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Item 1. Financial Statements

2024-07-31 compared with 2024-05-07 · 226 added, 129 removed, 604 unchanged (37% of the section changed)

16 unchanged sentences

Investments in unconsolidated subsidiaries 9,970 9,062

Assets associated with investment property held for sale 73,558 —

Total assets $ 6,958,920 $ 6,944,078

3 unchanged sentences

Deferred revenue and other liabilities 250,103 272,942

Liabilities associated with investment property held for sale 3,930 —

Total liabilities 3,459,347 3,300,223

3 unchanged sentences

219,654,953 and 219,448,429 shares issued and outstanding at

March 31, 2024 and December 31, 2023, respectively

June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 4,886,532 4,886,592

9 unchanged sentences

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

Three Months Ended March 31,

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

2024 2023 2024 2023

Rental income $ 205,836 $ 205,836 $ 411,649 $ 408,899

6 unchanged sentences

Depreciation and amortization 99,291 109,462 199,670 217,533

Impairment charges 66,201 — 66,201 —

Total expenses 233,515 177,890 401,293 353,842

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

Operating income 39,425 30,798

(Loss) gain on sales of operating properties, net ( 1,230 ) 28,440 ( 1,466 ) 28,440

Operating (loss) income ( 22,311 ) 59,309 17,114 90,107

Other (expense) income:

Interest expense ( 30,981 ) ( 27,205 ) ( 61,345 ) ( 52,630 )

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

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

Income tax expense of taxable REIT subsidiaries ( 132 ) ( 45 ) ( 290 ) ( 16 )

Equity in (loss) earnings of unconsolidated subsidiaries ( 174 ) 118 ( 594 ) ( 126 )

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

Other income, net 4,295 304 7,923 707

Net income 14,436 5,561

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

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

Net income per common share – basic and diluted $ 0.06 $ 0.02

Net (loss) income ( 49,303 ) 32,481 ( 34,867 ) 38,042

Net loss (income) attributable to noncontrolling interests 665 ( 423 ) 385 ( 593 )

Net (loss) income attributable to common shareholders $ ( 48,638 ) $ 32,058 $ ( 34,482 ) $ 37,449

Net (loss) income per common share – basic and diluted $ ( 0.22 ) $ 0.15 $ ( 0.16 ) $ 0.17

Weighted average common shares outstanding – basic 219,622,059 219,354,275 219,561,586 219,294,255

Weighted average common shares outstanding – diluted 219,622,059 220,032,366 219,561,586 219,999,440

Net income $ 14,436 $ 5,561

Net (loss) income $ ( 49,303 ) $ 32,481 $ ( 34,867 ) $ 38,042

Change in fair value of derivatives ( 4,708 ) 8,642 ( 2,166 ) ( 3,003 )

Total comprehensive income (loss) 16,978 ( 6,084 )

Comprehensive income attributable to noncontrolling interests ( 365 ) ( 82 )

Comprehensive income (loss) attributable to the Company $ 16,613 $ ( 6,166 )

Total comprehensive (loss) income ( 54,011 ) 41,123 ( 37,033 ) 35,039

Comprehensive loss (income) attributable to noncontrolling

737 ( 529 ) 372 ( 611 )

Comprehensive (loss) income attributable to the Company $ ( 53,274 ) $ 40,594 $ ( 36,661 ) $ 34,428

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

12 unchanged sentences

Distributions to common shareholders — — — — ( 54,901 ) ( 54,901 )

Net income attributable to common shareholders — — — — 14,156 14,156

Adjustment to redeemable noncontrolling interests — — ( 1,010 ) — — ( 1,010 )

Net income attributable to common

— — — — 14,156 14,156

Adjustment to redeemable noncontrolling

— — ( 1,010 ) — — ( 1,010 )

Balance at March 31, 2024 219,603,862 $ 2,196 $ 4,887,573 $ 54,891 $ ( 1,413,828 ) $ 3,530,832

Stock compensation activity 51,091 1 3,077 — — 3,078

Other comprehensive loss — — — ( 4,636 ) — ( 4,636 )

Distributions to common shareholders — — — — ( 54,917 ) ( 54,917 )

Net loss attributable to common shareholders — — — — ( 48,638 ) ( 48,638 )

Adjustment to redeemable noncontrolling

— — ( 4,118 ) — — ( 4,118 )

Balance at June 30, 2024 219,654,953 $ 2,197 $ 4,886,532 $ 50,255 $ ( 1,517,383 ) $ 3,421,601

Balance at December 31, 2022 219,185,658 $ 2,192 $ 4,897,736 $ 74,344 $ ( 1,207,757 ) $ 3,766,515

2 unchanged sentences

Distributions to common shareholders — — — — ( 52,659 ) ( 52,659 )

Net income attributable to common shareholders — — — — 5,391 5,391

Adjustment to redeemable noncontrolling interests — — ( 3,821 ) — — ( 3,821 )

Net income attributable to common

— — — — 5,391 5,391

Adjustment to redeemable noncontrolling

— — ( 3,821 ) — — ( 3,821 )

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

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

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

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

Net income attributable to common

— — — — 32,058 32,058

Adjustment to redeemable noncontrolling

— — ( 4,101 ) — — ( 4,101 )

