What changed in this filing

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Item 1. Financial Statements

2023-08-07 compared with 2023-05-03 · 179 added, 138 removed, 608 unchanged (34% of the section changed)

15 unchanged sentences

Investments in unconsolidated subsidiaries 10,311 10,414

Assets associated with investment property held for sale 22,727 —

Total assets $ 7,165,099 $ 7,341,982

3 unchanged sentences

Deferred revenue and other liabilities 289,671 298,039

Liabilities associated with investment property held for sale 939 —

Total liabilities 3,405,861 3,516,130

Commitments and contingencies

Limited Partners’ interests in Operating Partnership and other 57,054 53,967

Limited Partners’ interests in the Operating Partnership 60,927 53,967

Common shares, $ 0.01 par value, 490,000,000 shares authorized,

219,374,275 and 219,185,658 shares issued and outstanding at

March 31, 2023 and December 31, 2022, respectively

June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 4,894,907 4,897,736

9 unchanged sentences

($ in thousands, except share and per share data)

Three Months Ended March 31,

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

2023 2022 2023 2022

Rental income $ 205,836 $ 196,205 $ 408,899 $ 387,097

12 unchanged sentences

Interest expense ( 27,205 ) ( 25,709 ) ( 52,630 ) ( 51,223 )

Income tax benefit of taxable REIT subsidiary 29 71

Equity in loss of unconsolidated subsidiaries ( 244 ) ( 314 )

Income tax (expense) benefit of taxable REIT subsidiary ( 45 ) 188 ( 16 ) 259

Equity in earnings (loss) of unconsolidated subsidiaries 118 114 ( 126 ) ( 200 )

Other income (expense), net 304 ( 162 ) 707 ( 265 )

Net income (loss) 32,481 13,445 38,042 ( 3,381 )

Net (income) loss attributable to noncontrolling interests ( 170 ) 22

Net income attributable to noncontrolling interests ( 423 ) ( 314 ) ( 593 ) ( 292 )

Net income (loss) attributable to common shareholders $ 32,058 $ 13,131 $ 37,449 $ ( 3,673 )

4 unchanged sentences

Change in fair value of derivatives 8,642 17,559 ( 3,003 ) 56,497

Total comprehensive (loss) income ( 6,084 ) 22,112

Comprehensive income attributable to noncontrolling interests ( 82 ) ( 203 )

Comprehensive (loss) income attributable to the Company $ ( 6,166 ) $ 21,909

Total comprehensive income 41,123 31,004 35,039 53,116

Comprehensive income attributable to noncontrolling

( 529 ) ( 727 ) ( 611 ) ( 930 )

Comprehensive income attributable to the Company $ 40,594 $ 30,277 $ 34,428 $ 52,186

The accompanying notes are an integral part of these consolidated financial statements.

15 unchanged sentences

Balance at March 31, 2023 219,325,898 $ 2,193 $ 4,896,049 $ 62,787 $ ( 1,255,025 ) $ 3,706,004

Stock compensation activity 48,377 1 2,959 — — 2,960

Other comprehensive income — — — 8,536 — 8,536

Distributions to common shareholders — — — — ( 52,650 ) ( 52,650 )

Net income attributable to common shareholders — — — — 32,058 32,058

Adjustment to redeemable noncontrolling interests — — ( 4,101 ) — — ( 4,101 )

Balance at June 30, 2023 219,374,275 $ 2,194 $ 4,894,907 $ 71,323 $ ( 1,275,617 ) $ 3,692,807

Balance at December 31, 2021 218,949,569 $ 2,189 $ 4,898,673 $ ( 15,902 ) $ ( 962,913 ) $ 3,922,047

5 unchanged sentences

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 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

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

15 unchanged sentences

Capital expenditures ( 67,767 ) ( 58,731 )

Net proceeds from sales of land 917 1,935

Net proceeds from sales of operating properties 78,556 65,408

Investment in short-term deposits — 125,000

Small business loan repayments 287 372

1 unchanged sentence

Distribution from unconsolidated joint venture — 1,144

Net cash used in investing activities ( 41,514 ) ( 62,183 )

Net cash provided by investing activities 8,013 68,646

Cash flows from financing activities:

27 unchanged sentences

Investments in unconsolidated subsidiaries 10,311 10,414

Assets associated with investment property held for sale 22,727 —

Total assets $ 7,165,099 $ 7,341,982

3 unchanged sentences

Deferred revenue and other liabilities 289,671 298,039

Liabilities associated with investment property held for sale 939 —

Total liabilities 3,405,861 3,516,130

Commitments and contingencies

Limited Partners’ interests in Operating Partnership and other 57,054 53,967

Limited Partners’ interests in the Operating Partnership 60,927 53,967

Partners’ Equity:

Common equity, 219,374,275 and 219,185,658 units issued and outstanding

at March 31, 2023 and December 31, 2022, respectively

at June 30, 2023 and December 31, 2022, respectively

3,621,484 3,692,171

9 unchanged sentences

(in thousands, except unit and per unit data)

Three Months Ended March 31,

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

2023 2022 2023 2022

Rental income $ 205,836 $ 196,205 $ 408,899 $ 387,097

12 unchanged sentences

Interest expense ( 27,205 ) ( 25,709 ) ( 52,630 ) ( 51,223 )

Income tax benefit of taxable REIT subsidiary 29 71

Equity in loss of unconsolidated subsidiaries ( 244 ) ( 314 )

Income tax (expense) benefit of taxable REIT subsidiary ( 45 ) 188 ( 16 ) 259

Equity in earnings (loss) of unconsolidated subsidiaries 118 114 ( 126 ) ( 200 )

Other income (expense), net 304 ( 162 ) 707 ( 265 )

11 unchanged sentences

Change in fair value of derivatives 8,642 17,559 ( 3,003 ) 56,497

Total comprehensive (loss) income ( 6,084 ) 22,112

Comprehensive income attributable to noncontrolling interests ( 104 ) ( 144 )

Comprehensive (loss) income attributable to common unitholders $ ( 6,188 ) $ 21,968

Total comprehensive income 41,123 31,004 35,039 53,116

Comprehensive income attributable to noncontrolling

( 30 ) ( 182 ) ( 134 ) ( 326 )

Comprehensive income attributable to common

$ 41,093 $ 30,822 $ 34,905 $ 52,790

The accompanying notes are an integral part of these consolidated financial statements.

14 unchanged sentences

Balance at March 31, 2023 $ 3,643,217 $ 62,787 $ 3,706,004

Stock compensation activity 2,960 — 2,960

Other comprehensive income attributable to Parent Company — 8,536 8,536

Distributions to Parent Company ( 52,650 ) — ( 52,650 )

Net income attributable to Parent Company 32,058 — 32,058

Adjustment to redeemable noncontrolling interests ( 4,101 ) — ( 4,101 )

Balance at June 30, 2023 $ 3,621,484 $ 71,323 $ 3,692,807

Balance at December 31, 2021 $ 3,937,949 $ ( 15,902 ) $ 3,922,047

5 unchanged sentences

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 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

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

15 unchanged sentences

Capital expenditures ( 67,767 ) ( 58,731 )

Net proceeds from sales of land 917 1,935

Net proceeds from sales of operating properties 78,556 65,408

Investment in short-term deposits — 125,000

Small business loan repayments 287 372

1 unchanged sentence

Distribution from unconsolidated joint venture — 1,144

Net cash used in investing activities ( 41,514 ) ( 62,183 )

Net cash provided by investing activities 8,013 68,646

Cash flows from financing activities:

14 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2023

June 30, 2023

($ in thousands, except share, per share, unit and per unit amounts and where indicated in millions or billions)

6 unchanged sentences

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 March 31, 2023 owned approximately 98.6 % of the common partnership interests in the Operating Partnership (“General Partner Units”).

The Parent Company is the sole general partner of the Operating Partnership, and as of June 30, 2023 owned approximately 98.6 % of the common partnership interests in the Operating Partnership (“General Partner Units”).

The remaining 1.4 % of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) were owned by the limited partners.

3 unchanged sentences

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”).

The accompanying unaudited consolidated 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 March 31, 2023 and for the three months ended March 31, 2023 and 2022 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, 2022.

The unaudited consolidated financial statements as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein.

The unaudited 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, 2022.

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.

1 unchanged sentence

The results of operations for the interim periods are not necessarily indicative of the results that may be expected on an annual basis.

As of March 31, 2023, the Company’s portfolio consisted of the following (square footage in thousands) :

As of June 30, 2023, the Company’s portfolio consisted of the following:

Properties Square Footage

Operating retail properties (1)

181 28,590,350

Office properties 1 287,291

Development and redevelopment projects:

The Landing at Tradition – Phase II (2)

Carillon medical office building 1 126,000

1 unchanged sentence

(1) Included within operating retail properties are 11 properties that contain an office component.

Excludes one operating retail property classified as held for sale as of March 31, 2023.

Of the 181 operating retail properties, 178 are consolidated in these financial statements and the remaining three are accounted for under the equity method.

(2) The operating portion of this property is included within the property count for operating retail properties.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Components of Investment Properties

The following table summarizes the composition of the Company’s investment properties as of March 31, 2023 and December 31, 2022 (in thousands) :

The following table summarizes the composition of the Company’s investment properties as of June 30, 2023 and December 31, 2022 (in thousands) :

Balance as of

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Land, buildings and improvements $ 7,589,842 $ 7,656,765

2 unchanged sentences

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 months ended March 31, 2023 and 2022 (in thousands) :

Three Months Ended March 31,

Rental income related to the Company’s operating leases is comprised of the following for the three and six months ended June 30, 2023 and 2022 (in thousands) :

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

2023 2022 2023 2022

Fixed contractual lease payments – operating leases $ 160,134 $ 152,652 $ 318,724 $ 302,476

2 unchanged sentences

Straight-line rent adjustments 2,910 4,530 6,768 8,623

Straight-line rent reserve for uncollectibility ( 314 ) ( 62 )

Straight-line rent recovery (reserve) for uncollectibility 504 ( 202 ) 190 ( 264 )

Amortization of in-place lease liabilities, net 2,645 1,332 5,375 1,915

5 unchanged sentences

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 March 31, 2023, we owned investments in two consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights and we were the primary beneficiary.

As of March 31, 2023, these consolidated VIEs had mortgage debt of $ 28.1 million, which were secured by assets of the VIEs totaling $ 117.2 million.

As of June 30, 2023, we owned investments in two consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights and we were the primary beneficiary.

As of June 30, 2023, these consolidated VIEs had mortgage debt of $ 123.0 million, which were secured by assets of the VIEs totaling $ 227.2 million.

The Operating Partnership guarantees the mortgage debt of these VIEs.

30 unchanged sentences

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 three months ended March 31, 2023 and 2022 (in thousands) :

Three Months Ended March 31,

The following table summarizes the non-redeemable noncontrolling interests in consolidated properties for the six months ended June 30, 2023 and 2022 (in thousands) :

Six Months Ended June 30,

Noncontrolling interests balance as of January 1, $ 5,370 $ 5,146

Net income allocable to noncontrolling interests, excluding redeemable noncontrolling interests 134 62

Noncontrolling interests balance as of March 31,

Noncontrolling interests balance as of June 30,

$ 5,504 $ 5,208

2 unchanged sentences

The Company owns 90 % of the joint venture.

As of March 31, 2023, 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.

Subsequent to March 31, 2023, the construction loan was repaid in conjunction with the origination of a 10-year $ 95.1 million mortgage payable at a fixed interest rate of 5.36 % secured by the joint venture project.

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.

During the three months ended June 30, 2023, the Company originated a 10-year $ 95.1 million mortgage payable at a fixed interest rate of 5.36 % secured by the joint venture project.

In conjunction with the loan origination, the joint venture’s construction loan was repaid.

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 Company expects that these conditions will be met in the second half of 2023.

6 unchanged sentences

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 March 31, 2023 and December 31, 2022, 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.

As of June 30, 2023 and December 31, 2022, 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.

1 unchanged sentence

This adjustment is reflected in our shareholders’ and Parent Company’s equity.

For the three months ended March 31, 2023 and 2022, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:

Three Months Ended March 31,

For the three and six months ended June 30, 2023 and 2022, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:

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

2023 2022 2023 2022

Parent Company’s weighted average interest in Operating Partnership 98.6 % 98.7 % 98.7 % 98.8 %

Limited partners’ weighted average interests in Operating Partnership 1.4 % 1.3 % 1.3 % 1.2 %

As of March 31, 2023, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.6 % and 1.4 %.

As of June 30, 2023, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.6 % and 1.4 %.

As of December 31, 2022, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.7 % and 1.3 %.

4 unchanged sentences

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.

There were 3,034,212 and 2,870,697 Limited Partner Units outstanding as of March 31, 2023 and December 31, 2022, respectively.

There were 3,034,212 and 2,870,697 Limited Partner Units outstanding as of June 30, 2023 and December 31, 2022, respectively.

The increase in Limited Partner Units outstanding from December 31, 2022 is due to non-cash compensation awards granted to our executive officers in the form of Limited Partner Units.

2 unchanged sentences

(“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 March 31, 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.

As of June 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, were 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, 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.

1 unchanged sentence

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 March 31, 2022, 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 three months ended March 31, 2023 and 2022 were as follows (in thousands) :

Three Months Ended March 31,

As of June 30, 2022, 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 six months ended June 30, 2023 and 2022 were as follows (in thousands) :

Six Months Ended June 30,

Redeemable noncontrolling interests balance as of January 1, $ 53,967 $ 55,173

Net income (loss) allocable to redeemable noncontrolling interests 65 ( 34 )

Net income allocable to redeemable noncontrolling interests 459 230

Distributions declared to redeemable noncontrolling interests ( 1,456 ) ( 1,219 )

Other, net including adjustments to redemption value 7,957 2,995

Total limited partners’ interests in Operating Partnership and other

redeemable noncontrolling interests balance as of March 31,

Total limited partners’ interests in the Operating Partnership and other

redeemable noncontrolling interests balance as of June 30,

$ 60,927 $ 57,179

Limited partners’ interests in Operating Partnership $ 57,054 $ 50,306

Limited partners’ interests in the Operating Partnership $ 60,927 $ 47,109

Other redeemable noncontrolling interests in certain subsidiaries — 10,070

Total limited partners’ interests in Operating Partnership and other

redeemable noncontrolling interests balance as of March 31,

Total limited partners’ interests in the Operating Partnership and other

redeemable noncontrolling interests balance as of June 30,

$ 60,927 $ 57,179

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.

We follow the framework established under Financial Accounting Standards Board 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:

7 unchanged sentences

Any recently issued accounting standards or pronouncements have been excluded as they are either not relevant to the Company or are not expected to have a material impact on the Company’s consolidated financial statements.

The Company did not acquire any properties during the three months ended March 31, 2023.

The Company closed on the following asset acquisition during the three months ended March 31, 2022 (dollars in thousands) :

The Company did not acquire any properties during the six months ended June 30, 2023.

The Company closed on the following asset acquisitions during the six months ended June 30, 2022 (dollars in thousands) :

Date Property Name Metropolitan

2 unchanged sentences

February 16, 2022 Pebble Marketplace Las Vegas Multi-tenant retail 85,796 $ 44,100

The above acquisition was funded using a combination of available cash on hand and proceeds from the Company’s unsecured revolving line of credit.

April 13, 2022 MacArthur Crossing Dallas Two-tenant building 56,077 21,920

141,873 $ 66,020

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 sell any properties during the three months ended March 31, 2023.

The Company closed on the following disposition during the three months ended March 31, 2022 (dollars in thousands) :

The Company closed on the following dispositions during the six months ended June 30, 2023 (dollars in thousands) :

Date Property Name MSA Property Type Square

Footage Sales Price Gain

May 8, 2023 Kingwood Commons Houston Multi-tenant retail 158,172 $ 27,350 $ 4,740

June 8, 2023 Pan Am Plaza & Garage Indianapolis Land & garage — 52,025 23,700

158,172 $ 79,375 $ 28,440

The Company closed on the following dispositions during the six months ended June 30, 2022 (dollars in thousands) :

Date Property Name MSA Property Type Square

Footage Sales Price Gain

January 26, 2022 Hamilton Crossing Centre Indianapolis Redevelopment (1)

As of March 31, 2023, the Company had entered into a contract to sell Kingwood Commons, a 158,172 square foot multi-tenant retail property located in the Houston MSA.

This property qualified for held for sale accounting treatment upon meeting all applicable GAAP criteria during the quarter ended March 31, 2023, at which time depreciation and amortization were ceased.

In addition, the assets and liabilities associated with this property are separately classified as held for sale in the accompanying consolidated balance sheet as of March 31, 2023.

No properties qualified for held for sale accounting treatment as of December 31, 2022.

The following table presents the assets and liabilities associated with the investment property, Kingwood Commons, classified as held for sale as of March 31, 2023 (in thousands) :

March 31, 2023

Investment properties, at cost $ 34,856

accumulated depreciation ( 12,367 )

Net investment properties 22,489

Tenant and other receivables 123

Deferred costs, net 104

Prepaid and other assets 11

Assets associated with investment property held for sale $ 22,727

Accounts payable and accrued expenses $ 277

Deferred revenue and other liabilities 662

Liabilities associated with investment property held for sale $ 939

— $ 6,900 $ 3,168

June 16, 2022 Plaza Del Lago Chicago Multi-tenant retail (2)

100,016 58,650 23,958

100,016 $ 65,550 $ 27,126

(1) We sold a portion of the redevelopment at Hamilton Crossing Centre.

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

There were no discontinued operations for the six months ended June 30, 2023 and 2022 as none of the dispositions represented a strategic shift that has had, or will have, a material effect on our operations or financial results.

DEFERRED COSTS AND INTANGIBLES, NET

1 unchanged sentence

Deferred leasing costs, lease intangibles and similar costs are amortized on a straight-line basis over the terms of the related leases.

As of March 31, 2023 and December 31, 2022, deferred costs consisted of the following (in thousands) :

March 31, 2023 December 31, 2022

As of June 30, 2023 and December 31, 2022, deferred costs consisted of the following (in thousands) :

June 30, 2023 December 31, 2022

Acquired lease intangible assets $ 472,486 $ 522,152

2 unchanged sentences

accumulated amortization ( 189,342 ) ( 179,166 )

$ 381,643 $ 409,828

deferred costs associated with investment property held for sale ( 104 ) —

Total $ 353,714 $ 409,828

2 unchanged sentences

The amounts of such amortization included in the accompanying consolidated statements of operations and comprehensive income are as follows (in thousands) :

Three Months Ended March 31,

Six Months Ended June 30,

Amortization of deferred leasing costs, lease intangibles and other $ 57,610 $ 81,821

4 unchanged sentences

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.

As of March 31, 2023 and December 31, 2022, deferred revenue, intangibles, net and other liabilities consisted of the following (in thousands) :

March 31, 2023 December 31, 2022

As of June 30, 2023 and December 31, 2022, deferred revenue, intangibles, net and other liabilities consisted of the following (in thousands) :

June 30, 2023 December 31, 2022

Unamortized in-place lease liabilities $ 176,530 $ 188,815

2 unchanged sentences

Lease liabilities 68,168 67,167

$ 295,422 $ 298,039

deferred revenue associated with investment property held for sale ( 662 ) —

Total $ 289,671 $ 298,039

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 $ 5.9 million and $ 3.9 million for the three months ended March 31, 2023 and 2022, respectively.

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 $ 11.6 million and $ 8.5 million for the six months ended June 30, 2023 and 2022, respectively.

MORTGAGE AND OTHER INDEBTEDNESS

The following table summarizes the Company’s indebtedness as of March 31, 2023 and December 31, 2022 (in thousands) :

March 31, 2023 December 31, 2022

The following table summarizes the Company’s indebtedness as of June 30, 2023 and December 31, 2022 (in thousands) :

June 30, 2023 December 31, 2022

Mortgages payable $ 165,554 $ 233,621

6 unchanged sentences

Total mortgage and other indebtedness, net $ 2,937,963 $ 3,010,299

Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of March 31, 2023, considering the impact of interest rate swaps, is summarized below (dollars in thousands) :

Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of June 30, 2023, considering the impact of interest rate swaps, is summarized below (dollars in thousands) :

Outstanding Ratio Weighted Average

8 unchanged sentences

(1) Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps.

As of March 31, 2023, $ 820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 2.4 years.

As of June 30, 2023, $ 820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 2.2 years.

(2) Variable rate debt includes the portion of fixed rate debt that has been hedged by interest rate swaps.

As of March 31, 2023, $ 155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 2.4 years.

As of June 30, 2023, $ 155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 2.2 years.

Mortgages Payable

The following table summarizes the Company’s mortgages payable (dollars in thousands) :

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Balance Weighted Average

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Total mortgages payable $ 165,554 $ 233,621

(1) The fixed rate mortgages had interest rates ranging from 3.75 % to 5.73 % as of March 31, 2023 and December 31, 2022.

(1) The fixed rate mortgages had interest rates ranging from 3.75 % to 5.73 % as of June 30, 2023 and December 31, 2022.

(2) The interest rate on the variable rate mortgage is based on Bloomberg Short Term Bank Yield Index (“BSBY”) plus 160 basis points.

The one-month BSBY rate was 4.92 % and 4.36 % as of March 31, 2023 and December 31, 2022, respectively.

The one-month BSBY rate was 5.21 % and 4.36 % as of June 30, 2023 and December 31, 2022, respectively.

Subsequent to June 30, 2023, the Company amended the loan agreement to extend the maturity date to August 4, 2026, with a one-year extension option.

In addition, the interest rate margin increased to 215 basis points.

In conjunction with the extension, the Company made a $ 9.9 million paydown of the principal balance using available cash on hand.

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 three months ended March 31, 2023, we repaid mortgages payable totaling $ 161.5 million that had a weighted average fixed interest rate of 3.85 % and made scheduled principal payments of $ 0.8 million related to amortizing loans.

During the six months ended June 30, 2023, we (i) originated a 10-year $ 95.1 million mortgage payable at a fixed interest rate of 5.36 % secured by the multifamily rental portion of the expansion project at One Loudoun Downtown – Pads G & H, (ii) repaid mortgages payable totaling $ 161.5 million that had a weighted average fixed interest rate of 3.85 %, and (iii) made scheduled principal payments of $ 1.7 million related to amortizing loans.

Unsecured Notes

The following table summarizes the Company’s senior unsecured notes and exchangeable senior notes (dollars in thousands) :

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Maturity Date Balance Interest Rate Balance Interest Rate

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The following table summarizes the Company’s term loans and revolving line of credit (dollars in thousands) :

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Maturity Date Balance Interest Rate Balance Interest Rate

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(1) $ 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 credit spread was 1.10 % as of March 31, 2023 and December 31, 2022.

The applicable credit spread was 1.10 % as of June 30, 2023 and December 31, 2022.

(2) $ 250,000 of SOFR-based variable rate debt has been swapped to a fixed rate of 5.09 % through October 24, 2025.

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(3) $ 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 March 31, 2023 and December 31, 2022.

The applicable credit spread was 1.05 % as of June 30, 2023 and December 31, 2022.

(4) $ 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 March 31, 2023 and December 31, 2022.

The applicable credit spread was 1.35 % as of June 30, 2023 and December 31, 2022.

(5) 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.

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The Company may irrevocably elect to convert to the ratings-based pricing grid at any time.

As of March 31, 2023, making such an election would have resulted in a lower interest rate;

As of June 30, 2023, 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 Revolving Facility as of March 31, 2023 (dollars in thousands) :

The following table summarizes the key terms of the Revolving Facility as of June 30, 2023 (dollars in thousands) :

Leverage-Based Pricing Investment Grade Pricing

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and (v) a minimum unencumbered interest coverage ratio.

As of March 31, 2023, we were in compliance with all such covenants.

As of March 31, 2023, we had letters of credit outstanding totaling $ 0.3 million, against which no amounts were advanced as of March 31, 2023.

As of June 30, 2023, we were in compliance with all such covenants.

As of June 30, 2023, we had letters of credit outstanding totaling $ 0.3 million, against which no amounts were advanced as of June 30, 2023.

Unsecured Term Loans

As of March 31, 2023, the Operating Partnership has the following unsecured term loans:

As of June 30, 2023, the Operating Partnership has the following unsecured term loans:

(i) a $ 120.0 million unsecured term loan due July 2024 (the “$ 120 M Term Loan”), (ii) a $ 250.0 million unsecured term loan due October 2025 (the “$ 250 M Term Loan”), (iii) a $ 150.0 million unsecured term loan due July 2026 (the “$ 150 M Term Loan”), and (iv) the $ 300 M Term Loan that matures in July 2029, each of which bears interest at a rate of SOFR plus a credit spread.

1 unchanged sentence

The agreements related to the $ 150 M Term Loan and $ 300 M Term Loan include 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 in each agreement.

The following table summarizes the key terms of the unsecured term loans as of March 31, 2023 (dollars in thousands) :

The following table summarizes the key terms of the unsecured term loans as of June 30, 2023 (dollars in thousands) :

Unsecured Term Loans

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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 (in thousands) :

Three Months Ended March 31,

Six Months Ended June 30,

Amortization of debt issuance costs $ 1,782 $ 1,370

Fair Value of Fixed and Variable Rate Debt

As of March 31, 2023, the estimated fair value of fixed rate debt was $ 1.8 billion compared to the book value of $ 2.0 billion.

As of June 30, 2023, 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 3.75 % to 8.56 %.

As of March 31, 2023, the estimated fair value of variable rate debt was $ 947.8 million compared to the book value of $ 973.1 million.

As of June 30, 2023, the estimated fair value of variable rate debt was $ 850.5 million compared to the book value of $ 847.9 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 6.34 % to 7.34 %.

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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.

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 March 31, 2023 and December 31, 2022 (dollars in thousands) :

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 June 30, 2023 and December 31, 2022 (dollars in thousands) :

Fair Value Assets (Liabilities) (1)

Type of Hedge Number of Instruments Aggregate Notional Reference Rate Interest Rate Effective Date Maturity Date March 31, 2023 December 31, 2022

Type of Hedge Number of Instruments Aggregate Notional Reference Rate Interest Rate Effective Date Maturity Date June 30, 2023 December 31, 2022

Cash Flow Four $ 250,000 SOFR 2.99 % 12/1/2022 10/24/2025 $ 8,633 $ 7,134

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This settlement is included as a component of “Accumulated other comprehensive income” in the accompanying consolidated balance sheets and is being reclassified to earnings over time as the hedged items are recognized in earnings.

During the three months ended March 31, 2023, we accelerated the reclassification of $ 1.5 million in accumulated other comprehensive income as a reduction to interest expense as a result of a portion of the hedged forecasted transaction becoming probable not to occur.

During the six months ended June 30, 2023, we accelerated the reclassification of $ 1.5 million in accumulated other comprehensive income as a reduction to interest expense as a result of a portion of the hedged forecasted transaction becoming probable not to occur.

We currently expect that the debt issuance will occur during 2023.

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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 use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties.

As of March 31, 2023 and December 31, 2022, 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 of June 30, 2023 and December 31, 2022, 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 $ 4.2 million was reclassified as an increase to earnings during the three months ended March 31, 2023 and approximately $ 4.1 million was reclassified as a decrease to earnings during the three months ended March 31, 2022.

As interest payments on our derivatives are made over the next 12 months, we estimate the decrease to interest expense to be approximately $ 25.1 million, assuming the current SOFR and LIBOR curves.

Approximately $ 3.5 million and $ 7.7 million was reclassified as an increase to earnings during the three and six months ended June 30, 2023, respectively.

Approximately $ 3.3 million and $ 7.4 million was reclassified as a decrease to earnings during the three and six months ended June 30, 2022, respectively.

As interest payments on our derivatives are made over the next 12 months, we estimate the decrease to interest expense to be approximately $ 29.9 million, assuming the current SOFR curve.

Unrealized gains and losses on our interest rate derivative agreements are the only components of the change in accumulated other comprehensive income.

1 unchanged sentence

Distributions

Our Board of Trustees declared a cash distribution of $ 0.24 per common share and Common Unit for the first quarter of 2023.

This distribution was paid on April 14, 2023 to common shareholders and Common Unit holders of record as of April 7, 2023.

For the three months ended March 31, 2022, we declared a cash distribution of $ 0.20 per common share and Common Unit.

Our Board of Trustees declared a cash distribution of $ 0.24 per common share and Common Unit for the second quarter of 2023.

This distribution was paid on July 14, 2023 to common shareholders and Common Unit holders of record as of July 7, 2023.

For the six months ended June 30, 2023, we declared cash distributions totaling $ 0.48 per common share and Common Unit.

For the three and six months ended June 30, 2022, we declared cash distributions of $ 0.21 and $ 0.41 , respectively, per common share and Common Unit.

At-The-Market Offering Program

4 unchanged sentences

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.

As of March 31, 2023, the Company has no t sold any common shares under the ATM Program.

As of June 30, 2023, the Company has no t sold any common shares under the ATM Program.

Share Repurchase Program

3 unchanged sentences

In February 2023, the Company extended the Share Repurchase Program for an additional year so it will now terminate on February 28, 2024, if not terminated or extended prior to that date.

As of March 31, 2023, the Company has no t repurchased any shares under the Share Repurchase Program.

As of June 30, 2023, the Company has no t repurchased any shares under the Share Repurchase Program.

EARNINGS PER SHARE OR UNIT

6 unchanged sentences

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 those amounts in the denominator would have no dilutive impact.

Weighted average Limited Partner Units outstanding were 3.0 million and 2.4 million for the three months ended March 31, 2023 and 2022, respectively.

Due to the net loss allocable to common shareholders and Common Unit holders for the three months ended March 31, 2022, no securities had a dilutive impact for this period.

Weighted average Limited Partner Units outstanding were 3.0 million for the three and six months ended June 30, 2023, and 2.8 million and 2.6 million for the three and six months ended June 30, 2022, respectively.

Due to the net loss allocable to common shareholders and Common Unit holders for the six months ended June 30, 2022, no securities had a dilutive impact for this period.

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

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 March 31, 2023, the outstanding loan balance was $ 33.3 million, of which our share was $ 11.7 million.

As of June 30, 2023, the outstanding loan balance was $ 33.1 million, of which our share was $ 11.6 million.

The loan is secured by the hotel.

In 2021, we provided repayment and completion guaranties on loans totaling $ 66.2 million associated with the development of The Corner mixed-use project in the Indianapolis MSA.

As of March 31, 2023, the outstanding balance of the loans was $ 37.2 million, of which our share was $ 18.6 million.

As of March 31, 2023, we had outstanding letters of credit totaling $ 0.3 million with no amounts advanced against these instruments.

As of June 30, 2023, the outstanding balance of the loans was $ 44.5 million, of which our share was $ 22.2 million.

As of June 30, 2023, we had outstanding letters of credit totaling $ 0.3 million with no amounts advanced against these instruments.

Legal Proceedings

3 unchanged sentences

SUBSEQUENT EVENTS

Subsequent to March 31, 2023, we originated a 10-year $ 95.1 million mortgage payable at a fixed interest rate of 5.36 % secured by the multifamily rental portion of the expansion project at One Loudoun Downtown – Pads G & H.

Subsequent to June 30, 2023, we amended the loan agreement on a $ 27.9 million variable rate mortgage payable to extend the maturity date to August 4, 2026, with a one-year extension option.

In addition, the interest rate margin increased to 215 basis points.

In conjunction with the extension, we made a $ 9.9 million paydown of the principal balance using available cash on hand.

On August 7, 2023, a wholly owned subsidiary of the Company (“KRG Development”) assigned to Pan Am Development Partners, LLC (“Assignee”) certain rights and obligations created by a certain project agreement for the development of a hotel on the Pan Am Plaza site across from the Indiana Convention Center in Indianapolis, IN, including certain future development rights and a right of first offer involving the project (collectively, the “Project Rights and Obligations”).

Assignee is a wholly owned subsidiary of Circle Block Investors, LLC, the parent company that owns the Conrad Indianapolis hotel, of which Mr.

Kite, our Chairman Emeritus and the father of John A.

Kite, is the majority owner, and Mr.

Kite, our Chief Executive Officer and Chairman of the Board, and Mr.

McGowan, our President and Chief Operating Officer, are minority owners.

In connection with the transaction, Assignee assumed all Project Rights and Obligations from and after August 7, 2023 and will pay KRG Development an assignment fee of up to $ 3.5 million (the “Assignment Fee”), which is due and payable upon the completion of certain development activities that are expected to occur in 2024.

In connection with the transactions, Mr.

McGowan expressly acknowledged and agreed that they remain subject to their executive employment agreements with the Company, including, without limitation, the obligation of each executive to devote substantially all his business time and effort to the performance of his duties for the Company.

Assignee will engage a team of full-time professionals to perform the Project Rights and Obligations.

The transaction was approved by a special transaction committee of the independent trustees of the Company (the “Transaction Committee”) as well as the Company’s independent trustees.

The Transaction Committee engaged a third-party financial advisor to assist it in determining the net value of the Project Rights and Obligations and establishing the Assignment Fee.

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 1. Financial Statements