What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-07 compared with 2023-05-03 · 178 added, 93 removed, 345 unchanged (44% of the section changed)

37 unchanged sentences

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

As of March 31, 2023, we owned interests in 181 operating retail properties totaling approximately 28.5 million square feet, excluding one operating retail property classified as held for sale, and one office property with 0.3 million square feet.

As of June 30, 2023, we owned interests in 181 operating retail properties totaling approximately 28.6 million square feet and one office property with 0.3 million square feet.

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

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

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

Prior to 2021, inflation was relatively low and had a minimal impact on our operating and financial performance;

11 unchanged sentences

Operating Activity

During the first quarter of 2023, we executed new and renewal leases on 144 individual spaces totaling 831,231 square feet (13.0% cash leasing spread on 94 comparable leases).

New leases were signed on 44 individual spaces for 225,651 square feet of gross leasable area (“GLA”) (38.0% cash leasing spread on 17 comparable leases), while renewal leases were signed on 100 individual spaces for 605,580 square feet of GLA (10.0% cash leasing spread on 77 comparable leases).

During the second quarter of 2023, we executed new and renewal leases on 190 individual spaces totaling 1,331,056 square feet (14.8% cash leasing spread on 146 comparable leases).

New leases were signed on 52 individual spaces for 234,140 square feet of gross leasable area (“GLA”) (45.5% cash leasing spread on 29 comparable leases), while non-option renewal leases were signed on 85 individual spaces for 289,661 square feet of GLA (11.9% cash leasing spread on 64 comparable leases) and option renewals were signed on 53 individual spaces for 807,255 square feet of GLA (8.6% cash leasing spread).

Excluding option renewals, the blended cash spreads for comparable new and non-option renewal leases were 24.0%.

1 unchanged sentence

Results of Operations

The comparability of results of operations for the three months ended March 31, 2023 and 2022 is affected by our development, redevelopment, and operating property acquisition and disposition activities during these periods.

The comparability of results of operations for the three and six months ended June 30, 2023 and 2022 is affected by our development, redevelopment, and operating property acquisition and disposition activities during these periods.

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

The following operating properties were acquired at various times during the period from January 1, 2022 through March 31, 2023:

The following operating properties were acquired at various times during the period from January 1, 2022 through June 30, 2023:

Property Name Metropolitan

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Palms Plaza Miami, FL July 15, 2022 68,976

The following operating properties were sold during the period from January 1, 2022 through March 31, 2023:

The following operating and other properties were sold during the period from January 1, 2022 through June 30, 2023:

Property Name MSA Disposition Date GLA

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Worcester, MA October 27, 2022 —

Kingwood Commons Houston, TX May 8, 2023 158,172

Pan Am Plaza & Garage Indianapolis, IN June 8, 2023 —

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

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Development and Redevelopment Projects

The following properties were under active development or redevelopment at various times during the period from January 1, 2022 through March 31, 2023 and removed from our operating portfolio:

The following properties were under active development or redevelopment at various times during the period from January 1, 2022 through June 30, 2023 and removed from our operating portfolio:

Project Name MSA Transition to

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The Landing at Tradition – Phase II Port St.

Lucie, FL September 2021 Pending 39,900

Carillon MOB Washington, D.C.

Lucie, FL September 2021 June 2023 39,900

Carillon MOB (2)

Washington, D.C.

October 2021 Pending 126,000

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Shoppes at Quarterfield Baltimore, MD October 2021 June 2022 58,000

Edwards Multiplex – Ontario Los Angeles, CA March 2023 Pending 124,614

Edwards Multiplex – Ontario (2)

Los Angeles, CA March 2023 Pending 124,614

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

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(3) A portion of the Hamilton Crossing Centre redevelopment was sold in January 2022.

