What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-24 compared with 2022-02-25 · 210 added, 260 removed, 278 unchanged (63% of the section changed)

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The Company is the sole general partner of, and owns a majority of the ownership interests in, the Operating Partnership.

As of December 31, 2021, the Operating Partnership owned or had an ownership interest in 44 regional town centers and five community/power shopping centers.

These 49 regional town centers and community/power shopping centers (which include any adjoining mixed-use improvements) consist of approximately 48 million square feet of gross leasable area (“GLA”) and are referred to herein as the “Centers”.

As of December 31, 2022, the Operating Partnership owned or had an ownership interest in 44 Regional Town Centers (including office, hotel and residential space adjacent to these shopping centers), five community/power shopping centers, one office property and one redevelopment property.

These 51 Regional Town Centers, community/power shopping centers, office and redevelopment properties consist of approximately 47 million square feet of gross leasable area (“GLA”) and are referred to herein as the “Centers”.

The Centers consist of consolidated Centers (“Consolidated Centers”) and unconsolidated joint venture Centers (“Unconsolidated Joint Venture Centers”) as set forth in “Item 2.

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This information should be read in conjunction with the accompanying consolidated financial statements and notes thereto.

Acquisitions:

On August 2, 2022, the Company acquired the remaining 50% ownership interest in two former Sears parcels (Deptford Mall and Vintage Faire Mall) in the MS Portfolio LLC joint venture that it did not previously own for a total purchase price of $24.5 million.

Effective as of August 2, 2022, the Company now owns and has consolidated its 100% interest in these two former Sears parcels in its consolidated financial statements (See Note 15—Acquisitions in the Notes to the Consolidated Financial Statements).

Dispositions:

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The Company used its share of the proceeds from these sales of $46.5 million to pay down debt and for other general corporate purposes.

For the twelve months ended December 31, 2022, the Company and certain joint venture partners sold various land parcels in separate transactions, resulting in the Company’s share of the gain on sale of land of $23.9 million.

The Company used its share of the proceeds from these sales of $60.3 million to pay down debt and for other general corporate purposes.

Financing Activities:

On January 10, 2019, the Company replaced the existing loan on Fashion Outlets of Chicago with a new $300.0 million loan that bears interest at an effective rate of 4.61% and matures on February 1, 2031.

The Company used the net proceeds to pay down its line of credit and for general corporate purposes.

On February 22, 2019, the Company’s joint venture in The Shops at Atlas Park entered into an agreement to increase the total borrowing capacity of the existing loan on the property from $57.8 million to $80.0 million, and to extend the maturity date to October 28, 2021, including extension options.

Concurrent with the loan modification, the joint venture borrowed an additional $18.4 million.

The Company used its $9.2 million share of the additional proceeds to pay down its line of credit and

for general corporate purposes.

As discussed below, the Company's joint venture replaced this loan with a new loan prior to its maturity date in October 2021.

On June 3, 2019, the Company’s joint venture in SanTan Village Regional Center replaced the existing loan on the property with a new $220.0 million loan that bears interest at an effective rate of 4.34% and matures on July 1, 2029.

The Company used its share of the additional proceeds to pay down its line of credit and for general corporate purposes.

On June 27, 2019, the Company replaced the existing loan on Chandler Fashion Center with a new $256.0 million loan that bears interest at an effective rate of 4.18% and matures on July 5, 2024.

The Company used its share of the additional proceeds to pay down its line of credit and for general corporate purposes.

On July 25, 2019, the Company's previously unconsolidated joint venture in Fashion District Philadelphia amended the existing term loan on the joint venture to allow for additional borrowings up to $100.0 million at LIBOR plus 2.00%.

Concurrent with the amendment, the joint venture borrowed an additional $26.0 million.

On August 16, 2019, the joint venture borrowed an additional $25.0 million.

The Company used its share of the additional proceeds to pay down its line of credit and for general corporate purposes.

On September 12, 2019, the Company’s joint venture in Tysons Tower placed a new $190.0 million loan on the property that bears interest at an effective rate of 3.38% and matures on October 11, 2029.

The Company used its share of the proceeds to pay down its line of credit and for general corporate purposes.

On October 17, 2019, the Company’s joint venture in West Acres placed a construction loan on the property that allows for borrowing of up to $6.5 million, bears interest at an effective rate of 3.72% and matures on October 10, 2029.

The joint venture intends to use the proceeds from the loan to fund the expansion of the property.

On December 3, 2019, the Company replaced the existing loan on Kings Plaza Shopping Center with a new $540.0 million loan that bears interest at an effective rate of 3.71% and matures on January 1, 2030.

The Company used the additional proceeds to pay down its line of credit and for general corporate purposes.

On December 18, 2019, the Company’s joint venture in One Westside placed a $414.6 million construction loan on the redevelopment project (See "—Redevelopment and Development Activities").

The loan bears interest at LIBOR plus 1.70%, which can be reduced to LIBOR plus 1.50% upon the completion of certain conditions and matures on December 18, 2024.

The joint venture intends to use the loan proceeds to fund the completion of the project.

On September 15, 2020, the Company closed on a loan extension agreement for the $191.0 million loan on Danbury Fair Mall.

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The interest rate remained unchanged, and the Company repaid $10.0 million of the outstanding loan balance at closing.

As discussed below, the Company further extended this loan.

On November 17, 2020, the Company’s joint venture in Tysons VITA, the residential tower at Tysons Corner Center, placed a new $95.0 million loan on the property that bears interest at an effective rate of 3.43% and matures on December 1, 2030.

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On December 10, 2020, the Company made a loan (the "Partnership Loan") to the Company’s previously unconsolidated joint venture in Fashion District Philadelphia to fund the entirety of a $100.0 million repayment to reduce the mortgage loan on Fashion District Philadelphia from $301.0 million to $201.0 million.

This mortgage loan now matures on January 22, 2024, assuming exercise of a one-year extension option, and bears interest at LIBOR plus 3.5%, with a LIBOR floor of 0.50%.

As discussed below, this mortgage loan matures on January 22, 2024, and bears interest at SOFR plus 3.6%.

The partnership agreement for the joint venture was amended in connection with the Partnership Loan, and pursuant to the amended agreement, the Partnership Loan plus 15% accrued interest must be repaid prior to the resumption of 50/50 cash distributions to the Company and its joint venture partner (See Note 15–Consolidated Joint Venture and Acquisitions of the Company’s Consolidated Financial Statements).

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As discussed below, the Company's joint venture replaced this loan with a new loan prior to its maturity date that was further extended to February 2022.

On January 22, 2021, the Company closed on a one-year extension for the Green Acres Mall $258.2 million loan to February 3, 2022, which also included a one-year extension option to February 3, 2023 which has been exercised.

The interest rate remained unchanged, and the Company repaid $9 million of the outstanding loan balance at closing.

As discussed below, the Company replaced this loan prior to its maturity date.

On March 25, 2021, the Company closed on a two-year extension for the Green Acres Commons $124.6 million loan to March 29, 2023.

The interest rate is LIBOR plus 2.75% and the Company repaid $4.7 million of the outstanding loan balance at closing.

On April 14, 2021, the Company terminated its existing credit facility and entered into a new credit agreement, which provides for an aggregate $700 million facility, including a $525 million revolving loan facility that matures on April 14, 2023, with a one-year extension option, and a $175 million term loan facility that matures on April 14, 2024 (See "—Liquidity and Capital Resources").

As discussed below, the Company replaced this loan prior to its maturity date.

The Company drew the $175 million term loan facility in its entirety simultaneously with entering into the new credit agreement in April 2021 and subsequently paid off the remaining balance outstanding on the term loan facility with proceeds from the sale of Tucson La Encantada in September 2021.

On October 26, 2021, the Company's joint venture in The Shops at Atlas Park replaced the existing loan on the property with a new $65 million loan that bears interest at a floating rate of LIBOR plus 4.15% and matures on November 9, 2026, including extension options.

The loan is covered by an interest rate cap agreement that effectively prevents LIBOR from exceeding 3.0% through November 7, 2023.

On February 2, 2022, the Company’s joint venture in FlatIron Crossing replaced the existing $197 million loan on the property with a new $175 million loan that bears interest at SOFR plus 3.45% and matures on February 9, 2027, including extension options.

