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Item 7. Management’s Discussion and Analysis

2021-02-19 compared with 2020-02-21 · 400 added, 288 removed, 232 unchanged (75% of the section changed)

6 unchanged sentences

InvenTrust Properties Corp.

is a premier multi-tenant retail REIT that owns, leases, redevelops, acquires and manages grocery-anchored neighborhood centers, and select power centers that often have a grocery component, in Sun Belt markets with favorable demographics.

We seek to continue to execute our strategy to enhance our multi-tenant retail platform by further investing in grocery-anchored centers with essential retail in our current markets, while exhibiting focused and disciplined capital allocation.

During the year ended December 31, 2019 , we continued to execute on our strategy by opportunistically disposing of properties not located in our identified markets or where we believe the properties' values have been maximized.

Our strategy is to redeploy the proceeds from these sales with a disciplined approach into strategic retail properties in our target markets.

However, we face significant competition for attractive investment opportunities.

As a result of this competition, the purchase prices for attractive and suitable assets may be significantly elevated and may adversely impact our ability to redeploy the proceeds from property sales for reinvestment.

In addition, our disposition activity could continue to cause us to experience dilution in financial operating performance during the period in which we dispose of properties.

In evaluating our financial condition and operating performance, management focuses on the following financial and non-financial indicators, discussed in further detail herein:

Property net operating income ("NOI"), which excludes general and administrative expenses, depreciation and amortization, provision for asset impairment, interest, dividend and other income, gains (losses) from sales of properties, gains (losses) on extinguishment of debt, interest expense, net, equity in earnings (losses) and (impairment), net, from unconsolidated entities, and realized and unrealized gains on marketable securities, net;

Modified NOI, a supplemental measure not determined in accordance with GAAP, which reflects property NOI exclusive of lease termination income and GAAP rent adjustments (such as straight-line rent, above/below market lease amortization and amortization of lease incentives);

FFO Applicable to Common Shares, a supplemental non-GAAP measure;

Modified FFO Applicable to Common Shares, a supplemental non-GAAP measure;

is a premier multi-tenant retail REIT that acquires, owns, leases, redevelops, and manages grocery-anchored neighborhood centers, and select power centers that often have a grocery component, in Sun Belt markets with favorable demographics.

We seek to continue to execute our strategy to enhance our retail platform by further investing in grocery-anchored centers with essential retail in our current markets, while exhibiting focused and disciplined capital allocation.

Evaluation of Financial Condition and Operating Results

Historically, management has evaluated our financial condition and operating performance by focusing on the following financial and non-financial indicators, discussed in further detail herein:

• Modified Net Operating Income ("Modified NOI"), a supplemental non-GAAP measure;

• Funds From Operations ("FFO") Applicable to Common Shares and Dilutive Securities, a supplemental non-GAAP measure;

• Adjusted FFO ("AFFO") Applicable to Common Shares and Dilutive Securities, a supplemental non-GAAP measure;

• Cash flow from operations as determined in accordance with GAAP;

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• Leasing activity and lease rollover;

Management of operating expenses;

Management of general and administrative expenses;

• Operating expense levels and trends;

• General and administrative expense levels and trends;

• Debt maturities and leverage ratios;

• Liquidity levels.

Our Multi-Tenant Retail Portfolio

Impact of the COVID-19 Pandemic on the Company's Business and Financial Statements

The Company's business has been, and continues to be, disrupted by the COVID-19 pandemic.

We continue to assess the impact of the COVID-19 pandemic on all aspects of our business, including the impact on our tenants and their ability to make future rental payments in a timely fashion or at all and the possible impairment in value of our investment properties.

The spread of COVID-19 is having a significant impact on the global, national, regional and local economic conditions.

At this time, we are unable to estimate the full extent of these disruptions going forward on our financial condition and results of operations due to the evolving nature of the situation and numerous uncertainties that exist.

These uncertainties include the scope, severity and duration, and any resurgences of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the direct and indirect economic effects of the pandemic and containment measures, and the timing, length and nature of an economic recovery, among others.

We have taken and will consider a number of measures to mitigate the impact of the COVID-19 pandemic on our business and financial condition, including the following:

• For general corporate purposes and to increase our financial flexibility in light of the COVID-19 pandemic, we drew $150.0 million on the Revolving Credit Agreement on March 27, 2020.

On October 28, 2020, we paid down $100.0 million of this balance;

• We have implemented a work from home policy and have placed restrictions on air travel.

Our existing focus on providing remote-work IT solutions for our employees has enabled our workforce to transition smoothly to working from home with minimal disruption to our core operations.

We remain committed to the safety of our employees as they execute on our operational needs and provide support to our tenants;

• We delayed our publishing of an estimated share value from May 2020 to December 2020 as a result of the potential financial impact of the COVID-19 pandemic and the sharp drop in property transactions leading to limited visibility on property valuations;

• On June 11, 2020, we announced that our Board voted to suspend the SRP and the DRP until further notice.

Tenant Assistance Efforts and Deferred Rental Payments

Through February 9, 2021, we received requests for assistance from approximately 62% of our tenants representing approximately 52% of our GLA.

We continue to evaluate our tenants' requests and are negotiating the terms of potential lease amendments on an individual basis.

We do not expect all tenant requests will result in amended agreements, nor do we intend to forgo our contractual rights under our lease agreements.

There can be no assurance that all amendments will be consummated on the agreed-upon terms and/or if consummated, amounts due will be collected as required by terms of the agreement.

The status of our recurring tenant billings across our entire portfolio, including our proportionate share of the properties in our unconsolidated joint venture, is reflected in the following tables, which shows disaggregated gross rent billed in the second, third and fourth quarter as of December 31, 2020.

Disaggregation of Gross Rent Billed

Gross Rent Billed Collected Payment

Deferral Plan Estimated

Credit Loss Remaining

Accounts Receivable

Quarter end June 30, 2020 $ 52,495 $ 45,013 $ 3,244 $ 4,158 $ 80

Quarter end Sept.

30, 2020 $ 52,610 $ 49,423 $ 838 $ 1,966 $ 383

Quarter end Dec.

31, 2020 $ 52,961 $ 50,659 $ (1,166) $ 2,209 $ 1,259

Disaggregation of Gross Rent Billed

Gross Rent Billed Collected Payment

Deferral Plan Estimated

Credit Loss Remaining

Accounts Receivable

Quarter end June 30, 2020 100% 85.7% 6.2% 7.9% 0.2%

Quarter end Sept.

30, 2020 100% 94.0% 1.6% 3.7% 0.7%

Quarter end Dec.

31, 2020 100% 95.6% (2.2)% 4.2% 2.4%

During the year ended December 31, 2020, deferred rental payments of $1.9 million, including our proportionate share of our unconsolidated joint venture, became due and payable;

the Company has collected $1.7 million as of December 31, 2020.

During the year ended December 31, 2020, the Company had granted approximately $6.5 million, including our proportionate share of our unconsolidated joint venture, of rental payment deferrals, with contractual payment terms through the year ended December 31, 2023.

From January 1, 2021 through February 9, 2021, we collected unpaid gross rent billed of approximately $0.1 million from the quarter ended June 30, 2020, $0.02 million from the quarter ended September 30, 2020, and $1.2 million from the quarter ended December 31, 2020, including our proportionate share of the properties in our unconsolidated joint venture.

As of February 9, 2021, approximately 95.6% of our January 2021 tenant billings across our entire portfolio, including our proportionate share of the properties in our unconsolidated joint venture, have been collected.

Current Strategy and Outlook

InvenTrust focuses on grocery-anchored neighborhood centers, and select power centers that often have a grocery component, in markets with favorable demographics, including above average growth in population, employment and income.

We believe these conditions create favorable demand characteristics for grocery-anchored and necessity-based retail centers which will enable us to capitalize on potential future rent increases while enjoying sustained occupancy at our centers.

Using these criteria,

we have focused our strategy on 15 to 20 markets, including, but not limited to, the metropolitan areas of Atlanta, Austin, Charlotte, Dallas-Fort Worth-Arlington, Houston, the greater Los Angeles and San Diego areas, Miami, Orlando, Raleigh-Durham, San Antonio and Tampa.

Our portfolio of grocery-anchored centers is open and our grocery tenants are continuing to serve their communities during this crisis.

These properties play a critical role in the communities they serve, often providing essential retail and services such as groceries and healthcare products and services.

As of February 9, 2021, 100% of our properties were open for business and approximately 99% of our occupied GLA were permitted by state and local governments to be open and operating in some capacity.

Our strategically located regional field offices are within a two-hour drive of 90% of our properties which affords us the ability to respond to the needs and requests of our tenants as they maneuver through this crisis with the intent to minimize disruption.

In an effort to assist our tenants during this time, we have launched portfolio-wide initiatives aimed at providing designated common areas for outdoor dining and increasing signage at a number of properties to improve traffic flow to ease online order pick up and contactless transactions.

However, as a result of the COVID-19 pandemic:

some of our tenants have not been able to make rent payments to us in a timely fashion or at all, it will take longer to collect rent from many of our tenants, and retailer bankruptcies, failures, and store closings are expected to increase, leading to an increase in vacancies at our properties.

We believe the continued refinement of our retail platform has positioned us for future success and will allow us to evaluate, and ultimately execute on, a potential strategic transaction to achieve liquidity for and provide a return of capital to our stockholders in the long term.

