What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-07-31 · 167 added, 148 removed, 362 unchanged (47% 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 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.

As of September 30, 2024, we owned interests in 179 operating retail properties totaling approximately 27.7 million square feet, excluding one operating retail property classified as held for sale as of September 30, 2024, and one office property with 0.3 million square feet.

Of the 179 operating retail properties, 10 contain an office component.

We also owned two development projects under construction as of this date and an additional two properties with future redevelopment opportunities.

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

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

We also owned three development projects under construction as of this date and an additional two properties with future redevelopment opportunities.

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 progress in 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 executing leases that include higher fixed-rent bumps while also including CPI-based, anti-gouging protection for tenants.

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

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

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

Historically, economic indicators such as GDP growth, consumer confidence and employment have been correlated with demand for certain of our tenants’ products and services.

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Operating Activity

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).

The blended cash spreads for comparable new and non-option renewal leases were 23.7%.

During the third quarter of 2024, we executed new and renewal leases on 205 individual spaces totaling 1,651,986 square feet (11.1% cash leasing spread on 155 comparable leases).

New leases were signed on 63 individual spaces for 284,580 square feet of gross leasable area (“GLA”) (24.9% cash leasing spread on 35 comparable leases), while non-option renewal leases were

signed on 81 individual spaces for 477,515 square feet of GLA (11.9% cash leasing spread on 59 comparable leases) and option renewals were signed on 61 individual spaces for 889,891 square feet of GLA (7.7% cash leasing spread).

The blended cash spread for comparable new and non-option renewal leases was 16.7%.

Comparable new and renewal leases are defined as those for which the space was occupied by a tenant within the last 12 months.

Results of Operations

The comparability of results of operations for the three and six months ended June 30, 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 nine months ended September 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 June 30, 2024:

The following operating properties were acquired during the period from January 1, 2023 through September 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 June 30, 2024:

Prestonwood Place Dallas/Ft.

Worth September 22, 2023 155,975

Parkside West Cobb Atlanta August 30, 2024 141,627

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

Property Name MSA Disposition Date GLA

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

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

Reisterstown Road Plaza Baltimore, MD September 11, 2023 376,683

Eastside Dallas, TX October 24, 2023 43,640

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.

Kingwood Commons Houston May 8, 2023 158,172

Pan Am Plaza & Garage Indianapolis June 8, 2023 —

Reisterstown Road Plaza Baltimore September 11, 2023 376,683

Eastside Dallas/Ft.

Worth October 24, 2023 43,640

Ashland & Roosevelt Chicago May 31, 2024 104,176

In addition, during the nine months ended September 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 June 30, 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 September 30, 2024 and removed from our operating portfolio:

Project Name MSA Transition to

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The Corner – IN (2)

Indianapolis, IN December 2015 Pending 24,000

Indianapolis December 2015 Pending 24,000

One Loudoun Expansion (3)

Washington, D.C.

September 2024 Pending 119,000

Future Opportunities

Hamilton Crossing Centre (2)(4)

Indianapolis, IN June 2014 Pending 92,283

Indianapolis June 2014 Pending 92,283

Edwards Multiplex – Ontario (2)

Los Angeles, CA March 2023 Pending 124,614

Los Angeles March 2023 Pending 124,614

Completed Projects

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

(3) The property is comprised of the development project (which has been excluded from the Company’s same property pool due to the ongoing development) and the remaining retail operating portion of the property (which is included in the Company’s same property pool as of September 30, 2024).

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

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Phase I of the corporate campus was completed in 2023.

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,

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

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

Three Months Ended

September 30,

2024 2023 Change

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Total expenses 162,891 174,421 (11,530)

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

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

Gain (loss) on sales of operating properties, net 602 (5,972) 6,574

Operating income 44,964 26,826 18,138

Other (expense) income:

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Income tax expense of taxable REIT subsidiaries (35) (68) 33

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

Equity in loss of unconsolidated subsidiaries (607) (47) (560)

Other income, net 4,371 950 3,421

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)

Net income 17,053 2,177 14,876

Net income attributable to noncontrolling interests (324) (107) (217)

Net income attributable to common shareholders $ 16,729 $ 2,070 $ 14,659

Property operating expense to total revenue ratio 13.4 % 13.3 %

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) :

Rental income (including tenant reimbursements) increased $0.9 million, or 0.5%, due to the following (in thousands) :

Three Months Ended

June 30, 2023 to 2024

September 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (4,153)

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The net increase of $2.7 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 $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.

