Federal Realty Investment Trust (FRT) 10-K risk factor changes: FY2011 vs FY2010

[removed: Revenue] [added: Revenue] from our properties may be reduced or limited if the retail operations of our tenants are not [removed: successful.][added: successful.]

[removed: Our] [added: Our] net income depends on the success and continued presence of our “anchor” [removed: tenants.][added: tenants.]

[removed: We] [added: We] may be unable to collect balances due from tenants that file for bankruptcy [removed: protection.][added: protection.]

[removed: We] [added: We] may experience difficulty or delay in renewing leases or re-leasing [removed: space.][added: space.]

[added: We are subject to the risks that, upon expiration or termination of leases, whether by their terms, as a result of a tenant bankruptcy,] general economic conditions or otherwise, leases for space in our properties may not be renewed, space may not be re-leased, or the terms of renewal or re-lease, including the cost of required renovations or concessions to tenants, may be less favorable than current lease terms which may include decreases in rental rates.

[removed: The] [added: The] amount of debt we have and the restrictions imposed by that debt could adversely affect our business and financial [removed: condition.][added: condition.]

As of December 31, [removed: 2010,] [added: 2011,] we had approximately [removed: $1.8] [added: $2.1] billion of debt outstanding.

Of that outstanding debt, approximately [removed: $506.7] [added: $725.4] million was secured by all or a portion of 21 of our real estate projects and approximately [removed: $59.9] [added: $63.1] million represented capital lease obligations on [removed: three] [added: four] of our properties.

In addition, we own a 30% interest in a joint venture that had [removed: $57.6] [added: $57.4] million of debt secured by four properties as of December 31, [removed: 2010.][added: 2011.]

Approximately [removed: $1.7] [added: $2.1] billion [removed: (95%)] [added: (99.6%)] of our debt as of December 31, [removed: 2010,] [added: 2011 is fixed rate debt,] which includes all of our property secured [removed: debt and] [added: debt,] our capital lease [removed: obligations, is fixed rate debt.][added: obligations and our]

Our [added: unconsolidated] joint venture’s debt of [removed: $57.6] [added: $57.4] million is also fixed rate debt.

| [removed: |] • | [removed: |] require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, property acquisitions, redevelopments and other appropriate business opportunities that may arise in the future; |

| [removed: |] • | [removed: |] limit our ability to make distributions on our outstanding common shares and preferred shares; |

| [removed: |] • | [removed: |] make it difficult to satisfy our debt service requirements; |

| [removed: |] • | [removed: |] require us to dedicate increased amounts of our cash flow from operations to payments on debt upon refinancing or on our variable rate, unhedged debt, if interest rates rise; |

| [removed: |] • | [removed: |] limit our flexibility in planning for, or reacting to, changes in our business and the factors that affect the profitability of our business; |

| [removed: |] • | [removed: |] limit our ability to obtain any additional debt or equity financing we may need in the future for working capital, debt refinancing, capital expenditures, acquisitions, redevelopments or other general corporate purposes or to obtain such financing on favorable terms; and/or |

| [removed: |] • | [removed: |] limit our flexibility in conducting our business, which may place us at a disadvantage compared to competitors with less debt or debt with less restrictive terms. |

[removed: We] [added: We] are obligated to comply with financial and other covenants pursuant to our debt obligations that could restrict our operating activities, and the failure to comply with such covenants could result in defaults that accelerate payment under our [removed: debt.][added: debt.]

Our revolving credit [removed: facility] [added: facility, term loan] and certain series of notes include financial covenants that may limit our operating activities in the future.

| [removed: |] • | [removed: |] relating to the maintenance of property securing a mortgage; |

| [removed: |] • | [removed: |] restricting our ability to pledge assets or create liens; |

| [removed: |] • | [removed: |] restricting our ability to incur additional debt; |

| [removed: |] • | [removed: |] restricting our ability to amend or modify existing leases at properties securing a mortgage; |

| [removed: |] • | [removed: |] restricting our ability to enter into transactions with affiliates; and |

| [removed: |] • | [removed: |] restricting our ability to consolidate, merge or sell all or substantially all of our assets. |

As of December 31, [removed: 2010,] [added: 2011,] we were in compliance with all of our financial covenants.

Many of our debt arrangements, including our public [removed: notes] [added: notes, term loan] and our revolving credit facility, are cross-defaulted, which means that the lenders under those debt arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a default under certain of our other debt obligations.

[removed: Our] [added: Our] development activities have inherent [removed: risks.][added: risks.]

We generally do not [removed: intend] [added: look] to [removed: undertake on our own construction of any new large-scale mixed-use, ground-up development projects;] [added: acquire raw land for future development;] however, we do intend to complete the development and construction of [removed: remaining] [added: future] phases of projects we already [removed: have started,] [added: own,] such as Santana Row in San Jose, [removed: California and] [added: California,] Assembly Row in Somerville, Massachusetts, [removed: as well as any future redevelopment of Mid-Pike Plaza] [added: and Pike & Rose (Mid-Pike Plaza)] in Rockville, Maryland.

We may undertake development of these and other projects [added: on our own or bring in third parties] if it is justifiable on a risk-adjusted return basis.

[removed: If additional phases of] any [removed: of our existing projects or if any] new projects are not successful, it may adversely affect our financial condition and results of operations.

In addition to the risks associated with real estate investment in general as described [removed: elsewhere,] [added: elsewhere and] the [added: specific] risks [added: above, the risks] associated with our remaining development activities include:

| [removed: |] • | [removed: |] significant time lag between commencement and stabilization subjects us to greater risks due to fluctuations in the general economy; |

| [removed: |] • | [removed: |] failure or inability to obtain construction or permanent financing on favorable terms; |

| [removed: |] • | [removed: |] failure or inability to obtain public funding from governmental agencies to fund infrastructure projects; [added: including expected public funding in connection with our development at Assembly Row;] |

| [removed: |] • | [removed: |] expenditure of money and time on projects that may never be completed; |

| [removed: |] • | [removed: |] inability to achieve projected rental rates or anticipated pace of lease-up; |

| [removed: |] • | [removed: |] higher than estimated construction or operating costs, including labor and material costs; and |

| [removed: |] • | [removed: |] possible delay in completion of a project because of a number of factors, including weather, labor disruptions, construction delays or delays in receipt of zoning or other regulatory approvals, acts of terror or other acts of violence, or acts of God (such as fires, earthquakes or floods). |

$275.0 million term loan as the rate is effectively fixed by two interest rate swap agreements.

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If additional phases of any of our existing projects or if

In 2012, we expect to start construction on Assembly Row, Pike & Rose and additional residential units at Santana Row and anticipate investing approximately $500 million in these projects over the next few years.

While the significant size of the development investment poses a risk in itself, there are a number of other risks associated with these projects.

At Assembly Row, we are dependent on the performance of third parties to deliver significant aspects of the project that are critical to our success.

In addition at this project, our projected investment assumes that we will receive public funding which has been committed but has not been entirely funded.

At both Assembly Row and Pike & Rose, a substantial amount of our investment is related to infrastructure, the value of which may be negatively impacted if we do not complete subsequent phases.

Furthermore, with respect to residential development at Pike & Rose and Santana Row, we will be delivering these units into a residential environment in 2014-2015 that is uncertain.

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| • | contractor changes may delay the completion of development projects and increase overall costs; |

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We are subject to the risks that, upon expiration or termination of leases, whether by their terms, as a result of a tenant bankruptcy,

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A key component of our development at Assembly Row is the development of public infrastructure.

This includes the roads throughout the project as well as the building of a “T-Stop”, which is a stop on the greater Boston area’s subway system, adjacent to our property.

While we will contribute significantly to the infrastructure development, we also expect to receive substantial public funding for the project.

The final funding decision and amount, however, is out of our control and therefore, there can be no assurance that we will receive the public funding.

If we do not receive adequate public funding or necessary government approval for a T-Stop at the property, the project may not provide a justifiable risk- adjusted return resulting in a temporary or permanent hold on the project and a write-off of a portion of the project.

Of our approximately $1.8 billion of debt outstanding as of December 31, 2010, approximately $86.4 million bears interest at variable rates and was unhedged.

We also currently carry earthquake insurance on all of our properties in

California and environmental insurance on most of our properties.

The terms of our partnership require that certain acquisition opportunities be presented first to the joint venture, which limits our ability to acquire properties for our own account which could, in turn, limit our ability to grow.

In addition, in May 2010, we formed Newbury Street Partnership, a joint venture limited partnership with an affiliate of Taurus Investment Holdings, LLC (“Taurus”), which plans to acquire, operate and redevelop up to $200 million of properties located primarily in the Back Bay section of Boston, Massachusetts.

We do not serve as general partner or manager for this joint venture; however, Taurus must obtain our consent for certain major decisions.

Our joint venture with Taurus is subject to a buy-sell provision which is customary for real estate joint venture agreements and the industry.

The buy-sell can be exercised only in certain circumstances through May 2014 and may be initiated by either party at anytime thereafter, which could result in either the sale of our interest or the use of available cash or borrowings to acquire Taurus’ interest.

As of December 31, 2010, Newbury Street Partnership owned two mixed-use buildings on Newbury Street.

[removed: Overview][added: Overview]

We are an equity real estate investment trust [added: (“REIT”)] specializing in the ownership, [removed: management] [added: management,] and redevelopment of high quality retail and mixed-use properties located primarily in densely populated and affluent communities in [removed: strategic] [added: strategically selected] metropolitan markets in the [removed: Mid-Atlantic and] Northeast [added: and Mid-Atlantic] regions of the United States, as well as in California.

As of December 31, [removed: 2010,] [added: 2011,] we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as [removed: 85] [added: 87] predominantly retail real estate projects comprising approximately [removed: 18.3] [added: 19.3] million square feet.

In total, the real estate projects were [removed: 93.9%] [added: 93.4%] leased and [removed: 93.2%] [added: 92.4%] occupied at December 31, [removed: 2010.][added: 2011.]

A joint venture in which we own a 30% interest owned seven retail real estate projects totaling approximately 1.0 million square feet as of December 31, [removed: 2010.][added: 2011.]

In total, the joint venture properties in which we own [removed: an] [added: a 30%] interest were [removed: 91.0%] [added: 90.9%] leased and [removed: 90.4%] occupied at December 31, [removed: 2010.][added: 2011.]

We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for [removed: 43] [added: 44] consecutive years.

[removed: Critical] [added: Critical] Accounting [removed: Policies][added: Policies]

[removed: Management considers an accounting estimate to be] critical if changes in the estimate could have a material impact on our consolidated results of operations or financial condition.

Our significant accounting policies are more fully described in Note [removed: 1] [added: 2] to the [removed: Consolidated Financial Statements;] [added: consolidated financial statements;] however, the most critical accounting policies, which involve the use of estimates and assumptions as to future uncertainties and, therefore, may result in actual amounts that differ from estimates, are as follows:

[removed: _Revenue] [added: Revenue] Recognition and Accounts [removed: Receivable_][added: Receivable]

At December 31, [removed: 2010] [added: 2011] and [removed: 2009,] [added: 2010,] our allowance for doubtful accounts was [removed: $18.7] [added: $17.6] million and [removed: $16.1] [added: $18.7] million, respectively.

Historically, we have recognized bad debt expense between 0.4% and 1.3% of rental income and it was [removed: 1.2%] [added: 0.5%] in [removed: 2010] [added: 2011] reflecting [added: positive] economic changes and their impact to our tenants.

For example, in the event our estimates were not accurate and [added: we were required to increase our allowance by 1% of rental income, our bad debt expense would have increased and our net income would have decreased by $5.4 million.]

At December 31, [removed: 2010] [added: 2011] and [removed: 2009,] [added: 2010,] accounts receivable include approximately [removed: $45.6] [added: $50.5] million and [removed: $41.8] [added: $45.6] million, respectively, related to straight-line rents.

[removed: _Real Estate_][added: Real Estate]

[removed: These reviews take into account the] historical retirement and replacement of our assets, [added: expected redevelopments,] the repairs required to maintain the condition of our assets, [removed: the cost of redevelopments that may extend the useful lives of our assets] and general economic and real estate factors.

Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including [removed: applicable] [added: pre-construction costs, real estate taxes, insurance, construction costs and] salaries and [removed: the] related [removed: direct costs,] [added: costs of personnel directly involved,] are capitalized.

[removed: Interest] [added: Additionally, interest] costs on developments and major redevelopments are capitalized as part of developments and redevelopments not yet placed in service.

[removed: _Real] [added: Real] Estate [removed: Acquisitions_][added: Acquisitions]

Upon acquisition of operating real estate properties, we estimate the fair value of [removed: acquired tangible] assets [removed: (consisting of land, building] and [removed: improvements), identified intangible assets and] liabilities [removed: (consisting of above-market and below-market leases,] [added: acquired including land, building, improvements, leasing costs, intangibles such as] in-place [removed: leases] [added: leases, assumed debt,] and [removed: tenant relationships),] [added: current assets] and [removed: assumed debt.][added: liabilities, if any.]

[removed: _Long-Lived] [added: Long-Lived] Assets and [removed: Impairment_][added: Impairment]

[removed: _Contingencies_][added: Contingencies]

We accrue a liability for litigation if an unfavorable outcome is probable [added: and the amount of loss can be reasonably estimated.]

[removed: _Self-Insurance_][added: Self-Insurance]

Our accrual for self-insurance liability is determined by management and is based on claims filed and an estimate of claims [added: projected to be] incurred but not yet reported.

[removed: Recently Adopted] [added: Recently Issued] Accounting [removed: Pronouncements][added: Pronouncements]

[removed: Property] [added: 2011 Significant Property] Acquisitions and [removed: Dispositions][added: Disposition]

The operations of [removed: the buildings have been reclassified as discontinued operations] [added: this property are included] in [added: “discontinued operations” in] the consolidated statements of operations for all [removed: years] [added: periods] presented and included in “assets held for [removed: sale”] [added: sale/disposal”] in our consolidated balance [removed: sheets.][added: sheet as of December 31, 2010.]

[removed: 2010] [added: 2011] Significant Debt, Equity and Other [removed: Transactions][added: Transactions]

[removed: On January 28, 2010, we delivered notice exercising our option to extend the maturity date by one year to July 27, 2011 on our] [added: This new] revolving credit [removed: facility, which] [added: facility matures on July 6, 2015, subject to a one-year extension at our option, and] bears interest at LIBOR plus [removed: 42.5] [added: 115] basis points.

[removed: Due to these repayments, approximately] [added: The] $2.8 million [added: early extinguishment] of [removed: unamortized] debt [removed: fees were recorded as additional interest] expense in 2010 [removed: and are included in “early extinguishment of debt” in] [added: is due to] the [removed: consolidated statement] [added: write-off] of [removed: operations.][added: unamortized debt fees related to the]

[removed: On March 30, 2010, we acquired the first mortgage] [added: The] loan [removed: on a] [added: is secured by the] shopping center [removed: located] in Norwalk, Connecticut.

Because the loans [removed: are] [added: were] in default, we [removed: have] [added: had] certain rights under the first mortgage loan agreement that [removed: give] [added: gave] us the ability to direct the activities that most significantly [removed: impact] [added: impacted] the shopping center.

Although we [removed: are not currently exercising and do] [added: did] not [removed: expect to] exercise those rights, the existence of those rights in the loan agreement [removed: results] [added: resulted] in the entity being a [removed: VIE.][added: variable interest entity ("VIE").]

Additionally, given our investment in both the first and second mortgage on the property, the overall decline in fair market value since the loans were initiated, and the [removed: current] default status of the loans, we also [removed: have] [added: had] the obligation to absorb losses or rights to receive benefits that could potentially be significant to the VIE.

Consequently, we [removed: have determined we are] [added: were] the primary beneficiary of this VIE and consolidated the shopping center and adjacent building [removed: as of] [added: from] March 30, [removed: 2010.][added: 2010 to June 29, 2011.]

In May 2010, we formed Taurus Newbury Street JV II Limited Partnership (“Newbury Street Partnership”), a joint venture [removed: limited partnership] with an affiliate of Taurus Investment Holdings, LLC (“Taurus”), [removed: which plans] to acquire, operate and redevelop [removed: up to $200 million of] properties located primarily in the Back Bay section of Boston, Massachusetts.

We [removed: hold] [added: held] an 85% limited partnership interest in Newbury Street Partnership and Taurus [removed: holds] [added: held] a 15% limited partnership interest and [removed: serves] [added: served] as general partner.

As general partner, Taurus [removed: is] [added: was] responsible for the operation and management of the properties, subject to our approval on major decisions.

Forward-Looking Statements

Management considers an accounting estimate to be

These reviews may take into account such factors as the

We capitalized external and internal costs related to both development and redevelopment activities of $96 million and $4 million, respectively, for 2011 and $54 million and $3 million, respectively, for 2010.

We capitalized external and internal costs related to other property improvements of $46 million and $1 million, respectively, for 2011 and $39 million and $1 million, respectively, for 2010.

We capitalized external and internal costs related to leasing activities of $8 million and $5 million, respectively, for 2011 and $7 million and $4 million, respectively, for 2010.

The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $4 million, $1 million, and $5 million, respectively, for 2011 and $3 million, $1 million, and $4 million, respectively, for 2010.

We consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below market renewal option and include such renewal options in the calculation of in-place lease value when we consider these to be bargain renewal options.

In May 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” The pronouncement was issued to provide a uniform framework for fair value measurements and related disclosures between U.S. GAAP and International Financial Reporting Standards (“IFRS”).

ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements.

This pronouncement is effective for us in the first quarter of 2012 and is not expected to have a significant impact to our consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of shareholders’ equity and requires the presentation of components of net income and components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements.

In December 2011, the FASB deferred the requirement to present reclassification adjustments for each component of accumulated

other comprehensive income in both net income and other comprehensive income on the face of the financial statements.

These pronouncements are effective for us in the first quarter of 2012 and will not have a significant impact to our consolidated financial statements.

Approximately $1.2 million and $4.4 million of net assets acquired were allocated to other assets for “above market leases” and other liabilities for “below market leases”, respectively.

We incurred a total of $0.4 million of acquisition costs of which $0.2 million were incurred in 2011 and are included in “general and administrative expenses” for the year ended December 31, 2011.

On July 12, 2011, we sold Feasterville Shopping Center located in Feasterville, Pennsylvania for a sales price of $20.0 million resulting in a gain of $14.8 million.

The sale was completed as a Section 1031 tax deferred exchange transaction with the acquisition of Tower Shops.

On October 31, 2011, our Newbury Street Partnership sold its three buildings for $44.0 million.

As part of the sale, we received $34.6 million of the net proceeds which included the repayment of our $11.8 million loans.

Due to our earnings being recorded one quarter in arrears, we will recognize the gain on sale of $11.8 million in the first quarter 2012.

See Note 5 to the consolidated financial statements for further discussion of our Newbury Street Partnership.

On December 27, 2011, we acquired an 89.9% controlling interest in Montrose Crossing, a 357,000 square foot shopping center located in Rockville, Maryland.

The purchase price was $141.5 million and our 89.9% ownership interest was $127.2 million which was funded with cash and our pro-rata share of $80.0 million of new mortgage debt.

We are the managing member of the entity, control all significant operating decisions, and receive approximately 89.9% of the cash flow of the entity.

Therefore, we have consolidated the property and its operations effective on the acquisition date.

The purchase price has been preliminarily allocated to real estate assets, debt, and noncontrolling interests.

The final purchase price allocation to all acquired assets, liabilities, and noncontrolling interests will be finalized after our valuation studies are complete.

We incurred approximately $2.4 million of acquisition costs which are included in “general and administrative expenses” in 2011.

On December 30, 2011, we acquired a 48.2% controlling interest in Plaza El Segundo, a 381,000 square foot shopping center located in El Segundo, California.

The purchase price was $192.7 million and our 48.2% ownership interest was funded with $8.5 million of cash and the assumption of our pro-rata share of the existing $175.0 million mortgage debt.

We are the managing member of the entity, control all significant operating decisions, and receive the majority of the cash flow of the entity.

Therefore, we have consolidated the property and its operations effective on the acquisition date.

The purchase price has been preliminarily allocated to real estate assets, debt, and noncontrolling interests.

The final purchase price allocation to all acquired assets, liabilities, and noncontrolling interests will be finalized after our valuation studies are complete.

We incurred approximately $1.0 million of acquisition costs which are included in “general and administrative expenses” in 2011.

On December 30, 2011, we acquired an 8.1 acre land parcel adjacent to Plaza El Segundo for a purchase price of $15.9 million.

We intend to use the land parcel for future development.

In connection with the acquisition of Tower Shops on January 19, 2011, we assumed a mortgage loan with a face amount of $41.0 million and a fair value of approximately $42.9 million.

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we were required to increase our allowance by 1% of rental income, our bad debt expense would have increased and our net income would have decreased by $5.3 million.

A newly developed neighborhood shopping center building would typically have an economic useful life of 50 to 60 years, but since many of our assets are not newly developed buildings, estimating the useful lives of assets that are long-lived requires significant management judgment.

and the amount of loss can be reasonably estimated.

As further discussed in Note 8 to the Consolidated Financial Statements, we are party to a litigation matter related to a parcel of land adjacent to our Santana Row property.

During 2009, the judge awarded damages to the plaintiff including interest and costs of suit resulting in us increasing our litigation accrual to $16.4 million.

We and the plaintiff both appealed the ruling and oral arguments on the appeal were heard in December 2010.

A final ruling on the appeal was issued in February 2011 which rejected both appeals and consequently, affirmed the final judgment against us.

Therefore, in December 2010, we adjusted our accrual to $16.2 million which reflects the amount we expect to pay in first quarter 2011.

In June 2009, the Financial Accounting Standards Board (“FASB”) issued a new accounting standard which provides certain changes to the evaluation of a VIE including requiring a qualitative rather than quantitative analysis to determine the primary beneficiary of a VIE, continuous assessments of whether an enterprise is the primary beneficiary of a VIE, and enhanced disclosures about an enterprise’s involvement with a VIE.

Under the new standard, the primary beneficiary has both the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

We adopted the standard effective January 1, 2010.

The adoption did not have a material impact to our financial statements.

The newly required balance sheet disclosures regarding assets and liabilities of a consolidated VIE have been parenthetically included in our balance sheet.

These parenthetical amounts relate to Melville Mall in Huntington, New York, a shopping center and adjacent commercial building in Norwalk, Connecticut, which is further discussed in Note 3 to the consolidated financial statements in this Form 10-K, and Huntington Square in East Northport, New York, which is further discussed in Note 1 to the consolidated financial statements in this Form 10-K.

Although the adoption of this standard did not have a material impact to our financial statements, this standard could impact future consolidation of entities based on the specific facts and circumstances of those entities.

In July 2010, the FASB issued a new accounting standard that requires enhanced disclosures about financing receivables, including the allowance for credit losses, credit quality, and impaired loans.

This standard is effective for fiscal years ending after December 15, 2010.

We adopted the standard in the fourth quarter 2010 and it did not have a material impact to our financial statements.

_2010 Significant Acquisitions_

A summary of our significant acquisitions in 2010 is as follows:

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| Date | | Property | | City, State | | Gross Leasable Area | | | | Purchase Price | | |

| | | | | | | (In square feet) | | | | (In millions) | | |

| August 16 | | Huntington Square | | East Northport, NY | | | 74,000 | | | $ | 17.6 | (1) |

| November 10 | | Former Mervyn’s Parcel (Escondido Promenade) | | Escondido, CA | | | 75,000 | | | | 11.2 | (2) |

| November 22 | | Pentagon Row | | Arlington, VA | | | N/A | | | | 8.5 | (3) |

| December 27 | | Bethesda Row | | Bethesda, MD | | | N/A | | | | 9.4 | (4) |

| | | | | Total | | | 149,000 | | | $ | 46.7 | |

| (1) | We acquired the leasehold interest in this property. Approximately $9.2 million of net assets acquired were allocated to other assets for “above market leases” and a “below market ground lease” for which we are the lessee. Approximately $1.7 million of net assets acquired were allocated to liabilities for “below market leases”. We incurred approximately $0.3 million of acquisition costs which are included in “general and administrative expenses”. |

| (2) | This property is adjacent to and operated as part of Escondido Promenade which is owned through a partnership in which we own the controlling interest. |

| (3) | We and a subsidiary of Post Properties, Inc. (“Post”) purchased the fee interest in the land under Pentagon Row. The land was purchased as a result of a favorable outcome to litigation. In September 2008, we and Post sued Vornado Realty Trust and related entities (“Vornado”) for breach of contract in the Circuit Court of Arlington County, Virginia. The breach of contract was a result of Vornado’s acquiring in transactions in 2005 and 2007 the fee interest in the land under our Pentagon Row project without first giving us and Post the opportunity to purchase the fee interest in that land as required by the right of first offer (“ROFO”) provisions included in the documentation relating to the Pentagon Row project. On April 30, 2010, the judge in this case issued a ruling that Vornado failed to comply with the ROFO and as a result, breached the contract, and ordered Vornado to sell to us and Post, collectively, the land under Pentagon Row. Vornado appealed the ruling, however, the appeal was denied in November 2010. As part of the acquisition of the land and termination of the respective ground lease, we were relieved of our deferred ground rent liability for approximately $8.8 million. The liability was offset against the net purchase price with the excess of the liability over the purchase price of $0.3 million included in the statement of operations as an adjustment to rental expense. |

| (4) | We acquired the fee interest in approximately 2.1 acres of land under Bethesda Row. Prior to the transaction, the land parcel was owned pursuant to a ground lease and encumbered by a capital lease obligation which were terminated as part of the transaction. |

_2010 Assets Held for Sale_

In December 2010, we committed to a plan of sale for two buildings on Fifth Avenue in San Diego, California.

As the buildings met the criteria to be classified as held for sale, we recognized a $0.4 million loss to write down one of the buildings to its expected sales price less cost to sell.

We expect the sales will be completed in 2011.

_2009 Significant Transactions_

On June 26, 2009, one of our tenants acquired from us our fee interest in a land parcel in White Marsh, Maryland, that was subject to a long-term ground lease.

[removed: Interest] [added: Interest] Rate [removed: Risk][added: Risk]

[removed: 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 [removed: mortgage] [added: mortgages] and notes payable.

[removed: _Fixed] [added: Fixed] Interest Rate [removed: Debt_][added: Debt]

The majority of our outstanding debt obligations (maturing at various times through 2031 [removed: or through 2106 including] [added: or, with respect to] capital lease [removed: obligations)] [added: obligations through 2106)] have fixed interest rates which limit the risk of fluctuating interest rates.

At December 31, [removed: 2010,] [added: 2011,] we had [removed: $1.6] [added: $2.1] billion of fixed-rate debt [removed: outstanding] [added: outstanding, including our $275.0 million term loan as the rate is effectively fixed by two interest rate swap agreements,] and [removed: $59.9] [added: $63.1] million of capital lease obligations.

If market interest rates [added: used to calculate the fair value] on our fixed-rate debt instruments at December 31, [removed: 2010] [added: 2011] had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately [removed: $67.2] [added: $69.1] million.

If market interest rates [added: used to calculate the fair value] on our fixed-rate debt instruments at December 31, [removed: 2010] [added: 2011] had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately [removed: $71.7] [added: $73.5] million.

[removed: _Variable] [added: Variable] Interest Rate [removed: Debt_][added: Debt]

At December 31, [removed: 2010,] [added: 2011,] we had [removed: $86.4] [added: $9.4] million of variable rate debt outstanding which consisted of [removed: $77.0 million outstanding on our revolving credit facility and $9.4 million of] municipal bonds.

Based upon this amount of variable rate debt and the specific terms, if market interest rates increased 1.0%, our annual interest expense would increase by approximately [removed: $0.9] [added: $0.1] million, and our net income and cash flows for the year would decrease by approximately [removed: $0.9] [added: $0.1] million.

Conversely, if market interest rates decreased 1.0%, our annual interest expense would decrease by [removed: approximately $0.6] [added: less than $0.1] million with a corresponding increase in our net income and cash flows for the year.

[removed: ITEM] [added: ITEM] 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA][added: DATA]

As of December 31, 2011, we were party to two interest rate swap agreements to fix the variable rate portion of our $275.0 million term loan at 1.72% from December 1, 2011 through November 1, 2018.

Quoted market prices were used to estimate the

Our revolving credit facility had no outstanding balance as of December 31, 2011.

As of December 31, 2010, we were not party to any open derivative financial instruments.

##### [Table of Contents](#toc)

[removed: _References] [added: References] to “we,” “us,” “our” or the “Trust” refer to Federal Realty Investment Trust and our business and operations conducted through our directly or indirectly owned [removed: subsidiaries._][added: subsidiaries.]

[removed: General][added: General]

As of December 31, [removed: 2010,] [added: 2011,] we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as [removed: 85] [added: 87] predominantly retail real estate projects comprising approximately [removed: 18.3] [added: 19.3] million square feet.

In total, the real estate projects were [removed: 93.9%] [added: 93.4%] leased and [removed: 93.2%] [added: 92.4%] occupied at December 31, [removed: 2010.][added: 2011.]

A joint venture in which we own a 30% interest owned seven retail real estate projects totaling approximately 1.0 million square feet as of December 31, [removed: 2010.][added: 2011.]

In total, the joint venture properties in which we own an interest were [removed: 91.0%] [added: 90.9%] leased and [removed: 90.4%] occupied at December 31, [removed: 2010.][added: 2011.]

We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for [removed: 43] [added: 44] consecutive years.

Our website address is [removed: _www.federalrealty.com_.][added: www.federalrealty.com.]

[removed: Business] [added: Business] Objectives and [removed: Strategies][added: Strategies]

| [removed: |] • | [removed: |] protect investor capital; |

| [removed: |] • | [removed: |] provide increasing cash flow for distribution to shareholders; |

| [removed: |] • | [removed: |] generate higher internal growth than our peers; and |

| [removed: |] • | [removed: |] provide potential for capital appreciation. |

[removed: The] [added: Our portfolio includes, and we continue to acquire and redevelop, high quality retail in many formats ranging from regional community and neighborhood shopping centers that generally are anchored by grocery stores to] mixed-use properties [added: that] are typically centered around a retail component but may also include office, residential and/or hotel components.

[removed: _Operating Strategies_][added: Operating Strategies]

| [removed: |] • | [removed: |] increasing rental rates through the renewal of expiring leases or the leasing of space to new tenants at higher rental rates while limiting vacancy and down-time; |

| [removed: |] • | [removed: |] maintaining a diversified tenant base, thereby limiting exposure to any one tenant’s financial or operating difficulties; |

| [removed: |] • | [removed: |] monitoring the merchandising mix of our tenant base to achieve a balance of strong national and regional tenants with local specialty tenants; |

| [removed: |] • | [removed: |] minimizing overhead and operating costs; |

| [removed: |] • | [removed: |] monitoring the physical appearance of our properties and the construction quality, condition and design of the buildings and other improvements located on our properties to maximize our ability to attract customers and thereby generate higher rents and occupancy rates; |

| [removed: |] • | [removed: |] developing local and regional market expertise in order to capitalize on market and retailing trends; |

| [removed: |] • | [removed: |] leveraging the contacts and experience of our management team to build and maintain long-term relationships with tenants, investors and financing sources; [removed: and] |

| [removed: |] • | [removed: |] providing exceptional customer [removed: service.] [added: service; and] |

[removed: _Investing Strategies_][added: Investing Strategies]

Our investment strategy is to deploy capital at risk-adjusted rates of return that exceed our long-term weighted average cost of capital in projects that have potential for future income [removed: growth.][added: growth and increased value.]

| [removed: |] • | [removed: |] renovating, expanding, reconfiguring and/or retenanting our existing properties to take advantage of under-utilized land or existing square footage to increase revenue; |

| [removed: |] • | [removed: |] renovating or expanding tenant spaces for tenants capable of producing higher sales, and therefore, paying higher [removed: rents, including expanding space available to an existing tenant that is performing well but is operating out of an old or otherwise inefficient store format;] [added: rents;] |

| [removed: |] • | [removed: |] acquiring quality retail [removed: properties] and [removed: other quality] [added: mixed-use] properties [removed: that have a significant retail component] located in densely populated [removed: or] [added: and/or] affluent areas where barriers to entry for further development are high, and that have possibilities for enhancing operating performance [added: and creating value] through renovation, expansion, reconfiguration and/or retenanting; and |

| [removed: |] • | [removed: |] developing the retail portions of mixed-use properties and developing or otherwise investing in other portions of mixed-use properties we already own in order to capitalize on the overall value created in [removed: the mixed-use] [added: these] properties. |

[removed: _Investment Criteria_][added: Investment Criteria]

| [removed: |] • | [removed: |] the expected returns in relation to our short and long-term cost of capital as well as the anticipated risk we will face in achieving the expected returns; |

| [removed: |] • | [removed: |] the anticipated growth rate of operating income generated by the property; |

| [removed: |] • | [removed: |] the tenant mix at the property, tenant sales performance and the creditworthiness of those tenants; |

| [removed: |] • | [removed: |] the geographic area in which the property is located, including the population density and household incomes, as well as the population and income trends in that geographic area; |

| [removed: |] • | [removed: |] competitive conditions in the vicinity of the property, including competition for tenants and the ability of others to create competing properties through redevelopment, new construction or renovation; |

| [removed: |] • | [removed: |] access to and visibility of the property from existing roadways and the potential for new, widened or realigned, roadways within the property’s trade area, which may affect access and commuting and shopping patterns; |

| [removed: |] • | [removed: |] the level and success of our existing investments in the market area; |

| [removed: |] • | [removed: |] the current market value of the land, buildings and other improvements and the potential for increasing those market values; and |

| [removed: |] • | [removed: |] the physical condition of the land, buildings and other improvements, including the structural and environmental condition. |

[removed: _Financing Strategies_][added: Financing Strategies]

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| • | creating an experience at many of our properties that is identifiable, unique and serves the surrounding communities to help insulate these properties and the tenants at these properties from the impact of on-line retailing. |

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Our traditional focus has been and remains on regional community and neighborhood shopping centers that generally are anchored by grocery stores.

Late in 1994, recognizing a trend of increased consumer acceptance of retailer expansion to main streets, we expanded our investment strategy to include street retail and mixed-use properties.

##### [Table of Contents](#toc)

We will be subject to

In 2010, 2009, and 2008, our TRS incurred net income taxes/(refunds) of approximately $0.4 million, $0.5 million and $(0.8) million, respectively, primarily related to sales of condominiums at Santana Row and our investment in certain restaurant joint ventures at Santana Row.

None.

In May 2003, a breach of contract action was filed against us in the United States District Court for the Northern District of California, San Jose Division, alleging that a one page document entitled “Final Proposal” 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.” The “Final Proposal” explicitly stated that it was subject to approval of the terms and conditions of a formal agreement.

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 and the court issued a tentative ruling in April 2009 awarding damages to the plaintiff of approximately $14.4 million plus interest.

Accordingly, considering all the information available to us when we filed our March 31, 2009 Form 10-Q, our best estimate of damages, interest, and other costs was $21.4 million resulting in an increase in our accrual for this matter of $20.6 million.

In June 2009, the court issued a final judgment awarding damages of $15.9 million (including interest) plus costs of suit and in July 2009, we and the plaintiff both filed a notice of appeal with the United States Court of Appeals for the Ninth Circuit.

In December 2009, the plaintiff filed an “appellee’s principal and response brief” providing additional information regarding the issues the plaintiff is appealing.

Given the additional information regarding the appeal, we lowered our accrual to $16.4 million in the fourth quarter 2009, which reflected our best estimate of the litigation liability.

Oral arguments on the appeal were heard in December 2010.

A final ruling on the appeal was issued in February 2011 which rejected both appeals and consequently, affirmed the final judgment against us.

Therefore, in December 2010, we adjusted our accrual to $16.2 million which reflects the amount we expect to pay in first quarter 2011.

The net change in our accrual in 2010 and 2009 is included in “litigation provision” in our consolidated statements of operations.

The litigation accrual of $16.2 million and $16.4 million at December 31, 2010 and 2009, respectively, is included in the “accounts payable and accrued expenses” line item in our consolidated balance sheets.

During 2010 and 2009, we incurred additional legal and other costs related to this lawsuit and appeal process which are also included in the “litigation provision” line item in the consolidated statements of operations.

[removed: 10-K 1 d10k.htm] [added: |] FORM 10-K [added: |]

[removed: ##### [Table of Contents](#toc)][added: TABLE OF CONTENTS]

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: WASHINGTON,] [added: WASHINGTON,] D.C. [removed: 20549][added: 20549]

[removed: þ] [added: | ý |] ANNUAL REPORT PURSUANT TO THE SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [added: |]

For the fiscal year ended December 31, [removed: 2010][added: 2011]

[added: |] ¨ [added: |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [added: |]

[removed: FEDERAL] [added: FEDERAL] REALTY INVESTMENT [removed: TRUST][added: TRUST]

| [removed: (State] [added: (State] of [removed: Organization)] [added: Organization)] | | [removed: (IRS] [added: (IRS] Employer Identification [removed: No.)] [added: No.)] |

| [removed: (Address] [added: (Address] of Principal Executive [removed: Offices)] [added: Offices)] | | [removed: (Zip Code)] [added: (Zip Code)] |

[removed: (Registrant’s] [added: (Registrant’s] Telephone Number, Including Area [removed: Code)][added: Code)]

| [removed: Title] [added: Title] of Each [removed: Class] [added: Class] | | [removed: Name Of] [added: Name of] Each Exchange On Which [removed: Registered] [added: Registered] |

[removed: þ] [added: ý] Yes ¨ No

¨ Yes [removed: þ] [added: ý] No

[removed: þ] [added: ý] Yes [removed: ¨No][added: ¨ No]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate [removed: Website,] [added: Web site,] if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the [removed: Registrant] [added: registrant] was required to submit and post such files).

| Large Accelerated Filer | [removed: | þ | | |] [added: ý] | Accelerated Filer | [removed: |] ¨ |

| Non-Accelerated Filer | [removed: | ¨ | |] [added: o] (Do not check if a smaller reporting company) | [removed: |] Smaller reporting company | [removed: |] ¨ |

The aggregate market value of the [removed: Registrant’s] [added: Registrant's] common shares held by non-affiliates of the Registrant, based upon the closing sales price of the [removed: Registrant’s] [added: Registrant's] common shares on June 30, [removed: 2010] [added: 2011] was [removed: $4.3] [added: $5.3] billion.

The number of Registrant’s common shares outstanding on February 9, [removed: 2011] [added: 2012] was [removed: 61,537,817.][added: 63,672,252.]

[removed: ANNUAL] [added: ANNUAL] REPORT ON FORM [removed: 10-K][added: 10-K]

[removed: FISCAL] [added: FISCAL] YEAR ENDED DECEMBER 31, [removed: 2010][added: 2011]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the Registrant’s Proxy Statement to be filed with the Securities and Exchange Commission for the Registrant’s 2011 annual meeting of shareholders to be held in May [removed: 2011] [added: 2012] will be incorporated by reference into Part III hereof.

| [removed: [PART I](#tx124940_1) | | | |] [added: PART I] | | |

| Item 1. | [removed: | [Business](#tx124940_2) | | | 3] [added: Business] | [added: [3](#s843ABA28DDE89C3FD0F7A7B47CD30A7F)] |

| Item 1A. | [removed: | [Risk Factors](#tx124940_3) | | | 8] [added: Risk Factors] | [added: [7](#s9635628E1619B9FF9526A9307EA4C550)] |

| Item 1B. | [removed: | [Unresolved] [added: Unresolved] Staff [removed: Comments](#tx124940_4) | | | 19] [added: Comments] | [added: [15](#sD8ABC9F28321B610B891A932C9C16CEC)] |

| Item 2. | [removed: | [Properties](#tx124940_5) | | | 19] [added: Properties] | [added: [15](#s0607DA2B72B496B784D1A933897E5880)] |

| Item 3. | [removed: | [Legal Proceedings](#tx124940_6) | | | 28] [added: Legal Proceedings] | [added: [23](#s203A9896D4F7C9D11D27A975E8BD27A4)] |

| [removed: [PART II](#tx124940_8) | | | |] [added: PART II] | | |

| Item 5. | [removed: | [Market] [added: Market] for Our Common Equity and Related Shareholder Matters and Issuer Purchases of Equity [removed: Securities](#tx124940_9) | | | 29] [added: Securities] | [added: [24](#s01048D65867F047706DAA979AB8A727D)] |

| Item 6. | [removed: | [Selected] [added: Selected] Financial [removed: Data](#tx124940_10) | | | 31] [added: Data] | [added: [26](#sBD5541856E9B89DF6D4CA97B46F03D55)] |

| Item 7. | [removed: | [Management’s] [added: Management’s] Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx124940_11) | | | 33] [added: Operations] | [added: [28](#s6824A30E57D89EF15092A2FC8D059CF7)] |

| Item 7A. | [removed: | [Quantitative] [added: Quantitative] and Qualitative Disclosures about Market [removed: Risk](#tx124940_12) | | | 58] [added: Risk] | [added: [49](#s3A52C3FEB747D85E8363A2FC93E9BC59)] |

| Item 8. | [removed: | [Financial] [added: Financial] Statements and Supplementary [removed: Data](#tx124940_13) | | | 59] [added: Data] | [added: [50](#s77C9D7508F934D1DECE3A99331277A74)] |

| Item 9. | [removed: | [Changes] [added: Changes] In and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#tx124940_14) | | | 59] [added: Disclosure] | [added: [50](#s5F90AA5A38D7A2FBECD4A9941F2A95F3)] |

| Item 9A. | [removed: | [Controls] [added: Controls] and [removed: Procedures](#tx124940_15) | | | 59] [added: Procedures] | [added: [50](#s4217D37B4C42F31807B3A2FC95F67FD9)] |

| Item 9B. | [removed: | [Other Information](#tx124940_16) | | | 61] [added: Other Information] | [added: [52](#s0BC5ED24070CD2155783A99749256946)] |

10-K 1 frt-12312011x10k.htm

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¨ Yes ý No

FEDERAL REALTY INVESTMENT TRUST

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| --- | --- | --- |

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| Item 4. | Mine Safety Disclosures | [23](#s56749186812F1D667C69A9775738C66D) |

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| SIGNATURES | | [54](#s3ED9023B55460E99104BA2FCA80972EC) |

FORM 10-K

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TABLE OF CONTENTS

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| Item 4. | | [\[Removed and Reserved\]](#tx124940_7) | | | 28 | |

| [SIGNATURES](#tx124940_25) | | | | | 64 | |

[removed: General][added: General]

As of December 31, [removed: 2010,] [added: 2011,] we owned or had a majority ownership interest in community and neighborhood shopping centers and mixed-used properties which are operated as [removed: 85] [added: 87] predominantly retail real estate projects comprising approximately [removed: 18.3] [added: 19.3] million square feet.

No single property accounted for over 10% of our [removed: 2010] [added: 2011] total revenue.

We believe that our properties are adequately covered by commercial general liability, fire, flood, earthquake, terrorism and business interruption insurance provided by reputable companies, with [removed: commercially reasonable exclusions, deductibles and limits.]

[removed: Tenant Diversification][added: Tenant Diversification]

As of December 31, [removed: 2010,] [added: 2011,] we had approximately [removed: 2,400] [added: 2,500] leases, with tenants ranging from sole proprietors to major national and international retailers.

No one tenant or affiliated group of tenants accounted for more than [removed: 2.6%] [added: 2.5%] of our annualized base rent as of December 31, [removed: 2010.][added: 2011.]

[removed: Geographic Diversification][added: Geographic Diversification]

Our [removed: 85] [added: 87] real estate projects are located in 13 states and the District of Columbia.

The following table shows the number of projects, the gross leasable area (“GLA”) of commercial space and the percentage of total portfolio gross leasable area of commercial space in each state as of December 31, [removed: 2010.][added: 2011.]

| [removed: State] [added: State] | | [removed: Number] [added: Number] of [removed: Projects |] [added: Projects] | | | [removed: Gross] [added: Gross] Leasable [removed: Area |] [added: Area] | | | [removed: Percentage] [added: Percentage] of Gross Leasable [removed: Area |] [added: Area] | |

| | | [removed: (In] [added: (In] square [removed: feet) | | |] [added: feet)] | | | | | | | |

| New Jersey | | [removed: |] 4 | | | [removed: | 1,383,000 |] [added: 1,388,000] | | | [removed: 7.6] [added: 7.2] | % |

| New York | | [removed: |] 6 | | | [removed: | 1,198,000 |] [added: 1,200,000] | | | [removed: 6.5] [added: 6.2] | % |

| Illinois | | [removed: |] 4 | | | [removed: |] 752,000 | | | [removed: | 4.1] [added: 3.9] | % |

| Michigan | | [removed: |] 1 | | | [removed: |] 217,000 | | | [removed: | 1.2] [added: 1.1] | % |

| District of Columbia | | [removed: |] 2 | | | [removed: |] 168,000 | | | [removed: |] 0.9 | % |

| North Carolina | | [removed: |] 1 | | | [removed: |] 153,000 | | | [removed: |] 0.8 | % |

| [removed: Total | | | 85] [added: Total] | | [added: 87] | | [removed: 18,286,000] | [added: 19,259,000] | | | [removed: 100.0] [added: 100.0] | [removed: %] [added: %] |

| (1) | Additionally, we own two participating mortgages totaling approximately $29.4 million secured by multiple buildings in Manayunk, Pennsylvania, and [removed: $18.3] [added: an $11.7] million [removed: of loans] [added: mortgage] secured by [removed: two properties] [added: a shopping center] in Norwalk, Connecticut. |

[removed: Leases,] [added: Leases,] Lease Terms and Lease [removed: Expirations][added: Expirations]

Commercial property leases generally range from [removed: 3] [added: three] to [removed: 10] [added: ten] years; however, certain leases, primarily with anchor tenants, may be longer.

Leases on residential units are generally for a period of one year or less and, in [removed: 2010,] [added: 2011,] represented approximately [removed: 4.1%] [added: 4.3%] of total rental income.

The following table sets forth the schedule of lease expirations for our commercial leases in place as of December 31, [removed: 2010] [added: 2011] for each of the 10 years beginning with [removed: 2011] [added: 2012] and after [removed: 2020] [added: 2021] in the aggregate assuming that none of the tenants exercise future renewal options.

Annualized base rents reflect in-place contractual rents as of December 31, [removed: 2010.][added: 2011.]

| [removed: Year] [added: Year] of Lease [removed: Expiration] [added: Expiration] | | [removed: Leased] [added: Leased] Square Footage [removed: Expiring |] [added: Expiring] | | | [removed: Percentage] [added: Percentage] of Leased Square Footage [removed: Expiring |] [added: Expiring] | | | [removed: Annualized] [added: Annualized] Base Rent Represented by Expiring [removed: Leases] [added: Leases] | | | | [removed: Percentage] [added: Percentage] of Annualized Base Rent Represented by Expiring [removed: Leases |] [added: Leases] | |

[removed: Retail] [added: Retail] and Residential [removed: Properties][added: Properties]

The following table sets forth information concerning all real estate projects in which we owned an equity interest, had a leasehold interest, or otherwise controlled and are consolidated as of December 31, [removed: 2010.][added: 2011.]

| [removed: Property,] [added: Property,] City, State, Zip [removed: Code] [added: Code] | | [removed: Year Completed] [added: Year Completed] | | [removed: Year Acquired] [added: Year Acquired] | | [removed: Square Feet(1) /Apartment Units] [added: Square Feet(1) /Apartment Units] | | [removed: Average Rent Per Square Foot] [added: Average Rent Per Square Foot] | | [removed: Percentage Leased(2)] [added: Percentage Leased(2)] | | [removed: Principal Tenant(s)] [added: Principal Tenant(s)] |

| [removed: California] [added: California] | | | | | | | | | | | | |

| 150 Post Street San Francisco, CA 94108 | | 1908, 1965 | | 1997 | | 102,000 | | [removed: $42.36] [added: $41.48] | | 100% | | Brooks Brothers H & M |

| Colorado Blvd Pasadena, CA(3) | | 1905-1988 | | 1996/1998 | | 69,000 | | [removed: $37.58] [added: $39.21] | | [removed: 99%] [added: 83%] | | Pottery Barn Banana Republic |

| Crow Canyon Commons San Ramon, [removed: CA(3)(12)] [added: CA(3)(10)] | | 1980-2006 | | 2005/2007 | | 242,000 | | [removed: $19.02] [added: $19.55] | | 89% | | Lucky Loehmann’s [added: Dress Shop] Rite Aid |

| Escondido Promenade Escondido, CA [removed: 92029(4)(13)] [added: 92029(4)] | | 1987 | | 1996/2010 | | [removed: 222,000] [added: 297,000] | | [removed: $23.76] [added: $22.24] | | [removed: 98%] [added: 96%] | | [added: TJ Maxx] Toys R Us [removed: TJ Maxx] [added: Dick's Sporting Goods Ross Dress For Less] |

| Fifth Avenue San Diego, CA | | [removed: 1888-1995] [added: 1888-1998] | | [removed: 1996-1997] [added: 1996] | | [removed: 51,000] [added: 18,000] | | [removed: $27.46] [added: $47.21] | | [removed: 93%] [added: 100%] | | Urban Outfitters |

| Hermosa Avenue Hermosa Beach, CA | | 1922 | | 1997 | | [removed: 23,000] [added: 24,000] | | [removed: $31.59] [added: $30.23] | | 100% | | |

| Hollywood Blvd Hollywood, CA(5) | | 1921-1991 | | 1999 | | [removed: 153,000] [added: 140,000] | | [removed: $21.90] [added: $24.00] | | [removed: 75%] [added: 91%] | | DSW L.A. Fitness Fresh & Easy |

| Kings Court Los Gatos, CA 95032(3)(6) | | 1960 | | 1998 | | 79,000 | | [removed: $28.43] [added: $28.68] | | [removed: 97%] [added: 100%] | | Lunardi’s Supermarket CVS |

| Old Town Center Los Gatos, CA 95030 | | 1962, 1998 | | 1997 | | [removed: 95,000] [added: 96,000] | | [removed: $30.04] [added: $33.11] | | [removed: 97%] [added: 83%] | | [removed: Borders Books] Gap [removed: Kids] Banana Republic |

| Santana Row—Retail San Jose, CA 95128 | | 2002, 2009 | | 1997 | | [removed: 608,000] [added: 645,000] | | [removed: $44.31] [added: $46.60] | | [removed: 99%] [added: 94%] | | Crate & Barrel [removed: Borders Books] Container Store Best Buy CineArts Theatre Hotel Valencia |

commercially reasonable exclusions, deductibles and limits.

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | |

| Maryland | | 18 | | | 4,024,000 | | | 20.9 | % |

| Virginia | | 15 | | | 3,579,000 | | | 18.6 | % |

| California | | 13 | | | 2,943,000 | | | 15.3 | % |

| Pennsylvania(1) | | 10 | | | 2,289,000 | | | 11.9 | % |

| Massachusetts | | 7 | | | 1,386,000 | | | 7.2 | % |

| Florida | | 3 | | | 677,000 | | | 3.5 | % |

| Connecticut(1) | | 2 | | | 301,000 | | | 1.6 | % |

| Texas | | 1 | | | 182,000 | | | 0.9 | % |

| | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| 2012 | | 1,319,000 | | | 7 | % | | 33,423,000 | | | | 8 | % |

| 2013 | | 2,141,000 | | | 12 | % | | 51,869,000 | | | | 12 | % |

| 2014 | | 2,273,000 | | | 13 | % | | 52,123,000 | | | | 13 | % |

| 2015 | | 1,859,000 | | | 10 | % | | 42,881,000 | | | | 10 | % |

| 2016 | | 2,072,000 | | | 12 | % | | 51,965,000 | | | | 13 | % |

| 2017 | | 2,077,000 | | | 12 | % | | 45,232,000 | | | | 11 | % |

| 2018 | | 1,025,000 | | | 6 | % | | 22,491,000 | | | | 5 | % |

| 2019 | | 704,000 | | | 4 | % | | 17,481,000 | | | | 4 | % |

| 2020 | | 767,000 | | | 4 | % | | 20,984,000 | | | | 5 | % |

| 2021 | | 914,000 | | | 5 | % | | 25,137,000 | | | | 6 | % |

| Thereafter | | 2,624,000 | | | 15 | % | | 51,734,000 | | | | 13 | % |

| Total | | 17,775,000 | | | 100 | % | | $ | 415,320,000 | | | 100 | % |

Lease Rollovers

For 2011, we signed leases for a total of 1,417,000 square feet of retail space including 1,294,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 9% on a cash basis and 20% on a straight-line basis.

New leases for comparable spaces were signed for 534,000 square feet at an average rental increase of 11% on a cash basis and 21% on a straight-line basis.

Renewals for comparable spaces were signed for 760,000 square feet at an average rental increase of 7% on a cash basis and 19% on a straight-line basis.

For 2010, we signed leases for a total of 1,526,000 square feet of retail space including 1,455,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 8% on a cash basis and 18% on a straight-line basis.

New leases for comparable spaces were signed for 640,000 square feet at an average rental increase of 6% on a cash basis and 15% on a straight-line basis.

Renewals for comparable spaces were signed for 816,000 square feet at an average rental increase of 9% on a cash basis and 20% on a straight-line basis.

The rental increases associated with comparable spaces generally include all leases signed in arms-length transactions reflecting market leverage between landlords and tenants during the period.

The comparison between average rent for expiring leases and new leases is determined by including minimum rent and percentage rent paid on the expiring lease and minimum rent and in some instances, projections of first lease year percentage rent, to be paid on the new lease.

In some instances, management exercises judgment as to how to most effectively reflect the comparability of spaces reported in this calculation.

The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure.

The leases signed in 2011 generally become effective over the following two years though some may not become effective until 2014 and beyond.

##### [Table of Contents](#toc)

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Maryland | | | 17 | | | | 3,706,000 | | | | 20.2 | % |

| Virginia | | | 15 | | | | 3,616,000 | | | | 19.8 | % |

| California | | | 12 | | | | 2,497,000 | | | | 13.7 | % |

| Pennsylvania(1) | | | 11 | | | | 2,405,000 | | | | 13.1 | % |

| Massachusetts | | | 7 | | | | 1,382,000 | | | | 7.6 | % |

| Connecticut(1) | | | 2 | | | | 305,000 | | | | 1.7 | % |

| Florida | | | 2 | | | | 308,000 | | | | 1.7 | % |

| Texas | | | 1 | | | | 196,000 | | | | 1.1 | % |

| --- | --- |

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2011 | | | 1,412,000 | | | | 8 | % | | | 34,881,000 | | | | 9 | % |

| 2012 | | | 2,242,000 | | | | 13 | % | | | 50,088,000 | | | | 13 | % |

| 2013 | | | 2,070,000 | | | | 12 | % | | | 49,733,000 | | | | 13 | % |

| 2014 | | | 2,244,000 | | | | 13 | % | | | 51,217,000 | | | | 13 | % |

| 2015 | | | 1,789,000 | | | | 11 | % | | | 41,035,000 | | | | 11 | % |

| 2016 | | | 1,397,000 | | | | 8 | % | | | 34,708,000 | | | | 9 | % |

| 2017 | | | 1,125,000 | | | | 7 | % | | | 24,705,000 | | | | 6 | % |

| 2018 | | | 965,000 | | | | 6 | % | | | 19,015,000 | | | | 5 | % |

| 2019 | | | 718,000 | | | | 4 | % | | | 17,658,000 | | | | 4 | % |

| 2020 | | | 705,000 | | | | 4 | % | | | 19,185,000 | | | | 5 | % |

| Thereafter | | | 2,358,000 | | | | 14 | % | | | 45,448,000 | | | | 12 | % |

| Total | | | 17,025,000 | | | | 100 | % | | $ | 387,673,000 | | | | 100 | % |

| Newbury Street Boston, MA 02116(10) | | 1877-1929 | | 2010 | | 32,000 | | $80.37 | | 55% | | Pierre Deux Jonathan Adler |

| Feasterville Feasterville, PA 19047 | | 1958 | | 1980 | | 111,000 | | $13.81 | | 100% | | Giant Food OfficeMax |

| (8) | We own a 64.1% membership interest in this property. |

| (9) | 50% of the ownership of this property is in a “downREIT” partnership, of which a wholly owned subsidiary of the Trust is the sole general partner, with third party partners holding operating partnership units. |

| (13) | On November 10, 2010, we acquired an adjacent site to this property which totaled approximately 75,000 square feet, and we are in the process of preparing the space for lease. |

[removed: PART II][added: PART II]

Not applicable.

##### [Table of Contents](#toc)

| | [removed: | Price] [added: Price] Per [removed: Share] [added: Share] | | | | | | | | [removed: Dividends] [added: Dividends] Declared Per [removed: Share] [added: Share] | | |

| [removed: | High] [added: High] | | | | [removed: Low] [added: Low] | | | | | | | |

| [removed: 2010 |] [added: 2010] | | | | | | | | | | | |

| Fourth quarter | [removed: |] $ | 84.32 | | | $ | 74.87 | | | $ | 0.670 | |

| Third quarter | [removed: |] $ | 83.32 | | | $ | 68.91 | | | $ | 0.670 | |

| Second quarter | [removed: |] $ | 79.52 | | | $ | 68.35 | | | $ | 0.660 | |

| First quarter | [removed: |] $ | 74.11 | | | $ | 63.07 | | | $ | 0.660 | |

On February 9, [removed: 2011,] [added: 2012,] there were [removed: 3,666] [added: 3,508] holders of record of our common shares.

We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our regular annual dividend rate for [removed: 43] [added: 44] consecutive years.

Our total annual dividends paid per common share for [removed: 2010] [added: 2011] and [removed: 2009] [added: 2010] were [removed: $2.65] [added: $2.70] per share and [removed: $2.61] [added: $2.65] per share, respectively.

No assurances can be given regarding what portion, if any, of distributions in [removed: 2011] [added: 2012] or subsequent years will constitute a return of capital for federal income tax purposes.

| | [removed: | Year] [added: Year] Ended December [removed: 31,] [added: 31,] | | | | | | |

| Ordinary dividend | [removed: |] $ | [removed: 2.519] [added: 2.349] | | | $ | [removed: 2.377] [added: 2.519] | |

| Ordinary dividend eligible for 15% tax rate | [removed: |] [added: 0.027] | [removed: 0.025] | | | [added: 0.025] | [removed: 0.024] | |

| Return of capital | [removed: |] [added: 0.162] | [removed: 0.106] | | | [added: 0.106] | [removed: 0.183] | |

| Capital gain | [removed: |] [added: 0.162] | [removed: —] | | | [added: —] | [removed: 0.026] | |

[removed: Recent] [added: Recent] Sales of Unregistered [removed: Shares][added: Shares]

All other equity securities sold by us during [removed: 2010] [added: 2011] that were not registered have been previously reported in a Quarterly Report on Form 10-Q.

[removed: Purchases] [added: Purchases] of Equity Securities by the Issuer and Affiliated [removed: Purchasers][added: Purchasers]

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| 2011 | | | | | | | | | | | |

| Fourth quarter | $ | 92.45 | | | $ | 80.15 | | | $ | 0.690 | |

| Third quarter | $ | 90.55 | | | $ | 75.31 | | | $ | 0.690 | |

| Second quarter | $ | 88.12 | | | $ | 80.21 | | | $ | 0.670 | |

| First quarter | $ | 84.18 | | | $ | 76.14 | | | $ | 0.670 | |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

| 2011 | | | | 2010 | | | |

| | $ | 2.700 | | | $ | 2.650 | |

No equity securities were purchased by us during the fourth quarter of 2011, and 13,975 restricted common shares were forfeited by former employees.

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2009 | | | | | | | | | | | | |

| Fourth quarter | | $ | 70.49 | | | $ | 57.49 | | | $ | 0.660 | |

| Third quarter | | $ | 66.03 | | | $ | 48.24 | | | $ | 0.660 | |

| Second quarter | | $ | 59.28 | | | $ | 45.51 | | | $ | 0.650 | |

| First quarter | | $ | 60.31 | | | $ | 38.82 | | | $ | 0.650 | |

##### [Table of Contents](#toc)

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 2010 | | | | 2009 | | | |

| | | $ | 2.650 | | | $ | 2.610 | |

On October 8, 2010 and November 16, 2010, we redeemed 3,473 operating partnership units each for the equivalent number of our common shares.

No equity securities were purchased by us during 2010.

However, 495 restricted common shares were forfeited by former employees.

Financial Statements and Supplementary Data.” Our selected operating data, other data and balance sheet data for the years ended December 31, [removed: 2006] [added: 2007] through [removed: 2009] [added: 2010] have been reclassified to conform to the [removed: 2010] [added: 2011] presentation.

| | [removed: | Year] [added: Year] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | | [added: | | | | |]

| [added: 2011] | [removed: 2010] | | | | [removed: 2009] [added: 2010] | | | | [removed: 2008] | [added: 2009] | | | [removed: 2007] | | [added: 2008] | | [removed: 2006] | | | [added: 2007] | [added: | | | |]

| [removed: | (In] [added: (In] thousands, except per share data and [removed: ratios)] [added: ratios)] | | | | | | | | | | | | | | | | | | | | [added: | | | | |]

| [removed: Operating Data:] [added: Operating Data:] | | | | | | | | | | | | | | | | | | | | | [added: | | | |]

| Gain on sale of real estate | [added: $] | [added: 15,075 | | | |] $ | 1,410 | | | [added: |] $ | 1,298 | | | [added: |] $ | 12,572 | | | [added: |] $ | 94,768 | | | [removed: $ | 23,956 | |]

| Net income | [added: $] | [added: 149,612 | | | |] $ | 128,237 | | | [added: |] $ | 103,872 | | | [added: |] $ | 135,153 | | | [added: |] $ | 201,127 | | | [removed: $ | 123,065 | |]

| Net income attributable to the Trust | [added: $] | [added: 143,917 | | | |] $ | 122,790 | | | [added: |] $ | 98,304 | | | [added: |] $ | 129,787 | | | [added: |] $ | 195,537 | | | [removed: $ | 118,712 | |]

| Net income available for common shareholders | [added: $] | [added: 143,376 | | | |] $ | 122,249 | | | [added: |] $ | 97,763 | | | [added: |] $ | 129,246 | | | [added: |] $ | 195,095 | | | [removed: $ | 103,514 | |]

| Net cash provided by operating activities | [added: $] | [added: 244,711 | | | |] $ | 256,735 | | | [added: |] $ | 256,765 | | | [added: |] $ | 228,285 | | | [added: |] $ | 214,209 | | | [removed: $ | 186,654 | |]

| Net cash used in investing activities | [removed: |] $ | [removed: (187,088] [added: (196,369] | ) | | [added: |] $ | [removed: (127,341] [added: (187,088] | ) | | [added: |] $ | [removed: (207,567] [added: (127,341] | ) | | [added: |] $ | [removed: (151,439] [added: (207,567] | ) | | [added: |] $ | [removed: (317,429] [added: (151,439] | ) | [added: |]

| Net cash [removed: (used in)] provided by [added: (used in)] financing activities | [added: $] | [added: 3,667 | | | |] $ | (189,239 | ) | | [added: |] $ | (9,258 | ) | | [added: |] $ | (56,186 | ) | | [added: |] $ | (23,574 | ) | | [removed: $ | 133,631 | |]

| Dividends declared on common shares | [added: $] | [added: 171,335 | | | |] $ | 163,382 | | | [added: |] $ | 157,638 | | | [added: |] $ | 148,444 | | | [added: |] $ | 135,102 | | | [removed: $ | 133,066 | |]

| Weighted average number of common shares outstanding: | | | | | | | | | | | | | | | | | | | | | [added: | | | |]

| Basic | [added: 62,438] | | [added: | | |] 61,182 | | | | [added: |] 59,704 | | | | [removed: 58,665] | [added: 58,665] | | | [removed: 56,108] | | [added: 56,108] | | [removed: 53,469] | |

| Diluted | [added: 62,603] | | [added: | | |] 61,324 | | | | [added: |] 59,830 | | | | [removed: 58,889] | [added: 58,889] | | | [removed: 56,473] | | [added: 56,473] | | [removed: 53,858] | |

| Earnings per common share, basic: | | | | | | | | | | | | | | | | | | | | | [added: | | | |]

| Gain on sale of real estate | [added: —] | | [removed: 0.01] | | | [added: 0.01] | [removed: —] | | | | — | | | | [added: |] — | | | | [removed: 0.14] | [added: —] | [added: | | |]

| Total | [added: $] | [added: 2.29 | | | |] $ | 1.99 | | | [added: |] $ | 1.63 | | | [added: |] $ | 2.19 | | | [added: |] $ | 3.47 | | | [removed: $ | 1.93 | |]

| Earnings per common share, diluted: | | | | | | | | | | | | | | | | | | | | | [added: | | | |]

| Total | [added: $] | [added: 2.28 | | | |] $ | 1.98 | | | [added: |] $ | 1.63 | | | [added: |] $ | 2.19 | | | [added: |] $ | 3.45 | | | [removed: $ | 1.91 | |]

| Dividends declared per common [removed: share(2)] [added: share] | [added: $] | [added: 2.72 | | | |] $ | 2.66 | | | [added: |] $ | 2.62 | | | [added: |] $ | 2.52 | | | [added: |] $ | 2.37 | | | [removed: $ | 2.46 | |]

| [removed: Other Data:] [added: Other Data:] | | | | | | | | | | | | | | | | | | | | | [added: | | | |]

| Funds from operations available to common [removed: shareholders(3)(4)(5)] [added: shareholders(2)(3)] | [added: $] | [added: 251,576 | | | |] $ | 239,210 | | | [added: |] $ | 211,065 | | | [added: |] $ | 228,397 | | | [added: |] $ | 206,037 | | | [removed: $ | 176,419 | |]

| [removed: EBITDA(4)(6)] [added: EBITDA(3)(4)] | [added: $] | [added: 374,131 | | | |] $ | 352,481 | | | [added: |] $ | 328,491 | | | [added: |] $ | 344,465 | | | [added: |] $ | 423,150 | | | [removed: $ | 321,136 | |]

| Adjusted [removed: EBITDA(4)(6)] [added: EBITDA(3)(4)] | [added: $] | [added: 357,030 | | | |] $ | 351,071 | | | [added: |] $ | 327,193 | | | [added: |] $ | 331,893 | | | [added: |] $ | 328,382 | | | [removed: $ | 297,180 | |]

| Ratio of EBITDA to combined fixed charges and preferred share [removed: dividends(4)(6)(7)] [added: dividends(3)(4)(5)] | [added: 3.5] | | [removed: 3.1] | x | | [added: 3.1] | [removed: 2.8] | [added: |] x | | [added: 2.8] | [removed: 3.2] | [added: |] x | | [added: 3.2] | [removed: 3.3] | [added: |] x | | [added: 3.3] | [removed: 2.6] | [added: |] x |

| Ratio of Adjusted EBITDA to combined fixed charges and preferred share [removed: dividends(4)(6)(7)] [added: dividends(3)(4)(5)] | [added: 3.3] | | [removed: 3.1] | x | | [added: 3.1] | [removed: 2.7] | [added: |] x | | [added: 2.7] | [removed: 3.1] | [added: |] x | | [added: 3.1] | [removed: 2.6] | [added: |] x | | [added: 2.6] | [removed: 2.4] | [added: |] x |

| | [removed: | As] [added: As] of December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| [removed: | (In] [added: (In] thousands, except per share [removed: data)] [added: data)] | | | | | | | | | | | | | | | | | | | |

| [removed: Balance] [added: Balance] Sheet [removed: Data: |] [added: Data:] | | | | | | | | | | | | | | | | | | | |

| Real estate, at cost | [removed: |] $ | [removed: 3,895,942] [added: 4,434,544] | | | $ | [removed: 3,759,234] [added: 3,895,942] | | | $ | [removed: 3,673,685] [added: 3,759,234] | | | $ | [removed: 3,452,847] [added: 3,673,685] | | | $ | [removed: 3,204,258] [added: 3,452,847] | |

| Total assets | [removed: |] $ | [removed: 3,159,553] [added: 3,659,908] | | | $ | [removed: 3,222,309] [added: 3,159,553] | | | $ | [removed: 3,092,776] [added: 3,222,309] | | | $ | [removed: 2,989,297] [added: 3,092,776] | | | $ | [removed: 2,688,606] [added: 2,989,297] | |

| Mortgages payable and capital lease obligations | [removed: |] $ | [removed: 589,441] [added: 810,616] | | | $ | [removed: 601,884] [added: 589,441] | | | $ | [removed: 452,810] [added: 601,884] | | | $ | [removed: 450,084] [added: 452,810] | | | $ | [removed: 460,398] [added: 450,084] | |

| Notes payable | [removed: |] $ | [removed: 97,881] [added: 295,159] | | | $ | [removed: 261,745] [added: 97,881] | | | $ | [removed: 336,391] [added: 261,745] | | | $ | [removed: 210,820] [added: 336,391] | | | $ | [removed: 109,024] [added: 210,820] | |

| Senior notes and debentures | [removed: |] $ | [removed: 1,079,827] [added: 1,004,635] | | | $ | [removed: 930,219] [added: 1,079,827] | | | $ | [removed: 956,584] [added: 930,219] | | | $ | [removed: 977,556] [added: 956,584] | | | $ | [removed: 1,127,508] [added: 977,556] | |

| Preferred shares | [removed: |] $ | 9,997 | | | $ | 9,997 | | | $ | 9,997 | | | $ | 9,997 | | | $ | [removed: —] [added: 9,997] | |

| Number of common shares outstanding | [added: 63,544] | | [added: | |] 61,526 | | | | 61,242 | | | | 58,986 | | | | 58,646 | | | [removed: | 55,321 | |]

| [removed: (3)] [added: (2)] | FFO is a supplemental non-GAAP financial measure of real estate companies’ operating performances. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as follows: net income, computed in accordance with U.S. GAAP, plus [added: real estate related] depreciation and amortization [removed: of real estate assets] and excluding extraordinary items and gains on the sale of real estate. We compute FFO in accordance with the NAREIT definition, and we have historically reported our FFO available for common shareholders in addition to our net income. |

| [removed: |] [added: 2011] | [removed: 2010] | | | [added: 2010] | [removed: 2009] | | | [added: 2009] | [removed: 2008] | | | [added: 2008] | [removed: 2007] | | | [added: 2007] | [removed: 2006] | | |

| | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | |

| Rental income | $ | 538,701 | | | | $ | 522,651 | | | | $ | 510,777 | | | | $ | 499,100 | | | | $ | 462,856 | | |

| Property operating income(1) | $ | 382,890 | | | | $ | 372,615 | | | | $ | 362,359 | | | | $ | 353,373 | | | | $ | 334,950 | | |

| Income from continuing operations | $ | 131,554 | | | | $ | 125,851 | | | | $ | 101,325 | | | | $ | 119,655 | | | | $ | 98,323 | | |

| Continuing operations | $ | 2.00 | | | | $ | 1.95 | | | | $ | 1.59 | | | | $ | 1.93 | | | | $ | 1.64 | | |

| Discontinued operations | 0.29 | | | | | 0.03 | | | | | 0.04 | | | | | 0.26 | | | | | 1.83 | | | |

| Continuing operations | $ | 1.99 | | | | $ | 1.94 | | | | $ | 1.59 | | | | $ | 1.93 | | | | $ | 1.63 | | |

| Discontinued operations | 0.29 | | | | | 0.03 | | | | | 0.04 | | | | | 0.26 | | | | | 1.82 | | | |

| Gain on sale of real estate | — | | | | | 0.01 | | | | | — | | | | | — | | | | | — | | | |

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| Shareholders’ equity(6) | $ | 1,240,604 | | | $ | 1,115,768 | | | $ | 1,151,738 | | | $ | 1,084,569 | | | $ | 1,081,550 | |

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| | 2011 | | | | 2010 | | | | 2009 | | | | 2008 | | | | 2007 | | |

| Net income | $ | 149,612 | | | $ | 128,237 | | | $ | 103,872 | | | $ | 135,153 | | | $ | 201,127 | |

| Gain on deconsolidation of VIE | (2,026 | | ) | | — | | | | — | | | | — | | | | — | | |

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(4) The SEC has stated that EBITDA is a non-GAAP measure as calculated in the table below.

Adjusted EBITDA is a non-

GAAP measure that means net income or loss plus net interest expense, income taxes, depreciation and amortization, gain or loss on sale of real estate and impairments of real estate if any.

Adjusted EBITDA as presented may not be comparable to other similarly titled measures used by other REITs.

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