What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-07-31 compared with 2024-05-07 · 195 added, 117 removed, 315 unchanged (50% of the section changed)

37 unchanged sentences

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

As of March 31, 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.

As of June 30, 2024, we owned interests in 178 operating retail properties totaling approximately 27.6 million square feet, excluding one operating retail property classified as held for sale as of June 30, 2024, and one office property with 0.3 million square feet.

Of the 178 operating retail properties, 10 contain an office component.

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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.

Over the last year, we have made significant progress in 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.

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Operating Activity

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).

During the second quarter of 2024, we executed new and renewal leases on 160 individual spaces totaling 1,153,766 square feet (15.6% cash leasing spread on 136 comparable leases).

New leases were signed on 55 individual spaces for 372,155 square feet of gross leasable area (“GLA”) (34.8% cash leasing spread on 40 comparable leases), while non-option renewal leases were signed on 69 individual spaces for 314,899 square feet of GLA (14.3% cash leasing spread on 60 comparable leases) and option renewals were signed on 36 individual spaces for 466,712 square feet of GLA (6.0% cash leasing spread).

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Results of Operations

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.

The comparability of results of operations for the three and six months ended June 30, 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 property was acquired during the period from January 1, 2023 through March 31, 2024:

The following operating property was acquired during the period from January 1, 2023 through June 30, 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, 2023 through March 31, 2024:

The following operating and other properties were sold during the period from January 1, 2023 through June 30, 2024:

Property Name MSA Disposition Date GLA

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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.

Ashland & Roosevelt Chicago, IL May 31, 2024 104,176

In addition, during the six months ended June 30, 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, 2023 through March 31, 2024 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 June 30, 2024 and removed from our operating portfolio:

Project Name MSA Transition to

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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,

Comparison of Operating Results for the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

The following table reflects changes in the components of our consolidated statements of operations for the three months ended June 30, 2024 and 2023 (in thousands) :

Three Months Ended June 30,

2024 2023 Change

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Depreciation and amortization 99,291 109,462 (10,171)

Impairment charges 66,201 — 66,201

Total expenses 233,515 177,890 55,625

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

(Loss) gain on sales of operating properties, net (1,230) 28,440 (29,670)

Operating (loss) income (22,311) 59,309 (81,620)

Other (expense) income:

Interest expense (30,981) (27,205) (3,776)

Income tax expense of taxable REIT subsidiaries (132) (45) (87)

Equity in (loss) earnings of unconsolidated subsidiaries (174) 118 (292)

Other income, net 4,295 304 3,991

Net (loss) income (49,303) 32,481 (81,784)

Net loss (income) attributable to noncontrolling interests 665 (423) 1,088

Net (loss) income attributable to common shareholders $ (48,638) $ 32,058 $ (80,696)

Property operating expense to total revenue ratio 13.4 % 13.0 %

Rental income (including tenant reimbursements) did not change for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Rental income is comprised of the following (in thousands) :

Three Months Ended

June 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (3,866)

Properties under redevelopment or acquired during 2023 and/or 2024 1,646

Properties fully operational during 2023 and 2024 and other 2,220

The net increase of $2.2 million in rental income for properties that were fully operational during 2023 and 2024 is primarily due to increases in the following:

(i) tenant reimbursements of $3.5 million due to higher recoverable common area

maintenance expenses, (ii) base minimum rent of $2.0 million due to contractual rent changes, (iii) ancillary income of $0.5 million, and (iv) overage rent of $0.3 million due to improved tenant performance.

These variances were partially offset by a decrease in lease termination income of $2.8 million and an increase in bad debt expense of $1.3 million.

The occupancy of the fully operational properties decreased from 92.5% for the three months ended June 30, 2023 to 91.3% for the three months ended June 30, 2024.

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

This revenue increased by $1.3 million primarily as a result of higher gains on sales of undepreciated assets recognized during the three months ended June 30, 2024, partially offset by a decrease in miscellaneous income of $0.5 million.

We recorded fee income of $3.5 million and $1.0 million during the three months ended June 30, 2024 and 2023, respectively, from property management and development services provided to third parties and unconsolidated joint ventures.

The increase in fee income is primarily related to development fees earned related to the development of a hotel on the Pan Am Plaza site during the three months ended June 30, 2024.

Property operating expenses increased $1.3 million, or 4.9%, due to the following (in thousands) :

Three Months Ended

June 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (935)

Properties under redevelopment or acquired during 2023 and/or 2024 217

Properties fully operational during 2023 and 2024 and other 2,050

Total $ 1,332

The net increase of $2.1 million in property operating expenses for properties that were fully operational during 2023 and 2024 is primarily due to increases in the following:

(i) $0.8 million in non-recoverable operating expenses, (ii) $0.7 million in landscaping and repairs and maintenance expenses, (iii) $0.5 million in insurance, and (iv) $0.1 million in security expenses.