(i) base minimum rent of $2.8 million due to contractual rent changes, (ii) tenant reimbursements of $1.0 million due to higher recoverable common area maintenance expenses, and (iii) lease termination income of $0.6 million.

These variances were partially offset by an increase in bad debt expense of $1.2 million and a decrease in overage rent of $0.5 million.

The occupancy of the fully operational properties increased from 91.5% for the three months ended September 30, 2023 to 91.7% for the three months ended September 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.

This revenue decreased by $0.3 million primarily as a result of lower gains on sales of land recognized during the three months ended September 30, 2024, partially offset by an increase in miscellaneous income of $0.3 million.

We recorded fee income of $0.5 million and $1.1 million during the three months ended September 30, 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.

Property operating expenses increased $0.1 million, or 0.4%, due to the following (in thousands) :

Three Months Ended

June 30, 2023 to 2024

September 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (471)

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Properties fully operational during 2023 and 2024 and other 342

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.

The net increase of $0.3 million in property operating expenses for properties that were fully operational during 2023 and 2024 is primarily due to increases in insurance expenses of $1.0 million and landscaping and repairs and maintenance expenses of $0.6 million, partially offset by decreases in non-recoverable expenses of $0.8 million and utilities of $0.4 million.

As a percentage of revenue, property operating expenses increased from 13.3% to 13.4% due to an increase in expenses in 2024.

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Three Months Ended

June 30, 2023 to 2024

September 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (514)

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Total $ (1,233)

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.

The net decrease of $0.9 million in real estate taxes for properties that were fully operational during 2023 and 2024 is primarily due to (i) lower expected real estate tax assessments at certain properties in the portfolio in 2024, (ii) an increase in real estate tax refunds received during the three months ended September 30, 2024, and (iii) higher capitalized real estate tax expenses related to signed anchor leases at certain properties in the portfolio in 2024.

The majority of real estate tax expense is

recoverable from tenants and such recovery is reflected within “Rental income” in the accompanying consolidated statements of operations and comprehensive income.

General, administrative and other expenses decreased $0.7 million, or 4.7%, primarily due to lower compensation expense and a decrease in consulting fees in 2024.

Depreciation and amortization expense decreased $9.3 million, or 8.8%, due to the following (in thousands) :

Three Months Ended

June 30, 2023 to 2024

September 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (3,404)

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Total $ (9,274)

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,

The net decrease of $7.2 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 September 30, 2024.

Based on the results of our evaluations for impairment during the three months ended September 30, 2023 (see Note 4 to the accompanying consolidated financial statements), we recognized a $0.5 million impairment charge on Eastside, a retail operating property in the Dallas/Ft.

Worth MSA that was sold on October 24, 2023.

No impairment charges were recorded during the three months ended September 30, 2024.

We recorded a net gain on sales of operating properties of $0.6 million for the three months ended September 30, 2024 as a result of the receipt of an escrow related to the disposition of Reisterstown Road Plaza that previously closed on September 11, 2023.

We recorded a net loss on sales of operating properties of $6.0 million for the three months ended September 30, 2023 on the sale of Reisterstown Road Plaza.

Interest expense increased $6.2 million, or 24.2%, 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”) and the August 2024 public offering of $350.0 million in aggregate principal amount of 4.95% senior unsecured notes due 2031 (the “Notes Due 2031”).

Other income, net increased $3.4 million primarily due to interest income earned on the proceeds from the Notes Due 2031, which were invested in short-term deposits during the three months ended September 30, 2024.

Comparison of Operating Results for the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

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

Nine Months Ended September 30,

2024 2023 Change

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Rental income (including tenant reimbursements) increased $3.7 million, or 0.6%, due to the following (in thousands) :

Six Months Ended

June 30, 2023 to 2024

Nine Months Ended

September 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (12,735)

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The net increase of $9.0 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.

(i) base minimum rent of $5.1 million due to contractual rent changes, (ii) tenant reimbursements of $5.1 million due to higher recoverable common area maintenance expenses, and (iii) ancillary income of $1.0 million.

These variances were partially offset by an increase in bad debt expense of $1.2 million and decreases in lease termination income of $0.7 million and overage rent of $0.3 million.

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

This revenue 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.

