What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-02-11 compared with 2020-02-10 · 536 added, 487 removed, 971 unchanged (51% of the section changed)

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Management's Evaluation of Disclosure Controls and Procedures

The Trust maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Trust’s

management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

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333-160009) and incorporated herein by reference)

Amended and Restated Bylaws of Federal Realty Investment Trust dated February 12, 2003, as amended October 29, 2003, May 5, 2004, February 17, 2006, May 6, 2009, November 2, 2016, and February 5, 2019 (previously filed as Exhibit 3.2 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (File No.

3.2 Amended and Restated Bylaws of Federal Realty Investment Trust dated February 12, 2003, as amended October 29, 2003, May 5, 2004, February 17, 2006, May 6, 2009, November 2, 2016, February 5, 2019, and April 2, 2020 (previously filed as Exhibit 3.2 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (File No.

1-07533) and incorporated herein by reference)

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3.25% Notes due 2027;

3.20% Notes due 2029;

3.50% Notes due 2030;

1.25% Notes due 2026 (previously filed as Exhibit 4(a) to the Trust’s Registration Statement on Form S-3 (File No.

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1-07533), filed on September 29, 2017 and incorporated herein by reference)

Description of Securities (filed herewith)

4.8 Description of Securities (previously filed as Exhibit 4.8 to the Trust's Annual Report on Form 10-K for the year ended December 31, 2019 (File No.

001-07533 and incorporated here by reference)

10.1 * Severance Agreement between the Trust and Donald C.

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Becker dated February 16, 2005 (previously filed as Exhibit 10.27 to the 2004 Form 10-K and incorporated herein by reference)

Form of Restricted Share Award Agreement for awards made under the Trust’s 2003 Long-Term Incentive Award Program for shares issued out of 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.28 to the 2004 Form 10-K and incorporated herein by reference)

10.8 Form of Restricted Share Award Agreement for long term vesting and retention awards for shares issued out of the 2010 Plan (previously filed as Exhibit 10.35 to the Trust's Annual Report on Form 10-K for the year ended December 31, 2010 (File No.

1-07533) (the "2010 Form 10-K") and incorporated herein by reference)

Form of Option Award Agreement for awards made under the Trust’s 2003 Long-Term Incentive Award Program for shares issued out of the 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.32 to the 2005 Form 10-K and incorporated herein by reference)

Amended and Restated 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.34 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No.

1-07533) and incorporated herein by reference)

10.9 * Amendment to Severance Agreement between the Trust and Donald C.

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1-07533) and incorporated herein by reference)

Form of Restricted Share Award Agreement, dated as of February 10, 2011, between the Trust and Dawn M.

Becker (previously filed as Exhibit 10.41 to the Trust’s 2010 Form 10-K (File No.

1-07533) and incorporated herein by reference)

10.20 Credit Agreement dated as of July 7, 2011, by and among the Trust, as Borrower, the financial institutions party thereto and their permitted assignees under Section 12.6., as Lenders, Wells Fargo Bank, National Association, as Administrative Agent, PNC Bank, National Association, as Syndication Agent, Wells Fargo Securities, LLC, as a Lead Arranger and Book Manager, and PNC Capital Markets LLC, as a Lead Arranger and Book Manager (previously filed as Exhibit 10.1 to the Trust’s Current Report on Form 8-K (File No.

1-07533), filed on July 11, 2011 and incorporated herein by reference)

Term Loan Agreement dated as of November 22, 2011, by and among the Trust, as Borrower, the financial institutions party thereto and their permitted assignees under Section 12.6., as Lenders, PNC Bank, National Association, as Administrative Agent, Capital One, N.A., Syndication Agent, PNC Capital Markets, LLC, as a Lead Arranger and Book Manager, and Capital One, N.A., as a Lead Arranger and Book Manager (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K (File No.

1-07533), filed on November 28, 2011 and incorporated herein by reference)

10.21 Revised Form of Restricted Share Award Agreement for front loaded awards made under the Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.35 to the Trust's Annual Report on Form 10-K for the year ended December 31, 2012 (File No.

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1-07533), filed on April 26, 2013 and incorporated herein by reference)

First Amendment to the Term Loan Agreement, dated as of April 22, 2013, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.40 to the Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (File No.

1-07533) and incorporated herein by reference

Second Amendment to Term Loan Agreement, dated as of August 28, 2014, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K (File No.

1-07533), filed on September 2, 2014 and incorporated herein by reference)

10.26 Second Amendment to Credit Agreement, dated as of April 20, 2016, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8K (File No.

1-07533), filed on April 26, 2016 and incorporated herein by reference)

Third Amendment to Term Loan Agreement, dated as of April 20, 2016, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K (File No.

1-07533), filed on April 26, 2016 and incorporated herein by reference)

10.27 Severance Agreement between the Trust and Daniel Guglielmone dated August 15, 2016 (previously filed as Exhibit 10.36 to the Trust's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (File No.

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2019 and incorporated herin by reference)

Subsidiaries of Federal Realty Investment Trust (filed herewith)

10.29 2020 Performance Incentive Plan (previously filed as Appendix B to the Trust’s Definitive Proxy Statement for the 2020 Annual Meeting of Shareholders (File No.

01-07533) and incorporated herein by reference)

10.30 Term Loan Agreement dated as of May 6, 2020, by and among the Trust, as Borrower, the financial institutions party thereto and their permitted assignees under Section 12.6., as Lenders, PNC Bank, National Association, as Administrative Agent, Regions Bank, Truist Bank, and U.S.

Bank National Bank Association as Co-Syndication Agents, PNC Capital Markets, LLC, Regions Capital Markets, Suntrust Robinson Humphrey, Inc., and U.S.

Bank National Association, as Joint Lead Arrangers and Book Managers (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K (File No.

1-07533), filed on May 6, 2020 and incorporated herein by reference)

10.31 First Amendment to the Credit Agreement, dated as of May 6, 2020, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.2 to the Trust's Current Report on Form 8-K (File No.

1-07533), filed on May 6, 2020, and incorporated herein by reference)

10.32 Form of Restricted Share Award Agreement for awards made under the Trust’s Long-Term Incentive Award Program and the Trust’s Annual Incentive Bonus Program and basic awards with annual vesting for shares issued out of the 2020 Plan (filed herewith)

10.33 Form of Option Award Agreement for awards made under the Trust’s Long-Term Incentive Award Program for shares issued out of the 2020 Plan (filed herewith)

10.34 Form of Restricted Share Award Agreement for long-term vesting and retention awards made under the Trust’s Long-Term Incentive Award Program for shares issued out of the 2020 Plan (filed herewith)

10.35 Form of Performance Share Award Agreement for shares awarded out of the 2020 Plan (filed herewith)

10.36 Form of Option Award Agreement for basic options awarded out of the 20 2 0 Plan (filed herewith)

21.1 S ubsidiaries of Federal Realty Investment Trust (filed herewith)

23.1 Consent of Grant Thornton LLP (filed herewith)

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/ S / D ONALD C.

President, Chief Executive Officer and Trustee

Chief Executive Officer and Trustee

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated.

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Becker as his or her attorney-in-fact and agent, with full power of substitution and resubstitution for him or her in any and all capacities, to sign any or all amendments to this Report and to file same, with exhibits thereto and other documents in connection therewith, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that such attorney-in-fact and agent or his or her substitutes may do or cause to be done by virtue hereof.

Signature Title Date

/ S / D ONALD C.

President, Chief Executive Officer and

February 10, 2020

Trustee (Principal Executive Officer)

Chief Executive Officer and Trustee February 11, 2021

Wood (Principal Executive Officer)

/ S / D ANIEL G UGLIELMONE

Executive Vice President-Chief Financial

February 10, 2020

Daniel Guglielmone

Officer and Treasurer (Principal

Executive Vice President - Chief Financial February 11, 2021

Daniel Guglielmone Officer and Treasurer (Principal

Financial and Accounting Officer)

/ S / J OSEPH S.

Non-Executive Chairman

February 10, 2020

Non-Executive Chairman February 11, 2021

/ S / J ON E.

February 10, 2020

Trustee February 11, 2021

/ S / D AVID W.

February 10, 2020

Trustee February 11, 2021

/S/ E LIZABETH I.

February 10, 2020

Trustee February 11, 2021

/S/ N ICOLE Y.

Trustee February 11, 2021

/S/ A NTHONY P.

Trustee February 11, 2021

/ S / G AIL P.

February 10, 2020

Trustee February 11, 2021

Item 8 and Item 15(a)(1) and (2)

Index to Consolidated Financial Statements and Schedules

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Comprehensive Income

Consolidated Statement of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

Consolidated Financial Statements Page No.

Report of Independent Registered Public Accounting Firm F- 2

Report of Independent Registered Public Accounting Firm F- 3

Consolidated Balance Sheets F- 5

Consolidated Statements of Comprehensive Income F- 6

Consolidated Statement of Shareholders’ Equity F- 7

Consolidated Statements of Cash Flows F- 8

Notes to Consolidated Financial Statements F- 9

Financial Statement Schedules

Schedule III—Summary of Real Estate and Accumulated Depreciation

Schedule IV—Mortgage Loans on Real Estate

Schedule III—Summary of Real Estate and Accumulated Depreciation F- 32

Schedule IV—Mortgage Loans on Real Estate F- 40

All other schedules have been omitted either because the information is not applicable, not material, or is disclosed in our consolidated financial statements and related notes.

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/s/ GRANT THORNTON LLP

Charlotte, North Carolina

New York, New York

February 11, 2021

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Trust’s internal control over financial reporting as of December 31, 2020, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 11, 2021 expressed an unqualified opinion.

Change in accounting principle

As dicussed in Note 2 to the consolidated financial statements, the Trust has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Codification (ASC) Topic 842, Leases.

Basis for opinion

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Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Adoption of ASC 842 (Lessee) - Refer to Note 2 to the Financial Statements

The Trust adopted ASC Topic 842, Leases (ASC 842) as of January 1, 2019, which, from a lessee perspective, resulted in the recognition of a right-of-use asset (“ROU asset”) and a lease liability for operating leases (other than leases that meet the definition of a short-term lease).

The liability is equal to the present value of future lease payments and the asset is based on the liability, subject to certain adjustments, including initial direct costs.

We identified the adoption of ASC 842, from a lessee perspective, as a critical audit matter because it is a substantial change in accounting for leases and as such requires significant auditor judgment in obtaining sufficient appropriate audit evidence

related to management’s determination of the lease liability and ROU asset and their selection of a discount rate to be applied to future lease payments.

Our audit procedures related to the adoption of ASC 842 included the following:

We assessed the design and tested the operating effectiveness of internal controls relating to the initial adoption of ASC 842.

We verified the completeness of the population of leases that management evaluated as part of the initial adoption and ongoing accounting for leases in future periods.

We inspected a sample of lease contracts, compared the relevant inputs in management’s calculation to underlying lease documents, and recalculated the related ROU asset and lease liability.

We utilized a specialist to evaluate the discount rate used in the initial measurement of the lease liability upon adoption, including the appropriateness of the methodology employed to determine the discount rate and the final conclusion reached.

We tested the completeness and accuracy of the cumulative catch up adjustment recognized upon adoption.

We evaluated the new accounting policy for leases where the Trust is the lessee.

Adoption of ASC 842 (Lessor) - Refer to Note 2 to the Financial Statements

The Trust adopted ASC 842 as of January 1, 2019, which, from a lessor perspective, resulted in a change to the Trust’s revenue recognition policy for revenue earned under operating leases with their tenants.

We identified the adoption of ASC 842, from a lessor perspective, as a critical audit matter because significant auditor judgment was required in evaluating whether management had appropriately interpreted and implemented this new accounting standard for leases that were in place on the adoption date and for new leases entered into subsequent to the adoption date.

Our audit procedures related to the adoption of ASC 842 included the following:

We assessed the design and tested the operating effectiveness of internal controls relating to the initial adoption of ASC 842.

We evaluated the transition method implemented for leases that were in place at the adoption date and the new accounting policy for revenue earned under operating leases with their tenants.

We utilized specialists in these evaluations.

We tested the completeness and accuracy of the cumulative catch up adjustment recognized upon adoption.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Lease Collectibility Assessment

In order to recognize rental revenue on an accrual basis, the Trust must determine whether substantially all of the rents due under a lease arrangement are collectible.

If the Trust reaches the conclusion that substantially all of the rents are not collectible for a specific lease, then rental revenue under that arrangement can only be recognized when cash payment from the tenant is received.

Significant judgment is exercised by the Trust when making a collectibility assessment and includes the following considerations which require challenging and subjective auditor judgment in the execution of our audit procedures:

• Creditworthiness of the tenant.

• Current economic conditions.

• Historical experience with the tenant and other tenants operating in the same industry.

Our audit procedures related to the collectibility assessment included the following:

• We assessed the design and tested the operating effectiveness of internal controls relating to the collectibility assessment process.

• We evaluated management’s accounting policies related to this assessment.

• We verified the completeness of the population of tenants that management evaluated.

