What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-02-10 compared with 2021-02-11 · 258 added, 322 removed, 357 unchanged (62% of the section changed)

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Property operating income (1) $ 634,607 $ 545,332 $ 637,030

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

Gain on sale of real estate and change in control of interest, net of tax $ 89,950 $ 98,117 $ 116,393

Operating income $ 394,725 $ 289,524 $ 470,911

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Net cash used in investing activities $ (660,118) $ (368,383) $ (316,532)

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

Net cash (used in) provided by financing activities $ (452,967) $ 661,736 $ (100,105)

Earnings per common share, diluted:

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Number of common shares outstanding 78,603 76,727 75,541

(1) Property operating income is a non-GAAP measure.

See "Results of Operations" in this Item 7.

for further discussion.

(1) Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes.

This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure.

Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP.

The reconciliation of operating income to property operating income for 2021, 2020, and 2019 is as follows:

2021 2020 2019

(in thousands)

Operating income $ 394,725 $ 289,524 $ 470,911

General and administrative 49,856 41,680 42,754

Depreciation and amortization 279,976 255,027 239,758

Impairment charge — 57,218 —

Gain on sale of real estate and change in control of interest, net of tax (89,950) (98,117) (116,393)

Property operating income $ 634,607 $ 545,332 $ 637,030

(2) Funds from operations "FFO" is a supplemental non-GAAP measure.

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(3) EBITDA for Real Estate ("EBITDAre") is a non-GAAP measure that NAREIT defines as:

net income computed in accordance with GAAP plus net interest expense, income tax expense, depreciation and amortization, gain or loss on sale of real estate, impairments of real estate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.

We calculate EBITDAre consistent with the NAREIT definition.

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Early extinguishment of debt — 11,179 —

(Benefit) provision for income tax (194) 772 1,521

Provision (benefit) for income tax 118 (194) 772

Depreciation and amortization 279,976 255,027 239,758

Gain on sale of real estate (98,117) (116,779) (13,560)

Gain on sale of real estate and change in control of interest (89,950) (98,117) (116,779)

Impairment charge — 57,218 —

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We continue to monitor and address risks related to the COVID-19 pandemic.

In March 2020, the World Health Organization characterized COVID-19 as a global pandemic and in response to the rapid spread of the virus, state, and local governments issued orders and recommendations to attempt to reduce the further spread of the disease.

Such orders included shelter-in-place orders, travel restrictions, limitations on public gatherings, school closures, social distancing requirements and the closure of all but critical and essential businesses and services.

These orders required closure of all of our corporate offices as non-essential businesses.

Except for those employees who were critical to providing the necessary day-to-day property management functions required to keep our properties open and operating for essential businesses such as grocery stores and drug stores, and a few employees who were needed to carry out critical corporate functions, we transitioned our entire workforce to remote work in March 2020.

Although some of our corporate offices have reopened with capacity limitations, approximately 75% of our workforce continues to work remotely on a regular basis.

We have not laid off, furloughed, or terminated any employees nor have we modified the compensation of any or our employees as a result of COVID-19, and the transition to a largely remote workforce has not had any material adverse impact on our financial reporting systems, our internal controls, or disclosure controls and procedures.

The government imposed restrictions also required a significant number of tenants who do business in our properties, but were considered non-essential, to close their operations or to significantly limit the amount of business they are able to conduct in their stores.

These closures and restrictions have impacted the tenants’ ability to timely pay rent as required under our leases and also caused many tenants to close their business permanently.

As a result, our cash flow and results of operations in 2020 were materially adversely impacted and our vacancy increased above historical levels.

Since March 2020 when the World Health Organization characterized COVID-19 as a global pandemic, we have been and continue to be impacted by COVID-19 and the actions taken by federal, state, and local government to prevent its spread.

These actions included the closure of nonessential businesses and ordering residents to generally stay at home at the onset of the pandemic, phased reopenings and capacity limitations, and now generally lifted restrictions.

While the overall economy is showing signs of recovery from the initial impacts of COVID-19, workforce shortages, global supply chain bottlenecks and shortages, inflation, as well as COVID-19 variants are impacting the pace of recovery.

Closures and restrictions, along with general concern over the spread of COVID-19, required a significant number of tenants to close their operations or to significantly limit the amount of business they are able to conduct, which impacted their ability to timely pay rent as required under our leases and also caused many tenants to close their business permanently.

While improving, our cash flow and results of operations in the year ended December 31, 2021 continued to be materially adversely impacted, with vacancy levels remaining above historical levels.

Although virtually all of our leases required the tenants to pay rent even while they were not operating, we entered into numerous agreements to abate, defer, and/or restructure tenant rent payments for varying periods of time, all with the objective of collecting as much cash as reasonably possible and maintaining occupancy to the maximum extent.

We believe those actions will position many of our tenants to be able to return to payment of contractual rent as soon as possible after the impacts from the pandemic have subsided.

Given the impact to our cash flow caused by tenants not timely paying contractual rent, we took actions to improve our financial position and maximize our liquidity.

Those actions included raising $1.1 billion in May 2020 through a $400.0 million term loan and the issuance of $700.0 million of senior unsecured notes, amending the covenants on our revolving credit facility to provide us operating flexibility during the expected period during which our cash flow will be impacted, and raising an additional $400.0 million of senior unsecured notes in October 2020.

Throughout the last three quarters of 2020, we maintained levels of cash significantly in excess of the cash balances we have historically maintained which has adversely impacted our financial results;

however, we believe that such action was prudent to position us with what we expect to be sufficient liquidity to allow us to continue fully operating until our operating revenues return to more typical levels.

We believe that the actions we have taken to improve our financial position and maximize our liquidity, as described further in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2020 Annual Report on Form 10-K, will continue to mitigate the impact to our cash flow caused by tenants not timely paying contractual rent.

Throughout 2021, we continued to maintain levels of cash significantly in excess of the cash balances we have historically maintained which has adversely impacted our financial results;

however, we believe that such action was prudent to position us with what we expect to be sufficient liquidity to allow us to continue fully operating as our operating revenues begin to return to more typical levels.

As of December 31, 2021, there is no outstanding balance on our $1.0 billion revolving credit facility, and we have cash and cash equivalents of $162.1 million.

Given the adverse impact on our cash flow, we did not commence any significant new capital projects during 2020 and we stopped, at least temporarily, portions of our capital spend that could be stopped.

We did, however, continue investing in a number of our larger projects which were in the middle of construction and could not be stopped without causing material adverse financial impact to the company.

Additional discussion of the impact of COVID-19 on our results in 2020 and long-term operations can be found throughout Item 7 and Item 1A .

Additional discussion of the impact of COVID-19 on our results and long-term operations can be found throughout Item 7 and Item 1A .

Risk Factors.

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We actively endeavor to operate and develop our properties in a sustainable, responsible, and effective manner with the objective being to drive long-term growth and aid in value creation for our shareholders, tenants, employees, and local communities.

We have aligned our program and efforts with the United Nations Sustainable Development Goals, as described in our ESG Policy and our 2020 Corporate Responsibility Report, which are provided only for informational purposes on our website and not incorporated herein.

Our development activities have been heavily focused on owning, developing and operating properties that are certified under the U.S.

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This certification assesses a building’s impact on seven distinct categories related to overall health and well-being.

These development efforts earned us the Sector Leader Development designation in 2020 from the Global Real Estate Environmental Sustainability Benchmark (“GRESB”) and enabled us to issue our first green bond in 2020, a $400.0 million offering that will be supported by certain of our LEED gold and silver certified buildings.

See Note 5 to the consolidated financial statements.

We are also committed to implementing sustainable business practices at our operating properties that focus on energy efficiency, water conservation and waste minimization.

As an example, under our solar program that we started in 2012, we have installed on-site solar systems at 25 of our properties with a capacity of over 13 MW and we anticipate adding solar installations at several more of our properties over the next few years to further our ability to source energy from renewable sources.

Our current capacity placed us in the top 5 among real estate companies for onsite capacity in the Solar Energy Industry Association’s annual Solar Means Business Report.

We are also actively upgrading lighting at our properties with energy efficient LED lighting and installing electric vehicle car charging stations in numerous properties throughout our portfolio.

Currently, we are evaluating the risks presented by climate change to help us better understand potential actions we could take to help mitigate our portfolio’s environmental footprint while protecting our long-term investments.

We are also committed to implementing sustainable business practices at our operating properties that focus on energy efficiency, water conservation and waste minimization and have established energy and greenhouse gas (GHG) emissions reduction targets.

To achieve these targets, we are actively addressing energy efficiency projects on site such as upgrading to LED lighting;

and to address emissions we are procuring green energy, reducing electric consumption, and increasing our onsite solar generation capacity.