During the year ended December 31, 2021, the Company repaid $1.7 billion of debt then outstanding, including the $985 million repaid in connection with entering into the new credit agreement in April 2021.

These repaid amounts represented an approximately 20% reduction in the debt outstanding, at the Company’s share, since December 31, 2020.

extension options.

The loan is covered by an interest rate cap agreement that effectively prevents SOFR from exceeding 4.0% through February 15, 2024.

During the second quarter of 2020 and in July 2020, the Company secured agreements with its mortgage lenders on 19 mortgage loans to defer approximately $47.2 million of both second and third quarter of 2020 debt service payments at the Company’s pro rata share during the COVID-19 pandemic.

Of the deferred payments, $28.1 million and $36.9 million was repaid in the three months and twelve months ended December 31, 2020, respectively;

and the remaining balance was fully repaid during the first quarter of 2021.

On April 29, 2022, the Company replaced the existing $110.6 million loan on Pacific View with a new $72.0 million loan that bears interest at a fixed rate of 5.29% and matures on May 6, 2032.

On May 6, 2022, the Company closed on a two-year extension for The Oaks loan to June 5, 2024, at a new fixed interest rate of 5.25%.

The Company repaid $5.0 million of the outstanding loan balance at closing.

On July 1, 2022, the Company further extended the loan maturity on Danbury Fair Mall to July 1, 2023.

The interest rate remained unchanged at 5.5%, and the Company repaid $10.0 million of the outstanding loan balance at closing.

The Company did not repay the loan on Towne Mall on its maturity date of November 1, 2022, and has begun the process of transitioning the property to a loan receiver.

On November 14, 2022, the Company’s joint venture in Washington Square extended the maturity date on the $503.0 million loan on the property to November 1, 2026, including extension options.

The loan bears interest at a floating interest rate of SOFR plus 4.0%, subject to an interest rate cap agreement that effectively prevents SOFR from exceeding 4.0% through November 1, 2023.

The joint venture repaid $15.0 million ($9.0 million at the Company's pro rata share) of the loan at closing.

On December 9, 2022, the Company extended the maturity date on the $300.0 million loan on Santa Monica Place to December 9, 2025, including extension options.

The loan bears interest at a floating interest rate of LIBOR plus 1.48%.

On January 3, 2023, the Company replaced the existing $363.0 million of combined loans on Green Acres Mall and Green Acres Commons, both of which were scheduled to mature during the first quarter of 2023, with a $370.0 million loan that bears interest at a fixed rate of 5.90%, is interest only during the entire loan term and matures on January 6, 2028.

On January 20, 2023, the Company exercised its one-year extension option of the loan on Fashion District Philadelphia to January 22, 2024.

The interest rate is SOFR plus 3.60% and the Company repaid $26.1 million of the outstanding loan balance at closing.

The Company’s joint venture that owns Scottsdale Fashion Square expects to replace the existing $406 million mortgage loan on the property with a $700 million, five-year, fixed-rate loan.

The Company expects the joint venture to close this refinancing during the first quarter of 2023, subject to negotiating final documentation and customary closing conditions.

Redevelopment and Development Activities:

The Company's joint venture with Hudson Pacific Properties is redeveloping One Westside into 584,000 square feet of creative office space and 96,000 square feet of dining and entertainment space.

The entire creative office space has been leased to Google and is expected to be completed in 2022.

During the fourth quarter of 2021, the joint venture delivered the office space to Google for tenant improvement work, which Google has commenced.

The total cost of the project is estimated to be between $500.0 million and $550.0 million, with $125.0 million to $137.5 million estimated to be the Company's pro rata share.

The Company has incurred $106.9 million of the total $427.7 million incurred by the joint venture as of December 31, 2021.

The joint venture expects to fund the remaining costs of the development with its new $414.6 million construction loan (See "—Financing Activities").

The Company has a 50/50 joint venture with Simon Property Group, which was initially formed to develop Los Angeles Premium Outlets, a premium outlet center in Carson, California.

The Company has funded $38.6 million of the total $77.2 million incurred by the joint venture as of December 31, 2022.

In connection with the closures and lease rejections of several Sears stores owned or partially owned by the Company, the Company anticipates spending between $130.0 million to $160.0 million at the Company’s pro rata share to redevelop the Sears stores.

The anticipated openings of such redevelopments are expected to occur over several years.

The estimated range of redevelopment costs could increase if the Company or its joint venture decides to expand the scope of the redevelopments.

The Company has funded $40.9 million at its pro rata share as of December 31, 2021.

The Company is redeveloping an approximately 150,000 square foot, three-level space (formerly occupied by Bloomingdale’s and Arclight Theatre) at Santa Monica Place, a 527,000 square foot regional town center in Santa Monica, California, with an entertainment destination use, high-end fitness, and co-working space.

The total cost of the project is estimated to be between $35.0 million and $40.0 million.

The Company has incurred approximately $1.2 million as of December 31, 2022.

The anticipated opening is in 2024.

The Company’s joint venture in Scottsdale Fashion Square, a 1,884,000 square foot regional town center in Scottsdale, Arizona, is redeveloping a two-level Nordstrom wing with luxury-focused retail and restaurant uses.

The total cost of the project is estimated to be between $80.0 million and $90.0 million, with $40.0 million and $45.0 million estimated to be the Company’s pro rata share.

The Company has incurred $2.6 million of the total $5.1 million incurred by the joint venture as of December 31, 2022.

The anticipated opening is in 2024.

Other Transactions and Events:

On January 1, 2019, the Company adopted Accounting Standards Codification ("ASC") 842 "Leases", under the modified retrospective method.

The new standard amended the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e.

lessees and lessors).

In connection with the adoption of the new lease standard, the Company elected to use the transition packages of practical expedients for implementation provided by the Financial Accounting Standards Board ("FASB"), which included (i) relief from re-assessing whether an expired or existing contract meets the definition of a lease, (ii) relief from re-assessing the classification of expired or existing leases at the adoption date, (iii) allowing previously capitalized initial direct leasing costs to continue to be amortized, and (iv) application of the standard as of the adoption date rather than to all periods presented.

Upon adoption of the new standard, the Company has presented all revenues associated with leases as leasing revenue on its consolidated statements of operations.

The new standard requires the Company to reduce leasing revenue for credit losses

associated with lease receivables.

In addition, straight-line rent receivables are written off when the Company believes there is reasonable uncertainty regarding a tenant's ability to complete the term of the lease.

As a result, the Company recognized a cumulative effect adjustment of $2.2 million upon adoption for the write off of straight-line rent receivables of tenants that were in litigation or bankruptcy.

The new standard requires that lessors expense, on an as-incurred basis, certain initial direct costs that are not incremental in negotiating a lease.

Initial direct costs include the salaries and related costs for employees directly working on leasing activities.

Prior to January 1, 2019, these costs were capitalizable and therefore the new lease standard resulted in certain of these costs being expensed as incurred.

In March 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization.

As a result, all of the markets that the Company operates in were subject to stay-at-home orders, and the majority of its properties were temporarily closed in part or completely.

Following staggered re-openings during 2020, all Centers have been open and operating since October 7, 2020.

As of the date of this Annual Report on Form 10-K, government-imposed capacity restrictions resulting from COVID-19 have been essentially eliminated across the Company’s markets.

Although overall fundamentals at the Centers continued to improve during 2021, the Company expects that the COVID-19 pandemic, including the emergence of new variants, will continue to negatively impact its results for 2022 due, in part, to reduced occupancy relative to pre-COVID levels and additional Anchor closures, among other factors.

The Company continues to work with all of its stakeholders to mitigate the impact of COVID-19.

The Company has developed and implemented a long list of operational protocols based on Centers for Disease Control and Prevention recommendations designed to ensure the safety of its employees, tenants, service providers and shoppers.

Those measures include among others:

the use of sophisticated air filtration systems to increase air circulation and outside air flow and ventilation, significantly intensified cleaning and sanitizing procedures with special focus on high-touch and traffic areas, highly visible and accessible self-service sanitizing stations, providing masks at all properties as needed and requiring mask-wearing at nearly all properties in compliance with state and local requirements, touchless entries, social distance queuing including the use of digital technologies, path of travel guidelines including vertical transportation and deliveries, furniture placement and the use of sophisticated traffic-counting technology to ensure that its properties adhere to any relevant regulatory capacity constraints.