This revenue increased by $0.4 million primarily as a result of higher gains on sales of land recognized during the nine

months ended September 30, 2024, partially offset by decreases in miscellaneous income of $0.4 million and parking revenue of $0.4 million.

We recorded fee income of $4.2 million and $3.9 million during the nine months ended September 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 $2.2 million, or 2.7%, due to the following (in thousands) :

Six Months Ended

June 30, 2023 to 2024

Nine Months Ended

September 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (2,656)

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The net increase of $4.0 million in property operating expenses for properties that were fully operational during 2023 and 2024 is primarily due to increases in the following:

(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.

(i) $2.0 million in insurance expenses, (ii) $1.9 million in landscaping and repairs and maintenance expenses, (iii) $0.4 million in non-recoverable operating expenses, and (iv) $0.3 million in security expenses.

These variances were partially offset by a decrease in utilities of $0.6 million.

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

Real estate taxes decreased $2.1 million, or 2.6%, due to the following (in thousands) :

Six Months Ended

June 30, 2023 to 2024

Nine Months Ended

September 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (1,659)

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Total $ (2,086)

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

The net decrease of $1.0 million in real estate taxes for properties that were fully operational during 2023 and 2024 is primarily due to lower expected real estate tax assessments at certain properties in the portfolio in 2024 and higher capitalized real estate tax expenses related to signed anchor leases at certain properties in the portfolio in 2024.

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

General, administrative and other expenses decreased $2.8 million, or 6.7%, primarily due to lower compensation expense and a decrease in consulting fees in 2024.

Depreciation and amortization expense decreased $27.1 million, or 8.4%, due to the following (in thousands) :

Six Months Ended

June 30, 2023 to 2024

Nine Months Ended

September 30, 2023 to 2024

Properties or components of properties sold or held for sale during 2023 and/or 2024 $ (8,585)

2 unchanged sentences

Total $ (27,137)

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.

The net decrease of $22.7 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 nine months ended September 30, 2024.

Based on a reduction in the expected future hold period (see Note 4 to the accompanying consolidated financial statements), we recorded a $66.2 million impairment charge during the nine months ended September 30, 2024 related to City Center, a retail operating property in the New York MSA.

During the nine months ended September 30, 2023, we recorded a $0.5 million impairment charge on Eastside, a retail operating property in the Dallas/Ft.

Worth MSA that was sold on October 24, 2023.

We recorded a net loss on sales of operating properties of $0.9 million for the nine months ended September 30, 2024 primarily on the sale of Ashland & Roosevelt, which loss was offset by the receipt of a $0.6 million escrow related to the sale of Reisterstown Road Plaza that previously closed on September 11, 2023.

During the nine months ended September 30, 2023, we recorded a net gain on sales of operating properties of $22.5 million on the sale of Kingwood Commons, the undeveloped land and related parking garage at Pan Am Plaza, and Reisterstown Road Plaza.

Interest expense increased $14.9 million, or 19.0%, primarily due to interest on the Notes Due 2034 and the Notes Due 2031, 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 nine months ended September 30, 2024.

No such gain was recorded during the nine months ended September 30, 2023.

Other income, net increased $10.6 million primarily due to interest income earned on the proceeds from the Notes Due 2034 and the Notes Due 2031, which were invested in short-term deposits at various points during the nine months ended September 30, 2024.

Net Operating Income and Same Property Net Operating Income

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Development and redevelopment properties are included in the same property pool four full quarters after the properties have been transferred to the operating portfolio.

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

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

A redevelopment property is first excluded from the same property pool when the execution of a

redevelopment plan is likely, and we (a) begin recapturing space from tenants or (b) the contemplated plan significantly impacts the operations of the property.

For the three and nine months ended September 30, 2024, the same property pool excludes the following:

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

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

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

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

• 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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• office properties.

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,

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 Change 2024 2023 Change

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Economic occupancy percentage at period end 92.3 % 91.2 % 92.3 % 91.2 %

91.6 % 92.3 % 91.6 % 92.3 %

Economic occupancy percentage (2)

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Interest expense (31,640) (25,484) (92,985) (78,114)

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

Gain (loss) on sales of operating properties, net 602 (5,972) (864) 22,468

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

Net loss (income) attributable to noncontrolling interests

Net (income) loss attributable to noncontrolling interests

(324) (107) 61 (700)

Net (loss) income attributable to common shareholders

Net income (loss) attributable to common shareholders

$ 16,729 $ 2,070 $ (17,753) $ 39,519

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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, The Corner – IN, and One Loudoun Expansion;

(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 the economic occupancy percentage is primarily attributable to the Bed Bath & Beyond Inc.

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

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

Our Same Property NOI increased 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.

Our Same Property NOI increased 3.0% for the three months ended September 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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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 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,

In the FFO per share metrics, the Company excludes the dilutive effect of shares issuable upon the conversion of the Company’s 0.75% exchangeable senior notes maturing in April 2027 (the “Exchangeable Notes”) from the diluted weighted average number of common shares and units outstanding as a result of the Company’s capped call that was entered into concurrently with the issuance of the Exchangeable Notes.

The potential dilutive effect of the Exchangeable Notes under the if-converted method is an increase to the diluted weighted average number of common shares and units of 117,454 common shares for the three months ended September 30, 2024.

The capped call purchased by the Company offsets this dilution up to a capped price that is currently more than the Company’s share price.

Both items have been excluded to reflect that there is no economic dilution to shareholders and unitholders based upon the Company’s current share price.

For purposes of the net income per share metrics, the conversion feature of the Exchangeable Notes and the capped call are required to be considered independently.

Therefore, the capped call has been excluded from the calculation of net income per share as it is anti-dilutive.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

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

Net income (loss) $ 17,053 $ 2,177 $ (17,814) $ 40,219

net income attributable to noncontrolling interests in properties (63) (67) (204) (201)

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

(gain) loss on sales of operating properties, net (602) 5,972 864 (22,468)

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

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Three Months Ended

June 30, 2024

Net loss $ (49,303)

September 30, 2024

Net income $ 17,053

Depreciation and amortization 96,656

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Unconsolidated Adjusted EBITDA 597

Impairment charges 66,201

Loss on sales of operating properties, net 1,230

Gain on sales of operating properties, net (602)

Other income and expense, net (3,764)

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Net Debt to Adjusted EBITDA 4.9x

(1) Represents Adjusted EBITDA for the three months ended June 30, 2024 (as shown in the table above) multiplied by four.

(1) Represents Adjusted EBITDA for the three months ended September 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 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.

As of September 30, 2024, we had approximately $117.5 million in cash and cash equivalents on hand, $5.5 million in restricted cash and escrow deposits, $350.0 million of short-term deposits, and $1.1 billion of remaining availability under the Revolving Facility compared to $430.0 million of debt maturities due in 2025.

During the nine months ended September 30, 2024, we completed (i) 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, and (ii) a public offering of the Notes Due 2031, the proceeds of which are currently invested in short-term deposits that will be used to repay the $350.0 million principal balance of the 4.00% senior unsecured notes due March 2025.

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

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

While we believe that the nature of the properties in which we typically invest—primarily neighborhood and community shopping centers—provides a relatively stable revenue flow, an economic downturn, instability in the banking sector, 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.

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

Our Principal Capital Resources

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

As of 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.

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

We also had $467.5 million in cash, cash equivalents and short-term deposits as of September 30, 2024.

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

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Near-Term Debt Maturities .

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.

As of September 30, 2024, over the next 12 months we have no secured debt, excluding scheduled monthly principal payments, and $430.0 million of unsecured debt scheduled to mature.

We believe we have sufficient liquidity to repay this obligation through a combination of proceeds from the Notes Due 2031, cash flows generated from operations, capital markets transactions, and borrowings on the Revolving Facility.

Other Short-Term Liquidity Needs.

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Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest and principal payments on our debt of approximately $30.0 million and $1.3 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.

In July 2024, our Board of Trustees declared a cash distribution of $0.26 per common share and Common Unit for the third quarter of 2024.

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

During the nine months ended September 30, 2024, we incurred $18.8 million for recurring capital expenditures on operating properties and $73.7 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of September 30,

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 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 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.

During the three months ended September 30, 2024, we began development activities on the retail and office portions of the expansion project at One Loudoun Downtown (the “One Loudoun Expansion”), our mixed-use lifestyle center in the Washington, D.C.

In addition to the One Loudoun Expansion, as of September 30, 2024, we had development projects under construction at Carillon medical office building and The Corner – IN.

Our share of the total estimated costs for these three projects is approximately $172.6 million to $182.6 million, of which our share of the expected funding requirement is approximately $124.7 million to $134.7 million.