As a percentage of revenue, property operating expenses increased from 13.0% to 13.4% due to an increase in expenses in 2024.

Real estate taxes decreased $0.2 million, or 0.8%, due to the following (in thousands) :

Three Months Ended

June 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (488)

Properties under redevelopment or acquired during 2023 and/or 2024 (51)

Properties fully operational during 2023 and 2024 and other 335

Total $ (204)

The net increase of $0.3 million in real estate taxes for properties that were fully operational during 2023 and 2024 is primarily due to lower real estate tax refunds received in 2024, partially offset by 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 $1.5 million, or 10.6%, primarily due to lower than expected compensation expense.

Depreciation and amortization expense decreased $10.2 million, or 9.3%, due to the following (in thousands) :

Three Months Ended

June 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (2,578)

Properties under redevelopment or acquired during 2023 and/or 2024 1,056

Properties fully operational during 2023 and 2024 and other (8,649)

Total $ (10,171)

The net decrease of $8.6 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 acquired in the October 2021 merger with RPAI that became fully depreciated during the three months ended June 30, 2024.

Based on a reduction in the expected future hold period (see Note 3 to the accompanying consolidated financial statements), we recognized a $66.2 million impairment charge during the three months ended June 30, 2024 related to City Center, a retail operating property in the New York MSA.

No impairment charges were recorded during the three months ended June 30, 2023.

We recorded a net loss on sales of operating properties of $1.2 million for the three months ended June 30, 2024 on the sale of Ashland & Roosevelt compared to a net gain of $28.4 million on the sale of Kingwood Commons and the undeveloped land and related parking garage at Pan Am Plaza for the three months ended June 30, 2023.

Interest expense increased $3.8 million, or 13.9%, 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 (the “Notes Due 2034”), partially offset by favorable interest rate swaps.

Other income, net increased $4.0 million primarily due to interest income earned on the proceeds from the Notes Due 2034, which were invested in short-term deposits during the three months ended June 30, 2024.

Comparison of Operating Results for the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

The following table reflects changes in the components of our consolidated statements of operations for the six months ended June 30, 2024 and 2023 (in thousands) :

Six Months Ended June 30,

2024 2023 Change

Rental income $ 411,649 $ 408,899 $ 2,750

Other property-related revenue 4,457 3,799 658

Fee income 3,767 2,811 956

Total revenue 419,873 415,509 4,364

Property operating 56,645 54,546 2,099

Real estate taxes 53,027 53,880 (853)

General, administrative and other 25,750 27,883 (2,133)

Depreciation and amortization 199,670 217,533 (17,863)

Impairment charges 66,201 — 66,201

Total expenses 401,293 353,842 47,451

(Loss) gain on sales of operating properties, net (1,466) 28,440 (29,906)

Operating income 17,114 90,107 (72,993)

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Interest expense (61,345) (52,630) (8,715)

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

Income tax expense of taxable REIT subsidiaries (290) (16) (274)

Equity in loss of unconsolidated subsidiaries (594) (126) (468)

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Other income, net 7,923 707 7,216

Net income 14,436 5,561 8,875

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

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

Net (loss) income (34,867) 38,042 (72,909)

Net loss (income) attributable to noncontrolling interests 385 (593) 978

Net (loss) income attributable to common shareholders $ (34,482) $ 37,449 $ (71,931)

Property operating expense to total revenue ratio 13.5 % 13.1 %

Rental income (including tenant reimbursements) increased $2.8 million, or 0.7%, due to the following (in thousands) :

Three Months Ended

March 31, 2023

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

Six Months Ended

June 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (8,583)

Properties under redevelopment or acquired during 2023 and/or 2024 4,637

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Total $ 2,750

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.

The net increase of $6.7 million in rental income for properties that were fully operational during 2023 and 2024 is primarily due to increases in the following:

(i) tenant reimbursements of $4.3 million due to higher recoverable common area maintenance expenses, (ii) base minimum rent of $2.6 million due to contractual rent changes, (iii) ancillary income of $0.9 million, and (iv) overage rent of $0.2 million due to improved tenant performance.

These variances were partially offset by a decrease in lease termination income of $1.3 million.

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

This revenue decreased by $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.

This revenue increased by $0.7 million primarily as a result of higher gains on sales of undepreciated assets recognized during the six months ended June 30, 2024, partially offset by decreases in miscellaneous income of $0.7 million and parking revenue of $0.5 million.