The Company’s indoor properties feature vast interior common areas, most with two to three story ceiling clearances, ample floor space and a comfortable environment to practice effective social distancing even during peak retail periods.

The Company provides round-the-clock security to enforce policies and regulations, to discourage congregation and to encourage proper distancing.

Each property deploys robust messaging to inform all of the Company’s stakeholders of its operating standards and requirements within a multi-media platform that includes abundant on premise signage, digital and social messaging, and information within its property and corporate websites.

The Company believes that, due to the quality of design and construction of its malls, it will be able to continue to provide a safe indoor environment for its employees, tenants, service providers and shoppers.

Although the Company has incurred, and will continue to incur, some incremental costs associated with COVID-19 operating protocols and programs, these costs have not been, and are not anticipated to be, significant.

See “Outlook” in Results of Operations for a further discussion of the forward-looking impact of COVID-19 and the Company’s strategic plan to mitigate the anticipated negative impact on its financial condition and results of operations.

In March 2020, the Company declared a reduced second quarter dividend of $0.50 per share of its common stock, which was paid on June 3, 2020 in a combination of cash and shares of common stock, at the election of the stockholder, subject to a limitation that the aggregate amount of cash payable to holders of the Company’s common stock would not exceed 20% of the aggregate amount of the dividend, or $0.10 per share, for all stockholders of record on April 22, 2020.

The amount of the dividend represented a reduction from the Company’s first quarter 2020 dividend, and was paid in a combination of cash and shares of common stock to preserve liquidity in light of the impact and uncertainty arising out of the COVID-19 pandemic.

The Company declared a further reduced cash dividend of $0.15 per share of its common stock for the third and fourth quarters of 2020 and for the first, second and third quarters of 2021.

On October 28, 2021, the Company declared a fourth quarter cash dividend of $0.15 per share of its common stock, which was paid on December 3, 2021 to stockholders of record on November 9, 2021.

On January 27, 2022, the Company declared a fourth quarter cash dividend of $0.15 per share of its common stock, which will be paid on March 3, 2022 to stockholders of record on February 18, 2022.

The Company declared a cash dividend of $0.15 per share of its common stock for each of the first three quarters of 2022 and a cash dividend of $0.17 per share of its common stock for the fourth quarter of 2022.

On January 27, 2023, the Company announced a first quarter cash dividend of $0.17 per share of its common stock, which will be paid on March 3, 2023 to stockholders of record on February 17, 2023.

The dividend amount will be reviewed by the Board on a quarterly basis.

See “Liquidity and Capital Resources” for a further discussion of the Company’s anticipated liquidity needs, and the measures taken by the Company to meet those needs.

On December 31, 2020, the Company and its joint venture partner, Seritage Growth Properties (“Seritage”), entered into a distribution agreement.

The joint venture owned nine properties, including the former Sears parcels at the South Plains Mall and the Arrowhead Towne Center.

The joint venture distributed the former Sears parcel at South Plains Mall to the Company and the former Sears parcel at Arrowhead Towne Center to Seritage.

The joint venture partners agreed that the distributed properties were of equal value.

The Company now owns 100% of the former Sears parcel at South Plains Mall.

December 31, 2020, the Company consolidates its 100% interest in the Sears parcel at South Plains Mall in the Company’s consolidated financial statements (See Note 15-Consolidated Joint Venture and Acquisitions of the Company’s Consolidated Financial Statements).

In connection with the commencement of separate "at the market" offering programs, on each of February 1, 2021 and March 26, 2021, which are referred to as the "February 2021 ATM Program" and the "March 2021 ATM Program," respectively, and collectively as the "ATM Programs," the Company entered into separate equity distribution agreements with certain sales agents pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $500 million under each of the February 2021 ATM Program and the March 2021 ATM Program, or a total of $1 billion under the ATM Programs.

respectively, and collectively as the "ATM Programs," the Company entered into separate equity distribution agreements with certain sales agents pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $500 million under each of the February 2021 ATM Program and the March 2021 ATM Program, or a total of $1 billion under the ATM Programs.

As of December 31, 2022, the Company had approximately $151.7 million of gross sales of its common stock available under the March 2021 ATM Program.

The February 2021 ATM Program was fully utilized as of June 30, 2021 and is no longer active.

See “—Liquidity and Capital Resources” for a further discussion of the Company’s anticipated liquidity needs, and the measures taken by the Company to meet those needs.

In the last five years, inflation has not had a significant impact on the Company.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for a further discussion of the Company’s anticipated liquidity needs, and the measures taken by the Company to meet those needs.

Most of the leases at the Centers have rent adjustments periodically throughout the lease term.

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Additionally, most leases require the tenants to pay their pro rata share of property taxes and utilities.

Inflation is expected to have a negative impact on the Company's costs in 2022 and 2023.

Critical Accounting Policies and Estimates

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Actual results could differ from those estimates.

The Company’s significant accounting policies and estimates are described in more detail in Note 2-Summary of Significant Accounting Policies in the Company’s Notes to the Consolidated Financial Statements.

Some of these estimates and assumptions include judgments on revenue recognition, estimates for common area maintenance and real estate tax accruals, provisions for uncollectible accounts, impairment of long-lived assets, the allocation of purchase price between tangible and intangible assets, capitalization of costs and fair value measurements.

The Company believes the following are its critical accounting estimates:

The Company’s significant accounting policies and estimates are described in more detail in Note 2—Summary of Significant Accounting Policies in the Company’s Notes to the Consolidated Financial Statements.

However, the following policies are deemed to be critical:

Acquisitions:

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Leasing commissions and legal costs are recorded in deferred charges and other assets and are amortized over the remaining lease terms.

The value of in-place leases is recorded in deferred charges and other assets and amortized over the remaining lease terms plus

any below-market fixed rate renewal options.

Above or below-market leases are classified in deferred charges and other assets or in other accrued liabilities, depending on whether the contractual terms are above or below-market, and the asset or liability is amortized to minimum rents over the remaining terms of the leases.

The value of in-place leases are recorded in deferred charges and other assets and amortized over the remaining lease terms plus any below-market fixed rate renewal options.

Above or below-market leases are classified in deferred charges and other assets

or in other accrued liabilities, depending on whether the contractual terms are above or below-market, and the asset or liability is amortized to minimum rents over the remaining terms of the leases.

The remaining lease terms of below-market leases may include certain below-market fixed-rate renewal periods.

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For purposes of the discussion below, the Company defines "Same Centers" as those Centers that are substantially complete and in operation for the entirety of both periods of the comparison.

Non-Same Centers for comparison purposes include those Centers or properties that are going through a substantial redevelopment often resulting in the closing of a portion of the Center (“Redevelopment Properties”), those properties that have recently transitioned to or from equity method joint ventures to consolidated assets ("JV Transition Centers") and properties that have been disposed of ("Disposition Properties").

Non-Same Centers for comparison purposes include those Centers or properties that are going through a substantial redevelopment often resulting in the closing of a portion of the Center (“Redevelopment Properties”), those properties that have recently transitioned to or from equity method joint ventures to or from consolidated assets ("JV Transition Centers") and properties that have been disposed of ("Disposition Properties").

The Company moves a Center in and out of Same Centers based on whether the Center is substantially complete and in operation for the entirety of both periods of the comparison.

Accordingly, the Same Centers consist of all consolidated Centers, excluding the Redevelopment Properties, the JV Transition Centers and the Disposition Properties for the periods of comparison.

For the comparison of the year ended December 31, 2021 to the year ended December 31, 2020 and the comparison of the year ended December 31, 2020 to the year ended December 31, 2019, the Redevelopment Properties are Paradise Valley Mall and certain ground up developments.

For the comparison of the year ended December 31, 2021 to the year ended December 31, 2020 and the comparison of the year ended December 31, 2020 to the year ended December 31, 2019, the JV Transition Centers are Fashion District Philadelphia and Sears South Plains.

For the comparison of the year ended December 31, 2021 to the year ended December 31, 2020, the Redevelopment Properties are Paradise Valley Mall and certain ground up developments.

