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Unless stated otherwise or the context otherwise requires, "we," "our," and "us" means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership.
−Removed: The Parent Company specializes in the ownership, management, and redevelopment of high quality retail and mixed-use properties located primarily in communities where we believe demand exceeds supply, in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida.
−Removed: As of December 31, 2022, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 103 predominantly retail real estate projects comprising approximately 25.8 million square feet.
+Added: We specialize in the ownership, management, and redevelopment of high quality retail and mixed-use properties located primarily in communities where we believe demand exceeds supply, in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida.
+Added: As of December 31, 2023, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 102 predominantly retail real estate projects comprising approximately 26.0 million commercial square feet.
In total, the real estate projects were 94.2% leased and 92.2% occupied at December 31, 2023.
We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for 56 consecutive years.
−Removed: Impacts of COVID-19 Pandemic and General Economic Conditions
−Removed: Given the ongoing workforce shortages, global supply chain bottlenecks and shortages, and high inflation, we continue to monitor and address risks related to the COVID-19 pandemic and the general state of the economy.
−Removed: While improving, our cash flow and results of operations in the year ended December 31, 2022 continued to be negatively impacted largely due to vacancy levels remaining above historical levels.
−Removed: 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.
−Removed: We believe those actions positioned many of our tenants to be able to return to payment of contractual rent as soon as possible after the initial impacts from the pandemic started to subside.
−Removed: During 2022, we have continued to see improvements in overall cash collections from tenants with collection rates nearing pre-pandemic levels.
−Removed: We have also taken multiple steps over the past two years 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.
−Removed: On October 5, 2022, we amended our revolving credit facility increasing the borrowing capacity from $1.0 billion to $1.25 billion and extending the maturity date to April 5, 2027, plus two six-month extensions at our option.
−Removed: Additionally, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.75 billion.
−Removed: We also amended our unsecured term loan borrowing an additional $300.0 million.
−Removed: As of December 31, 2022, there is no outstanding balance on our $1.25 billion revolving credit facility, and we have cash and cash equivalents of $85.6 million.
−Removed: Additional discussion of the impact of current economic conditions and the COVID-19 pandemic on our results and long-term operations can be found throughout Item 7 and Item 1A .
+Added: General Economic Conditions
+Added: The heightened levels of inflation, higher interest rates, and the potentially worsening of economic conditions presents risks for our business and our tenants.
+Added: We continue to monitor and address risks related to the general state of the economy.
+Added: We believe that the actions we have taken to improve our financial position and maximize our liquidity will continue to mitigate the impact to our cash flow caused by tenants not timely paying contractual rent.
+Added: Additional discussion of the impact of current economic conditions 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.
−Removed: We have aligned our program and efforts with the United Nations Sustainable Development Goals, as described in our ESG Policy and our 2021 Corporate Responsibility Report, which are provided only for informational purposes on our website and not incorporated by reference herein.
−Removed: Our development activities have been heavily focused on owning, developing and operating properties that are certified under the U.S.
−Removed: Green Building Council’s® (“USGBC”) Leadership in Energy and Environmental Design™ (LEED®) rating system which serves as a third-party verification that a building or community was designed and built to mitigate its environmental footprint.
−Removed: We currently have 19 LEED certified buildings and our Pike & Rose project has achieved LEED for Neighborhood Development Stage 3 Gold certification.
−Removed: The COVID-19 pandemic has also increased our focus on owning, developing and operating healthier buildings.
−Removed: To that end, our new corporate headquarters space at our 909 Rose Avenue building has earned a Fitwel certification developed by the U.S.
−Removed: Centers for Disease Control and Prevention (CDC) together with the General Services Administration (GSA).
−Removed: This certification assesses a building’s impact on seven distinct categories related to overall health and well-being.
−Removed: 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 greenhouse gas (GHG) emissions reduction targets in accordance with the Science-Based Targets initiative as well as energy reduction targets.
+Added: We have aligned our program and efforts with the United Nations Sustainable Development Goals, as described in our ESG Policy and our 2022 Environmental Social and Governance Report, which are provided only for informational purposes on our website and not incorporated by reference herein.
+Added: We are committed to implementing sustainable business practices at our operating properties that focus on energy efficiency, water conservation and waste minimization and have established greenhouse gas (GHG) emissions reduction targets in accordance with the Science-Based Targets initiative as well as energy reduction targets.
To achieve these targets, we are actively addressing energy efficiency projects on site such as upgrading to LED lighting, procuring green energy, reducing electric consumption, and increasing our onsite solar generation capacity.
We have installed on-site solar systems at 26 of our properties with a capacity of 14 MW with more projects actively in progress.
−Removed: We also installed electric vehicle car charging stations in numerous properties throughout our portfolio.
+Added: We also installed electric vehicle car charging
+Added: stations in numerous properties throughout our portfolio.
We currently have over 400 charging stations in operation with more under construction.
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All of our efforts with respect to corporate responsibility are overseen by our Board of Trustees.
+Added: Our development activities have been heavily focused on owning, developing and operating properties that are certified under the U.S.
+Added: Green Building Council’s® (“USGBC”) Leadership in Energy and Environmental Design™ (LEED®) rating system which serves as a third-party verification that a building or community was designed and built to mitigate its environmental footprint.
+Added: We currently have 21 LEED certified buildings and our Pike & Rose project has achieved LEED for Neighborhood Development Stage 3 Gold certification.
+Added: Cyber Security
+Added: Our chief information officer, who has over 30 years of experience in managing information systems for real estate companies, heads our internal team of technology professionals who are responsible for managing our cybersecurity risks, which includes identifying our primary areas of risk, establishing processes, procedures, and systems to mitigate those risks and identifying and remediating any breaches that may occur.
+Added: Cybersecurity risk management falls under our general counsel as part of our overall risk management program, which is ultimately overseen by the Audit Committee of the Board of Trustees.
+Added: Our team is supported by a third party company that we have retained to act as our chief information security officer based on the third party company's experience in preventing cybersecurity incidents, advising clients about appropriate cybersecurity procedures and processes, and assessing the integrity of those procedures and processes.
+Added: The assessment and management of our cybersecurity risks covers all of our internal systems as well as the systems of third parties who maintain our data.
+Added: We rely on our management team's experience in risk management, in consultation with our third party advisor, to appropriately address cybersecurity threats.
+Added: As part of our processes to manage risks from cybersecurity threats, we have developed and enforce company-wide policies related to password encryption, strength and expiration, we require multi-factor authentication where appropriate, and we conduct regular employee training about our policies and cybersecurity threats.
+Added: We make use of firewalls, anti-virus software, backups, redundancies, regular penetration testing, and our systems monitor and flag irregularities in how our information systems are accessed or used.
+Added: Any known cybersecurity incidents would be reported by our chief information officer to our general counsel and disclosure committee for evaluation and remediation, and for a determination of how we might develop further security systems and procedures to address evolving cybersecurity threats.
+Added: Management provides written and verbal updates to the Audit Committee at least quarterly identifying our primary areas of risk, actions taken or planned to be taken to mitigate those risks, and specific activities undertaken during the quarter, including employee training and the results of that training.
+Added: Management would also provide updates to seek oversight from the Audit Committee on an ad hoc basis in connection with any material cybersecurity incident, should one occur.
+Added: We have not experienced any cybersecurity incident that has had a material impact on our business strategy, results of operations, or financial condition.
+Added: For more information, see Item 1A.
+Added: Risk Factors ("We face risks relating to cybersecurity threats that could cause loss of confidential information and other business distributions").
Critical Accounting Policies and Estimates
17 unchanged sentences
If leases currently classified as not probable are subsequently changed to probable, any lease receivables (including straight-line rent receivables) are re-instated with a corresponding increase to rental income.
−Removed: Our collection of rents has continued to improve, including collecting rents related to prior periods.
