Phillips Edison & Company, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS All references to “Notes” throughout this document refer to the footnotes to the consolidated financial statements in Part I, Item 1. Financial Statements. Cautionary Note Regarding Forward-Looking Statements Certain statements contained in this Quarterly Report on Form 10-Q (this “Report”) of Phillips Edison & Company, Inc. (“we,” the “Company,” “our,” or “us”) other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in those Acts. Such forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “can,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” “possible,” “initiatives,” “focus,” “seek,” “objective,” “goal,” “strategy,” “plan,” “potential,” “potentially,” “preparing,” “projected,” “future,” “long-term,” “once,” “should,” “could,” “would,” “might,” “uncertainty,” or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the U.S. Securities and Exchange Commission (“SEC”). Such statements include, but are not limited to, statements about our focus, plans, strategies, initiatives, and prospects; statements about the COVID-19 pandemic, including its duration and potential or expected impact on our tenants, our business, and our estimated value per share; statements about the duration or extent of the suspension of our distributions, share repurchase program, and dividend reinvestment program; and statements about our future results of operations, capital expenditures, and liquidity. Such statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those projected or anticipated, including, without limitation, (i) changes in national, regional, or local economic climates; (ii) local market conditions, including an oversupply of space in, or a reduction in demand for, properties similar to those in our portfolio; (iii) vacancies, changes in market rental rates, and the need to periodically repair, renovate, and re-let space; (iv) changes in interest rates and the availability of permanent mortgage financing; (v) competition from other available properties and the attractiveness of properties in our portfolio to our tenants; (vi) the financial stability of tenants, including the ability of tenants to pay rent; (vii) changes in tax, real estate, environmental, and zoning laws; (viii) the concentration of our portfolio in a limited number of industries, geographies, or investments; (ix) t he effects of the COVID-19 pandemic, including on the demand for consumer goods and services and levels of consumer confidence in the safety of visiting shopping centers as a result of the COVID-19 pandemic; (x) the measures taken by federal, state, and local government agencies and tenants in response to the COVID-19 pandemic, including mandatory business shutdowns, stay-at-home orders and social distancing guidelines; (xi) the impact of the COVID-19 pandemic on our tenants and their ability to pay rent on time or at all, or to renew their leases and, in the case of non-renewal, our ability to re-lease the space at the same or more favorable terms or at all; (xii) the length and severity of the COVID-19 pandemic in the United States; (xiii) the pace of recovery following the COVID-19 pandemic given the current severe economic contraction and increase in unemployment rates; (xiv) our ability to implement cost containment strategies; (xv) our and our tenants’ ability to obtain loans under the CARES Act or similar state programs; (xvi) our ability to pay down, refinance, restructure, or extend our indebtedness as it becomes due; (xvii) to the extent we were seeking to dispose of properties in the near term, significantly greater uncertainty regarding our ability to do so at attractive prices; (xviii) the impact of the COVID-19 pandemic on our business, results of operations, financial condition, and liquidity; and (xix) supply chain disruptions due to the COVID-19 pandemic. Additional important factors that could cause actual results to differ are described in the filings made from time to time by the Company with the SEC and include the risk factors and other risks and uncertainties described in our 2019 Annual Report on Form 10-K, filed with the SEC on March 12, 2020 , and those included in this Report, in each case as updated from time to time in our periodic and/or current reports filed with the SEC, which are accessible on the SEC’s website at www.sec.gov. Except as required by law, we do not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Overview We are an internally-managed REIT and one of the nation’s largest owners and operators of grocery-anchored shopping centers. The majority of our revenue is lease revenue derived from our real estate investments. Additionally, we operate an investment management business providing property management and advisory services to approximately $570 million of third-party assets. This business provides comprehensive real estate and asset management services to the Managed Funds. COVID-19 Strategy —During the first quarter of 2020, the COVID-19 pandemic began spreading globally, with the outbreak being classified as a pandemic by the World Health Organization on March 11, 2020. As a result of the pandemic, many state governments issued “stay-at-home” mandates that generally limited travel and movement of the general public to essential activities only and required all non-essential businesses to close. The following initiatives were enacted in response to the pandemic and remain in effect as of the date of this filing (unless otherwise noted): • We temporarily suspended stockholder distributions (see Note 9 for more detail); • We suspended the SRP for death, qualifying disability, or determination of incompetence, while our standard SRP remains suspended; • Our Compensation Committee approved a temporary 25% reduction to the base salary of our chief executive officer; a temporary 10% reduction to the base salaries of our president, chief operating officer, chief financial officer, and general counsel; and a temporary 10% reduction to board members’ base compensation for the 2020-2021 term; 20 • We have implemented expense reductions at the property and corporate levels, including the temporary reductions in executive salaries and director compensation, and reductions to our workforce and travel costs; • Our capital investments have been prioritized to support the reopening of our neighbors and new leasing activity, or deferred if possible; and • We borrowed $200 million on our revolving credit facility in April 2020 to ensure that we were able to meet our operating needs for a sustained period. Our rent and recovery collections during the second quarter, combined with the above initiatives, sufficiently funded our short-term operating needs and allowed us to repay in full the outstanding balance on our revolving credit facility in June 2020. In May 2020, many state governments began lifting, in whole or in part, the “stay-at-home” mandates, effectively removing or lessening the limitations on travel and allowing many businesses to reopen in full or limited capacity. Some states and localities have temporarily reinstated certain mandates in response to increasing reported cases of COVID-19. The impact these measures and the resulting consumer behavior are having on our portfolio has evolved throughout the second quarter, and we expect that it will continue to do so. Our management team has determined the following are key indicators of recovery for our portfolio and is executing a strategy to guide our tenants (which we refer to as a “neighbor” or our “neighbors”) through these phases (all statistics are approximate; ABR, Gross Leasable Area or “GLA”, and rent and recovery collections include the prorated portion attributable to properties owned through our joint ventures): • Assisting Neighbors in Reopening —Our wholly-owned properties and those owned through our joint ventures contained approximately 5,600 occupied neighbor spaces as of August 10, 2020 . At the peak of the pandemic-related closure activity, temporary closures reached 37% of all neighbor spaces, totaling 27% of our ABR and 22% of our GLA; of the neighbor spaces that temporarily closed, 88% , totaling 89% of our ABR and 90% of our GLA, have since reopened. We believe that the best way to ensure that we receive monthly payment of rent and other amounts due is to first have neighbors open and operating. In order to facilitate communication with our neighbors, we launched PECO Connect TM , a webpage designed to provide resources, information, and tools to assist our neighbors in reopening as states lift “stay-at-home” requirements and other restrictions. Resources made available through PECO Connect include, but are not limited to: the implementation of our Front Row To-Go TM program; a digital tool kit providing various marketing options, industry guides, and blueprints to facilitate effective communication between our neighbors and their customers; educational videos and webinars to help neighbors prepare for and adjust to the consumer environment as businesses reopen; a neighbor rewards program; and DashComm ® , our proprietary internal communications platform designed to deliver important updates and information to our neighbors as well as to facilitate our responses to neighbor questions and concerns. • Returning to Monthly Payments —We continue