What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-07 compared with 2023-11-02 · 156 added, 265 removed, 276 unchanged (60% of the section changed)

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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.

• 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);

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• 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;

• the financial stability of our tenants;

• the competitive environment in which we operate, including potential oversupplies of, or a reduction in demand for, rental space;

• acquisition, disposition, development and joint venture risks;

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• 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;

• risks related to our current geographical concentration of properties in the states of Texas, Florida, and North Carolina and the metropolitan statistical areas (“MSAs”) of New York, Atlanta, Seattle, Chicago, and Washington, D.C.;

• civil unrest, acts of violence, terrorism or war, acts of God, climate change, epidemics, pandemics, natural disasters and severe weather conditions, including such events that may result in underinsured or uninsured losses or other increased costs and expenses;

• 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;

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• our ability to satisfy environmental, social or governance standards set by various constituencies;

• insurance costs and coverage;

• insurance costs and coverage, especially in Florida and Texas coastal areas;

• risks associated with cybersecurity attacks and the loss of confidential information and other business disruptions;

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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.

As of March 31, 2024, we owned interests in 180 operating retail properties totaling approximately 28.1 million square feet 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.

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.

We believe inflationary concerns could negatively impact consumer confidence and spending and our tenants’ sales and overall health.

This could, in turn, continue to put downward pricing pressure on rents that we are able to charge to new or renewing tenants, such that future rent spreads and, in some cases, our percentage rents, could be adversely impacted.

Many of our leases contain provisions designed to mitigate the adverse impact of inflation, including annual 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 most leases.

Over the last year, we have made significant improvements converting leases to include higher fixed-rent bumps while also including CPI-based, anti-gouging protection for tenants.

However, the stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses could be lower than the increase in inflation at any given time.

Inflation may also increase labor or other general and administrative expenses that cannot be easily reduced.

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.

If an economic recession returns, it could, among other impacts, (i) increase the number of our tenants that are unable to meet their lease obligations to us and (ii) limit the demand for space in our properties from new tenants.

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).

During the first quarter of 2024, we executed new and renewal leases on 185 individual spaces totaling 968,681 square feet (12.8% cash leasing spread on 130 comparable leases).

New leases were signed on 38 individual spaces for 175,087 square feet of gross leasable area (“GLA”) (48.1% cash leasing spread on 19 comparable leases), while non-option renewal leases were signed on 93 individual spaces for 330,966 square feet of GLA (12.2% cash leasing spread on 57 comparable leases) and option renewals were signed on 54 individual spaces for 462,628 square feet of GLA (5.3% cash leasing spread).

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

The blended cash spreads for comparable new and non-option renewal leases were 23.3%.

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.

The comparability of results of operations for the three months ended March 31, 2024 and 2023 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 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

The following operating property was acquired during the period from January 1, 2023 through March 31, 2024:

Property Name MSA Acquisition Date GLA

Prestonwood Place Dallas, TX September 22, 2023 155,975

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

The following operating and other properties were sold during the period from January 1, 2023 through March 31, 2024:

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

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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.

Eastside Dallas, TX October 24, 2023 43,640

In addition, during the three months ended March 31, 2024, the joint venture that owned Glendale Center Apartments, of which we have an 11.5% ownership interest, sold the 267-unit property to a third party.

Glendale Center Apartments is adjacent to our Glendale Town Center operating retail property in the Indianapolis MSA.

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:

The following properties were under active development or redevelopment at various times during the period from January 1, 2023 through March 31, 2024 and removed from our operating portfolio:

Project Name MSA Transition to

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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

Active Projects

Carillon MOB (2)

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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:

December 2022 67,000

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

The Corner – IN (2)

Indianapolis, IN December 2015 Pending 24,000

Future Opportunities

Hamilton Crossing Centre (2)(3)

Indianapolis, IN June 2014 Pending 92,283

Edwards Multiplex – Ontario (2)

Los Angeles, CA March 2023 Pending 124,614

Completed Projects

The Landing at Tradition – Phase II Port St.

Lucie, FL September 2021 June 2023 39,900

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

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(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.