As of September 30, 2024, we have incurred $35.2 million of these costs.

We anticipate incurring the majority of the remaining costs for these projects over the next 12 to 24 months and believe we have the ability to fund these projects through cash flows from operations or borrowings on the Revolving Facility.

Share Repurchase Program

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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 June 30, 2024, the Company has not repurchased any shares under the Share Repurchase Program.

As of September 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 June 30, 2024.

We are obligated under 12 ground leases for approximately 98 acres of land as of September 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.

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Capital Expenditures on Consolidated Properties

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

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

Nine Months Ended

September 30, 2024

Active development and redevelopment projects $ 9,405

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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 $0.2 million for the six months ended June 30, 2024.

Debt Maturities

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) :

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

Principal Payments Term

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Total $ 3,239,928

(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 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.

During the nine months ended September 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 June 30, 2024, we had cash, cash equivalents and restricted cash of $158.8 million.

As of September 30, 2024, we had cash, cash equivalents and restricted cash of $123.0 million.

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

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

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

Comparison of the Nine Months Ended September 30, 2024 to the Nine Months Ended September 30, 2023

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

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 Change

Net cash provided by operating activities $ 308,049 $ 291,177 $ 16,872

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

Net cash used in investing activities (469,459) (55,483) (413,976)

Net cash provided by (used in) financing activities 243,238 (299,350) 542,588

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

Increase (decrease) in cash, cash equivalents and restricted cash 81,828 (63,656) 145,484

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

Cash, cash equivalents and restricted cash, at end of period $ 123,258 $ 58,314

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.

Cash provided by operating activities was $308.0 million for the nine months ended September 30, 2024 and $291.2 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.

Cash used in investing activities was $469.5 million for the nine months ended September 30, 2024 and $55.5 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 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.

• We invested $615.0 million of proceeds from the Notes Due 2034 and the Notes Due 2031 in short-term certificates of deposit during the nine months ended September 30, 2024 and received $265.0 million in principal upon maturity of the certificates of deposit that matured in June and July 2024;

• We acquired Parkside West Cobb for $39.6 million during the nine months ended September 30, 2024 compared to the acquisition of Prestonwood Place for $78.3 million during the nine months ended September 30, 2023;

• We received net proceeds of $37.2 million from the sale of Ashland & Roosevelt, five parcels of land, and the receipt of an escrow related to the disposition of Reisterstown Road Plaza during the nine months ended September 30, 2024 compared to net proceeds of $124.9 million from the sale of Kingwood Commons, the undeveloped land and related parking garage at Pan Am Plaza, Reisterstown Road Plaza and two parcels of land during the nine months ended September 30, 2023;

• Capital expenditures increased by $3.2 million primarily related to the timing of capital projects along with a change in construction payables of $4.9 million for the nine months ended September 30, 2024;

• We contributed a total of $11.8 million to unconsolidated joint ventures during the nine months ended September 30, 2024 primarily related to our share of the repayment of the construction loan associated with the development of the Embassy Suites at the University of Notre Dame;

• 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 nine months ended September 30, 2024.

Cash provided by financing activities was $243.2 million for the nine months ended September 30, 2024 compared to cash used in financing activities of $299.4 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 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.

• We received total proceeds of $693.0 million from the Notes Due 2034 and the Notes Due 2031 and borrowed $40.0 million on the Revolving Facility during the nine months ended September 30, 2024 compared to borrowings

of $237.0 million on the Revolving Facility and proceeds of $95.1 million from the origination of a mortgage payable during the nine months ended September 30, 2023;

• We repaid the following during the nine months ended September 30, 2024:

(i) $149.6 million principal balance of the 4.58% senior unsecured notes that matured on June 30, 2024, (ii) $120.0 million unsecured term loan that matured on July 17, 2024, (iii) $40.0 million of borrowings on the Revolving Facility, and (iv) $3.9 million of mortgages payable compared to repayments of (i) $198.0 million of borrowings on the Revolving Facility, (ii) $174.1 million of mortgages payable, and (iii) $95.0 million principal balance of the 4.23% senior unsecured notes due 2023 during the nine months ended September 30, 2023;

• We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $167.4 million during the nine months ended September 30, 2024 compared to distributions of $160.0 million during the nine months ended September 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 June 30, 2024.

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