What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-05 compared with 2022-05-06 · 201 added, 102 removed, 335 unchanged (47% of the section changed)

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Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements, financial or otherwise, expressed or implied by the forward-looking statements.

Currently, one of the most significant factors that could cause actual outcomes to differ significantly from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus (“COVID-19”), including possible resurgences, variants and mutations, on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market and the global economy and financial markets.

Currently, one significant factor that could cause actual outcomes to differ significantly from our forward-looking statements is the adverse effect of the current pandemic of the novel coronavirus (“COVID-19”), including possible resurgences, variants and mutations, on the financial condition, results of operations, cash flows and performance of the Company and its tenants, the real estate market and the global economy and financial markets.

Moreover, investors are cautioned to interpret many of the risks identified under the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as being heightened as a result of the ongoing and numerous adverse effects of COVID-19.

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• national and local economic, business, real estate and other market conditions, particularly in connection with low or negative growth in the U.S.

economy as well as economic uncertainty (including the potential effects of inflation);

economy as well as economic uncertainty (including the potential effects of inflation and increases in interest rates);

• financing risks, including the availability of, and costs associated with, sources of liquidity;

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retail sector, interest rate volatility, job growth and real estate market and overall economic conditions.

As of March 31, 2022, we owned interests in 181 operating retail properties totaling approximately 28.8 million square feet and one office property with 0.3 million square feet.

As of June 30, 2022, we owned interests in 181 operating retail properties totaling approximately 28.8 million square feet and one office property with 0.3 million square feet.

Of the 181 operating retail properties, 11 contain an office component.

We also owned seven development projects under construction as of this date.

We also owned five development projects under construction as of this date.

Merger with RPAI

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Immediately following the closing of the Merger, Merger Sub merged with and into the Operating Partnership so that all of the assets and liabilities of the Company continue to be held at or below the Operating Partnership level.

As a result of the Merger, we acquired 100 operating retail properties and five active development projects along with multiple parcels of entitled land for future value creation, creating a top five open-air shopping center REIT.

As a result of the Merger, we acquired 100 operating retail properties and five development projects along with multiple parcels of entitled land for future value creation, creating a top five open-air shopping center REIT.

The combined high-quality, open-air portfolio is a mixture of predominantly necessity-based, grocery-anchored neighborhood and community centers, combined with vibrant mixed-use assets.

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The Operating Partnership issued an equivalent amount of General Partner Units to the Parent Company.

Most of our leases contain provisions designed to mitigate the adverse impact of inflation, including stated rent increases and requirements for tenants to pay a share of operating expenses, including common area maintenance, real estate taxes, insurance or other operating expenses related to the maintenance of our properties, including escalation clauses in certain leases.

Most of our leases also include clauses that allow us to collect additional rent based on a percentage of tenants’ gross sales over stated thresholds, which sales generally increase as prices rise.

In addition, we believe that the rental rates in many of our leases are below current market rates for comparable space and that upon renewal, such rates may be increased to be in line with current rates, which may offset certain inflationary expense pressures.

We also periodically evaluate our exposure to interest rate fluctuations and enter into interest rate protection agreements to mitigate the impact of changes in interest rates on our variable rate debt.

Impacts on Business from COVID-19

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Since we cannot estimate when the containment measures will roll back, end, or be reinstated, we cannot estimate the ultimate operational and financial impact of COVID-19 on our business.

As the domestic economy continues to recover, retailers continue to improve their operations to account for the pandemic, including using open-air centers as convenient shopping destinations and last-mile fulfillment through the use of in-store pickup, curbside pickup, and shipping from stores.

As the domestic economy recovered from many of the effects of COVID-19, retailers improved their operations to account for the pandemic, including using open-air centers as convenient shopping destinations and last-mile fulfillment through the use of in-store pickup, curbside pickup, and shipping from stores.

Historically, economic indicators such as GDP growth, consumer confidence and employment have been correlated with demand for certain of our tenants’ products and services.

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therefore, there can be no assurances that we will not experience further declines in revenues, net income, Funds From Operations (“FFO”) or other operating metrics, which could be material.

Most of our leases also include clauses that allow us to collect additional rent based on a percentage of tenants’ gross sales over stated thresholds, which sales generally increase as prices rise.

In addition, we believe that the rental rates in many of our leases are below current market rates for comparable space and that upon renewal, such rates may be increased to be inline with current rates, which may offset certain inflationary expense pressures.

Operating Activity

During the first quarter of 2022, we executed new and renewal leases on 182 individual spaces totaling 1,053,963 square feet (16.1% cash leasing spread on 105 comparable leases).

During the second quarter of 2022, we executed new and renewal leases on 206 individual spaces totaling 1,198,263 square feet (13.2% cash leasing spread on 145 comparable leases).

New leases were signed on 68 individual spaces for 277,184 square feet of gross leasable area (“GLA”) (49.1% cash leasing spread on 26 comparable leases), while renewal leases were signed on 138 individual spaces for 921,079 square feet of GLA (8.0% cash leasing spread on 119 comparable leases).