However, we may be unable to execute on such a transaction on terms we would find attractive for our stockholders and our ability to do so will be influenced by external and macroeconomic factors including, among others, the effects and duration of the COVID-19 pandemic and any future resurgences, the timing and nature of any recovery from the COVID-19 pandemic, interest rate movements, local, regional, national and global economic performance, competitive factors, the impact of e-commerce on the retail industry, future retailer store closings, retailer consolidation, retailers reducing store size, retailer bankruptcies, and government policy changes.

At this time, the COVID-19 pandemic and related uncertainties have delayed our process for exploring and executing upon a potential strategic transaction.

Highlights for the year ended December 31, 2020

During the year ended December 31, 2020, we continued to execute our strategy to enhance our platform with the acquisition of retail properties in our core markets.

Acquisition Date Property Metropolitan Area Center Type Gross Acquisition Price Square Feet

February 25, 2020 Trowbridge Crossing Atlanta, GA Neighborhood center $ 10,950 $ 62,600

March 10, 2020 Antoine Town Center (a) Houston, TX Neighborhood center 22,254 $ 110,500

November 6, 2020 Kroger at Eldridge Town Center (b) Houston, TX Community center 9,043 64,722

$ 42,247 $ 237,822

(a) This retail property was acquired from the Company's unconsolidated joint venture, as disclosed in "Note 6.

Investment in Unconsolidated Entities" .

(b) The Kroger at Eldridge Town Center is combined for property count purposes with a retail property already owned.

During the year ended December 31, 2020, we disposed of the following:

Disposition Date Property Metropolitan Area Center Type Gross

Disposition Price Square Feet

February 10, 2020 University Oaks Shopping Center (a) Round Rock, TX Power center $ 527 N/A

February 12, 2020 Centerplace of Greeley (a) Greeley, CO Community center 123 N/A

May 1, 2020 Woodlake Crossing San Antonio, TX Power center 5,500 160,000

September 30, 2020 Eldridge Town Center (a) Houston, TX Community center 451 N/A

November 25, 2020 Antoine Town Center (b) Houston, TX Neighborhood center 800 1,610

December 31, 2020 Eldridge Town Center (a) Houston, TX Community center 1,055 N/A

$ 8,456 161,610

(a) The Company recognized gains on sale related to the completion of partial condemnations at these retail properties.

(b) The Company recognized a gain on sale related to the disposition of an outparcel at this retail property.

Revolving Credit Agreement

On December 21, 2018, we entered into an unsecured revolving credit agreement, which amended and restated our prior unsecured revolving credit agreement in its entirety, and provides for a $350.0 million unsecured revolving line of credit (the "Revolving Credit Agreement").

During the second quarter of 2020, we drew $150,000 on the revolving credit agreement at an interest rate of 2.01% reflecting 1-Month LIBOR plus 1.05%.

We subsequently repaid $100,000 of that draw during the fourth quarter of 2020.

Provision for Asset Impairment

During the three months ended March 31, 2020, we identified one retail property that had a reduction in its expected holding period and recorded a provision for asset impairment of $9.0 million on the consolidated statement of operations and comprehensive (loss) income for the year ended December 31, 2020 as a result of the fair value being lower than the property's carrying value.

Our fair value was based on an executed sales contract.

Provision for Asset Impairment on an Asset in an Unconsolidated Joint Venture

During the three months ended December 31, 2020, we identified one retail property within the IAGM joint venture that had a reduction in its expected holding period by the joint venture and recorded a provision for asset impairment of $11.0 million.

Our share of this provision for asset impairment of $6.1 million on its consolidated statement of operations and comprehensive (loss) income as part of equity in (losses) earnings and (impairment), net, for the year ended December 31, 2020.

Our Retail Portfolio

Our wholly-owned, consolidated and managed retail properties include grocery-anchored community and neighborhood centers and power centers, including those classified as necessity-based.

As of December 31, 2019 , we owned 65 retail properties with a GLA of approximately 10.9 million square feet, which includes 11 retail properties with a GLA of approximately 2.6 million square feet owned through the Company's ownership interest in an unconsolidated joint venture, IAGM.

The following table summarizes our multi-tenant retail portfolio as of December 31, 2019 , 2018 and 2017.

Total Portfolio

Wholly-Owned and Consolidated

Retail Properties

As of December 31, 2020, we owned or had an interest in 65 retail properties with a GLA of approximately 10.8 million square feet, which includes 10 retail properties with a GLA of approximately 2.5 million square feet owned through the Company's 55% ownership interest in an unconsolidated joint venture, IAGM.

The following table summarizes our retail portfolio, on a wholly-owned, IAGM, and pro rata combined basis, as of December 31, 2020 and 2019.

Retail Properties IAGM

Retail Properties Pro Rata Combined

Retail Portfolio

2020 2019 2020 2019 2020 2019

of properties 55 54 10 11 65 65

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Economic occupancy 94.8% 95.4% 87.4% 94.6% 93.8% 95.3%

Multi-Tenant Retail Portfolio Summary by Center Type

The following tables summarize our multi-tenant retail portfolio, by center type, as of December 31, 2019 , 2018 and 2017.

ABR PSF $18.69 $18.79 $17.36 $17.42 $18.52 $18.60

Retail Portfolio Summary by Center Type

Our retail properties consist of community and neighborhood centers and power centers.

• Community and neighborhood centers are generally open-air and designed for tenants that offer a wide array of merchandise and services, including groceries, soft goods and convenience-oriented offerings.

Our community centers contain large anchor stores and a significant presence of national retail tenants.

Our neighborhood centers are generally smaller open-air centers with a grocery store anchor and/or drugstore and other small service-type retailers.

• Power centers are generally larger and consist of several anchors, such as discount department stores, off-price stores, specialty grocers and warehouse clubs.

Typically, the number of specialty tenants is limited and most are national or regional in scope.

The following tables summarize our retail portfolio, by center type, as of December 31, 2020 and 2019.

Community and neighborhood centers

Total Portfolio

Wholly-Owned and Consolidated

Retail Properties

Retail Properties IAGM

Retail Properties Pro Rata Combined

Retail Portfolio

2020 2019 2020 2019 2020 2019

of properties 44 42 5 6 49 48

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Economic occupancy 95.0% 95.6% 88.6% 94.8% 94.2% 95.5%

ABR PSF $19.77 $20.18 $17.21 $17.21 $19.45 $19.75

Power centers

Total Portfolio

Wholly-Owned and Consolidated

Retail Properties

Retail Properties IAGM

Retail Properties Pro Rata Combined

Retail Portfolio

2020 2019 2020 2019 2020 2019

of properties 11 12 5 5 16 17

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Economic occupancy 94.5% 95.1% 86.0% 94.3% 93.2% 95.0%

Same-Property Multi-Tenant Retail Portfolio Summary

The following table summarizes the GLA, economic occupancy and ABR per square foot of the properties included in our multi-tenant retail portfolio classified as same-property for the years ended December 31, 2019 and 2018.

ABR PSF $17.03 $16.84 $17.57 $17.77 $17.11 $16.96

Same-Property Retail Portfolio Summary

The following table summarizes the GLA, economic occupancy and ABR PSF of the properties included in our retail portfolio classified as same-property for the years ended December 31, 2020 and 2019.

The properties classified as same-property were owned for the entirety of both periods presented.

Same-property results for the years ended December 31, 2019 and 2018

Total Portfolio

Wholly-Owned and Consolidated

Retail Properties

Retail Properties IAGM

Retail Properties Pro Rata Combined

Retail Portfolio

2020 2019 2020 2019 2020 2019

of properties 46 46 10 10 56 56

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Economic occupancy 94.8% 96.5% 87.4% 94.2% 93.6% 96.1%

ABR PSF $18.52 $18.28 $17.36 $17.62 $18.35 $18.19

Leasing Activity

The following table summarizes the leasing activity for leases that were executed during the year ended December 31, 2019, compared with expiring or expired leases for the same or previous tenant for renewals and the same unit for new leases at the 65 retail properties in our multi-tenant retail portfolio.

We had GLA totaling 1,312,882 square feet expiring during the year ended December 31, 2019, of which 960,758 square feet was re-leased.

The following tables summarize the leasing activity for leases that were executed during the year ended December 31, 2020, compared with expiring or expired leases for the same or previous tenant for renewals and the same unit for new leases at our 65 retail properties.

These tables do not include rent deferral lease amendments executed as a result of the impact of the COVID-19 pandemic.

Wholly-owned Retail Properties

In our wholly-owned retail portfolio, we had GLA totaling 714,498 square feet expiring during the year ended December 31, 2020, of which 587,138 square feet was re-leased.

This achieved a retention rate of approximately 82.2%.

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for the year ended

New Contractual Rent

Prior Contractual Rent

% Change over Prior Contract Rent (b)

Weighted Average Lease Term

Tenant Improvement Allowance ($PSF)

Lease Commissions ($PSF)

31, 2020 GLA SF New Contractual Rent

($PSF)(b) Prior Contractual Rent

($PSF)(b) % Change over Prior Contract Rent (b) Weighted Average Lease Term

(Years) Tenant Improvement Allowance ($PSF) Lease Commissions ($PSF)

Comparable Renewal

Leases (a) 116 516,048 $20.93 $20.15 3.9% 5.4 $0.56 $0.08

Comparable New Leases (a) 14 41,941 $24.79 $25.72 (3.6)% 8.8 $22.05 $8.58

Non-Comparable Renewal and New Leases

Non-Comparable Renewal and New Leases 44 251,001 $16.21 N/A N/A 6.6 $15.95 $6.08

Total 174 808,990 $21.22 $20.57 3.2% 5.9 $6.45 $2.38

Anchor tenants (leases over 10,000 square feet)

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Comparable New Leases (a) 1 15,247 $14.25 $14.50 (1.7)% 10.4 $25.00 $8.76

Non-Comparable Renewal and New Leases

Non-Comparable Renewal and New Leases 5 151,817 $8.14 N/A N/A 5.5 $9.84 $2.33

Total 15 440,881 $11.45 $11.29 1.4% 5.5 $4.25 $1.11

Non-anchor tenants (leases under 10,000 square feet)

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Comparable New Leases (a) 13 26,694 $30.80 $32.12 (4.1)% 7.9 $20.37 $8.48

Non-Comparable Renewal and New Leases

Comparable leases are leases that meet all of the following criteria:

Non-Comparable Renewal and New Leases 39 99,184 $29.54 n/a N/A 8.3 $25.31 $11.81

Total 159 368,109 $31.71 $30.55 3.8% 6.4 $9.08 $3.91

(a) Comparable leases are leases that meet all of the following criteria:

terms greater than one year, unit was vacant one year or less prior to occupancy, square footage of unit remains unchanged or within 10% of prior unit square footage, and has a rent structure consistent with the previous tenant.