−Removed: As a result, our collectibility related adjustments for the year ended December 31, 2022 resulted in an increase to rental income of $4.1 million, as compared to a $24.0 million decrease to rental income during the year ended December 31, 2021, which reflected lower levels of cash collections and elevated levels of rent abatements and disputes directly related to COVID-19.
+Added: Our collectibility related adjustments for the years ended December 31, 2023 and 2022 resulted in a decrease to rental income of $0.4 million and an increase to rental income of $4.1 million, respectively.
As of December 31, 2023 and 2022, the revenue from approximately 28% and 31% of our tenants (based on total commercial leases), respectively, is being recognized on a cash basis.
As of December 31, 2023 and 2022, our straight-line rent receivables balance was $138.4 million and $126.6 million, respectively, and is included in "accounts and notes receivable, net" on our consolidated balance sheet.
−Removed: As of December 31, 2022, we executed rent deferral agreements related to the COVID-19 pandemic representing approximately $48 million of rent.
−Removed: We have subsequently collected approximately $35 million of those amounts previously deferred.
−Removed: Other revenue recognition policies
−Removed: When we enter into a transaction to sell a property or a portion of a property, we evaluate the recognition of the sale under ASC 610-20, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets." In accordance with ASC 610-20, we apply the guidance in ASC 606, "Revenue from Contracts with Customers," to determine whether and when control transfers and how to measure the associated gain or loss.
−Removed: We determine the transaction price based on the consideration we expect to receive.
−Removed: 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.
−Removed: 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.
−Removed: The estimation of variable consideration requires us to make assumptions and apply significant judgment.
−Removed: The existence and amount of variable consideration can vary significantly among transactions.
−Removed: Historically, our property sales have had variable consideration of less than 1% of total expected consideration;
−Removed: however, we had one transaction in 2019 where the variable consideration was approximately $45.5 million.
Real Estate Acquisitions
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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.
−Removed: During 2022, we acquired properties included in our consolidated financial statements with a total purchase price of $443.1 million.
−Removed: $1.9 million, or less than 1% of the total purchase price was allocated to above market lease assets and $38.7 million, or 9% was allocated to below market lease liabilities.
−Removed: If the amounts allocated in 2022 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 $2.1 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).
+Added: During 2022 and 2023, we acquired properties included in our consolidated financial statements with a total purchase price of $509.1 million.
+Added: $3.4 million, or 1% of the total purchase price was allocated to above market lease assets and $39.9 million, or 8% was allocated to below market lease liabilities.
+Added: If the amounts allocated in 2022 and 2023 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 $2.2 million (using the weighted average life of below market liabilities at each respective acquired property) and annual depreciation expense would decrease by approximately $0.7 million (using a depreciable life of 35 years).
Long-Lived Assets and Impairment
4 unchanged sentences
If the undiscounted cash flows are less than the net book value, the property is written down to expected fair value.
−Removed: The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for space by tenants and rental rates over long periods.
+Added: The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for
+Added: space by tenants and rental rates over long periods.
Because our properties typically have a long life, the assumptions used to estimate the future recoverability of book value requires significant management judgment.
5 unchanged sentences
See Note 2 to the consolidated financial statements.
−Removed: 2022 Acquisitions, Dispositions, and Other Transactions
−Removed: During the year ended December 31, 2022, we acquired the following properties:
−Removed: Date Acquired Property City/State Gross Leasable Area (GLA) Gross Value
−Removed: (in square feet) (in millions)
−Removed: April 20, 2022 &
−Removed: July 27, 2022 Kingstowne Towne Center Kingstowne, Virginia 410,000 $ 200.0 (1)
−Removed: July 18, 2022 Hilton Village (office building) Scottsdale, Arizona 212,000 $ 53.6 (2)
−Removed: July 27, 2022 The Shops at Pembroke Gardens Pembroke Pines, Florida 391,000 $ 180.5 (3)
−Removed: November 18, 2022 Hoboken (301 Washington St.) Hoboken, New Jersey N/A $ 9.0 (4)
−Removed: (1) Approximately $11.3 million and $0.3 million of net assets were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $20.2 million of net assets acquired were allocated to other liabilities for "below market leases."
−Removed: (2) This building is adjacent to, and will be operated as part of our Hilton Village property.
−Removed: The land is controlled under a long-term ground lease that expires on September 30, 2075, for which we have recorded a $6.5 million "operating lease right of use asset" (net of a $0.8 million above market liability) and a $7.3 million "operating lease liability." Approximately $8.9 million of net assets acquired were allocated to other assets for "acquired lease costs" and $0.1 million of net assets acquired were allocated to other liabilities for "below market leases."
−Removed: (3) Approximately $16.3 million and $1.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $18.4 million of net assets acquired were allocated to other liabilities for "below market leases."
−Removed: (4) This property, that we own a 90% ownership interest in, was acquired through our Hoboken joint venture, and is in the beginning stages of redevelopment.
−Removed: On October 6, 2022, we acquired a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers for a combined price of $58.9 million.
−Removed: On the date of acquisition, the properties had combined mortgage debt of $76.1 million, of which, our share is approximately $36.2 million.
−Removed: Approximately $8.0 million and $2.0 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $17.1 million of net assets acquired were allocated to other liabilities for "below market leases." Additional information on the properties is listed below:
−Removed: Property City/State Gross Leasable Area (GLA) Purchase Price
−Removed: (in square feet) (in millions)
−Removed: Chandler Festival Chandler, Arizona 355,000 $ 40.8
−Removed: Chandler Gateway Chandler, Arizona 262,000 $ 18.1
−Removed: During the year ended December 31, 2022, we sold two residential properties (one included an adjacent retail pad), one retail property, one parcel of land, and one portion of a property for sales prices totaling $136.2 million, resulting in net gains totaling approximately $84.1 million.
−Removed: Other Transactions
−Removed: On July 13, 2022, we acquired the 21.8% redeemable noncontrolling interest in the partnership that owns our Plaza El Segundo shopping center for $23.6 million, bringing our ownership interest to 100%.
−Removed: On August 25, 2022, we entered into a tenancy in common ("TIC") agreement with our partner in the partnership that owned Escondido Promenade.
−Removed: As a result, the Company owns a 77.7% TIC interest, and our former partner owns the remaining 22.3% interest.
−Removed: While the Company controlled and consolidated Escondido Promenade under the previous partnership arrangement, control is shared under the TIC agreement.
−Removed: The transaction is considered a transfer of our previous controlling partner interest in exchange for a non-controlling TIC interest.
−Removed: Accordingly, we deconsolidated the entity and recorded our TIC interest at fair value as an equity method investment.
−Removed: We recognized a $70.4 million "gain on deconsolidation of VIE" on our consolidated statements of operations, which is the difference between the net carrying value of the deconsolidated entity and the fair value of our TIC interest.
−Removed: As of August 25, 2022, the fair value of our investment in the entity was $110.0 million, and is included in "investment in partnerships" on our consolidated balance sheet as of December 31, 2022.
−Removed: As a part of this transaction, we made a $3.5 million loan to our co-owner, which is included in "accounts and notes receivable, net" on our consolidated balance sheet at December 31, 2022.
−Removed: In addition, we entered into a purchase option agreement to acquire the TIC interest from our co-owner, which was secured through an option payment of $1.5 million, and allows us to exercise our option at any time between February 1, 2023 and March 15, 2023.
+Added: 2023 Acquisitions and Dispositions
+Added: On January 31, 2023, we acquired the 168,000 square foot portion of Huntington Square shopping center that was not previously owned, as well as the fee interest in the land underneath the portion of the shopping center which we controlled under a long-term ground lease for $35.5 million.
+Added: As a result of this transaction, we now own the entire fee interest in this 243,000 square foot property and the "operating lease right of use assets, net" on our consolidated balance sheet decreased by $5.3 million.
