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

Index to Consolidated Financial Statements and Schedules

Consolidated Financial Statements	Page No.
Report of Independent Registered Public Accounting Firm	F-2
Report of Independent Registered Public Accounting Firm	F-3
Consolidated Balance Sheets	F-4
Consolidated Statements of Comprehensive Income	F-5
Consolidated Statement of Shareholders’ Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8
Financial Statement Schedules
Schedule III—Summary of Real Estate and Accumulated Depreciation	F-32
Schedule IV—Mortgage Loans on Real Estate	F-40

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

F-1

Report of Independent Registered Public Accounting Firm

Trustees and Shareholders

Federal Realty Investment Trust

Opinion on internal control over financial reporting

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, 2018, 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, the Trust maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, 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) (“PCAOB”), the consolidated financial statements of the Trust as of and for the year ended December 31, 2018, and our report dated February 13, 2019 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Trust’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Evaluation of Disclosure Controls and Procedures. Our responsibility is to express an opinion on the Trust’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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

Definition and limitations of internal control over financial reporting

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

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

/s/ GRANT THORNTON LLP

Charlotte, North Carolina

February 13, 2019

F-2

Report of Independent Registered Public Accounting Firm

Trustees and Shareholders

Federal Realty Investment Trust

Opinion on the 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, 2018 and 2017, and the related consolidated statements of comprehensive income, changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Trust as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, 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) (“PCAOB”), the Trust’s internal control over financial reporting as of December 31, 2018, 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 13, 2019 expressed an unqualified opinion.

Basis for opinion

These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the Trust’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ GRANT THORNTON LLP

We have served as the Trust’s auditor since 2002.

Charlotte, North Carolina

February 13, 2019

F-3

Federal Realty Investment Trust

Consolidated Balance Sheets

	December 31,
	2018				2017
	(In thousands, except share and per share data)
ASSETS
Real estate, at cost
Operating (including $1,701,804 and $1,639,486 of consolidated variable interest entities, respectively)	$	7,307,622			$	6,950,188
Construction-in-progress (including $51,313 and $43,393 of consolidated variable interest entities, respectively)	495,274				684,873
Assets held for sale	16,576				—
	7,819,472				7,635,061
Less accumulated depreciation and amortization (including $292,374 and $247,410 of consolidated variable interest entities, respectively)	(2,059,143		)		(1,876,544		)
Net real estate	5,760,329				5,758,517
Cash and cash equivalents	64,087				15,188
Accounts and notes receivable	142,237				209,877
Mortgage notes receivable, net	30,429				30,429
Investment in real estate partnerships	26,859				23,941
Prepaid expenses and other assets	265,703				237,803
TOTAL ASSETS	$	6,289,644			$	6,275,755
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable (including $444,388 and $460,372 of consolidated variable interest entities, respectively)	$	474,379			$	491,505
Capital lease obligations	71,519				71,556
Notes payable	279,027				320,265
Senior notes and debentures	2,404,279				2,401,440
Accounts payable and accrued expenses	177,922				196,332
Dividends payable	78,207				75,931
Security deposits payable	17,875				16,667
Other liabilities and deferred credits	182,898				169,388
Total liabilities	3,686,106				3,743,084
Commitments and contingencies (Note 7)
Redeemable noncontrolling interests	136,208				141,157
Shareholders’ equity
Preferred shares, authorized 15,000,000 shares, $.01 par:
5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 per share), 6,000 shares issued and outstanding	150,000				150,000
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding	9,997				9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 74,249,633 and 73,090,877 shares issued and outstanding, respectively	745				733
Additional paid-in capital	3,004,442				2,855,321
Accumulated dividends in excess of net income	(818,877		)		(749,367		)
Accumulated other comprehensive (loss) income	(416		)		22
Total shareholders’ equity of the Trust	2,345,891				2,266,706
Noncontrolling interests	121,439				124,808
Total shareholders’ equity	2,467,330				2,391,514
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,289,644			$	6,275,755

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

F-4

Federal Realty Investment Trust

Consolidated Statements of Comprehensive Income

	Year Ended December 31,
	2018				2017				2016
	(In thousands, except per share data)
REVENUE
Rental income	$	895,698			$	841,461			$	786,583
Other property income	16,589				12,825				11,015
Mortgage interest income	3,149				3,062				3,993
Total revenue	915,436				857,348				801,591
EXPENSES
Rental expenses	173,094				164,890				158,326
Real estate taxes	114,776				107,839				95,286
General and administrative	33,600				36,281				33,399
Depreciation and amortization	244,245				216,050				193,585
Total operating expenses	565,715				525,060				480,596
OPERATING INCOME	349,721				332,288				320,995
Other interest income	942				475				374
Interest expense	(110,154		)		(100,125		)		(94,994		)
Early extinguishment of debt	—				(12,273		)		—
(Loss) income from real estate partnerships	(3,398		)		(417		)		50
INCOME FROM CONTINUING OPERATIONS	237,111				219,948				226,425
Gain on sale of real estate and change in control of interests, net	11,915				77,922				32,458
NET INCOME	249,026				297,870				258,883
Net income attributable to noncontrolling interests	(7,119		)		(7,956		)		(8,973		)
NET INCOME ATTRIBUTABLE TO THE TRUST	241,907				289,914				249,910
Dividends on preferred shares	(8,042		)		(2,458		)		(541		)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	233,865			$	287,456			$	249,369
EARNINGS PER COMMON SHARE, BASIC
Net income available for common shareholders	$	3.18			$	3.97			$	3.51
Weighted average number of common shares	73,274				72,117				70,877
EARNINGS PER COMMON SHARE, DILUTED
Net income available for common shareholders	$	3.18			$	3.97			$	3.50
Weighted average number of common shares	73,302				72,233				71,049
NET INCOME	$	249,026			$	297,870			$	258,883
Other comprehensive (loss) income - change in value of interest rate swaps	(438		)		2,599				1,533
COMPREHENSIVE INCOME	248,588				300,469				260,416
Comprehensive income attributable to noncontrolling interests	(7,119		)		(7,956		)		(8,973		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST	$	241,469			$	292,513			$	251,443

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

F-5

Federal Realty Investment Trust

Consolidated Statement of Shareholders’ Equity

	Shareholders’ Equity of the Trust
	Preferred Shares							Common Shares							Additional Paid-in Capital				Accumulated Dividends in Excess of Net Income				Accumulated Other Comprehensive Income/(Loss)				Noncontrolling Interests				Total Shareholders' Equity
	Shares			Amount				Shares			Amount
	(In thousands, except share data)
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
Net income, excluding $2,713 attributable to redeemable noncontrolling interests	—			—				—			—				—				249,910				—				6,260				256,170
Other comprehensive income - change in value of interest rate swaps	—			—				—			—				—				—				1,533				—				1,533
Dividends declared to common shareholders	—			—				—			—				—				(274,402		)		—				—				(274,402		)
Dividends declared to preferred shareholders	—			—				—			—				—				(541		)		—				—				(541		)
Distributions declared to noncontrolling interests	—			—				—			—				—				—				—				(7,546		)		(7,546		)
Common shares issued	—			—				2,156,671			21				324,170				—				—				—				324,191
Exercise of stock options	—			—				55,365			1				4,541				—				—				—				4,542
Shares issued under dividend reinvestment plan	—			—				15,619			—				2,387				—				—				—				2,387
Share-based compensation expense, net of forfeitures	—			—				134,913			2				11,225				—				—				—				11,227
Shares withheld for employee taxes	—			—				(30,671	)		—				(4,451		)		—				—				—				(4,451		)
Conversion and redemption of OP units	—			—				170,608			2				18,677				—				—				(18,679		)		—
Contributions from noncontrolling interests	—			—				—			—				—				—				—				885				885
Adjustment to redeemable noncontrolling interests	—			—				—			—				(20,091		)		—				—				—				(20,091		)
BALANCE AT DECEMBER 31, 2016	399,896			9,997				71,995,897			722				2,718,325				(749,734		)		(2,577		)		99,102				2,075,835
January 1, 2017 adoption of new accounting standard	—			—				—			—				83				(83		)		—				—				—
Net income, excluding $3,874 attributable to redeemable noncontrolling interests	—			—				—			—				—				289,914				—				4,082				293,996
Other comprehensive income - change in value of interest rate swaps	—			—				—			—				—				—				2,599				—				2,599
Dividends declared to common shareholders	—			—				—			—				—				(287,006		)		—				—				(287,006		)
Dividends declared to preferred shareholders	—			—				—			—				—				(2,458		)		—				—				(2,458		)
Distributions declared to noncontrolling interests	—			—				—			—				—				—				—				(5,560		)		(5,560		)
Common shares issued, net	—			—				826,592			8				108,240				—				—				—				108,248
Preferred shares issued, net	6,000			150,000											(5,035		)														144,965
Exercise of stock options	—			—				152,634			2				9,977				—				—				—				9,979
Shares issued under dividend reinvestment plan	—			—				17,911			—				2,373				—				—				—				2,373
Share-based compensation expense, net of forfeitures	—			—				107,522			1				12,370				—				—				—				12,371
Shares withheld for employee taxes	—			—				(29,709	)		—				(4,229		)		—				—				—				(4,229		)
Conversion and redemption of OP units	—			—				20,030			—				2,569				—				—				(2,569		)		—
Contributions from noncontrolling interests	—			—				—			—				—				—				—				35,331				35,331
Purchase of noncontrolling interests															42												(5,578		)		(5,536		)
Adjustment to redeemable noncontrolling interests	—			—				—			—				10,606				—				—				—				10,606
BALANCE AT DECEMBER 31, 2017	405,896			$	159,997			73,090,877			$	733			$	2,855,321			$	(749,367	)		$	22			$	124,808			$	2,391,514
January 1, 2018 adoption of new accounting standard - See Note 2	—			—				—			—				—				(6,028		)		—				—				(6,028		)
Net income, excluding $3,865 attributable to redeemable noncontrolling interests	—			—				—			—				—				241,907				—				3,254				245,161
Other comprehensive loss - change in value of interest rate swaps	—			—				—			—				—				—				(438		)		—				(438		)
Dividends declared to common shareholders	—			—				—			—				—				(297,347		)		—				—				(297,347		)
Dividends declared to preferred shareholders	—			—				—			—				—				(8,042		)		—				—				(8,042		)
Distributions declared to noncontrolling interests	—			—				—			—				—				—				—				(5,175		)		(5,175		)
Common shares issued, net	—			—				987,461			10				126,061				—				—				—				126,071
Exercise of stock options	—			—				105,803			1				4,571				—				—				—				4,572
Shares issued under dividend reinvestment plan	—			—				17,952			—				2,159				—				—				—				2,159
Share-based compensation expense, net of forfeitures	—			—				55,223			1				12,735				—				—				—				12,736
Shares withheld for employee taxes	—			—				(8,432	)		—				(958		)		—				—				—				(958		)
Conversion and redemption of OP units	—			—				749			—				(544		)		—				—				(5,468		)		(6,012		)
Contributions from noncontrolling interests	—			—				—			—				—				—				—				4,020				4,020
Adjustment to redeemable noncontrolling interests	—			—				—			—				5,097				—				$	—			—				5,097
BALANCE AT DECEMBER 31, 2018	405,896			$	159,997			74,249,633			$	745			$	3,004,442			$	(818,877	)		$	(416	)		$	121,439			$	2,467,330

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

F-6

Federal Realty Investment Trust

Consolidated Statements of Cash Flows

	Year Ended December 31,
	2018				2017				2016
	(In thousands)
OPERATING ACTIVITIES
Net income	$	249,026			$	297,870			$	258,883
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	244,245				216,050				193,585
Gain on sale of real estate and change in control of interests, net	(11,915		)		(77,922		)		(32,458		)
Early extinguishment of debt	—				12,273				—
Loss (income) from real estate partnerships	3,398				417				(50		)
Other, net	4,147				(2,674		)		474
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Proceeds from new market tax credit transaction, net of deferred costs	12,353				—				—
Decrease in accounts receivable, net	917				2,059				1,868
(Increase) decrease in prepaid expenses and other assets	(2,070		)		(3,695		)		214
Increase in accounts payable and accrued expenses	2,650				14,242				7,159
Increase (decrease) in security deposits and other liabilities	13,937				208				(2,003		)
Net cash provided by operating activities	516,688				458,828				427,672
INVESTING ACTIVITIES
Acquisition of real estate	(13,503		)		(437,772		)		(142,958		)
Capital expenditures - development and redevelopment	(302,120		)		(441,984		)		(379,720		)
Capital expenditures - other	(66,138		)		(76,952		)		(57,560		)
Proceeds from sale of real estate and real estate partnership interests	177,775				136,055				—
Proceeds from partnership formation	37,998				—				—
Investment in real estate partnerships	(1,037		)		(696		)		(7,220		)
Distribution from real estate partnership in excess of earnings	275				1,729				3,910
Leasing costs	(25,430		)		(16,656		)		(18,299		)
(Issuance) repayment of mortgage and other notes receivable, net	(67		)		(1,646		)		11,626
Net cash used in investing activities	(192,247		)		(837,922		)		(590,221		)
FINANCING ACTIVITIES
Net (repayment) borrowings under revolving credit facility, net of costs	(41,000		)		41,000				(56,916		)
Issuance of senior notes, net of costs	—				572,134				241,795
Redemption and retirement of senior notes	—				(161,930		)		—
Repayment of mortgages, capital leases, and notes payable	(16,620		)		(56,328		)		(49,559		)
Issuance of common shares, net of costs	130,918				118,583				329,103
Issuance of preferred shares, net of costs	—				144,991				—
Dividends paid to common and preferred shareholders	(301,194		)		(282,995		)		(267,694		)
Shares withheld for employee taxes	(958		)		(4,229		)		(4,451		)
Contributions from noncontrolling interests	2,838				13,449				662
Distributions to and redemptions of noncontrolling interests	(15,293		)		(15,230		)		(24,102		)
Net cash (used in) provided by financing activities	(241,309		)		369,445				168,838
Increase (decrease) in cash, cash equivalents, and restricted cash	83,132				(9,649		)		6,289
Cash, cash equivalents, and restricted cash at beginning of year	25,200				34,849				28,560
Cash, cash equivalents, and restricted cash at end of year	$	108,332			$	25,200			$	34,849

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

F-7

Federal Realty Investment Trust

Notes to Consolidated Financial Statements

December 31, 2018, 2017 and 2016

NOTE 1—BUSINESS AND ORGANIZATION

Federal Realty Investment Trust (the “Trust”) is an equity real estate investment trust (“REIT”) specializing in the ownership, management, and redevelopment of retail and mixed-use properties. Our properties are located primarily in densely populated and affluent communities in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As of December 31, 2018, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 104 predominantly retail real estate projects.

We operate in a manner intended to enable us to qualify as a REIT for federal income tax purposes. A REIT that distributes at least 90% of its taxable income to its shareholders each year and meets certain other conditions is not taxed on that portion of its taxable income which is distributed to its shareholders.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Our consolidated financial statements include the accounts of the Trust, its corporate subsidiaries, and all entities in which the Trust has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity (“VIE”). The equity interests of other investors are reflected as noncontrolling interests or redeemable noncontrolling interests. All significant intercompany transactions and balances are eliminated in consolidation. We account for our interests in joint ventures, which we do not control, using the equity method of accounting. Certain 2017 and 2016 amounts have been reclassified to conform to current period presentation.

Use of Estimates

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

Revenue Recognition and Accounts Receivable

Our leases with tenants are classified as operating leases. Substantially all such leases contain fixed escalations which occur at specified times during the term of the lease. Base rents are recognized on a straight-line basis from when the tenant controls the space through the term of the related lease, net of valuation adjustments, based on management’s assessment of credit, collection and other business risk. Percentage rents, which represent additional rents based upon the level of sales achieved by certain tenants, are recognized at the end of the lease year or earlier if we have determined the required sales level is achieved and the percentage rents are collectible. Real estate tax and other cost reimbursements are recognized on an accrual basis over the periods in which the related expenditures are incurred. For a tenant to terminate its lease agreement prior to the end of the agreed term, we may require that they pay a fee to cancel the lease agreement. Lease termination fees for which the tenant has relinquished control of the space are generally recognized on the termination date. When a lease is terminated early but the tenant continues to control the space under a modified lease agreement, the lease termination fee is generally recognized evenly over the remaining term of the modified lease agreement.

We make estimates of the collectability of our accounts receivable related to minimum rents, straight-line rents, expense reimbursements and other revenue. Accounts receivable is carried net of this allowance for doubtful accounts. Our determination as to the collectability of accounts receivable and correspondingly, the adequacy of this allowance, is based primarily upon evaluations of individual receivables, current economic conditions, historical experience and other relevant factors. The allowance for doubtful accounts is increased or decreased through bad debt expense. Accounts receivable are written-off when they are deemed to be uncollectible and we are no longer actively pursuing collection. At December 31, 2018 and 2017, our allowance for doubtful accounts was $12.7 million and $11.8 million, respectively.

In some cases, primarily relating to straight-line rents, the collection of accounts receivable extends beyond one year. Our experience relative to unbilled straight-line rents is that a portion of the amounts otherwise recognizable as revenue is never billed to or collected from tenants due to early lease terminations, lease modifications, bankruptcies and other factors. Accordingly, the extended collection period for straight-line rents along with our evaluation of tenant credit risk may result in

F-8

the nonrecognition of a portion of straight-line rental income until the collection of such income is reasonably assured. If our evaluation of tenant credit risk changes indicating more straight-line revenue is reasonably collectible than previously estimated and realized, the additional straight-line rental income is recognized as revenue. If our evaluation of tenant credit risk changes indicating a portion of realized straight-line rental income is no longer collectible, a reserve and bad debt expense is recorded. At December 31, 2018 and 2017, accounts receivable include approximately $97.4 million and $93.1 million, respectively, related to straight-line rents.

We completed construction on 221 condominium units at our Assembly Row and Pike & Rose properties. Beginning on January 1, 2018, with the adoption of ASU 2014-09, "Revenue from Contracts with Customers," (see "Recent Accounting Pronouncements" for discussion of change in timing of revenue recognition), gains or losses on the sale of these condominium units are recognized as the condominium units are legally sold. In 2017, we accounted for contracted condominium sales under the percentage-of completion method, based on an evaluation of the criteria specified in ASC Topic 360-20, “Property, Plant and Equipment – Real Estate Sales,” including: the legal commitment of the purchaser in the real estate contract, whether the construction of the project was beyond a preliminary phase, whether sufficient units had been contracted to ensure the project would not revert to a rental project, the ability to reasonably estimate the aggregate project sale proceeds and aggregate project costs, and the determination that the buyer had made an adequate initial and continuing cash investment under the contract. When the percentage-of-completion criteria had not been met, no profit was recognized. The application of these criteria can be complex and required us to make assumptions.

Real Estate

Land, buildings and improvements are recorded at cost. Depreciation is computed using the straight-line method. Estimated useful lives range generally from 35 years to a maximum of 50 years on buildings and major improvements. Minor improvements, furniture and equipment are capitalized and depreciated over useful lives ranging from 2 to 20 years. Maintenance and repairs that do not improve or extend the useful lives of the related assets are charged to operations as incurred. Tenant improvements are capitalized and depreciated over the life of the related lease or their estimated useful life, whichever is shorter. If a tenant vacates its space prior to contractual termination of its lease, the undepreciated balance of any tenant improvements are written off if they are replaced or have no future value. In 2018, 2017 and 2016, real estate depreciation expense was $216.0 million, $193.3 million and $173.2 million, respectively, including amounts from real estate sold and assets under capital lease obligations.

Effective January 1, 2018, (upon the adoption of ASU 2014-09, "Revenue from Contracts with Customers," as amended and interpreted) sales of real estate are recognized generally upon the transfer of control, which usually occurs when the real estate is legally sold. Prior to January 1, 2018, sales of real estate were recognized only when sufficient down payments had been obtained, possession and other attributes of ownership had been transferred to the buyer and we had no significant continuing involvement. The application of these criteria can be complex and required us to make assumptions. We believe the relevant criteria were met for all real estate sold during the periods presented.

Our methodology of allocating the cost of acquisitions to assets acquired and liabilities assumed is based on estimated fair values, replacement cost and/or appraised values. When we acquire operating real estate properties, the purchase price is allocated to land, building, improvements, leasing costs, intangibles such as in-place leases, assumed debt, if any, and to current assets and liabilities acquired, if any. The value allocated to in-place leases is amortized over the related lease term and reflected as rental income in the consolidated statements of comprehensive income. 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. If the value of below market lease intangibles includes renewal option periods, we include such renewal periods in the amortization period utilized. If a tenant vacates its space prior to contractual termination of its lease, the unamortized balance of any in-place lease value is written off to rental income.

Transaction costs related to asset acquisitions, such as broker fees, transfer taxes, legal, accounting, valuation, and other professional and consulting fees, are capitalized as part of the acquisition cost. The acquisition of an operating shopping center typically qualifies as an asset acquisition.

When applicable, as lessee, we classify our leases of land and building as operating or capital leases. We are required to use judgment and make estimates in determining the lease term, the estimated economic life of the property and the interest rate to be used in determining whether or not the lease meets the qualification of a capital lease and is recorded as an asset.

We capitalize certain costs related to the development and redevelopment of real estate including pre-construction costs, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved. Additionally, we capitalize interest costs related to development and redevelopment activities. Capitalization of these costs begin when the activities and related expenditures commence and cease when the project is substantially complete and ready for its intended

F-9

use at which time the project is placed in service and depreciation commences. Additionally, we make estimates as to the probability of certain development and redevelopment projects being completed. If we determine the development or redevelopment is no longer probable of completion, we expense all capitalized costs which are not recoverable.

We review for impairment on a property by property basis. Impairment is recognized on properties held for use when the expected undiscounted cash flows for a property are less than its carrying amount, at which time, the property is written-down to fair value. Properties held for sale are recorded at the lower of the carrying amount or the expected sales price less costs to sell.

Cash and Cash Equivalents

We define cash and cash equivalents as cash on hand, demand deposits with financial institutions and short term liquid investments with an initial maturity, when purchased, under three months. Cash balances in individual banks may exceed the federally insured limit by the Federal Deposit Insurance Corporation (the “FDIC”). At December 31, 2018, we had $70.6 million in excess of the FDIC insured limit.

Prepaid Expenses and Other Assets

Prepaid expenses and other assets consist primarily of lease costs, prepaid property taxes and acquired above market leases. Capitalized lease costs are direct costs incurred which were essential to originate a lease and would not have been incurred had the leasing transaction not taken place and include third party commissions and salaries and related costs of personnel directly related to time spent obtaining a lease. Capitalized lease costs are amortized over the life of the related lease. If a tenant vacates its space prior to the contractual termination of its lease, the unamortized balance of any previously capitalized lease costs are written off.

Debt Issuance Costs

Costs related to the issuance of debt instruments are deferred and are amortized as interest expense over the estimated life of the related issue using the straight-line method which approximates the effective interest method. If a debt instrument is paid off prior to its original maturity date, the unamortized balance of debt issuance costs are written off to interest expense or, if significant, included in “early extinguishment of debt.” Debt issuance costs related to our revolving credit facility are classified as an asset and are included in "prepaid expenses and other assets" in our consolidated balance sheets. All other debt issuance costs are presented as a direct deduction from the carrying amount of the debt liability.

Derivative Instruments

We may use derivative instruments to manage exposure to variable interest rate risk. We generally enter into interest rate swaps to manage our exposure to variable interest rate risk and treasury locks to manage the risk of interest rates rising prior to the issuance of debt. We enter into derivative instruments that qualify as cash flow hedges and do not enter into derivative instruments for speculative purposes.

Interest rate swaps associated with cash flow hedges are recorded at fair value on a recurring basis. Effectiveness of cash flow hedges is assessed both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recorded in other comprehensive income (loss) which is included in accumulated other comprehensive income (loss) on the balance sheet and statement of shareholders' equity. Cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. In addition, the default risk of the counterparty is evaluated by monitoring the credit worthiness of the counterparty which includes reviewing debt ratings and financial performance. If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recognized in earnings in the period affected.

Prior to November 1, 2018, we were party to two interest rate swap agreements that effectively fixed the rate on the term loan at 2.62%. Both swaps were designated and qualified as cash flow hedges and were recorded at fair value. As of December 31, 2018, our Assembly Row hotel joint venture is a party to two interest rate swap agreements that effectively fix the interest rate on the joint venture's mortgage debt at 5.206%. Both swaps were designated and qualify as cash flow hedges. Hedge ineffectiveness has not impacted earnings in 2018, 2017 and 2016.

Mortgage Notes Receivable

We have made certain mortgage loans that, because of their nature, qualify as loan receivables. At the time the loans were made, we did not intend for the arrangement to be anything other than a financing and did not contemplate a real estate investment. We evaluate each investment to determine whether the loan arrangement qualifies as a loan, joint venture or real

F-10

estate investment and the appropriate accounting thereon. Such determination affects our balance sheet classification of these investments and the recognition of interest income derived therefrom. We receive additional interest, however, we never receive in excess of 50% of the residual profit in the project, and because the borrower has either a substantial investment in the project or has guaranteed all or a portion of our loan (or a combination thereof), the loans qualify for loan accounting. The amounts under these arrangements are presented as mortgage notes receivable at December 31, 2018 and 2017.

Mortgage notes receivable are recorded at cost, net of any valuation adjustments. Interest income is accrued as earned. Mortgage notes receivable are considered past due based on the contractual terms of the note agreement. On a quarterly basis, we evaluate the collectability of each mortgage note receivable based on various factors which may include payment history, expected fair value of the collateral securing the loan, internal and external credit information and/or economic trends. A loan is considered impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due under the existing contractual terms. When a loan is considered impaired, the amount of the loss accrual is calculated by comparing the carrying amount of the mortgage note receivable to the present value of expected future cash flows. Since our loans are collateralized by a first mortgage, the loans have risk characteristics similar to the risks in owning commercial real estate.

At December 31, 2018 and 2017, we had two mortgage notes receivable, with aggregate carrying amounts of $30.4 million, and weighted average interest rates of 10.3% and 10.0%, respectively, which were secured by first mortgages on retail buildings.

Share Based Compensation

We grant share based compensation awards to employees and trustees typically in the form of restricted common shares, common shares, and options. We measure share based compensation expense based on the grant date fair value of the award and recognize the expense ratably over the requisite service period, which is typically the vesting period. See Note 12 for further discussion regarding our share based compensation plans and policies.

Variable Interest Entities

Certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or in which equity investors do not have the characteristics of a controlling financial interest qualify as VIEs. VIEs are required to be consolidated by their primary beneficiary. The primary beneficiary of a VIE 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.

Our equity method investments in the Pike & Rose hotel joint venture, the Assembly Row hotel joint venture, and the La Alameda shopping center are also considered variable interests in a VIE. As we do not control the activities that most significantly impact the economic performance of the joint ventures, we are not the primary beneficiary and do not consolidate. As of December 31, 2018 and 2017, our investment in these joint ventures and maximum exposure to loss was $26.9 million and $23.9 million, respectively.

In addition, we have 18 entities that meet the criteria of a VIE in which we hold a variable interest. For each of these entities, we control the significant operating decisions and consequently have the power to direct the activities that most significantly impact the economic performance of the entities. As we also have the obligation to absorb the majority of the losses and/or the right to receive a majority of the benefits for each of these entities, all are consolidated in our financial statements. Net real estate assets and mortgage payables related to variable interest entities included in our consolidated balance sheets were approximately $1.5 billion and $444.4 million, respectively, as of December 31, 2018, and $1.4 billion and $460.4 million, respectively, as of December 31, 2017.

We have also evaluated our mortgage notes receivable investments and determined that the entities obligated under the mortgage notes are not VIEs. Our equity method investments and mortgage notes receivable balances are presented separately in our consolidated balance sheets.

Redeemable Noncontrolling Interests

We have certain noncontrolling interests that are redeemable for cash upon the occurrence of an event that is not solely in our control and therefore are classified outside of permanent equity. We adjust the carrying amounts of these noncontrolling interests that are currently redeemable to redemption value at the balance sheet date. Adjustments to the carrying amount to reflect changes in redemption value are recorded as adjustments to additional paid-in capital in shareholders' equity. These amounts are classified within the mezzanine section of the consolidated balance sheets.

F-11

The following table provides a rollforward of the redeemable noncontrolling interests:

	Year Ended
	December 31,
	2018				2017
	(In thousands)
Beginning balance	$	141,157			$	143,694
Net income	3,865				3,874
Contributions	354				11,109
Distributions & Redemptions	(4,071		)		(6,914		)
Change in redemption value	(5,097		)		(10,606		)
Ending balance	$	136,208			$	141,157

On January 12, 2017, we exercised our purchase option on non-controlling interests in San Antonio Center for $2.6 million of cash and 44,195 of downREIT operating partnership units.

Income Taxes

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

We have elected to treat certain of our subsidiaries as taxable REIT subsidiaries, which we refer to as a TRS. In general, a TRS may engage in any real estate business and certain non-real estate businesses, subject to certain limitations under the Internal Revenue Code of 1986, as amended (the “Code”). A TRS is subject to federal and state income taxes. Our TRS activities have not been material.

With few exceptions, we are no longer subject to U.S. federal, state, and local tax examinations by tax authorities for years before 2015. As of December 31, 2018 and 2017, we had no material unrecognized tax benefits. While we currently have no material unrecognized tax benefits, as a policy, we recognize penalties and interest accrued related to unrecognized tax benefits as income tax expense.

Segment Information

Our primary business is the ownership, management, and redevelopment of retail and mixed-use properties. We review operating and financial information for each property on an individual basis and therefore, each property represents an individual operating segment. We evaluate financial performance using property operating income, which consists of rental income, other property income and mortgage interest income, less rental expenses and real estate taxes. No individual commercial or residential property constitutes more than 10% of our revenues or property operating income and we have no operations outside of the United States of America. Therefore, we have aggregated our properties into one reportable segment as the properties share similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent business strategies, are typically located in major metropolitan areas, and have similar tenant mixes.

F-12

Recent Accounting Pronouncements

Standard		Description		Date of Adoption		Effect on the financial statements or significant matters
Recently adopted:
Revenue from Contracts with Customers (Topic 606) and related updates: ASU 2014-09, May 2014, Revenue from Contracts with Customers ASU 2015-14, August 2015, Revenue from Contracts with Customers: Deferral of the Effective Date ASU 2016-08, March 2016, Revenue from Contracts with Customers: Principal versus Agent Considerations ASU 2016-10, April 2016, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing ASU 2016-12, May 2016, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients ASU 2016-20, December 2016, Revenue from Contracts with Customers: Technical Corrections and Improvements		In May 2014, the the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." ASU 2014-09 as amended and interpreted by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20, 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 2016-08 clarifies how to identify the unit of accounting for the principal versus agent evaluation, how to apply the control principle to certain types of arrangements, such as service transactions, and reframed the indicators in the guidance to focus on evidence that an entity is acting as a principal rather than as an agent. ASU 2016-10 clarifies the existing guidance on identifying performance obligations and licensing implementation. ASU 2016-12 adds practical expedients related to the transition for contract modifications and further defines a completed contract, clarifies the objective of the collectability assessment and how revenue is recognized if collectability is not probable, and when non-cash considerations should be measured. ASU 2016-20 corrects or improves guidance in thirteen narrowly focused aspects of the guidance. The standard allows for either "full retrospective" adoption, meaning the standard is applied to all of the periods presented, or "modified retrospective" adoption, meaning the cumulative impact of applying the standard is recognized in accumulated dividends in excess of net income on the date of application.		January 2018		We implemented the new revenue recognition guidance retrospectively with the cumulative effect recognized in accumulated dividends in excess of net income at the date of initial application. The primary impact relates to condominium sales. Most of our revenue is accounted for under the leasing standard, and therefore is not subject to this standard. In 2017, gains on contracted condominium sales were recognized using the percentage-of-completion method, with the gain recognized once certain criteria were met in advance of legal closing. Under the new guidance, condominium sale gains are recognized as the condominium units are legally sold, which is typically upon closing. $5.4 million of condominium gains (net of $1.4 million of income taxes) recorded under the percentage-of-completion method in 2017 were reversed through opening accumulated dividends in excess of net income. If we had used the percentage-of-completion method during 2018, we would have recorded $0.7 million of condominium gains (net of $0.2 million of income taxes) in 2018. With the exception of condominium sales, the adoption of the standard did not have a significant impact on our consolidated financial statements, with an additional cumulative effect of $0.6 million reflected in opening accumulated dividends in excess of net income.

F-13

Standard		Description		Date of Adoption		Effect on the financial statements or significant matters
ASU 2016-15, August 2016, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments		This ASU provides classification guidance for eight specific topics including debt extinguishment costs, contingent consideration payments made after a business combination, and distributions received from equity method investees.		January 2018		This standard did not have an impact on our consolidated financial statements.
ASU 2016-18, November 2016, Statement of Cash Flows (Topic 203) - Restricted Cash		This ASU requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or cash equivalents. Amounts generally described as restricted cash and equivalents should be included with cash and cash equivalents when reconciling the beginning and end of period total amounts on the statement of cash flows.		January 2018		Prior to the adoption of this standard, "net cash provided by operating activities" was $423.7 million and $369.0 million for the years ended December 31, 2017 and 2016, respectively, and "net cash used in investing activities" was $590.2 million and $353.8 million for the years ended December 31, 2017 and 2016, respectively. After the adoption, "net cash provided by operating activities" was $458.8 million and $427.7 million for the years ended December 31, 2017 and 2016, respectively, and "net cash used in investing activities" was $837.9 million and $590.2, for the years ended December 31, 2017 and 2016, respectively. The reclassification is reflected in "increase in cash, cash equivalents, and restricted cash" in the Consolidated Statements of Cash Flows. See additional disclosures in "Consolidated Statement of Cash Flows - Supplemental Disclosures."
ASU 2017-05, February 2017, Other Income - Gains and Losses from the Recognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets		This ASU clarifies that ASC 610-20 applies to all nonfinancial assets (including real estate) for which the counterparty is not a customer and also clarifies that all businesses are derecognized using the deconsolidation guidance. Additionally, it defines an insubstance nonfinancial asset as a financial asset that is promised to a counterparty in a contract in which substantially all of the fair value of the assets promised in the contract is concentrated in nonfinancial assets, which excludes cash or cash equivalents and liabilities. Under the current guidance, a partial sale is recognized and carryover basis is used for the retained interest, however, the new guidance eliminates the use of carryover basis and generally requires a full gain to be recognized for prospective disposals of nonfinancial assets.		January 2018		The new guidance is expected to impact the gain recognized when a real estate asset is sold to a non-customer and a noncontrolling interest is retained. The adoption of this standard did not have a significant impact on our consolidated financial statements.
ASU 2017-09, May 2017, Compensation-Stock Compensation (Topic 718): Scope of Modification Accoutning		The ASU clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, an entity will not apply modification accounting if the awards' fair value, vesting conditions, and the classification of the award as equity or a liability are the same immediately before and after the change. The new guidance is applied prospectively to awards granted or modified after the adoption date.		January 2018		The adoption of this standard did not have a significant impact on our consolidated financial statements, as there have been no modifications to awards for the year ending December 31, 2018.

F-14

Standard		Description		Date of Adoption		Effect on the financial statements or significant matters
Adopted subsequent to December 31, 2018:
Leases (Topic 842) and related updates: ASU 2016-02, February 2016, Leases (Topic 842) ASU 2018-10, July 2018, Codification improvements to Topic 842, Leases ASU 2018-11, July 2018, Leases (Topic 842) ASU 2018-20, December 2018, Leases (Topic 842) Narrow Scope Improvements for Lessors		This ASU significantly changes the accounting for leases by requiring lessees to recognize assets and liabilities for leases greater than 12 months on their balance sheet. The lessor model stays substantially the same; however, there were modifications to conform lessor accounting with the lessee model, eliminate real estate specific guidance, further define certain lease and non-lease components, and change the definition of initial direct costs of leases requiring significantly more leasing related costs to be expensed upfront. ASU 2018-10 provides narrow amendments that clarify how to apply certain aspects of the guidance in ASU 2016-02. ASU 2018-11 provides the option of an additional transition method, by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. It also provides lessors an option to not separate lease and non-lease components when certain criteria are met. ASU 2018-20 provides narrow scope amendments including the requirement to exclude variable payments made by the lessee to a third party on behalf of the lessor from revenue (e.g., lessee payments of real estate taxes made directly to the taxing authority on behalf of the lessor are excluded from revenue).		January 2019		We have elected to apply the transition provisions of ASC Topic 842 at the beginning of the period of adoption (i.e., January 1, 2019), and therefore, will not retrospectively adjust prior periods presented. We have also elected to apply certain adoption related practical expedients for all leases that commenced prior to the effective date. These practical expedients include not reassessing whether any expired or existing contracts are or contain leases; not reassessing the lease classification for any expired or existing leases; and not reassessing initial direct costs for any existing leases. The primary impact of adoption on January 1, 2019 will be to record a lease obligation liability and right of use asset for operating leases where we are the lessee. The most significant of these operating leases are ground leases at 14 properties. The lease obligation liability and right of use asset (prior to adjustments for unamortized direct costs and purchase accounting assets/liabilities) to be recorded on January 1, 2019 approximates $75 million. Given our application of the practical expedients noted above, we will apply the lease classification requirements under ASC Topic 842 for all new leases or existing leases that are modified after the adoption date and we will no longer be able to capitalize certain costs related to these leases. For the year ended December 31, 2018, we capitalized approximately $7.5 million of internal leasing and external legal leasing costs. For new leases and existing leases that are modified after the effective date, only a portion of these types of costs can be capitalized and as a result, the costs that no longer qualify for capitalization will be included in “general and administrative expense” in the period incurred. Additionally, the presentation of certain rental income and rental expense on the consolidated statements of comprehensive income will be impacted. For the year ended December 31, 2018, rental income and rental expense include $6.5 million relating to real estate taxes paid by tenants on our behalf directly to taxing authorities. Effective January 1, 2019, payments of this nature will no longer be recorded gross as revenue and expense on the consolidated statements of comprehensive income.

F-15

Standard		Description		Date of Adoption		Effect on the financial statements or significant matters
Not Yet Adopted:
Financial Instruments - Credit Losses (Topic 326) and related updates: ASU 2016-13, June 2016, Financial Instruments - Credit Losses (Topic 326) ASU 2018-19, November 2018, Codification improvements to Topic 326, Financial Instruments - Credit Losses		This ASU changes the impairment model for most financial assets and certain other instruments, requiring the use of an "expected credit loss" model and adding more disclosure requirements. ASU 2018-19 clarifies that impairment of of receivables arising from operating leases should accounted for in accordance with Topic 842, Leases.		January 2020		This standard is not expected to have a significant impact to our consolidated financial statements.
ASU 2018-15, August 2018, Intangibles - Goodwill and Other Internal Use Software: Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract		This ASU requires a customer in a cloud computing arrangement (i.e. hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement. Entities will expense costs during the preliminary project and post-implementation stages as they are incurred. The guidance can be applied prospectively to all implementation costs incurred after th date of adoption or retrospectively in accordance with ASC 250-10-45-5 through ASC 250-10-45-10.		January 2020		This standard is not expected to have a significant impact to our consolidated financial statements.

Consolidated Statements of Cash Flows—Supplemental Disclosures

The following table provides supplemental disclosures related to the Consolidated Statements of Cash Flows:

	Year Ended December 31,
	2018				2017				2016
	(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	129,001			$	125,684			$	113,016
Interest capitalized	(18,847		)		(25,559		)		(18,022		)
Interest expense	$	110,154			$	100,125			$	94,994
Cash paid for interest, net of amounts capitalized	$	107,494			$	105,201			$	90,185
Cash paid for income taxes	$	675			$	352			$	296
NON-CASH INVESTING AND FINANCING TRANSACTIONS (1):
Mortgage loans refinanced	$	—			$	166,823			$	—
Mortgage loans assumed with acquisition	$	—			$	79,401			$	34,385
DownREIT operating partnership units issued with acquisition	$	—			$	5,918			$	—
DownREIT operating partnership units redeemed for common shares	$	101			$	2,569			$	18,679
Shares issued under dividend reinvestment plan	$	1,884			$	2,017			$	2,017
Contribution from noncontrolling interest	$	1,435			$	—			$	—

(1) See Note 3 for additional disclosures relating to our investment in the Assembly Row hotel joint venture.

F-16

Capitalized lease costs are direct costs incurred which were essential to originate a lease and would not have been incurred had the leasing transaction not taken place. These costs include third party commissions and salaries and personnel costs related to obtaining a lease. Capitalized lease costs are amortized over the initial term of the related lease which generally ranges from three to ten years. We view these lease costs as part of the up-front initial investment we made in order to generate a long-term cash inflow and therefore, we classify cash outflows related to leasing costs as an investing activity in our consolidated statements of cash flows. See the "Recent Accounting Pronouncements Adopted Subsequent to December 31, 2018," section in this note for further discussion regarding the change in accounting for lease costs.

	December 31,
	2018				2017
	(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents	$	64,087			$	15,188
Restricted cash (1)	44,245				10,012
Total cash, cash equivalents, and restricted cash	$	108,332			$	25,200

(1)	Restricted cash balances are included in "prepaid expenses and other assets" on our consolidated balance sheets.

NOTE 3—REAL ESTATE

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

		Cost				Accumulated Depreciation and Amortization				Encumbrances
		(In thousands)
December 31, 2018
Retail and mixed-use properties		$	7,680,653			$	(2,000,274	)		$	454,053
Retail properties under capital leases		127,719				(49,216		)		71,519
Residential		11,100				(9,653		)		20,326
		$	7,819,472			$	(2,059,143	)		$	545,898
December 31, 2017
Retail and mixed-use properties		$	7,500,929			$	(1,821,046	)		$	470,720
Retail properties under capital leases		123,346				(46,140		)		71,556
Residential		10,786				(9,358		)		20,785
		$	7,635,061			$	(1,876,544	)		$	563,061

The residential property investment is our investment in Rollingwood Apartments. All of other residential units are included in retail and mixed-use properties.

2018 Property Acquisitions and Dispositions

On June 15, 2018, we formed a new joint venture to develop Jordan Downs Plaza which, when completed, will be an approximately 113,000 square foot grocery anchored shopping center located in Los Angeles County, California. We initially invested $34.4 million as a result of a pre-funding requirement for equity to be advanced prior to the start of construction. We own approximately 91% of the venture, and control the 9.4 acre land parcel on which the shopping center will be constructed under a long-term ground lease that expires June 15, 2093 (including two 10-year option periods which may be exercised at our option). The Jordan Downs Plaza development is expected to generate income tax credits under the New Market Tax Credit Program ("NMTC") which was provided for in the Community Renewal Tax Relief Act of 2000 ("the Act") and is intended to induce investment in underserved areas of the United States. The Act permits taxpayers to claim credits against their Federal income taxes for qualified investments. A third party bank contributed $13.9 million to the development, and is entitled to the related tax credit benefits, but they do not have an interest in the underlying economics of the property. The transaction also includes a put/call provision whereby we may be obligated or entitled to purchase the third party bank’s interest. We believe the put will be exercised at its $1,000 strike price. Based on our assessment of control, we concluded that the project and certain other transaction related entities should be consolidated. The $13.9 million in proceeds received in exchange for the transfer of the tax credits has been deferred and will be recognized when the tax benefits are delivered to the third party bank without risk of recapture. Direct and incremental costs of $1.6 million incurred in structuring the NMTC transaction have also been deferred. The Trust anticipates recognizing the net cash received as revenue upon completion of the seven-year NMTC

F-17

compliance period. Cash in escrow at December 31, 2018 of $32.2 million reflects cash that will ultimately be used for the development of the shopping center, and is included in "prepaid expenses and other assets" on our consolidated balance sheet. The cash is held in escrow pursuant to the new market tax credit transaction documents and will be released as qualified development expenditures are incurred.

In August 2018, we contributed hotel related assets valued at $44.0 million to our Assembly Row hotel joint venture, and received a cash distribution of $38.0 million. At December 31, 2018, our investment in the venture was $5.6 million. The joint venture is considered a variable interest entity controlled by our partner, and as a result, we are using the equity method to account for our investment.

On August 16, 2018, we sold the residential building at our Chelsea Commons property in Chelsea, Massachusetts for a sales price of $15.0 million, resulting in a gain of 3.1 million.

On November 9, 2018, we sold our Atlantic Plaza property in North Reading, Massachusetts for a sales price of $27.2 million, resulting in a gain of $1.6 million.

On November 29, 2018, we acquired a 40,000 square foot building adjacent to our Bell Gardens property for $9.6 million.

During the year ended December 31, 2018, we closed on the sale of 176 condominium units at our Assembly Row and Pike & Rose properties (combined) and received proceeds net of closing costs of $133.5 million, For the year ended December 31, 2018, we recognized a gain of $7.2 million, net of $1.6 million of income taxes. The cost basis for remaining condominium units that are ready for their intended use as of December 31, 2018 is $16.6 million, and is included in "assets held for sale" on our consolidated balance sheets.

2017 Property Acquisitions and Dispositions

On February 1, 2017, we acquired a leasehold interest in Hastings Ranch Plaza, a 274,000 square foot shopping center in Pasadena, California for $29.5 million. The land is subject to a long-term ground lease that expires on April 30, 2054. Approximately $21.5 million of assets acquired were allocated to lease intangibles and included within other assets. Approximately $15.2 million of net assets acquired were allocated to lease liabilities and included in other liabilities.

On March 31, 2017, we acquired the fee interest in Riverpoint Center, a 211,000 square foot shopping center in the Lincoln Park neighborhood of Chicago, Illinois for $107.0 million. Approximately $1.0 million and $12.3 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

We leased three parcels of land at our Assembly Row property to two ground lessees. Both lessees exercised purchase options under the related ground leases. The sale transaction related to the purchase option on one of our ground leases was completed on April 4, 2017 for a sales price of $36.0 million. On June 28, 2017, the sale transactions related to the purchase options on our other two ground lease parcels were completed for a total sales price of $17.3 million. The net gain recognized in connection with these transactions was approximately $15.4 million.

On May 19, 2017, we acquired the fee interest in a 71,000 square foot, mixed-use property located in Berkeley, California based on a gross value of $23.9 million. The acquisition was completed through a newly formed entity for which we own a 90% controlling interest. Approximately $0.8 million and $0.3 million of net assets acquired were allocated to other assets for "above market leases" and other liabilities for "below market leases," respectively, and approximately $2.4 million was allocated to noncontrolling interests.

On August 2, 2017, we acquired an approximately 90% interest in a joint venture that owns six shopping centers in Los Angeles County, California based on a gross value of $357 million, including the assumption of $79.4 million of mortgage debt. Approximately $7.8 million of assets acquired were allocated to lease intangibles and included within other assets, approximately $36.2 million of net assets acquired were allocated to lease liabilities and included in other liabilities, and approximately $30.6 million was allocated to noncontrolling interests. That joint venture also acquired a 24.5% interest in La Alameda, a shopping center in Walnut Park, California for $19.8 million. The property has $41.0 million of mortgage debt, of which the joint venture's share is approximately $10 million. Additional information on the properties is listed below:

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Property		City/State		GLA
				(in square feet)
Azalea		South Gate, CA		222,000
Bell Gardens		Bell Gardens, CA		330,000
La Alameda		Walnut Park, CA		245,000
Olivo at Mission Hills (1)		Mission Hills, CA		155,000
Plaza Del Sol		South El Monte, CA		48,000
Plaza Pacoima		Pacoima, CA		204,000
Sylmar Towne Center		Sylmar, CA		148,000
				1,352,000
(1) Property is currently being redeveloped. GLA reflects approximate square footage once the property is open and operating.

The following unaudited pro forma financial data includes the total revenues, operating expenses (including approximately $11.5 million and $11.4 million of depreciation and amortization expense for the years ended December 31, 2017 and 2016, respectively), and interest expense/financing costs related to the properties acquired on August 2, 2017 as if they had occurred on January 1, 2016. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of income would have been, nor does it represent the results of income for future periods.

		Year Ended December 31,
		2017				2016
		(in millions) (unaudited)
Total revenue		$	872.9			$	826.6
Net income available for common shareholders		284.6				244.3

On August 25, 2017, we sold our property located at 150 Post Street in San Francisco, California for a sales price of $69.3 million, resulting in a gain of $45.2 million.

On September 25, 2017, we sold our North Lake Commons property in Lake Zurich, Illinois for a sales price of $15.6 million, resulting in a gain of $4.9 million.

On December 28, 2017, we sold a parcel of land at our Bethesda Row property in Bethesda, Maryland for a sales price of $8.5 million, resulting in a gain of $6.5 million.

For the year ended December 31, 2017, we recognized a $5.4 million gain, net of $1.4 million of income taxes, related to the sale of condominiums at our Assembly Row property based on the percentage-of-completion method. In connection with recording the gain, we recognized a receivable of $67.1 million as of December 31, 2017. See discussion in Note 2 to the Consolidated Financial Statements with respect to the change in accounting for condominium gains.

NOTE 4—ACQUIRED IN-PLACE LEASES

Acquired lease assets are included in prepaid expenses and other assets and comprise above market leases where we are the lessor and below market leases where we are the lessee. Acquired lease liabilities are included in other liabilities and deferred credits and comprise below market leases where we are the lessor and above market leases where we are the lessee. The following is a summary of our acquired lease assets and liabilities:

	December 31, 2018								December 31, 2017
	Cost				Accumulated Amortization				Cost				Accumulated Amortization
	(in thousands)
Above market leases, lessor	$	49,128			$	(33,843	)		$	52,393			$	(31,406	)
Below market leases, lessee	34,604				(2,533		)		34,604				(1,705		)
Total	$	83,732			$	(36,376	)		$	86,997			$	(33,111	)
Below market leases, lessor	$	(189,379	)		$	65,408			$	(193,085	)		$	56,716
Above market leases, lessee	(9,084		)		1,065				(9,084		)		560
Total	$	(198,463	)		$	66,473			$	(202,169	)		$	57,276

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The value allocated to in-place leases where we are the lessor is amortized over the related lease term and reflected as additional rental income for below market leases or a reduction of rental income for above market leases in the consolidated statements of comprehensive income. The related amortization of in-place leases where we are the lessee is reflected as additional rental expense for below market leases or a reduction of rental expenses for above market leases in the consolidated statements of comprehensive income. The following is a summary of acquired lease amortization:

	Year Ended December 31,
	2018				2017				2016
	(in thousands)
Amortization of above market leases, lessor	$	(5,608	)		$	(6,005	)		$	(6,726	)
Amortization of below market leases, lessor	12,445				10,726				8,551
Net increase in rental income	$	6,837			$	4,721			$	1,825
Amortization of below market leases, lessee	$	828			$	781			$	255
Amortization of above market leases, lessee	(505		)		(290		)		(135		)
Net increase in rental expense	$	323			$	491			$	120

The following is a summary of the remaining weighted average amortization period for our acquired lease assets and acquired lease liabilities:

		December 31, 2018
Above market leases, lessor		4.0 years
Below market leases, lessee		40.6 years
Below market leases, lessor		19.0 years
Above market leases, lessee		15.9 years

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

		Acquired Lease Assets				Acquired Lease Liabilities
		(In thousands)
Year ending December 31,
2019		$	3,720			$	9,284
2020		3,086				8,290
2021		2,730				7,677
2022		2,320				7,296
2023		2,191				7,030
Thereafter		33,309				92,413
		$	47,356			$	131,990

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NOTE 5—DEBT

The following is a summary of our total debt outstanding as of December 31, 2018 and 2017:

			Principal Balance as of December 31,								Stated Interest Rate as of			Stated Maturity Date as of
Description of Debt			2018				2017				December 31, 2018			December 31, 2018
Mortgages payable			(Dollars in thousands)
The Grove at Shrewsbury (West)			$	—			$	10,545			6.38	%		March 1, 2018
Rollingwood Apartments			20,331				20,820				5.54	%		May 1, 2019
The Shops at Sunset Place			64,453				66,603				5.62	%		September 1, 2020
29th Place			4,117				4,341				5.91	%		January 31, 2021
Sylmar Towne Center			17,006				17,362				5.39	%		June 6, 2021
Plaza Del Sol			8,409				8,579				5.23	%		December 1, 2021
THE AVENUE at White Marsh			52,705				52,705				3.35	%		January 1, 2022
Montrose Crossing			69,310				71,054				4.20	%		January 10, 2022
Azalea			40,000				40,000				3.73	%		November 1, 2025
Bell Gardens			12,936				13,184				4.06	%		August 1, 2026
Plaza El Segundo			125,000				125,000				3.83	%		June 5, 2027
The Grove at Shrewsbury (East)			43,600				43,600				3.77	%		September 1, 2027
Brook 35			11,500				11,500				4.65	%		July 1, 2029
Chelsea			5,941				6,268				5.36	%		January 15, 2031
Subtotal			475,308				491,561
Net unamortized premium and debt issuance costs			(929		)		(56		)
Total mortgages payable			474,379				491,505
Notes payable
Term loan			275,000				275,000				LIBOR + 0.90%			November 21, 2019
Revolving credit facility			—				41,000				LIBOR + 0.825%			April 20, 2020
Various			4,392				4,819				11.31	%		Various through 2028
Subtotal			279,392				320,819
Net unamortized debt issuance costs			(365		)		(554		)
Total notes payable			279,027				320,265
Senior notes and debentures
2.55% notes			250,000				250,000				2.55	%		January 15, 2021
3.00% notes			250,000				250,000				3.00	%		August 1, 2022
2.75% notes			275,000				275,000				2.75	%		June 1, 2023
3.95% notes			300,000				300,000				3.95	%		January 15, 2024
7.48% debentures			29,200				29,200				7.48	%		August 15, 2026
3.25% notes			475,000				475,000				3.25	%		July 15, 2027
6.82% medium term notes			40,000				40,000				6.82	%		August 1, 2027
4.50% notes			550,000				550,000				4.50	%		December 1, 2044
3.625% notes			250,000				250,000				3.625	%		August 1, 2046
Subtotal			2,419,200				2,419,200
Net unamortized discount and debt issuance costs			(14,921		)		(17,760		)
Total senior notes and debentures			2,404,279				2,401,440
Capital lease obligations
Various			71,519				71,556				Various			Various through 2106
Total debt and capital lease obligations			$	3,229,204			$	3,284,766

On March 1, 2018, we repaid the $10.5 million mortgage loan on The Grove at Shrewsbury (West) at par.

On August 10, 2018, we exercised our option to extend the maturity date of our $275.0 million unsecured term loan by one year to November 21, 2019.

During 2018, 2017 and 2016, the maximum amount of borrowings outstanding under our $800.0 million revolving credit facility was $177.0 million, $344.0 million and $251.5 million, respectively. The weighted average amount of borrowings outstanding was $83.1 million, $147.5 million and $77.3 million, respectively, and the weighted average interest rate, before amortization of debt fees, was 2.7%, 1.9% and 1.3%, respectively. The revolving credit facility requires an annual facility fee of

F-21

$1.0 million. At December 31, 2018, our revolving credit facility had no balance outstanding, and had $41.0 million outstanding at December 31, 2017.

Our revolving credit facility, term loan, and certain notes require us to comply with various financial covenants, including the maintenance of minimum shareholders’ equity and debt coverage ratios and a maximum ratio of debt to net worth. As of December 31, 2018, we were in compliance with all default related debt covenants.

Scheduled principal payments on mortgages payable, notes payable, senior notes and debentures as of December 31, 2018 are as follows:

	Mortgages Payable					Notes Payable					Senior Notes and Debentures				Total Principal
	(In thousands)
Year ending December 31,
2019	$	25,795		(1)		$	275,551				$	—			$	301,346
2020	65,539					613			(2)		—				66,152
2021	30,541					682					250,000				281,223
2022	117,018					758					250,000				367,776
2023	730					787					275,000				276,517
Thereafter	235,685					1,001					1,644,200				1,880,886
	$	475,308				$	279,392				$	2,419,200			$	3,173,900			(3)

---

(1)	2019 maturities include a $20.3 million mortgage loan, which was paid off at par on January 31, 2019, prior to its original maturity date.

(2)	Our $800.0 million revolving credit facility matures on April 20, 2020, subject to two six-month extensions at our option. As of December 31, 2018, there was no outstanding balance under this credit facility.

(3)	The total debt maturities differ from the total reported on the consolidated balance sheet due to the unamortized net premium/discount and debt issuance costs on mortgage loans, notes payable, and senior notes as of December 31, 2018.

Future minimum lease payments and their present value for property under capital leases as of December 31, 2018, are as follows:

	(In thousands)
Year ending December 31,
2019	$	5,800
2020	5,800
2021	5,800
2022	5,810
2023	60,013
Thereafter	82,862
	166,085
Less amount representing interest	(94,566		)
Present value	$	71,519

NOTE 6—FAIR VALUE OF FINANCIAL INSTRUMENTS

A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value are as follows:

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

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

3.	Level 3 Inputs—prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable

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In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.

Except as disclosed below, the carrying amount of our financial instruments approximates their fair value. The fair value of our mortgages payable, notes payable and senior notes and debentures is sensitive to fluctuations in interest rates. Quoted market prices (Level 1) were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis (Level 2) is generally used to estimate the fair value of our mortgages and notes payable. Considerable judgment is necessary to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. A summary of the carrying amount and fair value of our mortgages payable, notes payable and senior notes and debentures is as follows:

	December 31, 2018								December 31, 2017
Carrying Value				Fair Value				Carrying Value				Fair Value
(In thousands)
Mortgages and notes payable	$	753,406			$	751,361			$	811,770			$	824,419
Senior notes and debentures	$	2,404,279			$	2,371,392			$	2,401,440			$	2,498,445

During 2018, we had two interest rate swap agreements with a notional amount of $275.0 million that were measured at fair value on a recurring basis, which expired on November 1, 2018. The interest rate swap agreements fixed the variable portion of our $275.0 million term loan at 1.72% through November 1, 2018. The fair values of the interest rate swap agreements were based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The fair value of our swaps at December 31, 2017 was an asset of less than $0.1 million and is included in "prepaid expenses and other assets" on our consolidated balance sheet. During 2018, we reclassified $0.5 million from other comprehensive income as a decrease to interest expense. The value of our interest rate swaps increased $2.6 million in 2017 (including $1.8 million reclassified from other comprehensive income as an increase to interest expense). These changes in value are included in "accumulated other comprehensive income." A summary of our financial assets that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:

	December 31, 2018																December 31, 2017
	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
	(In thousands)
Interest rate swaps	$	—			$	—			$	—			$	—			$	—			$	22			$	—			$	22

One of our equity method investees has two interest rate swaps which qualify as cash flow hedges. During 2018, our share of the change in fair value of the related swaps included in "accumulated other comprehensive (loss) income" was $0.4 million.

NOTE 7—COMMITMENTS AND CONTINGENCIES

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

We are currently a party to various legal proceedings. We accrue a liability for litigation if an unfavorable outcome is probable and the amount of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, we accrue the best estimate within the range; however, if no amount within the range is a better estimate than any other amount, the minimum within the range is accrued. Legal fees related to litigation are expensed as incurred. Other than as described below, we do not believe that the ultimate outcome of these matters, either individually or in the aggregate, could have a material adverse effect on our financial position or overall trends in results of operations; however, litigation is subject to inherent uncertainties. Also under our leases, tenants are typically obligated to indemnify us from and against all liabilities, costs and expenses imposed upon or asserted against us (1) as owner of the properties due to certain matters relating to the operation of the properties by the tenant, and (2) where appropriate, due to certain matters relating to the ownership of the properties prior to their acquisition by us.

In November 2016, we were included as a defendant in a class action lawsuit, in the circuit court for Montgomery County, Maryland, related to predatory towing by a third party company we had retained to provide towing services at several of our properties in Montgomery County, Maryland. Given the costs and risks of continuing litigation on this matter, we elected to participate in a settlement for which our share was approximately $0.4 million, and was reimbursed by insurance. The settlement did not cover liability for certain tows that were included in the lawsuit that the defendant class believes cannot be

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pursued because of the statute of limitations. Accordingly, we do not believe we should have any additional liability for these remaining tows; however, if we are unsuccessful in dismissing these tows from the litigation, our liability would be less than $0.1 million.

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

We reserve for estimated losses, if any, associated with warranties given to a buyer at the time real estate is sold or other potential liabilities relating to that sale, taking any insurance policies into account. These warranties may extend up to ten years and require significant judgment. If changes in facts and circumstances indicate that warranty reserves are understated, we will accrue additional reserves at such time a liability has been incurred and the costs can be reasonably estimated. Warranty reserves are released once the legal liability period has expired or all related work has been substantially completed. During 2016, the legal liability period relating to our latent defect warranty on condominiums sold at Santana Row expired. Upon expiration, we released the remaining $4.9 million warranty reserve which is included in "gain on sale of real estate and change in control of interests" in the consolidated statement of comprehensive income for the year ended December 31, 2016.

At December 31, 2018 and 2017, our reserves for general liability costs were $3.1 million and $3.3 million, respectively, and are included in “accounts payable and accrued expenses” in our consolidated balance sheets. Any potential losses which exceed our estimates would result in a decrease in our net income. During both 2018 and 2017, we made payments from these reserves of $1.4 million. Although we consider the reserve to be adequate, there can be no assurance that the reserve will prove to be adequate over-time to cover losses due to the difference between the assumptions used to estimate the reserve and actual losses.

At December 31, 2018, we had letters of credit outstanding of approximately $1.3 million.

As of December 31, 2018 in connection with capital improvement, development, and redevelopment projects, the Trust has contractual obligations of approximately $568.2 million.

We are obligated under ground lease agreements on several shopping centers requiring minimum annual payments as follows, as of December 31, 2018:

	(In thousands)
Year ending December 31,
2019	$	4,794
2020	4,807
2021	4,815
2022	4,931
2023	4,971
Thereafter	184,803
	$	209,121

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

Under the terms of the Congressional Plaza partnership agreement, a minority partner has the right to require us and the other minority partner to purchase its 26.63% interest in Congressional Plaza at the interest’s then-current fair market value. If the other minority partner defaults in their obligation, we must purchase the full interest. Based on management’s current estimate of fair market value as of December 31, 2018, our estimated maximum liability upon exercise of the put option would range from approximately $78 million to $83 million.

A master lease for Melville Mall includes a fixed purchase price option in 2021 for $5 million. If we fail to exercise our purchase option, the owner of Melville Mall has a put option which would require us to purchase Melville Mall in 2023 for $5 million.

The other member in Montrose Crossing has the right to require us to purchase all of its 10.1% interest in Montrose Crossing at the interest's then-current fair market value. If the other member fails to exercise its put option, we have the right to purchase its

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interest on or after December 27, 2021 at fair market value. Based on management’s current estimate of fair market value as of December 31, 2018, our estimated maximum liability upon exercise of the put option would range from approximately $13 million to $14 million.

Two of the members in Plaza El Segundo have the right to require us to purchase their 10.0% and 11.8% ownership interests at the interests' then-current fair market value. If the members fail to exercise their put options, we have the right to purchase each of their interests on or after December 30, 2026 at fair market value. Based on management’s current estimate of fair market value as of December 31, 2018, our estimated maximum liability upon exercise of the put option would range from approximately $23 million to $26 million.

Effective January 1, 2017, the other member in The Grove at Shrewsbury and Brook 35 has the right to require us to purchase all of its approximately 4.8% interest in The Grove at Shrewsbury and approximately 8.8% interest in Brook 35 at the interests' then-current fair market value. Based on management's current estimate of fair market value as of December 31, 2018, our estimated maximum liability upon exercise of the put option would range from $9 million to $10 million. On January 4, 2019, we acquired a portion of the noncontrolling interest in Brook 35 for $0.8 million, bringing the noncontrolling ownership interest down to 6.5%.

Under the terms of certain partnership agreements, the partners have the right to exchange their operating partnership units for cash or the same number of our common shares, at our option. A total of 738,423 downREIT operating partnership units are outstanding which have a total fair value of $87.2 million, based on our closing stock price on December 31, 2018.

NOTE 8—SHAREHOLDERS’ EQUITY

We have a Dividend Reinvestment Plan (the “Plan”), whereby shareholders may use their dividends and optional cash payments to purchase shares. In 2018, 2017 and 2016, 17,952 shares, 17,911 shares and 15,619 shares, respectively, were issued under the Plan.

On September 29, 2017, we issued 6,000,000 Depositary Shares, each representing 1/1000th interest of 5.0% Series C Cumulative Redeemable Preferred Share, par value $0.01 per share ("Series C Preferred Shares"), at the liquidation preference of $25.00 per depositary share (or $25,000 per Series C Preferred share) in an underwritten public offering, which were outstanding as of December 31, 2018 and 2017. The Series C Preferred Shares accrue dividends at a rate of 5.0% of the $25,000 liquidation preference per year and are redeemable at our option on or after September 29, 2022. Additionally, they are not convertible and holders of these shares generally have no voting rights, unless we fail to pay dividends for six or more quarters. The net proceeds after underwriting fees and other costs were approximately $145.0 million for the year ended December 31, 2017.

As of December 31, 2018, 2017, and 2016, we had 399,896 shares of 5.417% Series 1 Cumulative Convertible Preferred Shares (“Series 1 Preferred Shares”) outstanding that have a liquidation preference of $25 per share and par value $0.01 per share. The Series 1 Preferred Shares accrue dividends at a rate of 5.417% per year and are convertible at any time by the holders to our common shares at a conversion rate of $104.69 per share. The Series 1 Preferred Shares are also convertible under certain circumstances at our election. The holders of the Series 1 Preferred Shares have no voting rights.

On May 7, 2018, 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 $400.0 million. We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay amounts of outstanding under our revolving credit facility and/or for general corporate purposes. For the year ended December 31, 2018, we issued 987,383 common shares at a weighted average price per share of $129.19 for net cash proceeds of $126.1 million and paid $1.3 million in commissions and $0.2 million in additional offering expenses related to the sales of these common shares. For the year ended December 31, 2017, we issued 826,517 common shares at a weighted average price per share of $132.56 for net cash proceeds of $108.3 million and paid $1.1 million in commissions and $0.2 million in additional offering expenses related to the sales of these common shares. As of December 31, 2018, we had the capacity to issue up to $272.4 million in common shares under our ATM equity program.

F-25

NOTE 9—DIVIDENDS

The following table provides a summary of dividends declared and paid per share:

	Year Ended December 31,
	2018								2017								2016
	Declared				Paid				Declared				Paid				Declared				Paid
Common shares	$	4.040			$	4.020			$	3.960			$	3.940			$	3.840			$	3.800
5.417% Series 1 Cumulative Convertible Preferred shares	$	1.354			$	1.354			$	1.354			$	1.354			$	1.354			$	1.354
5.0% Series C Cumulative Redeemable Preferred shares (1)	$	1.250			$	1.306			$	0.368			$	—			$	—			$	—
(1) Amount represents dividends per depositary share, each representing 1/1000th of a share.

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

	Year Ended December 31,
2018				2017				2016
Common shares
Ordinary dividend	$	3.859			$	3.940			$	3.800
Ordinary dividend eligible for 15% rate	0.161				—				—
	$	4.020			$	3.940			$	3.800
5.417% Series 1 Cumulative Convertible Preferred shares
Ordinary dividend	$	1.300			$	1.354			$	1.354
Ordinary dividend eligible for 15% rate	0.054				—				—
	$	1.354			$	1.354			$	1.354
5.0% Series C Cumulative Redeemable Preferred shares
Ordinary dividend	$	1.254			$	—			$	—
Ordinary dividend eligible for 15% rate	0.052				$	—			$	—
	$	1.306			$	—			$	—

On October 31, 2018, the Trustees declared a quarterly cash dividend of $1.02 per common share, payable January 15, 2019 to common shareholders of record on January 2, 2019.

NOTE 10—OPERATING LEASES

At December 31, 2018, our 104 predominantly retail shopping center and mixed-use properties are located in 12 states and the District of Columbia. There are approximately 3,000 commercial leases and 2,600 residential leases. Our commercial tenants range from sole proprietorships to national retailers and corporations. At December 31, 2018, no one tenant or corporate group of tenants accounted for more than 2.7% of annualized base rent.

Our leases with commercial property and residential tenants are classified as operating leases. Commercial property leases generally range from three to ten years (certain leases with anchor tenants may be longer), and in addition to minimum rents, may provide for percentage rents based on the tenant’s level of sales achieved and cost recoveries for the tenant’s share of certain operating costs. Leases on apartments are generally for a period of 1 year or less.

As of December 31, 2018, future minimum rentals from noncancelable commercial operating leases (excluding both tenant reimbursements of operating expenses and percentage rent based on tenants' sales).

F-26

	(In thousands)
Year ending December 31,
2019	$	606,183
2020	561,265
2021	490,979
2022	418,337
2023	338,324
Thereafter	1,391,705
	$	3,806,793

NOTE 11—COMPONENTS OF RENTAL INCOME AND EXPENSE

The principal components of rental income are as follows:

	Year Ended December 31,
	2018				2017				2016
	(In thousands)
Minimum rents
Retail and commercial	$	616,137			$	585,178			$	549,552
Residential	71,001				55,416				49,465
Cost reimbursement	178,333				171,528				158,042
Percentage rent	11,241				11,148				10,977
Other	18,986				18,191				18,547
Total rental income	$	895,698			$	841,461			$	786,583

Minimum rents include the following:

	Year Ended December 31,
	2018				2017				2016
	(In millions)
Straight-line rents	$	5.0			$	12.9			$	8.1
Net amortization of above and below market leases	$	6.8			$	4.7			$	1.8

The principal components of rental expenses are as follows:

	Year Ended December 31,
2018				2017				2016
(In thousands)
Repairs and maintenance	$	67,745			$	67,996			$	64,942
Utilities	27,635				25,763				24,968
Management fees and costs	24,024				22,297				20,823
Payroll	16,140				14,922				13,832
Marketing	7,935				9,007				8,520
Insurance	7,547				7,762				7,758
Bad debt expense	4,708				2,591				2,375
Ground rent	4,697				3,826				2,561
Other operating	12,663				10,726				12,547
Total rental expenses	$	173,094			$	164,890			$	158,326

F-27

NOTE 12—SHARE-BASED COMPENSATION PLANS

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

	Year Ended December 31,
	2018				2017				2016
	(In thousands)
Grants of common shares and options	$	12,736			$	12,371			$	11,227
Capitalized share-based compensation	(1,017		)		(1,385		)		(1,310		)
Share-based compensation expense	$	11,719			$	10,986			$	9,917

In May 2010, our shareholders approved the 2010 Performance Incentive Plan, as amended (the "2010 Plan”), which authorized the grant of share options, common shares and other share-based awards for up to 2,450,000 common shares of beneficial interest. As of December 31, 2018, we have grants outstanding under this one share-based compensation plan.

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

The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities, term, dividend yields, employee exercises and estimated forfeitures are primarily based on historical data. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of each share award is determined based on the closing trading price of our common shares on the grant date. No options were granted in 2017.

The following table provides a summary of the weighted-average assumption used to value options granted in 2018 and 2016:

	Year Ended December 31,
	2018			2016
Volatility	18.0	%		18.8	%
Expected dividend yield	3.6	%		2.8	%
Expected term (in years)	7.5			6.0
Risk free interest rate	2.8	%		1.5	%

The following table provides a summary of option activity for 2018:

	Shares Under Option			Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
								(In years)		(In thousands)
Outstanding at December 31, 2017	106,485			$	44.18
Granted	488			111.34
Exercised	(105,803	)		43.48
Forfeited or expired	(488	)		111.34
Outstanding at December 31, 2018	682			$	152.34			7.1		$	—
Exercisable at December 31, 2018	273			$	152.34			7.1		$	—

The weighted-average grant-date fair value of options granted in 2018 and 2016 was $14.42 and $19.52 per share, respectively. The total cash received from options exercised during 2018, 2017 and 2016 was $4.6 million, $10.0 million and $4.5 million, respectively. The total intrinsic value of options exercised during the years ended December 31, 2018, 2017 and 2016 was $8.2 million, $10.7 million and $4.2 million, respectively.

The following table provides a summary of restricted share activity for 2018:

F-28

	Shares			Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2017	237,171			$	145.27
Granted	101,614			112.88
Vested	(86,294	)		143.71
Forfeited	(46,391	)		142.98
Unvested at December 31, 2018	206,100			$	130.46

The weighted-average grant-date fair value of stock awarded in 2018, 2017 and 2016 was $112.88, $139.31 and $152.70, respectively. The total vesting-date fair value of shares vested during the year ended December 31, 2018, 2017 and 2016, was $9.7 million, $12.5 million and $13.8 million, respectively.

As of December 31, 2018, there was $14.2 million of total unrecognized compensation cost related to unvested share-based compensation arrangements (i.e. options and unvested shares) granted under our plans. This cost is expected to be recognized over the next 5.4 years with a weighted-average period of 1.9 years.

Subsequent to December 31, 2018, common shares were awarded under various compensation plans as follows:

Date		Award				Vesting Term		Beneficiary
January 2, 2019		6,177		Shares		Immediate		Trustees
February 5, 2019		103,658		Restricted Shares		3-5 years		Officers and key employees

NOTE 13—SAVINGS AND RETIREMENT PLANS

We have a savings and retirement plan in accordance with the provisions of Section 401(k) of the Code. Generally, employees can elect, at their discretion, to contribute a portion of their compensation up to a maximum of $18,500 for 2018 and $18,000 for 2017 and 2016. Under the plan, we contribute 50% of each employee’s elective deferrals up to 5% of eligible earnings. In addition, we may make discretionary contributions within the limits of deductibility set forth by the Code. Our full-time employees are immediately eligible to become plan participants. Employees are eligible to receive matching contributions immediately on their participation; however, these matching payments will not vest until their third anniversary of employment. Our expense for the years ended December 31, 2018, 2017 and 2016 was approximately $688,000, $632,000 and $602,000, respectively.

A non-qualified deferred compensation plan for our officers and certain other employees was established in 1994 that allows the participants to defer a portion of their income. As of December 31, 2018 and 2017, we are liable to participants for approximately $12.0 million and $12.8 million, respectively, under this plan. Although this is an unfunded plan, we have purchased certain investments to match this obligation. Our obligation under this plan and the related investments are both included in the accompanying consolidated financial statements.

NOTE 14—EARNINGS PER SHARE

We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation methodology whereby EPS for each class of common stock and participating securities is calculated according to dividends declared and participation rights in undistributed earnings. For 2018, 2017, and 2016 we had 0.2 million weighted average unvested shares outstanding, which are considered participating securities. Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares; the portion of earnings allocated to the unvested shares is reflected as “earnings allocated to unvested shares” in the reconciliation below.

In the dilutive EPS calculation, dilutive stock options were calculated using the treasury stock method consistent with prior periods. There were 682 anti-dilutive stock options in 2018 and 2017, respectively, and no anti-dilutive stock options in 2016. The conversions of downREIT operating partnership units and 5.417% Series 1 Cumulative Convertible Preferred Shares are anti-dilutive for all periods presented and accordingly, have been excluded from the weighted average common shares used to compute diluted EPS.

F-29

	Year Ended December 31,
	2018				2017				2016
	(In thousands, except per share data)
NUMERATOR
Income from continuing operations	$	237,111			$	219,948			$	226,425
Less: Preferred share dividends	(8,042		)		(2,458		)		(541		)
Less: Income from continuing operations attributable to noncontrolling interests	(7,119		)		(7,666		)		(7,648		)
Less: Earnings allocated to unvested shares	(930		)		(942		)		(702		)
Income from continuing operations available for common shareholders	221,020				208,882				217,534
Gain on sale of real estate and change in control of interests, net	11,915				77,632				31,133
Net income available for common shareholders, basic and diluted	$	232,935			$	286,514			$	248,667
DENOMINATOR
Weighted average common shares outstanding—basic	73,274				72,117				70,877
Effect of dilutive securities:
Stock options	28				116				172
Weighted average common shares outstanding—diluted	73,302				72,233				71,049
EARNINGS PER COMMON SHARE, BASIC
Net income available for common shareholders	$	3.18			$	3.97			$	3.51
EARNINGS PER COMMON SHARE, DILUTED
Net income available for common shareholders	$	3.18			$	3.97			$	3.50
Income from continuing operations attributable to the Trust	$	229,992			$	212,282			$	218,777

NOTE 15—SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Summarized quarterly financial data is as follows:

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	(In thousands, except per share data)
2018
Revenue	$	225,405			$	224,902			$	229,753			$	235,376
Operating income	$	86,145			$	89,896			$	90,342			$	83,338
Net income(1)	$	62,931			$	65,533			$	64,180			$	56,382
Net income attributable to the Trust(1)	$	61,247			$	63,595			$	62,558			$	54,507
Net income available for common shareholders(1)	$	59,237			$	61,584			$	60,548			$	52,496
Earnings per common share—basic(1)	$	0.81			$	0.84			$	0.82			$	0.71
Earnings per common share—diluted(1)	$	0.81			$	0.84			$	0.82			$	0.71
	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	(In thousands, except per share data)
2017
Revenue	$	207,389			$	208,049			$	217,953			$	223,957
Operating income	$	81,544			$	83,090			$	84,497			$	83,157
Net income(2)	$	58,070			$	78,133			$	108,882			$	52,785
Net income attributable to the Trust(2)	$	56,190			$	76,291			$	106,777			$	50,656
Net income available for common shareholders(2)	$	56,055			$	76,156			$	106,600			$	48,645
Earnings per common share—basic(2)	$	0.78			$	1.05			$	1.47			$	0.67
Earnings per common share—diluted(2)	$	0.78			$	1.05			$	1.47			$	0.67

F-30

(1)

First and second quarter 2018 include net gains of $3.3 million and $4.0 million, respectively, related to condominiums sold at our Assembly Row and Pike & Rose properties. Third quarter 2018 includes a $3.1 million gain on sale of real estate from our residential building at our Chelsea Commons property. Fourth quarter 2018 includes a $1.6 million gain on sale of real estate from our Atlantic Plaza property. All of these transactions are further discussed in Note 3.

(2)

Second quarter 2017 includes a $15.4 million gain related to the sale of three ground lease parcels at our Assembly Row property in Somerville, Massachusetts. Third quarter 2017 includes a $50.8 million gain on sale of real estate from our 150 Post Street and North Lake Commons properties. Fourth quarter 2017 includes a $6.5 million gain related to the sale of a parcel of land at our Bethesda Row property. Additionally, second, third, and fourth quarter 2017 include net percentage-of-completion gains of $3.3 million, $0.6 million, and $1.5 million, respectively, related to condominiums under binding contract at our Assembly Row property. All of these transactions are further discussed in Note 3. Fourth quarter 2017 includes a $12.3 million early extinguishment of debt charge.

NOTE 16—SUBSEQUENT EVENT

On January 31, 2019, we repaid the $20.3 million mortgage loan on Rollingwood Apartments, at par, prior to its original maturity date.

F-31

FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2018 (Dollars in thousands)
COLUMN A		COLUMN B				COLUMN C								COLUMN D				COLUMN E												COLUMN F				COLUMN G		COLUMN H		COLUMN I
Descriptions		Encumbrance				Initial cost to company								Cost Capitalized Subsequent to Acquisition				Gross amount at which carried at close of period												Accumulated Depreciation and Amortization				Date of Construction		Date Acquired		Life on which depreciation in latest income statements is computed
Land				Building and Improvements				Land				Building and Improvements				Total
29TH PLACE (Virginia)		$	4,097			$	10,211			$	18,863			$	11,777			$	10,195			$	30,656			$	40,851			$	13,410			1975 - 2001		5/30/2007		35 years
ANDORRA (Pennsylvania)						2,432				12,346				10,857				2,432				23,203				25,635				19,686				1953		1/12/1988		35 years
ASSEMBLY ROW/ASSEMBLY SQUARE MARKETPLACE (Massachusetts)						93,252				34,196				573,115				69,421				631,142				700,563				57,207				2005, 2012-2018		2005-2013		35 years
AZALEA (California)		39,655				40,219				67,117				115				40,219				67,232				107,451				3,586				2014		8/2/2017		35 years
BALA CYNWYD (Pennsylvania)						3,565				14,466				25,570				2,683				40,918				43,601				21,709				1955		9/22/1993		35 years
BARCROFT PLAZA (Virginia)						12,617				29,603				4,472				12,617				34,075				46,692				3,232				1963, 1972, 1990, & 2000		1/13/16 & 11/7/16		35 years
BARRACKS ROAD (Virginia)						4,363				16,459				47,397				4,363				63,856				68,219				44,674				1958		12/31/1985		35 years
BELL GARDENS (California)		12,492				24,403				85,947				183				24,403				86,130				110,533				6,000				1990, 2003, 2006		8/2/17 & 11/29/18		35 years
BETHESDA ROW (Maryland)						46,579				35,406				146,423				43,904				184,504				228,408				79,230				1945-2008		12/31/93, 6/2/97, 1/20/06, 9/25/08, 9/30/08, & 12/27/10		35 - 50 years
BRICK PLAZA (New Jersey)						—				24,715				60,396				4,094				81,017				85,111				49,569				1958		12/28/1989		35 years
BRISTOL PLAZA (Connecticut)						3,856				15,959				12,156				3,856				28,115				31,971				18,839				1959		9/22/1995		35 years
BROOK 35 (New Jersey)		11,283				7,128				38,355				2,548				7,128				40,903				48,031				6,860				1986/2004		1/1/2014		35 years
CAMPUS PLAZA (Massachusetts)						16,710				13,412				314				16,710				13,726				30,436				1,826				1970		1/13/2016		35 years
CHELSEA COMMONS (Massachusetts)		5,729				8,689				19,466				1,626				8,669				21,112				29,781				7,722				1962/1969/2008		8/25/06, 1/30/07, & 7/16/08		35 years
COCOWALK (Florida)						35,063				71,476				23,773				34,406				95,906				130,312				8,379				1990/1994, 1922-1973, 2018		5/4/15, 7/1/15, 12/16/15, 7/26/16, 6/30/17, & 8/10/17		35 years
COLORADO BLVD (California)						5,262				4,071				10,209				5,262				14,280				19,542				11,088				1905-1988		12/31/96 & 8/14/98		35 years
CONGRESSIONAL PLAZA (Maryland)						2,793				7,424				92,870				1,020				102,067				103,087				56,821				1965/2003		4/1/1965		35 years

F-32

FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2018 (Dollars in thousands)
COLUMN A		COLUMN B				COLUMN C								COLUMN D				COLUMN E												COLUMN F				COLUMN G		COLUMN H		COLUMN I
Descriptions		Encumbrance				Initial cost to company								Cost Capitalized Subsequent to Acquisition				Gross amount at which carried at close of period												Accumulated Depreciation and Amortization				Date of Construction		Date Acquired		Life on which depreciation in latest income statements is computed
Land				Building and Improvements				Land				Building and Improvements				Total
COURTHOUSE CENTER (Maryland)						1,750				1,869				2,866				1,750				4,735				6,485				2,115				1975		12/17/1997		35 years
CROSSROADS (Illinois)						4,635				11,611				18,490				4,635				30,101				34,736				17,297				1959		7/19/1993		35 years
CROW CANYON COMMONS (California)						27,245				54,575				8,065				27,245				62,640				89,885				23,626				Late 1970's/ 1998/2006		12/29/05 & 2/28/07		35 years
DARIEN (Connecticut)						30,368				19,523				4,278				30,368				23,801				54,169				3,722				1920-2009		4/3/13 & 7/20/18		35 years
DEDHAM PLAZA (Massachusetts)						14,841				12,918				14,925				14,841				27,843				42,684				16,192				1959		12/31/93 & 12/14/16		35 years
DEL MAR VILLAGE (Florida)						15,624				41,712				13,638				15,587				55,387				70,974				22,290				1982/1994/2007		5/30/08, 7/11/08, & 10/14/14		35 years
EAST BAY BRIDGE (California)						29,079				138,035				11,919				29,079				149,954				179,033				30,706				1994-2001, 2011/2012		12/21/2012		35 years
EASTGATE CROSSING (North Carolina)						1,608				5,775				27,193				1,608				32,968				34,576				20,680				1963		12/18/1986		35 years
ELLISBURG (New Jersey)						4,028				11,309				18,877				4,013				30,201				34,214				20,892				1959		10/16/1992		35 years
ESCONDIDO PROMENADE (California)						19,117				15,829				16,057				19,117				31,886				51,003				17,459				1987		12/31/96 & 11/10/10		35 years
FALLS PLAZA (Virginia)						1,798				1,270				10,880				1,819				12,129				13,948				8,897				1960/1962		9/30/67 & 10/05/72		25 years
FEDERAL PLAZA (Maryland)						10,216				17,895				42,145				10,216				60,040				70,256				44,673				1970		6/29/1989		35 years
FINLEY SQUARE (Illinois)						9,252				9,544				20,417				9,252				29,961				39,213				21,116				1974		4/27/1995		35 years
FLOURTOWN (Pennsylvania)						1,345				3,943				11,699				1,507				15,480				16,987				6,517				1957		4/25/1980		35 years
FOURTH STREET (California)						13,978				9,909				104				13,978				10,013				23,991				635				1948,1975		5/19/2017		35 years
FREE STATE SHOPPING CENTER (Maryland)						18,581				41,658				5,271				18,581				46,929				65,510				5,530				1970		1/13/2016		35 years
FRESH MEADOWS (New York)						24,625				25,255				41,722				24,633				66,969				91,602				40,833				1946-1949		12/5/1997		35 years
FRIENDSHIP CENTER (District of Columbia)						12,696				20,803				4,610				12,696				25,413				38,109				12,944				1998		9/21/2001		35 years
GAITHERSBURG SQUARE (Maryland)						7,701				5,271				15,716				5,973				22,715				28,688				18,358				1966		4/22/1993		35 years
GARDEN MARKET (Illinois)						2,677				4,829				7,173				2,677				12,002				14,679				8,030				1958		7/28/1994		35 years
GOVERNOR PLAZA (Maryland)						2,068				4,905				20,363				2,068				25,268				27,336				21,247				1963		10/1/1985		35 years
GRAHAM PARK PLAZA (Virginia)						1,237				15,096				19,277				1,169				34,441				35,610				27,995				1971		7/21/1983		35 years
GRATIOT PLAZA (Michigan)						525				1,601				17,840				525				19,441				19,966				17,770				1964		3/29/1973		25.75 years

F-33

FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2018 (Dollars in thousands)
COLUMN A		COLUMN B				COLUMN C								COLUMN D				COLUMN E												COLUMN F				COLUMN G		COLUMN H		COLUMN I
Descriptions		Encumbrance				Initial cost to company								Cost Capitalized Subsequent to Acquisition				Gross amount at which carried at close of period												Accumulated Depreciation and Amortization				Date of Construction		Date Acquired		Life on which depreciation in latest income statements is computed
Land				Building and Improvements				Land				Building and Improvements				Total
GREENLAWN PLAZA (New York)						10,590				20,869				380				10,590				21,249				31,839				2,618				1975/2004		1/13/2016		35 years
GREENWICH AVENUE (Connecticut)						7,484				5,444				1,199				7,484				6,643				14,127				4,360				1968		4/12/1995		35 years
HASTINGS RANCH PLAZA (California)						—				22,393				269				—				22,662				22,662				1,476				1958, 1984, 2006, 2007		2/1/2017		35 years
HAUPPAUGE (New York)						8,791				15,262				5,125				8,419				20,759				29,178				12,449				1963		8/6/1998		35 years
HERMOSA AVENUE (California)						1,116				280				4,829				1,368				4,857				6,225				3,528				1922		9/17/1997		35 years
HOLLYWOOD BLVD (California)						8,300				16,920				21,492				8,370				38,342				46,712				15,374				1929/1991		3/22/99 & 6/18/99		35 years
HUNTINGTON (New York)						12,194				16,008				18,537				12,194				34,545				46,739				16,411				1962		12/12/88, 10/26/07, & 11/24/15		35 years
HUNTINGTON SQUARE (New York)						—				10,075				2,748				506				12,317				12,823				3,780				1980/2004-2007		8/16/2010		35 years
IDYLWOOD PLAZA (Virginia)						4,308				10,026				2,753				4,308				12,779				17,087				9,325				1991		4/15/1994		35 years
JORDAN DOWNS PLAZA (California)						—				3,255				11,697				—				14,952				14,952				—				2018		6/15/2018		N/A
KINGS COURT (California)						—				10,714				884				—				11,598				11,598				9,139				1960		8/24/1998		26 years
LANCASTER (Pennsylvania)		4,907				—				2,103				11,614				432				13,285				13,717				8,070				1958		4/24/1980		22 years
LANGHORNE SQUARE (Pennsylvania)						720				2,974				18,742				720				21,716				22,436				15,900				1966		1/31/1985		35 years
LAUREL (Maryland)						7,458				22,525				27,843				7,462				50,364				57,826				38,950				1956		8/15/1986		35 years
LAWRENCE PARK (Pennsylvania)						6,150				8,491				18,572				6,161				27,052				33,213				22,745				1972		7/23/1980 & 4/3/17		22 years
LEESBURG PLAZA (Virginia)						8,184				10,722				17,918				8,184				28,640				36,824				15,528				1967		9/15/1998		35 years
LINDEN SQUARE (Massachusetts)						79,382				19,247				50,936				79,346				70,219				149,565				24,578				1960-2008		8/24/2006		35 years
MELVILLE MALL (New York)						35,622				32,882				23,485				35,622				56,367				91,989				14,734				1974		10/16/2006		35 years
MERCER MALL (New Jersey)		55,472				29,738				51,047				47,401				29,738				98,448				128,186				44,812				1975		10/14/03 & 1/31/17		25 - 35 years
MONTROSE CROSSING (Maryland)		69,310				48,624				91,819				21,542				48,624				113,361				161,985				28,916				1960s, 1970s, 1996 & 2011		12/27/11 & 12/19/13		35 years
MOUNT VERNON/SOUTH VALLEY/7770 RICHMOND HWY. (Virginia)						10,068				33,501				41,621				10,150				75,040				85,190				36,802				1966/1972/1987/2001		3/31/03, 3/21/03, & 1/27/06		35 years

F-34

FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2018 (Dollars in thousands)
COLUMN A		COLUMN B				COLUMN C								COLUMN D				COLUMN E												COLUMN F				COLUMN G		COLUMN H		COLUMN I
Descriptions		Encumbrance				Initial cost to company								Cost Capitalized Subsequent to Acquisition				Gross amount at which carried at close of period												Accumulated Depreciation and Amortization				Date of Construction		Date Acquired		Life on which depreciation in latest income statements is computed
Land				Building and Improvements				Land				Building and Improvements				Total
NORTH DARTMOUTH (Massachusetts)						9,366				—				3				9,366				3				9,369				1				2004		8/24/2006
NORTHEAST (Pennsylvania)						1,152				10,596				21,987				1,153				32,582				33,735				21,280				1959		8/30/1983		35 years
OLD KEENE MILL (Virginia)						638				998				7,151				638				8,149				8,787				5,715				1968		6/15/1976		33.33 years
OLD TOWN CENTER (California)						3,420				2,765				29,663				3,420				32,428				35,848				22,076				1962, 1997-1998		10/22/1997		35 years
OLIVO AT MISSION HILLS (California)						15,048				46,732				15,215				15,048				61,947				76,995				1,453				2017-2018		8/2/2017		35 years
PAN AM (Virginia)						8,694				12,929				7,892				8,695				20,820				29,515				15,818				1979		2/5/1993		35 years
PENTAGON ROW (Virginia)						—				2,955				103,348				—				106,303				106,303				49,449				1999 - 2002		1998 & 11/22/10		35 years
PERRING PLAZA (Maryland)						2,800				6,461				21,898				2,800				28,359				31,159				24,001				1963		10/1/1985		35 years
PIKE & ROSE (Maryland)						31,471				10,335				524,922				27,929				538,799				566,728				36,543				1963, 2012-2018		5/18/82, 10/26/07, & 7/31/12		50 years
PIKE 7 PLAZA (Virginia)						14,970				22,799				10,274				14,914				33,129				48,043				17,690				1968		3/31/97 & 7/8/15		35 years
PLAZA DEL MERCADO (Maryland)						10,305				21,553				14,705				10,305				36,258				46,563				3,964				1969		1/13/2016		35 years
PLAZA DEL SOL (California)		8,532				5,605				12,331				—				5,605				12,331				17,936				720				2009		8/2/2017		35 years
PLAZA EL SEGUNDO/THE POINT (California)		124,244				62,127				153,556				70,231				64,463				221,451				285,914				46,765				2006/2007/2016		12/30/11, 6/14/13, 7/26/13, & 12/27/13		35 years
PLAZA PACOIMA (California)						38,138				12,227				—				38,138				12,227				50,365				773				2010		8/2/2017		35 years
QUEEN ANNE PLAZA (Massachusetts)						3,319				8,457				6,525				3,319				14,982				18,301				10,359				1967		12/23/1994		35 years
QUINCE ORCHARD (Maryland)						3,197				7,949				28,316				2,928				36,534				39,462				21,216				1975		4/22/1993		35 years
RIVERPOINT CENTER (Illinois)						15,422				104,572				664				15,422				105,236				120,658				6,046				1989, 2012		3/31/2017		35 years
ROCKVILLE TOWN SQUARE (Maryland)		4,436				—				8,092				44,099				—				52,191				52,191				19,088				2005 - 2007		2006 - 2007		50 years
ROLLINGWOOD APTS. (Maryland)		20,326				552				2,246				8,302				774				10,326				11,100				9,653				1960		1/15/1971		25 years
SAM'S PARK & SHOP (District of Columbia)						4,840				6,319				2,697				4,840				9,016				13,856				5,518				1930		12/1/1995		35 years

F-35

FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2018 (Dollars in thousands)
COLUMN A		COLUMN B				COLUMN C								COLUMN D				COLUMN E												COLUMN F				COLUMN G		COLUMN H		COLUMN I
Descriptions		Encumbrance				Initial cost to company								Cost Capitalized Subsequent to Acquisition				Gross amount at which carried at close of period												Accumulated Depreciation and Amortization				Date of Construction		Date Acquired		Life on which depreciation in latest income statements is computed
Land				Building and Improvements				Land				Building and Improvements				Total
SAN ANTONIO CENTER (California)						39,920				32,466				1,919				39,920				34,385				74,305				6,207				1958, 1964-1965, 1974-1975, 1995-1997		1/9/2015		35 years
SANTANA ROW (California)						66,682				7,502				887,246				53,217				908,213				961,430				200,651				1999-2006, 2009, 2011, 2014, 2016-2018		3/5/97, 7/13/12, 9/6/12, 4/30/13 & 9/23/13		40 - 50 years
SAUGUS PLAZA (Massachusetts)						4,383				8,291				3,050				4,383				11,341				15,724				7,092				1976		10/1/1996		35 years
SYLMAR TOWNE CENTER (California)		17,446				18,522				24,636				325				18,522				24,961				43,483				1,319				1973		8/2/2017		35 years
THE AVENUE AT WHITE MARSH (Maryland)		52,543				20,682				72,432				26,626				20,685				99,055				119,740				35,323				1997		3/8/2007		35 years
THE GROVE AT SHREWSBURY (New Jersey)		42,776				18,016				103,115				4,223				18,021				107,333				125,354				17,289				1988/1993/2007		1/1/2014 & 10/6/14		35 years
THE SHOPPES AT NOTTINGHAM SQUARE (Maryland)						4,441				12,849				403				4,441				13,252				17,693				5,387				2005 - 2006		3/8/2007		35 years
THE SHOPS AT SUNSET PLACE (Florida)		65,946				64,499				50,853				9,076				64,499				59,929				124,428				9,406				1999		10/1/2015		35 years
THIRD STREET PROMENADE (California)						22,645				12,709				45,765				25,125				55,994				81,119				34,348				1888-2000		1996-2000		35 years
TOWER SHOPPNG CENTER (Virginia)						7,170				10,518				4,399				7,280				14,807				22,087				9,328				1953-1960		8/24/1998		35 years
TOWER SHOPS (Florida)						29,940				43,390				24,259				29,962				67,627				97,589				18,494				1989		1/19/11 & 6/13/14		35 years
TOWN CENTER OF NEW BRITAIN (Pennsylvania)						1,282				12,285				1,800				1,470				13,897				15,367				5,482				1969		6/29/2006		35 years
TOWSON RESIDENTIAL (FLATS @703) (Maryland)						2,328				—				20,047				2,328				20,047				22,375				837				2016-2017		3/8/2007		35 years
TROY HILLS (New Jersey)						3,126				5,193				30,974				5,865				33,428				39,293				22,105				1966		7/23/1980		22 years
TYSON'S STATION (Virginia)						388				453				3,890				493				4,238				4,731				3,869				1954		1/17/1978		17 years
VILLAGE AT SHIRLINGTON (Virginia)		6,704				9,761				14,808				41,784				4,234				62,119				66,353				29,320				1940, 2006-2009		12/21/1995		35 years
WESTGATE CENTER (California)						6,319				107,284				42,767				6,319				150,051				156,370				54,800				1960-1966		3/31/2004		35 years
WHITE MARSH PLAZA (Maryland)						3,478				21,413				835				3,478				22,248				25,726				9,106				1987		3/8/2007		35 years
WHITE MARSH OTHER (Maryland)						31,953				1,843				146				31,983				1,959				33,942				874				1985		3/8/2007		35 years

F-36

FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2018 (Dollars in thousands)
COLUMN A		COLUMN B				COLUMN C								COLUMN D				COLUMN E												COLUMN F				COLUMN G		COLUMN H		COLUMN I
Descriptions		Encumbrance				Initial cost to company								Cost Capitalized Subsequent to Acquisition				Gross amount at which carried at close of period												Accumulated Depreciation and Amortization				Date of Construction		Date Acquired		Life on which depreciation in latest income statements is computed
Land				Building and Improvements				Land				Building and Improvements				Total
WILDWOOD (Maryland)						9,111				1,061				14,197				9,111				15,258				24,369				8,727				1958		5/5/1969		33.33 years
WILLOW GROVE (Pennsylvania)						1,499				6,643				22,117				1,499				28,760				30,259				27,126				1953		11/20/1984		35 years
WILLOW LAWN (Virginia)						3,192				7,723				92,318				7,790				95,443				103,233				60,517				1957		12/5/1983		35 years
WYNNEWOOD (Pennsylvania)						8,055				13,759				21,109				8,055				34,868				42,923				24,551				1948		10/29/1996		35 years
TOTALS		$	545,898			$	1,459,321			$	2,416,071			$	3,944,080			$	1,422,834			$	6,396,638			$	7,819,472			$	2,059,143

F-37

FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED Three Years Ended December 31, 2018 Reconciliation of Total Cost (in thousands)
Balance, December 31, 2015	$	6,064,406
Additions during period
Acquisitions	229,296
Improvements	483,932
Deduction during period—dispositions and retirements of property	(18,561		)
Balance, December 31, 2016	6,759,073
Additions during period
Acquisitions	555,476
Improvements	492,541
Deduction during period—dispositions and retirements of property	(172,029		)
Balance, December 31, 2017	7,635,061
Additions during period
Acquisitions	14,940
Improvements	407,225
Deduction during period—dispositions and retirements of property	(237,754		)
Balance, December 31, 2018 (1)	$	7,819,472

---

(1)	For Federal tax purposes, the aggregate cost basis is approximately $7.2 billion as of December 31, 2018.

F-38

FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED Three Years Ended December 31, 2018 Reconciliation of Accumulated Depreciation and Amortization (in thousands)
Balance, December 31, 2015	$	1,574,041
Additions during period—depreciation and amortization expense	173,244
Deductions during period—dispositions and retirements of property	(18,051		)
Balance, December 31, 2016	1,729,234
Additions during period—depreciation and amortization expense	193,340
Deductions during period—dispositions and retirements of property	(46,030		)
Balance, December 31, 2017	1,876,544
Additions during period—depreciation and amortization expense	215,969
Deductions during period—dispositions and retirements of property	(33,370		)
Balance, December 31, 2018	$	2,059,143

F-39

FEDERAL REALTY INVESTMENT TRUST SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE Year Ended December 31, 2018 (Dollars in thousands)
Column A		Column B		Column C		Column D		Column E						Column F						Column G						Column H
Description of Lien		Interest Rate		Maturity Date		Periodic Payment Terms		Prior Liens						Face Amount of Mortgages						Carrying Amount of Mortgages(1)						Principal Amount of Loans Subject to delinquent Principal or Interest
Mortgage on retail buildings in Philadelphia, PA		8% or 10% based on timing of draws, plus participation		May 2021		Interest only monthly; balloon payment due at maturity		$	—					$	21,179					$	21,179			(2)		$	—
Mortgage on retail buildings in Philadelphia, PA		10% plus participation		May 2021		Interest only monthly; balloon payment due at maturity		—						9,250						9,250						—
								$	—					$	30,429					$	30,429					$	—

---

(1)	For Federal tax purposes, the aggregate tax basis is approximately $30.4 million as of December 31, 2018.

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

F-40

FEDERAL REALTY INVESTMENT TRUST SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE - CONTINUED Three Years Ended December 31, 2018 Reconciliation of Carrying Amount (in thousands)
Balance, December 31, 2015	$	41,618
Deductions during period:
Collection and satisfaction of loans	(11,714		)
Balance, December 31, 2016	29,904
Additions during period:
Issuance of loans	525
Balance, December 31, 2017	30,429
Balance, December 31, 2018	$	30,429

F-41