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,

The redevelopment projects at Hamilton Crossing Centre and The Corner – IN will include the creation of a mixed-used development.

(3) Approximately half of the Hamilton Crossing site was sold in January 2022 to Republic Airways, Inc.

In addition to the sale, the Company entered into a development and construction management agreement for the development of a corporate campus for Republic Airways.

Phase I of the corporate campus was completed in 2023.

Comparison of Operating Results for the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

The following table reflects changes in the components of our consolidated statements of operations for the three months ended March 31, 2024 and 2023 (in thousands) :

Three Months Ended March 31,

2024 2023 Change

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General, administrative and other 12,784 13,384 (600)

Merger and acquisition costs — 108 (108)

Depreciation and amortization 100,379 108,071 (7,692)

Impairment charges 477 — 477

Total expenses 167,778 175,952 (8,174)

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Interest expense (30,364) (25,425) (4,939)

Income tax expense of taxable REIT subsidiary (68) — (68)

Equity in (loss) earnings of unconsolidated subsidiaries (47) 144 (191)

Income tax (expense) benefit of taxable REIT subsidiaries (158) 29 (187)

Equity in loss of unconsolidated subsidiaries (420) (244) (176)

Gain on sale of unconsolidated property, net 2,325 — 2,325

Other income, net 3,628 403 3,225

Net income (loss) 2,177 (7,721) 9,898

Net income 14,436 5,561 8,875

Net income attributable to noncontrolling interests (280) (170) (110)

Net income (loss) attributable to common shareholders $ 2,070 $ (7,837) $ 9,907

Net income attributable to common shareholders $ 14,156 $ 5,391 $ 8,765

Property operating expense to total revenue ratio 13.5 % 13.2 %

1 unchanged sentence

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)

March 31, 2023

Properties or components of properties sold during 2023 and/or 2024 $ (3,629)

Properties under redevelopment or acquired during 2023 and/or 2024 2,691

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Total $ 2,750

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.

The net increase of $3.7 million in rental income for properties that were fully operational during 2023 and 2024 is primarily due to (i) an increase in lease termination income of $1.5 million, (ii) a decrease in bad debt expense of $1.1 million, (iii) an increase in tenant reimbursements of $0.7 million due to higher recoverable common area maintenance expenses, and

(iv) an increase in ancillary income of $0.4 million.

The occupancy of the fully operational properties decreased from 92.6% for the three months ended March 31, 2023 to 90.9% for the three months ended March 31, 2024.

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.

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.

This revenue decreased by $0.6 million primarily as a result of a decrease in parking revenue of $0.4 million due to the sale of Pam Am Plaza Garage in June 2023 along with a decrease in miscellaneous income of $0.2 million.

We recorded fee income of $0.3 million and $1.8 million during the three months ended March 31, 2024 and 2023, 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

September 30, 2022 to 2023

Properties or components of properties sold or held for sale during 2022 and/or 2023 $ (658)

March 31, 2023

Properties or components of properties sold during 2023 and/or 2024 $ (1,328)

Properties under redevelopment or acquired during 2023 and/or 2024 273

Properties fully operational during 2023 and 2024 and other 1,822

Total $ 2,137

The net increase of $1.8 million in property operating expenses for properties that were fully operational during 2023 and 2024 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) :

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

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) :

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.

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

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

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) :

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.

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) :

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.

(i) $0.7 million in landscaping and repairs and maintenance expenses, (ii) $0.6 million in insurance, (iii) $0.3 million in non-recoverable operating expenses, and (iv) $0.2 million in security expenses.

As a percentage of revenue, property operating expenses increased from 13.2% to 13.5% due to an increase in expenses in 2024.

Real estate taxes decreased $0.6 million, or 2.4%, due to the following (in thousands) :

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)

Three Months Ended

March 31, 2023

Properties or components of properties sold during 2023 and/or 2024 $ (541)

Properties under redevelopment or acquired during 2023 and/or 2024 301

1 unchanged sentence

Total $ (649)

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.

The net decrease of $0.4 million in real estate taxes for properties that were fully operational during 2023 and 2024 is primarily due to higher capitalized real estate tax expenses related to signed anchor leases at certain properties in the portfolio in 2024.