We have installed on-site solar systems at 25 of our properties with a capacity of over 13 MW with more projects actively in progress.

Our current capacity placed us in the top 5 among real estate companies for onsite capacity in the most recent Solar Energy Industry Association’s annual Solar Means Business Report.

We are also actively installing electric vehicle car charging stations in numerous properties throughout our portfolio.

We currently have over 300 charging stations in operation with more under construction.

We also understand that we face risks presented by climate change and are working to evaluate our risk exposure.

In our 2020 Corporate Responsibility Report, we provided a disclosure pursuant to the Task Force on Climate Related Financial Disclosure and we intend to provide that disclosure annually.

We are also highly committed to our employees and fostering a work environment that promotes growth, development and personal well-being.

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All of our efforts with respect to corporate responsibility are overseen by our Board of Trustees.

Critical Accounting Policies

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as “GAAP”, requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses.

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Our significant accounting policies are more fully described in Note 2 to the consolidated financial statements;

however, the most critical accounting policies, which involve the use of estimates and assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows:

Revenue Recognition and Accounts Receivable

however, the most critical accounting policies, which are most important to the portrayal of our financial condition and results of operations, and involve the use of complex estimates and significant assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows:

Collectibility of Lease Income

Our leases with our tenants are classified as operating leases.

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 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 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.

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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.

These actions included the closure of nonessential businesses and ordering residents to generally stay at home at the onset of the pandemic, phased re-openings and capacity limitations, and now generally lifted restrictions.

Closures and restrictions, along with the general concern over the spread of COVID-19, required a significant number of tenants to close their operations or to significantly limit the amount of business they were able to conduct, which impacted their ability to timely pay rent as required under our leases and also caused many tenants to close their business permanently.

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 primarily 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 number of commercial leases) is being recognized on a cash basis.

Accordingly, during the years ended December 31, 2021 and 2020, we recognized collectibility related adjustments of $24.0 million and $106.6 million, respectively.

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 $0.7 million and $12.7 million, respectively of straight-line rent receivables related to tenants changed to a cash basis of revenue recognition during the years ended December 31, 2021 and 2020.

As of December 31, 2021 and 2020, the revenue from approximately 34% and 35% of our tenants (based on total commercial leases), respectively, is being recognized on a cash basis.

As of December 31, 2021 and 2020, our straight-line rent receivables balance was $110.7 million and $103.3 million, respectively, and is included in "accounts and notes receivable, net" on our consolidated balance sheet.

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Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of a gain recognized will not occur.

We analyze the risk of a significant gain reversal and if necessary limit the amount of

variable consideration recognized in order to mitigate this risk.

We analyze the risk of a significant gain reversal and if necessary limit the amount of variable consideration recognized in order to mitigate this risk.

The estimation of variable consideration requires us to make assumptions and apply significant judgment.

The nature of our business as an owner, redeveloper and operator of retail shopping centers and mixed-use properties means that we invest significant amounts of capital.

Depreciation and maintenance costs relating to our properties constitute substantial costs for us as well as the industry as a whole.

We capitalize real estate investments and depreciate them on a straight-line basis in accordance with GAAP and consistent with industry standards based on our best estimates of the assets’ physical and economic useful lives.

We periodically review the estimated lives of our assets and implement changes, as necessary, to these estimates and, therefore, to our depreciation rates.

These reviews may take into account such factors as the historical retirement and replacement of our assets, expected redevelopments, and general economic and real estate factors.

Certain events, such as unforeseen competition or changes in customer shopping habits, could substantially alter our assumptions regarding our ability to realize the expected return on investment in the property and therefore reduce the economic life of the asset and affect the amount of depreciation expense to be charged against both the current and future revenues.

These assessments have a direct impact on our net income.

The longer the economic useful life, the lower the depreciation expense will be for that asset in a fiscal period, which in turn will increase our net income.

Similarly, having a shorter economic useful life would increase the depreciation for a fiscal period and decrease our net income.

Land, buildings and real estate under development are recorded at cost.

We calculate depreciation using the straight-line method with useful lives ranging generally from 35 years to a maximum of 50 years on buildings and major improvements.

Maintenance and repair costs are charged to operations as incurred.

Tenant work and other major improvements, which improve or extend the life of the asset, are capitalized and depreciated over the life of the lease or the estimated useful life of the improvements, whichever is shorter.

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

Capitalized costs associated with leases are depreciated or amortized over the base term of the lease.

Unamortized leasing costs are charged to expense if the applicable tenant vacates before the expiration of its lease.

Undepreciated tenant work is written-off if the applicable tenant vacates and the tenant work is replaced or has no future value.

Additionally, we make estimates as to the probability of certain development and redevelopment projects being completed.

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

Interest costs on developments and major redevelopments are capitalized as part of developments and redevelopments not yet placed in service.

Capitalization of interest commences when development activities and expenditures begin and end upon completion, which is when the asset is ready for its intended use.

Generally, rental property is considered substantially complete and ready for its intended use upon completion of tenant improvements, but no later than one year from completion of major construction activity.

We make judgments as to the time period over which to capitalize such costs and these assumptions have a direct impact on net income because capitalized costs are not subtracted in calculating net income.

If the time period for capitalizing interest is extended, more interest is capitalized, thereby decreasing interest expense and increasing net income during that period.

Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-construction costs, real estate taxes, insurance, and construction costs and salaries and related costs of personnel directly involved, are capitalized.

We capitalized external and internal costs related to both development and redevelopment activities of $404 million and $9 million, respectively, for 2020 and $352 million and $9 million, respectively, for 2019.

We capitalized external and internal costs related to other property improvements of $64 million and $3 million, respectively, for 2020 and $80 million and $3 million, respectively, for 2019.

We capitalized external and internal costs related to leasing activities of $11 million and $2 million, respectively, for 2020 and $24 million and $2 million, respectively, for 2019.

The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $9 million, $3 million, and $2 million, respectively, for 2020 and $8 million, $3 million, and $2 million, respectively, for 2019.

Total capitalized costs were $494 million for 2020 and $471 million for 2019, respectively.

The existence and amount of variable consideration can vary significantly among transactions.

Historically, our property sales have had variable consideration of less than 1% of total expected consideration;

however, we had one transaction in 2019 where the variable consideration was approximately $45.5 million.

Real Estate Acquisitions

Upon acquisition of operating real estate properties, we estimate the fair value of assets and liabilities acquired including land, building, improvements, leasing costs, intangibles such as in-place leases, assumed debt, and current assets and liabilities, if any.

Upon acquisition of operating real estate properties, we estimate the fair value of assets and liabilities acquired including land, building, improvements, leasing costs, intangibles such as acquired leases, assumed debt, and current assets and liabilities, if any.

Based on these estimates, we allocate the purchase price to the applicable assets and liabilities.

We utilize methods similar to those used by independent appraisers in estimating the fair value of acquired assets and liabilities.

The value allocated to in-place leases is amortized over the related lease term and reflected as rental income in the statement of operations.

We consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below market renewal option and

include such renewal options in the calculation of in-place lease value when we consider these to be bargain renewal options.

The value allocated to acquired leases is amortized over the related lease term and reflected as rental income in the statement of operations.

We consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below market renewal option and include such renewal options in the calculation of in-place lease value when we consider these to be bargain renewal options.

If the value of below market lease intangibles includes renewal option periods, we include such renewal periods in the amortization period utilized.

If a tenant vacates its space prior to contractual termination of its lease, the unamortized balance of any in-place lease value is written off to rental income.

Variable Interest Entities (VIEs) and Consolidation

We have 17 entities that meet the criteria of a VIE and are consolidated.

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

In addition, we hold equity method investments in two hotel joint ventures and one shopping center which are considered variable interests in a VIE as of December 31, 2020.

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

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

VIEs are required to be consolidated by their primary beneficiary.

The primary beneficiary of a VIE has both the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could be significant to the VIE.

The determination of the power to direct the activities that most significantly impact economic performance requires judgment and is impacted by numerous factors including the purpose of the VIE, contractual rights and obligations of variable interest holders, and mechanisms for the resolution of disputes among the variable interest holders.

If a tenant vacates its space prior to contractual termination of its lease, the unamortized balance of any acquired lease value is written off to rental income.

During 2021, we acquired properties with a total purchase price of $440.9 million.

$4.6 million, or 1% of the total purchase price was allocated to above market lease assets and $57.3 million, or 13% was allocated to below market lease liabilities.

If the amounts allocated in 2021 to below market lease liabilities and building assets were each reduced by 5% of the total purchase price, annual below market lease liability amortization increasing rental income would decrease by approximately $2.5 million (using the weighted average life of below market liabilities at each respective acquired property) and annual depreciation expense would decrease by approximately $0.6 million (using a depreciable life of 35 years).