Comparison of Operating Results for the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

The following table reflects changes in the components of our consolidated statements of operations for the three months ended March 31, 2023 and 2022 (in thousands) :

Three Months Ended March 31,

Comparison of Operating Results for the Three Months Ended June 30, 2023 to the Three Months Ended June 30, 2022

The following table reflects changes in the components of our consolidated statements of operations for the three months ended June 30, 2023 and 2022 (in thousands) :

Three Months Ended June 30,

2023 2022 Change

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Interest expense (27,205) (25,709) (1,496)

Income tax benefit of taxable REIT subsidiary 29 71 (42)

Equity in loss of unconsolidated subsidiaries (244) (314) 70

Income tax (expense) benefit of taxable REIT subsidiary (45) 188 (233)

Equity in earnings of unconsolidated subsidiaries 118 114 4

Other income (expense), net 304 (162) 466

Net income (loss) 5,561 (16,826) 22,387

Net (income) loss attributable to noncontrolling interests (170) 22 (192)

Net income (loss) attributable to common shareholders $ 5,391 $ (16,804) $ 22,195

Net income 32,481 13,445 19,036

Net income attributable to noncontrolling interests (423) (314) (109)

Net income attributable to common shareholders $ 32,058 $ 13,131 $ 18,927

Property operating expense to total revenue ratio 13.0 % 12.9 %

1 unchanged sentence

three months ended

March 31, 2022 to 2023

June 30, 2022 to 2023

Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (1,146)

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The net increase of $7.6 million in rental income for properties that were fully operational during 2022 and 2023 is primarily due to increases in the following:

(i) base minimum rent of $6.3 million, (ii) tenant reimbursements of $2.9 million due to higher recoverable common area maintenance expenses and real estate taxes, and (iii) overage rent of $1.0 million due to improved tenant performance.

These variances were partially offset by an increase in bad debt expense of $1.2 million and lower lease termination fees of $0.3 million.

(i) base minimum rent of $5.2 million, (ii) lease termination income of $1.9 million, and (iii) overage rent of $0.6 million due to improved tenant performance, along with lower bad debt expense of $0.8 million.

These variances were partially offset by decreases in ancillary income of $0.6 million and tenant reimbursements of $0.4 million mainly due to current year real estate tax refunds due to tenants.

The occupancy of the fully operational properties increased from 91.5% for 2022 to 92.3% for 2023.

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

This revenue increased by $0.7 million primarily as a result of insurance recovery proceeds of $0.3 million received during the three months ended March 31, 2023 and an increase in ancillary income.

We recorded fee income of $1.8 million and $2.3 million during the three months ended March 31, 2023 and 2022, respectively, from property management and development services provided to third parties and unconsolidated joint ventures.

This revenue decreased by $1.8 million primarily as a result of lower gains on sales of undepreciated assets recognized during the three months ended June 30, 2023 and a decrease in parking revenue.

We recorded fee income of $1.0 million and $2.7 million during the three months ended June 30, 2023 and 2022, respectively, from property management and development services provided to third parties and unconsolidated joint ventures.

The decrease in fee income is primarily related to a decrease in development fees earned related to the development of a corporate campus for Republic Airways at Hamilton Crossing Centre.

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three months ended

March 31, 2022 to 2023

June 30, 2022 to 2023

Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (321)

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Total $ 1,109

The net increase of $1.0 million in property operating expenses for properties that were fully operational during 2022 and 2023 is primarily due to increases of $0.5 million in insurance expense and landscaping and a $0.2 million increase in utilities, partially offset by a $0.3 million decrease in repairs and maintenance.

As a percentage of revenue, property operating expenses decreased from 13.3% to 13.2% due to an increase in revenue in 2023.

Real estate taxes increased $0.3 million, or 1.2%, due to the following (in thousands) :

The net increase of $1.0 million in property operating expenses for properties that were fully operational during 2022 and 2023 is primarily due to increases of $0.8 million in non-recoverable operating expenses and $0.6 million in landscaping and repairs and maintenance expense, partially offset by a $0.5 million decrease in insurance expense.

As a percentage of revenue, property operating expenses increased from 12.9% to 13.0% due to an increase in expenses in 2023.

