KITE REALTY GROUP TRUST 10-Q

ITEM 1. FINANCIAL STATEMENTS KITE REALTY GROUP TRUST Consolidated Balance Sheets (Unaudited) ($ in thousands, except share and per share data) September 30, 2022 December 31, 2021 Assets: Investment properties, at cost $ 7,715,516 $ 7,592,348 Less: accumulated depreciation ( 1,093,912 ) ( 884,809 ) Net investment properties 6,621,604 6,707,539 Cash and cash equivalents 88,447 93,241 Tenant and other receivables, including accrued straight-line rent of $ 40,716 and $ 28,071 , respectively 86,593 68,444 Restricted cash and escrow deposits 8,060 7,122 Deferred costs, net 441,924 541,518 Short-term deposits — 125,000 Prepaid and other assets 142,757 84,826 Investments in unconsolidated subsidiaries 10,560 11,885 Total assets $ 7,399,945 $ 7,639,575 Liabilities and Equity: Liabilities: Mortgage and other indebtedness, net $ 3,012,870 $ 3,150,808 Accounts payable and accrued expenses 152,015 184,982 Deferred revenue and other liabilities 300,009 321,419 Total liabilities 3,464,894 3,657,209 Commitments and contingencies Limited Partners’ interests in Operating Partnership and other 56,954 55,173 Equity: Common shares, $ 0.01 par value, 490,000,000 shares authorized, 219,098,394 and 218,949,569 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively 2,191 2,189 Additional paid-in capital 4,903,773 4,898,673 Accumulated other comprehensive income (loss) 72,693 ( 15,902 ) Accumulated deficit ( 1,105,845 ) ( 962,913 ) Total shareholders’ equity 3,872,812 3,922,047 Noncontrolling interests 5,285 5,146 Total equity 3,878,097 3,927,193 Total liabilities and equity $ 7,399,945 $ 7,639,575 The accompanying notes are an integral part of these consolidated financial statements. 4 KITE REALTY GROUP TRUST Consolidated Statements of Operations and Comprehensive Income (Unaudited) ($ in thousands, except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue: Rental income $ 195,675 $ 70,216 $ 582,772 $ 206,097 Other property-related revenue 3,013 1,054 7,932 3,133 Fee income 1,623 195 6,603 1,144 Total revenue 200,311 71,465 597,307 210,374 Expenses: Property operating 25,507 10,482 77,558 30,978 Real estate taxes 25,703 8,624 80,445 26,574 General, administrative and other 14,859 8,241 41,977 23,676 Merger and acquisition costs 108 9,198 1,006 9,958 Depreciation and amortization 115,831 30,193 357,096 90,625 Total expenses 182,008 66,738 558,082 181,811 Gain on sales of operating properties, net — 1,260 27,126 27,517 Operating income 18,303 5,987 66,351 56,080 Other (expense) income: Interest expense ( 26,226 ) ( 12,878 ) ( 77,449 ) ( 37,386 ) Income tax benefit of taxable REIT subsidiary — 91 259 308 Equity in earnings (loss) of unconsolidated subsidiaries 144 ( 196 ) ( 56 ) ( 758 ) Other income (expense), net 58 168 ( 207 ) 189 Net (loss) income ( 7,721 ) ( 6,828 ) ( 11,102 ) 18,433 Net income attributable to noncontrolling interests ( 116 ) ( 132 ) ( 408 ) ( 1,058 ) Net (loss) income attributable to common shareholders $ ( 7,837 ) $ ( 6,960 ) $ ( 11,510 ) $ 17,375 Net (loss) income per common share – basic $ ( 0.04 ) $ ( 0.08 ) $ ( 0.05 ) $ 0.21 Net (loss) income per common share – diluted $ ( 0.04 ) $ ( 0.08 ) $ ( 0.05 ) $ 0.20 Weighted average common shares outstanding – basic 219,103,669 84,556,689 219,053,320 84,468,519 Weighted average common shares outstanding – diluted 219,103,669 84,556,689 219,053,320 85,383,849 Dividends declared per common share $ 0.21 $ 0.18 $ 0.60 $ 0.50 Net (loss) income $ ( 7,721 ) $ ( 6,828 ) $ ( 11,102 ) $ 18,433 Change in fair value of derivatives 33,131 1,919 89,628 8,653 Total comprehensive income (loss) 25,410 ( 4,909 ) 78,526 27,086 Comprehensive income attributable to noncontrolling interests ( 511 ) ( 173 ) ( 1,441 ) ( 1,302 ) Comprehensive income (loss) attributable to the Company $ 24,899 $ ( 5,082 ) $ 77,085 $ 25,784 The accompanying notes are an integral part of these consolidated financial statements. 5 KITE REALTY GROUP TRUST Consolidated Statements of Shareholders’ Equity (Unaudited) (in thousands, except share data) Common Shares Additional Paid-in Capital Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Shares Amount Balance at December 31, 2021 218,949,569 $ 2,189 $ 4,898,673 $ ( 15,902 ) $ ( 962,913 ) $ 3,922,047 Stock compensation activity 93,334 1 1,821 — — 1,822 Other comprehensive income — — — 38,713 — 38,713 Distributions declared to common shareholders — — — — ( 41,600 ) ( 41,600 ) Net loss attributable to common shareholders — — — — ( 16,804 ) ( 16,804 ) Adjustment to redeemable noncontrolling interests — — ( 5,597 ) — — ( 5,597 ) Balance at March 31, 2022 219,042,903 $ 2,190 $ 4,894,897 $ 22,811 $ ( 1,021,317 ) $ 3,898,581 Stock compensation activity 58,095 1 2,850 — — 2,851 Other comprehensive income — — 17,146 — 17,146 Distributions declared to common shareholders — — — — ( 43,808 ) ( 43,808 ) Net income attributable to common shareholders — — — — 13,131 13,131 Adjustment to redeemable noncontrolling interests — — 3,239 — — 3,239 Balance at June 30, 2022 219,100,998 $ 2,191 $ 4,900,986 $ 39,957 $ ( 1,051,994 ) $ 3,891,140 Stock compensation activity ( 2,604 ) — 2,881 — — 2,881 Other comprehensive income — — — 32,736 — 32,736 Distributions declared to common shareholders — — — — ( 46,014 ) ( 46,014 ) Net loss attributable to common shareholders — — — — ( 7,837 ) ( 7,837 ) Adjustment to redeemable noncontrolling interests — — ( 94 ) — — ( 94 ) Balances, September 30, 2022 219,098,394 $ 2,191 $ 4,903,773 $ 72,693 $ ( 1,105,845 ) $ 3,872,812 Balance at December 31, 2020 84,187,999 $ 842 $ 2,085,003 $ ( 30,885 ) $ ( 824,306 ) $ 1,230,654 Stock compensation activity 182,486 2 1,464 — — 1,466 Other comprehensive income — — — 6,537 — 6,537 Distributions declared to common shareholders — — — — ( 12,992 ) ( 12,992 ) Net income attributable to common shareholders — — — — 24,577 24,577 Purchase of capped calls — — ( 9,800 ) — — ( 9,800 ) Exchange of redeemable noncontrolling interests for common shares 115,697 1 2,061 — — 2,062 Adjustment to redeemable noncontrolling interests — — ( 10,633 ) — — ( 10,633 ) Balance at March 31, 2021 84,486,182 $ 845 $ 2,068,095 $ ( 24,348 ) $ ( 812,721 ) $ 1,231,871 Stock compensation activity 35,467 — 1,977 — — 1,977 Other comprehensive loss — — — ( 6 ) — ( 6 ) Distributions declared to common shareholders — — — — ( 14,363 ) ( 14,363 ) Net loss attributable to common shareholders — — — — ( 242 ) ( 242 ) Exchange of redeemable noncontrolling interests for common shares 25,000 — 530 — — 530 Adjustment to redeemable noncontrolling interests — — ( 6,292 ) — — ( 6,292 ) Balance at June 30, 2021 84,546,649 $ 845 $ 2,064,310 $ ( 24,354 ) $ ( 827,326 ) $ 1,213,475 Stock compensation activity 2,254 — 1,989 — — 1,989 Other comprehensive income — — — 1,878 — 1,878 Distributions to common shareholders — — — — ( 15,221 ) ( 15,221 ) Net loss attributable to common shareholders — — — — ( 6,960 ) ( 6,960 ) Exchange of redeemable noncontrolling interests for common shares 26,538 1 536 — — 537 Adjustment to redeemable noncontrolling interests — — 3,148 — — 3,148 Balance at September 30, 2021 84,575,441 $ 846 $ 2,069,983 $ ( 22,476 ) $ ( 849,507 ) $ 1,198,846 The accompanying notes are an integral part of these consolidated financial statements. 6 KITE REALTY GROUP TRUST Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2022 2021 Cash flows from operating activities: Net (loss) income $ ( 11,102 ) $ 18,433 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 359,265 92,587 Gain on sales of operating properties, net ( 27,126 ) ( 27,517 ) Straight-line rent ( 12,653 ) ( 1,215 ) Compensation expense for equity awards 8,209 5,667 Amortization of debt fair value adjustments ( 10,204 ) ( 333 ) Amortization of in-place lease liabilities ( 3,143 ) ( 1,432 ) Changes in assets and liabilities: Tenant receivables ( 7,021 ) 8,449 Deferred costs and other assets ( 15,691 ) ( 1,951 ) Accounts payable, accrued expenses, deferred revenue and other liabilities ( 18,105 ) 11,143 Net cash provided by operating activities 262,429 103,831 Cash flows from investing activities: Acquisitions of interests in properties ( 100,142 ) — Capital expenditures ( 106,536 ) ( 36,935 ) Net proceeds from sales of land 3,680 47,706 Net proceeds from sales of operating properties 65,408 2,484 Investment in short-term deposits 125,000 ( 125,000 ) Small business loan repayments 513 541 Change in construction payables ( 2,636 ) 2,141 Distribution from unconsolidated joint venture 1,144 — Capital contribution to unconsolidated joint venture ( 125 ) — Net cash used in investing activities ( 13,694 ) ( 109,063 ) Cash flows from financing activities: Proceeds from issuance of common shares, net 20 31 Repurchases of common shares upon the vesting of restricted shares ( 1,144 ) ( 458 ) Purchase of capped calls — ( 9,800 ) Debt and equity issuance costs ( 4,922 ) ( 6,017 ) Loan proceeds 445,000 175,000 Loan payments ( 558,151 ) ( 52,096 ) Distributions paid – common shareholders ( 131,422 ) ( 42,576 ) Distributions paid – redeemable noncontrolling interests ( 1,972 ) ( 1,639 ) Net cash (used in) provided by financing activities ( 252,591 ) 62,445 Net change in cash, cash equivalents and restricted cash ( 3,856 ) 57,213 Cash, cash equivalents and restricted cash, beginning of period 100,363 46,586 Cash, cash equivalents and restricted cash, end of period $ 96,507 $ 103,799 Non-cash investing and financing activities Exchange of redeemable noncontrolling interests for common shares $ — $ 3,129 The accompanying notes are an integral part of these consolidated financial statements. 7 KITE REALTY GROUP, L.P. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (in thousands, except unit data) September 30, 2022 December 31, 2021 Assets: Investment properties, at cost $ 7,715,516 $ 7,592,348 Less: accumulated depreciation ( 1,093,912 ) ( 884,809 ) Net investment properties 6,621,604 6,707,539 Cash and cash equivalents 88,447 93,241 Tenant and other receivables, including accrued straight-line rent of $ 40,716 and $ 28,071 , respectively 86,593 68,444 Restricted cash and escrow deposits 8,060 7,122 Deferred costs, net 441,924 541,518 Short-term deposits — 125,000 Prepaid and other assets 142,757 84,826 Investments in unconsolidated subsidiaries 10,560 11,885 Total assets $ 7,399,945 $ 7,639,575 Liabilities and Equity: Liabilities: Mortgage and other indebtedness, net $ 3,012,870 $ 3,150,808 Accounts payable and accrued expenses 152,015 184,982 Deferred revenue and other liabilities 300,009 321,419 Total liabilities 3,464,894 3,657,209 Commitments and contingencies Limited Partners’ interests in Operating Partnership and other 56,954 55,173 Partners’ Equity: Common equity, 219,098,394 and 218,949,569 units issued and outstanding at September 30, 2022 and December 31, 2021, respectively 3,800,119 3,937,949 Accumulated other comprehensive income (loss) 72,693 ( 15,902 ) Total Partners’ equity 3,872,812 3,922,047 Noncontrolling interests 5,285 5,146 Total equity 3,878,097 3,927,193 Total liabilities and equity $ 7,399,945 $ 7,639,575 The accompanying notes are an integral part of these consolidated financial statements. 8 KITE REALTY GROUP, L.P. AND SUBSIDIARIES Consolidated Statements of Operations and Comprehensive Income (Unaudited) (in thousands, except unit and per unit data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue: Rental income $ 195,675 $ 70,216 $ 582,772 $ 206,097 Other property-related revenue 3,013 1,054 7,932 3,133 Fee income 1,623 195 6,603 1,144 Total revenue 200,311 71,465 597,307 210,374 Expenses: Property operating 25,507 10,482 77,558 30,978 Real estate taxes 25,703 8,624 80,445 26,574 General, administrative and other 14,859 8,241 41,977 23,676 Merger and acquisition costs 108 9,198 1,006 9,958 Depreciation and amortization 115,831 30,193 357,096 90,625 Total expenses 182,008 66,738 558,082 181,811 Gain on sales of operating properties, net — 1,260 27,126 27,517 Operating income 18,303 5,987 66,351 56,080 Other (expense) income: Interest expense ( 26,226 ) ( 12,878 ) ( 77,449 ) ( 37,386 ) Income tax benefit of taxable REIT subsidiary — 91 259 308 Equity in earnings (loss) of unconsolidated subsidiaries 144 ( 196 ) ( 56 ) ( 758 ) Other income (expense), net 58 168 ( 207 ) 189 Net (loss) income ( 7,721 ) ( 6,828 ) ( 11,102 ) 18,433 Net income attributable to noncontrolling interests ( 209 ) ( 132 ) ( 535 ) ( 396 ) Net (loss) income attributable to common unitholders $ ( 7,930 ) $ ( 6,960 ) $ ( 11,637 ) $ 18,037 Allocation of net (loss) income: Limited Partners $ ( 93 ) $ — $ ( 127 ) $ 662 Parent Company ( 7,837 ) ( 6,960 ) ( 11,510 ) 17,375 $ ( 7,930 ) $ ( 6,960 ) $ ( 11,637 ) $ 18,037 Net (loss) income per common unit – basic and diluted $ ( 0.04 ) $ ( 0.08 ) $ ( 0.05 ) $ 0.21 Weighted average common units outstanding – basic 222,059,366 87,003,748 221,791,428 86,951,170 Weighted average common units outstanding – diluted 222,059,366 87,003,748 221,791,428 87,866,501 Distributions declared per common unit $ 0.21 $ 0.18 $ 0.60 $ 0.50 Net (loss) income $ ( 7,721 ) $ ( 6,828 ) $ ( 11,102 ) $ 18,433 Change in fair value of derivatives 33,131 1,919 89,628 8,653 Total comprehensive income (loss) 25,410 ( 4,909 ) 78,526 27,086 Comprehensive income attributable to noncontrolling interests ( 209 ) ( 132 ) ( 535 ) ( 396 ) Comprehensive income (loss) attributable to common unitholders $ 25,201 $ ( 5,041 ) $ 77,991 $ 26,690 The accompanying notes are an integral part of these consolidated financial statements. 9 KITE REALTY GROUP, L.P. AND SUBSIDIARIES Consolidated Statements of Partners’ Equity (Unaudited) (in thousands) General Partner Total Common Equity Accumulated Other Comprehensive (Loss) Income Balance at December 31, 2021 $ 3,937,949 $ ( 15,902 ) $ 3,922,047 Stock compensation activity 1,822 — 1,822 Other comprehensive income attributable to Parent Company — 38,713 38,713 Distributions declared to Parent Company ( 41,600 ) — ( 41,600 ) Net loss attributable to Parent Company ( 16,804 ) — ( 16,804 ) Adjustment to redeemable noncontrolling interests ( 5,597 ) — ( 5,597 ) Balance at March 31, 2022 $ 3,875,770 $ 22,811 $ 3,898,581 Stock compensation activity 2,851 — 2,851 Other comprehensive income attributable to Parent Company — 17,146 17,146 Distributions declared to Parent Company ( 43,808 ) — ( 43,808 ) Net income attributable to Parent Company 13,131 — 13,131 Adjustment to redeemable noncontrolling interests 3,239 — 3,239 Balance at June 30, 2022 $ 3,851,183 $ 39,957 $ 3,891,140 Stock compensation activity 2,881 — 2,881 Other comprehensive income attributable to Parent Company — 32,736 32,736 Distributions declared to Parent Company ( 46,014 ) — ( 46,014 ) Net loss attributable to Parent Company ( 7,837 ) — ( 7,837 ) Adjustment to redeemable noncontrolling interests ( 94 ) — ( 94 ) Balance at September 30, 2022 $ 3,800,119 $ 72,693 $ 3,872,812 Balance at December 31, 2020 $ 1,261,539 $ ( 30,885 ) $ 1,230,654 Stock compensation activity 1,466 — 1,466 Other comprehensive income attributable to Parent Company — 6,537 6,537 Distributions declared to Parent Company ( 12,992 ) — ( 12,992 ) Net income attributable to Parent Company 24,577 — 24,577 Purchase of capped calls ( 9,800 ) — ( 9,800 ) Conversion of Limited Partner Units to shares of the Parent Company 2,062 — 2,062 Adjustment to redeemable noncontrolling interests ( 10,633 ) — ( 10,633 ) Balance at March 31, 2021 $ 1,256,219 $ ( 24,348 ) $ 1,231,871 Stock compensation activity 1,977 — 1,977 Other comprehensive loss attributable to Parent Company — ( 6 ) ( 6 ) Distributions declared to Parent Company ( 14,363 ) — ( 14,363 ) Net loss attributable to Parent Company ( 242 ) — ( 242 ) Conversion of Limited Partner Units to shares of the Parent Company 530 — 530 Adjustment to redeemable noncontrolling interests ( 6,292 ) — ( 6,292 ) Balance at June 30, 2021 $ 1,237,829 $ ( 24,354 ) $ 1,213,475 Stock compensation activity 1,989 — 1,989 Other comprehensive income attributable to Parent Company — 1,878 1,878 Distributions declared to Parent Company ( 15,221 ) — ( 15,221 ) Net loss attributable to Parent Company ( 6,960 ) — ( 6,960 ) Conversion of Limited Partner Units to shares of the Parent Company 537 — 537 Adjustment to redeemable noncontrolling interests 3,148 — 3,148 Balance at September 30, 2021 $ 1,221,322 $ ( 22,476 ) $ 1,198,846 The accompanying notes are an integral part of these consolidated financial statements. 10 KITE REALTY GROUP, L.P. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2022 2021 Cash flows from operating activities: Net (loss) income $ ( 11,102 ) $ 18,433 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 359,265 92,587 Gain on sales of operating properties, net ( 27,126 ) ( 27,517 ) Straight-line rent ( 12,653 ) ( 1,215 ) Compensation expense for equity awards 8,209 5,667 Amortization of debt fair value adjustments ( 10,204 ) ( 333 ) Amortization of in-place lease liabilities ( 3,143 ) ( 1,432 ) Changes in assets and liabilities: Tenant receivables ( 7,021 ) 8,449 Deferred costs and other assets ( 15,691 ) ( 1,951 ) Accounts payable, accrued expenses, deferred revenue and other liabilities ( 18,105 ) 11,143 Net cash provided by operating activities 262,429 103,831 Cash flows from investing activities: Acquisition of interests in properties ( 100,142 ) — Capital expenditures ( 106,536 ) ( 36,935 ) Net proceeds from sales of land 3,680 47,706 Net proceeds from sales of operating properties 65,408 2,484 Investment in short-term deposits 125,000 ( 125,000 ) Small business loan repayments 513 541 Change in construction payables ( 2,636 ) 2,141 Distribution from unconsolidated joint venture 1,144 — Capital contribution to unconsolidated joint venture ( 125 ) — Net cash used in investing activities ( 13,694 ) ( 109,063 ) Cash flows from financing activities: Contributions from the General Partner 20 31 Repurchases of common shares upon the vesting of restricted shares ( 1,144 ) ( 458 ) Purchase of capped calls — ( 9,800 ) Debt and equity issuance costs ( 4,922 ) ( 6,017 ) Loan proceeds 445,000 175,000 Loan payments ( 558,151 ) ( 52,096 ) Distributions paid – common unitholders ( 131,422 ) ( 42,576 ) Distributions paid – redeemable noncontrolling interests ( 1,972 ) ( 1,639 ) Net cash (used in) provided by financing activities ( 252,591 ) 62,445 Net change in cash, cash equivalents and restricted cash ( 3,856 ) 57,213 Cash, cash equivalents and restricted cash, beginning of period 100,363 46,586 Cash, cash equivalents and restricted cash, end of period $ 96,507 $ 103,799 Non-cash investing and financing activities Conversion of Limited Partner Units to shares of the Parent Company $ — $ 3,129 The accompanying notes are an integral part of these consolidated financial statements. 