The majority of real estate tax expense is recoverable from tenants and such recovery is reflected within “Rental income” in the accompanying consolidated statements of operations and comprehensive income.

General, administrative and other expenses decreased $0.6 million, or 4.5%, primarily due to a decrease in payroll costs due to lower head count.

Depreciation and amortization expense decreased $7.7 million, or 7.1%, due to the following (in thousands) :

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)

Three Months Ended

March 31, 2023

Properties or components of properties sold during 2023 and/or 2024 $ (2,510)

Properties under redevelopment or acquired during 2023 and/or 2024 1,722

1 unchanged sentence

Total $ (7,692)

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.

The net decrease of $6.9 million in depreciation and amortization at properties that were fully operational during 2023 and 2024 is primarily due to the timing of placing assets in service and writing-off tenant-related assets as a result of tenant move-outs along with certain assets with shorter useful lives acquired in the October 2021 merger with RPAI that became fully depreciated during the prior year.

Interest expense increased $4.9 million, or 19.4%, primarily due to interest on the January 2024 public offering of $350.0 million in aggregate principal amount of 5.50% senior unsecured notes due 2034 (“Notes Due 2034”), partially offset by favorable interest rate swaps.

The $2.3 million gain on sale of unconsolidated property represents our share of the gain on the sale of Glendale Center Apartments during the three months ended March 31, 2024.

No such gain was recorded during the three months ended March 31, 2023.

Other income, net increased $3.2 million primarily due to interest income earned on the proceeds from the Notes Due 2034.

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 and nine months ended September 30, 2023, the same property pool excludes the following:

For the three months ended March 31, 2024, the same property pool excludes the following:

• properties acquired or placed in service during 2023 and 2024;

• 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;

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

• The Landing at Tradition – Phase II, which was reclassified from active redevelopment into our operating portfolio in June 2023;

• our active development and redevelopment projects at Carillon medical office building and The Corner – IN;

• Hamilton Crossing Centre and Edwards Multiplex – Ontario, which were reclassified from our operating portfolio into redevelopment in June 2014 and March 2023, respectively;

• properties sold or classified as held for sale during 2023 and 2024;

• 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

The following table presents Same Property NOI and a reconciliation to net income attributable to common shareholders for the three months ended March 31, 2024 and 2023 (dollars in thousands) :

Three Months Ended March 31,

2024 2023 Change

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

175 175 175 175

Leased percentage at period end (2)

9 unchanged sentences

Net operating income – non-same activity (4)

12,809 14,417 41,167 39,226

Total property NOI 152,509 150,482 1.3 %

1 unchanged sentence

General, administrative and other (12,784) (13,384)

Merger and acquisition costs — (108) — (1,006)

Impairment charges (477) — (477) —

Depreciation and amortization (100,379) (108,071)

Interest expense (30,364) (25,425)

(Loss) gain on sales of operating properties, net (5,972) — 22,468 27,126

Loss on sales of operating properties, net (236) —

Gain on sale of unconsolidated property, net 2,325 —

Net income attributable to noncontrolling interests

(107) (116) (700) (408)

Net income (loss) attributable to common shareholders

Net income attributable to common shareholders

$ 14,156 $ 5,391

1 unchanged sentence

(i) properties acquired or placed in service during 2023 and 2024;

(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.

(ii) The Landing at Tradition – Phase II, which was reclassified from active redevelopment into our operating portfolio in June 2023;

(iii) our active development and redevelopment projects at Carillon medical office building and The Corner – IN;

(iv) Hamilton Crossing Centre and Edwards Multiplex – Ontario, which were reclassified from our operating portfolio into redevelopment in June 2014 and March 2023, respectively;

(v) properties sold or classified as held for sale during 2023 and 2024;

and (vi) office properties.

(2) Decrease in leased and economic occupancy percentages is primarily attributable to the Bed Bath & Beyond Inc.

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(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.

Our Same Property NOI increased 1.8% for the three months ended March 31, 2024 compared to the same period of the prior year primarily due to contractual rent growth and lower bad debt expense.

Funds From Operations

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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),

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.

The NAREIT white paper defines FFO as net income (calculated in accordance with GAAP), 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.

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)

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) 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 for the three months ended March 31, 2024 and 2023 (unaudited) are as follows (dollars in thousands) :

Three Months Ended March 31,

Net income $ 14,436 $ 5,561

net income attributable to noncontrolling interests in properties (67) (104)

loss (gain) on sales of operating properties, net 5,972 — (22,468) (27,126)

impairment charges 477 — 477 —

loss on sales of operating properties, net 236 —

gain on sale of unconsolidated property, net (2,325) —

depreciation and amortization of consolidated and

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FFO per share of the Operating Partnership – diluted $ 0.50 $ 0.51

FFO of the Operating Partnership (1)

$ 114,730 $ 108,256 $ 342,243 $ 319,398

merger and acquisition costs — 108 — 1,006

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.

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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

EBITDA is Adjusted EBITDA for the most recent quarter multiplied by four.

We define EBITDA, a non-GAAP financial measure, as net income before interest expense, income tax expense of the taxable REIT subsidiaries, and depreciation and amortization.

For informational purposes, we also provide Adjusted EBITDA, which we define as EBITDA less (i) EBITDA from unconsolidated entities, as adjusted, (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 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.

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

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

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

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

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Three Months Ended

September 30, 2023

March 31, 2024

Net income $ 14,436

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Interest expense 30,364

Income tax expense of taxable REIT subsidiary 68

Income tax expense of taxable REIT subsidiaries 158

EBITDA 145,337

Unconsolidated Adjusted EBITDA 369

Impairment charges 477

Gain on sale of unconsolidated property, net (2,325)

Loss on sales of operating properties, net 236

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Partner share of consolidated joint venture debt (2)

cash, cash equivalents, and restricted cash (61,410)

debt discounts, premiums and issuance costs, net (15,840)

Company’s consolidated debt and share of unconsolidated debt 3,196,409

cash, cash equivalents, restricted cash and short-term deposits (356,712)

Company share of Net Debt $ 2,839,697

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.

(1) Represents Adjusted EBITDA for the three months ended March 31, 2024 (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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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

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 continuously 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, 2024, we had approximately $83.6 million in cash and cash equivalents on hand, $5.4 million in restricted cash and escrow deposits, $265.0 million of short-term deposits, and $1.1 billion of remaining availability under the Revolving Facility compared to $269.6 million of debt maturing in the second through fourth quarters of 2024.

During the three months ended March 31, 2024, we completed a public offering of the Notes Due 2034, the proceeds of which are currently invested in short-term deposits that will be used to satisfy all 2024 debt maturities.

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.

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.

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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 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.

As of March 31, 2024, we had approximately $1.1 billion available under the Revolving Facility for future borrowings.

We also had $348.6 million in cash, cash equivalents and short-term deposits as of March 31, 2024.

We were in compliance with all applicable financial covenants under the Revolving Facility, unsecured term loans and senior unsecured notes as of March 31, 2024.

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 September 30, 2023, the Company has not sold any common shares under the ATM Program.

As of March 31, 2024, 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 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.

As of March 31, 2024, we had no secured debt, excluding scheduled monthly principal payments, and $619.6 million of unsecured debt scheduled to mature prior to March 31, 2025.

We believe we have sufficient liquidity to repay these obligations with proceeds from the Notes Due 2034, additional available cash on hand, and borrowings on the Revolving Facility.

Other Short-Term Liquidity Needs.

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

Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest 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.

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 $90.0 million and $3.9 million, respectively, for the remainder of 2024, expected dividend payments to our common shareholders and common unitholders, and recurring capital expenditures.

In February 2024, our Board of Trustees declared a cash distribution of $0.25 per common share and Common Unit for the first quarter of 2024.

This distribution was paid on April 12, 2024 to common shareholders and common unitholders of record as of April 5, 2024.

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.

We believe we have sufficient liquidity to pay any dividend from available 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).

During the three months ended March 31, 2024, we incurred $5.7 million for recurring capital expenditures on operating properties and $18.4 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 March 31, 2024 (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 24 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).