Real estate taxes decreased $1.2 million, or 4.3%, due to the following (in thousands) :

three months ended

March 31, 2022 to 2023

June 30, 2022 to 2023

Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (411)

1 unchanged sentence

Properties fully operational during 2022 and 2023 and other (1,410)

The net increase of $0.6 million in real estate taxes for properties that were fully operational during 2022 and 2023 is primarily due to lower real estate tax refunds received in 2023, partially offset by a decrease in real estate tax assessments at certain properties in the portfolio in 2023.

Total $ (1,186)

The net decrease of $1.4 million in real estate taxes for properties that were fully operational during 2022 and 2023 is primarily due to higher real estate tax refunds received in 2023 and lower real estate tax assessments at certain properties in the portfolio in 2023.

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

General, administrative and other expenses increased $0.1 million, or 0.6%.

This increase is primarily due to higher compensation expense, offset by lower head count than the comparative period.

The Company did not incur any significant merger and acquisition costs related to the merger with RPAI during the three months ended March 31, 2023.

The Company incurred $0.9 million of merger and acquisition costs during the three months ended March 31, 2022, primarily consisting of professional fees and technology costs.

General, administrative and other expenses increased $0.7 million, or 5.0%, primarily due to higher compensation expense.

The Company did not incur any significant merger and acquisition costs related to the merger with RPAI during the three months ended June 30, 2023 and 2022.

Depreciation and amortization expense decreased $10.3 million, or 8.6%, due to the following (in thousands) :

three months ended

March 31, 2022 to 2023

June 30, 2022 to 2023

Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (1,056)

2 unchanged sentences

Total $ (10,299)

The net decrease of $11.6 million in depreciation and amortization at properties that were fully operational during 2022 and 2023 is primarily due to certain assets with shorter useful lives that became fully depreciated during 2022.

Interest expense decreased $0.1 million, or 0.3%, primarily due to favorable interest rate swaps, partially offset by higher interest costs related to our variable rate debt, including borrowings on the Revolving Facility that were used to repay mortgages payable at maturity.

The net decrease of $10.9 million in depreciation and amortization at properties that were fully operational during 2022 and 2023 is primarily due to certain assets with shorter useful lives that became fully depreciated during the prior year.

We recorded a net gain on sales of operating properties of $28.4 million for the three months ended June 30, 2023 on the sale of Kingwood Commons and the undeveloped land and related parking garage at Pan Am Plaza compared to a net gain of $24.0 million on the sale of Plaza Del Lago for the three months ended June 30, 2022.

Interest expense increased $1.5 million, or 5.8%, primarily due to higher interest costs related to our variable rate debt, partially offset by favorable interest rate swaps.

Comparison of Operating Results for the Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022

The following table reflects changes in the components of our consolidated statements of operations for the six months ended June 30, 2023 and 2022 (in thousands) :

Six Months Ended June 30,

2023 2022 Change

Rental income $ 408,899 $ 387,097 $ 21,802

Other property-related revenue 3,799 4,919 (1,120)

Fee income 2,811 4,980 (2,169)

Total revenue 415,509 396,996 18,513

Property operating 54,546 52,051 2,495

Real estate taxes 53,880 54,742 (862)

General, administrative and other 27,883 27,118 765

Merger and acquisition costs — 898 (898)

Depreciation and amortization 217,533 241,265 (23,732)

Total expenses 353,842 376,074 (22,232)

Gain on sales of operating properties, net 28,440 27,126 1,314

Operating income 90,107 48,048 42,059

Other (expense) income:

Interest expense (52,630) (51,223) (1,407)

Income tax (expense) benefit of taxable REIT subsidiary (16) 259 (275)

Equity in loss of unconsolidated subsidiaries (126) (200) 74

Other income (expense), net 707 (265) 972

Net income (loss) 38,042 (3,381) 41,423

Net income attributable to noncontrolling interests (593) (292) (301)