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

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net income $ 14,436 $ 5,561

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 34,867 ) $ 38,042

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization 201,586 219,315

Loss on sales of operating properties, net 236 —

Loss (gain) on sales of operating properties, net 1,466 ( 28,440 )

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

Impairment charges 66,201 —

Straight-line rent ( 6,780 ) ( 6,958 )

10 unchanged sentences

Net proceeds from sales of land 4,855 917

Net proceeds from sales of operating properties 29,809 78,556

Investment in short-term deposits ( 265,000 ) —

Proceeds from short-term deposits 145,000 —

Small business loan repayments — 287

1 unchanged sentence

Distribution from unconsolidated joint venture 1,618 —

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

Capital contribution to unconsolidated joint venture ( 946 ) —

Net cash (used in) provided by investing activities ( 154,601 ) 8,013

Cash flows from financing activities:

29 unchanged sentences

Investments in unconsolidated subsidiaries 9,970 9,062

Assets associated with investment property held for sale 73,558 —

Total assets $ 6,958,920 $ 6,944,078

3 unchanged sentences

Deferred revenue and other liabilities 250,103 272,942

Liabilities associated with investment property held for sale 3,930 —

Total liabilities 3,459,347 3,300,223

3 unchanged sentences

Common equity, 219,654,953 and 219,448,429 units issued and outstanding

at March 31, 2024 and December 31, 2023, respectively

at June 30, 2024 and December 31, 2023, respectively

3,371,346 3,515,703

9 unchanged sentences

(in thousands, except unit and per unit data)

Three Months Ended March 31,

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

2024 2023 2024 2023

Rental income $ 205,836 $ 205,836 $ 411,649 $ 408,899

6 unchanged sentences

Depreciation and amortization 99,291 109,462 199,670 217,533

Impairment charges 66,201 — 66,201 —

Total expenses 233,515 177,890 401,293 353,842

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

Operating income 39,425 30,798

(Loss) gain on sales of operating properties, net ( 1,230 ) 28,440 ( 1,466 ) 28,440

Operating (loss) income ( 22,311 ) 59,309 17,114 90,107

Other (expense) income:

Interest expense ( 30,981 ) ( 27,205 ) ( 61,345 ) ( 52,630 )

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

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

Income tax expense of taxable REIT subsidiaries ( 132 ) ( 45 ) ( 290 ) ( 16 )

Equity in (loss) earnings of unconsolidated subsidiaries ( 174 ) 118 ( 594 ) ( 126 )

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

Other income, net 4,295 304 7,923 707

Net income 14,436 5,561

Net (loss) income ( 49,303 ) 32,481 ( 34,867 ) 38,042

Net income attributable to noncontrolling interests ( 74 ) ( 30 ) ( 141 ) ( 134 )

Net income attributable to common unitholders $ 14,369 $ 5,457

Allocation of net income:

Net (loss) income attributable to common unitholders $ ( 49,377 ) $ 32,451 $ ( 35,008 ) $ 37,908

Allocation of net (loss) income:

Limited Partners $ ( 739 ) $ 393 $ ( 526 ) $ 459

1 unchanged sentence

$ ( 49,377 ) $ 32,451 $ ( 35,008 ) $ 37,908

Net income per common unit – basic and diluted $ 0.06 $ 0.02

Net (loss) income per common unit – basic and diluted $ ( 0.22 ) $ 0.15 $ ( 0.16 ) $ 0.17

Weighted average common units outstanding – basic 223,329,063 222,388,487 223,219,523 222,287,815

Weighted average common units outstanding – diluted 223,329,063 223,066,578 223,219,523 222,993,000

Net income $ 14,436 $ 5,561

Net (loss) income $ ( 49,303 ) $ 32,481 $ ( 34,867 ) $ 38,042

Change in fair value of derivatives ( 4,708 ) 8,642 ( 2,166 ) ( 3,003 )

Total comprehensive income (loss) 16,978 ( 6,084 )

Comprehensive income attributable to noncontrolling interests ( 67 ) ( 104 )

Comprehensive income (loss) attributable to common unitholders $ 16,911 $ ( 6,188 )

Total comprehensive (loss) income ( 54,011 ) 41,123 ( 37,033 ) 35,039

Comprehensive income attributable to noncontrolling

( 74 ) ( 30 ) ( 141 ) ( 134 )

Comprehensive (loss) income attributable to common

$ ( 54,085 ) $ 41,093 $ ( 37,174 ) $ 34,905

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

14 unchanged sentences

Balance at March 31, 2024 $ 3,475,941 $ 54,891 $ 3,530,832

Stock compensation activity 3,078 — 3,078

Other comprehensive loss attributable to Parent Company — ( 4,636 ) ( 4,636 )

Distributions to Parent Company ( 54,917 ) — ( 54,917 )

Net loss attributable to Parent Company ( 48,638 ) — ( 48,638 )

Adjustment to redeemable noncontrolling interests ( 4,118 ) — ( 4,118 )

Balance at June 30, 2024 $ 3,371,346 $ 50,255 $ 3,421,601

Balance at December 31, 2022 $ 3,692,171 $ 74,344 $ 3,766,515

5 unchanged sentences

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

Stock compensation activity 2,960 — 2,960

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

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

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

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

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

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

3 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net income $ 14,436 $ 5,561

