What changed in this filing

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Item 1A. Risk Factors

2021-02-11 compared with 2020-02-10 · 116 added, 91 removed, 249 unchanged (45% of the section changed)

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Some of our leases provide for the payment, in addition to base rent, of additional rent above the base amount according to a specified percentage of the gross sales generated by the tenants and generally provide for reimbursement of real estate taxes and expenses of operating the property.

Economic, legal, and/or competitive conditions may impact the success of our tenants’ retail operations and therefore the amount of rent and expense reimbursements we receive from our tenants.

Economic, legal, and/or competitive conditions, as well as COVID-19, may impact the success of our tenants’ retail operations and therefore the amount of rent and expense reimbursements we receive from our tenants.

Any reduction in our tenants' abilities to pay base rent, percentage rent, or other charges on a timely basis, including the closing of stores prior to the end of the lease term or the filing by any of our tenants for bankruptcy protection, will adversely affect our financial condition and results of operations.

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The closing of one or more anchor stores at a property could adversely affect that property and result in lease terminations by, or reductions in rent from, other tenants whose leases may permit termination or rent reduction in those circumstances or whose own operations may suffer as a result.

We continue to see higher levels of anchor turnover and closings in some markets, which has caused an oversupply of larger retail spaces.

Over the past several years, we have seen higher levels of anchor turnover and closings in some markets, which has caused an oversupply of larger retail spaces.

Therefore, tenant demand for certain of our anchor spaces may decrease and as a result, we may see an increase in vacancy and/or a decrease in rents for those spaces that could have a negative impact to our net income.

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• industry slowdowns;

• increased business restrictions due to health crises

• relocations of businesses;

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If additional phases of any of our existing projects or if any new projects are not successful, it may adversely affect our financial condition and results of operations.

During 2019 , construction was substantially completed on the development of Phase II at both Assembly Row and Pike & Rose, with portions of both projects opening during 2018 and 2019.

Additionally, we continued construction on Phase III at both projects, and our on-going redevelopment efforts at Santana Row.

A further discussion of these projects, expected costs, and current status can be found in Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations in the "Outlook" subsection.

In addition to the risks associated with real estate investment in general, as described elsewhere and the specific risks above, the risks associated with our remaining development activities include:

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• higher than estimated construction or operating costs, including labor and material costs;

possible delay in completion of a project because of a number of factors, including weather, labor disruptions, construction delays or delays in receipt of zoning or other regulatory approvals, acts of terror or other acts of violence, or acts of God (such as fires, earthquakes or floods).

• possible delay in completion of a project because of a number of factors, including COVID-19, weather, labor disruptions, construction delays or delays in receipt of zoning or other regulatory approvals, acts of terror or other acts of violence, or acts of God (such as fires, earthquakes or floods).

Redevelopments and acquisitions may fail to perform as expected.

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As of December 31, 2020, we held 15 predominantly retail real estate projects jointly with other persons in addition to properties owned in a “downREIT” structure.

Additionally, we own an interest in the joint ventures that own the hotel components of Pike & Rose and Assembly Row.

Additionally, as of December 31, 2020, we owned an interest in the joint ventures that own the hotel components of Pike & Rose and Assembly Row.

On January 4, 2021, we acquired our partner's 20% interest in our joint venture arrangement related to the Pike & Rose hotel.

We may make additional joint investments in the future.

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As a result, we may be unable to renew or duplicate our current insurance coverage in adequate amounts or at reasonable prices.

In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts and toxic mold, or, if offered, the expense of obtaining these types of insurance may not be justified.

In addition, insurance companies may no longer offer coverage against certain types of losses, such as losses due to terrorist acts, pandemics, and toxic mold, or, if offered, the expense of obtaining these types of insurance may not be justified.

We therefore may cease to have insurance coverage against certain types of losses and/or there may be decreases in the limits of insurance available.

If an uninsured loss or a loss in excess of our insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as well as the anticipated future revenue from the property, but still remain obligated for any mortgage debt or other financial obligations related to the property.

obligations related to the property.

We cannot guarantee that material losses in excess of insurance proceeds will not occur in the future.

any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property.

If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay revenue and result in large expenses to repair or rebuild the property.

Also, due to inflation, changes in codes and ordinances, environmental considerations and other factors, it may not be feasible to use insurance proceeds to replace a building after it has been damaged or destroyed.

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Events such as these could adversely affect our results of operations and our ability to meet our obligations, including distributions to our shareholders.

Natural disasters and climate change could have an adverse impact on our cash flow and operating results.

Natural disasters, climate change and health crises, including the COVID-19 pandemic, could have an adverse impact on our cash flow and operating results.

Climate change may add to the unpredictability and frequency of natural disasters and severe weather conditions and create additional uncertainty as to future trends and exposures.

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If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from these events, our earnings, liquidity or capital resources could be adversely affected.

In addition, our business is subject to risks related to the effects of public health crises, epidemics and pandemics, including the

COVID-19 pandemic.

Such events could inhibit global, national and local economic activity;

adversely affect trading activity

in securities markets, which could negatively impact the trading prices of our common shares and debt securities and our ability

to access the securities markets as a source of liquidity;

adversely affect our tenants’ financial condition by limiting foot traffic

and staffing at their businesses, which could affect their ability to pay rent and willingness to make new leasing commitments;

reduce our cash flow, which could impact our ability to pay dividends at the current rate and in the current format or at all or to service our debt;

temporarily or permanently reduce the demand for retail or office space;

interfere with our business operations by requiring our personnel to work remotely;

increase the frequency of cyber-attacks;

disrupt supply chains that could be important in our development and redevelopment activities;

interfere with potential purchases and sales of properties;

impact our ability to pay dividends at the current rate and in the current format or at all;

and have other direct and indirect effects that are difficult to predict.

Such risks depend upon the nature and severity of the public health concern, as well as the extent and duration of government-mandated orders and personal decisions to limit travel, economic activity and personal interaction, none of which can be predicted with confidence.

In particular, we cannot predict the duration of stay-at-home and other government orders instituted in response to the COVID-19 pandemic, which vary by jurisdiction, or the pandemics' short and long term economic effects, each of which could have a material adverse effect on our business.

An increased focus on metrics and reporting related to corporate responsibility, specifically related to environmental, social and governance ("ESG") factors, may impose additional costs and expose us to new risks.

Investors and other stakeholders have become more focused on understanding how companies address a variety of ESG factors.

Many of those investors and shareholders look to ESG rating systems that have been developed by third party groups to allow comparisons between companies on ESG factors as they evaluate investment decisions as well as to company disclosures.

Although we participate in many of these ratings systems and generally score relatively well in those in which we do participate, we do not participate in, and would not necessarily score well in, all of the available ratings systems.

Further, the criteria used in these ratings systems change frequently, and we cannot guaranty that we will be able to score well as criteria change.

We supplement our participation in ratings systems with corporate disclosures of our ESG activities but many investors and stakeholders may look for specific disclosures that we do not provide.

Failure to participate in certain of the third party ratings systems, failure to score well in those ratings systems or failure to provide certain ESG disclosures could result in reputational harm when investors or others compare us against similar companies in our industry and could cause certain investors to be unwilling to invest in our stock which could adversely impact our ability to raise capital.

For more information about the Trust's Corporate Responsibility initiatives, see Item 7.

"Management's Discussion and Analysis of Financial Condition and Results of Operations - Corporate Responsibility."

Risk Factors Related to our Funding Strategies and Capital Structure

The amount of debt we have and the restrictions imposed by that debt could adversely affect our business and financial condition.

As of December 31, 2019 , all of our $3.4 billion of debt outstanding has a fixed rate or is fixed via interest rate swap agreements.

As of December 31, 2020, we had approximately $4.3 billion of debt outstanding.

Of that outstanding debt, approximately $486.0 million was secured by all or a portion of 11 of our real estate projects.

As of December 31, 2020, approximately 90.7% of our debt is fixed rate or is fixed via interest rate swap agreements, which includes all of our property secured debt and our unsecured senior notes.

Our organizational documents do not limit the level or amount of debt that we may incur.

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We are obligated to comply with financial and other covenants pursuant to our debt obligations that could restrict our operating activities, and the failure to comply with such covenants could result in defaults that accelerate payment under our debt agreements.

Our revolving credit facility and certain series of notes include financial covenants that may limit our operating activities in the future.

Our revolving credit facility, unsecured term loan, and certain series of notes include financial covenants that may limit our operating activities in the future.

We are also required to comply with additional covenants that include, among other things, provisions:

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Rising interest rates could adversely affect our cash flow and the market price of our outstanding debt and preferred shares.

Of our $3.4 billion of debt outstanding as of December 31, 2019 , approximately $56.5 million bears interest at a variable rate of LIBOR plus 195.0 basis points and is effectively fixed through two interest rate swap agreements.

Of our $4.3 billion of debt outstanding as of December 31, 2020, approximately $456.5 million bears interest at a variable rate, of which, $400.0 million is our unsecured term loan that bears interest at a variable rate of LIBOR plus 135 basis points and $56.5 million in mortgages payable that bear interest at a variable rate of LIBOR plus 195 basis points and are effectively fixed through two interest rate swap agreements.

We also have a $1.0 billion revolving credit facility, on which no balance was outstanding at December 31, 2020, that bears interest at LIBOR plus 77.5 basis points.

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On July 27, 2017, the United Kingdom's Financial Conduct Authority announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

It is unclear if LIBOR will cease to exist at that time, if a new method of calculating LIBOR will be established, or if an alternative reference rate will be established.

The Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the

Secured Overnight Financing Rate ("SOFR") as its preferred alternative to U.S.

On November 30, 2020, the ICE Benchmark Administration Limited announced its plan to extend the date that most U.S.

LIBOR values would cease being computed and published from December 31, 2021 to June 30, 2023.

The Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate ("SOFR") as its preferred alternative to U.S.

dollar LIBOR in derivatives and other financial contracts.

We are not able to predict when LIBOR will cease to be available or if SOFR, or another alternative rate reference rate, attains market traction as a LIBOR replacement.

If LIBOR ceases to exist, we will need to agree upon a benchmark replacement index with the bank, and as such the interest rate on our revolving credit facility and certain mortgage payables may change.

At this time, we can not predict the effect of any discontinuance, modification or other reforms to LIBOR, or if SOFR, or another alternative rate reference rate, attains market traction as a LIBOR replacement.

As LIBOR phases out and ceases to exist, we will need to agree upon a benchmark replacement index with the bank, and as such the interest rate on our revolving credit facility and certain mortgage payables may change.

The new rate may not be as favorable as those in effect prior to any LIBOR phase-out.

Furthermore, the transition process may result in delays in funding, higher interest expense, additional expenses, and increased volatility in markets for instruments that currently rely on LIBOR, all of which could negatively impact our cash flow.

We may be required to incur additional debt to qualify as a REIT.

As a REIT, we must generally make annual distributions to shareholders of at least 90% of our taxable income.

We are subject to income tax on amounts of undistributed taxable income and net capital gain.

In addition, we would be subject to a 4% excise tax if we fail to distribute sufficient income to meet a minimum distribution test based on our ordinary income, capital gain and aggregate undistributed income from prior years.

We intend to make distributions to shareholders to comply with the Code’s distribution provisions and to avoid federal income and excise tax.

We may need to borrow funds to meet our distribution requirements because:

our income may not be matched by our related expenses at the time the income is considered received for purposes of determining taxable income;

non-deductible capital expenditures, creation of reserves, or debt service requirements may reduce available cash but not taxable income.

In these circumstances, we might have to borrow funds on terms we might otherwise find unfavorable and we may have to borrow funds even if our management believes the market conditions make borrowing financially unattractive.

Current tax law also allows us to pay a portion of our distributions in shares instead of cash.

Risk Factors Related to our Company and the Market Price of our Securities

The market value of our debt and equity securities is subject to various factors that may cause significant fluctuations or volatility.

As with other publicly traded securities, the market price of our debt and equity securities depends on various factors, which may change from time to time and/or may be unrelated to our financial condition, operating performance or prospects that may cause significant fluctuations or volatility in such prices.

These factors include, among others:

general economic and financial market conditions;

level and trend of interest rates;

our ability to access the capital markets to raise additional capital;

the issuance of additional equity or debt securities;

changes in our funds from operations (“FFO”) or earnings estimates;

changes in our credit or analyst ratings;

our financial condition and performance;

market perception of our business compared to other REITs;

market perception of REITs, in general, compared to other investment alternatives.

We cannot assure you we will continue to pay dividends at historical rates.

Our ability to continue to pay dividends on our common shares at historical rates or to increase our common share dividend rate, and our ability to pay preferred share dividends and service our debt securities, will depend on a number of factors, including, among others, the following:

our financial condition and results of future operations;

the performance by our tenants under their contractual lease agreements;

the terms of our loan covenants;

our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates.

If we do not maintain or increase the dividend on our common shares, it could have an adverse effect on the market price of our common shares and other securities.

Any preferred shares we may offer in the future may have a fixed dividend rate that would not increase with any increases in the dividend rate of our common shares.

Conversely, payment of dividends on our common shares may be subject to payment in full of the dividends on any preferred shares and payment of interest on any debt securities we may offer.

Loss of our key management could adversely affect performance and the value of our common shares.

We are dependent on the efforts of our key management.

Although we believe qualified replacements could be found for any departures of key executives, the loss of their services could adversely affect our performance and the value of our common shares.

We may adjust our business policies without shareholder approval.

We may modify our approach to investment, financing, borrowing, and other operating strategies without shareholder approval.

A change in the approach to any of these items could adversely affect our financial condition and results of operations, and the market price of our securities.

Our current business plan focuses on our investment in high quality retail based properties that are typically neighborhood and community shopping centers or mixed-use properties, principally through redevelopments and acquisitions.

If this business plan is not successful, it could have a material adverse effect on our financial condition and results of operations.

Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this Annual Report on Form 10-K.

Except as may be required by law, we make no promise to update any of the forward-looking statements as a result of new information, future events or otherwise.

You should carefully review the above risks and the risk factors.

We face risks relating to cyber attacks that could cause loss of confidential information and other business disruptions.

We rely extensively on information technology systems to process transactions and manage our business, and our business is at risk from and may be impacted by cyber attacks.

These could include attempts to gain unauthorized access to our data and computer systems as well as attacks on third party's information technology systems that we rely on to provide important information technology services relating to key business functions, such as payroll.

Attacks can be both individual and/or highly organized attempts by very sophisticated hacking organizations.

We employ a number of measures to prevent, detect and mitigate these threats, which include password encryption, frequent password change events, firewall detection systems, anti-virus software in-place, frequent backups, a redundant data system for core applications and penetration testing;

however, there is no guarantee such efforts will be successful in preventing a cyber attack.

A cyber attack could compromise the confidential information of our employees, tenants and vendors.

A successful attack could disrupt and otherwise adversely affect our business operations.

Risk Factors Related to our REIT Status and Other Laws and Regulations

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All real property and the operations conducted on real property are subject to federal, state and local laws, ordinances and regulations relating to hazardous materials, environmental protection and human health and safety.

Under various federal, state and local laws, ordinances and regulations, we and our tenants may be required to investigate and clean up certain hazardous or toxic substances released on or in properties we own or operate, and also may be required to pay other costs relating to hazardous or toxic substances.

This liability may be imposed without regard to whether we or our tenants knew about the release of these types of substances or were responsible for their release.

The presence of contamination or the failure to properly remediate contamination at any of our properties may adversely affect our ability to sell or lease those properties or to borrow funds by using those properties as collateral.

Under various federal, state and local laws, ordinances and regulations, we and our tenants may be responsible for the disposal or treatment of hazardous or toxic substances released on or in properties we own or operate, as well as certain other potential costs relating to hazardous or toxic substances (including governmental fines and injuries to persons and property).

This liability may be imposed whether or not we knew about, or were responsible for, the presence of hazardous or toxic substances.

Further, the presence of contamination on our properties or the failure to properly remediate contamination at any of our properties may adversely affect

our ability to sell or lease those properties or to borrow funds by using those properties as collateral.

The costs or liabilities could exceed the value of the affected real estate.

We are not aware of any environmental condition with respect to any of our properties that management believes would have a material adverse effect on our business, assets or results of operations taken as a whole.

The uses of any of our properties prior to our acquisition of the property and the building materials used at the property are among the property-specific factors that will affect how the environmental laws are applied to our properties.

If we are subject to any material environmental liabilities, the liabilities could adversely affect our results of operations and our ability to meet our obligations.

We cannot predict what other environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or what environmental conditions may be found to exist on the properties in the future.

Compliance with existing and new laws and regulations may require us or our tenants to spend funds to remedy environmental problems.

Our tenants, like many of their competitors, have incurred, and will continue to incur, capital and operating expenditures and other costs associated with complying with these laws and regulations, which will adversely affect their potential profitability.

Generally, our tenants must comply with environmental laws and meet remediation requirements.

Our leases typically impose obligations on our tenants to indemnify us from any compliance costs we may incur as a result of the environmental conditions on the property caused by the tenant.

If a lease does not require compliance or if a tenant fails to or cannot comply, we could be

forced to pay these costs.

If not addressed, environmental conditions could impair our ability to sell or re-lease the affected properties in the future or result in lower sales prices or rent payments.

In addition, changes in government legislation and regulation on climate change could result in increased capital expenditures to improve the energy efficiency of our existing properties and could also require us to spend more on our development or redevelopment projects without a corresponding increase in revenues, which may adversely affect our financial condition, results of operations and cash flows.

The Americans with Disabilities Act of 1990 could require us to take remedial steps with respect to existing or newly acquired properties.

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For example, not more than 50% in value of our outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code) during the last half of any taxable year.

To protect our REIT status, our declaration of trust prohibits any one shareholder from owning (actually or constructively) more than 9.8% in value of the outstanding common shares or of any class or series of outstanding preferred shares.

To protect our REIT status, our declaration of trust prohibits any one shareholder from

owning (actually or constructively) more than 9.8% in value of the outstanding common shares or of any class or series of outstanding preferred shares.

The constructive ownership rules are complex.

Shares of our capital stock owned, actually or constructively, by a group of related individuals and/or entities may be treated as constructively owned by one of those individuals or entities.

As a result, the acquisition of less than 9.8% in value of the outstanding common shares and/or a class or series of preferred shares (or the acquisition of an interest in an entity that owns common shares or preferred shares) by an individual or entity could cause that individual or entity (or another) to own constructively more than 9.8% in value of the

outstanding capital stock.

If that happened, either the transfer of ownership would be void or the shares would be transferred to a charitable trust and then sold to someone who can own those shares without violating the 9.8% ownership limit.

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The 9.8% ownership restrictions may delay, defer or prevent a transaction or a change of our control that might involve a premium price for the common shares or otherwise be in the shareholders’ best interest.

federal tax reform legislation now and in the future could affect REITs, both positively and negatively, in ways that are difficult to anticipate.

The Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”), signed into law on December 22, 2017, represents sweeping tax reform legislation that makes significant changes to corporate and individual tax rates and the calculation of taxes.

While we currently do not expect the 2017 Tax Act will have a significant direct impact on us, it may impact us indirectly as our tenants and the jurisdictions in which we do business as well as the overall investment thesis for REITs may be impacted both positively and negatively in ways that are difficult to predict.

Additionally, the overall impact of the 2017 Tax Act depends on future interpretations and regulations that may be issued by federal tax authorities, as well as changes in state and local taxation in response to the 2017 Tax Act, and it is possible that such future interpretations, regulations and other changes could adversely impact us.

Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could have a material adverse effect on us and our investors.

The rules dealing with U.S.

federal income taxation are constantly under review by persons involved in the legislative process, and by the Internal Revenue Service (“IRS”) and the U.S.

Department of the Treasury (“Treasury”).

Changes to the tax laws or interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materially and adversely affect us and our investors.

In particular, additional technical corrections legislation and implementing regulations may be enacted or promulgated in response to the Tax Cuts and Job Acts of 2017 (the "Act"), and substantive legislative changes to the Act are also possible.

In response to the COVID-19 pandemic, multiple pieces of legislation have already been enacted, including the 2020 CARES Act, and there have also been significant issuances of regulatory and other guidance, and further legislative enactments and other IRS or Treasury action is possible.

No prediction can be made as to the likelihood of passage of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders.

Accordingly, such new legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify to be taxed as a REIT and/or the U.S.

federal income tax consequences to us and our investors of such qualification.

Certain tax and anti-takeover provisions of our declaration of trust and bylaws may inhibit a change of our control.

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This bylaw provision may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares, by a vote of a majority of the shareholders entitled to vote, and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.

We may be required to incur additional debt to qualify as a REIT.

As a REIT, we must generally make annual distributions to shareholders of at least 90% of our taxable income.

We are subject to income tax on amounts of undistributed taxable income and net capital gain.

We intend to make distributions to shareholders to comply with the Code’s distribution provisions and to avoid federal income and excise tax.

We may need to borrow funds to meet our distribution requirements because:

• our income may not be matched by our related expenses at the time the income is considered received for purposes of determining taxable income;

• non-deductible capital expenditures, creation of reserves, or debt service requirements may reduce available cash but not taxable income.

Current tax law also allows us to pay a portion of our distributions in shares instead of cash.

General Risk Factors

The market value of our debt and equity securities is subject to various factors that may cause significant fluctuations or volatility.

These factors include, among others:

• general economic and financial market conditions;

• level and trend of interest rates;

• our ability to access the capital markets to raise additional capital;

• the issuance of additional equity or debt securities;

• changes in our funds from operations (“FFO”) or earnings estimates;

• changes in our credit or analyst ratings;

• our financial condition and performance;

• market perception of our business compared to other REITs;

• market perception of REITs, in general, compared to other investment alternatives.

We cannot assure you we will continue to pay dividends in the current composition or at historical rates.

• our financial condition and results of future operations;

• the performance by our tenants under their contractual lease agreements;

• the terms of our loan covenants;

• our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates.

If we do not maintain or increase, or if we change the composition of the dividend on our common shares, it could have an adverse effect on the market price of our common shares and other securities.