+Added: Approximately $4.1 million and $1.3 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively.
+Added: On May 26, 2023, we exercised our option and acquired the 22.3% tenancy in common ("TIC") interest from our co-owner at Escondido Promenade for $30.5 million, bringing our ownership interest to 100%.
+Added: As a result of the transaction, we gained control of this property, and effective May 26, 2023, we have consolidated this property.
+Added: Approximately $1.8 million and $0.2 million of net assets associated with the 22.3% interest acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $1.1 million of net assets associated with the 22.3% interest acquired were allocated to other liabilities for "below market leases."
+Added: On October 12, 2023, we acquired the fee interest under a portion of our Mercer on One (formerly Mercer Mall) shopping center for $55.0 million pursuant to the purchase option included in the master lease.
+Added: As a result of this transaction, "finance lease right of use assets, net" of $37.8 million were allocated to "operating real estate" and "finance lease liabilities" decreased by $55.0 million.
+Added: During the year ended December 31, 2023, we sold one retail property and one portion of a property for sales prices totaling $30.4 million, resulting in net gains totaling approximately $9.7 million.
2023 Significant Debt and Equity Transactions
−Removed: On February 14, 2022, 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.
−Removed: Our ATM equity program also allows shares to be sold through forward sales contracts.
−Removed: We intend to use the net proceeds from ATM equity program issuances to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay indebtedness and/or for general corporate purposes.
−Removed: During 2022, we settled the remaining forward sales agreements entered into during 2021 by issuing 2,203,655 common shares for net proceeds of $259.4 million, and consequently, we have no outstanding open forward sales agreements as of December 31, 2022.
−Removed: For the year ended December 31, 2022, we issued 430,473 common shares at a weighted average price per share of $111.49 for net cash proceeds of $47.4 million including paying $0.5 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares.
+Added: For the three months ended December 31, 2023, we sold 1,220,842 common shares (of which, 62,895 settled on January 2, 2024) at a weighted average price per share of $101.30 for net cash proceeds of $122.4 million including paying $1.2 million in commissions and $0.1 million in additional operating expenses related to the sales of these common shares.
+Added: For the year ended December 31, 2023, we sold 1,372,889 common shares (of which, 62,895 settled on January 2, 2024) at a weighted average price per share of $101.89 for net cash proceeds of $138.3 million including paying $1.4 million in commissions and $0.2 million in additional offering expenses related to the sales of these common shares.
As of December 31, 2023, we had the capacity to issue up to $312.1 million in common shares under our ATM equity program.
−Removed: On June 29, 2022, we repaid the $16.1 million mortgage loan on one of the buildings at our Hoboken property, at par.
−Removed: On October 5, 2022, we amended our revolving credit facility, increasing the borrowing capacity from $1.0 billion to $1.25 billion, extending the maturity date to April 5, 2027, plus two six-month extension options, transitioning the interest rate provisions from LIBOR to the secured overnight financing rate ("SOFR"), and adjusting the spread for SOFR based loans.
−Removed: Our SOFR based loans bear interest at Daily Simple SOFR or Term SOFR as defined in the credit agreement plus 0.10% plus a spread, based on our credit rating.
−Removed: The current spread is 77.5 basis points.
−Removed: In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.75 billion.
−Removed: On October 5, 2022, we also amended our unsecured term loan and borrowed an additional $300.0 million, bringing the total outstanding to $600.0 million.
−Removed: The term loan amendment also transitioned the interest rate provisions from LIBOR to SOFR.
−Removed: This SOFR based loan bears interest at Term SOFR as defined in the agreement, plus 0.10%, plus an 85 basis point spread, based on our current credit rating.
−Removed: The net proceeds from the term loan were used to repay the $267.0 million outstanding balance on the revolving credit facility and for general corporate purposes.
−Removed: 2023 Acquisition
−Removed: On January 31, 2023, we acquired the 180,000 square foot portion of Huntington Square shopping center that was not previously owned, as well as the fee interest in the land underneath the portion of the shopping center which we control under a long-term ground lease for $35.5 million.
+Added: On April 12, 2023, we issued $350.0 million of fixed rate senior unsecured notes that mature on May 1, 2028 and bear interest at 5.375%.
+Added: The notes were offered at 99.590% of the principal amount with a yield to maturity of 5.468%.
+Added: The net proceeds, after issuance discount, underwriting fees, and other costs were $345.7 million.
+Added: The net proceeds of these notes, or "green bonds," will be allocated to the financing and refinancing of recently completed and future eligible green projects, which includes (i) investments in acquisitions of buildings;
+Added: (ii) building developments or redevelopments;
+Added: (iii) renovations in existing buildings;
+Added: 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 Gold or Platinum certification (or environmentally equivalent successor standards).
+Added: Net proceeds will be available for repayment of indebtedness, or may be invested in short-term income-producing investments or may be used to temporarily repay current and/or future amounts outstanding under our revolving credit facility.
+Added: Effective May 4, 2023, our Declaration of Trust was amended to increase the number of authorized common shares of beneficial interest to 200,000,000.
+Added: On June 1, 2023, we repaid our $275.0 million 2.75% senior unsecured notes at maturity.
+Added: On December 28, 2023, one of our wholly-owned subsidiaries entered into a $200.0 million mortgage loan, which bears interest at SOFR, plus a 95 basis point spread, matures on December 28, 2025, plus two one-year extensions, at our option, and is
+Added: secured by our Bethesda Row property.
+Added: The interest rate is effectively fixed at 5.03% through the initial maturity date, as a result of three interest rate swap agreements.
+Added: Our net proceeds were $199.1 million, after debt issuance costs.
+Added: Our subsidiary's obligations under the mortgage loan are guaranteed by the Operating Partnership.
+Added: 2024 Significant Debt Transactions
+Added: On January 11, 2024, our Operating Partnership issued $485.0 million aggregate principal amount of 3.25% Exchangeable Senior Notes (the “Notes”) that mature on January 15, 2029, unless earlier exchanged, purchased or redeemed.
+Added: On or after July 15, 2028, the Notes will be exchangeable for cash up to the principal amount of the Notes and, if applicable, cash, common shares of the Trust, or a combination thereof at our option, in respect of the remainder, if any, of the exchange obligation in excess of the principal amount.
+Added: The exchange rate initially equals 8.1436 common shares per $1,000 principal amount of the Notes (equivalent to an exchange price of approximately $122.80 per common share).
+Added: Net proceeds after the initial purchaser’s discount and estimated offering costs were approximately $471 million.
+Added: In connection with the Notes, we entered into privately negotiated capped call transactions with certain of the initial purchasers of the notes or their affiliates or other financial institutions.
+Added: The capped call transactions cover, subject to customary adjustments, the number of our common shares that initially underlie the Notes.
+Added: The capped call transactions are expected generally to reduce the potential dilution to our common shares upon exchange of any Notes and/or offset any cash payments we are required to make in excess of the principal amount of the Notes, with such reduction and/or offset subject to a cap.
+Added: The cap price of the capped call transaction initially is approximately $143.26 per share, which represents a premium of approximately 40% over the last reported sale price of our common shares of $102.33 on the New York Stock Exchange on January 8, 2024, and is subject to certain adjustments under the terms of the capped call transactions.
+Added: A portion of the proceeds from the Notes were used to pay the capped call premium of $19.4 million, which will be recorded in shareholders' equity for the Trust and capital for the Operating Partnership.
+Added: On January 16, 2024, we repaid the $600.0 million 3.95% senior unsecured notes at maturity.
Capitalized Costs
5 unchanged sentences
Total capitalized costs were $312 million for 2023 and $425 million for 2022, respectively.
−Removed: Corporate Reorganization
−Removed: In January 2022, we completed a reorganization into an umbrella partnership real estate investment trust, or "UPREIT." 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, as well our 2021 Annual Report on Form 10-K filed on February 10, 2022.