Non-comparable leases are not included in totals.

Highlights for the year ended December 31, 2019

Liquidation of Joint Venture Interest

On June 24, 2019, we liquidated all interests in Downtown Railyard Venture, LLC ("DRV"), a joint venture established for the purpose of developing and selling a land development in Sacramento, California, in exchange for $30.0 million of cash consideration.

During the year ended December 31, 2018, we recorded an other-than-temporary impairment of $29.9 million on DRV due to a reduction in the expected hold period, thereby reducing the investment to an estimated fair value that we believed would be most probable of realization if the investment was liquidated.

As a result of the other-than-temporary impairment, the liquidation of interests resulted in no gain or loss being recognized on the transaction during the year ended December 31, 2019.

University House Communities Group, Inc., Indemnity Claims

During the year ended December 31, 2019, we recognized additional losses, within discontinued operations, of $25.5 million as a result of the final settlement related to indemnity claims between UHC Acquisition Sub LLC ("UHC") and the Company.

Share Repurchase Program

On November 1, 2019, we adopted the Share Repurchase Program, authorizing redemption of the Company's shares of common stock, subject to certain conditions and limitations, to provide limited liquidity to qualifying stockholders.

Our obligation to repurchase any shares under the Share Repurchase Program was conditioned upon our having sufficient funds available to complete the repurchase.

The repurchase price per share for all stockholders is equal to a 25% discount to the most recent estimated NAV per share of our common stock established by our Board, which was $3.14 per share as of May 1, 2019.

During the year ended December 31, 2019, 8,517,605 shares were repurchased in connection with the Program.

The price per share for all shares repurchased was $2.355 for aggregate consideration of $20.1 million.

Amended and Restated Distribution Reinvestment Plan

On November 1, 2019, we began offering shares of our common stock to our existing stockholders pursuant to the DRP.

Under the DRP, stockholders may elect to reinvest an amount equal to the distributions declared on their shares of common stock into additional shares of our common stock in lieu of receiving cash distributions.

In accordance with the DRP, participants may acquire shares of common stock at a 25% discount to the most recent estimated NAV per share of our common stock established by our Board, which was $3.14 per share as of May 1, 2019.

As of December 31, 2019, the DRP purchase price was $2.355 per share.

In connection with the DRP, in January 2020, we sold a total of 21,249 shares and generated $0.05 million in gross offering proceeds under the DRP.

Distribution rate

On November 11, 2019, our Board approved an increase to our annual distribution rate effective for the quarterly distribution payable in April 2020, from $0.0737 to $0.0759 per share annualized.

Recent Activities

In preparing our consolidated financial statements, we have evaluated events and transactions occurring after December 31, 2019, through the date the financial statements were issued for recognition and disclosure purposes.

Current Strategy and Outlook

Using these criteria, we have identified 15 to 20 markets within the metropolitan areas of Atlanta, Austin, Charlotte, Dallas-Fort Worth-Arlington, Houston, the greater Los Angeles and San Diego areas, Miami, Orlando, Raleigh-Durham, San Antonio and Tampa.

We have a coordinated program to increase rental income by maximizing existing re-development opportunities and identifying locations in our current multi-tenant retail platform where we can increase the overall square footage of the property.

In addition, we work with our tenants to expand rentable square footage at select retail properties where demand warrants additional supply.

In addition, due to our properties as both retail centers and community focal points, we are able to identify short-term and specialty leasing opportunities that generate revenue from areas of the properties which are typically vacant.

Our grocery-anchored neighborhood centers bring consumers to our well-located properties, while our larger-format necessity-based power center retailers continue to adapt their business models to embrace omni-channel retail and appeal to consumers' continuing focus on value.

Our property management team is focused on enhancing the consumer shopping experience at our centers by maintaining strong tenant relationships, controlling expenses, and investing in sustainability programs at a number of our retail properties with initiatives such as LED lighting, trash recycling, water conservation and other programs to reduce energy consumption and expenses.

In addition, our leasing staff continues to focus on leasing space at our retail properties at favorable rental rates while establishing a more favorable tenant mix and identifying complementary uses to maximize tenant performance.

We believe our strong locations have allowed and will continue to allow us to backfill the vacancies created by such tenants.

We believe the refinement of our multi-tenant retail platform has positioned us for future success and will allow us to evaluate and ultimately execute on a potential strategic transaction, achieve liquidity for and provide a return of capital to our stockholders in the long term.

While we believe in our ability to execute on our plan, the timing is uncertain and may be shortened or extended by external and macroeconomic factors including, among others, interest rate movements, local, regional, national and global economic performance, competitive factors, the impact of e-commerce on the retail industry, future retailer store closings, retailer consolidation, retailers reducing store size, retailer bankruptcies, and government policy changes.

(b) Non-comparable leases are not included in totals.

IAGM Retail Properties

In our IAGM retail portfolio, we had GLA totaling 148,257 square feet expiring during the year ended December 31, 2020, of which 106,140 square feet was re-leased.

This achieved a retention rate of approximately 71.6%.

of Leases Executed

for the year ended

31, 2020 GLA SF New Contractual Rent

($PSF)(b) Prior Contractual Rent

($PSF)(b) % Change over Prior Contract Rent (b) Weighted Average Lease Term

(Years) Tenant Improvement Allowance ($PSF) Lease Commissions ($PSF)

Comparable Renewal

Leases (a) 37 249,256 $16.96 $17.86 (5.0)% 4.8 $0.29 $0.06

Comparable New Leases (a) 2 4,892 $26.76 $26.61 0.6% 8.0 $20.00 $5.10

Non-Comparable Renewal and New Leases 17 76,336 $21.34 N/A N/A 9.3 $18.83 $6.52

Total 56 330,484 $17.15 $18.03 (4.9)% 5.9 $4.87 $1.63

Anchor tenants (leases over 10,000 square feet)

Comparable Renewal Leases (a) 7 165,806 $12.42 $13.57 (8.5)% 4.4 $— $—

Comparable New Leases (a) — — $— $— — — $— $—

Non-Comparable Renewal and New Leases 2 32,048 $14.21 N/A N/A 10.5 $3.12 $4.22

Total 9 197,854 $12.42 $13.57 (8.5)% 5.4 $0.51 $0.68

Non-anchor tenants (leases under 10,000 square feet)

Comparable Renewal Leases (a) 30 83,450 $25.97 $26.40 (1.6)% 5.5 $0.88 $0.19

Comparable New Leases (a) 2 4,892 $26.76 $26.61 0.6% 8.0 $20.00 $5.10

Non-Comparable Renewal and New Leases 15 44,288 $26.50 N/A N/A 8.4 $30.20 $8.19

Total 47 132,630 $26.00 $26.41 (1.6)% 6.5 $11.37 $3.04

(a) Comparable leases are leases that meet all of the following criteria:

(b) Non-comparable leases are not included in totals.

Results of Operations

2 unchanged sentences

We generate substantially all of our net income from property operations.

Since January 1, 2018, we have acquired 11 retail properties and disposed of 24 retail properties and transferred two retail properties to their lenders in satisfaction of non-recourse debt.

All dollar amounts shown in the following tables are stated in thousands unless otherwise noted.

The following table presents the changes in our income.

Year ended December 31,

Increase (Decrease)

Since January 1, 2019, we have acquired nine retail properties and disposed of 11 retail properties.

The following table presents the changes in our income for the years ended December 31, 2020 and 2019.

Year ended December 31, Composition of Total Decrease, net

2020 2019 Total

Decrease, net Acquisition Increase Disposition Decrease Same-Property

Lease income, net $ 192,957 $ 220,653 $ (27,696) $ 14,792 $ (29,868) $ (12,620)

1 unchanged sentence

Other fee income 3,647 3,856 (209) — — (209)

Lease income, net, consists of basic monthly rent, amortization of acquired above and below market leases, amortization of lease inducements, straight-line rent adjustments, percentage of sales rental income recorded pursuant to tenant leases, contractual reimbursements for real estate taxes, common area maintenance costs, tax and insurance costs, late charges, termination fee income, and estimated credit losses resulting from changes in the collectability of operating lease receivables.

The change in lease income, net, was a result of the following:

$40.4 million decrease from our dispositions,

$21.2 million increase from our acquisitions, and,

$3.3 million increase from our properties classified as same-property.

The following table presents the changes in our operating expenses.

