What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-27 compared with 2022-02-22 · 160 added, 227 removed, 542 unchanged (42% of the section changed)

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We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995 and included this statement for purposes of complying with these safe harbor provisions.

Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies, beliefs and expectations, are generally identifiable by use of the words “anticipate,” “believe,” “can,” “continue,” “could,” “designed,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or similar expressions.

Such forward-looking statements include, but are not limited to, statements regarding:

the expected impact of the novel coronavirus (“COVID-19”) pandemic on our business, financial results and financial condition;

the expected impact of the novel coronavirus (“COVID-19”) pandemic, supply chain and labor issues and rising interest rates on our business, financial results and financial condition;

our ability to raise additional capital, including via future issuances of equity and debt, and the use of proceeds from such issuances;

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the possibility of future asset impairments;

potential developments, expansions, renovations, acquisitions or dispositions of outlet centers;

potential developments, expansions, renovations, acquisitions or dispositions of outlet centers, including our Nashville development;

compliance with debt covenants;

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our inability to develop new outlet centers or expand existing outlet centers successfully;

risks related to the economic performance and market value of our outlet centers;

risks related to the economic performance and market value of our outlet centers, including due to changes in the national, regional and local economic climate, inflation and rising interest rates;

the relative illiquidity of real property investments;

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risk associated with a possible terrorist activity or other acts or threats of violence, public health crises and threats to public safety;

risks associated with supply chain disruptions and labor shortages;

our dependence on rental income from real property;

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the risk of a cyber-attack or an act of cyber-terrorism;

as well as the other risks described in “Item 1A-Risk Factors” in Part I of this Annual Report on Form 10-K..

We qualify all of our forward-looking statements by these cautionary statements.

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Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

For a further discussion of the risks relating to our business, see “Item 1A-Risk Factors” in Part I of this Annual Report on Form 10-K.

The following discussion should be read in conjunction with the consolidated financial statements appearing elsewhere in this report.

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• Leasing Activity

• COVID-19 Pandemic

• Results of Operations

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General Overview

As of December 31, 2021, we had 30 consolidated outlet centers in 18 states totaling 11.5 million square feet.

As of December 31, 2022, we had 29 consolidated outlet centers in 18 states totaling 11.4 million square feet, one managed center and one center under construction.

We also had 6 unconsolidated outlet centers totaling 2.1 million square feet, including 2 outlet centers in Canada.

The table below details our acquisitions, new developments, expansions and dispositions of consolidated and unconsolidated outlet centers that significantly impacted our results of operations and liquidity from January 1, 2019 to December 31, 2021:

Consolidated Outlet Centers Unconsolidated Joint Venture Outlet Centers

The table below details our acquisitions, new developments, expansions and dispositions of consolidated and unconsolidated outlet centers that impacted our results of operations and liquidity from January 1, 2020 to December 31, 2022:

Consolidated Outlet Centers Unconsolidated Joint Venture Outlet Centers Managed Centers

Outlet Center Quarter Acquired/Open/Disposed/Demolished Square Feet (in thousands) Number of

Outlet Centers Square Feet (in thousands) Number of

Outlet Centers

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Dispositions:

Nags Head First Quarter (82) (1) — —

Ocean City First Quarter (200) (1) — —

Park City First Quarter (320) (1) — —

Williamsburg First Quarter (276) (1) — —

Bromont Second Quarter — — (161) (1)

Terrell, Texas Third Quarter (178) (1) — — — —

Other 3 — — — — —

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Dispositions:

Terrell Third Quarter (178) (1) — —

Jeffersonville, Ohio First Quarter (412) (1) — — — —

Saint Sauveur, Quebec First Quarter — — (99) (1) — —

Other (8) — — — — —

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Dispositions:

Jeffersonville First Quarter (412) (1) — —

Saint Sauveur First Quarter (99) (1)

Blowing Rock, North Carolina Fourth Quarter (104) (1) — — — —

Palm Beach, Florida Third Quarter — — — — 457 1

Other 4 — — —

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Leasing Activity

In 2021, we revised our rent spread presentation from a commenced basis to executed basis and we are presenting it for comparable and non- comparable space.

Comparable space excludes leases for space that was vacant for more than 12 months (non-comparable space).

We believe that this presentation provides additional information and improves comparability to other retail REITs.

Prior period results have been revised to conform with the current period presentation.

The following table provides information for our consolidated outlet centers related to leases for new stores that opened or renewals that were executed during the years ended December 31, 2022 and 2021, respectively:

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COVID-19 Pandemic

Due to the COVID-19 pandemic, a number of our tenants requested rent deferrals, rent abatements or other types of rent relief during this pandemic.

Due to the COVID-19 pandemic, a number of our tenants requested rent deferrals, rent abatements or other types of rent relief during this pandemic in 2020.

As a response, in late March 2020, we offered all tenants in our consolidated portfolio the option to defer 100% of April and May rents interest free, payable in equal installments due in January and February of 2021.

As of December 31, 2021, contractual fixed rents billed during 2020 that were deferred as a direct result of the COVID-19 pandemic and remain outstanding totaled $82,000.

Through December 31, 2021, the Company had collected 99% of the 2020 deferred rents due to be repaid during the year ended December 31, 2021.

Through December 31, 2022, the Company had collected 99% of the 2020 deferred rents.

The extent of future tenant requests for rent relief and the impact on our results of operations and cash flows is uncertain and cannot be predicted at this time.

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2022 Compared to 2021

Net income (loss)

Net income increased $47.6 million in the 2021 period to a net income of $9.6 million as compared to a net loss of $38.0 million for the 2020 period.

Net income increased $76.3 million in the 2022 period to a net income of $85.8 million as compared to net income of $9.5 million for the 2021 period.

The increase in net income is primarily due to the following:

• 2020 was impacted by the COVID-19 pandemic and had significant revenue reductions

• variable revenue derived from tenant sales was significantly higher in 2021 as the COVID-19 pandemic impacted traffic to our centers in the 2020 period and our centers operated under reduced hours.

• the 2020 period included $64.8 million in impairment charges recognized on the outlet center in Mashantucket, Connecticut and a $2.4 million impairment charge recognized on the outlet center in Jeffersonville, Ohio, and

• the 2020 period included our share of an impairment charge totaling $3.1 million in equity in earnings that related to the Saint-Sauveur, Quebec outlet center in our Canadian joint venture.

The increase in net income was partially offset by the following:

• 2021 included $7.0 million in impairment charges recognized on the outlet center in Mashantucket, Connecticut,

• the 2021 period included a loss on the early extinguishment of debt of $47.9 million related to the redemption of all of our bonds due in 2023 and 2024,

• in the current period we recorded a foreign currency loss of approximately $3.6 million in other income (expense), which had been previously recorded in other comprehensive income associated with the sale the outlet center in Saint-Sauveur held in our RioCan joint venture

• the $9.9 million decrease in lease termination fees compared to the prior year,

• the loss in revenues from the sale of our two centers in 2020 and 2021 described below, and

• the 2020 period included a $2.3 million gain recorded on the sale of our Terrell outlet center.

In the tables below, information set forth for properties disposed includes the Terrell outlet center sold in August 2020 and the Jeffersonville outlet center sold in January 2021.

• increase in average portfolio occupancy rate from 93% to 95%,

• gain on sale of assets in the 2022 period of $3.2 million from the sale in December 2022 of our Blowing Rock, North Carolina outlet center,

• decrease in interest expense from the full year impact of the refinance of $400 million of unsecured debt during the third quarter of 2021 at a rate of 2.75%, along with the full year impact of debt reductions during 2021 using the proceeds from equity issuances during the first half of 2021.

• the prior year included a loss on the early extinguishment of debt of $47.9 million, and a $7.0 million impairment charge recognized on the outlet center in Mashantucket, Connecticut.

In the tables below, information set forth for properties disposed includes the Jeffersonville outlet center sold in January 2021 and the Blowing Rock outlet center sold in December 2022.

Rental Revenues

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$ 421,419 $ 407,766 $ 13,653

Rental revenues from existing properties in the prior year period included the impact of a $40.1 million COVID-19 pandemic-related revenue reduction.

In addition, variable revenues, which are derived from tenant sales, were higher in the 2021 period as a result of the impact of the COVID-19 pandemic on the 2020 period, which included mandated store closures by local and state authorities during the second quarter, continued lower traffic levels to our centers in the third quarter and to the centers operating under reduced hours.

The 2020 period includes a higher amount of lease termination fees from certain early lease terminations as a result of a significant amount of space recaptured due to bankruptcies and brand-wide restructuring in the 2020 period.

In addition, in the prior year, we recognized a write-off of revenue of approximately $7.2 million of straight-line rents associated with the tenant bankruptcies and uncollectible accounts.

Rental revenues increased primarily due to growth in occupancy and rental rates in 2022.

Our average occupancy increased from 93% to 95% from 2021 to 2022.

Additionally, rental revenues were also impacted by the net reversal of revenue reserves in the 2022 period of approximately $4.1 million, compared to $1.2 million of net reserves recorded in 2021.

Additionally, the 2022 period included the acceleration of amortization of an above market lease intangible for one tenant of approximately $1.0 million.

Management, Leasing and Other Services

Management, leasing and other services increased $1.5 million in the 2021 period compared to the 2020 period.

Management, leasing and other services increased $746,000 in the 2022 period compared to the 2021 period.

The following table sets forth the changes in various components of management, leasing and other services (in thousands):

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Leasing and other fees 194 228 (34)

Expense reimbursements from unconsolidated joint ventures 3,836 3,017 819

Expense reimbursements from unconsolidated joint ventures and managed properties 4,432 3,836 596

Total Fees $ 7,157 $ 6,411 $ 746

Management, leasing and other service revenue increased in the 2021 period due to the prior year impact of the COVID-19 pandemic.

The COVID-19 pandemic resulted in materially lower rental revenues received during the 2020 period which resulted in lower management fees.

In addition, expense reimbursements from unconsolidated joint ventures were higher in the 2021 period as our centers operated under reduced hours during 2020 as a result of the COVID-19 pandemic.

Management, leasing and other service revenue increased in the 2022 period due to the addition of property management and leasing responsibilities for a center in Palm Beach, Florida.

Other Revenues

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$ 14,037 $ 12,348 $ 1,689

Other revenues from existing properties increased in the 2021 period due to the prior year impact of the COVID-19 pandemic and our focus on increasing other revenue streams in 2021 The 2020 period included large reductions in the variable vending and other revenue sources due to the mandatory store closures by local and state authorities for a portion of the 2020 period discussed above, as well as the COVID-19 pandemic impacting traffic to our centers and the centers operating under reduced hours.

Other revenues from existing properties increased in the 2022 period due an increase in other revenue streams, such as paid media, sponsorships and onsite signage, on a local and national level.

Property Operating Expenses

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Property operating expenses from property disposed 962 (170) 1,132

Expenses related to unconsolidated joint ventures 3,837 3,017 820

Expenses related to unconsolidated joint ventures and managed properties 4,432 3,836 596

Other property operating expense 1,906 2,312 (406)

$ 143,936 $ 140,736 $ 3,200

Property operating expenses at existing properties increased in the 2021 period compared to the 2020 period primarily due to the lower costs needed to operate and advertise the centers while stores were closed under government mandates in response to the COVID-19 pandemic in 2020, as well as operating the centers under reduced hours when the stores reopened during the 2020 period.

Property operating expenses from properties disposed for the 2021 period includes $1.7 million in net proceeds received from the successful appeal of property taxes for tax years prior to disposition.

Property operating expenses at existing properties increased in the 2022 period compared to the 2021 period primarily due to an increase in property insurance and property taxes.

Property operating expenses from properties disposed for the 2021 period includes $1.7 million in net proceeds received from the successful appeal of property taxes for certain tax years prior to disposition.

General and Administrative Expenses

General and administrative expenses increased $5.7 million in the 2022 period compared to the 2021 period.

The 2021 period includes higher compensation costs due to the addition of certain executives and other key employees added to drive operational and growth initiatives and increases in other professional and legal fees, some of which are related to collection of rents from periods during the COVID-19 mandated shut downs.

The 2020 period included temporary reductions in compensation costs of our executive officers and other employees and virtually all travel and entertainment expenses were eliminated following the onset of the pandemic.

In addition, 2021 includes compensation cost related to employees that accepted a voluntary retirement plan with an effective retirement date of March 31, 2021, as well as other executive severance costs incurred during 2021, totaling $3.6 million.

The 2022 period includes higher compensation costs due to the addition of certain executives and other key employees during the second half of 2021 and during 2022 to drive operational and growth initiatives, which led to increased costs in 2022.

In addition, 2022 includes executive severance costs, totaling $2.4 million.

The 2021 period includes compensation cost related to employees that accepted a voluntary retirement plan with an effective retirement date of March 31, 2021, as well as other executive severance costs incurred during 2021, totaling $3.6 million.

Finally, travel costs have increased compared to 2021 with the decrease in restrictions from COVID-19 and other corporate employee benefit costs have increased as well.

Impairment Charges

During the first quarter and fourth quarter of 2020 and the fourth quarter of 2021, we determined that the estimated future undiscounted cash flows of our Foxwoods outlet center in Mashantucket, Connecticut did not exceed the property's carrying value due to a continuing decline in operating results.

Therefore, we recorded $64.8 million and $7.0 million of non-cash impairment charges in our consolidated statement of operations for both 2020 and 2021, respectively, which equaled the excess of the property's carrying value over its estimated fair value.

In addition, in 2020, we recorded a $2.4 million impairment charge on the outlet center in Jeffersonville, Ohio.

During the fourth quarter of 2021, we determined that the estimated future undiscounted cash flows of our Foxwoods outlet center in Mashantucket, Connecticut did not exceed the property's carrying value due to a continuing decline in operating results.

Therefore, we recorded $7.0 million of non-cash impairment charges in our consolidated statement of operations for 2021, which equaled the excess of the property's carrying value over its estimated fair value.

There were no impairment charges in 2022.

Depreciation and Amortization

Depreciation and amortization expense decreased $7.1 million in the 2021 period compared to the 2020 period.

Depreciation and amortization expense increased $1.9 million in the 2022 period compared to the 2021 period.

The following table sets forth the changes in various components of depreciation and amortization costs from the 2021 period to the 2022 period (in thousands):

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$ 111,904 $ 110,008 $ 1,896

Depreciation and amortization decreased at our existing properties due to the lower basis in our Foxwoods property due to impairments recorded in the first and fourth quarters of 2020, and due to tenant improvements and lease related intangibles, which are amortized over shorter lives, in other parts of the portfolio becoming fully depreciated during the reporting periods.

During 2022, we adjusted the useful lives of our solar assets from twenty years to ten years, resulting in an incremental $4.4 million of depreciation expense.

Excluding this change, our depreciation would have decreased

due primarily to tenant improvements becoming fully depreciated and a decrease in our redevelopment activity.

Interest Expense

Interest expense decreased $10.3 million in the 2021 period compared to the 2020 period for the following reasons:

• In August 2021, we completed a public offering of $400.0 million in senior notes due 2031 in an underwritten public offering.

The notes were priced at 98.552% of the principal amount to yield 2.917% to maturity.

The notes pay interest semi-annually at a rate of 2.750% per annum and mature on September 1, 2031.

• During 2021, we completed the early redemption of $250.0 million of our 3.875% senior notes due December 2023 and $250.0 million of our 3.75% senior notes due 2024.

• During 2021, we paid down $50.0 million of borrowings under our unsecured term loan.

• Interest rate swap agreements in place during the 2021 period had lower average interest rates compared to the 2020 period.

• The 2020 period included interest expense related to borrowing in March 2020 approximately $599.8 million under our unsecured lines of credit to increase liquidity and preserve financial flexibility as a result of the COVID-19 pandemic.

In June 2020, we repaid $200.0 million of these borrowings, and by August 2020, we had repaid the entire $599.8 million outstanding balance bringing the outstanding balance to zero as of December 31, 2020.

During the 2021 period, we had no borrowings under our unsecured lines of credit.

Interest expense decreased $5.9 million in the 2022 period compared to the 2021 period primarily because during August and September 2021, we completed a public offering of $400.0 million of 2.750% 10 year senior notes and completed the early redemption of $100.0 million of 3.875% senior notes due in 2023 and $250.0 million of 3.75% senior notes due in 2024, redeemed $150.0 million of senior notes in April 2021 and repaid $50.0 million of our term loan, reducing our average interest rate.

In addition, proceeds from our 2021 equity offerings were used to reduce debt in 2021, also contributing to a reduction of interest expense in 2022.

Loss on Early Extinguishment of Debt

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Gain on Sale of Assets

In August 2020, we sold a non-core outlet center in Terrell, Texas for net proceeds of $7.6 million, which resulted in a gain on sale of assets of $2.3 million.

The proceeds from the sale of this unencumbered asset were used to pay down balances outstanding under our unsecured lines of credit.

In December 2022, we sold a non-core outlet center in Blowing Rock, North Carolina for net proceeds of $12.4 million, which resulted in a gain on sale of assets of $3.2 million.

We did not have a gain or loss on the sale of our Jeffersonville, Ohio asset in 2021.

Other Income (Expense)

Other income (expense) decreased approximately $2.5 million in the 2021 period compared to the 2020 period.

In March 2021, the RioCan joint venture closed on the sale of its outlet center in Saint-Sauveur, for net proceeds of approximately $9.4 million.

Other income (expense) increased approximately $7.6 million in the 2022 period compared to the 2021 period, primarily due to a $2.4 million gain on sale of a non-real estate asset and higher investment income on our cash and cash equivalents from opportunities available in the current rising interest rate environment.

Also, in March 2021, the RioCan joint venture closed on the sale of its outlet center in Saint-Sauveur, for net proceeds of approximately $9.4 million.

Our share of the proceeds was approximately $4.7 million.

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Equity in Earnings (Losses) of Unconsolidated Joint Ventures

Equity in earnings (losses) of unconsolidated joint ventures increased approximately $7.8 million in the 2021 period compared to the 2020 period.

Equity in earnings (losses) of unconsolidated joint ventures decreased approximately $310,000 in the 2022 period compared to the 2021 period.

In the table below, information set forth for property disposed includes the Saint-Sauveur, Quebec outlet center in our Canadian joint venture, which was sold in March 2021.

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$ 8,594 $ 8,904 $ (310)

Equity in earnings (losses) of unconsolidated joint ventures from existing properties increased due to the impact of COVID-19 on revenues in the previous year.

Equity in earnings (losses) from properties disposed includes our share of an impairment charge totaling $3.1 million in the 2020 period related to the Saint-Sauveur, Quebec outlet center in our Canadian joint venture.

The impairment charge was primarily driven by deterioration of net operating income caused by market competition and the COVID-19 pandemic.

Equity in earnings (losses) of unconsolidated joint ventures from existing properties decreased primarily due to the increase in variable interest rates in 2022 that negatively impacted two of our joint ventures that had variable rate mortgages.

In addition, the variable interest mortgage for our Columbus, Ohio joint venture was refinanced in September 2022 and now has a fixed interest rate of 6.25% compared to LIBOR + 1.85%.

2021 Compared to 2020

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The Company's principal source of funding for its dividend payments is distributions it receives from the Operating Partnership.

Through its ownership of the sole general partner of the Operating Partnership, the Company has the full, exclusive and complete responsibility for the Operating Partnership's day-to-day management and control.

Through its status as the sole general partner of the Operating Partnership, the Company has the full, exclusive and complete responsibility for the Operating Partnership's day-to-day management and control.

The Company causes the Operating Partnership to distribute all, or such portion as the Company may in its discretion determine, of its available cash in the manner provided in the Operating Partnership's partnership agreement.

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However, the Company's only material asset is its investment in the Operating Partnership.

The Company believes the Operating Partnership's sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured credit facilities, are adequate for it to make its distribution payments to the Company and, in turn, for the Company to make its dividend payments to its shareholders and to finance its continued operations, growth strategy and additional expenses we expect to incur.

The Company believes the Operating Partnership's sources of working capital, specifically its cash flow from operations, and borrowings available under its unsecured credit facilities, are adequate for it to make its distribution payments to the Company and, in turn, for the Company to make its dividend payments to its shareholders and to finance its continued operations, investment and growth strategy and additional expenses we expect to incur.

However, there can be no assurance that the Operating Partnership's sources of capital will continue to be available at all or in amounts sufficient to meet its needs, including its ability to make distribution payments to the Company.

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While historically the Company has satisfied this distribution requirement by making cash distributions to its shareholders, it may choose to satisfy this requirement by making distributions of cash or other property, including, in limited circumstances, the Company's own shares.

Based on our 2021 estimated taxable loss, we were not required make a distribution to our shareholders in order to maintain our REIT status as described above.

For tax reporting purposes, we distributed approximately $83.1 million during 2022.

Given the uncertainty related to the pandemic’s near and potential long-term impact, in May 2020 the Company’s Board of Directors temporarily suspended dividend distributions to conserve approximately $35.0 million in cash per quarter and preserve our balance sheet strength and flexibility.

Beginning in January 2021, the Board reinstated dividend distributions and declared and paid dividends on a quarterly basis for the year ended December 31, 2021.

On January 13, 2022, the Board declared a dividend of $0.1825 per share paid in February 2022.

The Board continues to evaluate the potential for future dividend distributions on a quarterly basis.

If in any taxable year the Company were to fail to qualify as a REIT and certain statutory relief provisions were not applicable, we would not be allowed a deduction for distributions to shareholders in computing taxable income and would be subject to U.S.

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Because the Company consolidates the Operating Partnership, the section entitled "Liquidity and Capital Resources of the Operating Partnership" should be read in conjunction with this section to understand the liquidity and capital resources of the Company on a consolidated basis and how the Company is operated as a whole.

Under our ATM Offering program, which commenced in February 2021, we may offer and sell our common shares, $0.01 par value per share (“Common Shares”), having an aggregate gross sales price of up to $250.0 million (the “Shares”).

Under our at-the-market stock offering (“ATM Offering”) program, which commenced in February 2021, we may offer and sell our common shares, $0.01 par value per share (“Common Shares”), having an aggregate gross sales price of up to $250.0 million (the “Shares”).

We may sell the Shares in amounts and at times to be determined by us but we have no obligation to sell any of the Shares.

Actual sales, if any, will depend on a variety of factors to be determined by us from time to time, including, among other things, market conditions, the trading price of the Common Shares, capital needs and determinations by us of the appropriate sources of its funding.

We currently intend to use the net proceeds from the sale of shares pursuant to the ATM Offering for working capital and general corporate purposes.

We currently intend to use the net proceeds from any sale of shares pursuant to the ATM Offering for working capital and general corporate purposes.

As of December 31, 2022, we had approximately $60.1 million remaining available for sale under our ATM Offering program.

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In May 2021, the Company’s Board of Directors authorized the repurchase of up to $80.0 million of the Company’s outstanding shares through May 31, 2023.

This authorization replaced a previous repurchase authorization for approximately $80.0 million that expired in May 2021.

In June 2020, we amended our debt agreements primarily to improve future covenant flexibility and such amendments included a prohibition on share repurchases for twelve months starting July 1, 2020 (the “Repurchase Covenant”).

The Company temporarily suspended share repurchases for at least the twelve months starting July 1, 2020 and ending on June 30, 2021 in light of the Repurchase Covenant.

On July 1, 2021, the Repurchase Covenant expired.

Repurchases may be made from time to time through open market, privately-negotiated, structured or derivative transactions (including accelerated share repurchase transactions), or other methods of acquiring shares.

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The Company may, from time to time, enter into Rule 10b5-1 plans to facilitate the repurchase of its shares under this authorization.

The Company did not repurchase any shares for the year ended December 31, 2021 and 2020.

The Company did not repurchase any shares during the years ended December 31, 2022, 2021 and 2020.

The remaining amount authorized to be repurchased under the program as of December 31, 2022 was approximately $80.0 million.

Shares repurchased during the years ended December 31, 2021, 2020 and 2019 were as follows:

2021 2020 2019

Total number of shares purchased — — 1,209,328

Average price paid per share $ — $ — $ 16.52

Total price paid exclusive of commissions and related fees (in thousands) $ — $ — $ 19,976

In January 2023, the Company's Board of Directors declared a $0.22 cash dividend per common share payable on February 15, 2023 to each shareholder of record on January 31, 2023, and a $0.22 cash distribution per Operating Partnership unit to the Operating Partnership's unitholders.

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We believe we achieve a strong and flexible financial position by attempting to:

(1) maintain a conservative leverage position relative to our portfolio when pursuing new development, expansion and acquisition opportunities, (2) extend and sequence debt maturities, (3) manage our interest rate risk through a proper mix of fixed and variable rate debt, (4) maintain access to liquidity by using our lines of credit in a conservative manner and (5) preserve internally generated sources of capital by strategically divesting of our non-core assets and maintaining a conservative distribution payout ratio.

We manage our capital structure to reflect a long-term investment approach and utilize multiple sources of capital to meet our requirements, including without limitation issuances of equity under our ATM program.

(1) maintain a conservative leverage position relative to our portfolio when pursuing new development, expansion and acquisition opportunities, (2) extend and sequence debt maturities, (3) manage our interest rate risk through an appropriate mix of fixed and variable rate debt and interest rate hedging strategies, (4) maintain access to liquidity by using our lines of credit in a conservative manner and (5) preserve internally generated sources of capital by maintaining a conservative distribution payout ratio.

We manage our capital structure to reflect a long-term investment approach and utilize multiple sources of capital to meet our requirements, including without limitation, cash on hand, retained free cash flow and debt and equity issuances.

Capital Expenditures

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Renovations 369 761 (392)

761 5,505 (4,744)

Second generation tenant allowances (2)

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Additions to rental property-cash basis $ 77,310 $ 45,186 $ 32,124

(1) New outlet center developments and expansions in the 2021 period included a land acquisition at our Westgate outlet center.

(2) Major outlet center renovations in the 2020 period included costs related to bringing two magnet tenants to our Lancaster outlet center.

(3) In the 2021 period, second generation tenant allowances are presented net of $3.3 million tenant allowance reversals, which were the result of a lease modification.

(4) The increase in other capital expenditures in 2021 was primarily due to our decision in 2020 to defer all capital projects except essential and life-safety projects, due to the impact on cash flows caused by the COVID-19 pandemic.

We expect total capital expenditures for 2022 to be approximately $125.0 million as compared to capital expenditures of $45.2 million in 2021.

Based on our liquidity we expect to fund these capital expenditures in 2022.

(1) New outlet center developments and expansions in the 2022 period primarily due to development costs at our site in Nashville, TN.

The 2021 period included a land acquisition at our Westgate outlet center.

(2) In the 2022 and 2021 periods, second generation tenant allowances are presented net of $1.5 million and $3.3 million tenant allowance reversals respectively, which were the result of a lease modifications.

(3) The increase in other capital expenditures in 2022 was primarily related to our ongoing solar initiatives.

Other capital expenditures includes capital expenditures related to recurring and value-enhancing capital activities.

We expect total capital expenditures for 2023 to be approximately $210 million as compared to capital expenditures of $77.3 million in 2022 driven primarily by approximately $110 million of anticipated development costs to complete our site in Nashville, Tennessee.

We expect to maintain sufficient liquidity to fund these capital expenditures.

Potential Future Developments, Acquisitions and Dispositions

As of the date of this filing, we are in the initial study period for potential new developments, including a potential site in Nashville, Tennessee.

We may also use joint venture arrangements to develop other potential sites.

However, there can be no assurance that these potential future projects will ultimately be developed.

In the case of projects to be wholly-owned by us, we expect to fund these projects with borrowings under our unsecured lines of credit and cash flows from operations, but may also fund them with capital from additional public debt and equity offerings.

As of the date of this filing, we are not in the pre-development period for any potential new developments.

We may use joint venture arrangements to develop potential sites.

We expect to maintain sufficient liquidity to fund existing capital expenditures, including completion of our Nashville, Tennessee asset.

In the case of projects to be wholly-owned by us, we expect to fund these projects with cash on hand, borrowings under our unsecured lines of credit and cash flows from operations, but may also fund them with capital from additional public debt and equity offerings.

For projects to be developed through joint venture arrangements, we may use collateralized construction loans to fund a portion of the project, with our share of the equity requirements funded from sources described above.

We intend to continue to grow our portfolio by developing, expanding or acquiring additional outlet centers.

We intend to continue to grow our portfolio by developing, expanding or acquiring additional retail real estate assets.

Future retail real estate assets may be wholly-owned by us, owned through joint ventures or partnership arrangements, or through management agreements.

However, you should note that any developments or expansions that we, or a joint venture that we have an ownership interest in, have planned or anticipated may not be started or completed as scheduled, or may not result in accretive net income or funds from operations ("FFO").

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Unconsolidated Real Estate Joint Ventures

From time to time, we form joint venture arrangements to develop outlet centers.

From time to time, we form joint venture arrangements to develop or acquire outlet centers.

As of December 31, 2022, we have partial ownership interests in six unconsolidated outlet centers totaling approximately 2.1 million square feet, including two outlet centers in Canada.

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We separately report investments in joint ventures for which accumulated distributions have exceeded investments in, and our share of net income or loss of, the joint ventures within other liabilities in the consolidated balance sheets because we are committed and intend to provide further financial support to these joint ventures.

We believe our joint ventures will be able to fund their operating and capital needs during 2022 based on their sources of working capital, specifically cash flow from operations, access to contributions from partners, and ability to refinance all or portion of its debt obligations, including the ability to exercise upcoming extensions of near term maturities.

We believe our joint ventures will be able to fund their operating and capital needs during 2023 based on their sources of working capital, specifically cash flow from operations, access to contributions from partners, and ability to refinance all or portion of their debt obligations, including the ability to exercise upcoming extensions of near term maturities.

Our joint ventures are typically encumbered by a mortgage on the joint venture property.

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Future Debt Obligations

As described further in Note 8 of the notes to the consolidated financial statements, as of December 31, 2021, scheduled maturities of our existing long-term debt for 2022, 2023, 2024, 2025 and 2026 are $4.4 million, $44.9 million, $305.1 million, $1.5 million and $355.7 million, respectively.

As described further in Note 8 of the notes to the consolidated financial statements, as of December 31, 2022, scheduled maturities and principal amortization of our existing debt for 2023, 2024, 2025, 2026 and 2027 are $4.8 million, $5.1 million, $1.5 million, $407.4 million and $625.0 million, respectively.

As of December 31, 2022, scheduled maturities after 2027 aggregate to $400.0 million.

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We are obligated to make periodic interest payments at fixed and variable rates, depending on the terms of the applicable debt agreements.

Based on applicable interest rates and scheduled debt maturities as of December 31, 2021, these interest obligations total approximately $239.1 million and range from approximately $30.2 million to $41.1 million on an annual basis over the next five years.

Based on applicable interest rates, forward curve estimates, and scheduled debt maturities as of December 31, 2022, these interest obligations total approximately $253.4 million and range from approximately $18.4 million to $53.2 million on an annual basis over the next five years.

Operating Lease Obligations

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These obligations range from approximately $1.3 million to $1.5 million on an annual basis over the next five years.

The majority of these contractual obligations relate to our solar initiative and installation of electric vehicle charging stations in 2022.

The following table sets forth our changes in cash flows from 2022 and 2021 (in thousands):

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Operating Activities

The increase in net cash provided by operating activities was primarily due to the collection of rent deferred from April and May of 2020 during the beginning of the COVID-19 pandemic.

These rents were payable during 2021, the majority of which was due in the first quarter of 2021.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic.” In addition, our cash collections normalized during 2021, whereas the second and third quarters of 2020 had uncollected and deferred contractual rents as a result of COVID-19.

The decrease in net cash provided by operating activities was primarily due to changes in working capital, offset by an increase in rental revenues primarily due to an increase in occupancy rates and increase in rental rates,

Investing Activities

The primary cause for the increase in net cash used in investing activities was due to additions in rental property, additions to non-real estate assets, and additions to deferred lease costs, which was offset by increased distributions in excess of cumulative earnings from unconsolidated joint ventures.

The primary cause for the increase in net cash used in investing activities was due to the purchase of land at our new center in Nashville, Tennessee, paired with construction costs related to increased additions to rental properties during 2022 and increase in short-term investments.

The 2021 period included net proceeds of approximately $8.1 million received from the sale of our Jeffersonville outlet center, while the 2022 period included lower distributions in excess of cumulative earnings from unconsolidated joint ventures and net proceeds of approximately $12.4 million related to the sale of the property in Blowing Rock, North Carolina.

Financing Activities

The primary cause for the increase in net cash used in financing activities was due to early redemption of $250.0 million of our 3.875% senior notes due December 2023 and $250.0 million of our 3.75% senior notes due 2024, including make whole premiums of $44.9 million.

The primary cause for the decrease in net cash used in financing activities was the increase in the term loan borrowing capacity and the Southaven mortgage increased capacity, in addition to the early redemption in 2021 of $250.0 million of our 3.875% senior notes due December 2023 and $250.0 million of our 3.75% senior notes due 2024, including make whole premiums of $44.9 million.

In addition, in March 2021 and June 2021, we paid down a total of $50.0 million of borrowings under our unsecured term loan with cash on hand.

We also had higher dividend payments in 2021 compared to 2020.

The increase in net cash used in financing activities was partially offset by proceeds received during 2021 from our August 2021 public offering of $400.0 million in senior notes due 2031 and sales of commons shares under our ATM Offering program generating net proceeds of approximately $187.0 million.

This was offset by higher dividend payments in 2022 compared to 2021.

Financing Arrangements

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The Company and Operating Partnership are well-known seasoned issuers with a joint shelf registration statement on Form S-3, expiring in February 2024, that allows us to register unspecified amounts of different classes of securities.

To generate capital to reinvest into other attractive investment opportunities, we may also consider the use of additional operational and developmental joint ventures, the sale or lease of outparcels on our existing properties and the sale of certain properties that do not meet our long-term investment criteria.

To generate capital to reinvest into other attractive investment opportunities, we may also consider the use of additional operational and developmental joint ventures, property management opportunities, the sale or lease of outparcels on our existing properties and the sale of certain properties that do not meet our long-term investment criteria.

Based on cash provided by operations, existing lines of credit, ongoing relationships with certain financial institutions and our ability to sell debt or issue equity subject to market conditions, we believe that we have access to the necessary financing to fund the planned capital expenditures for at least the next twelve months.

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Amounts accumulated for such payments will be used in the interim to reduce the outstanding borrowings under our existing unsecured lines of credit or invested in short-term money market or other suitable instruments.

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.

As of December 31, 2021, our total liquidity was approximately $681.3 million, including cash and cash equivalents on our balance sheet and the full undrawn capacity under our $520 million unsecured lines of credit.

Based on estimated monthly cash expenditures of approximately $28.6 million (excluding dividends and debt maturities) for 2022, we expect to have sufficient liquidity to meet our obligations for at least the next 12 months.

For further discussion of COVID-19, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations-COVID-19 Pandemic.”

As of December 31, 2022, our total liquidity was approximately $784.6 million, including $264.6 million of cash and cash equivalents and short-term investments on our balance sheet and the full undrawn capacity under our $520 million unsecured lines of credit.

We believe our current balance sheet position is financially sound;

however, due to the economic uncertainty caused by the COVID-19 pandemic and the inherent uncertainty and unpredictability of the capital and credit markets, we can give no assurance that affordable access to capital will exist between now and when our next significant debt matures, which is our unsecured term loan due April 2024.

however, due to the economic uncertainty caused by the current macroeconomic environment, including rising interest rates and inflation, and the inherent uncertainty and unpredictability of the capital and credit markets, we can give no assurance that affordable access to capital will exist between now and when our next significant debt matures, which is our senior notes due September 2026.

Equity Offerings under the ATM Offering Program

In February 2021, the Company implemented the ATM Offering program whereby it may offer and sell the Company's common shares having an aggregate gross sales price of up to $250.0 million.

In February 2021, the Company established the ATM Offering program whereby it may offer and sell the Company's common shares having an aggregate gross sales price of up to $250.0 million.

During 2021, under this program, the Company sold 10.0 million shares at a weighted average price of $18.97 per share, generating net proceeds of $187.1 million and leaving a remaining authorization of $60.1 million.

The proceeds were contributed to the Operating Partnership and then used primarily to reduce indebtedness as described in the sections immediately below.

During 2022, the Company did not sell any shares under the ATM Offering program.

Redemption of the 2023 and 2024 Senior Notes and public offering of aggregate $400.0 Million Unsecured Senior Notes due 2031

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In March 2021 and June 2021, we paid down a total of $50.0 million of borrowings under our $350.0 million unsecured term loan with cash on hand, reducing the balance outstanding to $300.0 million as of December 31, 2021.

In October 2022, we amended and restated our unsecured term loan.

The outstanding balance was increased from $300.0 million to $325.0 million and the maturity was extended to January 2027 plus a one-year extension option.

The interest rate changed from LIBOR + 1.25% to Adjusted SOFR + 1.20% based on our current credit rating.

The amendment also incorporates a sustainability metric, reducing the applicable grid-based interest rate spread by one basis point annually, subject to meeting certain thresholds.

The outstanding balance as of December 31, 2022 was $325.0 million.

Unsecured Lines of Credit Amendments and Extension

In June 2020, we amended the debt agreements for our lines of credit and bank term loan, primarily to improve future covenant flexibility.

The amendments, among other things, allowed us to access the existing surge leverage provision, which provides for an increase to the maximum thresholds to 65% from 60% for total leverage and unsecured leverage, for twelve months from July 1, 2020 to June 30, 2021, during which time share repurchases were prohibited.

Additionally, the leverage covenants are determined based on the calculation period which is modified to be based on the immediately preceding three calendar month period annualized for the calculation date occurring on December 31, 2020;

the immediately preceding six calendar month period annualized for the calculation date occurring on March 31, 2021;

the immediately preceding nine calendar month period annualized for the calculation date occurring on June 30, 2021;

and for all other calculation dates occurring during the term on the agreement, the immediately preceding twelve calendar month period.

Some definitional modifications related to the calculation of certain covenants are permanent, including the netting of cash balances in excess of $30.0 million (or debt maturing in the next 24 months, if less) as well as using adjusted EBITDA, which adds back general and administrative expenses not attributable to the subsidiaries or properties and deducts a management fee of 3% of rental revenues in liability and asset calculations for certain covenants.

The amendments revised the interest rate to provide a LIBOR floor of 0.25% for the portions of the lines of credit and bank term loan that are not fixed with an interest rate swap.

Although the amended covenants provide additional flexibility and we expect to remain in compliance with such covenants, the potential impacts from COVID-19 are highly uncertain and therefore could impact covenant compliance in the future.

In July 2021, we amended our unsecured lines of credit and extended the maturity date from October 2021 to July 2025, which may be extended by an additional year by exercising two six-month extension options.

The amendment eliminated the LIBOR floor, which was previously 0.25%, and entitles us to a one basis point annual reduction in the interest rate if we meet certain sustainability thresholds.

Other pricing terms remained the same.

The lines provide for borrowings of up to $520.0 million, including a $20.0 million liquidity line and a $500.0 million syndicated line.

A 0.25% facility fee is due annually on the entire committed amount of each facility.

In certain circumstances, total line capacity may be increased to $1.2 billion through an accordion feature in the syndicated line.

In October 2022 we amended the debt agreements for our unsecured lines of credit to change the interest rate index from LIBOR to Adjusted SOFR.

All other terms remained unchanged.

Other Financing Activity

In April 2021, Moody’s lowered the Company’s credit rating to Baa3, stable.

As the Company no longer had a split rating between the rating agencies, the pricing over LIBOR for the lines of credit, term loan and facility fee increased to 1.20%, 1.25% and 0.25%, respectively, effective May 1, 2021.

In October 2021, the joint venture that owns the Southaven, MS outlet center exercised its option to extend the maturity of the Southaven, MS mortgage to April 2023 and paid down the principal balance by $11.3 million to $40.1 million.

The interest rate remains LIBOR + 1.80%.

In October 2021, the joint venture that owns the Southaven, Mississippi outlet center exercised its option to extend the maturity of the Southaven, Mississippi mortgage to April 2023 and paid down the principal balance by $11.3 million to $40.1 million.

The outlet center is consolidated for financial reporting purposes and we funded the entire $11.3 million.

Additionally, in October 2022, the Southaven, Mississippi joint venture amended and restated its secured mortgage, increasing the outstanding balance to $51.7 million from $40.1 million, extending maturity to October 2026 plus a one year extension option, from April 2023, with an interest rate of Adjusted SOFR plus 200 basis points.

During 2021, we completed the principal payments of certain mortgage notes secured by the Atlantic City property with stated interest rates that ranged from 5.14% to 6.27% and which were scheduled to mature in 2021.

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We have historically been, and at December 31, 2022 are, in compliance with all of our debt covenants.

The ongoing financial impact of the COVID-19 pandemic could potentially negatively impact our future compliance with financial covenants of our credit facilities, term loan and other debt agreements and result in a default and potentially an acceleration of indebtedness.

Our continued compliance with these covenants depends on many factors and could be impacted by current or future economic conditions.

Failure to comply with these covenants would result in a default which, if we were unable to cure or obtain a waiver from the lenders, could accelerate the repayment obligations.

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We believe that we have access to the necessary financing to fund our short-term liquidity needs.

As of December 31, 2021, we believe our most restrictive covenants are contained in our senior, unsecured notes.

Key financial covenants and their covenant levels, which are calculated based on contractual terms, include the following:

As of December 31, 2022, we were in compliance with all financial and non-financial covenants related to our debt obligations.

Senior unsecured notes financial covenants Required Actual

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Consolidated Income Available for Debt Service to Annual Debt Service Charge > 1.5 x 5.7 x

In addition, key financial covenants for our lines of credit and term loan, include the following as of December 31, 2021:

Required Actual

Lines of credit and term loan Required Actual

Total Liabilities to Total Adjusted Asset Value <60% 40 %

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Unencumbered Interest Coverage Ratio > 1.5 x 5.6

Depending on the future economic impact of COVID-19, other covenants related to credit facilities, term loans, and other debt obligations could become one of our most restrictive covenants.

Debt of unconsolidated joint ventures

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Charlotte $ 100.0 July 2028 4.27 % — % $ —

Columbus 71.0 November 2022 LIBOR + 1.85% 16.8 % 11.9

Columbus 71.0 October 2032 6.25 % — % —

Galveston/Houston 64.5 July 2023 LIBOR + 1.85% 15.5 % 10.0

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$ 329.0 $ 10.0

In September 2022, the joint venture that owns the Columbus, Ohio outlet center completed the refinance of its existing $71.0 million mortgage, which had an interest rate of LIBOR + 1.85% and a maturity date of November 2022.

The refinanced mortgage remained $71.0 million but became a non-recourse loan with a maturity date in October 2032 and a fixed interest rate of 6.25%.

Critical Accounting Estimates

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If our estimates of the projected future cash flows change based on uncertain market conditions or holding periods, our evaluation of impairment losses may be different and such differences could be material to our consolidated financial statements.

The Foxwoods outlet center, which is part of a casino property, continues to face leasing challenges that led to declines in occupancy and estimated operating cash flows.

As a result, during December 2021, due to a decrease in the estimated hold period and declining operating results, we determined the carrying value of the Foxwoods outlet center was not recoverable.

Discount rates and terminal capitalization rates utilized in the approach above were derived from property-specific information, market transactions and other financial and industry data.

The terminal capitalization rate and discount rate are significant unobservable inputs in determining the fair value.

In estimating the fair value for our Foxwoods outlet center, the terminal capitalization rate changed from 7.8% in 2020 to 8.3% in 2021.

The discount rate changed from 8.5% in 2020 to 9.3% in 2021.

We recorded an impairment charge of $7.0 million in our consolidated statement of operations, which equaled the excess of the carrying value of our Foxwoods outlet center over its estimated fair value.

We have not materially changed the assumptions used in the analysis during the year ended December 31, 2022, and no impairments were identified.

One of our outlet centers has an estimated fair value significantly less than its recorded carrying value of approximately $113.0 million.

However, based on our current plan with respect to that outlet center, we believe that its carrying amount is recoverable and therefore no impairment charge was recorded.

Accordingly, we will continue to monitor circumstances and events in future periods that could affect inputs such as the expected holding period, operating cash flow forecasts and capitalization rates, utilized to determine whether an impairment charge is necessary.

As these inputs are difficult to predict and are subject to future events that may alter our assumptions, the future cash flows estimated by management in its impairment analysis may not be achieved, and actual losses or impairment may be realized in the future.

If in the future we reduce our estimate of cash flow projections, we may need to impair some of these assets.

We have not materially changed the assumptions used in the analysis during the year ended December 31, 2022, and we have not taken any impairments of our assets during 2022 .

Evaluation of Impairment of investments

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During the year ended December 31, 2020, as a direct result of the pandemic, bankruptcies and restructurings, the Company's earnings were negatively impacted by approximately $47.3 million due to (1) write-offs related to bankruptcies and other uncollectible accounts due to financial weakness, (2) one-time concessions in exchange for landlord-favorable amendments to lease structure, (3) reserves for a portion of deferred and under negotiation billings that we expect to become uncollectible in future periods and (4) and write-offs of straight-line rents associated with the bankruptcies and uncollectible accounts.

As of December 31, 2021, contractual fixed rents billed during 2020 that were deferred as a direct result of the COVID-19 pandemic and remain outstanding totaled $82,000.

Through December 31, 2021, the Company had collected 99% of the 2020 deferred rents due to be repaid during the year ended December 31, 2021.

During 2021, our business and financial results improved, and metrics such as average 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.

During 2022, we had reversals of revenue reserves of approximately $4.1 million, compared to $1.2 million of net reserves recorded in 2021.

During 2021 and 2022, our business and financial results improved, and metrics such as average 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 extent of future tenant requests for rent relief and the impact on our results of operations and cash flows is uncertain and cannot be predicted at this time.

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We compensate for these limitations by relying primarily on our GAAP results and using Core FFO only as a supplemental measure.

Below is a reconciliation of net income (loss) to FFO and Core FFO available to common shareholders (in thousands, except per share amounts):

2021 2020 2019

Net income (loss) $ 9,558 $ (38,013) $ 92,728

Below is a reconciliation of net income to FFO and Core FFO available to common shareholders (in thousands, except per share amounts):

Net income $ 85,831 $ 9,558

Adjusted for:

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Impairment charges - consolidated (1)

6,989 67,226 37,610

Impairment charges - unconsolidated joint ventures — 3,091 —

Loss on sale of joint venture property, including foreign currency effect (2)

3,704 — 3,641

Gain on sale of assets (3,156) —

FFO 203,206 139,567

FFO attributable to noncontrolling interests in other consolidated partnerships — (190) (195)

Allocation of earnings to participating securities (1,683) (1,453)

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Compensation related to voluntary retirement plan and other executive officer severance and retirement (4)

3,579 573 4,371

Casualty gain — (969)

Gain on sale of outparcel — (992) —

Gain on sale of non-real estate asset (6)

Loss on early extinguishment of debt (5)

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Diluted weighted average common shares (for earnings per share computations) 105,636 101,979

Effect of outstanding options — 94

Exchangeable operating partnership units 4,759 4,790

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110,395 106,769

(1) The 2020 amount includes $4.0 million of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

(1) The 2021 amount includes $563,000 of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

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Each Class A common limited partnership unit is exchangeable for one of the Company's common shares, subject to certain limitations to preserve the Company's REIT status.

(4) The 2019 amount represents the accelerated recognition of compensation cost entitled to be received by the Company’s former President and Chief Operating Officer per the terms of a transition agreement executed in connection with his retirement.

The 2020 and 2021 amounts include compensation cost related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

The 2021 amount also includes other executive officer severance costs incurred during 2021.

(4) The 2021 amount includes compensation cost related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

The 2021 and 2022 amounts include executive officer severance costs incurred during those years.

(5) In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 for $163.0 million in cash.

In September 2021, the Company completed a redemption of the remaining senior notes due 2023, $100.0 million in aggregate principal amount outstanding, and all of its 3.750% senior notes due 2024, $250.0 million in aggregate principal outstanding, for $381.9 million in cash.

The loss on extinguishment of debt includes make-whole premiums of $44.9 million for both of these redemptions.

The loss on extinguishment of debt for 2021 includes make-whole premiums of $44.9 million for both of these redemptions.

In October 2022, the Company refinanced its Term Loan to add $25.0 million of borrowing capacity and extend the maturity to January 2027 plus a one-year extension option as well as change the interest rate from LIBOR + 1.25% to Adjusted SOFR + 1.20%.

(6) Represents gain on sale of the corporate aircraft.

Portfolio Net Operating Income and Same Center NOI

We present portfolio net operating income (“Portfolio NOI”) and same center net operating income (“Same Center NOI”) as supplemental measures of our operating performance.

Portfolio NOI represents our property level net operating income which is defined as total operating revenues less property operating expenses and excludes termination fees and non-cash adjustments including straight-line rent, net above and below market rent amortization, impairment charges and gains or losses on the sale of assets recognized during the periods presented.

Portfolio NOI represents our property level net operating income which is defined as total operating revenues less property operating expenses and excludes termination fees and non-cash adjustments including straight-line rent, net above and below market rent amortization, impairment charges, loss on early extinguishment of debt, and gains or losses on the sale of assets recognized during the periods presented.

We define Same Center NOI as Portfolio NOI for the properties that were operational for the entire portion of both comparable reporting periods and which were not acquired, or subject to a material expansion or non-recurring event, such as a natural disaster, during the comparable reporting periods.

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We compensate for these limitations by relying primarily on our GAAP results and using Portfolio NOI and Same Center NOI only as supplemental measures.

Below is a reconciliation of net income (loss) to Portfolio NOI and Same Center NOI for the consolidated portfolio (in thousands):

Net income (loss) $ 9,558 $ (38,013)

Below is a reconciliation of net income to Portfolio NOI and Same Center NOI for the consolidated portfolio (in thousands):

Net income $ 85,831 $ 9,558

Adjusted to exclude:

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Depreciation and amortization 111,904 110,008

Other non-property (income) expenses 165 1,359

Other non-property expenses 312 165

Corporate general and administrative expenses 71,657 66,023

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The loss on extinguishment of debt includes make-whole premiums of $44.9 million for both of these redemptions.

The loss on extinguishment of debt for 2021 includes make-whole premiums of $44.9 million for both of these redemptions.

(2) Non-cash items include straight-line rent, above and below market rent amortization, straight-line rent expense on land leases and gains or losses on outparcel sales, as applicable.

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Outlet centers sold:

Terrell August 2020

Jeffersonville January 2021

Blowing Rock December 2022

Adjusted EBITDA, EBITDAre and Adjusted EBITDAre

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Each of these measures is defined as follows:

We define Adjusted EBITDA as net income (loss) available to the Company’s common shareholders computed in accordance with GAAP before interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, joint venture properties, outparcels and other assets, impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate, compensation related to voluntary retirement plan and other executive officer severance, casualty gains and losses, gains and losses on early extinguishment of debt, net and other items that we do not consider indicative of the Company's ongoing operating performance.

We determine EBITDAre based on the definition set forth by NAREIT, which is defined as net income (loss) available to the Company’s common shareholders computed in accordance with GAAP before interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, gains and losses on change of control and impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate and after adjustments to reflect our share of the EBITDAre of unconsolidated joint ventures.

We define Adjusted EBITDA as net income (loss) computed in accordance with GAAP before net interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, joint venture properties, outparcels and other assets, impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate, compensation related to voluntary retirement plan and other executive officer severance, casualty gains and losses, gains and losses on early extinguishment of debt, net and other items that we do not consider indicative of the Company's ongoing operating performance.

We determine EBITDAre based on the definition set forth by Nareit, which is defined as net income (loss) computed in accordance with GAAP before net interest expense, income taxes (if applicable), depreciation and amortization, gains and losses on sale of operating properties, gains and losses on change of control and impairment write-downs of depreciated property and of investment in unconsolidated joint ventures caused by a decrease in value of depreciated property in the affiliate and after adjustments to reflect our share of the EBITDAre of unconsolidated joint ventures.

Adjusted EBITDAre is defined as EBITDAre excluding gains and losses on early extinguishment of debt, net, casualty gains and losses, compensation related to voluntary retirement plan and other executive officer severance, casualty gains and losses, gains and losses on sale of outparcels, and other items that that we do not consider indicative of the Company's ongoing operating performance.

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We compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA, EBITDAre and Adjusted EBITDAre only as supplemental measures.

Below is a reconciliation of Net Income (loss) to Adjusted EBITDA (in thousands):

2021 2020 2019

Net income (loss) $ 9,558 $ (38,013) $ 92,728

Below is a reconciliation of Net Income to Adjusted EBITDA (in thousands):

Net income $ 85,831 $ 9,558

Adjusted to exclude:

Interest expense 52,866 63,142 61,672

Interest expense, net (6)

43,372 52,426

Income tax expense (7)

Depreciation and amortization 111,904 110,008

Impairment charges - consolidated (1)

6,989 67,226 37,610

Impairment charge - unconsolidated joint ventures — 3,091 —

Loss on sale of joint venture property, including foreign currency effect (2)

3,704 — 3,641

Gain on sale of assets (3,156) —

Compensation related to voluntary retirement plan and other executive severance (3)

3,579 573 4,371

Gain on sale of non-real estate asset (5)

Casualty gain — (969)

Gain on sale of outparcel - unconsolidated joint ventures — (992) —

Loss on early extinguishment of debt (4)

Adjusted EBITDA $ 238,340 $ 233,308

Below is a reconciliation of Net Income (loss) to EBITDAre and Adjusted EBITDAre (in thousands):

2021 2020 2019

Net income (loss) $ 9,558 $ (38,013) $ 92,728

Below is a reconciliation of Net Income to EBITDAre and Adjusted EBITDAre (in thousands):

Net income $ 85,831 $ 9,558

Adjusted to exclude:

Interest expense 52,866 63,142 61,672

Interest expense, net (6)

43,372 52,426

Income tax expense (7)

Depreciation and amortization 111,904 110,008

Impairment charges - consolidated (1)

6,989 67,226 37,610

Impairment charge - unconsolidated joint ventures — 3,091 —

Loss on sale of joint venture property, including foreign currency effect (2)

3,704 — 3,641

Gain on sale of assets (3,156) —

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EBITDAre $ 256,194 $ 200,314

Compensation related to voluntary retirement plan and other executive officer severance (3)

3,579 573 4,371

Compensation related to voluntary retirement plan and other executive severance (3)

Casualty gain — (969)

Gain on sale of outparcel - unconsolidated joint ventures — (992) —

Gain on sale of non-real estate asset (5)

Loss on early extinguishment of debt (4)

Adjusted EBITDAre $ 256,445 $ 250,784

(1) The 2020 amount includes $4.0 million of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

(1) The 2021 amount includes $563,000 of impairment loss attributable to the right-of-use asset associated with the ground lease at the Mashantucket (Foxwoods), Connecticut outlet center.

(2) Includes a $3.6 million charge related to the foreign currency effect of the sale of the Saint-Sauveur, Quebec property by the RioCan joint venture in March 2021.

(3) The 2019 amount represents the accelerated recognition of compensation cost entitled to be received by the Company’s former President and Chief Operating Officer per the terms of a transition agreement executed in connection with his retirement.

The 2020 and 2021 amounts include compensation costs related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

The 2021 amount also includes other executive officer severance costs incurred during 2021.

(3) The 2021 amount includes compensation costs related to a voluntary retirement plan offer which required eligible participants to give notice of acceptance by December 1, 2020 for an effective retirement date of March 31, 2021.

The 2021 and 2022 amounts include executive officer severance costs incurred during those years

(4) In October 2022, the Company refinanced its Term Loan to add $25.0 million of borrowing capacity and extended the maturity to January 2027 plus a one-year extension option as well as changed the interest rate from LIBOR + 1.25% to Adjusted SOFR + 1.20%.

In April 2021, the Company completed a partial redemption of $150.0 million aggregate principal amount of its $250.0 million 3.875% senior notes due December 2023 for $163.0 million in cash.

The loss on extinguishment of debt includes make-whole premiums of $44.9 million for both of these redemptions.

The loss on extinguishment of debt for 2021 includes make-whole premiums of $44.9 million for both of these redemptions.

(5) Represents gain on sale of the corporate aircraft.

(6) Includes interest expense less interest income, which is included in other income on our statement of operations.

In 2022, we revised our presentation of interest expense to show this net of interest income.

Prior period results have been revised to conform with the current period presentation.

(7) In 2022, income tax expense was added back in a separate line to arrive at EBITDA and EBITDAre.

Prior period results have been revised to conform with the current period presentation.

Economic Conditions and Outlook

We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business and geographies, including how it will impact our tenants and business partners.

For further discussion of COVID-19, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - COVID-19 Pandemic.”

We are closely monitoring the impact of supply chain and labor issues, inflationary pressures, rising interest rates and the overall macroeconomic environment on all aspects of our business and geographies, including how it will impact our tenants and business partners.

The majority of our leases contain provisions designed to mitigate the impact of inflation.

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

As a result of the COVID-19 pandemic, we saw reductions in rental revenues during 2020 as a result of declines in the sales volumes of certain tenants.

However, during 2021, our tenants' average sales per square foot for the consolidated portfolio was the highest in our company's history, resulting in significant increases in rental revenues compared to the prior year.

In addition, certain of our lease agreements include co-tenancy and/or sales-based provisions that may allow a tenant to pay reduced rent and/or terminate a lease prior to its natural expiration if we fail to maintain certain occupancy levels or retain specified named tenants, or if the tenant does not achieve certain specified sales targets.

1 unchanged sentence

Our occupancy at our consolidated centers improved from 95% at the end of 2021 to 97% at the end of 2022.

Our outlet centers typically include well-known, national, brand name companies.

Our outlet centers typically include well-known, national, branded companies.

By maintaining a broad base of well-known tenants and a geographically diverse portfolio of properties located across the United States, we believe we reduce our operating and leasing risks.

No one tenant (including affiliates) accounts for more than 8% of our square feet or 7% of our rental revenues.

During the year ended December 31, 2022, no one tenant (including affiliates) accounted for more than 7% of our square feet or 6% of our rental revenues.

Due to the relatively short-term nature of our tenants’ leases, a significant portion of the leases in our portfolio come up for renewal each year.

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The current challenging retail environment has impacted our business as our operations are subject to the operating results and operating decisions of our retail tenants.

We are encouraged by the recent improvement in traffic and sales trends, which in many cases are exceeding 2019 levels, and the fact that collections of monthly rents have normalized.

However, many retailers across the country are currently facing, or expect to face, potential logistics and staffing issues.

While we believe many of these retailers are proactively navigating this situation, the ultimate impact of labor and supply chain issues is unknown.

We may continue to experience pressure from current vacancies, potential additional store closures and potential rent modifications.

As is typical in the retail industry, certain tenants have closed, or will close, certain stores by terminating their lease prior to its contractual expiration or as a result of filing for protection under bankruptcy laws, or may request modifications to their existing lease terms.

We recaptured approximately 136,000 square feet within our consolidated portfolio during the year ended December 31, 2021 related to bankruptcies and brand-wide restructurings by retailers, compared to 903,000 square feet for the year ended December 31, 2020.

We believe outlet stores will continue to be a profitable and fundamental distribution channel for many brand name manufacturers.

While we continue to attract and retain additional tenants, if we were unable to successfully renew or re-lease a significant amount of this space on favorable economic terms or in a timely manner, the loss in rent and our Same Center NOI could be further negatively impacted in 2022.

As a result of COVID-19, occupancy could be negatively impacted in 2022.

We continue to be encouraged by the stability of our sales trends which remain elevated above pre-pandemic levels.

However, many retailers across the country are currently facing, or expect to face, potential impact of logistics and staffing issues, although there has been improvement in these areas in 2022.

While we believe many of these retailers are proactively navigating this situation, the ultimate impact of inflation, labor and supply chain issues and overall macroeconomic environment is unknown.

We believe retail real estate will continue to be a profitable and fundamental distribution channel for many brands and retailers.

Occupancy at our consolidated centers was 96.9% and 95.1% as of December 31, 2022 and 2021, respectively.

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 7. Management’s Discussion and Analysis