to work with our neighbors to resume normal monthly rent payments. Our efforts have included raising awareness of the benefits available through the Coronavirus Aid, Relief, and Economic Security Act, including the Paycheck Protection Program and Health Care Enhancement Act (collectively, the “CARES Act”) and other small business programs. The CARES Act was intended to provide economic relief and stimulus to taxpayers and businesses in order to mitigate the economic impact of the pandemic, and provided an estimated $2.7 trillion to combat the COVID-19 pandemic and stimulate the economy through the provision of government loans and grants to affected individuals and businesses. As more of our neighbors continue to reopen, we are seeing our collections improve as a result. The table below shows the improvement since April, the month in which we began to see decreased collections resulting from the COVID-19 pandemic and related neighbor impacts: % of Rent and Recoveries Collected (1) Month % of ABR Open (1) All Neighbor Spaces Grocer Neighbor Spaces April 2020 75% 84% 100% May 2020 91% 86% 100% June 2020 97% 89% 100% July 2020 98% 90% 99% (1) Collections for April, May, June, and July 2020 include any amounts billed for those respective months that were received through August 10, 2020 . For other statistics, April, May, June, and July 2020 are approximate as of April 30, 2020, May 31, 2020, June 30, 2020, and July 31, 2020, respectively. The total number of neighbor spaces that are or were temporarily closed in connection with COVID-19 is approximately 2,100 . As of August 10, 2020 , 97% of total neighbor spaces, or 98% of our portfolio ABR, was open. • Establishing Payment Plans —We believe substantially all neighbors, including those that were required to temporarily close under governmental mandates, are contractually obligated to continue with their rent payments as documented in our lease agreements with them. We further believe that it is best to begin negotiation of relief only once a neighbor has reopened, and we have continued to see payments made toward rent and recovery charges owed during the second quarter. As of August 10, 2020 , we have executed relief agreements for approximately 240 neighbor spaces, primarily in the form of short-term payment plans without a reduction in amounts owed to us. These relief agreements totaled approximately $3.8 million , or 1.0% of portfolio ABR, and the weighted-average term over which we expect to receive payment on executed payment plans is less than twelve months. We are in negotiations with additional neighbors, which we believe will lead to more neighbors repaying their past due charges. We will continue to work with neighbors on establishing plans to repay past due amounts, and will monitor the impact of such payment plans on our results of operations in future quarters. • Collecting on Payment Plans —The final measure of recovery for our portfolio is to collect the past due amounts under the terms negotiated with our neighbors. Whether we are ultimately able to collect these amounts will be determined 21 by a number of factors, many of which are outside our control, especially the impact of the COVID-19 pandemic on the overall economy and each of our neighbors. Portfolio and Leasing Statistics —Below are statistical highlights of our wholly-owned portfolio: June 30, 2020 Number of properties 284 Number of states 31 Total square feet (in thousands) 31,787 Leased % of rentable square feet 95.6 % Average remaining lease term (in years) (1) 4.6 % ABR from grocery-anchored properties 97.0 % (1) The average remaining lease term in years excludes future options to extend the term of the lease. The following table details information for our joint ventures, which is the basis for determining the prorated information included in the subsequent tables as of June 30, 2020 (dollars and square feet in thousands): June 30, 2020 Joint Venture Ownership Percentage Number of Properties ABR (1) GLA (2) Necessity Retail Partners 20% 7 $ 11,962 851 Grocery Retail Partners I 15% 17 24,926 1,905 Grocery Retail Partners II 10% 3 3,858 312 (1) We calculate ABR as monthly contractual rent as of June 30, 2020 , multiplied by 12 months. (2) GLA is defined as the portion of the total square feet of a building that is available for leasing. Lease Expirations —The following chart shows, on an aggregate basis, all of the scheduled lease expirations after June 30, 2020 for each of the next ten years and thereafter for our wholly-owned properties and the prorated portion of those owned through our joint ventures: 22 Our ability to create rental rate growth generally depends on our leverage during new and renewal lease negotiations with prospective and existing neighbors, which typically occurs when occupancy at our centers is high or during periods of economic growth and recovery. Conversely, we may experience rental rate decline when occupancy at our centers is low or during periods of economic recession, as the leverage during new and renewal lease negotiations may shift to prospective and existing neighbors. Most of our grocery neighbors have remained open throughout the COVID-19 pandemic, and many other neighbor spaces were allowed to remain open, though their sales may have been impacted by social distancing and “stay-at-home” mandates. The number of our neighbor spaces that temporarily closed as a result of the COVID-19 pandemic peaked in April 2020 and has significantly decreased as states began to lift in full or in part “stay-at-home” mandates in May 2020. Certain neighbors remain temporarily closed, have since closed after reopening, are limiting the number of customers allowed in their locations, or have modified their operations in other ways that may impact their profitability, either as a result of government mandates or self-elected efforts to reduce the spread of COVID-19. Some states and localities have temporarily reinstated certain mandates in response to increasing reported cases of COVID-19. These actions could result in increased permanent store closings and could reduce the demand for leasing space in our shopping centers and result in a decline in average rental rates on expiring leases. As of June 30, 2020 , our average rental rates on new leases have exceeded the average rental rates on expiring leases and our occupancy remained flat as compared to December 31, 2019 . We anticipate increased volatility in new and renewal rental rates until the business environment becomes more stable. For our wholly-owned properties and the prorated share of those owned through our joint ventures, subsequent to June 30, 2020 , we renewed approximately 0.3 million total square feet and $3.5 million of total ABR of future expiring leases. This includes six anchor lease renewals, some of which were pursuant to the exercise of an option to extend the lease. See the section below titled Management’s Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Leasing Activity for further discussion of leasing activity. 23 Portfolio Tenancy —We define national neighbors as those neighbors that operate in at least three states. Regional neighbors are defined as those neighbors that have at least three locations in fewer than three states. The following charts present the composition of our portfolio, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, by neighbor type as of June 30, 2020 : The following charts present the composition of our portfolio by neighbor industry as of June 30, 2020 : 24 We estimate that approximately 51% of our ABR, including the pro rata portion attributable to our properties owned through our joint ventures, is from retail and service businesses generally deemed essential under most state and local mandates issued in response to the COVID-19 pandemic. The composition of our portfolio as a percentage of ABR is as follows: June 30, 2020 Essential Retail and Services: Grocery 35.5 % Banks 2.4 % Dollar stores 2.2 % Pet supply 2.2 % Medical 1.9 % Hardware/Automotive 1.6 % Wine, beer, and liquor 1.4 % Pharmacy 1.0 % Other essential 2.9 % Total essential retail and services (1) 51.1 % Restaurants: Quick service 9.5 % Full service 5.8 % Total restaurants 15.3 % Other Retail and Services: Services 16.2 % Soft goods 12.9 % Fitness 3.3 % Entertainment 1.2 % Total other retail and services 33.6 % Total ABR 100.0 % (1) Includes neighbors that we believe are considered to be essential retail and service businesses but that may have temporarily closed due to decreases in foot traffic and customer patronage as a result of “stay-at-home” mandates and social distancing guidelines implemented in response to the COVID-19 pandemic. 