Year ended December 31,

Total income $ 197,833 $ 226,490 $ (28,657) $ 14,840 $ (30,718) $ (12,779)

Lease income, net, for the year ended December 31, 2020, decreased by $12.6 million on a same property basis when compared to the same period in 2019, primarily as a result of increased estimated credit losses of $6.0 million related to billed rent, increased estimated credit losses of $3.0 million related to straight-line rent receivable write-offs, increased rent abatements of $1.0 million, and net decreases in all other lease income of $2.2 million.

We believe that the foregoing reductions in lease income, net were directly attributable to the effects of the COVID-19 pandemic on our tenants.

The following table presents the changes in our operating expenses for the years ended December 31, 2020 and 2019.

Year ended December 31, Composition of Total Decrease, net

2020 2019 Total

Decrease, net Acquisition Increase Disposition Decrease Same-Property

Operating expenses

Depreciation and amortization $ 87,755 $ 97,429 $ (9,674) $ 7,657 $ (11,329) $ (6,002)

Property operating expenses

Property operating 27,909 31,944 (4,035) 2,100 (4,751) (1,384)

Real estate taxes 30,845 34,232 (3,387) 2,846 (4,952) (1,281)

General and administrative expenses

General and administrative 33,141 35,361 (2,220) — — (2,220)

Total operating expenses $ 179,650 $ 198,966 $ (19,316) $ 12,603 $ (21,032) $ (10,887)

The changes in our operating expenses were a result of the following:

$3.2 million decrease in depreciation and amortization, which was primarily a result of $5.8 million of accelerated depreciation at one property under re-development in 2018,

$7.1 million decrease in property operating expenses from our dispositions,

$3.4 million increase in property operating expenses from our acquisitions and $0.8 million increase in property operating expenses from our properties classified as same-property,

$4.9 million decrease in real estate taxes from our dispositions since January 1, 2018, and,

$2.9 million increase in real estate taxes from our acquisitions and $1.0 million increase in real estate taxes from our properties classified as same-property.

The following table presents the components of other income (expense).

Depreciation and amortization, for the year ended December 31, 2020, decreased $6.0 million on a same property basis when compared to the same period in 2019 as a result of decreased in-place lease amortization of $3.0 million, decreased corporate IT software depreciation of $1.6 million, and decreased building, site, and tenant improvement depreciation of $1.4 million.

Property operating expenses, for the year ended December 31, 2020, decreased $1.4 million on a same property basis when compared to the same period in 2019 as a result of decreased landscaping, snow removal, and waste removal costs of $1.1 million and net decreases in all other property operating expenses of $0.3 million.

Real estate taxes, for the year ended December 31, 2020, decreased $1.3 million on a same property basis when compared to the same period in 2019 as a result of real estate tax refunds received.

General and administrative expenses for the year ended December 31, 2020, decreased $2.2 million, when compared to the same period in 2019, primarily as a result of decreased marketing and conference costs of $0.7 million, decreased stock administration and valuation costs of $0.3 million, decreased compensation and long-term incentive plan costs of $0.4 million, and net decreases in all other general and administrative expenses of $0.8 million.

We believe that the foregoing reductions in general and administrative expenses were directly attributable to the effects of the COVID-19 pandemic.

The following table presents the components of other (expense) income.

Year ended December 31,

Increase (Decrease)

Other income (expense)

Interest, dividend and other income

2020 2019 Change, net

Other (expense) income

Interest expense, net $ (18,749) $ (22,717) $ 3,968

(Loss) gain on extinguishment of debt, net

Loss on extinguishment of debt (2,543) (2,901) 358

Provision for asset impairment (9,002) (2,359) (6,643)

Gain on sale and transfer of investment properties, net

Equity in earnings (losses) and (impairment), net, of unconsolidated entities

Realized and unrealized gains on marketable securities, net

Total other income

Gain on sale of investment properties, net 1,752 62,011 (60,259)

Equity in (losses) earnings and (impairment), net, of unconsolidated entities (3,141) 957 (4,098)

Other income and expense, net 3,326 1,384 1,942

Total other (expense) income, net $ (28,357) $ 36,375 $ (64,732)

Interest expense, net

Interest expense, net, consists of interest incurred on mortgages payable and our corporate credit facilities, interest incurred on other financing instruments, and amortization of loan fees.

Changes in interest expense, net, were a result of the following:

$3.5 million decrease from our dispositions,

$0.7 million decrease from the surrender of two retail properties to the lenders in satisfaction of non-recourse debt in 2018,

$0.3 million decrease related to properties classified as same-property, and,

$2.3 million increase from a higher outstanding balance on our corporate term loan subsequent to December 31, 2018.

(Loss) gain on extinguishment of debt, net

During the year ended December 31, 2019, we recognized a loss on extinguishment of debt of $2.9 million related to the loan pay-offs on two retail properties disposed of, comprising a $2.7 million prepayment penalty and $0.2 million of loan fee write-offs.

During the year ended December 31, 2018, we recognized a gain on extinguishment of debt, net, of $9.1 million as a result of the following:

$10.8 million gain related to the surrender of Stonecrest Marketplace and a $1.7 million gain related to the surrender of Bellerive Plaza (both to their lenders in satisfaction of non-recourse debt), and,

$3.3 million loss related to the loan pay-offs on four retail properties at disposition as a result of $3.1 million in prepayment penalties.

Interest expense, net, for the year ended December 31, 2020 decreased $4.0 million when compared to the same period in 2019, primarily as a result of repaying total mortgages payable of $106.7 million across five retail properties since January 1, 2019, resulting in interest savings of $3.6 million.

Although our corporate credit facilities increased $98.0 million from January 1, 2019, the higher principal balances were more than offset by the impact of declining 1-month LIBOR interest rates, resulting in the remaining decrease in interest expense of $0.4 million.

Loss on extinguishment of debt

During the year ended December 31, 2020, we recognized a loss of $2.5 million on the extinguishment of total mortgages payable of $26.3 million on two retail properties, primarily related to prepayment penalties.

During the year ended December 31, 2019, we recognized a loss of $2.9 million on the extinguishment of total mortgages payable of $36.1 million on two retail properties, primarily related to prepayment penalties.

Provision for asset impairment

During the year ended December 31, 2020, we identified one retail property that had a reduction in its expected hold period.

As a result, we recorded a provision for asset impairment of $2.4 million as the fair value (based on the agreed upon price) in the purchase contract being lower than the property's carrying value.

This property was sold in 2019.

During the year ended December 31, 2018, we identified three retail properties that had reductions in their expected holding periods.

As a result, we recorded an additional provision for asset impairment of:

$0.8 million on the disposal of one retail property in 2018, and

$2.7 million on two retail properties as a result of the fair value (the agreed upon price with the buyers) in the sales contracts being lower than the properties' carrying values during the year ended December 31, 2018.

These properties were sold in 2018.

Gain on sale and transfer of investment properties, net

We recorded a provision for asset impairment of $9.0 million as a result of the executed sales contract price being lower than the property's carrying value.

This property was sold on May 1, 2020.

During the year ended December 31, 2019, we identified one retail property that had a reduction in its expected hold period.

We recorded a provision for asset impairment of $2.4 million as a result of the executed sales contract price being lower than the property's carrying value.

This property was sold on September 25, 2019.

Gain on sale of investment properties, net

During the year ended December 31, 2020, we recognized a gain of $1.8 million on the sale of one retail property, partial sale of one retail property, and the completion of partial condemnations at three retail properties.

During the year ended December 31, 2019, we recognized a gain of $62.0 million on the sale of ten retail properties.

During the year ended December 31, 2018, we recognized a gain on sale and transfer of investment properties, net, of $95.1 million as a result of the following:

$93.1 million net gain on the sale of 14 retail properties,

$1.8 million gain on transfer of assets, net, related to the surrender of Stonecrest Marketplace and Bellerive Plaza to the lender, and,

$0.2 million gain related to the completion of a partial condemnation at one retail property.

Equity in earnings (losses) and (impairment), net, of unconsolidated entities

During the year ended December 31, 2019, we recognized equity in earnings, net, of unconsolidated entities of $1.0 million as a result of net income from property operations within the IAGM joint venture.

During the year ended December 31, 2018, we recognized equity in earnings (losses) and (impairment), net, of unconsolidated entities of $31.4 million as a result of the following:

$29.9 million other-than-temporary impairment on DRV due to a reduction in the expected hold period of the joint venture, and,

$2.0 million equity in losses as a result of a net loss in property operations within the IAGM joint venture, including our $0.8 million share of a provision for asset impairment on three retail properties and our $0.3 million share of losses on the sale of two retail properties.

Equity in (losses) earnings and (impairment), net, of unconsolidated entities

We recognized $3.1 million of equity in losses of unconsolidated entities for the year ended December 31, 2020 and $1.0 million of equity in earnings for the year ended December 31, 2019.

The $4.0 million decrease is the result of decreased income from property operations after management fees of $0.6 million and increased provision for asset impairment of $5.3 million, which were partially offset by decreased interest expense of $1.9 million.

Other income and expense, net

Other income and expense, net, consists of interest earned on cash and cash equivalents, income tax benefits and expenses, and non-operating income and expenses.

Under the federal legislation enacted on March 27, 2020, known as the CARES Act, certain limitations on the deductibility of net operating losses ("NOLs") enacted under prior federal tax legislation have been temporarily rolled back.

In particular, the CARES Act permits businesses to carryback NOLs generated in taxable years beginning after December 31, 2017 and before January 1, 2021 to the previous five years and temporarily suspends, until taxable years beginning after December 31, 2020, the annual limit of 80% on the amount of taxable income that NOLs generated in taxable years beginning after December 31, 2017 may offset.