11 KITE REALTY GROUP TRUST AND KITE REALTY GROUP, L.P. AND SUBSIDIARIES Notes to Consolidated Financial Statements September 30, 2022 (Unaudited) ($ in thousands, except share, per share, unit and per unit amounts and where indicated in millions or billions) NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION Kite Realty Group Trust (the “Parent Company”), through its majority-owned subsidiary, Kite Realty Group, L.P. (the “Operating Partnership”), owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development and redevelopment of high-quality, open-air shopping centers and mixed-use assets in select markets in the United States. The terms “Company,” “we,” “us,” and “our” refer to the Parent Company and the Operating Partnership, collectively, and those entities owned or controlled by the Parent Company and/or the Operating Partnership. The Operating Partnership was formed on August 16, 2004, when the Parent Company contributed properties and the net proceeds from an initial public offering of shares of its common stock to the Operating Partnership. The Parent Company was organized in Maryland in 2004 to succeed in the development, acquisition, construction and real estate businesses of its predecessor. We believe the Company qualifies as a real estate investment trust (“REIT”) under provisions of the Internal Revenue Code of 1986, as amended. The Parent Company is the sole general partner of the Operating Partnership, and as of September 30, 2022 owned approximately 98.7 % of the common partnership interests in the Operating Partnership (“General Partner Units”). The remaining 1.3 % of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) were owned by the limited partners. As the sole general partner of the Operating Partnership, the Parent Company has full, exclusive and complete responsibility and discretion in the day-to-day management and control of the Operating Partnership. The Parent Company and the Operating Partnership are operated as one enterprise. The management of the Parent Company consists of the same members as the management of the Operating Partnership. As the sole general partner with control of the Operating Partnership, the Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have any significant assets other than its investment in the Operating Partnership. The accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) may have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the presentation not misleading. The unaudited financial statements as of September 30, 2022 and for the three and nine months ended September 30, 2022 and 2021 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein. The consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the combined Annual Report on Form 10-K of the Parent Company and the Operating Partnership for the year ended December 31, 2021. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the reported period. Actual results could differ from these estimates. The results of operations for the interim periods are not necessarily indicative of the results that may be expected on an annual basis. On October 22, 2021, we completed a merger with Retail Properties of America, Inc. (“RPAI”) in accordance with the Agreement and Plan of Merger dated July 18, 2021 (the “Merger Agreement”), by and among the Company, its wholly owned subsidiary, KRG Oak, LLC (“Merger Sub”), and RPAI, pursuant to which RPAI merged with and into Merger Sub (the “Merger”). 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. The transaction value was approximately $ 4.7 billion, including the assumption of approximately $ 1.8 billion of debt. We acquired 100 operating retail properties and five development projects through the Merger along with multiple parcels of entitled land for future value creation. 12 Pursuant to the terms of the Merger Agreement, each outstanding share of RPAI common stock converted into the right to receive 0.623 common shares of the Company plus cash in lieu of fractional Company shares. The aggregate value of the Merger consideration paid or payable to former holders of RPAI common stock was approximately $ 2.8 billion, excluding the value of RPAI restricted stock units that vested at closing and certain restricted share awards assumed by the Company at closing. In connection with the Merger, the Operating Partnership issued an equivalent amount of General Partner Units to the Parent Company. As of September 30, 2022, we owned interests in 183 operating retail properties totaling approximately 28.9 million square feet and one office property with 0.3 million square feet. Of the 183 operating retail properties, 11 contain an office component. We also owned four development projects under construction as of this date. Of the 183 operating retail properties, 180 are consolidated in these financial statements and the remaining three are accounted for under the equity method. NOTE 2. CONSOLIDATION, INVESTMENTS IN JOINT VENTURES AND NONCONTROLLING INTERESTS Components of Investment Properties The following table summarizes the composition of the Company’s investment properties as of September 30, 2022 and December 31, 2021: Balance as of ($ in thousands) September 30, 2022 December 31, 2021 Land, buildings and improvements $ 7,639,490 $ 7,543,376 Furniture, equipment and other 7,495 7,612 Construction in progress 68,531 41,360 Investment properties, at cost $ 7,715,516 $ 7,592,348 Components of Rental Income including Allowance for Uncollectible Accounts Rental income related to the Company’s operating leases is comprised of the following for the three and nine months ended September 30, 2022 and 2021: Three Months Ended September 30, Nine Months Ended September 30, ($ in thousands) 2022 2021 2022 2021 Fixed contractual lease payments – operating leases $ 155,399 $ 54,894 $ 457,875 $ 164,095 Variable lease payments – operating leases 36,636 12,461 112,725 38,540 Bad debt (reserve) recovery ( 1,882 ) 1,709 ( 3,624 ) 338 Straight-line rent adjustments 4,328 585 12,951 1,109 Straight-line rent (reserve) recovery for uncollectibility ( 34 ) 39 ( 298 ) 587 Amortization of in-place lease liabilities, net 1,228 528 3,143 1,428 Rental income $ 195,675 $ 70,216 $ 582,772 $ 206,097 The Company makes estimates as to the collectability of its accounts receivable. In making these estimates, the Company reviews a variety of qualitative and quantitative data and considers such facts as the credit quality of our customer, historical write-off experience and current economic trends, to make a subjective determination. An allowance for uncollectible accounts, including future credit losses of the accrued straight-line rent receivables, is maintained for estimated losses resulting from the inability of certain tenants to meet contractual obligations under their lease agreements. Short-Term Deposits During the nine months ended September 30, 2022, the Company used the proceeds from a $ 125.0 million short-term deposit that matured on April 7, 2022 to repay borrowings on the Company’s revolving line of credit. The deposit balance was held in a custody account at Bank of New York Mellon and earned interest at a rate of the Federal Funds Rate plus 43 basis points. Interest income on the deposit is recorded within “Other income (expense), net” on the accompanying consolidated statements of operations and comprehensive income. 13 Consolidation and Investments in Joint Ventures The accompanying financial statements are presented on a consolidated basis and include all accounts of the Parent Company, the Operating Partnership, the taxable REIT subsidiaries (“TRSs”) of the Operating Partnership, subsidiaries of the Operating Partnership that are controlled and any variable interest entities (“VIEs”) in which the Operating Partnership is the primary beneficiary. As of September 30, 2022, we owned investments in three consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights and we were the primary beneficiary. As of September 30, 2022, these consolidated VIEs had mortgage debt of $ 28.5 million, which were secured by assets of the VIEs totaling $ 118.9 million. The Operating Partnership guarantees the mortgage debt of these VIEs. The Operating Partnership is considered a VIE as the limited partners do not hold kick-out rights or substantive participating rights. The Parent Company consolidates the Operating Partnership as it is the primary beneficiary. Income Taxes and REIT Compliance Parent Company The Parent Company, which is considered a corporation for U.S. federal income tax purposes, has been organized and operated, and intends to continue to operate, in a manner that will enable it to maintain its qualification as a REIT for U.S. federal income tax purposes. As a result, it generally will not be subject to U.S. federal income tax on the earnings that it distributes to the extent it distributes its “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) to shareholders of the Parent Company and meets certain other requirements on a recurring basis. To the extent that it satisfies this distribution requirement, but distributes less than 100% of its taxable income, it will be subject to U.S. federal corporate income tax on its undistributed REIT taxable income. REITs are subject to a number of organizational and operational requirements. If the Parent Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income tax on its taxable income at regular corporate rates for a period of four years following the year in which qualification is lost. We may also be subject to certain U.S. federal, state and local taxes on our income and property and to U.S. federal income and excise taxes on our undistributed taxable income even if the Parent Company does qualify as a REIT. The Operating Partnership intends to continue to make distributions to the Parent Company in amounts sufficient to assist the Parent Company in adhering to REIT requirements and maintaining its REIT status. We have elected to treat Kite Realty Holdings, LLC as a TRS of the Operating Partnership. In addition, in connection with the Merger, we assumed RPAI’s existing TRS, IWR Protective Corporation, as a TRS of the Operating Partnership and we may elect to treat other subsidiaries as TRSs in the future. This election enables us to receive income and provide services that would otherwise be impermissible for a REIT. Deferred tax assets and liabilities are established for temporary differences between the financial reporting bases and the tax bases of assets and liabilities at the tax rates expected to be in effect when the temporary differences reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Operating Partnership The allocated share of income and loss, other than the operations of our TRSs, is included in the income tax returns of the Operating Partnership’s partners. Accordingly, the only U.S. federal income taxes included in the accompanying consolidated financial statements are in connection with the TRSs. Noncontrolling Interests We report the non-redeemable noncontrolling interests in subsidiaries as equity, and the amount of consolidated net income attributable to these noncontrolling interests is set forth separately in the consolidated financial statements. The following table summarizes the non-redeemable noncontrolling interests in consolidated properties for the nine months ended September 30, 2022 and 2021: Nine Months Ended September 30, ($ in thousands) 2022 2021 Noncontrolling