For the comparison of the year ended December 31, 2022 to the year ended December 31, 2021, the JV Transition Centers are the two former Sears parcels at Deptford Mall and Vintage Faire Mall (See "Acquisitions" in Management's Overview and Summary), and for the comparison of the year ended December 31, 2021 to the year ended December 31, 2020, the JV Transition Centers are Fashion District Philadelphia and Sears South Plains.

The change in revenues and expenses at the JV Transition Centers is primarily due to the conversion of Fashion District Philadelphia from an Unconsolidated Joint Venture Center to a Consolidated Center (See Note 15–Consolidated Joint Venture and Acquisitions in the Company's Notes to the Consolidated Financial Statements).

For comparison of the year ended December 31, 2021 to the year ended December 31, 2020, the Disposition Properties are Paradise Valley Mall and Tucson La Encantada.

For comparison of the year ended December 31, 2020 to the year ended December 31, 2019, the Disposition Property is Promenade at Casa Grande .

For the comparison of the year ended December 31, 2022 to the year ended December 31, 2021 and the comparison of the year ended December 31, 2021 to the year ended December 31, 2020, the Disposition Properties are Paradise Valley Mall and Tucson La Encantada.

Unconsolidated joint ventures are reflected using the equity method of accounting.

The Company's pro rata share of the results from these Centers is reflected in the consolidated statements of operations as equity in income (loss) of unconsolidated joint ventures.

The Company considers tenant annual sales per square foot (for tenants in place for a minimum of twelve months or longer and 10,000 square feet and under), occupancy rates (excluding large retail stores or "Anchors") and releasing spreads (i.e.

The Company considers tenant annual sales, occupancy rates (excluding large retail stores or "Anchors") and releasing spreads (i.e.

a comparison of initial average base rent per square foot on leases executed during the trailing twelve months to average base rent per square foot at expiration for the leases expiring during the trailing twelve months based on the spaces 10,000 square feet and under) to be key performance indicators of the Company's internal growth.

During the fourth quarter of 2021, comparable tenant sales for spaces less than 10,000 square feet across the portfolio increased by 12% relative to pre-COVID sales during the fourth quarter of 2019.

The leased occupancy rate increased to 91.5%, a 1.80% increase from 89.7% at December 31, 2020 and a 3.0% increase from 88.5% at March 31, 2021, which was the Company’s lowest occupancy level since the start of the COVID-19 pandemic.

Releasing spreads increased as the Company executed leases at an average rent of $60.02 for new and renewal leases executed compared to $57.23 on leasing expiring, resulting in a releasing spread increase of $2.79 per square foot, or 5%, for the twelve months ended December 31, 2021.

During the trailing twelve months ended December 31, 2022, comparable tenant sales for spaces less than 10,000 square feet across the portfolio increased by 2.8% compared to the time frame in 2021.

The leased occupancy rate of 92.6% at December 31, 2022 represented a 1.1% increase from 91.5% at December 31, 2021 and a 0.5% sequential increase compared to the 92.1% occupancy rate at September 30, 2022.

Releasing spreads increased as the Company executed leases at an average rent of $60.48 for new and renewal leases executed compared to $58.16 on leases expiring, resulting in a releasing spread increase of $2.32 per square foot, or 4%, for the trailing twelve months ended December 31, 2022.

The Company continues to renew or replace leases that are scheduled to expire in 2023, however, for a variety of factors, the Company cannot be certain of its ability to sign, renew or replace leases expiring in 2023 or beyond.

These leases that are scheduled to expire in 2022 represent approximately 1.0 million square feet of the Centers, accounting for 16.93% of the GLA of mall stores and freestanding stores, for spaces 10,000 square feet and under, as of December 31, 2021.

These calculations exclude Centers under development or redevelopment and property dispositions (See "Dispositions" and "Redevelopment and Development Activities" in Management's Overview and Summary), and include square footage of Centers owned by joint ventures at the Company’s share.

These leases that are scheduled to expire represent approximately 1.0 million square feet of the Centers, accounting for 18.14% of the GLA of mall stores and freestanding stores, for spaces 10,000 square feet and under, as of December 31, 2022.

These calculations exclude Centers under development or redevelopment and property dispositions (See “Acquisitions,” "Dispositions" and "Redevelopment and Development Activities" in Management's Overview and Summary), and include square footage of Centers owned by joint ventures at the Company’s share.

2023 lease expirations continue to be an important focal point for the Company.

The Company now has commitments on approximately 39% of the remaining 2022 expiring square footage with another approximately 55% in the letter of intent stage, disregarding leases for stores that have closed or for stores that tenants have indicated they intend to close.

The Company has entered into 118 leases for new spaces totaling approximately 1.2 million square feet that have opened or are planned for opening in 2022, and another 15 leases for new spaces totaling approximately 840,000 square feet opening after 2022.

As of December 31, 2022, the Company has executed leases or commitments from retailers that are in lease documentation for 52% of the leased space expiring in 2023, and another 27% of such expiring space is in the letter of intent stage.

Excluding those leases, the remaining leases expiring in 2023, which represent approximately 600,000 square feet of the Centers, are in the prospecting stage.

The Company has entered into 123 leases for new stores totaling approximately 1.1 million square feet that have opened or are planned for opening in 2023, and another 17 leases for new stores totaling approximately 925,000 square feet opening after 2023.

While there may be additional new space openings in 2023, any such leases are not yet executed.

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The average tenant allowance was $17.82 per square foot.

The majority of the Company's COVID-19 related lease amendments are excluded from these numbers.

The Company has a long-term four-pronged business strategy that focuses on the acquisition, leasing and management, redevelopment and development of Regional Town Centers.

Although fundamentals at the Centers continued to improve during 2021, the Company expects that the COVID-19 pandemic, including the emergence of new variants, will continue to negatively impact its results for 2022 due, in part, to reduced occupancy relative to pre-COVID levels and additional Anchor closures, among other factors.

All Centers have been open and operating since October 7, 2020.

As of the date of this Annual Report on Form 10-K, government-imposed capacity restrictions resulting from COVID-19 have been essentially eliminated across the Company’s markets.

During 2022, the Company leased 3.8 million square feet, which represents the strongest year of leasing volume for the Company when measured on a comparable center basis since before the 2009 Global Financial Crisis.

The Company’s portfolio also experienced the smallest volume of tenant bankruptcies since 2013.

As of December 31, 2022, the Company’s portfolio leased occupancy was 92.6%, which has increased 4.1% in the past seven quarters since the pandemic-driven low of 88.5% as of March 31, 2021.

The Company continues to make progress addressing the near-term maturities of its non-recourse mortgage debt, as further described below.

Although fundamentals at the Centers continued to improve during 2022, operating results in 2023 could be negatively impacted by certain macro-economic factors, including any continued increase in inflation and interest rates or an economic slowdown or recession.

The Company experienced a positive impact to its leasing revenue during the three and twelve months ended December 31, 2022.

Leasing revenue increased by approximately 12.4% and 3.9%, including joint ventures at the Company’s share, compared to the three and twelve months ending December 31, 2020, respectively.

This increase was primarily due to (i) increases in percentage rent, which was primarily driven by accelerating tenant sales and all of the Company’s Centers being fully open and operating in 2021 as compared to 2020;

and (ii) decreases in bad debt reserves and decreases in retroactive rent abatements incurred in 2021 compared to 2020.

During the twelve months ended December 31, 2021, certain of the Company’s previously reserved accounts receivable were collected resulting in a reduction of bad debt expense.

These collections were a result of improving economic conditions that have become evident as the impact of the pandemic has eased as well as collection efforts by the Company.

As a result of government-imposed capacity restrictions resulting from COVID-19 essentially being eliminated across the Company’s markets, combined with pent up demand, the positive economic impacts of consumer savings, fiscal stimulus and other factors, sales and traffic at the Company’s Centers continued to greatly improve during the fourth quarter of 2021 with extremely high customer conversion rates.

Traffic levels continue to range in the mid 90%’s relative to 2019.

Comparable tenant sales from spaces less than 10,000 square feet across the portfolio increased by 12% relative to pre-COVID sales during the fourth quarter of 2019.

For the twelve months ended December 31, 2021, comparable tenant sales from spaces less than 10,000 square feet across the portfolio increased by 10% relative to sales during the same pre-COVID twelve-month period of 2019.

For the three months ended December 31, 2021, the Company signed 146 leases for approximately 0.5 million square feet.