As a result of the additional anticipated NOL carryback claims for our taxable REIT subsidiaries, tax benefits of $1.2 million have been recognized during the year ended December 31, 2020.

Net loss from discontinued operations

During the year ended December 31, 2019, we recognized $25.5 million relating to indemnity claims from the sale of our student housing business, which was sold in June 2016.

On June 14, 2019, a final settlement for the claims was reached in the amount of $30.0 million, which we paid on June 24, 2019.

Net Operating Income

We evaluate the performance of our wholly-owned and consolidated retail properties based on modified NOI.

Modified NOI reflects income from operations excluding lease termination income and GAAP rent adjustments (such as straight-line rent, above/below market lease amortization and amortization of lease incentives).

We believe modified NOI, same-property modified NOI, and modified NOI from other investment properties, each of which are supplemental non-GAAP financial measures, provide added comparability across periods when evaluating the financial condition and operating performance that is not readily apparent from "Operating income" or "Net income" in accordance with GAAP.

We evaluate the performance of our wholly-owned and consolidated retail properties based on Modified NOI, which excludes general and administrative expenses, depreciation and amortization, provision for asset impairment, other income and expense, net, gains (losses) from sales of properties, gains (losses) on extinguishment of debt, interest expense, net, equity in (losses) earnings and (impairment), net, from unconsolidated entities, lease termination income and expense, and GAAP rent adjustments (such as straight-line rent, above/below market lease amortization and amortization of lease incentives).

We bifurcate Modified NOI into same-property Modified NOI and Modified NOI from other investment properties based on whether the underlying retail properties meet our same-property criteria.

We believe the supplemental non-GAAP financial measures of Modified NOI, same-property Modified NOI, and Modified NOI from other investment properties provide added comparability across periods when evaluating our financial condition and operating performance that is not readily apparent from "Operating income" or "Net income" in accordance with GAAP.

Comparison of same-property results for the years ended December 31, 2020 and 2019

A total of 46 wholly-owned retail properties met our same-property criteria for the years ended December 31, 2020 and 2019.

Modified NOI from other investment properties in the table below for the years ended December 31, 2019 and 2018 includes retail properties that did not meet our same-property criteria.

The following table represents the reconciliation of net income,

the most directly comparable GAAP measure, to Modified NOI and same-property modified NOI for the years ended December 31, 2019 and 2018.

The following table represents the reconciliation of net income, the most directly comparable GAAP measure, to Modified NOI and same-property Modified NOI for the years ended December 31, 2020 and 2019:

Year ended December 31,

Increase (Decrease)

2020 2019 Change, net

Net (loss) income $ (10,174) $ 38,399 $ (48,573)

Adjustments to reconcile to non-GAAP metrics:

Net loss from discontinued operations — 25,500 (25,500)

Income tax expense

Realized and unrealized gains on marketable securities, net

Equity in (earnings) losses and impairment, net, of unconsolidated entities

Other income and expense, net (3,326) (1,384) (1,942)

Equity in losses (earnings) and impairment, net, of unconsolidated entities 3,141 (957) 4,098

Interest expense, net 18,749 22,717 (3,968)

Loss (gain) on extinguishment of debt, net

Gain on sale and transfer of investment properties, net

Interest, dividend and other income

Loss on extinguishment of debt 2,543 2,901 (358)

Gain on sale of investment properties, net (1,752) (62,011) 60,259

Provision for asset impairment 9,002 2,359 6,643

Depreciation and amortization 87,755 97,429 (9,674)

General and administrative expenses

General and administrative 33,141 35,361 (2,220)

Other fee income (3,647) (3,856) 209

Adjustments to Modified NOI (a) (7,249) (10,830) 3,581

Modified NOI from other investment properties (b)

Modified NOI 128,183 145,628 (17,445)

Modified NOI from other investment properties (17,707) (28,875) 11,168

Same-property Modified NOI $ 110,476 $ 116,753 $ (6,277)

Adjustments to modified NOI include termination fee income and GAAP rent adjustments (such as straight-line rent, above/below market lease amortization and amortization of lease incentives).

Modified NOI from other investment properties for the years ended December 31, 2019 and 2018 includes retail properties that did not meet our same-property criteria.

(a) Adjustments to Modified NOI include termination fee income and expense and GAAP rent adjustments.

Comparison of the components of same-property Modified NOI for the years ended December 31, 2020 and 2019:

Year ended December 31,

Year ended December 31, Change

2020 2019 Variance

Lease income, net $ 159,042 $ 168,080 $ (9,038) (5.4)%

Other property income 1,157 1,109 48 4.3%

160,199 169,189 (8,990) (5.3)%

Property operating expenses 23,660 25,091 (1,431) (5.7)%

Real estate taxes 26,063 27,345 (1,282) (4.7)%

49,723 52,436 (2,713) (5.2)%

Same-property Modified NOI $ 110,476 $ 116,753 $ (6,277) (5.4)%

Same-property modified NOI increased by $4.1 million , or 3.9% , when comparing the year ended December 31, 2019, to the same period in 2018.

Approximately $3.0 million of this increase in modified NOI is attributed to base rent increases resulting from leasing previously unoccupied space and achieving more favorable rent terms with tenants.

The remaining increase is the result of an increase in other property income of $0.7 million which was offset by an increase of $1.7 million in non-recoverable operating expenses.

Included in the $4.1 million increase is $1.1 million related to the strategic acquisition of an adjacent portion of an existing shopping center that expanded GLA at a property classified as same-property.

Same-property Modified NOI decreased by $6.3 million, or 5.4%, when comparing the year ended December 31, 2020, to the same period in 2019, and was primarily a result of:

• an increase in estimated credit losses of $6.0 million,

• an increase in rent abatements of $1.0 million,

• a decrease in recovery revenue of $2.0 million, and was offset by:

• a decrease in recoverable expenses of $2.4 million,

• a decrease in non-recoverable expenses of $0.3 million.

These fluctuations in Same-property Modified NOI were, in our judgment, attributable to the impact of the COVID-19

pandemic, primarily those attributing to increased estimated credit losses.

Funds From Operations

The National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a standard known as Funds From Operations ("FFO").

Our FFO, based on the NAREIT definition, is net income (or loss) in accordance with GAAP excluding gains (or losses) resulting from dispositions of properties, plus depreciation and amortization and impairment charges on depreciable real property, after adjustments for unconsolidated partnerships and joint ventures in which we hold an interest.

We have adopted the NAREIT definition in our calculation of FFO Applicable to Common Shares because management considers FFO a widely accepted and appropriate non-GAAP measure of performance for REITs.

The National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a widely accepted non-GAAP financial measure of operating performance known as Funds From Operations ("FFO").

Our FFO, based on the NAREIT definition, is net income (or loss) in accordance with GAAP, excluding gains (or losses) resulting from dispositions of properties, plus depreciation and amortization and impairment charges on depreciable real property.

Adjustments for unconsolidated joint ventures are calculated to reflect our proportionate share of the joint venture's funds from operations on the same basis.

In calculating FFO, impairment charges of depreciable real estate assets are added back even though the impairment charge may represent a permanent decline in value due to the decreased operating performance of the applicable property.

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If evidence exists that a loss reflected in the investment of an unconsolidated entity is due to the impairment of depreciable real estate assets, our share of these impairments is added back to net income in the determination of FFO.

Modified Funds From Operations ("Modified FFO") is an additional financial measure we use because FFO includes certain non-comparable items that affect our performance over time.

We define Modified FFO as FFO Applicable to Common Shares excluding the impact of discrete non-operating transactions and other events, which we do not deem representative of the comparable operating results of our multi-tenant retail platform.

We believe FFO Applicable to Common Shares provides a performance measure that, when compared year over year, reflects the impact on operations from trends in occupancy rates, rental rates, operating costs, acquisition and development activities, and financing costs.

This provides a perspective of our financial performance that is not immediately apparent from net income determined in accordance with GAAP.

We believe that Modified FFO extends that perspective and is helpful in assisting management and investors in assessing the sustainability of operating performance in future periods by excluding items that may cause short-term fluctuations in net income but have no impact on operating cash flows.

FFO and Modified FFO are intended to be neither a substitute for "net income" nor a substitute for "cash flows from operating activities" as determined by GAAP.

Other REITs may use alternative methodologies for calculating similarly titled measures, which may not be comparable to our calculation of FFO Applicable to Common Shares or Modified FFO Applicable to Common Shares.

FFO Applicable to Common Shares and Modified FFO Applicable to Common Shares are calculated as follows:

We believe FFO Applicable to Common Shares and Dilutive Securities, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding our performance because the historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time.

Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT, using historical accounting for depreciation, could be less informative.

Adjusted Funds From Operations ("AFFO") is an additional supplemental non-GAAP financial measure of our operating performance.

In particular, AFFO provides an additional measure to compare the operating performance of different REITs without having to account for certain remaining amortization assumptions within FFO and other unique revenue and expense items which are not pertinent to measuring a particular company's on-going operating performance.

In that regard, we use AFFO as an input to our compensation plan to determine cash bonuses and measure the achievement of certain performance-based equity awards.

Our adjustments to FFO to arrive at AFFO include removing the impact of (i) amortization of debt premiums, discounts, and financing costs, (ii) amortization of above and below-market leases and lease inducements, (iii) depreciation and amortization of corporate assets, (iv) straight-line rent adjustments, (v) gains (or losses) resulting from debt extinguishments (vi) other nonoperating revenue and expense items which are not pertinent to measuring on-going operating performance, (vii) adjustments for unconsolidated joint ventures to reflect our share of the ventures' AFFO on the same basis.