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Results of Operations

The comparability of results of operations for the three months ended March 31, 2022 and 2021 is affected by our Merger with RPAI that was completed on October 22, 2021, in which we acquired 100 operating retail properties as well as five active development projects, along with our development, redevelopment, and operating property acquisition and disposition activities during these periods.

The comparability of results of operations for the three and six months ended June 30, 2022 and 2021 is affected by our Merger with RPAI that was completed on October 22, 2021, in which we acquired 100 operating retail properties as well as five development projects, along with our development, redevelopment, and operating property acquisition and disposition activities during these periods.

Therefore, we believe it is most useful to review the comparisons of our results of operations for these periods in conjunction with the discussion of our activities during those periods, which is set forth below.

Property Acquisitions

In addition to the properties we acquired in the Merger, the following properties were acquired at various times during the period from January 1, 2021 through March 31, 2022:

In addition to the properties we acquired in the Merger, the following properties were acquired at various times during the period from January 1, 2021 through June 30, 2022:

Property Name Metropolitan

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Pebble Marketplace Las Vegas, NV February 2022 85,796

MacArthur Crossing two-tenant building Dallas, TX April 2022 56,077

Operating Property Dispositions

The following operating property was sold during the period from January 1, 2021 through March 31, 2022:

The following operating properties were sold during the period from January 1, 2021 through June 30, 2022:

Property Name MSA Disposition Date Owned GLA

Westside Market Dallas, TX October 2021 93,377

Plaza Del Lago (1)

Chicago, IL June 2022 100,016

(1) Plaza Del Lago also contains 8,800 square feet of residential space comprised of 18 multifamily rental units.

Development and Redevelopment Projects

The following properties were under active development or redevelopment at various times during the period from January 1, 2021 through March 31, 2022 and removed from our operating portfolio:

The following properties were under active development or redevelopment at various times during the period from January 1, 2021 through June 30, 2022 and removed from our operating portfolio:

Project Name MSA Transition to

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Washington, D.C.

October 2021 Pending 67,000

October 2021 Residential:

Pending 67,000

Shoppes at Quarterfield (4)

Baltimore, MD October 2021 Pending 58,000

Baltimore, MD October 2021 June 2022 58,000

(1) Transition date represents the date the property was transferred from our operating portfolio into redevelopment status.

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(4) Project was assumed as part of the Merger with RPAI in October 2021.

Comparison of Operating Results for the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

The following table reflects changes in the components of our consolidated statements of operations for the three months ended March 31, 2022 and 2021.

Three Months Ended March 31,

Comparison of Operating Results for the Three Months Ended June 30, 2022 to the Three Months Ended June 30, 2021

The following table reflects changes in the components of our consolidated statements of operations for the three months ended June 30, 2022 and 2021.

Three Months Ended June 30,

($ in thousands) 2022 2021 Change

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Income tax benefit of taxable REIT subsidiary 188 100 88

Equity in earnings (loss) of unconsolidated subsidiaries 114 (244) 358

Other (expense) income, net (162) 227 (389)

Net income (loss) 13,445 (95) 13,540

Net income attributable to noncontrolling interests (314) (147) (167)

Net income (loss) attributable to common shareholders $ 13,131 $ (242) $ 13,373

Property operating expense to total revenue ratio 12.9 % 14.7 %

Rental income (including tenant reimbursements) increased $126.3 million, or 185.7%, due to the following:

($ in thousands) Net change

three months ended

June 30, 2021 to 2022

Properties or components of properties sold during 2021 or 2022 $ 63

Properties under redevelopment or acquired during 2021 and/or 2022 1,663

Properties acquired in the Merger with RPAI 122,735

Properties fully operational during 2021 and 2022 and other 1,810

Total $ 126,271

The net increase of $1.8 million in rental income for properties fully operational during 2021 and 2022 is primarily due to higher base minimum rent of $0.4 million due to improved tenant performance and an increase in tenant reimbursements due to higher recoverable common area maintenance expenses and real estate taxes.

These variances were partially offset by a decrease in lease termination income of $0.3 million.

The occupancy of the fully operational properties increased from 88.8% for 2021 to 90.5% for 2022.

Other property-related revenue primarily consists of parking revenues, gains on the sale of land and other miscellaneous activity.

This revenue increased by $4.6 million primarily as a result of an increase in ancillary income of $1.9 million, higher gains on sales of undepreciated assets of $1.3 million recognized during the three months ended June 30, 2022, and an increase in parking revenue of $0.3 million.

We recorded fee income of $2.7 million and $0.5 million during the three months ended June 30, 2022 and 2021, respectively, from property management and development services provided to third parties and unconsolidated joint ventures.

The increase in fee income is primarily related to development fee services for the development of a corporate campus for Republic Airways.

Property operating expenses increased $15.9 million, or 155.4%, due to the following:

($ in thousands) Net change

three months ended

June 30, 2021 to 2022

Properties or components of properties sold during 2021 or 2022 $ (22)

Properties under redevelopment or acquired during 2021 and/or 2022 236

Properties acquired in the Merger with RPAI 13,556

Properties fully operational during 2021 and 2022 and other 2,126

Total $ 15,896

The net increase of $2.1 million in property operating expenses for properties fully operational during 2021 and 2022 is primarily due to increases in insurance expense of $1.5 million and utilities of $0.4 million, partially offset by a reduction in non-recoverable operating expenses.