Net income (loss) attributable to common shareholders $ 37,449 $ (3,673) $ 41,122

Property operating expense to total revenue ratio 13.1 % 13.1 %

Rental income (including tenant reimbursements) increased $21.8 million, or 5.6%, due to the following (in thousands) :

six months ended

June 30, 2022 to 2023

Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (2,117)

Properties under redevelopment or acquired during 2022 and/or 2023 7,512

Properties fully operational during 2022 and 2023 and other 16,407

Total $ 21,802

The net increase of $16.4 million in rental income for properties that were fully operational during 2022 and 2023 is primarily due to increases in the following:

(i) base minimum rent of $11.4 million due to an increase in occupancy, (ii) tenant reimbursements of $2.5 million due to higher recoverable common area maintenance expenses, (iii) overage rent of $1.7 million due to improved tenant performance, and (iv) lease termination income of $1.6 million.

These variances were partially offset by an increase in bad debt expense of $0.4 million and a decrease in ancillary income of $0.3 million.

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

This revenue decreased by $1.1 million primarily as a result of lower gains on sales of undepreciated assets recognized during the six months ended June 30, 2023 and a decrease in parking revenue.

We recorded fee income of $2.8 million and $5.0 million during the six months ended June 30, 2023 and 2022, respectively, from property management and development services provided to third parties and unconsolidated joint ventures.

The decrease in fee income is primarily related to a decrease in development fees earned related to the development of a corporate campus for Republic Airways at Hamilton Crossing Centre.

Property operating expenses increased $2.5 million, or 4.8%, due to the following (in thousands) :

six months ended

June 30, 2022 to 2023

Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (414)

Properties under redevelopment or acquired during 2022 and/or 2023 883

Properties fully operational during 2022 and 2023 and other 2,026

Total $ 2,495

The net increase of $2.0 million in property operating expenses for properties that were fully operational during 2022 and 2023 is primarily due to increases of $1.0 million in non-recoverable operating expenses and $0.9 million in landscaping and repairs and maintenance expense, partially offset by a $0.2 million decrease in insurance expense.

As a percentage of revenue, property operating expenses remained flat at 13.1% for both periods.

Real estate taxes decreased $0.9 million, or 1.6%, due to the following (in thousands) :

six months ended

June 30, 2022 to 2023

Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (875)

Properties under redevelopment or acquired during 2022 and/or 2023 863

Properties fully operational during 2022 and 2023 and other (850)

Total $ (862)

The net decrease of $0.9 million in real estate taxes for properties that were fully operational during 2022 and 2023 is primarily due to a decrease in real estate tax assessments at certain properties in the portfolio in 2023, partially offset by lower real estate tax refunds received in 2023.

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

General, administrative and other expenses increased $0.8 million, or 2.8%.

This increase is primarily due to higher compensation expense, partially offset by lower head count than the comparative period.

The Company did not incur any significant merger and acquisition costs related to the merger with RPAI during the six months ended June 30, 2023.

The Company incurred $0.9 million of merger and acquisition costs during the six months ended June 30, 2022, primarily consisting of professional fees and technology costs.

Depreciation and amortization expense decreased $23.7 million, or 9.8%, due to the following (in thousands) :

six months ended

June 30, 2022 to 2023

Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (4,691)

Properties under redevelopment or acquired during 2022 and/or 2023 3,093

Properties fully operational during 2022 and 2023 and other (22,134)

Total $ (23,732)

The net decrease of $22.1 million in depreciation and amortization at properties that were fully operational during 2022 and 2023 is primarily due to certain assets with shorter useful lives that became fully depreciated during the prior year.

We recorded a net gain on sales of operating properties of $28.4 million for the six months ended June 30, 2023 on the sale of Kingwood Commons and the undeveloped land and related parking garage at Pan Am Plaza compared to a net gain of $27.1 million on the sale of Plaza Del Lago and a portion of Hamilton Crossing Centre for the six months ended June 30, 2022.