For the twelve months ended December 31, 2021, the Company signed 833 leases for approximately 3.5 million square feet, which represents a 2% increase on a same center basis in the amount of leased square feet relative to what was leased over the same pre-COVID twelve-month period ended December 31, 2019.

2021 was the highest volume leasing year for the Company since 2015, when viewed on a same center basis.

Leasing revenue increased by approximately 1.9% and 5.2%, compared to the three and twelve months ended December 31, 2021, respectively.

This increase includes the joint ventures at the Company’s share and excludes the Disposition Properties and The Shops at Northbridge, at the Company’s share.

Among other factors, the increase for the year was primarily due to increases in occupancy and from decreases in retroactive rent abatements incurred in 2022 compared to 2021.

Traffic levels during the fourth quarter of 2022 continued to range in the mid 90%’s relative to the pre-pandemic fourth quarter of 2019.

Similar traffic trends were generally consistent throughout all of 2022 when compared to pre-pandemic 2019.

Comparable tenant sales from spaces less than 10,000 square feet across the portfolio for the trailing twelve months ended December 31, 2022 increased by 2.8% compared to the same period in 2021.

Portfolio tenant sales per square foot for spaces less than 10,000 square feet for the trailing twelve months ended December 31, 2022 were $869 compared to $801 for the pre-pandemic trailing twelve months ended December 31, 2019.

During 2022, the Company signed 974 new and renewal leases for approximately 3.8 million square feet, compared to 816 leases and 3.4 million square feet signed during 2021.

This leasing volume represented a 19% increase in the number of leases and a 10% increase in the amount of square footage leased compared to the same period in 2021 on a comparable basis.

The Company believes that diversity of use within its tenant base will be a prominent internal growth catalyst at its Centers going forward, as new uses enhance the productivity and diversity of the tenant mix and have the potential to significantly increase customer traffic at the applicable Centers.

During the year ended December 31, 2021, the Company signed deals for new stores with approximately 100 new-to-Macerich portfolio uses for over 840,000 square feet, with another nearly 300,000 square feet of such new-to-Macerich portfolio uses currently in negotiation as of the date of this Annual Report on Form 10-K.

As of December 31, 2021, the leased occupancy rate increased to 91.5% compared to the leased occupancy rate of 90.3% at September 30, 2021 and 89.7% at December 31, 2020.

The leased occupancy rate has improved by 3.0% from the lowest occupancy level since the start of the COVID-19 pandemic, which was 88.5% as of March 31, 2021.

The Company’s rent collections have continued to significantly improve and are now comparable to pre-COVID levels.

The Company has made significant progress in its negotiations with national and local tenants to secure rental payments, despite a significant portion of the Company’s tenants having requested rental assistance, whether in the form of deferral or rent reduction.

This effort of negotiating COVID-19 rental assistance agreements is essentially now completed.

The lease amendments negotiated by the Company related to COVID-19 have resulted in a combination of rent payment deferrals and rent abatements.

The majority of the Company’s leases required continued payment of rent by the Company’s tenants during the period of government mandated closures caused by COVID-19.

Additionally, many of the Company’s leases contain co-tenancy clauses.

Certain Anchor or small tenant closures have become permanent following the re-opening of the Company’s Centers, and co-tenancy clauses within certain leases may be triggered as a result.

During the year ended December 31, 2022, the Company signed deals for new stores with new-to-Macerich portfolio uses for over 440,000 square feet, with another 210,000 square feet of such new-to-Macerich portfolio leases currently in negotiation as of the date of this Annual Report on Form 10-K.

As of December 31, 2022, the leased occupancy rate increased to 92.6%, a 1.1% increase compared to the leased occupancy rate of 91.5% at December 31, 2021 and a 0.5% sequential increase compared to the leased occupancy rate of 92.1% at September 30, 2022.

The Company’s rent collections through the year ended December 31, 2022 have been comparable to pre-COVID-19 levels for the year ended December 31, 2019.

Prior to 2022, the Company completed the majority of its pandemic-driven negotiations with national and local tenants to secure rental payments.

Those negotiations resulted in the Company entering into lease amendments that granted significant rental assistance in the form of rent deferral and/or rent reduction.

Many of the Company’s leases contain co-tenancy clauses.

Certain Anchor or small tenant closures have become permanent, whether caused by the pandemic or otherwise, and co-tenancy clauses within certain leases may be triggered as a result.

The Company does not anticipate that the negative impact of such clauses on lease revenue will be significant.

During the years ended December 31, 2021 and 2020, the Company incurred $47.6 million and $56.4 million, respectively, of rent abatements at the Company’s share, relating primarily to 2020 rents as a result of COVID-19 and negotiated $4.6 million and $32.9 million of rent deferrals during the years ended December 31, 2021 and 2020, respectively, at the Company’s share.

During the three months ended December 31, 2021 and 2020, the Company incurred $1.3 million and $37.9 million, respectively, of rent abatements at the Company’s share relating primarily to 2020 rents as a result of COVID-19.

The Company negotiated $0.3 million of rent deferrals during the three months ended December 31, 2021.

As of December 31, 2021, $4.0 million of the rent deferrals remain outstanding, with $2.6 million scheduled to be repaid during the remainder of 2022 and the balance scheduled for repayment in 2023 and thereafter.

During 2020, there were 42 bankruptcy filings involving the Company’s tenants, totaling 322 leases and involving approximately 6.0 million square feet and $85.4 million of annual leasing revenue at the Company’s share.

During 2021, the pace of such filings has decreased substantially, as there were ten bankruptcy filings involving the Company’s tenants, totaling 62 leases and involving approximately 369,000 square feet and $11.9 million of annual leasing revenue at the Company’s share.

This included two leases totaling 139,000 square feet with a single department store retailer that quickly emerged from bankruptcy and assumed both of its leases with the Company.

Excluding this department store retailer, bankruptcy filings during 2021 only involved approximately 230,000 square feet.

The Company anticipates that the pace of bankruptcy filings in 2022 will similarly be lower than years prior to 2020.

During the year ended December 31, 2021, the Company incurred $47.6 million of rent abatements at the Company’s share, relating primarily to 2020 rents as a result of COVID-19 and negotiated $4.6 million of rent deferrals during the year ended December 31, 2021 at the Company’s share.

During the year ended December 31, 2022, the Company incurred $1.4 million of rent abatements at the Company’s share.

The Company negotiated $1.1 million of rent deferrals during the year ended December 31, 2022.

As of December 31, 2022, $2.6 million of the rent deferrals remain outstanding, with $1.4 million scheduled to be repaid during 2023 and the balance scheduled for repayment thereafter.

During 2022, the pace of bankruptcy filings involving the Company’s tenants decreased substantially as compared to 2021, with only two bankruptcy filings involving three of the Company's tenants representing approximately 111,000 square feet of leased space and $2.2 million of annual leasing revenue at the Company’s share.

The Company continues to expect that the pace of bankruptcy filings in 2023 will be low.

Year-to-date in 2023, there have been two bankruptcy filings involving the Company’s tenants totaling seven leases and representing approximately 39,000 square feet of leased space and $1.9 million of annual leasing revenue.

During 2023, the Company expects to generate positive cash flow from operations after recurring operating capital expenditures, leasing capital expenditures and payment of dividends.

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This expected surplus will be used to de-lever the Company’s balance sheet as well as to fund the Company’s development and redevelopment pipeline (See "—Redevelopment and Development Activities" in Management's Overview and Summary).

Given the prior disruption from COVID-19 and the related impacts on the capital markets, the Company has secured extensions of term from one to three years of its near-term maturing non-recourse mortgage loans totaling an aggregate of approximately $950 million on Danbury Fair Mall, The Shops at Atlas Park, Fashion Outlets of Niagara, FlatIron Crossing, Green Acres Mall and Green Acres Commons.

On October 26, 2021, the Company’s joint venture closed a $65 million, five-year loan, including extension options, that bears interest at LIBOR plus 4.15% to refinance The Shops at Atlas Park, which replaced a $67.5 million loan on the property.

Additionally, on February 2, 2022, the Company’s joint venture in FlatIron Crossing replaced the existing $197 million loan on the property with a new $175 million loan that bears interest at SOFR plus 3.45% and matures on February 9, 2027, including extension options.