Long-Lived Assets and Impairment

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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.

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, taking into account the anticipated hold period, 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.

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

We are also required to estimate the anticipated hold period.

A change in the expected holding period from a long term hold to a short term would cause a significant change in the undiscounted cash flows and could result in an impairment charge.

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.

Contingencies

We are sometimes involved in lawsuits, warranty claims, and environmental matters arising in the ordinary course of business.

Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.

We accrue a liability for litigation if an unfavorable outcome is probable and the amount of loss can be reasonably estimated.

If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, we accrue the best estimate within the range;

however, if no amount within the range is a better estimate than any other amount, the minimum within the range is accrued.

Any difference between our estimate of a potential loss and the actual outcome would result in an increase or decrease to net income.

Recently Adopted and Recently Issued Accounting Pronouncements

See Note 2 to the consolidated financial statements.

2020 Property Acquisitions, Dispositions, and Impairment

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

2021 Acquisitions and Dispositions

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 encumbering the hotel.

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

We also recognized a gain on acquisition of the controlling interest of $2.1 million related to the difference between the carrying value and fair value of the previously held equity interest.

On February 22, 2021, we acquired the fee interest at our Mount Vernon Plaza property in Alexandria, Virginia for $5.6 million.

As a result of this transaction, the "operating lease right of use assets" and "operating lease liabilities" on our consolidated balance sheet decreased by $9.8 million.

We now own the entire fee interest on this property.

During the year ended December 31, 2021, we acquired the following properties:

Date Acquired Property City/State Gross Leasable Area (GLA) Ownership % Gross Value

(in square feet) (in millions)

January 10, 2020

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

February 12, 2020

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.

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 disposals below.

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.

April 30, 2021 Chesterbrook (1) McLean, Virginia 90,000 80 % $ 32.1 (2)

June 1, 2021 Grossmont Center (1) La Mesa, California 933,000 60 % $ 175.0 (3)

June 14, 2021 Camelback Colonnade (1) Phoenix, Arizona 642,000 98 % $ 162.5 (4)

June 14, 2021 Hilton Village (1) Scottsdale, Arizona 93,000 98 % $ 37.5 (5)

September 2, 2021 Twinbrooke Shopping Centre Fairfax, Virginia 106,000 100 % $ 33.8 (6)

(1) These acquisitions were completed through newly formed joint ventures, for which we own the controlling interest listed above, and therefore, these properties are consolidated in our financial statements.

(2) Approximately $1.9 million and $0.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $8.0 million of net assets acquired were allocated to other liabilities for "below market leases."

(3) Approximately $12.3 million and $2.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $14.7 million of net assets acquired were allocated to other liabilities for "below market leases."

(4) Approximately $11.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and $28.3 million were allocated to other liabilities for "below market leases."

(5) The land is controlled under a long-term ground lease that expires on December 31, 2076, for which we have recorded a $10.4 million "operating lease right of use asset" (net of a $1.3 million above market liability) and an $11.6 million "operating lease liability." Approximately $2.7 million and $1.1 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $3.6 million were allocated to other liabilities for "below market leases."

(6) Approximately $1.2 million and $0.3 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $2.7 million of net assets acquired were allocated to other liabilities for "below market leases."

During the year ended December 31, 2021, we sold two properties and a portion of three properties for a total sales price of $141.6 million, which resulted in a net gain of $88.3 million.

2021 Significant Debt and Equity Transactions

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% of 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 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%.

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 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 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.

We have an at-the-market (“ATM”) equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $400.0 million.

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

For the year ended December 31, 2020, we sold 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.

On February 24, 2021, we replaced our existing at-the-market (“ATM”) equity program with a new ATM equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $500.0 million.

On May 7, 2021, we amended this ATM equity program, which reset the limit to $500.0 million.

The new ATM equity program also allows shares to be sold through forward sales contracts.

We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay indebtedness and/or for general corporate purposes.

For the year ended December 31, 2021, we issued 847,471 common shares at a weighted average price per share of $104.19 for net cash proceeds of $87.0 million including paying $0.9 million in commissions and $0.4 million in additional offering expenses related to the sales of these common shares.

We also entered into forward sales contracts for the year ended December 31, 2021 for 2,999,955 common shares under our ATM equity program at a weighted average offering price of $120.22.

During 2021, we settled a portion of the forward sales agreements entered into during the year by issuing 796,300 common shares for net proceeds of $85.7 million.

The forward price that we will receive upon physical settlement of the remaining forward sale agreements is subject to the adjustment for (i) commissions, (ii) a floating interest rate factor equal to a specified daily rate less a spread, (iii) the forward purchasers' stock borrowing costs and (iv) scheduled dividends during the term of the forward sale agreements.

The remaining open forward shares may be settled at any time on or before multiple required settlement dates ranging from June 2022 to December 2022.

As of December 31, 2021, we had the capacity to issue up to $175.0 million in common shares under our ATM equity program.

2021 Transactions

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.

We seek growth in earnings, funds from operations, and cash flows primarily through a combination of the following:

On April 16, 2021, we repaid $100.0 million of our existing $400.0 million term loan, amended the agreement on the remaining $300.0 million to lower the current spread over LIBOR from 135 basis points to 80 basis points based on our current credit rating, and extended the initial maturity date to April 16, 2024, along with two one-year extensions, at our option.

In 2021, we repaid the following mortgage loans, at par, prior to their original maturity date:

Property Repayment Date Principal

(in millions)

Sylmar Towne Center February 5, 2021 $ 16.2

Plaza Del Sol September 1, 2021 $ 7.9

Montrose Crossing October 12, 2021 $ 64.1

The AVENUE at White Marsh November 2, 2021 $ 52.7

Capitalized Costs

We capitalized external and internal costs related to both development and redevelopment activities of $356 million and $10 million, respectively, for 2021 and $404 million and $9 million, respectively, for 2020.

We capitalized external and internal costs related to other property improvements of $64 million and $4 million, respectively, for 2021 and $64 million and $3 million, respectively, for 2020.

We capitalized external and internal costs related to leasing activities of $19 million and $3 million, respectively, for 2021 and $11 million and $2 million, respectively, for 2020.

The amount of capitalized

internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $10 million, $3 million, and $3 million, respectively, for 2021 and $9 million, $3 million, and $2 million, respectively, for 2020.

Total capitalized costs were $456 million for 2021 and $494 million for 2020, respectively.

Corporate Reorganization

In January of 2022, we completed the UPREIT reorganization described in the Explanatory Note at the beginning of this Annual Report.

Prior to the UPREIT Reorganization, our business was conducted through the Predecessor.

This Annual Report pertains to the business and results of operations of the Predecessor for its fiscal year ended December 31, 2021.

As a result of the UPREIT reorganization, the Parent Company became the successor issuer to the Predecessor under the Exchange Act.

The Parent Company and the Partnership have elected to co-file this Annual Report of the Predecessor to ensure continuity of information to investors.

For additional information on our UPREIT reorganization, please see our Current Reports on Form 8-K filed with the SEC on January 3, 2022 and January 5, 2022.

Our long-term growth strategy is focused on growth in earnings, funds from operations, and cash flows primarily through a combination of the following:

• growth in our comparable property portfolio,

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At December 31, 2021, no single tenant accounted for more than 2.7% of annualized base rent.

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

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 of January 31, 2021, approximately 98% of our retail tenants were open.

These economic hardships have adversely impacted our business, and had a negative effect on our financial results during 2020 .

With very few exceptions, our leases require tenants to continue

to pay rent even while closed as a result of the pandemic, however, many tenants did not pay rents and other charges during the second quarter of 2020.

Subsequently, in the second half of 2020, a portion of our tenants have resumed paying their rent and/or other charges as their businesses were able to reopen;

however government mandated restrictions are still in order in many of our markets.

Our percentage of contractual rent collected each quarter has continued to increase since the low point in April 2020, including some tenants paying past due amounts.

As of December 31, 2020 , we have entered into agreements with approximately 32% of our tenants (based on total commercial leases) to defer rent payments to later periods, largely through 2021, although some extend beyond, and negotiations with other tenants are still ongoing.

While increasing cash collection rates is a positive trend driven by government mandated restrictions gradually being lifted, we expect that our rent collections will continue to be below our tenants’ contractual rent obligations and historical levels, which will continue to adversely impact our results of operations.

The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted.

Depending upon the duration of tenant closures, operating restrictions, and the overall economic downturn resulting from COVID-19, we may find that even deferred rents are difficult to collect, and we may experience higher vacancy levels.

While the duration and severity of the economic impact resulting from COVID-19 is unknown, we seek to position the Trust to participate in the resulting economic recovery.

