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Item 7. Management’s Discussion and Analysis

2025-02-13 compared with 2024-02-12 · 115 added, 130 removed, 386 unchanged (39% of the section changed)

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General Economic Conditions

The heightened levels of inflation, higher interest rates, and the potentially worsening of economic conditions presents risks for our business and our tenants.

The economy continues to face several issues including inflation risk, high interest rates, and potentially worsening economic conditions, which presents risks for our business and our tenants.

We continue to monitor and address risks related to the general state of the economy.

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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 2022 Environmental Social and Governance Report, which are provided only for informational purposes on our website and not incorporated by reference herein.

We have aligned our program and efforts with the United Nations Sustainable Development Goals, as described in our Sustainability Policy and our 2023 Environmental Social and Governance Report, which are provided only for informational purposes on our website and not incorporated by reference herein.

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.

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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.

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.

Real Estate Acquisitions

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

The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for

space by tenants and rental rates over long periods.

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

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2024 Acquisitions and Dispositions

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.

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.

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.

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%.

As a result of the transaction, we gained control of this property, and effective May 26, 2023, we have consolidated this property.

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."

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.

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.

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.

On May 31, 2024, we acquired the fee interest in Virginia Gateway, which is comprised of five adjacent shopping centers in Gainesville, Virginia, totaling 664,000 square feet, for $215.0 million.

Approximately $21.1 million and $0.4 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $13.3 million of net assets acquired were allocated to other liabilities for "below market leases."

On July 31, 2024, we acquired the fee interest in Pinole Vista Crossing, a 216,000 square foot retail shopping center in Pinole, California for $60.0 million.

Approximately $5.7 million of net assets acquired were allocated to other assets for "acquired lease costs," and $4.0 million of net assets acquired were allocated to other liabilities for "below market leases."

During the year ended December 31, 2024, we sold our Third Street Promenade property and a portion of our White Marsh Other property for sales prices totaling $106.8 million, resulting in a gain on sale of $53.8 million.

2024 Significant Debt and Equity Transactions

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.

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.

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%.

The notes were offered at 99.590% of the principal amount with a yield to maturity of 5.468%.

The net proceeds, after issuance discount, underwriting fees, and other costs were $345.7 million.

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;

(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 Gold or Platinum certification (or environmentally equivalent successor standards).

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.

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.

On June 1, 2023, we repaid our $275.0 million 2.75% senior unsecured notes at maturity.

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

secured by our Bethesda Row property.

The interest rate is effectively fixed at 5.03% through the initial maturity date, as a result of three interest rate swap agreements.

Our net proceeds were $199.1 million, after debt issuance costs.

Our subsidiary's obligations under the mortgage loan are guaranteed by the Operating Partnership.

2024 Significant Debt Transactions

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.

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.

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).

Net proceeds after the initial purchaser’s discount and estimated offering costs were approximately $471 million.

On January 11, 2024, our Operating Partnership issued $485.0 million aggregate principal amount of 3.25% Exchangeable Senior Notes due 2029 (the “Notes”) in a private placement.

The notes bear interest at an annual rate of 3.25%, payable semiannually in arrears on January 15 th and July 15 th of each year, beginning July 15, 2024.

The notes mature on January 15, 2029, unless earlier exchanged, purchased, or redeemed.

Net proceeds after the initial purchaser's discount and offering costs were approximately $471.5 million.

Interest expense, including $2.6 million of debt issuance cost amortization, was $17.9 million related to these Notes for the year ended December 31, 2024.

Including the debt cost amortization, the current effective interest rate on these notes is approximately 3.9%.

The unamortized debt issuance costs related to the Notes were $10.9 million at December 31, 2024.

Prior to the close of business on July 15, 2028, the Notes will be exchangeable at the option of the holders only upon certain circumstances and during certain periods.

On or after July 15, 2028, until the close of business on the second scheduled trading day immediately preceding the maturity date of the Notes, holders may exchange their Notes at any time.