• We researched recent publicly available information such as bankruptcy filings, industry journals, and periodicals, and for any of the Trust’s tenants identified in our research we evaluated whether such information was considered in management’s collectibility assessment.

• For a sample of tenant receivables where collectibility was deemed as probable, we inspected and evaluated management’s documentation supporting the collectibility assessment.

• We selected a sample of tenant receivable balances to verify they are accurately aged.

• We selected a sample of leases to evaluate the collectibility assessment conclusion reached by management and performed the following procedures for each selection:

◦ Verified that management’s accounting policies related to the collectibility assessment were followed.

◦ Obtained from management documentation such as tenant collection history and any direct correspondence and evaluated management’s considerations supporting the collectibility assessment conclusion reached.

◦ Researched publicly available information to independently verify the completeness and accuracy of management’s information used to make the collectibility assessment.

/s/ GRANT THORNTON LLP

We have served as the Trust’s auditor since 2002.

Charlotte, North Carolina

New York, New York

February 11, 2021

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Assets held for sale — 1,729

8,582,870 8,298,132

Less accumulated depreciation and amortization (including $335,735 and $296,165 of consolidated variable interest entities, respectively) ( 2,357,692 ) ( 2,215,413 )

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Prepaid expenses and other assets 218,953 227,060

TOTAL ASSETS $ 7,607,624 $ 6,794,992

LIABILITIES AND SHAREHOLDERS’ EQUITY

Mortgages payable, net (including $413,681 and $469,184 of consolidated variable interest entities, respectively) $ 484,111 $ 545,679

Capital lease obligations

Notes payable, net 402,776 3,781

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Year Ended December 31,

2020 2019 2018

(In thousands, except per share data)

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Total operating expenses 586,869 581,270 565,715

Gain on sale of real estate, net

Impairment charge ( 57,218 ) — —

Gain on sale of real estate, net of tax 98,117 116,393 11,915

OPERATING INCOME 289,524 470,911 361,636

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Loss from partnerships ( 8,062 ) ( 2,012 ) ( 3,398 )

NET INCOME 135,888 360,542 249,026

Net income attributable to noncontrolling interests ( 4,182 ) ( 6,676 ) ( 7,119 )

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Weighted average number of common shares 75,515 74,766 73,302

Other comprehensive (loss) income - change in value of interest rate swaps

NET INCOME $ 135,888 $ 360,542 $ 249,026

Other comprehensive loss - change in value of interest rate swaps ( 5,302 ) ( 397 ) ( 438 )

COMPREHENSIVE INCOME 130,586 360,145 248,588

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Shareholders’ Equity of the Trust

Preferred Shares

Common Shares

Preferred Shares Common Shares Additional

Capital Accumulated

Excess of Net

Income Accumulated

Comprehensive

Income/(Loss)

Noncontrolling Interests

Total Shareholders' Equity

Income/(Loss) Noncontrolling Interests Total Shareholders' Equity

Shares Amount Shares Amount

(In thousands, except share data)

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Net income, excluding $3,865 attributable to redeemable noncontrolling interests — — — — — 241,907 — 3,254 245,161

Other comprehensive income - change in value of interest rate swaps

Dividends declared to common shareholders

Other comprehensive loss - change in value of interest rate swaps — — — — — — ( 438 ) — ( 438 )

Dividends declared to common shareholders ($4.04 per share) — — — — — ( 297,347 ) — — ( 297,347 )

Dividends declared to preferred shareholders — — — — — ( 8,042 ) — — ( 8,042 )

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Common shares issued, net — — 987,461 10 126,061 — — — 126,071

Preferred shares issued, net

Exercise of stock options — — 105,803 1 4,571 — — — 4,572

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Contributions from noncontrolling interests — — — — — — — 4,020 4,020

Purchase of noncontrolling interests

Adjustment to redeemable noncontrolling interests — — — — 5,097 — — — 5,097

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Other comprehensive loss - change in value of interest rate swaps — — — — — — ( 397 ) — ( 397 )

Dividends declared to common shareholders

Dividends declared to common shareholders ($4.14 per share) — — — — — ( 310,973 ) — — ( 310,973 )

Dividends declared to preferred shareholders — — — — — ( 8,042 ) — — ( 8,042 )

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Common shares issued, net — — 1,069,740 11 142,705 — — — 142,716

Exercise of stock options

Shares issued under dividend reinvestment plan — — 15,909 — 2,095 — — — 2,095

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Net income, excluding $2,228 attributable to redeemable noncontrolling interests — — — — — 131,706 — 1,954 133,660

Other comprehensive loss - change in value of interest rate swaps

Dividends declared to common shareholders

Other comprehensive loss - change in value of interest rate swaps, excluding $471 attributable to redeemable noncontrolling interest — — — — — — ( 4,831 ) — ( 4,831 )

Dividends declared to common shareholders ($4.22 per share) — — — — — ( 320,302 ) — — ( 320,302 )

Dividends declared to preferred shareholders — — — — — ( 8,042 ) — — ( 8,042 )

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Shares withheld for employee taxes — — ( 33,034 ) — ( 4,052 ) — — — ( 4,052 )

Conversion and redemption of OP units

Redemption of OP units — — — — ( 30 ) — — ( 3,290 ) ( 3,320 )

Contributions from noncontrolling interests — — — — — — — 120 120

Purchase of noncontrolling interest — — — — ( 1,210 ) — — ( 6,111 ) ( 7,321 )

Adjustment to redeemable noncontrolling interests — — — — 21,933 — — — 21,933

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Year Ended December 31,

2020 2019 2018

(In thousands)

OPERATING ACTIVITIES

Net income $ 135,888 $ 360,542 $ 249,026

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 255,027 239,758 244,245

Gain on sale of real estate, net

Impairment charge 57,218 — —

Gain on sale of real estate, net of tax ( 98,117 ) ( 116,393 ) ( 11,915 )

Early extinguishment of debt 11,179 — —

Loss from partnerships 8,062 2,012 3,398

Other, net 6,142 169 4,147

Changes in assets and liabilities, net of effects of acquisitions and dispositions:

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Capital expenditures - other ( 68,064 ) ( 82,836 ) ( 66,138 )

Costs associated with property sold under threat of condemnation, net ( 12,924 ) — —

Proceeds from sale of real estate 183,461 321,997 177,775

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Leasing costs ( 15,080 ) ( 25,459 ) ( 25,430 )

Issuance of mortgage and other notes receivable, net

Increase in mortgage and other notes receivable, net ( 10,268 ) ( 357 ) ( 67 )

Net cash used in investing activities ( 368,383 ) ( 316,532 ) ( 192,247 )

FINANCING ACTIVITIES

Net (repayments) borrowings under revolving credit facility, including costs

Net repayments under revolving credit facility, including costs ( 638 ) ( 4,012 ) ( 41,000 )

Issuance of senior notes, net of costs 1,094,283 399,913 —

Redemption and retirement of senior notes ( 510,360 ) — —

Issuance of notes payable, net of costs 398,722 — —

Repayment of mortgages, finance leases, and notes payable ( 70,237 ) ( 301,029 ) ( 16,620 )

Issuance of common shares, net of costs 99,177 143,027 130,918

Issuance of preferred shares, net of costs

Dividends paid to common and preferred shareholders ( 324,596 ) ( 313,649 ) ( 301,194 )

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Distributions to and redemptions of noncontrolling interests ( 20,563 ) ( 20,133 ) ( 15,293 )

Net cash (used in) provided by financing activities

Increase (decrease) in cash, cash equivalents, and restricted cash

Net cash provided by (used in) financing activities 661,736 ( 100,105 ) ( 241,309 )

Increase in cash, cash equivalents, and restricted cash 663,282 45,282 83,132

Cash, cash equivalents, and restricted cash at beginning of year 153,614 108,332 25,200

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A REIT that distributes at least 90 % of its taxable income to its shareholders each year and meets certain other conditions is not taxed on that portion of its taxable income which is distributed to its shareholders.

Impacts of COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of novel coronavirus disease ("COVID-19") as a pandemic.

While we currently expect the impact to our properties is temporary in nature, the extent of the future effects of COVID-19 on our business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty.

NOTE 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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We account for our interests in joint ventures, which we do not control, using the equity method of accounting.

Certain 2018 and 2017 amounts have been reclassified to conform to current period presentation.

Use of Estimates

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When collection of substantially all lease payments during the lease term is considered probable, the lease qualifies for accrual accounting.

Lease payments are recognized on a straight-line basis from when the tenant controls the space through the term of the related lease.

Lease payments are recognized on a straight-line basis from the point in time when the tenant controls the space through the term of the related lease.

Variable lease payments relating to percentage rent are recognized at the end of the lease year or earlier if we have determined the required sales level is achieved.

Real estate tax and other cost reimbursements are recognized on an accrual basis over the periods in which the related expenditures are incurred.

Many of our leases contain tenant options that enable the tenant to extend the term of the lease at expiration at pre-established rental rates that often include fixed rent increases, consumer price index adjustments or other market rate adjustments from the prior base rent.

For a tenant to terminate its lease agreement prior to the end of the agreed term, we may require that they pay a fee to cancel the lease agreement.

Lease termination fees for which the tenant has relinquished control of the space are generally recognized on the termination date.

Lease termination fees are generally recognized on the termination date if the tenant has relinquished control of the space.

When a lease is terminated early but the tenant continues to control the space under a modified lease agreement, the lease termination fee is generally recognized evenly over the remaining term of the modified lease agreement.

Lease concessions (unrelated to the COVID-19 pandemic) are evaluated to determine whether the concession represents a modification of the original lease contract.

Modifications generally result in a reassessment of the lease term and lease classification, and remeasurement of lease payments received.

Remeasured lease payments are recognized on a straight-line basis over the remaining term of the modified lease contract.

In April 2020, the Financial Accounting Standards Board ("FASB") issued interpretive guidance relating to the accounting for lease concessions provided as a result of the COVID-19 pandemic that allows entities to treat the concession as if it was a part of the existing contract instead of applying lease modification accounting.

This guidance is only applicable to the COVID-19 pandemic related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee.

We have elected this option relating to qualifying rent deferral and rent abatement agreements.

For qualifying lease modifications with rent deferrals, this results in no change to our revenue recognition but an increase in the lease receivable balance until the deferred rent has been repaid.

For qualifying lease modifications that include rent abatement concessions, this results in a direct reduction of rental income in the current period.

As of December 31, 2020, we have entered into rent deferral agreements and rent abatement agreements related to the COVID-19 pandemic representing approximately $ 36 million and $ 35 million, respectively, of rent otherwise owed during the year ended December 31, 2020, and continue negotiations with other tenants.

When collection of substantially all lease payments during the lease term is not considered probable, total lease revenue is limited to the lesser of revenue recognized under accrual accounting or cash received.

Determining the probability of collection of substantially all lease payments during lease term requires judgment.

This determination is impacted by numerous factors including our assessment of the tenant’s credit worthiness, economic conditions, our historical experience with the tenant and tenants operating in the same industry, and the length of the lease term.

Determining the probability of collection of substantially all lease payments during a lease term requires significant judgment.

This determination is impacted by numerous factors including our assessment of the tenant’s credit worthiness, economic conditions, tenant sales productivity in that location, historical experience with the tenant and tenants operating in the same industry, future prospects for the tenant and the industry in which it operates, and the length of the lease term.

If leases currently classified as probable are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income.

If leases currently classified as not probable are subsequently changed to probable, any lease receivables (including straight-line rent receivables) are re-instated with a corresponding increase to rental income.

Since March 2020, federal, state, and local governments have taken various actions to mitigate the spread of COVID-19.

This includes initially ordering closures of nonessential business and ordering residents to generally stay at home, subsequent phased re-openings, and during the fourth quarter of 2020, additional closures and capacity limitations as infection levels increased in certain areas.

These actions, along with the general concern over the spread of COVID-19, have resulted in many of our tenants temporarily or even permanently closing their businesses, and for some, it has impacted their ability to pay rent.

As a result, we revised our collectibility assumptions for many of our tenants most significantly impacted by COVID-19.

Accordingly, during the year ended December 31, 2020, we recognized collectibility related adjustments of $ 106.6 million.

This includes changes in our collectibility assessments from probable to not probable, disputed rents, and any rent abatements directly related to COVID-19, as well as the write-off of $ 12.7 million of straight-line rent receivables related to tenants changed to a cash basis of revenue recognition during the year ended December 31, 2020.

As of December 31, 2020, the revenue from approximately 35 % of our tenants (based on total commercial leases) is being recognized on a cash basis.

As of December 31, 2020 and 2019, our straight-line rent receivables balance was $ 103.3 million and $ 100.3 million, respectively, and is included in "accounts and notes receivable, net" on our consolidated balance sheet.

Policy prior to January 1, 2019

Prior to January 1, 2019, management estimates of collectability were considered when reserving for billed and accrued lease receivables and straight-line rent receivables.

Full and partial reserves were recorded when determined to be appropriate with a

corresponding charge to bad debt expense.

Full and partial reserves were recorded when determined to be appropriate with a corresponding charge to bad debt expense.

The primary impact of the adoption of ASC 842, “Leases,” on our recognition of lease revenue relates to the upfront and ongoing assessment of the collectability of substantially all lease payments required by the new standard.