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 34,867 ) $ 38,042

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization 201,586 219,315

Loss on sales of operating properties, net 236 —

Loss (gain) on sales of operating properties, net 1,466 ( 28,440 )

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

Impairment charges 66,201 —

Straight-line rent ( 6,780 ) ( 6,958 )

10 unchanged sentences

Net proceeds from sales of land 4,855 917

Net proceeds from sales of operating properties 29,809 78,556

Investment in short-term deposits ( 265,000 ) —

Proceeds from short-term deposits 145,000 —

Small business loan repayments — 287

1 unchanged sentence

Distribution from unconsolidated joint venture 1,618 —

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

Capital contribution to unconsolidated joint venture ( 946 ) —

Net cash (used in) provided by investing activities ( 154,601 ) 8,013

Cash flows from financing activities:

15 unchanged sentences

Notes to Consolidated Financial Statements

March 31, 2024

June 30, 2024

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

6 unchanged sentences

We believe the Company qualifies as a real estate investment trust (“REIT”) under sections 856-860 of the Internal Revenue Code of 1986, as amended.

The Parent Company is the sole general partner of the Operating Partnership and, as of March 31, 2024, owned approximately 98.3 % of the common partnership interests in the Operating Partnership (“General Partner Units”).

The Parent Company is the sole general partner of the Operating Partnership and, as of June 30, 2024, owned approximately 98.3 % of the common partnership interests in the Operating Partnership (“General Partner Units”).

The remaining 1.7 % of the common partnership interests (“Limited Partner Units” and, together with the General Partner Units, the “Common Units”) were owned by the limited partners.

5 unchanged sentences

Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) may have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the presentation not misleading.

The unaudited consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and 2023 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein.

The unaudited consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 include all adjustments, consisting of normal recurring adjustments, necessary in the opinion of management to present fairly the financial information set forth therein.

The unaudited consolidated financial statements in this Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the combined Annual Report on Form 10-K of the Parent Company and the Operating Partnership for the year ended December 31, 2023.

2 unchanged sentences

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

As of March 31, 2024, the Company’s portfolio consisted of the following:

As of June 30, 2024, the Company’s portfolio consisted of the following:

Properties Square Footage

8 unchanged sentences

(1) Included within operating retail properties are 10 properties that contain an office component.

Excludes one operating retail property classified as held for sale as of June 30, 2024.

Of the 178 operating retail properties, 175 are consolidated within these financial statements and the remaining three are accounted for under the equity method.

2 unchanged sentences

Components of Investment Properties

The following table summarizes the composition of the Company’s investment properties as of March 31, 2024 and December 31, 2023 (in thousands) :

The following table summarizes the composition of the Company’s investment properties as of June 30, 2024 and December 31, 2023 (in thousands) :

Balance as of

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Land, buildings and improvements $ 7,475,763 $ 7,684,066

2 unchanged sentences

Components of Rental Income including Allowance for Uncollectible Accounts

Rental income related to the Company’s operating leases is comprised of the following for the three months ended March 31, 2024 and 2023 (in thousands) :

Three Months Ended March 31,

Rental income related to the Company’s operating leases is comprised of the following for the three and six months ended June 30, 2024 and 2023 (in thousands) :

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

2024 2023 2024 2023

Fixed contractual lease payments – operating leases $ 161,673 $ 160,134 $ 322,213 $ 318,724

9 unchanged sentences

Short-Term Deposits

As of March 31, 2024, the Company has $ 265.0 million in short-term deposits invested at Goldman Sachs Bank USA and KeyBank National Association, which will be used to satisfy all 2024 debt maturities.

The deposit balance approximates fair value and earns interest at a weighted average rate of 5.34 % with a final maturity date of July 22, 2024.

During the three months ended March 31, 2024, the Company earned $ 2.9 million of interest income on the deposits, which is recorded within “Other income, net” in the accompanying consolidated statements of operations and comprehensive income.

In January 2024, the Company invested $ 265.0 million in short-term deposits at Goldman Sachs Bank USA and KeyBank National Association.

As of June 30, 2024, the Company had $ 120.0 million remaining in short-term deposits.

The short-term deposits earned interest at a weighted average interest rate of 5.34 % with a final maturity date of July 22, 2024.

During the six months ended June 30, 2024, the Company earned $ 6.2 million of interest income on the deposits, which is recorded within “Other income, net” in the accompanying consolidated statements of operations and comprehensive income.

Consolidation and Investments in Joint Ventures

The accompanying financial statements are presented on a consolidated basis and include all accounts of the Parent Company, the Operating Partnership, the taxable REIT subsidiaries (“TRSs”) of the Operating Partnership, subsidiaries of the Operating Partnership that are controlled and any variable interest entities (“VIEs”) in which the Operating Partnership is the primary beneficiary.

As of March 31, 2024, we owned investments in two consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights and we were the primary beneficiary.

As of March 31, 2024, these consolidated VIEs had mortgage debt totaling $ 111.5 million, which was secured by assets of the VIEs totaling $ 218.1 million.

As of June 30, 2024, we owned investments in two consolidated joint ventures that were VIEs in which the partners did not have substantive participating rights and we were the primary beneficiary.