We continue to have several development projects in process, albeit at a slower pace due to COVID-19 related restrictions, being delivered as follows:

• In the 1 st quarter of 2020, we delivered the fully leased eight story, 301,000 square foot office building at Santana Row.

• The first phase of construction on the 12 acres of land that we control across from Santana Row includes an eight story 376,000 square foot office building, with over 1,700 parking spaces.

The building is expected to cost between $250 million and $270 million with openings beginning in 2022.

• Phase III of Assembly Row includes 277,000 square feet of office space (of which, 150,000 square feet is pre-leased), 56,000 square feet of retail space, 500 residential units, and over 800 additional parking spaces.

The expected costs for Phase III are between $465 million and $485 million and is projected to open beginning in 2021.

• At Pike & Rose, we have continued construction on a 212,000 square foot office building (which includes 7,000 square feet of ground floor retail space), and includes over 600 additional parking spaces.

Federal, state, and local governments have taken various actions to mitigate the spread of COVID-19, including initially ordering closures of non-essential businesses and ordering residents to generally stay at home.

While many of these restrictions have since been lifted, they required a significant number of tenants to close their operations or to significantly limit the amount of business they were able to conduct in their stores.

These closures and restrictions, along with general concerns over the spread of COVID-19 have impacted the tenants' ability to timely pay rent as required under our leases and also caused many tenants to close their business permanently.

While we are seeing signs of considerable improvement, these economic hardships have adversely impacted our business, and continue to have a negative effect on our financial results during 2021 .

With very few exceptions, our leases require tenants to continue to pay rent even while closed as a result of the pandemic, and while many tenants did not pay rents and other charges during a portion of 2020, the majority of our tenants have resumed paying all or a p ortion of their rent and/or other charges as their businesses were able to reopen.

Our percentage of contractual rent actually collected has continued to increase since the low point in April 2020, including some tenants paying past due amounts.

As of December 31, 2021, we have entered into agreements with approximately 32% of our tenants (based on total commercial leases) to defer rent payments to later periods, largely through 2022, although some extend beyond.

While increasing monthly cash collection rates is a positive trend driven by government mandated restrictions gradually being lifted and improved outlook by some tenants, we expect that our rent collections will continue to be below our tenants' contractual rent obligations and historical levels into 2022, which will continue to adversely impact our results of operations.

We are also experiencing a lower level of occupancy than in our past, largely due to the pandemic, which will adversely impact our results until we can release the space and the tenant commences paying rent as well as limit future vacancies caused by the pandemic.

We are, however, experiencing strong demand for our commercial space as evidenced by the 2.1 million square feet of comparable space retail leasing we've completed in 2021, as well as our overall leased percentage at 93.6%, compared to our occupied percentage of only 91.1%.

We have begun to see impacts of overall supply chain disruptions affecting the broader economy, including significantly longer lead times, limited availability, and increased costs for certain construction and other materials that support our leasing, development, and redevelopment activities.

If disruptions continue to worsen, they could result in extended timeframes and/or increased costs for completion of our projects and tenant build-outs, which could delay the commencement of rent payments under new leases.

Similarly, if our tenants experience significant disruptions in supply chains supporting their own products, or staffing issues due to labor shortages, their ability to pay rent may be adversely affected.

We continue to

monitor these macroeconomic developments and are working with our tenants and our vendors to limit the overall impact to our business.

The extent of such impact from COVID-19 will depend on future developments, which are highly uncertain and cannot be predicted.

Depending upon the duration of tenant closures, future operating restrictions, and the overall economic downturn resulting from COVID-19, we may find that even deferred rents are difficult to collect, and we may experience higher vacancy levels.

While the duration and severity of the economic impact resulting from COVID-19 is unknown, we seek to position the Trust to continue to participate in the resulting economic recovery.

We continue to have several development projects in process being delivered as follows:

• Phase III of Assembly Row includes 277,000 square feet of office space, 56,000 square feet of retail space, and 500 residential units.

The expected costs for Phase III are between $465 million and $485 million with spaces being delivered beginning in the second quarter of 2021.

At December 31, 2021, 162,000 square feet of office space has been delivered, all of the units in the residential building have been delivered, and 23,000 square feet of retail space has opened.

• Phase III at Pike & Rose includes a 212,000 square foot office building (which includes 7,000 square feet of ground floor retail space).

The building is expected to cost between $128 million and $135 million.

At December 31, 2020, approximately 61,000 square feet of office space has been delivered, of which approximately 45,000 square feet is our new corporate headquarters.

• Our properties are located primarily in densely populated and/or affluent areas with high barriers to entry which allow us to take advantage of redevelopment opportunities that enhance our operating performance through renovation, expansion, reconfiguration, and/or retenanting.

We evaluate our properties on an ongoing basis to identify these types of opportunities.

At December 31, 2021, approximately 162,000 square feet of office and retail space has been delivered, of which approximately 45,000 square feet is our new corporate headquarters.

• Phase IV at Pike & Rose is a 276,000 square foot office building (which includes 10,000 square feet of ground floor retail space).

Approximately 105,000 square feet of the office space is pre-leased to a single tenant.

The building is expected to cost between $185 million and $200 million, and begin delivering in late 2023.

• The first phase of construction on Santana West includes an eight story 376,000 square foot office building, which is expected to cost between $250 million and $270 million.

• Throughout the portfolio, we currently have redevelopment projects underway with a projected total cost of approximately $313 million that we expect to stabilize over the next several years.

The above includes our best estimates based on information currently known, however, the completion of construction, final costs, and the timing of openings and rent starts will be dependent upon the duration of governmental restrictions and the duration and severity of the economic impacts of COVID-19.

The above includes our best estimates based on information currently known, however, the completion of construction, final costs, and the timing of leasing and openings may be further impacted by the current environment including the duration and severity of the economic impacts of COVID-19 and supply chain disruptions affecting the broader economy.

The development of future phases of Assembly Row, Pike & Rose and Santana Row will be pursued opportunistically based on, among other things, market conditions, tenant demand, and our evaluation of whether those phases will generate an appropriate financial return.

We continue to review acquisition opportunities in our primary markets that complement our portfolio and provide long-term growth opportunities.

We continue to review acquisition opportunities that complement our portfolio and provide long-term growth opportunities.

Initially, some of our acquisitions do not contribute significantly to earnings growth;

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Generally, our acquisitions are initially financed by available cash and/or borrowings under our revolving credit facility which may be repaid later with funds raised through the issuance of new equity or new long-term debt.

We may also finance our acquisitions through the issuance of common shares, preferred shares, or downREIT units as well as through assumed mortgages and property sales.

We may also finance our acquisitions through the issuance of common shares, preferred shares, or units in our operating partnership (see "Corporate Reorganization" discussion in this Item 7), as well as through assumed mortgages and property sales.

At December 31, 2021, the leasable square feet in our properties was 93.6% leased and 91.1% occupied.

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For the year ended December 31, 2021 and the comparison of 2021 and 2020, all or a portion of 95 properties were considered comparable properties and seven were considered non-comparable properties.

For the year ended December 31, 2020, two properties and two portions of properties were moved from non-comparable to comparable properties, two properties and one portion of a property were removed from comparable properties and one property was removed from non-comparable properties as they were sold during 2020, one property was moved from acquisitions to non-comparable properties, and one property was moved from comparable to non-comparable properties, compared to the designations as of December 31, 2019.

For the year ended December 31, 2021, two portions of properties were moved from non-comparable properties to comparable properties, one

property and two portions of properties were moved from acquisitions to comparable properties, one property was moved from comparable properties to non-comparable properties, two properties and one portion of a property were removed from comparable properties as they were sold, and two portions of properties were removed from non-comparable properties, as they were sold, compared to the designations as of December 31, 2020.

While there is judgment surrounding changes in designations, we typically move non-comparable properties to comparable properties once they have stabilized, which is typically considered 90% physical occupancy or when the growth expected from the redevelopment has been included in the comparable periods.

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Impairment charge — (57,218) 57,218 100.0 %

Gain on sale of real estate, net of tax 98,117 116,393 (18,276) (15.7) %

Gain on sale of real estate and change in control of interest 89,950 98,117 (8,167) (8.3) %

Operating income 394,725 289,524 105,201 36.3 %

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Early extinguishment of debt — (11,179) 11,179 100.0 %

Loss from partnerships (8,062) (2,012) (6,050) 300.7 %

Income (loss) from partnerships 1,245 (8,062) 9,307 115.4 %

Total other, net (125,644) (153,636) 27,992 (18.2) %

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Net income attributable to the Trust $ 261,498 $ 131,706 $ 129,792 98.5 %

(1) Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes.

This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure.

Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP.