As a percentage of revenue, property operating expenses decreased from 14.7% to 12.9% due to an increase in revenue in 2022.

Real estate taxes increased $19.3 million, or 226.1%, due to the following:

($ in thousands) Net change

three months ended

June 30, 2021 to 2022

Properties or components of properties sold during 2021 or 2022 $ 231

Properties under redevelopment or acquired during 2021 and/or 2022 157

Properties acquired in the Merger with RPAI 18,380

Properties fully operational during 2021 and 2022 and other 565

Total $ 19,333

The net increase of $0.6 million in real estate taxes for properties that were fully operational during 2021 and 2022 is primarily due to a slight increase in real estate tax assessments at certain properties in the portfolio.

The majority of real estate tax expense is recoverable from tenants and such recovery is reflected within rental income.

General, administrative and other expenses increased $5.7 million, or 69.2%.

This increase is primarily due to incremental head count as part of the Merger and higher share-based compensation expense.

The Company did not incur any significant merger and acquisition costs related to the Merger with RPAI during the three months ended June 30, 2022 compared to $0.8 million of merger and acquisition costs incurred during the three months ended June 30, 2021.

Depreciation and amortization expense increased $90.0 million, or 301.9%, primarily as a result of the Merger with RPAI as detailed below:

($ in thousands) Net change

three months ended

June 30, 2021 to 2022

Properties or components of properties sold during 2021 or 2022 $ 325

Properties under redevelopment or acquired during 2021 and/or 2022 1,259

Properties acquired in the Merger with RPAI 87,470

Properties fully operational during 2021 and 2022 and other 909

Total $ 89,963

The net increase of $0.9 million in depreciation and amortization at properties fully operational during 2021 and 2022 is primarily due to the timing of additions and disposals at operating properties.

Interest expense increased $13.4 million, or 109.6%, primarily due to interest costs of $13.0 million related to debt assumed in conjunction with the Merger.

Comparison of Operating Results for the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

The following table reflects changes in the components of our consolidated statements of operations for the six months ended June 30, 2022 and 2021.

Six Months Ended June 30,

($ in thousands) 2022 2021 Change

Rental income $ 384,119 $ 135,880 $ 248,239

Other property-related revenue 7,897 2,078 5,819

Fee income 4,980 948 4,032

Total revenue 396,996 138,906 258,090

Property operating 52,051 20,496 31,555

Real estate taxes 54,742 17,950 36,792

General, administrative and other 27,118 15,435 11,683

Merger and acquisition costs 898 760 138

Depreciation and amortization 241,265 60,431 180,834

Total expenses 376,074 115,072 261,002

Gain on sales of operating properties, net 27,126 26,258 868

Operating income 48,048 50,092 (2,044)

Other (expense) income:

Interest expense (51,223) (24,508) (26,715)

Income tax benefit of taxable REIT subsidiary 259 218 41

Equity in loss of unconsolidated subsidiaries (200) (562) 362

Other expense, net (103) (206) 103

Other (expense) income, net (265) 19 (284)

Net (loss) income (3,381) 25,259 (28,640)

Net loss (income) attributable to noncontrolling interests 22 (778) 800

Net income attributable to noncontrolling interests (292) (926) 634

Net (loss) income attributable to common shareholders $ (3,673) $ 24,333 $ (28,006)

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($ in thousands) Net change

six months ended

June 30, 2021 to 2022

Properties or components of properties sold during 2021 or 2022 $ 506

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Total $ 248,239

The net decrease of $1.3 million in rental income for properties fully operational during 2021 and 2022 is primarily due to a decrease in lease termination income of $1.0 million and lower tenant reimbursements due to lower recoverable real estate taxes.

These variances were partially offset by higher base minimum rent of $0.5 million due to improved tenant performance and higher overage rent of $0.4 million.

The occupancy of the fully operational properties increased from 88.4% for 2021 to 89.5% for 2022.

The net increase of $0.1 million in rental income for properties fully operational during 2021 and 2022 is primarily due to higher base minimum rent of $0.9 million due to improved tenant performance, higher overage rent of $0.4 million, and an increase in tenant reimbursements due to higher recoverable common area maintenance expenses.

These variances were partially offset by a $1.3 million decrease in lease termination income.

Other property-related revenue primarily consists of parking revenues, gains on the sale of land and other miscellaneous activity.

This revenue increased by $1.2 million primarily as a result of an increase in parking revenue of $0.4 million and specialty income of $1.0 million, partially offset by $0.3 million of gains on sales of undepreciated assets recognized during the three months ended March 31, 2021.

No such gain was recognized during the three months ended March 31, 2022.

We recorded fee income of $2.3 million and $0.4 million during the three months ended March 31, 2022 and 2021, respectively, from property management and development services provided to third parties and unconsolidated joint ventures.

This revenue increased by $5.8 million primarily as a result of an increase in ancillary income of $3.0 million, higher gains on sales of undepreciated assets of $1.1 million recognized during the six months ended June 30, 2022, and an increase in parking revenue of $0.8 million.