As of June 30, 2024, these consolidated VIEs had mortgage debt totaling $ 110.9 million, which was secured by assets of the VIEs totaling $ 217.3 million.

The Operating Partnership guarantees the mortgage debt of these VIEs.

1 unchanged sentence

The Parent Company consolidates the Operating Partnership as it is the primary beneficiary.

As of March 31, 2024, the Company also owned investments in four unconsolidated joint ventures accounted for under the equity method, which are not considered VIEs.

As of June 30, 2024, the Company also owned investments in four unconsolidated joint ventures accounted for under the equity method, which are not considered VIEs.

On January 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, resulting in a gain on sale of $ 20.2 million.

The Company recognized its share of the gain on sale of unconsolidated property of $ 2.3 million during the three months ended March 31, 2024.

The Company recognized its share of the gain on sale of unconsolidated property of $ 2.3 million during the six months ended June 30, 2024.

In addition, the Company received a $ 1.6 million distribution upon the disposition of the property.

27 unchanged sentences

We report the non-redeemable noncontrolling interests in subsidiaries as equity, and the amount of consolidated net income attributable to these noncontrolling interests is set forth separately in the accompanying consolidated financial statements.

The following table summarizes the non-redeemable noncontrolling interests in consolidated properties for the three months ended March 31, 2024 and 2023 (in thousands) :

Three Months Ended March 31,

The following table summarizes the non-redeemable noncontrolling interests in consolidated properties for the six months ended June 30, 2024 and 2023 (in thousands) :

Six Months Ended June 30,

Noncontrolling interests balance as of January 1, $ 2,430 $ 5,370

1 unchanged sentence

Distributions to noncontrolling interests ( 692 ) —

Noncontrolling interests balance as of March 31,

Noncontrolling interests balance as of June 30,

$ 1,879 $ 5,504

4 unchanged sentences

Under terms defined in the joint venture agreement, after construction completion and stabilization of the development project (as defined in the joint venture agreement), the Company has the ability to call, and the joint venture partner has the ability to put to the Company, subject to certain conditions, the joint venture partner’s interest in the joint venture at fair value.

As of March 31, 2024, these conditions for exercising the put and call options have been met but neither the Company nor the joint venture partner has exercised their respective options.

As of June 30, 2024, these conditions for exercising the put and call options have been met but neither the Company nor the joint venture partner has exercised their respective options.

The joint venture is considered a VIE primarily because the Company’s joint venture partner does not have substantive kick-out rights or substantive participating rights.

5 unchanged sentences

The carrying amount of the redeemable noncontrolling interests in the Operating Partnership is reflected at the greater of historical book value or redemption value with a corresponding adjustment to additional paid-in capital.

As of March 31, 2024 and December 31, 2023, the redemption value of the redeemable noncontrolling interests in the Operating Partnership exceeded the historical book value, and the balances were accordingly adjusted to redemption value.

As of June 30, 2024 and December 31, 2023, the redemption value of the redeemable noncontrolling interests in the Operating Partnership exceeded the historical book value, and the balances were accordingly adjusted to redemption value.

We allocate net operating results of the Operating Partnership after noncontrolling interests in the consolidated properties based on the partners’ respective weighted average ownership interest.

1 unchanged sentence

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

For the three months ended March 31, 2024 and 2023, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:

Three Months Ended March 31,

For the three and six months ended June 30, 2024 and 2023, the weighted average interests of the Parent Company and the limited partners in the Operating Partnership were as follows:

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

2024 2023 2024 2023

Parent Company’s weighted average interest in the Operating Partnership 98.3 % 98.6 % 98.4 % 98.7 %

Limited partners’ weighted average interests in the Operating Partnership 1.7 % 1.4 % 1.6 % 1.3 %

As of March 31, 2024, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.3 % and 1.7 %.

As of June 30, 2024, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.3 % and 1.7 %.

As of December 31, 2023, the Parent Company’s interest and the limited partners’ redeemable noncontrolling ownership interests in the Operating Partnership were 98.4 % and 1.6 %.

4 unchanged sentences

The Parent Company also has the right to redeem the Limited Partner Units directly from the limited partner in exchange for either cash in the amount specified above or a number of its common shares equal to the number of Limited Partner Units being redeemed.

There were 3,707,004 and 3,512,868 Limited Partner Units outstanding as of March 31, 2024 and December 31, 2023, respectively.

There were 3,707,004 and 3,512,868 Limited Partner Units outstanding as of June 30, 2024 and December 31, 2023, respectively.

The increase in Limited Partner Units outstanding from December 31, 2023 is due to non-cash compensation awards granted to our executive officers in the form of Limited Partner Units.

The redeemable noncontrolling interests in the Operating Partnership for the three months ended March 31, 2024 and 2023 were as follows (in thousands) :

Three Months Ended March 31,

The redeemable noncontrolling interests in the Operating Partnership for the six months ended June 30, 2024 and 2023 were as follows (in thousands) :

Six Months Ended June 30,

Redeemable noncontrolling interests balance as of January 1, $ 73,287 $ 53,967

Net income allocable to redeemable noncontrolling interests 213 65

Net (loss) income allocable to redeemable noncontrolling interests ( 526 ) 459

Distributions declared to redeemable noncontrolling interests ( 1,809 ) ( 1,456 )

Other, net including adjustments to redemption value 5,141 7,957

Total limited partners’ interests in the Operating Partnership balance as of March 31,

Total limited partners’ interests in the Operating Partnership balance as of June 30,

$ 76,093 $ 60,927

16 unchanged sentences

The Company will continue to evaluate the impact of this final rule until it becomes effective.