25 The following table presents our top twenty neighbors by ABR, including our wholly-owned properties and the prorated portion of those owned through our joint ventures, as of June 30, 2020 (dollars and square feet in thousands): June 30, 2020 Neighbor (1) ABR % of ABR Leased Square Feet % of Leased Square Feet Number of Locations (2) Kroger $ 26,837 6.8 % 3,466 11.2 % 66 Publix 22,022 5.6 % 2,241 7.3 % 56 Ahold Delhaize 17,496 4.5 % 1,278 4.1 % 25 Albertsons-Safeway 16,104 4.1 % 1,629 5.3 % 31 Walmart 8,932 2.3 % 1,770 5.7 % 13 Giant Eagle 8,117 2.1 % 823 2.7 % 12 Sprouts Farmers Market 4,885 1.2 % 334 1.1 % 11 TJX Companies 4,727 1.2 % 428 1.4 % 15 Dollar Tree 4,023 1.0 % 437 1.4 % 44 Raley's 3,884 1.0 % 253 0.8 % 4 SUPERVALU 3,402 0.9 % 370 1.2 % 7 Subway Group 3,057 0.8 % 126 0.4 % 91 Schnuck's 3,025 0.8 % 328 1.1 % 5 Save Mart 2,619 0.7 % 309 1.0 % 6 Southeastern Grocers 2,599 0.7 % 291 0.9 % 8 Anytime Fitness, Inc. 2,590 0.7 % 173 0.6 % 37 Lowe's 2,407 0.6 % 371 1.2 % 4 Kohl's Corporation 2,255 0.6 % 365 1.2 % 4 Food 4 Less (PAQ) 2,215 0.6 % 119 0.4 % 2 Petco Animal Supplies, Inc. 2,104 0.5 % 127 0.4 % 11 $ 143,300 36.7 % 15,238 49.4 % 452 (1) Neighbors are grouped by parent company and may represent multiple subsidiaries and banners. (2) Number of locations excludes auxiliary leases with grocery anchors such as fuel stations, pharmacies, and liquor stores. Additionally, in the event that a parent company has multiple subsidiaries or banners in a single shopping center, those subsidiaries are included as one location. 26 Results of Operations Impact of the COVID-19 Pandemic The COVID-19 pandemic did not significantly impact our results of operations for the first quarter of 2020. In the second quarter, we noted significant impacts to rental income, including our collectability reserves. While our overall collections in the second quarter were lower than previous periods, we have seen steady improvement in each month since April, which corresponds with the number of neighbors who have reopened their business. At the same time, the COVID-19 pandemic has increased the uncertainty of collecting rents from a number of our neighbors. For neighbors with a higher degree of uncertainty, we may not record revenue for amounts billed until the cash is received. Based on our analysis, no individual neighbor category was deemed to be entirely non-creditworthy. We continue to perform our analysis by examining each individual neighbor. For the three and six months ended June 30, 2020 , we had $12.0 million and $14.8 million , respectively, in revenue that will not be recognized until cash is collected or the neighbor resumes payment and is considered creditworthy. As of June 30, 2020, this represented approximately 8% of out of nearly 5,100 total neighbors. This has resulted in reduced revenues for the quarter, and our estimates around collectability will likely continue to create volatility in our earnings at least in the short term. A portion of these neighbors may eventually vacate their space, and we may see a decline in occupancy in future quarters. The duration of any decline will depend on many factors and cannot be estimated at this time. In our efforts to maximize collections in the near term while also supporting our neighbors as they operate through this pandemic, we have begun negotiating rent relief primarily in the form of payment plans and deferrals on rent and recovery charges, which allow for changes in the timing of payments, but not the total amount of consideration due to us under the lease. In a limited number of instances, we may also agree to waive certain charges due to us under the lease. During the three months ended June 30, 2020 , our negotiated rent relief was minimal. As more neighbors resume paying their full monthly charges, we will enter into additional discussions on how to recover outstanding amounts. The ultimate impact on revenue in the future cannot be determined at this time, but may ultimately be the result of negotiated rental revenue reductions and changes in the timing of cash payments, which may or may not be material. The negative economic impact of the COVID-19 pandemic has placed significant financial strain on certain businesses, leading to uncertainty in their ability to continue operations. As such, we have received notification of entry into bankruptcy proceedings from several of our neighbors, representing an exposure of only 1.1% of our total ABR. However, some of these neighbors may assume their leases during the course of the bankruptcy proceedings, which would further lower our exposure. We have included our assessment of the impact of these bankruptcies in our estimate of rent collectability, which impacted recorded revenue, as noted previously. The ongoing impact of the COVID-19 pandemic and the resulting economic downturn will likely continue to be significant to our results of operations for the remainder of 2020 and potentially beyond as a result of a number of factors outside of our control. These factors include, but are not limited to, overall economic conditions on both a macro and micro level, including consumer demand as well as retailer demand for space within our shopping centers; the impact of social distancing guidelines, recommendations from governmental authorities, and consumer shopping preferences; the nature and effectiveness of any economic stimulus or relief measures; and the impact of all of the factors above, including other potentially unknown factors, on our neighbors’ ability to continue paying rent and related charges on time or at all and neighbors’ willingness to renew their leases on the same terms or at all. The impact of these factors, some of which have already been realized, could include reduced revenue from neighbor concessions, increased collectability reserves, decreased recovery rates on expenses, and other unforeseen impacts that may arise in the course of operating during these circumstances. See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Overview for our observation of neighbor impacts through August 10, 2020 . The duration of the pandemic and mitigating measures, and their economic impact, has caused some of our current neighbors to permanently vacate their spaces and/or not renew their leases, and we may have difficulty leasing these spaces on the same or better terms or at all, and/or incur additional costs to lease vacant spaces. Extended periods of vacancy or reduced revenues may trigger impairments of our real estate assets. Additionally, these factors may impact disposition activity by decreasing demand and negatively impacting capitalization rates. Our disposition and acquisition activity was reduced as a result of the pandemic during the second quarter. We believe that our investment focus on grocery-anchored shopping centers that provide daily necessities will help lessen the negative effect of the pandemic on our business compared to non-grocery anchored shopping centers. We are closely monitoring the occupancy, operating performance, and neighbor sales results at our centers, including those neighbors operating with reduced hours or under government-imposed restrictions. We took action to maximize our financial flexibility by implementing expense reductions at the property and corporate level; prioritizing capital projects to support the reopening of our neighbors and new leasing activity, or deferring if possible; and suspending monthly distributions and share repurchases. 27 Summary of Operating Activities for the Three Months Ended June 30, 2020 and 2019 Three Months Ended June 30, Favorable (Unfavorable) Change (Dollars in thousands) 2020 2019 $ % Revenues: Rental income $ 115,654 $ 129,030 (13,376 ) (10.4 )% Fee and management income 2,760 3,051 (291 ) (9.5 )% Other property income 626 500 126 25.2 % Operating Expenses: Property operating expenses (19,629 ) (20,933 ) 1,304 6.2 % Real estate tax expenses (16,453 ) (17,930 ) 1,477 8.2 % General and administrative expenses (9,806 ) (13,540 ) 3,734 27.6 % Depreciation and amortization (56,370 ) (59,554 ) 3,184 5.3 % Impairment of real estate assets — (25,199 ) 25,199 NM Other: Interest expense, net (22,154 ) (25,758 ) 3,604 14.0 % Loss on disposal of property, net (541 ) (1,266 ) 725 57.3 % Other expense, net (500 ) (10,573 ) 10,073 95.3 % Net loss (6,413 ) (42,172 ) 35,759 84.8 % Net loss attributable to noncontrolling interests 825 5,602 (4,777 ) (85.3 )% Net loss attributable to stockholders $ (5,588 ) $ (36,570 ) $ 30,982 84.7 % Our basis for analyzing significant fluctuations in our results of operations generally includes review of the results of our same-center portfolio, non-same-center portfolio, and revenues and expenses from our management activities. We define our same-center portfolio as the 278 properties that were owned and operational prior to January 1, 2019 . We define our non-same-center portfolio as those properties that were not fully owned and operational in both periods owing to real estate asset activity occurring after December 31, 2018 , which includes 25 properties disposed of and five properties acquired. Below are explanations of the significant fluctuations in the results of operations for the three months ended June 30, 2020 and 2019 : Rental Income decreased $13.4 million as follows: • $8.5 million decrease related to our same-center portfolio. We have identified an increased number of neighbors as a credit risk, largely due to the COVID-19 pandemic and its economic impact. As a result, we saw a decrease to rental income of $12.1 million related to revenue that will not be recognized until cash is collected or the neighbor resumes payment and is considered creditworthy, including $3.1 million in straight-line rent reversals for the related leases. This impact offsets an improvement of $1.9 million primarily due to an increase in average minimum rent per square foot and average occupancy, as well as a $2.8 million increase in recovery income; and • $4.9 million decrease primarily related to our net disposition of 20 properties. Property Operating Expenses decreased $1.3 million as follows: • $0.8 million decrease related to our net disposition of 20 properties; and • $0.5 million decrease related to our same-center portfolio and corporate operating activities, including $1.6 million of reduced compensation in connection with our expense reduction initiatives and performance compensation, partially offset by higher insurance costs. Real Estate Tax Expenses decreased $1.5 million primarily as follows: • $0.9 million decrease related to our same-center portfolio, primarily as a result of successful real estate tax appeals; and • $0.5 million decrease related to our net disposition of 20 properties. General and Administrative Expenses: • The $3.7 million decrease in general and administrative expenses was primarily related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to compensation. Depreciation and Amortization decreased $3.2 million primarily as follows: • $2.3 million decrease related to our net disposition of 20 properties; and • $0.9 million decrease related to our same-center portfolio and corporate operating activities, primarily due to intangible assets becoming fully amortized by December 31, 2019 . 