KITE REALTY GROUP TRUST 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the accompanying historical financial statements and related notes thereto. In this discussion, unless the context suggests otherwise, references to “our Company,” “we,” “us,” and “our” mean Kite Realty Group Trust and its direct and indirect subsidiaries, including Kite Realty Group, L.P. CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events and actual results, performance, transactions or achievements, financial or otherwise, may differ materially from the results, performance, transactions or achievements, financial or otherwise, expressed or implied by the forward-looking statements. Risks, uncertainties and other factors that might cause such differences, some of which could be material, include but are not limited to: • national and local economic, business, banking, real estate and other market conditions, particularly in connection with low or negative growth in the U.S. economy as well as economic uncertainty (including a potential economic slowdown or recession, rising interest rates, inflation, unemployment, or limited growth in consumer income or spending); • financing risks, including the availability of, and costs associated with, sources of liquidity; • our ability to refinance, or extend the maturity dates of, our indebtedness; • the level and volatility of interest rates; • the financial stability of tenants; • the competitive environment in which we operate, including potential oversupplies of and reduction in demand for rental space; • acquisition, disposition, development and joint venture risks; • property ownership and management risks, including the relative illiquidity of real estate investments, and expenses, vacancies or the inability to rent space on favorable terms or at all; • our ability to maintain our status as a real estate investment trust (“REIT”) for U.S. federal income tax purposes; • potential environmental and other liabilities; • impairment in the value of real estate property we own; • the attractiveness of our properties to tenants, the actual and perceived impact of e-commerce on the value of shopping center assets and changing demographics and customer traffic patterns; • business continuity disruptions and a deterioration in our tenants’ ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed to operate efficiently, causing costs to rise sharply and inventory to fall; • risks related to our current geographical concentration of properties in Texas, Florida, Maryland, New York, and North Carolina; • civil unrest, acts of violence, terrorism or war, acts of God, climate change, epidemics, pandemics (including the ongoing pandemic of the novel coronavirus (“COVID-19”)), natural disasters and severe weather conditions, including such events that may result in underinsured or uninsured losses or other increased costs and expenses; 27 • changes in laws and government regulations including governmental orders affecting the use of our properties or the ability of our tenants to operate, and the costs of complying with such changed laws and government regulations; • possible short-term or long-term changes in consumer behavior due to COVID-19 and the fear of future pandemics; • our ability to satisfy environmental, social or governance standards set by various constituencies; • insurance costs and coverage; • risks associated with cybersecurity attacks and the loss of confidential information and other business disruptions; • other factors affecting the real estate industry generally; and • other risks identified in this Quarterly Report on Form 10-Q and, from time to time, in other reports we file with the Securities and Exchange Commission (the “SEC”) or in other documents that we publicly disseminate, including, in particular, the section titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. We undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. Overview Our Business and Properties Kite Realty Group Trust is a publicly held REIT that, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development, and redevelopment of high-quality, open-air shopping centers and mixed-use assets that are primarily grocery-anchored and located in high-growth Sun Belt and select strategic gateway markets in the United States. We derive our revenue primarily from the collection of contractual rents and reimbursement payments from tenants under existing lease agreements at each of our properties. Therefore, our operating results depend materially on, among other things, the ability of our tenants to make required lease payments, the health and resilience of the U.S. retail sector, interest rate volatility, stability in the banking sector, job growth, the real estate market and overall economic conditions. As of September 30, 2023, we owned interests in 180 operating retail properties totaling approximately 28.3 million square feet, excluding one operating retail property classified as held for sale, and one office property with 0.3 million square feet. Of the 180 operating retail properties, 10 contain an office component. We also owned two development projects under construction as of this date and an additional two properties with future redevelopment opportunities. Inflation Prior to 2021, inflation was relatively low and had a minimal impact on our operating and financial performance; however, inflation increased significantly over the past two years and remained elevated with a slow downtrend. Most of our leases contain provisions designed to mitigate the adverse impact of inflation, including stated rent increases and requirements for tenants to pay a share of operating expenses, including common area maintenance, real estate taxes, insurance or other operating expenses related to the maintenance of our properties, with escalation clauses in certain leases. Most of our leases also include clauses that allow us to collect additional rent based on a percentage of tenants’ gross sales over stated thresholds, which sales generally increase as prices rise. In addition, we believe that rental rates in many of our leases are below current market rates for comparable space and that upon renewal or re-leasing, such rates may be increased to be in line with current rates, which may offset certain inflationary expense pressures. Due to the high inflation environment, the U.S. Federal Reserve aggressively raised short-term interest rates to slow the economy down, which has caused our borrowing costs to rise. We continually evaluate our exposure to interest rate fluctuations and enter into interest rate protection agreements to mitigate the impact of changes in interest rates on our variable rate debt. However, because we cannot predict with any level of certainty what future actions the U.S. Federal Reserve will take to combat the high inflationary environment, we cannot estimate the ultimate impact it will have on our operating and financial performance. Historically, economic indicators such as GDP growth, consumer confidence and employment have been correlated with demand for certain of our tenants’ products and services. If an economic recession returns, it could increase the number of our tenants that are unable to meet their lease obligations to us and could limit the demand for space in our properties from new tenants. 28 Operating Activity During the third quarter of 2023, we executed new and renewal leases on 214 individual spaces totaling 1,398,695 square feet (14.2% cash leasing spread on 165 comparable leases). New leases were signed on 67 individual spaces for 226,593 square feet of gross leasable area (“GLA”) (36.0% cash leasing spread on 33 comparable leases), while non-option renewal leases were signed on 83 individual spaces for 329,048 square feet of GLA (17.8% cash leasing spread on 68 comparable leases) and option renewals were signed on 64 individual spaces for 843,054 square feet of GLA (8.3% cash leasing spread). Excluding option renewals, the blended cash spreads for comparable new and non-option renewal leases were 24.0%. Comparable new and renewal leases are defined as those for which the space was occupied by a tenant within the last 12 months. Results of Operations The comparability of results of operations for the three and nine months ended September 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. Acquisitions The following operating properties were acquired at various times during the period from January 1, 2022 through September 30, 2023: Property Name Metropolitan Statistical Area (“MSA”) Acquisition Date GLA Pebble Marketplace Las Vegas, NV February 16, 2022 85,796 MacArthur Crossing two-tenant building Dallas, TX April 13, 2022 56,077 Palms Plaza Miami, FL July 15, 2022 68,976 Prestonwood Place Dallas, TX September 22, 2023 155,975 Dispositions The following operating and other properties were sold during the period from January 1, 2022 through September 30, 2023: Property Name MSA Disposition Date GLA Plaza Del Lago (1) Chicago, IL June 16, 2022 100,016 Lincoln Plaza – Lowe’s (2) Worcester, MA October 27, 2022 — Kingwood Commons Houston, TX May 8, 2023 158,172 Pan Am Plaza & Garage Indianapolis, IN June 8, 2023 — Reisterstown Road Plaza Baltimore, MD September 11, 2023 376,683 (1) Plaza Del Lago also contains 8,800 square feet of residential space comprised of 18 multifamily rental units. (2) We sold the ground lease interest in one tenant at an existing multi-tenant operating retail property. The total number of properties in our portfolio was not affected by this transaction. In addition to the above dispositions, Eastside, a 43,640 square foot operating retail property located in the Dallas MSA, is classified as held for sale as of September 30, 2023 and was sold on October 24, 2023. 29 Development and Redevelopment Projects The following properties were under active development or redevelopment at various times during the period from January 1, 2022 through September 30, 2023 and removed from our operating portfolio: Project Name MSA Transition to Development or Redevelopment ( 1) Transition to Operating Portfolio GLA Hamilton Crossing Centre (2)(3) Indianapolis, IN June 2014 Pending 92,283 The Corner (2) Indianapolis, IN December 2015 Pending 24,000 Eddy Street Commons – Phase III South Bend, IN September 2020 March 2022 18,600 The Landing at Tradition – Phase II Port St. Lucie, FL September 2021 June 2023 39,900 Carillon MOB (2) Washington, D.C. October 2021 Pending 126,000 Circle East Baltimore, MD October 2021 September 2022 82,000 One Loudoun Downtown – Residential and Pads G&H Commercial Washington, D.C. October 2021 Residential: June 2022 Commercial: December 2022 67,000 Shoppes at Quarterfield Baltimore, MD October 2021 June 2022 58,000 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. For legacy Retail Properties of America, Inc. (“RPAI”) projects, the transition date represents the later of the date of the closing of the merger (October 2021) and the date the project was transferred into redevelopment status. (2) This property has been identified as a redevelopment property and is not included in the operating portfolio or the same property pool. The redevelopment projects at Hamilton Crossing Centre and The Corner will include the creation of a mixed-used development. (3) A portion of the Hamilton Crossing Centre redevelopment was sold in January 2022. 30 Comparison of Operating Results for the Three Months Ended September 30, 2023 to the Three Months Ended September 30, 2022 The following table reflects changes in the components of our consolidated statements of operations for the three months ended September 30, 2023 and 2022 (in thousands) : Three Months Ended September 30, 2023 2022 Change Revenue: Rental income $ 203,990 $ 195,675 $ 8,315 Other property-related revenue 2,172 3,013 (841) Fee income 1,057 1,623 (566) Total revenue 207,219 200,311 6,908 Expenses: Property operating 27,644 25,507 2,137 Real estate taxes 26,453 25,703 750 General, administrative and other 13,917 14,859 (942) Merger and acquisition costs — 108 (108) Depreciation and amortization 105,930 115,831 (9,901) Impairment charges 477 — 477 Total expenses 174,421 182,008 (7,587) Loss on sales of operating properties, net (5,972) — (5,972) Operating income 26,826 18,303 8,523 Other (expense) income: Interest expense (25,484) (26,226) 742 Income tax expense of taxable REIT subsidiary (68) — (68) Equity in (loss) earnings of unconsolidated subsidiaries (47) 144 (191) Other income, net 950 58 892 Net income (loss) 2,177 (7,721) 9,898 Net income attributable to noncontrolling interests (107) (116) 9 Net income (loss) attributable to common shareholders $ 2,070 $ (7,837) $ 9,907 Property operating expense to total revenue ratio 13.3 % 12.7 % Rental income (including tenant reimbursements) increased $8.3 million, or 4.2%, due to the following (in thousands) : Net change three months ended September 30, 2022 to 2023 Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (1,709) Properties under redevelopment or acquired during 2022 and/or 2023 1,304 Properties fully operational during 2022 and 2023 and other 8,720 Total $ 8,315 The net increase of $8.7 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 $3.6 million, (ii) tenant reimbursements due to higher recoverable common area maintenance expenses of $2.3 million, and (iii) overage rent of $0.2 million due to improved tenant performance, along with lower bad debt expense of $1.7 million. The occupancy of the fully operational properties decreased from 91.9% for the three months ended September 30, 2022 to 91.6% for the three months ended September 30, 2023. Other property-related revenue primarily consists of parking revenues, gains on the sale of land and other miscellaneous activity. This revenue decreased by $0.8 million primarily as a result of lower gains on sales of undepreciated assets recognized during the three months ended September 30, 2023 and a decrease in parking revenue due to the sale of Pam Am Plaza Garage in June 2023. 31 We recorded fee income of $1.1 million and $1.6 million during the three months ended September 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 $2.1 million, or 8.4%, due to the following (in thousands) : Net change three months ended September 30, 2022 to 2023 Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (658) Properties under redevelopment or acquired during 2022 and/or 2023 64 Properties fully operational during 2022 and 2023 and other 2,731 Total $ 2,137 The net increase of $2.7 million in property operating expenses for properties that were fully operational during 2022 and 2023 is primarily due to increases in the following: (i) $2.0 million in non-recoverable operating expenses, (ii) $0.2 million in landscaping and repairs and maintenance expense, and (iii) $0.2 million in utilities. As a percentage of revenue, property operating expenses increased from 12.7% to 13.3% due to an increase in expenses in 2023. Real estate taxes increased $0.8 million, or 2.9%, due to the following (in thousands) : Net change three months ended September 30, 2022 to 2023 Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (187) Properties under redevelopment or acquired during 2022 and/or 2023 331 Properties fully operational during 2022 and 2023 and other 606 Total $ 750 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 higher 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 decreased $0.9 million, or 6.3%, primarily due to lower incremental head count and the timing of backfills, partially offset by an increase in executive transportation expenses. The Company did not incur any significant merger and acquisition costs related to the merger with RPAI during the three months ended September 30, 2023 and 2022. Depreciation and amortization expense decreased $9.9 million, or 8.5%, due to the following (in thousands) : Net change three months ended September 30, 2022 to 2023 Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (1,811) Properties under redevelopment or acquired during 2022 and/or 2023 976 Properties fully operational during 2022 and 2023 and other (9,066) Total $ (9,901) The net decrease of $9.1 million in depreciation and amortization at properties that were fully operational during 2022 and 2023 is primarily due to the timing of placing assets in service and writing-off tenant-related assets as a result of tenant move-outs. Based on the results of our evaluations for impairment, we recorded a $0.5 million impairment charge during the three months ended September 30, 2023 on Eastside, a retail operating property located in the Dallas MSA that qualified for held-for-sale accounting treatment as of September 30, 2023. No impairment charges were recorded during the three months ended September 30, 2022. 32 We recorded a net loss on sales of operating properties of $6.0 million for the three months ended September 30, 2023 on the sale of Reisterstown Road Plaza. We did not sell any properties during the three months ended September 30, 2022. Interest expense decreased $0.7 million, or 2.8%, primarily due to favorable interest rate swaps, partially offset by higher interest costs related to our variable rate debt. Comparison of Operating Results for the Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022 The following table reflects changes in the components of our consolidated statements of operations for the nine months ended September 30, 2023 and 2022 (in thousands) : Nine Months Ended September 30, 2023 2022 Change Revenue: Rental income $ 612,889 $ 582,772 $ 30,117 Other property-related revenue 5,971 7,932 (1,961) Fee income 3,868 6,603 (2,735) Total revenue 622,728 597,307 25,421 Expenses: Property operating 82,190 77,558 4,632 Real estate taxes 80,333 80,445 (112) General, administrative and other 41,800 41,977 (177) Merger and acquisition costs — 1,006 (1,006) Depreciation and amortization 323,463 357,096 (33,633) Impairment charges 477 — 477 Total expenses 528,263 558,082 (29,819) Gain on sales of operating properties, net 22,468 27,126 (4,658) Operating income 116,933 66,351 50,582 Other (expense) income: Interest expense (78,114) (77,449) (665) Income tax (expense) benefit of taxable REIT subsidiary (84) 259 (343) Equity in loss of unconsolidated subsidiaries (173) (56) (117) Other income (expense), net 1,657 (207) 1,864 Net income (loss) 40,219 (11,102) 51,321 Net income attributable to noncontrolling interests (700) (408) (292) Net income (loss) attributable to common shareholders $ 39,519 $ (11,510) $ 51,029 Property operating expense to total revenue ratio 13.2 % 13.0 % Rental income (including tenant reimbursements) increased $30.1 million, or 5.2%, due to the following (in thousands) : Net change nine months ended September 30, 2022 to 2023 Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (3,779) Properties under redevelopment or acquired during 2022 and/or 2023 9,170 Properties fully operational during 2022 and 2023 and other 24,726 Total $ 30,117 The net increase of $24.7 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 $13.5 million due to an increase in occupancy, (ii) tenant reimbursements of $4.9 million due to higher recoverable common area maintenance expenses, (iii) overage rent of $1.8 million due to improved tenant performance, and (iv) lease termination income of $1.7 million, along with a decrease in bad debt expense of $1.2 million. These variances were partially offset by a decrease in ancillary income of $0.4 million. 33 Other property-related revenue primarily consists of parking revenues, gains on the sale of land and other miscellaneous activity. This revenue decreased by $2.0 million primarily as a result of lower gains on sales of undepreciated assets recognized during the nine months ended September 30, 2023 and a decrease in parking revenue due to the sale of Pam Am Plaza Garage in June 2023. We recorded fee income of $3.9 million and $6.6 million during the nine months ended September 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 $4.6 million, or 6.0%, due to the following (in thousands) : Net change nine months ended September 30, 2022 to 2023 Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (1,218) Properties under redevelopment or acquired during 2022 and/or 2023 1,030 Properties fully operational during 2022 and 2023 and other 4,820 Total $ 4,632 The net increase of $4.8 million in property operating expenses for properties that were fully operational during 2022 and 2023 is primarily due to increases of $2.8 million in non-recoverable operating expenses, $1.3 million in landscaping and repairs and maintenance expense, and $0.3 million in utilities, partially offset by a $0.3 million decrease in insurance expense. As a percentage of revenue, property operating expenses increased from 13.0% to 13.2% due to an increase in expenses in 2023. Real estate taxes decreased $0.1 million, or 0.1%, due to the following (in thousands) : Net change nine months ended September 30, 2022 to 2023 Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (1,313) Properties under redevelopment or acquired during 2022 and/or 2023 1,255 Properties fully operational during 2022 and 2023 and other (54) Total $ (112) The net decrease of $0.1 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 decreased $0.2 million, or 0.4%, primarily due to lower incremental head count and the timing of backfills, partially offset by an increase in executive transportation expenses. The Company did not incur any significant merger and acquisition costs related to the merger with RPAI during the nine months ended September 30, 2023. The Company incurred $1.0 million of merger and acquisition costs during the nine months ended September 30, 2022, primarily consisting of professional fees and technology costs. Depreciation and amortization expense decreased $33.6 million, or 9.4%, due to the following (in thousands) : Net change nine months ended September 30, 2022 to 2023 Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (6,925) Properties under redevelopment or acquired during 2022 and/or 2023 4,023 Properties fully operational during 2022 and 2023 and other (30,731) Total $ (33,633) 34 The net decrease of $30.7 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. Based on the results of our evaluations for impairment, we recorded a $0.5 million impairment charge during the nine months ended September 30, 2023 on Eastside, a retail operating property located in the Dallas MSA that qualified for held-for-sale accounting treatment as of September 30, 2023. No impairment charges were recorded during the nine months ended September 30, 2022. We recorded a net gain on sales of operating properties of $22.5 million for the nine months ended September 30, 2023 on the sale of Kingwood Commons, the undeveloped land and related parking garage at Pan Am Plaza, and Reisterstown Road 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 nine months ended September 30, 2022. Interest expense increased $0.7 million, or 0.9%, primarily due to higher interest costs related to our variable rate debt, including borrowings on the $1.1 billion unsecured revolving credit facility (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 We use property net operating income (“NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. We define NOI as income from our real estate, including lease termination fees received from tenants, less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses, including merger and acquisition costs. We believe that NOI is helpful to investors as a measure of our operating performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as depreciation and amortization, interest expense, and impairment, if any. We also use same property NOI (“Same Property NOI”), a non-GAAP financial measure, to evaluate the performance of our properties. Same Property NOI is net income excluding properties that have not been owned for the full periods presented. Same Property NOI also excludes (i) net gains from outlot sales, (ii) straight-line rent revenue, (iii) lease termination income in excess of lost rent, (iv) amortization of lease intangibles, and (v) significant prior period expense recoveries and adjustments, if any. When we receive payments in excess of any accounts receivable for terminating a lease, Same Property NOI will include such excess payments as monthly rent until the earlier of the expiration of 12 months or the start date of a replacement tenant. We believe that Same Property NOI is helpful to investors as a measure of our operating performance because it includes only the NOI of properties that have been owned for the full periods presented. We believe such presentation eliminates disparities in net income due to the acquisition or disposition of properties during the particular periods presented, and thus provides a more consistent metric for the comparison of our properties. Same Property NOI includes the results of properties that have been owned for the entire current and prior year reporting periods. NOI and Same Property NOI should not, however, be considered as alternatives to net income (calculated in accordance with GAAP) as indicators of our financial performance. Our computation of NOI and Same Property NOI may differ from the methodology used by other REITs and, therefore, may not be comparable to such other REITs. When evaluating the properties that are included in the same property pool, we have established specific criteria for determining the inclusion of properties acquired or those recently under development. An acquired property is included in the same property pool when there is a full quarter of operations in both years subsequent to the acquisition date. Development and redevelopment properties are included in the same property pool four full quarters after the properties have been transferred to the operating portfolio. 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 and nine months ended September 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, 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; 35 • Edwards Multiplex – Ontario, which was reclassified from our operating portfolio into redevelopment in March 2023; • properties sold or classified as held for sale during 2022 and 2023; and • office properties. The following table presents Same Property NOI and a reconciliation to net income (loss) attributable to common shareholders for the three and nine months ended September 30, 2023 and 2022 (dollars in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 Change 2023 2022 Change Number of properties in same property pool for the period (1) 175 175 175 175 Leased percentage at period end (2) 93.5 % 94.7 % 93.5 % 94.7 % Economic occupancy percentage at period end (2) 91.3 % 91.8 % 91.3 % 91.8 % Economic occupancy percentage (3) 91.6 % 91.9 % 92.2 % 91.5 % Same Property NOI $ 139,256 $ 133,061 4.7 % $ 415,170 $ 393,475 5.5 % Reconciliation of Same Property NOI to most directly comparable GAAP measure: Net operating income – same properties $ 139,256 $ 133,061 $ 415,170 $ 393,475 Net operating income – non-same activity (4) 12,809 14,417 41,167 39,226 Total property NOI 152,065 147,478 3.1 % 456,337 432,701 5.5 % Other income, net 1,892 1,825 5,268 6,599 General, administrative and other (13,917) (14,859) (41,800) (41,977) Merger and acquisition costs — (108) — (1,006) Impairment charges (477) — (477) — Depreciation and amortization (105,930) (115,831) (323,463) (357,096) Interest expense (25,484) (26,226) (78,114) (77,449) (Loss) gain on sales of operating properties, net (5,972) — 22,468 27,126 Net income attributable to noncontrolling interests (107) (116) (700) (408) Net income (loss) attributable to common shareholders $ 2,070 $ (7,837) $ 39,519 $ (11,510) (1) Same Property NOI excludes the following: (i) properties acquired or placed in service during 2022 and 2023; (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H; (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; (vi) properties sold or classified as held for sale during 2022 and 2023; and (vii) office properties. (2) Decrease in leased and economic occupancy percentages is primarily attributable to the Bed Bath & Beyond Inc. bankruptcy. (3) Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent; calculated as a weighted average based on the timing of cash rent commencement and expiration during the period. (4) 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 4.7% for the three months ended September 30, 2023 compared to the same period of the prior year primarily due to higher base rent driven by positive new and renewal leasing spreads, contractual rent growth, an increase in overage rent, and lower bad debt expense. Funds From Operations Funds From Operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of our operating performance. We calculate FFO, a non-GAAP financial measure, in accordance with the best practices described in the April 2002 National Policy Bulletin of the National Association of Real Estate Investment Trusts (“NAREIT”), as restated in 2018. The NAREIT white paper defines FFO as net income (calculated in accordance with GAAP), 36 excluding (i) depreciation and amortization related to real estate, (ii) gains and losses from the sale of certain real estate assets, (iii) gains and losses from change in control, and (iv) impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Considering the nature of our business as a real estate owner and operator, the Company believes that FFO is helpful to investors in measuring our operational performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flows from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions. Our computation of FFO may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the current NAREIT definition differently than we do. From time to time, the Company may report or provide guidance with respect to “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 and nine months ended September 30, 2023 and 2022 (unaudited) are as follows (dollars in thousands) : Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net income (loss) $ 2,177 $ (7,721) $ 40,219 $ (11,102) Less: net income attributable to noncontrolling interests in properties (67) (209) (201) (535) Less: loss (gain) on sales of operating properties, net 5,972 — (22,468) (27,126) Add: impairment charges 477 — 477 — Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests 106,171 116,186 324,216 358,161 FFO of the Operating Partnership (1) 114,730 108,256 342,243 319,398 Less: Limited Partners’ interests in FFO (1,685) (1,437) (4,739) (3,932) FFO attributable to common shareholders (1) $ 113,045 $ 106,819 $ 337,504 $ 315,466 FFO per share of the Operating Partnership – diluted $ 0.51 $ 0.49 $ 1.54 $ 1.44 FFO of the Operating Partnership (1) $ 114,730 $ 108,256 $ 342,243 $ 319,398 Add: merger and acquisition costs — 108 — 1,006 Less: prior period collection impact — (691) — (2,745) FFO, as adjusted, of the Operating Partnership $ 114,730 $ 107,673 $ 342,243 $ 317,659 FFO, as adjusted, per share of the Operating Partnership – diluted $ 0.51 $ 0.48 $ 1.54 $ 1.43 (1) “FFO of the Operating Partnership” measures 100% of the operating performance of the Operating Partnership’s real estate properties. “FFO attributable to common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership. Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) We define EBITDA, a non-GAAP financial measure, as net income before interest expense, income tax expense of the taxable REIT subsidiary, and depreciation and amortization. For informational purposes, we also provide Adjusted EBITDA, which we define as EBITDA less (i) Adjusted EBITDA from unconsolidated entities, (ii) gains on sales of operating properties or impairment charges, (iii) merger and acquisition costs, (iv) other income and expense, (v) noncontrolling interest Adjusted EBITDA, and (vi) other non-recurring activity or items impacting comparability from period to period. Annualized Adjusted 37 EBITDA is Adjusted EBITDA for the most recent quarter multiplied by four. Net Debt to Adjusted EBITDA is our share of net debt divided by Annualized Adjusted EBITDA. EBITDA, Adjusted EBITDA, Annualized Adjusted EBITDA and Net Debt to Adjusted EBITDA, as calculated by us, are not comparable to EBITDA and EBITDA-related measures reported by other REITs that do not define EBITDA and EBITDA-related measures exactly as we do. EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA do not represent cash generated from operating activities in accordance with GAAP and should not be considered alternatives to net income as an indicator of performance or as alternatives to cash flows from operating activities as an indicator of liquidity. Considering the nature of our business as a real estate owner and operator, we believe that EBITDA, Adjusted EBITDA and the ratio of Net Debt to Adjusted EBITDA are helpful to investors in measuring our operational performance because they exclude various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult. For informational purposes, we also provide Annualized Adjusted EBITDA, adjusted as described above. We believe this supplemental information provides a meaningful measure of our operating performance. We believe presenting EBITDA and the related measures in this manner allows investors and other interested parties to form a more meaningful assessment of our operating results. The following table presents a reconciliation of our EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA to net income (the most directly comparable GAAP measure) and a calculation of Net Debt to Adjusted EBITDA (in thousands) : Three Months Ended September 30, 2023 Net income $ 2,177 Depreciation and amortization 105,930 Interest expense 25,484 Income tax expense of taxable REIT subsidiary 68 EBITDA 133,659 Unconsolidated Adjusted EBITDA 591 Impairment charges 477 Loss on sales of operating properties, net 5,972 Other income and expense, net (903) Noncontrolling interests (197) Adjusted EBITDA 139,599 Annualized Adjusted EBITDA (1) $ 558,394 Company share of Net Debt: Mortgage and other indebtedness, net $ 2,868,828 Plus: Company share of unconsolidated joint venture debt 51,738 Less: Partner share of consolidated joint venture debt (2) (9,861) Less: cash, cash equivalents, and restricted cash (61,410) Less: debt discounts, premiums and issuance costs, net (25,626) Company share of Net Debt $ 2,823,669 Net Debt to Adjusted EBITDA 5.1x (1) Represents Adjusted EBITDA for the three months ended September 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. Liquidity and Capital Resources Overview Our primary finance and capital strategy is to maintain a strong balance sheet with sufficient flexibility to fund our operating and investment activities in a cost-effective manner. We consider a number of factors when evaluating our level of indebtedness and making decisions regarding additional borrowings or equity offerings, including the interest or dividend rate, the maturity date and the Company’s debt maturity ladder, the impact of financial metrics such as overall Company leverage 38 levels and coverage ratios, and the Company’s ability to generate cash flow to cover debt service. 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 September 30, 2023, we had approximately $52.3 million in cash and cash equivalents on hand, $6.0 million in restricted cash and escrow deposits, $1.1 billion of remaining availability under the Revolving Facility, and no debt maturities until June 2024. During the nine months ended September 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 and repaid the $95.0 million principal balance of the 4.23% senior unsecured notes due 2023 using available cash on hand. We believe we will have adequate liquidity over the next 12 months and beyond to operate our business and meet our cash requirements. We derive the majority of our revenue from tenants who lease space from us under existing lease agreements at each of our properties. 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, 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 For a discussion of cash generated from operations, see “Cash Flows” beginning on page 42. In addition to cash generated from operations, our other principal capital resources are discussed below. Over the last several years, we have made substantial progress in enhancing our liquidity position and reducing our leverage and borrowing costs. We continue to focus on a balanced approach to growth and staggering debt maturities in order to retain our financial flexibility. As of September 30, 2023, we had approximately $1.1 billion available under the Revolving Facility for future borrowings. We also had $52.3 million in cash and cash equivalents as of September 30, 2023. We were in compliance with all applicable financial covenants under the Revolving Facility, unsecured term loans and senior unsecured notes as of September 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. Equity securities may be offered and sold by the Parent Company, and the net proceeds of any such offerings would be contributed to the Operating Partnership in exchange for additional General Partner Units. Debt securities may be offered and sold by the Operating Partnership with the Operating Partnership receiving the proceeds. From time to time, we may issue securities under this shelf registration statement for general corporate purposes, which may include acquisitions of additional properties, repayment of outstanding indebtedness, capital expenditures, the expansion, redevelopment, and/or improvement of properties in our portfolio, working capital and other general purposes. In February 2021, the Company and the Operating Partnership entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with each of BofA Securities, Inc., Citigroup Global Markets Inc., KeyBanc Capital Markets Inc. and Raymond James & Associates, Inc., pursuant to which the Company may sell, from time to time, up to an aggregate sales price of $150.0 million of its common shares of beneficial interest, $0.01 par value per share under an at-the-market offering program (the “ATM Program”). In November 2021, the Company and the Operating Partnership amended the Equity Distribution Agreement to reflect their filing of a shelf registration statement on November 16, 2021 with the SEC. The Operating Partnership intends to use the net proceeds, if any, to repay borrowings under the Revolving Facility and other indebtedness and for working capital and other general corporate purposes. The Operating Partnership may also use the net proceeds for acquisitions of operating properties and the development or redevelopment of properties, although there are currently no understandings, commitments or agreements to do so. As of September 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. We may also raise capital by disposing of properties, land parcels or other assets that are no longer core components of our growth strategy. The sale price may differ from our carrying value at the time of sale. 39 Our Principal Liquidity Needs Short-Term Liquidity Needs Near-Term Debt Maturities . As of September 30, 2023, we had no secured debt, excluding scheduled monthly principal payments, and $269.6 million of unsecured debt scheduled to mature prior to September 30, 2024. We believe we have sufficient liquidity to repay these obligations from cash on hand and borrowings on the Revolving Facility. Other Short-Term Liquidity Needs. The requirements for qualifying as a REIT and for a tax deduction for some or all of the dividends paid to shareholders necessitate that we distribute at least 90% of our taxable income on an annual basis. Such requirements cause us to have substantial liquidity needs over both the short and long term. Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest and principal payments on our debt of approximately $30.0 million and $1.3 million, respectively, for the remainder of 2023, expected dividend payments to our common shareholders and Common Unit holders, and recurring capital expenditures. In July 2023, our Board of Trustees declared a cash distribution of $0.24 per common share and Common Unit for the third quarter of 2023. This distribution was paid on October 13, 2023 to common shareholders and Common Unit holders of record as of October 6, 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 nine months ended September 30, 2023, we incurred $13.4 million for recurring capital expenditures on operating properties and $65.4 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 September 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 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 part of its bankruptcy process, three of the former tenant’s leases were acquired by other retailers and the remaining leases were rejected. 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 over the next 12 to 18 months. During the nine months ended September 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 September 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 expected funding requirement is estimated to be $59.7 million. As of September 30, 2023, we have incurred $27.1 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. Share Repurchase Program The Company has an existing share repurchase program under which it may repurchase, from time to time, up to a maximum of $300.0 million of its common shares (the “Share Repurchase Program”). The Company intends to fund any future repurchases under the Share Repurchase Program with cash on hand or availability under the Revolving Facility, subject to any applicable restrictions. The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements and other factors. 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 September 30, 2023, the Company has not repurchased any shares under the Share Repurchase Program. 40 Long-Term Liquidity Needs Our long-term liquidity needs consist primarily of funds necessary to pay for any new development projects, redevelopment of existing properties, non-recurring capital expenditures, acquisitions of properties, payment of indebtedness at maturity and obligations under ground leases. Selective Acquisitions, Developments and Joint Ventures . We may selectively pursue the acquisition, development and redevelopment of other properties, which would require additional capital. It is unlikely that we would have sufficient funds on hand to meet these long-term capital requirements. We would have to satisfy these needs through additional borrowings, sales of common or preferred shares, issuance of Operating Partnership units, cash generated through property dispositions and/or participation in joint venture arrangements. We cannot be certain that we would have access to these sources of capital on satisfactory terms, if at all, to fund our long-term liquidity requirements. We evaluate all future opportunities against pre-established criteria including, but not limited to, location, demographics, expected return, tenant credit quality, tenant relationships, and the amount of existing retail space. Our ability to access the capital markets will depend on a number of factors, including general capital market conditions. Potential Debt Repurchases. We may from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to repurchase our senior unsecured notes