DISPOSITIONS AND IMPAIRMENT CHARGES

The Company closed on the following disposition during the six months ended June 30, 2024 (dollars in thousands) :

Date Property Name MSA Property Type Square

Footage Sales Price Gain (Loss)

May 31, 2024 Ashland & Roosevelt Chicago Multi-tenant retail 104,176 $ 30,600 $ ( 1,230 )

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

Date Property Name MSA Property Type Square

Footage Sales Price Gain (Loss)

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

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

158,172 $ 79,375 $ 28,440

As of June 30, 2024, we have classified City Center, a 362,278 square foot multi-tenant retail property in the New York MSA, as held for sale as the Company has committed to a plan to sell this asset and expects that the sale will be completed within one year.

This property qualified for held-for-sale accounting treatment upon meeting all applicable GAAP criteria as of June 30, 2024, at which time depreciation and amortization were ceased.

In addition, the assets and liabilities associated with this property are separately classified as held for sale in the accompanying consolidated balance sheet as of June 30, 2024.

No properties qualified for held-for-sale accounting treatment as of December 31, 2023.

As of June 30, 2024, in connection with the preparation and review of the second quarter 2024 financial statements and in conjunction with classifying City Center as held for sale, we evaluated City Center for impairment and recorded a $ 66.2 million impairment charge due to changes in the facts and circumstances underlying the Company’s expected future hold period of the property.

A shortening of the expected future hold period is considered an impairment indicator;

therefore, we assessed the recoverability of City Center by comparing the carrying value of long-lived assets of $ 135.1 million as of June 30, 2024 to its estimated fair value of $ 69.6 million, which was determined using the income approach, less estimated selling costs of $ 0.7 million.

The income approach involves discounting the estimated income stream and reversion (presumed sale) value of a property over an estimated hold period to a present value at a risk-adjusted rate.

We used capitalization rates as a significant assumption in the valuation model, which are considered to be Level 3 inputs within the fair value hierarchy.

We applied capitalization rates ranging from 6.0 % to 15.0 % to property income streams based upon the risk profile of the respective tenants and market rent of the leasable space.

Based on this analysis, we recorded a $ 66.2 million non-cash impairment charge on City Center during the three months ended June 30, 2024.

The following table presents the assets and liabilities associated with City Center, the investment property classified as held for sale as of June 30, 2024 (in thousands) :

June 30, 2024

Net investment properties $ 67,984

Tenant and other receivables 2,522

Restricted cash and escrow deposits 225

Deferred costs, net 2,577

Prepaid and other assets 250

Assets associated with investment property held for sale $ 73,558

Accounts payable and accrued expenses $ 637

Deferred revenue and other liabilities 3,293

Liabilities associated with investment property held for sale $ 3,930

There were no discontinued operations for the six months ended June 30, 2024 and 2023 as none of the dispositions or planned dispositions represented a strategic shift that has had, or will have, a material effect on our operations or financial results.

DEFERRED COSTS AND INTANGIBLES, NET

1 unchanged sentence

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

As of March 31, 2024 and December 31, 2023, deferred costs consisted of the following (in thousands) :

March 31, 2024 December 31, 2023

As of June 30, 2024 and December 31, 2023, deferred costs consisted of the following (in thousands) :

June 30, 2024 December 31, 2023

Acquired lease intangible assets $ 389,158 $ 433,771

2 unchanged sentences

accumulated amortization ( 204,640 ) ( 204,262 )

$ 266,461 $ 304,171

deferred costs associated with investment property held for sale ( 2,577 ) —

Deferred costs, net $ 263,884 $ 304,171

2 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

Amortization of deferred leasing costs, lease intangibles and other $ 40,850 $ 57,610

3 unchanged sentences

The amortization of below-market lease liabilities is recognized as revenue over the remaining life of the leases (including option periods for leases with below-market renewal options) through 2085.

Tenant rent payments received in advance are recognized as revenue in the period to which they apply, which is typically the month following their receipt.

As of March 31, 2024 and December 31, 2023, deferred revenue, intangibles, net and other liabilities consisted of the following (in thousands) :

March 31, 2024 December 31, 2023

Tenant rent payments

received in advance are recognized as revenue in the period to which they apply, which is typically the month following their receipt.

As of June 30, 2024 and December 31, 2023, deferred revenue, intangibles, net and other liabilities consisted of the following (in thousands) :

June 30, 2024 December 31, 2023

Unamortized in-place lease liabilities $ 149,279 $ 159,449

2 unchanged sentences

Lease liabilities 68,037 68,925

$ 253,396 $ 272,942

deferred revenue associated with investment property held for sale ( 3,293 ) —

Deferred revenue and other liabilities $ 250,103 $ 272,942

The amortization of below-market lease intangibles is included as a component of “Rental income” in the accompanying consolidated statements of operations and comprehensive income and totaled $ 5.0 million and $ 5.9 million for the three months ended March 31, 2024 and 2023, respectively.

