Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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(a)(1) Financial Statements

Our consolidated financial statements and notes thereto, together with Management’s Report on Internal Control over Financial Reporting and Report of Independent Registered Public Accounting Firm are included as a separate section of this Annual Report on Form 10-K commencing on page F-1.

(2) Financial Statement Schedules

Our financial statement schedules are included in a separate section of this Annual Report on Form 10-K commencing on page F-37.

(3) Exhibits

A list of exhibits to this Annual Report on Form 10-K is set forth on the Exhibit Index immediately preceding such exhibits and is incorporated herein by reference.

(b) See Exhibit Index

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized this 26th day of February, 2009.


Federal Realty Investment Trust

By:		/S/ DONALD C. WOOD
		Donald C. Wood Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated. Each person whose signature appears below hereby constitutes and appoints each of Donald C. Wood and Dawn M. Becker as his or her attorney-in-fact and agent, with full power of substitution and resubstitution for him or her in any and all capacities, to sign any or all amendments to this Report and to file same, with exhibits thereto and other documents in connection therewith, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary in connection with such matters and hereby ratifying and confirming all that such attorney-in-fact and agent or his or her substitutes may do or cause to be done by virtue hereof.


Signature	Title	Date

/S/ DONALD C. WOOD Donald C. Wood	Chief Executive Officer, Trustee (Principal Executive Officer)	February 26, 2009

/S/ ANDREW P. BLOCHER Andrew P. Blocher	Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer)	February 26, 2009

/S/ JOSEPH S. VASSALLUZZO Joseph S. Vassalluzzo	Non-Executive Chairman	February 26, 2009

/S/ JON E. BORTZ Jon Bortz	Trustee	February 26, 2009

/S/ DAVID W. FAEDER David W. Faeder	Trustee	February 26, 2009

/S/ KRISTIN GAMBLE Kristin Gamble	Trustee	February 26, 2009

/S/ GAIL P. STEINEL Gail P. Steinel	Trustee	February 26, 2009

/S/ WARREN M. THOMPSON Warren M. Thompson	Trustee	February 26, 2009

Item 8 and Item 15(a)(1) and (2)

Index to Consolidated Financial Statements and Schedules


Consolidated Financial Statements		Page No.
Management Assessment Report on Internal Control over Financial Reporting		F-2
Report of Independent Registered Public Accounting Firm		F-3
Report of Independent Registered Public Accounting Firm		F-4
Consolidated Balance Sheets		F-5
Consolidated Statements of Operations		F-6
Consolidated Statement of Shareholders’ Equity		F-7
Consolidated Statements of Cash Flows		F-8
Notes to Consolidated Financial Statements		F-9-F-36

Financial Statement Schedules
Schedule III—Summary of Real Estate and Accumulated Depreciation		F-37-F-43
Schedule IV—Mortgage Loans on Real Estate		F-44-F-45

All other schedules have been omitted either because the information is not applicable, not material, or is disclosed in our consolidated financial statements and related notes.

F-1

Management Assessment Report on Internal Control over Financial Reporting

The management of Federal Realty is responsible for establishing and maintaining adequate internal control over financial reporting. Establishing and maintaining internal control over financial reporting is a process designed by, or under the supervision of, our President and Chief Executive Officer and Senior Vice President and Chief Financial Officer, as appropriate, and effected by our employees, including management and our Board of Trustees, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. This process includes policies and procedures that:

	•		pertain to the maintenance of records that accurately and fairly reflect the transactions and dispositions of our assets in reasonable detail;

	•		provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are made only in accordance with the authorization procedures we have established; and

	•		provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of any of our assets in circumstances that could have a material adverse effect on our financial statements.

Management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our internal control over financial reporting will prevent all errors and fraud. In designing and evaluating our control system, management recognized that any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Further, the design of a control system must reflect the fact that there are resource constraints, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, that may affect our operation have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management’s override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Management conducted an assessment of the effectiveness of the Trust’s internal control over financial reporting as of December 31, 2008. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework. Based on this assessment, management concluded that our internal control over financial reporting is effective, based on those criteria, as of December 31, 2008.

Grant Thornton LLP, the independent registered public accounting firm that audited the Trust’s consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the Trust’s internal control over financial reporting, which appears on page F-3 of this Annual Report on Form 10-K.

F-2

Report of Independent Registered Public Accounting Firm

Trustees and Shareholders of Federal Realty Investment Trust

We have audited Federal Realty Investment Trust (a Maryland real estate investment trust) and subsidiaries’ (the Trust) internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Federal Realty Investment Trust’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Assessment Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on Federal Realty Investment Trust’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Federal Realty Investment Trust and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by COSO_._

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Federal Realty Investment Trust and subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008 and our report dated February 25, 2009 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

McLean, Virginia

February 25, 2009

F-3

Report of Independent Registered Public Accounting Firm

Trustees and Shareholders of Federal Realty Investment Trust

We have audited the accompanying consolidated balance sheets of Federal Realty Investment Trust (a Maryland real estate investment trust) and subsidiaries (the Trust) as of December 31, 2008 and 2007, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2008. Our audits of the basic financial statements included the financial statement schedules listed in the index appearing under Item 15(a) (1) and (2). These financial statements and financial statement schedules are the responsibility of the Trust’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Trust as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Trust’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 25, 2009 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

McLean, Virginia

February 25, 2009

F-4

Federal Realty Investment Trust

CONSOLIDATED BALANCE SHEETS


	December 31,
	2008			2007
	(In thousands)
ASSETS
Real estate, at cost
Operating	$	3,567,035		$	3,265,020
Construction-in-progress		106,650			147,925
Assets held for sale (discontinued operations)		—			39,902

		3,673,685			3,452,847
Less accumulated depreciation and amortization		(846,258	)		(756,703	)

Net real estate		2,827,427			2,696,144
Cash and cash equivalents		15,223			50,691
Accounts and notes receivable		73,688			61,108
Mortgage notes receivable		45,780			40,638
Investment in real estate partnership		29,252			29,646
Prepaid expenses and other assets		95,344			103,620
Debt issuance costs, net of accumulated amortization of $6,484 and $4,815, respectively		6,062			7,450

TOTAL ASSETS	$	3,092,776		$	2,989,297

LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable	$	389,318		$	373,975
Capital lease obligations		63,492			76,109
Notes payable		336,391			210,820
Senior notes and debentures		956,584			977,556
Accounts payable and accrued expenses		86,950			99,360
Dividends payable		38,719			36,142
Security deposits payable		11,309			10,703
Other liabilities and deferred credits		63,059			58,182

Total liabilities		1,945,822			1,842,847
Minority interests		32,352			31,818
Commitments and contingencies (Note 8)
Shareholders’ equity
Preferred stock, authorized 15,000,000 shares, $.01 par:
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding		9,997			9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 60,487,244 and 60,133,270 issued, respectively		605			601
Additional paid-in capital		1,559,381			1,541,020
Accumulated dividends in excess of net income		(426,574	)		(407,376	)
Treasury shares at cost, 1,501,566 and 1,487,605 shares, respectively		(28,807	)		(28,807	)
Notes receivable from issuance of common shares		—			(803	)

Total shareholders’ equity		1,114,602			1,114,632

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,092,776		$	2,989,297

The accompanying notes are an integral part of these consolidated statements.

F-5

Federal Realty Investment Trust

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended December 31,
	2008			2007			2006
	(In thousands, except per share data)
REVENUE
Rental income	$	501,964		$	465,728		$	414,261
Other property income		14,013			12,834			7,460
Mortgage interest income		4,548			4,560			5,095

Total revenue		520,525			483,122			426,816

EXPENSES
Rental expenses		109,718			99,363			84,164
Real estate taxes		55,714			46,897			41,139
General and administrative		26,732			26,581			21,921
Depreciation and amortization		111,022			101,633			92,751

Total operating expenses		303,186			274,474			239,975

OPERATING INCOME		217,339			208,648			186,841
Other interest income		916			921			2,042
Interest expense		(99,163	)		(111,365	)		(95,234	)
Income from real estate partnership		1,612			1,395			656

INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTERESTS		120,704			99,599			94,305
Minority interests		(5,366	)		(5,590	)		(4,353	)

INCOME FROM CONTINUING OPERATIONS		115,338			94,009			89,952
DISCONTINUED OPERATIONS
Discontinued operations—income		1,877			6,760			4,804
Discontinued operations—gain on sale of real estate		12,572			94,768			16,515

Results from discontinued operations		14,449			101,528			21,319

INCOME BEFORE GAIN ON SALE OF REAL ESTATE		129,787			195,537			111,271
Gain on sale of real estate		—			—			7,441

NET INCOME		129,787			195,537			118,712
Dividends on preferred stock		(541	)		(442	)		(10,423	)
Preferred stock redemption costs		—			—			(4,775	)

NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	129,246		$	195,095		$	103,514

EARNINGS PER COMMON SHARE, BASIC
Continuing operations	$	1.96		$	1.67		$	1.40
Discontinued operations		0.24			1.81			0.40
Gain on sale of real estate		—			—			0.14

	$	2.20		$	3.48		$	1.94

Weighted average number of common shares, basic		58,665			56,108			53,469

EARNINGS PER COMMON SHARE, DILUTED
Continuing operations	$	1.95		$	1.65		$	1.39
Discontinued operations		0.24			1.80			0.39
Gain on sale of real estate		—			—			0.14

	$	2.19		$	3.45		$	1.92

Weighted average number of common shares, diluted		58,914			56,543			53,962

The accompanying notes are an integral part of these consolidated statements.

F-6

Federal Realty Investment Trust

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY


	Preferred Stock					Common Shares			Additional Paid-in Capital			Accumulated Dividends In Excess of Net Income			Treasury Shares					Deferred Compensation On Restricted Shares			Notes Receivable From the Issuance of Common Shares			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares		Amount			Shares	Amount				Shares		Amount
	(In thousands, except share data)
BALANCE AT DECEMBER 31, 2005	5,400		$	135,000		54,371,057	$	544	$	1,114,732		$	(437,817	)	(1,480,360	)	$	(28,794	)	$	(9,704	)	$	(1,792	)	$	2,678		$	774,847
Comprehensive income:
Net income	—			—		—		—		—			118,712		—			—			—			—			—			118,712
Change in valuation on interest rate swaps	—			—		—		—		—			—		—			—			—			—			(1,493	)		(1,493	)

Total comprehensive income																														117,219
Change due to termination of hedge relationship	—			—		—		—		—			—		—			—			—			—			(1,185	)		(1,185	)
Dividends declared to common shareholders	—			—		—		—		—			(133,066	)	—			—			—			—			—			(133,066	)
Dividends declared to preferred shareholders	—			—		—		—		—			(10,423	)	—			—			—			—			—			(10,423	)
Common shares issued	—			—		2,002,670		20		149,077			—		—			—			—			—			—			149,097
Exercise of stock options	—			—		266,579		2		8,843			—		—			—			—			—			—			8,845
Shares issued under dividend reinvestment plan	—			—		44,077		—		3,101			—		—			—			—			—			—			3,101
Share-based compensation expense (SFAS No.123 (R))	—			—		84,217		1		6,490			—		—			—			—			—			—			6,491
Cumulative effect of change in accounting principle	—			—		—		—		(6,416	)		—		—			—			9,704			—			—			3,288
Conversion and redemption of OP units	—			—		37,216		1		615			—		—			—			—			—			—			616
Preferred shares redeemed	(5,400	)		(135,000	)	—		—		4,775			(4,775	)	—			—			—			—			—			(135,000	)
Unvested shares forfeited	—			—		—		—		—			—		(4,919	)		(13	)		—			—			—			(13	)
Loans paid	—			—		—		—		—			—		—			—			—			261			—			261

BALANCE AT DECEMBER 31, 2006	—			—		56,805,816		568		1,281,217			(467,369	)	(1,485,279	)		(28,807	)		—			(1,531	)		—			784,078
Net income/comprehensive income	—			—		—		—		—			195,537		—			—			—			—			—			195,537
Dividends declared to common shareholders	—			—		—		—		—			(135,102	)	—			—			—			—			—			(135,102	)
Dividends declared to preferred shareholders	—			—		—		—		—			(442	)	—			—			—			—			—			(442	)
Common shares issued	—			—		2,884,099		29		240,162			—		—			—			—			—			—			240,191
Exercise of stock options	—			—		106,117		1		5,066			—		—			—			—			—			—			5,067
Shares issued under dividend reinvestment plan	—			—		32,615		—		2,821			—		—			—			—			—			—			2,821
Share-based compensation expense (SFAS No.123 (R))	—			—		127,867		1		8,039			—		—			—			—			—			—			8,040
Conversion and redemption of OP units	—			—		176,756		2		3,715			—		—			—			—			—			—			3,717
Preferred shares issued	399,896			9,997		—		—		—			—		—			—			—			—			—			9,997
Unvested shares forfeited	—			—		—		—		—			—		(2,326	)		—			—			—			—			—
Loans paid	—			—		—		—		—			—		—			—			—			728			—			728

BALANCE AT DECEMBER 31, 2007	399,896			9,997		60,133,270		601		1,541,020			(407,376	)	(1,487,605	)		(28,807	)		—			(803	)		—			1,114,632
Net income/comprehensive income	—			—		—		—		—			129,787		—			—			—			—			—			129,787
Dividends declared to common shareholders	—			—		—		—		—			(148,444	)	—			—			—			—			—			(148,444	)
Dividends declared to preferred shareholders	—			—		—		—		—			(541	)	—			—			—			—			—			(541	)
Common shares issued	—			—		274		—		19			—		—			—			—			—			—			19
Exercise of stock options	—			—		214,853		2		8,006			—		—			—			—			—			—			8,008
Shares issued under dividend reinvestment plan	—			—		39,343		—		2,755			—		—			—			—			—			—			2,755
Share-based compensation expense (SFAS No.123 (R))	—			—		99,504		2		7,776			—		—			—			—			—			—			7,778
Conversion and redemption of OP units	—			—		—				(195	)		—		—			—			—			—			—			(195	)
Unvested shares forfeited	—			—		—		—		—			—		(13,961	)		—			—			—			—			—
Loans paid	—			—		—		—		—			—		—			—			—			803			—			803

BALANCE AT DECEMBER 31, 2008	399,896		$	9,997		60,487,244	$	605	$	1,559,381		$	(426,574	)	(1,501,566	)	$	(28,807	)	$	—		$	—		$	—		$	1,114,602

The accompanying notes are an integral part of these consolidated statements.

F-7

Federal Realty Investment Trust

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended December 31,
	2008			2007			2006
	(In thousands)
OPERATING ACTIVITIES
Net income	$	129,787		$	195,537		$	118,712
Adjustment to reconcile net income to net cash provided by operating activities
Depreciation and amortization, including discontinued operations		111,069			105,966			97,879
Gain on sale of real estate		(12,572	)		(94,768	)		(23,956	)
Equity in income from real estate partnership		(1,612	)		(1,395	)		(656	)
Minority interests		5,366			5,590			4,353
Other, net		1,585			(2,267	)		2,328
Changes in assets and liabilities net of effects of acquisitions and dispositions:
Increase in accounts receivable		(6,303	)		(6,743	)		(3,786	)
Decrease (increase) in prepaid expenses and other assets		2,668			3,002			(11,792	)
(Decrease) increase in accounts payable and accrued expenses		(4,329	)		266			2,846
Increase in security deposits and other liabilities		2,626			9,021			726

Net cash provided by operating activities		228,285			214,209			186,654

INVESTING ACTIVITIES
Acquisition of real estate		(99,625	)		(69,487	)		(266,984	)
Capital expenditures—development and redevelopment		(104,196	)		(111,600	)		(95,718	)
Capital expenditures—other		(33,790	)		(25,755	)		(23,961	)
Proceeds from sale of real estate		44,890			83,979			82,345
Investment in real estate partnership		—			(20,427	)		(4,960	)
Distribution from real estate partnership in excess of earnings		363			967			631
Leasing costs		(9,921	)		(9,756	)		(8,628	)
(Issuance) repayment of mortgage and other notes receivable, net		(5,288	)		640			(154	)

Net cash used in investing activities		(207,567	)		(151,439	)		(317,429	)

FINANCING ACTIVITIES
Net borrowings (repayment) under revolving credit facility, net of costs		123,500			(98,000	)		41,209
Issuance of note payable, net of costs		—			199,525			149,979
Issuance of senior notes		—			—			509,887
Repayment of senior notes		(20,800	)		(150,000	)		(40,500	)
Repayment of mortgages, capital leases and notes payable		(18,512	)		(7,603	)		(405,552	)
Extension fee on term loan		(200	)		—			—
Redemption of Series B preferred shares		—			—			(135,000	)
Issuance of common shares		11,585			170,855			161,292
Dividends paid to common and preferred shareholders		(146,418	)		(131,443	)		(142,947	)
Distributions to minority interests		(5,341	)		(6,908	)		(4,737	)

Net cash (used in) provided by financing activities		(56,186	)		(23,574	)		133,631

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(35,468	)		39,196			2,856
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		50,691			11,495			8,639

CASH AND CASH EQUIVALENTS, END OF YEAR	$	15,223		$	50,691		$	11,495

The accompanying notes are an integral part of these consolidated statements.

F-8

Federal Realty Investment Trust

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2008, 2007 and 2006

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business and Organization

Federal Realty Investment Trust (the “Trust”) is an equity real estate investment trust specializing in the ownership, management, development and redevelopment of retail and mixed-use properties. Our properties are located primarily in densely populated and affluent communities in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, as well as in California. As of December 31, 2008, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 84 predominantly retail real estate projects.

We operate in a manner intended to enable us to qualify as a real estate investment trust (or REIT) for federal income tax purposes. A REIT that distributes at least 90% of its taxable income to its shareholders each year and meets certain other conditions is not taxed on that portion of its taxable income which is distributed to its shareholders. Therefore, federal income taxes on our REIT taxable income have been and are generally expected to be immaterial. We are obligated to pay state taxes, generally consisting of franchise or gross receipts taxes in certain states. Such state taxes also have not been material.

We have elected to treat certain of our subsidiaries as taxable REIT subsidiaries, which we refer to as a TRS. In general, a TRS may engage in any real estate business and certain non-real estate businesses, subject to certain limitations under the Internal Revenue Code of 1986, as amended (the “Code”). A TRS is subject to federal and state income taxes. The sales of condominiums at Santana Row, which occurred between August 2005 and August 2006 were conducted through a TRS. Other than these sales, our TRS activities have not been material.

Principles of Consolidation and Estimates

Our consolidated financial statements include the accounts of the Trust, its corporate subsidiaries, and all entities in which the Trust has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity. The equity interests of other investors are reflected as minority interests. All significant intercompany transactions and balances are eliminated in consolidation. We account for our interests in joint ventures, which we do not control or manage, using the equity method of accounting.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as “GAAP,” requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management’s best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates.

Reclassifications

Certain 2007 and 2006 amounts have been reclassified to conform to current period presentation.

Revenue Recognition and Accounts Receivable

Our leases with tenants are classified as operating leases. Substantially all such leases contain fixed escalations which occur at specified times during the term of the lease. Base rents are recognized on a straight-line basis from when the tenant controls the space through the term of the related lease, net of valuation adjustments, based on management’s assessment of credit, collection and other business risk. Percentage rents, which represent

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additional rents based upon the level of sales achieved by certain tenants, are recognized at the end of the lease year or earlier if we have determined the required sales level is achieved and the percentage rents are collectible. Real estate tax and other cost reimbursements are recognized on an accrual basis over the periods in which the related expenditures are incurred. For a tenant to terminate its lease agreement prior to the end of the agreed term, we may require that they pay a fee to cancel the lease agreement. Lease termination fees for which the tenant has relinquished control of the space are generally recognized on the termination date. When a lease is terminated early but the tenant continues to control the space under a modified lease agreement, the lease termination fee is generally recognized evenly over the remaining term of the modified lease agreement.

We make estimates of the collectibility of our accounts receivable related to minimum rents, straight-line rents, expense reimbursements and other revenue or income. In some cases, primarily relating to straight-line rents, the collection of these amounts extends beyond one year. Our experience relative to unbilled straight-line rents is that a certain portion of the amounts otherwise recognizable as revenue is never billed to or collected from tenants due to early lease terminations, lease modifications, bankruptcies and other factors. Accordingly, the extended collection period for straight-line rents along with our evaluation of tenant credit risk may result in the nonrecognition of a portion of straight-line rental income until the collection of such income is reasonably assured. If our evaluation of tenant credit risk changes indicating more straight-line revenue is reasonably collectible than previously estimated and realized, the additional straight-line rental income is recognized as revenue. If our evaluation of tenant credit risk changes indicating a portion of realized straight-line rental income is no longer collectible, a reserve and bad debt expense is recorded. At December 31, 2008 and 2007, accounts receivable include approximately $37.2 million and $32.0 million, respectively, related to straight-line rents. At December 31, 2008 and 2007, our allowance for doubtful accounts was $11.8 million and $7.0 million, respectively.

Real Estate

Land, buildings and improvements are recorded at cost. Depreciation is computed using the straight-line method. Estimated useful lives range generally from 35 years to a maximum of 50 years on buildings and major improvements. Minor improvements, furniture and equipment are capitalized and depreciated over useful lives ranging from 3 to 20 years. Maintenance and repairs that do not improve or extend the useful lives of the related assets are charged to operations as incurred. Tenant improvements are capitalized and depreciated over the life of the related lease or their estimated useful life, whichever is shorter. If a tenant vacates its space prior to contractual termination of its lease, the undepreciated balance of any tenant improvements are written off if they are replaced or have no future value. In 2008, 2007 and 2006, depreciation expense was $101.3 million, $96.5 million and $89.6 million, respectively, including amounts included in discontinued operations and assets under capital lease obligations.

In accordance with Statement of Financial Accounting Standard (“SFAS”) No. 66, “Accounting for Sales of Real Estate,” sales are recognized at closing only when sufficient down payments have been obtained, possession and other attributes of ownership have been transferred to the buyer and we have no significant continuing involvement. The application of SFAS No. 66 can be complex and requires us to make assumptions. We believe the criteria of SFAS No. 66 was met for all real estate sold during 2008, 2007 and 2006.

In accordance with SFAS No. 141, “Business Combinations,” our methodology of allocating the cost of acquisitions to assets acquired and liabilities assumed is based on estimated fair values, replacement cost and appraised values. When we acquire operating real estate properties, the purchase price is allocated to land and buildings, intangibles such as in-place leases and to current assets and liabilities acquired, if any. The value allocated to in-place leases is amortized over the related lease term and reflected as rental income in the statement of operations. If a tenant vacates its space prior to contractual termination of its lease, the unamortized balance of any in-place lease value is written off to rental income.

We are the lessee of certain land and buildings. We classify our leases of land and building as operating or capital leases in accordance with the provisions of SFAS No. 13, “Accounting for Leases.”

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In accordance with SFAS No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects,” we capitalize certain costs related to the development and redevelopment of real estate including pre-construction costs, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved. Additionally, in accordance with SFAS No. 34, “Capitalization of Interest Costs,” we capitalize interest costs related to development and redevelopment activities. Capitalization of these costs begin when the activities and related expenditures commence and cease when the project is substantially complete and ready for its intended use at which time the project is placed-in service and depreciation commences.

In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” we review for impairment on a property by property basis. Impairment is recognized on properties held for use when the expected undiscounted cash flows for a property are less than its carrying amount at which time the property is written-down to fair value. Properties held for sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell. SFAS No. 144 also requires the sale or disposal of a “component of an entity” to be treated as discontinued operations. The properties sold by us typically meet the definition of a component of an entity and as such the revenues and expenses associated with sold properties are reclassified to discontinued operations for all periods presented.

In June 2006, we sold Greenlawn Plaza to our unconsolidated real estate partnership resulting in a gain of $7.4 million. Due to our continuing involvement in the property, Greenlawn Plaza did not qualify for discontinued operations classification under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Accordingly, the results of operations through the date of sale are included in continuing operations and the gain on sale is included in “gain on sale of real estate.”

Cash and Cash Equivalents

We define cash and cash equivalents as cash on hand, demand deposits with financial institutions and short term liquid investments with an initial maturity under three months. Cash balances in individual banks may exceed insurable amounts.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist primarily of lease costs, prepaid property taxes and acquired above market leases. Capitalized lease costs are direct costs incurred which were essential to originate a lease and would not have been incurred had the leasing transaction not taken place and include third party commissions and salaries and related costs of personnel directly related to time spent obtaining a lease. Capitalized lease costs are amortized over the life of the related lease. If a tenant vacates its space prior to the contractual termination of its lease, the unamortized balance of any lease costs are written off. Other assets also include the premiums paid for split dollar life insurance covering several officers and former officers which were approximately $4.6 million at December 31, 2008 and 2007.

Debt Issuance Costs

Costs related to the issuance of debt instruments are capitalized and are amortized as interest expense over the estimated life of the related issue using the straight-line method which approximates the effective interest method.

Derivative Instruments

We use derivative instruments to manage exposure to variable interest rate risk. We generally enter into interest rate swaps to manage our exposure to variable interest rate risk and treasury locks to manage the risk of interest rates rising prior to the issuance of debt. We enter into derivative instruments that qualify as cash flow hedges under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and do not enter into derivative instruments for speculative purposes. As of December 31, 2008 and 2007, we had no outstanding hedging instruments.

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Our cash flow hedges are recorded at fair value. We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis. The effective portion of changes in fair value of our cash flow hedges is recorded in other comprehensive income, and the ineffective portion of changes in fair value of our cash flow hedges is recognized in earnings in the period affected. Hedge ineffectiveness did not have a significant impact on earnings in 2008, 2007 and 2006, and we do not anticipate it will have a significant effect in the future.

Acquisition, Development and Construction Loan Arrangements

We have made certain mortgage loans that, because of their nature, qualify as loan receivables. At the time the loans were made, we did not intend for the arrangement to be anything other than a financing and did not contemplate a real estate investment. Using guidance set forth in the Third Notice to Practitioners issued by the AICPA in February 1986 entitled “ADC Arrangements” (“the Third Notice”), we evaluate each investment to determine whether the loan arrangement qualifies under the Third Notice as a loan, joint venture or real estate investment and the appropriate accounting thereon. Such determination affects our balance sheet classification of these investments and the recognition of interest income derived therefrom. Generally, we receive additional interest on these loans, however we never receive in excess of 50% of the residual profit in the project (as defined in the Third Notice) and because the borrower has either a substantial investment in the project or has guaranteed all or a portion of our loan (or a combination thereof) the loans qualify for loan accounting. The amounts under ADC arrangements are presented as mortgage notes receivable at December 31, 2008 and 2007.

Share Based Compensation

Effective January 1, 2006, we adopted the fair value recognition provisions of SFAS No. 123(R), “Share-Based Payment,” using the modified-prospective-transition method. Under this transition method, compensation cost recognized beginning January 1, 2006 includes: (a) compensation costs for all share-based payments granted prior to, but not vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123(R).

On January 1, 2006, we recorded the cumulative effect of adopting SFAS No. 123(R). This cumulative effect resulted in decreasing accrued liabilities by $3.3 million and increasing shareholders’ equity by $3.3 million. These balance sheet changes related to deferred compensation on unvested shares. Under SFAS No. 123(R), deferred compensation is no longer recorded at the time unvested shares are issued. Share-based compensation expense is now recorded over the requisite service period with an offsetting credit to equity (generally additional paid-in capital).

Redemption of Preferred Stock

On November 27, 2006, we redeemed our $135 million 8.5% Series B Cumulative Redeemable Preferred Shares at their face value. The original issuance costs of $4.8 million were charged to shareholders’ equity when the shares were issued. On July 31, 2003, the Emerging Issues Task Force provided clarification on the treatment of the difference between the redemption value and the carrying value, adjusting for issuance costs, for GAAP financial reporting. As a result, our Consolidated Statement of Operations for the year ended December 31, 2006 reflects a charge of $4.8 million in “Preferred stock redemption costs” as a reduction of net income in computing net income available for common shareholders.

Variable Interest Entities

In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46 (revised December 2003) (“FIN 46-R”), “Consolidation of Variable Interest Entities.” FIN 46-R clarifies the application of Accounting Research Bulletin 51, Consolidated Financial Statements, for certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial

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support from other parties or in which equity investors do not have the characteristics of a controlling financial interest (“variable interest entities”). Variable interest entities within the scope of FIN 46-R are required to be consolidated by their primary beneficiary. The primary beneficiary of a variable interest entity is determined to be the party that absorbs a majority of the entity’s expected losses, receives a majority of its expected returns, or both. We have evaluated the applicability of FIN 46-R to our investments in certain joint ventures including our real estate partnership with affiliates of a discretionary fund created and advised by ING Clarion Partners and determined that these joint ventures do not meet the requirements of a variable interest entity and, therefore, consolidation of these ventures is not required. These investments are accounted for using the equity method. We have also evaluated the applicability of FIN 46-R to our mortgage loans receivable and determined that they are not variable interest entities. Our investment balances from our real estate partnership and mortgage notes receivable are presented in our consolidated balance sheets.

On October 16, 2006, we acquired the leasehold interest in Melville Mall under a 20 year master lease. Additionally, we loaned the owner of Melville Mall $34.2 million secured by a second mortgage on the property. We have an option to purchase the shopping center on or after October 16, 2021 for a price of $5.0 million plus the assumption of the first mortgage and repayment of the second mortgage. We have determined that this property is held in a variable interest entity for which we are the primary beneficiary. Accordingly, beginning October 16, 2006, we consolidated this property and its operations. As of December 31, 2008 and 2007, $24.5 million and $25.1 million, respectively, is included in mortgages payable for the mortgage loan secured by Melville Mall, however, the loan is not our legal obligation. At December 31, 2008, net real estate assets related to Melville Mall included in our consolidated balance sheet are approximately $66.5 million.

In conjunction with the acquisitions of several of our properties, we entered into Reverse Section 1031 like-kind exchange agreements with a third party intermediary. The exchange agreements are for a maximum of 180 days and allow us, for tax purposes, to defer gains on sale of other properties sold within this period. Until the earlier of termination of the exchange agreements or 180 days after the respective acquisition dates, the third party intermediary is the legal owner of each property, although we control each property and retain all of the economic benefits and risks associated with the property. Each property is held by a third party intermediary in a variable interest entity for which we are the primary beneficiary. Accordingly, we consolidate these properties and their operations even during the period they are held by a third party intermediary.

From December 29, 2005 to June 5, 2006, a third party intermediary was the legal owner of Crow Canyon Commons, but we controlled the property and retained all of the economic benefit and risk associated with the property. Accordingly, we consolidated the property and its operations beginning December 29, 2005.

From May 30, 2007 to October 11, 2007, a third party intermediary was the legal owner of Shoppers’ World, but we controlled the property and retained all of the economic benefit and risk associated with the property. Accordingly, we consolidated the property and its operations beginning May 30, 2007.

From May 30, 2008 to November 25, 2008, a third party intermediary was the legal owner of Del Mar Village, but we controlled the property and retained all of the economic benefit and risk associated with the property. Accordingly, we consolidated the property and its operations beginning May 30, 2008.

Effective on July 11, 2008 with the acquisition of 7015 & 7045 Beracasa Way and September 4, 2008 with the acquisition of Courtyard Shops, a third party intermediary was the legal owner of the respective property. Since we control both properties and retain all economic benefits and risks associated with the properties, we consolidated the properties and their operations effective on their respective acquisition dates. Quantitative information regarding significant assets and liabilities of these variable interest entities is included in Note 2 and Note 6 to these consolidated financial statements.

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Accounting for Income Taxes

In July 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes” which is an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 was issued to reduce the diversity in practice associated with certain aspects of recognition, disclosure and measurement related to accounting for uncertain income tax positions. We adopted FIN 48 effective January 1, 2007. The adoption of FIN 48 did not have a material impact on our financial position, results of operations, or cash flows. We recognize penalties and interest accrued related to unrecognized tax benefits as income tax expense. With few exceptions, we are no longer subject to U.S. federal, state, and local tax examinations by tax authorities for years before 2003. As of December 31, 2008 and 2007, we had no material unrecognized tax benefits.

New Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies to accounting pronouncements that require or permit fair value measurements, except for share-based payments under SFAS No. 123(R). We adopted the recognition and disclosure provisions of SFAS No. 157 for financial assets and financial liabilities and for nonfinancial assets and nonfinancial liabilities that are re-measured at least annually effective January 1, 2008; the adoption did not have a material impact on our financial position, results of operations or cash flows. In accordance with FSP SFAS No. 157-2, “Effective Date of FASB Statement No. 157”, we are required to adopt the provisions of SFAS No. 157 for all other nonfinancial assets and nonfinancial liabilities effective January 1, 2009 and do not expect the adoption to have a material impact on our financial position, results of operations or cash flows.

SFAS No. 157 establishes a hierarchy for inputs used in measuring fair value as follows:

	1.	Level 1 Inputs—quoted prices in active markets for identical assets or liabilities

	2.	Level 2 Inputs—observable inputs other than quoted prices in active markets for identical assets and liabilities

	3.	Level 3 Inputs—unobservable inputs

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement. Our derivative instruments, as further discussed in Note 6, were measured using Level 2 inputs.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115” (“SFAS No. 159”). This standard permits entities to choose to measure many financial instruments and certain other items at fair value and is effective for the first fiscal year beginning after November 15, 2007. We did not make this fair value election when we adopted SFAS No. 159 effective January 1, 2008, and, therefore, it did not have an impact on our financial position, results of operations, or cash flows.

On December 4, 2007, the FASB issued Statement No. 141 (R), “Business Combinations” (“SFAS No. 141 (R)”). SFAS No. 141 (R) broadens and clarifies the definition of a business which will result in significantly more of our acquisitions being treated as business combinations rather than asset acquisitions. FAS 141 (R) is effective for business combinations for which the acquisition date is on or after January 1, 2009. Early adoption is not permitted and therefore, this will only impact prospective acquisitions with no change to the accounting for acquisitions completed prior to or on December 31, 2008. The new standard requires us to expense as incurred all acquisition related transaction costs which could include broker fees, transfer taxes, legal, accounting, valuation,

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and other professional and consulting fees; for acquisitions prior to January 1, 2009, these costs were capitalized as part of the acquisition cost. The impact to our financial statements will vary significantly depending on the number of acquisitions, size of the acquisitions, and location of the acquisitions. Based on acquisitions in the last three years, transaction costs for single asset acquisitions typically ranged from $0.1 million to $1.0 million with significantly higher transaction costs for an acquisition of a larger portfolio. The new standard includes several other changes to the accounting for business combinations including requiring contingent consideration to be measured at fair value at acquisition and subsequently remeasured through the income statement if accounted for as a liability as the fair value changes, any adjustments during the purchase price allocation period to be “pushed back” to the acquisition date with prior periods being adjusted for any changes, and the business combination to be accounted for on the acquisition date or the date control is obtained. During 2008, we expensed all acquisition related costs for acquisitions which did not close prior to December 31, 2008.

On December 4, 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB 51” (“SFAS No. 160”). The new standard significantly changes the accounting and reporting of minority interests in the consolidated financial statements. The new standard requires a non-controlling interest, which is currently referred to as a minority interest, to be recognized as a component of equity rather than included in the mezzanine section of the balance sheet where it is currently presented. The terminology “minority interest” is changed to “noncontrolling interest”. The “minority interest” caption on the statement of operations will be reflected as “net income attributable to the noncontrolling interests” and shown after consolidated net income and will be an adjustment to reconcile to net income. This is a presentation only change for minority interest on both the balance sheet and statement of operations and will have no impact to net income, total liabilities and equity, and earnings per share. The statement also requires the recognition of 100% of the fair values of assets acquired and liabilities assumed in acquisitions of less than 100% controlling interest with subsequent acquisitions of the non-controlling interest recorded as equity transactions. SFAS No. 160 is effective January 1, 2009 and is to be applied prospectively except for the presentation changes to the balance sheet and income statement which will be applied retrospectively in the 2009 financial statements. Effective January 1, 2009, we will reclassify $32.4 million from the mezzanine section of the balance sheet to shareholders’ equity. The additional impact on the financial statements will vary depending on the level of transactions with entities involving non-controlling interests.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 requires enhanced disclosures about an entity’s derivative instruments and hedging activities and is effective for fiscal years beginning after November 15, 2008. We do not expect the adoption of SFAS No. 161 to have a material impact on our consolidated financial statements.

In June 2008, the FASB issued FSP EITF No. 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities” (“FSP EITF No. 03-6-1”). Under the FSP, unvested share-based payment awards that contain non-forfeitable rights to receive dividends (whether paid or unpaid) are participating securities, and should be included in computation of EPS pursuant to the two-class method. As part of our stock based compensation program, we issue restricted shares which vest over a three to six year period; these shares have non-forfeitable rights to dividends immediately after issuance. We currently exclude the unvested shares from the basic EPS calculation and include them using the treasury stock method in diluted earnings per share. We expect the adoption of FSP EITF No. 03-6-1 to result in a minimal decrease to our basic and diluted earnings per share calculations for all periods presented. The FSP is effective for fiscal years beginning after December 15, 2008 and will require retrospective application to all prior period EPS data presented in the financial statements; early adoption is not permitted.

In November 2008, the EITF issued Issue 08-6, “Equity Method Investment Accounting Considerations” (“EITF 08-6”), which clarified the accounting for certain transactions and impairment considerations involving equity method investments. EITF 08-6 clarified that equity method investments should initially be measured at cost, the issuance of shares by the investee would result in a gain or loss on issuance of shares reflected in the income statement of the equity investor, and that a loss in value of an equity investment which is other than a

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temporary decline should be recognized in accordance with APB 18, “The Equity Method of Accounting for Investments in Common Stock”. The consensus is effective on a prospective basis beginning on January 1, 2009; we do not expect EITF 08-6 to have a material impact on our financial position, results of operations, or cash flows.

Consolidated Statements of Cash Flows – Supplemental Disclosures

The following table provides additional information related to the Consolidated Statements of Cash Flows:


	2008			2007			2006
	(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	104,464		$	125,259		$	106,877
Interest capitalized		(5,301	)		(7,865	)		(4,069	)
Interest expense related to discontinued operations		—			(6,029	)		(7,574	)

Interest expense	$	99,163		$	111,365		$	95,234

Cash paid for interest, net of amounts capitalized	$	95,897		$	117,125		$	91,484

Cash paid for income taxes	$	444		$	1,427		$	5,098	(1)

NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Mortgage loans assumed with acquisitions	$	32,452		$	79,987		$	44,297
Extinguishment of capital lease obligations	$	11,545		$	76,449		$	—
Note payable issued with acquisitions	$	2,221		$	—		$	—
Common shares issued with acquisitions	$	—		$	77,957		$	—
DownREIT operating partnership units issued with acquisitions	$	—		$	16,358		$	—
Preferred shares issued with acquisitions	$	—		$	9,997		$	—

(1)	Cash paid for income taxes for 2006 includes $4.1 million related to the sales of condominiums at Santana Row which were conducted through a TRS.

NOTE 2. REAL ESTATE

A summary of our real estate investments and related encumbrances is as follows:


	Cost		Accumulated Depreciation and Amortization			Encumbrances
	(In thousands)
December 31, 2008
Retail and mixed-use properties	$	3,530,539	$	(811,636	)	$	389,318
Retail properties under capital leases		115,784		(25,556	)		63,492
Residential		27,362		(9,066	)		—

	$	3,673,685	$	(846,258	)	$	452,810

December 31, 2007
Retail and mixed-use properties	$	3,224,196	$	(717,257	)	$	373,975
Retail properties under capital leases		201,544		(30,957	)		76,109
Residential		27,107		(8,489	)		—

	$	3,452,847	$	(756,703	)	$	450,084

Retail and mixed-use properties includes the residential portion of Santana Row and for 2008, Arlington East (Bethesda Row). The residential property investments are comprised of our investments in Rollingwood Apartments and Crest Apartments at Congressional Plaza.

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A summary of our significant acquisitions in 2008 and 2007 is as follows:


Date	Property	City, State	Gross Leasable Area	Purchase Price
			(In square feet)	(In millions)
Year ended December 31, 2008
May 30	Del Mar Village	Boca Raton, FL	154,000	$	41.7	(1)
July 11	7015 & 7045 Beracasa Way	Boca Raton, FL	24,000		6.7	(2)
July 16	Chelsea Commons Phase II	Chelsea, MA	26,000		8.0	(3)
September 4	Courtyard Shops	Wellington, FL	127,000		37.9	(4)
September 25 and 30	Bethesda Row	Bethesda, MD	N/A		38.8	(5)

		Total	331,000	$	133.1


Year ended December 31, 2007
February 28	Crow Canyon Crest	San Ramon, CA	17,000	$	10.9	(6)
March 8	The White Marsh Portfolio:(7)	White Marsh, MD			189.4	(8)
	THE AVENUE at White Marsh		296,000
	The Shoppes at Nottingham Square		186,000
	White Marsh Plaza		79,000
	White Marsh Other		53,000
May 30	Shoppers’ World	Charlottesville, VA	169,000		27.2	(9)
October 26	Mid-Pike Plaza	Rockville, MD	—		45.2	(10)
October 26	Huntington Shopping Center	Huntington, NY	—		37.7	(10)

		Total	800,000	$	310.4

(1)	Approximately $1.7 million and $7.4 million of the net assets acquired were allocated to other assets for “above market leases” and liabilities for “below market leases,” respectively.

(2)	Approximately $0.2 million of the net assets acquired were allocated to other assets for “above market leases”. The two buildings acquired are adjacent to our Del Mar Village shopping center.

(3)	Approximately $0.2 million and $0.3 million of the net assets acquired were allocated to other assets for “above market leases” and liabilities for “below market leases,” respectively. This property includes four pad sites that are adjacent to our Chelsea Commons property.

(4)	Approximately $0.6 million and $1.0 million of the net assets acquired were allocated to other assets for “above market leases” and liabilities for “below market leases,” respectively.

(5)

On September 25 and 30, 2008, we completed exchange transactions whereby we sold our fee interest in four land parcels that were subject to long-term ground leases with tenants and acquired the fee interest in two land parcels under our Bethesda Row property. Prior to the transactions, the land parcels at Bethesda Row were encumbered by capital lease obligations which were extinguished as part of the transactions. The transactions were completed as 1031 tax deferred exchange transactions and involved net cash paid to us of $23.2 million.

(6)	Approximately $0.4 million and $1.8 million of the net assets acquired were allocated to other assets for “above market leases” and liabilities for “below market leases,” respectively.

(7)

The White Marsh Portfolio was purchased using $11.5 million of cash plus a combination of common stock and convertible preferred stock, downREIT operating partnership units, and the assumption of mortgage loans through a merger with Nottingham Properties, Inc. The acquisition also included ground leases covering 50,000 square feet of office space and a hotel which are not included in gross leasable area.

(8)	Approximately $3.6 million and $9.3 million of the net assets acquired were allocated to other assets for “above market leases” and liabilities for “below market leases,” respectively.

(9)	Approximately $0.8 million and $2.1 million of the net assets acquired were allocated to other assets for “above market leases” and liabilities for “below market leases,” respectively.

(10)

On October 26, 2007, we completed an exchange transaction whereby we sold our leasehold interests in six New Jersey properties and acquired the fee interests in Mid-Pike Plaza and Huntington Shopping Center. Prior to the transaction, we held leasehold interests in all eight properties. The transaction was completed as a 1031 tax-deferred exchange and involved a cash payment of $17.2 million. All eight properties were previously encumbered by capital lease obligations which were extinguished as part of the transaction.

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On November 16, 2007, we purchased the 10% minority interest in three properties located at our Fifth Avenue, Hermosa Avenue and Third Street Promenade projects for $5.7 million. We now own 100% of these properties.

A summary of our significant dispositions in 2008 and 2007 is as follows:


Sale Date	Property	Location	Year Acquired or Built	Gross Leasable Area		Sales Price		Gain
				(In square feet)		(In millions)
Year ended December 31, 2008
September 25 and 30	Four Land Parcels:(1)					$	38.8	$	0.9
	The Shoppes at Nottingham Square	White Marsh, MD	2007	134,000
	White Marsh Other	White Marsh, MD	2007	N/A	(2)
	White Marsh Other	White Marsh, MD	2007	3,000
	North Dartmouth	North Dartmouth, MA	2006	135,000
December 29	Greenwich Avenue	Greenwich, CT	1995	7,000			7.2		5.2	(3)

		Total		279,000		$	46.0	$	6.1


Year ended December 31, 2007
April 5	Bath Shopping Center	Bath, ME	2006	101,000		$	21.8	$	0.6	(4)
June 20	Key Road Plaza	Keene, NH	2006	76,000			15.3		0.4	(5)
June 20	Riverside Plaza	Keene, NH	2006	218,000			25.9		0.5	(6)
October 11	Forest Hills	Forest Hills, NY	1997	39,500			33.2		19.1	(7)
October 26	New Jersey Leasehold Interests:						65.7		79.6	(8)
	Allwood Shopping Center	Clifton, NJ	1988	50,000
	Blue Star Shopping Center	Watchung, NJ	1988	410,000
	Brunswick Shopping Center	North Brunswick, NJ	1988	303,000
	Clifton Shopping Center	Clifton, NJ	1988	80,000
	Hamilton Shopping Center	Hamilton, NJ	1988	190,000
	Rutgers Shopping Center	Franklin, NJ	1988	267,000

		Total		1,734,500		$	161.9	$	100.2

(1)

On September 25 and 30, 2008, we completed exchange transactions whereby we sold our fee interest in four land parcels that were subject to long-term ground leases with tenants and acquired the fee interest in two land parcels under our Bethesda Row property. Three of the land parcels we sold were in White Marsh, MD, and one parcel was in North Dartmouth, MA. The transactions were completed as 1031 tax deferred exchange transactions and involved net cash paid to us of $23.2 million.

(2)	This land parcel was subject to a ground lease covering 50,000 square feet of office space not included in our gross leasable area.

(3)	We sold one of two retail buildings located in Greenwich, CT.

(4)	Gain of $0.6 million is net of $0.3 million in taxes.

(5)	Gain of $0.4 million is net of $0.1 million in taxes.

(6)	Gain of $0.5 million is net of $0.1 million in taxes.

(7)	We sold two of three retail buildings located in Forest Hills, NY.

(8)

On October 26, 2007, we completed an exchange transaction whereby we sold our leasehold interests in six New Jersey properties and acquired the fee interests in Mid-Pike Plaza and Huntington Shopping Center. The transaction was completed as a 1031 tax-deferred exchange and involved a cash payment of $17.2 million. All eight properties were previously encumbered by capital lease obligations which were extinguished as part of the transaction.

F-18

NOTE 3. MORTGAGE NOTES RECEIVABLE

At December 31, 2008 and 2007, we had mortgage notes receivable with an aggregate carrying amount of $45.8 million and $40.6 million, respectively, which are net of a valuation allowance of $4.2 million and $4.6 million, respectively. These mortgage notes are due over various terms from November 2009 to May 2021. At December 31, 2008 and 2007, our mortgages had a weighted average interest rate of 9.9%. Interest income is accrued as earned. Under the terms of certain of these mortgages, we receive additional interest based upon the gross income of the secured properties and, upon sale of the properties, we will share in the appreciation of the properties.

On November 5, 2008, we entered into an agreement to loan a third party up to $7.3 million which is secured by two properties. The loan has an initial term of one year and bears interest at LIBOR plus 725 basis points at a minimum of 10.0%. The borrower has two one-year extension options with interest at LIBOR plus 925 basis points at a minimum of 12.0%. Interest is due monthly in arrears and is payable out of net cash flow from the two properties. Any unpaid interest is due at maturity. The loan can be repaid at any time prior to maturity without penalty. As of December 31, 2008, we have funded $5.5 million to the borrower which is secured by one property.

NOTE 4. REAL ESTATE PARTNERSHIP

We have a joint venture arrangement (“the Partnership”) with affiliates of a discretionary fund created and advised by ING Clarion Partners (“Clarion”). We own 30% of the equity in the Partnership, and Clarion owns 70%. As of December 31, 2008, the Partnership owned seven retail real estate projects. We are the manager of the Partnership and its properties, earning fees for acquisitions, dispositions, management, leasing, and financing. We also have the opportunity to receive performance-based earnings through our Partnership interest. As of December 31, 2008, we have made total contributions of $34.8 million and received total distributions of $6.4 million. We account for our interest in the Partnership using the equity method.

The following tables provide summarized operating results and the financial position of the Partnership:


	Year Ended December 31,
	2008		2007		2006
	(In thousands)
OPERATING RESULTS
Revenue	$	19,111	$	17,566	$	10,523
Expenses
Other operating expenses		5,185		4,478		2,828
Depreciation and amortization		4,792		4,471		2,767
Interest expense		4,537		4,478		3,506

Total expenses		14,514		13,427		9,101

Net income	$	4,597	$	4,139	$	1,422

Our share of net income from real estate partnership	$	1,612	$	1,395	$	656

F-19


	December 31,
	2008		2007
	(In thousands)
BALANCE SHEETS
Real estate, net	$	187,910	$	191,747
Cash		2,604		1,453
Other assets		7,066		7,173

Total assets	$	197,580	$	200,373

Mortgages payable	$	81,365	$	81,540
Other liabilities		7,363		8,691
Partners’ capital		108,852		110,142

Total liabilities and partners’ capital	$	197,580	$	200,373

Our share of unconsolidated debt	$	24,410	$	24,462

Our investment in real estate partnership	$	29,252	$	29,646

Our unconsolidated real estate partnership made no acquisitions in 2008. The following table provides a summary of acquisitions made by our unconsolidated real estate partnership in 2007:


Date	Property	City, State	Gross Leasable Area	Purchase Price
			(In square feet)	(In millions)
February 15	Free State Shopping Center	Bowie, MD	278,000	$	64.1
February 20	Lake Barcroft Shopping Center(1)	Falls Church, VA	9,000		6.0

		Total	287,000	$	70.1

(1)	The property acquired is adjacent to and operated as part of Barcroft Plaza which is also owned by the Partnership.

On April 10, 2007, our unconsolidated real estate partnership entered into a mortgage note for approximately $4.2 million. The mortgage note is secured by the Lake Barcroft property, which was acquired in February 2007, and by Barcroft Plaza. The Lake Barcroft property is adjacent to and operated as part of Barcroft Plaza. The note matures on July 1, 2016, bears interest at 5.71% per annum and requires monthly payments of interest only.

NOTE 5. ACQUIRED IN-PLACE LEASES

Acquired above market leases are included in prepaid expenses and other assets and had a balance of $19.1 million and $17.6 million at December 31, 2008 and 2007, respectively, and accumulated amortization of $6.6 million and $4.7 million at December 31, 2008 and 2007, respectively. Acquired below market leases are included in other liabilities and deferred credits and had a balance of $53.1 million and $46.0 million at December 31, 2008 and 2007, respectively, and accumulated amortization of $16.6 million and $13.3 million at December 31, 2008 and 2007, respectively. The value allocated to in-place leases is amortized over the related lease term and reflected as additional rental income for below market leases or a reduction of rental income for above market leases in the statement of operations. Rental income included net amortization from acquired in-place leases of $2.2 million, $2.9 million and $2.5 million in 2008, 2007 and 2006, respectively. The remaining weighted-average amortization period as of December 31, 2008, is 8.9 years and 14.9 years for above market leases and below market leases, respectively.

F-20

The amortization for acquired in-place leases during the next five years and thereafter, assuming no early lease terminations, is as follows:


	Above Market Leases		Below Market Leases
	(In thousands)
Year ending December 31,
2009	$	2,247	$	4,055
2010		1,871		3,437
2011		1,550		3,100
2012		1,175		2,805
2013		881		2,396
Thereafter		4,787		20,669

	$	12,511	$	36,462

F-21

NOTE 6. DEBT

The following is a summary of our total debt outstanding as of December 31, 2008 and 2007:


	Principal Balance as of December 31,						Stated Interest Rate as of December 31, 2008		Maturity Date
Description of Debt	2008			2007
	(Dollars in thousands)
Mortgage loans
Leesburg Plaza	$	—		$	9,631		6.510	%	October 1, 2008
164 E. Houston Street		—			46		7.500	%	October 6, 2008
White Marsh Other		—			1,149		6.060	%	December 31, 2008
Mercer Mall		4,370			4,441		8.375	%	April 1, 2009
Federal Plaza		33,128			33,675		6.750	%	June 1, 2011
Tysons Station		6,070			6,217		7.400	%	September 1, 2011
Courtyard Shops		7,731			—		6.870	%	July 1, 2012
Bethesda Row		19,996			—		5.370	%	January 1, 2013
Bethesda Row		4,437			—		5.050	%	February 1, 2013
White Marsh Plaza		10,122			10,350		6.040	%	April 1, 2013
Crow Canyon		21,214			21,588		5.400	%	August 11, 2013
Melville Mall		24,456			25,095		5.250	%	September 1, 2014
THE AVENUE at White Marsh		60,016			61,035		5.460	%	January 1, 2015
Barracks Road		41,368			41,988		7.950	%	November 1, 2015
Hauppauge		15,595			15,828		7.950	%	November 1, 2015
Lawrence Park		29,322			29,761		7.950	%	November 1, 2015
Wildwood		25,773			26,159		7.950	%	November 1, 2015
Wynnewood		29,882			30,330		7.950	%	November 1, 2015
Brick Plaza		30,633			31,128		7.415	%	November 1, 2015
Shoppers’ World		5,865			5,980		5.910	%	January 31, 2021
Mount Vernon		11,640			11,962		5.660	%	April 15, 2028
Chelsea		8,101			8,240		5.360	%	January 15, 2031

Subtotal		389,719			374,603
Net unamortized discount		(401	)		(628	)

Total mortgage loans		389,318			373,975

Notes payable
Term loan		200,000			200,000		LIBOR+0.575	%	November 6, 2009
Revolving credit facility		123,500			—		LIBOR+0.425	%	July 27, 2010
Other		2,296			—		6.500	%	April 1, 2012
Perring Plaza renovation		1,195			1,420		10.000	%	January 31, 2013
Escondido (Municipal bonds)		9,400			9,400		1.878	%	October 1, 2016

Total notes payable		336,391			210,820

Senior notes and debentures
8.75% notes		175,000			175,000		8.750	%	December 1, 2009
4.50% notes		75,000			75,000		4.500	%	February 15, 2011
6.00% notes		175,000			175,000		6.000	%	July 15, 2012
5.40% notes		135,000			135,000		5.400	%	December 1, 2013
5.65% notes		125,000			125,000		5.650	%	June 1, 2016
6.20% notes		200,000			200,000		6.200	%	January 15, 2017
7.48% debentures		29,200			50,000		7.480	%	August 15, 2026
6.82% medium term notes		40,000			40,000		6.820	%	August 1, 2027

Subtotal		954,200			975,000
Net unamortized premium		2,384			2,556

Total senior notes and debentures		956,584			977,556

Capital lease obligations		63,492			76,109		Various		Various through 2106

Total debt and capital lease obligations	$	1,745,785		$	1,638,460

F-22

On February 21, 2008, we entered into two interest rate swap agreements to fix the variable portion of our $200 million term loan through November 6, 2008. The first swap fixed the variable rate at 2.725% on a notional amount of $100 million and the second swap fixed the variable rate at 2.852% on a notional amount of $100 million for a combined fixed rate of 2.789%. Both swaps were designated and qualified as cash flow hedges and were recorded at fair value until the swaps ended on November 6, 2008.

On July 1, 2008, we repaid the $9.6 million mortgage loan on Leesburg Plaza which had an original maturity date of October 1, 2008. This loan was repaid with funds borrowed on our $300 million revolving credit facility.

On July 15, 2008, we exercised a one-year extension for our $200 million term loan extending the maturity date to November 6, 2009.

On August 15, 2008, one of the holders redeemed $20.8 million of the outstanding $50.0 million balance of our 7.48% debentures. The notice period for additional redemptions has expired. These debentures were repaid with funds borrowed on our $300 million revolving credit facility.

In connection with the acquisition of Courtyard Shops and two land parcels at Bethesda Row, we assumed three mortgage notes as follows:


Property	Fair Value(1)		Maturity Date	Stated Annual Interest Rate
	(In millions)
Courtyard Shops	$	8.1	July 1, 2012	6.87	%
Bethesda Row	$	20.0	January 1, 2013	5.37	%
Bethesda Row	$	4.4	February 1, 2013	5.05	%

(1)	The aggregate face amount of the mortgage notes is $32.2 million. However, in accordance with GAAP, these mortgage notes were recorded at their aggregate fair value of $32.5 million.

On September 25 and 30, 2008, we acquired the fee interest in two land parcels under our Bethesda Row property. Prior to the transactions, we had capital lease obligations totaling $11.5 million on the two land parcels which were extinguished as part of the transactions.

On December 31, 2008, we repaid the $1.1 million mortgage loan on one of our properties in White Marsh, MD, on its maturity date. This loan was repaid with funds borrowed on our $300 million revolving credit facility.

The maximum amount of borrowings outstanding under our $300 million revolving credit facility during 2008, 2007 and 2006 was $159.0 million, $244.0 million and $297.0 million, respectively. The weighted average amount of borrowings outstanding was $61.4 million, $154.3 million and $106.0 million for 2008, 2007 and 2006, respectively. Our revolving credit facility had a weighted average interest rate, before amortization of debt fees, of 3.0%, 5.6% and 5.6% for 2008, 2007 and 2006, respectively. In addition, we are required to pay an annual facility fee of $0.5 million. The loan matures on July 27, 2010, subject to a one-year extension at our option.

Our credit facility and certain notes require us to comply with various financial covenants, including the maintenance of minimum shareholder’s equity and debt coverage ratios and a maximum ratio of debt to net worth. As of December 31, 2008, we were in compliance with all loan covenants.

F-23

Scheduled principal payments on mortgage loans, notes payable, senior notes and debentures as of December 31, 2008 are as follows:


	Mortgage Loans		Notes Payable			Senior Notes and Debentures		Total Principal
	(In thousands)
Year ending December 31,
2009	$	11,389	$	201,153		$	175,000	$	387,542
2010		7,714		124,361	(1)		—		132,075
2011		45,039		720			75,000		120,759
2012		14,662		727			175,000		190,389
2013		59,460		30			135,000		194,490
Thereafter		251,455		9,400			394,200		655,055

	$	389,719	$	336,391		$	954,200	$	1,680,310	(2)

(1)	Our $300 million four-year revolving credit facility matures on July 27, 2010, subject to a one-year extension at our option. As of December 31, 2008, there is $123.5 million drawn under this credit facility.

(2)	The total debt maturities differs from the total reported on the consolidated balance sheet due to the unamortized discount or premium on certain senior notes, debentures and mortgage payables.

Future minimum lease payments and their present value for property under capital leases as of December 31, 2008, are as follows:


	(In thousands)
Year Ending December 31,
2009	$	5,590
2010		5,590
2011		5,590
2012		5,599
2013		5,602
Thereafter		154,040

		182,011
Less amount representing interest		(118,519	)

Present value	$	63,492

Certain of our capital lease obligations required payments based on the performance of the related properties in addition to the minimum payment amounts set forth above. The additional performance based payments were $4.1 million and $5.6 million in 2007 and 2006, respectively and are included in “discontinued operations—income.” All capital leases with performance based payments were extinguished in October 2007.

F-24

NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Except as disclosed below, the carrying amount of our financial instruments approximates their fair value. The fair value of our mortgages payable, notes payable, and senior notes and debentures is sensitive to fluctuations in interest rates. Quoted market prices were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis is generally used to estimate the fair value of our mortgages and notes payable. Considerable judgment is necessary to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. A summary of the carrying amount and fair value of our mortgages payable, notes payable and senior notes and debentures is as follows:


	December 31, 2008				December 31, 2007
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Mortgages and notes payable	$	725,709	$	722,908	$	584,795	$	603,200
Senior notes and debentures	$	956,584	$	799,241	$	977,556	$	979,562

NOTE 8. COMMITMENTS AND CONTINGENCIES

We are sometimes involved in lawsuits, warranty claims, and environmental matters arising in the ordinary course of business. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters.

We are currently a party to various legal proceedings. Other than as described below, we do not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on our financial position or overall trends in results of operations; however, litigation is subject to inherent uncertainties. Also under our leases, tenants are typically obligated to indemnify us from and against all liabilities, costs and expenses imposed upon or asserted against us (1) as owner of the properties due to certain matters relating to the operation of the properties by the tenant, and (2) where appropriate, due to certain matters relating to the ownership of the properties prior to their acquisition by us.

We have a litigation matter filed against us in May 2003 which alleges that a one page document entitled “Final Proposal,” which included language that it was subject to approval of formal documentation, constituted a ground lease of a parcel of property located adjacent to our Santana Row property and gave the plaintiff the option to require that we acquire the property at a price determined in accordance with a formula included in the “Final Proposal.” A trial as to liability only was held in June 2006 and a jury rendered a verdict against us. A trial on the issue of damages was held in April 2008; however, the judge has not yet issued a ruling. Reports from our experts and the plaintiff’s experts show potential damages ranging from $600,000 to $24 million. Pending the judge’s ruling, we cannot make a reasonable estimate of potential damages. We will evaluate whether to appeal the jury verdict after the judge issues his ruling on damages taking into account a variety of factors including the amount of damages awarded. If we choose not to appeal or we appeal and are not successful in overturning the jury verdict, we will be liable for damages. Depending on the amount of damages awarded, it is possible there could be a material adverse impact on our net income in the period in which it becomes both probable that we will have to pay the damages and such damages can be reasonably estimated. In any event, management does not believe that this matter will have a material impact on our financial position.

We are also involved in a litigation matter relating to a shopping center in New Jersey where a former tenant has alleged that we and our management agent acted improperly by failing to disclose a condemnation action at the property that was pending when the lease was signed. A trial as to liability only was concluded in April 2007, and in May 2008, a judgment was entered that ruled in our favor on certain legal issues and against us on other legal issues. In December 2008, we reached a settlement with the plaintiff of those matters where the court ruled against us and determined that we are liable. The total settlement amount was $2.3 million of which we paid $1.15 million and the third party management agent paid $1.15 million. We are currently in the process of

F-25

settling the amount of the portion of the plaintiff’s legal fees which we are required to pay; we expect the amount to be approximately $1.0 million of which we will pay 50% and the third party management agent will pay 50%. Our share of the total estimated settlement of $1.6 million is included in “general and administrative expense” in the statement of operations.

We reserve for estimated losses, if any, associated with warranties given to a buyer at the time real estate is sold or other potential liabilities relating to that sale, taking any insurance policies into account. These warranties may extend up to ten years and require significant judgment. Any increases to our estimated warranty losses would usually result in a decrease in net income.

In 2005 and 2006, warranty reserves for condominium units sold at Santana Row were established to cover potential costs for materials, labor and other items associated with warranty-type claims that may arise within the ten-year statutorily mandated latent construction defect warranty period. In 2006 and 2007, we increased our warranty reserves by $2.5 million and $5.1 million, respectively, net of taxes, related to defective work done by third party contractors while upgrades were made to certain units being prepared for sale. During 2007 and 2008, we evaluated the potentially affected units, and as of December 31, 2008, have substantially completed the inspections and repairs. The extent of the damages encountered in the units and the resulting costs to repair varied considerably amongst the units. As a result, we have adjusted the warranty reserve to reflect the actual costs incurred related to these issues which is approximately $2.4 million, net of $1.5 million of taxes. The change in the reserve of $5.2 million is included in “Discontinued operations—gain on sale of real estate” in 2008. These amounts do not reflect any amounts we may recover in the future from insurance or the contractors responsible for the defective work. Due to the inherent uncertainty related to the recovery from insurance or the contractor, we are unable to estimate an expected recovery; any recovery will be reflected in our financial statements once the amount is determinable, considered probable, and collectible.

We are self-insured for general liability costs up to predetermined retained amounts per claim, and we believe that we maintain adequate accruals to cover our retained liability. We currently do not maintain third party stop-loss insurance policies to cover liability costs in excess of predetermined retained amounts. Our accrual for self-insurance liability is determined by management and is based on claims filed and an estimate of claims incurred but not yet reported. Management considers a number of factors, including third-party actuarial analysis and future increases in costs of claims, when making these determinations. If our liability costs exceed these accruals, it will reduce our net income.

At December 31, 2008 and 2007, our reserves for warranties and general liability costs were $8.6 million and $16.0 million, respectively. Any potential losses which exceed our estimates would result in a decrease in our net income. During 2008 and 2007, we made payments from these reserves of $2.5 million and $2.4 million, respectively. Although we consider the reserve to be adequate, there can be no assurance that the reserve will prove to be adequate over-time to cover losses due to the difference between the assumptions used to estimate the reserve and actual losses.

At December 31, 2008, we had letters of credit outstanding of approximately $10.5 million which are collateral for existing indebtedness and other obligations of the Trust.

Under the terms of the Congressional Plaza partnership agreement, from and after January 1, 1986, an unaffiliated third party has the right to require us and the two other minority partners to purchase between one-half to all of its 29.47% interest in Congressional Plaza at the interest’s then-current fair market value. Based on management’s current estimate of fair market value as of December 31, 2008, our estimated maximum liability upon exercise of the put option would range from approximately $42 million to $49 million.

Under the terms of one other partnership which owns a project in southern California, if certain leasing and revenue levels are obtained for the property owned by the partnership, the other partner may require us to purchase their partnership interest at a formula price based upon property operating income. The purchase price for the partnership will be paid using our common shares or, subject to certain conditions, cash. If the other partner does not redeem their interest, we may choose to purchase the limited partnership interest upon the same terms.

F-26

Under the terms of various other partnership agreements for entities, the partners have the right to exchange their operating units for cash or the same number of our common shares, at our option. As of December 31, 2008, a total of 373,260 operating units are outstanding.

We have one ground lease in which the lessor has a put option, which would require us to purchase the property during the remaining lease term. If the lessor were to exercise this option in 2009, the purchase price would be approximately $7.1 million.

A master lease for Mercer Mall includes a fixed purchase price option for $55 million in 2023. If we fail to exercise our purchase option, the owner of Mercer Mall has a put option which would require us to purchase Mercer Mall for $60 million in 2025.

A master lease for Melville Mall includes a fixed purchase price option in 2021 for $5 million and the assumption of the owner’s debt which is $24.5 million at December 31, 2008. If we fail to exercise our purchase option, the owner of Melville Mall has a put option which would require us to purchase Melville Mall in 2023 for $5 million and the assumption of the owner’s debt.

As of December 31, 2008 in connection with renovation and development projects, the Trust has contractual obligations of approximately $52.5 million.

We are obligated under ground lease agreements on several shopping centers requiring minimum annual payments as follows, as of December 31, 2008:


	(In thousands)
Year Ending December 31,
2009		3,122
2010		3,131
2011		3,167
2012		3,056
2013		3,064
Thereafter		185,437

	$	200,977

NOTE 9. SHAREHOLDERS’ EQUITY

We have a Dividend Reinvestment Plan, whereby shareholders may use their dividends and optional cash payments to purchase shares. In 2008, 2007 and 2006, 39,343 shares, 32,615 shares, and 44,077 shares, respectively, were issued under the Plan.

On March 8, 2007, as part of the consideration to acquire the White Marsh portfolio, we issued (i) 884,066 common shares at $88.18 per share, par value $0.01 per share, (ii) 399,896 shares of 5.417% Series 1 Cumulative Convertible Preferred Shares (“Series 1 Preferred Shares”) at the liquidation preference of $25 per share, par value $0.01 per share, and (iii) 185,504 downREIT operating partnership units at $88.18 per share. The Series 1 Preferred Shares accrue dividends at a rate of 5.417% per year and are convertible at any time by the holders to our common shares at a conversion rate of $104.69 per share. The Series 1 Preferred Shares are also convertible under certain circumstances at our election. The holders of the Series 1 Preferred Shares have no voting rights.

On December 27, 2007, we issued 2.0 million common shares at $81.21 per share, for cash proceeds of approximately $162.4 million before other expenses of the offering. The proceeds were used to reduce the amount outstanding on our revolving credit facility.

F-27

NOTE 10. DIVIDENDS

A summary of dividends declared and paid per share is as follows:


	Year Ended December 31,
	2008				2007				2006
	Declared		Paid		Declared		Paid		Declared			Paid
Common shares	$	2.520	$	2.480	$	2.370	$	2.335	$	2.460	(1)	$	2.440	(1)
5.417% Series 1 Cumulative Convertible Preferred(2)	$	1.354	$	1.354	$	1.106	$	0.767	$	—		$	—
8.5% Series B Cumulative Redeemable Preferred(3)	$	—	$	—	$	—	$	—	$	1.753		$	2.284

(1)	Includes a special dividend declared and paid of $0.20 resulting from the sales of condominiums at Santana Row.

(2)	On March 8, 2007, as part of the consideration to acquire the White Marsh portfolio, we issued 399,896 shares of 5.417% Series 1 Cumulative Convertible Preferred shares. Dividends are paid on a quarterly basis at a rate of 5.417% per year.

(3)	On November 27, 2006, the Trust redeemed all 5,400,000 outstanding shares of its Series B Cumulative Redeemable Preferred Shares. Dividends on the Series B Preferred Shares ceased to accrue on November 27, 2006.

A summary of the income tax status of dividends per share paid is as follows:


	Year Ended December 31,
	2008		2007		2006
Common shares
Ordinary dividend	$	2.455	$	2.174	$	1.813
Ordinary dividend eligible for 15% rate		0.025		0.044		0.066
Return of capital		—		—		0.561
Capital gain		—		0.117		—

	$	2.480	$	2.335	$	2.440

5.417% Series 1 Cumulative Convertible Preferred
Ordinary dividend	$	1.341	$	0.714	$	—
Ordinary dividend eligible for 15% rate		0.013		0.015		—
Capital gain		—		0.038		—

	$	1.354	$	0.767	$	—

8.5% Series B Cumulative Redeemable Preferred
Ordinary dividend	$	—	$	—	$	2.284
Capital gain		—		—		—

	$	—	$	—	$	2.284

On October 29, 2008, the Trustees declared a quarterly cash dividend of $0.65 per common share, payable January 15, 2009 to common shareholders of record on January 2, 2009.

NOTE 11. OPERATING LEASES

At December 31, 2008, our 84 predominantly retail shopping center and mixed use properties are located in 13 states and the District of Columbia. There are approximately 2,450 leases with tenants providing a wide range of retail products and services. These tenants range from sole proprietorships to national retailers; no one tenant or corporate group of tenants accounts for more than 2.6% of annualized base rent.

F-28

Our leases with commercial property and residential tenants are classified as operating leases. Commercial property leases generally range from three to ten years (certain leases with anchor tenants may be longer), and in addition to minimum rents, usually provide for percentage rents based on the tenant’s level of sales achieved and cost recoveries for the tenant’s share of certain operating costs. Leases on apartments are generally for a period of one year or less.

As of December 31, 2008, minimum future commercial property rentals from noncancelable operating leases, before any reserve for uncollectible amounts and assuming no early lease terminations, at our operating properties are as follows:


	(In thousands)
Year Ending December 31,
2009		367,354
2010		343,076
2011		305,344
2012		265,742
2013		215,761
Thereafter		1,224,073

	$	2,721,350

NOTE 12. COMPONENTS OF RENTAL INCOME AND EXPENSE

The principal components of rental income are as follows:


	Year Ended December 31,
	2008		2007		2006
	(In thousands)
Minimum rents
Retail and commercial	$	366,380	$	345,486	$	310,955
Residential		18,326		15,312		12,805
Cost reimbursement		103,381		91,164		77,617
Percentage rent		8,415		7,884		6,921
Other		5,462		5,882		5,963

	$	501,964	$	465,728	$	414,261

Minimum rents include $5.8 million, $8.1 million and $5.7 million for 2008, 2007 and 2006, respectively, to recognize minimum rents on a straight-line basis. In addition, minimum rents include $2.2 million, $2.9 million and $2.5 million for 2008, 2007 and 2006, respectively, to recognize income from the amortization of in-place leases in accordance with SFAS No. 141.

F-29

The principal components of rental expenses are as follows:


	Year Ended December 31,
	2008		2007		2006
	(In thousands)
Repairs and maintenance	$	38,969	$	35,403	$	28,371
Utilities		18,112		16,837		14,814
Management fees and costs		14,082		13,127		12,479
Payroll properties		8,093		7,445		6,896
Bad debt expense		6,228		1,660		547
Ground rent		5,875		6,002		6,041
Insurance		5,510		6,888		5,491
Marketing		5,953		4,539		3,953
Other operating		6,896		7,462		5,572

	$	109,718	$	99,363	$	84,164

NOTE 13. DISCONTINUED OPERATIONS

Results of properties sold constitute discontinued operations and as such, the operations of these properties are classified as discontinued operations for all periods presented. A summary of the financial information for the discontinued operations is as follows:


	Year Ended December 31,
	2008		2007		2006
	(In thousands)
Revenue from discontinued operations	$	2,724	$	23,990	$	25,050
Income from discontinued operations	$	1,877	$	6,760	$	4,804

In September 2008, we applied for a refund of taxes paid to the state of California related to our TRS activities, primarily the condominium units sold in 2005 and 2006 at Santana Row. The refund related to the condominium units of $1.1 million is included in “Discontinued operations—gain on sale of real estate.”

NOTE 14. SHARE-BASED COMPENSATION PLANS

A summary of share-based compensation expense included in net income is as follows:


	Year Ended December 31,
	2008			2007			2006
	(In thousands)
Share-based compensation incurred
Grants of common shares	$	6,442		$	6,867		$	5,156
Grants of options		1,336			1,173			1,334

		7,778			8,040			6,490
Capitalized share-based compensation		(1,208	)		(805	)		(620	)

Share-based compensation expensed	$	6,570		$	7,235		$	5,870

As of December 31, 2008, we have grants outstanding under two share-based compensation plans. In May 2007, our shareholders approved an amendment to the 2001 Long Term Incentive Plan (“the 2001 Plan”), originally established in May 2001, which increased the authorization to grant share options, common shares and other share-based awards from 1,750,000 common shares of beneficial interest to 3,250,000 common shares of beneficial interest. Our 1993 Long Term Incentive Plan (‘the 1993 Plan”) authorized the grant of share options, common shares and other share-based awards for up to 5,500,000 common shares of beneficial interest. The 1993 Plan expired in May 2003.

F-30

Option awards under the 2001 Plan and the 1993 Plan are required to have an exercise price at least equal to the closing trading price of our common shares on the date of grant. Options and share awards under these plans generally vest over 3 to 5 years and option awards typically have a 10-year contractual term. We pay dividends on unvested shares. Certain options and share awards provide for accelerated vesting if there is a change in control. Additionally, the vesting on certain option and share awards can accelerate in part or in full upon retirement based on the age of the retiree or upon termination without cause.

Effective December 31, 2007, Larry Finger, our former Chief Financial Officer, was no longer employed by the Trust. Under his existing severance agreement, his departure was treated as a termination without cause. As a result, we recognized approximately $0.6 million related to the accelerated vesting of unvested shares and options and $0.4 million related to a cash payment to Mr. Finger. These amounts are included in general and administrative expenses in the 2007 consolidated statement of operations.

As a result of the exercise of options, we had notes outstanding from our officers and employees for $0.8 million at December 31, 2007; the notes were fully repaid during 2008. These notes bore interest at LIBOR plus a market-rate spread with the rate adjusted annually on the anniversary date and were collateralized by the shares with recourse to the borrower. Option awards made in 2001 and later do not provide for employees to be able to exercise their options with a loan from the Trust.

The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities, term, dividend yields, employee exercises and employee terminations are primarily based on historical data. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of each share award is determined based on the closing trading price of our common shares on the grant date.

The following table provides a summary of the weighted-average assumption used to value options:


	Year Ended December 31,
	2008		2007		2006
Volatility	21.4	%	20.0	%	18.7	%
Expected dividend yield	3.6	%	3.4	%	4.9	%
Expected term (in years)	5.4		4.1		3.8
Risk free interest rate	2.7	%	4.7	%	4.6	%

The following table provides a summary of option activity for 2008:


	Shares Under Option		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
					(In years)	(In thousands)
Outstanding at December 31, 2007	850,628		$	49.13
Granted	206,117			73.15
Exercised	(214,853	)		37.36
Forfeited or expired	(16,546	)		82.91

Outstanding at December 31, 2008	825,346		$	57.52	6.4	$	9,410

Exercisable at December 31, 2008	424,333		$	42.71	4.6	$	9,410

The weighted-average grant-date fair value of options granted during 2008, 2007 and 2006 was $10.46 per share, $14.48 per share and $7.97 per share, respectively. The total cash received from options exercised during 2008, 2007 and 2006 was $8.0 million, $5.1 million and $8.8 million, respectively. The total intrinsic value of options exercised during the year ended December 31, 2008, 2007 and 2006 was $9.3 million, $4.1 million and $10.9 million, respectively.

F-31

The following table provides a summary of restricted share activity for 2008:


	Shares		Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2007	198,406		$	77.21
Granted	99,504			72.98
Vested	(98,658	)		66.73
Forfeited	(13,961	)		86.93

Unvested at December 31, 2008	185,291		$	79.49

The weighted-average grant-date fair value of stock awarded in 2008, 2007 and 2006 was $72.98, $91.13 and $68.18, respectively. The total vesting-date fair value of shares vested during the year ended December 31, 2008, 2007 and 2006 was $5.9 million, $10.7 million and $7.0 million, respectively.

As of December 31, 2008, there was $12.5 million of total unrecognized compensation cost related to unvested share-based compensation arrangements (i.e. options and unvested shares) granted under our plans. This cost is expected to be recognized over the next 5.1 years with a weighted-average period of 1.4 years.

Subsequent to December 31, 2008, common shares and options were awarded under various incentive compensation plans as follows:


Date	Award	Vesting Term	Beneficiary
February 17, 2009	71,975 Restricted shares	3 to 5 years	Officers and key employees
February 17, 2009	193,036 Options	5 years	Officers and key employees
January 2, 2009	6,039 Shares	Immediate	Trustees

NOTE 15. SAVINGS AND RETIREMENT PLANS

We have a savings and retirement plan in accordance with the provisions of Section 401(k) of the Internal Revenue Code. Generally, employees can elect, at their discretion, to contribute a portion of their compensation up to a maximum of $15,500, $15,500 and $15,000 for 2008, 2007 and 2006, respectively. Under the plan, we contribute 50% of each employee’s first 5% of contributions. In addition, we may make discretionary contributions within the limits of deductibility set forth by the Code. Our employees are immediately eligible to become plan participants. Employees are eligible to receive matching contributions immediately on their participation, however, these matching payments will not vest until their first anniversary of employment. Our expense for the years ended December 31, 2008, 2007 and 2006 was approximately $397,000, $365,000 and $342,000, respectively.

A non-qualified deferred compensation plan for our officers and certain other employees was established in 1994 that allows the participants to defer a portion of their income. As of December 31, 2008, we are liable to participants for approximately $3.8 million under this plan. Although this is an unfunded plan, we have purchased certain investments to match this obligation. Our obligation under this plan and the related investments are both included in the accompanying financial statements.

F-32

NOTE 16. EARNINGS PER SHARE

We calculate basic and diluted earnings per share in accordance with SFAS No. 128, “Earnings Per Share.” Basic earnings per share (“EPS”) is computed by dividing net income available for common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares and then shared in our earnings. In 2008, 2007 and 2006, operating partnership units and Series 1 Preferred Shares were excluded from diluted EPS as the conversion of these units would have resulted in an anti-dilutive effect. Certain stock options and unvested shares have also been excluded from the calculation of diluted earnings per share as they are anti-dilutive.

The following table sets forth the reconciliation between basic and diluted EPS:


	Year Ended December 31,
	2008			2007			2006
	(In thousands, except per share data)
NUMERATOR
Income from continuing operations	$	115,338		$	94,009		$	89,952
Preferred stock dividends		(541	)		(442	)		(10,423	)
Preferred stock redemption costs		—			—			(4,775	)

Income from continuing operations available for common shareholders		114,797			93,567			74,754
Discontinued operations—income		1,877			6,760			4,804
Discontinued operations—gain on sale of real estate		12,572			94,768			16,515
Gain on sale of real estate		—			—			7,441

Net income available for common shareholders, basic and dilutive	$	129,246		$	195,095		$	103,514

DENOMINATOR
Weighted average common shares outstanding—basic		58,665			56,108			53,469
Effect of dilutive securities:
Stock options		223			365			389
Unvested stock		26			70			104

Weighted average common shares outstanding—dilutive		58,914			56,543			53,962

EARNINGS PER COMMON SHARE, BASIC
Continuing operations	$	1.96		$	1.67		$	1.40
Discontinued operations		0.24			1.81			0.40
Gain on sale of real estate		—			—			0.14

	$	2.20		$	3.48		$	1.94

EARNINGS PER COMMON SHARE, DILUTED
Continuing operations	$	1.95		$	1.65		$	1.39
Discontinued operations		0.24			1.80			0.39
Gain on sale of real estate		—			—			0.14

	$	2.19		$	3.45		$	1.92

F-33

NOTE 17. SEGMENT INFORMATION

FASB Statement No. 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS No. 131”) requires disclosure of certain operating and financial data with respect to separate business activities within an enterprise. Our primary business is the ownership, management, development, and redevelopment of retail and mixed use properties. During 2008, we restructured our asset management and property operations groups and consequently, re-evaluated our reportable segments. We review operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. We evaluate financial performance using property operating income defined as total revenues less rental expenses and real estate taxes. No individual property constitutes more than 10% of our revenues or property operating income and we have no operations outside of the United States of America. Therefore, we have aggregated our properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities including they are operated using consistent business strategies, are typically located in major metropolitan areas, and have similar tenant mixes. While we believe we have only one reportable segment as defined by SFAS No. 131, we have continued to provide additional information by geographic region as presented below.


	Year Ended December 31, 2008
	East			West			Other			Total
	(In thousands)
Rental income	$	389,569		$	112,395		$	—		$	501,964
Other property income		11,828			2,185			—			14,013
Mortgage interest income		3,043			1,505			—			4,548
Rental expenses		(78,717	)		(31,001	)		—			(109,718	)
Real estate taxes		(44,244	)		(11,470	)		—			(55,714	)

Property operating income		281,479			73,614			—			355,093
General and administrative expense		—			—			(26,732	)		(26,732	)
Depreciation and amortization		(78,631	)		(31,576	)		(815	)		(111,022	)
Other interest income		645			271			—			916
Interest expense		—			—			(99,163	)		(99,163	)
Income from real estate partnership		—			—			1,612			1,612

Income from continuing operations before minority interests	$	203,493		$	42,309		$	(125,098	)	$	120,704
Minority interests		—			—			(5,366	)		(5,366	)
Discontinued operations—income		—			—			1,877			1,877
Discontinued operations—gain on sale of real estate		—			—			12,572			12,572

Net income	$	203,493		$	42,309		$	(116,015	)	$	129,787

Total assets	$	2,112,910		$	907,760		$	72,106		$	3,092,776

F-34


	Year Ended December 31, 2007
	East			West			Other			Total
	(In thousands)
Rental income	$	360,928		$	104,800		$	—		$	465,728
Other property income		9,156			3,678			—			12,834
Mortgage interest income		3,003			1,557			—			4,560
Rental expenses		(70,490	)		(28,873	)		—			(99,363	)
Real estate taxes		(37,306	)		(9,591	)		—			(46,897	)

Property operating income		265,291			71,571			—			336,862
General and administrative expense		—			—			(26,581	)		(26,581	)
Depreciation and amortization		(70,306	)		(30,285	)		(1,042	)		(101,633	)
Other interest income		754			167			—			921
Interest expense		—			—			(111,365	)		(111,365	)
Income from real estate partnership		—			—			1,395			1,395

Income from continuing operations before minority interests	$	195,739		$	41,453		$	(137,593	)	$	99,599
Minority interests		—			—			(5,590	)		(5,590	)
Discontinued operations—income		—			—			6,760			6,760
Discontinued operations—gain on sale of real estate		—			—			94,768			94,768

Net income	$	195,739		$	41,453		$	(41,655	)	$	195,537

Total assets	$	1,988,181		$	887,112		$	114,004		$	2,989,297


	Year Ended December 31, 2006
	East			West			Other			Total
	(In thousands)
Rental income	$	317,458		$	96,803		$	—		$	414,261
Other property income		4,588			2,872			—			7,460
Mortgage interest income		3,163			1,932			—			5,095
Rental expenses		(56,779	)		(27,385	)		—			(84,164	)
Real estate taxes		(32,104	)		(9,035	)		—			(41,139	)

Property operating income		236,326			65,187			—			301,513
General and administrative expense		—			—			(21,921	)		(21,921	)
Depreciation and amortization		(61,560	)		(29,433	)		(1,758	)		(92,751	)
Other interest income		1,649			393			—			2,042
Interest expense		—			—			(95,234	)		(95,234	)
Income from real estate partnership		—			—			656			656

Income from continuing operations before minority interests	$	176,415		$	36,147		$	(118,257	)	$	94,305
Minority interests		—			—			(4,353	)		(4,353	)
Discontinued operations—income		—			—			4,804			4,804
Discontinued operations—gain on sale of real estate		—			—			16,515			16,515
Gain on sale of real estate		—			—			7,441			7,441

Net income	$	176,415		$	36,147		$	(93,850	)	$	118,712

Total assets	$	1,745,273		$	881,676		$	61,657		$	2,688,606

F-35

NOTE 18. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data is as follows:


	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(In thousands, except per share data)
2008
Revenue(1)	$	126,369	$	128,837	$	131,683	$	133,636
Operating Income	$	54,387	$	53,584	$	55,363	$	54,005
Net income	$	29,986	$	28,974	$	37,102	$	33,725
Net income available for common shareholders	$	29,851	$	28,839	$	36,966	$	33,590
Earnings per common share—basic	$	0.51	$	0.49	$	0.63	$	0.57
Earnings per common share—diluted	$	0.51	$	0.49	$	0.63	$	0.57

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(In thousands, except per share data)
2007
Revenue(1)	$	114,804	$	118,241	$	123,491	$	126,586
Operating Income	$	49,462	$	51,969	$	54,041	$	53,176
Net income	$	23,136	$	26,718	$	23,515	$	122,168
Net income available for common shareholders	$	23,100	$	26,583	$	23,379	$	122,033
Earnings per common share—basic	$	0.42	$	0.47	$	0.42	$	2.16
Earnings per common share—diluted	$	0.41	$	0.47	$	0.41	$	2.14

(1)	As required by SFAS No. 144, revenue has been reduced to reflect the results of discontinued operations. Revenue from discontinued operations, by quarter, is summarized as follows:


	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(In thousands)
2008 revenue from discontinued operations	$	854	$	856	$	834	$	180
2007 revenue from discontinued operations	$	8,196	$	6,805	$	6,496	$	2,493

NOTE 19. SUBSEQUENT EVENTS

On January 5, 2009, we repaid the $4.4 million mortgage loan on Mercer Mall which had an original maturity date of April 1, 2009. This loan was repaid with funds borrowed on our $300 million revolving credit facility.

On January 12, 2009 and February 5, 2009, we purchased and retired $5.0 million and $0.9 million, respectively, of the outstanding $175.0 million balance of our 8.75% notes. The notes were repaid with funds borrowed on our $300 million revolving credit facility.

F-36

FEDERAL REALTY INVESTMENT TRUST

SCHEDULE III

SUMMARY OF REAL ESTATE AND ACCUMULATED

DEPRECIATION

December 31, 2008

(Dollars in thousands)


COLUMN A			COLUMN B		COLUMN C		COLUMN D	COLUMN E			COLUMN F	COLUMN G	COLUMN H	COLUMN I
Descriptions			Encumbrance		Initial cost to company		Cost Capitalized Subsequent to Acquisition	Gross amount at which carried at close of period			Accumulated Depreciation and Amortization	Date of Construction	Date(s) Acquired	Life on which depreciation in latest income statements is computed
		Land		Building and Improvements		Land	Building and Improvements	Total
150 POST STREET (San Francisco)	CA		—		11,685	9,181	16,643	11,685	25,824	37,509	9,413	1908	10/23/97	35 years
ANDORRA (Pennsylvania)	PA		—		2,432	12,346	8,282	2,432	20,628	23,060	12,265	1953	01/12/88	35 years
ASSEMBLY SQUARE (Massachusetts)	MA		—		38,319	34,196	64,722	47,647	89,590	137,237	6,854	2005	2005-2008	35 years
THE AVENUE AT WHITE MARSH (Maryland)	MD		60,067		20,682	72,432	1,297	20,682	73,729	94,411	4,834	1997	03/08/07	35 years
BALA CYNWYD (Pennsylvania)	PA		—		3,565	14,466	16,180	3,566	30,645	34,211	10,018	1955	09/22/93	35 years
BARRACKS ROAD (Virginia)	VA		41,368		4,363	16,459	24,492	4,363	40,951	45,314	28,295	1958	12/31/85	35 years
BETHESDA ROW (Maryland)	MD		25,412		36,971	35,406	117,100	35,272	154,205	189,477	24,856	1945-2008	12/31/93, 1/20/06, 9/25/08, & 9/30/08	35-50 years
BRICK PLAZA (New Jersey)	NJ		30,633			24,715	31,675	3,788	52,602	56,390	32,091	1958	12/28/89	35 years
BRISTOL (Connecticut)	CT		—		3,856	15,959	6,799	3,856	22,758	26,614	8,596	1959	09/22/95	35 years
CHELSEA COMMONS (Massachusetts)	MA		7,711		9,417	19,466	136	9,417	19,602	29,019	1,070	1962/1969/2008	08/25/06, 1/30/07, & 7/16/08	35 years
COLORADO BLVD (California)	CA		—		5,262	4,071	7,339	5,262	11,410	16,672	5,397	1905/1915/1980	12/31/96 & 8/14/98	35 years
CONGRESSIONAL PLAZA (Maryland)	MD		—		2,793	7,424	60,064	2,793	67,488	70,281	34,664	1965/2003	04/01/65	35 years
COURTHOUSE CENTER (Maryland)	MD		—		1,750	1,869	604	1,750	2,473	4,223	923	1975	12/17/97	35 years
COURTYARD SHOPS (Florida)	FL		7,978		16,862	21,851	76	16,862	21,927	38,789	261	1990	09/04/08	35 years
CROSSROADS (Illinois)	IL		—		4,635	11,611	7,669	4,635	19,280	23,915	9,420	1959	07/19/93	35 years
CROW CANYON COMMONS (California)	CA		21,214		8,638	54,575	1,782	8,638	56,357	64,995	4,854	Late 1970's/2006	12/29/05 & 02/28/07	35 years

F-37

FEDERAL REALTY INVESTMENT TRUST

SCHEDULE III

SUMMARY OF REAL ESTATE AND ACCUMULATED

DEPRECIATION—CONTINUED

December 31, 2008

(Dollars in thousands)


COLUMN A			COLUMN B		COLUMN C		COLUMN D			COLUMN E			COLUMN F	COLUMN G	COLUMN H	COLUMN I
Descriptions			Encumbrance		Initial cost to company		Cost Capitalized Subsequent to Acquisition			Gross amount at which carried at close of period			Accumulated Depreciation and Amortization	Date of Construction	Date(s) Acquired	Life on which depreciation in latest income statements is computed
		Land		Building and Improvements		Land	Building and Improvements		Total
DEDHAM PLAZA (Massachusetts)	MA		—		12,287	12,918	6,023			12,287	18,941	31,228	8,588	1959	12/31/93	35 years
DEL MAR VILLAGE (Florida)	FL		—		14,218	39,559	84			14,218	39,643	53,861	741	1982/1984	5/30/08 & 7/11/08	35 years
EASTGATE (North Carolina)	NC		—		1,608	5,775	17,663			1,608	23,438	25,046	10,717	1963	12/18/86	35 years
ELLISBURG CIRCLE (New Jersey)	NJ		—		4,028	11,309	12,369			4,013	23,693	27,706	13,295	1959	10/16/92	35 years
ESCONDIDO PROMENADE (California)	CA		—		11,505	12,147	4,712			11,505	16,859	28,364	5,372	1987	12/31/96	35 years
FALLS PLAZA (Virginia)	VA		—		1,798	1,270	8,886			1,819	10,135	11,954	5,995	1960/1962	09/30/67 & 10/05/72	25 years
FEASTERVILLE (Pennsylvania)	PA		—		1,431	1,600	8,858			1,452	10,437	11,889	7,226	1958	07/23/80	20 years
FEDERAL PLAZA (Maryland)	MD		33,128		10,216	17,895	34,036			10,216	51,931	62,147	27,884	1970	06/29/89	35 years
FIFTH AVENUE (California)(4)	CA		—		3,844	1,352	7,773			3,874	9,095	12,969	3,293	1888-1995	1996-1997	35 years
FINLEY SQUARE (Illinois)	IL		—		9,252	9,544	12,494			9,252	22,038	31,290	10,666	1974	04/27/95	35 years
FLOURTOWN (Pennsylvania)	PA		—		1,345	3,943	10,109			1,470	13,927	15,397	6,402	1957	04/25/80	35 years
FOREST HILLS (New York)	NY		—		2,885	2,885	2,319			3,010	5,079	8,089	1,817	1937-1987	12/16/97	35 years
FRESH MEADOWS (New York)	NY		—		24,625	25,255	18,888			24,627	44,141	68,768	17,531	1946-1949	12/05/97	35 years
FRIENDSHIP CENTER (District of Columbia)	DC		—		12,696	20,803	(155	)		12,696	20,648	33,344	4,343	1998	09/21/01	35 years
GAITHERSBURG SQUARE (Maryland)	MD		—		7,701	5,271	11,031			5,973	18,030	24,003	11,498	1966	04/22/93	35 years
GARDEN MARKET (Illinois)	IL		—		2,677	4,829	4,018			2,677	8,847	11,524	4,022	1958	07/28/94	35 years
GOVERNOR PLAZA (Maryland)	MD		—		2,068	4,905	15,036			2,068	19,941	22,009	11,283	1963	10/01/85	35 years
GRATIOT PLAZA (Michigan)	MI		—		525	1,601	16,600			525	18,201	18,726	10,092	1964	03/29/73	25 3/4 years
GREENWICH AVENUE (Connecticut)	CT		—		7,484	5,445	1,007			7,484	6,452	13,936	2,435	1900-1993	1995	35 years

F-38

FEDERAL REALTY INVESTMENT TRUST

SCHEDULE III

SUMMARY OF REAL ESTATE AND ACCUMULATED

DEPRECIATION—CONTINUED

December 31, 2008

(Dollars in thousands)


COLUMN A			COLUMN B		COLUMN C		COLUMN D	COLUMN E			COLUMN F	COLUMN G	COLUMN H	COLUMN I
Descriptions			Encumbrance		Initial cost to company		Cost Capitalized Subsequent to Acquisition	Gross amount at which carried at close of period			Accumulated Depreciation and Amortization	Date of Construction	Date(s) Acquired	Life on which depreciation in latest income statements is computed
		Land		Building and Improvements		Land	Building and Improvements	Total
HAUPPAUGE (New York)	NY		15,595		8,791	15,262	3,740	8,791	19,002	27,793	5,775	1963	08/06/98	35 years
HERMOSA AVE (California)	CA		—		1,116	280	4,020	1,368	4,048	5,416	1,513	1923	09/17/97	35 years
HOLLYWOOD BLVD. (California)	CA		—		8,300	16,920	13,883	8,300	30,803	39,103	3,883	1929/1991	3/22/99 & 6/18/99	35 years
HOUSTON STREET (Texas)(9)	TX		—		14,680	1,976	50,754	14,778	52,632	67,410	15,057	var	1998	35 years
HUNTINGTON (New York)	NY		—		—	16,008	22,555	11,713	26,850	38,563	6,360	1962	12/12/88 & 10/26/07	35 years
IDYLWOOD PLAZA (Virginia)	VA		—		4,308	10,026	1,315	4,308	11,341	15,649	4,837	1991	04/15/94	35 years
KINGS COURT (California)	CA		—		—	10,714	862	—	11,576	11,576	4,791	1960	08/24/98	26 years
LANCASTER (Pennsylvania)	PA		4,907		—	2,103	8,737	—	10,840	10,840	5,798	1958	04/24/80	22 years
LANGHORNE SQUARE (Pennsylvania)	PA		—		720	2,974	15,269	720	18,243	18,963	9,590	1966	01/31/85	35 years
LAUREL (Maryland)	MD		—		7,458	22,525	17,837	7,576	40,244	47,820	26,090	1956	08/15/86	35 years
LAWRENCE PARK (Pennsylvania)	PA		29,322		5,723	7,160	16,743	5,734	23,892	29,626	19,653	1972	07/23/80	22 years
LEESBURG PLAZA (Virginia)	VA		—		8,184	10,722	15,328	8,184	26,050	34,234	5,739	1967	09/15/98	35 years
LINDEN SQUARE (Massachusetts)	MA		—		79,382	19,247	42,662	79,370	61,921	141,291	1,706	1960-2008	08/24/06	35 years
LOEHMANN'S PLAZA (Virginia)	VA		—		1,237	15,096	16,076	1,248	31,161	32,409	18,129	1971	07/21/83	35 years
MELVILLE MALL (New York)	NY		24,012		35,622	32,882	101	35,622	32,983	68,605	2,114	1974	10/16/06	35 years
MERCER MALL (New Jersey)	NJ		55,664		4,488	70,076	30,503	5,032	100,035	105,067	17,908	1975	10/14/03	25-35 years
MID PIKE PLAZA (Maryland)	MD		—		—	10,335	33,963	7,517	36,781	44,298	4,759	1963	05/18/82 & 10/26/07	50 years
MOUNT VERNON/SOUTH VALLEY/7770 RICHMOND HWY. (Virginia)	VA		11,640		10,068	33,501	33,509	10,147	66,931	77,078	9,970	1972/1966/1974	03/31/03, 3/21/03, & 1/27/06	35 years
TOWN CENTER OF NEW BRITAIN (Pennsylvania)	PA		—		1,282	12,285	558	1,262	12,863	14,125	959	1969	06/29/06	35 years

F-39

FEDERAL REALTY INVESTMENT TRUST

SCHEDULE III

SUMMARY OF REAL ESTATE AND ACCUMULATED

DEPRECIATION—CONTINUED

December 31, 2008

(Dollars in thousands)


COLUMN A			COLUMN B		COLUMN C		COLUMN D			COLUMN E			COLUMN F	COLUMN G	COLUMN H	COLUMN I
Descriptions			Encumbrance		Initial cost to company		Cost Capitalized Subsequent to Acquisition			Gross amount at which carried at close of period			Accumulated Depreciation and Amortization	Date of Construction	Date(s) Acquired	Life on which depreciation in latest income statements is computed
		Land		Building and Improvements		Land	Building and Improvements		Total
NORTH DARTMOUTH (Massachusetts)	MA		—		27,214	—	(17,846	)		9,366	2	9,368	—	2004	08/24/06	—
NORTHEAST (Pennsylvania)	PA		—		1,152	10,596	10,776			1,153	21,371	22,524	14,111	1959	08/30/83	35 years
NORTH LAKE COMMONS (Illinois)	IL		—		2,782	8,604	2,304			2,628	11,062	13,690	4,606	1989	04/27/94	35 years
OLD KEENE MILL (Virginia)	VA		—		638	998	4,451			638	5,449	6,087	4,554	1968	06/15/76	33 1/3 years
OLD TOWN CENTER (California)	CA		—		3,420	2,765	27,868			3,420	30,633	34,053	12,441	1962, 1997-1998	10/22/97	35 years
PAN AM SHOPPING CENTER (Virginia)	VA		—		8,694	12,929	6,602			8,695	19,530	28,225	9,414	1979	02/05/93	35 years
PENTAGON ROW (Virginia)	VA		—		—	2,955	84,847			—	87,802	87,802	22,431	1999 - 2002	1998	35 years
PERRING PLAZA (Maryland)	MD		—		2,800	6,461	17,348			2,800	23,809	26,609	15,679	1963	10/01/85	35 years
PIKE 7 (Virginia)	VA		—		9,709	22,799	2,327			9,709	25,126	34,835	9,103	1968	03/31/97	35 years
QUEEN ANNE PLAZA (Massachusetts)	MA		—		3,319	8,457	3,874			3,319	12,331	15,650	6,070	1967	12/23/94	35 years
QUINCE ORCHARD PLAZA (Maryland)	MD		—		3,197	7,949	9,844			2,928	18,062	20,990	10,392	1975	04/22/93	35 years
ROCKVILLE TOWN SQUARE (Maryland)	MD		—		—	8,092	29,186			—	37,278	37,278	1,854	2005 - 2007	2006 -2007	50 years
ROLLINGWOOD APTS. (Maryland)	MD		—		552	2,246	4,430			572	6,656	7,228	6,251	1960	01/15/71	25 years
SAM'S PARK & SHOP (District of Columbia)	DC		—		4,840	6,319	1,155			4,840	7,474	12,314	3,043	1930	12/01/95	35 years
SANTANA ROW (California)	CA		—		41,969	1,161	464,551			49,725	457,956	507,681	58,756	1999 - 2008	03/05/97	40 -50 years
SAUGUS (Massachusetts)	MA		—		4,383	8,291	1,019			4,383	9,310	13,693	3,573	1976	10/01/96	35 years
SHIRLINGTON (Virginia)	VA		6,259		9,761	14,808	25,749			5,798	44,520	50,318	10,566	1940, 2006-2008	12/21/95	35 years

F-40

FEDERAL REALTY INVESTMENT TRUST

SCHEDULE III

SUMMARY OF REAL ESTATE AND ACCUMULATED

DEPRECIATION—CONTINUED

December 31, 2008

(Dollars in thousands)


COLUMN A			COLUMN B			COLUMN C				COLUMN D				COLUMN E						COLUMN F		COLUMN G	COLUMN H	COLUMN I
Descriptions			Encumbrance			Initial cost to company				Cost Capitalized Subsequent to Acquisition				Gross amount at which carried at close of period						Accumulated Depreciation and Amortization		Date of Construction	Date(s) Acquired	Life on which depreciation in latest income statements is computed
		Land			Building and Improvements			Land		Building and Improvements			Total
SHOPPERS WORLD (Virginia)	VA			5,816			10,211		18,863		448				10,225		19,297		29,522		1,045	1975 -2001	05/30/07	35 years
THE SHOPPES AT NOTTINGHAM SQUARE (Maryland)	MD			—			27,029		12,849		(12,308	)			14,692		12,878		27,570		822	2005 -2006	03/08/07	35 years
THIRD STREET PROMENADE (California) (9)	CA			—			22,645		12,709		41,453				24,668		52,139		76,807		18,931	1888-2000	1996-2000	35 years
TOWER (Virginia)	VA			—			7,170		10,518		2,079				7,129		12,638		19,767		4,277	1953-1960	08/24/98	35 years
TROY (New Jersey)	NJ			—			3,126		5,193		15,420				4,028		19,711		23,739		14,664	1966	07/23/80	22 years
TYSON’S STATION (Virginia)	VA			6,070			388		453		2,826				475		3,192		3,667		2,881	1954	01/17/78	17 years
WESTGATE (California)	CA			—			6,319		107,284		2,561				6,319		109,845		116,164		13,104	1960-1966	03/31/04	35 years
WHITE MARSH PLAZA (Maryland)	MD			10,359			3,478		21,413		36				3,478		21,449		24,927		1,448	1987	03/08/07	35 years
WHITE MARSH OTHER (Maryland)	MD			—			37,812		1,843		(7,729	)			30,076		1,850		31,926		132	1985	03/08/07	35 years
WILDWOOD (Maryland)	MD			25,773			9,111		1,061		7,514				9,111		8,575		17,686		7,313	1958	05/05/69	33 1/3 years
WILLOW GROVE (Pennsylvania)	PA			—			1,499		6,643		19,010				1,499		25,653		27,152		17,685	1953	11/20/84	35 years
WILLOW LAWN (Virginia)	VA			—			3,192		7,723		65,052				7,790		68,177		75,967		37,060	1957	12/05/83	35 years
WYNNEWOOD (Pennsylvania)	PA			29,882			8,055		13,759		14,399				8,055		28,158		36,213		12,410	1948	10/29/96	35 years

TOTALS			$	452,810		$	759,247	$	1,200,166	$	1,714,272			$	762,611	$	2,911,074	$	3,673,685	$	846,258

F-41

FEDERAL REALTY INVESTMENT TRUST

SCHEDULE III

SUMMARY OF REAL ESTATE AND ACCUMULATED

DEPRECIATION—CONTINUED

Three Years Ended December 31, 2008

Reconciliation of Total Cost

(In thousands)


Balance, December 31, 2005	$	2,829,321
Additions during period
Acquisitions		317,287
Improvements		112,930
Deduction during period—disposition and retirements of property		(55,280	)

Balance, December 31, 2006		3,204,258
Additions during period
Acquisitions		313,934
Improvements		140,613
Deduction during period—disposition and retirements of property		(205,958	)

Balance, December 31, 2007		3,452,847
Additions during period
Acquisitions		122,662
Improvements		144,192
Deduction during period—disposition and retirements of property		(46,016	)

Balance, December 31, 2008	$	3,673,685

(A)	For Federal tax purposes, the aggregate cost basis is approximately $3.1 billion as of December 31, 2008.

F-42

FEDERAL REALTY INVESTMENT TRUST

SCHEDULE III

SUMMARY OF REAL ESTATE AND ACCUMULATED

DEPRECIATION—CONTINUED

Three Years Ended December 31, 2008

Reconciliation of Accumulated

Depreciation and Amortization

(In thousands)


Balance, December 31, 2005	$	663,750
Additions during period—depreciation and amortization expense		89,564
Deductions during period—disposition and retirements of property		(12,807	)

Balance, December 31, 2006		740,507
Additions during period—depreciation and amortization expense		96,454
Deductions during period—disposition and retirements of property		(80,258	)

Balance, December 31, 2007		756,703
Additions during period—depreciation and amortization expense		101,321
Deductions during period—disposition and retirements of property		(11,766	)

Balance, December 31, 2008	$	846,258

F-43

FEDERAL REALTY INVESTMENT TRUST

SCHEDULE IV

MORTGAGE LOANS ON REAL ESTATE

Year Ended December 31, 2008

(Dollars in thousands)


Column A	Column B	Column C	Column D	Column E	Column F		Column G
Description of Lien	Interest Rate	Maturity Date	Periodic Payment Terms	Prior Liens	Face Amount of Mortgages		Carrying Amount of Mortgages(1)
Mortgage on land and mixed-use building in Norwalk, CT	Greater of 10% or LIBOR plus 725 basis points	November 2009	Interest only, balloon payment due at maturity	—	$	5,515	$	5,397	(2)

Mortgage on Hotel in San Jose, CA	9%	August 2016	Principal and interest; balloon payment due at maturity(3)	—		16,221		12,063

Mortgage on retail buildings in Philadelphia, PA	8% or 10% based on timing of draws, plus participation	May 2021	Interest only monthly; balloon payment due at maturity	—		19,070		19,070	(4)

Mortgage on retail buildings in Philadelphia, PA	10% plus participation	May 2021	Interest only; balloon payment due at maturity	—		9,250		9,250

					$	50,056	$	45,780

(1)	For Federal tax purposes, the aggregate tax basis is approximately $49.9 million as of December 31, 2008.

(2)	The borrower has two one-year extension options with interest at the greater of 12% or LIBOR plus 925 basis points. The mortgage is available for up to $7.3 million.

(3)	This note was amended on August 4, 2006. The amended note decreased the interest from 14% to 9% per annum, and requires monthly payments of principal and interest based on 15-year amortization schedule.

(4)	This mortgage is available for up to $25.0 million.

F-44

FEDERAL REALTY INVESTMENT TRUST

SCHEDULE IV

MORTGAGE LOANS ON REAL ESTATE—CONTINUED

Three Years Ended December 31, 2008

Reconciliation of Carrying Amount

(In thousands)


Balance, December 31, 2005	$	40,531
Additions during period:
Issuance of loans		4,321
Deductions during period:
Collection and satisfaction of loans		(4,055	)
Allowance for collectibility		(280	)
Amortization of discount		239

Balance, December 31, 2006		40,756
Additions during period:
Issuance of loans		8
Deductions during period:
Collection and satisfaction of loans		(556	)
Amortization of discount		430

Balance, December 31, 2007		40,638
Additions during period:
Issuance of loans		5,612
Loan fee		(219	)
Deductions during period:
Collection and satisfaction of loans		(719	)
Amortization of discount /loan fee		468

Balance, December 31, 2008	$	45,780

F-45

EXHIBIT INDEX


Exhibit No.		Description
3.1		Declaration of Trust of Federal Realty Investment Trust dated May 5, 1999 as amended by the Articles of Amendment of Declaration of Trust of Federal Realty Investment Trust dated May 6, 2004, as corrected by the Certificate of Correction of Articles of Amendment of Declaration of Trust of Federal Realty Investment Trust dated June 17, 2004 (previously filed as Exhibit 3.1 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 (File No. 1-07533) (the “2005 2Q Form 10-Q”) and incorporated herein by reference)

3.2		Amended and Restated Bylaws of Federal Realty Investment Trust dated February 12, 2003, as amended October 29, 2003, May 5, 2004 and February 17, 2006 (previously filed as Exhibit 3.2 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 2005 (File No. 1-07533) (the “2005 Form 10-K”) and incorporated herein by reference)

4.1		Specimen Common Share certificate (previously filed as Exhibit 4(i) to the Trust’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-07533) (the “1999 Form 10-K”) and incorporated herein by reference)

4.2		Articles Supplementary relating to the 5.417% Series 1 Cumulative Convertible Preferred Shares of Beneficial Interest (previously filed as Exhibit 4.1 to the Trust’s Current Report on Form 8-K filed on March 13, 2007, (File No. 1-07533) and incorporated herein by reference)

4.3		Amended and Restated Rights Agreement, dated March 11, 1999, between the Trust and American Stock Transfer & Trust Company (previously filed as Exhibit 1 to the Trust’s Registration Statement on Form 8-A/A filed on March 11, 1999 (File No. 1-07533) and incorporated herein by reference)

4.4		First Amendment to Amended and Restated Rights Agreement, dated as of November 2003, between the Trust and American Stock Transfer & Trust Company (previously filed as Exhibit 4.5 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 1-07533) and incorporated herein by reference)

4.5		Indenture dated December 13, 1993 related to the Trust’s 7.48% Debentures due August 15, 2026; and 6.82% Medium Term Notes due August 1, 2027; (previously filed as Exhibit 4(a) to the Trust’s Registration Statement on Form S-3 (File No. 33-51029), and amended on Form S-3 (File No. 33-63687), filed on December 13, 1993 and incorporated herein by reference)

4.6		Indenture dated September 1, 1998 related to the Trust’s 8.75% Notes due December 1, 2009; 6 1/8% Notes due November 15, 2007; 4.50% Notes due 2011; 5.65% Notes due 2016; 6.00% Notes due 2012; 6.20% Notes due 2017; and 5.40% Notes due 2013 (previously filed as Exhibit 4(a) to the Trust’s Registration Statement on Form S-3 (File No. 333-63619) filed on September 17, 1998 and incorporated herein by reference)

4.7		Pursuant to Regulation S-K Item 601(b)(4)(iii), the Trust by this filing agrees, upon request, to furnish to the Securities and Exchange Commission a copy of other instruments defining the rights of holders of long-term debt of the Trust

10.1		Amended and Restated 1993 Long-Term Incentive Plan, as amended on October 6, 1997 and further amended on May 6, 1998 (previously filed as Exhibit 10.26 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-07533) and incorporated herein by reference)

10.2		Fiscal Agency Agreement dated as of October 28, 1993 between the Trust and Citibank, N.A. (previously filed as an exhibit to the Trust’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993 (File No. 1-07533) and incorporated herein by reference)

EXHIBIT INDEX


Exhibit No.		Description
10.3		Form of Severance Agreement between the Trust and Certain of its Officers dated December 31, 1994 (previously filed as a portion of Exhibit 10 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 1-07533) and incorporated herein by reference)

10.4		* Severance Agreement between the Trust and Donald C. Wood dated February 22, 1999 (previously filed as a portion of Exhibit 10 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (File No. 1-07533) (the “1999 1Q Form 10-Q”) and incorporated herein by reference)

10.5		* Executive Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 22, 1999 (previously filed as a portion of Exhibit 10 to the 1999 1Q Form 10-Q and incorporated herein by reference)

10.6		* Amendment to Executive Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 16, 2005 (previously filed as Exhibit 10.12 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 2004 (File No. 1-07533) (the “2004 Form 10-K”) and incorporated herein by reference)

10.7		* Split Dollar Life Insurance Agreement dated August 12, 1998 between the Trust and Donald C. Wood (previously filed as a portion of Exhibit 10 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 2000 (File No. 1-07533) and incorporated herein by reference)

10.8		* Severance Agreement between the Trust and Jeffrey S. Berkes dated March 1, 2000 (previously filed as a portion of Exhibit 10 to the Trust’s Annual Report on Form 10-K for the year ended December 31, 2001 (File No. 1-07533) and incorporated herein by reference)

10.9		* Amendment to Severance Agreement between Federal Realty Investment Trust and Jeffrey S. Berkes dated February 16, 2005 (previously filed as Exhibit 10.17 to the 2004 Form 10-K and incorporated herein by reference)

10.10		* Severance Agreement dated March 1, 2002 between the Trust and Larry E. Finger (previously filed as a portion of Exhibit 10 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2002 (File No. 1-07533) and incorporated herein by reference)

10.11		* Amendment to Severance Agreement between Federal Realty Investment Trust and Larry E. Finger dated February 16, 2005 (previously filed as Exhibit 10.19 to the 2004 Form 10-K and incorporated herein by reference)

10.12		* Amendment to Stock Option Agreement dated August 15, 2002 between the Trust and Dawn M. Becker (previously filed as a portion of Exhibit 10 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002 (File No. 1-075330 and incorporated herein by reference)

10.13		2001 Long-Term Incentive Plan (previously filed as Exhibit 99.1 to the Trust’s S-8 Registration Number 333-60364 filed on May 7, 2001 and incorporated herein by reference)

10.14		* Health Coverage Continuation Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 16, 2005 (previously filed as Exhibit 10.26 to the 2004 Form 10-K and incorporated herein by reference)

10.15		* Severance Agreement between the Trust and Dawn M. Becker dated April 19, 2000 (previously filed as Exhibit 10.26 to the Trust’s 2005 2Q Form 10-Q and incorporated herein by reference)

EXHIBIT INDEX


Exhibit No.		Description

10.16		* Amendment to Severance Agreement between the Trust and Dawn M. Becker dated February 16, 2005 (previously filed as Exhibit 10.27 to the 2004 Form 10-K and incorporated herein by reference)

10.17		Form of Restricted Share Award Agreement for awards made under the Trust’s 2003 Long-Term Incentive Award Program for shares issued out of 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.28 to the 2004 Form 10-K and incorporated herein by reference)

10.18		Form of Restricted Share Award Agreement for awards made under the Trust’s Annual Incentive Bonus Program for shares issued out of 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.29 to the 2004 Form 10-K and incorporated herein by reference)

10.19		Form of Option Award Agreement for options awarded under 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.30 to the 2004 Form 10-K and incorporated herein by reference)

10.20		Form of Option Award Agreement for awards made under the Trust’s 2003 Long-Term Incentive Award Program for shares issued out of the 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.32 to the 2005 Form 10-K and incorporated herein by reference)

10.21		Credit Agreement dated as of July 28, 2006, by and among the Trust, Wachovia Capital Markets LLC, Wachovia Bank, National Association and various other financial institutions (previously filed as Exhibit 10.1 to the Trust’s Current Report on Form 8-K (File No. 1-07533), filed on July 31, 2006 and incorporated herein by reference)

10.22		Amended and Restated 2001 Long-Term Incentive Plan (previously filed as Exhibit 10.34 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 1-07533) and incorporated herein by reference)

10.23		Credit Agreement dated as of November 9, 2007, by and among the Trust, Wachovia Capital Markets LLC, Wachovia Bank, National Association and various other financial institutions (previously filed as Exhibit 10.25 to the Trust’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (File No. 1-07533) (“the 2007 Form 10-K”) and incorporated herein by reference)

10.24		Consulting Agreement between the Trust and Larry E. Finger dated January 1, 2008 (previously filed as Exhibit 10.26 to the 2007 Form 10-K and incorporated herein by reference)

10.25		Change in Control Agreement between the Trust and Andrew P. Blocher dated February 12, 2007 (previously filed as Exhibit 10.27 to the Trust’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (File No. 1-07533) and incorporated herein by reference)

10.26		Amendment to Severance Agreement between the Trust and Donald C. Wood dated January 1, 2009 (filed herewith)

10.27		Second Amendment to Executive Agreement between the Trust and Donald C. Wood dated January 1, 2009 (filed herewith)

10.28		Amendment to Health Coverage Continuation Agreement between the Trust and Donald C. Wood dated January 1, 2009 (filed herewith)

10.29		Second Amendment to Severance Agreement between the Trust and Jeffrey S. Berkes dated January 1, 2009 (filed herewith)

10.30		Second Amendment to Severance Agreement between the Trust and Dawn M. Becker dated January 1, 2009 (filed herewith)

EXHIBIT INDEX


Exhibit No.		Description

10.31		Amendment to Change in Control Agreement between the Trust and Andrew P. Blocher dated January 1, 2009 (filed herewith)

10.32		Amendment to Stock Option Agreements between the Trust and Andrew P. Blocher dated February 17, 2009 (filed herewith)

10.33		Restricted Share Award Agreement between the Trust and Andrew P. Blocher dated February 17, 2009 (filed herewith)

10.34		Combined Incentive and Non-Qualified Stock Option Agreement between the Trust and Andrew P. Blocher dated February 17, 2009 (filed herewith)

10.35		Severance Agreement between the Trust and Andrew P. Blocher dated February 17, 2009 (filed herewith)

21.1		Subsidiaries of Federal Realty Investment Trust (filed herewith)

23.1		Consent of Grant Thornton LLP (filed herewith)

24.1		Power of Attorney (included on signature page)

31.1		Rule 13a-14(a) Certification of Chief Executive Officer (filed herewith)

31.2		Rule 13a-14(a) Certification of Chief Financial Officer (filed herewith)

32.1		Section 1350 Certification of Chief Executive Officer (filed herewith)

32.2		Section 1350 Certification of Chief Financial Officer (filed herewith)

*	Management contract or compensatory plan to be filed under Item 15(b) of Form 10-K.

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