We recorded fee income of $3.8 million and $2.8 million during the six months ended June 30, 2024 and 2023, respectively, from property management and development services provided to third parties and unconsolidated joint ventures.

The increase in fee income is primarily related to development fees earned related to the development of a hotel on the Pan Am Plaza site during 2024, partially offset by a decrease in development fees earned related to the development of a corporate campus for Republic Airways at Hamilton Crossing Centre in 2024 due to the completion of Phase I of the corporate campus in 2023.

Property operating expenses increased $2.1 million, or 3.8%, due to the following (in thousands) :

Three Months Ended

March 31, 2023

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

Six Months Ended

June 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (2,184)

Properties under redevelopment or acquired during 2023 and/or 2024 522

Properties fully operational during 2023 and 2024 and other 3,761

Total $ 2,099

The net increase of $3.8 million in property operating expenses for properties that were fully operational during 2023 and 2024 is primarily due to increases in the following:

(i) $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.

(i) $1.4 million in landscaping and repairs and maintenance expenses, (ii) $1.2 million in non-recoverable operating expenses, (iii) $1.0 million in insurance, and (iv) $0.3 million in security expenses.

As a percentage of revenue, property operating expenses increased from 13.1% to 13.5% due to an increase in expenses in 2024.

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

Three Months Ended

March 31, 2023

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

Six Months Ended

June 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (1,145)

Properties under redevelopment or acquired during 2023 and/or 2024 300

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Total $ (853)

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.

There was no change in real estate taxes for properties that were fully operational during 2023 and 2024.

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.

General, administrative and other expenses decreased $2.1 million, or 7.6%, primarily due to lower than expected compensation expense.

Depreciation and amortization expense decreased $17.9 million, or 8.2%, due to the following (in thousands) :

Three Months Ended

March 31, 2023

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

Six Months Ended

June 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (5,181)

Properties under redevelopment or acquired during 2023 and/or 2024 2,778

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Total $ (17,863)

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.

The net decrease of $15.5 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 acquired in the October 2021 merger with RPAI that became fully depreciated during the six months ended June 30, 2024.

Based on a reduction in the expected future hold period (see Note 3 to the accompanying consolidated financial statements), we recorded a $66.2 million impairment charge during the six months ended June 30, 2024 related to City Center, a retail operating property in the New York MSA.

No impairment charges were recorded during the six months ended June 30, 2023.

We recorded a net loss on sales of operating properties of $1.5 million for the six months ended June 30, 2024 primarily on the sale of Ashland & Roosevelt compared to a net gain of $28.4 million on the sale of Kingwood Commons and the undeveloped land and related parking garage at Pan Am Plaza for the six months ended June 30, 2023.

Interest expense increased $8.7 million, or 16.6%, primarily due to interest on the 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 recognized during the six months ended June 30, 2024.

No such gain was recorded during the six months ended June 30, 2023.

Other income, net increased $7.2 million primarily due to interest income earned on the proceeds from the Notes Due 2034, which were invested in short-term deposits during the six months ended June 30, 2024.

Net Operating Income and Same Property Net Operating Income

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

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

For the three and six months ended June 30, 2024, the same property pool excludes the following:

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

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• office properties.

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

The following table presents Same Property NOI and a reconciliation to net income attributable to common shareholders for the three and six months ended June 30, 2024 and 2023 (dollars in thousands) :

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

2024 2023 Change 2024 2023 Change

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

Leased percentage at period end (2)

177 177 177 177

Leased percentage at period end 94.8 % 94.5 % 94.8 % 94.5 %

Economic occupancy percentage at period end (2)

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Net operating income – non-same activity (4)

11,397 13,778 21,633 25,705

Total property NOI 153,925 153,790 0.1 % 306,434 304,272 0.7 %

1 unchanged sentence

General, administrative and other (12,966) (14,499) (25,750) (27,883)

Impairment charges (66,201) — (66,201) —

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

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

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

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

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

Net income attributable to noncontrolling interests

Net income attributable to common shareholders

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

(1) Same Property NOI excludes the following:

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(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;

(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;

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and (vi) office properties.

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

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

(3) Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent;

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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 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.

Our Same Property NOI increased 1.8% for the three months ended June 30, 2024 compared to the same period of the prior year primarily due to contractual rent growth, partially offset by higher bad debt expense.

Funds From Operations

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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.

Considering the nature of our business as a real estate owner and operator, the Company believes that FFO is helpful to investors in measuring our operational performance because it excludes various items included in net income that do not relate to or are not indicative of our operating performance, such as gains or losses from sales of depreciated property and depreciation and amortization, which can make periodic and peer analyses of operating performance more difficult.

FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flows from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions.

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From time to time, the Company may report or provide guidance with respect to “FFO, as adjusted,” which removes the impact of certain non-recurring and non-operating transactions or other items the Company does not consider to be representative of its core operating results including, without limitation, (i) gains or losses associated with the early extinguishment of debt, (ii) gains or losses associated with litigation involving the Company that is not in the normal course of business, (iii) merger and acquisition costs, (iv) the impact on earnings from employee severance, (v) the excess of redemption value over carrying value of preferred stock redemption, and (vi) 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

Our calculations of FFO and reconciliation to net income for the three and six months ended June 30, 2024 and 2023 (unaudited) are as follows (dollars in thousands) :

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

2024 2023 2024 2023

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

net income attributable to noncontrolling interests in properties (74) (30) (141) (134)

loss on sales of operating properties, net 236 —

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

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

impairment charges 66,201 — 66,201 —

depreciation and amortization of consolidated and

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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

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

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

1 unchanged sentence

Three Months Ended

March 31, 2024

Net income $ 14,436

June 30, 2024

Net loss $ (49,303)

Depreciation and amortization 99,291

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Unconsolidated Adjusted EBITDA 611

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

Impairment charges 66,201

Loss on sales of operating properties, net 1,230

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Net Debt to Adjusted EBITDA 4.8x

(1) Represents Adjusted EBITDA for the three months ended March 31, 2024 (as shown in the table above) multiplied by four.

(1) Represents Adjusted EBITDA for the three months ended June 30, 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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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.

As of June 30, 2024, we had approximately $153.8 million in cash and cash equivalents on hand, $4.9 million in restricted cash and escrow deposits, $120.0 million of short-term deposits that were used to repay the $120.0 million unsecured term loan due July 2024 (the “$120M Term Loan”), and $1.1 billion of remaining availability under the Revolving Facility.

During the six months ended June 30, 2024, we completed a public offering of the Notes Due 2034, the proceeds of which were used to satisfy all 2024 debt maturities and for general corporate purposes.

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 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.

As of June 30, 2024, we had approximately $1.1 billion available under the Revolving Facility for future borrowings.

We also had $273.8 million in cash, cash equivalents and short-term deposits as of June 30, 2024.

We were in compliance with all applicable financial covenants under the Revolving Facility, unsecured term loans and senior unsecured notes as of June 30, 2024.

On June 7, 2024, the Company filed with the SEC a new shelf registration statement on Form S-3, which is effective for a term of three years, relating to the offer and sale, from time to time, of an indeterminate amount of equity and debt securities.

Equity securities may be offered and sold by the Parent Company, and the net proceeds of any such offerings would be contributed to the Operating Partnership in exchange for additional General Partner Units.

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From time to time, we may issue securities under this shelf registration statement for general corporate purposes, which may include acquisitions of additional properties, repayment of outstanding indebtedness, capital expenditures, the expansion, redevelopment, and/or improvement of properties in our portfolio, working capital and other general purposes.

In February 2021, the Company and the Operating Partnership entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with each of BofA Securities, Inc., Citigroup Global Markets Inc., KeyBanc Capital Markets Inc.

and Raymond James & Associates, Inc., pursuant to which the Company may sell, from time to time, up to an aggregate sales price of $150.0 million of its common shares of beneficial interest, $0.01 par value per share under an at-the-market offering program (the “ATM Program”).

In November 2021, the Company and the Operating Partnership amended the Equity Distribution Agreement to reflect their filing of a shelf registration statement on November 16, 2021 with the SEC.

The Operating Partnership intends to use the net proceeds, if any, to repay borrowings under the Revolving Facility and other indebtedness and for working capital and other general corporate purposes.

The Operating Partnership may also use the net proceeds for acquisitions of operating properties and the development or redevelopment of properties, although there are currently no understandings, commitments or agreements to do so.

As of 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 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.

As of June 30, 2024, over the next 12 months we have no secured debt, excluding scheduled monthly principal payments, and $470.0 million of unsecured debt scheduled to mature.

Subsequent to June 30, 2024, we repaid the $120M Term Loan with a portion of the proceeds from the Notes Due 2034, leaving $350.0 million of unsecured debt scheduled to mature prior to June 30, 2025.

We believe we have sufficient liquidity to repay this obligation through a combination of cash flows generated from operations, capital markets transactions, 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 $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.

Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest and principal payments on our debt of approximately $60.0 million and $2.6 million, respectively, for the remainder of 2024, expected dividend payments to our common shareholders and common unitholders, and recurring capital expenditures.