Interest expense increased $1.4 million, or 2.7%, primarily due to higher interest costs related to our variable rate debt, including borrowings on the Revolving Facility that were used to repay mortgages payable at maturity, partially offset by favorable interest rate swaps.

Net Operating Income and Same Property Net Operating Income

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

For the three months ended March 31, 2023, the same property pool excludes the following:

For the three and six months ended June 30, 2023, the same property pool excludes the following:

• properties acquired or placed in service during 2022 and 2023;

• the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H;

• Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in June 2022 and September 2022, respectively;

• three active development and redevelopment projects;

• Shoppes at Quarterfield, Circle East and The Landing at Tradition – Phase II, which were reclassified from active redevelopment into our operating portfolio in June 2022, September 2022 and June 2023, respectively;

• two active development and redevelopment projects;

• Edwards Multiplex – Ontario, which was reclassified from our operating portfolio into redevelopment in March 2023;

1 unchanged sentence

• office properties.

The following table presents Same Property NOI and a reconciliation to net income (loss) attributable to common shareholders for the three months ended March 31, 2023 and 2022 (dollars in thousands) :

Three Months Ended March 31,

2023 2022 Change

The following table presents Same Property NOI and a reconciliation to net income (loss) attributable to common shareholders for the three and six months ended June 30, 2023 and 2022 (dollars in thousands) :

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

2023 2022 Change 2023 2022 Change

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

177 177 177 177

Leased percentage at period end 94.2 % 94.0 % 94.2 % 94.0 %

6 unchanged sentences

Net operating income – non-same activity (3)

13,356 13,076 24,830 21,895

Total property NOI 153,790 145,928 5.4 % 304,272 285,223 6.7 %

5 unchanged sentences

Gain on sales of operating properties, net 28,440 23,958 28,440 27,126

Net (income) loss attributable to noncontrolling interests

Net income attributable to noncontrolling interests

(423) (314) (593) (292)

Net income (loss) attributable to common shareholders

3 unchanged sentences

(ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H;

(iii) Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in June 2022 and September 2022, respectively;

(iv) three active development and redevelopment projects;

(iii) Shoppes at Quarterfield, Circle East and The Landing at Tradition – Phase II, which were reclassified from active redevelopment into our operating portfolio in June 2022, September 2022 and June 2023, respectively;

(iv) two active development and redevelopment projects;

(v) Edwards Multiplex – Ontario, which was reclassified from our operating portfolio into redevelopment in March 2023;

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

Our Same Property NOI increased 6.5% for the three months ended March 31, 2023 compared to the same period of the prior year primarily due to higher base rent driven by an increase in occupancy and an increase in overage rent.

Our Same Property NOI increased 5.7% for the three months ended June 30, 2023 compared to the same period of the prior year primarily due to higher base rent driven by an increase in occupancy and an increase in overage rent.

Funds From Operations

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From time to time, the Company may report or provide guidance with respect to “FFO, as adjusted,” which removes the impact of certain non-recurring and non-operating transactions or other items the Company does not consider to be representative of its core operating results including, without limitation, (i) gains or losses associated with the early extinguishment of debt, (ii) gains or losses associated with litigation involving the Company that is not in the normal course of business, (iii) merger and acquisition costs, (iv) the impact on earnings from employee severance, (v) the excess of redemption value over carrying value of preferred stock redemption, and (vi) in 2022, the impact of prior period bad debt or the collection of accounts receivable previously written off (“prior period collection impact”) due to the recovery from the COVID-19 pandemic, which are not otherwise adjusted in the Company’s calculation of FFO.