Other revenue recognition policies

In 2018, we completed construction on 221 condominium units at our Assembly Row and Pike & Rose properties.

Beginning on January 1, 2018, with the adoption of ASU 2014-09, "Revenue from Contracts with Customers," gains or losses on the sale of these condominium units are recognized as the condominium units are legally sold.

In 2017, we accounted for contracted condominium sales under the percentage-of completion method, based on an evaluation of the criteria specified in ASC Topic 360-20, “Property, Plant and Equipment – Real Estate Sales,” including:

the legal commitment of the purchaser in the real estate contract, whether the construction of the project was beyond a preliminary phase, whether sufficient units had been contracted to ensure the project would not revert to a rental project, the ability to reasonably estimate the aggregate project sale proceeds and aggregate project costs, and the determination that the buyer had made an adequate initial and continuing cash investment under the contract.

When the percentage-of-completion criteria had not been met, no profit was recognized.

The application of these criteria can be complex and required us to make assumptions.

Sales of real estate are recognized generally upon the transfer of control, which usually occurs when the real estate is legally sold.

When we enter into a transaction to sell a property or a portion of a property, we evaluate the recognition of the sale under ASC 610-20, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets." In accordance with ASC 610-20, we apply the guidance in ASC 606, "Revenue from Contracts with Customers," to determine whether and when control transfers and how to measure the associated gain or loss.

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Estimated useful lives range generally from 35 years to a maximum of 50 years on buildings and major improvements.

Minor improvements, furniture and equipment are capitalized and depreciated over useful lives ranging from 2 to 20 years.

improvements, furniture and equipment are capitalized and depreciated over useful lives ranging from 2 to 20 years.

Maintenance and repairs that do not improve or extend the useful lives of the related assets are charged to operations as incurred.

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In 2020, 2019 and 2018, real estate depreciation expense was $ 227.9 million, $ 215.4 million and $ 216.0 million, respectively, including amounts from real estate sold.

Effective January 1, 2018, (upon the adoption of ASU 2014-09, "Revenue from Contracts with Customers," as amended and interpreted) sales of real estate are recognized generally upon the transfer of control, which usually occurs when the real estate is legally sold.

Prior to January 1, 2018, sales of real estate were recognized only when sufficient down payments had been obtained, possession and other attributes of ownership had been transferred to the buyer and we had no significant continuing involvement.

The application of these criteria can be complex and required us to make assumptions.

We believe the relevant criteria were met for all real estate sold during the periods presented.

Our methodology of allocating the cost of acquisitions to assets acquired and liabilities assumed is based on estimated fair values, replacement cost and/or appraised values.

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The acquisition of an operating shopping center typically qualifies as an asset acquisition.

Prior to the adoption of ASU 2016-02, "Leases," when applicable, as lessee, we classify our leases of land and building as operating or capital leases.

We are required to use judgment and make estimates in determining the lease term, the estimated economic life of the property and the interest rate to be used in determining whether or not the lease meets the qualification of a capital lease.

Subsequently, capital leases are now considered "finance leases," see "Recent Accounting Pronouncements," for an explanation of the impact to our consolidated balance sheet.

Prior to the adoption of ASU 2016-02, "Leases," when applicable, as lessee, we classified our leases of land and building as operating or capital leases.

We were required to use judgment and make estimates in determining the lease term, the estimated economic life of the property and the interest rate to be used in determining whether or not the lease meets the qualification of a capital lease.

Subsequently, capital leases are now considered "finance leases."

We capitalize certain costs related to the development and redevelopment of real estate including pre-construction costs, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved, are capitalized.

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If we determine the development or redevelopment is no longer probable of completion, we expense all capitalized costs which are not recoverable.

We review for impairment on a property by property basis.

Impairment is recognized on properties held for use when the expected undiscounted cash flows for a property are less than its carrying amount, at which time, the property is written-down to fair value.

Properties held for sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell.

Long-Lived Assets and Impairment

There are estimates and assumptions made by management in preparing the consolidated financial statements for which the actual results will be determined over long periods of time.

This includes the recoverability of long-lived assets, including our properties that have been acquired or redeveloped and our investment in certain joint ventures.

Management’s evaluation of impairment includes review for possible indicators of impairment as well as, in certain circumstances, undiscounted and discounted cash flow analysis.

Since most of our investments in real estate are wholly-owned or controlled assets which are held for use, a property with impairment indicators is first tested for impairment by comparing the undiscounted cash flows, including residual value, to the current net book value of the property.

If the undiscounted cash flows are less than the net book value, the property is written down to expected fair value.

The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for space by tenants and rental rates over long periods.

Because our properties typically have a long life, the assumptions used to estimate the future recoverability of book value requires significant management judgment.

Actual results could be significantly different from the estimates.

These estimates have a direct impact on net income, because recording an impairment charge results in a negative adjustment to net income.

Cash and Cash Equivalents

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Capitalized lease costs are incremental direct costs incurred which were essential to originate a successful leasing arrangement and would not have been incurred had the leasing transaction not taken place.

Capitalized lease costs are amortized over the life of the related lease.

These costs include third party commissions related to obtaining a lease.

Capitalized lease costs are amortized over the initial life of the related lease which generally ranges from three to ten years.

We view these lease costs as part of the up-front initial investment we made in order to generate a long-term cash inflow and therefore, we classify cash outflows related to leasing costs as an investing activity in our consolidated statements of cash flows.

If a tenant vacates its space prior to the contractual termination of its lease, the unamortized balance of any previously capitalized lease costs are written off.

See the "Leases" section in this note for further discussion regarding the change in accounting for lease costs.

Debt Issuance Costs

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If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recognized in earnings in the period affected.

During 2019 , we entered into two interest rate swap agreements that effectively fix the interest rate on a mortgage payable associated with our Hoboken acquisition at 3.67 % .

At December 31, 2020, we have two interest rate swap agreements that effectively fix the interest rate on a mortgage payable associated with our Hoboken acquisition at 3.67 %.

Both swaps were designated and qualify for cash flow hedge accounting.

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Mortgage Notes Receivable

We have made certain mortgage loans that, because of their nature, qualify as loan receivables.

At the time the loans were made, we did not intend for the arrangement to be anything other than a financing and did not contemplate a real estate investment.

We have invested in certain mortgage loans that, because of their nature, qualify as loan receivables.

At the time of investment, we did not intend for the arrangement to be anything other than a financing and did not contemplate a real estate investment.

We evaluate each investment to determine whether the loan arrangement qualifies as a loan, joint venture or real estate investment and the appropriate accounting thereon.

Such determination affects our balance sheet classification of these investments and the recognition of interest income derived therefrom.

We receive additional interest, however, we never receive in excess of 50 % of the residual profit in the project, and because the borrower has either a substantial investment in the project or has guaranteed all or a portion of our loan (or a combination thereof), the loans qualify for loan accounting.

In one of our mortgage loan arrangements, we receive additional interest, however, we never receive in excess of 50 % of the residual profit in the project, and because the borrower has either a substantial investment in the project or has guaranteed all or a portion of our loan (or a combination thereof), the loans qualify for loan accounting.

The amounts under these arrangements are presented as mortgage notes receivable at December 31, 2020 and 2019.

Mortgage notes receivable are recorded at cost, net of any valuation adjustments.

Effective January 1, 2020, (upon the adoption of ASU 2016-13, "Financial Instruments - Credit Losses," as amended and interpreted), we account for mortgage notes receivable using the "expected credit loss" model, and accordingly impairment losses are estimated and recorded for the entire life of the loan.

Prior to the implementation of ASC 326, we recognized impairment losses as incurred.

Interest income is accrued as earned.

Mortgage notes receivable are considered past due based on the contractual terms of the note agreement.

On a quarterly basis, we evaluate the collectability of each mortgage note receivable based on various factors which may include payment history, expected fair value of the collateral securing the loan, internal and external credit information and/or economic trends.

A loan is considered impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due under the existing contractual terms.

a quarterly basis, we evaluate the collectability of each mortgage note receivable and update our expected credit loss model based on various factors which may include payment history, expected fair value of the collateral securing the loan, internal and external credit information and/or economic trends.

A loan is considered impaired when it is probable that we will be unable to collect all amounts due under the existing contractual terms.

When a loan is considered impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the mortgage note receivable to the present value of expected future cash flows.

Since our loans are collateralized by a first mortgage, the loans have risk characteristics similar to the risks in owning commercial real estate.

At December 31, 2019 and 2018 , we had two mortgage notes receivable, with aggregate carrying amounts of $ 30.4 million , and weighted average interest rates of 10.0 % and 10.3 % , respectively, which were secured by first mortgages on retail buildings.

Since two loans are collateralized by a first mortgage, these loans have risk characteristics similar to the risks in owning commercial real estate.

At December 31, 2020, we had four mortgage notes receivable with an aggregate carrying amount, net of valuation adjustments of $ 39.9 million, and a weighted average interest rate of 10.0 %.

Approximately $ 30.3 million of the loans are secured by first mortgages on retail buildings at December 31, 2020.

Share Based Compensation

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As of December 31, 2020 and 2019, our investment in these joint ventures and maximum exposure to loss was $ 18.7 million and $ 23.4 million, respectively.

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

See footnote 15 to the consolidated financial statements for additional details of this transaction.

In addition, we have 17 entities that meet the criteria of a VIE in which we hold a variable interest.

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As we also have the obligation to absorb the majority of the losses and/or the right to receive a majority of the benefits for each of these entities, all are consolidated in our financial statements.

Net real estate assets related to VIEs included in our consolidated balance sheets were approximately $ 1.5 billion for both December 31, 2019 and 2018 , and mortgages related to VIEs included in our consolidated balance sheets were approximately $ 469.2 million and $ 444.4 million , as of December 31, 2019 and 2018 , respectively.

Net real estate assets related to VIEs included in our consolidated balance sheets were approximately $ 1.4 billion and $ 1.5 billion as of December 31, 2020 and 2019, respectively, and mortgages related to VIEs included in our consolidated balance sheets were approximately $ 413.7 million and $ 469.2 million, as of December 31, 2020 and 2019, respectively.

We have also evaluated our mortgage notes receivable investments and determined that the entities obligated under the mortgage notes are not VIEs.

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Contributions 19,335 9,961

Net income 2,228 3,430

Distributions & redemptions ( 1,197 ) ( 15,366 )

Other comprehensive loss - change in value of interest rate swaps ( 471 ) —

Change in redemption value ( 21,933 ) 5,525

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On August 2, 2019, we acquired the 10.1 % redeemable noncontrolling interest in the partnership that owns our Montrose Crossing Shopping Center for $ 10.0 million, bringing our ownership interest to 100 %.

We adopted ASC 842 effective January 1, 2019 under the modified retrospective approach and elected the optional transition method to apply the provisions of ASC 842 as of the adoption date, rather than the earliest period presented.

We elected to apply certain adoption related practical expedients for all leases that commenced prior to the election date.

These practical expedients included not reassessing whether any expired or existing contracts were or contained leases;

not reassessing the lease classification for any expired or existing leases;

and not reassessing initial direct costs for any existing leases.

We also elected the practical expedient for lessors to combine our lease and non-lease components (primarily impacts common area maintenance recoveries).

We recorded a charge to the opening accumulated dividends in excess of net income of $ 7.1 million in 2019 as a result of the adoption of ASC 842.

This charge was attributable to the write off certain direct leasing costs recorded under the previous lease accounting rules for leases which had not commenced as well as the write off of unreserved receivables (including straight-line receivables) for leases where we had determined the collection of substantially all the lease payments required for the term is not probable.

Also upon adoption of ASC 842 and reflected in our 2019 and 2020 financial statements, we do not record a gross up of revenue and expense for costs (such as real estate taxes) paid directly by lessees on our behalf.

We have ground leases at 12 properties which are accounted for as operating leases.

The operating lease right of use ("ROU") assets and related liabilities are shown separately on the face of our consolidated balance sheet and reflect the present value of the minimum lease payments.

A key input in the calculation is the discount rate.

As the rate implied in the lease agreements is not readily determinable, we utilize our incremental borrowing rate that correspond to the remaining term of the lease, our credit spread, and and adjustment to reflect the collateralized payment terms present in the lease.

Our operating lease agreements may include options to extend the lease term or terminate it early.

We include options to extend or terminate leases in the ROU operating lease asset and liability when it is reasonably certain we will exercise these options.

Operating lease expense is recognized on a straight-line basis over the non-cancellable lease term and is included in rental expenses in our consolidated statements of operations.

We elected to apply the short-term lease exemption within ASC 842, and as such we have not recorded an ROU asset or lease liability for leases with terms of less than 12 months.

We operate in a manner intended to enable us to qualify as a REIT for federal income tax purposes.

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We have elected to treat certain of our subsidiaries as taxable REIT subsidiaries, which we refer to as a TRS.

In general, a TRS may engage in any real estate business and certain non-real estate businesses, subject to certain limitations under the Internal Revenue Code of 1986, as amended (the “Code”).