interests balance as of January 1, $ 5,146 $ 698 Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests 139 — Noncontrolling interests balance as of September 30, $ 5,285 $ 698 14 Noncontrolling Interests – Joint Venture Prior to the Merger with RPAI, RPAI entered into a joint venture related to the development, ownership and operation of the multifamily rental portion of the expansion project at One Loudoun Downtown – Pads G & H. The Company owns 90 % of the joint venture. As of September 30, 2022, the Company has funded $ 0.9 million of the partner’s development costs related to One Loudoun Downtown – Pads G & H through a loan provided by the Company to the joint venture. The loan is secured by the joint venture project, is required to be repaid subsequent to the completion of construction and stabilization of the project and is eliminated upon consolidation. Under terms defined in the joint venture agreement, after construction completion and stabilization of the development project (as defined in the joint venture agreement), the Company has the ability to call, and the joint venture partner has the ability to put to the Company, subject to certain conditions, the joint venture partner’s interest in the joint venture at fair value. The joint venture is considered a VIE primarily because the Company’s joint venture partner does not have substantive kick-out rights or substantive participating rights. The Company is considered the primary beneficiary as it has a controlling financial interest in the joint venture. As such, the Company has consolidated this joint venture and presented the joint venture partner’s interests as noncontrolling interests. Redeemable Noncontrolling Interests – Limited Partners Limited Partner Units are redeemable noncontrolling interests in the Operating Partnership. We classify redeemable noncontrolling interests in the Operating Partnership in the accompanying consolidated balance sheets outside of permanent equity because we may be required to pay cash to holders of Limited Partner Units upon redemption of their interests in the Operating Partnership or deliver registered shares upon their conversion. The carrying amount of the redeemable noncontrolling interests in the Operating Partnership is reflected at the greater of historical book value or redemption value with a corresponding adjustment to additional paid-in capital. As of September 30, 2022, the redemption value of the redeemable noncontrolling interests in the Operating Partnership did not exceed the historical book value, and the balances were accordingly adjusted to historical book value. As of December 31, 2021, the redemption value of the redeemable noncontrolling interests in the Operating Partnership exceeded the historical book value, and the balances were accordingly adjusted to redemption value. We allocate net operating results of the Operating Partnership after noncontrolling interests in the consolidated properties based on the partners’ respective weighted average ownership interest. We adjust the redeemable noncontrolling interests in the Operating Partnership at the end of each reporting period to reflect their interests in the Operating Partnership or redemption value. This adjustment is reflected in our shareholders’ and Parent Company’s equity. For the three and nine months ended September 30, 2022 and 2021, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Parent Company’s weighted average interest in Operating Partnership 98.7 % 97.2 % 98.8 % 97.1 % Limited partners’ weighted average interests in Operating Partnership 1.3 % 2.8 % 1.2 % 2.9 % At September 30, 2022, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.7 % and 1.3 %. At December 31, 2021, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.9 % and 1.1 %. Concurrent with the Parent Company’s initial public offering and related formation transactions, certain individuals received Limited Partner Units of the Operating Partnership in exchange for their interests in certain properties. The limited partners have the right to redeem Limited Partner Units for cash or, at the Parent Company’s election, common shares of the Parent Company in an amount equal to the market value of an equivalent number of common shares of the Parent Company at the time of redemption. Such common shares must be registered, which is not fully in the Parent Company’s control. Therefore, the limited partners’ interest is not reflected in permanent equity. The Parent Company also has the right to redeem the Limited Partner Units directly from the limited partner in exchange for either cash in the amount specified above or a number of its common shares equal to the number of Limited Partner Units being redeemed. 15 There were 2,955,697 and 2,377,777 Limited Partner Units outstanding as of September 30, 2022 and December 31, 2021, respectively. The increase in Limited Partner Units outstanding from December 31, 2021 is due to non-cash compensation awards made to our executive officers in the form of Limited Partner Units. Redeemable Noncontrolling Interests – Subsidiaries Prior to the merger with Inland Diversified Real Estate Trust, Inc. (“Inland Diversified”) in 2014, Inland Diversified formed joint ventures with the previous owners of certain properties and issued Class B units in three joint ventures that indirectly own those properties. As of September 30, 2022, the Class B units related to one of these joint ventures that owned Crossing at Killingly Commons, our multi-tenant retail property in Dayville, Connecticut, was outstanding and accounted for as noncontrolling interests in the remaining venture. In October 2022, the remaining Class B units became redeemable at the partner’s election and the fulfillment of certain redemption criteria for cash or Limited Partner Units in the Operating Partnership. In October 2022, we received notice from our joint venture partner of its exercise of their right to redeem the remaining Class B units for cash in the amount of $ 9.7 million, which redemption was funded using cash on October 3, 2022. Prior to the redemption, the Class B units did not have a maturity date and were not mandatorily redeemable unless either party had elected for the units to be redeemed. Prior to the redemption, we consolidated this joint venture because we controlled the decision-making and our joint venture partner had limited protective rights. We classify the redeemable noncontrolling interests related to the remaining Class B units in the accompanying consolidated balance sheets outside of permanent equity because, under certain circumstances, we may be required to pay cash to the Class B unitholders in this subsidiary upon redemption of their interests. The carrying amount of these redeemable noncontrolling interests is required to be reflected at the greater of initial book value or redemption value with a corresponding adjustment to additional paid-in capital. As of September 30, 2022 and December 31, 2021, the redemption amounts of these interests did not exceed their fair value nor did they exceed the initial book value. The redeemable noncontrolling interests in the Operating Partnership and subsidiaries for the nine months ended September 30, 2022 and 2021 were as follows: Nine Months Ended September 30, ($ in thousands) 2022 2021 Redeemable noncontrolling interests balance as of January 1, $ 55,173 $ 43,275 Net income allocable to redeemable noncontrolling interests 269 1,058 Distributions declared to redeemable noncontrolling interests ( 1,972 ) ( 1,639 ) Other, net including adjustments to redemption value 3,484 10,587 Total limited partners’ interests in Operating Partnership and other redeemable noncontrolling interests balance as of September 30, $ 56,954 $ 53,281 Limited partners’ interests in Operating Partnership $ 46,884 $ 43,211 Other redeemable noncontrolling interests in certain subsidiaries 10,070 10,070 Total limited partners’ interests in Operating Partnership and other redeemable noncontrolling interests balance as of September 30, $ 56,954 $ 53,281 Fair Value Measurements We follow the framework established under Financial Accounting Standards Board (“FASB”) ASC 820, Fair Value Measurements and Disclosures , for measuring fair value of non-financial assets and liabilities that are not required or permitted to be measured at fair value on a recurring basis but only in certain circumstances, such as a business combination or upon determination of an impairment. Assets and liabilities recorded at fair value on the consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows: • Level 1 fair value inputs are quoted prices in active markets for identical instruments to which we have access. • Level 2 fair value inputs are inputs other than quoted prices included in Level 1 that are observable for similar instruments, either directly or indirectly, and appropriately consider counterparty creditworthiness in the valuations. 16 • Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an instrument at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Effects of Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) , which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In March 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offered Rate (“LIBOR”)-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. During the nine months ended September 30, 2022, the Company elected to apply additional expedients related to contract modifications, changes in critical terms, and updates to the designated hedged risks as qualifying changes have been made to applicable debt and derivative contracts. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. NOTE 3. ACQUISITIONS RPAI Merger On October 22, 2021, we completed a Merger with RPAI pursuant to which RPAI merged with and into Merger Sub, with the Company continuing as the surviving public company. 