The amortization of below-market lease intangibles is included as a component of “Rental income” in the accompanying consolidated statements of operations and comprehensive income and totaled $ 9.8 million and $ 11.6 million for the six months ended June 30, 2024 and 2023, respectively.

MORTGAGE AND OTHER INDEBTEDNESS

The following table summarizes the Company’s indebtedness as of March 31, 2024 and December 31, 2023 (in thousands) :

March 31, 2024 December 31, 2023

The following table summarizes the Company’s indebtedness as of June 30, 2024 and December 31, 2023 (in thousands) :

June 30, 2024 December 31, 2023

Mortgages payable $ 150,761 $ 153,306

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Total mortgage and other indebtedness, net $ 3,015,626 $ 2,829,202

Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of March 31, 2024, considering the impact of interest rate swaps, is summarized below (dollars in thousands) :

Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of June 30, 2024, considering the impact of interest rate swaps, is summarized below (dollars in thousands) :

Outstanding Ratio Weighted Average

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

As of March 31, 2024, $ 820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 1.4 years.

As of June 30, 2024, $ 820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 1.2 years.

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

As of March 31, 2024, $ 155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 1.4 years.

As of June 30, 2024, $ 155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 1.2 years.

Mortgages Payable

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Balance Weighted Average

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Total mortgages payable $ 150,761 $ 153,306

(1) The fixed rate mortgages had interest rates ranging from 3.75 % to 5.73 % as of March 31, 2024 and December 31, 2023.

(1) The fixed rate mortgages had interest rates ranging from 3.75 % to 5.73 % as of June 30, 2024 and December 31, 2023.

(2) The interest rate on the variable rate mortgage is based on Bloomberg Short Term Bank Yield Index (“ BSBY ”) plus 215 basis points.

The one-month BSBY rate was 5.35 % and 5.44 % as of March 31, 2024 and December 31, 2023, respectively.

The one-month BSBY rate was 5.39 % and 5.44 % as of June 30, 2024 and December 31, 2023, respectively.

Mortgages payable, which are secured by certain real estate and, in some cases, by guarantees from the Operating Partnership, are generally due in monthly installments of principal and interest and mature over various terms through 2033.

During the three months ended March 31, 2024, we made scheduled principal payments of $ 1.3 million related to amortizing loans.

During the six months ended June 30, 2024, we made scheduled principal payments of $ 2.6 million related to amortizing loans.

Unsecured Notes

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Maturity Date Balance Interest Rate Balance Interest Rate

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however, due to hedging activities, the Company’s interest rate is 4.60 %.

During the three months ended March 31, 2024, the Company completed a public offering of $ 350.0 million in aggregate principal amount of 5.50 % senior unsecured notes due 2034 (“Notes Due 2034”).

During the six months ended June 30, 2024, the Company completed a public offering of $ 350.0 million in aggregate principal amount of 5.50 % senior unsecured notes due 2034 (the “Notes Due 2034”).

The Notes Due 2034 were priced at 98.670 % of the principal amount to yield 5.673 % to maturity and will mature on March 1, 2034, unless earlier redeemed.

The proceeds will be used to satisfy the $ 269.6 million of debt maturities due in 2024 and for general corporate purposes.

A portion of the proceeds were used to repay the $ 149.6 million principal balance of the 4.58 % senior unsecured notes that matured on June 30, 2024.

Subsequent to June 30, 2024, the remaining proceeds were used to repay the $ 120.0 million unsecured term loan due July 2024 (the “$ 120 M Term Loan”) and for general corporate purposes.

Unsecured Term Loans and Revolving Line of Credit

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Maturity Date Balance Interest Rate Balance Interest Rate

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(1) $ 120,000 of SOFR -based variable rate debt has been swapped to a fixed rate of 1.58 % plus a credit spread based on a ratings grid ranging from 0.80 % to 1.65 % through July 17, 2024.

The applicable credit spread was 1.10 % as of March 31, 2024 and December 31, 2023.

The applicable credit spread was 1.10 % as of June 30, 2024 and December 31, 2023.

Subsequent to June 30, 2024, the $ 120 M Term Loan was repaid with a portion of the proceeds from the Notes Due 2034.

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

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(3) $ 150,000 of SOFR -based variable rate debt has been swapped to a fixed rate of 1.68 % plus a credit spread based on a ratings grid ranging from 0.75 % to 1.60 % through July 17, 2026.

The applicable credit spread was 1.05 % as of March 31, 2024 and December 31, 2023.

The applicable credit spread was 1.05 % as of June 30, 2024 and December 31, 2023.

(4) $ 300,000 of SOFR -based variable rate debt has been swapped to a fixed rate of 2.47 % plus a credit spread based on a ratings grid ranging from 1.15 % to 2.20 % through August 1, 2025.

The applicable credit spread was 1.35 % as of March 31, 2024 and December 31, 2023.

The applicable credit spread was 1.35 % as of June 30, 2024 and December 31, 2023.

(5) The revolving line of credit has two six-month extension options that the Company can exercise, at its election, subject to (i) customary representations and warranties, including, but not limited to, the absence of an event of default as defined in the unsecured credit agreement and (ii) payment of an extension fee equal to 0.075 % of the revolving line of credit capacity.

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

As of March 31, 2024, making such an election would have resulted in a lower interest rate;

As of June 30, 2024, making such an election would have resulted in a lower interest rate;

however, the Company had not made the election to convert to the ratings-based pricing grid.

The Credit Agreement includes a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth therein.

The following table summarizes the key terms of the Revolving Facility as of March 31, 2024 (dollars in thousands) :

The greenhouse gas emission reduction targets have not been achieved as of June 30, 2024.

The following table summarizes the key terms of the Revolving Facility as of June 30, 2024 (dollars in thousands) :

Leverage-Based Pricing Investment Grade Pricing

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and (v) a minimum unencumbered interest coverage ratio.

As of March 31, 2024, we were in compliance with all such covenants.

As of June 30, 2024, we were in compliance with all such covenants.

Unsecured Term Loans

As of March 31, 2024, the Operating Partnership has the following unsecured term loans:

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

As of June 30, 2024, the Operating Partnership has the following unsecured term loans:

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

The $ 120 M Term Loan, $ 150 M Term Loan and $ 300 M Term Loan are each priced on a ratings-based pricing grid while the $ 250 M Term Loan is priced on a leverage-based pricing grid.

The agreements related to the $ 150 M Term Loan and $ 300 M Term Loan include a sustainability metric based on targeted greenhouse gas emission reductions, which results in a reduction of the otherwise applicable interest rate margin by one basis point upon achievement of targets set forth in each agreement.

The following table summarizes the key terms of the unsecured term loans as of March 31, 2024 (dollars in thousands) :

Subsequent to June 30, 2024, the $ 120 M Term Loan was repaid with a portion of the proceeds from the Notes Due 2034.

The following table summarizes the key terms of the unsecured term loans as of June 30, 2024 (dollars in thousands) :

Unsecured Term Loans

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7/29/2029 N/A 1.15 % – 2.20 %

(1) Subsequent to June 30, 2024, the $ 120 M Term Loan was repaid with a portion of the proceeds from the Notes Due 2034.

(2) The maturity date may be extended for up to three additional periods of one year each at the Operating Partnership’s option, subject to certain conditions.

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The following amounts of amortization of debt issuance costs are included as a component of “Interest expense” in the accompanying consolidated statements of operations and comprehensive income (in thousands) :

Three Months Ended March 31,

Six Months Ended June 30,

Amortization of debt issuance costs $ 1,916 $ 1,782

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The following amounts of amortization are included as a component of “Interest expense” in the accompanying consolidated statements of operations and comprehensive income (in thousands) :

Three Months Ended March 31,

Six Months Ended June 30,

Amortization of debt discounts, premiums and hedge instruments $ 7,490 $ 9,998

In addition, the estimated amounts of reduction to interest expense as of March 31, 2024 for each of the next five years and thereafter related to the amortization of debt discounts, premiums and assumed hedge instruments, assuming these instruments are held to maturity, are as follows (in thousands) :

April 2024 through December 2024 $ 9,955

In addition, the estimated amounts of the reduction to interest expense as of June 30, 2024 for each of the next five years and thereafter related to the amortization of debt discounts, premiums and assumed hedge instruments, assuming these instruments are held to maturity, are as follows (in thousands) :

July 2024 through December 2024 $ 6,222

Thereafter 5,411

Total unamortized debt discounts, premiums and hedge instruments $ 36,052

The following table reconciles total unamortized debt discounts, premiums and hedge instruments as of March 31, 2024 to the balance of unamortized discounts and premiums, net (in thousands) :

The following table reconciles total unamortized debt discounts, premiums and hedge instruments as of June 30, 2024 to the balance of unamortized discounts and premiums, net (in thousands) :

Unamortized discounts and premiums on mortgages payable, senior unsecured notes and unsecured term loans $ 34,055

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Fair Value of Fixed and Variable Rate Debt

As of March 31, 2024, the estimated fair value of fixed rate debt was $ 2.2 billion compared to the book value of $ 2.3 billion.

As of June 30, 2024, the estimated fair value of fixed rate debt was $ 2.1 billion compared to the book value of $ 2.2 billion.

The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 5.82 % to 7.02 %.

As of March 31, 2024, the estimated fair value of variable rate debt was $ 839.9 million compared to the book value of $ 836.4 million.

As of June 30, 2024, the estimated fair value of variable rate debt was $ 841.8 million compared to the book value of $ 835.8 million.

The fair value was estimated using Level 2 and 3 inputs with cash flows discounted at current borrowing rates for similar instruments, which ranged from 6.49 % to 6.54 %.

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The agreements with each of our derivative counterparties provide that in the event of default on any of our indebtedness, we could also be declared in default on our derivative obligations.

The following table summarizes the terms and fair values of the Company’s derivative financial instruments that were designated and qualified as part of a hedging relationship as of March 31, 2024 and December 31, 2023 (dollars in thousands) :

The following table summarizes the terms and fair values of the Company’s derivative financial instruments that were designated and qualified as part of a hedging relationship as of June 30, 2024 and December 31, 2023 (dollars in thousands) :

Fair Value Assets (Liabilities) (1)

Type of Hedge Number of Instruments Aggregate Notional Reference Rate Interest Rate Effective Date Maturity Date March 31, 2024 December 31, 2023

Type of Hedge Number of Instruments Aggregate Notional Reference Rate Interest Rate Effective Date Maturity Date June 30, 2024 December 31, 2023

Cash Flow Four $ 250,000 SOFR 2.99 % 12/1/2022 10/24/2025 $ 5,700 $ 4,952

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We have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, although the credit valuation adjustments associated with our derivatives use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties.

As of March 31, 2024 and December 31, 2023, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives.

As of June 30, 2024 and December 31, 2023, we assessed the significance of the impact of the credit valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of our derivatives.

As a result, we have determined that our derivative valuations were classified within Level 2 of the fair value hierarchy.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to earnings over time as the hedged items are recognized in earnings.

Approximately $ 4.9 million and $ 4.2 million was reclassified as a reduction to interest expense during the three months ended March 31, 2024 and 2023, respectively.

Approximately $ 4.9 million and $ 9.8 million was reclassified as a reduction to interest expense during the three and six months ended June 30, 2024, respectively.

Approximately $ 3.5 million and $ 7.7 million was reclassified as a reduction to interest expense during the three and six months ended June 30, 2023,

respectively.

As interest payments on our derivatives are made over the next 12 months, we estimate the decrease to interest expense to be approximately $ 21.1 million, assuming the current SOFR curve.

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Distributions

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.

For the three months ended March 31, 2023, we declared a cash distribution of $ 0.24 per common share and Common Unit.

At-The-Market Offering Program

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 its 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 March 31, 2024, the Company has no t sold any common shares under the ATM Program.

Our Board of Trustees declared a cash distribution of $ 0.25 per common share and Common Unit for the second quarter of 2024.

This distribution was paid on July 16, 2024 to common shareholders and common unitholders of record as of July 9, 2024.

For the six months ended June 30, 2024, we declared cash distributions totaling $ 0.50 per common share and Common Unit.

For the three and six months ended June 30, 2023, we declared cash distributions of $ 0.24 and $ 0.48 per common share and Common Unit, respectively.

Share Repurchase Program

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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 no t repurchased any shares under the Share Repurchase Program.

As of June 30, 2024, the Company has no t repurchased any shares under the Share Repurchase Program.

EARNINGS PER SHARE OR UNIT

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(ii) Limited Partner Units, which may be exchanged for either cash or common shares at the Parent Company’s option and under certain circumstances;

(iii) AO LTIP Units;

(iii) “appreciation only” long-term incentive plan units;

and (iv) deferred common share units, which may be credited to the personal accounts of non-employee trustees in lieu of compensation paid in cash or the issuance of common shares to such trustees.

Limited Partner Units have been omitted from the Parent Company’s denominator for the purpose of computing diluted earnings per share since the effect of including those amounts in the denominator would have no dilutive impact.

Weighted average Limited Partner Units outstanding were 3.6 million and 3.0 million for the three months ended March 31, 2024 and 2023, respectively.

Weighted average Limited Partner Units outstanding were 3.7 million for the three and six months ended June 30, 2024 and 3.0 million for the three and six months ended June 30, 2023.

Due to the net loss allocable to common shareholders and common unitholders for the three and six months ended June 30, 2024, no securities had a dilutive impact for those periods.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

In 2017, we provided a repayment guaranty on a $ 33.8 million construction loan associated with the development of the Embassy Suites at the University of Notre Dame, consistent with our 35 % ownership interest.

Our portion of the repayment guaranty is limited to $ 5.9 million, and the guaranty’s term is through July 1, 2024, the maturity date of the construction loan.

As of March 31, 2024, the outstanding loan balance was $ 32.5 million, of which our share was $ 11.4 million.

The loan is secured by the hotel.

Our portion of the repayment

guaranty was limited to $ 5.9 million, and the guaranty’s term was through July 1, 2024, the maturity date of the construction loan.

As of June 30, 2024, the outstanding loan balance was $ 32.3 million, of which our share was $ 11.3 million.

Subsequent to June 30, 2024, the joint venture repaid the construction loan and we contributed $ 10.2 million representing our 35 % share of the debt repaid.

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

As of March 31, 2024, the outstanding balance of the loans was $ 65.6 million, of which our share was $ 32.8 million.

As of June 30, 2024, the outstanding balance of the loans was $ 70.1 million, of which our share was $ 35.1 million.

Legal Proceedings

3 unchanged sentences

SUBSEQUENT EVENTS

In connection with the preparation of our financial statements, we have evaluated events and transactions that occurred subsequent to March 31, 2024 for recognition and/or disclosure purposes.

Based on this evaluation, there were no subsequent events from March 31, 2024 through the date the financial statements were issued.

Subsequent to June 30, 2024, we:

• repaid the $ 120.0 million unsecured term loan due July 2024 with a portion of the proceeds from the Notes Due 2034 and the corresponding interest rate swaps matured;

• contributed $ 10.2 million to the repayment of the construction loan at Embassy Suites at the University of Notre Dame representing our 35 % share of the joint venture debt repaid.

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

What changed 10-Q

Item 1. Financial Statements