What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-01 compared with 2022-05-02 · 203 added, 106 removed, 210 unchanged (60% of the section changed)

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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.

As of June 30, 2022, our portfolio was comprised of 379 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 March 31, 2022, our three largest tenants by annualized base rent (“ABR”) were The TJX Companies, Inc.

As of June 30, 2022, our three largest tenants by annualized base rent (“ABR”) were The TJX Companies, Inc.

(“TJX”), The Kroger Co.

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(“Burlington”).

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

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

federal income tax laws, commencing with our taxable year ended December 31, 2011, has maintained such requirements through our taxable year ended December 31, 2021, and intends to satisfy such requirements for subsequent taxable years.

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We provide our tenants with dedicated service through both our national accounts leasing team based in New York and our network of four regional offices in Atlanta, Chicago, Philadelphia, and San Diego, as well as our 13 leasing and property management satellite offices throughout the country.

We believe that this structure enables us to obtain critical national market intelligence, while also benefitting from the regional and local expertise of our leasing and operations teams.

We believe that this structure enables us to obtain critical national market intelligence, while also benefiting from the regional and local expertise of our leasing and operations teams.

• Experienced Management – Senior members of our management team are seasoned real estate operators with extensive public company leadership experience.

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Leasing Highlights

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

As of June 30, 2022, billed and leased occupancy were 89.0% and 92.5%, respectively, as compared to 88.1% and 91.1%, respectively, as of June 30, 2021.

The following table summarizes our executed leasing activity for the three months ended June 30, 2022 and 2021 (dollars in thousands, except for per square foot (“PSF”) amounts):

For the Three Months Ended June 30, 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 56 923,394 13.48 — — 8.6 %

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 2021

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

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

The following table summarizes our executed leasing activity for the six months ended June 30, 2022 and 2021 (dollars in thousands, except for PSF amounts):

For the Six Months Ended June 30, 2022

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

New, renewal and option leases 817 5,192,585 $ 16.40 $ 4.63 $ 2.08 12.8 %

New and renewal leases 708 3,352,196 18.77 7.18 3.22 16.0 %

New leases 315 1,650,148 18.73 12.58 6.44 35.0 %

Renewal leases 393 1,702,048 18.80 1.94 0.10 10.6 %

Option leases 109 1,840,389 12.10 — — 7.4 %

For the Six Months Ended June 30, 2021

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

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

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

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

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

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

(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.

Acquisition Activity

• 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.

• During the six months ended June 30, 2022, we acquired seven shopping centers, one outparcel, and one land parcel and paid less than $0.1 million related to previously acquired assets for an aggregate purchase price of $409.7 million, including transaction costs and closing credits.

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

Disposition Activity

• 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.

• During the six months ended June 30, 2022, we disposed of ten shopping centers and four partial shopping centers for aggregate net proceeds of $140.0 million, resulting in aggregate gain of $44.8 million and aggregate impairment of $4.6 million.

In addition, during the six months ended June 30, 2022, we resolved contingencies related to previously disposed assets, resulting in net gain of $0.1 million.

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

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

Results of Operations

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

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

Comparison of the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

Revenues (in thousands)

Three Months Ended March 31,

Three Months Ended June 30,

2022 2021 $ Change

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Rental income

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 in rental income for the three months ended June 30, 2022 of $19.0 million, as compared to the corresponding period in 2021, was due to a $15.3 million increase for assets owned for the full period and a $3.7 million increase due to net acquisition and disposition activity.

The increase for assets owned for the full period was due to (i) an $8.1 million increase in base rent;

(ii) a $3.8 million increase in expense reimbursements;

(iii) a $3.2 million increase associated with revenues deemed uncollectible;

(iv) a $3.1 million increase in straight-line rental income, net;

(v) a $1.3 million increase in ancillary and other rental income;

and (vi) a $0.9 million increase in percentage rents;

partially offset by (vii) a $3.1 million decrease in lease termination fees;

and (viii) a $1.9 million decrease in accretion of below-market leases, net of amortization of above-market leases and tenant inducements.

The $8.1 million increase in base rent for assets owned for the full period was primarily due to contractual rent increases, positive rent spreads for new and renewal leases and option exercises of 12.8% during the six months ended June 30, 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 $3.8 million increase in expense reimbursements was primarily attributable to an increase in reimbursable operating expenses.

The increase associated with revenues deemed uncollectible was primarily attributable to the impact of COVID-19 reserves in 2021.