In general, a TRS may engage in any real estate business and certain non-real estate businesses, subject to certain limitations under the Internal

Revenue Code of 1986, as amended (the “Code”).

A TRS is subject to federal and state income taxes.

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Recent Accounting Pronouncements

Date of Adoption

Effect on the financial statements or significant matters

Recently adopted:

Leases (Topic 842) and related updates:

February 2016,

Leases (Topic 842)

ASU 2018-10, July

2018, Codification

improvements to

Topic 842, Leases

ASU 2018-11, July

2018, Leases (Topic

December 2018,

Leases (Topic 842)

Improvements for

March 2019, Leases

ASC 842 significantly changes the accounting for leases by requiring lessees to recognize assets and liabilities for leases greater than 12 months on their balance sheet.

The larger changes to the lessor model include:

a change to the definition of initial direct costs of leases (resulting in the upfront expensing of more leasing related costs), the requirement to make an upfront and ongoing assessment of whether collection of substantially all of the lease payments required for the term of the lease is probable (if not probable, lease revenue is effectively recongnized when cash is collected), certain presentation changes, and the elimination of real estate specific guidance.

ASU 2018-10, ASU 2018-20, and ASU 2019-01 provide narrow amendments that clarify how to apply certain aspects of the guidance in ASU 2016-02.

ASU 2018-11 provides the option of an additional transition method, by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

It also provides lessors an option to not separate lease and non-lease components when certain criteria are met.

We have elected to apply the transition provisions of ASC Topic 842 at the beginning of the period of adoption (i.e., January 1, 2019), and therefore, did not retrospectively adjust prior periods presented.

We have also elected to apply certain adoption related practical expedients for all leases that commenced prior to the effective date.

These practical expedients include not reassessing whether any expired or existing contracts are or contain leases;

not reassessing the lease classification for any expired or existing leases;

and not reassessing initial direct costs for any existing leases.

We have also elected the practical expedient allowing lessors to combine non-lease and lease components (primarily impacts common area maintenance recoveries).

From a lessee perspective, the primary impact of adoption on January 1, 2019 was to record a lease obligation liability and right of use asset for operating leases where we are the lessee.

The most significant of these operating leases are ground leases at 14 properties.

The operating lease right of use assets and related liabilities are shown separately on the face of our consolidated balance sheet and reflect the present value of the minimum lease payments.

A key input in the calculation is the discount rate.

As the rate implied in the lease agreements is not readily determinable, we utilized our incremental borrowing rate, which takes into account estimates including interest rates that correspond to the remaining term of the lease, our credit spread, and an adjustment to reflect the collateralized payment terms present in the lease.

Additionally, amounts previously recorded as capital lease assets and included in real estate have been reclassified in the December 31, 2019 balance sheet as finance lease right of use assets and the related capital lease obligations have been reclassified in the December 31, 2019 balance sheet as finance lease liabilities.

Income statement presentation is not impacted for our existing operating and finance leases.

From a lessor perspective, adoption of ASC 842 results in a charge to opening accumulated dividends in excess of net income of $7.1 million.

This charge is attributable to the write off of certain direct leasing costs recorded as of December 31, 2018 under the previous lease accounting rules for leases which had not commenced and the write off of December 31, 2018 unreserved receivables (including straight-line receivables) for leases where we have determined that the collection of substantially all of the lease payments required for the term of the lease is not probable.

Income statement presentation changes incorporated into our December 31, 2019 financial statements include:

no longer recording a gross up of revenue and expense for costs (such as real estate taxes) paid directly by lessees on our behalf and recording collectability adjustments against revenue rather than as bad debt within rental expenses.

As a result of the change in the definition of initial direct costs of leases, capitalized leasing costs excluding external commissions decreased to $2.2 million for the year ended December 31, 2019 from $7.5 million for the year ended December 31, 2018.

Date of Adoption

Effect on the financial statements or significant matters

Adopted subsequent to December 31, 2019:

Standard Description Effect on the financial statements or significant matters

Adopted on January 1, 2020:

Financial Instruments - Credit Losses (Topic 326) and related updates:

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ASU 2018-19 clarifies that impairment of of receivables arising from operating leases should accounted for in accordance with Topic 842, Leases.

While our mortgage notes receivable and certain other accounts receivables are impacted by this standard, the adoption of this standard will not have a significant impact to our consolidated financial statements.

Upon adoption of this standard, we recorded expected losses of $0.5 million in opening accumulated dividends in excess of net income.

During the year ended December 31, 2020, we recorded additional expected losses of $0.4 million, which are included in rental expenses.

ASU 2018-15, August 2018, Intangibles - Goodwill and Other Internal Use Software:

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The guidance can be applied prospectively to all implementation costs incurred after the date of adoption or retrospectively in accordance with ASC 250-10-45-5 through ASC 250-10-45-10.

The adoption of this standard will not have a significant impact to our consolidated financial statements.

The following table provides additional information on our operating and finance leases where we are the lessee:

December 31, 2019

(In thousands)

Finance lease cost:

Amortization of right-of-use assets

Interest on lease liabilities

Operating lease cost

Variable lease cost

Total lease cost

OTHER INFORMATION:

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows for finance leases

Operating cash flows for operating leases

Financing cash flows for finance leases

December 31, 2019

Weighted-average remaining term - finance leases

Weighted-average remaining term - operating leases

Weighted-average discount rate - finance leases

Weighted-average discount rate - operating leases

The adoption of this standard did not have a significant impact to our consolidated financial statements.

Issued in 2020:

ASU 2020-04, March 2020, Reference Rate Reform (Topic 848)

This ASU provides companies with optional practical expedients to ease the accounting burden for contract modifications associated with transitioning away from LIBOR and other interbank offered rates that are expected to be discontinued as part of reference rate reform.

For hedges, the guidance generally allows changes to the reference rate and other critical terms without having to de-designate the hedging relationship, as well as allows the shortcut method to continue to be applied.

For contract modifications, changes in the reference rate or other critical terms will be treated as a continuation of the prior contract.

This guidance can be applied immediately, however, is generally only available through December 31, 2022.

We are still evaluating the impact of reference rate reform and whether we will apply any of these practical expedients.

ASU 2020-06, August 2020, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity

This ASU simplifies the accounting for convertible instruments by removing the requirements to separately present certain conversion features in equity, simplifying the settlement assessment that entities are required to perform to determine whether a contract qualifies for equity classification, and generally requiring use of the if-converted method for all convertible instruments in the diluted EPS calculation and include the effect of potential share settlement (if the effect is more dilutive).

The guidance is effective for annual periods beginning after December 15, 2021, and interim periods therein.

The adoption of this standard is not expected to have a significant impact to our consolidated financial statements.

Consolidated Statements of Cash Flows—Supplemental Disclosures

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Year Ended December 31,

2020 2019 2018

(In thousands)

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NON-CASH INVESTING AND FINANCING TRANSACTIONS (1):

Mortgage loans refinanced

Mortgage loans assumed/entered into with acquisition

DownREIT operating partnership units issued with acquisition $ 18,920 $ — $ —

Mortgage loans assumed with acquisition $ 8,903 $ 98,041 $ —

DownREIT operating partnership units redeemed for common shares $ — $ 14,105 $ 101

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Contribution from noncontrolling interest $ — $ — $ 1,435

(1) See Note 5 for additional disclosures relating to the mortgages entered into and assumed as a result of the Hoboken acquisition in 2019.

In addition, see Note 3 for additional disclosures relating to our investment in the Assembly Row hotel joint venture in 2018.

Capitalized lease costs are incremental direct costs incurred which were essential to originate a lease and would not have been incurred had the leasing transaction not taken place.

These costs include third party commissions related to obtaining a lease.

Capitalized lease costs are amortized over the initial term of the related lease which generally ranges from three to ten years.

We view these lease costs as part of the up-front initial investment we made in order to generate a long-term cash inflow

and therefore, we classify cash outflows related to leasing costs as an investing activity in our consolidated statements of cash flows.

See the "Recent Accounting Pronouncements" section in this note for further discussion regarding the change in accounting for lease costs as well as the operating lease right of use assets and lease liabilities recorded in connection with our adoption of ASC Topic 842.

(1) See Note 5 for additional disclosures relating to the mortgages entered into and assumed as a result of the Hoboken acquisition.

(In thousands)

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2020 Property Acquisitions

Date Acquired

Gross Leasable Area (GLA)

Purchase Price

(in square feet)

(in millions)

Date Acquired Property City/State Gross Leasable Area (GLA) Purchase Price

(in square feet) (in millions)

January 10, 2020

Fairfax Junction Fairfax, Virginia 49,000 $ 22.3 (1)

February 12, 2020

Fairfax Junction

Fairfax, Virginia

September 13, 2019

San Antonio Center

Mountain View, California

November 15, 2019

Georgetowne Shopping Center

Brooklyn, New York

Hoboken (37 mixed-use buildings)

Hoboken, New Jersey

Hoboken (2 mixed-use buildings) Hoboken, New Jersey 12,000

(1) This property is adjacent to, and will be operated as part of the property acquired in 2019.

The purchase price was paid with a combination of cash and the issuance of 163,322 downREIT operating partnership units.

Approximately $ 0.5 million and $ 0.4 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

(2) The purchase price includes the assumption of $ 8.9 million of mortgage debt, and is in addition to the 37 buildings previously acquired in 2019, and was completed through the same joint venture.

Less than $ 0.1 million and approximately $ 3.3 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

2020 Impairment

On September 1, 2020, the $ 60.6 million non-recourse mortgage loan on The Shops at Sunset Place matured.

The mortgage was not repaid, and thus the lender declared the loan in default.

We evaluated our long-term plans for the property, taking into account current market conditions and prospective development and redevelopment returns, as well as the impact of COVID-19 on the revenue prospects for the property, and concluded we did not expect to move forward with the planned redevelopment or repay the mortgage balance, and thus, did not expect to be long term holders of the asset.

Given these expectations, we recorded an impairment charge of $ 57.2 million during the third quarter of 2020.

The fair value estimate used to determine the impairment charge was determined by market comparable data and discounted cash flow analyses.

The cash flows utilized in such analyses are comprised of unobservable inputs which include forecasted rental revenue and expenses based upon market conditions and future expectations.

The capitalization rates and discount rates utilized in such analyses are based upon unobservable rates that we believe to be within a reasonable range of current market rates for the property.

Based on these inputs, we have determined that the $ 57 million estimated valuation of the property is classified within Level 3 of the fair value hierarchy.

On December 31, 2020, we sold The Shops at Sunset Place for $ 65.5 million and repaid the mortgage loan.

The resulting gain of $ 9.2 million is included in the cumulative 2020 gain of $ 98.1 million noted in the 2020 Property Dispositions section below.

2020 Property Dispositions

During the year ended December 31, 2020, we sold three properties (including The Shops at Sunset Place discussed above) and one building for a total sales price of $ 186.1 million, which resulted in a gain of $ 98.1 million.

During the year ended December 31, 2020, we closed on the sale of the remaining two condominium units at our Pike & Rose property, receiving proceeds net of closing costs of $ 2.1 million.

2019 Property Acquisitions

Date Acquired Property City/State Gross Leasable Area (GLA) Purchase Price

(in square feet) (in millions)

February 8, 2019 Fairfax Junction Fairfax, Virginia 75,000 $ 22.5 (1)

September 13, 2019 San Antonio Center Mountain View, California 6,000 $ 6.5

November 15, 2019 Georgetowne Shopping Center Brooklyn, New York 147,000 $ 83.7 (2)

Various 2019 Hoboken (37 mixed-use buildings) Hoboken, New Jersey 158,000 $ 189.2 (3)

(1) Approximately $ 0.6 million and $ 0.4 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

(2) Approximately $ 2.0 million and $ 0.4 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

(3) These acquisitions were completed through a newly formed joint venture, for which we own a 90 % interest.

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The consideration in the transaction is considered variable because we have agreed to indemnify the condemning authority for these costs.

Consequently, we have recorded a liability of $ 45.5 million to reflect our estimate of the final consideration, net of estimated condemnation proceeding costs and other transaction related costs.

The resulting net gain on sale is approximately $ 85.1 million .

Consequently, at December 31, 2019, we recorded a liability of $ 45.5 million to reflect our estimate of the final consideration, net of estimated condemnation proceeding costs and other transaction related costs.

The resulting net gain on sale was approximately $ 85.1 million.

During the year ended December 31, 2019, we sold three properties and one land parcel for a net sales price of $ 149.0 million, which resulted in a net gain of $ 28.3 million.

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The cost basis for the remaining condominium units as of December 31, 2019 is $ 1.7 million, and is included in "assets held for sale" on our consolidated balance sheet.

2018 Property Acquisitions and Dispositions

On June 15, 2018 , we formed a new joint venture to develop Freedom Plaza (formerly known as Jordan Downs Plaza) which, when completed, will be an approximately 113,000 square foot grocery anchored shopping center located in Los Angeles County, California.

We initially invested $ 34.4 million as a result of a pre-funding requirement for equity to be advanced prior to the start of construction.