−Removed: Immediately following the reorganization, the Parent Company had the same consolidated assets and liabilities as Federal Realty Investment Trust immediately before the reorganization.
−Removed: The Parent Company exercises exclusive control over the General Partner and does not have assets or liabilities other than its investment in the Operating Partnership.
−Removed: As a result, the UPREIT reorganization represented a merger of entities under common control in accordance with accounting principles generally accepted in the United States ("GAAP").
−Removed: Accordingly, the accompanying consolidated financial statements including the notes thereto, are presented as if the UPREIT reorganization had occurred at the earliest period presented.
Our long-term growth strategy is focused on growth in earnings, funds from operations, and cash flows primarily through a combination of the following:
2 unchanged sentences
• expansion of our portfolio through property acquisitions.
−Removed: While the general economic effects of the elevated levels of inflation, rising interest rates, and the COVID-19 pandemic are impacting us in the short-term, our long-term focus has not changed.
+Added: Although general economic impacts of elevated levels of inflation and rising interest rates are impacting us in the short-term, our long-term focus has not changed.
Our comparable property growth is primarily driven by increases in rental rates on new leases and lease renewals, changes in portfolio occupancy, and the redevelopment of those assets.
Over the long-term, the infill nature and strong demographics of our properties provide a strategic advantage allowing us to maintain relatively high occupancy and generally increase rental rates.
+Added: We continue to experience strong demand for our commercial space as evidenced by the 2.0 million square feet of comparable space leasing we've completed in 2023, and the 2.0% spread between our leased rate of 94.2% and our occupied rate of 92.2%.
+Added: During 2023, we have seen an uptick in tenants filing for bankruptcy compared to the prior two years.
+Added: As a result, approximately 290,000 square feet of anchor space became vacant during the second half of 2023, of which, approximately 38,000 is leased to a replacement tenant.
+Added: This will negatively impact our occupancy and net income in the short term, however, we expect to be able to re-lease the space at similar or better aggregate rents over the next several quarters, and
+Added: we are actively in negotiations with replacement tenants.
+Added: Additionally, the effects of high levels of inflation and rising interest rates continue to negatively impact our business with the largest impacts being higher interest costs, increased material costs, and higher operating costs.
+Added: We continue to see impacts of increased costs for certain construction and other materials that support our development and redevelopment activities.
+Added: Worsening supply chain disruptions could also result in extended time frames and/or increased costs for completion of our projects and tenant build-outs, which could delay the commencement of rent payments under new leases.
+Added: Similarly, if our tenants experience significant disruptions in supply chains supporting their own products, staffing issues due to labor shortages, or are otherwise impacted by worsening economic conditions, their ability to pay rent may be adversely affected.
+Added: We continue to monitor these macroeconomic developments and are working with our tenants and our vendors to limit the overall impact to our business.
We believe the locations and nature of our centers and diverse tenant base partially mitigates any potential negative changes in the economic environment.
2 unchanged sentences
At December 31, 2023, no single tenant accounted for more than 2.7% of annualized base rent.
−Removed: The effects of the current economic conditions, the COVID-19 pandemic, and inflation continue to negatively impact our business with the largest current impacts being lower occupancy, supply chain disruptions, and higher interest costs.
−Removed: At December 31, 2022, our commercial space is 92.8% occupied, which is below historical levels largely due to tenant failures as a result of the pandemic.
−Removed: This lower occupancy will adversely impact our results until we can release the space and then commences paying rent, as well as limit future vacancies.
−Removed: We are, however, experiencing strong demand for our commercial space as evidenced by the 2.0 million square feet of comparable space leasing we've completed in 2022, and the 1.7% spread between our leased rate of 94.5% and our occupied rate of 92.8%.
−Removed: 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.
−Removed: We continue 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 development and redevelopment activities.
−Removed: 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.
−Removed: Similarly, if our
−Removed: 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.
−Removed: We continue to monitor these macroeconomic developments and are working with our tenants and our vendors to limit the overall impact to our business.
−Removed: The duration and severity of the economic impact from the current economic environment and the COVID-19 pandemic will depend on future developments, which are highly uncertain and cannot be predicted, however , 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:
−Removed: • Phase III of Assembly Row includes 277,000 square feet of office space, 56,000 square feet of retail space, and 500 residential units.
−Removed: As of December 31, 2022, Phase III is substantially complete, with expected final costs between $475 million and $485 million.
−Removed: • Phase III at Pike & Rose includes a 212,000 square foot office building (which includes 7,000 square feet of ground floor retail space and approximately 45,000 square feet is our new corporate headquarters).
−Removed: As of December 31, 2022, Phase III is substantially complete, with final estimated costs between $130 million and $135 million.
• Phase IV at Pike & Rose is a 276,000 square foot office building (which includes 10,000 square feet of ground floor retail space).
−Removed: Approximately 157,000 square feet of the office space is pre-leased to two tenants.
−Removed: The building is expected to cost between $185 million and $200 million, and begin delivering in late 2023.
−Removed: • The first phase of construction on Santana West includes an eight story 376,000 square foot office building, which is expected to cost between $300 million and $315 million.
+Added: Approximately 172,000 square feet of the office space is leased to two tenants, and approximately 8,000 square feet of retail is leased.
+Added: The building is expected to cost between $185 million and $200 million, and began delivering in late September 2023.
+Added: As of December 31, 2023, approximately 109,000 square feet of office space is open.
+Added: • Construction on Santana West includes an eight story 376,000 square foot office building, which is expected to cost between $315 million and $330 million.
+Added: Approximately 29,000 square feet of space is leased as of December 31, 2023.
• Throughout the portfolio, we currently have redevelopment projects underway with a projected total cost of approximately $321 million that we expect to stabilize over the next several years.
−Removed: 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, supply chain disruptions, broader economic conditions, and inflation.
−Removed: 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.
+Added: 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 broader, as well as local, economic conditions, inflation, higher interest rates, and higher operating costs.
+Added: The development of future phases of Assembly Row, Pike & Rose, Santana Row, and other properties 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 that complement our portfolio and provide long-term growth opportunities.
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We may also finance our acquisitions through the issuance of common shares, preferred shares, or units in the Operating Partnership, as well as through assumed mortgages and property sales.
−Removed: At December 31, 2022, the leasable square feet in our properties was 94.5% leased and 92.8% occupied.
+Added: At December 31, 2023, the leasable commercial square feet in our properties was 94.2% leased and 92.2% occupied.
The leased rate is higher than the occupied rate due to leased spaces that are being redeveloped or improved or that are awaiting permits and, therefore, are not yet ready to be occupied.
3 unchanged sentences
Information provided on a comparable property basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties that are currently under development or are being repositioned for significant redevelopment and investment.
−Removed: For the year ended December 31, 2022 and the comparison of 2022 and 2021, all or a portion of 91 properties, were considered comparable properties and seven were considered non-comparable properties.
−Removed: For the year ended December 31, 2022, one property was moved from comparable properties to non-comparable properties, one property was moved from non-comparable properties to comparable properties, three properties were removed from comparable properties, as they were sold, and one property was removed from comparable properties, as it was deconsolidated, compared to the designations as of December 31, 2021.
−Removed: 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
−Removed: occupancy or when the growth expected from the redevelopment has been included in the comparable periods.
+Added: For the year ended December 31, 2023 and the comparison of 2023 and 2022, all or a portion of 94 properties, were considered comparable properties and eight were considered non-comparable properties.
+Added: For the year ended December 31, 2023, one property was moved from comparable properties to non-comparable properties, four properties and one portion of a
+Added: property were moved from acquisitions to comparable properties, and one property and one portion of a property were removed from comparable properties, as they were sold, compared to the designations as of December 31, 2022.
+Added: 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.
We typically remove properties from comparable properties when the repositioning of the asset has commenced and has or is expected to have a significant impact to property operating income within the calendar year.
Acquisitions are moved to comparable properties once we have owned the property for the entirety of comparable periods and the property is not under development or being repositioned for significant redevelopment and investment.
−Removed: Comparable property information replaces our previous same center designations.
YEAR ENDED DECEMBER 31, 2023 COMPARED TO YEAR ENDED DECEMBER 31, 2022
12 unchanged sentences
Gain on deconsolidation of VIE — 70,374 (70,374) (100.0) %
−Removed: Gain on sale of real estate and change in control of interest 93,483 89,950 3,533 3.9 %
+Added: Gain on sale of real estate 9,881 93,483 (83,602) (89.4) %
Operating income 406,470 526,408 (119,938) (22.8) %
17 unchanged sentences
Gain on deconsolidation of VIE — (70,374)
−Removed: Gain on sale of real estate and change in control of interest (93,483) (89,950)
+Added: Gain on sale of real estate (9,881) (93,483)
Property operating income $ 769,059 $ 717,596
Property Revenues
−Removed: Total property revenue increased $123.2 million, or 12.9%, to $1.1 billion in 2022 compared to $951.2 million in 2021.
+Added: Total property revenue increased $57.8 million, or 5.4%, to $1.13 billion in 2023 compared to $1.07 billion in 2022.
The percentage occupied at our shopping centers was 92.2% at December 31, 2023 compared to 92.8% at December 31, 2022.
−Removed: The most significant driver of the increase in property revenues is the ongoing recovery from the initial impacts of COVID-19
−Removed: during 2022, as compared to 2021, when COVID-19 related restrictions were still in effect for a portion of the year.
Changes in the components of property revenue are discussed below.
1 unchanged sentence
Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments.
−Removed: Rental income increased $124.5 million, or 13.1%, to $1.1 billion in 2022 compared to $948.8 million in 2021 due primarily to the following:
+Added: Rental income increased $57.7 million, or 5.4%, to $1.13 billion in 2023 compared to $1.07 billion in 2022 due primarily to the following:
• an increase of $25.4 million from 2022 and 2023 acquisitions,
−Removed: • an increase of $36.3 million from comparable properties primarily related to higher percentage rent, parking income, and specialty leasing of $10.7 million primarily the result of the gradual lifting of COVID-19 closures and restrictions during 2021, higher rental rates of $9.9 million, higher average occupancy of approximately $8.3 million, a $5.7 million increase in CAM recoveries on higher CAM costs, and a $3.2 million increase in tenant recoveries, partially offset by lower net termination fees and legal fee income of $2.5 million,
−Removed: • an increase of $30.6 million from non-comparable properties primarily driven by the opening of Phase III at Assembly Row in 2021, redevelopment related occupancy increases at CocoWalk, and the 2021 and 2022 openings at the Phase III office building at Pike & Rose, partially offset by redevelopment related occupancy decreases at Huntington Shopping Center,
−Removed: • a $28.0 million decrease in collectibility related impacts across all properties primarily due to higher collection rates and lower rent abatements in 2022 as tenants continue to recover from the initial impacts of COVID-19, and
−Removed: • an increase of $4.2 million from improving demand at our Pike & Rose hotel,
+Added: • an increase of $23.3 million from comparable properties primarily related to higher rental rates of approximately $16.4 million, higher average occupancy of approximately $5.5 million, and a $5.1 million increase in recoveries from tenants, partially offset by a $2.9 million increase in collectibility related adjustments and a $2.7 million decrease in lease termination fee income,
+Added: • an increase of $19.2 million from non-comparable properties primarily driven by occupancy increases at Assembly Row Phase III, Darien Commons, Pike & Rose Phases III & IV, and CocoWalk, partially offset by redevelopment related occupancy decreases at Friendship Center, and
+Added: • an increase of $2.8 million from higher demand at our Pike & Rose hotel,
partially offset by
• a decrease of $13.0 million from property sales.
−Removed: Mortgage Interest Income
−Removed: Mortgage interest income decreased $1.3 million, or 54.4%, to $1.1 million in 2022 compared to $2.4 million in 2021 primarily due to the repayment of $31.1 million of mortgage notes receivable in May 2021.
Property Expenses
4 unchanged sentences
This increase is primarily due to the following:
−Removed: • an increase of $12.2 million from comparable properties due primarily to higher repairs and maintenance costs, utilities, and management fees, as 2021 had lower costs as a result of COVID-19 impacts, as well as inflationary impacts in 2022 and higher insurance costs,
• an increase of $4.4 million from 2022 and 2023 acquisitions,
−Removed: • an increase of $6.9 million from non-comparable properties due primarily to the 2021 openings of Phase III at Assembly Row, the Phase III office building at Pike & Rose, and CocoWalk, as well as increased costs associated with the redevelopment of Huntington Shopping Center, and
−Removed: • an increase of $5.3 million from higher operating costs at our Pike & Rose hotel largely due to lifting of COVID-19 restrictions,
+Added: • an increase of $1.6 million from comparable properties due primarily to higher repairs and maintenance costs and other operating costs driven by inflationary impacts, higher insurance costs and utilities, and an increase in management fees on higher revenues, partially offset by lower snow removal costs,
+Added: • an increase of $0.9 million from non-comparable properties driven by openings at Darien Commons, CocoWalk, and Assembly Row Phase III, partially offset by lower costs associated with the redevelopment of Huntington Shopping Center, and
+Added: • an increase of $0.7 million in operating expenses at our Pike & Rose hotel as a result of higher occupancy,
partially offset by
−Removed: • a decrease of $1.5 million from our property sales.
−Removed: 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 21.3% for the year ended December 31, 2022 from 20.9% for the year ended December 31, 2021.
+Added: • a decrease of $5.1 million from property sales.
+Added: As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income decreased to 20.5% for the year ended December 31, 2023 from 21.3% for the year ended December 31, 2022.
Real Estate Taxes
Real estate tax expense increased $3.6 million, or 2.8% to $131.4 million in 2023 compared to $127.8 million in 2022 due primarily to the following:
−Removed: • an increase of $5.6 million from 2021 and 2022 acquisitions,
−Removed: • an increase of $2.6 million from non-comparable properties due primarily to the opening of Phase III at Assembly Row, and
−Removed: • an increase of $2.1 million from comparable properties primarily due to a true-up in 2021 of prior year supplemental taxes at one of our properties and higher assessments,
+Added: • an increase of $4.1 million from 2022 and 2023 acquisitions, and
+Added: • an increase of $0.8 million from comparable properties due to higher assessments partially offset by successful tax appeals,
partially offset by
2 unchanged sentences
Property operating income increased $51.5 million, or 7.2%, to $769.1 million in 2023 compared to $717.6 million in 2022.
−Removed: This increase is primarily driven by the ongoing recovery from the initial impacts of COVID-19, which resulted in lower collectibility related adjustments and higher percentage rent, specialty leasing, and parking income, compared to 2021 during which COVID-19 related restrictions were gradually being lifted.
−Removed: Also contributing to the increase were property acquisitions, higher occupancy and rental rates at comparable properties, and the opening of Phase III at Assembly Row in 2021, partially offset by property sales.
−Removed: Other Operating
−Removed: General and Administrative Expense
−Removed: General and administrative expense increased $2.8 million, or 5.6%, to $52.6 million in 2022 from $49.9 million in 2021.
−Removed: This increase is due primarily to higher personnel related costs.
+Added: This increase is primarily driven by higher rental rates and occupancy, the 2022 and 2023 openings at our non-comparable properties, and 2022 and 2023 acquisitions, partially offset by property sales.
Depreciation and Amortization
Depreciation and amortization expense increased $19.4 million, or 6.4%, to $321.8 million in 2023 from $302.4 million in 2022.
−Removed: This increase is due primarily to property acquisitions, the openings of Phase III at Assembly Row, the Phase III office building at Pike & Rose, and CocoWalk, partially offset by the net impact of accelerated depreciation related to 2021 and 2022 redevelopment activities and 2021 property sales.
+Added: This increase is due primarily to property acquisitions, our investment in comparable properties, placing redevelopment properties into service, and the reconsolidation of Escondido Promenade during the second quarter of 2023, partially offset by 2022 property sales.
Gain on Deconsolidation of VIE
−Removed: The $70.4 million gain on deconsolidation of VIE for the year ended December 31, 2022 is the result of the deconsolidation of Escondido Promenade in connection with the execution of the related August 25, 2022 TIC agreement (see Note 3 for additional information).
−Removed: Gain on Sale of Real Estate and Change in Control of Interest
−Removed: The $93.5 million gain on sale of real estate for the year ended December 31, 2022 is due primarily to a net gain of $84.1 million from the sale of two residential properties (including an adjacent retail pad), one retail property, and one parcel of land (see Note 3 for additional information), and a $9.3 million gain related to the reduction of our liability for estimated condemnation and transaction costs associated with the sale under threat of condemnation in December 2019 at San Antonio Center (see Note 7 for additional information).
−Removed: 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 joint venture (see Note 3 to the consolidated financial statements for additional information).
+Added: The $70.4 million gain on deconsolidation of VIE for the year ended December 31, 2022 is the result of the deconsolidation of Escondido Promenade during the third quarter of 2022 (see Note 3 to the consolidated financial statements for additional information).
+Added: Gain on Sale of Real Estate
+Added: The $9.9 million gain on sale of real estate for the year ended December 31, 2023 is due primarily to the sale of one retail property and one portion of a property (see Note 3 to the consolidated financial statements for additional information).
+Added: The $93.5 million gain on sale of real estate for the year ended December 31, 2022 is due primarily to a net gain of $84.1 million from the sale of two residential properties (including an adjacent retail pad), one retail property, and one parcel of land (see Note 3 to the consolidated financial statements for additional information), and a $9.3 million gain related to the reduction of our liability for estimated condemnation and transaction costs associated with the sale under threat of condemnation in December 2019 at San Antonio Center.
Operating Income
−Removed: Operating income increased $131.7 million, or 33.4%, to $526.4 million in 2022 compared to $394.7 million in 2021.
−Removed: This increase is primarily due to the gain on the deconsolidation of a VIE, and the ongoing recovery from the impacts of COVID-19 restrictions, which resulted in lower collectibility related adjustments and higher percentage rent, specialty leasing, and parking income, compared to 2021 during which COVID-19 related restrictions were gradually being lifted.
−Removed: Also contributing to the increase were property acquisitions, higher occupancy and rental rates at comparable properties, and the opening of Phase III at Assembly Row in 2021, partially offset by property sales and higher personnel related costs.
+Added: Operating income decreased $119.9 million, or 22.8%, to $406.5 million in 2023 compared to $526.4 million in 2022.
+Added: This decrease is primarily driven by lower gains on sale of real estate, the prior year gain on the deconsolidation of a VIE, and property sales, partially offset by higher rental rates and occupancy, 2022 and 2023 acquisitions, and the 2022 and 2023 openings at our non-comparable properties.
+Added: Other Interest Income
+Added: Other interest income increased $3.6 million, or 337.2%, to $4.7 million in 2023 compared to $1.1 million in 2022.
+Added: This increase is primarily driven by interest earned on the proceeds of our April 2023 senior unsecured note issuance until the June 1, 2023 payoff of our 2.75% senior unsecured notes and higher interest earned on cash balances.
Interest Expense
2 unchanged sentences
• an increase of $25.4 million due to a higher overall weighted average borrowing rate, and
−Removed: • a decrease of $4.0 million in capitalized interest,
+Added: • an increase of $9.3 million due to higher weighted average borrowings,
partially offset by
−Removed: • a decrease of $0.2 million due to lower weighted average borrowings.
+Added: • an increase of $3.9 million in capitalized interest.
Gross interest costs were $190.4 million and $155.7 million in 2023 and 2022, respectively.
1 unchanged sentence
Income from Partnerships
−Removed: Income from partnerships increased $3.9 million or 315.3% to $5.2 million in 2022 compared to $1.2 million in 2021.
−Removed: This increase is due primarily to improved operating results at our Assembly Row hotel joint venture and our restaurant joint ventures, largely the result of the easing of COVID-19 closures and restrictions and the forgiveness of certain loans for some of our restaurants joint ventures and at our Assembly Row hotel joint venture.
−Removed: Net income attributable to noncontrolling interests
−Removed: Net income attributable to noncontrolling interests increased $2.6 million, or 34.1%, to $10.2 million in 2022 compared to $7.6 million in 2021.
−Removed: The increase is primarily due to 2021 acquisitions and higher income at our properties with third party partners.
+Added: Income from partnerships decreased $1.3 million or 25.2% to $3.9 million in 2023 compared to $5.2 million in 2022.
+Added: This decrease is primarily driven by lower income at our restaurant joint ventures largely attributable to higher forgiveness of certain loans in the prior year.
Discussions of year-to-year comparisons between 2022 and 2021 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, 2022 filed with the Securities and Exchange Commission on February 8, 2023.
1 unchanged sentence
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, the Trust is generally required to make annual distributions to shareholders of at least 90% of our taxable income (cash dividends paid in 2023 were approximately $360.9 million).
−Removed: 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).
−Removed: We maintain a $1.25 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.
−Removed: During 2022, we have continued to see improvements in overall cash collections from tenants with collection rates nearing pre-pandemic levels.
−Removed: We have also taken multiple steps over the past two years to strengthen our financial position, maximize liquidity, and to provide maximum flexibility during these uncertain times.
−Removed: On October 5, 2022, we amended our revolving credit facility increasing the borrowing capacity from $1.0 billion to $1.25 billion and extending the maturity date to April 5, 2027, plus two six-month extensions at our option.
−Removed: Additionally, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.75 billion.
−Removed: We also amended our unsecured term loan, borrowing an additional $300.0 million.
−Removed: As of December 31, 2022, there is no balance outstanding on our $1.25 billion unsecured revolving credit facility and we had cash and cash equivalents of $85.6 million.
+Added: Remaining cash flow from operations after regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities) and dividend payments is used to fund recurring and non-recurring capital projects (such as tenant improvements and redevelopments).
+Added: We maintain an unsecured $1.25 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.
+Added: On April 12, 2023, we issued $350.0 million of 5.375% senior unsecured notes, on December 28, 2023, we entered into a $200.0 million secured loan that bears interest at 5.03% through the initial maturity date, and on January 11, 2024, we issued $485.0 million of 3.25% exchangeable senior unsecured notes.
+Added: We also raised $138.3 million from sales of common shares under our ATM equity program.
+Added: We repaid $275.0 million of 2.75% senior unsecured notes at maturity on June 1, 2023, repaid $600.0 million of 3.95% unsecured notes at maturity on January 16, 2024, and extended the maturity of our $600.0 million term loan to April 2025 (with an additional one year extension at our option still available to further extend the loan to April 2026).
+Added: For the remainder of 2024, we have no additional debt maturing.
+Added: As of December 31, 2023, we had cash and cash equivalents of $250.8 million and no balance outstanding on our $1.25 billion unsecured revolving credit facility.
For the year ended 2023, the weighted average amount of borrowings outstanding on our revolving credit facility was $44.7 million, and the weighted average interest rate, before amortization of debt fees, was 5.9%.
We also have the capacity to issue up to $312.1 million in common shares under the ATM program.
−Removed: We have $275.0 million of debt maturing in 2023.
−Removed: Our overall capital requirements during 2023 will be impacted by the overall economic environment including impacts of inflation, supply chain issues, and a potential recession, as well as acquisition opportunities and the level and general timing of our redevelopment and development activities.
+Added: Our overall capital requirements during 2024 will be impacted by the overall economic environment including impacts of inflation, higher interest rates, and a potential recession, as well as acquisition opportunities and the level and general timing of our redevelopment and development activities.
We currently have development and redevelopment projects in various stages of construction with remaining costs of $250 million.
We expect to incur the majority of those costs in the next two years.
−Removed: We expect overall capital costs to be at levels consistent with 2022 or slightly reduced as we complete current redevelopment
−Removed: projects, prepare vacant space for new tenants, and complete the current phase and start on the next phase of our larger mixed use development projects.
+Added: We expect overall capital costs to be at levels slightly reduced from 2023 as we complete current redevelopment projects, prepare vacant space for new tenants, and complete the current phase and prepare for the next phase of our larger mixed use development projects.
We believe cash flow from operations, the cash on our balance sheet, and our $1.25 billion revolving credit facility will allow us to continue to operate our business in the short-term.
2 unchanged sentences
We expect these sources of liquidity and opportunities for operating flexibility to allow us to meet our financial obligations over the long term.
−Removed: While we have seen significant improvements from the initial negative impacts of the COVID-19 pandemic, it, along with the overall state of the economy continues to affect our overall business, and we expect it will continue to negatively impact our business in the short term.
−Removed: However, 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.
+Added: 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
Year Ended December 31,
+Added: 2023 2022 Change
(In thousands)
1 unchanged sentence
Net cash used in investing activities (358,325) (785,998) 427,673
−Removed: Net cash provided by (used in) financing activities 190,414 (452,967)
−Removed: Decrease in cash and cash equivalents (78,815) (641,733)
+Added: Net cash (used in) provided by financing activities (33,849) 190,414 (224,263)
+Added: Increase (decrease) in cash and cash equivalents 163,656 (78,815) 242,471
Cash, cash equivalents, and restricted cash, beginning of year 96,348 175,163 (78,815)
1 unchanged sentence
Net cash provided by operating activities increased $39.1 million to $555.8 million during 2023 from $516.8 million during 2022.
−Removed: The increase was primarily attributable to higher net income before non-cash items and gains on sale of real estate, partially offset by the timing of collections of real estate tax reconciliation billings during 2021 and the timing of payments.
−Removed: Net cash used in investing activities increased $125.9 million to $786.0 million during 2022 from $660.1 million during 2021.
−Removed: The increase was primarily attributable to:
−Removed: • a $72.0 million increase in acquisition of real estate primarily due to 2022 property acquisitions (see Note 3 to the consolidated financial statements for additional information), as compared to 2021 property acquisitions,
−Removed: • the $31.1 million payoff of two mortgage notes receivable in May 2021,
−Removed: • a $20.0 million increase in investment in partnerships, resulting from the 2022 acquisition of a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers (see Note 3 to the consolidated financial statements for additional information), and
−Removed: • $18.0 million for net costs paid in 2022 relating to the partial sale under threat of condemnation at San Antonio Center in 2019,
−Removed: partially offset by
+Added: The increase was primarily attributable to higher net income after adjusting for non-cash items and gains on sale of real estate, as well as higher collections related to year end recovery billings.
+Added: Net cash used in investing activities decreased $427.7 million to $358.3 million during 2023 from $786.0 million during 2022.
+Added: The decrease was primarily attributable to:
+Added: • a $377.9 million decrease in acquisition of real estate primarily due to the January 2023 Huntington Square acquisition and the acquisition of our partner's 22.3% TIC interest in Escondido Promenade (see Note 3 to the consolidated financial statements for additional information), as compared to 2022 property acquisitions,
• a $105.6 million decrease in net capital expenditures,
−Removed: Net cash used in financing activities decreased $643.4 million to $190.4 million provided during 2022 from $453.0 million used during 2021.
+Added: • a $23.2 million decrease in investment in partnerships, resulting from the 2022 acquisition of a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers (see Note 3 to the consolidated financial statements for additional information), and
+Added: • $16.7 million decrease in costs paid relating to the partial sale under threat of condemnation at San Antonio Center in 2019,
+Added: partially offset by,
+Added: • a $105.3 million decrease in net proceeds from the sale of real estate primarily due to $28.5 million of net proceeds from the sale of one retail property and one portion of a property during 2023, as compared to $133.7 million of net proceeds from the sale of two residential properties (one included an adjacent retail pad), one retail property, one parcel of land, and one portion of a property during 2022.
+Added: Net cash provided by financing activities decreased $224.3 million to $33.8 million used during 2023 from $190.4 million provided during 2022.
The decrease was primarily attributable to:
• $298.6 million in net proceeds from our unsecured term loan in October 2022,
−Removed: • a $258.2 million decrease in repayment of mortgages, finance leases, and notes payable primarily due to the $16.1 million mortgage loan repayment on one of the buildings at our Hoboken property in June 2022, as compared to the $140.9 million net repayments of four mortgage loans in 2021, the $100.0 million partial repayment of our $400.0 term loan which was amended in April 2021, and the $31.5 million repayment of the mortgage loan related to the Pike & Rose hotel in January 2021, and
−Removed: • $134.3 million increase in net proceeds from the issuance of common shares under our ATM equity program for net proceeds of $306.8 million and $172.7 million, respectively, during 2022 and 2021,
+Added: • $275.0 million from the June 2023 repayment of our $275.0 million 2.75% senior unsecured notes,
+Added: • a $175.4 million decrease in net proceeds from the issuance of common shares primarily related to issuances under our ATM program for net proceeds of $131.7 million and $306.8 million, respectively, during 2023 and 2022,
+Added: • a $39.0 million increase in repayment of mortgages, finance leases, and notes payable primarily due to the October 2023 finance lease buyout for $55.0 million (see Note 3 to the consolidated financial statements for additional information), as compared to the $16.1 million mortgage loan repayment on one of the buildings at our Hoboken property in June 2022, and
+Added: • an $11.9 million increase in dividends paid to common and preferred shareholders due to an increase in the number of outstanding shares, as well as an increase to the common share dividend rate,
partially offset by,
−Removed: • a $27.6 million increase in distributions to and redemptions of noncontrolling interests primarily related to our acquisition of the redeemable noncontrolling interest in the partnership that owns the Plaza El Segundo shopping center for $23.6 million, and
−Removed: • an $11.6 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.
+Added: • $345.7 million in net proceeds from the issuance of $350.0 million of 5.375% senior unsecured notes in April 2023,
+Added: • $199.2 million in net proceeds from the mortgage loan secured by our Bethesda Row property, which was entered into in December 2023, and
+Added: • a $23.3 million decrease in distributions to and redemptions of noncontrolling interests primarily related to the July 2022 acquisition of the redeemable noncontrolling interest in the partnership that owns the Plaza El Segundo shopping center for $23.6 million.
Cash Requirements
11 unchanged sentences
(1) The weighted average interest rate on our fixed and variable rate debt is 4.1% as of December 31, 2023.
+Added: Of the $1.2 billion of debt maturing in the next twelve months as of December 31, 2023, $600.0 million was repaid at maturity in January 2024 and an additional $600.0 million related to our term loan was extended one year to April 2025.
(2) The weighted average interest rate on the fixed and variable rate debt related to our unconsolidated real estate partnerships is 4.36% as of December 31, 2023.
(3) This includes minimum rental payments related to both finance and operating leases.
−Removed: (4) Lease obligations in the next twelve months include the $55 million fixed purchase price option for Mercer Mall as discussed in 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.
7 unchanged sentences
Based on management's current estimate of fair market value as of December 31, 2023, our estimated maximum liability upon exercise of the put option would range from $6 million to $7 million.
−Removed: (d) Effective September 18, 2023, the other member in Hoboken has the right to require us to purchase all of its 10% ownership interest at the interest's then-current fair market value.
+Added: (d) The other member in Hoboken has the right to require us to purchase all of its 10% ownership interest at the interest's then-current fair market value.
Based on management's current estimate of fair market value as of December 31, 2023, our estimated maximum liability upon exercise of the put option would range from $10 million to $11 million.
(e) Effective June 14, 2026, the other member in Camelback 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.
−Removed: Based on management's current
−Removed: estimate of fair value as of December 31, 2022, our estimated maximum liability upon exercise of the put option would range from $4 million to $5 million.
+Added: Based on management's current estimate of fair value as of December 31, 2023, our estimated maximum liability upon exercise of the put option would range from $4 million to $5 million.
(f) Effective October 6, 2027, the other member in the partnership that owns equity method investments in Chandler Festival and Chandler Gateway has the right to require us to purchase its 2.5% net ownership interest.
15 unchanged sentences
Azalea Acquired $ 40,000 3.73 % November 1, 2025
+Added: Bethesda Row (1) 200,000 200,000 SOFR + 0.95% December 28, 2025
Bell Gardens Acquired 11,531 4.06 % August 1, 2026
2 unchanged sentences
Brook 35 11,500 11,500 4.65 % July 1, 2029
−Removed: Hoboken (24 Buildings) (1) 56,450 55,060 LIBOR + 1.95% December 15, 2029
+Added: Hoboken (24 Buildings) (2) 56,450 53,617 SOFR + 1.95% December 15, 2029
Various Hoboken (14 Buildings) (3) Acquired 29,878 Various Various through 2029
1 unchanged sentence
Subtotal 519,144
−Removed: Net unamortized debt issuance costs and premium (1,702)
+Added: Net unamortized debt issuance costs and discount (2,208)
Total mortgages payable, net 516,936
8 unchanged sentences
Unsecured fixed rate
−Removed: 2.75% notes 275,000 275,000 2.75 % June 1, 2023
3.95% notes 600,000 600,000 3.95 % January 15, 2024
3 unchanged sentences
6.82% medium term notes 40,000 40,000 6.82 % August 1, 2027
+Added: 5.375% notes 350,000 350,000 5.375 % May 1, 2028
3.20% notes 400,000 400,000 3.20 % June 15, 2029
7 unchanged sentences
_____________________
+Added: (1) On December 29, 2023, we entered into three interest rate swap agreements that fix the interest rate on the mortgage loan at a weighted average interest rate of 5.03% through the initial maturity date.
(2) On November 26, 2019, we entered into two interest rate swap agreements that fix the interest rate on the mortgage loan at 3.67%.
+Added: The reference rate for the mortgage loan and related swaps was amended from LIBOR to SOFR in May 2023.
+Added: The amendment was effective for interest payments subsequent to July 1, 2023.
(3) The interest rates on these mortgages range from 3.91% to 5.00%.
−Removed: (3) Our revolving credit facility SOFR loans bear interest at Daily Simple SOFR or Term SOFR as defined in the credit agreement and our term loan bears interest at Term SOFR, plus 0.10%, plus a spread, based on our current credit rating.
−Removed: (4) The maximum amount drawn under our revolving credit facility during 2022 was $330.0 million and the weighted average effective interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was 3.2%.
+Added: (4) On February 6, 2024, we extended the maturity date to April 16, 2025, with an additional one year extension at our option still available to further extend the loan to April 16, 2026.
+Added: (5) Our revolving credit facility SOFR loans bear interest at Daily Simple SOFR or Term SOFR and our term loan bears interest at Term SOFR as defined in the respective credit agreements, plus 0.10%, plus a spread, based on our current credit rating.
+Added: (6) The maximum amount drawn under our $1.25 billion revolving credit facility during 2023 was $115.5 million and the weighted average effective interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was 5.9%.
(7) The Operating Partnership is the obligor under our revolving credit facility, term loan, and senior notes and debentures.
−Removed: (6) The interest rates on these notes payable range from 3.00% to 11.31%.
Our revolving credit facility, unsecured term loan, and other debt agreements include financial and other covenants that may limit our operating activities in the future.
16 unchanged sentences
_____________________
−Removed: (1) Our $600.0 million term loan matures on April 16, 2024, plus two one-year extensions, at our option.
−Removed: (2) Our $1.25 billion revolving credit facility matures on April 5, 2027, plus two six-month extensions, at our option.
+Added: (1) Our $600.0 million term loan had an original maturity date of April 16, 2024.
+Added: On February 6, 2024, we extended the term loan to April 16, 2025 with an additional one year extension at our option still available to further extend the loan to April 16, 2026.
+Added: (2) Our $200.0 million mortgage loan secured by Bethesda Row matures on December 28, 2025 plus two one-year extensions, at our option to December 28, 2027.
+Added: (3) Our $1.25 billion revolving credit facility matures on April 5, 2027, plus two six-month extensions at our option to April 5, 2028.
As of December 31, 2023, there was no outstanding balance under this credit facility.
6 unchanged sentences
Effectiveness of cash flow hedges is assessed both at inception and on an ongoing basis.
−Removed: The effective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recorded in other comprehensive income (loss) which is included in "accumulated other comprehensive loss" on the balance sheet and statement of shareholders' equity.
−Removed: Cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate.
−Removed: In addition, the default risk of the counterparty is evaluated by monitoring the credit worthiness of the counterparty which includes reviewing debt ratings and financial performance.
+Added: The effective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recorded in other comprehensive income which is included in "accumulated other comprehensive income" on the balance sheets, statement of shareholders' equity, and statement of capital.
+Added: Cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and SOFR rate.
+Added: In addition, the default risk of the counterparty is evaluated by monitoring the credit worthiness of the counterparty which includes reviewing debt ratings and financial
If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recognized in earnings in the period affected.
−Removed: As of December 31, 2022, 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%.
−Removed: Our Assembly Row hotel joint venture is also a party to two interest rate swap agreements that effectively fix their debt at 5.206%.
+Added: As of December 31, 2023, 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% and we have three interest rate swap agreements that effectively fix the interest rate on a mortgage payable associated with Bethesda Row at 5.03% through the initial maturity date.
+Added: Our Assembly Row hotel joint venture is also a party to two interest rate swap agreements that effectively fix 100% of its outstanding $39.0 million of debt through May 2025 at 6.39% and 50% of its outstanding debt from June 2025 through May 2028 at 6.03%.
All swaps were designated and qualify as cash flow hedges.
27 unchanged sentences
Gain on sale of real estate and change in control of interests, net (9,881) (93,483) (89,892)
−Removed: Impairment charge, net — — 50,728
Depreciation and amortization of real estate assets 285,689 266,741 243,711
2 unchanged sentences
Dividends on preferred shares (1) (7,500) (7,500) (8,042)
−Removed: Income attributable to operating partnership units 2,810 2,998 3,151
+Added: Income attributable to downREIT operating partnership units 2,767 2,810 2,998
Income attributable to unvested shares (1,955) (1,797) (1,581)
3 unchanged sentences
_____________________
−Removed: (1) For the year ended December 31, 2022, 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."
−Removed: (2) For the year ended December 31, 2020, FFO available for common shareholders includes an $11.2 million charge related to early extinguishment of debt.
−Removed: If this charge was excluded, our FFO available for common shareholders for 2020 would have been $345.0 million, and FFO available for common shareholders, per diluted share would have been $4.52.
+Added: (1) For the years ended December 31, 2023 and 2022, 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 number of common shares, diluted."
(2) The weighted average common shares used to compute FFO per diluted common share includes downREIT operating partnership units that were excluded from the computation of diluted EPS.
1 unchanged sentence
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.