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

Other revenues

Other revenues remained generally consistent for the three months ended June 30, 2022 as compared to the corresponding period in 2021.

Operating Expenses (in thousands)

Three Months Ended June 30,

2022 2021 $ Change

Operating expenses

Operating costs $ 34,497 $ 28,755 $ 5,742

Real estate taxes 42,304 42,257 47

Depreciation and amortization 85,137 81,212 3,925

Impairment of real estate assets 7 431 (424)

General and administrative 29,702 26,461 3,241

Total operating expenses $ 191,647 $ 179,116 $ 12,531

Operating costs

The increase in operating costs for the three months ended June 30, 2022 of $5.7 million, as compared to the corresponding period in 2021, was due to a $5.4 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 $0.3 million increase in operating costs due to net acquisition and disposition activity.

Real estate taxes

The increase in real estate taxes for the three months ended June 30, 2022 of less than $0.1 million, as compared to the corresponding period in 2021, was due to a $0.8 million increase in real estate taxes due to net acquisition and disposition activity, partially offset by a $0.8 million decrease for assets owned for the full period, primarily due to an increase in favorable adjustments related to prior year assessments.

Depreciation and amortization

The increase in depreciation and amortization for the three months ended June 30, 2022 of $3.9 million, as compared to the corresponding period in 2021, was primarily due to a $5.3 million increase attributable to net acquisition and disposition activity and capital expenditures for assets owned for the full period, partially offset by a $1.4 million decrease in accelerated depreciation and amortization related to tenant move-outs.

Impairment of real estate assets

During the three months ended June 30, 2022, aggregate impairment of less than $0.1 million was recognized on one shopping center, as a result of disposition activity.

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

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

General and administrative

The increase in general and administrative costs for the three months ended June 30, 2022 of $3.2 million, as compared to the corresponding period in 2021, was primarily due to an increase in net compensation costs and conference expenses.

During the three months ended June 30, 2022 and 2021, construction compensation costs of $4.3 million and $4.2 million, respectively, were capitalized to building and improvements and leasing legal costs of $0.9 million and $0.3 million, respectively and leasing commission costs of $2.1 million and $1.6 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Other Income and Expenses (in thousands)

Three Months Ended June 30,

2022 2021 $ Change

Other income (expense)

Dividends and interest $ 35 $ 104 $ (69)

Interest expense (47,886) (49,689) 1,803

Gain on sale of real estate assets 22,988 32,603 (9,615)

Loss on extinguishment of debt, net (221) (32) (189)

Other (1,609) (466) (1,143)

Total other expense $ (26,693) $ (17,480) $ (9,213)

Dividends and interest

Dividends and interest remained generally consistent for the three months ended June 30, 2022 as compared to the corresponding period in 2021.

Interest expense

The decrease in interest expense for the three months ended June 30, 2022 of $1.8 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 three months ended June 30, 2022, four shopping centers and three partial shopping center were disposed of resulting in aggregate gain of $23.0 million.

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

In addition, during the

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

Loss on extinguishment of debt, net

During the three months ended June 30, 2022, we amended and restated our unsecured credit facility agreements (the "Unsecured Credit Facility"), resulting in a $0.2 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 June 30, 2022 of $1.1 million, as compared to the corresponding period in 2021, was primarily due to an increase in transaction costs.

Comparison of the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

Revenues (in thousands)

Six Months Ended June 30,

2022 2021 $ Change

Rental income 604,260 563,394 $ 40,866

Other revenues 500 3,376 (2,876)

Total revenues $ 604,760 $ 566,770 $ 37,990

Rental income

The increase in rental income for the six months ended June 30, 2022 of $40.9 million, as compared to the corresponding period in 2021, was due to a $35.8 million increase for assets owned for the full period and a $5.1 million increase due to net acquisition and disposition activity.

The increase for assets owned for the full period was due to (i) a $15.6 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 $1.2 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.

(ii) a $5.1 million increase in expense reimbursements;

(iii) a $9.6 million increase associated with revenues deemed uncollectible;

(iv) a $5.4 million increase in straight-line rental income, net;

(v) a $2.4 million increase in ancillary and other rental income;

and (vi) a $2.2 million increase in percentage rents;

partially offset by (vii) a $3.2 million decrease in lease termination fees;

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

The $15.6 million increase in base rent for assets owned for the full period was primarily due to contractual rent increases, positive rent spreads for new and renewal leases and option exercises of 12.8% during the six months ended June 30, 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 $5.1 million increase in expense reimbursements was primarily attributable to an increase in reimbursable operating expenses.