Our calculations of FFO and reconciliation to net income and FFO, as adjusted, for the three months ended March 31, 2023 and 2022 (unaudited) are as follows (dollars in thousands) :

Three Months Ended March 31,

Our calculations of FFO and reconciliation to net income and FFO, as adjusted, for the three and six months ended June 30, 2023 and 2022 (unaudited) are as follows (dollars in thousands) :

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

2023 2022 2023 2022

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

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

Three Months Ended March 31, 2023

Three Months Ended

June 30, 2023

Net income $ 32,481

1 unchanged sentence

Interest expense 27,205

Income tax benefit of taxable REIT subsidiary (29)

Income tax expense of taxable REIT subsidiary 45

EBITDA 169,193

12 unchanged sentences

Net Debt to Adjusted EBITDA 5.0x

(1) Represents Adjusted EBITDA for the three months ended March 31, 2023 (as shown in the table above) multiplied by four.

(1) Represents Adjusted EBITDA for the three months ended June 30, 2023 (as shown in the table above) multiplied by four.

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

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We will continue to monitor the capital markets and may consider raising additional capital through the issuance of our common or preferred shares, unsecured debt securities, or other securities.

As of March 31, 2023, we had approximately $43.7 million in cash on hand, $9.0 million in restricted cash and escrow deposits, $1.0 billion of remaining availability under the $1.1 billion unsecured revolving credit facility (the “Revolving Facility”), and $122.8 million of debt maturities for the remainder of 2023.

As of June 30, 2023, we had approximately $129.3 million in cash on hand, $5.7 million in restricted cash and escrow deposits, $1.1 billion of remaining availability under the $1.1 billion unsecured revolving credit facility (the “Revolving Facility”), and $122.8 million of debt maturities for the remainder of 2023.

During the three months ended June 30, 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.

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

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Therefore, our ability to generate cash from operations is dependent upon the rents that we are able to charge and collect from our tenants.

While we believe that the nature of the properties in which we typically invest—primarily neighborhood and community shopping centers—provides a relatively stable revenue flow, an economic downturn, instability in the banking sector, and/or the ongoing effects of COVID-19, among other events, could adversely affect the ability of some of our tenants to meet their lease obligations.

in the banking sector, tenant bankruptcies, inflation, labor shortages, supply chain constraints, and/or increasing energy prices and interest rates, among other events, could adversely affect the ability of some of our tenants to meet their lease obligations.

Our Principal Capital Resources

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

As of March 31, 2023, we had approximately $1.0 billion available under the Revolving Facility for future borrowings.

We also had $43.7 million in cash and cash equivalents as of March 31, 2023.

We were in compliance with all applicable financial covenants under the Revolving Facility, unsecured term loans and senior unsecured notes as of March 31, 2023.

As of June 30, 2023, we had approximately $1.1 billion available under the Revolving Facility for future borrowings.

We also had $129.3 million in cash and cash equivalents as of June 30, 2023.

We were in compliance with all applicable financial covenants under the Revolving Facility, unsecured term loans and senior unsecured notes as of June 30, 2023.

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

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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 not sold any common shares under the ATM Program.

As of June 30, 2023, the Company has not sold any common shares under the ATM Program.

In the future, we will continue to monitor the capital markets and may consider raising additional capital through the issuance of our common shares, preferred shares or other securities.

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Near-Term Debt Maturities .

As of March 31, 2023, we had $27.8 million of secured debt, excluding scheduled monthly principal payments, and $95.0 million of unsecured debt scheduled to mature prior to March 31, 2024.

As of June 30, 2023, we had $27.8 million of secured debt, excluding scheduled monthly principal payments, and $244.6 million of unsecured debt scheduled to mature prior to or on June 30, 2024.

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

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Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest and principal payments on our debt of approximately $60.0 million and $1.4 million, respectively, for the remainder of 2023, expected dividend payments to our common shareholders and Common Unit holders, and recurring capital expenditures.

In February 2023, 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.

Future distributions, if any, are at the discretion of the Board of Trustees, who will continue to evaluate our

sources and uses of capital, liquidity position, operating fundamentals, maintenance of our REIT qualification and other factors they may deem relevant.

In April 2023, 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.

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

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

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

During the three months ended March 31, 2023, we incurred $3.0 million for recurring capital expenditures on operating properties and $15.1 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of March 31, 2023 (excluding development and redevelopment properties).