On February 2, 2022, the Company’s joint venture in FlatIron Crossing replaced the existing $197 million loan on the property with a new $175 million loan that bears interest at SOFR plus 3.70% and matures on February 9, 2025, including extension options.

On April 29, 2022, the Company closed on a new $72 million loan at Pacific View with a fixed rate of 5.29% that matures on May 6, 2032.

On May 6, 2022, the Company closed on a two-year extension of the loan on The Oaks to June 5, 2024.

The loan will now bear a fixed interest rate of 5.25%, and the Company repaid $5.0 million of the outstanding loan balance at closing.

On July 1, 2022, the Company extended the loan maturity on Danbury Fair Mall to July 1, 2023.

The interest rate remained unchanged at 5.5%, and the Company repaid $10.0 million of the outstanding loan balance at closing.

On November 14, 2022, the Company’s joint venture closed a four-year extension on the $503 million loan on Washington Square.

$15 million of the loan was repaid at closing by the joint venture ($9 million at the Company’s share).

The extended loan bears interest at a floating rate of SOFR plus 4.0%, subject to an interest rate cap agreement, and matures on November 1, 2026, including extension options.

On December 9, 2022, the Company closed a three-year extension on the $300 million loan on Santa Monica Place.

None of the loan amount was repaid at closing.

The extended loan bears interest at a floating rate of LIBOR plus 1.48% and matures on December 9, 2025, including extension options.

In addition, on January 3, 2023, the Company closed on a five-year $370.0 million combined refinance of Green Acres Mall and Green Acres Commons.

The new interest only loan bears a fixed interest rate of 5.90% and matures on January 6, 2028.

On January 20, 2023, the Company exercised its one-year extension option of the loan on Fashion District Philadelphia to January 22, 2024.

The interest rate is SOFR plus 3.60% and the Company repaid $26.1 million of the outstanding loan balance at closing.

The Company’s joint venture in Scottsdale Fashion Square expects to replace the existing $406.0 million mortgage loan on the property with a $700.0 million, five-year, fixed-rate loan.

The Company expects the joint venture to close this refinancing during the first quarter of 2023, subject to negotiating final documentation and customary closing conditions.

The Company did not repay the loan on Towne Mall on its maturity date of November 1, 2022, and has begun the process of transitioning the property to a loan receiver.

(See “—Financing Activities” in Management’s Overview and Summary).

During the second quarter of 2021, the Company repaid and terminated its existing credit facility and entered into a new credit agreement, which provides for an aggregate $700 million facility, including a $525 million revolving loan facility that matures on April 14, 2023, with a one-year extension option, and a $175 million term loan facility that matures on April 14, 2024.

Concurrent with the closing of this credit facility, the Company repaid $985.0 million of debt (See “—Liquidity and Capital Resources”).

As of December 31, 2021, the outstanding balance on the revolving loan facility was $119 million, less the amount of unamortized deferred financing costs of $14.2 million.

On September 20, 2021, the Company paid off the remaining balance outstanding on the term loan facility with proceeds from the sale of Tucson La Encantada (See “Dispositions” in Management’s Overview and Summary).

Rising interest rates could increase the cost of the Company’s borrowings due to its outstanding floating-rate debt and lead to higher interest rates on new fixed-rate debt.

Rising interest rates are increasing the cost of the Company’s borrowings due to its outstanding floating-rate debt and have led to higher interest rates on new fixed-rate debt.

The Company expects to incur increased interest expense from the refinancing or extension of loans that may currently carry below-market interest rates.

In certain cases, the Company may limit its exposure to interest rate fluctuations related to a portion of its floating-rate debt by using interest rate cap and swap agreements.

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However, any interest rate cap or swap agreements that the Company enters into may not be effective in reducing its exposure to interest rate changes.

For example, the Company’s prior swap agreements, which expired on September 30, 2021, resulted in increases in interest expense in 2021.

The Company did not have any swap agreements in place as of December 31, 2021.

Comparison of Years Ended December 31, 2022 and 2021

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Leasing revenue includes the amortization of above and below-market leases, the amortization of straight-line rents, lease termination income and the provision for bad debts.

The amortization of above and below-market leases increased from $1.9 million in 2021 to $2.2 million in 2022.

The amortization of straight-line rents decreased from $5.9 million in 2021 to $(0.8) million in 2022.

Lease termination income decreased from $19.1 million in 2021 to $13.0 million in 2022.

Percentage rent decreased from $58.8 million in 2021 to $49.5 million in 2022.

Recovery of bad debts decreased from $6.4 million in 2021 to $0.7 million in 2022.

Other income decreased from $33.9 million in 2021 to $30.1 million in 2022.

This decrease is primarily due to income related to the Disposition Properties.

Management Companies' revenue increased from $26.0 million in 2021 to $28.5 million in 2022 due to an increase in management and leasing fees.

Shopping Center and Operating Expenses:

Shopping center and operating expenses decreased $5.1 million, or 1.7%, from 2021 to 2022.

The decrease in shopping center and operating expenses is attributed to decreases of $1.2 million from the Same Centers and $4.6 million from the Disposition Properties, offset in part by an increase of $0.7 million from the JV Transition Centers.

Leasing Expenses:

Leasing expenses increased from $24.8 million in 2021 to $32.7 million in 2022 due to an increase in compensation expense.

Management Companies' Operating Expenses:

Management Companies' operating expenses increased $6.8 million from 2021 to 2022 due to an increase in compensation expense.

Depreciation and Amortization:

Depreciation and amortization decreased $19.5 million from 2021 to 2022.

The decrease in depreciation and amortization is primarily attributed to a decrease of $10.9 million from the Same Centers and $9.7 million from the Disposition Properties offset in part by an increase of $1.1 million from the JV Transition Centers.

Interest Expense (Income):

Interest expense (income) increased $24.2 million from 2021 to 2022.

The increase in interest expense (income) is attributed to an increase of $38.5 million from the financing arrangement (See Note 12–Financing Arrangement in the Company's Notes to the Consolidated Financial Statements) and $4.3 million from the Same Centers offset in part by decreases of $16.5 million from borrowings under the line of credit and $2.1 million from the Disposition Properties.

The increase in interest expense from the financing arrangement is primarily due to the change in fair value of the underlying properties and the mortgage notes payable on the underlying properties.

The above interest expense items are net of capitalized interest, which increased from $9.5 million in 2021 to $10.5 million in 2022.

Equity in (Loss) Income of Unconsolidated Joint Ventures:

Equity in (loss) income of unconsolidated joint ventures decreased $20.9 million from 2021 to 2022.

The decrease in equity in (loss) income of unconsolidated joint ventures is primarily due to the write-down of assets as a result of the reduction in the estimated holding periods of certain properties.

Gain (Loss) on Sale or Write Down of Assets, net:

Gain (loss) on sale or write down of assets, net decreased from $75.7 million in 2021 to $7.7 million in 2022.

The decrease is primarily due to $11.1 million of impairments in 2022 and the $117.2 million gain on sale of Tucson La Encantada in 2021 offset in part by the sale and impairment loss of $41.6 million on Estrella Falls in 2021.

Net (Loss) Income:

Net income decreased $81.2 million from 2021 to 2022.

The decrease in net income is primarily due to the variances noted above.

Funds From Operations ("FFO"):

Primarily as a result of the factors mentioned above, FFO attributable to common stockholders and unit holders—diluted, excluding financing expense in connection with Chandler Freehold and loss on extinguishment of debt increased 3.4% from $423.2 million in 2021 to $437.5 million in 2022.

For a reconciliation of net (loss) income attributable to the Company, the most directly comparable GAAP financial measure, to FFO attributable to common stockholders and unit holders, excluding financing expense in connection with Chandler Freehold and loss on extinguishment of debt and FFO attributable to common stockholders and unit holders—diluted, excluding financing expense in connection with Chandler Freehold and loss on extinguishment of debt , see "Funds From Operations ("FFO")" below.

Operating Activities:

Cash provided by operating activities increased $51.1 million from 2021 to 2022.

The increase is primarily due to the changes in assets and liabilities and the results, as discussed above.

Investing Activities:

Cash used in investing activities increased $236.4 million from 2021 to 2022.