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. The aggregate value of the Merger consideration paid or payable to former holders of RPAI common stock was approximately $ 2.8 billion, excluding the value of RPAI restricted stock units that vested at closing and certain restricted share awards assumed by the Company at closing. The total purchase price was calculated based on the closing price of the Company’s common stock on October 21, 2021, the last business day prior to the effective time of the Merger, which was $ 21.18 per share. At the effective time of the Merger, each share of RPAI common stock issued and outstanding immediately prior to the effective time was converted into the right to receive 0.623 newly issued Company common shares plus cash in lieu of fractional Company shares. In addition, holders of (i) options to purchase shares of RPAI common stock, (ii) certain awards of restricted shares of RPAI common stock (as agreed in accordance with the Merger Agreement), and (iii) restricted stock units representing the right to vest in and be issued shares of RPAI common stock became entitled to receive cash and/or Company common shares in accordance with the terms of the Merger Agreement. The Company assumed certain existing awards of restricted shares of RPAI common stock, each of which were converted into 0.623 awards of restricted Company common shares plus cash in lieu of fractional Company shares in accordance with the Merger Agreement. In connection with the Merger, the Operating Partnership issued an equivalent amount of General Partner Units to the Parent Company. The number of RPAI common stock outstanding as of October 21, 2021 converted to shares of the Company’s common stock was determined as follows: RPAI common stock outstanding as of October 21, 2021 214,797,869 Exchange ratio 0.623 Company common shares issued for outstanding RPAI common stock 133,814,066 Company common shares issued for RPAI restricted stock units 1,117,399 Total Company common shares issued 134,931,465 The following table presents the purchase price and total value of equity consideration paid by the Company at the close of the Merger: (in thousands, except share price) Price of Company common shares Equity Consideration Given (Company common shares issued) Total Value of Stock Consideration (1) As of October 21, 2021 $ 21.18 134,931 $ 2,847,369 17 (1) The total value of stock consideration is the total of the common shares issued multiplied by the closing price of the Company’s common stock on October 21, 2021 excluding the value of certain RPAI restricted stock that vested at the closing of the Merger and share awards assumed by the Company at the closing of the Merger. As a result of the Merger, the Company acquired 100 operating retail properties and five development projects under construction along with multiple parcels of entitled land for future value creation. During the nine months ended September 30, 2022, the Company incurred $ 1.0 million of merger and acquisition costs consisting primarily of professional fees and technology costs, which are recorded within “Merger and acquisition costs” in the accompanying consolidated statements of operations and comprehensive income. In addition, the Company assumed approximately $ 1.8 billion of debt in connection with the Merger. “Rental income” and “Net income attributable to common shareholders” in the accompanying consolidated statements of operations and comprehensive income include revenues from the RPAI portfolio of $ 124.7 million and $ 375.0 million and net loss of $ 7.1 million and $ 17.3 million for the three months and nine months ended September 30, 2022, respectively, which includes $ 84.0 million and $ 265.2 million of depreciation and amortization, respectively, as a result of the Merger. Purchase Price Allocation In accordance with ASC 805-10, Business Combinations , the Company accounted for the Merger as a business combination using the acquisition method of accounting. Based on the value of the common shares issued, the total fair value of the assets acquired and liabilities assumed in the Merger was $ 2.8 billion as of October 22, 2021, the date of the Merger. The Company used the following valuation methodologies, inputs and assumptions to estimate the fair value of the assets acquired and liabilities assumed: • Investment properties: The Company estimated the fair value of the buildings on an as-if-vacant basis using either a direct capitalization method or a discounted cash flow analysis. Comparable market data, real estate tax assessments and independent appraisals were used in estimating the fair value of the land acquired. These valuation methodologies are based on Level 2 and Level 3 inputs in the fair value hierarchy, such as estimates of future income growth, capitalization rates and cash flow projections at the respective properties. • Acquired lease intangible assets: The Company estimated the fair value of its above-market and below-market in-place leases based on the present value (using a discount rate that reflects the risk associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over the remaining non-cancelable term of the leases. Any below-market renewal options are also considered in the in-place lease values. This valuation methodology is based on Level 3 inputs in the fair value hierarchy. • In-place lease liabilities: The Company estimated the fair value of its in-place leases using independent and internal sources, which are methods similar to those used by independent appraisers. Factors we consider in our analysis include an estimate of costs to execute similar leases including tenant improvements, leasing commissions and foregone costs and rent received during the estimated lease-up period as if the space was vacant. This valuation methodology is based on Level 3 inputs in the fair value hierarchy. • Mortgage and other indebtedness: The Company estimated the fair value of the secured and unsecured debt assumed, including related derivative instruments, using third party and independent sources for our estimates. Any difference between the fair value and stated value of the assumed debt is recorded as a discount or premium and amortized over the remaining term of the loan using the interest method. This valuation methodology is based on Level 2 and Level 3 inputs in the fair value hierarchy. The range of the most significant Level 3 assumptions utilized in determining the value of the real estate and related assets acquired through the Merger with RPAI are as follows: Range of Assumptions Net rental rate per square foot – Anchors $ 4.00 to $ 45.00 Net rental rate per square foot – Small Shops $ 7.00 to $ 140.00 Capitalization rate 5.50 % to 12.00 % 18 The following table summarizes the final purchase price allocation, including the acquisition date fair value of the tangible and intangible assets acquired and liabilities assumed: ($ in thousands) Purchase Price Allocation Investment properties $ 4,425,254 Acquired lease intangible assets 535,465 Cash, accounts receivable and other assets 84,632 Total assets acquired 5,045,351 Mortgage and other indebtedness, net ( 1,848,476 ) Accounts payable, other liabilities, tenant security deposits and prepaid rent ( 176,391 ) In-place lease liabilities ( 168,652 ) Noncontrolling interests ( 4,463 ) Total liabilities assumed ( 2,197,982 ) Total purchase price $ 2,847,369 The following table details the weighted average amortization periods, in years, of the purchase price allocated to real estate and related intangible assets and liabilities acquired arising from the Merger: Weighted Average Amortization Period (in years) Land 10.2 Building 18.8 Tenant improvements 6.7 In-place lease intangibles 5.5 Above-market leases 5.7 Below-market leases (including below-market option periods) 20.5 Fair market value of debt adjustments 6.8 Pro Forma Financial Information (unaudited) The pro forma financial information set forth below is based upon the Company’s historical consolidated statements of operations for the three and nine months ended September 30, 2021, adjusted to give effect for the properties assumed through the Merger as if they were acquired as of January 1, 2021. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of income would have been, nor does it purport to represent the results of income for future periods. ($ in thousands) Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021 Rental income $ 190,908 $ 560,423 Net loss $ ( 38,786 ) $ ( 87,551 ) Net loss attributable to common shareholders $ ( 38,358 ) $ ( 86,571 ) Net loss attributable to common shareholders per common share: Basic $ ( 0.17 ) $ ( 0.39 ) Diluted $ ( 0.17 ) $ ( 0.39 ) 19 Asset Acquisitions The Company closed on the following asset acquisitions during the nine months ended September 30, 2022: Date Property Name Metropolitan Statistical Area (MSA) Property Type Square Footage Acquisition Price February 16, 2022 Pebble Marketplace Las Vegas Multi-tenant retail 85,796 $ 44,100 April 13, 2022 MacArthur Crossing Dallas Two-tenant building 56,077 21,920 July 15, 2022 Palms Plaza Miami Multi-tenant retail 68,976 35,750 210,849 $ 101,770 The above acquisitions were funded using a combination of available cash on hand and proceeds from the Company’s unsecured revolving line of credit. Substantially all of the purchase price was allocated to investment properties. The Company did not acquire any properties during the nine months ended September 30, 2021. NOTE 4. DISPOSITIONS During the nine months ended September 30, 2022, the Company sold Plaza Del Lago, a 100,016 square foot multi-tenant retail property located in the Chicago MSA, for a sales price of $ 58.7 million and a net gain of $ 24.0 million. Plaza Del Lago also contains 8,800 square feet of residential space comprised of 18 multifamily rental units. In addition, the Company sold a portion of Hamilton Crossing Centre, a redevelopment property located in the Indianapolis MSA, for a sales price of $ 6.9 million and a net gain of $ 3.2 million during the nine months ended September 30, 2022. During the nine months ended September 30, 2021, the Company sold 17 ground leases for gross proceeds of $ 42.0 million and a net gain of $ 27.6 million. A portion of the proceeds was used to pay down our unsecured revolving line of credit . NOTE 5. DEFERRED COSTS AND INTANGIBLES, NET Deferred costs consist primarily of acquired lease intangible assets, broker fees and capitalized internal commissions incurred in connection with lease originations. Deferred leasing costs, lease intangibles and similar costs are amortized on a straight-line basis over the terms of the related leases. As of September 30, 2022 and December 31, 2021, deferred costs consisted of the following: ($ in thousands) September 30, 2022 December 31, 2021 Acquired lease intangible assets $ 539,730 $ 567,149 Deferred leasing costs and other 64,286 55,817 604,016 622,966 Less: accumulated amortization ( 162,092 ) ( 81,448 ) Total $ 441,924 $ 541,518 Amortization of deferred leasing costs, lease intangibles and other is included within “Depreciation and amortization” in the accompanying consolidated statements of operations and comprehensive income. The amortization of above-market lease intangibles is included as a reduction to “Rental income” in the accompanying consolidated statements of operations and comprehensive income. The amounts of such amortization included in the accompanying consolidated statements of operations are as follows: Nine Months Ended September 30, ($ in thousands) 2022 2021 Amortization of deferred leasing costs, lease intangibles and other $ 117,177 $ 8,005 Amortization of above-market lease intangibles $ 10,161 $ 700 NOTE 6. DEFERRED REVENUE, INTANGIBLES, NET AND OTHER LIABILITIES Deferred revenue and other liabilities consist of the unamortized fair value of below-market lease liabilities recorded in connection with purchase accounting, retainage payables for development and redevelopment projects, tenant rent payments received in advance of the month in which they are due, and lease liabilities recorded upon adoption of ASU 2016-02, Leases (Topic 842) . The amortization of below-market lease liabilities is recognized as revenue over the remaining life of the leases (including option periods for leases with below-market renewal options) through 2085. Tenant rent payments received in advance are recognized as revenue in the period to which they apply, which is typically the month following their receipt. 20 As of September 30, 2022 and December 31, 2021, deferred revenue, intangibles, net and other liabilities consisted of the following: ($ in thousands) September 30, 2022 December 31, 2021 Unamortized in-place lease liabilities $ 193,894 $ 210,261 Retainages payable and other 10,513 10,796 Tenant rents received in advance 28,059 30,125 Lease liabilities 67,543 70,237 Total $ 300,009 $ 321,419 The amortization of below-market lease intangibles is included as a component of “Rental income” in the accompanying consolidated statements of operations and comprehensive income and totaled $ 13.3 million and $ 2.1 million for the nine months ended September 30, 2022 and 2021, respectively. NOTE 7. MORTGAGE AND OTHER INDEBTEDNESS The following table summarizes the Company’s indebtedness as of September 30, 2022 and December 31, 2021: ($ in thousands) September 30, 2022 December 31, 2021 Mortgages payable $ 234,433 $ 392,590 Senior unsecured notes 1,924,635 1,924,635 Unsecured term loans 820,000 720,000 Revolving line of credit — 55,000 2,979,068 3,092,225 Unamortized discounts and premiums, net 46,877 69,425 Unamortized debt issuance costs, net ( 13,075 ) ( 10,842 ) Total mortgage and other indebtedness, net $ 3,012,870 $ 3,150,808 Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of September 30, 2022, considering the impact of interest rate swaps, is summarized below: ($ in thousands) Amount Outstanding Ratio Weighted Average Interest Rate Weighted Average Years to Maturity Fixed rate debt (1) $ 2,795,595 94 % 3.96 % 4.6 Variable rate debt (2) 183,473 6 % 7.02 % 3.4 Debt discounts, premiums and issuance costs, net 33,802 N/A N/A N/A Total $ 3,012,870 100 % 4.15 % 4.5 (1) Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps. As of September 30, 2022, $ 820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 2.9 years. (2) Variable rate debt includes the portion of fixed rate debt that has been hedged by interest rate swaps. As of September 30, 2022, $ 155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 2.9 years. Mortgages Payable The following table summarizes the Company’s mortgages payable: September 30, 2022 December 31, 2021 ($ in thousands) Balance Weighted Average Interest Rate Weighted Average Years to Maturity Balance Weighted Average Interest Rate Weighted Average Years to Maturity Fixed rate mortgages payable (1) $ 205,960 3.98 % 1.6 $ 363,577 4.13 % 1.7 Variable rate mortgage payable (2) 28,473 4.69 % 0.8 29,013 1.70 % 0.1 Total mortgages payable $ 234,433 $ 392,590 (1) The fixed rate mortgages had interest rates ranging from 3.75 % to 5.73 % as of September 30, 2022 and December 31, 2021. 21 (2) On April 1, 2022, the interest rate on the variable rate mortgage switched to the Bloomberg Short Term Bank Yield Index (“BSBY”) plus 160 basis points from LIBOR plus 160 basis points. The one-month BSBY rate was 3.09 % as of September 30, 2022. The one-month LIBOR rate was 0.10 % as of December 31, 2021. Mortgages payable are secured by certain real estate and, in some cases, by guarantees from the Operating Partnership, are generally due in monthly installments of principal and interest and mature over various terms through 2032. During the nine months ended September 30, 2022, we repaid mortgages payable totaling $ 155.2 million that had a weighted average fixed interest rate of 4.31 % and made scheduled principal payments of $ 3.0 million related to amortizing loans. Unsecured Notes The following table summarizes the Company’s senior unsecured notes and exchangeable senior notes: September 30, 2022 December 31, 2021 ($ in thousands) Maturity Date Balance Interest Rate Balance Interest Rate Senior notes – 4.23 % due 2023 September 10, 2023 $ 95,000 4.23 % $ 95,000 4.23 % Senior notes – 4.58 % due 2024 (1) June 30, 2024 149,635 4.58 % 149,635 4.58 % Senior notes – 4.00 % due 2025 (2) March 15, 2025 350,000 4.00 % 350,000 4.00 % Senior notes – LIBOR + 3.65 % due 2025 (3) September 10, 2025 80,000 7.40 % 80,000 3.86 % Senior notes – 4.08 % due 2026 (1) September 30, 2026 100,000 4.08 % 100,000 4.08 % Senior notes – 4.00 % due 2026 October 1, 2026 300,000 4.00 % 300,000 4.00 % Senior exchangeable notes – 0.75 % due 2027 April 1, 2027 175,000 0.75 % 175,000 0.75 % Senior notes – LIBOR + 3.75 % due 2027 (4) September 10, 2027 75,000 7.50 % 75,000 3.96 % Senior notes – 4.24 % due 2028 (1) December 28, 2028 100,000 4.24 % 100,000 4.24 % Senior notes – 4.82 % due 2029 (1) June 28, 2029 100,000 4.82 % 100,000 4.82 % Senior notes – 4.75 % due 2030 (2) September 15, 2030 400,000 4.75 % 400,000 4.75 % Total senior unsecured notes $ 1,924,635 $ 1,924,635 (1) Private placement notes assumed in connection with the Merger. (2) Publicly placed notes assumed in connection with the Merger. (3) $ 80,000 of 4.47 % senior unsecured notes has been swapped to a variable rate of three-month LIBOR plus 3.65 % through September 10, 2025. (4) $ 75,000 of 4.57 % senior unsecured notes has been swapped to a variable rate of three-month LIBOR plus 3.75 % through September 10, 2025. Unsecured Term Loans and Revolving Line of Credit The following table summarizes the Company’s term loans and revolving line of credit: September 30, 2022 December 31, 2021 ($ in thousands) Maturity Date Balance Interest Rate Balance Interest Rate Unsecured term loan due 2023 – fixed rate (1)(2) November 22, 2023 $ — — % $ 200,000 4.10 % Unsecured term loan due 2024 – fixed rate (1)(3) July 17, 2024 120,000 2.68 % 120,000 2.88 % Unsecured term loan due 2025 – fixed rate (4) October 24, 2025 250,000 5.09 % 250,000 5.09 % Unsecured term loan due 2026 – fixed rate (1)(5) July 17, 2026 150,000 2.73 % 150,000 2.97 % Unsecured term loan due 2029 – fixed rate (6) July 29, 2029 300,000 4.05 % — — % Total unsecured term loans $ 820,000 $ 720,000 Unsecured credit facility revolving line of credit – variable rate (7) January 8, 2026 $ — 4.24 % $ 55,000 1.20 % (1) Unsecured term loans assumed in connection with the Merger. (2) As of December 31, 2021, $ 200,000 of LIBOR-based variable rate debt had been swapped to a fixed rate 2.85 % plus a credit spread based on a leverage grid ranging from 1.20 % to 1.85 % through November 22, 2023. The applicable credit spread was 1.25 % as of December 31, 2021. (3) As of September 30, 2022, $ 120,000 of Secured Overnight Financing Rate (“SOFR”)-based variable rate debt has been swapped to a fixed rate of 1.58 % plus a credit spread based on a ratings grid ranging from 0.80 % to 1.65 % through July 17, 2024. The applicable 22 credit spread was 1.10 % as of September 30, 2022. As of December 31, 2021, $ 120,000 of LIBOR-based variable rate debt had been swapped to a fixed rate 1.68 % plus a credit spread based on a leverage grid ranging from 1.20 % to 1.70 % through July 17, 2024. The applicable credit spread was 1.20 % as of December 31, 2021. (4) $ 250,000 of LIBOR-based variable rate debt has been swapped to a fixed rate of 5.09 % through October 24, 2025. The maturity date of the term loan may be extended for up to three additional periods of one year at the Operating Partnership’s option, subject to certain conditions. (5) As of September 30, 2022, $ 150,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 1.68 % plus a credit spread based on a ratings grid ranging from 0.75 % to 1.60 % through July 17, 2026. The applicable credit spread was 1.05 % as of September 30, 2022. As of December 31, 2021, $ 150,000 of LIBOR-based variable rate debt had been swapped to a fixed rate 1.77 % plus a credit spread based on a leverage grid ranging from 1.20 % to 1.70 % through July 17, 2026. The applicable credit spread was 1.20 % as of December 31, 2021. (6) $ 300,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 2.70 % plus a credit spread based on a ratings grid ranging from 1.15 % to 2.20 % through November 22, 2023. The applicable credit spread was 1.35 % as of September 30, 2022. (7) The revolving line of credit has two six-month extension options that the Company can exercise, at its election, subject to (i) customary representations and warranties, including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) payment of an extension fee equal to 0.075 % of the revolving line of credit capacity. On July 29, 2022, SOFR replaced LIBOR as the interest reference rate for the revolving line of credit. Unsecured Revolving Credit Facility On July 29, 2022, the Operating Partnership, as borrower, and the Company entered into the Second Amendment (the “Second Amendment”) to the Sixth Amended and Restated Credit Agreement, dated as of July 8, 2021 (as amended, the “Credit Agreement”) with a syndicate of financial institutions to provide for (i) a $ 250.0 million increase to the $ 850.0 million unsecured revolving line of credit that was assumed in the Merger, resulting in a $ 1.1 billion unsecured revolving credit facility (the “2022 Revolving Facility”) and (ii) a seven-year $ 300.0 million unsecured term loan (the “$ 300 M Term Loan”). Under the Second Amendment, the Operating Partnership has the option, subject to certain customary conditions, to increase the 2022 Revolving Facility and/or incur additional term loans in an aggregate amount for all such increases and additional loans of up to $ 600.0 million, for a total facility amount of up to $ 2.0 billion. The 2022 Revolving Facility has a scheduled maturity date of January 8, 2026, which maturity date may be extended for up to two additional periods of six months at the Operating Partnership’s option, subject to certain conditions. Borrowings under the 2022 Revolving Facility bear interest at a rate per annum equal to SOFR plus a margin based on the Operating Partnership’s leverage ratio or credit rating, respectively, plus a facility fee based on the Operating Partnership’s leverage ratio or credit rating, respectively. The SOFR rate is also subject to an additional 0.10 % spread adjustment as specified in the Second Amendment. The 2022 Revolving Facility is currently priced on the leverage-based pricing grid. In accordance with the Credit Agreement, the credit spread set forth in the leverage grid resets quarterly based on the Company’s leverage, as calculated at the previous quarter end. The Company may irrevocably elect to convert to the ratings-based pricing grid at any time. As of September 30, 2022, making such an election would have resulted in a lower interest rate; however, the Company had not made the election to convert to the ratings-based pricing grid. The Credit Agreement includes a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth therein. The following table summarizes the key terms of the 2022 Revolving Facility as of September 30, 2022: ($ in thousands) Leverage-Based Pricing Investment Grade Pricing 2022 Credit Agreement Maturity Date Extension Option Extension Fee Credit Spread Facility Fee Credit Spread Facility Fee SOFR Adjustment $ 1,100,000 unsecured revolving line of credit 1/8/2026 2 six -month 0.075 % 1.05 %– 1.50 % 0.15 %– 0.30 % 0.725 %– 1.40 % 0.125 %– 0.30 % 0.10 % The Operating Partnership’s ability to borrow under the Credit Agreement is subject to ongoing compliance by the Operating Partnership and its subsidiaries with various restrictive covenants, including with respect to liens, transactions with affiliates, dividends, mergers and asset sales. In addition, the Credit Agreement requires that the Operating Partnership satisfy certain financial covenants, including (i) a maximum leverage ratio; (ii) a minimum fixed charge coverage ratio; (iii) a maximum secured indebtedness ratio; (iv) a maximum unsecured leverage ratio; and (v) a minimum unencumbered interest coverage ratio. As of September 30, 2022, we were in compliance with all such covenants. As of September 30, 2022, we had letters of credit outstanding which totaled $ 1.5 million, against which no amounts were advanced as of September 30, 2022. 23 Unsecured Term Loans On July 29, 2022, in conjunction with the Second Amendment, the Operating Partnership obtained a $ 300 M Term Loan that is priced on a ratings-based pricing grid at a rate of SOFR plus a credit spread ranging from 1.15 % to 2.20 %. The SOFR rate is also subject to an additional 0.10 % spread adjustment as specified in the Second Amendment. Proceeds from the $ 300 M Term Loan were used to repay the Operating Partnership’s $ 200.0 million unsecured term loan that was assumed in the Merger and was scheduled to mature on November 22, 2023 (the “$ 200 M Term Loan”), certain secured loans, and for other general corporate purposes. The Operating Partnership is permitted to prepay the $ 300 M Term Loan in whole or in part, at any time, subject to a prepayment fee if prepaid on or before July 29, 2024. The agreement related to the $ 300 M Term Loan includes a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth therein. On October 22, 2021, in connection with the Merger, the Operating Partnership (as successor by merger to RPAI) assumed RPAI’s $ 120.0 million (the “$ 120 M Term Loan”) and $ 150.0 million (the “$ 150 M Term Loan”) unsecured term loans, which were originally priced on a leverage-based pricing grid with the credit spread set forth in the leverage grid resetting quarterly based on the Company’s leverage, as calculated at the previous quarter end. The Company had the option to irrevocably elect to convert to a ratings-based pricing grid at any time. On August 2, 2022, the Company made the election to convert to the ratings-based pricing grid. The agreement related to the $ 150 M Term Loan includes a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth therein. Under the agreement related to the $ 120 M Term Loan and the $ 150 M Term Loan, the Operating Partnership has the option to increase each of the term loans to $ 250.0 million upon the Operating Partnership’s request, subject to certain conditions, including obtaining commitments from any one or more lenders, whether or not currently party to the term loan agreement, to provide such increased amounts. The Operating Partnership is permitted to prepay each of the $ 120 M Term Loan and $ 150 M Term Loan, in whole or in part, at any time without being subject to a prepayment fee. On October 25, 2018, the Operating Partnership entered into a term loan agreement with KeyBank National Association, as Administrative Agent, and the other lenders party thereto, providing for an unsecured term loan facility of up to $ 250.0 million (the “$ 250 M Term Loan”). The Operating Partnership has the option to increase the $ 250 M Term Loan to $ 300.0 million, subject to certain conditions, including obtaining commitments from any one or more lenders, whether or not currently party to the term loan agreement, to provide such increased amounts. The Operating Partnership is permitted to prepay the $ 250 M Term Loan in whole or in part, at any time, subject to a prepayment fee if prepaid on or before October 25, 2023. The unsecured term loan agreements contain representations, financial and other affirmative and negative covenants and events of default that are substantially similar to those contained in the Credit Agreement. The unsecured term loan agreements all rank pari passu with the Operating Partnership’s 2022 Revolving Facility and other unsecured indebtedness of the Operating Partnership. The following table summarizes the key terms of the unsecured term loans as of September 30, 2022: ($ in thousands) Unsecured Term Loans Maturity Date Leverage-Based Pricing Credit Spread Investment Grade Pricing Credit Spread SOFR Adjustment $ 120,000 unsecured term loan due 2024 7/17/2024 1.20 % – 1.70 % 0.80 % – 1.65 % 0.10 % $ 250,000 unsecured term loan due 2025 10/24/2025 (1) 2.00 % – 2.55 % 2.00 % – 2.50 % N/A $ 150,000 unsecured term loan due 2026 7/17/2026 1.20 % – 1.70 % 0.75 % – 1.60 % 0.10 % $ 300,000 unsecured term loan due 2029 7/29/2029 N/A 1.15 % – 2.20 % 0.10 % (1) The maturity date may be extended for up to three additional periods of one year each at the Operating Partnership’s option, subject to certain conditions. 24 Debt Issuance Costs Debt issuance costs are amortized over the terms of the respective loan agreements. The following amounts of amortization of debt issuance costs are included as a component of “Interest expense” in the accompanying consolidated statements of operations and comprehensive income: Nine Months Ended September 30, ($ in thousands) 2022 2021 Amortization of debt issuance costs $ 2,169 $ 1,963 Fair Value of Fixed and Variable Rate Debt As of September 30, 2022, the estimated fair value of fixed rate debt was $ 1.9 billion compared to the book value of $ 2.1 billion. The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 6.67 % to 7.06 %. As of September 30, 2022, the estimated fair value of variable rate debt was $ 850.5 million compared to the book value of $ 848.5 million. The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 4.09 % to 5.14 %. NOTE 8. DERIVATIVE INSTRUMENTS, HEDGING ACTIVITIES AND OTHER COMPREHENSIVE INCOME In order to manage potential future variable interest rate risk, we enter into interest rate derivative agreements from time to time. We do not use interest rate derivative agreements for trading or speculative purposes. The agreements with each of our derivative counterparties provide that in the event of default on any of our indebtedness, we could also be declared in default on our derivative obligations. During the three months ended September 30, 2022, we amended certain interest rate swap agreements, contemporaneous with a modification of the Company’s unsecured revolving credit facility and $ 300 M Term Loan, $ 120 M Term Loan and $ 150 M Term Loan, to facilitate reference rate reform, converting the outstanding swaps from LIBOR to SOFR. In addition, we (i) designated the interest rate swaps related to the $ 200 M Term Loan that