ 2,331 The following table presents the deferrals that were not lease modifications and were included in Receivables, net on the Company's Unaudited Condensed Consolidated Balance Sheets: COVID-19 Deferred Receivable Beginning balance, December 31, 2020 $ 15,359 Deferred lease payments (not lease modifications) 6,185 Deferred lease payments deemed uncollectible ( 1,760 ) Deferred lease payments received ( 10,416 ) Ending balance, March 31, 2021 9,368 Deferred lease payments (not lease modifications) 2,665 Deferred lease payments deemed uncollectible 425 Deferred lease payments received ( 8,378 ) Ending balance, June 30, 2021 4,080 Deferred lease payments (not lease modifications) 2,942 Deferred lease payments deemed uncollectible 445 Deferred lease payments received ( 4,902 ) Ending balance, September 30, 2021 $ 2,565 23 10. Leases The Company periodically enters into agreements in which it is the lessee, including ground leases for shopping centers that it operates and office leases for administrative space. The agreements range in term from less than one year to 50 or more years, with certain agreements containing renewal options for up to an additional 100 years. Upon lease execution, the Company recognizes a lease liability and a right-of-use (“ROU”) asset based on the present value of future lease payments over the noncancellable lease term. As of September 30, 2021 the Company is not including any prospective renewal or termination options in its lease liabilities or ROU assets, as the exercise of such options is not reasonably certain. Certain agreements require the Company to pay its proportionate share of property operating expenses such as common area expenses, utilities, insurance and real estate taxes, and certain capital expenditures related to the maintenance of the properties. These payments are not included in the calculation of the lease liability and are presented as variable lease costs. The following tables present additional information pertaining to the Company’s operating leases: Three Months Ended September 30, Nine Months Ended September 30, Supplemental Statements of Operations Information 2021 2020 2021 2020 Operating lease costs $ 1,438 $ 1,761 $ 4,484 $ 5,278 Short-term lease costs — 10 1 29 Variable lease costs 39 146 242 380 Total lease costs $ 1,477 $ 1,917 $ 4,727 $ 5,687 Nine Months Ended September 30, Supplemental Statements of Cash Flows Information 2021 2020 Operating cash outflows from operating leases $ 4,633 $ 5,286 ROU assets obtained in exchange for operating lease liabilities — 1,140 ROU assets written off due to dispositions and lease modifications ( 229 ) ( 1,748 ) Operating Lease Liabilities As of September 30, 2021 Future minimum operating lease payments: 2021 (remaining three months) $ 1,504 2022 5,986 2023 5,296 2024 5,203 2025 4,902 Thereafter 25,071 Total future minimum operating lease payments 47,962 Less: imputed interest ( 13,120 ) Operating lease liabilities $ 34,842 Supplemental Balance Sheets Information As of September 30, 2021 As of December 31, 2020 Operating lease liabilities (1)(2) $ 34,842 $ 38,599 ROU assets (1)(3) $ 30,376 $ 34,006 (1) As of September 30, 2021 and December 31, 2020, the weighted average remaining lease term was 12.7 years and 12.7 years, respectively, and the weighted average discount rate was 4.41 % and 4.39 %, respectively. (2) These amounts are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets. (3) These amounts are included in Other assets on the Company’s unaudited Condensed Consolidated Balance Sheets. As of September 30, 2021, there were no material leases that have been executed but not yet commenced. 24 11. Equity and Capital ATM Program In January 2020, the Company established an at-the-market equity offering program (the “ATM Program”) through which the Company may sell from time to time up to an aggregate of $ 400.0 million of its common stock through sales agents over a three -year period. The ATM Program also provides that the Company may enter into forward contracts for shares of its common stock with forward sellers and forward purchasers. The ATM Program is scheduled to expire on January 9, 2023, unless earlier terminated or extended by the Company, sales agents, forward sellers and forward purchasers. As of September 30, 2021, no shares have been issued under the ATM Program, and as a result, $ 400.0 million of common stock remained available for issuance. Share Repurchase Program In January 2020, the Company established a new share repurchase program (the “Program”) for up to $ 400.0 million of the Company’s common stock. The Program is scheduled to expire on January 9, 2023, unless suspended or extended by the Board of Directors. The Program replaced the Company’s prior share repurchase program, which expired on December 5, 2019. During the nine months ended September 30, 2021, the Company did not repurchase any shares of common stock. During the nine months ended September 30, 2020, the Company repurchased 1.7 million shares of common stock under the Program at an average price per share of $ 15.14 for a total of $ 25.0 million, excluding commissions. The Company incurred total commissions of less than $ 0.1 million in conjunction with the Program for the nine months ended September 30, 2020. As of September 30, 2021, the Program had $ 375.0 million of available repurchase capacity. Common Stock In connection with the vesting of restricted stock units (“RSUs”) under the Company’s equity-based compensation plan, the Company withholds shares to satisfy tax withholding obligations. During the nine months ended September 30, 2021 and 2020, the Company withheld 0.3 million and 0.2 million shares of its common stock, respectively. Dividends and Distributions During the nine months ended September 30, 2021, the Company declared common stock dividends and OP Unit distributions of $ 0.645 per share/unit. During the nine months ended September 30, 2020, the Company declared common stock dividends and OP Unit distributions of $ 0.285 per share/unit. In response to COVID-19, the Company suspended the dividend in the second and third quarters of 2020. In the fourth quarter of 2020, the Company resumed the dividend at a rate of $ 0.215 per common share. As of September 30, 2021 and December 31, 2020, the Company had declared but unpaid common stock dividends and OP Unit distributions of $ 66.6 million and $ 66.0 million, respectively. These amounts are included in Accounts payable, accrued expenses and other liabilities on the Company’s unaudited Condensed Consolidated Balance Sheets. 12. Stock Based Compensation During the year ended December 31, 2013, the Board of Directors approved the 2013 Omnibus Incentive Plan (the “Plan”). The Plan provides for a maximum of 15.0 million shares of the Company’s common stock to be issued for qualified and non-qualified options, stock appreciation rights, restricted stock and RSUs, OP Units, performance awards and other stock-based awards. During the nine months ended September 30, 2021 and the year ended December 31, 2020, the Company granted RSUs to certain employees. The RSUs are divided into multiple tranches, which are all subject to service-based vesting conditions. Certain tranches are also subject to performance-based or market-based criteria, which contain a threshold, target, above target, and maximum number of units which can be earned. The number of units actually earned for each tranche is determined based on performance during a specified performance period. Tranches that only have a service-based component can only earn a target number of units. The aggregate number of RSUs granted, assuming that the target level of performance is achieved, was 1.0 million and 0.7 million for the nine months ended September 30, 2021 and the year ended December 31, 2020, respectively, with vesting periods ranging from one to five years . For the performance-based and service-based RSUs granted, fair value is based on the Company’s grant date stock price. For the market-based RSUs granted during the nine months ended September 30, 2021 and the year ended December 31, 2020, the Company calculated the grant date fair values per unit using a Monte Carlo simulation based on the probability of satisfying the market performance hurdles over the remainder of the performance period based on the Company’s historical common stock performance relative to the other 25 companies within the FTSE NAREIT Equity Shopping Centers Index as well as the following significant assumptions: (i) volatility of 50.0 % to 64.0 % and 20.0 % to 23.0 %, respectively; (ii) a weighted average risk-free interest rate of 0.11 % to 0.18 % and 1.20 % to 1.30 %, respectively; and (iii) the Company’s weighted average common stock dividend yield of 4.1 % to 5.8 % and 5.9 % to 6.0 %, respectively. During the three months ended September 30, 2021 and 2020, the Company recognized $ 4.3 million and $ 3.5 million of equity compensation expense, respectively, of which $ 0.3 million and $ 0.3 million was capitalized, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized $ 11.7 million and $ 8.5 million of equity compensation expense, respectively, of which $ 0.8 million and $ 0.7 million was capitalized, respectively. These amounts are included in General and administrative expense on the Company’s unaudited Condensed Consolidated Statements of Operations. As of September 30, 2021, the Company had $ 22.7 million of total unrecognized compensation expense related to unvested stock compensation, which is expected to be recognized over a weighted average period of approximately 2.2 years. 26 13. Earnings per Share Basic earnings per share (“EPS”) is calculated by dividing net income attributable to the Company’s common stockholders, including any participating securities, by the weighted average number of shares outstanding for the period. Certain restricted shares issued pursuant to the Company’s share-based compensation program are considered participating securities, as such stockholders have rights to receive non-forfeitable dividends. Fully-diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into shares of common stock. Unvested RSUs are not allocated net losses and/or any excess of dividends declared over net income, as such amounts are allocated entirely to the Company’s common stock. The following table provides a reconciliation of the numerator and denominator of the EPS calculations for the three and nine months ended September 30, 2021 and 2020 (dollars in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Computation of Basic Earnings Per Share: Net income $ 46,145 $ 27,944 $ 188,944 $ 96,769 Non-forfeitable dividends on unvested restricted shares ( 207 ) ( 82 ) ( 593 ) ( 269 ) Net income attributable to the Company’s common stockholders for basic earnings per share $ 45,938 $ 27,862 $ 188,351 $ 96,500 Weighted average number shares outstanding – basic 297,188 296,562 297,165 296,982 Basic earnings per share attributable to the Company’s common stockholders: Net income per share $ 0.15 $ 0.09 $ 0.63 $ 0.32 Computation of Diluted Earnings Per Share: Net income attributable to the Company’s common stockholders for diluted earnings per share $ 45,938 $ 27,862 $ 188,351 $ 96,500 Weighted average shares outstanding – basic 297,188 296,562 297,165 296,982 Effect of dilutive securities: Equity awards 1,081 300 1,044 335 Weighted average shares outstanding – diluted 298,269 296,862 298,209 297,317 Diluted earnings per share attributable to the Company’s common stockholders: Net income per share $ 0.15 $ 0.09 $ 0.63 $ 0.32 27 14. Earnings per Unit Basic earnings per unit is calculated by dividing net income attributable to the Operating Partnership’s common unitholders, including any participating securities, by the weighted average number of partnership common units outstanding for the period. Certain restricted units issued pursuant to the Company’s share-based compensation program are considered participating securities, as such unitholders have rights to receive non-forfeitable dividends. Fully-diluted earnings per unit reflects the potential dilution that could occur if securities or other contracts to issue common units were exercised or converted into common units. Unvested RSUs are not allocated net losses and/or any excess of dividends declared over net income, as such amounts are allocated entirely to the Operating Partnership’s common units. The following table provides a reconciliation of the numerator and denominator of the earnings per unit calculations for the three and nine months ended September 30, 2021 and 2020 (dollars in thousands, except per unit data): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Computation of Basic Earnings Per Unit: Net income $ 46,145 $ 27,944 $ 188,944 $ 96,769 Non-forfeitable dividends on unvested restricted units ( 207 ) ( 82 ) ( 593 ) ( 269 ) Net income attributable to the Operating Partnership’s common units for basic earnings per unit $ 45,938 $ 27,862 $ 188,351 $ 96,500 Weighted average number common units outstanding – basic 297,188 296,562 297,165 296,982 Basic earnings per unit attributable to the Operating Partnership’s common units: Net income per unit $ 0.15 $ 0.09 $ 0.63 $ 0.32 Computation of Diluted Earnings Per Unit: Net income attributable to the Operating Partnership’s common units for diluted earnings per unit $ 45,938 $ 27,862 $ 188,351 $ 96,500 Weighted average common units outstanding – basic 297,188 296,562 297,165 296,982 Effect of dilutive securities: Equity awards 1,081 300 1,044 335 Weighted average common units outstanding – diluted 298,269 296,862 298,209 297,317 Diluted earnings per unit attributable to the Operating Partnership’s common units: Net income per unit $ 0.15 $ 0.09 $ 0.63 $ 0.32 28 15. Commitments and Contingencies Legal Matters Except as described below, the Company is not presently involved in any material litigation arising outside the ordinary course of business. However, the Company is involved in routine litigation arising in the ordinary course of business, none of which the Company believes, individually or in the aggregate, taking into account existing reserves, will have a material impact on the Company’s financial condition, operating results or cash flows. As previously disclosed, on August 1, 2019, the Company finalized a settlement with the SEC with respect to matters initially disclosed on February 8, 2016 relating to a review conducted by the Audit Committee of the Company’s Board of Directors into certain accounting matters and the related conduct of certain former Company executives. Also as previously disclosed, the U.S. Attorney’s Office for the Southern District of New York has indicated that it is no longer pursuing actions relating to these matters with respect to the Company’s former employees. In July 2021, the SEC dismissed its pending civil action against two former employees relating to these matters and indicated that it would not seek further sanctions against two other former employees who had previously consented to judgments. The Company believes that no additional governmental proceedings relating to these matters will be brought against the Company. Environmental Matters Under various federal, state and local laws, ordinances and regulations, the Company may be or become liable for the costs of removal or remediation of certain hazardous or toxic substances released on or in the Company’s property or disposed of by the Company or its tenants, as well as certain other potential costs which could relate to hazardous or toxic substances (including governmental fines and injuries to persons and property). The Company does not believe that any resulting liability from such matters will have a material impact on the Company’s financial condition, operating results or cash flows. During the three and nine months ended September 30, 2021 and 2020, the Company did no t incur any material governmental fines resulting from environmental matters. 16. Related-Party Transactions In the ordinary course of conducting its business, the Company enters into agreements with its affiliates in relation to the leasing and management of its real estate assets. As of September 30, 2021 and December 31, 2020, there were no material receivables from or payables to related parties. During the three and nine months ended September 30, 2021 and 2020, the Company did no t engage in any material related-party transactions. 17. Subsequent Events In preparing the unaudited Condensed Consolidated Financial Statements, the Company has evaluated events and transactions occurring after September 30, 2021 for recognition and/or disclosure purposes. Based on this evaluation, there were no subsequent events from September 30, 2021 through the date the financial statements were issued. 29