In April 2024, 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.

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.

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

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.

During the six months ended June 30, 2024, we incurred $12.7 million for recurring capital expenditures on operating properties and $43.6 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of June 30, 2024 (excluding development and redevelopment properties).

We currently anticipate incurring approximately $100 million of additional major tenant improvement costs related to executed leases for tenants not yet open 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.

As of March 31, 2024, we had development projects under construction at Carillon medical office building and The Corner – IN.

As of June 30, 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 March 31, 2024, we have incurred $31.9 million of these costs.

As of June 30, 2024, we have incurred $33.1 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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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.

As of June 30, 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;

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.

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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Commitments under Ground Leases.

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.

We are obligated under 12 ground leases for approximately 98 acres of land as of June 30, 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 three months ended March 31, 2024 (in thousands) :

Three Months Ended

March 31, 2024

The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the six months ended June 30, 2024 (in thousands) :

Six Months Ended

June 30, 2024

Active development and redevelopment projects $ 6,692

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

If we had experienced a 10% reduction in development and redevelopment activities without a corresponding decrease in indirect project costs, we would have recorded additional expense of $0.1 million for the three months ended March 31, 2024.

Debt Maturities

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) :

The following table summarizes the scheduled maturities and principal amortization of the Company’s indebtedness as of June 30, 2024, presented on a calendar year basis (in thousands) :

Principal Payments Term

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Total $ 3,015,626

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

Failure to comply with the obligations under our debt agreements, including payment obligations, could cause an event of default under such debt, which, among other things, could result in the loss of title to the assets securing the debt, acceleration of the payment of all principal and interest and/or termination of the agreements, or exposure to the risk of foreclosure.

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

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.

During the six months ended June 30, 2024, we received a credit rating upgrade with a stable outlook from two of the rating agencies and a positive credit rating outlook from the third 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 March 31, 2024, we had cash, cash equivalents and restricted cash of $89.0 million.

As of June 30, 2024, we had cash, cash equivalents and restricted cash of $158.8 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 Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

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

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 Change

Net cash provided by operating activities $ 195,686 $ 180,425 $ 15,261

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

Net cash (used in) provided by investing activities (154,601) 8,013 (162,614)

Net cash provided by (used in) financing activities 76,480 (175,454) 251,934

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

Increase in cash, cash equivalents and restricted cash 117,565 12,984 104,581

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

Cash, cash equivalents and restricted cash, at end of period $ 158,995 $ 134,954

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.

Cash provided by operating activities was $195.7 million for the six months ended June 30, 2024 and $180.4 million for the same period of 2023.

The cash flows were positively impacted by an increase in net operating income and interest income received from the short-term certificates of deposit.

Cash used in investing activities was $154.6 million for the six months ended June 30, 2024 compared to cash provided by investing activities of $8.0 million for the same period of 2023.

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

• 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.

• We invested $265.0 million of proceeds from the Notes Due 2034 in short-term certificates of deposit and received $145.0 million upon maturity of the certificate of deposit that matured in June 2024;

• We received net proceeds of $34.7 million from the sale of Ashland & Roosevelt and four parcels of land during the six months ended June 30, 2024 compared to net proceeds of $79.5 million from the sale of Kingwood Commons, the undeveloped land and related parking garage at Pan Am Plaza, and two parcels of land during the six months ended June 30, 2023;

• Capital expenditures decreased by $0.6 million primarily related to the timing of capital projects along with a change in construction payables of $2.8 million for the six months ended June 30, 2024;

• 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 six months ended June 30, 2024.

Cash provided by financing activities was $76.5 million for the six months ended June 30, 2024 compared to cash used in financing activities of $175.5 million for the same period of 2023.

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

• 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.

• We received $345.3 million of proceeds from the Notes Due 2034 and borrowed $40.0 million on the Revolving Facility during the six months ended June 30, 2024 compared to borrowings of $198.0 million on the Revolving Facility and proceeds of $95.1 million from the origination of a mortgage payable during the six months ended June 30, 2023;

• We repaid the $149.6 million principal balance of the 4.58% senior unsecured notes that matured on June 30, 2024, $40.0 million of borrowings on the Revolving Facility, and $2.6 million of mortgages payable during the six months ended June 30, 2024 compared to repayments of $198.0 million of borrowings on the Revolving Facility and $163.2 million of mortgages payable during the six months ended June 30, 2023;

• We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $111.5 million during the six months ended June 30, 2024 compared to distributions of $106.6 million during the six months ended June 30, 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 March 31, 2024.

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