(1) Property operating income is a non-GAAP measure.

See "Summary Financial Information" in this Item 7 for further discussion.

Property Revenues

Total property revenue decreased $100.3 million, or 10.7%, to $835.5 million in 2020 compared to $935.8 million in 2019.

Total property revenue increased $115.7 million, or 13.9%, to $951.2 million in 2021 compared to $835.5 million in 2020.

The percentage occupied at our shopping centers was 91.1% at December 31, 2021 compared to 90.2% at December 31, 2020.

The most significant driver of the decrease in property revenues is the impact of COVID-19, as many of our tenants were forced to temporarily or in some cases permanently close their businesses, resulting in changes in our collectibility estimates and in some cases rent abatement.

The most significant driver of the increase in property revenues is the generally lifted COVID-19 restrictions during 2021, as compared to 2020 when COVID-19 government imposed closures and restrictions were generally still in effect.

Changes in the components of property revenue are discussed below.

Rental Income

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectiblity related impacts.

Rental income decreased $100.6 million, or 10.8%, to $832.2 million in 2020 compared to $932.7 million in 2019 due primarily to the following:

• higher collectibility related impacts including rent abatements across all properties of $102.1 million primarily the result of COVID-19 impacts.

This includes the write-off of $12.7 million of straight-line receivables primarily related to tenants who were changed to cash basis of revenue recognition during the year ended December 31, 2020.

• a decrease of $24.6 million at comparable properties due primarily to lower average occupancy rates of approximately $18.0 million, lower parking income and percentage rent of of $6.3 million primarily due to the impacts from COVID-19 related closures, lower recoveries of $5.3 million primarily the result of lower snow removal expense and utilities, and lower termination fee and legal fee income of $1.3 million, partially offset by higher rental rates of approximately $9.3 million, and

• decrease of $14.4 million from property sales,

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments.

Rental income increased $116.7 million, or 14.0%, to $948.8 million in 2021 compared to $832.2 million in 2020 due primarily to the following:

• an $82.6 million decrease in collectibility related impacts including rent abatements across all properties, primarily due to higher collection rates in 2021 as tenants begin to recover from the initial impacts of COVID-19, and moving a large number of tenants from accrual basis to cash basis in 2020,

• an increase of $32.2 million primarily from 2021 acquisitions (see Note 3 to the consolidated financial statements for additional information), and

• an increase of $25.4 million from non-comparable properties driven by the opening of Phase III at Assembly Row in 2021 and our Phase III office building at Pike & Rose in 2020, redevelopment related occupancy increases at CocoWalk, the opening of our new office building at Santana Row in early 2020, higher net termination fees, and the opening of Freedom Plaza in 2020,

partially offset by

• and increase of $19.7 million from non comparable properties driven by the opening of our new office building at Santana Row in early 2020 and the opening of Freedom Plaza in 2020 and

• an increase of $19.5 million from acquisitions of Hoboken during the second half of 2019 and early 2020, and Georgetowne Shopping Center in November 2019.

• a decrease of $17.1 million from property sales, and

• a decrease of $6.1 million at comparable properties due primarily to lower average occupancy of approximately $14.1 million, lower net termination fees and legal fee income of $5.1 million, and a $2.1 million decrease in recoveries primarily related to real estate tax recoveries, partially offset by higher percentage rent, specialty leasing, and parking income of $7.2 million, primarily due to the impact of COVID-19 related closures and restrictions in 2020, and higher rental rates of $6.7 million.

Mortgage Interest Income

Mortgage interest income decreased $0.9 million, or 28.3%, to $2.4 million in 2021 compared to $3.3 million in 2020 primarily due to the payoff of two mortgage notes receivable in May 2021 (see Note 2 to the consolidated financial statements for additional information).

Property Expenses

Total property expenses decreased $8.6 million, or 2.9%, to $290.2 million in 2020 compared to $298.8 million in 2019.

Total property expenses increased $26.5 million, or 9.1%, to $316.6 million in 2021 compared to $290.2 million in 2020.

Changes in the components of property expenses are discussed below.

Rental Expenses

Rental expenses decreased $16.9 million, or 9.0%, to $170.9 million in 2020 compared to $187.8 million in 2019.

This decrease is primarily due to the following:

• an $11.9 million charge in 2019 related to the buyout of a lease at Assembly Square Marketplace,

• a decrease of $9.5 million from comparable properties due to lower snow removal expenses, and lower repairs and maintenance, management fees, and utilities primarily driven by the impact of COVID-19 partially offset by an increase in insurance costs, and

• a decrease of $2.2 million from our property sales,

Rental expenses increased $27.2 million, or 15.9%, to $198.1 million in 2021 compared to $170.9 million in 2020.

This increase is primarily due to the following:

• an increase of $19.3 million from comparable properties due to higher repairs and maintenance costs, demolition costs, and utilities, as 2020 had lower costs as a result of COVID-19 impacts, higher snow removal costs, and higher insurance costs,

• an increase of $8.8 million primarily from 2021 acquisitions, and

• an increase of $6.1 million from non-comparable properties driven by the opening of Phase III at Assembly Row in 2021, the Phase III office building at Pike & Rose in 2020, the CocoWalk redevelopment in late 2020, and the opening of our new office building at Santana Row in early 2020,

partially offset by

• an increase of $2.8 million from acquisitions of Hoboken during the second half of 2019 and early 2020, and Georgetowne Shopping Center in November 2019, and

• an increase of $2.5 million from non comparable properties driven by the opening of our new office building at Santana Row in early 2020 and the opening of Freedom Plaza in 2020.

• a decrease of $5.0 million from our property sales.

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income increased to 20.9% for the year ended December 31, 2021 from 20.5% for the year ended December 31, 2020.

Real Estate Taxes

Real estate tax expense increased $8.3 million, or 7.5% to $119.2 million in 2020 compared to $110.9 million in 2019 due primarily to the following:

• an increase of $3.8 million from comparable properties due to higher current year assessments, and tax refunds recorded in 2019 from a multi-year appeal and reassessment at three of our properties,

• an increase of $3.1 million from acquisitions of Hoboken during the second half of 2019 and early 2020 and Georgetowne Shopping Center in November 2019, and

• an increase of $2.3 million from non-comparable properties due primarily to the opening of our new office building at Santana Row in early 2020,

Real estate tax expense decreased $0.7 million, or 0.6% to $118.5 million in 2021 compared to $119.2 million in 2020 due primarily to the following:

• a decrease of $3.5 million from our property sales, and

• a decrease of $3.3 million from comparable properties primarily due to a true-up of supplemental taxes at several of our California properties billed in 2020 and prior year tax refunds recorded in 2021,

partially offset by

• a decrease of $0.8 million from our property sales.

• an increase of $3.1 million from 2021 acquisitions, and

• an increase of $2.9 million from non-comparable properties due primarily to the opening of Phase III at Assembly Row in 2021, the opening of our new office building at Santana Row in early 2020, increases in assessments as a result of our redevelopment activities, and the Phase III office building at Pike & Rose in 2020.

Property Operating Income

Property operating income decreased $91.7 million, or 14.4%, to $545.3 million in 2020 compared to $637.0 million in 2019.

This decrease is primarily due to the impact of COVID-19, which resulted in higher collectibility related impacts, lower percentage rent, and lower parking income;

as well as the impact of property sales, partially offset by the opening of our new office building at Santana Row in early 2020, property acquisitions, and the prior year charge related to the buyout of a lease at Assembly Square Marketplace.

Property operating income increased $89.3 million, or 16.4%, to $634.6 million in 2021 compared to $545.3 million in 2020.

This increase is primarily due to the lifting of COVID-19 restrictions during 2021, which resulted in lower collectibility related adjustments and higher specialty leasing, percentage rent, and parking income.

Also contributing to the increases were property acquisitions, placing redevelopment properties into service, the opening of Phase III at Assembly Row in 2021, and the opening of our new office building at Santana Row in early 2020, partially offset by lower average occupancy, property dispositions, higher repairs and maintenance and utilities expense, and higher snow removal expense.

Other Operating

General and Administrative Expense

General and administrative expense decreased $1.1 million, or 2.5%, to $41.7 million in 2020 from $42.8 million in 2019.

This decrease is due primarily to lower personnel related costs and COVID-19 impacts including office closures and cancellations of all non-essential business travel and company events.

General and administrative expense increased $8.2 million, or 19.6%, to $49.9 million in 2021 from $41.7 million in 2020.

This increase is due primarily to higher personnel related costs.

Depreciation and Amortization

Depreciation and amortization expense increased $24.9 million, or 9.8%, to $280.0 million in 2021 from $255.0 million in 2020.