The Operating Partnership will settle exchanges of the Notes by delivering cash up to the principal amount of the Notes exchanged, 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.

If we elect to settle any portion of the exchange obligation in excess of the principal amount with shares of the Trust, an equivalent number of common units will be issued by the Operating Partnership to the Trust.

The exchange rate initially equals 8.1436 common shares per $1,000 principal amount of the Notes (which is equivalent to an exchange price of approximately $122.80 per common share and reflects an exchange premium of approximately 20% based on the closing price of $102.33 on January 8, 2024).

The initial exchange rate is subject to adjustment upon the occurrence of certain events, including in the event of a payment of a quarterly common dividend in excess of $1.09 per share, but will not be adjusted for any accrued and unpaid interest.

While our quarterly common dividend per share currently exceeds $1.09, the exchange rate has not materially changed.

The Operating Partnership may redeem the Notes, at its option , in whole or in part, on or after January 20, 2027 if the last reported sales price of the common shares has been at least 130% of the exchange price then in effect for at least 20 trading days (whether or not consecutive) during any 30 day consecutive trading period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Operating Partnership provides notice of redemption.

The redemption price will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

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.

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On January 16, 2024, we repaid the $600.0 million 3.95% senior unsecured notes at maturity.

On February 6, 2024, we exercised our first option and extended the maturity date of our $600.0 million unsecured 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.

On March 8, 2024, we amended our existing at-the-market (“ATM”) equity program under which we may from time to time offer and sell common shares.

This amendment reset the aggregate offering price of the program to $500.0 million.

Our 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, 2024, we issued 2,059,654 common shares at a weighted average price per share of $109.20 for net cash proceeds of $222.3 million including paying $2.2 million in commissions and $0.4 million in additional offering expenses related to the sales of these common shares.

For the year ended December 31, 2023, we issued 1,309,994 common shares at a weighted average price per share of $101.74 for net cash proceeds of $131.7 million including paying $1.3 million in commissions and $0.2 million in additional offering expenses related to the sales of these common shares.

We also entered into forward sales contracts for the three months and year ended December 31, 2024 for 476,497 common shares and 1,186,422 common shares, respectively under our ATM equity program at a weighted average offering price of $115.43 and $115.72, respectively.

During the three months and year ended December 31, 2024, we settled a portion of the forward sales agreements entered into during the year by issuing 709,925 common shares for net proceeds of $81.7 million.

The forward price that we will receive upon physical settlement of the agreements is subject to the adjustment for (i) commissions, (ii) 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 December 2025.

As of December 31, 2024, we have the remaining capacity to issue up to $144.4 million in common shares under our ATM equity program.

Capitalized Costs

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• growth in our comparable property portfolio,

• growth in our portfolio from property redevelopments and expansions, and

• expansion of our portfolio through property acquisitions.

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.

• expansion of our portfolio through property acquisitions, and

• growth in our portfolio from property redevelopments and expansions.

Although general economic impacts of elevated levels of inflation and higher 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.

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We continue to experience strong demand for our commercial space as evidenced by the 2.4 million square feet of comparable space leasing we've completed in 2024, and the 2.1% spread between our leased rate of 96.2% and our occupied rate of 94.1%.

During 2023, we have seen an uptick in tenants filing for bankruptcy compared to the prior two years.

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.

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

we are actively in negotiations with replacement tenants.

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.

However, the effects of high levels of inflation and interest rates continue to negatively impact our business with the largest impacts being higher interest costs, increased material costs, and higher operating costs.

We continue to see impacts of increased costs for certain construction and other materials that support our development and redevelopment activities.

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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.

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

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.

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• 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 172,000 square feet of the office space is leased to two tenants, and approximately 8,000 square feet of retail is leased.

Approximately 220,000 square feet of the office space is leased and all of the retail space is leased.

The building is expected to cost between $180 million and $190 million, and began delivering in late September 2023.

As of December 31, 2023, approximately 109,000 square feet of office space is open.

As of December 31, 2024, approximately 164,000 square feet of office space is open and 5,000 square feet of retail space is open.