We own approximately 91 % of the venture, and control the 9.4 acre land parcel on which the shopping center will be constructed under a long-term ground lease that expires June 15, 2093 (including two 10-year option periods which may be exercised at our option).

The Freedom Plaza development is expected to generate income tax credits under the New Market Tax Credit Program ("NMTC") which was provided for in the Community Renewal Tax Relief Act of 2000 ("the Act") and is intended to induce investment in underserved areas of the United States.

The Act permits taxpayers to claim credits against their Federal income taxes for qualified investments.

A third party bank contributed $ 13.9 million to the development, and is entitled to the related tax credit benefits, but they do not have an interest in the underlying economics of the property.

The transaction also includes a put/call provision whereby we may be obligated or entitled to purchase the third party bank’s interest.

We believe the put will be exercised at its $ 1,000 strike price.

Based on our assessment of control, we concluded that the project and certain other transaction related entities should be consolidated.

The $ 13.9 million in proceeds received in exchange for the transfer of the tax credits has been deferred and will be recognized when the tax benefits are delivered to the third party bank without risk of recapture.

Direct and incremental costs of $ 1.6 million incurred in structuring the NMTC transaction have also been deferred.

The Trust anticipates recognizing the net cash received as revenue upon completion of the seven-year NMTC compliance period.

Cash in escrow at December 31, 2019 of $ 12.6 million , reflects remaining cash that will ultimately be used for the development of the shopping center, and is included in "prepaid expenses and other assets" on our consolidated balance sheets.

The cash is held in escrow pursuant to the new market tax credit transaction documents and will be released as qualified development expenditures are incurred.

In August 2018 , we contributed hotel related assets valued at $ 44.0 million to our Assembly Row hotel joint venture, and received a cash distribution of $ 38.0 million .

At December 31, 2019 , our investment in the venture was $ 3.2 million .

The joint venture is considered a variable interest entity controlled by our partner, and as a result, we are using the equity method to account for our investment.

During the year ended December 31, 2018, we sold two properties for a net sales price of $ 42.2 million , which resulted in a net gain of $ 4.7 million .

On November 29, 2018 , we acquired a 40,000 square foot building adjacent to our Bell Gardens property for $ 9.6 million .

During the year ended December 31, 2018 , we closed on the sale of 176 condominium units at our Assembly Row and Pike & Rose properties (combined) and received proceeds net of closing costs of $ 133.5 million , For the year ended December 31, 2018 , we recognized a gain of $ 7.2 million , net of $ 1.6 million of income taxes.

The cost basis for remaining condominium units that were ready for their intended use as of December 31, 2018 was $ 16.6 million , and is included in "assets held for sale" on our consolidated balance sheet.

NOTE 4— ACQUIRED IN-PLACE LEASES

4 unchanged sentences

The following is a summary of our acquired lease assets and liabilities:

December 31, 2019

December 31, 2018

Accumulated Amortization

December 31, 2020 December 31, 2019

Cost Accumulated Amortization Cost Accumulated Amortization

(in thousands)

1 unchanged sentence

Below market leases, lessee 34,604 ( 4,190 ) 34,604 ( 3,362 )

Total $ 78,164 $ ( 35,851 ) $ 83,134 $ ( 36,195 )

Below market leases, lessor $ ( 174,582 ) $ 68,286 $ ( 177,512 ) $ 66,419

Above market leases, lessee ( 9,084 ) 2,116 ( 9,084 ) 1,590

Total $ ( 183,666 ) $ 70,402 $ ( 186,596 ) $ 68,009

The value allocated to in-place leases where we are the lessor is amortized over the related lease term and reflected as additional rental income for below market leases or a reduction of rental income for above market leases in the consolidated statements of comprehensive income.

2 unchanged sentences

Year Ended December 31,

2020 2019 2018

(in thousands)

7 unchanged sentences

December 31, 2020

Above market leases, lessor

Below market leases, lessee

Below market leases, lessor

Above market leases, lessee

Above market leases, lessor 3.5 years

Below market leases, lessee 38.6 years

Below market leases, lessor 17.8 years

Above market leases, lessee 13.4 years

The amortization for acquired in-place leases during the next five years and thereafter, assuming no early lease terminations, is as follows:

Acquired Lease Assets

Acquired Lease Liabilities

Acquired Lease Assets Acquired Lease Liabilities

(In thousands)

Year ending December 31,

2021 $ 3,302 $ 7,738

2022 2,637 7,501

2023 2,439 7,253

2024 2,189 6,784

2025 1,911 6,300

Thereafter 29,835 77,688

$ 42,313 $ 113,264

The following is a summary of our total debt outstanding as of December 31, 2020 and 2019:

Principal Balance as of December 31,

Stated Interest Rate as of

Stated Maturity Date as of

Description of Debt

December 31, 2019

Mortgages payable

(Dollars in thousands)

Rollingwood Apartments

The Shops at Sunset Place

September 1, 2020

January 31, 2021

Sylmar Towne Center

Plaza Del Sol

December 1, 2021

THE AVENUE at White Marsh

January 1, 2022

Montrose Crossing

January 10, 2022

November 1, 2025

August 1, 2026

Plaza El Segundo

The Grove at Shrewsbury (East)

September 1, 2027

Hoboken (24 Buildings)

LIBOR + 1.95%

December 15, 2029

Various Hoboken (12 Buildings)

Various through 2029

January 15, 2031

Hoboken (1 Building)

Principal Balance as of December 31, Stated Interest Rate as of Stated Maturity Date as of

Description of Debt 2020 2019 December 31, 2020 December 31, 2020

Mortgages payable (Dollars in thousands)

The Shops at Sunset Place $ — $ 61,987 5.62 % September 1, 2020

29th Place — 3,878 5.91 % January 31, 2021

Sylmar Towne Center 16,236 16,630 5.39 % June 6, 2021

Plaza Del Sol 8,041 8,230 5.23 % December 1, 2021

THE AVENUE at White Marsh 52,705 52,705 3.35 % January 1, 2022

Montrose Crossing 65,596 67,492 4.20 % January 10, 2022

Azalea 40,000 40,000 3.73 % November 1, 2025

Bell Gardens 12,408 12,677 4.06 % August 1, 2026

Plaza El Segundo 125,000 125,000 3.83 % June 5, 2027

The Grove at Shrewsbury (East) 43,600 43,600 3.77 % September 1, 2027

Brook 35 11,500 11,500 4.65 % July 1, 2029

Hoboken (24 Buildings) 56,450 56,450 LIBOR + 1.95% December 15, 2029

Various Hoboken (14 Buildings) 32,705 24,627 Various (1) Various through 2029

Chelsea 5,234 5,597 5.36 % January 15, 2031

Hoboken (1 Building) 16,560 16,874 3.75 % July 1, 2042

Subtotal 486,035 547,247

Net unamortized premium and debt issuance costs ( 1,924 ) ( 1,568 )

1 unchanged sentence

Notes payable

LIBOR + 0.90%

November 21, 2019

Revolving credit facility

LIBOR + 0.775%

January 19, 2024

Various through 2028

Term loan 400,000 — LIBOR + 1.35% May 6, 2021

Revolving credit facility — — LIBOR + 0.775% January 19, 2024

Various 3,270 3,843 11.31 % Various through 2028

Subtotal 403,270 3,843

Net unamortized debt issuance costs ( 494 ) ( 62 )

1 unchanged sentence

Senior notes and debentures

January 15, 2021

August 1, 2022

January 15, 2024

7.48% debentures

August 15, 2026

July 15, 2027

6.82% medium term notes

August 1, 2027

June 15, 2029

December 1, 2044

August 1, 2046

2.55% notes — 250,000 2.55 % January 15, 2021

3.00% notes — 250,000 3.00 % August 1, 2022

2.75% notes 275,000 275,000 2.75 % June 1, 2023

3.95% notes 600,000 300,000 3.95 % January 15, 2024

1.25% notes 400,000 — 1.25 % February 15, 2026

7.48% debentures 29,200 29,200 7.48 % August 15, 2026

3.25% notes 475,000 475,000 3.25 % July 15, 2027

6.82% medium term notes 40,000 40,000 6.82 % August 1, 2027

3.20% notes 400,000 400,000 3.20 % June 15, 2029

3.50% notes 400,000 — 3.50 % June 1, 2030

4.50% notes 550,000 550,000 4.50 % December 1, 2044

3.625% notes 250,000 250,000 3.625 % August 1, 2046

Subtotal 3,419,200 2,819,200

Net unamortized discount and debt issuance costs ( 14,712 ) ( 12,066 )

Total senior notes and debentures 3,404,488 2,807,134

Various through 2106

Total debt and capital lease obligations

Total debt $ 4,291,375 $ 3,356,594

_____________________

1) The interest rates on these mortgages range from 3.91 % to 5.00 %.

On January 31, 2019 , we repaid the $ 20.3 million mortgage loan on Rollingwood Apartments, at par, prior to its original maturity date.

On June 7, 2019 , we issued $ 300.0 million of fixed rate senior unsecured notes that mature on June 15, 2029 and bear interest at 3.20 % .

In connection with the two buildings we acquired in Hoboken, New Jersey on February 12, 2020, we assumed two mortgage loans with a net face amount of $ 8.9 million and a fair value of $ 9.0 million.

The mortgage loans bear interest at 4.00 % and mature on July 27, 2027.

In March 2020, in order to strengthen our financial position and balance sheet, to maximize our liquidity, and to provide maximum financial flexibility to continue our business initiatives as the effects of COVID-19 continue to evolve, we borrowed $ 990.0 million under our revolving credit facility, representing a draw-down of almost the entirety of our $ 1.0 billion revolving credit facility.

This amount was subsequently repaid when we entered into a $ 400.0 million unsecured term loan on May 6, 2020 and issued $ 700.0 million of fixed rate unsecured senior notes on May 11, 2020.

The unsecured term loan matures on May 6, 2021, plus one twelve month extension at our option, and bears interest at LIBOR plus 135 basis points based on our current credit rating.

Our net proceeds from this transaction after underwriting fees and other costs were $ 398.7 million.

The $ 700.0 million of unsecured senior notes issued in May 2020 comprise a $ 300.0 million reopening of our 3.95 % senior notes maturing on January 15, 2024 and a $ 400.0 million issuance of 3.50 % senior notes maturing on June 1, 2030.

The 3.95 % senior notes were offered at 103.257 % of the principal amount with a yield to maturity of 2.944 %, and have the same terms and are of the same series as the $ 300.0 million senior notes issued on December 9, 2013.

The 3.50 % senior notes were offered at 98.911 % of the principal amount with a yield to maturity of 3.630 %.

Our net proceeds from these transactions after the net issuance premium, underwriting fees, and other costs were $ 700.1 million.

On September 1, 2020, the $ 60.6 million non-recourse mortgage loan on The Shops at Sunset Place matured and was not repaid.

The lender declared the loan in default until the non-recourse loan was repaid as part of the sale of the property on December 31, 2020.

The default did not trigger a cross default with any other indebtedness.

The repayment amount including accrued interest and fees, net of $ 4.5 million of escrows held by the lender was $ 58.5 million.

On October 13, 2020, we issued $ 400.0 million of fixed rate senior unsecured notes that mature on February 15, 2026 and bear interest at 1.25 %.

The notes were offered at 99.339 % of the principal amount with a yield to maturity of 1.379 %.

On August 21, 2019 , we issued an additional $ 100.0 million senior notes of the same series and with the same terms.

The August notes were offered at 103.813 % of the principal amount, with a yield to maturity of 2.744 % .

The combined net proceeds from the note offerings after net issuance premium, underwriting fees, and other costs were $ 399.9 million , which were primarily used to repay our $ 275.0 million unsecured term loan, at par, on June 7, 2019 and for general corporate purposes.

On July 25, 2019 , we amended our revolving credit facility to increase our borrowing capacity to $ 1.0 billion and extend the maturity date to January 19, 2024, plus two six-month extensions at our option.

Under the amended facility, the spread over LIBOR is 77.5 basis points based on our current credit rating.

In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $ 1.5 billion .

The net proceeds of the notes, or "green bonds," after issuance discount, underwriting fees, and other costs were approximately $ 394.2 million, and will be allocated to the financing and refinancing of recently completed and future eligible green projects, which includes (i) investments in acquisitions of buildings;

(ii) building developments or redevelopments;

(iii) renovations in existing buildings;

and (iv) tenant improvement projects, in each case that have received, or are expected to receive, in the three years prior to the issuance of the notes or during the term of the notes, a LEED Silver, Gold, or Platinum certification (or environmentally equivalent successor standards).

Net proceeds allocated to previously incurred costs associated with eligible green projects will be available for repayment of indebtedness.

On December 15, 2020, we repaid our $ 250.0 million 2.55 % notes prior to the original maturity date of January 15, 2021 at par.

The redemption price of $ 252.7 million included accrued but unpaid interest of $ 2.7 million.

On December 31, 2020, we repaid our $ 250.0 million 3.00 % notes prior to the original maturity date of August 1, 2022.

The redemption price of $ 263.5 million included a make-whole premium of $ 10.4 million and accrued but unpaid interest of $ 3.1 million.

The "early extinguishment of debt" charge in 2020 of $ 11.2 million includes the make-whole premium and the write off of the unamortized discount and debt issuance fees.

On December 31, 2020, we also repaid the $ 3.6 million mortgage loan on 29th Place, at par, prior to its original maturity date.

During 2020, 2019 and 2018, the maximum amount of borrowings outstanding under our revolving credit facility was $ 990.0 million, $ 116.5 million and $ 177.0 million, respectively.

2 unchanged sentences

At December 31, 2020 and 2019, our revolving credit facility had no balance outstanding.

In connection with our Hoboken, New Jersey acquisitions in 2019 , we assumed mortgage loans with a face amount of $ 41.6 million and a fair value of $ 42.9 million , and entered into a new mortgage loan with a face amount of $ 56.5 million .

The mortgage loans associated with our Hoboken acquisitions have the following contractual terms:

Stated Interest Rate

Maturity Date

(in millions)

September 18, 2019 (date assumed)

November 26, 2019 (date originated)

LIBOR + 1.95%

December 15, 2029

November 26, 2019 (date assumed)

December 19, 2019 (date assumed)

_____________________

The interest rate is effectively fixed at 3.67 % as a result of two interest rate swap agreements.

The interest rates on these mortgages range from 3.91 % to 5.00 % and have maturity dates ranging from January 9, 2025 to May 31, 2029.

The interests rates on these mortgages range from 4.00 % to 4.38 % and have maturity dates ranging from October 1, 2025 to July 1, 2026.

Our revolving credit facility and certain notes require us to comply with various financial covenants, including the maintenance of minimum shareholders’ equity and debt coverage ratios and a maximum ratio of debt to net worth.

Our revolving credit facility, term loan, and certain notes require us to comply with various financial covenants, including the maintenance of minimum shareholders’ equity and debt coverage ratios and a maximum ratio of debt to net worth.

As of December 31, 2020, we were in compliance with all default related debt covenants.

Scheduled principal payments on mortgages payable, notes payable, senior notes and debentures as of December 31, 2020 are as follows:

Senior Notes and

Payable Notes

Payable Senior Notes and

Debentures Total

(In thousands)

1 unchanged sentence

2021 $ 28,101 $ 400,676 (1) $ — $ 428,777

2022 119,706 751 — 120,457

2023 3,549 765 275,000 279,314

2024 3,688 656 (2) 600,000 604,344

2025 48,033 333 — 48,366

Thereafter 282,958 89 2,544,200 2,827,247

$ 486,035 $ 403,270 $ 3,419,200 $ 4,308,505 (3)

_____________________

(1) Our $ 400.0 million term loan matures on May 6, 2021 plus one twelve month extension, at our option.

(2) Our $ 1.0 billion revolving credit facility matures on January 19, 2024, plus two six-month extensions at our option.

15 unchanged sentences

A summary of the carrying amount and fair value of our mortgages payable, notes payable and senior notes and debentures is as follows:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Value Fair Value Carrying

Value Fair Value

(In thousands)

1 unchanged sentence

Senior notes and debentures $ 3,404,488 $ 3,761,465 $ 2,807,134 $ 3,001,216

During 2019 , we entered into two interest rate swap agreements with notional amounts of $ 56.5 million that are measured at fair value on a recurring basis.

The interest rate swap agreements fix the interest rate on $ 56.5 million of mortgage payables associated with our Hoboken acquisition at 3.67 % through December 15, 2029 .

As of December 31, 2020, we have two interest rate swap agreements with notional amounts of $ 56.5 million that are measured at fair value on a recurring basis.

The interest rate swap agreements fix the interest rate on $ 56.5 million of mortgage payables at 3.67 % through December 15, 2029.

The fair values of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs.

The fair value of our swaps at December 31, 2019 was an asset of $ 0.1 million and is included in "prepaid expenses and other assets" on our consolidated balance sheet.

During 2019 , we reclassified less than $ 0.1 million from other comprehensive income as an increase to interest expense.

A summary of our financial assets that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:

December 31, 2019

December 31, 2018

The fair value of our swaps at December 31, 2020 was a liability of $ 4.7 million and is included in "prepaid expenses and other assets" on our consolidated balance sheet.

During 2020, the value of our interest rate

swaps decreased $ 4.8 million (including $ 0.7 million reclassified from other comprehensive loss to interest expense).

A summary of our financial (liabilities) assets that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:

December 31, 2020 December 31, 2019

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

(In thousands)

22 unchanged sentences

Warranty reserves are released once the legal liability period has expired or all related work has been substantially completed.

On December 17, 2020, we acquired one of our partner's preferred and common interests in the partnership that owns our Plaza El Segundo property for $ 7.3 million, bringing our ownership to approximately 78.2 %.

On December 11, 2019, w e received proceeds related to the sale under the threat of condemnation at San Antonio Center as discussed in Note 3 to the consolidated financial statements.

We have indemnified the condemning authority for all costs incurred related to the condemnation proceedings including any payments required to tenants at the property and expect the process will take several years to complete.

During 2020, we incurred $ 12.9 million of net payments to tenants, and consequently , at December 31, 2020, we have a liability of $ 32.6 million to reflect our estimate of the remaining consideration.

At December 31, 2020 and 2019, our reserves for general liability costs were $ 4.6 million and $ 3.0 million, respectively, and are included in “accounts payable and accrued expenses” in our consolidated balance sheets.

4 unchanged sentences

As of December 31, 2020 in connection with capital improvement, development, and redevelopment projects, the Trust has contractual obligations of approximately $ 356.1 million.

Future minimum lease payments and their present value for properties under finance leases as of December 31, 2019 , are as follows:

We are obligated under operating lease agreements on several shopping centers and one office lease requiring minimum annual payments as follows, as of December 31, 2020:

(In thousands)

Year ending December 31,

Thereafter 175,387

Total future minimum operating lease payments $ 201,201

Less amount representing interest ( 128,760 )

Add straight line lease obligation

Present value

We are obligated under operating lease agreements on several shopping centers requiring minimum annual payments as follows, as of December 31, 2019 :

Operating lease liabilities $ 72,441

Future minimum lease payments and their present value for properties under finance leases as of December 31, 2020, are as follows:

(In thousands)

Year ending December 31,

Thereafter 80,837

Total future minimum finance lease payments 154,486

Less amount representing interest ( 82,437 )

Finance lease liabilities $ 72,049

A master lease for Mercer Mall includes a fixed purchase price option for $ 55 million in 2023.

1 unchanged sentence

Under the terms of the Congressional Plaza partnership agreement, a minority partner has the right to require us and the other minority partner to purchase its 26.63 % interest in Congressional Plaza at the interest’s then-current fair market value.

If the other minority partner defaults in their obligation, we must purchase the full interest.

If the okother minority partner defaults in their obligation, we must purchase the full interest.

Based on management’s current estimate of fair market value as of December 31, 2020, our estimated maximum liability upon exercise of the put option would range from approximately $ 69 million to $ 72 million.

13 unchanged sentences

In 2020, 2019 and 2018, 24,491 shares, 15,909 shares and 17,952 shares, respectively, were issued under the Plan.

On September 29, 2017 , we issued 6,000,000 Depositary Shares, each representing 1/1000th interest of 5.0 % Series C Cumulative Redeemable Preferred Share, par value $ 0.01 per share ("Series C Preferred Shares"), at the liquidation preference of $ 25.00 per depositary share (or $ 25,000 per Series C Preferred share) in an underwritten public offering, which were outstanding as of December 31, 2019 , 2018 , and 2017.

As of December 31, 2020, 2019, and 2018, we had 6,000,000 Depositary Shares outstanding, each representing 1/1000th interest of 5.0 % Series C Cumulative Redeemable Preferred Share, par value $ 0.01 per share ("Series C Preferred Shares"), at the liquidation preference of $ 25.00 per depositary share (or $ 25,000 per Series C Preferred share).

The Series C Preferred Shares accrue dividends at a rate of 5.0 % of the $ 25,000 liquidation preference per year and are redeemable at our option on or after September 29, 2022.

Additionally, they are not convertible and holders of these shares generally have no voting rights, unless we fail to pay dividends for six or more quarters.

The net proceeds after underwriting fees and other costs were approximately $ 145.0 million for the year ended December 31, 2017.

As of December 31, 2020, 2019, and 2018, we had 399,896 shares of 5.417 % Series 1 Cumulative Convertible Preferred Shares (“Series 1 Preferred Shares”) outstanding that have a liquidation preference of $ 25 per share and par value $ 0.01 per share.

4 unchanged sentences

We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay amounts of outstanding under our revolving credit facility and/or for general corporate purposes.

For the year ended December 31, 2019 , we issued 1,069,699 common shares at a weighted average price per share of $ 134.71 for net cash proceeds of $ 142.7 million and paid $ 1.2 million in commissions and $ 0.2 million in additional offering expenses related to the sales of these common shares.

For the year ended December 31, 2020, we issued 1,080,804 common shares at a weighted average price per share of $ 92.51 for net cash proceeds of $ 98.8 million including paying $ 1.0 million in commissions and $ 0.1 million in additional offering expenses related to the sales of these common shares.

For the year ended December 31, 2019, we issued 1,069,699 common shares at a weighted average price per share of $ 134.71 for net cash proceeds of $ 142.7 million and paid $ 1.2 million in commissions and $ 0.2 million in additional offering expenses related to the sales of these common shares.

3 unchanged sentences

Year Ended December 31,

2020 2019 2018

Declared Paid Declared Paid Declared Paid

Common shares $ 4.220 $ 4.210 $ 4.140 $ 4.110 $ 4.040 $ 4.020

4 unchanged sentences

Year Ended December 31,

2020 2019 2018

Common shares

Ordinary dividend $ 3.452 $ 4.110 $ 3.859

Return of capital 0.758 — —

Ordinary dividend eligible for 15% rate — — 0.161

$ 4.210 $ 4.110 $ 4.020

5.417% Series 1 Cumulative Convertible Preferred shares

1 unchanged sentence

Ordinary dividend eligible for 15% rate — — 0.054

$ 1.354 $ 1.354 $ 1.354

5.0% Series C Cumulative Redeemable Preferred shares

1 unchanged sentence

Ordinary dividend eligible for 15% rate — — 0.052

On October 30, 2019 , the Trustees declared a quarterly cash dividend of $ 1.05 per common share, payable January 15, 2020 to common shareholders of record on January 2, 2020 .

NOTE 10— OPERATING LEASES

$ 1.250 $ 1.250 $ 1.306

On November 5, 2020, the Trustees declared a quarterly cash dividend of $ 1.06 per common share, payable January 15, 2021 to common shareholders of record on January 4, 2021.

NOTE 10— LEASES

At December 31, 2020, our 101 predominantly retail shopping center and mixed-use properties are located in 11 states and the District of Columbia.

8 unchanged sentences

Year ending December 31,

2021 $ 586,082

Thereafter 1,493,377

The following table provides additional information on our operating and finance leases where we are the lessee:

Year Ended December 31,

(In thousands)

Finance lease cost:

Amortization of right-of-use assets $ 1,284 $ 1,284

Interest on lease liabilities 5,826 5,824

Operating lease cost 5,946 6,063

Variable lease cost 353 487

Total lease cost $ 13,409 $ 13,658

OTHER INFORMATION:

ROU assets obtained in exchange for operating lease liabilities 855 —

ROU assets obtained in exchange for finance lease liabilities — —

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows for finance leases 5,736 5,759

Operating cash flows for operating leases 5,498 5,561

Financing cash flows for finance leases 46 47

Year Ended December 31,

Weighted-average remaining term - finance leases 17.3 years 18.2 years

Weighted-average remaining term - operating leases 53.4 years 53.7 years

Weighted-average discount rate - finance leases 8.0 % 8.0 %

Weighted-average discount rate - operating leases 4.4 % 4.5 %

NOTE 11— COMPONENTS OF RENTAL EXPENSE

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

(In thousands)

Repairs and maintenance $ 66,845 $ 73,179 $ 67,745

Utilities 25,065 27,729 27,635

Management fees and costs 23,752 24,930 24,024

Payroll 16,691 16,485 16,140

Insurance 12,439 9,036 7,547

Marketing 6,432 7,427 7,935

Ground rent 4,595 4,803 4,697

Bad debt (1) — — 4,708

Other operating (2) 15,101 24,242 12,663

1 unchanged sentence

_____________________

Collectibility adjustments are now presented as a reduction of rental income rather than rental expense in accordance with our adoption of the new lease standard (see Note 2 for additional disclosure).

(1) Collectibility adjustments are now presented as a reduction of rental income rather than rental expense in accordance with our adoption of the new lease standard in 2019.

(2) Other operating for the year ended December 31, 2019 includes an $ 11.9 million charge relating to the buyout of a lease at Assembly Square Marketplace .

2 unchanged sentences

Year Ended December 31,

2020 2019 2018

(In thousands)

2 unchanged sentences

Share-based compensation expense $ 11,924 $ 12,276 $ 11,719

We have grants outstanding under our shareholder approved 2010 Performance Incentive Plan, as amended (the "2010 Plan”), which authorized the grant of share options, common shares and other share-based awards for up to 2,450,000 common shares of beneficial interest.