The increase associated with revenues deemed uncollectible was primarily attributable to the impact of COVID-19 reserves in 2021.

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

Other revenues

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.

The decrease in other revenues for the six months ended June 30, 2022 of $2.9 million, as compared to the corresponding period in 2021, was primarily due to a decrease in tax increment financing income.

Operating Expenses (in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

2022 2021 $ Change

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Operating costs

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.

The increase in operating costs for the six months ended June 30, 2022 of $9.2 million, as compared to the corresponding period in 2021, was due to an $8.6 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 $0.5 million increase in operating costs due to net acquisition and disposition activity.

Real estate taxes

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.

The decrease in real estate taxes for the six months ended June 30, 2022 of $1.2 million, as compared to the corresponding period in 2021, was due to a $2.3 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 $1.1 million increase in real estate taxes due to net acquisition and disposition activity.

Depreciation and amortization

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.

The increase in depreciation and amortization for the six months ended June 30, 2022 of $4.7 million, as compared to the corresponding period in 2021, was primarily due to a $9.1 million increase attributable to net acquisition and disposition activity and capital expenditures for assets owned for the full period, partially offset by a $4.4 million decrease in accelerated depreciation and amortization related to tenant move-outs.

Impairment of real estate assets

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.

During the six months ended June 30, 2022, aggregate impairment of $4.6 million was recognized on two shopping centers, as a result of disposition activity.

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

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

General and administrative

The increase in general and administrative costs for the three months ended March 31, 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.

The increase in general and administrative costs for the six months ended June 30, 2022 of $6.6 million, as compared to the corresponding period in 2021, was primarily due to an increase in net compensation costs and conference expenses, partially offset by a decrease in litigation and other non-routine legal expenses.

During the six months ended June 30, 2022 and 2021, construction compensation costs of $8.5 million and $7.9 million, respectively, were capitalized to building and improvements and leasing legal costs of $2.5 million and $0.8 million, respectively and leasing commission costs of $3.9 million and $2.8 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

Other Income and Expenses (in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

2022 2021 $ Change

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Dividends and interest

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

Dividends and interest remained generally consistent for the six months ended June 30, 2022 as compared to the corresponding period in 2021.

Interest expense

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.

The decrease in interest expense for the six months ended June 30, 2022 of $3.5 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 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.

During the six months ended June 30, 2022, eight shopping centers and four partial shopping centers were disposed of resulting in aggregate gain of $44.8 million.

In addition, during the six months ended June 30, 2022, we resolved contingencies related to previously disposed assets resulting in net gain of $0.1 million.

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

Loss on extinguishment of debt, net

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

The increase in other 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.

During the six months ended June 30, 2022, we amended and restated our Unsecured Credit Facility, resulting in a $0.2 million loss on extinguishment of debt due to the acceleration of unamortized debt issuance costs.

During the six months ended June 30, 2021, we repaid $350.0 million of an unsecured term loan under our 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 six months ended June 30, 2022 of $2.5 million, as compared to the corresponding period in 2021, was primarily due to favorable tax adjustments and legal settlements in the prior year and an increase in transaction costs.

Liquidity and Capital Resources

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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.

As of June 30, 2022, we had $1.24 billion of available liquidity, including $1.2 billion under our Unsecured Credit Facility and $28.8 million of 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.

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;

Our expected material cash requirements for the twelve months ended June 30, 2023 and thereafter are comprised of (i) contractually obligated expenditures;

(ii) other essential expenditures;

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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):

The following table summarizes our debt maturities (excluding extension options), interest payment obligations, and obligations under non-cancelable operating leases (excluding renewal options), as of June 30, 2022 (dollars in millions):

Contractually Obligated Expenditures Twelve

March 31, 2023 Thereafter

June 30, 2023 Thereafter

Debt maturities (1)

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(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.

(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 June 30, 2022.

“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.

We incur certain 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.

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.

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

The amount of real estate taxes that we incur depends on the assessed values of our properties, 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.

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 revenue or occupancy decrease, and certain costs we incur are generally not reimbursed.

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.

We intend to continue to satisfy these requirements and maintain our REIT status.

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

The following table summarizes our dividend activity for the second and third quarters of 2022:

Quarter 2022 Third

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

Dividend declaration date April 27, 2022 July 27, 2022

Dividend record date July 5, 2022 October 4, 2022

Dividend payable date July 15, 2022 October 17, 2022

Opportunistic Expenditures

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

We also 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.

• The amount of future acquisition 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.

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Brixmor Property Group Inc .

Three Months Ended March 31,

Six Months Ended June 30,

2022 2021 $ Change

Net cash provided by operating activities $ 274,116 $ 274,862 $ (746)

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Net cash used in financing activities (126,526) (138,527) 12,001

Net change in cash, cash equivalents and restricted cash (268,987) 35,299 (304,286)

Cash, cash equivalents and restricted cash at beginning of period 297,743 370,087 (72,344)

Cash, cash equivalents and restricted cash at end of period $ 28,756 $ 405,386 $ (376,630)

Brixmor Operating Partnership LP

Three Months Ended March 31,

Six Months Ended June 30,

2022 2021 $ Change

Net cash provided by operating activities $ 274,116 $ 274,862 $ (746)

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Net cash used in financing activities (111,557) (138,527) 26,970

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.

Net change in cash, cash equivalents and restricted cash (254,018) 35,299 (289,317)

Cash, cash equivalents and restricted cash at beginning of period 282,585 360,073 (77,488)

Cash, cash equivalents and restricted cash at end of period $ 28,567 $ 395,372 $ (366,805)

Operating Activities

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

During the three months ended March 31, 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.

During the six months ended June 30, 2022, our net cash provided by operating activities decreased $0.7 million as compared to the corresponding period in 2021.

The decrease was primarily due to (i) a decrease from net working capital;

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

(iii) a decrease in lease termination fees;

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

partially offset by (v) an increase in same property net operating income;

and (vi) a decrease in cash outflows for interest expense.

Investing Activities

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

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

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

During the six months ended June 30, 2022, our net cash used in investing activities increased $315.5 million as compared to the corresponding period in 2021.

The increase was primarily due to (i) an increase of $342.9 million in acquisitions of real estate assets;

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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.

During the six months ended June 30, 2022 and 2021, we expended $147.0 million and $135.3 million, respectively, on improvements to and investments in real estate assets.

Included in these amounts are insurance proceeds of $2.2 million and $2.8 million, respectively, which were received during the six months ended June 30, 2022 and 2021.

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

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

As of March 31, 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.

As of June 30, 2022, we had 55 in-process anchor space repositioning, redevelopment, and outparcel development projects with an aggregate anticipated cost of $398.2 million, of which $215.3 million had been incurred as of June 30, 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.

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 proceeds from capital markets transactions.

Acquisitions of and proceeds from sales of real estate assets

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

During the three months ended March 31, 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.

During the six months ended June 30, 2022, we acquired seven shopping centers, one outparcel, and one land parcel and paid less than $0.1 million related to previously disposed assets for an aggregate purchase price of $409.7 million, including transaction costs and closing credits.

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

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

During the three months ended March 31, 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.

During the six months ended June 30, 2022, the Company disposed of ten shopping centers and four partial shopping centers for aggregate net proceeds of $140.0 million.

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

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

Financing Activities

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.

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

During the six months ended June 30, 2022, our net cash used in financing activities decreased $12.0 million as compared to the corresponding period in 2021.

The decrease was primarily due to (i) a $47.4 million increase in issuances of common stock;

partially offset by (ii) a $16.1 million increase in distributions to our common stockholders;

(iii) a $9.4 million increase in debt repayments, net of borrowings;

(iv) a $5.1 million increase in

repurchases of common shares in conjunction with the equity award plans;

and (v) a $4.8 million increase in deferred financing and debt extinguishment costs.

Non-GAAP Performance Measures

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

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

Three Months Ended March 31,

Our reconciliation of net income to Nareit FFO for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands, except per share amounts):

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

2022 2021 2022 2021

Net income $ 87,791 $ 90,428 $ 167,297 $ 142,799

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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, 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

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, net, and (vi) income or 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 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, net.

Comparison of the Three and Six Months Ended June 30, 2022 to the Three and Six Months Ended June 30, 2021

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

2022 2021 Change 2022 2021 Change

Number of properties 356 356 — 354 354 —

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

Three Months Ended March 31,

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

2022 2021 2022 2021

Net income $ 87,791 $ 90,428 $ 167,297 $ 142,799

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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;

With respect to our shopping centers, our long-term leases generally 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, which may also offset certain inflationary expense pressures.

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, which may also offset certain inflationary expense pressures.

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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What changed 10-Q

Item 2. Management’s Discussion and Analysis