• Construction on Santana West includes an eight story 369,000 square foot office building, which is expected to cost between $325 million and $335 million.

Approximately 29,000 square feet of space is leased as of December 31, 2023.

Approximately 241,000 square feet of space is leased, of which 29,000 square feet of space is open as of December 31, 2024.

• Throughout the portfolio, we currently have redevelopment projects underway with a projected total cost of approximately $271 million that we expect to stabilize over the next several years.

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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.

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.

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

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.

For the year ended December 31, 2024 and the comparison of 2023, all or a portion of 95 properties were considered comparable properties and seven were considered non-comparable properties.

For the year ended December 31, 2024, one property and two portions of properties were moved from non-comparable properties to comparable properties, two properties and one portion of a property were moved from acquisitions to comparable properties, and two properties were removed from comparable as we no longer own the properties, compared to the designations as of December 31, 2023.

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.

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.

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Rental income $ 1,170,078 $ 1,101,439 $ 68,639 6.2 %

Other property income 31,258 29,602 1,656 5.6 %

Mortgage interest income 1,116 1,113 3 0.3 %

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Depreciation and amortization (342,598) (321,763) (20,835) 6.5 %

Gain on deconsolidation of VIE — 70,374 (70,374) (100.0) %

Gain on sale of real estate 54,040 9,881 44,159 446.9 %

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Depreciation and amortization 342,598 321,763

Gain on deconsolidation of VIE — (70,374)

Gain on sale of real estate (54,040) (9,881)

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The percentage occupied at our shopping centers was 94.1% at December 31, 2024 compared to 92.2% at December 31, 2023.

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 collectibility related adjustments.

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,

• 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,

• 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

• an increase of $2.8 million from higher demand at our Pike & Rose hotel,

Other property income includes revenue for our Pike & Rose hotel, parking income, and other incidental income from our properties.

The increase in property revenues is due primarily to the following:

• an increase of $37.7 million from comparable properties primarily related to higher rental rates of approximately $22.8 million, a $12.4 million increase in recoveries from tenants on higher expenses, and higher average occupancy of approximately $4.4 million, partially offset by a $2.5 million decrease in lease termination fee income and a $0.8 million increase in collectibility related adjustments,

• an increase of $17.7 million from non-comparable properties primarily driven by occupancy increases at Pike & Rose Phase IV, Huntington Shopping Center, Darien Commons, and Santana West,

• an increase of $17.4 million from 2024 and 2023 acquisitions, and

• an increase of $5.3 million from Escondido Promenade, which was reconsolidated in the second quarter of 2023 after we gained control of the property (see Note 3 to the consolidated financial statements for additional information),

partially offset by

• a decrease of $13.0 million from property sales.

• a decrease of $9.0 million from property dispositions.

Property Expenses

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This increase is primarily due to the following:

• an increase of $11.0 million from comparable properties due primarily to higher repairs and maintenance costs, snow removal costs, utilities and insurance costs, and an increase in management fees on higher revenues,

• an increase of $3.3 million from 2024 and 2023 acquisitions,

• 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,

• 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

• an increase of $0.7 million in operating expenses at our Pike & Rose hotel as a result of higher occupancy,

• an increase of $3.2 million from non-comparable properties driven by openings at Pike & Rose Phase IV, Huntington Shopping Center, Santana West, and Darien Commons, and

• an increase of $1.0 million from Escondido Promenade, which was reconsolidated in the second quarter of 2023 after we gained control of the property,

partially offset by

• a decrease of $5.1 million from 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 decreased to 20.5% for the year ended December 31, 2023 from 21.3% for the year ended December 31, 2022.

• a decrease of $1.4 million from property dispositions.

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, 2024 from 21.0% for the year ended December 31, 2023.