The increase in cash used in investing activities is primarily attributed to a decrease in proceeds from the sale of assets of $287.1 million offset in part by an increase of $37.4 million in distributions from unconsolidated joint ventures and $21.0 million in proceeds from collection of receivable in connection with sale of joint venture property.

Financing Activities:

Cash used in financing activities decreased $0.5 billion from 2021 to 2022.

The decrease in cash used in financing activities is primarily due to the decrease in payments on mortgages, bank and other notes payable of $1.7 billion offset by a reduction in the amounts of net proceeds received from sales of common shares under the ATM Programs of $830.4 million and proceeds from mortgages, bank and other notes payable of $315.0 million.

Comparison of Years Ended December 31, 2021 and 2020

Leasing revenue increased by $47.2 million, or 6.4%, from 2020 to 2021.

The increase in leasing revenue is attributed to increases of $23.2 million from the Same Centers and $31.8 million from the JV Transition Centers offset in part by $7.8 million from the Disposition Properties.

Leasing revenue includes the amortization of above and below-market leases, the amortization of straight-line rents, lease termination income and the provision for bad debts.

The amortization of above and below-market leases decreased from $2.1 million in 2020 to $1.9 million in 2021.

The amortization of straight-line rents

decreased from $24.8 million in 2020 to $5.9 million in 2021.

The amortization of straight-line rents decreased from $24.8 million in 2020 to $5.9 million in 2021.

Lease termination income increased from $8.3 million in 2020 to $19.1 million in 2021.

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Gain (loss) on sale or write down of assets, net increased from a loss of $68.1 million in 2020 to a gain of $75.7 million in 2021.

The increase is primarily due to the $36.7 million of impairment losses on Wilton Mall and Paradise Valley Mall, $4.2 million write-down of non-real estate assets and $36.7 million write-down of development costs in 2020 and $117.2 million gain on the sale of Tucson La Encantada and $29.4 million gain on land sales in 2021 offset in part by the sale and impairment

loss of $41.6 million on Estrella Falls and $28.3 million loss related to North Bridge in 2021 (See "Dispositions" in Management's Overview and Summary).

The impairment losses were due to the reduction in the estimated holding periods of the properties.

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The decrease in cash provided by financing activities is primarily due to decreases in proceeds from mortgages, bank and other notes payable of $140.0 million and an increase in payments on mortgages, bank and other notes payable of $2.0 billion offset in part by net proceeds from sales of common shares under the ATM Programs of $830.2 million and a decrease in dividends and distributions of $36.4 million.

Comparison of Years Ended December 31, 2020 and 2019

Leasing revenue decreased by $118.6 million, or 13.8%, from 2019 to 2020.

The decrease in leasing revenue is attributed to decreases of $116.7 million from the Same Centers, $2.7 million from the Redevelopment Properties and $0.5 million from the Disposition Property offset in part by $1.3 million from the JV Transition Centers.

Leasing revenue includes the amortization of above and below-market leases, the amortization of straight-line rents, lease termination income and the provision for bad debts.

The amortization of above and below-market leases decreased from $5.2 million in 2019 to $2.1 million in 2020.

The amortization of straight-line rents increased from $10.5 million in 2019 to $24.8 million in 2020.

Lease termination income increased from $4.7 million in 2019 to $8.3 million in 2020.

Provision for bad debts increased from $7.7 million in 2019 to $44.3 million in 2020.

The increase in bad debt expense is a result of the Company assessing collectability by tenant and determining that it was no longer probable that substantially all leasing revenue would be collected from certain tenants, which includes tenants that have declared bankruptcy, tenants at risk of filing bankruptcy or other tenants where collectability was no longer probable.

The decrease in leasing revenue and increase in bad debt at the Same Centers is primarily the result of COVID-19 (See "Other Transactions and Events" in Management's Overview and Summary).

Other income decreased from $27.9 million in 2019 to $22.2 million in 2020.

The decrease is primarily a decline in parking garage income due to the closures of properties as a result of COVID-19 (See "Other Transactions and Events" in Management's Overview and Summary).

Management Companies' revenue decreased from $40.7 million in 2019 to $23.5 million in 2020 due to a decrease in management fees, development fees and interest income due to the collection of notes receivable in 2019.

Shopping Center and Operating Expenses:

Shopping center and operating expenses decreased $14.3 million, or 5.3%, from 2019 to 2020.

The decrease in shopping center and operating expenses is attributed to decreases of $14.6 million from the Same Centers and $0.8 million from the Redevelopment Properties offset in part by $0.6 million from the Disposition Property and $0.5 million from the JV Transition Centers.

The decrease in shopping center and operating expenses at the Same Centers is primarily the result of COVID-19 (See "Other Transactions and Events" in Management's Overview and Summary).

Leasing Expenses:

Leasing expenses decreased from $29.6 million in 2019 to $25.2 million in 2020 due to less leasing activity in 2020.

REIT General and Administrative Expenses:

REIT general and administrative expenses increased $7.7 million from 2019 to 2020 due to an increase in compensation and consulting expense.

Depreciation and Amortization:

Depreciation and amortization decreased $11.1 million from 2019 to 2020.

The decrease in depreciation and amortization is primarily attributed to a decrease of $13.1 million from the Same Centers offset in part by increases of $1.3 million from the Redevelopment Properties and $0.7 million from the JV Transition Centers.

Interest (Income) Expense:

Interest (income) expense decreased $62.7 million from 2019 to 2020.

The decrease in interest (income) expense is attributed to a decrease of $72.8 million from the Financing Arrangement (See Note 12–Financing Arrangement in the Company's Notes to the Consolidated Financial Statements), offset in part by increases of $6.3 million from the Same Centers, $3.3 million from borrowings under the line of credit and $0.5 million from the JV Transition Centers.

The decrease in interest expense from the Financing Arrangement is primarily due to the change in fair value of the underlying properties and the mortgage notes payable on the underlying properties.

The increase in interest expense at the Same Centers is primarily due to the new loans on Fashion Outlets of Chicago, Chandler Fashion Center, SanTan Village Regional Center and Kings Plaza Shopping Center (See "Financing Activities" in Management's Overview and Summary).

The above interest expense items are net of capitalized interest, which decreased from $9.6 million in 2019 to $5.2 million in 2020.

Equity in (Loss) Income of Unconsolidated Joint Ventures:

Equity in (loss) income of unconsolidated joint ventures decreased $75.5 million from 2019 to 2020.

The decrease in equity in (loss) income of unconsolidated joint ventures is primarily due to a decrease in leasing revenue and other income as a result of COVID-19 ( See "Other Transactions and Events" in Management's Overview and Summary).

Leasing revenue includes a provision for bad debt which increased from $3.1 million in 2019 to $20.0 million in 2020.

Loss on Remeasurement of Assets

Loss on remeasurement of assets of $163.3 million relates to Fashion District Philadelphia (See Note 15 –Consolidated Joint Venture and Acquisitions in the Company's Notes to the Consolidated Financial Statements).

Loss on Sale or Write Down of Assets, net:

Loss on sale or write down of assets, net increased $56.2 million from 2019 to 2020.

The increase in loss on sale or write down of assets, net is primarily due to the $36.7 million of impairment losses, $4.2 million write-down of non-real estate assets and $36.7 million write-down of development costs in 2020, offset in part by $16.4 million in the write-down of development costs in 2019.

The impairment losses in 2020 were due to the reduction in the estimated holding periods of Wilton Mall and Paradise Valley Mall.

Net (Loss) Income:

Net (loss) income decreased $348.0 million from 2019 to 2020.

The decrease in net (loss) income is primarily the result of COVID-19 (See "Other Transactions and Events" in Management's Overview and Summary) and the loss on remeasurement of assets discussed above.

Funds From Operations ("FFO"):

Primarily as a result of the factors mentioned above, FFO attributable to common stockholders and unit holders—diluted, excluding financing expense in connection with Chandler Freehold and loss on extinguishment of debt decreased 36.8% from $537.3 million in 2019 to $339.5 million in 2020.

Operating Activities:

Cash provided by operating activities decreased $230.3 million from 2019 to 2020.

The decrease is primarily due to a $96.0 million increase in tenant and other receivables, a $47.9 million decrease in other accrued liabilities and to the other changes in assets and liabilities and the results, as discussed above.

