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Item 7. Management’s Discussion and Analysis

2024-02-12 compared with 2023-02-13 · 82 added, 81 removed, 280 unchanged (37% of the section changed)

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Our key strategies to achieve this objective include proactively managing our Portfolio to drive internal growth, pursuing value-enhancing reinvestment opportunities, and prudently executing on acquisition and disposition activity, while also maintaining a flexible capital structure positioned for growth.

In addition, as we execute on our key strategies, we do so guided by our purpose-driven Corporate Responsibility (“CR”) strategy and our commitment to environmental, social, and governance (“ESG”) issues.

In addition, as we execute on our key strategies, we do so guided by our purpose-driven Corporate Responsibility strategy.

We believe the following set of competitive advantages positions us to successfully execute on our key strategies:

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Acquisition Activity

• During the year ended December 31, 2023, we acquired two land parcels for an aggregate purchase price of $2.3 million, including transaction costs and closing credits.

• During the year ended December 31, 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 year ended December 31, 2021, we acquired six shopping centers, one outparcel, and two land parcels for an aggregate purchase price of $258.8 million, including transaction costs and closing credits.

Disposition Activity

• During the year ended December 31, 2022, we disposed of 16 shopping centers and 10 partial shopping centers for aggregate net proceeds of $277.0 million resulting in aggregate gain of $109.2 million and aggregate impairment of $5.7 million.

In addition, during the year ended December 31, 2022, we resolved contingencies related to previously disposed assets and had land at one shopping center seized through eminent domain for aggregate net proceeds of $2.8 million, resulting in aggregate gain of $2.4 million.

• During the year ended December 31, 2023, we disposed of 11 shopping centers and nine partial shopping centers for aggregate net proceeds of $182.0 million, resulting in aggregate gain of $65.3 million and aggregate impairment of $6.1 million.

In addition, during the year ended December 31, 2023, we disposed of a non-operating asset and resolved contingencies related to a previously disposed asset for aggregate net proceeds of $0.3 million, resulting in aggregate net gain of $0.1 million.

• During the year ended December 31, 2022, we disposed of 16 shopping centers and 10 partial shopping centers for aggregate net proceeds of $277.0 million, resulting in aggregate gain of $109.2 million and aggregate impairment of $5.7 million.

In addition, during the year ended December 31, 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

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Rental income

The increase in rental income for the year ended December 31, 2022 of $71.1 million, compared to the corresponding period in 2021, was due to a $55.9 million increase for assets owned for the full period and a $15.1 million increase in rental income due to net transaction activity.

The increase in rental income for the year ended December 31, 2023 of $26.5 million, compared to the corresponding period in 2022, was due to a $40.3 million increase for assets owned for the full period, partially offset by a $13.8 million decrease due to net transaction activity.

The increase for assets owned for the full period was due to (i) a $32.5 million increase in base rent;

(ii) a $15.0 million increase in expense reimbursements;

(iii) a $7.9 million increase in straight-line rental income, net;

(iv) a $4.5 million increase in ancillary and other rental income;

(v) a $3.1 million increase in percentage rents;

and (vi) a $2.6 million increase associated with revenues deemed uncollectible;

partially offset by (vii) a $5.5 million decrease in lease termination fees;

and (viii) a $2.4 million decrease in accretion of below-market leases, net of amortization of above-market leases and tenant improvements.

The $33.6 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 12.7% during the year ended December 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 COVID-19.

The $12.1 million increase in expense reimbursements was primarily attributable to increases in billed occupancy, reimbursable operating expenses, and real estate taxes.

(iii) a $1.5 million increase in lease termination fees;

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

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

and (vi) a $0.1 million increase in straight-line rental income, net;

partially offset by (vii) a $9.2 million decrease in rental income associated with revenues deemed uncollectible;

and (viii) a $0.2 million decrease in ancillary and other rental income.

The $32.5 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 15.3% during the year ended December 31, 2023 and 12.7% during the year ended December 31, 2022, and an increase in weighted average billed occupancy.

The $15.0 million increase in expense reimbursements was primarily attributable to increases in weighted average billed occupancy, reimbursable operating costs, and real estate taxes.

The $9.2 million decrease in rental income associated with revenues deemed uncollectible was primarily attributable to reduced cash collections associated with amounts previously reserved.

Other revenues

The decrease in other revenues for the year ended December 31, 2022 of $5.3 million, compared to the corresponding period in 2021, was primarily due to a decrease in tax increment financing income.

The increase in other revenues for the year ended December 31, 2023 of $0.5 million, compared to the corresponding period in 2022, was primarily due to an increase in tax increment financing income.

Operating Expenses (in thousands)

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Operating costs

The increase in operating costs for the year ended December 31, 2022 of $9.4 million, compared to the corresponding period in 2021, was due to a $7.7 million increase for assets owned for the full period primarily due to increases in repairs and maintenance, utilities, and insurance costs, in addition to a $1.7 million increase in operating costs due to net transaction activity.

The increase in operating costs for the year ended December 31, 2023 of $5.1 million, compared to the corresponding period in 2022, was due to a $7.2 million increase in operating costs for assets owned for the full period, primarily due to increases in repairs and maintenance, utilities, and insurance, partially offset by a $2.1 million decrease due to net transaction activity.

Real estate taxes

The increase in real estate taxes for the year ended December 31, 2022 of $4.6 million, compared to the corresponding period in 2021, was primarily due to a $2.7 million increase due to net transaction activity and a $1.9 million increase for assets owned for the full period, primarily due to an increase in current year assessments.

The increase in real estate taxes for the year ended December 31, 2023 of $3.1 million, compared to the corresponding period in 2022, was primarily due to a $2.5 million increase in real estate taxes due to net transaction activity, in addition to a $0.6 million increase in real estate taxes for assets owned for the full period, primarily due to an increase in current year assessments, partially offset by an increase in favorable adjustments related to prior year assessments and an increase in real estate tax refunds.

Depreciation and amortization

The increase in depreciation and amortization for the year ended December 31, 2022 of $17.6 million, compared to the corresponding period in 2021, was primarily due to a $14.9 million increase attributable to net transaction activity, and a $2.7 million increase for assets owned for the full period, primarily due to capital expenditures, partially offset by accelerated depreciation and amortization related to tenant move-outs.

The increase in depreciation and amortization for the year ended December 31, 2023 of $17.5 million, compared to the corresponding period in 2022, was primarily due to a $20.5 million increase for assets owned for the full period, due to capital expenditures and an increase in accelerated depreciation and amortization related to tenant move-outs, partially offset by a $3.0 million decrease due to net transaction activity.

Impairment of real estate assets

During the year ended December 31, 2023, aggregate impairment of $17.8 million was recognized on two shopping centers and two partial shopping centers as a result of disposition activity, and one operating property.

During the year ended December 31, 2022, aggregate impairment of $5.7 million was recognized on two shopping centers and one partial shopping center as a result of disposition activity.

During the year ended December 31, 2021, aggregate impairment of $1.9 million was recognized on two shopping centers as a result of disposition activity.

General and administrative

The increase in general and administrative costs for the year ended December 31, 2022 of $11.8 million, compared to the corresponding period in 2021, was primarily due to an increase in net compensation costs, marketing expenses, and travel and entertainment costs, partially offset by decreases in litigation and other non-routine legal, professional, office, and other expenses.

General and administrative costs remained generally consistent for the year ended December 31, 2023 as compared to the corresponding period in 2022.

During the years ended December 31, 2023 and 2022, construction compensation costs of $18.5 million and $17.5 million, respectively, were capitalized to building and improvements and leasing legal costs of $4.6 million and $4.1 million, respectively, and leasing commission costs of $7.9 million and $7.9 million, respectively, were capitalized to deferred charges and prepaid expenses, net.

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Gain on sale of real estate assets 65,439 111,563 (46,124)

Loss on extinguishment of debt, net (221) (28,345) 28,124

Gain (loss) on extinguishment of debt, net 4,356 (221) 4,577

Other (2,446) (3,639) 1,193

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Dividends and interest

Dividends and interest remained generally consistent for the year ended December 31, 2022 compared to the corresponding period in 2021.

The increase in dividends and interest for the year ended December 31, 2023 of $0.4 million, compared to the corresponding period in 2022, was primarily due to an increase in interest income.

Interest expense

The decrease in interest expense for the year ended December 31, 2022 of $2.3 million, compared to the corresponding period in 2021, was primarily due to lower overall debt obligations, partially offset by a higher weighted average interest rate.

The decrease in interest expense for the year ended December 31, 2023 of $1.7 million, compared to the corresponding period in 2022, was primarily due to a lower overall debt obligations, partially offset by a higher weighted average interest rate.

In addition, capitalized interest increased as a result of higher weighted average interest rates along with higher construction in process balances.

Gain on sale of real estate assets

During the year ended December 31, 2022, we disposed of 14 shopping centers and nine partial shopping centers that resulted in aggregate gain of $109.2 million.

In addition, during the year ended December 31, 2022, we resolved contingencies related to previously disposed assets and had land at one shopping center seized through eminent domain resulting in aggregate net proceeds of $2.8 million, resulting in aggregate gain of $2.4 million.

During the year ended December 31, 2021, we disposed of 16 shopping centers and 15 partial shopping centers that resulted in aggregate gain of $73.1 million.

Loss on extinguishment of debt, net

During the year ended December 31, 2022, we amended and restated our unsecured credit facility effective April 28, 2022 (the "Unsecured Credit Facility"), which is comprised of a $1.25 billion revolving credit facility (the "Revolving Facility") and a $300.0 million term loan, in addition to a new $200.0 million delayed draw term loan (together, the "Term Loan Facility"), resulting in a $0.2 million loss on extinguishment of debt due to the acceleration of unamortized debt issuance costs.

During the year ended December 31, 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 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.

The increase in other expense for the year ended December 31, 2022 of $3.6 million, 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 in the current year.

During the year ended December 31, 2023, nine shopping centers and seven partial shopping centers were disposed of resulting in aggregate gain of $65.3 million.

In addition, during the year ended December 31, 2023, we disposed of a non-operating asset and resolved contingencies relating to a previously disposed asset, resulting in aggregate net gain of $0.1 million.

During the year ended December 31, 2022, 14 shopping centers and nine partial shopping centers were disposed of resulting in aggregate gain of $109.2 million.

Gain (loss) on extinguishment of debt, net

During the year ended December 31, 2023, we repurchased $199.6 million of our outstanding 3.650% 2024 Notes pursuant to the Tender Offer, with $300.4 million aggregate principal amount of the 2024 Notes remaining outstanding.

We funded the Tender Offer with proceeds from our $200.0 million delayed draw term loan.

In connection with the Tender Offer, we recognized a $4.4 million gain on extinguishment of debt during the year ended December 31, 2023.

During the year ended December 31, 2022, we amended and restated our Unsecured Credit Facility, which is comprised of the Revolving Facility and the Term Loan Facility, resulting in a $0.2 million loss on extinguishment of debt due to the acceleration of unamortized debt issuance costs.

The decrease in other expense for the year ended December 31, 2023 of $1.2 million, compared to the corresponding period in 2022, was primarily due to a decrease in transaction costs.

Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on February 7, 2022, for a discussion of the comparison of the year ended December 31, 2021 to the year ended December 31, 2020.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the year ended December 31, 2022, filed with the SEC on February 13, 2023, for a discussion of the comparison of the year ended December 31, 2022 to the year ended December 31, 2021.

Liquidity and Capital Resources

We anticipate that our cash flows from the sources listed below will provide adequate capital for the next 12 months and beyond for all anticipated uses, including all scheduled payments on our outstanding debt, current and anticipated tenant and other capital improvements, stockholder distributions, including those required to maintain our qualification as a REIT, and other obligations associated with conducting our business.

We anticipate that our cash flows from the sources listed below will provide adequate capital for the next 12 months and beyond for all anticipated uses, including all scheduled payments on our outstanding debt, current and anticipated tenant and other capital improvements, stockholder distributions to maintain our qualification as a REIT, and other obligations associated with conducting our business.

Our primary expected sources and uses of capital are as follows:

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• leasing capital expenditures;

• value-enhancing reinvestment capital expenditures;

• dividend/distribution payments;

• value-enhancing reinvestment capital expenditures;

• acquisitions;

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

As of December 31, 2022, we had $1.35 billion of available liquidity, including $1.32 billion under our Unsecured Credit Facility and $21.3 million of cash and cash equivalents and restricted cash.

As of December 31, 2023, we had $1.25 billion of available liquidity, including $1.23 billion under our Revolving Facility and $18.9 million of cash and cash equivalents and restricted cash.

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

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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 December 31, 2022.

See Item 7 A.

“Quantita tive and Qua litative Dis closures abo ut Market Ri sk” for a further discussion of these and other factors that could impact interest payments

(2) Scheduled interest payments for variable rate loans are presented using rates (including the impact of interest rate swaps), as of December 31, 2023.

“Quantitative and Qualitative Disclosures about Market Risk” for a further discussion of these and other factors that could impact interest payments

Other Essential Expenditures

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We carry comprehensive insurance to protect our Portfolio against various losses.

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

The amount of insurance expense that we incur depends on the assessed values of our properties, prevailing market rates, and the size and composition of our Portfolio.

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

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

We incur corporate level expenses such as employee compensation costs, professional fees, corporate office rents, and other platform expenses.

The amount of corporate level expenses that we incur depends on the size and composition of our Portfolio and platform and prevailing market wages and rates.

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, costs that we incur generally do not decrease if revenue or occupancy decreases, and certain costs that we incur are not typically reimbursed.

However, costs that we incur generally do not decrease if revenue or occupancy decrease, and certain costs that we incur, such as corporate level expenses, are not typically 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.

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Dividend declared per common share $ 0.2725 $ 0.2725

Dividend declaration date October 25, 2022 February 1, 2023

Dividend declaration date October 24, 2023 January 31, 2024

Dividend record date January 3, 2024 April 2, 2024

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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 are underway.

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

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.

The amount of value-enhancing reinvestment capital expenditures that we incur depends 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 are underway.

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

The amount of future acquisition expenditures 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.

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

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

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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 year ended December 31, 2022, our net cash provided by operating activities increased $14.1 million compared to the corresponding period in 2021.

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

During the year ended December 31, 2023, our net cash provided by operating activities increased $22.4 million, as compared to the corresponding period in 2022.

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

(ii) an increase in net operating income due to net transaction activity;

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

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

(v) a decrease in other non-same property net operating income;

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

and (vii) a decrease in lease termination fees.

(ii) an increase from net working capital;

(iii) an increase in lease termination fees;

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

partially offset by (v) a decrease in net operating income due to net transaction activity and other non-same property net operating income;

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

Investing Activities

Net cash used in investing activities primarily 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 activity.

During the year ended December 31, 2022, our net cash used in investing activities increased $131.4 million compared to the corresponding period in 2021.

The increase was primarily due to (i) an increase of $150.9 million in acquisitions of real estate assets;

(ii) an increase of $21.7 million in improvements to and investments in real estate assets;

and (iii) an increase of $1.2 million in purchases of marketable securities, net of proceeds from sales;

partially offset by (iv) an increase of $42.4 million in net proceeds from sales of real estate assets.

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 activity.

During the year ended December 31, 2023, our net cash used in investing activities decreased $299.4 million, as compared to the corresponding period in 2022.

The decrease was primarily due to (i) a decrease of $407.4 million in acquisitions of real estate assets and (ii) a decrease of $4.3 million in purchases of marketable securities, net of sales;

partially offset by (iii) a decrease of $97.5 million in net proceeds from sales of real estate assets;

and (iv) an increase of $14.8 million in improvements to and investments in real estate assets.

Improvements to and investments in real estate assets

During the years ended December 31, 2023 and 2022, we expended $345.2 million and $330.4 million, respectively, on improvements to and investments in real estate assets.

These amounts are net of insurance proceeds of $7.7 million and $3.3 million, respectively, which were received during the year ended December 31, 2022 and 2021.

Included in these amounts are insurance proceeds of $0.7 million and $7.7 million, respectively, which were received during the year ended December 31, 2023 and 2022.

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, tenant allowances, and external leasing commissions.

Leasing related capital expenditures represent tenant specific costs incurred to lease or renew 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.

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As of December 31, 2023, we had 45 in-process anchor space repositioning, redevelopment and outparcel development projects with an aggregate anticipated cost of $429.2 million, of which $197.2 million had been incurred as of December 31, 2023.

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

In addition, we have identified a pipeline of future redevelopment projects aggregating approximately $900 million of potential capital investment, which we expect to execute over the coming 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 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.

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

During the year ended December 31, 2023, we acquired two land parcels for an aggregate purchase price of $2.3 million, including transaction costs and closing credits.

During the year ended December 31, 2022, we acquired seven shopping centers, one outparcel, and one land parcel for an aggregate purchase price of $409.7 million, including transaction costs and closing credits.

During the year ended December 31, 2021, we acquired six shopping centers, one outparcel and two land parcels for an aggregate purchase price of $258.8 million, including transaction costs and closing credits.

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

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 year ended December 31, 2023, we disposed of 11 shopping centers and nine partial shopping centers for aggregate net proceeds of $182.0 million.

In addition, during the year ended December 31, 2023, we received aggregate net proceeds of $0.3 million related to a non-operating asset.

During the year ended December 31, 2022, we disposed of 16 shopping centers and 10 partial shopping centers for aggregate net proceeds of $277.0 million.

During the year ended December 31, 2021, we disposed of 17 shopping centers and 15 partial shopping centers for aggregate net proceeds of $237.4 million.

In addition, during the year ended December 31, 2021, we received aggregate net proceeds of less than $0.1 million from previously disposed assets.

Financing Activities

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 year ended December 31, 2022, our net cash used in financing activities increased $86.8 million compared to the corresponding period in 2021.

The increase was primarily due to (i) a $122.7 million increase in debt repayments, net of borrowings;

During the year ended December 31, 2023, our net cash used in financing activities increased $47.7 million, as compared to the corresponding period in 2022.

The increase was primarily due to (i) a $53.1 million decrease in issuances of common stock;

(ii) a $25.7 million increase in distributions to our common stockholders;

and (iii) a $0.7 million increase in repurchases of common stock;

partially offset by (iv) a $48.0 million increase in issuances of common stock;

partially offset by (iv) a $24.2 million decrease in debt borrowings, net of repayments;

and (v) a $7.6 million decrease in deferred financing and debt extinguishment costs.

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

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

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

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

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Same property NOI excludes (i) lease termination fees, (ii) straight-line rental income, net, (iii) accretion of below-market leases, net of amortization of above-market leases and tenant inducements, (iv) straight-line ground rent expense, net, (v) income or expense associated with our captive insurance company, (vi) depreciation and amortization, (vii) impairment of real estate assets, (viii) general and administrative expense, and (ix) other income and expense (including interest expense and gain on sale of real estate assets).

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 lease termination fees, straight-line rental income, net, accretion of below-market leases, net of amortization of above-market leases and tenant inducements, straight-line ground rent expense, net, income or expense associated with our captive insurance company, depreciation and amortization, impairment of real estate assets, general and administrative expense, and other income and expense (including interest expense and gain on sale of real estate assets).

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.

Considering the nature of our business as a real estate owner and operator, we believe that 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 lease termination fees, straight-line rental income, net, accretion of below-market leases, net of amortization of above-market leases and tenant inducements, straight-line ground rent expense, net, income or expense associated with our captive insurance company, depreciation and amortization, impairment of real estate assets, general and administrative expense, and other income and expense (including interest expense and gain on sale of real estate assets).

We believe that same property NOI is also useful to investors because it further eliminates disparities in NOI by only including NOI of properties owned for the entirety of both periods presented and excluding properties under development and completed new development properties that have been stabilized for less than one year and

therefore provides a more consistent metric for comparing the operating performance of our real estate between periods.

Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022

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Rental revenue is recognized on a straight-line basis over the terms of the related leases.

The cumulative difference between rental revenue recognized on our Consolidated Statements of Operations and contractual payment terms is recognized as deferred rent and included in Receivables, net on our Consolidated Balance Sheets.

The cumulative difference between rental revenue recognized on our Consolidated Statements of Operations and contractual payment terms is recognized as deferred rent and included in Receivables,

net on our Consolidated Balance Sheets.

We commence recognizing rental revenue based on the date we make the underlying asset available for use by the tenant.

Leases also typically provide for the reimbursement 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, by the lessee and are recognized in the period the applicable expenditures are incurred and/or contractually required to be reimbursed.

Leases also typically provide for the reimbursement 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, by the lessee and are recognized in the period the applicable expenditures are incurred and/or contractually required to be reimbursed.

We periodically evaluate the collectability of our receivables related to rental revenue, straight-line rent, expense reimbursements, and those attributable to other revenue generating activities.

We analyze individual tenant receivables and consider tenant credit-worthiness, the length of time a receivable has been outstanding, and current economic trends when evaluating collectability.

In 2022 and 2021, our evaluation included consideration of the impact of COVID-19 on the collectability of our receivables.

This assessment involved significant judgment regarding the severity and duration of the disruption caused by COVID-19, as well as judgment regarding which industries and tenants would be most significantly impacted.

Any receivables that are deemed to be uncollectible are recognized as a reduction to Rental income on our Consolidated Statements of Operations.

20 unchanged sentences

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

however, inflation significantly increased over the last two years and may continue to be elevated or increase further.

however, inflation has significantly increased over the last three years and may continue to be elevated or increase further.

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 certain non-reimbursable property operating expenses, including expenses incurred on vacant units.

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.

1 unchanged sentence

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-K

Item 7. Management’s Discussion and Analysis