Our calculation of AFFO Applicable to Common Shares and Dilutive Securities is not reduced by any capital expenditures.

Other REITs may use alternative methodologies for calculating similarly titled measures, which may not be comparable to our definition and calculation of FFO Applicable to Common Shares and Dilutive Securities or AFFO Applicable to Common Shares and Dilutive Securities.

Furthermore, FFO and AFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as alternatives to net income as an indication of our performance.

FFO and AFFO should not be considered as alternatives to our cash flows from operating, investing, and financing activities.

Nor should FFO and AFFO be considered as measures of liquidity, our ability to make cash distributions, or our ability to service our debt.

Prior to January 1, 2020, we reported a non-GAAP supplemental measure of operating performance, Modified Funds From Operations ("MFFO").

We discontinued the use of MFFO in favor of AFFO as we believe that it is a more meaningful supplemental non-GAAP financial measure of our operating performance than MFFO.

FFO Applicable to Common Shares and Dilutive Securities and AFFO Applicable to Common Shares and Dilutive Securities is calculated as follows:

Year ended December 31,

Net (loss) income $ (10,174) $ 38,399

Depreciation and amortization related to investment properties 86,524 94,322

Our share of depreciation and amortization recognized in equity in earnings (losses) and (impairment), net, of unconsolidated entities

Provision for asset impairment 9,002 2,359

Our share of provision for asset impairment recognized in equity in earnings (losses) and (impairment), net, of unconsolidated entities

Gain on sale and transfer of investment properties, net

Our share of losses from property dispositions recognized in equity in earnings (losses) and (impairment), net, of unconsolidated entities

FFO Applicable to Common Shares

Realized and unrealized gains on marketable securities, net

Loss (gain) on extinguishment of debt, net

Amortization of mark to market debt, premium, and discount, net

Gain on sale of investment properties, net (1,752) (62,011)

Provision for indemnification claims (a) — 25,500

Our share of IAGM's depreciation and amortization related to investment properties 8,967 11,074

Our share of IAGM's provision for asset impairment 6,059 794

Our share of IAGM's loss on sale of investment properties, net — 307

FFO Applicable to Common Shares and Dilutive Securities $ 98,626 $ 110,744

Loss on extinguishment of debt 2,543 2,901

Amortization of debt premiums, discounts and financing costs, net 1,826 1,706

Amortization of above and below-market leases and lease inducements, net (7,060) (6,148)

Depreciation and amortization of corporate assets

Depreciation and amortization related to corporate assets 1,231 3,107

Straight-line rent adjustment, net (2,590) (3,609)

Our share of straight-line rent adjustment, net, recognized in equity in earnings (losses) and (impairment), net, of unconsolidated entities

Stock-based compensation, net

Provision for indemnification claims in discontinued operations

Modified FFO Applicable to Common Shares

Uncollectible straight-line rent 3,214 145

Non-operating income and expense, net (b) (1,557) (253)

Our share of IAGM's loss on extinguishment of debt 5 —

Our share of IAGM's amortization of financing costs 299 306

Our share of IAGM's amortization of above and below-market leases and lease inducements, net 302 201

Our share of IAGM's straight-line rent adjustment, net 376 (52)

Our share of IAGM's non-operating income and expense, net (b) (51) (90)

AFFO Applicable to Common Shares and Dilutive Securities $ 97,164 $ 108,958

Weighted average number of common shares outstanding - basic 719,882,476 728,620,309

Effect of unvested restricted shares (c) — 763,840

Weighted average number of common shares outstanding - diluted 719,882,476 729,384,149

Net (loss) income per common share, diluted $ (0.01) $ 0.05

Per share adjustments for FFO Applicable to Common Shares and Dilutive Securities 0.15 0.10

FFO Applicable to Common Shares and Dilutive Securities per share $ 0.14 $ 0.15

Per share adjustments for AFFO Applicable to Common Shares and Dilutive Securities (0.01) —

AFFO Applicable to Common Shares and Dilutive Securities per share $ 0.13 $ 0.15

(a) The provision for indemnification claims of $25.5 million recognized during the year ended December 31, 2019, was an adjustment to the gain on disposition of our discontinued operation (student housing business).

We exclude disposition gains and losses from FFO.

(b) Non-operating income and expense, net, includes other non-operating revenue and expense items which are not pertinent to measuring ongoing operating performance, such as termination fee expense, miscellaneous income, and settlement income.

(c) For purposes of calculating non-GAAP per share metrics, the same denominator is used as that which would be used in calculating earnings per share under GAAP.

For the year ended December 31, 2020, the effects of unvested restricted shares have been excluded from the denominator in the diluted net loss per share calculations under GAAP as they were antidilutive.

Critical Accounting Policies and Estimates

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Actual results may differ from these estimates.

Consolidation

Variable Interest Entities

We evaluate our investments in LLCs and LPs to determine whether each such entity may be a VIE.

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The equity method of accounting is applied to entities in which we are not the primary beneficiary, or the entity is not a VIE and we do not have control, but can exercise influence over the entity with respect to its operations and major decisions.

Our ability to correctly assess control over an entity affects the presentation of these investments in our consolidated financial statements.

As of December 31, 2020 and 2019, the Company had no VIEs.

Revenue Recognition

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• who constructs or directs the construction of the improvements.

Credit Losses

We review the collectability of amounts due from our tenants on a regular basis.

We regularly evaluate the collectability of these lease-related receivables by analyzing past due account balances and consider such facts as the credit quality of our customer, historical write-off experience, tenant credit-worthiness and current economic trends.

If collection is not probable, regardless of whether we have entered into an amendment to provide the tenant with COVID-19 related rent relief, the lease payments will be accounted for on a cash basis, and revenue will be recorded as cash is received.

If reassessed, and the collection of substantially all of the lease payments from the tenant becomes probable, the accrual basis of revenue recognition is reestablished.

The provision for estimated credit losses resulting from changes in the expected collectability of lease payments, including variable payments, is recognized as a direct adjustment to lease income on the consolidated statements of operations and comprehensive (loss) income, and a direct write-off of the operating lease receivables, including straight-line rent receivable, on the consolidated balance sheets.

Sale of Real Estate

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If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and amortized over the useful life of the acquired assets.

Generally, acquisition of real estate qualifies as an asset acquisition.

We allocate the purchase price of real estate to land, building, other building improvements, tenant improvements, intangible assets and liabilities (such as the value of above- and below-market leases, in-place leases and origination costs associated with in-place leases).

The values of above- and below-market leases are recorded as intangible assets, net, and intangible liabilities, net, respectively, on the consolidated balance sheets, and are amortized as either a decrease (in the case of above-market leases) or an increase (in the case of below-market leases) to rental income over the remaining term of the associated tenant lease.

The values, if any, associated with in-place leases are recorded in intangible assets, net on the consolidated balance sheets and are amortized to depreciation and amortization expense on the consolidated statements of operations and comprehensive income over the remaining lease term.

The values of above- and below-market leases are recorded as intangible assets, net, and intangible liabilities, net, respectively, on the consolidated balance sheets, and are amortized as either a decrease (in the case of above-market leases) or an increase (in the case of below-market leases) to lease income over the remaining term of the associated tenant lease.

The difference between the contractual rental rates and our estimate of market rental rates is measured over a period equal to the remaining non-cancelable term of the leases plus the term of any below-market renewal options.

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Impairment of Long Lived Assets

We assess the carrying values of the long-lived assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable, such as a reduction in the expected holding period of the asset.

We assess the carrying values of the long-lived tangible and intangible assets whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable, such as a reduction in the expected holding period of a property.

If it is determined that the carrying value is not recoverable because the expected undiscounted cash flows do not exceed that carrying value, we record an impairment loss to the extent that the carrying value exceeds the estimated fair value.

The valuation and possible subsequent impairment of investment properties is a significant estimate that can and does change based on our continuous process of analyzing each property's economic condition at a point in time and reviewing assumptions about uncertain inherent factors, including observable inputs such as contractual revenues and unobservable inputs such as forecasted revenues and expenses, estimated net disposition proceeds, and discount rate.

These unobservable inputs are based on market conditions and our expected growth rates.

These unobservable inputs are based on market conditions and the property's expected growth rates.

However, assumptions and estimates about future cash flows and capitalization rates are complex and subjective.

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Real estate is reflected at cost less accumulated depreciation within investment property on the consolidated balance sheets.

Ordinary repairs and maintenance are expensed as incurred.

Repairs and maintenance costs are expensed as incurred.

Depreciation expense is computed using the straight-line method.

Buildings are depreciated based upon an estimated useful life of 30 years, and 5-15 years for furniture, fixtures and equipment and site improvements.

Finance lease assets are generally amortized using the straight-line method over the lease term.

Finance lease asset amortization is included in depreciation and amortization on the consolidated statements of operations and comprehensive income.

Tenant improvements are amortized on a straight-line basis over the lesser of the life of the tenant improvement or the lease term and is included in depreciation and amortization on the consolidated statements of operations and comprehensive income.

A range of estimated useful lives of 15-30 years is used for buildings and other improvements, and a range of 5-20 years is used for furniture, fixtures and equipment.

Finance lease asset amortization is computed using the straight-line method over the lease term and included in depreciation and amortization on the consolidated statements of operations and comprehensive (loss) income.

Tenant improvements not of use to subsequent tenants are amortized on a straight-line basis over the lesser of the life of the tenant improvement or the lease term and is included in depreciation and amortization on the consolidated statements of operations and comprehensive (loss) income.

Direct and indirect costs that are clearly related to the construction and improvements of investment properties are capitalized.