28 Impairment of Real Estate Assets: • Our decrease in impairment of real estate assets of $25.2 million was primarily due to reduced disposition activity. Our impairments during the three months ended June 30, 2019 were related to assets under contract or actively marketed for sale at a disposition price that was less than the carrying value, the proceeds from which were used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes. We continue to sell non-core assets and may potentially recognize impairments in future quarters, but our anticipated disposition activity will likely be delayed or reduced due to current market conditions as a result of the COVID-19 pandemic. Interest Expense, Net: • The $3.6 million decrease was largely due to repricing activities in 2019 as well as the decrease in LIBOR during the three months ended June 30, 2020 as compared to the same period in 2019 . Interest Expense, Net was comprised of the following (dollars in thousands): Three Months Ended June 30, 2020 2019 Interest on revolving credit facility, net $ 979 $ 566 Interest on term loans, net 11,685 15,851 Interest on secured debt 7,316 5,767 Non-cash amortization and other 2,174 3,574 Interest expense, net $ 22,154 $ 25,758 Weighted-average interest rate as of end of period 3.1 % 3.5 % Weighted-average term (in years) as of end of period 4.5 4.7 Other Expense, Net : • The $10.1 million decrease was largely due to other impairment charges of $9.7 million in connection with the REIT III public offering recognized during the three months ended June 30, 2019 , which included a $7.8 million impairment of a corporate intangible asset and a $1.9 million impairment of organization and offering costs. Other Expense, Net was comprised of the following (dollars in thousands): Three Months Ended June 30, 2020 2019 Equity in loss of unconsolidated joint ventures $ (359 ) $ (520 ) Transaction and acquisition expenses (14 ) (188 ) Federal, state, and local income tax expense (180 ) (341 ) Other impairment charges — (9,661 ) Other 53 137 Other expense, net $ (500 ) $ (10,573 ) 29 Summary of Operating Activities for the Six Months Ended June 30, 2020 and 2019 Six Months Ended June 30, Favorable (Unfavorable) Change (Dollars in thousands) 2020 2019 $ % Revenues: Rental income $ 244,120 $ 257,890 $ (13,770 ) (5.3 )% Fee and management income 4,925 6,312 (1,387 ) (22.0 )% Other property income 1,518 1,148 370 32.2 % Operating Expenses: Property operating expenses (41,391 ) (43,799 ) 2,408 5.5 % Real estate tax expenses (33,565 ) (35,278 ) 1,713 4.9 % General and administrative expenses (20,546 ) (26,750 ) 6,204 23.2 % Depreciation and amortization (112,597 ) (120,543 ) 7,946 6.6 % Impairment of real estate assets — (38,916 ) 38,916 NM Other: Interest expense, net (44,929 ) (50,842 ) 5,913 11.6 % (Loss) gain on disposal of property, net (2,118 ) 5,855 (7,973 ) (136.2 )% Other income (expense), net 9,369 (3,037 ) 12,406 NM Net income (loss) 4,786 (47,960 ) 52,746 110.0 % Net (income) loss attributable to noncontrolling interests (605 ) 6,195 (6,800 ) (109.8 )% Net income (loss) attributable to stockholders $ 4,181 $ (41,765 ) $ 45,946 110.0 % For details surrounding our basis for analyzing significant fluctuations in our results of operations as well as definitions related to our portfolio of real estate assets, please see the Summary of Operating Activities for the Three Months Ended June 30, 2020 and 2019 section above. Below are explanations of the significant fluctuations in the results of operations for the six months ended June 30, 2020 and 2019 : Rental Income decreased $13.8 million as follows: • $5.4 million decrease related to our same-center portfolio. We have identified an increased number of neighbors as a credit risk, largely due to the COVID-19 pandemic and its economic impact. As a result, we saw a decrease to rental income of $14.3 million related to revenue that will not be recognized until cash is collected or the neighbor resumes payment and is considered creditworthy, including $3.1 million in straight-line rent reversals for the related leases. This offsets an improvement of $4.2 million primarily related to increases in average minimum rent per square foot and average occupancy, as well as a $5.2 million increase in recovery income; and • $8.4 million decrease primarily related to our net disposition of 20 properties. Fee and Management Income: • The $1.4 million decrease in fee and management income is primarily due to fees no longer received from REIT III following its acquisition by us in October 2019 and a decrease in fees received from NRP, primarily due to property dispositions. Property Operating Expenses decreased $2.4 million as follows: • $1.6 million decrease related to our net disposition of 20 properties; and • $0.8 million decrease related to our same-center portfolio and corporate operating activities, including $2.0 million of reduced compensation in connection with our expense reduction initiatives and performance compensation, partially offset by higher insurance costs. Real Estate Tax Expenses decreased $1.7 million as follows: • $1.1 million decrease related to our net disposition of 20 properties; and • $0.6 million decrease related to our same-center portfolio primarily as a result of successful real estate tax appeals. General and Administrative Expenses: • The $6.2 million decrease in general and administrative expenses was primarily related to expense reductions taken to reduce the impact of the COVID-19 pandemic, with the majority of these decreases related to compensation. Depreciation and Amortization decreased $7.9 million primarily as follows: • $4.6 million decrease related to our net disposition of 20 properties; and • $3.4 million decrease related to our same-center portfolio and corporate operating activities, primarily due to intangible lease assets becoming fully amortized by December 31, 2019 . 30 Impairment of Real Estate Assets: • The decrease in impairment of real estate assets of $38.9 million was primarily due to reduced disposition activity. Our impairments during the six months ended June 30, 2019 were related to assets under contract or actively marketed for sale at a disposition price that was less than the carrying value, the proceeds from which were used to fund tax-efficient acquisitions, to fund redevelopment opportunities in owned centers, and for general corporate purposes. We continue to sell non-core assets and may potentially recognize impairments in future quarters, but our anticipated disposition activity will likely be delayed or reduced due to current market conditions as a result of the COVID-19 pandemic. Interest Expense, Net: • The $5.9 million decrease was largely due to repricing activities in 2019 as well as the decrease in LIBOR during the six months ended June 30, 2020 as compared to the same period in 2019 . Interest Expense, Net was comprised of the following (dollars in thousands): Six Months Ended June 30, 2020 2019 Interest on revolving credit facility, net $ 1,195 $ 1,421 Interest on term loans, net 24,416 30,704 Interest on secured debt 14,665 11,539 Non-cash amortization and other 4,653 7,178 Interest expense, net $ 44,929 $ 50,842 Weighted-average interest rate as of end of period 3.1 % 3.5 % Weighted-average term (in years) as of end of period 4.5 4.7 (Loss) Gain on the Disposal of Property, Net : • The $8.0 million change was primarily related to the sale of four properties with a net loss and associated write-offs of $2.1 million during the six months ended June 30, 2020 , as compared to the sale of six properties with a net gain of $5.9 million during the six months ended June 30, 2019 (see Note 4 ). Other Income (Expense), Net : • The $12.4 million change was largely due to other impairment charges of $9.7 million in connection with the REIT III public offering during the three months ended June 30, 2019 , which included a $7.8 million impairment of a corporate intangible asset and a $1.9 million impairment of organization and offering costs, and the change in the fair value of our earn-out liability. Other Income (Expense), Net was comprised of the following (dollars in thousands): Six Months Ended June 30, 2020 2019 Change in fair value of earn-out liability $ 10,000 $ 7,500 Equity in loss of unconsolidated joint ventures (639 ) (976 ) Transaction and acquisition expenses (59 ) (276 ) Federal, state, and local income tax expense (209 ) (341 ) Other impairment charges — (9,661 ) Other 276 717 Other income (expense), net $ 9,369 $ (3,037 ) 31 Leasing Activity —The volume of our leasing activity slowed as a result of the COVID-19 pandemic during the second quarter. The average rent per square foot and cost of executing leases fluctuates based on the neighbor mix, size of the leased space, and lease term. Leases with national and regional neighbors generally require a higher cost per square foot to execute than those with local neighbors. However, generally such national and regional neighbors will also pay higher rates for a longer term. Below is a summary of leasing activity for our wholly-owned properties for the three months ended June 30, 2020 and 2019 : Total Deals (1) Inline Deals (1)(2) 2020 2019 2020 2019 New leases: Number of leases 61 100 58 96 Square footage (in thousands) 197 393 159 227 ABR (in thousands) $ 3,034 $ 5,467 $ 2,801 $ 4,017 ABR per square foot $ 15.38 $ 13.91 $ 17.59 $ 17.67 Cost per square foot of executing new leases (3) $ 19.48 $ 25.68 $ 23.35 $ 30.54 Number of comparable leases (4) 20 33 19 33 Comparable rent spread (5) 15.5 % 10.5 % 15.9 % 10.5 % Weighted average lease term (in years) 6.1 8.1 7.2 7.0 Renewals and options: Number of leases 108 159 95 148 Square footage (in thousands) 975 716 209 309 ABR (in thousands) $ 8,942 $ 9,579 $ 4,141 $ 6,759 ABR per square foot $ 9.17 $ 13.39 $ 19.81 $ 21.87 ABR per square foot prior to renewals $ 8.73 $ 12.15 $ 18.40 $ 19.73 Percentage increase in ABR per square foot 5.0 % 10.2 % 7.7 % 10.9 % Cost per square foot of executing renewals and options $ 1.62 $ 2.59 $ 3.69 $ 4.29 Number of comparable leases (4) 87 122 84 117 Comparable rent spread (5) 7.1 % 10.8 % 9.0 % 11.0 % Weighted average lease term (in years) 5.4 4.8 3.5 4.4 Portfolio retention rate (6) 88.2 % 87.1 % 70.3 % 76.2 % (1) Per square foot amounts may not recalculate exactly based on other amounts presented within the table due to rounding. (2) We consider an inline deal to be a lease for less than 10,000 square feet of GLA. (3) The cost of executing new leases, renewals, and options includes leasing commissions, tenant improvement costs, landlord work, and tenant concessions. The costs associated with landlord work are excluded for repositioning and redevelopment projects, if any. (4) A comparable lease is a lease that is executed for the exact same space (location and square feet) in which a neighbor was previously located. For a lease to be considered comparable, it must have been executed within 365 days from the earlier of legal possession or the day the prior neighbor physically vacated the space. (5) The comparable rent spread compares the percentage increase (or decrease) of new or renewal leases (excluding options) to the expiring lease of a unit that was occupied within the past twelve months. (6) The portfolio retention rate is calculated by dividing (a) total square feet of retained neighbors with current period lease expirations by (b) the square feet of leases expiring during the period. 32 Below is a summary of leasing activity for our wholly-owned properties for the six months ended June 30, 2020 and 2019 (1) : Total Deals Inline Deals 2020 2019 2020 2019 New leases: Number of leases 148 207 135 199 Square footage (in thousands) 579 716 339 479 ABR (in thousands) $ 8,597 $ 10,345 $ 6,015 $ 8,184 ABR per square foot $ 14.84 $ 14.44 $ 17.72 $ 17.07 Cost per square foot of executing new leases $ 21.16 $ 26.51 $ 25.78 $ 29.10 Number of comparable leases 45 73 44 71 Comparable rent spread 10.8 % 14.6 % 10.7 % 13.0 % Weighted average lease term (in years) 8.2 7.6 6.8 6.7 Renewals and options: Number of leases 235 322 208 300 Square footage (in thousands) 1,714 1,404 458 635 ABR (in thousands) $ 18,662 $ 20,129 $ 9,505 $ 13,865 ABR per square foot $ 10.89 $ 14.34 $ 20.75 $ 21.83 ABR per square foot prior to renewals $ 10.24 $ 13.12 $ 18.83 $ 19.52 Percentage increase in ABR per square foot 6.7 % 9.3 % 12.2 % 11.9 % Cost per square foot of executing renewals and options $ 3.41 $ 2.91 $ 4.36 $ 4.68 Number of comparable leases 176 252 170 244 Comparable rent spread 9.2 % 11.6 % 11.8 % 12.4 % Weighted average lease term (in years) 5.0 4.8 3.7 4.6 Portfolio retention rate 79.5 % 85.5 % 68.6 % 78.4 % (1) See the footnotes to the summary of leasing activity table for the three months ended June 30, 2020 and 2019 for more detail regarding certain items throughout this table. Additionally, subsequent to June 30, 2020, through July 31, we executed a total of 44 new leases. Non-GAAP Measures Same-Center Net Operating Income — We present Same-Center NOI as a supplemental measure of our performance. We define NOI as total operating revenues, adjusted to exclude non-cash revenue items, less property operating expenses and real estate taxes. For the three and six months ended June 30, 2020 and 2019 , Same-Center NOI represents the NOI for the 278 properties that were wholly-owned and operational for the entire portion of both comparable reporting periods. We believe Same-Center NOI provides useful information to our investors about our financial and operating performance because it provides a performance measure of the revenues and expenses directly involved in owning and operating real estate assets and provides a perspective not immediately apparent from net income (loss). Because Same-Center NOI excludes the change in NOI from properties acquired or disposed of after December 31, 2018 , it highlights operating trends such as occupancy levels, rental rates, and operating costs on properties that were operational for both comparable periods. Other REITs may use different methodologies for calculating Same-Center NOI, and accordingly, our Same-Center NOI may not be comparable to other REITs. Same-Center NOI should not be viewed as an alternative measure of our financial performance as it does not reflect the operations of our entire portfolio, nor does it reflect the impact of general and administrative expenses, depreciation and amortization, interest expense, other income (expense), or the level of capital expenditures and leasing costs necessary to maintain the operating performance of our properties that could materially impact our results from operations. 33 The table below compares Same-Center NOI (dollars in thousands): Three Months Ended June 30, Favorable (Unfavorable) Six Months Ended June 30, Favorable (Unfavorable) 2020 2019 $ Change % Change 2020 2019 $ Change % Change Revenues: Rental income (1) $ 84,506 $ 90,089 $ (5,583 ) $ 175,422 $ 179,696 $ (4,274 ) Tenant recovery income 28,067 27,277 790 58,372 56,005 2,367 Other property income 591 447 144 1,465 1,059 406 Total revenues 113,164 117,813 (4,649 ) (3.9 )% 235,259 236,760 (1,501 ) (0.6 )% Operating expenses: Property operating expenses 16,728 16,140 (588 ) 34,971 34,213 (758 ) Real estate taxes 16,164 17,001 837 33,284 33,383 99 Total operating expenses 32,892 33,141 249 0.8 % 68,255 67,596 (659 ) (1.0 )% Total Same-Center NOI $ 80,272 $ 84,672 $ (4,400 ) (5.2 )% $ 167,004 $ 169,164 $ (2,160 ) (1.3 )% (1) Excludes straight-line rental income, net amortization of above- and below-market leases, and lease buyout income. Same-Center NOI Reconciliation —Below is a reconciliation of Net (Loss) Income to NOI for our real estate investments and Same-Center NOI (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 (1) 2020 2019 (1) Net (loss) income $ (6,413 ) $ (42,172 ) $ 4,786 $ (47,960 ) Adjusted to exclude: Fees and management income (2,760 ) (3,051 ) (4,925 ) (6,312 ) Straight-line rental expense (income) (2) 948 (2,819 ) (1,364 ) (4,532 ) Net amortization of above- and below-market leases (795 ) (1,091 ) (1,583 ) (2,224 ) Lease buyout income (214 ) (223 ) (308 ) (456 ) General and administrative expenses 9,806 13,540 20,546 26,750 Depreciation and amortization 56,370 59,554 112,597 120,543 Impairment of real estate assets — 25,199 — 38,916 Interest expense, net 22,154 25,758 44,929 50,842 Loss (gain) on disposal of property, net 541 1,266 2,118 (5,855 ) Other expense (income), net 500 10,573 (9,369 ) 3,037 Property operating expenses related to fees and management income 891 1,531 1,528 2,826 NOI for real estate investments 81,028 88,065 168,955 175,575 Less: Non-same-center NOI (3) (756 ) (3,393 ) (1,951 ) (6,411 ) Total Same-Center NOI $ 80,272 $ 84,672 $ 167,004 $ 169,164 (1) Certain prior period amounts have been reclassified to conform with current year presentation. (2) Excludes straight-line rent adjustments for neighbors deemed to be non-creditworthy. (3) Includes operating revenues and expenses from non-same-center properties which includes properties acquired or sold and corporate activities. Funds from Operations (“FFO”) and Core FFO — FFO is a non-GAAP performance financial measure that is widely recognized as a measure of REIT operating performance. The National Association of Real Estate Investment Trusts (“Nareit”) defines FFO as net income (loss) computed in accordance with GAAP, excluding gains (or losses) from sales of property and gains (or losses) from change in control, plus depreciation and amortization, and after adjustments for impairment losses on real estate and impairments of in-substance real estate investments in investees that are driven by measurable decreases in the fair value of the depreciable real estate held by the unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect FFO on the same basis. We calculate FFO Attributable to Stockholders and Convertible Noncontrolling Interests in a manner consistent with the Nareit definition, with an additional adjustment made for noncontrolling interests that are not convertible into common stock. Core FFO is an additional performance financial measure used by us as FFO includes certain non-comparable items that affect our performance over time. We believe that Core FFO is helpful in assisting management and investors with the assessment of the sustainability of operating performance in future periods. We believe it is more reflective of our core operating performance and provides an additional measure to compare our performance across reporting periods on a consistent basis by excluding items that may cause short-term fluctuations in net income (loss). To arrive at Core FFO, we adjust FFO attributable to stockholders and convertible noncontrolling interests to exclude certain recurring and non-recurring items 34 including, but not limited to, depreciation and amortization of corporate assets, changes in the fair value of the earn-out liability, amortization of unconsolidated joint venture basis differences, gains or losses on the extinguishment or modification of debt, other impairment charges, and transaction and acquisition expenses. FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and Core FFO should not be considered alternatives to net income (loss) or income (loss) from continuing operations under GAAP, as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions. Core FFO may not be a useful measure of the impact of long-term operating performance on value if we do not continue to operate our business plan in the manner currently contemplated. Accordingly, FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and Core FFO should be reviewed in connection with other GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Our FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and Core FFO, as presented, may not be comparable to amounts calculated by other REITs. The following table presents our calculation of FFO, FFO Attributable to Stockholders and Convertible Noncontrolling Interests, and Core FFO and provides additional information related to our operations (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, 2020 2019 (1) 2020 2019 (1) Calculation of FFO Attributable to Stockholders and Convertible Noncontrolling Interests Net (loss) income $ (6,413 ) $ (42,172 ) $ 4,786 $ (47,960 ) Adjustments: Depreciation and amortization of real estate assets 54,892 57,828 109,709 117,170 Impairment of real estate assets — 25,199 — 38,916 Loss (gain) on disposal of property, net 541 1,266 2,118 (5,855 ) Adjustments related to unconsolidated joint ventures 940 1,051 1,594 2,106 FFO attributable to the Company 49,960 43,172 118,207 104,377 Adjustments attributable to noncontrolling interests not convertible into common stock — (41 ) — (231 ) FFO attributable to stockholders and convertible noncontrolling interests $ 49,960 $ 43,131 $ 118,207 $ 104,146 Calculation of Core FFO FFO attributable to stockholders and convertible noncontrolling interests $ 49,960 $ 43,131 $ 118,207 $ 104,146 Adjustments: Depreciation and amortization of corporate assets 1,478 1,726 2,888 3,373 Change in fair value of earn-out liability — — (10,000 ) (7,500 ) Amortization of unconsolidated joint venture basis differences 254 353 721 697 Loss on extinguishment or modification of debt, net — — 73 — Other impairment charges — 9,661 — 9,661 Transaction and acquisition expenses 14 188 59 276 Core FFO $ 51,706 $ 55,059 $ 111,948 $ 110,653 FFO Attributable to Stockholders and Convertible Noncontrolling Interests per share and Core FFO per share Weighted-average common shares outstanding - diluted (2) 333,494 326,607 333,420 326,124 FFO attributable to stockholders and convertible noncontrolling interests per share - diluted $ 0.15 $ 0.13 $ 0.35 $ 0.32 Core FFO per share - diluted $ 0.16 $ 0.17 $ 0.34 $ 0.34 (1) Certain prior period amounts have been reclassified to conform with current year presentation. (2) Restricted stock awards were dilutive to FFO Attributable to Stockholders and Convertible Noncontrolling Interests per share and Core FFO per share for the three and six months ended June 30, 2020 and 2019 , and, accordingly, their impact was included in the weighted-average common shares used in their respective per share calculations. For the three months ended June 30, 2020 and for the three and six months ended June 30, 2019 , restricted stock awards had an anti-dilutive effect upon the calculation of earnings per share and thus were excluded. For details related to the calculation of earnings per share, see Note 10 . Earnings Before Interest, Taxes, Depreciation, and Amortization for Real Estate (“EBITDAre”) and Adjusted EBITDAre — We have included the calculation of EBITDA re to better align with publicly traded REITs. Additionally, we believe that, as another important earnings metric, it is a useful indicator of our ability to support our debt obligations. Nareit defines EBITDA re as net income (loss) computed in accordance with GAAP before (i) interest expense, (ii) income tax expense, (iii) depreciation and amortization, (iv) gains or losses from disposition of depreciable property, and (v) impairment write-downs 35 of depreciable property. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect EBITDA re on the same basis. Adjusted EBITDA re is an additional performance measure used by us as EBITDA re includes certain non-comparable items that affect our performance over time. To arrive at Adjusted EBITDA re, we exclude certain recurring and non-recurring items from EBITDAre, including, but not limited to: (i) changes in the fair value of the earn-out liability; (ii) other impairment charges; (iii) amortization of basis differences in our investments in our unconsolidated joint ventures; and (iv) transaction and acquisition expenses. We use EBITDA re and Adjusted EBITDA re as additional measures of operating performance which allow us to compare earnings independent of capital structure, determine debt service and fixed cost coverage, and measure enterprise value. EBITDA re and Adjusted EBITDA re should not be considered as alternatives to net income (loss), as an indication of our liquidity, nor as an indication of funds available to cover our cash needs, including our ability to fund distributions. Accordingly, EBITDA re and Adjusted EBITDA re should be reviewed in connection with other GAAP measurements, and should not be viewed as more prominent measures of performance than net income (loss) or cash flows from operations prepared in accordance with GAAP. Our EBITDA re and Adjusted EBITDA re , as presented, may not be comparable to amounts calculated by other REITs. The following table presents our calculation of EBITDA re and Adjusted EBITDA re and provides additional information related to our operations (in thousands, except per share amounts): Three Months Ended June 30, Six Months Ended June 30, Year Ended 2020 2019 2020 2019 2019 Calculation of EBITDA re Net (loss) income $ (6,413 ) $ (42,172 ) $ 4,786 $ (47,960 ) $ (72,826 ) Adjustments: Depreciation and amortization 56,370 59,554 112,597 120,543 236,870 Interest expense, net 22,154 25,758 44,929 50,842 103,174 Loss (gain) on disposal of property, net 541 1,266 2,118 (5,855 ) (28,170 ) Impairment of real estate assets — 25,199 — 38,916 87,393 Federal, state, and local tax expense 180 341 209 341 785 Adjustments related to unconsolidated joint ventures 1,391 1,763 2,568 3,529 2,571 EBITDA re $ 74,223 $ 71,709 $ 167,207 $ 160,356 $ 329,797 Calculation of Adjusted EBITDA re EBITDA re $ 74,223 $ 71,709 $ 167,207 $ 160,356 $ 329,797 Adjustments: Change in fair value of earn-out liability — — (10,000 ) (7,500 ) (7,500 ) Other impairment charges — 9,661 — 9,661 9,661 Transaction and acquisition expenses 14 188 59 276 598 Amortization of unconsolidated joint venture basis differences 254 353 721 697 2,854 Adjusted EBITDA re $ 74,491 $ 81,911 $ 157,987 $ 163,490 $ 335,410 Liquidity and Capital Resources General —Aside from standard operating expenses, we expect our principal cash demands to be for: • principal and interest payments on our outstanding indebtedness; • cash distributions to stockholders to comply with REIT requirements; • capital expenditures and leasing costs; • investments in real estate; and • redevelopment and repositioning projects. We expect our primary sources of liquidity to be: • operating cash flows; • proceeds from debt financings, including borrowings under our unsecured revolving credit facility; • proceeds received from the disposition of properties; • distributions received from joint ventures; • available, unrestricted cash and cash equivalents; and • reinvested distributions once distributions to stockholders resume and thus the DRIP is reactivated/reinstated. 36 Our cash from operations has been reduced, and we anticipate that it may continue to be be negatively impacted, at least in the near term, as a result of the immediate impact of the COVID-19 pandemic as we temporarily experience reduced or delayed cash payments and/or revenue from neighbors. Additionally, our cash from financing activities has been and will continue to be impacted by actions taken to preserve liquidity, as we have suspended our distributions, the DRIP, and the SRP. We are monitoring events closely and managing our cash usage, which also includes prioritizing our capital spending and redevelopment to support the reopening of our neighbors and new leasing activity, or deferring if possible, as well as reducing other property and corporate expenses. At this time, we believe our current sources of liquidity, most significantly our operating cash flows and borrowing availability on our revolving credit facility, are sufficient to meet our short- and long-term cash demands. Debt —The following table summarizes information about our debt as of June 30, 2020 and December 31, 2019 (dollars in thousands): June 30, 2020 December 31, 2019 Total debt obligations, gross $ 2,337,466 $ 2,372,521 Weighted average interest rate at end of period 3.1 % 3.4 % Weighted average term (in years) at end of period 4.5 5.0 Revolving credit facility capacity $ 500,000 $ 500,000 Revolving credit facility availability (1) 490,404 489,805 Revolving credit facility maturity (2) October 2021 October 2021 (1) Net of any outstanding balance and letters of credit. (2) The revolving credit facility has an additional option to extend the maturity to October 2022, with its execution being subject to compliance with certain terms included in the loan agreement, including the absence of any defaults and the payment of relevant fees. In January 2020, we paid down $30.0 million of term loan debt maturing in 2021 using proceeds from property dispositions in 2019. Following this repayment, our next term loan maturity is in April 2022 . In April 2020, we borrowed $200 million on our revolving credit facility to meet our operating needs for a sustained period due to the COVID-19 pandemic. Our rent and recovery collections during the second quarter, combined with the above initiatives, sufficiently funded our short-term operating needs and allowed us to repay in full the outstanding balance on our revolving credit facility in June 2020. Our debt is subject to certain covenants, and as of June 30, 2020 , we were in compliance with the restrictive covenants of our outstanding debt obligations. We expect to continue to meet the requirements of our debt covenants over the next twelve months. Financial Leverage Ratios — We believe our debt to Adjusted EBITDA re , debt to total enterprise value, and debt covenant compliance as of June 30, 2020 allow us access to future borrowings as needed in the near term. The following table presents our calculation of net debt and total enterprise value, inclusive of our prorated portion of net debt and cash and cash equivalents owned through our joint ventures, as of June 30, 2020 and December 31, 2019 (dollars in thousands): June 30, 2020 December 31, 2019 Net debt: Total debt, excluding market adjustments and deferred financing expenses $ 2,384,553 $ 2,421,520 Less: Cash and cash equivalents 54,894 18,376 Net debt $ 2,329,659 $ 2,403,144 Enterprise value: Net debt $ 2,329,659 $ 2,403,144 Total equity value (1) 2,914,931 3,682,161 Total enterprise value $ 5,244,590 $ 6,085,305 (1) Total equity value is calculated as the number of common shares and OP units outstanding multiplied by the EVPS as of June 30, 2020 and December 31, 2019, respectively. There were 333.1 million diluted shares outstanding with an EVPS of $8.75 and 331.7 million diluted shares outstanding with an EVPS of $11.10 as of June 30, 2020 and December 31, 2019 , respectively. 37 The following table presents our calculation of net debt to Adjusted EBITDA re and net debt to total enterprise value as of June 30, 2020 and December 31, 2019 (dollars in thousands): June 30, 2020 December 31, 2019 Net debt to Adjusted EBITDA re - annualized : Net debt $ 2,329,659 $ 2,403,144 Adjusted EBITDA re - annualized (1) 329,907 335,410 Net debt to Adjusted EBITDA re - annualized 7.1 x 7.2 x Net debt to total enterprise value Net debt $ 2,329,659 $ 2,403,144 Total enterprise value 5,244,590 6,085,305 Net debt to total enterprise value 44.4 % 39.5 % (1) Adjusted EBITDA re is annualized based on trailing twelve months. See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - EBITDA re and Adjusted EBITDA re for a reconciliation to Net (Loss) Income . Capital Expenditures and Redevelopment Activity —We make capital expenditures during the course of normal operations, which include maintenance capital expenditures and tenant improvements as well as value-enhancing anchor space repositioning and redevelopment, ground-up outparcel development, and other accretive projects. Our capital investments are being prioritized to support the reopening of our neighbors and new leasing activity, or deferred if possible, in order to maximize our available capital in response to the uncertainty around the duration and negative impact of the COVID-19 pandemic. During the six months ended June 30, 2020 and 2019 , we had capital spend of $28.5 million and $27.2 million , respectively. Our capital spend during the six months ended June 30, 2020 included $16.1 million related to development and redevelopment projects. We anticipate that obligations related to capital improvements as well as redevelopment and development can be met with cash flows from operations, cash flows from dispositions, or borrowings on our unsecured revolving line of credit. Acquisition Activity —We continually monitor the commercial real estate market for properties that have future growth potential, are located in attractive demographic markets, and support our business objectives. Given the uncertainty around the COVID-19 pandemic as well as the resulting market conditions, we expect acquisition activity to remain low for the remainder of 2020 . During the six months ended June 30, 2020 , we acquired two parcels of land, as described in Note 4 to the consolidated financial statements, for a total cash outlay of $4.3 million . During the six months ended June 30, 2019 , we acquired one property and one parcel of land for a total cash outlay of $49.9 million . Disposition and Contribution Activity —We are actively evaluating our portfolio of assets for opportunities to make strategic dispositions of assets that no longer meet our growth and investment objectives or assets that have stabilized in order to capture their value. We expect to continue to make strategic dispositions during 2020, though the volume will likely be less than anticipated due to the impact of the COVID-19 pandemic and the resulting economic downturn. The following table highlights our property dispositions for the six months ended June 30, 2020 and 2019 (dollars and square feet in thousands): Six Months Ended June 30, 2020 2019 Number of properties sold 4 6 Number of outparcels sold — 1 GLA 336 835 Proceeds from the sale of real estate $ 25,778 $ 47,857 (Loss) gain on sale of properties, net (1) (1,436 ) 6,627 (1) The (loss) gain on sale of properties, net does not include miscellaneous write-off activity, which is also recorded in (Loss) Gain on Disposal of Property, Net on the consolidated statements of operations. 38 Distributions —Distributions to our common stockholders and OP unit holders, including key financial metrics for comparison purposes, for the six months ended June 30, 2020 and 2019 , are as follows (in thousands): Cash distributions to OP unit holders Net cash provided by operating activities Cash distributions to common stockholders Core FFO (1) Distributions reinvested through the DRIP (1) See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Measures - Funds from Operations and Core Funds from Operations for the definition of Core FFO, for information regarding why we present Core FFO, and for a reconciliation of this non-GAAP financial measure to Net Income (Loss). During 2020, we paid distributions monthly of $0.05583344 per share for the months of December 2019 and January, February, and March 2020 on a cash basis. The timing and amount of distributions is determined by our Board and is influenced in part by our intention to comply with REIT requirements of the Internal Revenue Code, as well as our results of operations, our general financial condition, general economic conditions, and other factors. To maintain our qualification as a REIT, we must make aggregate annual distributions to our stockholders of at least 90% of our REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain, and which does not necessarily equal net income (loss) as calculated in accordance with GAAP). We generally will not be subject to U.S. federal income tax on the income that we distribute to our stockholders each year due to meeting the REIT qualification requirements. However, we may be subject to certain state and local taxes on our income, property, or net worth and to federal income and excise taxes on our undistributed income. We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders. On March 27, 2020, our Board temporarily suspended stockholder distributions, which became effective after the payment of the March 2020 distribution on April 1, 2020. The DRIP was also temporarily suspended, and the March 2020 distribution paid on April 1, 2020 was paid all in cash. In August 2019, our Board suspended the SRP with respect to standard repurchases. On March 27, 2020, our Board suspended the SRP for death, qualifying disability, or determination of incompetence. In determining to suspend the payment of distributions and the operation of the DRIP and the SRP, the Board considered various factors, including the impact that the COVID-19 pandemic and the measures taken by governmental agencies and our neighbors in response to the COVID-19 pandemic are expected to continue to have on our shopping centers and our financial 39 condition, liquidity sources, and capital needs. The suspension of distributions and share repurchases is expected to be re-evaluated at the November Board meeting. Cash Flow Activities —As of June 30, 2020 , we had cash and cash equivalents and restricted cash of $79.3 million , a net cash decrease of $15.8 million during the six months ended June 30, 2020 . Below is a summary of our cash flow activity for the six months ended June 30, 2020 and 2019 (dollars in thousands): Six Months Ended June 30, 2020 2019 $ Change % Change Net cash provided by operating activities $ 89,906 $ 100,069 $ (10,163 ) (10.2 )% Net cash used in investing activities (6,466 ) (26,987 ) 20,521 (76.0 )% Net cash used in financing activities (99,218 ) (104,830 ) 5,612 (5.4 )% Operating Activities —Our net cash provided by operating activities was primarily impacted by the following: • Property operations and working capita l—Most of our operating cash comes from rental and tenant recovery income and is offset by property operating expenses, real estate taxes, and general and administrative costs. Our change in cash flows from property operations is primarily due to reduced revenue and collections as a result of the COVID-19 pandemic, partially mitigated by expense reduction measures at the property and corporate levels. • Fee and management income —We also generate operating cash from our third-party investment management business, pursuant to various management and advisory agreements between us and the Managed Funds. Our fee and management income was $4.9 million for the six months ended June 30, 2020 , a decrease of $1.4 million as compared to the same period in 2019 , primarily due to fee and management income no longer received from REIT III following its acquisition by us in October 2019 and a decrease in fees received from NRP largely due to property dispositions. • Cash paid for interest —During the six months ended June 30, 2020 , we paid $41.0 million for interest, a decrease of $3.2 million over the same period in 2019 largely due to lower debt and a decrease in LIBOR as compared to the same period in 2019 . Investing Activities —Our net cash used in investing activities was primarily impacted by the following: • Real estate acquisitions —During the six months ended June 30, 2020 , we acquired two parcels of land, for a total cash outlay of $4.3 million . During the six months ended June 30, 2019 , we acquired one property and one parcel of land for a total cash outlay of $49.9 million . • Real estate dispositions —During the six months ended June 30, 2020 , we disposed of four properties for a net cash inflow of $25.8 million , as compared to the disposal of six properties and one outparcel for a net cash inflow of $47.9 million during the same period in 2019 . • Capital expenditures —We invest capital into leasing our properties and maintaining or improving the condition of our properties. During the six months ended June 30, 2020 , we paid $28.5 million for capital expenditures, an increase of $1.3 million over the same period in 2019 , primarily driven by our investment in value-added redevelopment and new development in our existing centers during the first quarter of 2020 . Our capital expenditures were reduced during the second quarter of 2020 as our capital investments have been prioritized to support the reopening of our neighbors and new leasing activity, or deferred if possible, in response to the uncertainty around the duration and negative impact of the COVID-19 pandemic. Financing Activities —Our net cash used in financing activities was primarily impacted by the following: • Debt borrowings and payments —Cash from financing activities is primarily affected by inflows from borrowings and outflows from payments on debt. As our debt obligations mature, we intend to refinance the remaining balance, if possible, or pay off the balances at maturity using proceeds from operations and/or corporate-level debt. During the six months ended June 30, 2020 , we had $35.2 million in net repayment of debt primarily as a result of a pay down in January 2020 of $30.0 million on term loan debt maturing in 2021. During the six months ended June 30, 2019 we had $18.2 million in net repayment of debt primarily as a result of payments on our revolving credit facility, funded primarily by cash inflows from a 1031 exchange escrow release. • Distributions to stockholders and OP unit holders —Cash used for distributions to common stockholders and OP unit holders decreased $16.1 million for the six months ended June 30, 2020 as compared to the same period in 2019 , primarily due to the temporary suspension of stockholder distributions which became effective after the payment of the March 2020 dividend on April 1, 2020. • Share repurchases —Cash outflows for share repurchases decreased by $6.6 million for the six months ended June 30, 2020 as compared to the same period in 2019 due to the suspension of the SRP for death, qualifying disability, or determination of incompetence which became effective March 27, 2020, and the suspension of the SRP with respect to standard repurchases in August 2019. 40 Critical Accounting Policies and Estimates Our 2019 Annual Report on Form 10-K, filed with the SEC on March 12, 2020 , contains a description of our critical accounting policies and estimates, including those relating to real estate acquisitions, rental income, and the valuation of real estate assets. There have been no significant changes to our critical accounting policies during 2020 . Because of the adverse economic conditions and uncertainty regarding the negative impacts of the COVID-19 pandemic, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change or vary significantly from actual results. Please refer to Notes 2 and 12 for additional discussion on the potential impact that the COVID-19 pandemic could have on significant accounting estimates as employed per our critical accounting policies. Impact of Recently Issued Accounting Pronouncements In response to the COVID-19 pandemic, the FASB issued interpretive guidance addressing the accounting treatment for lease concessions attributable to the pandemic. Under this guidance, entities may elect to account for such lease concessions consistent with how they would be accounted for under ASC Topic 842, Leases, (“ASC 842”) if the enforceable rights and obligations for the lease concessions already existed within the lease agreement, regardless of whether such enforceable rights and obligations are explicitly outlined within the lease. This accounting treatment may only be applied if (1) the lease concessions were granted as a direct result of the pandemic, and (2) the total cash flows under the modified lease are less than or substantially the same as the cash flows under the original lease agreement. As a result, entities that make this election will not have to analyze each lease to determine whether enforceable rights and obligations for concessions exist within the contract, and may elect not to account for these concessions as lease modifications within the scope of ASC 842. Some concessions will provide a deferral of payments, which may affect the timing of cash receipts without substantively impacting the total consideration per the original lease agreement. The FASB has stated that there are multiple acceptable methods to account for deferrals under the interpretive guidance: • Account for the concession as if no changes to the lease contract were made, increasing the lease receivable as payments accrue and continuing to recognize income; or • Account for deferred lease payments as variable lease payments. We have elected not to account for any qualifying lease concessions granted as a result of the COVID-19 pandemic as lease modifications and will account for any qualifying concessions granted as if no changes to the lease contract were made. This will result in an increase to the related lease receivable as payments accrue while we continue to recognize rental income. We will, however, assess the impact of any such concessions on estimated collectability of the related lease payments and will reflect any adjustments as necessary as an offset to Rental Income on the consolidated statements of operations. Please refer to Note 2 for discussion of the impact of other recently issued accounting pronouncements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes from the quantitative and qualitative disclosures about market risk disclosed in Part II, Item 7A of our 2019 Annual Report on Form 10-K filed with the SEC on March 12, 2020 .