maturing at various dates through September 2030 in open-market transactions, by tender offer or otherwise, as market conditions warrant. Commitments under Ground Leases. We are obligated under 12 ground leases for approximately 98 acres of land as of September 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 nine months ended September 30, 2023 (in thousands) : Nine Months Ended September 30, 2023 Active development and redevelopment projects $ 21,110 Recurring operating capital expenditures (primarily tenant improvements) and other 77,584 Total $ 98,694 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 $0.3 million for the nine months ended September 30, 2023. Debt Maturities The following table summarizes the scheduled maturities and principal amortization of the Company’s indebtedness as of September 30, 2023, presented on a calendar year basis (in thousands) : Secured Debt Scheduled Principal Payments Term Maturities Unsecured Debt Total 2023 $ 1,260 $ — $ — $ 1,260 2024 5,121 — 269,635 274,756 2025 5,248 — 680,000 685,248 2026 5,381 — 589,000 594,381 2027 4,720 8,200 250,000 262,920 Thereafter 31,849 92,788 900,000 1,024,637 $ 53,579 $ 100,988 $ 2,688,635 $ 2,843,202 Debt discounts, premiums and issuance costs, net 25,626 Total $ 2,868,828 41 Failure to comply with the obligations under our debt agreements, including payment obligations, could cause an event of default under such debt, which, among other things, could result in the loss of title to the assets securing the debt, acceleration of the payment of all principal and interest and/or termination of the agreements, or exposure to the risk of foreclosure. In addition, certain of our variable rate loans contain cross-default provisions whereby a violation by the Company of any financial covenant set forth in the Revolving Facility will constitute an “Event of Default” under the loans, which could allow the lenders to accelerate the amounts due under our debt agreements if we fail to satisfy these financial covenants. See “Item 1A. Risk Factors – Risks Related to Our Operations” in our Annual Report on Form 10-K for the year ended December 31, 2022 for more information related to the risks associated with our indebtedness. Impact of Changes in Credit Ratings on Our Liquidity We have received investment grade corporate credit ratings from three nationally recognized credit rating agencies. These ratings did not change as of September 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. Cash Flows As of September 30, 2023, we had cash, cash equivalents and restricted cash of $58.3 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 Nine Months Ended September 30, 2023 to the Nine Months Ended September 30, 2022 Our cash flow activities are summarized as follows (in thousands) : Nine Months Ended September 30, 2023 2022 Change Net cash provided by operating activities $ 291,177 $ 262,429 $ 28,748 Net cash used in investing activities (55,483) (13,694) (41,789) Net cash used in financing activities (299,350) (252,591) (46,759) Decrease in cash, cash equivalents and restricted cash (63,656) (3,856) (59,800) Cash, cash equivalents and restricted cash, at beginning of period 121,970 100,363 Cash, cash equivalents and restricted cash, at end of period $ 58,314 $ 96,507 Cash provided by operating activities was $291.2 million for the nine months ended September 30, 2023 and $262.4 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 $55.5 million for the nine months ended September 30, 2023 and $13.7 million for the same period of 2022. Highlights of significant cash sources and uses in investing activities are as follows: • We received net proceeds of $123.9 million from the sale of Kingwood Commons, the undeveloped land and related parking garage at Pan Am Plaza, and Reisterstown Road Plaza during the nine months ended September 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 nine months ended September 30, 2022; • We acquired Prestonwood Place for $78.3 million during the nine months ended September 30, 2023 compared to the acquisitions of Pebble Marketplace, the two-tenant building adjacent to MacArthur Crossing, and Palms Plaza for $100.1 million during the nine months ended September 30, 2022; • We received the proceeds from a $125.0 million short-term deposit that matured on April 7, 2022 during the nine months ended September 30, 2022; and 42 • Capital expenditures decreased by $7.8 million primarily related to the timing of capital projects along with a change in construction payables of $3.7 million for the nine months ended September 30, 2023. Cash used in financing activities was $299.4 million for the nine months ended September 30, 2023 and $252.6 million for the same period of 2022. Highlights of significant cash sources and uses in financing activities are as follows: • We borrowed $237.0 million on the Revolving Facility and received proceeds of $95.1 million from the origination of a mortgage payable during the nine months ended September 30, 2023 compared to borrowings of $145.0 million on the Revolving Facility and entering into a seven-year $300.0 million unsecured term loan during the nine months ended September 30, 2022; • We repaid (i) $198.0 million of borrowings on the Revolving Facility, (ii) $174.1 million of mortgages payable, and (iii) the $95.0 million principal balance of the 4.23% senior unsecured notes due 2023 during the nine months ended September 30, 2023 compared to repayments of (i) $200.0 million of borrowings on the Revolving Facility, (ii) a $200.0 million unsecured term loan that was scheduled to mature in 2023, and (iii) $158.2 million of mortgages payable during the nine months ended September 30, 2022; and • We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $160.0 million during the nine months ended September 30, 2023 compared to distributions of $133.4 million during the nine months ended September 30, 2022. Critical Accounting Estimates We based the discussion and analysis of our financial condition and results of operations upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. 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 September 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.