Real Estate Taxes

Real estate tax expense increased $10.8 million, or 8.2% to $142.2 million in 2024 compared to $131.4 million in 2023 due primarily to the following:

• an increase of $4.1 million from 2022 and 2023 acquisitions, and

• an increase of $0.8 million from comparable properties due to higher assessments partially offset by successful tax appeals,

• an increase of $6.1 million from comparable properties due to higher assessments and successful tax appeals in 2023,

• an increase of $2.8 million from non-comparable properties due primarily to successful tax appeals in 2023, and openings at Pike & Rose Phase IV, Darien Commons, and Huntington Shopping Center,

• an increase of $1.9 million from 2024 acquisitions, and

• an increase of $0.6 million from Escondido Promenade, which was reconsolidated in the second quarter of 2023 after we gained control of the property,

partially offset by

• a decrease of $1.5 million from our property sales.

• a decrease of $0.7 million from property dispositions.

Property Operating Income

Property operating income increased $41.6 million, or 5.4%, to $810.7 million in 2024 compared to $769.1 million in 2023.

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.

This increase is primarily driven by higher rental rates and average occupancy, 2024 acquisitions, 2023 and 2024 openings at our non-comparable properties, and the reconsolidation of Escondido Promenade during the second quarter of 2023, partially offset by property dispositions, higher rental expenses after recoveries from tenants, and lower lease termination fee income.

General and administrative expenses

General and administrative expense decreased $1.0 million, or 1.9%, to $49.7 million in 2024 compared to $50.7 million in 2023.

This decrease is primarily driven by lower employee compensation expense and higher amounts allocated to operations as a result of higher revenues, partially offset by a $3.7 million one-time charge related to the departure of an executive officer.

Depreciation and amortization

Depreciation and amortization expense increased $20.8 million, or 6.5%, to $342.6 million in 2024 from $321.8 million in 2023.

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

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).

This increase is due primarily to 2024 acquisitions, our investment in comparable properties, the opening of Pike & Rose Phase IV, placing redevelopment properties into service, and the reconsolidation of Escondido Promenade during the second quarter of 2023, partially offset by property dispositions.

Gain on Sale of Real Estate

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).

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.

The $54.0 million gain on sale of real estate for the year ended December 31, 2024 is due primarily to the sale of Third Street Promenade and a portion of our White Marsh Other property (see Note 3 to the consolidated financial statements for additional information).

The $9.9 million gain on sale of real estate for the year ended December 31, 2023 is due primarily to the sale of our Town Center of New Britain shopping center and a portion of Third Street Promenade (see Note 3 to the consolidated financial statements for additional information).

Operating Income

Operating income decreased $119.9 million, or 22.8%, to $406.5 million in 2023 compared to $526.4 million in 2022.

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.

Other Interest Income

Other interest income increased $3.6 million, or 337.2%, to $4.7 million in 2023 compared to $1.1 million in 2022.

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.

Operating income increased $65.9 million, or 16.2%, to $472.4 million in 2024 compared to $406.5 million in 2023.

This increase is primarily driven by higher gains on sale of real estate, higher rental rates and average occupancy, 2024 acquisitions, 2023 and 2024 openings at our non-comparable properties, and the reconsolidation of Escondido Promenade during the second quarter of 2023, partially offset by property dispositions, higher rental expenses after recoveries from tenants, and lower lease termination fee income.

Interest Expense

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This increase is due primarily to the following:

• an increase of $25.4 million due to a higher overall weighted average borrowing rate, and

• an increase of $9.3 million due to higher weighted average borrowings,

partially offset by

• an increase of $3.9 million in capitalized interest.

• an increase of $5.1 million due to a higher overall weighted average borrowing rate,

• a decrease of $2.1 million in capitalized interest, and

• an increase of $0.4 due to higher weighted average borrowings.

Gross interest costs were $196.0 million and $190.4 million in 2024 and 2023, respectively.

Capitalized interest was $20.5 million and $22.6 million in 2024 and 2023, respectively.

Income from Partnerships

Income from partnerships decreased $1.3 million or 25.2% to $3.9 million in 2023 compared to $5.2 million in 2022.

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 2023 and 2022 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, 2023 filed with the Securities and Exchange Commission on February 12, 2024.

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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.