During the six months ended June 30, 2023, we incurred $8.0 million for recurring capital expenditures on operating properties and $39.3 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of June 30, 2023 (excluding development and redevelopment properties).

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

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

In 2023, certain retailers have filed for Chapter 11 bankruptcy protection including Bed Bath & Beyond Inc., a tenant that, as of March 31, 2023, occupied 582,000 square feet across 22 locations in our portfolio and generates $7.8 million of annualized base rent.

If leases were rejected in the bankruptcy process, the re-leasing costs may be significant depending on the number of closures.

During the three months ended March 31, 2023, we began redevelopment activities at Edwards Multiplex – Ontario and reclassified this property from our operating portfolio into redevelopment.

As of March 31, 2023, we had development projects under construction at The Landing at Tradition – Phase II, the medical office building at Carillon, and The Corner (IN).

Our share of total estimated costs for these three projects is $102.8 million, of which our share of the remaining expected funding requirement is estimated to be $70.9 million.

As of March 31, 2023, we have incurred $33.0 million of these costs.

In 2023, certain retailers have filed for bankruptcy protection including Bed Bath & Beyond Inc., a tenant that, as of December 31, 2022, occupied 613,000 square feet across 23 locations in our portfolio and generated $8.3 million of annualized base rent.

As of June 30, 2023, eight tenant leases have been rejected in the bankruptcy process and we expect that additional leases will be rejected during the third quarter of 2023.

Re-leasing costs may be significant for the leases that were rejected and we could experience a significant reduction in our revenues from those properties.

During the six months ended June 30, 2023, we completed major redevelopment construction activities at The Landing at Tradition – Phase II and placed this project in service.

In addition, we began redevelopment activities at Edwards Multiplex – Ontario and reclassified this property from our operating portfolio into redevelopment.

As of June 30, 2023, we had development projects under construction at the medical office building at Carillon and The Corner (IN).

Our share of total estimated costs for these two projects is $91.6 million, of which our share of the remaining expected funding requirement is estimated to be $59.7 million.

As of June 30, 2023, we have incurred $24.8 million of these costs.

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

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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 not repurchased any shares under the Share Repurchase Program.

As of June 30, 2023, the Company has not repurchased any shares under the Share Repurchase Program.

Long-Term Liquidity Needs

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Commitments under Ground Leases.

We are obligated under 12 ground leases for approximately 98 acres of land as of March 31, 2023.

We are obligated under 12 ground leases for approximately 98 acres of land as of June 30, 2023.

Most of these ground leases require fixed annual rent payments and the expiration dates of the remaining initial terms of these ground leases range from 2025 to 2092.

Capital Expenditures on Consolidated Properties

The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the three months ended March 31, 2023 (in thousands) :

Three Months Ended

March 31, 2023

The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the six months ended June 30, 2023 (in thousands) :

Six Months Ended

June 30, 2023

Active development and redevelopment projects $ 14,006

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

If we had experienced a 10% reduction in development and redevelopment activities, without a corresponding decrease in indirect project costs, we would have recorded additional expense of $0.1 million for the three months ended March 31, 2023.

Debt Maturities

The following table summarizes the scheduled maturities and principal amortization of the Company’s indebtedness as of March 31, 2023, presented on a calendar year basis (in thousands) :

The following table summarizes the scheduled maturities and principal amortization of the Company’s indebtedness as of June 30, 2023, presented on a calendar year basis (in thousands) :

Principal Payments Term

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

These ratings did not change as of March 31, 2023.

These ratings did not change as of June 30, 2023.

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

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

As of March 31, 2023, we had cash, cash equivalents and restricted cash of $52.7 million.

As of June 30, 2023, we had cash, cash equivalents and restricted cash of $135.0 million.

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

We place our cash and short-term investments with highly rated financial institutions.

While we attempt to limit our exposure at any point in time, occasionally such cash and investments may temporarily exceed the Federal Deposit Insurance Corporation (“FDIC”) and the Securities Investor Protection

Corporation (“SIPC”) insurance limits.