We recorded fee income of $5.0 million and $0.9 million during the six months ended June 30, 2022 and 2021, respectively, from property management and development services provided to third parties and unconsolidated joint ventures.

The increase in fee income is primarily related to development fee services for the development of a corporate campus for Republic Airways.

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($ in thousands) Net change

six months ended

June 30, 2021 to 2022

Properties or components of properties sold during 2021 or 2022 $ (26)

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Total $ 31,555

The net increase of $0.5 million in property operating expenses for properties fully operational during 2021 and 2022 is primarily due to increases in repairs and maintenance expense of $0.9 million and insurance expense of $0.4 million, partially offset by a reduction in non-recoverable operating expenses.

The net increase of $4.8 million in property operating expenses for properties fully operational during 2021 and 2022 is primarily due to increases in insurance expense of $1.5 million and utilities of $0.4 million, as well as an increase in non-recoverable operating expenses.

As a percentage of revenue, property operating expenses decreased from 14.8% to 13.1% due to an increase in revenue in 2022.

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($ in thousands) Net change

six months ended

June 30, 2021 to 2022

Properties or components of properties sold during 2021 or 2022 $ 516

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This increase is primarily due to incremental head count as part of the Merger and higher share-based compensation expense.

The Company incurred $0.9 million of merger and acquisition costs related to the Merger with RPAI during the three months ended March 31, 2022.

The Company incurred $0.9 million and $0.8 million of merger and acquisition costs related to the Merger with RPAI during the six months ended June 30, 2022 and 2021, respectively.

These costs primarily consist of professional fees and technology costs.

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($ in thousands) Net change

six months ended

June 30, 2021 to 2022

Properties or components of properties sold during 2021 or 2022 $ 3,599

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We define NOI as income from our real estate, including lease termination fees received from tenants, less our property operating expenses.

NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses,

including merger and acquisition costs.

NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses, including merger and acquisition costs.

We believe that NOI is helpful to investors as a measure of our operating performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as depreciation and amortization, interest expense, and impairment, if any.

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A redevelopment property is first excluded from the same property pool when the execution of a redevelopment plan is likely and we (a) begin recapturing space from tenants or (b) the contemplated plan significantly impacts the operations of the property.

For the three months ended March 31, 2022, the same property pool excludes (i) Glendale Town Center, which was reclassified from active redevelopment into our operating portfolio in December 2021, (ii) seven active development and redevelopment projects, (iii) Arcadia Village and Pebble Marketplace, which were acquired subsequent to January 1, 2021, and (iv) office properties.

The following table reflects Same Property NOI and a reconciliation to net (loss) income attributable to common shareholders for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

($ in thousands) 2022 2021 Change

Number of properties in same property pool for the period (1)

For the three and six months ended June 30, 2022, the same property pool excludes (i) Glendale Town Center and Shoppes at Quarterfield, which were reclassified from active redevelopment into our operating portfolio in December 2021 and June 2022, respectively, (ii) the multifamily rental units at One Loudoun Downtown – Pads G & H, (iii) five active development and redevelopment projects, (iv) Arcadia Village and Pebble Marketplace, which were acquired subsequent to January 1, 2021, and (v) office properties.

The following table reflects Same Property NOI and a reconciliation to net income (loss) attributable to common shareholders for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, Six Months Ended June 30,

($ in thousands) 2022 2021 Change 2022 2021 % Change

Number of properties in same property pool

for the period (1)

177 177 177 177

Leased percentage at period end 93.8 % 92.2 % 93.8 % 92.2 %

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Gain on sales of operating properties, net 23,958 50 27,126 26,258

Net loss (income) attributable to noncontrolling interests 22 (778)

Net (loss) income attributable to common shareholders $ (16,804) $ 24,577

(1) Same Property NOI excludes (i) Glendale Town Center, which was reclassified from active redevelopment into our operating portfolio in December 2021, (ii) seven active development and redevelopment projects, (iii) Arcadia Village and Pebble Marketplace, which were acquired subsequent to January 1, 2021, and (iv) office properties.

Net income attributable to noncontrolling interests

(314) (147) (292) (926)

Net income (loss) attributable to common

$ 13,131 $ (242) $ (3,673) $ 24,333

(1) Same Property NOI excludes (i) Glendale Town Center and Shoppes at Quarterfield, which were reclassified from active redevelopment into our operating portfolio in December 2021 and June 2022, respectively, (ii) the multifamily rental units at One Loudoun Downtown – Pads G & H, (iii) five active development and redevelopment projects, (iv) Arcadia Village and Pebble Marketplace, which were acquired subsequent to January 1, 2021, and (v) office properties.

(2) Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent.

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(3) Includes non-cash activity across the portfolio as well as NOI from properties not included in the same property pool, including properties sold during both periods.

Our Same Property NOI increased 5.9% for the three months ended March 31, 2022 compared to the same period of the prior year primarily due to improved collection activity and tenant performance resulting in a reduction in bad debt expense in 2022 compared to 2021, which was more heavily impacted by the COVID-19 pandemic.

Our Same Property NOI increased 3.8% for the three months ended June 30, 2022 compared to the same period of the prior year primarily due to improved occupancy driven by continued strong leasing activity.

Funds From Operations

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FFO excludes the 2021 gain on sale of the ground lease portfolios as these sales were part of our capital strategy distinct from our ongoing operating strategy of selling individual land parcels from time to time.

FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flow from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions.

computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do.

FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is

not an alternative to cash flow from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions.

Our computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do.

From time to time, the Company may report or provide guidance with respect to “NAREIT FFO as adjusted,” which removes the impact of certain non-recurring and non-operating transactions or other items the Company does not consider to be representative of its core operating results including, without limitation, gains or losses associated with the early extinguishment of debt, gains or losses associated with litigation involving the Company that is not in the normal course of business, merger and acquisition costs, the impact on earnings from employee severance, the excess of redemption value over carrying value of preferred stock redemption, and the impact of prior period bad debt or the collection of accounts receivable previously written off (“prior period collection impact”), which are not otherwise adjusted in the Company’s calculation of FFO.

Our calculations of FFO (1) and reconciliation to consolidated net income and FFO, as adjusted, for the three months ended March 31, 2022 and 2021 (unaudited) are as follows:

Three Months Ended March 31,

Our calculations of FFO (1) and reconciliation to consolidated net income and FFO, as adjusted, for the three and six months ended June 30, 2022 and 2021 (unaudited) are as follows:

Three Months Ended June 30, Six Months Ended June 30,

($ in thousands) 2022 2021 2022 2021

Net (loss) income $ (16,826) $ 25,355

Net income (loss) $ 13,445 $ (95) $ (3,381) $ 25,259

net income attributable to noncontrolling interests in properties (182) (132) (326) (264)

gain on sales of operating properties, net (23,958) (50) (27,126) (26,258)

depreciation and amortization of consolidated and unconsolidated entities,

net of noncontrolling interests

depreciation and amortization of consolidated and

unconsolidated entities, net of noncontrolling interests

120,128 30,142 241,975 61,113

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For informational purposes, we also provide Annualized Adjusted EBITDA, adjusted as described above.

We believe this supplemental information provides a meaningful measure of our operating performance.

We believe this supplemental information provides a meaningful measure of our operating

We believe presenting EBITDA and the related measures in this manner allows investors and other interested parties to form a more meaningful assessment of our operating results.

The following table presents a reconciliation of our EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA to net income (the most directly comparable GAAP measure) and a calculation of Net Debt to Adjusted EBITDA:

($ in thousands) Three Months Ended March 31, 2022

Net loss $ (16,826)

($ in thousands) Three Months Ended June 30, 2022

Net income $ 13,445

Depreciation and amortization 119,761

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Partner share of consolidated joint venture debt (2)

cash, cash equivalents, restricted cash and short-term deposits (207,190)

cash, cash equivalents, and restricted cash (99,152)

debt discounts, premiums and issuance costs, net (44,717)

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Net Debt to Adjusted EBITDA 5.3x

(1) Represents Adjusted EBITDA for the three months ended March 31, 2022 (as shown in the table above) multiplied by four.

(1) Represents Adjusted EBITDA for the three months ended June 30, 2022 (as shown in the table above) multiplied by four.

(2) Partner share of consolidated joint venture debt is calculated based upon the partner’s pro-rata ownership of the joint venture, multiplied by the related secured debt balance.

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One of the benefits of the Merger was a strengthened balance sheet to provide the Company with increased liquidity, a well-staggered debt maturity ladder, and an appropriately sized development pipeline.

As part of the Merger, we assumed an $850.0 million revolving line of credit, of which the borrowing capacity was $713.5 million as of March 31, 2022, along with other indebtedness.

As of March 31, 2022, we had approximately $74.3 million in cash on hand, $7.8 million in restricted cash and escrow deposits, $713.5 million of remaining availability under our Revolving Facility, $125.0 million of short-term deposits, and $83.5 million of debt maturities for the remainder of 2022.

Subsequent to March 31, 2022, we used the $125.0 million short-term deposit that matured on April 7, 2022 to repay borrowings on our revolving line of credit.

As part of the Merger, we assumed an $850.0 million unsecured revolving credit facility (the “Revolving Facility”), of which the borrowing capacity was $848.5 million as of June 30, 2022, along with other indebtedness.

As of June 30, 2022, we had approximately $90.8 million in cash on hand, $8.4 million in restricted cash and escrow deposits, $848.5 million of remaining availability under the Revolving Facility, and only $46.0 million of debt maturities due for the remainder of 2022.

During the three months ended June 30, 2022, we used the $125.0 million short-term deposit that matured on April 7, 2022 to repay borrowings on our revolving line of credit.

We believe we will have adequate liquidity over the next 12 months and beyond to operate our business and meet our cash requirements.

However, because we do not know the ultimate severity and length of the COVID-19 pandemic or the short- or long-term impact it may have on consumer behavior, and thus cannot predict the impact it will have on our tenants and on the debt and equity capital markets, we cannot estimate the ultimate impact it will have on our liquidity and capital resources.

However, because we do not know the ultimate severity and length of the COVID-19 pandemic or the short- or long-term impact it may have on consumer behavior,

and thus cannot predict the impact it will have on our tenants and on the debt and equity capital markets, we cannot estimate the ultimate impact it will have on our liquidity and capital resources.

Our Principal Capital Resources

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We continue to focus on a balanced approach to growth and staggering debt maturities in order to retain our financial flexibility.

As of March 31, 2022, we had approximately $713.5 million available under our Revolving Facility for future borrowings.

We also had $199.3 million in cash, cash equivalents and short-term deposits as of March 31, 2022.

We were in compliance with all applicable financial covenants under our Revolving Facility, unsecured term loans and senior unsecured notes as of March 31, 2022.

As of June 30, 2022, we had approximately $848.5 million available under the Revolving Facility for future borrowings.

We also had $90.8 million in cash and cash equivalents as of June 30, 2022.

We were in compliance with all applicable financial covenants under the Revolving Facility, unsecured term loans and senior unsecured notes as of June 30, 2022.

Subsequent to June 30, 2022, the Operating Partnership entered into the Second Amendment (the “Second Amendment”) to the sixth amended and restated credit agreement with a syndicate of financial institutions to provide for a $250.0 million increase to the Revolving Facility, resulting in a $1.1 billion unsecured revolving credit facility (the “2022 Revolving Facility”).

Under the Second Amendment, the Operating Partnership has the option to increase the 2022 Revolving Facility to an aggregate committed amount of up to $1.7 billion upon the Operating Partnership’s request, subject to certain conditions.

In addition, the Operating Partnership issued a seven-year $300.0 million unsecured term loan, the proceeds of which were used to repay the Operating Partnership’s existing $200.0 million unsecured term loan that was scheduled to mature on November 22, 2023 and for general corporate purposes.

On November 16, 2021, the Company filed with the SEC a shelf registration statement on Form S-3, which is effective for a term of three years, relating to the offer and sale, from time to time, of an indeterminate amount of equity and debt securities.

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and Raymond James & Associates, Inc., pursuant to which the Company may sell, from time to time, up to an aggregate sales price of $150.0 million of its common shares of beneficial interest, $0.01 par value per share under an at-the-market offering program (the “ATM Program”).

On November 30, 2021, the Company and the Operating Partnership amended the Equity Distribution Agreement to reflect the filing by the Company and the Operating Partnership of a shelf registration statement on November 16, 2021 with the SEC.

As of March 31, 2022, the Company has not sold any common shares under the ATM Program.

On November 30, 2021, the Company and the Operating Partnership amended the Equity Distribution Agreement to reflect their filing of a shelf registration statement on November 16, 2021 with the SEC.

As of June 30, 2022, the Company has not sold any common shares under the ATM Program.

The Operating Partnership intends to use the net proceeds, if any, to repay borrowings under its Revolving Facility and other indebtedness and for working capital and other general corporate purposes.

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Near-Term Debt Maturities .

As of March 31, 2022, we had $256.9 million of secured debt scheduled to mature prior to March 31, 2023, excluding scheduled monthly principal payments.

We believe we have sufficient liquidity to repay this obligation from cash on hand, short-term deposits and, if needed, borrowings on our Revolving Facility.

As of June 30, 2022, we had $237.6 million of secured debt scheduled to mature prior to June 30, 2023, excluding scheduled monthly principal payments.

We believe we have sufficient liquidity to repay this obligation from cash on hand and borrowings on the Revolving Facility.

Other Short-Term Liquidity Needs.

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Such requirements cause us to have substantial liquidity needs over both the short and long term.

Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest payments of approximately $85.0 million and scheduled principal payments on our debt of approximately $2.6 million for the remainder of 2022, expected dividend payments to our common shareholders and Common Unit holders, and recurring capital expenditures.

In February 2022, our Board of Trustees declared a cash distribution of $0.20 per common share and Common Unit for the first quarter of 2022.

This distribution was paid on April 15, 2022 to common shareholders and Common Unit holders of record

as of April 8, 2022.

Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest and principal payments on our debt of approximately $60.0 million and $2.0 million, respectively, for the remainder of 2022, expected dividend payments to our common shareholders and Common Unit holders, and recurring capital expenditures.

In May 2022, our Board of Trustees declared a cash distribution of $0.21 per common share and Common Unit for the second quarter of 2022.

This distribution was paid on July 15, 2022 to common shareholders and Common Unit holders of record as of July 8, 2022.

Future distributions, if any, are at the discretion of the Board of Trustees, who will continue to evaluate our sources and uses of capital, liquidity position, operating fundamentals, maintenance of our REIT qualification and other factors they may deem relevant.

We believe we have sufficient liquidity to pay any dividend from cash on hand and borrowings on the Revolving Facility.

Other short-term liquidity needs include expenditures for tenant improvements, external leasing commissions and recurring capital expenditures.

During the three months ended March 31, 2022, we incurred $3.7 million for recurring capital expenditures on operating properties, $13.0 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of March 31, 2022 (excluding development and redevelopment properties).

During the six months ended June 30, 2022, we incurred $7.9 million for recurring capital expenditures on operating properties and $29.3 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of June 30, 2022 (excluding development and redevelopment properties).

We currently anticipate incurring approximately $100 million of additional major tenant improvement costs related to executed leases for space that is currently vacant at a number of our operating properties over the next 12 to 18 months.

We believe we have the ability to fund these costs through cash flow from operations or by borrowing on the Revolving Facility.

As of March 31, 2022, we had seven development projects under construction, including five projects assumed in the Merger with RPAI.

Total estimated costs for these projects are $176.1 million, of which our share is estimated to be $112.2 million.

As of March 31, 2022, we have incurred $21.0 million of these costs.

We anticipate incurring the majority of the remaining costs for these projects over the next 24 months and believe we have the ability to fund these projects through cash flow from operations or by borrowing on the Revolving Facility.

We believe we have the ability to fund these costs through cash flow from operations or borrowings on the Revolving Facility.

During the three months ended June 30, 2022, we completed major redevelopment construction activities at Shoppes at Quarterfield and the residential portion of the project at One Loudoun Downtown and placed these projects in service.

As of June 30, 2022, we had five development projects under construction.

Total estimated costs for the five projects are $159.8 million, of which our share is estimated to be $95.9 million.

As of June 30, 2022, we have incurred $15.8 million of these costs.

Share Repurchase Program

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In February 2022, the Company extended its Share Repurchase Program for an additional year and it will now terminate on February 28, 2023, if not terminated or extended prior to that date.

In April 2022, the Company’s Board of Trustees authorized a $150.0 million increase to the size of the Share Repurchase Program, authorizing share repurchases up to an aggregate $300.0 million.

As of March 31, 2022, the Company has not repurchased any shares under its Share Repurchase Program.

The Company intends to fund any future repurchases under the Share Purchase Program with cash on hand or availability under the Revolving Facility, subject to any applicable restrictions.

In April 2022, the Company’s Board of Trustees authorized a $150.0 million increase to the size of the Share Repurchase Program, authorizing share repurchases up to an aggregate of $300.0 million.

As of June 30, 2022, the Company has not repurchased any shares under its Share Repurchase Program.

The Company intends to fund any future repurchases under the Share Repurchase Program with cash on hand or availability under the Revolving Facility, subject to any applicable restrictions.

The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements and other factors.

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It is unlikely that we would have sufficient funds on hand to meet these long-term capital requirements.

We would have to satisfy these needs through additional borrowings, sales of common or preferred shares, issuance of Operating Partnership units, cash generated through property dispositions and/or participation in joint venture arrangements.

We would have to satisfy these needs through additional borrowings, sales

of common or preferred shares, issuance of Operating Partnership units, cash generated through property dispositions and/or participation in joint venture arrangements.

We cannot be certain that we would have access to these sources of capital on satisfactory terms, if at all, to fund our long-term liquidity requirements.

We evaluate all future opportunities against pre-established criteria including, but not limited to, location, demographics, expected return, tenant credit quality, tenant relationships, and amount of existing retail space.

Our ability to access the capital markets will be dependent on a number of factors, including general capital market conditions.

Potential Debt Repurchase.

Potential Debt Repurchases.

We may from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to repurchase our senior unsecured notes maturing at various dates through September 2030 in open-market transactions, by tender offer or otherwise, as market conditions warrant.

Commitments under Ground Leases.

We are obligated under 12 ground leases for approximately 98 acres of land as of March 31, 2022.

We are obligated under 12 ground leases for approximately 98 acres of land as of June 30, 2022.

Most of these ground leases require fixed annual rent payments and the expiration dates of the remaining initial terms of these ground leases range from 2023 to 2092.

Capital Expenditures on Consolidated Properties

The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the three months ended March 31, 2022:

($ in thousands) Three Months Ended March 31, 2022

The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the six months ended June 30, 2022:

($ in thousands) Six Months Ended

June 30, 2022

Active development and redevelopment projects $ 23,697

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We capitalize certain indirect costs such as interest, payroll, and other general and administrative costs related to these development activities.

If we had experienced a 10% reduction in development and redevelopment activities, without a corresponding decrease in indirect project costs, we would have recorded additional expense of $0.1 million for the three months ended March 31, 2022.

Debt Maturities

The following table presents maturities of mortgage debt and corporate debt as of March 31, 2022, presented on a calendar year basis:

The following table presents maturities of mortgage and corporate debt as of June 30, 2022, presented on a calendar year basis:

($ in thousands)

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Failure to comply with the obligations under our debt agreements (including payment obligations) could cause an event of default under such debt, which, among other things, could result in the loss of title to the assets securing the debt, acceleration of the payment of all principal and interest and/or termination of the agreements, or exposure to the risk of foreclosure.

In addition, certain of our variable rate loans contain cross-default provisions that provide that a violation by us of any financial covenant set forth in our Revolving Facility will constitute an “Event of Default” under the loans, which could allow the lenders to accelerate the amounts due under our debt agreements if we fail to satisfy these financial covenants.

In addition, certain of our variable rate loans contain cross-default provisions that provide that a violation by us of any financial covenant set forth in the Revolving Facility will constitute an “Event of Default” under the loans, which could allow the lenders to accelerate the amounts due under our debt agreements if we fail to satisfy these financial covenants.

See “Item 1A.

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We have received investment grade corporate credit ratings from three nationally recognized credit rating agencies.

These ratings did not change as of March 31, 2022.

These ratings did not change as of June 30, 2022.

In the future, the ratings could change based upon, among other things, the impact that prevailing economic conditions may have on our results of operations and financial condition.

Credit rating reductions by one or more rating agencies could also adversely affect our access to funding sources, the cost and other terms of obtaining funding, as well as our overall financial condition, operating results and cash flow.

As of March 31, 2022, we had cash, cash equivalents and restricted cash of $82.2 million.

As of June 30, 2022, we had cash, cash equivalents and restricted cash of $99.2 million.

We may be subject to concentrations of credit risk with regard to our cash and cash equivalents.

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While we attempt to limit our exposure at any point in time, occasionally such cash and investments may temporarily be in excess of FDIC and SIPC insurance limits.

We also maintain certain compensating balances

in several financial institutions in support of borrowings from those institutions.

We also maintain certain compensating balances in several financial institutions in support of borrowings from those institutions.

Such compensating balances were not material to the consolidated balance sheets.

Comparison of the Three Months Ended March 31, 2022 to the Three Months Ended March 31, 2021

Cash provided by operating activities was $49.6 million for the three months ended March 31, 2022 and $31.3 million for the same period of 2021.

The cash flows were positively impacted by the Merger, which generated incremental operating income, along with improved collection activity including previously deferred rent from the COVID-19 pandemic.

Comparison of the Six Months Ended June 30, 2022 to the Six Months Ended June 30, 2021

Cash provided by operating activities was $154.3 million for the six months ended June 30, 2022 and $67.4 million for the same period of 2021.

The cash flows were positively impacted by the Merger, which generated significant incremental operating income, along with improved collection activity including previously deferred rent from the COVID-19 pandemic.

This improvement was partially offset by costs paid as part of the Merger along with higher interest costs related to the debt assumed in the Merger.

Cash used in investing activities was $62.2 million for the three months ended March 31, 2022 compared to cash provided by investing activities of $33.9 million for the same period of 2021.

Cash provided by investing activities was $68.6 million for the six months ended June 30, 2022 compared to cash used in investing activities of $99.5 million for the same period of 2021.

Highlights of significant cash sources and uses in investing activities are as follows:

• We acquired Pebble Marketplace and deposited funds for the acquisition of a two-tenant building adjacent to MacArthur Crossing totaling $44.3 million during the three months ended March 31, 2022;

• We received net proceeds of $39.9 million related to the sale of 16 ground leases during the three months ended March 31, 2021;

• Capital expenditures increased by $15.9 million, partially offset by a change in construction payables of $1.3 million for the three months ended March 31, 2022.

Cash used in financing activities was $5.6 million for the three months ended March 31, 2022 compared to cash provided by financing activities of $120.8 million for the same period of 2021.

• We received the proceeds from a $125.0 million short-term deposit that matured on April 7, 2022;

• We acquired Pebble Marketplace and the two-tenant building adjacent to MacArthur Crossing totaling $65.8 million during the six months ended June 30, 2022;

• We received net proceeds of $65.4 million from the sale of Plaza Del Lago and a portion of Hamilton Crossing Centre during the six months ended June 30, 2022 compared to net proceeds of $41.1 million related to the sale of 16 ground leases and a parcel of land during the six months ended June 30, 2021;

• Capital expenditures increased by $37.5 million, partially offset by a change in construction payables of $0.7 million for the six months ended June 30, 2022.

Cash used in financing activities was $224.2 million for the six months ended June 30, 2022 compared to cash provided by financing activities of $79.6 million for the same period of 2021.

Highlights of significant cash sources and uses in financing activities are as follows:

• We borrowed $80.0 million on the Revolving Facility and used a portion of the proceeds to repay $42.2 million of mortgage debt during the three months ended March 31, 2022 compared to $25.6 million of debt repayments during the three months ended March 31, 2021;

• We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $42.2 million for the three months ended March 31, 2022 compared to distributions of $13.5 million for the three months ended March 31, 2021;

• In March 2021, we issued $175.0 million of exchangeable senior notes in a private placement offering to fund a portion of our 2022 debt maturities and other borrowings.

• We repaid $135.8 million of debt, net of borrowings on the Revolving Facility, during the six months ended June 30, 2022 compared to borrowings of $123.5 million on the Revolving Facility, net of debt repayments, during the six months ended June 30, 2021;

• We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $86.6 million for the six months ended June 30, 2022 compared to distributions of $28.4 million for the six months ended June 30, 2021;

• In 2021, we issued $175.0 million of exchangeable senior notes in a private placement offering to fund a portion of our 2022 debt maturities and other borrowings.

In connection with this issuance, we incurred transaction costs of $5.3 million and purchased capped calls for $9.8 million.

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The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.

There were no changes made by management to the critical accounting policies in the three months ended March 31, 2022.

There were no changes made by management to the critical accounting policies in the three months ended June 30, 2022.

We discuss the most critical estimates in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022.

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-Q

Item 2. Management’s Discussion and Analysis