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.

We also raised $138.3 million from sales of common shares under our ATM equity program.

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).

For the remainder of 2024, we have no additional debt maturing.

On January 11, 2024, we issued $485.0 million aggregate principal amount of 3.25% exchangeable senior notes, for which the proceeds were used to repay our $600.0 million of 3.95% senior unsecured notes at maturity on January 16, 2024.

Our $600.0 million unsecured term loan has a maturity in April 2025, however, there is a one-year extension at our option that would extend the maturity to April 2026, if exercised.

In addition to the term loan, we have $243.1 million of debt maturing during the

remainder of 2025, of which, $200.0 million is the mortgage loan secured by Bethesda Row, which has two one-year extensions, at our option, that would extend the maturity date to December 28, 2027.

As of December 31, 2024, we had cash and cash equivalents of $123.4 million and no balance outstanding on our $1.25 billion unsecured revolving credit facility.

We also have outstanding forward sales agreements for net proceeds of $54.7 million as of December 31, 2024, and the capacity to issue up to $144.4 million in common shares under the ATM program.

For the year ended 2024, the weighted average amount of borrowings outstanding on our revolving credit facility was $33.5 million, and the weighted average interest rate, before amortization of debt fees, was 6.1%.

We also have the capacity to issue up to $312.1 million in common shares under the ATM program.

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.

Our capital requirements in 2025 will depend on acquisition opportunities, the level and general timing of our redevelopment and development activities, and the overall economic environment.

We currently have development and redevelopment projects in various stages of construction with remaining costs of $228 million.

We expect to incur the majority of those costs in the next two years.

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 expect other capital costs to be at levels consistent with 2024.

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.

9 unchanged sentences

Net cash used in investing activities (446,826) (358,325) (88,501)

Net cash (used in) provided by financing activities (33,849) 190,414 (224,263)

Increase (decrease) in cash and cash equivalents 163,656 (78,815) 242,471

Net cash used in financing activities (252,298) (33,849) (218,449)

(Decrease) increase in cash and cash equivalents (124,561) 163,656 (288,217)

Cash, cash equivalents, and restricted cash, beginning of year 260,004 96,348 163,656

1 unchanged sentence

Net cash provided by operating activities increased $18.7 million to $574.6 million during 2024 from $555.8 million during 2023.

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.

Net cash used in investing activities decreased $427.7 million to $358.3 million during 2023 from $786.0 million during 2022.

The decrease was primarily attributable to:

• 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,

• 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

• $16.7 million decrease in costs paid relating to the partial sale under threat of condemnation at San Antonio Center in 2019,

The increase was primarily attributable to higher net income after adjusting for non-cash items and gains on sale of real estate, partially offset by the timing of interest payments.

Net cash used in investing activities increased $88.5 million to $446.8 million during 2024 from $358.3 million during 2023.

The increase was primarily attributable to:

• a $213.3 million increase in acquisition of real estate primarily due to the May 2024 acquisition of the Virginia Gateway and the July 2024 acquisition of Pinole Vista Crossing (see Note 3 to the consolidated financial statements for additional information), as compared to the January 2023 Huntington Square acquisition and the acquisition of our partner's 22.3% TIC interest in Escondido Promenade in May 2023,

partially offset by,

• 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.

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,

• $275.0 million from the June 2023 repayment of our $275.0 million 2.75% senior unsecured notes,

• 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,

• 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

• 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,

• a $71.5 million increase in net proceeds from the sale of real estate primarily due to $99.9 million of net proceeds from the sale of Third Street Promenade and a portion of our White Marsh Other property in 2024, as compared to $28.5 million of net proceeds from the sale of Town Center of New Britain and a portion of Third Street Promenade in 2023, and

• a $64.4 million decrease in capital expenditures.

Net cash used in financing activities increased $218.4 million to $252.3 million during 2024 from $33.8 million during 2023.

The increase was primarily attributable to:

• a $325.0 million increase in repayment of senior notes due to the January 2024 repayment of our $600.0 million 3.95% senior unsecured notes at maturity, as compared to the June 2023 repayment of our $275.0 million 2.75% senior unsecured notes,

• $199.2 million in net proceeds from the mortgage loan secured by our Bethesda Row property, which was entered into in December 2023,

• a $19.4 million premium paid for the capped call transaction entered into in connection with the issuance of $485.0 million 3.25% exchangeable senior notes in January 2024,

• a $12.4 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, and

• a $12.3 million increase in distributions to and redemptions of noncontrolling interests primarily related to our April 2024 acquisition of the noncontrolling interest in the partnership that owns our CocoWalk property for approximately $12.4 million,

partially offset by,

• $345.7 million in net proceeds from the issuance of $350.0 million of 5.375% senior unsecured notes in April 2023,

• $199.2 million in net proceeds from the mortgage loan secured by our Bethesda Row property, which was entered into in December 2023, and

• 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.

• a $172.2 million increase in net proceeds from the issuance of common shares under our ATM program,

• a $125.8 million net increase in proceeds from the issuance of senior notes due to net proceeds of $471.5 million from the issuance of $485.0 million 3.25% exchangeable senior notes in January 2024, as compared to $345.7 million in net proceeds from the issuance of $350.0 million of 5.375% senior unsecured notes in April 2023, and

• a $55.0 million decrease in repayment of mortgages, finance leases, and notes payable primarily due to the October 2023 finance lease buyout (see Note 3 to the consolidated financial statements for additional information)

Cash Requirements

11 unchanged sentences

(1) The weighted average interest rate on our fixed and variable rate debt is 3.9% as of December 31, 2024.

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.

Of the $848.1 million of debt maturing in the next twelve months as of December 31, 2024, $600.0 million is related to our term loan, which has a one-year option to extend the April 2025 maturity date to April 2026.

Additionally, we have two one-year extensions, at our option, to extend the December 2025 maturity date of our $200.0 million mortgage loan secured by Bethesda Row to December 2027.

(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, 2024.

4 unchanged sentences

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

Based on management’s current estimate of fair market value as of December 31, 2023, our estimated liability upon exercise of the put option would range from approximately $66 million to $69 million.

Based on management’s current

estimate of fair market value as of December 31, 2024, our estimated liability upon exercise of the put option would range from approximately $60 million to $63 million.

(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.

43 unchanged sentences

Unsecured fixed rate

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

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

3 unchanged sentences

5.375% notes 350,000 350,000 5.375 % May 1, 2028

3.25% exchangeable notes 485,000 485,000 3.25 % January 15, 2029

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

7 unchanged sentences

_____________________

(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%.

The reference rate for the mortgage loan and related swaps was amended from LIBOR to SOFR in May 2023.

The amendment was effective for interest payments subsequent to July 1, 2023.

(1) The interest rate on this mortgage loan is fixed at a weighted average interest rate of 5.03% through the initial maturity date through three interest rate swap agreements.

We have two one-year extensions, at our option to extend the maturity date of this mortgage loan to December 28, 2027.

(2) The interest rate on this mortgage loan is fixed at 3.67% through two interest rate swap agreements.

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

(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.

(4) 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.

1 unchanged sentence

(6) The Operating Partnership is the obligor under our revolving credit facility, term loan, and senior notes and debentures.

Effective April 1, 2024, a wholly owned subsidiary of the Operating Partnership guarantees the loan.

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

_____________________

(1) Our $600.0 million term loan had an original maturity date of April 16, 2024.

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.

(1) Our $600.0 million term loan matures on April 16, 2025, plus one one-year extension at our option to April 16, 2026.

(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.

10 unchanged sentences

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.

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

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.

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.

29 unchanged sentences

Gain on deconsolidation of a VIE — — (70,374)

Gain on sale of real estate and change in control of interests, net (9,881) (93,483) (89,892)

Gain on sale of real estate (54,040) (9,881) (93,483)

Depreciation and amortization of real estate assets 302,455 285,689 266,741

12 unchanged sentences

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