Option awards under the plan are required to have an exercise price at least equal to the closing trading price of our common shares on the date of grant.

As of December 31, 2020, we have grants outstanding under two share-based compensation plans.

In May 2020, our shareholders approved the 2020 Performance Incentive Plan ("the 2020 Plan"), which authorized the grant of share options, common shares, and other share-based awards for up to 1,750,000 common shares of beneficial interest.

Our 2010 Long Term Incentive Plan, as amended (the "2010 Plan”), which expired in May 2020, authorized the grant of share options, common shares and other share-based awards for up to 2,450,000 common shares of beneficial interest.

Option awards under the plans are required to have an exercise price at least equal to the closing trading price of our common shares on the date of grant.

Options and restricted share awards under the plan generally vest over three to seven years and option awards typically have a ten-year contractual term.

10 unchanged sentences

Year Ended December 31,

Volatility 18.0 %

Expected dividend yield 3.6 %

2 unchanged sentences

The following table provides a summary of option activity for 2020:

Contractual Term

(In thousands)

Option Weighted-

Price Weighted-

Contractual Term Aggregate

(In years) (In thousands)

Outstanding at December 31, 2019 682 $ 152.34

Exercised — —

Forfeited or expired — —

2 unchanged sentences

The weighted-average grant-date fair value of options granted in 2018 was $ 14.42 per share, which were later forfeited during 2018.

The total cash received from options exercised during 2018 and 2017 was $ 4.6 million and $ 10.0 million , respectively.

The total intrinsic value of options exercised during the years ended December 31, 2018 and 2017 was $ 8.2 million and $ 10.7 million , respectively.

The total cash received from options exercised during 2018 was $ 4.6 million.

The total intrinsic value of options exercised during the year ended December 31, 2018 was $ 8.2 million.

The following table provides a summary of restricted share activity for 2020:

Weighted-Average

Shares Weighted-Average

Grant-Date Fair

Unvested at December 31, 2019 220,578 $ 129.78

Granted 116,351 124.55

Vested ( 101,651 ) 129.39

Forfeited ( 2,100 ) 131.78

Unvested at December 31, 2020 233,178 $ 127.32

5 unchanged sentences

Subsequent to December 31, 2020, common shares were awarded under various compensation plans as follows:

January 2, 2020

February 4, 2020

Restricted Shares

Officers and key employees

Date Award Vesting Term Beneficiary

January 4, 2021 9,928 Shares Immediate Trustees

February 10, 2021 137,210 Restricted Shares 3-5 years Officers and key employees

February 10, 2021 3,658 Options 5 years Officers and key employees

Additionally, on February 10, 2021, 10,441 restricted stock units were awarded to an officer that vest at the end of four years.

The final awards earned are based on meeting certain market based performance criteria, and may vary from 0% to 200% of the original award.

NOTE 13— SAVINGS AND RETIREMENT PLANS

21 unchanged sentences

Year Ended December 31,

2020 2019 2018

(In thousands, except per share data)

Net income $ 135,888 $ 360,542 $ 249,026

Preferred share dividends ( 8,042 ) ( 8,042 ) ( 8,042 )

5 unchanged sentences

Weighted average common shares outstanding—diluted 75,515 74,766 73,302

EARNINGS PER COMMON SHARE, BASIC

Net income available for common shareholders

EARNINGS PER COMMON SHARE, DILUTED

Net income available for common shareholders

NOTE 15— SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data is as follows:

(In thousands, except per share data)

Operating income (1)

Net income (1)

Net income attributable to the Trust (1)

Net income available for common shareholders (1)

Earnings per common share—basic (1)

Earnings per common share—diluted (1)

(In thousands, except per share data)

Operating income (2)

Net income (2)

Net income attributable to the Trust (2)

EARNINGS PER COMMON SHARE, BASIC AND DILUTED

Net income available for common shareholders $ 1.62 $ 4.61 $ 3.18

Earnings per common share—basic (2)

Earnings per common share—diluted (2)

Second and third quarter 2019 include net gains of $ 16.2 million and $ 14.3 million , respectively, related to the sale of two properties and one parcel of land, as well as condominiums sold at our Assembly Row and Pike & Rose properties.

Third quarter 2019 also includes an $ 11.9 million charge related to the buyout of a lease at Assembly Square Marketplace.

Fourth quarter 2019 includes an $ 85.1 million net gain on sale under the threat of condemnation of a portion of San Antonio Center .

All of these transactions are further discussed in Note 3.

First and second quarter 2018 include net gains of $ 3.3 million and $ 4.0 million , respectively, related to condominiums sold at our Assembly Row and Pike & Rose properties.

Third and fourth quarter 2018 include gains of $ 3.1 million and $ 1.6 million , respectively, related to the sale of one residential building and one property.

All of these transactions are further discussed in Note 3.

NOTE 16— SUBSEQUENT EVENT

On January 10, 2020 , we acquired a 49,000 square foot shopping center in Fairfax, Virginia for $ 22.3 million .

This acquisition was funded by 163,322 downREIT operating partnership units.

NOTE 15— SUBSEQUENT EVENTS

On January 4, 2021, we acquired our partner's 20 % interest in our joint venture arrangement related to the Pike & Rose hotel for $ 2.3 million, and repaid the $ 31.5 million mortgage loan.

As a result of the transaction, we gained control of the hotel portion of this property, and effective January 4, 2021, we have consolidated this asset.

On February 5, 2021, we repaid the $ 16.2 million mortgage loan on Sylmar Town Center, at par, prior to its original maturity date.

FEDERAL REALTY INVESTMENT TRUST

2 unchanged sentences

(Dollars in thousands)

Initial cost to company

Gross amount at which carried at

close of period

Life on which

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I

Descriptions Encumbrance Initial cost to company Cost

Acquisition Gross amount at which carried at

close of period Accumulated

Amortization Date

Construction Date

Acquired Life on which

statements is

Land Building and

Improvements Land Building and

Improvements Total

29TH PLACE (Virginia) $ 10,211 $ 18,863 $ 9,588 $ 10,195 $ 28,467 $ 38,662 $ 14,173 1975 - 2001 5/30/2007 (1)

1 unchanged sentence

ASSEMBLY ROW/ASSEMBLY SQUARE MARKETPLACE (Massachusetts) 93,252 34,196 832,881 69,421 890,908 960,329 88,384 2005, 2012-2020 2005-2013 (1)

2005, 2012-2019

AZALEA (California) 39,750 40,219 67,117 ( 7 ) 40,219 67,110 107,329 8,550 2014 8/2/2017 (1)

1 unchanged sentence

BARCROFT PLAZA (Virginia) 12,617 29,603 7,235 12,617 36,838 49,455 5,904 1963, 1972, 1990, & 2000 1/13/16 & 11/7/16 (1)

1963, 1972, 1990, & 2000

1/13/16 & 11/7/16

BARRACKS ROAD (Virginia) 4,363 16,459 48,774 4,363 65,233 69,596 48,945 1958 12/31/1985 (1)

BELL GARDENS (California) 12,082 24,406 85,947 671 24,406 86,618 111,024 14,425 1990, 2003, 2006 8/2/17 & 11/29/18 (1)

1990, 2003, 2006

8/2/17 & 11/29/18

BETHESDA ROW (Maryland) 46,579 35,406 162,367 43,904 200,448 244,352 92,357 1945-2008 12/31/93, 6/2/97, 1/20/06, 9/25/08, 9/30/08, & 12/27/10 (1)

12/31/93, 6/2/97, 1/20/06, 9/25/08, 9/30/08, & 12/27/10

BRICK PLAZA (New Jersey) — 24,715 78,133 4,094 98,754 102,848 56,240 1958 12/28/1989 (1)

4 unchanged sentences

2008 8/25/06, 1/30/07, & 7/16/08 (1)

8/25/06, 1/30/07, & 7/16/08

COCOWALK (Florida) 34,406 72,123 73,504 50,838 129,195 180,033 12,333 1990/1994, 1922-1973, 2018-2019 5/4/15, 7/1/15, 12/16/15, 7/26/16, 6/30/17, & 8/10/17 (1)

1990/1994, 1922-1973, 2018-2019

5/4/15, 7/1/15, 12/16/15, 7/26/16, 6/30/17, & 8/10/17

COLORADO BLVD (California) 2,415 3,964 6,905 2,415 10,869 13,284 9,397 1905-1988 8/14/98 (1)

12/31/96 & 8/14/98

CONGRESSIONAL PLAZA (Maryland)

FEDERAL REALTY INVESTMENT TRUST

2 unchanged sentences

(Dollars in thousands)

Initial cost to company

Gross amount at which carried at

close of period

Life on which

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I

Descriptions Encumbrance Initial cost to company Cost

Acquisition Gross amount at which carried at

close of period Accumulated

Amortization Date

Construction Date

Acquired Life on which

statements is

Land Building and

Improvements Land Building and

Improvements Total

CONGRESSIONAL PLAZA (Maryland) 2,793 7,424 95,605 2,793 103,029 105,822 59,967 1965/2003/ 2016 4/1/1965 (1)

COURTHOUSE CENTER (Maryland) 1,750 1,869 3,445 1,750 5,314 7,064 2,768 1975 12/17/1997 (1)

CROSSROADS (Illinois) 4,635 11,611 19,649 4,635 31,260 35,895 20,191 1959 7/19/1993 (1)

CROW CANYON COMMONS (California)

12/29/05 & 2/28/07

DARIEN (Connecticut)

CROW CANYON COMMONS (California) 27,245 54,575 8,911 27,245 63,486 90,731 28,124 Late 1970's/

1998/2006 12/29/05 & 2/28/07 (1)

DEDHAM PLAZA (Massachusetts) 16,658 13,964 16,521 16,658 30,485 47,143 18,282 1959 12/31/93, 12/14/16, 1/29/19, & 3/12/19 (1)

12/31/93, 12/14/16, 1/29/19, & 3/12/19

DEL MAR VILLAGE (Florida) 15,624 41,712 16,427 15,587 58,176 73,763 26,043 1982/1994/ 2007 5/30/08, 7/11/08, & 10/14/14 (1)

1982/1994/2007

5/30/08, 7/11/08, & 10/14/14

EAST BAY BRIDGE (California) 29,069 138,035 12,123 29,069 150,158 179,227 41,377 1994-2001, 2011/2012 12/21/2012 (1)

1994-2001, 2011/2012

EASTGATE CROSSING (North Carolina)

ELLISBURG (New Jersey) 4,028 11,309 18,872 4,013 30,196 34,209 21,740 1959 10/16/1992 (1)

ESCONDIDO PROMENADE (California) 19,117 15,829 18,627 19,117 34,456 53,573 20,066 1987 12/31/96 & 11/10/10 (1)

12/31/96 & 11/10/10

FAIRFAX JUNCTION (Virgina) 16,768 23,825 575 16,768 24,400 41,168 1,647 1981/1986/ 2000 2/8/19 & 1/10/20 (1)

FALLS PLAZA (Virginia) 1,798 1,270 13,044 1,819 14,293 16,112 9,477 1960/1962 9/30/67 & 10/05/72 (1)

9/30/67 & 10/05/72

FEDERAL PLAZA (Maryland) 10,216 17,895 42,735 10,216 60,630 70,846 48,440 1970 6/29/1989 (1)

11 unchanged sentences

(Dollars in thousands)

Initial cost to company

Gross amount at which carried at

close of period

Life on which

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I

Descriptions Encumbrance Initial cost to company Cost

Acquisition Gross amount at which carried at

close of period Accumulated

Amortization Date

Construction Date

Acquired Life on which

statements is

Land Building and

Improvements Land Building and

Improvements Total

GEORGETOWNE SHOPPING CENTER (New York) 32,202 49,586 1,469 32,202 51,055 83,257 2,047 1969/2006/ 2015 11/15/19 (1)

1969/2006/2015

GOVERNOR PLAZA (Maryland) 2,068 4,905 19,272 2,068 24,177 26,245 21,399 1963 10/1/1985 (1)

4 unchanged sentences

HASTINGS RANCH PLAZA (California) 2,257 22,393 616 2,257 23,009 25,266 3,013 1958, 1984, 2006, 2007 2/1/2017 (1)

1958, 1984, 2006, 2007

HAUPPAUGE (New York) 8,791 15,262 5,829 8,419 21,463 29,882 13,729 1963 8/6/1998 (1)

HOBOKEN (New Jersey) 105,939 47,460 167,835 546 47,460 168,381 215,841 6,006 1887-2006 9/18/19, 11/26/19, 12/19/19, & 2/12/20 (1)

9/18/19, 11/26/19, & 12/19/19

HOLLYWOOD BLVD (California) 8,300 16,920 36,159 8,370 53,009 61,379 18,599 1929/1991 3/22/99 & 6/18/99 (1)

3/22/99 & 6/18/99

HUNTINGTON (New York) 12,194 16,008 19,604 12,194 35,612 47,806 18,564 1962 12/12/88, 10/26/07, & 11/24/15 (1)