As of March 31, 2024, we had development projects under construction at Carillon medical office building 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.

As of March 31, 2024, we have incurred $31.9 million of these costs.

We anticipate incurring the majority of the remaining costs for these projects over the next 12 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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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.

In February 2024, the Company extended the Share Repurchase Program for an additional year to February 28, 2025, if not terminated or extended prior to that date.

As of March 31, 2024, the Company has not repurchased any shares under the Share Repurchase Program.

Long-Term Liquidity Needs

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

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

therefore, 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.

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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.

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 March 2034 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.

We are obligated under 12 ground leases for approximately 98 acres of land as of March 31, 2024.

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.

Assuming we exercise all available options to extend the terms of our ground leases, our ground leases will expire between 2043 and 2115.

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

The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the three months ended March 31, 2024 (in thousands) :

Three Months Ended

March 31, 2024

Active development and redevelopment projects $ 3,712

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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 $0.3 million for the nine months ended September 30, 2023.

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, 2024.

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) :

The following table summarizes the scheduled maturities and principal amortization of the Company’s indebtedness as of March 31, 2024, presented on a calendar year basis (in thousands) :

Principal Payments Term

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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, 2023 for more information related to the risks associated with our indebtedness.

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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 September 30, 2023.

During the three months ended March 31, 2024, we received a credit rating upgrade with a stable outlook from one of the rating agencies and a positive credit rating outlook from another rating agency.

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 September 30, 2023, we had cash, cash equivalents and restricted cash of $58.3 million.

As of March 31, 2024, we had cash, cash equivalents and restricted cash of $89.0 million.

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

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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

Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

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

Nine Months Ended September 30,

Three Months Ended March 31,

2024 2023 Change

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Net cash used in investing activities (289,338) (41,514) (247,824)

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)

Net cash provided by (used in) financing activities 283,291 (91,364) 374,655

Increase (decrease) in cash, cash equivalents and restricted cash 47,534 (69,275) 116,809

Cash, cash equivalents and restricted cash, at beginning of period 41,430 121,970

Cash, cash equivalents and restricted cash, at end of period $ 88,964 $ 52,695

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.

Cash provided by operating activities was $53.6 million for the three months ended March 31, 2024 and $63.6 million for the same period of 2023.

The cash flows were negatively impacted due to the timing of annual insurance premium payments, partially offset by an increase in net operating income.

Cash used in investing activities was $289.3 million for the three months ended March 31, 2024 and $41.5 million for the same period of 2023.

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;

• 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.

• We invested $265.0 million of proceeds from the Notes Due 2034 in short-term certificates of deposit during the three months ended March 31, 2024;

• Capital expenditures decreased by $10.9 million primarily related to the timing of capital projects along with a change in construction payables of $0.5 million for the three months ended March 31, 2024;

• We received net proceeds of $1.8 million from the sale of land at Broadstone Station during the three months ended March 31, 2024.

We did not sell any land during the three months ended March 31, 2023;

• We received a $1.6 million distribution upon the joint venture’s disposition of Glendale Center Apartments, of which we own an 11.5% interest, to a third party during the three months ended March 31, 2024.

Cash provided by financing activities was $283.3 million for the three months ended March 31, 2024 compared to cash used in financing activities of $91.4 million for the same period of 2023.

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;

• 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.

• We received $345.3 million of proceeds from the Notes Due 2034 and borrowed $40.0 million on the Revolving Facility during the three months ended March 31, 2024 compared to borrowings of $162.0 million on the Revolving Facility during the three months ended March 31, 2023;

• We repaid $40.0 million of borrowings on the Revolving Facility and $1.3 million of mortgages payable during the three months ended March 31, 2024 compared to repayments of $37.0 million of borrowings on the Revolving Facility and $162.3 million of mortgages payable during the three months ended March 31, 2023;

• We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $55.7 million during the three months ended March 31, 2024 compared to distributions of $53.3 million during the three months ended March 31, 2023.

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 September 30, 2023.

There were no changes made by management to the critical accounting policies in the three months ended March 31, 2024.

We discuss the most critical estimates in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 20, 2024.

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