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

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

Comparison of the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022

Comparison of the Six Months Ended June 30, 2023 to the Six Months Ended June 30, 2022

Our cash flow activities are summarized as follows (in thousands) :

Three Months Ended March 31,

Six Months Ended June 30,

2023 2022 Change

Net cash provided by operating activities $ 180,425 $ 154,322 $ 26,103

Net cash used in investing activities (41,514) (62,183) 20,669

Net cash provided by investing activities 8,013 68,646 (60,633)

Net cash used in financing activities (175,454) (224,179) 48,725

Decrease in cash, cash equivalents and restricted cash (69,275) (18,173) (51,102)

Increase (decrease) in cash, cash equivalents and restricted cash 12,984 (1,211) 14,195

Cash, cash equivalents and restricted cash, at beginning of period 121,970 100,363

Cash, cash equivalents and restricted cash, at end of period $ 134,954 $ 99,152

Cash provided by operating activities was $63.6 million for the three months ended March 31, 2023 and $49.6 million for the same period of 2022.

Cash provided by operating activities was $180.4 million for the six months ended June 30, 2023 and $154.3 million for the same period of 2022.

The cash flows were positively impacted from an increase in net operating income.

Cash used in investing activities was $41.5 million for the three months ended March 31, 2023 and $62.2 million for the same period of 2022.

Cash provided by investing activities was $8.0 million for the six months ended June 30, 2023 and $68.6 million for the same period of 2022.

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

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

• Capital expenditures increased by $15.4 million driven by the construction activity at our development projects and anchor leasing activity, partially offset by a change in construction payables of $2.6 million for the three months ended March 31, 2023.

Cash used in financing activities was $91.4 million for the three months ended March 31, 2023 and $5.6 million for the same period of 2022.

• We received net proceeds of $78.6 million from the sale of Kingwood Commons and the undeveloped land and related parking garage at Pan Am Plaza during the six months ended June 30, 2023 compared to net proceeds of $65.4 million from the sale of Plaza Del Lago and a portion of Hamilton Crossing Centre during the six months ended June 30, 2022;

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

• We received the proceeds from a $125.0 million short-term deposit that matured on April 7, 2022 during the six months ended June 30, 2022;

• Capital expenditures increased by $9.0 million driven by the construction activity at our development projects and anchor leasing activity, partially offset by a change in construction payables of $4.0 million for the six months ended June 30, 2023.

Cash used in financing activities was $175.5 million for the six months ended June 30, 2023 and $224.2 million for the same period of 2022.

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

• We borrowed $162.0 million on the Revolving Facility and used the proceeds to repay $199.3 million of mortgage debt during the three months ended March 31, 2023 compared to borrowings of $80.0 million on the Revolving Facility, a portion of which were used to repay $42.2 million of mortgage debt during the three months ended March 31, 2022;

• We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $53.3 million during the three months ended March 31, 2023 compared to distributions of $42.2 million during the three months ended March 31, 2022.

• We borrowed $198.0 million on the Revolving Facility and received proceeds of $95.1 million from the origination of a mortgage payable during the six months ended June 30, 2023 compared to borrowings of $120.0 million on the Revolving Facility during the six months ended June 30, 2022;

• We repaid $198.0 million of borrowings on the Revolving Facility and $163.2 million of mortgages payable during the six months ended June 30, 2023 compared to repayments of $175.0 million on the Revolving Facility and $80.8 million of mortgages payable during the six months ended June 30, 2022;

• We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $106.6 million during the six months ended June 30, 2023 compared to distributions of $86.6 million during the six months ended June 30, 2022.

Critical Accounting Estimates

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

There were no changes made by management to the critical accounting policies in the three months ended March 31, 2023.

There were no changes made by management to the critical accounting policies in the three months ended June 30, 2023.

We discuss the most critical estimates in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 21, 2023.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis