Federal Realty Investment Trust (FRT) 10-K risk factor changes: FY2015 vs FY2014

Economic [added: and/or competitive] conditions may impact the success of our tenants’ retail operations and therefore the amount of rent and expense reimbursements we receive from our tenants.

[removed: Demand] [added: While demand] for our retail spaces has been [removed: strong and while] [added: strong,] there can be no assurance that this will [removed: continue, we remain optimistic given the trends we have seen over the past few years.][added: continue.]

[removed: However, any] [added: Any] reduction in our tenants’ abilities to pay base rent, percentage rent or other charges on a timely basis, including the filing by any of our tenants for bankruptcy protection, will adversely affect our financial condition and results of operations.

While our anchor tenant space is currently [removed: well] [added: 96.1%] occupied, we have seen an overall decrease in the number of tenants available to fill anchor spaces.

As of December 31, [removed: 2014,] [added: 2015,] we had approximately [removed: $2.4] [added: $2.6] billion of debt outstanding.

Of that outstanding debt, approximately [removed: $563.7] [added: $482.8] million was secured by all or a portion of [removed: 14] [added: nine] of our real estate projects and approximately $71.6 million represented capital lease obligations on four of our properties.

In addition, we [removed: own] [added: owned] a 30% interest in a joint venture that had $34.4 million of debt secured by two properties as of December 31, [removed: 2014.][added: 2015.]

Approximately [removed: $2.4] [added: $2.6] billion [removed: (99.6%)] [added: (97.6%)] of our debt as of December 31, [removed: 2014] [added: 2015] is fixed rate debt, which includes all of our property secured debt, our capital lease obligations and our $275.0 million term loan as the rate is effectively fixed by two interest rate swap agreements.

Our [removed: unconsolidated] joint venture’s debt of $34.4

[removed: million] [added: million, which] is [added: unconsolidated as of December 31, 2015, is] also fixed rate debt.

Our ability to make scheduled [removed: payments of the] principal [added: payments] of, to pay interest on, or to refinance our indebtedness will depend primarily on our future performance, which to a certain extent is subject to economic, financial, competitive and other factors beyond our control.

As of December 31, [removed: 2014,] [added: 2015,] we were in compliance with all of our financial covenants.

We generally do not look to acquire raw land for future development; however, we do intend to complete the development and construction of future phases of projects we already own, such as [removed: Santana Row in San Jose, California,] Assembly Row in Somerville, [removed: Massachusetts,] [added: Massachusetts] and Pike & Rose in North Bethesda, Maryland.

[added: Additionally, we cannot guarantee that] additional financing, refinancing or other capital will be available in the amounts we desire or on favorable terms.

[removed: Our access to] debt or equity capital depends on a number of factors, including the market’s perception of our growth potential and risk profile, our ability to pay dividends, and our current and potential future earnings.

Of our approximately [removed: $2.4] [added: $2.6] billion of debt outstanding as of December 31, [removed: 2014,] [added: 2015,] approximately [removed: $284.4] [added: $337.9] million bears interest at variable rates of which $275.0 million is effectively fixed through two interest rate swap agreements.

We have a $600.0 million revolving credit facility, on which [removed: no balance] [added: $53.5 million] is outstanding at December 31, [removed: 2014,] [added: 2015,] that bears interest at LIBOR plus 90 basis points.

As of December 31, [removed: 2014,] [added: 2015,] we held [removed: seven] [added: nine] predominantly retail real estate projects jointly with other persons in addition to our joint venture with affiliates of a discretionary fund created and advised by [removed: ING] Clarion Partners (“Clarion”) and properties owned in a “downREIT” structure.

Additionally, [removed: in fourth quarter 2014,] we [added: have] entered into a joint venture agreement related to the hotel component of Phase II of our Pike & Rose development project.

Although as of December 31, [removed: 2014,] [added: 2015,] we held the [removed: managing general partnership or membership interest] [added: controlling interests] in all of our existing co-investments (except the [added: Clarion and] hotel [removed: investment] [added: investments] discussed [removed: above)] [added: above),] we generally must obtain the consent of the co-investor or meet defined criteria to sell or to finance these properties.

Our tenants, like many of their competitors, have incurred, and will continue to incur, capital and [added: operating expenditures and other costs associated with complying with these laws and regulations, which will adversely affect their potential profitability.]

Under Maryland law, unless a REIT elects not to be subject to this law, “control shares” acquired in a “control share acquisition” have no voting rights except to the extent approved by shareholders by a vote of two-thirds of the [removed: votes entitled to be cast on the matter, excluding shares owned by the acquirer and by officers or trustees who are employees of the REIT.]

We employ a number of measures to prevent, detect and mitigate these threats, which include password encryption, frequent password change events, firewall detection systems, anti-virus software in-place, frequent backups, a redundant data system for core applications and annual penetration testing; however, there is no guarantee such efforts will be [added: successful in preventing a cyber attack.]

On January 13, 2016, we acquired our partner's 70% interest in the joint venture, and assumed 100% of the related debt.

During 2015, construction commenced on the development of Phase II at both Assembly Row and Pike & Rose.

At Santana Row, we continue our on-going redevelopment efforts, and are constructing a new 234,500 square foot office building, which has been fully leased to one tenant.

| • | failure or inability of partners to perform on hotel joint ventures; |

Our access to

On January 13, 2016 we acquired our partner's 70% interest in our Clarion joint venture, and subsequently own 100% of the related properties.

votes entitled to be cast on the matter, excluding shares owned by the acquirer and by officers or trustees who are employees of the REIT.

| | |

| --- | --- |

| | |

| --- | --- |

During 2014, construction on Phase I of both Assembly Row and Pike & Rose continued with portions of both projects opening in 2014 and the remainder of Phase I of both projects expected to be completed in 2015.

Additionally, we plan to proceed with the development of Phase II at Pike & Rose with construction expected to commence in the first half of 2015.

At Santana Row, we completed and stabilized the new 212 unit residential building and commenced construction in Q4 2014 on a new 225,500 square foot office building.

Additionally, we cannot guarantee that

On July 1, 2004, we entered into a joint venture with Clarion for purposes of acquiring properties.

Although we are the managing general partner of that entity, we have only a 30% ownership interest in that entity.

Our partner’s consent is required to take certain actions with respect to the properties acquired by the venture and, as a result, we may not be able to take actions that we believe are necessary or desirable to protect or increase the value of the property or the property’s income stream.

Pursuant to the terms of our partnership, we must obtain our partner’s consent to do the following:

| • | enter into new anchor tenant leases, modify existing anchor tenant leases or enforce remedies against anchor tenants; |

| • | make certain repairs, renovations or other changes or improvements to properties; and |

| • | sell or finance the property with secured debt. |

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

Either partner may initiate these provisions at any time, which could result in either the sale of our interest or the use of available cash or borrowings to acquire Clarion’s interest.

Our investment in this joint venture is also subject to the risks described above for jointly owned investments.

As of December 31, 2014, this joint venture owned six properties.

operating expenditures and other costs associated with complying with these laws and regulations, which will adversely affect their potential profitability.

successful in preventing a cyber attack.

Risk Factors” in this report for important information regarding these forward-looking statements and certain risk and uncertainties [removed: that may affect us.]

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

As of December 31, [removed: 2014,] [added: 2015,] we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as [removed: 89] [added: 90] predominantly retail real estate projects comprising approximately [removed: 20.2] [added: 21.4] million square feet.

In total, the real estate projects were [removed: 95.6%] [added: 94.3%] leased and [removed: 94.7%] [added: 93.5%] occupied at December 31, [removed: 2014.][added: 2015.]

A joint venture in which we [removed: own] [added: owned] a 30% interest owned six retail real estate projects totaling approximately 0.8 million square feet as of December 31, [removed: 2014.][added: 2015.]

In total, the joint venture properties in which we [removed: own] [added: owned] a 30% interest were [removed: 86.1%] [added: 93.6%] leased and [removed: 82.8%] [added: 85.3%] occupied at December 31, [removed: 2014.][added: 2015.]

We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for [removed: 47] [added: 48] consecutive years.

Lease [added: termination] fees for which the tenant has relinquished control of the space are generally recognized on the termination date.

At December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] our allowance for doubtful accounts was [removed: $12.4] [added: $11.7] million and [removed: $12.7] [added: $12.4] million, respectively.

Historically, we have recognized bad debt expense between [removed: 0.4%] [added: 0.3%] and 1.3% of rental income and it was [removed: 0.3%] [added: 0.2%] in [removed: 2014] [added: 2015] reflecting positive economic changes and their impact to our tenants.

[added: For example,] in the event our estimates were not accurate and 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 [removed: $6.7] [added: $7.3] million.

At December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] accounts receivable includes approximately [removed: $66.1] [added: $72.7] million and [removed: $60.6] [added: $66.1] million, respectively, related to straight-line rents.

We capitalized external and internal costs related to both development and redevelopment activities of [removed: $277] [added: $232] million and [removed: $7] [added: $8] million, respectively, for [removed: 2014] [added: 2015] and [removed: $275] [added: $277] million and [removed: $6] [added: $7] million, respectively, for [removed: 2013.][added: 2014.]

[removed: We capitalized external] and internal costs related to other property improvements of [removed: $45] [added: $42] million and $2 million, respectively, for [removed: 2014] [added: 2015] and [removed: $48] [added: $45] million and [removed: $1] [added: $2] million, respectively, for [removed: 2013.][added: 2014.]

We capitalized external and internal costs related to leasing activities of [removed: $29] [added: $17] million and [removed: $7] [added: $6] million, respectively, for [removed: 2014] [added: 2015] and [removed: $9] [added: $29] million and [removed: $6] [added: $7] million, respectively, for [removed: 2013.][added: 2014.]

[added: The amount of capitalized internal costs] for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $7 million, $1 million, and $6 million, [removed: respectively,] for [removed: 2014 and $6 million, $1 million,] [added: both 2015] and [removed: $5 million, respectively, for 2013.][added: 2014.]

Total capitalized costs were [removed: $367] [added: $307] million and [removed: $345] [added: $367] million for [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] respectively.

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

Management considers a number of factors, including third-party actuarial [removed: analysis] [added: analysis, previous experience in our portfolio,] and future increases in costs of claims, when making these determinations.

[removed: 2014] [added: 2015] Significant Property Acquisitions and [removed: Disposition][added: Dispositions]

Our effective [removed: economic] interest approximates [removed: 84%] [added: 80%] and was funded by the assumption of our share of [removed: $68] [added: $18.7] million of mortgage debt, [removed: 632,000] [added: 58,000] downREIT operating partnership units, and [removed: $13] [added: $27] million of [removed: cash (which was in an escrow account at December 31, 2013).][added: cash.]

Approximately [removed: $1.7] [added: $1.5] million and [removed: $2.3] [added: $4.3] million of net assets acquired were allocated to other assets for "above market [removed: leases"] [added: leases,"] and other liabilities for "below market leases," respectively.

Additionally, [removed: $71.1] [added: $16.3] million was allocated to [removed: redeemable and nonredeemable] noncontrolling interests.

We incurred [removed: $2.0] [added: $0.9] million of acquisition costs, [removed: of] which [removed: $1.0 million were incurred in 2014, and] are included in "general and administrative expenses" in [removed: 2014 and 2013 on the accompanying consolidated statements of comprehensive income.][added: 2015.]

As this noncontrolling interest [removed: is] [added: was] mandatorily redeemable, it [removed: has been] [added: was] classified as a liability [removed: of approximately $9 million] and [removed: is] [added: was] included in "other liabilities and deferred credits" on the [added: accompanying] December 31, 2014 consolidated balance sheet.

Subsequent Event - [removed: 2015] [added: 2016] Property Acquisition

[removed: We] [added: In total, we] incurred [removed: $0.7] [added: $1.1] million [removed: of] [added: in] acquisition costs [removed: in 2014] which are included in "general and administrative [removed: expenses."][added: expenses" in 2015.]

[removed: 2014] [added: 2015] Significant Debt and Equity Transactions

In connection with the acquisition of [removed: The Grove at Shrewsbury and Brook 35 on] [added: San Antonio Center in] January [removed: 1, 2014,] [added: 2015,] we assumed [added: a] mortgage [removed: loans] [added: loan] with a face amount of [removed: $68.3] [added: $18.7] million and a fair value of [removed: $73.8] [added: $19.3] million.

| [added: Description of Debt] | [added: Original Debt Issued | | |] Principal [added: Balance as of December 31, 2015] | | | | Stated Interest Rate [added: as of December 31, 2015] | | | Maturity Date |

| | (In millions) | | | [removed: | | | | |]

| The Grove at Shrewsbury (East) | [removed: $] [added: Acquired] | [removed: 45.4] | | [added: 43,557] | [added: | | |] 5.82 | % | | October 1, 2017 |

| The Grove at Shrewsbury (West) | [removed: $] [added: Acquired] | [removed: 11.4] | | [added: 11,024] | [added: | | |] 6.38 | % | | March 1, 2018 |

| 4.50% [removed: Senior Notes (1)] [added: notes] | [removed: Issuance] [added: 450,000] | [removed: $] | [removed: 250.0] | [added: 450,000] | | [removed: 4.50] | [removed: %] | [added: 4.50] | [removed: November 14, 2014] [added: %] | | December 1, 2044 |

[removed: (1)] The net proceeds from this note offering after issuance discounts, underwriting [removed: fees] [added: fees,] and other costs were approximately [removed: $244.6] [added: $247.5] million.

[removed: (1)] The [removed: total amount due at payoff] [added: redemption price] of [removed: $64.0] [added: $222.2] million included a [removed: prepayment] [added: make-whole] premium of [removed: $3.0] [added: $19.2] million and accrued but unpaid interest of [removed: $0.1] [added: $3.0] million.

The [removed: prepayment] [added: make-whole] premium is included in "early extinguishment of debt" in [removed: 2014][added: 2015.]

On [removed: February 12, 2014] [added: May 11, 2015] we replaced our existing at the market (“ATM”) equity program with a new ATM equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $300.0 million.

We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay amounts [added: of] outstanding under our revolving credit facility and/or for general corporate purposes.

For the three months ended December 31, [removed: 2014,] [added: 2015,] we issued [removed: 469,200] [added: 63,007] common shares at [removed: the] [added: a] weighted average price per share of [removed: $132.54] [added: $144.54] for net cash proceeds of [removed: $61.5] [added: $9.0] million and paid [removed: $0.6] [added: $0.1] million in commissions and less than $0.1 million in additional offering expenses related to the sales of these common shares.

that may affect us.

On January 13, 2016, we acquired our partner's 70% interest in the joint venture and subsequently own 100% of the related properties.

We capitalized external

A portion of the land is controlled under a long-term ground lease.

Approximately $8.1 million of assets acquired were allocated to lease intangibles and included within other assets.

Approximately $19.1 million was allocated to lease intangibles primarily related to "below market leases," and is included within other liabilities.

We incurred $1.8 million of acquisition costs, of which $1.1 million were incurred in 2015, and included in "general and administrative expense" in 2015 and 2014.

On February 25, 2015, we acquired the interest of one of the noncontrolling interest holders in The Grove at Shrewsbury for $8.8 million.

On April 24, 2015, we sold our Houston Street property in San Antonio, Texas for a sales price of $46.1 million, resulting in a gain of $11.5 million.

On May 4, 2015, we acquired CocoWalk, a 198,000 square foot retail property located in the Coconut Grove neighborhood of Miami, Florida for $87.5 million.

The acquisition was completed through a newly formed entity ("CocoWalk LLC") for which we own a preferred interest and an 80% common interest.

Additionally, approximately $6.9 million was allocated to noncontrolling interests.

On July 1, 2015 and December 16, 2015, we acquired partial interests in eight buildings in the Coconut Grove neighborhood of Miami, Florida for $7.8 million through our CocoWalk LLC entity.

On July 8, 2015 we acquired a parcel of land adjacent to our Pike 7 Plaza property for $5.0 million.

On October 1, 2015, we acquired The Shops at Sunset Place, a 515,000 square foot mixed-use property located in South Miami, Florida based on a gross value of $110.2 million.

The acquisition was completed through a newly formed entity for which we own an 85% interest.

Approximately $4.8 million and $6.6 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

Additionally, approximately $6.3 million was allocated to noncontrolling interests.

The transaction includes the assumption of an existing $70.8 million mortgage loan.

On November 19, 2015, we sold our Courtyard Shops property in Wellington, Florida for a sales price of $52.8 million, resulting in a gain of $16.8 million.

On January 13, 2016, we acquired our partner's 70% equity interest in our joint venture arrangement with affiliates of a discretionary fund created and advised by Clarion Partners (“Clarion”), for $153.7 million, which includes $130 million of cash and the assumption of three interest only mortgage loans with a total principal balance of $34.4 million.

With the acquisition, we gained control of the six underlying properties, which will be consolidated as of the acquisition date.

The mortgage loan bore interest at 5.27%, and had an original maturity date of January 1, 2016.

On November 2, 2015, we repaid the mortgage loan at par for $18.1 million.

On March 16, 2015, we issued $200.0 million aggregate principal amount of 4.50% senior unsecured notes due December 1, 2044.

The notes were offered at 105.38% of the principal amount with a yield to maturity of 4.18%.

The notes have the same terms and are of the same series as the $250.0 million senior notes issued on November 14, 2014.

Our net proceeds from the March note offering after issuance premium, underwriting fees and other costs were $208.6 million.

The proceeds were used on April 11, 2015 to repay our $200.0 million 6.20% notes prior to the original maturity date of January 15, 2017.

On August 3, 2015 we repaid the following mortgage loans, which had a weighted average interest rate of 7.9%, at par prior to their maturity date of November 1, 2015:

| | | | |

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

| | | | |

| | Principal Payoff Amount | | |

| Barracks Road | $ | 35.3 | |

| Brick Plaza | 25.9 | | |

| Wynnewood | 25.5 | | |

| Lawrence Park | 25.0 | | |

| Wildwood | 22.0 | | |

| Hauppauge | 13.3 | | |

For example,

The amount of capitalized internal costs

Our accrual for self-insurance liability is determined by

Effective January 1, 2014, we acquired a controlling interest in The Grove at Shrewsbury, a 187,000 square foot shopping center in Shrewsbury, New Jersey, and Brook 35, a 99,000 square foot shopping center in Sea Girt, New Jersey for a gross value of $161 million.

We entered into an agreement to acquire the interest of one of the noncontrolling interest holders in The Grove at Shrewsbury in 2015.

An additional noncontrolling interest holder has the right to require us to acquire its interests in The Grove at Shrewsbury and Brook 35 at the then current fair market value beginning on January 1, 2017.

On July 24, 2014, the joint venture arrangement with affiliates of a discretionary fund created and advised by ING Clarion Partners sold the fee interest in Pleasant Shops in Weymouth, Massachusetts for a sales price of $34.3 million, resulting in a gain on sale of $14.5 million.

Our share of the gain was $4.4 million.

The joint venture partners received distributions totaling $32.8 million as a result of the sale, of which our distribution was $10.4 million.

Our effective interest approximates 80% and was funded by the assumption of our share of $18.7 million of mortgage debt, which has a stated interest rate of 5.27% and matures on January 1, 2016, approximately 58,000 downREIT operating partnership units and approximately $27 million of cash.

The mortgage loans are secured by the individual properties with the following contractual terms:

| | | | | | | | | |

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

| | | | | | | | | |

| Brook 35 Plaza | $ | 11.5 | | | 5.46 | % | | July 1, 2014 |

During 2014, we refinanced or issued the following loans or debt securities:

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

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

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

| | | Amount | | | | Stated Interest Rate | | | Refinance/Issuance Date | | Maturity Date |

| | | (In millions) | | | | | | | | | |

| Brook 35 Plaza Mortgage Loan | Refinance | $ | 11.5 | | | 4.65 | % | | June 2, 2014 | | July 1, 2029 |

| THE AVENUE at White Marsh Mortgage Loan | Refinance | $ | 52.7 | | | 3.35 | % | | December 15, 2014 | | January 1, 2022 |

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

During 2014, we fully repaid or redeemed the following loans or debt securities:

| | | | | | | | | |

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

| | | | | | | | | |

| | | Payoff Amount | | | | Repayment Date | | Maturity Date |

| | | (In millions) | | | | | | |

| Melville Mall Mortgage Loan | | $ | 20.3 | | | June 3, 2014 | | September 1, 2014 |

| East Bay Bridge Mortgage Loan (1) | | $ | 61.0 | | | December 10, 2014 | | March 1, 2016 |

| 5.65% Senior Notes (2) | | $ | 125.0 | | | December 12, 2014 | | June 1, 2016 |

| | | | | | | | | |

(2) The redemption price of $134.5 million included a make-whole premium of approximately $9.2 million and accrued but unpaid interest of $0.2 million.

The make-whole premium is included in "early extinguishment of debt" in 2014.

On August 28, 2014, we amended our term loan agreement and lowered the spread over LIBOR by 40 basis points from 130 basis points to 90 basis points based on our current credit rating.

The amendment also provides us the option to extend the maturity date by one year.

While there can be no assurance that these conditions will continue, we remain optimistic given the trends we have seen over the past few years.

We continue our ongoing redevelopment efforts at Santana Row.

As of December 31, [removed: 2014,] [added: 2015,] we were party to two interest rate swap agreements that effectively fix the rate on the $275.0 million term loan at 2.62%.

[added: 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 [removed: instruments.]

At December 31, [removed: 2014,] [added: 2015,] we had [removed: $2.3] [added: $2.5] billion of fixed-rate debt outstanding, including our $275.0 million term loan as the rate is effectively fixed by two interest rate swap agreements; we also had capital lease obligations of $71.6 million.

If market interest rates used to calculate the fair value on our fixed-rate debt instruments at December 31, [removed: 2014] [added: 2015] had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately [removed: $133.6] [added: $157.9] million.

If market interest rates used to calculate the fair value on our fixed-rate debt instruments at December 31, [removed: 2014] [added: 2015] had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately [removed: $149.8] [added: $179.5] million.

At December 31, [removed: 2014,] [added: 2015,] we had [removed: $9.4] [added: $62.9] million of variable rate debt outstanding which consisted of [added: $53.5 million 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: $0.1] [added: $0.6] million, and our net income and cash flows for the year would decrease by approximately [removed: $0.1] [added: $0.6] million.

Conversely, if market interest rates decreased 1.0%, our annual interest expense would decrease by [removed: less than $0.1] [added: approximately $0.5] million with a corresponding increase in our net income and cash flows for the year.

instruments.

Quoted market prices were used to estimate the

Our revolving credit facility had no outstanding balance as of December 31, 2014.

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

As of December 31, [removed: 2014,] [added: 2015,] we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as [removed: 89] [added: 90] predominantly retail real estate projects comprising approximately [removed: 20.2] [added: 21.4] million square feet.

In total, the real estate projects were [removed: 95.6%] [added: 94.3%] leased and [removed: 94.7%] [added: 93.5%] occupied at December 31, [removed: 2014.][added: 2015.]

A joint venture in which we [removed: own] [added: owned] a 30% interest owned six retail real estate projects totaling approximately 0.8 million square feet as of December 31, [removed: 2014.][added: 2015.]

In total, the joint venture properties in which we [removed: own] [added: owned] an interest were [removed: 86.1%] [added: 93.6%] leased and [removed: 82.8%] [added: 85.3%] occupied at December 31, [removed: 2014.][added: 2015.]

We have paid quarterly dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for [removed: 47] [added: 48] consecutive years.

| ◦ | the sale of our equity or debt securities through public offerings, including our [removed: at the market] [added: at-the-market] ("ATM") equity program in which we may from time to time offer and sell common shares, or private placements, |

At February [removed: 6, 2015,] [added: 5, 2016,] we had [removed: 269] [added: 299] full-time employees and [removed: 136] [added: 137] part-time employees.

[removed: However, we cannot predict the impact of new or] changed laws or regulations on properties we currently own or may acquire in the future.

[added: We have no current plans for] substantial capital expenditures with respect to compliance with environmental, health, safety and similar laws and we carry environmental insurance which covers a number of environmental risks for most of our properties.

On January 13, 2016, we acquired our partner's 70% interest in the joint venture and subsequently own 100% of the related properties.

However, we cannot predict the impact of new or

We have no current plans for

For the fiscal year ended December 31, [removed: 2014][added: 2015]

The aggregate market value of the Registrant's common shares held by non-affiliates of the Registrant, based upon the closing sales price of the Registrant's common shares on June 30, [removed: 2014] [added: 2015] was [removed: $8.2] [added: $8.9] billion.

The number of Registrant’s common shares outstanding on February [removed: 6, 2015] [added: 5, 2016] was [removed: 68,664,043.][added: 69,669,864.]

FISCAL YEAR ENDED DECEMBER 31, [removed: 2014][added: 2015]

Portions of the Registrant’s Proxy Statement to be filed with the Securities and Exchange Commission for the Registrant’s [removed: 2014] [added: 2015] annual meeting of shareholders to be held in May [removed: 2015] [added: 2016] will be incorporated by reference into Part III hereof.

| Item 1. | Business | [removed: [3](#s7B9B56494721B82FCEB8C49B3C0FD1AB)] [added: [3](#s94A3A5FFCBD47886DE2B15F5F4B8E094)] |

| Item 1A. | Risk Factors | [removed: [7](#s1B9AB4EA9B6B1E83DECEC49B3C41B183)] [added: [7](#s7AA997250CFE4BD96BC715F5F4D9D8DD)] |

| Item 1B. | Unresolved Staff Comments | [removed: [16](#s98A220306E7962EB3C45C49B3C6093BE)] [added: [15](#s8B66AC20017AE972219615F5F50B7385)] |

| Item 2. | Properties | [removed: [16](#sDE463F425FAADF817873C49B17514288)] [added: [16](#s40E2C52801780BA44F6B15F5DE658B6B)] |

| Item 3. | Legal Proceedings | [removed: [24](#sD7477B66233E3FAF9DABC49B3CBC91D9)] [added: [23](#sC3ECE52971D2B30B0DC515F5F55FCD31)] |

| Item 4. | Mine Safety Disclosures | [removed: [24](#s912CF828819305108EB2C49B3CE51083)] [added: [23](#s3CEC31EC98F153C95DFB15F5F57FE737)] |

| Item 5. | Market for Our Common Equity and Related Shareholder Matters and Issuer Purchases of Equity Securities | [removed: [25](#sC2B0A4B40B77E444BC53C49B187B906E)] [added: [24](#s29E8421FFC91E7B49C8715F5DE657B00)] |

| Item 6. | Selected Financial Data | [removed: [27](#s90CCCBFD758BE9427A54C49B15D7CF8A)] [added: [27](#s02BD349C657D7992285B15F5DE44AAAA)] |

| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | [removed: [29](#s11BDF115496F85CF521AC49B0E77EC11)] [added: [29](#s93706F9706D7E2E4CC7B15F5D464FBD5)] |

| Item 7A. | Quantitative and Qualitative Disclosures about Market Risk | [removed: [49](#s37C04C6A39EFC790407AC49B3E370065)] [added: [49](#sC2DBB3DC3037B3DBFAA515F5F6CD2742)] |

| Item 8. | Financial Statements and Supplementary Data | [removed: [50](#sC48A330246881ED5111EC49B3E41D461)] [added: [50](#s1857A636BBAB3B2D74AD15F5F6D6A4C1)] |

| Item 9. | Changes In and Disagreements with Accountants on Accounting and Financial Disclosure | [removed: [50](#s2DD52A7D7BA4414F88A6C49B3E541777)] [added: [50](#sB66AF114B572CC51128A15F5F6FD57FB)] |

| Item 9A. | Controls and Procedures | [removed: [50](#sD000159793CAACC123C7C49B3E864F8D)] [added: [50](#sB979EB860F0B9E104E2015F5F721908B)] |

| Item 9B. | Other Information | [removed: [52](#sA50BFB701D2D6AC0E55FC49B3EA68C73)] [added: [52](#s7D00FA066D77524EF29E15F5F75300D0)] |

| Item 10. | Trustees, Executive Officers and Corporate Governance | [removed: [53](#sDAA5385C744A9F175B69C49B3EFD2402)] [added: [53](#s58C2F098DB2E4667BBFD15F5F7A60D12)] |

| Item 11. | Executive Compensation | [removed: [53](#s6BE4F11828FAA7E6BA8AC49B3F2EDB91)] [added: [53](#s4D246561B1ABBBEE5D7715F5F7C6541C)] |

| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters | [removed: [53](#sCC46C0AC9E2BAB15CC02C49B3F4E1454)] [added: [53](#s139EA973B0E2D12920B815F5F7F93137)] |

| Item 13. | Certain Relationships and Related Transactions, and Trustee Independence | [removed: [53](#sF1FC1C99D05E0B291D54C49B3F7FA8BA)] [added: [53](#sC4E87CF9089F8C1EBD5C15F5F81B5B48)] |

| Item 14. | Principal Accountant Fees and Services | [removed: [53](#sE7CB8AB2741B928B7D5DC49B3FA102D8)] [added: [53](#s9A385D82FAD11D3EE89515F5F84DD2E6)] |

| Item 15. | Exhibits and Financial Statement Schedules | [removed: [53](#s63D0C892EF929C7D0194C49B3FF79B7D)] [added: [53](#sF3913412A98CAE77A45F15F5F8A0FDC2)] |

10-K 1 frt-1231201510k.htm 10-K

| SIGNATURES | | [54](#s06B28CFEA8F27E64FEA515F5F8C0509B) |

10-K 1 frt-1231201410k.htm 10-K

| SIGNATURES | | [54](#s84F49B2A9FBBB3BDABA6C49B4029D873) |

As of December 31, [removed: 2014,] [added: 2015,] we owned or had a majority ownership interest in community and neighborhood shopping centers and mixed-used properties which are operated as [removed: 89] [added: 90] predominantly retail real estate projects comprising approximately [removed: 20.2] [added: 21.4] million square feet.

These properties are located primarily in densely populated and affluent communities in strategic metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, as well as [removed: California.][added: California and South Florida.]

No single property accounted for over 10% of our [removed: 2014] [added: 2015] total revenue.

As of December 31, [removed: 2014,] [added: 2015,] we had approximately 2,700 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: 3.1%] [added: 2.9%] of our annualized base rent as of December 31, [removed: 2014.][added: 2015.]

Our [removed: 89] [added: 90] real estate projects are located in [removed: 13] [added: 12] 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: 2014.][added: 2015.]

| Massachusetts | | 7 | | | [removed: 1,708,000] [added: 1,789,000] | | | 8.4 | % |

| New Jersey | | 6 | | | [removed: 1,688,000] [added: 1,718,000] | | | [removed: 8.3] [added: 8.0] | % |

| New York | | 5 | | | [removed: 1,137,000] [added: 1,138,000] | | | [removed: 5.6] [added: 5.3] | % |

| Michigan | | 1 | | | 217,000 | | | [removed: 1.1] [added: 1.0] | % |

| North Carolina | | 1 | | | 153,000 | | | [removed: 0.8] [added: 0.7] | % |

| Total | | [removed: 89] [added: 90] | | | [removed: 20,242,000] [added: 21,379,000] | | | 100.0 | % |

| (1) | Additionally, we own two participating mortgages totaling approximately [removed: $29.5] [added: $29.9] million secured by multiple buildings in Manayunk, Pennsylvania, and an $11.7 million mortgage secured by a shopping center in Norwalk, Connecticut. |

Leases on residential units are generally for a period of one year or less and, in [removed: 2014,] [added: 2015,] represented approximately [removed: 5.6%] [added: 6.1%] 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: 2014] [added: 2015] for each of the 10 years beginning with [removed: 2015] [added: 2016] and after [removed: 2024] [added: 2025] 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: 2014.][added: 2015.]

Tenant improvements and incentives for comparable spaces were $44.46 per square foot for new leases and $1.27 [removed: per square foot] for [removed: renewals] [added: renewal leases] in 2014.

For [removed: 2013,] [added: 2015,] we signed leases for a total of [removed: 1,629,000] [added: 1,593,000] square feet of retail space including [removed: 1,370,000] [added: 1,405,000] square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of [removed: 20%] [added: 17%] on a cash basis and [removed: 33%] [added: 29%] on a straight-line basis.

New leases for comparable spaces were signed for [removed: 586,000] [added: 547,000] square feet at an average rental increase of [removed: 35%] [added: 22%] on a cash basis and [removed: 51%] [added: 35%] on a straight-line basis.

Renewals for comparable spaces were signed for [removed: 784,000] [added: 859,000] square feet at an average rental increase of [removed: 10%] [added: 14%] on a cash basis and [removed: 21%] [added: 24%] on a straight-line basis.

Tenant improvements and incentives for comparable spaces were [removed: $45.83] [added: $60.98] per square foot for new leases and [removed: $1.70] [added: $8.79 per square foot] for [removed: renewal leases] [added: renewals] in [removed: 2013.][added: 2015.]

The leases signed in [removed: 2014] [added: 2015] generally become effective over the following two years though some may not become effective until [removed: 2017] [added: 2018] and beyond.

Historically, we have executed comparable space leases for 1.2 to 1.5 million square feet of retail space each year and expect [removed: that] [added: the] volume for [removed: 2015] [added: 2016] will be in line with our historical averages with overall positive increases in rental income.

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: 2014.][added: 2015.]

| 150 Post Street San Francisco, CA 94108 | | 1908, 1965 | | 1997 | | [removed: 104,000] [added: 105,000] | | [removed: $44.73] [added: $35.18] | | [removed: 98%] [added: 83%] | | H & M |

| Colorado Blvd Pasadena, CA 91103(4) | | 1905-1988 | | 1996/1998 | | 69,000 | | [removed: $39.48] [added: $41.05] | | 100% | | Pottery Barn Banana Republic |

| Crow Canyon Commons San Ramon, CA 94583 | | 1980, 1998, 2006 | | 2005/2007 | | 241,000 | | [removed: $22.12] [added: $26.44] | | [removed: 98%] [added: 95%] | | Sprouts Rite Aid Sports Authority [added: Orchard Supply Hardware] |

| East Bay Bridge Emeryville & Oakland, CA 94608 | | 1994-2001, 2011, 2012 | | 2012 | | 438,000 | | [removed: $15.71] [added: $17.72] | | [removed: 100%] [added: 99%] | | Home Depot Michaels Pak-N-Save Target [added: Nordstrom Rack Sports Authority] |

| Escondido Promenade Escondido, CA 92029(5) | | 1987 | | 1996/2010 | | 298,000 | | [removed: $23.58] [added: $24.34] | | 98% | | TJ Maxx Toys R Us Dick's Sporting Goods Ross Dress For Less |

| Hermosa Avenue Hermosa Beach, CA 90254 | | 1922 | | 1997 | | 24,000 | | [removed: $36.92] [added: $37.64] | | 100% | | |

| Hollywood Blvd Hollywood, CA 90028(6) | | 1929, 1991 | | 1999 | | [removed: 187,000] [added: 180,000] | | [removed: $30.53] [added: $33.56] | | [removed: 99%] [added: 91%] | | Marshalls La La Land DSW L.A. Fitness [removed: Fresh & Easy] |

| Kings Court Los Gatos, CA 95032(4)(7) | | 1960 | | 1998 | | 80,000 | | [removed: $31.11] [added: $31.46] | | 100% | | Lunardi’s Supermarket CVS |

| Old Town Center Los Gatos, CA 95030 | | 1962, 1998 | | 1997 | | 95,000 | | [removed: $37.26] [added: $38.55] | | [removed: 98%] [added: 97%] | | Gap Banana Republic Anthropologie |

| Plaza El Segundo [added: / The Point] El Segundo, CA 90245(5)(10) | | 2006-2007 | | [removed: 2011] [added: 2011/2015] | | [removed: 380,000] [added: 450,000] | | [removed: $37.88] [added: $41.63] | | [removed: 99%] [added: 98%] | | H&M Anthropologie Best Buy HomeGoods Whole Foods Dick's Sporting Goods Container Store |

| Santana Row San Jose, CA 95128 | | 2002, 2009 | | 1997 | | [removed: 649,000] [added: 651,000] | | [removed: $49.44] [added: $50.13] | | 98% | | H&M Crate & Barrel Container Store Best Buy CineArts Theatre Hotel Valencia |

| Santana Row Residential San Jose, CA 95128 | | 2003-2006, 2011, 2014 | | 1997, 2012 | | 662 units | | N/A | | [removed: 97%] [added: 95%] | | |

| Third Street Promenade Santa Monica, CA 90401 | | 1888-2000 | | 1996-2000 | | 209,000 | | [removed: $69.57] [added: $71.00] | | [removed: 100%] [added: 99%] | | Abercrombie & Fitch J. Crew Old Navy Banana Republic |

| Westgate Center San Jose, CA 95129 | | 1960-1966 | | 2004 | | [removed: 637,000] [added: 638,000] | | [removed: $16.11] [added: $17.38] | | 98% | | Nike Factory Target Walmart Neighborhood Market Burlington Coat Factory Ross Dress For Less Michaels Nordstrom Rack J. Crew Gap Factory Store |

| Bristol Plaza Bristol, CT 06010 | | 1959 | | 1995 | | [removed: 267,000] [added: 266,000] | | [removed: $12.89] [added: $13.17] | | [removed: 91%] [added: 92%] | | Stop & Shop TJ Maxx |

| Maryland | | 18 | | | 3,977,000 | | | 18.6 | % |

| California | | 14 | | | 3,854,000 | | | 18.0 | % |

| Virginia | | 15 | | | 3,601,000 | | | 16.8 | % |

| Pennsylvania(1) | | 10 | | | 2,299,000 | | | 10.8 | % |

| Florida | | 4 | | | 1,316,000 | | | 6.2 | % |

| Illinois | | 4 | | | 752,000 | | | 3.5 | % |

| Connecticut(1) | | 3 | | | 397,000 | | | 1.9 | % |

| 2016 | | 1,117,000 | | | 6 | % | | $ | 33,337,000 | | | 6 | % |

| 2017 | | 2,601,000 | | | 13 | % | | 67,645,000 | | | | 13 | % |

| 2018 | | 2,507,000 | | | 13 | % | | 63,129,000 | | | | 12 | % |

| 2019 | | 2,632,000 | | | 13 | % | | 65,970,000 | | | | 13 | % |

| 2020 | | 2,026,000 | | | 10 | % | | 55,177,000 | | | | 11 | % |

| 2021 | | 2,115,000 | | | 11 | % | | 54,767,000 | | | | 10 | % |

| 2022 | | 1,390,000 | | | 7 | % | | 34,514,000 | | | | 7 | % |

| 2023 | | 885,000 | | | 4 | % | | 27,868,000 | | | | 5 | % |

| 2024 | | 1,050,000 | | | 5 | % | | 31,088,000 | | | | 6 | % |

| 2025 | | 1,299,000 | | | 6 | % | | 36,668,000 | | | | 7 | % |

| Thereafter | | 2,364,000 | | | 12 | % | | 55,055,000 | | | | 10 | % |

| Total | | 19,986,000 | | | 100 | % | | $ | 525,218,000 | | | 100 | % |

| San Antonio Center Mountain View, CA 94040 (4)(7) | | 1958, 1964-1965, 1974-1975, 1995-1997 | | 2015 | | 376,000 | | $12.67 | | 96% | | Kohl's Walmart Trader Joe's 24 Hour Fitness Jo-Ann Stores |

| CocoWalk Coconut Grove, FL 33133 (5)(13) | | 1990/1994, 1922-1973 | | 2015 | | 216,000 | | $36.20 | | 82% | | Cinepolis Theaters Gap Youfit Health Club |

| The Shops at Sunset Place South Miami, FL 33143 (5)(10) | | 1999 | | 2015 | | 515,000 | | $22.53 | | 82% | | AMC Theaters L.A. Fitness Barnes & Noble GameTime |

| | |

| --- | --- |

| (13) | This property includes partial interests in eight buildings in addition to our initial acquisition. See further discussion in Note 3 to the Financial Statements. |

| Maryland | | 18 | | | 3,851,000 | | | 19.0 | % |

| Virginia | | 15 | | | 3,595,000 | | | 17.8 | % |

| California | | 13 | | | 3,411,000 | | | 16.9 | % |

| Pennsylvania(1) | | 10 | | | 2,295,000 | | | 11.3 | % |

| Illinois | | 4 | | | 751,000 | | | 3.7 | % |

| Florida | | 3 | | | 698,000 | | | 3.4 | % |

| Connecticut(1) | | 3 | | | 398,000 | | | 2.0 | % |

| Texas | | 1 | | | 172,000 | | | 0.9 | % |

| 2015 | | 1,203,000 | | | 6 | % | | $ | 30,857,000 | | | 6 | % |

| 2016 | | 1,907,000 | | | 10 | % | | 51,812,000 | | | | 11 | % |

| 2017 | | 2,602,000 | | | 14 | % | | 66,746,000 | | | | 14 | % |

| 2018 | | 2,425,000 | | | 13 | % | | 59,936,000 | | | | 12 | % |

| 2019 | | 2,619,000 | | | 14 | % | | 63,209,000 | | | | 13 | % |

| 2020 | | 1,471,000 | | | 8 | % | | 37,669,000 | | | | 8 | % |

| 2021 | | 1,230,000 | | | 6 | % | | 34,128,000 | | | | 7 | % |

| 2022 | | 1,257,000 | | | 6 | % | | 31,054,000 | | | | 6 | % |

| 2023 | | 909,000 | | | 5 | % | | 27,175,000 | | | | 5 | % |

| 2024 | | 1,002,000 | | | 5 | % | | 28,994,000 | | | | 6 | % |

| Thereafter | | 2,547,000 | | | 13 | % | | 59,022,000 | | | | 12 | % |

| Total | | 19,172,000 | | | 100 | % | | $ | 490,602,000 | | | 100 | % |

| Courtyard Shops Wellington, FL 33414 | | 1990, 1998 | | 2008 | | 130,000 | | $20.62 | | 99% | | Publix |

| Texas | | | | | | | | | | | | |

| Houston Street San Antonio, TX 78205 | | 1890-1935 | | 1998 | | 172,000 | | $24.49 | | 93% | | Hotel Valencia Walgreens |

On February [removed: 6, 2015,] [added: 5, 2016,] there were [removed: 2,971] [added: 2,840] 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: 47] [added: 48] consecutive years.

Our total annual dividends paid per common share for [removed: 2014] [added: 2015] and [removed: 2013] [added: 2014] were [removed: $3.21] [added: $3.55] per share and [removed: $2.97] [added: $3.21] per share, respectively.

No assurances can be given regarding what portion, if any, of distributions in [removed: 2015] [added: 2016] or subsequent years will constitute a return of capital for federal income tax purposes.

| Ordinary dividend | $ | [removed: 3.178] [added: 3.515] | | | $ | [removed: 2.911] [added: 3.178] | |

| Capital gain | [removed: 0.032] [added: 0.035] | | | | [removed: 0.059] [added: 0.032] | | |

The following performance graph compares the cumulative total shareholder return on Federal Realty's common shares with the S&P 500 Index and the index of equity real estate investment trusts prepared by the National Association of Real Estate Investment Trusts ("NAREIT") for the five fiscal years commencing December 31, [removed: 2009,] [added: 2010,] and ending December 31, [removed: 2014,] [added: 2015,] assuming an investment of $100 and the reinvestment of all dividends into additional common shares during the holding period.

[removed: ][added: ]

During the three months ended December 31, [removed: 2014,] [added: 2015,] there were no redemptions of operating partnership units.

All other equity securities sold by us during [removed: 2014] [added: 2015] that were not registered have been previously reported in a Quarterly Report on Form 10-Q.

| 2015 | | | | | | | | | | | |

| Fourth quarter | $ | 149.96 | | | $ | 135.60 | | | $ | 0.940 | |

| Third quarter | $ | 139.05 | | | $ | 124.96 | | | $ | 0.940 | |

| Second quarter | $ | 149.20 | | | $ | 127.84 | | | $ | 0.870 | |

| First quarter | $ | 150.27 | | | $ | 135.74 | | | $ | 0.870 | |

| 2015 | | | | 2014 | | | |

| | $ | 3.550 | | | $ | 3.210 | |

During 2015, 9,915 restricted common shares were forfeited by former employees.

The following information describes stock repurchases during the fourth quarter of the fiscal year ended December 31, 2015:

| | | | | | | | | |

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

| | | | | | | | | |

| Period | Total number of shares purchased (1) | Average price paid per share | | | Total number of shares purchased as part of publicly announced plans or programs | Maximum number or approximate dollar amount of shares that may yet be purchased under the plans or programs | | |

| October 1, 2015 - October 31, 2015 | 29,064 | $ | 142.05 | | — | $ | — | |

(1) Represents shares delivered in payment of withholding taxes in connection with restricted stock vesting by participants.

| 2013 | | | | | | | | | | | |

| Fourth quarter | $ | 108.15 | | | $ | 100.30 | | | $ | 0.780 | |

| Third quarter | $ | 107.44 | | | $ | 96.99 | | | $ | 0.780 | |

| Second quarter | $ | 117.96 | | | $ | 96.21 | | | $ | 0.730 | |

| First quarter | $ | 109.30 | | | $ | 104.50 | | | $ | 0.730 | |

| 2014 | | | | 2013 | | | |

| | $ | 3.210 | | | $ | 2.970 | |

During the fourth quarter of 2014, no equity securities were purchased by us.

| [removed: 2014] [added: 2015] | | | | | [removed: 2013] [added: 2014] | | | | | [removed: 2012] [added: 2013] | | | | | [removed: 2011] [added: 2012] | | | | | [removed: 2010] [added: 2011] | | | | |

| Rental income | $ | [removed: 666,322] [added: 727,812] | | | | $ | [removed: 620,089] [added: 666,322] | | | | $ | [removed: 580,114] [added: 620,089] | | | | $ | [removed: 536,749] [added: 580,114] | | | | $ | [removed: 520,677] [added: 536,749] | | |

| Property operating income(1) | $ | [removed: 474,167] [added: 510,595] | | | | $ | [removed: 446,959] [added: 474,167] | | | | $ | [removed: 426,721] [added: 446,959] | | | | $ | [removed: 381,335] [added: 426,721] | | | | $ | [removed: 371,198] [added: 381,335] | | |

| Income from continuing operations | $ | [removed: 167,888] [added: 190,094] | | | | $ | [removed: 137,811] [added: 167,888] | | | | $ | [removed: 142,972] [added: 137,811] | | | | $ | [removed: 130,319] [added: 142,972] | | | | $ | [removed: 124,778] [added: 130,319] | | |

| Gain on sale of real estate | $ | [removed: 4,401] [added: 28,330] | | | | $ | [removed: 28,855] [added: 4,401] | | | | $ | [removed: 11,860] [added: 28,855] | | | | $ | [removed: 15,075] [added: 11,860] | | | | $ | [removed: 1,410] [added: 15,075] | | |

| Net income | $ | [removed: 172,289] [added: 218,424] | | | | $ | [removed: 167,608] [added: 172,289] | | | | $ | [removed: 156,232] [added: 167,608] | | | | $ | [removed: 149,612] [added: 156,232] | | | | $ | [removed: 128,237] [added: 149,612] | | |

| Net income attributable to the Trust | $ | [removed: 164,535] [added: 210,219] | | | | $ | [removed: 162,681] [added: 164,535] | | | | $ | [removed: 151,925] [added: 162,681] | | | | $ | [removed: 143,917] [added: 151,925] | | | | $ | [removed: 122,790] [added: 143,917] | | |

| Net income available for common shareholders | $ | [removed: 163,994] [added: 209,678] | | | | $ | [removed: 162,140] [added: 163,994] | | | | $ | [removed: 151,384] [added: 162,140] | | | | $ | [removed: 143,376] [added: 151,384] | | | | $ | [removed: 122,249] [added: 143,376] | | |

| Net cash provided by operating activities | $ | [removed: 346,130] [added: 359,835] | | | | $ | [removed: 314,498] [added: 346,130] | | | | $ | [removed: 296,633] [added: 314,498] | | | | $ | [removed: 244,711] [added: 296,633] | | | | $ | [removed: 256,735] [added: 244,711] | | |

| Net cash used in investing activities | $ | [removed: (396,150] [added: (353,763] | ) | | | $ | [removed: (345,198] [added: (396,150] | ) | | | $ | [removed: (273,558] [added: (345,198] | ) | | | $ | [removed: (196,369] [added: (273,558] | ) | | | $ | [removed: (187,088] [added: (196,369] | ) | |

| Net cash [removed: provided by] (used in) [added: provided by] financing activities | $ | [removed: 9,044] [added: (32,977] | [added: )] | | | $ | [removed: 82,639] [added: 9,044] | | | | $ | [removed: (53,893] [added: 82,639] | [removed: )] | | | $ | [removed: 3,667] [added: (53,893] | [added: )] | | | $ | [removed: (189,239] [added: 3,667] | [removed: )] | |

| Dividends declared on common shares | $ | [removed: 224,190] [added: 250,388] | | | | $ | [removed: 198,965] [added: 224,190] | | | | $ | [removed: 182,813] [added: 198,965] | | | | $ | [removed: 171,335] [added: 182,813] | | | | $ | [removed: 163,382] [added: 171,335] | | |

| Basic | [removed: 67,322] [added: 68,797] | | | | | [removed: 65,331] [added: 67,322] | | | | | [removed: 63,881] [added: 65,331] | | | | | [removed: 62,438] [added: 63,881] | | | | | [removed: 61,182] [added: 62,438] | | | |

| Diluted | [removed: 67,492] [added: 68,981] | | | | | [removed: 65,483] [added: 67,492] | | | | | [removed: 64,056] [added: 65,483] | | | | | [removed: 62,603] [added: 64,056] | | | | | [removed: 61,324] [added: 62,603] | | | |

| Continuing operations | $ | [removed: 2.35] [added: 2.63] | | | | $ | [removed: 2.01] [added: 2.35] | | | | $ | [removed: 2.15] [added: 2.01] | | | | $ | [removed: 1.98] [added: 2.15] | | | | $ | [removed: 1.93] [added: 1.98] | | |

| Discontinued operations | — | | | | | [removed: 0.38] [added: —] | | | | | [removed: 0.02] [added: 0.38] | | | | | [removed: 0.31] [added: 0.02] | | | | | [removed: 0.05] [added: 0.31] | | | |

| Gain on sale of real estate | [removed: 0.07] [added: 0.41] | | | | | [removed: 0.08] [added: 0.07] | | | | | [removed: 0.19] [added: 0.08] | | | | | [removed: —] [added: 0.19] | | | | | [removed: 0.01] [added: —] | | | |

| Total | $ | [removed: 2.42] [added: 3.04] | | | | $ | [removed: 2.47] [added: 2.42] | | | | $ | [removed: 2.36] [added: 2.47] | | | | $ | [removed: 2.29] [added: 2.36] | | | | $ | [removed: 1.99] [added: 2.29] | | |

| Continuing operations | $ | [removed: 2.34] [added: 2.62] | | | | $ | [removed: 2.00] [added: 2.34] | | | | $ | [removed: 2.14] [added: 2.00] | | | | $ | [removed: 1.97] [added: 2.14] | | | | $ | [removed: 1.93] [added: 1.97] | | |

| Discontinued operations | — | | | | | [removed: 0.38] [added: —] | | | | | [removed: 0.02] [added: 0.38] | | | | | [removed: 0.31] [added: 0.02] | | | | | [removed: 0.04] [added: 0.31] | | | |

| Gain on sale of real estate | [removed: 0.07] [added: 0.41] | | | | | [removed: 0.08] [added: 0.07] | | | | | [removed: 0.19] [added: 0.08] | | | | | [removed: —] [added: 0.19] | | | | | [removed: 0.01] [added: —] | | | |

| Total | $ | [removed: 2.41] [added: 3.03] | | | | $ | [removed: 2.46] [added: 2.41] | | | | $ | [removed: 2.35] [added: 2.46] | | | | $ | [removed: 2.28] [added: 2.35] | | | | $ | [removed: 1.98] [added: 2.28] | | |

| Dividends declared per common share | $ | [removed: 3.30] [added: 3.62] | | | | $ | [removed: 3.02] [added: 3.30] | | | | $ | [removed: 2.84] [added: 3.02] | | | | $ | [removed: 2.72] [added: 2.84] | | | | $ | [removed: 2.66] [added: 2.72] | | |

| Funds from operations available to common shareholders(2) | $ | [removed: 327,597] [added: 352,857] | | | | $ | [removed: 289,938] [added: 327,597] | | | | $ | [removed: 277,237] [added: 289,938] | | | | $ | [removed: 251,576] [added: 277,237] | | | | $ | [removed: 239,210] [added: 251,576] | | |

| EBITDA(3) | $ | [removed: 447,495] [added: 504,696] | | | | $ | [removed: 446,555] [added: 447,495] | | | | $ | [removed: 410,918] [added: 446,555] | | | | $ | [removed: 374,131] [added: 410,918] | | | | $ | [removed: 352,481] [added: 374,131] | | |

| Adjusted EBITDA(3) | $ | [removed: 443,094] [added: 476,366] | | | | $ | [removed: 417,700] [added: 443,094] | | | | $ | [removed: 399,058] [added: 417,700] | | | | $ | [removed: 357,030] [added: 399,058] | | | | $ | [removed: 351,071] [added: 357,030] | | |

| Ratio of EBITDA to combined fixed charges and preferred share dividends(3)(4) | [removed: 3.5] [added: 3.9] | | | x | | [removed: 3.3] [added: 3.5] | | | x | | 3.3 | | | x | | [removed: 3.5] [added: 3.3] | | | x | | [removed: 3.1] [added: 3.5] | | | x |

| Ratio of Adjusted EBITDA to combined fixed charges and preferred share dividends(3)(4) | [removed: 3.5] [added: 3.6] | | | x | | [removed: 3.1] [added: 3.5] | | | x | | [removed: 3.2] [added: 3.1] | | | x | | [removed: 3.3] [added: 3.2] | | | x | | [removed: 3.1] [added: 3.3] | | | x |

| [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | |

| Real estate, at cost | $ | [removed: 5,608,998] [added: 6,064,406] | | | $ | [removed: 5,149,463] [added: 5,608,998] | | | $ | [removed: 4,779,674] [added: 5,149,463] | | | $ | [removed: 4,426,444] [added: 4,779,674] | | | $ | [removed: 3,895,942] [added: 4,426,444] | |

| Total assets | $ | [removed: 4,546,870] [added: 4,911,709] | | | $ | [removed: 4,219,294] [added: 4,546,870] | | | $ | [removed: 3,898,565] [added: 4,219,294] | | | $ | [removed: 3,666,210] [added: 3,898,565] | | | $ | [removed: 3,159,553] [added: 3,666,210] | |

| Mortgages payable and capital lease obligations | $ | [removed: 635,345] [added: 554,442] | | | $ | [removed: 660,127] [added: 635,345] | | | $ | [removed: 832,482] [added: 660,127] | | | $ | [removed: 810,616] [added: 832,482] | | | $ | [removed: 589,441] [added: 810,616] | |

| Notes payable | $ | [removed: 290,519] [added: 343,600] | | | $ | [removed: 300,822] [added: 290,519] | | | $ | [removed: 299,575] [added: 300,822] | | | $ | [removed: 295,159] [added: 299,575] | | | $ | [removed: 97,881] [added: 295,159] | |

| Senior notes and debentures | $ | [removed: 1,483,813] [added: 1,744,324] | | | $ | [removed: 1,360,913] [added: 1,483,813] | | | $ | [removed: 1,076,545] [added: 1,360,913] | | | $ | [removed: 1,004,635] [added: 1,076,545] | | | $ | [removed: 1,079,827] [added: 1,004,635] | |

| Shareholders’ equity | $ | [removed: 1,692,556] [added: 1,781,931] | | | $ | [removed: 1,471,297] [added: 1,692,556] | | | $ | [removed: 1,310,593] [added: 1,471,297] | | | $ | [removed: 1,240,604] [added: 1,310,593] | | | $ | [removed: 1,115,768] [added: 1,240,604] | |

| Number of common shares outstanding | [removed: 68,606] [added: 69,493] | | | | [removed: 66,701] [added: 68,606] | | | | [removed: 64,815] [added: 66,701] | | | | [removed: 63,544] [added: 64,815] | | | | [removed: 61,526] [added: 63,544] | | |

| | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | |

| Operating income | $ | [removed: 271,037] [added: 300,154] | | | $ | [removed: 254,161] [added: 271,037] | | | $ | [removed: 253,862] [added: 254,161] | | | $ | [removed: 226,462] [added: 253,862] | | | $ | [removed: 228,145] [added: 226,462] | |

| General and administrative | [removed: 32,316] [added: 35,645] | | | | [removed: 31,970] [added: 32,316] | | | | [removed: 31,158] [added: 31,970] | | | | [removed: 28,985] [added: 31,158] | | | | [removed: 24,189] [added: 28,985] | | |

| Depreciation and amortization | [removed: 170,814] [added: 174,796] | | | | [removed: 160,828] [added: 170,814] | | | | [removed: 141,701] [added: 160,828] | | | | [removed: 125,888] [added: 141,701] | | | | [removed: 118,534] [added: 125,888] | | |

Financial Statements and Supplementary Data.”

Financial Statements and Supplementary Data.” Our selected operating data, other data and balance sheet data for the years ended December 31, 2010 through 2013 have been reclassified to conform to the 2014 presentation.

| Litigation provision | — | | | | — | | | | — | | | | — | | | | 330 | | |

We carried out an assessment as of December 31, [removed: 2014] [added: 2015] of the effectiveness of the design and operation of our disclosure controls and procedures and our internal control over financial reporting.

There was no change in our internal control over financial reporting during our fourth fiscal quarter of [removed: 2014] [added: 2015] that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Certain information required in Part III is omitted from this Report but is incorporated herein by reference from our Proxy Statement for the [removed: 2015] [added: 2016] Annual Meeting of Shareholders (as amended or supplemented, the “Proxy Statement”).

Our consolidated financial statements and notes thereto, together with Management’s Report on Internal Control over Financial Reporting and Reports of Independent Registered Public Accounting Firm are included as a separate section of this Annual Report on Form 10-K commencing on page [removed: [F-1](#s1A9E9BEE25635DFD653BC49B4048F840).][added: [F-1](#s4477A0D23C7D4325AA3315F5F8F37EBA).]

Our financial statement schedules are included in a separate section of this Annual Report on Form 10-K commencing on page [removed: [F-30](#s9073DB2B8CFD0E5635F4C49B1147B84D).][added: [F-30](#s8F7B284592D791DBF5CB15F5D8B457D6).]

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 February [removed: 10, 2015.][added: 9, 2016.]

| /S/ DONALD C. WOOD | | President, Chief Executive Officer and | | February [removed: 10, 2015] [added: 9, 2016] |

| /S/ JAMES M. TAYLOR, JR. | | Executive Vice President-Chief Financial | | February [removed: 10, 2015] [added: 9, 2016] |

| /S/ JOSEPH S. VASSALLUZZO | | Non-Executive Chairman | | February [removed: 10, 2015] [added: 9, 2016] |

| /S/ JON E. BORTZ | | Trustee | | February [removed: 10, 2015] [added: 9, 2016] |

| /S/ DAVID W. FAEDER | | Trustee | | February [removed: 10, 2015] [added: 9, 2016] |

| /S/ KRISTIN GAMBLE | | Trustee | | February [removed: 10, 2015] [added: 9, 2016] |

| /S/ GAIL P. STEINEL | | Trustee | | February [removed: 10, 2015] [added: 9, 2016] |

| /S/ WARREN M. THOMPSON | | Trustee | | February [removed: 10, 2015] [added: 9, 2016] |

| Management Assessment Report on Internal Control over Financial Reporting | [removed: [F-2](#sDF019990C5DE590CC2FBC49B407A93C9)] [added: [F-2](#sF71900402CCC880507B615F5F9156BCF)] |

| Report of Independent Registered Public Accounting Firm | [removed: [F-3](#s56A34A35F3BFC0E4BC75C49B409B1822)] [added: [F-3](#s5B971CAC227AA163EB5315F5F947F88E)] |

| Report of Independent Registered Public Accounting Firm | [removed: [F-4](#s9C4C2A987395852FC12CC49B40CDB483)] [added: [F-4](#s0398D58CED0380DC2DC015F5F967DDBB)] |

| Consolidated Balance Sheets | [removed: [F-5](#sCD064BF7A6CA4D240EEBC49B0E78E3B8)] [added: [F-5](#s0E79214470F0F884911D15F5D4654D81)] |

| Consolidated Statements of Comprehensive Income | [removed: [F-6](#sA146975C6DD77FDE624AC49B0E8E517C)] [added: [F-6](#s5EA47DCC3BE1A7CA39D515F5D47F0D27)] |

| Consolidated Statement of Shareholders’ Equity | [removed: [F-7](#sB4CCFD6885B80DD6712AC49B0EA5DA07)] [added: [F-7](#s8F4C64E66CE3B1F9262715F5D49A8CE3)] |

| Consolidated Statements of Cash Flows | [removed: [F-8](#s2C7A0293E72CC5F2288CC49B0F69F41F)] [added: [F-8](#s418E89B22E547BD5676315F5D4E9306B)] |

| Notes to Consolidated Financial Statements | [removed: [F-9](#sB4CDE776A4D81479C36FC49B41EB869E)] [added: [F-9](#sC13D472A52892B378C2915F5FA949247)] |

| Schedule III—Summary of Real Estate and Accumulated Depreciation | [removed: [F-30](#s9073DB2B8CFD0E5635F4C49B1147B84D)] [added: [F-30](#s8F7B284592D791DBF5CB15F5D8B457D6)] |

| Schedule IV—Mortgage Loans on Real Estate | [removed: [F-37](#sEDC81DC093E56751FC90C49B1288D2B3)] [added: [F-37](#s4429497FF6E0C464A23015F5DA40D7BF)] |

Management conducted an assessment of the effectiveness of the Trust’s internal control over financial reporting as of December 31, [removed: 2014.][added: 2015.]

Based on this assessment, management concluded that our internal control over financial reporting is effective, based on those criteria, as of December 31, [removed: 2014.][added: 2015.]

We have audited the internal control over financial reporting of Federal Realty Investment Trust (a Maryland real estate investment trust) and Subsidiaries (collectively, the "Trust") as of December 31, [removed: 2014,] [added: 2015,] based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, Federal Realty Investment Trust and Subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2014,] [added: 2015,] based on criteria established in the 2013 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 financial statements of the Trust as of and for the year ended December 31, [removed: 2014] [added: 2015] and our report dated February [removed: 10, 2015] [added: 9, 2016] expressed an unqualified opinion on those financial statements.

We have audited the accompanying consolidated balance sheets of Federal Realty Investment Trust (a Maryland real estate investment trust) and Subsidiaries (collectively, the "Trust") as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the related consolidated statements of comprehensive income, [added: changes in] shareholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2014.][added: 2015.]

Our audits of the basic consolidated financial statements included the financial statement schedules listed in the index appearing under Item [removed: 15(a) (1) and (2).][added: 15(a)(2).]

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Federal Realty Investment Trust and Subsidiaries as of December 31, [removed: 2014] [added: 2015] and [removed: 2013,] [added: 2014,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2014,] [added: 2015,] in conformity with accounting principles generally accepted in the United States of America.

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, [removed: 2014,] [added: 2015,] based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February [removed: 10, 2015] [added: 9, 2016] expressed an unqualified opinion.

| | [added: 2015 | | | |] 2014 | | | | 2013 | | |

| Operating (including [removed: $282,303] [added: $485,971] and [removed: $265,138] [added: $282,303] of consolidated variable interest entities, respectively) | $ | [removed: 5,128,757] [added: 5,630,771] | | | $ | [removed: 4,618,258] [added: 5,128,757] | |

| Construction-in-progress | [removed: 480,241] [added: 433,635] | | | | [removed: 531,205] [added: 480,241] | | |

| Less accumulated depreciation and amortization (including [removed: $26,618] [added: $35,782] and [removed: $19,086] [added: $26,618] of consolidated variable interest entities, respectively) | [removed: (1,467,050] [added: (1,574,041] | | ) | | [removed: (1,350,471] [added: (1,467,050] | | ) |

| Net real estate | [removed: 4,141,948] [added: 4,490,365] | | | | [removed: 3,798,992] [added: 4,141,948] | | |

| Cash and cash equivalents | [removed: 47,951] [added: 21,046] | | | | [removed: 88,927] [added: 47,951] | | |

| Accounts and notes receivable, net | [removed: 93,291] [added: 110,402] | | | | [removed: 84,838] [added: 93,291] | | |

| Mortgage notes receivable, net | [removed: 50,988] [added: 41,618] | | | | [removed: 55,155] [added: 50,988] | | |

| Investment in real estate partnerships | [removed: 37,457] [added: 41,546] | | | | [removed: 32,264] [added: 37,457] | | |

| Prepaid expenses and other assets | [removed: 160,167] [added: 190,203] | | | | [removed: 145,062] [added: 160,167] | | |

February 9, 2016

February 9, 2016

| | 2015 | | | | 2014 | | |

| | 6,064,406 | | | | 5,608,998 | | |

| Share-based compensation expense, net of forfeitures | — | | | — | | | | 108,803 | | | 1 | | | | 11,198 | | | | — | | | | — | | | | — | | | | 11,199 | | |

| Shares withheld for employee taxes | — | | | — | | | | (16,972 | ) | | — | | | | (1,842 | | ) | | — | | | | — | | | | — | | | | (1,842 | | ) |

| Shares withheld for employee taxes | — | | | — | | | | (29,912 | ) | | — | | | | (3,335 | | ) | | — | | | | — | | | | — | | | | (3,335 | | ) |

| Net income, excluding $3,423 attributable to redeemable noncontrolling interests | — | | | — | | | | — | | | — | | | | — | | | | 210,219 | | | | — | | | | 4,782 | | | | 215,001 | | |

| Common shares issued | — | | | — | | | | 813,548 | | | 8 | | | | 108,537 | | | | — | | | | — | | | | — | | | | 108,545 | | |

| Exercise of stock options | — | | | — | | | | 29,940 | | | — | | | | 1,991 | | | | — | | | | — | | | | — | | | | 1,991 | | |

| Share-based compensation expense, net of forfeitures | — | | | — | | | | 52,213 | | | 1 | | | | 12,073 | | | | — | | | | — | | | | — | | | | 12,074 | | |

| Shares withheld for employee taxes | — | | | — | | | | (64,227 | ) | | | | | | (9,211 | | ) | | — | | | | — | | | | — | | | | (9,211 | | ) |

| Redemption of OP units | — | | | — | | | | 39,611 | | | — | | | | 4,072 | | | | — | | | | — | | | | (4,223 | | ) | | (151 | | ) |

| BALANCE AT DECEMBER 31, 2015 | 399,896 | | | $ | 9,997 | | | 69,493,392 | | | $ | 696 | | | $ | 2,381,867 | | | $ | (724,701 | ) | | $ | (4,110 | ) | | $ | 118,182 | | | $ | 1,781,931 | |

The operating properties sold

See Note 19 for additional information regarding our January 13, 2016 acquisition of Clarion's 70% interest in this partnership.

We have also determined that our hotel joint venture at our Pike & Rose project does not meet the requirement of a variable interest entity and have accounted for our related investment using the equity method.

respectively, and mortgages payable (net of unamortized premium) of $178.3 million and $180.3 million, respectively.

On February 25, 2015, we acquired the interest of the noncontrolling interest holder for $8.8 million.

We have determined the joint venture that owns CocoWalk and other partial interests in buildings in the Coconut Grove neighborhood of Miami, Florida, is a variable interest entity for which we are the primary beneficiary.

We own an 80% common interest of the entity, as well as a preferred interest.

We control the significant operating decisions, consequently having the power to direct the activities that most significantly impact economic performance of the entity, and have the obligation to absorb the majority of the losses and receive the majority of the benefits.

Therefore, the entity is consolidated in our financial statements as of May 4, 2015.

As of December 31, 2015, net real estate assets related to CocoWalk included in our consolidated balance sheets are approximately $97.2 million.

Our maximum exposure to loss is approximately $88.8 million.

We have determined the joint venture that owns The Shops at Sunset Place is a variable interest entity for which we are the primary beneficiary.

We own an 85% common interest of the entity.

We control the significant operating decisions, consequently having the power to direct the activities that most significantly impact economic performance of the entity, and have the obligation to absorb the majority of the losses and receive the majority of the benefits.

Therefore, the entity is consolidated in our financial statements as of October 1, 2015.

As of December 31, 2015, net real estate assets related to The Shops at Sunset Place included in our consolidated balance sheets are approximately $115.8 million, and the entity has a mortgage payable (net of unamortized premium) of $75.9 million.

Our maximum exposure to loss is approximately $35.5 million.

| | 2015 | | | | 2014 | | |

| Change in redemption value | 19,114 | | | | 9,032 | | |

In February 2015, the FASB issued ASU 2015-02, "Amendments to the Consolidation Analysis." ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are variable or voting interest entities, eliminates the presumption that the general partner should consolidate a limited partnership, modifies the consolidation analysis for reporting entities that are involved in variable interest entities, particularly those that have fee arrangements and related party relationships, and provides a scope exception from consolidation guidance for reporting entities with interests in legal entities that operate as registered money market funds.

In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 requires debt issuance costs related to a debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, rather than classified as an asset.

Recognition and measurement of debt issuance costs are not affected.

Subsequently, in August 2015, the FASB issued ASU 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements," which allows an entity to present the costs related to securing a line-of- credit arrangement as an asset, regardless of whether there are any outstanding borrowings.

ASU 2015-03 and ASU 2015-15 are effective for us in the first quarter of 2016 and are not expected to have a significant impact on our consolidated financial statements.

In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09, "Revenue from Contracts with Customers," which will now be effective for us in the first quarter of 2018.

In September 2015, the FASB issued ASU 2015-16, "Simplifying the Accounting for Measurement-Period Adjustments." ASU 2015-16 requires that, if the initial accounting for the business combination is incomplete as of the end of the reporting period in which the acquisition occurs, the acquirer records provisional amounts based on information available at the acquisition date.

| | |

| --- | --- |

| | |

| --- | --- |

February 10, 2015

February 10, 2015

| | | | | | | | |

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

| | | | | | | | |

| | 5,608,998 | | | | 5,149,463 | | |

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

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| BALANCE AT DECEMBER 31, 2011 | 399,896 | | | $ | 9,997 | | | 63,544,150 | | | $ | 636 | | | $ | 1,764,940 | | | $ | (555,541 | ) | | $ | (3,940 | ) | | $ | 24,512 | | | $ | 1,240,604 | |

| Net income, excluding $2,592 attributable to redeemable noncontrolling interests | — | | | — | | | | — | | | — | | | | — | | | | 151,925 | | | | — | | | | 1,715 | | | | 153,640 | | |

| Common shares issued | — | | | — | | | | 1,039,405 | | | 10 | | | | 106,209 | | | | — | | | | — | | | | — | | | | 106,219 | | |

| Exercise of stock options | — | | | — | | | | 97,430 | | | 1 | | | | 5,666 | | | | — | | | | — | | | | — | | | | 5,667 | | |

| Conversion and redemption of OP units | — | | | — | | | | — | | | — | | | | (439 | | ) | | — | | | | — | | | | (389 | | ) | | (828 | | ) |

| Share-based compensation expense, net of shares withheld for employee taxes | — | | | — | | | | 91,831 | | | 1 | | | | 9,356 | | | | — | | | | — | | | | — | | | | 9,357 | | |

| Share-based compensation expense, net of shares withheld for employee taxes | — | | | — | | | | 87,735 | | | 1 | | | | 9,605 | | | | — | | | | — | | | | — | | | | 9,606 | | |

| Proceeds from sale of real estate in real estate partnership | 10,406 | | | | — | | | | — | | |

Effective January 1, 2014, we adopted ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” as further discussed in "Recently Adopted Accounting Pronouncements." Prior to January 1, 2014, the sale or disposal of a “component of an entity” was treated as discontinued operations.

As of December 31, 2013, $20.7 million is included in mortgages payable (net of unamortized discount) for the mortgage loan secured by Melville Mall, however, the loan was not our legal obligation.

| Adjustment to redeemable noncontrolling interests | 9,032 | | | | 9,857 | | |

Recently Adopted Accounting Pronouncements

The standard also requires additional disclosures about discontinued operations as well as disposal transactions that do not meet the discontinued operations criteria.

The standard is applicable prospectively for all disposals initially classified as held for sale in periods after adoption.

We adopted the standard effective January 1, 2014, and there was no impact to the current period financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." ASU 2014-09 supersedes nearly all existing revenue recognition guidance under GAAP and replaces it with a core revenue recognition principle, that an entity will recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, and creates a five-step model for revenue recognition in accordance with this principle.

ASU 2014-09 also requires new disclosures in both interim and annual reporting periods.

The guidance in ASU 2014-09 does not apply to contracts within the scope of ASC 840, Leases.

ASU 2014-09 will be effective for us in the first quarter of 2017 and allows for either full retrospective or modified retrospective adoption.

In August 2014, the FASB issued ASU 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” ASU 2014-15 provides guidance regarding management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and if such doubt exists, requires specific disclosures.

| Retail and mixed-use properties | | $ | 5,024,800 | | | $ | (1,310,791 | ) | | $ | 565,935 | |

| Retail properties under capital leases | | 115,028 | | | | (31,955 | | ) | | 71,671 | | |

| Residential | | 9,635 | | | | (7,725 | | ) | | 22,521 | | |

| | | $ | 5,149,463 | | | $ | (1,350,471 | ) | | $ | 660,127 | |

We have entered into an agreement to acquire the interest of one of the noncontrolling interest holders in The Grove at Shrewsbury in 2015.

An additional noncontrolling interest holder has the right to require us to acquire its interests in The Grove at Shrewsbury and Brook 35 at the then current fair market value beginning on January 1, 2017.