The increase is due primarily to property acquisitions, the opening of our new office buildings at Santana Row in early 2020, and the write off of lease related assets for vacating tenants, partially offset by property sales.

This increase is due primarily to 2021 property acquisitions, accelerated depreciation related to the demolition of one of our buildings in the early stages of redevelopment, the opening of Phase III of Assembly Row and the Pike & Rose, placing redevelopment properties into service, and the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in January 2021, partially offset by 2020 property sales and the lower write-off of lease related assets for vacating tenants.

Impairment Charge

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See Note 3 to the consolidated financial statements for further discussion.

Gain on Sale of Real Estate, Net of Tax

Gain on Sale of Real Estate and Change in Control of Interest

The $90.0 million gain on sale of real estate for the year ended December 31, 2021 is due to the sale of two properties and portions of three properties, as well as the $2.1 million gain relating to the acquisition of the previously unconsolidated Pike & Rose hotel join venture (see Note 3 to the consolidated financial statements for additional information).

The $98.1 million gain on sale of real estate, net of tax for the year ended December 31, 2020 is due to the sale of three properties and one building.

The $116.4 million gain on sale of real estate, net for the year ended December 31, 2019 is primarily due to the following:

• $85.1 million related to the sale under the threat of condemnation of 11.7 acres of San Antonio Center,

• $28.3 million related to the sale of three properties and one land parcel, and

• $2.6 million net gain related to condominium unit sales that have closed at our Assembly Row and Pike & Rose properties.

Operating Income

Operating income decreased $181.4 million, or 38.5%, to $289.5 million in 2020 compared to $470.9 million in 2019.

This decrease is due primarily due to the impact of COVID-19, which resulted in higher collectibility related impacts, the impairment charge related to The Shops at Sunset Place, a lower net gain on the sale of real estate, and the impact of property sales, lower percentage rent, and lower parking income, partially offset by the opening of our new office building at Santana Row in early 2020, property acquisitions, the prior year charge related to the buyout of a lease at Assembly Square Marketplace, and lower personnel related costs which were largely due to the impact of COVID-19.

Operating income increased $105.2 million, or 36.3%, to $394.7 million in 2021 compared to $289.5 million in 2020.

This increase is primarily due to the lifting of COVID-19 restrictions, which resulted in lower collectibility related adjustments and higher specialty leasing, percentage rent, and parking income compared to 2020.

Also contributing to the increases were the prior year impairment charge related to The Shops at Sunset Place, property acquisitions, placing redevelopment properties into service, the opening of Phase III at Assembly Row in 2021, and the opening of our new office building at Santana Row in early 2020, partially offset by lower average occupancy, higher personnel related costs, property dispositions, higher repairs and maintenance and utilities expense, a lower gain on sales of real estate, and higher snow removal expense.

Interest Expense

Interest expense increased $26.7 million, or 24.3%, to $136.3 million in 2020 compared to $109.6 million in 2019.

This increase is due primarily to the following:

• an increase of $20.2 million from higher borrowings in response to the COVID-19 pandemic (see further discussions in "2020 Significant Debt and Equity Transactions" in Part II, Item 7 of the Annual Report) and

• an increase of $13.0 million due to higher weighted average borrowings primarily from the $400 million issuance of our 3.20% notes in 2019, and $106.9 million of mortgage loans associated with our Hoboken acquisitions,

partially offset by

Interest expense decreased $8.6 million, or 6.3%, to $127.7 million in 2021 compared to $136.3 million in 2020.

This decrease is due primarily to the following:

• a decrease of $6.2 million due to a lower overall weighted average borrowing rate, and

• an increase of $2.9 million in capitalized interest, primarily attributable to the development of Phase III of Assembly Row and Pike & Rose.

• a decrease of $3.2 million due to lower weighted average borrowings,

partially offset by

• a decrease of $0.8 million in capitalized interest.

Gross interest costs were $150.3 million and $159.7 million in 2021 and 2020, respectively.

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Early Extinguishment of Debt

The $11.2 million early extinguishment of debt for the year ended December 31, 2020 relates to the make-whole premium paid as part of the early redemption of our 3.00% senior notes on December 31, 2020 and the related write-off of the unamortized discount and debt fees.

Loss from Partnerships

Loss from partnerships increased to $8.1 million in 2020 compared to $2.0 million in 2019.

The increase is primarily due to our share of losses from our hotel investments at Assembly Row and Pike & Rose, largely the result of COVID-19 related reductions in travel.

The $11.2 million early extinguishment of debt charge for the year ended December 31, 2020 relates to the make-whole premium paid as part of the early redemption of our $250 million 3.00% senior notes on December 31, 2020 and the related write-off of the unamortized discount and debt fees.

Income (loss) from Partnerships

Income (loss) from partnerships increased $9.3 million or 115.4% to $1.2 million of income in 2021 compared to a loss of $8.1 million in 2020.

This increase is due primarily to the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in January 2021 and improved operating results at our restaurant joint ventures and at our Assembly Row hotel joint venture, largely the result of the easing of COVID-19 closures and restrictions.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests decreased to $4.2 million in 2020 compared to $6.7 million in 2019.

The decrease is driven by lower net income at our partnership properties primarily due to the impact of COVID-19, partially offset by higher income attributable to our operating partnership units due to additional downREIT operating partnership units issued in connection with the acquisition of Fairfax Junction in January 2020.

Net income attributable to noncontrolling interests increased $3.4 million, or 81.3%, to $7.6 million in 2021 compared to $4.2 million in 2020.

The increase is primarily due to The Shops at Sunset Place prior year impairment charge and 2021 acquisitions.

Discussions of year-to-year comparisons between 2020 and 2019 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission on February 11, 2021.

Liquidity and Capital Resources

Due to the nature of our business and strategy, we typically generate significant amounts of cash from operations.

The cash generated from operations is primarily paid to our common and preferred shareholders in the form of dividends.

As a REIT, we must generally make annual distributions to shareholders of at least 90% of our taxable income (cash dividends paid in 2020 were approximately $325.4 million).

Due to the nature of our business and strategy, we typically generate significant amounts of cash from operations which is largely paid to our common and preferred shareholders in the form of dividends because as a REIT, we are generally required to make annual distributions to shareholders of at least 90% of our taxable income (cash dividends paid in 2021 were approximately $337.4 million).

Remaining cash flow from operations after dividend payments is used to fund recurring and non-recurring capital projects (such as tenant improvements and redevelopments), and regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities).

In 2020, our dividends were funded not only by cash from operations but also other sources of liquidity.

We maintain a $1.0 billion revolving credit facility to fund short term cash flow needs and also look to the public and private debt and equity markets, joint venture relationships, and property dispositions to fund capital expenditures on a long-term basis.

We are currently experiencing lower levels of cash from operations due to lower rent collections from tenants impacted by the COVID-19 pandemic (see further discussion under the "Outlook" section of this Item 2).

While the overall economic impacts of the pandemic are unknown, we have taken multiple steps during the last several months to strengthen our financial position, maximize liquidity, and to provide maximum flexibility during these uncertain times.

Throughout the last three quarters of 2020, we have maintained levels of cash significantly in excess of the cash balances we have historically maintained.

In March 2020, we borrowed $990.0 million under our revolving credit facility, representing a draw-down of almost the entirety of our $1.0 billion credit facility.

In May 2020, we entered into a $400.0 million unsecured term loan and issued $700.0 million of fixed rate unsecured senior notes for combined net proceeds of $1.1 billion.

We subsequently repaid the outstanding balance on our revolving credit facility and amended how certain covenants are calculated to provide us more operating flexibility.

Additionally, 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%.

During the fourth quarter 2020, we raised $98.8 million under our ATM equity program after fees and other costs.

As of December 31, 2020, there is no outstanding balance on our $1.0 billion unsecured revolving credit facility, we had cash and cash equivalents of $798.3 million, and we had the capacity to issue up to $28.4 million in common shares under the ATM program.

During 2021, we have continued to see improvements in overall cash collections from tenants as compared to 2020, although not yet at pre-COVID-19 levels (see further discussion under the "Outlook" section of this Item 2).

While the overall economic impacts of the pandemic are unknown, we have taken multiple steps to strengthen our financial position, maximize liquidity, and to provide maximum flexibility during these uncertain times, including maintaining levels of cash in excess of the cash balances we have historically maintained.

As of December 31, 2021, there is no balance outstanding on our $1.0 billion unsecured revolving credit facility and we had cash and cash equivalents of $162.1 million.

We also had outstanding forward sales agreements for net proceeds of $264.0 million as of December 31, 2021, and the capacity to issue up to $175.0 million in common shares under the ATM program.

We have no debt maturing until June 2023.

For the year ended 2021, the weighted average amount of borrowings outstanding on our revolving credit facility was $19.6 million, and the weighted average interest rate, before amortization of debt fees, was 0.9%.

Subsequent to December 31, 2020, we repaid one mortgage loan, resulting in only $7.9 million of debt maturing in 2021, excluding our $400.0 million term loan, which may be extended for an additional twelve months at our option.

Our overall capital requirements during 2021 will be impacted by the extent and duration of COVID-19 related closures, impacts on our cash collections, and overall economic impacts including any halts to construction activities that might occur.

It will also be impacted by acquisition opportunities and the level and general timing of our redevelopment and development activities.

While the amount of future expenditures will depend on numerous factors, we expect to continue to see higher levels of capital investments in our properties under development and redevelopment, as we continue to invest in the current phase of

these projects and are not expecting COVID-19 related halts in construction activities as we experienced in 2020.

With respect to other capital investments related to our existing properties, we expect to incur levels more consistent with prior years with an overall increase compared to 2020.

We believe that the cash on our balance sheet together with rents we collect, as well as our $1.0 billion revolving credit facility will allow us to continue to operate our business in the near-term.

Given our recent ability to access capital markets, we also expect debt or equity to be available to us.

We may also further delay the timing of certain development and redevelopment projects, as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy.

While the COVID-19 pandemic has negatively impacted our business during the year ended December 31, 2020, and we expect it will continue to negatively impact our business in the short term, we intend to operate with and to maintain our long term commitment to a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-grade debt ratings.

Our overall capital requirements during 2022 will be impacted by the extent and duration of COVID-19 related closures and restrictions, impacts on our cash collections, and overall economic impacts that might occur including supply chain issues.

Cash requirements will also be impacted by acquisition opportunities and the level and general timing of our redevelopment and development activities.

While the amount of future expenditures will depend on numerous factors, we expect to continue to see elevated levels of investment as we continue to invest in our overall portfolio to better position our properties for a post-COVID environment, costs to prepare vacant space for new tenants, and investments to complete the current phase and start on the next phase of our larger mixed-use development projects although at a slightly reduced level from 2021, largely due to deliveries in 2021 of our third phase of Assembly Row.

We believe that the cash on our balance sheet together with rents we collect, as well as our $1.0 billion revolving credit facility will allow us to continue to operate our business through the remainder of the COVID-19 pandemic.

Given our ability to access the capital markets, we also expect debt or equity to be available to us.

We also have the ability to delay the timing of certain development and redevelopment projects as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy.

While we have seen improvements from the initial negative impacts of the COVID-19 pandemic, it has continued to affect our

overall business during the year ended December 31, 2021, and we expect it will continue to negatively impact our business in the short term, we intend to operate with and to maintain our long term commitment to a conservative capital structure that will

allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-grade debt ratings.

Summary of Cash Flows

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(In thousands)

Cash provided by operating activities $ 369,929 $ 461,919

Cash used in investing activities (368,383) (316,532)

Cash provided by (used in) financing activities 661,736 (100,105)

Increase in cash and cash equivalents 663,282 45,282

Net cash provided by operating activities $ 471,352 $ 369,929

Net cash used in investing activities (660,118) (368,383)

Net cash (used in) provided by financing activities (452,967) 661,736

(Decrease) increase in cash and cash equivalents (641,733) 663,282

Cash, cash equivalents, and restricted cash, beginning of year 816,896 153,614

Cash, cash equivalents, and restricted cash, end of year $ 175,163 $ 816,896

Net cash provided by operating activities decreased $92.0 million to $369.9 million during 2020 from $461.9 million during 2019.

The decrease was primarily attributable to lower net income before non-cash items and the timing of cash receipts, both largely driven by impacts of the COVID-19 pandemic and payments of annual real estate tax recovery billings.

Net cash provided by operating activities increased $101.4 million to $471.4 million during 2021 from $369.9 million during 2020.

The increase was primarily attributable to higher net income before non-cash items and the timing of cash receipts including higher accounts receivable and lower prepaid rent balances in 2020 as a result of the COVID-19 pandemic.

Net cash used in investing activities increased $291.7 million to $660.1 million during 2021 from $368.4 million during 2020.

The increase was primarily attributable to:

• a $138.5 million decrease in proceeds from sales of real estate, resulting from the sale of three properties, one building, and the two remaining condominium units at our Pike & Rose property in 2020, as compared to the sale under the threat of condemnation of a portion of San Antonio Center and the sale of three properties, one land parcel, and the sale of 43 condominiums at our Assembly Row and Pike & Rose properties in 2019,

• a $81.6 million increase in capital expenditures and leasing costs as we continue to invest in Pike & Rose, Assembly Row, Santana Row and other redevelopments,

• $12.9 million for net costs paid in 2020 relating to the partial sale under threat of condemnation at San Antonio Center in 2019, and

• a $9.6 million acquisition of two loans secured by a shopping center in Rockville, Maryland, that is owned by a third party,

• a $356.9 million increase in acquisition of real estate primarily due to 2021 property acquisitions (see Note 3 to the consolidated financial statements for additional information), and

• a $45.6 million decrease in proceeds from sales of real estate, resulting from the sale of two properties and a portion of three properties in 2021, as compared to the sale of three properties, one building, and the two remaining condominium units at our Pike & Rose property in 2020,

partially offset by

• a $194.9 million decrease in acquisitions of real estate, primarily due to the acquisitions of Georgetowne Shopping Center, 37 mixed-use buildings in Hoboken, New Jersey, and Fairfax Junction in 2019, partially offset by the acquisition of two additional buildings in Hoboken, New Jersey in 2020.

Net cash provided by financing activities increased $761.8 million to $661.7 million during 2020 from $100.1 million used in during 2019.

The increase was primarily attributable to:

• a $694.4 million increase due to net proceeds of $700.1 million from the issuance of $400.0 million of 3.50% unsecured senior notes and the $300.0 million reopening of our 3.95% unsecured senior notes in May 2020, and $394.2 million from the issuance of $400.0 million of 1.25% unsecured senior notes in October 2020, as compared to $399.9 million in net proceeds from the issuance of $300.0 million of 3.20% senior unsecured notes in June 2019 and an additional $100.0 million of the same series in August 2019,

• $398.7 million in net proceeds from our unsecured term loan in May 2020, and

• a $230.8 million decrease in repayment of mortgages, finance leases, and notes payable primarily due to the repayment of our $275.0 million unsecured term loan in June 2019 and the $20.3 million payoff of the mortgage loan on Rollingwood Apartments in January 2019, partially offset by the $60.6 million payoff of the mortgage loan on The Shops at Sunset Place in December 2020 and the $3.6 million payoff of the mortgage loan on 29th Place, both in December 2020,

• a $54.5 million decrease in net capital expenditures and leasing costs,

• a $41.4 million increase in net repayments and acquisitions of mortgages and other notes receivable primarily due to the $31.1 million payoff of two mortgage notes receivable in May 2021, as compared to the $9.6 million acquisition of two mortgage notes receivable in September 2020, and

• $12.9 million paid in 2020 relating to the partial sale under threat of condemnation at San Antonio Center in 2019.

Net cash provided by financing activities decreased $1.1 billion to $453.0 million used during 2021 from $661.7 million provided during 2020.

The decrease was primarily attributable to:

• a $1.1 billion decrease due to net proceeds of $700.1 million from the issuance of $400.0 million of 3.50% unsecured senior notes and the $300.0 million reopening of our 3.95% unsecured senior notes in May 2020, and $394.2 million in net proceeds from our $400.0 million of 1.25% unsecured senior notes in October 2020,

• $398.7 million in net proceeds from our unsecured term loan in May 2020,

• a $207.4 million increase in repayment of mortgages, finance leases, and notes payable primarily due to the $140.9 million net repayments of four mortgage loans in 2021 (see Note 5 to the consolidated financial statements for more information), the $100.0 million repayment of our $400.0 million term loan which was amended in April 2021, and the $31.5 million repayment of the mortgage loan encumbering the Pike & Rose hotel in January 2021, partially offset by the $60.6 million payoff of the mortgage loan on The Shops at Sunset Place in December 2020 and the $3.6 million payoff of the mortgage loan on 29th Place, both in December 2020, and

• an $11.1 million increase in dividends paid to shareholders due to an increase in the common share dividend rate and an increase in the number of common shares outstanding,

partially offset by,

• $510.4 million from the December 2020 redemptions of our our $250.0 million 2.55% unsecured senior notes and our $250.0 million 3.00% unsecured senior notes, with a make-whole premium of $10.4 million,

• $43.9 million decrease in net proceeds from the issuance of 1.1 million common shares under our ATM program at a weighted average price of $92.51 during 2020, as compared to 1.1 million common shares at weighted average price of $134.71 in 2019, and

• a $10.9 million increase in dividends paid to shareholders due to an increase in the common share dividend rate and an increase in the number of common shares outstanding.

