What changed in this filing

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Item 1A. Risk Factors

2023-02-27 compared with 2022-02-22 · 42 added, 42 removed, 192 unchanged (30% of the section changed)

6 unchanged sentences

Real property investments are subject to varying degrees of risk.

The economic performance and values of real estate may be affected by many factors, including changes in the national, regional and local economic climate, inflation, changes in government policies and regulations, unemployment rates, consumer confidence, consumer shopping preferences, local conditions such as an oversupply of space or a reduction in demand for real estate in the area, the attractiveness of the properties to tenants, competition from other available space, our ability to provide adequate maintenance and insurance and increased operating costs.

The economic performance and values of real estate may be affected by many factors, including changes in the national, regional and local economic climate, inflation, interest rates, changes in government policies and regulations, unemployment rates, consumer confidence, consumer shopping preferences, local conditions such as an oversupply of space or a reduction in demand for real estate in the area, the attractiveness of the properties to tenants, competition from other available space, our ability to provide adequate maintenance and insurance and increased operating costs.

We may be unable to develop new outlet centers or expand existing outlet centers successfully.

We intend to continue to develop new outlet centers and expand existing outlet centers as opportunities arise.

We intend to continue to develop new outlet centers and expand existing outlet centers as opportunities arise and are in the process of developing a new outlet center in Nashville, Tennessee.

However, there are significant risks associated with our development activities in addition to those generally associated with the ownership and operation of established retail properties.

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Risks Related to our Business

The current COVID-19 pandemic has negatively affected and will likely continue to negatively affect our business, financial condition, liquidity and results of operations and those of our tenants.

The current COVID-19 pandemic has had, and likely will continue to have, repercussions across local, national and global economies and financial markets.

COVID-19 has impacted all states where our tenants operate their businesses or where our properties are located and measures taken to prevent the spread of or remediate outbreaks of COVID-19, including “shelter-in place” or “stay-at-home” orders or other quarantine mandates issued by local, state or federal authorities, have had an adverse effect on our business and the businesses of our tenants.

The full extent of the adverse impact on our results of operations, liquidity (including our ability to access capital markets), and our ability to develop, acquire, dispose or lease properties for our portfolio, is unknown and will depend on future developments, which are highly uncertain and cannot be predicted.

Our results of operations, liquidity and cash flows may continue to be materially affected.

The current COVID-19 pandemic has negatively affected and may continue to negatively affect our business, financial condition, liquidity and results of operations and those of our tenants.

Other pandemics or public health crises may have similar adverse impacts.

The COVID-19 pandemic has had, and likely will continue to have, repercussions across local, national and global economies and financial markets.

Our financial results for 2020 were materially adversely impacted by COVID-19.

During 2021, our business and financial results improved, and metrics such as average overall occupancy rates, traffic to our centers, sales reported by our tenants, and collections of rental revenues returned to near, at, or in some cases above, pre-pandemic levels.

Nevertheless, the extent to which the COVID-19 pandemic continues to impact our financial condition, results of operations and cash flows will depend on future developments which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the availability or effectiveness of vaccines or treatments, future mutations or variants of the virus, and the direct and indirect economic effects of the pandemic and containment measures, among others.

The impact of the COVID-19 pandemic on our rental revenue for the future cannot be determined at present.

The situation surrounding the COVID-19 pandemic remains fluid, and we are continuing to manage our response in collaboration with tenants, government officials and business partners and assessing potential impacts to our financial position and operating results, as well as potential adverse developments in our business.

The COVID-19 pandemic, or a future pandemic, could also have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:

• The reduced economic activity that could result in a prolonged recession and may consequently negatively impact consumer discretionary spending;

difficulty accessing debt and equity capital on attractive terms, or at all, deterioration in our credit ratings, a severe disruption and instability in the global financial markets or deterioration in credit and financing conditions may affect our access to capital necessary to fund business operations or address maturing liabilities on a timely basis and our tenants' ability to fund their business operations and meet their obligations to us.

• The financial impact of the COVID-19 pandemic could negatively impact our future compliance with financial covenants of our credit facility and other debt agreements and result in a default and potentially an acceleration of indebtedness, which non-compliance could negatively impact our liquidity.

• Any impairment in value of our tangible or intangible assets which could be recorded as a result of weaker economic conditions

During 2021 and 2022, our business and financial results improved, and metrics such as average overall occupancy rates, traffic to our centers, sales reported by our tenants, and collections of rental revenues returned to near, at, or in some cases above, pre-pandemic levels.

The COVID-19 pandemic, or a future pandemic or other public health crisis, could also have material and adverse effects on our ability to successfully operate and on our financial condition, results of operations and cash flows due to, among other factors:

• Reduced economic activity that could result in a prolonged recession and may consequently negatively impact consumer discretionary spending, which could impact our tenants' ability to fund their business operations and meet their obligations to us as well as reduce variable rents;

• Difficulty accessing debt and equity capital on attractive terms, or at all;

• Any inability to comply with financial covenants of our credit facility and other debt agreements which could result in a default and potentially an acceleration of indebtedness;

• Any impairment in value of our tangible or intangible assets;

• A general decline in business activity and demand for real estate transactions could adversely affect our ability or desire to grow our portfolio of properties or dispose of properties at a net gain, as applicable.

• A deterioration in our or our tenants' ability to operate in affected areas or delays in the supply of products or services to us or our tenants from vendors that are needed for our or our tenants' operations could adversely affect our operations and those of our tenants.

• A significant increase in the number of tenants that file for Chapter 11 bankruptcy;

adverse impacts from requiring employees to work remotely, such as reductions in productivity and heightened cybersecurity risks;

and the potential negative impact on the health of our personnel, particularly if a significant number of them are impacted, could result in a deterioration in our ability to ensure business continuity during this disruption.

• Requiring employees to work remotely and/or the potential negative impact on the health of our personnel could result in a deterioration in our ability to ensure business continuity.

Our earnings and therefore our profitability are dependent on rental income from real property.

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Accordingly, declines in these tenants' results of operations would reduce the income produced by our properties.

If the sales or profitability of our retail tenants decline sufficiently, whether due to a change in consumer preferences, legislative changes that increase the cost of their operations, supply chain issues or otherwise, such tenants may be unable to pay their existing rents as such rents would represent a higher percentage of their sales.

If the sales or profitability of our retail tenants decline sufficiently, whether due to a change in consumer preferences, the current macroeconomic environment, legislative changes that increase the cost of their operations, supply chain issues or otherwise, such tenants may be unable to pay their existing rents as such rents would represent a higher percentage of their sales.

Any resulting leasing delays, failures to make payments or tenant bankruptcies could result in the termination of such tenants' leases.

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Consumer spending habits have changed and may continue to evolve.

Certain retailers have experienced, and may continue to experience for the foreseeable future considerable decreases in customer traffic in their retail stores, increased competition from alternative retail options such as those accessible via the Internet and other forms of pressure on their business models.

Certain retailers have experienced, and may continue to experience for the foreseeable future considerable decreases in customer traffic in their retail stores, increased competition, and other forms of pressure on their business models.

As pressure on such retailers increases, their ability to maintain their stores, meet their obligations both to us and to their external lenders and suppliers, withstand takeover attempts by investors or rivals or avoid bankruptcy and/or liquidation may be impaired, adversely impacting our results of operations to the extent our revenues are dependent on variable revenue sources, and resulting in closures of their stores or their seeking a lease modification with us.

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Also, our success and the achievement of our goals are dependent upon our ability to attract and retain qualified employees.

We may from time to time be subject to litigation that could negatively impact our financial condition, cash flows, results of operations and the trading price of our Common Shares.

We may from time to time be a defendant in lawsuits and regulatory proceedings relating to our business.

Such litigation and proceedings may result in defense costs, settlements, fines or judgments against us, some of which may not be covered by insurance.

Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such litigation or proceedings.

An unfavorable outcome may result in our having to pay significant fines, judgments or settlements, which, if uninsured, or if exceeding insurance coverage, could adversely impact our financial condition, cash flows, results of operations and the trading price of our Common Shares.

Additionally, certain proceedings or the resolution of certain proceedings may affect the availability or cost of some of our insurance coverage and expose us to increased risks that would be uninsured.

See Note 21 to the consolidated financial statements, updated by our subsequent filings with the SEC, for a discussion of pending litigation, if any.

Risks Related to our Indebtedness and Financial Markets

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We might be subject to additional costs, such as transaction fees or breakage costs, if we terminate these arrangements.

Uncertainty relating to the determination of LIBOR and the phasing out of LIBOR after 2021, or, in certain cases, 2023, may adversely affect our results of operations, financial condition, liquidity and net worth.

As of December 31, 2021, we had $340.1 million of debt and 13 interest rate swaps with an aggregate notional value of $300.0 million outstanding that were indexed to the London Interbank Offered Rate (“LIBOR”).

In addition, we have a $520.0 million unsecured revolving line of credit facility that is indexed to LIBOR but had no borrowings under it.

LIBOR is subject to regulatory guidance and/or reform that could cause interest rates under our current or future debt agreements to perform differently than in the past or cause other unanticipated consequences.

Some tenors of LIBOR were discontinued on December 31, 2021 and the remaining tenors are expected to be discontinued on or after June 30, 2023.

The Secured Overnight Financing Rate (“SOFR”) and the Bloomberg Short-Term Bank Yield ("BSBY") have been proposed as alternatives to LIBOR.

We are monitoring and evaluating the risks related to potential changes in LIBOR availability, which include potential changes in interest paid on debt and amounts received and paid on interest rate swaps.

In addition, the value of debt or derivative instruments tied to LIBOR could also be impacted when LIBOR is limited or discontinued and contracts must be transitioned to a new alternative rate.

There is no guarantee that either SOFR or BSBY will become a widely accepted benchmark in place of LIBOR.

For some instruments, the method of transitioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.

If a contract is not transitioned to an alternative rate and LIBOR is discontinued, the impact on our contracts is likely to vary by contract.

While we expect most tenors of LIBOR to be available until 2023, it is possible that LIBOR will become unavailable prior to that time.

This could occur, for example, if a sufficient number of banks decline to make submissions to the LIBOR administrator.

In that case, the risks associated with the transition to an alternative reference rate would be accelerated and/or magnified.

Any of these events could have an adverse effect on our financing costs, and as a result, our financial condition, operating results and cash flows.

The market price of our common shares or other securities may fluctuate significantly in response to many factors.

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impairment charges affecting the carrying value of one or more of our outlet centers;

changes in the general retail environment;

changes in the general retail environment and macroeconomic conditions;

industry trends, such as consolidation;

shareholder activism and bankruptcy or brand-wide restructurings of retailers.

In addition, a large proportion of our common shares has been and may continue to be traded by short sellers which may put pressure on the supply and demand for our common shares.

We could face adverse consequences as a result of the actions of activist shareholders.

In recent years, proxy contests and other forms of shareholder activism have been directed against numerous public companies.

Shareholders may engage in proxy solicitations, advance shareholder proposals, or otherwise attempt to effect changes in or acquire control over us.

Campaigns by shareholders to effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term shareholder value through actions such as financial restructuring, increased debt, special dividends, share repurchases, or sales of assets or the entire company.

Shareholder activists may also seek to involve themselves in the governance, strategic direction and operations of the company.

If a shareholder, by itself or in conjunction with other shareholders or as part of a group, engages in activist activities with respect to us, our business could be adversely affected because responding to proxy contests and other actions by activist shareholders can be costly and time-consuming, potentially disrupting operations and diverting the attention of our Board of Directors, senior management and employees from the execution of business strategies.

In addition, perceived uncertainties as to our future direction might result in the loss of potential business opportunities and harm our ability to attract new tenants, customers and investors.

If individuals are elected to our Board of Directors with a specific agenda, it might adversely affect our ability to effectively and timely implement our strategies and initiatives and to retain and attract experienced executives and employees.

Finally, we might experience a significant increase in legal fees and administrative and associated costs incurred in connection with responding to a proxy contest or related action.

These actions could also negatively affect our share price.

Risks Related to Federal Income Tax Laws

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Our information technology systems have been and may in the future be attacked or breached by individuals or organizations intending to obtain sensitive data regarding our business, customers, employees, tenants or other third parties with whom we do business or disrupt our business operations and information technology systems.

While we maintain some of our own critical information technology systems, we also depend on third-party providers for important information technology software, products and services relating to several key business functions, such as payroll, electronic communications and certain accounting and finance functions.

Many of these providers have likewise experienced and expect to continue to experience cyberattacks and other security incidents.

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In addition, we use our information technology systems to protect confidential or sensitive customer, employee and Company information developed and maintained in the normal course of our business.

Certain of these systems have been attacked, and any attack on such systems that results in the unauthorized release or loss of customer, employee or other confidential or sensitive data could have a material adverse effect on our business reputation, increase our costs of remediation and compliance (particularly in light of increased regulation of corporate data privacy and cybersecurity practices) and expose us to material legal claims and liability by private litigants and regulatory agencies.

If the unauthorized release or loss of customer, employee or other confidential or sensitive data were to occur, our operations and financial results and our share price could also be adversely affected.

Our measures to prevent, detect and mitigate cyber threats, including password protection, firewalls, backup servers, threat monitoring and periodic penetration testing, may not be successful in preventing a data breach or limiting the effects of a breach.

Furthermore, the security measures employed by third-party service providers may prove to be ineffective at preventing breaches of their systems.

Furthermore, the security measures employed by third-party service providers may prove to be ineffective at preventing breaches of their systems, which in turn may impact our business and operations.

We expect the frequency and intensity of cyberattacks to escalate in the future, particularly as threat actors become more sophisticated, for example, by deploying tools and techniques that are specifically designed to circumvent controls, to evade detection, and even to remove or obfuscate forensic evidence, all of which impedes our ability to detect, identify, investigate and remediate against cyberattacks.

Continued remote and hybrid working arrangements also present additional cybersecurity risks given the prevalence of social engineering and vulnerabilities that are inherent in many non-corporate and home networks.

In addition, laws, regulations, regulatory frameworks and industry standards related to cybersecurity and data privacy issues are developing rapidly, which may pose complex compliance challenges, lead to increased costs and potentially subject us to liability for violations.

While we carry insurance related to cybersecurity events, our policies may not cover all of the costs and liabilities that could be incurred as the result of cyberattack or other security incident.

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

What changed 10-K

Item 1A. Risk Factors