The increase in tenant and other receivables and the decrease in other accrued liabilities is primarily attributed to a decrease in rents collected and a decrease in prepaid rent as a result of COVID-19 (See "Other Transactions and Events" in Management's Overview and Summary).

Investing Activities:

Cash used in investing activities increased $90.8 million from 2019 to 2020.

The increase in cash used in investing activities is primarily attributed to a decrease in distributions from unconsolidated joint ventures of $187.9 million, offset in part by a decrease of $121.6 million in development, redevelopment, expansion and renovation of properties.

Financing Activities:

Cash provided by financing activities increased $724.7 million from 2019 to 2020.

The increase in cash provided by financing activities is primarily due to a decrease in payments on mortgages, bank and other notes payable of $1.5 billion and a decrease in dividends and distributions of $294.7 million which are offset by a decrease in proceeds from mortgages, bank and other notes payable of $1.1 billion.

The decreases in payments on mortgages, bank and other notes payable, dividends and distributions and the proceeds from mortgages, bank and other notes payable are attributed to the Company's plan to increase liquidity in connection with COVID-19 (See "Other Transactions and Events" in Management's Overview and Summary).

Liquidity and Capital Resources

The Company anticipates meeting its liquidity needs for its operating expenses, debt service and dividend requirements for the next twelve months and beyond through cash generated from operations, distributions from unconsolidated joint ventures, working capital reserves and/or borrowings under its line of credit.

Following the uncertain environment brought about by COVID-19, the Company took a number of previously disclosed measures in the year ended December 31, 2020 to enhance its liquidity position over the short-term, some of which continued into the year ended December 31, 2021.

However, the Company currently anticipates meeting its liquidity needs for the next twelve months as it has done historically.

Uses of Capital

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$ 108,628 $ 81,790 $ 123,314

The Company expects amounts to be incurred during the next twelve months for tenant allowances and deferred leasing charges to be less than or comparable to 2021.

The Company expects amounts to be incurred during the next twelve months for tenant allowances and deferred leasing charges to be comparable to 2022.

The Company expects to incur approximately $150.0 million during 2023 for development, redevelopment, expansion and renovations.

This includes the Company's share of the remaining development costs of One Westside of approximately $30.0 million, which is fully funded by a non-recourse construction facility.

Capital for these expenditures, developments and/or redevelopments has been, and is expected to continue to be, obtained from a combination of cash on hand, debt or equity financings, which are expected to include borrowings under the Company's line of credit, from property financings and construction loans, each to the extent available.

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The Company has also generated liquidity in the past, and may continue to do so in the future, through equity offerings and issuances, property refinancings, joint venture transactions and the sale of non-core assets.

For example, the Company sold Paradise Valley Mall in Phoenix, Arizona and Tucson La Encantada in Tucson, Arizona during the year ended December 31, 2021.

The Company used the proceeds from these sales to pay down its line of credit and other debt obligations.

For example, the Company sold Paradise Valley Mall in Phoenix, Arizona and Tucson La Encantada in Tucson, Arizona during the year ended December 31, 2021 and used the proceeds to pay down its line of credit and other debt obligations.

During the year ended December 31, 2022, the Company and certain joint venture partners sold various land parcels in separate transactions for aggregate proceeds of $60.3 million (at the Company's share), which the Company used to pay down debt and for other general corporate purposes.

Furthermore, the Company has filed a shelf registration statement, which registered an unspecified amount of common stock, preferred stock, depositary shares, debt securities, warrants, rights, stock purchase contracts and units that may be sold from time to time by the Company.

On each of February 1, 2021 and March 26, 2021, the Company registered a separate "at the market" offering program, pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $500 million under each ATM Program, or a total of $1.0 billion under the ATM Programs, in amounts and at times to be determined by the Company.

The following table sets forth certain information with respect to issuances made under each of the ATM Programs as of December 31, 2021.

(Dollars and shares in thousands) February 2021 ATM Program March 2021 ATM Program

For the Three Months Ended:

Number of Shares Issued Net Proceeds Sales Commissions Number of Shares Issued Net Proceeds Sales Commissions

March 31, 2021 36,001 $ 477,283 $ 9,746 9,991 $ 119,724 $ 2,448

June 30, 2021 686 12,269 254 13,229 182,149 3,720

September 30, 2021 — — — 2,122 38,449 787

December 31, 2021 — — — 19 367 9

Total 36,687 $ 489,552 $ 10,000 25,361 $ 340,689 $ 6,964

During the twelve months ended December 31, 2021, the Company issued approximately 62.0 million shares of common stock under the ATM Programs for net proceeds of $830.2 million.

During the twelve months ended December 31, 2022, no shares were issued under the March 2021 ATM Program.

As of December 31, 2022, the Company had approximately $151.7 million of gross sales of its common stock available under the March 2021 ATM Program.

The February 2021 ATM Program was fully utilized as of June 30, 2021 and is no longer active.

The Company paid a cash dividend of $0.15 per share of its common stock, for each quarter in the year ended December 31, 2021.

This quarterly dividend level was lower than the quarterly dividend paid prior to the onset of COVID-19, which was $0.75 per share.

The capital and credit markets can fluctuate and, at times, limit access to debt and equity financing for companies.

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however, there is no assurance the Company will be able to do so in future periods or on similar terms and conditions.

Many factors impact the Company's ability to access capital, such as its overall debt level, interest rates, interest coverage ratios, prevailing market conditions and the impact of COVID-19.

Increases in the Company's proportion of floating rate debt will cause it to be subject to interest rate fluctuations in the future.

Many factors impact the Company's ability to access capital, such as its overall debt level, interest rates, interest coverage ratios and prevailing market conditions, including periods of economic slowdown or recession.

The Company expects to incur increased interest expense from the refinancing or extension of loans that may currently carry below-market interest rates.

In addition, increases in the Company's proportion of floating rate debt will cause it to be subject to interest rate fluctuations in the future.

The Company's total outstanding loan indebtedness, which includes mortgages and other notes payable, at December 31, 2022 was $6.81 billion (consisting of $4.40 billion of consolidated debt, less $0.41 billion of noncontrolling interests, plus $2.82 billion of its pro rata share of unconsolidated joint venture debt).

The majority of the Company's debt consists of fixed-rate conventional mortgage notes collateralized by individual properties.

The Company expects that all of the maturities during the next twelve months will be refinanced, restructured, extended and/or paid off from the Company's line of credit or cash on hand.

The Company expects that all of the maturities during the next twelve months will be refinanced, restructured, extended and/or paid off from the Company's line of credit or cash on hand, with the exception of the loan on Towne Mall.

The Company believes that the pro rata debt provides useful information to investors regarding its financial condition because it includes the Company’s share of debt from unconsolidated joint ventures and, for consolidated debt, excludes the Company’s partners’ share from consolidated joint ventures, in each case presented on the same basis.

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The Company’s pro rata share of debt should not be considered as a substitute for the Company’s total consolidated debt determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to the Company’s financial information prepared in accordance with GAAP.

The Company accounts for its investments in joint ventures that it does not have a controlling interest or is not the primary beneficiary of using the equity method of accounting and those investments are reflected on the consolidated balance sheets of the Company as investments in unconsolidated joint ventures.

As of December 31, 2021, one of the Company’s joint ventures had $50.0 million of debt that could become recourse to the Company, should the joint venture be unable to discharge the obligation of the related debt.

The Company accounts for its investments in joint ventures that it does not have a controlling interest or is not the primary beneficiary using the equity method of accounting and those investments are reflected on the consolidated balance sheets of the Company as investments in unconsolidated joint ventures.

Additionally, as of December 31, 2022, the Company was contingently liable for $40.9 million in letters of credit guaranteeing performance by the Company of certain obligations relating to the Centers.

As of December 31, 2022, $40.7 million of these letters of credit were secured by restricted cash.

The Company does not believe that these letters of credit will result in a liability to the Company.

On March 29, 2021, the Company sold Paradise Valley Mall to a newly formed joint venture for $100 million.

Concurrent with the sale, the Company elected to reinvest into the joint venture at a 5% ownership interest.

The Company received $95.3 million of net proceeds.

On September 17, 2021, the Company sold Tucson La Encantada in Tucson, Arizona for $165.3 million.

The Company received $100.1 million of net cash proceeds which was used to repay debt (See “—Dispositions” in Management’s Overview and Summary).