was repaid in July 2022 to the $ 300 M Term Loan with an effective date of August 2022 and a maturity date of November 2023; (ii) entered into two forward-starting interest rate swap contracts with notional amounts totaling $ 200.0 million that swap a floating rate of term SOFR to a fixed rate of 2.37 % plus a credit spread of 1.35 % with an effective date of November 2023 and a maturity date of August 2025; and (iii) entered into two agreements to swap a total of $ 100.0 million of SOFR-based variable rate debt to a fixed rate of 2.66 % plus a credit spread of 1.35 % with an effective date of August 2022 and a maturity date of August 2025. The following table summarizes the terms and fair values of the Company’s derivative financial instruments that were designated and qualified as part of a hedging relationship as of September 30, 2022 and December 31, 2021: ($ in thousands) Fair Value Assets (Liabilities) (1) Type of Hedge Number of Instruments Aggregate Notional Reference Rate Interest Rate Effective Date Maturity Date September 30, 2022 December 31, 2021 Cash Flow Four $ 250,000 LIBOR 3.09 % 12/3/2018 10/24/2025 $ 7,243 $ ( 18,282 ) Cash Flow Two 100,000 SOFR 2.66 % 8/1/2022 8/1/2025 3,645 — Cash Flow Two 200,000 SOFR 2.72 % 8/3/2022 11/22/2023 3,295 ( 7,769 ) Cash Flow Three 120,000 SOFR 1.58 % 8/15/2022 7/17/2024 5,414 ( 2,190 ) Cash Flow Three 150,000 SOFR 1.68 % 8/15/2022 7/17/2026 11,684 ( 3,876 ) $ 820,000 $ 31,281 $ ( 32,117 ) Fair Value (2) Two $ 155,000 LIBOR LIBOR + 3.70 % 4/23/2021 9/10/2025 $ ( 14,979 ) $ ( 2,630 ) Forward-Starting Cash Flow (3) Two $ 150,000 SOFR 1.356 % 12/1/2022 6/1/2032 $ 26,732 $ 299 Forward-Starting Cash Flow Two $ 200,000 SOFR 2.37 % 11/22/2023 8/1/2025 $ 4,761 $ — (1) Derivatives in an asset position are included within “Prepaid and other assets” and derivatives in a liability position are included within “Accounts payable and accrued expenses” in the accompanying consolidated balance sheets. (2) The derivative agreements swap a blended fixed rate of 4.52 % for a blended floating rate of LIBOR plus 3.70 %. 25 (3) Subsequent to September 30, 2022, we terminated these two forward-starting interest rate swaps with notional amounts totaling $ 150.0 million and received proceeds of $ 30.9 million upon termination. This settlement is included as a component of accumulated other comprehensive income and will be reclassified to earnings over time as the hedged items are recognized in earnings. These interest rate derivative agreements are the only assets or liabilities that we record at fair value on a recurring basis. The valuation of these assets and liabilities is determined using widely accepted techniques including discounted cash flow analysis. These techniques consider the contractual terms of the derivatives (including the period to maturity) and use observable market-based inputs such as interest rate curves and implied volatilities. We also incorporate credit valuation adjustments into the fair value measurements to reflect nonperformance risk on both our part and that of the respective counterparties. We determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, although the credit valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties. As of September 30, 2022 and December 31, 2021, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined the credit valuation adjustments were not significant to the overall valuation of our derivatives. As a result, we determined our derivative valuations were classified within Level 2 of the fair value hierarchy. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to earnings over time as the hedged items are recognized in earnings. Approximately $ 1.2 million and $ 1.7 million was reclassified as a reduction to earnings during the three months ended September 30, 2022 and 2021, respectively. Approximately $ 8.6 million and $ 4.1 million was reclassified as a reduction to earnings during the nine months ended September 30, 2022 and 2021, respectively. As interest payments on our derivatives are made over the next 12 months, we estimate the decrease to interest expense to be $ 13.1 million, assuming the current LIBOR and SOFR curves. Unrealized gains and losses on our interest rate derivative agreements are the only components of the change in accumulated other comprehensive loss. NOTE 9. SHAREHOLDERS’ EQUITY Distributions Our Board of Trustees declared a cash distribution of $ 0.22 per common share and Common Unit for the third quarter of 2022. This distribution was paid on October 14, 2022 to common shareholders and Common Unit holders of record as of October 7, 2022. At-The-Market Offering Program On February 23, 2021, the Company and the Operating Partnership entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with each of BofA Securities, Inc., Citigroup Global Markets Inc., KeyBanc Capital Markets Inc. 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 their filing of a shelf registration statement on November 16, 2021 with the SEC. As of September 30, 2022, the Company has no t sold any common shares under the ATM Program. The Operating Partnership intends to use the net proceeds, if any, to repay borrowings under its 2022 Revolving Facility and other indebtedness and for working capital and other general corporate purposes. The Operating Partnership may also use the net proceeds for acquisitions of operating properties and the development or redevelopment of properties, although there are currently no understandings, commitments or agreements to do so. Share Repurchase Program In February 2021, the Company’s Board of Trustees approved a share repurchase program, authorizing share repurchases up to an aggregate of $ 150.0 million (the “Share Repurchase Program”). 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 of $ 300.0 million. As of September 30, 2022, the Company has no t 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 2022 Revolving Facility, subject 26 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. NOTE 10. EARNINGS PER SHARE OR UNIT Basic earnings per share or unit is calculated based on the weighted average number of common shares or units outstanding during the period. Diluted earnings per share or unit is determined based on the weighted average number of common shares or units outstanding during the period combined with the incremental average common shares or units that would have been outstanding assuming the conversion of all potentially dilutive common shares or units into common shares or units as of the earliest date possible. Potentially dilutive securities include (i) outstanding options to acquire common shares; (ii) Limited Partner Units, which may be exchanged for either cash or common shares at the Parent Company’s option and under certain circumstances; (iii) appreciation-only Long-Term Incentive Plan (“AO LTIP”) units; and (iv) deferred common share units, which may be credited to the personal accounts of non-employee trustees in lieu of compensation paid in cash or the issuance of common shares to such trustees. Limited Partner Units have been omitted from the Parent Company’s denominator for the purpose of computing diluted earnings per share since the effect of including these amounts in the denominator would have no dilutive impact. Weighted average Limited Partner Units outstanding were 3.0 million and 2.7 million for the three and nine months ended September 30, 2022, respectively, and 2.4 million and 2.5 million for the three and nine months ended September 30, 2021, respectively. Due to the net loss allocable to common shareholders and Common Unit holders for the three and nine months ended September 30, 2022 and the three months ended September 30, 2021, no securities had a dilutive impact for those periods. NOTE 11. COMMITMENTS AND CONTINGENCIES Other Commitments and Contingencies We are obligated under various completion guarantees with certain lenders and lease agreements with tenants to complete all or portions of a development project and tenant-specific space currently under construction. We believe we currently have sufficient financing in place to fund these projects and expect to do so primarily through free cash flow or borrowings on the 2022 Revolving Facility. In 2017, we provided a repayment guaranty on a $ 33.8 million construction loan associated with the development of the Embassy Suites at the University of Notre Dame, consistent with our 35 % ownership interest. Our portion of the repayment guaranty is limited to $ 5.9 million and the guaranty’s term is through July 1, 2024, the maturity date of the construction loan. As of September 30, 2022, the outstanding loan balance was $ 33.6 million, of which our share was $ 11.8 million. The loan is secured by the hotel. As of September 30, 2022, we had outstanding letters of credit totaling $ 1.5 million with no amounts advanced against these instruments. Legal Proceedings We are not subject to any material litigation nor, to management’s knowledge, is any material litigation currently threatened against us. We are parties to routine litigation, claims, and administrative proceedings arising in the ordinary course of business. Management believes that such matters will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows taken as a whole. 27 NOTE 12. SUBSEQUENT EVENTS Subsequent to September 30, 2022, we: • redeemed all remaining Class B units related to a joint venture that owned Crossing at Killingly Commons that was entered into by Inland Diversified prior to its merger with the Company for $ 9.7 million; • sold one ground lease at Lincoln Plaza, our multi-tenant retail property in Worcester, Massachusetts, for a sales price of $ 10.0 million; and • terminated two forward-starting interest rate swaps with notional amounts totaling $ 150.0 million and received proceeds of $ 30.9 million upon termination. This settlement is included as a component of accumulated other comprehensive income and will be reclassified to earnings over time as the hedged items are recognized in earnings. 28