12/12/88, 10/26/07, & 11/24/15

HUNTINGTON SQUARE (New York) — 10,075 3,537 506 13,106 13,612 4,751 1980/2004-2007 8/16/2010 (1)

1980/2004-2007

IDYLWOOD PLAZA (Virginia) 4,308 10,026 3,089 4,308 13,115 17,423 10,100 1991 4/15/1994 (1)

4 unchanged sentences

LAWRENCE PARK (Pennsylvania) 6,150 8,491 26,556 6,161 35,036 41,197 23,922 1972 7/23/1980 & 4/3/17 (1)

7/23/1980 & 4/3/17

LEESBURG PLAZA (Virginia) 8,184 10,722 18,416 8,184 29,138 37,322 16,976 1967 9/15/1998 (1)

1 unchanged sentence

MELVILLE MALL (New York) 35,622 32,882 35,161 35,622 68,043 103,665 19,630 1974 10/16/2006 (1)

MERCER MALL (New Jersey)

10/14/03 & 1/31/17

FEDERAL REALTY INVESTMENT TRUST

2 unchanged sentences

(Dollars in thousands)

Initial cost to company

Gross amount at which carried at

close of period

Life on which

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I

Descriptions Encumbrance Initial cost to company Cost

Acquisition Gross amount at which carried at

close of period Accumulated

Amortization Date

Construction Date

Acquired Life on which

statements is

MONTROSE CROSSING (Maryland)

1960s, 1970s, 1996 & 2011

12/27/11 & 12/19/13

Land Building and

Improvements Land Building and

Improvements Total

MERCER MALL (New Jersey) 5,917 18,358 47,690 5,869 66,096 71,965 34,954 1975 10/14/03 & 1/31/17 (1)

MONTROSE CROSSING (Maryland) 65,596 48,624 91,819 24,539 48,624 116,358 164,982 35,861 1960s, 1970s, 1996 & 2011 12/27/11 & 12/19/13 (1)

MOUNT VERNON/SOUTH VALLEY/7770 RICHMOND HWY.

1966/1972/1987/2001

3/31/03, 3/21/03, & 1/27/06

(Virginia) 10,068 33,501 43,397 10,150 76,816 86,966 41,890 1966/1972/ 1987/2001 3/31/03, 3/21/03, & 1/27/06 (1)

NORTH DARTMOUTH (Massachusetts) 9,366 — 3 9,366 3 9,369 2 2004 8/24/2006 (1)

2 unchanged sentences

OLD TOWN CENTER (California) 3,420 2,765 31,684 3,420 34,449 37,869 23,745 1962, 1997-1998 10/22/1997 (1)

1962, 1997-1998

OLIVO AT MISSION HILLS (California) 15,048 46,732 19,503 15,048 66,235 81,283 4,706 2017-2018 8/2/2017 (1)

1 unchanged sentence

PENTAGON ROW (Virginia) — 2,955 104,222 — 107,177 107,177 54,974 1999 - 2002 1998 & 11/22/10 (1)

1998 & 11/22/10

PERRING PLAZA (Maryland) 2,800 6,461 22,637 2,800 29,098 31,898 24,646 1963 10/1/1985 (1)

PIKE & ROSE (Maryland) 31,471 10,335 608,663 27,929 622,540 650,469 65,962 1963, 2012-2020 5/18/82, 10/26/07, & 7/31/12 (1)

1963, 2012-2019

5/18/82, 10/26/07, & 7/31/12

PIKE 7 PLAZA (Virginia) 14,970 22,799 11,775 14,914 34,630 49,544 19,814 1968 3/31/97 & 7/8/15 (1)

3/31/97 & 7/8/15

PLAZA DEL MERCADO (Maryland) 10,305 21,553 15,037 10,305 36,590 46,895 7,234 1969 1/13/2016 (1)

1 unchanged sentence

PLAZA EL SEGUNDO/THE POINT (California) 124,429 62,127 153,556 81,203 64,788 232,098 296,886 61,152 2006/2007/ 2016 12/30/11, 6/14/13, 7/26/13, & 12/27/13 (1)

2006/2007/2016

12/30/11, 6/14/13, 7/26/13, & 12/27/13

QUEEN ANNE PLAZA (Massachusetts) 3,319 8,457 6,654 3,319 15,111 18,430 10,991 1967 12/23/1994 (1)

1 unchanged sentence

RIVERPOINT CENTER (Illinois) 15,422 104,572 1,930 15,422 106,502 121,924 12,907 1989, 2012 3/31/2017 (1)

ROCKVILLE TOWN SQUARE (Maryland)

ROLLINGWOOD APTS.

FEDERAL REALTY INVESTMENT TRUST

2 unchanged sentences

(Dollars in thousands)

Initial cost to company

Gross amount at which carried at

close of period

Life on which

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I

Descriptions Encumbrance Initial cost to company Cost

Acquisition Gross amount at which carried at

close of period Accumulated

Amortization Date

Construction Date

Acquired Life on which

statements is

SAM'S PARK & SHOP (District of Columbia)

Land Building and

Improvements Land Building and

Improvements Total

ROCKVILLE TOWN SQUARE (Maryland) — 8,092 37,191 — 45,283 45,283 18,838 2005 - 2007 2006 - 2007 (1)

ROLLINGWOOD APTS.

(Maryland) 552 2,246 8,805 774 10,829 11,603 10,237 1960 1/15/1971 (1)

SAN ANTONIO CENTER (California) 26,400 18,462 1,714 26,400 20,176 46,576 4,584 1958, 1964-1965, 1974-1975, 1995-1997 1/9/2015, 9/13/19 (1)

1958, 1964-1965, 1974-1975, 1995-1997

1/9/2015, 9/13/19

SANTANA ROW (California) 66,682 7,502 1,076,914 57,592 1,093,506 1,151,098 243,734 1999-2006, 2009, 2011, 2014, 2016-2020 3/5/97, 7/13/12, 9/6/12, 4/30/13 & 9/23/13 (1)

1999-2006, 2009, 2011, 2014, 2016-2019

3/5/97, 7/13/12, 9/6/12, 4/30/13 & 9/23/13

SAUGUS PLAZA (Massachusetts) 4,383 8,291 4,580 4,383 12,871 17,254 8,135 1976 10/1/1996 (1)

1 unchanged sentence

THE AVENUE AT WHITE MARSH (Maryland) 52,651 20,682 72,432 29,339 20,685 101,768 122,453 42,152 1997 3/8/2007 (1)

THE COMMONS AT DARIEN (Connecticut) 30,368 19,523 26,037 30,368 45,560 75,928 5,051 1920-2009 4/3/13 & 7/20/18 (1)

THE GROVE AT SHREWSBURY (New Jersey) 42,972 18,016 103,115 6,002 18,021 109,112 127,133 24,453 1988/1993/ 2007 1/1/2014 & 10/6/14 (1)

1988/1993/2007

1/1/2014 & 10/6/14

THE SHOPPES AT NOTTINGHAM SQUARE (Maryland) 4,441 12,849 1,054 4,441 13,903 18,344 6,416 2005 - 2006 3/8/2007 (1)

THE SHOPS AT SUNSET PLACE (Florida)

THIRD STREET PROMENADE (California) 22,645 12,709 43,667 25,125 53,896 79,021 34,458 1888-2000 1996-2000 (1)

1 unchanged sentence

TOWER SHOPS (Florida) 29,940 43,390 24,934 29,962 68,302 98,264 23,599 1989, 2017 1/19/11 & 6/13/14 (1)

1/19/11 & 6/13/14

TOWN CENTER OF NEW BRITAIN (Pennsylvania) 1,282 12,285 3,015 1,693 14,889 16,582 6,487 1969 6/29/2006 (1)

3 unchanged sentences

VILLAGE AT SHIRLINGTON (Virginia) 9,761 14,808 39,325 4,234 59,660 63,894 32,191 1940, 2006-2009 12/21/1995 (1)

1940, 2006-2009

WESTGATE CENTER (California)

WHITE MARSH PLAZA (Maryland)

FEDERAL REALTY INVESTMENT TRUST

2 unchanged sentences

(Dollars in thousands)

Initial cost to company

Gross amount at which carried at

close of period

Life on which

COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I

Descriptions Encumbrance Initial cost to company Cost

Acquisition Gross amount at which carried at

close of period Accumulated

Amortization Date

Construction Date

Acquired Life on which

statements is

Land Building and

Improvements Land Building and

Improvements Total

WESTGATE CENTER (California) 6,319 107,284 43,851 6,319 151,135 157,454 66,806 1960-1966 3/31/2004 (1)

WHITE MARSH PLAZA (Maryland) 3,478 21,413 1,497 3,488 22,900 26,388 10,402 1987 3/8/2007 (1)

WHITE MARSH OTHER (Maryland) 29,724 1,843 148 29,754 1,961 31,715 968 1985 3/8/2007 (1)

3 unchanged sentences

WYNNEWOOD (Pennsylvania) 8,055 13,759 20,822 8,055 34,581 42,636 26,423 1948 10/29/1996 (1)

TOTALS $ 484,111 $ 1,387,748 $ 2,493,283 $ 4,701,839 $ 1,374,797 $ 7,208,073 $ 8,582,870 $ 2,357,692

(1) Depreciation of building and improvements is calculated based on useful lives ranging from the life of the lease to 50 years.

6 unchanged sentences

Additions during period

Acquisitions 14,940

Improvements 407,225

Deduction during period—dispositions and retirements of property ( 237,754 )

Balance, December 31, 2018 7,819,472

January 1, 2019 adoption of new accounting standard - See Note 2 ( 71,859 )

Additions during period

Acquisitions 309,921

Improvements 441,703

Deduction during period—dispositions and retirements of property ( 201,105 )

Balance, December 31, 2019 8,298,132

January 1, 2019 adoption of new accounting standard - See Note 2

Additions during period

Deduction during period—dispositions and retirements of property

Acquisitions 39,440

Improvements 473,679

Deductions during period

Impairment of property ( 68,484 )

Dispositions and retirement of property ( 159,897 )

Balance, December 31, 2020 (1) $ 8,582,870

10 unchanged sentences

Balance, December 31, 2018 2,059,143

January 1, 2019 adoption of new accounting standard - See Note 2 ( 18,173 )

Additions during period—depreciation and amortization expense 215,382

1 unchanged sentence

Balance, December 31, 2019 2,215,413

January 1, 2019 adoption of new accounting standard - See Note 2

Additions during period—depreciation and amortization expense 229,199

Deductions during period—dispositions and retirements of property

Deductions during period

Impairment of property ( 11,631 )

Dispositions and retirements of property ( 75,289 )

Balance, December 31, 2020 $ 2,357,692

3 unchanged sentences

(Dollars in thousands)

Description of Lien

Interest Rate

Maturity Date

Periodic Payment

of Mortgages(1)

retail buildings in Philadelphia, PA

participation

Interest only

Column A Column B Column C Column D Column E Column F Column G Column H

Description of Lien Interest Rate Maturity Date Periodic Payment

Liens Face Amount

of Mortgages Carrying

of Mortgages(1) Principal

retail buildings in Philadelphia, PA 8% or 10%

participation May 2021 Interest only

balloon payment due at maturity $ — $ 21,872 $ 21,082 (2) $ 21,082 (3)

Mortgage on retail buildings in Philadelphia, PA

10% plus participation

Interest only monthly;

Mortgage on retail buildings in Philadelphia, PA 10% plus participation May 2021 Interest only monthly;

balloon payment due

at maturity — 9,250 9,250 9,250 (3)

Second mortgage on a retail shopping center in Rockville, MD 11.5 % February 2026 Interest only monthly;

balloon payment due

at maturity 58,750 (4) 5,075 5,075 —

Second mortgage on a retail shopping center in Rockville, MD 10.75 % February 2026 Interest only monthly;

balloon payment due

at maturity 58,750 (4) 4,500 4,485 —

$ 58,750 $ 40,697 $ 39,892 $ 30,332

_____________________

(1) For Federal tax purposes, the aggregate tax basis is approximately $ 40.7 million as of December 31, 2020.

Upon the adoption of ASU 2016-13, we recorded expected losses related to these loans, and are required to do so going forward.

See note 2 to the consolidated financial statements.

(2) This mortgage is available for up to $ 25.0 million.

(3) The borrower was notified in October 2020 that these mortgages were in default.

No interest payments were made from April through July, and partial payments from August through December 31, 2020.

(4) These mortgages are both subordinate to a first mortgage of $ 58.8 million in total.

We do not hold the first mortgage loan on this property.

Accordingly, the amount of the prior lien at December 31, 2020 is estimated.

FEDERAL REALTY INVESTMENT TRUST

3 unchanged sentences

(in thousands)

Balance, December 31, 2016

Balance, December 31, 2017, 2018, and 2019 $ 30,429

January 1, 2020 adoption of new accounting standard - See Note 2 ( 790 )

Additions during period:

Acquisition of loans, net of valuation adjustments 9,560

Issuance of loans 693

Balance, December 31, 2020 $ 39,892

Balance, December 31, 2018

Balance, December 31, 2019

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 9A. Controls and Procedures