Costs incurred for property taxes and insurance are capitalized during periods in which activities necessary to prepare the property for its intended use are in progress.

Interest costs are also capitalized during such periods.

Costs incurred for interest, property taxes and insurance are capitalized during periods in which activities necessary to prepare the property for its intended use are in progress.

We qualify and have elected to be taxed as a REIT under the Code for federal income tax purposes commencing with the tax year ended December 31, 2005.

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Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income, property or net worth and federal income and excise taxes on our undistributed income.

We have elected to treat certain of our consolidated subsidiaries, and may in the future elect to treat newly formed subsidiaries, as TRSs pursuant to the Code.

From time to time, we may elect to treat certain of our consolidated subsidiaries as TRSs pursuant to the Code.

Among other activities, TRSs may participate in non-real estate related activities and/or perform non-customary services for tenants and are subject to federal and state income tax at regular corporate tax rates.

During 2020, the Company either revoked the TRS elections or dissolved the legal entities for any of its consolidated subsidiaries that were elected as TRSs.

Liquidity and Capital Resources

Development, Re-development, Capital Expenditures and Leasing Activities

The following table summarizes capital resources used through development and re-development, capital expenditures and leasing activities at the Company's retail properties owned during the year ended December 31, 2019 .

These costs are classified as cash used in capital expenditures and tenant improvements on the consolidated statements of cash flows for the year ended December 31, 2019 .

The following table summarizes capital resources used through development and re-development, capital expenditures, and leasing activities at our retail properties owned during the year ended December 31, 2020.

These costs are classified as cash used in capital expenditures and tenant improvements and investment in development and re-development projects on the consolidated statements of cash flows for the year ended December 31, 2020.

Development and

Re-development

Capital Expenditures

Indirect costs

Direct development and re-development costs relate to construction of buildings at our retail properties.

Indirect development and re-development costs relate to the capitalized interest, real estate taxes, insurance and payroll attributed to improvements at our retail properties.

Direct leasing costs relate to improvements to a tenant space that are either paid directly by or reimbursed to the tenants.

Re-development Capital Expenditures Leasing Total

Direct costs $ 1,417 (a) $ 3,499 $ 7,597 (c) $ 12,513

Indirect costs 691 (b) 1,903 — 2,594

Total $ 2,108 $ 5,402 $ 7,597 $ 15,107

(a) Direct development and re-development costs relate to construction of buildings at our retail properties.

(b) Indirect development and re-development costs relate to capitalized interest, real estate taxes, insurance and payroll attributed to improvements at our retail properties.

(c) Direct leasing costs relate to improvements to a tenant space that are either paid directly by or reimbursed to the tenants.

Short-Term Liquidity and Capital Resources

On a short-term basis, our principal demands for funds are to pay our operating, corporate, and transaction readiness expenses, as well as property capital expenditures, to make distributions to our stockholders, and to pay interest and principal on our indebtedness.

We expect to meet our short-term liquidity requirements from cash flows from operations, distributions from our joint venture investment, sales of our retail properties and available capacity on our revolving credit agreements.

On a short-term basis, our principal uses for funds are to pay our operating and corporate expenses, interest and principal on our indebtedness, property capital expenditures, and to make distributions to our stockholders.

At this time, we do not expect the COVID-19 pandemic to impact our ability to meet our short-term liquidity requirements.

However, our ability to maintain adequate liquidity for our operations in the future is dependent upon a number of factors, including our revenue, macroeconomic conditions, the length and severity of business disruptions caused by the COVID-19 pandemic, our ability to contain costs, including capital expenditures, and to collect rents and other receivables, and various other factors, many of which are beyond our control.

We will continue to monitor our liquidity position and may seek to raise funds through debt or equity financing in the future to fund operations, significant investments or acquisitions that are consistent with our strategy.

Our ability to raise these funds may also be diminished by the impact of the COVID-19 pandemic on the capital markets.

Long-Term Liquidity and Capital Resources

Our objectives are to maximize revenue generated by our multi-tenant retail platform, to further enhance the value of our retail properties to produce attractive current yield and long-term returns for our stockholders, and to generate sustainable and predictable cash flow from our operations to distribute to our stockholders.

We are seeking to increase our operating cash flows over time through the execution of our strategy.

Our Board approved an increase to our annual distribution rate effective for the quarterly distribution paid in April 2019.

As we execute our retail strategy, the Board has evaluated and will continue to evaluate our distribution rate and, if the Board deems appropriate, adjust the rate to take into account our progress in refining and balancing our multi-tenant retail platform.

Our objectives are to maximize revenue generated by our retail platform, to further enhance the value of our retail properties to produce attractive current yield and long-term returns for our stockholders, and to generate sustainable and predictable cash flow from our operations to distribute to our stockholders.

Any future determination to pay distributions will be at the discretion of our Board and will depend on our financial condition, capital requirements, restrictions contained in current or future financing instruments, and such other factors as our Board deems relevant.

In December 2020, our Board approved an increase to our annual distribution rate effective for the quarterly distribution paid in April 2021.

The Board will continue to evaluate our distribution rate and, if it deems appropriate, adjust the distribution to take into account the ongoing effects of the COVID-19 pandemic and our operating and capital needs.

See "Part I, Item 1A.Risk Factors - There is no assurance that we will be able to continue paying cash distributions or that distributions will increase over time."

Our primary sources and uses of capital are as follows:

Operating cash flows from our real estate investments, which consists of our retail properties;

• Operating cash flows from our real estate investments;

• Distributions from our joint venture investment;

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• Proceeds from corporate borrowings;

Proceeds from interest earned on cash and cash equivalents.

• Interest earned on cash and cash equivalents.

• To pay our operating expenses;

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• To service or pay down our debt;

To invest in properties and portfolios of properties;

• To invest in properties;

• To fund development, re-development, maintenance and capital expenditures or leasing investments;

To repurchase our common stock.

We may, from time to time, seek to retire or purchase additional amounts of our outstanding equity through cash purchases or exchanges for other securities.

Such purchases or exchanges, if any, will depend on our liquidity requirements, contractual restrictions, and other factors.

The amounts involved may be material.

• To fund other general corporate uses.

We may, from time to time, seek to acquire additional amounts of our outstanding equity through cash purchases or exchanges for other securities.

Such purchases or exchanges, if any, will depend on our liquidity requirements, contractual restrictions, and other factors, and may be material.

Summary of Cash Flows

Year ended December 31,

Increase (Decrease)

Year ended December 31, Decrease

Cash provided by operating activities $ 94,155 $ 106,008 $ (11,853)

Cash (used in) provided by investing activities

Cash used in investing activities (49,060) (41,797) (7,263)

Cash used in financing activities (82,073) (68,316) (13,757)

(Decrease) increase in cash and cash equivalents

Decrease in cash, cash equivalents, and restricted cash (36,978) (4,105) (32,873)

Cash, cash equivalents, and restricted cash at beginning of year 260,748 264,853 (4,105)

Cash, cash equivalents, and restricted cash at end of year $ 223,770 $ 260,748 $ (36,978)

Cash provided by operating activities of $106.0 million and $124.7 million for the years ended December 31, 2019 and 2018, respectively, was generated primarily from income from property operations and operating distributions from unconsolidated entities.

Cash provided by operating activities decreased $18.6 million when comparing the year ended December 31, 2019 , to the same period in 2018 primarily as a result of general fluctuations in working capital and the disposition of 24 retail

properties and transfer of two retail properties since January 1, 2018, which was partially offset by the acquisition of ten retail properties since January 1, 2018.

Cash provided by operating activities of $94.2 million and $106.0 million for the years ended December 31, 2020 and 2019, respectively, was generated primarily from income from property operations and operating distributions from IAGM.

Cash provided by operating activities decreased $11.9 million when comparing the year ended December 31, 2020, to the same period in 2019 primarily as a result of reduced lease income partially offset by reduced operating expenses, both principally due to the impact of the COVID-19 pandemic and the disposition of 11 retail properties since January 1, 2019, which was partially offset by the acquisition of nine retail properties since January 1, 2019.

Cash used in investing activities of $49.1 million for the year ended December 31, 2020, was primarily the result of:

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• $2.2 million for investment in development projects,

$5.6 million for lease commissions and other leasing costs,

• $1.4 million for lease commissions and other leasing costs, and was partially offset by cash provided of

• $8.0 million from net proceeds received from the sale of investment properties, and

• $0.8 million from cash inflows from other investing activities.

Cash used in investing activities of $41.8 million for the year ended December 31, 2019, was primarily the result of:

• $359.1 million for acquisitions of investment properties,

• $17.8 million for capital expenditures and tenant improvements,

• $7.1 million for investment in development projects,

• $5.6 million for lease commissions and other leasing cost,

• $30.0 million to settle the UHC claims as described in " Note 12.

Commitments and Contingencies " of the consolidated financial statements, partially offset by cash provided of

Commitments and Contingencies " of the consolidated financial statements, and was partially offset by cash provided of

• $346.7 million from net proceeds received from the sale of investment properties,

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• $1.1 million from cash inflows from other investing activities.

Cash provided by investing activities of $175.4 million for the year ended December 31, 2018, was primarily the result of:

$430.5 million from net proceeds received from the sale of investment properties,

$2.7 million received from net cash inflows from other investing activities, partially offset by cash used of

$220.8 million for acquisitions of investment properties,

$27.2 million for capital expenditures and tenant improvements,

$3.8 million for investment in development projects, and

$6.0 million for lease commissions and other leasing costs.

Cash used in financing activities of $82.1 million for the year ended December 31, 2020, was primarily the result of:

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• $1.1 million for the payment of tax withholding for share-based compensation,

$0.2 million for the payment of finance lease liabilities, partially offset by cash provided of

$118.0 million from proceeds received from debt related to the Term Loan Agreement.

• $0.2 million for the payment of finance lease liabilities, and was partially offset by cash provided of

• $150.0 million from proceeds received from our unsecured revolving credit agreements.

$100.0 million of that draw was repaid during the fourth quarter of 2020 and is included in the pay-off of debt described above.

Cash used in financing activities of $68.3 million for the year ended December 31, 2019, was primarily the result of:

• $111.0 million for pay-offs of debt, debt prepayment penalties, principal payments of mortgage debt, and payment of loan fees and other deposits,

$98.4 million for the 2018 Offer,

• $20.4 million for the repurchase of common stock under our share repurchase plan,

• $53.3 million to pay distributions,

• $1.4 million for the payment of tax withholding for share-based compensation,

$0.3 million for the payment of finance lease liabilities, partially offset by cash provided of

• $0.2 million for the payment of finance lease liabilities, and was partially offset by cash provided of

• $118.0 million from proceeds from debt related to the Term Loan Agreement.

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We maintain our cash and cash equivalents at major financial institutions.

The combined account balances at one or more institutions generally exceed the Federal Depository Insurance Corporation ("FDIC") insurance coverage.

The combined account balances at one or more institutions generally exceed the FDIC insurance coverage.

The Company periodically assesses the credit risk associated with these financial institutions.

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Acquisitions and Dispositions of Real Estate Investments

In 2020, we acquired two retail properties and the underlying real estate of a grocery tenant adjacent to an existing retail property.

In 2019, we acquired seven retail properties and a building and two retail parcels adjacent to three existing retail properties.

In 2018, we acquired three retail properties, including one retail property classified as a consolidated VIE, and the acquisition of two retail parcels adjacent to two existing retail properties.

These acquisitions were funded with available cash, disposition

proceeds, and mortgage indebtedness.

These acquisitions were funded with available cash and disposition proceeds.

During the years ended December 31, 2020 and 2019, we invested net cash of approximately $41.4 million and $359.1 million, respectively, for these acquisitions.

In 2019, we disposed of ten retail properties.

In 2018, we disposed of 16 retail properties, including the surrender of two properties to their respective lenders in satisfaction of non-recourse debt, and completed a partial condemnation at one retail property for an aggregate gross disposition price of $466.2 million .

In 2020, we disposed of one retail property, completed a partial sale of one retail property, and completed partial condemnations at three retail properties for an aggregate gross disposition price of $8.5 million.

In 2019, we disposed of ten retail properties for an aggregate gross disposition price of $357.8 million.

Distributions

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As we execute on our retail strategy, the Board evaluated and expects to continue to evaluate our distribution rate on a periodic basis.

See " Part I.

Business - Current Strategy and Outlook " for more information regarding our retail strategy.

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Year ended December 31,

2020 2019 2018 2017 2016

Distributions declared $ 54,604 $ 53,473 $ 53,782 $ 53,758 $ 83,633

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Distributions reinvested $ 185 $ 50 $ — $ — $ —

Share Repurchase Program

Our obligation to repurchase any shares under the Share Repurchase Program was conditioned upon our having sufficient funds available to complete the repurchase.

During the year ended December 31, 2019, 8,517,605 shares were repurchased in connection with the Share Repurchase Program.

The price per share for all shares repurchased was $2.355.

Amended and Restated Distribution Reinvestment Plan

Suspension of Second Amended and Restated Share Repurchase Program and the Amended and Restated Distribution Reinvestment Plan

On November 1, 2019, we adopted the SRP, authorizing redemption of the Company's shares of common stock, subject to certain conditions and limitations, to provide limited liquidity to qualifying stockholders.

During the year ended December 31, 2020, 2,136,119 shares were repurchased in connection with the SRP at a price per share of $2.355.

During the year ended December 31, 2019, 8,517,605 shares were repurchased in connection with the SRP at a price per share of $2.355.

On November 1, 2019, we began offering shares of our common stock to our existing stockholders pursuant to the DRP.

In connection with the DRP, in January 2020, we sold a total of 21,249 shares and generated $0.05 million in gross offering proceeds under the DRP.

During the year ended December 31, 2020 we sold a total of 79,040 shares in connection with the DRP at a price per share of $2.355.

On June 11, 2020, in light of the impact of the COVID-19 pandemic, we announced that our Board voted to suspend the SRP and the DRP, effective July 11, 2020.

Mortgages Payable, Maturities

The following table shows the scheduled maturities for the Company's mortgages payable as of December 31, 2020, for each of the next five years and thereafter:

Maturities during the year ending December 31,

Mortgages payable

Scheduled maturities by year:

As of December 31, 2020

Total $ 107,261

Credit Agreements, Maturities

As of December 31, 2020, we had a total of $50.0 million outstanding under our revolving credit facility at an interest rate of 1.19%.

The following table shows the Company's outstanding borrowings under its unsecured term loans as of December 31, 2020.

Principal Balance

Interest Rate

Maturity Date

$250.0 million 5 year - swapped to fixed rate (a)

December 21, 2023

$250.0 million 5 year - swapped to fixed rate (a)

December 21, 2023

$250.0 million 5 year - variable rate (b)

December 21, 2023

$150.0 million 5.5 year - swapped to fixed rate (a)

June 21, 2024

$150.0 million 5.5 year - swapped to fixed rate (a)

June 21, 2024

$150.0 million 5.5 year - variable rate (b)

June 21, 2024

Principal Balance Interest Rate Maturity Date

$250.0 million 5 year - swapped to fixed rate (a) $ 100,000 2.6795% December 21, 2023

$250.0 million 5 year - swapped to fixed rate (a) 100,000 2.6795% December 21, 2023

$250.0 million 5 year - variable rate (b) 50,000 1.3548% December 21, 2023

$150.0 million 5.5 year - swapped to fixed rate (a) 50,000 2.6915% June 21, 2024

$150.0 million 5.5 year - swapped to fixed rate (a) 50,000 2.6990% June 21, 2024

$150.0 million 5.5 year - variable rate (b) 50,000 1.3548% June 21, 2024

Total unsecured term loans $ 400,000

During the third quarter of 2019, the Company entered into four interest rate swap agreements which effectively replaced the two interest rate swaps which terminated on December 1, 2019.

Of the four new interest rate swap agreements, two have a notional amount of $100,000 , an effective date of December 2, 2019, a termination date of December 21, 2023, and achieve a fixed interest rate of 2.6795% .

The other two interest rate swap agreements each have a notional amount of $50,000 , an effective date of December 2, 2019, a termination date of June 21, 2024, and achieve fixed interest rates of 2.6915% and 2.6990% .

Interest rate reflects 1-Month LIBOR plus 1.20% effective December 2, 2019.

(a) A s of December 31, 2020, the Company has 4 interest rate swap agreements, of which 2 each have a notional amount of $100.0 million, an effective date of December 2, 2019, a termination date of December 21, 2023, and achieve a fixed interest rate of 2.68%.

The other 2 interest rate swap agreements each have a notional amount of $50.0 million, an effective date of December 2, 2019, a termination date of June 21, 2024, and achieve fixed interest rates of 2.69% and 2.70%.

(b) Interest rate reflects 1-Month LIBOR plus 1.20% effective December 2, 2019.

Off Balance Sheet Arrangements

The Company does not have off balance sheet arrangements other than its joint venture, IAGM, as disclosed in " Part IV.

Investment in Consolidated and Unconsolidated Entities."

Investment in Unconsolidated Entities."

Contractual Obligations

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Debt" in the consolidated financial statements.

The unconsolidated entity in which we have an investment has third party mortgage debt of $258.8 million at December 31, 2019 , as described in "Note 6.

Investment in Consolidated and Unconsolidated Entities" in the consolidated financial statements.

The unconsolidated joint venture in which we have an investment has third party mortgage debt of $244.0 million at December 31, 2020, as described in "Note 6.

Investment in Unconsolidated Entities" in the consolidated financial statements.

It is anticipated that our unconsolidated entity will be able to repay or refinance all of its debt on a timely basis.

The following table presents, on a consolidated basis, obligations and commitments to make future payments under debt obligations and lease agreements.

It excludes third-party debt associated with our unconsolidated entity and debt discounts that are not future cash obligations as of December 31, 2019.

It excludes third-party debt associated with our unconsolidated joint venture and debt discounts that are not future cash obligations as of December 31, 2020.

Payments due by year ending December 31,

2021 2022 2023 2024 2025 Thereafter Total

Long term debt:

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Variable rate debt, principal — 50,000 50,000 50,000 — — 150,000

Interest 14,496 13,877 11,365 3,070 744 — 43,552

Total long term debt 14,496 86,711 301,462 168,770 29,374 — 600,813

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Finance lease obligations (c) 408 279 21 — — — 708

Includes $300.0 million of variable rate unsecured term loan debt that has been swapped to a fixed rate as of December 31, 2019.

Includes leases on corporate office spaces.

Includes contracts for property improvements which have been deemed to contain finance leases.

Grand total $ 15,451 $ 87,512 $ 302,019 $ 169,320 $ 29,427 $ — $ 603,729

(a) Includes $300.0 million of variable rate unsecured term loan debt that has been swapped to a fixed rate as of December 31, 2020.

(b) Includes leases on corporate office spaces.

A number of our leases contain provisions designed to partially mitigate any adverse impact of inflation.

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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