• $510.4 million from the December 2020 redemptions of our $250.0 million 2.55% unsecured senior notes and our $250.0 million 3.00% unsecured senior notes, with a make-whole premium of $10.4 million,

• $73.8 million increase in net proceeds from the issuance of 1.6 million common shares under our ATM program for net proceeds of $172.7 million (see Note 8 to our consolidated financial statements for additional details on these transactions), as compared to 1.1 million common shares for net proceeds of $98.8 million in 2020, and

• a $10.8 million decrease in distributions to and redemptions of noncontrolling interests primarily due to the 2020 acquisition of one of our partner's interests in the partnership that owns our Plaza El Segundo property for $7.3 million.

Cash Requirements

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(2) The weighted average interest rate on the fixed and variable rate debt related to our unconsolidated real estate partnerships is 4.24% as of December 31, 2021.

$25.2 million of the requirements in the next twelve months was repaid when we acquired our partners' share of the Pike & Rose hotel joint venture on January 4, 2021.

See Note 15 to the consolidated financial statements for additional information.

(3) This includes minimum rental payments related to both finance and operating leases.

(4) This includes the liability related to the sale under threat of condemnation at San Antonio Center as further discussed in Note 3 and Note 7 to the consolidated financial statements.

(4) This includes the liability related to the sale under threat of condemnation at San Antonio Center as further discussed in Note 7 to the consolidated financial statements.

In addition to the amounts set forth in the table above and other liquidity requirements previously discussed, the following potential commitments exist:

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(b) Under the terms of various other partnership agreements, the partners have the right to exchange their operating partnership units for cash or the same number of our common shares, at our option.

As of December 31, 2020, a total of 744,617 operating partnership units are outstanding.

As of December 31, 2021, a total of 666,831 downREIT operating partnership units are outstanding.

(c) Two of the members in Plaza El Segundo have the right to require us to purchase their 10.0% and 11.8% ownership interests at the interests' then-current fair market value.

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Based on management's current estimate of fair market value as of December 31, 2021, our estimated maximum liability upon exercise of the put option would range from $9 million to $10 million.

(f) At December 31, 2020, we had letters of credit outstanding of approximately $4.7 million.

(f) Effective June 14, 2026, the other member in Cambelback Colonnade and Hilton Village has the right to require us to purchase all of its 2.0% ownership interest at the interest's then-current fair market value.

Based on management's current estimate of fair value as of December 31, 2021, our estimated maximum liability upon exercise of the put option would range from $4 million to $5 million.

(g) Effective June 1, 2029, the other member in Grossmont Center has the right to require us to purchase all of its 40.0% ownership interest at the interest's then-current fair market value.

Based on management's current estimate of fair value as of December 31, 2021, our estimated maximum liability upon exercise of the put option would range from $68 million to $73 million.

(h) At December 31, 2021, we had letters of credit outstanding of approximately $4.8 million.

Off-Balance Sheet Arrangements

At December 31, 2020, we have three real estate related equity method investments with total debt outstanding of $109.7 million, of which our share is $53.3 million.

At December 31, 2021, we have two real estate related equity method investments with total debt outstanding of $79.8 million, of which our share is $28.6 million.

Our investment in these ventures at December 31, 2021 was $8.9 million.

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Secured fixed rate

Sylmar Towne Center Acquired $ 16,236 5.39 % June 6, 2021

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

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

Montrose Crossing 80,000 65,596 4.20 % January 10, 2022

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

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Subtotal 341,579

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

Total mortgages payable 484,111

Net unamortized debt issuance costs and premium (1,586)

Total mortgages payable, net 339,993

Notes payable

Term Loan 400,000 400,000 LIBOR + 1.35% May 6, 2021

Revolving credit facility (4) 1,000,000 — LIBOR + 0.775% January 19, 2024

Term Loan 400,000 300,000 LIBOR + 0.80% April 16, 2024

Various 7,239 2,635 11.31 % Various through 2028

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Net unamortized debt issuance costs (1,169)

Total notes payable 402,776

Total notes payable, net 301,466

Senior notes and debentures

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Subtotal 3,419,200

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

Total senior notes and debentures 3,404,488

Net unamortized debt issuance costs and premium (13,112)

Total senior notes and debentures, net 3,406,088

Total debt, net $ 4,047,547

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As of December 31, 2021, we were in compliance with all of the financial and other covenants related to our revolving credit facility, term loan, and senior notes.

Additionally, we were in compliance with all of the financial and other covenants that could trigger loan default on our mortgage loans.

If we were to breach any of these financial and other covenants and did not cure the breach within an applicable cure period, our lenders could require us to repay the debt immediately and, if the debt is secured, could immediately begin proceedings to take possession of the property securing the loan.

Additionally, we were in compliance with all of the financial and other covenants that could trigger a loan default on our mortgage loans.

If we were to breach any of these financial and other covenants and did not cure the breach within an applicable cure period, our lenders could require us to repay

the debt immediately and, if the debt is secured, could immediately begin proceedings to take possession of the property securing the loan.

Many of our debt arrangements, including our public notes and our revolving credit facility, are cross-defaulted, which means that the lenders under those debt arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a default under certain of our other debt obligations.

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_____________________

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

1) Our $300.0 million term loan matures on April 16, 2024, plus two one-year extensions, at our option.

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

As of December 31, 2021, there was no outstanding balance under this credit facility.

3) The total debt maturities differ from the total reported on the consolidated balance sheet due to the unamortized net premium/discount and debt issuance costs on mortgage loans, notes payable, and senior notes as of December 31, 2020.

3) The total debt maturities differ from the total reported on the consolidated balance sheet due to the unamortized net debt issuance costs and premium/discount on mortgage loans, notes payable, and senior notes as of December 31, 2021.

Interest Rate Hedging

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As of December 31, 2021, we have two interest rate swap agreements that effectively fix the interest rate on a mortgage payable associated with our Hoboken portfolio at 3.67%.

Our Assembly Row hotel joint venture is also a party to two interest rate swap agreements that effectively fix the interest rate on the joint venture's mortgage debt at 5.206%.

Our Assembly Row hotel joint venture is also a party to two interest rate swap agreements that effectively fix their debt at 5.206%.

All swaps were designated and qualify as cash flow hedges.

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net income, computed in accordance with U.S.

GAAP, plus real estate related depreciation and amortization, gains and losses on the sale of real estate, and impairment write-downs of depreciable real estate.

GAAP, plus real estate related depreciation and amortization, and excluding gains and losses on the sale of real estate or changes in control, net of tax, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity.

We compute FFO in accordance with the NAREIT definition, and we have historically reported our FFO available for common shareholders in addition to our net income and net cash provided by operating activities.

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Comparison of our presentation of FFO to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs.

An increase or decrease in FFO available for common shareholders does not necessarily result in an increase or decrease in aggregate distributions because our Board of Trustees is not required to increase distributions on a quarterly basis unless necessary for us to maintain REIT status.

However, we must distribute at least 90% of our taxable income to remain qualified as a REIT.

However, we must distribute at least 90% of our annual taxable income to remain qualified as a REIT.

Therefore, a significant increase in FFO will generally require an increase in distributions to shareholders although not necessarily on a proportionate basis.

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Net income attributable to noncontrolling interests (7,583) (4,182) (6,676)

Gain on sale of real estate, net of tax (91,922) (116,393) (11,915)

Gain on sale of real estate and change in control of interests, net (89,892) (91,922) (116,393)

Impairment charge, net — 50,728 —

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_____________________

(1) For the years ended December 31, 2019 and 2018, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."

(1) For the year ended December 31, 2019, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."

(2) For the year ended December 31, 2020, FFO available for common shareholders includes a $11.2 million charge related to early extinguishment of debt.

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For the year ended December 31, 2019, FFO available for common shareholders includes an $11.9 million charge relating to the buyout of a lease at Assembly Square Marketplace.

If this charge was excluded, our FFO available for common shareholders for 2019 would have been $477.7 million, and FFO available for common shareholders, per diluted share would have been $6.33.

(3) The weighted average common shares used to compute FFO per diluted common share also includes operating partnership units that were excluded from the computation of diluted EPS.

If this charge was excluded, our FFO

available for common shareholders for 2019 would have been $477.7 million, and FFO available for common shareholders, per diluted share would have been $6.33.

(3) The weighted average common shares used to compute FFO per diluted common share includes operating partnership units that were excluded from the computation of diluted EPS.

Conversion of these operating partnership units is dilutive in the computation of FFO per diluted common share but is anti-dilutive for the computation of diluted EPS for the periods presented.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis