What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-02 compared with 2021-11-01 · 146 added, 222 removed, 170 unchanged (68% of the section changed)

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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 September 30, 2021, our portfolio was comprised of 386 shopping centers (the “Portfolio”) totaling approximately 68 million square feet of GLA.

We own and operate one of the largest publicly-traded open-air retail portfolios by gross leasable area (“GLA”) in the United States (“U.S.”), comprised primarily of community and neighborhood shopping centers.

As of March 31, 2022, our portfolio was comprised of 380 shopping centers (the “Portfolio”) totaling approximately 67 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 September 30, 2021, our three largest tenants by annualized base rent (“ABR”) were The TJX Companies, Inc.

As of March 31, 2022, our three largest tenants by annualized base rent (“ABR”) were The TJX Companies, Inc.

(“TJX”), The Kroger Co.

(“Kroger”), and Burlington Stores, Inc.

(“Burlington”).

BPG has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the U.S.

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• 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 we are one of the largest landlords by GLA to TJX, Kroger, and Burlington, 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.

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• 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.

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.

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.

Expense reimbursements primarily consist of payments made by tenants to us for a portion 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.

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

As discussed below, 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 October 26, 2021, we have collected 94% of base rent for the nine months ended December 31, 2020, 96% of first quarter 2021 base rent, 97% of second quarter 2021 base rent, and 97% of third 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 September 30, 2021, billed and leased occupancy were 88.2% and 91.5%, respectively, as compared to 88.0% and 91.2%, respectively, as of September 30, 2020.

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

For the Three Months Ended September 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 386 2,770,003 $ 14.54 $ 3.23 $ 1.43 10.7 %

New and renewal leases 332 1,719,493 16.62 5.20 2.31 12.3 %

New leases 161 745,712 17.43 9.62 5.28 26.3 %

Renewal leases 171 973,781 15.99 1.82 0.04 7.6 %

Option leases 54 1,050,510 11.14 — — 7.6 %

For the Three Months Ended September 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 418 3,155,433 $ 14.20 $ 2.55 $ 1.08 6.1 %

New and renewal leases 368 2,152,872 15.53 3.71 1.58 5.7 %

New leases 103 683,517 16.22 10.05 4.94 14.1 %

Renewal leases 265 1,469,355 15.21 0.76 0.01 4.5 %

Option leases 50 1,002,561 11.35 0.07 — 7.1 %

(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 nine months ended September 30, 2021 and 2020 (dollars in thousands, except for per PSF amounts):

For the Nine Months Ended September 30, 2021

As of March 31, 2022, billed and leased occupancy were 88.6% and 92.1%, respectively, as compared to 87.8% and 90.8%, respectively, as of March 31, 2021.

The following table summarizes our executed leasing activity for the three months ended March 31, 2022 and 2021 (dollars in thousands, except for per square foot (“PSF”) amounts):

For the Three Months Ended March 31, 2022

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

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Option leases 53 916,995 10.71 — — 5.8 %

For the Nine Months Ended September 30, 2020

For the Three Months Ended March 31, 2021

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

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Acquisition Activity

• During the nine months ended September 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 nine months ended September 30, 2020, we acquired two land parcels for $3.4 million, including transaction costs.

• During the three months ended March 31, 2022, we acquired three shopping centers and one land parcel and paid less than $0.1 million related to previously acquired assets for an aggregate purchase price of $158.2 million, including transaction costs and closing credits.

In addition, during the three months ended March 31, 2022, we funded $6.1 million of deposits on assets that are under contract to be acquired.

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

Disposition Activity

• During the nine months ended September 30, 2021, we disposed of nine shopping centers, 14 partial shopping centers and one land parcel for aggregate net proceeds of $124.4 million resulting in aggregate gain of $49.5 million and aggregate impairment of $1.5 million.

In addition, during the nine months ended September 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 nine months ended September 30, 2020, we 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.

• During the three months ended March 31, 2022, we disposed of five shopping centers and one partial shopping center for aggregate net proceeds of $58.9 million, resulting in aggregate gain of $21.8 million and aggregate impairment of $1.1 million.

In addition, during the three months ended March 31, 2022, we resolved contingencies related to previously disposed assets, resulting in net gain of $0.1 million.

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

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 September 30, 2021 to the Three Months Ended September 30, 2020

Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

Revenues (in thousands)

Three Months Ended September 30,

Three Months Ended March 31,

2022 2021 $ Change

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Rental income

The increase in rental income for the three months ended September 30, 2021 of $36.2 million, as compared to the corresponding period in 2020, was due to a $38.6 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 $25.7 million decrease in revenues deemed uncollectible;

(ii) a $7.8 million increase in straight-line rental income, net;

(iii) a $3.0 million increase in base rent;

The increase in rental income for the three months ended March 31, 2022 of $21.9 million, as compared to the corresponding period in 2021, was due to a $20.3 million increase for assets owned for the full period and a $1.6 million increase due to acquisition and disposition activity.

The increase for assets owned for the full period was due to (i) a $7.5 million increase in base rent;

(ii) a $6.3 million decrease in revenues deemed uncollectible;

(iii) a $2.3 million increase in straight-line rental income, net;

(iv) a $1.3 million increase in expense reimbursements;

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

(vi) a $0.6 million increase in lease termination fees;

and (vii) a $0.3 million increase in percentage rents;

partially offset by (viii) a $1.3 million decrease in accretion of below-market leases, net of amortization of above-market leases and tenant inducements.

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

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

The $3.0 million increase in base rent for the remaining portfolio was primarily due to a decrease in COVID-19 rent deferrals accounted for as lease modifications and rent abatements, in addition to contractual rent increases and positive rent spreads for new and renewal leases and option exercises of 9.1% during the nine months ended September 30, 2021 and 7.2% during the year ended December 31, 2020, partially offset by a decrease in weighted average billed occupancy.

Other revenues

Other revenues remained generally consistent for the three months ended September 30, 2021 as compared to the corresponding period in 2020.

Operating Expenses (in thousands)

Three Months Ended September 30,

2021 2020 $ Change

Operating expenses

Operating costs $ 32,774 $ 24,794 $ 7,980

Real estate taxes 39,763 42,124 (2,361)

Depreciation and amortization 81,724 87,488 (5,764)

Impairment of real estate assets — 5,746 (5,746)

General and administrative 25,309 27,748 (2,439)

Total operating expenses $ 179,570 $ 187,900 $ (8,330)

Operating costs

The increase in operating costs for the three months ended September 30, 2021 of $8.0 million, as compared to the corresponding period in 2020, was primarily due to an $8.1 million increase for assets owned for the full period primarily due to an increase in repair and maintenance costs and a decrease in favorable insurance captive adjustments, partially offset by a $0.1 million decrease in operating costs due to net disposition activity.

Real estate taxes

The decrease in real estate taxes for the three months ended September 30, 2021 of $2.4 million, as compared to the corresponding period in 2020, was primarily due to a $1.8 million decrease for assets owned for the full period, primarily due to an increase in favorable adjustments related to prior year assessments, and a $0.6 million decrease in real estate taxes due to net disposition activity.

Depreciation and amortization

The decrease in depreciation and amortization for the three months ended September 30, 2021 of $5.8 million, as compared to the corresponding period in 2020, was primarily due to a $5.6 million decrease for assets owned for the full period, primarily related to a decrease in accelerated depreciation and amortization related to tenant move-outs, and a $0.2 million decrease in depreciation and amortization due to net disposition activity.

Impairment of real estate assets

During the three months ended September 30, 2020, aggregate impairment of $5.7 million was recognized on one shopping center as a result of disposition activity and one operating property.

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

General and administrative

The decrease in general and administrative costs for the three months ended September 30, 2021 of $2.4 million, as compared to the corresponding period in 2020, was primarily due to a decrease in litigation and other non-routine legal expenses, partially offset by an increase in net compensation costs.

During the three months ended September 30, 2021 and 2020, construction compensation costs of $4.2 million and $3.8 million, respectively, were capitalized to building and improvements and leasing legal costs of $0.7 million and $0.1 million, respectively and leasing commission costs of $2.0 million and $1.4 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Other Income and Expenses (in thousands)

Three Months Ended September 30,

2021 2020 $ Change

Other income (expense)

Dividends and interest $ 51 $ 109 $ (58)

Interest expense (48,918) (50,991) 2,073

Gain on sale of real estate assets 11,122 13,621 (2,499)

Loss on extinguishment of debt, net (27,116) (50) (27,066)

Other 390 (780) 1,170

Total other expense $ (64,471) $ (38,091) $ (26,380)

Dividends and interest

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

Interest expense

The decrease in interest expense for the three months ended September 30, 2021 of $2.1 million, as compared to the corresponding period in 2020, was primarily due to lower overall debt obligations.

Gain on sale of real estate assets

During the three months ended September 30, 2021, three shopping centers, five partial shopping centers and one land parcel were disposed of resulting in aggregate gain of $11.1 million.

During the three months ended September 30, 2020, two shopping centers, one partial shopping center and one land parcel were disposed of resulting in aggregate gain of $13.1 million.

In addition, during the three months ended September 30, 2020, we 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, and we received final insurance proceeds related to two shopping centers that were damaged by Hurricane Michael resulting in aggregate gain of $0.4 million.

Loss on extinguishment of debt, net

During the three months ended September 30, 2021, we redeemed all $500.0 million of our 3.250% Senior Notes due 2023, resulting in a $27.1 million loss on extinguishment of debt.

Loss on extinguishment of debt includes $25.5 million of prepayment fees and $1.6 million of accelerated unamortized debt issuance costs and debt discounts.

During the three months ended September 30, 2020, we repurchased $0.7 million of our 3.875% Senior Notes due 2022 through a tender offer, resulting in a $0.1 million loss on extinguishment of debt.

Loss on extinguishment of debt includes less than $0.1 million of prepayment fees and less than $0.1 million of accelerated unamortized debt issuance costs and debt discounts.

The increase in other income for the three months ended September 30, 2021 of $1.2 million, as compared to the corresponding period in 2020, was primarily due to favorable tax adjustments in the current year.

Comparison of the Nine Months Ended September 30, 2021 to the Nine Months Ended September 30, 2020

Revenues (in thousands)

Nine Months Ended September 30,

2021 2020 $ Change

Rental income $ 853,407 $ 781,635 $ 71,772

Other revenues 3,549 2,221 1,328

Total revenues $ 856,956 $ 783,856 $ 73,100

Rental income

The increase in rental income for the nine months ended September 30, 2021 of $71.8 million, as compared to the corresponding period in 2020, was due to an $80.1 million increase for assets owned for the full period, partially

offset by an $8.3 million decrease in rental income due to net disposition activity.

The increase for assets owned for the full period was due to (i) a $56.6 million decrease in revenues deemed uncollectible;

(ii) a $21.9 million increase in straight-line rental income, net;

(iii) a $2.8 million increase in lease termination fees;

(iv) a $2.2 million increase in ancillary and other rental income;

(v) a $2.2 million increase in expense reimbursements;

and (vi) a $1.1 million increase in percentage rents;

partially offset by (vii) a $3.4 million decrease in base rent;

and (viii) a $3.3 million decrease in accretion of below-market leases, net of amortization of above-market leases and tenant inducements.

(v) a $1.2 million increase in percentage rents;

(vi) a $1.1 million increase in ancillary and other rental income;

and (vii) a $0.7 million increase in accretion of below-market leases, net of amortization of above-market leases and tenant inducements;

partially offset by (v) a $0.1 million decrease in lease termination fees.

The $7.5 million increase in base rent for assets owned for the full period was primarily due to contractual rent increases and positive rent spreads for new and renewal leases and option exercises of 13.1% during the three months ended March 31, 2022 and 10.1% during the year ended December 31, 2021, an increase in weighted average billed occupancy, and a decrease in rent deferrals accounted for as lease modifications and rent abatements related to the current pandemic of the novel coronavirus (“COVID-19”).

The decrease in revenues deemed uncollectible was primarily attributable to the impact of COVID-19 reserves in 2021 and recoveries of previously reserved amounts in 2022.

The increase in straight-line rental income, net was primarily attributable to the impact of COVID-19 reserves in 2021.

The $3.4 million decrease in base rent for the remaining portfolio was primarily due to a decrease in weighted average billed occupancy, partially offset by a decrease in COVID-19 rent deferrals accounted for as lease modifications and rent abatements, in addition to contractual rent increases and positive rent spreads for new and renewal leases and option exercises of 9.1% during the nine months ended September 30, 2021 and 7.2% during the year ended December 31, 2020.

Other revenues

The increase in other revenues for the nine months ended September 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.

The decrease in other revenues for the three months ended March 31, 2022 of $3.0 million, as compared to the corresponding period in 2021, was primarily due to a decrease in tax increment financing income.

Operating Expenses (in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 $ Change

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Operating costs

The increase in operating costs for the nine months ended September 30, 2021 of $12.6 million, as compared to the corresponding period in 2020, was primarily due to a $13.3 million increase for assets owned for the full period, primarily due to an increase in repair and maintenance, insurance and utility costs and a decrease in favorable insurance captive adjustments, partially offset by a $0.7 million decrease in operating costs due to net disposition activity.

The increase in operating costs for the three months ended March 31, 2022 of $3.4 million, as compared to the corresponding period in 2021, was due to a $3.3 million increase for assets owned for the full period primarily due to an increase in repair and maintenance, utility, and insurance costs, in addition to a $0.1 million increase in operating costs due to acquisition and disposition activity.

Real estate taxes

The decrease in real estate taxes for the nine months ended September 30, 2021 of $1.9 million, as compared to the corresponding period in 2020, was primarily due to a $2.1 million decrease in real estate taxes due to net disposition activity, partially offset by a $0.2 million increase for assets owned for the full period.

The decrease in real estate taxes for the three months ended March 31, 2022 of $1.2 million, as compared to the corresponding period in 2021, was due to a $1.5 million decrease for assets owned for the full period, primarily due to an increase in favorable adjustments related to prior year assessments and an increase in capitalized real estate taxes, partially offset by a $0.3 million increase in real estate taxes due to acquisition and disposition activity.

Depreciation and amortization

The decrease in depreciation and amortization for the nine months ended September 30, 2021 of $5.0 million, as compared to the corresponding period in 2020, was primarily due to a $2.0 million decrease in depreciation and amortization due to net disposition activity and a $3.0 million decrease for assets owned for the full period, primarily related to a decrease in amortization of acquired in-place lease intangibles and accelerated depreciation and amortization related to tenant move-outs, partially offset by an increase in depreciation and amortization related to value-enhancing reinvestment capital expenditures.

The increase in depreciation and amortization for the three months ended March 31, 2022 of $0.8 million, as compared to the corresponding period in 2021, was due to a $2.5 million increase due to acquisition and disposition activity, partially offset by a $1.7 million decrease for assets owned for the full period, primarily related to a decrease in accelerated depreciation and amortization related to tenant move-outs.

Impairment of real estate assets

During the nine months ended September 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 nine months ended September 30, 2020, aggregate impairment of $16.3 million was recognized on two shopping centers and one partial shopping center as a result of disposition activity and two operating properties.

During the three months ended March 31, 2022, aggregate impairment of $4.6 million was recognized on one shopping center, as a result of disposition activity, and one operating property.

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

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 nine months ended September 30, 2021 of $1.6 million, as compared to the corresponding period in 2020, was primarily due to an increase in net compensation costs and routine legal expenses, partially offset by a decrease in litigation and other non-routine legal expenses.

During the nine months ended September 30, 2021 and 2020, construction compensation costs of $12.1 million and $10.9 million, respectively, were capitalized to building and improvements and leasing legal costs of $1.5 million and $0.2 million, respectively and leasing commission costs of $4.8 million and $4.0 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

The increase in general and administrative costs for the three months ended March 31, 2022 of $3.4 million, as compared to the corresponding period in 2021, 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 March 31, 2022 and 2021, construction compensation costs of $4.2 million and $3.8 million, respectively, were capitalized to building and improvements and leasing legal costs of $1.5 million and $0.4 million, respectively and leasing commission costs of $1.9 million and $1.1 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Other Income and Expenses (in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

2022 2021 $ Change

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Dividends and interest

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

Dividends and interest remained generally consistent for the three months ended March 31, 2022 as compared to the corresponding period in 2021.

Interest expense

The decrease in interest expense for the nine months ended September 30, 2021 of $0.6 million, as compared to the corresponding period in 2020, was primarily due to lower overall debt obligations.

The decrease in interest expense for the three months ended March 31, 2022 of $1.7 million, as compared to the corresponding period in 2021, was primarily due to a lower weighted average interest rate and lower overall debt obligations.

Gain on sale of real estate assets

During the nine months ended September 30, 2021, eight shopping centers, 14 partial shopping centers and one land parcel were disposed of resulting in aggregate gain of $49.5 million.

During the nine months ended September 30, 2020, six shopping centers, two partial shopping centers and one land parcel were disposed of resulting in aggregate gain of $21.3 million.

In addition, during the nine months ended September 30, 2020, we 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, and we received final insurance proceeds related to two shopping centers that were damaged by Hurricane Michael resulting in aggregate gain of $0.4 million.

During the three months ended March 31, 2022, four shopping centers and one partial shopping center were disposed of resulting in aggregate gain of $21.8 million.

In addition, during the three months ended March 31, 2022, we resolved contingencies related to previously disposed assets resulting in net gain of $0.1 million.

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

Loss on extinguishment of debt, net

During the nine months ended September 30, 2021, we redeemed all $500.0 million of our 3.250% Senior Notes due 2023 and 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 $28.3 million loss on extinguishment of debt.

Loss on extinguishment of debt includes $25.5 million of prepayment fees and $2.8 million of accelerated unamortized debt issuance costs and debt discounts.

During the nine months ended September 30, 2020, we repurchased $183.2 million of our 3.875% Senior Notes due 2022 through a tender offer and repaid our $7.0 million secured loan, resulting in a $10.4 million loss on extinguishment of debt, net.

Loss on extinguishment of debt, net includes $9.7 million of prepayment fees and $0.7 million of accelerated unamortized debt issuance costs and debt discounts, net of premiums.

The increase in other income for the nine months ended September 30, 2021 of $3.2 million, as compared to the corresponding period in 2020, was primarily due to favorable tax adjustments and legal settlements in the current year.

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

The increase in other expense for the three months ended March 31, 2022 of $1.3 million, as compared to the corresponding period in 2021, was primarily due to favorable tax adjustments and legal settlements in the prior year.

Liquidity and Capital Resources

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• issuance of equity securities.

• debt repayments;

• maintenance capital expenditures;

• leasing capital expenditures;

• debt repayments;

• dividend/distribution payments;

4 unchanged sentences

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 September 30, 2021, we had $1.2 billion of available liquidity under the Revolving Facility and $404.4 million in cash and cash equivalents and restricted cash.

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

As of March 31, 2022, we had $1.2 billion of available liquidity under our $1.25 billion revolving credit facility (the “Revolving Facility”) and $40.4 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 September 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 $182.4 million, respectively, over the next 12 months and $4.9 billion and $938.0 million, respectively, thereafter.

As of September 30, 2021, the weighted average time to maturity is 5.7 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 September 30, 2021.

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

As previously discussed under the header “Impacts on Business from COVID-19”, the COVID-19 pandemic has had, and 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

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 stockholders on an annual basis.

Material Cash Requirements

Our expected material cash requirements for the twelve months ended March 31, 2023 and thereafter are comprised of (i) contractually obligated expenditures;

(ii) other essential expenditures;

and (iii) opportunistic expenditures.

Contractually Obligated Expenditures

The following table summarizes our debt maturities (excluding extension options), interest payment obligations (excluding debt premiums and discounts and deferred financing costs), and obligations under non-cancelable operating leases (excluding renewal options), as of March 31, 2022 (dollars in millions):

Contractually Obligated Expenditures Twelve

March 31, 2023 Thereafter

Debt maturities (1)

$ 95.0 $ 4,918.5

Interest payments (1)(2)

Operating leases 5.8 39.9

Total $ 283.7 $ 5,804.6

(1) Amounts presented do not assume the issuance of new debt upon maturity of existing debt.

(2) Scheduled interest payments included in these amounts for variable rate loans are presented using rates (including the impact of interest rate swaps), as of March 31, 2022.

Amounts presented exclude debt premiums and discounts and deferred financing costs.

“Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2021 for a further discussion of these and other factors that could impact interest payments.

Other Essential Expenditures

We incur certain other essential expenditures in the ordinary course of business, such as common area expenses, utilities, insurance, real estate taxes, capital expenditures related to the maintenance of our properties, leasing capital expenditures, and corporate level expenses.

The amount of common area expenses, utilities, and capital expenditures related to the maintenance of our properties that we incur depends on changes in the scope of services that we provide, changes in prevailing market rates, and changes in the size and composition of our Portfolio.

Additionally, we carry comprehensive insurance to protect our Portfolio against various losses.

The amount of insurance expense that we incur depends on the assessed value of our Portfolio, prevailing market rates, changes in risk, and the size and composition of our Portfolio.

Furthermore, we incur real estate taxes in the various jurisdictions in which we operate.

The amount of real estate taxes that we incur depends on changes in assessed values, changes in tax rates assessed by various jurisdictions, and changes in the size and composition of our Portfolio.

Leasing capital expenditures represent tenant specific costs incurred to lease space, including tenant improvements, tenant allowances, and external leasing commissions.

The amount of leasing capital expenditures that we incur depends on the volume and nature of leasing activity.

Leases typically provide for the reimbursement of property operating

expenses such as common area expenses, utilities, insurance, and real estate taxes, and certain capital expenditures related to the maintenance of our properties.

However, these costs generally do not decrease if a property is not fully occupied, and certain costs are non-reimbursable.

In order to continue to qualify as a REIT for federal income tax purposes, we must meet several organizational and operational requirements, including a requirement that we annually distribute to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains.

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

Cash dividends paid to common stockholders for the nine months ended September 30, 2021 and 2020 were $193.2 million and $170.4 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 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 was paid on October 15, 2021 to shareholders of record on October 5, 2021.

In October 2021, our Board of Directors declared a quarterly cash dividend of $0.240 per common share for the fourth quarter of 2021.

The dividend is payable on January 18, 2022 to shareholders of record on January 5, 2022.

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

The following table summarizes our dividend activity for the first quarter of 2022 and the second quarter of 2022:

Quarter 2022 Second

Dividend declared per common share $ 0.240 $ 0.240

Dividend declaration date February 1, 2022 April 27, 2022

Dividend record date April 5, 2022 July 5, 2022

Dividend payable date April 18, 2022 July 15, 2022

Opportunistic Expenditures

We also intend to continue to utilize cash for opportunistic expenditures such as value-enhancing reinvestment and acquisition activity.

• The amount of value-enhancing reinvestment capital expenditures that we may incur in future periods is contingent on a variety of factors that may change from period to period, such as the number, total expected cost, and nature of value-enhancing reinvestment projects that we execute.

See “Improvements to and investments in real estate assets” below for further information regarding our in-process reinvestment projects and pipeline of future redevelopment projects.

• The amount of future acquisition and disposition activity depends on the availability of opportunities that further concentrate our Portfolio in attractive retail submarkets and optimize the quality and long-term growth rate of our asset base.

Our acquisition strategy focuses on buying assets with strong growth potential that are located in our existing markets and will allow us to leverage our operational platform and expertise to create value.

Our acquisition activity may include acquisitions of open-air shopping centers, non-owned anchor spaces, and retail buildings and/or outparcels at, or adjacent to, our shopping centers.

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.

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

Brixmor Property Group Inc .

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash provided by operating activities $ 112,260 $ 110,513

Net cash used in investing activities (174,937) (34,125)

Net cash provided by (used in) financing activities (234,490) 406,319

Net cash used in financing activities (194,682) (73,791)

Brixmor Operating Partnership LP

Nine Months Ended September 30,

Three Months Ended March 31,

Net cash provided by operating activities $ 112,260 $ 110,513

Net cash used in investing activities (174,937) (34,125)

Net cash provided by (used in) financing activities (234,489) 396,321

Cash and cash equivalents and restricted cash for BPG were $404.4 million and $611.2 million as of September 30, 2021 and 2020, respectively.

Cash and cash equivalents and restricted cash for the Operating Partnership were $394.4 million and $601.2 million as of September 30, 2021 and 2020, respectively.

Net cash used in financing activities (186,052) (73,791)

Cash and cash equivalents and restricted cash for BPG and the Operating Partnership were $40.4 million and $33.9 million, respectively, as of March 31, 2022.

Cash and cash equivalents and restricted cash for BPG and the Operating Partnership were $372.7 million and $362.7 million, respectively, as of March 31, 2021.

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 nine months ended September 30, 2021, our net cash provided by operating activities increased $101.2 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 interest expense;

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

During the three months ended March 31, 2022, our net cash provided by operating activities increased $1.7 million as compared to the corresponding period in 2021.

The increase was primarily due to (i) an increase in same property net operating income;

and (ii) a decrease in cash outflows for interest expense;

partially offset by (iii) a decrease from net working capital;

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

(v) a decrease in net operating income due to acquisition and disposition activity;

and (vi) a decrease in lease termination fees.

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 nine months ended September 30, 2021, our net cash used in investing activities increased $15.9 million as compared to the corresponding period in 2020.

The increase was primarily due to (i) an increase of $63.3 million

in acquisitions of real estate assets;

partially offset by (ii) an increase of $41.5 million in net proceeds from sales of real estate assets;

(iii) a decrease of $5.6 million in improvements to and investments in real estate assets;

and (iv) a $0.3 million decrease in purchases of marketable securities, net of proceeds from sales.

During the three months ended March 31, 2022, our net cash used in investing activities increased $140.8 million as compared to the corresponding period in 2021.

The increase was primarily due to (i) an increase of $160.5 million in acquisitions of real estate assets;

(ii) an increase of $7.3 million in improvements to and investments in real estate assets;

and (iii) an increase of $0.1 million in purchases of marketable securities, net of proceeds from sales;

partially offset by (iv) an increase of $27.1 million in net proceeds from sales of real estate assets.

Improvements to and investments in real estate assets

During the nine months ended September 30, 2021 and 2020, we expended $212.4 million and $217.9 million, respectively, on improvements to and investments in real estate assets.

In addition, during the nine months ended September 30, 2021 and 2020, insurance proceeds of $2.9 million and $7.3 million, respectively, were received and included in improvements to and investments in real estate assets.

During the three months ended March 31, 2022 and 2021, we expended $70.1 million and $62.8 million, respectively, on improvements to and investments in real estate assets.

Included in these amounts are insurance proceeds of $2.0 million and $2.2 million, respectively, which were received during the three months ended March 31, 2022 and 2021.

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.

Leasing related capital expenditures represent tenant specific costs incurred to lease space, including tenant improvements, tenant allowances, and external leasing commissions.

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 September 30, 2021, we had 49 in-process anchor space repositioning, redevelopment and outparcel development projects with an aggregate anticipated cost of $396.3 million, of which $245.0 million had been incurred as of September 30, 2021.

In addition, we have identified a pipeline of future reinvestment projects aggregating approximately $900.0 million of potential capital investment, which we expect to execute over the next several years.

As of March 31, 2022, we had 54 in-process anchor space repositioning, redevelopment, and outparcel development projects with an aggregate anticipated cost of $418.9 million, of which $217.0 million had been incurred as of March 31, 2022.

In addition, we have identified a pipeline of future redevelopment projects aggregating approximately $900.0 million 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, net cash provided by operating activities, proceeds from sales of real estate assets, and/or available liquidity under the Revolving Facility.

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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 nine months ended September 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 nine months ended September 30, 2020, we acquired two land parcels for $3.4 million, including transaction costs.

During the three months ended March 31, 2022, we acquired three shopping centers and one land parcel and paid less than $0.1 million related to previously disposed assets for an aggregate purchase price of $158.2 million, including transaction costs and closing credits.

In addition, during the three months ended March 31, 2022, we funded $6.1 million of deposits on assets that are under contract to be acquired.

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

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 nine months ended September 30, 2021, we disposed of nine shopping centers, 14 partial shopping centers and one land parcel for aggregate net proceeds of $124.4 million.

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

During the nine months ended September 30, 2020, we disposed of eight shopping centers, three partial shopping centers and one land parcel for aggregate net proceeds of $81.9 million.

In addition, during the nine months ended September 30, 2020, we received aggregate net proceeds of $1.0 million from previously disposed assets.

During the three months ended March 31, 2022, we disposed of five shopping centers and one partial shopping center for aggregate net proceeds of $58.9 million.

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

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 nine months ended September 30, 2021, our net cash provided by (used in) financing activities decreased $640.8 million as compared to the corresponding period in 2020.

The decrease was primarily due to (i) a $625.5 million decrease in debt borrowings, net of repayments;

(ii) a $22.8 million increase in distributions to our common stockholders;

and (iii) a $15.6 million increase in deferred financing and debt extinguishment costs;

partially offset by (iv) a $23.1 million decrease in repurchases of common stock.

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.

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

During the three months ended March 31, 2022, our net cash used in financing activities increased $120.9 million as compared to the corresponding period in 2021.

The increase was primarily due to (i) a $154.4 million increase in debt repayments, net of borrowings;

(ii) an $8.1 million increase in distributions to our common stockholders;

and (iii) a $5.4 million increase in repurchases of common shares in conjunction with equity award plans;

partially offset by (iv) a $43.9 million increase in issuances of common stock;

and (v) a $3.1 million decrease in deferred financing and debt extinguishment costs.

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 GAAP.

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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.

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 nine months ended September 30, 2021 and 2020 is as follows (in thousands, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Our reconciliation of net income to Nareit FFO for the three months ended March 31, 2022 and 2021 is as follows (in thousands, except per share amounts):

Three Months Ended March 31,

Net income $ 79,506 $ 52,371

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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 is calculated (using properties owned for the entirety of both periods and excluding properties under development and completed new development properties that 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.

Comparison of the Three and Nine Months Ended September 30, 2021 to the Three and Nine Months Ended September 30, 2020

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 Change 2021 2020 Change

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, corporate level expenses (including general and administrative), lease termination fees, straight-line rental income, net, accretion of below-market leases, net of amortization of above-market leases and tenant inducements, and straight-line ground rent expense.

We believe that same property NOI is also useful to investors because it further eliminates disparities in NOI due to the acquisition or disposition of properties or the stabilization of completed new development properties during the periods presented and therefore provides a more consistent metric for comparing the operating performance of our real estate between periods.

Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

Three Months Ended March 31,

2022 2021 Change

Number of properties 360 360 —

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Net income $ 79,506 $ 52,371

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Accretion of below-market leases, net of amortization of above-market leases and tenant inducements (2,044) (984)

Straight-line ground rent expense 32 35 120 105

Straight-line ground rent expense, net (8) 46

Depreciation and amortization 84,222 83,420

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Same property NOI $ 202,406 $ 186,711

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 operating expenses resulting from inflation;

Prior to 2021, inflation was low and had a minimal impact on our operating and financial performance;

however, inflation has significantly increased in 2021 and 2022 and may continue to be elevated or increase further.

With respect to our shopping centers, 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 a portion 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 operating expenses resulting from inflation;

however, we have exposure to increases in non-reimbursable property operating expenses, including expenses incurred on vacant units.

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.

With respect to our outstanding indebtedness, we periodically evaluate our exposure to interest rate fluctuations, and have and may continue to enter into interest rate protection agreements that mitigate, but do not eliminate, the impact of changes in interest rates on our variable rate loans.

With respect to general and administrative costs, we continually seek opportunities to offset inflationary cost pressures through routine evaluations of our spending levels and through ongoing efforts to utilize technology to enhance the efficiency of our people and processes.

Quantitative and Qualitative Disclosures about Market Risk

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis