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-5
Consolidated Statements of Comprehensive Income	F-6
Consolidated Statement of Shareholders’ Equity	F-7
Consolidated Statements of Cash Flows	F-8
Notes to Consolidated Financial Statements	F-9
Financial Statement Schedules
Schedule III—Summary of Real Estate and Accumulated Depreciation	F-31
Schedule IV—Mortgage Loans on Real Estate	F-39

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.

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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, 2019, 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, 2019, 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, 2019, and our report dated February 10, 2020 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 10, 2020

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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, 2019 and 2018, 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, 2019, and the related notes and financial statement schedules included under Item 15(a) (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, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, 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, 2019, 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 10, 2020 expressed an unqualified opinion.

Change in accounting principle

As dicussed in Note 2 to the consolidated financial statements, the Trust has changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Codification (ASC) Topic 842, Leases.

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.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Adoption of ASC 842 (Lessee) - Refer to Note 2 to the Financial Statements

The Trust adopted ASC Topic 842, Leases (ASC 842) as of January 1, 2019, which, from a lessee perspective, resulted in the recognition of a right-of-use asset (“ROU asset”) and a lease liability for operating leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of future lease payments and the asset is based on the liability, subject to certain adjustments, including initial direct costs.

We identified the adoption of ASC 842, from a lessee perspective, as a critical audit matter because it is a substantial change in accounting for leases and as such requires significant auditor judgment in obtaining sufficient appropriate audit evidence

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related to management’s determination of the lease liability and ROU asset and their selection of a discount rate to be applied to future lease payments.

Our audit procedures related to the adoption of ASC 842 included the following:

•	We assessed the design and tested the operating effectiveness of internal controls relating to the initial adoption of ASC 842.

•	We verified the completeness of the population of leases that management evaluated as part of the initial adoption and ongoing accounting for leases in future periods.

•	We inspected a sample of lease contracts, compared the relevant inputs in management’s calculation to underlying lease documents, and recalculated the related ROU asset and lease liability.

•	We utilized a specialist to evaluate the discount rate used in the initial measurement of the lease liability upon adoption, including the appropriateness of the methodology employed to determine the discount rate and the final conclusion reached.

•	We tested the completeness and accuracy of the cumulative catch up adjustment recognized upon adoption.

•	We evaluated the new accounting policy for leases where the Trust is the lessee.

Adoption of ASC 842 (Lessor) - Refer to Note 2 to the Financial Statements

The Trust adopted ASC 842 as of January 1, 2019, which, from a lessor perspective, resulted in a change to the Trust’s revenue recognition policy for revenue earned under operating leases with their tenants.

We identified the adoption of ASC 842, from a lessor perspective, as a critical audit matter because significant auditor judgment was required in evaluating whether management had appropriately interpreted and implemented this new accounting standard for leases that were in place on the adoption date and for new leases entered into subsequent to the adoption date.

Our audit procedures related to the adoption of ASC 842 included the following:

•	We assessed the design and tested the operating effectiveness of internal controls relating to the initial adoption of ASC 842.

•	We evaluated the transition method implemented for leases that were in place at the adoption date and the new accounting policy for revenue earned under operating leases with their tenants. We utilized specialists in these evaluations.

•	We tested the completeness and accuracy of the cumulative catch up adjustment recognized upon adoption.

/s/ GRANT THORNTON LLP

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

Charlotte, North Carolina

February 10, 2020

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Federal Realty Investment Trust

Consolidated Balance Sheets

	December 31,
	2019				2018
	(In thousands, except share and per share data)
ASSETS
Real estate, at cost
Operating (including $1,676,866 and $1,701,804 of consolidated variable interest entities, respectively)	$	7,535,983			$	7,307,622
Construction-in-progress (including $102,583 and $51,313 of consolidated variable interest entities, respectively)	760,420				495,274
Assets held for sale	1,729				16,576
	8,298,132				7,819,472
Less accumulated depreciation and amortization (including $296,165 and $292,374 of consolidated variable interest entities, respectively)	(2,215,413		)		(2,059,143		)
Net real estate	6,082,719				5,760,329
Cash and cash equivalents	127,432				64,087
Accounts and notes receivable	152,572				142,237
Mortgage notes receivable, net	30,429				30,429
Investment in partnerships	28,604				26,859
Operating lease right of use assets	93,774				—
Finance lease right of use assets	52,402				—
Prepaid expenses and other assets	227,060				265,703
TOTAL ASSETS	$	6,794,992			$	6,289,644
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $469,184 and $444,388 of consolidated variable interest entities, respectively)	$	545,679			$	474,379
Capital lease obligations	—				71,519
Notes payable, net	3,781				279,027
Senior notes and debentures, net	2,807,134				2,404,279
Accounts payable and accrued expenses	255,503				177,922
Dividends payable	81,676				78,207
Security deposits payable	21,701				17,875
Operating lease liabilities	73,628				—
Finance lease liabilities	72,062				—
Other liabilities and deferred credits	157,938				182,898
Total liabilities	4,019,102				3,686,106
Commitments and contingencies (Note 7)
Redeemable noncontrolling interests	139,758				136,208
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, 75,540,804 and 74,249,633 shares issued and outstanding, respectively	759				745
Additional paid-in capital	3,166,522				3,004,442
Accumulated dividends in excess of net income	(791,124		)		(818,877		)
Accumulated other comprehensive loss	(813		)		(416		)
Total shareholders’ equity of the Trust	2,535,341				2,345,891
Noncontrolling interests	100,791				121,439
Total shareholders’ equity	2,636,132				2,467,330
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,794,992			$	6,289,644

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

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Federal Realty Investment Trust

Consolidated Statements of Comprehensive Income

	Year Ended December 31,
	2019				2018				2017
	(In thousands, except per share data)
REVENUE
Rental income	$	932,738			$	912,287			$	854,286
Mortgage interest income	3,050				3,149				3,062
Total revenue	935,788				915,436				857,348
EXPENSES
Rental expenses	187,831				173,094				164,890
Real estate taxes	110,927				114,776				107,839
General and administrative	42,754				33,600				36,281
Depreciation and amortization	239,758				244,245				216,050
Total operating expenses	581,270				565,715				525,060
Gain on sale of real estate, net	116,393				11,915				77,922
OPERATING INCOME	470,911				361,636				410,210
OTHER INCOME/(EXPENSE)
Other interest income	1,266				942				475
Interest expense	(109,623		)		(110,154		)		(100,125		)
Early extinguishment of debt	—				—				(12,273		)
Loss from partnerships	(2,012		)		(3,398		)		(417		)
NET INCOME	360,542				249,026				297,870
Net income attributable to noncontrolling interests	(6,676		)		(7,119		)		(7,956		)
NET INCOME ATTRIBUTABLE TO THE TRUST	353,866				241,907				289,914
Dividends on preferred shares	(8,042		)		(8,042		)		(2,458		)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	345,824			$	233,865			$	287,456
EARNINGS PER COMMON SHARE, BASIC
Net income available for common shareholders	$	4.61			$	3.18			$	3.97
Weighted average number of common shares	74,766				73,274				72,117
EARNINGS PER COMMON SHARE, DILUTED
Net income available for common shareholders	$	4.61			$	3.18			$	3.97
Weighted average number of common shares	74,766				73,302				72,233
NET INCOME	$	360,542			$	249,026			$	297,870
Other comprehensive (loss) income - change in value of interest rate swaps	(397		)		(438		)		2,599
COMPREHENSIVE INCOME	360,145				248,588				300,469
Comprehensive income attributable to noncontrolling interests	(6,676		)		(7,119		)		(7,956		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST	$	353,469			$	241,469			$	292,513

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

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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, 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
January 1, 2019 adoption of new accounting standard - See Note 2	—			—				—			—				—				(7,098		)		—				—				(7,098		)
Net income, excluding $3,430 attributable to redeemable noncontrolling interests	—			—				—			—				—				353,866				—				3,246				357,112
Other comprehensive loss - change in value of interest rate swaps	—			—				—			—				—				—				(397		)		—				(397		)
Dividends declared to common shareholders	—			—				—			—				—				(310,973		)		—				—				(310,973		)
Dividends declared to preferred shareholders	—			—				—			—				—				(8,042		)		—				—				(8,042		)
Distributions declared to noncontrolling interests	—			—				—			—				—				—				—				(9,961		)		(9,961		)
Common shares issued, net	—			—				1,069,740			11				142,705				—				—				—				142,716
Shares issued under dividend reinvestment plan	—			—				15,909			—				2,095				—				—				—				2,095
Share-based compensation expense, net of forfeitures	—			—				111,555			1				13,329				—				—				—				13,330
Shares withheld for employee taxes	—			—				(34,320	)		—				(4,626		)		—				—				—				(4,626		)
Conversion and redemption of OP units	—			—				128,287			2				14,102				—				—				(14,176		)		(72		)
Contributions from noncontrolling interests	—			—				—			—				—				—				—				243				243
Adjustment to redeemable noncontrolling interests	—			—				—			—				(5,525		)		—				—				—				(5,525		)
BALANCE AT DECEMBER 31, 2019	405,896			159,997				75,540,804			759				3,166,522				(791,124		)		(813		)		100,791				2,636,132

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

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Federal Realty Investment Trust

Consolidated Statements of Cash Flows

	Year Ended December 31,
	2019				2018				2017
	(In thousands)
OPERATING ACTIVITIES
Net income	$	360,542			$	249,026			$	297,870
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	239,758				244,245				216,050
Gain on sale of real estate, net	(116,393		)		(11,915		)		(77,922		)
Early extinguishment of debt	—				—				12,273
Loss from partnerships	2,012				3,398				417
Other, net	169				4,147				(2,674		)
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				—
(Increase) decrease in accounts receivable, net	(16,128		)		917				2,059
Increase in prepaid expenses and other assets	(10,253		)		(2,070		)		(3,695		)
Increase in accounts payable and accrued expenses	2,327				2,650				14,242
(Decrease) increase in security deposits and other liabilities	(115		)		13,937				208
Net cash provided by operating activities	461,919				516,688				458,828
INVESTING ACTIVITIES
Acquisition of real estate	(204,516		)		(13,503		)		(437,772		)
Capital expenditures - development and redevelopment	(327,074		)		(302,120		)		(441,984		)
Capital expenditures - other	(82,836		)		(66,138		)		(76,952		)
Proceeds from sale of real estate	321,997				177,775				136,055
Proceeds from partnership formation	—				37,998				—
Investment in partnerships	(1,052		)		(1,037		)		(696		)
Distribution from partnerships in excess of earnings	2,765				275				1,729
Leasing costs	(25,459		)		(25,430		)		(16,656		)
Issuance of mortgage and other notes receivable, net	(357		)		(67		)		(1,646		)
Net cash used in investing activities	(316,532		)		(192,247		)		(837,922		)
FINANCING ACTIVITIES
Net (repayments) borrowings under revolving credit facility, including costs	(4,012		)		(41,000		)		41,000
Issuance of senior notes, net of costs	399,913				—				572,134
Redemption and retirement of senior notes	—				—				(161,930		)
Repayment of mortgages, finance leases, and notes payable	(301,029		)		(16,620		)		(56,328		)
Issuance of common shares, net of costs	143,027				130,918				118,583
Issuance of preferred shares, net of costs	—				—				144,991
Dividends paid to common and preferred shareholders	(313,649		)		(301,194		)		(282,995		)
Shares withheld for employee taxes	(4,626		)		(958		)		(4,229		)
Contributions from noncontrolling interests	404				2,838				13,449
Distributions to and redemptions of noncontrolling interests	(20,133		)		(15,293		)		(15,230		)
Net cash (used in) provided by financing activities	(100,105		)		(241,309		)		369,445
Increase (decrease) in cash, cash equivalents, and restricted cash	45,282				83,132				(9,649		)
Cash, cash equivalents, and restricted cash at beginning of year	108,332				25,200				34,849
Cash, cash equivalents, and restricted cash at end of year	$	153,614			$	108,332			$	25,200

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

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Federal Realty Investment Trust

Notes to Consolidated Financial Statements

December 31, 2019**,** 2018 and 2017

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, 2019, 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 2018 and 2017 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

Policy beginning January 1, 2019, with our adoption of Accounting Standards Codification (ASC) 842, "Leases"

Our leases with our tenants are classified as operating leases. When collection of substantially all lease payments during the lease term is considered probable, the lease qualifies for accrual accounting. Lease payments are recognized on a straight-line basis from when the tenant controls the space through the term of the related lease. Variable lease payments relating to percentage rent are recognized at the end of the lease year or earlier if we have determined the required sales level is achieved. 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.

When collection of substantially all lease payments during the lease term is not considered probable, total lease revenue is limited to the lesser of revenue recognized under accrual accounting or cash received. Determining the probability of collection of substantially all lease payments during lease term requires judgment. This determination is impacted by numerous factors including our assessment of the tenant’s credit worthiness, economic conditions, our historical experience with the tenant and tenants operating in the same industry, and the length of the lease term. If leases currently classified as probable are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income.

Policy prior to January 1, 2019

Prior to January 1, 2019, management estimates of collectability were considered when reserving for billed and accrued lease receivables and straight-line rent receivables. Full and partial reserves were recorded when determined to be appropriate with a

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corresponding charge to bad debt expense. The primary impact of the adoption of ASC 842, “Leases,” on our recognition of lease revenue relates to the upfront and ongoing assessment of the collectability of substantially all lease payments required by the new standard.

Other revenue recognition policies

In 2018, 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," 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.

When we enter into a transaction to sell a property or a portion of a property, we evaluate the recognition of the sale under ASC 610-20, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets." In accordance with ASC 610-20, we apply the guidance in ASC 606, "Revenue from Contracts with Customers," to determine whether and when control transfers and how to measure the associated gain or loss. We determine the transaction price based on the consideration we expect to receive. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal of a gain recognized will not occur. We analyze the risk of a significant gain reversal and if necessary limit the amount of variable consideration recognized in order to mitigate this risk. The estimation of variable consideration requires us to make assumptions and apply significant judgment.

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 2019, 2018 and 2017, real estate depreciation expense was $215.4 million, $216.0 million and $193.3 million, respectively, including amounts from real estate sold.

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.

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Prior to the adoption of ASU 2016-02, "Leases," 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. Subsequently, capital leases are now considered "finance leases," see "Recent Accounting Pronouncements," for an explanation of the impact to our consolidated balance sheet.

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, are capitalized. 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 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, 2019, we had $131.5 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 incremental direct costs incurred which were essential to originate a successful leasing arrangement and would not have been incurred had the leasing transaction not taken place. 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.

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During 2019, we entered into two interest rate swap agreements that effectively fix the interest rate on a mortgage payable associated with our Hoboken acquisition at 3.67%. Both swaps were designated and qualify for cash flow hedge accounting. As of December 31, 2019, 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 2019, 2018 and 2017.

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 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, 2019 and 2018.

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, 2019 and 2018, we had two mortgage notes receivable, with aggregate carrying amounts of $30.4 million, and weighted average interest rates of 10.0% and 10.3%, 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, 2019 and 2018, our investment in these joint ventures and maximum exposure to loss was $23.4 million and $26.9 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 related to VIEs included in our consolidated balance sheets were approximately $1.5 billion for both December 31, 2019 and 2018, and mortgages related to VIEs included in our consolidated balance sheets were approximately $469.2 million and $444.4 million, as of December 31, 2019 and 2018, respectively.

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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.

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

	Year Ended
	December 31,
	2019				2018
	(In thousands)
Beginning balance	$	136,208			$	141,157
Contributions	9,961				354
Net Income	3,430				3,865
Distributions & Redemptions	(15,366		)		(4,071		)
Change in redemption value	5,525				(5,097		)
Ending balance	$	139,758			$	136,208

On August 2, 2019, we acquired the 10.1% redeemable noncontrolling interest in the partnership that owns our Montrose Crossing Shopping Center for $10.0 million, bringing our ownership interest to 100%.

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 2016. As of December 31, 2019 and 2018, 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.

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Recent Accounting Pronouncements

Standard		Description		Date of Adoption		Effect on the financial statements or significant matters
Recently adopted:
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 ASU 2019-01, March 2019, Leases (Topic 842), Codification Improvements		ASC 842 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 larger changes to the lessor model include: a change to the definition of initial direct costs of leases (resulting in the upfront expensing of more leasing related costs), the requirement to make an upfront and ongoing assessment of whether collection of substantially all of the lease payments required for the term of the lease is probable (if not probable, lease revenue is effectively recongnized when cash is collected), certain presentation changes, and the elimination of real estate specific guidance. ASU 2018-10, ASU 2018-20, and ASU 2019-01 provide 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.		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, did 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. We have also elected the practical expedient allowing lessors to combine non-lease and lease components (primarily impacts common area maintenance recoveries). From a lessee perspective, the primary impact of adoption on January 1, 2019 was 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 operating lease right of use assets and related liabilities are shown separately on the face of our consolidated balance sheet and reflect the present value of the minimum lease payments. A key input in the calculation is the discount rate. As the rate implied in the lease agreements is not readily determinable, we utilized our incremental borrowing rate, which takes into account estimates including interest rates that correspond to the remaining term of the lease, our credit spread, and an adjustment to reflect the collateralized payment terms present in the lease. Additionally, amounts previously recorded as capital lease assets and included in real estate have been reclassified in the December 31, 2019 balance sheet as finance lease right of use assets and the related capital lease obligations have been reclassified in the December 31, 2019 balance sheet as finance lease liabilities. Income statement presentation is not impacted for our existing operating and finance leases. From a lessor perspective, adoption of ASC 842 results in a charge to opening accumulated dividends in excess of net income of $7.1 million. This charge is attributable to the write off of certain direct leasing costs recorded as of December 31, 2018 under the previous lease accounting rules for leases which had not commenced and the write off of December 31, 2018 unreserved receivables (including straight-line receivables) for leases where we have determined that the collection of substantially all of the lease payments required for the term of the lease is not probable. Income statement presentation changes incorporated into our December 31, 2019 financial statements include: no longer recording a gross up of revenue and expense for costs (such as real estate taxes) paid directly by lessees on our behalf and recording collectability adjustments against revenue rather than as bad debt within rental expenses. As a result of the change in the definition of initial direct costs of leases, capitalized leasing costs excluding external commissions decreased to $2.2 million for the year ended December 31, 2019 from $7.5 million for the year ended December 31, 2018.

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Standard		Description		Date of Adoption		Effect on the financial statements or significant matters
Adopted subsequent to December 31, 2019:
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		While our mortgage notes receivable and certain other accounts receivables are impacted by this standard, the adoption of this standard will not 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 the date of adoption or retrospectively in accordance with ASC 250-10-45-5 through ASC 250-10-45-10.		January 2020		The adoption of this standard will not have a significant impact to our consolidated financial statements.

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The following table provides additional information on our operating and finance leases where we are the lessee:

		Year Ended
		December 31, 2019
		(In thousands)
LEASE COST:
Finance lease cost:
Amortization of right-of-use assets		$	1,284
Interest on lease liabilities		5,824
Operating lease cost		6,063
Variable lease cost		487
Total lease cost		$	13,658
OTHER INFORMATION:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for finance leases		5,759
Operating cash flows for operating leases		5,561
Financing cash flows for finance leases		47
		December 31, 2019
Weighted-average remaining term - finance leases		18.2 years
Weighted-average remaining term - operating leases		53.7 years
Weighted-average discount rate - finance leases		8.0		%
Weighted-average discount rate - operating leases		4.5		%

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,
	2019				2018				2017
	(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	130,110			$	129,001			$	125,684
Interest capitalized	(20,487		)		(18,847		)		(25,559		)
Interest expense	$	109,623			$	110,154			$	100,125
Cash paid for interest, net of amounts capitalized	$	106,180			$	107,494			$	105,201
Cash paid for income taxes	$	483			$	675			$	352
NON-CASH INVESTING AND FINANCING TRANSACTIONS (1):
Mortgage loans refinanced	$	—			$	—			$	166,823
Mortgage loans assumed/entered into with acquisition	$	98,041			$	—			$	79,401
DownREIT operating partnership units issued with acquisition	$	—			$	—			$	5,918
DownREIT operating partnership units redeemed for common shares	$	14,105			$	101			$	2,569
Settlement of partner loan receivable via dilution of partner interests	$	5,379			$	—			$	—
Shares issued under dividend reinvestment plan	$	1,784			$	1,884			$	2,017
Contribution from noncontrolling interest	$	—			$	1,435			$	—

(1) See Note 5 for additional disclosures relating to the mortgages entered into and assumed as a result of the Hoboken acquisition in 2019. In addition, see Note 3 for additional disclosures relating to our investment in the Assembly Row hotel joint venture in 2018.

Capitalized lease costs are incremental 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 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

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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" section in this note for further discussion regarding the change in accounting for lease costs as well as the operating lease right of use assets and lease liabilities recorded in connection with our adoption of ASC Topic 842.

	December 31,
	2019				2018
	(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents	$	127,432			$	64,087
Restricted cash (1)	26,182				44,245
Total cash, cash equivalents, and restricted cash	$	153,614			$	108,332

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

NOTE 3**—REAL ESTATE**

2019 Property Acquisitions

Date Acquired		Property		City/State		Gross Leasable Area (GLA)		Purchase Price
						(in square feet)		(in millions)
February 8, 2019		Fairfax Junction		Fairfax, Virginia		75,000		$	22.5		(1)
September 13, 2019		San Antonio Center		Mountain View, California		6,000		$	6.5
November 15, 2019		Georgetowne Shopping Center		Brooklyn, New York		147,000		$	83.7		(2)
Various 2019		Hoboken (37 mixed-use buildings)		Hoboken, New Jersey		158,000		$	189.2		(3)

(1) Approximately $0.6 million and $0.4 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

(2) Approximately $2.0 million and $0.4 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

(3) These acquisitions were completed through a newly formed joint venture, for which we own a 90% interest. The purchase price includes new and assumptions of mortgage debt totaling approximately $98.0 million. This property includes 123 residential units in addition to the GLA in the table above. Approximately $3.6 million and $8.1 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

2019 Property Dispositions

On December 11, 2019, we received $154.7 million in net proceeds related to the sale under the threat of condemnation of 11.7 acres of San Antonio Center to a local school district ("the condemning authority"). As part of the transaction, the condemning authority will commence condemnation proceedings in order to terminate all existing leases they assumed at closing. We have indemnified the condemning authority for all costs incurred related to the condemnation proceedings including any payments required to tenants at the property and expect the process will take several years to complete. The consideration in the transaction is considered variable because we have agreed to indemnify the condemning authority for these costs. Consequently, we have recorded a liability of $45.5 million to reflect our estimate of the final consideration, net of estimated condemnation proceeding costs and other transaction related costs. The resulting net gain on sale is approximately $85.1 million.

During the year ended December 31, 2019, we sold three properties and one land parcel for a net sales price of $149.0 million, which resulted in a net gain of $28.3 million.

During the year ended December 31, 2019, we closed on the sale of 43 condominium units at our Assembly Row and Pike & Rose properties (combined), received proceeds net of closing costs of $20.1 million, and recognized a gain of $2.6 million, net of income taxes. The cost basis for the remaining condominium units as of December 31, 2019 is $1.7 million, and is included in "assets held for sale" on our consolidated balance sheet.

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2018 Property Acquisitions and Dispositions

On June 15, 2018, we formed a new joint venture to develop Freedom Plaza (formerly known as 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 Freedom 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 compliance period. Cash in escrow at December 31, 2019 of $12.6 million, reflects remaining 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 sheets. 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, 2019, our investment in the venture was $3.2 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.

During the year ended December 31, 2018, we sold two properties for a net sales price of $42.2 million, which resulted in a net gain of $4.7 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 were ready for their intended use as of December 31, 2018 was $16.6 million, and is included in "assets held for sale" on our consolidated balance sheet.

NOTE 4—ACQUIRED IN-PLACE LEASES

Acquired lease assets comprise above market leases where we are the lessor and below market leases where we are the lessee. Acquired lease liabilities comprise below market leases where we are the lessor and above market leases where we are the lessee. As a lessor, acquired above market leases are included in prepaid expenses and other assets, and acquired below market leases are included in other liabilities and deferred credits. In accordance with our adoption of ASC Topic 842, acquired below market leases and acquired above market leases where we are the lessee are included in right of use assets. The following is a summary of our acquired lease assets and liabilities:

	December 31, 2019								December 31, 2018
	Cost				Accumulated Amortization				Cost				Accumulated Amortization
	(in thousands)
Above market leases, lessor	$	48,530			$	(32,833	)		$	49,128			$	(33,843	)
Below market leases, lessee	34,604				(3,362		)		34,604				(2,533		)
Total	$	83,134			$	(36,195	)		$	83,732			$	(36,376	)
Below market leases, lessor	$	(177,512	)		$	66,419			$	(189,379	)		$	65,408
Above market leases, lessee	(9,084		)		1,590				(9,084		)		1,065
Total	$	(186,596	)		$	68,009			$	(198,463	)		$	66,473

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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,
	2019				2018				2017
	(in thousands)
Amortization of above market leases, lessor	$	(3,239	)		$	(5,608	)		$	(6,005	)
Amortization of below market leases, lessor	9,623				12,445				10,726
Net increase in rental income	$	6,384			$	6,837			$	4,721
Amortization of below market leases, lessee	$	828			$	828			$	781
Amortization of above market leases, lessee	(525		)		(505		)		(290		)
Net increase in rental expense	$	303			$	323			$	491

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

		December 31, 2019
Above market leases, lessor		3.7 years
Below market leases, lessee		39.6 years
Below market leases, lessor		18.1 years
Above market leases, lessee		14.4 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,
2020		$	4,350			$	8,235
2021		3,370				7,687
2022		2,716				7,394
2023		2,488				7,134
2024		2,223				6,603
Thereafter		31,792				81,534
		$	46,939			$	118,587

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NOTE 5—DEBT

The following is a summary of our total debt outstanding as of December 31, 2019 and 2018:

			Principal Balance as of December 31,								Stated Interest Rate as of			Stated Maturity Date as of
Description of Debt			2019				2018				December 31, 2019			December 31, 2019
Mortgages payable			(Dollars in thousands)
Rollingwood Apartments			$	—			$	20,331			5.54	%		May 1, 2019
The Shops at Sunset Place			61,987				64,453				5.62	%		September 1, 2020
29th Place			3,878				4,117				5.91	%		January 31, 2021
Sylmar Towne Center			16,630				17,006				5.39	%		June 6, 2021
Plaza Del Sol			8,230				8,409				5.23	%		December 1, 2021
THE AVENUE at White Marsh			52,705				52,705				3.35	%		January 1, 2022
Montrose Crossing			67,492				69,310				4.20	%		January 10, 2022
Azalea			40,000				40,000				3.73	%		November 1, 2025
Bell Gardens			12,677				12,936				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
Hoboken (24 Buildings)			56,450				—				LIBOR + 1.95%			December 15, 2029
Various Hoboken (12 Buildings)			24,627				—				Various (1)			Various through 2029
Chelsea			5,597				5,941				5.36	%		January 15, 2031
Hoboken (1 Building)			16,874				—				3.75	%		July 1, 2042
Subtotal			547,247				475,308
Net unamortized premium and debt issuance costs			(1,568		)		(929		)
Total mortgages payable			545,679				474,379
Notes payable
Term loan			—				275,000				LIBOR + 0.90%			November 21, 2019
Revolving credit facility			—				—				LIBOR + 0.775%			January 19, 2024
Various			3,843				4,392				11.31	%		Various through 2028
Subtotal			3,843				279,392
Net unamortized debt issuance costs			(62		)		(365		)
Total notes payable			3,781				279,027
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
3.20% notes			400,000				—				3.20	%		June 15, 2029
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			2,819,200				2,419,200
Net unamortized discount and debt issuance costs			(12,066		)		(14,921		)
Total senior notes and debentures			2,807,134				2,404,279
Various			—				71,519				Various			Various through 2106
Total debt and capital lease obligations			$	3,356,594			$	3,229,204

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1)	The interest rates on these mortgages range from 3.91% to 5.00%.

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

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On June 7, 2019, we issued $300.0 million of fixed rate senior unsecured notes that mature on June 15, 2029 and bear interest at 3.20%. The notes were offered at 99.838% of the principal amount with a yield to maturity of 3.219%. On August 21, 2019, we issued an additional $100.0 million senior notes of the same series and with the same terms. The August notes were offered at 103.813% of the principal amount, with a yield to maturity of 2.744%. The combined net proceeds from the note offerings after net issuance premium, underwriting fees, and other costs were $399.9 million, which were primarily used to repay our $275.0 million unsecured term loan, at par, on June 7, 2019 and for general corporate purposes.

On July 25, 2019, we amended our revolving credit facility to increase our borrowing capacity to $1.0 billion and extend the maturity date to January 19, 2024, plus two six-month extensions at our option. Under the amended facility, the spread over LIBOR is 77.5 basis points based on our current credit rating. In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.5 billion.

During 2019, 2018 and 2017, the maximum amount of borrowings outstanding under our revolving credit facility was $116.5 million, $177.0 million and $344.0 million, respectively. The weighted average amount of borrowings outstanding was $26.8 million, $83.1 million and $147.5 million, respectively, and the weighted average interest rate, before amortization of debt fees, was 3.2%, 2.7% and 1.9%, respectively. The revolving credit facility requires an annual facility fee of $1.0 million. At December 31, 2019 and 2018, our revolving credit facility had no balance outstanding.

In connection with our Hoboken, New Jersey acquisitions in 2019, we assumed mortgage loans with a face amount of $41.6 million and a fair value of $42.9 million, and entered into a new mortgage loan with a face amount of $56.5 million. The mortgage loans associated with our Hoboken acquisitions have the following contractual terms:

		Principal				Stated Interest Rate				Maturity Date
		(in millions)
September 18, 2019 (date assumed)		$	17.0			3.75	%			July 1, 2042
November 26, 2019 (date originated)		$	56.5			LIBOR + 1.95%		(1)		December 15, 2029
November 26, 2019 (date assumed)		$	5.7			Various		(2)		Various	(2)
December 19, 2019 (date assumed)		$	18.9			Various		(3)		Various	(3)

---

(1)	The interest rate is effectively fixed at 3.67% as a result of two interest rate swap agreements.

(2)	The interest rates on these mortgages range from 3.91% to 5.00% and have maturity dates ranging from January 9, 2025 to May 31, 2029.

(3)	The interests rates on these mortgages range from 4.00% to 4.38% and have maturity dates ranging from October 1, 2025 to July 1, 2026.

Our revolving credit facility 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, 2019, 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, 2019 are as follows:

	Mortgages Payable					Notes Payable					Senior Notes and Debentures				Total Principal
	(In thousands)
Year ending December 31,
2020	$	66,252				$	613				$	—			$	66,865
2021	31,519					680					250,000				282,199
2022	119,460					756					250,000				370,216
2023	3,293					775					275,000				279,068
2024	3,421					665			(1)		300,000				304,086
Thereafter	323,302					354					1,744,200				2,067,856
	$	547,247				$	3,843				$	2,819,200			$	3,370,290			(2)

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(1)	Our $1.0 billion revolving credit facility matures on January 19, 2024, plus two six-month extensions at our option. As of December 31, 2019, there was no outstanding balance under this credit facility.

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(2)	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, 2019.

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

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, 2019								December 31, 2018
Carrying Value				Fair Value				Carrying Value				Fair Value
(In thousands)
Mortgages and notes payable	$	549,460			$	562,049			$	753,406			$	751,361
Senior notes and debentures	$	2,807,134			$	3,001,216			$	2,404,279			$	2,371,392

During 2019, we entered into two interest rate swap agreements with notional amounts of $56.5 million that are measured at fair value on a recurring basis. The interest rate swap agreements fix the interest rate on $56.5 million of mortgage payables associated with our Hoboken acquisition at 3.67% through December 15, 2029. The fair values of the interest rate swap agreements are 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, 2019 was an asset of $0.1 million and is included in "prepaid expenses and other assets" on our consolidated balance sheet. During 2019, we reclassified less than $0.1 million from other comprehensive income as an increase to interest expense. 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, 2019																December 31, 2018
	Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3				Total
	(In thousands)
Interest rate swaps	$	—			$	130			$	—			$	130			$	—			$	—			$	—			$	—

One of our equity method investees has two interest rate swaps which qualify as cash flow hedges. At December 31, 2019 and December 31, 2018, our share of the decrease in fair value of the related swaps included in "accumulated other comprehensive loss" was $0.9 million and $0.4 million, respectively.

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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.

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.

At December 31, 2019 and 2018, our reserves for general liability costs were $3.0 million and $3.1 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 2019 and 2018, we made payments from these reserves of $1.3 million and $1.4 million, respectively. Although we consider the reserve to be adequate, there can be no assurance that the reserve will prove to be adequate over-time to cover losses due to the difference between the assumptions used to estimate the reserve and actual losses.

At December 31, 2019, we had letters of credit outstanding of approximately $4.3 million.

As of December 31, 2019 in connection with capital improvement, development, and redevelopment projects, the Trust has contractual obligations of approximately $572.4 million.

Future minimum lease payments and their present value for properties under finance leases as of December 31, 2019, are as follows:

	(In thousands)
Year ending December 31,
2020	$	5,800
2021	5,800
2022	5,810
2023	60,013
2024	1,013
Thereafter	81,849
	160,285
Less amount representing interest	(88,808		)
Add straight line lease obligation	585
Present value	$	72,062

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We are obligated under operating lease agreements on several shopping centers requiring minimum annual payments as follows, as of December 31, 2019:

	(In thousands)
Year ending December 31,
2020	$	4,824
2021	4,832
2022	4,948
2023	4,988
2024	4,951
Thereafter	179,896
	$	204,439

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, 2019, our estimated maximum liability upon exercise of the put option would range from approximately $79 million to $84 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.

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, 2019, our estimated maximum liability upon exercise of the put option would range from approximately $30 million to $33 million.

The other member in The Grove at Shrewsbury and Brook 35 has the right to require us to purchase all of its approximately 4.1% interest in The Grove at Shrewsbury and approximately 6.5% 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, 2019, our estimated maximum liability upon exercise of the put option would range from $7 million to $8 million.

Effective September 18, 2023, the other member in Hoboken has the right to require us to purchase all of its 10.0% ownership interest at the interest's then-current fair market value. Based on management's current estimate of fair market value as of December 31, 2019, our estimated maximum liability upon exercise of the put option would range from $9 million to $10 million.

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 609,584 downREIT operating partnership units are outstanding which have a total fair value of $78.5 million, based on our closing stock price on December 31, 2019.

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 2019, 2018 and 2017, 15,909 shares, 17,952 shares and 17,911 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, 2019, 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.

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As of December 31, 2019, 2018, and 2017, 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, 2019, we issued 1,069,699 common shares at a weighted average price per share of $134.71 for net cash proceeds of $142.7 million and paid $1.2 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, 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. As of December 31, 2019, we had the capacity to issue up to $128.3 million in common shares under our ATM equity program.

NOTE 9—DIVIDENDS

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

	Year Ended December 31,
	2019								2018								2017
	Declared				Paid				Declared				Paid				Declared				Paid
Common shares	$	4.140			$	4.110			$	4.040			$	4.020			$	3.960			$	3.940
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			$	1.250			$	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,
2019				2018				2017
Common shares
Ordinary dividend	$	4.110			$	3.859			$	3.940
Ordinary dividend eligible for 15% rate	—				0.161				—
	$	4.110			$	4.020			$	3.940
5.417% Series 1 Cumulative Convertible Preferred shares
Ordinary dividend	$	1.354			$	1.300			$	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	$	1.250			$	1.254			$	—
Ordinary dividend eligible for 15% rate	—				0.052				$	—
	$	1.250			$	1.306			$	—

On October 30, 2019, the Trustees declared a quarterly cash dividend of $1.05 per common share, payable January 15, 2020 to common shareholders of record on January 2, 2020.

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NOTE 10—OPERATING LEASES

At December 31, 2019, 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 2,700 residential leases. Our commercial tenants range from sole proprietorships to national retailers and corporations. At December 31, 2019, no one tenant or corporate group of tenants accounted for more than 2.6% 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, 2019, future minimum rentals from noncancelable commercial operating leases (excluding both tenant reimbursements of operating expenses and percentage rent based on tenants' sales) are as follows:

	(In thousands)
Year ending December 31,
2020	$	616,760
2021	565,835
2022	498,438
2023	422,729
2024	352,221
Thereafter	1,528,699
	$	3,984,682

NOTE 11—COMPONENTS OF RENTAL EXPENSE

The principal components of rental expenses are as follows:

	Year Ended December 31,
2019				2018				2017
(In thousands)
Repairs and maintenance	$	73,179			$	67,745			$	67,996
Utilities	27,729				27,635				25,763
Management fees and costs	24,930				24,024				22,297
Payroll	16,485				16,140				14,922
Insurance	9,036				7,547				7,762
Marketing	7,427				7,935				9,007
Ground rent	4,803				4,697				3,826
Bad debt (1)	—				4,708				2,591
Other operating (2)	24,242				12,663				10,726
Total rental expenses	$	187,831			$	173,094			$	164,890

---

(1)	Collectibility adjustments are now presented as a reduction of rental income rather than rental expense in accordance with our adoption of the new lease standard (see Note 2 for additional disclosure).

(2)	Other operating for the year ended December 31, 2019 includes an $11.9 million charge relating to the buyout of a lease at Assembly Square Marketplace.

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NOTE 12**—SHARE-BASED COMPENSATION PLANS**

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

	Year Ended December 31,
	2019				2018				2017
	(In thousands)
Grants of common shares and options	$	13,330			$	12,736			$	12,371
Capitalized share-based compensation	(1,054		)		(1,017		)		(1,385		)
Share-based compensation expense	$	12,276			$	11,719			$	10,986

We have grants outstanding under our shareholder approved 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.

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 2019 and 2017.

The following table provides a summary of the assumptions used to value options granted in 2018:

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

The following table provides a summary of option activity for 2019:

	Shares Under Option			Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
								(In years)		(In thousands)
Outstanding at December 31, 2018	682			$	152.34
Granted	—			—
Exercised	—			—
Forfeited or expired	—			—
Outstanding at December 31, 2019	682			$	152.34			6.1		$	—
Exercisable at December 31, 2019	409			$	152.34			6.1		$	—

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

The following table provides a summary of restricted share activity for 2019:

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	Shares			Weighted-Average Grant-Date Fair Value
Unvested at December 31, 2018	206,100			$	130.46
Granted	122,056			133.30
Vested	(97,077	)		133.35
Forfeited	(10,501	)		151.22
Unvested at December 31, 2019	220,578			$	129.78

The weighted-average grant-date fair value of stock awarded in 2019, 2018 and 2017 was $133.30, $112.88 and $139.31, respectively. The total vesting-date fair value of shares vested during the year ended December 31, 2019, 2018 and 2017, was $13.0 million, $9.7 million and $12.5 million, respectively.

As of December 31, 2019, there was $17.1 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 4.9 years with a weighted-average period of 2.4 years.

Subsequent to December 31, 2019, common shares were awarded under various compensation plans as follows:

Date		Award				Vesting Term		Beneficiary
January 2, 2020		5,591		Shares		Immediate		Trustees
February 4, 2020		101,981		Restricted Shares		1-7 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 $19,000 for 2019, $18,500 for 2018, and 18,000 for 2017. 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, 2019, 2018 and 2017 was approximately $764,000, $688,000 and $632,000, 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, 2019 and 2018, we are liable to participants for approximately $14.7 million and $12.0 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 2019, 2018, and 2017 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 2019, 2018, and 2017, respectively. 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.

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	Year Ended December 31,
	2019				2018				2017
	(In thousands, except per share data)
NUMERATOR
Net income	$	360,542			$	249,026			$	297,870
Less: Preferred share dividends	(8,042		)		(8,042		)		(2,458		)
Less: Income from operations attributable to noncontrolling interests	(6,676		)		(7,119		)		(7,956		)
Less: Earnings allocated to unvested shares	(1,007		)		(930		)		(942		)
Net income available for common shareholders, basic and diluted	$	344,817			$	232,935			$	286,514
DENOMINATOR
Weighted average common shares outstanding—basic	74,766				73,274				72,117
Stock options	—				28				116
Weighted average common shares outstanding—diluted	74,766				73,302				72,233
EARNINGS PER COMMON SHARE, BASIC
Net income available for common shareholders	$	4.61			$	3.18			$	3.97
EARNINGS PER COMMON SHARE, DILUTED
Net income available for common shareholders	$	4.61			$	3.18			$	3.97

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)
2019
Revenue	$	232,227			$	230,465			$	233,947			$	239,149
Operating income (1)	$	91,093			$	109,579			$	94,018			$	176,221
Net income (1)	$	61,803			$	82,667			$	67,106			$	148,966
Net income attributable to the Trust (1)	$	60,144			$	80,902			$	65,465			$	147,355
Net income available for common shareholders (1)	$	58,134			$	78,891			$	63,455			$	145,344
Earnings per common share—basic (1)	$	0.78			$	1.05			$	0.84			$	1.92
Earnings per common share—diluted (1)	$	0.78			$	1.05			$	0.84			$	1.92
	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 (2)	$	89,461			$	93,868			$	93,467			$	84,840
Net income (2)	$	62,931			$	65,533			$	64,180			$	56,382
Net income attributable to the Trust (2)	$	61,247			$	63,595			$	62,558			$	54,507
Net income available for common shareholders (2)	$	59,237			$	61,584			$	60,548			$	52,496
Earnings per common share—basic (2)	$	0.81			$	0.84			$	0.82			$	0.71
Earnings per common share—diluted (2)	$	0.81			$	0.84			$	0.82			$	0.71

(1)

Second and third quarter 2019 include net gains of $16.2 million and $14.3 million, respectively, related to the sale of two properties and one parcel of land, as well as condominiums sold at our Assembly Row and Pike & Rose properties. Third quarter 2019 also includes an $11.9 million charge related to the buyout of a lease at Assembly Square Marketplace. Fourth quarter 2019 includes an $85.1 million net gain on sale under the threat of condemnation of a portion of San Antonio Center. All of these transactions are further discussed in Note 3.

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(2)	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 and fourth quarter 2018 include gains of $3.1 million and $1.6 million, respectively, related to the sale of one residential building and one property. All of these transactions are further discussed in Note 3.

NOTE 16—SUBSEQUENT EVENT

On January 10, 2020, we acquired a 49,000 square foot shopping center in Fairfax, Virginia for $22.3 million. This acquisition was funded by 163,322 downREIT operating partnership units.

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2019 (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)		$	3,868			$	10,211			$	18,863			$	11,985			$	10,195			$	30,864			$	41,059			$	14,953			1975 - 2001		5/30/2007		(1)
ANDORRA (Pennsylvania)						2,432				12,346				11,718				2,432				24,064				26,496				20,382				1953		1/12/1988		(1)
ASSEMBLY ROW/ASSEMBLY SQUARE MARKETPLACE (Massachusetts)						93,252				34,196				662,720				69,421				720,747				790,168				72,687				2005, 2012-2019		2005-2013		(1)
AZALEA (California)		39,702				40,219				67,117				(3		)		40,219				67,114				107,333				6,109				2014		8/2/2017		(1)
BALA CYNWYD (Pennsylvania)						3,565				14,466				39,175				2,683				54,523				57,206				23,062				1955		9/22/1993		(1)
BARCROFT PLAZA (Virginia)						12,617				29,603				6,515				12,617				36,118				48,735				4,513				1963, 1972, 1990, & 2000		1/13/16 & 11/7/16		(1)
BARRACKS ROAD (Virginia)						4,363				16,459				48,764				4,363				65,223				69,586				47,069				1958		12/31/1985		(1)
BELL GARDENS (California)		12,292				24,406				85,947				589				24,406				86,536				110,942				10,215				1990, 2003, 2006		8/2/17 & 11/29/18		(1)
BETHESDA ROW (Maryland)						46,579				35,406				151,640				43,904				189,721				233,625				85,602				1945-2008		12/31/93, 6/2/97, 1/20/06, 9/25/08, 9/30/08, & 12/27/10		(1)
BRICK PLAZA (New Jersey)						—				24,715				72,050				4,094				92,671				96,765				52,749				1958		12/28/1989		(1)
BRISTOL PLAZA (Connecticut)						3,856				15,959				11,786				3,856				27,745				31,601				19,149				1959		9/22/1995		(1)
BROOK 35 (New Jersey)		11,304				7,128				38,355				2,792				7,128				41,147				48,275				8,360				1986/2004		1/1/2014		(1)
CAMPUS PLAZA (Massachusetts)						16,710				13,412				315				16,710				13,727				30,437				2,415				1970		1/13/2016		(1)
CHELSEA COMMONS (Massachusetts)		5,402				8,689				19,466				2,126				8,669				21,612				30,281				8,382				1962/1969/2008		8/25/06, 1/30/07, & 7/16/08		(1)
COCOWALK (Florida)						35,063				71,476				47,158				34,406				119,291				153,697				10,175				1990/1994, 1922-1973, 2018-2019		5/4/15, 7/1/15, 12/16/15, 7/26/16, 6/30/17, & 8/10/17		(1)
COLORADO BLVD (California)						5,262				4,071				10,375				5,262				14,446				19,708				11,507				1905-1988		12/31/96 & 8/14/98		(1)
CONGRESSIONAL PLAZA (Maryland)						2,793				7,424				95,064				2,793				102,488				105,281				58,521				1965/2003		4/1/1965		(1)

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2019 (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				3,106				1,750				4,975				6,725				2,408				1975		12/17/1997		(1)
CROSSROADS (Illinois)						4,635				11,611				19,462				4,635				31,073				35,708				18,708				1959		7/19/1993		(1)
CROW CANYON COMMONS (California)						27,245				54,575				8,392				27,245				62,967				90,212				25,878				Late 1970's/ 1998/2006		12/29/05 & 2/28/07		(1)
DARIEN (Connecticut)						30,368				19,523				7,214				30,368				26,737				57,105				4,351				1920-2009		4/3/13 & 7/20/18		(1)
DEDHAM PLAZA (Massachusetts)						16,658				13,964				15,825				16,658				29,789				46,447				17,108				1959		12/31/93, 12/14/16, 1/29/19, & 3/12/19		(1)
DEL MAR VILLAGE (Florida)						15,624				41,712				15,821				15,587				57,570				73,157				24,154				1982/1994/2007		5/30/08, 7/11/08, & 10/14/14		(1)
EAST BAY BRIDGE (California)						29,069				138,035				11,839				29,069				149,874				178,943				36,029				1994-2001, 2011/2012		12/21/2012		(1)
EASTGATE CROSSING (North Carolina)						1,608				5,775				27,806				1,608				33,581				35,189				21,822				1963		12/18/1986		(1)
ELLISBURG (New Jersey)						4,028				11,309				19,277				4,013				30,601				34,614				21,832				1959		10/16/1992		(1)
ESCONDIDO PROMENADE (California)						19,117				15,829				17,942				19,117				33,771				52,888				19,105				1987		12/31/96 & 11/10/10		(1)
FAIRFAX JUNCTION (Virgina)						10,229				11,321				25				10,229				11,346				21,575				548				1981/2000		2/8/2019		(1)
FALLS PLAZA (Virginia)						1,798				1,270				11,370				1,819				12,619				14,438				9,078				1960/1962		9/30/67 & 10/05/72		(1)
FEDERAL PLAZA (Maryland)						10,216				17,895				42,396				10,216				60,291				70,507				46,693				1970		6/29/1989		(1)
FINLEY SQUARE (Illinois)						9,252				9,544				22,645				9,252				32,189				41,441				22,071				1974		4/27/1995		(1)
FLOURTOWN (Pennsylvania)						1,345				3,943				11,795				1,507				15,576				17,083				7,028				1957		4/25/1980		(1)
FOURTH STREET (California)						13,978				9,909				2,345				13,978				12,254				26,232				1,014				1948,1975		5/19/2017		(1)
FREEDOM PLAZA (California)						—				3,255				35,623				—				38,878				38,878				—				2018-2019		6/15/2018		(1)
FRESH MEADOWS (New York)						24,625				25,255				43,297				24,633				68,544				93,177				43,607				1946-1949		12/5/1997		(1)
FRIENDSHIP CENTER (District of Columbia)						12,696				20,803				4,662				12,696				25,465				38,161				13,970				1998		9/21/2001		(1)
GAITHERSBURG SQUARE (Maryland)						7,701				5,271				15,692				5,973				22,691				28,664				18,933				1966		4/22/1993		(1)
GARDEN MARKET (Illinois)						2,677				4,829				7,295				2,677				12,124				14,801				8,640				1958		7/28/1994		(1)

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2019 (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
GEORGETOWNE SHOPPING CENTER (New York)						30,738				50,103				946				32,199				49,588				81,787				295				1969/2006/2015		11/15/2019		(1)
GOVERNOR PLAZA (Maryland)						2,068				4,905				20,620				2,068				25,525				27,593				22,092				1963		10/1/1985		(1)
GRAHAM PARK PLAZA (Virginia)						1,237				15,096				20,518				1,169				35,682				36,851				28,526				1971		7/21/1983		(1)
GRATIOT PLAZA (Michigan)						525				1,601				17,996				525				19,597				20,122				18,005				1964		3/29/1973		(1)
GREENLAWN PLAZA (New York)						10,590				20,869				412				10,590				21,281				31,871				3,468				1975/2004		1/13/2016		(1)
GREENWICH AVENUE (Connecticut)						7,484				5,445				10,819				7,484				16,264				23,748				4,824				1968		4/12/1995		(1)
HASTINGS RANCH PLAZA (California)						—				22,393				438				—				22,831				22,831				2,272				1958, 1984, 2006, 2007		2/1/2017		(1)
HAUPPAUGE (New York)						8,791				15,262				5,388				8,419				21,022				29,441				13,170				1963		8/6/1998		(1)
HOBOKEN (New Jersey)		98,224				45,385				150,905				952				43,450				153,792				197,242				628				1887-2006		9/18/19, 11/26/19, & 12/19/19		(1)
HOLLYWOOD BLVD (California)						8,300				16,920				26,745				8,370				43,595				51,965				16,783				1929/1991		3/22/99 & 6/18/99		(1)
HUNTINGTON (New York)						12,194				16,008				18,484				12,194				34,492				46,686				17,431				1962		12/12/88, 10/26/07, & 11/24/15		(1)
HUNTINGTON SQUARE (New York)						—				10,075				3,148				506				12,717				13,223				4,238				1980/2004-2007		8/16/2010		(1)
IDYLWOOD PLAZA (Virginia)						4,308				10,026				2,779				4,308				12,805				17,113				9,716				1991		4/15/1994		(1)
KINGS COURT (California)						—				10,714				866				—				11,580				11,580				9,545				1960		8/24/1998		(1)
LANCASTER (Pennsylvania)						—				2,103				6,116				432				7,787				8,219				6,008				1958		4/24/1980		(1)
LANGHORNE SQUARE (Pennsylvania)						720				2,974				18,992				720				21,966				22,686				16,661				1966		1/31/1985		(1)
LAUREL (Maryland)						7,458				22,525				28,273				7,462				50,794				58,256				40,417				1956		8/15/1986		(1)
LAWRENCE PARK (Pennsylvania)						6,150				8,491				19,621				6,161				28,101				34,262				23,385				1972		7/23/1980 & 4/3/17		(1)
LEESBURG PLAZA (Virginia)						8,184				10,722				18,165				8,184				28,887				37,071				16,067				1967		9/15/1998		(1)
LINDEN SQUARE (Massachusetts)						79,382				19,247				51,735				79,346				71,018				150,364				26,947				1960-2008		8/24/2006		(1)
MELVILLE MALL (New York)						35,622				32,882				31,450				35,622				64,332				99,954				17,028				1974		10/16/2006		(1)
MERCER MALL (New Jersey)						5,917				18,358				48,524				5,917				66,882				72,799				33,340				1975		10/14/03 & 1/31/17		(1)

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2019 (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
MONTROSE CROSSING (Maryland)		67,492				48,624				91,819				22,110				48,624				113,929				162,553				32,948				1960s, 1970s, 1996 & 2011		12/27/11 & 12/19/13		(1)
MOUNT VERNON/SOUTH VALLEY/7770 RICHMOND HWY. (Virginia)						10,068				33,501				42,942				10,150				76,361				86,511				39,734				1966/1972/1987/2001		3/31/03, 3/21/03, & 1/27/06		(1)
NORTH DARTMOUTH (Massachusetts)						9,366				—				3				9,366				3				9,369				1				2004		8/24/2006		(1)
NORTHEAST (Pennsylvania)						938				8,779				22,027				939				30,805				31,744				19,120				1959		8/30/1983		(1)
OLD KEENE MILL (Virginia)						638				998				11,093				638				12,091				12,729				6,017				1968		6/15/1976		(1)
OLD TOWN CENTER (California)						3,420				2,765				29,348				3,420				32,113				35,533				22,722				1962, 1997-1998		10/22/1997		(1)
OLIVO AT MISSION HILLS (California)						15,048				46,732				17,869				15,048				64,601				79,649				3,016				2017-2018		8/2/2017		(1)
PAN AM (Virginia)						8,694				12,929				8,314				8,695				21,242				29,937				16,292				1979		2/5/1993		(1)
PENTAGON ROW (Virginia)						—				2,955				103,383				—				106,338				106,338				52,509				1999 - 2002		1998 & 11/22/10		(1)
PERRING PLAZA (Maryland)						2,800				6,461				22,943				2,800				29,404				32,204				24,834				1963		10/1/1985		(1)
PIKE & ROSE (Maryland)						31,471				10,335				579,682				27,929				593,559				621,488				50,600				1963, 2012-2019		5/18/82, 10/26/07, & 7/31/12		(1)
PIKE 7 PLAZA (Virginia)						14,970				22,799				11,569				14,914				34,424				49,338				18,736				1968		3/31/97 & 7/8/15		(1)
PLAZA DEL MERCADO (Maryland)						10,305				21,553				14,859				10,305				36,412				46,717				5,571				1969		1/13/2016		(1)
PLAZA DEL SOL (California)		8,308				5,605				12,331				—				5,605				12,331				17,936				1,185				2009		8/2/2017		(1)
PLAZA EL SEGUNDO/THE POINT (California)		124,336				62,127				153,556				77,079				64,788				227,974				292,762				54,745				2006/2007/2016		12/30/11, 6/14/13, 7/26/13, & 12/27/13		(1)
QUEEN ANNE PLAZA (Massachusetts)						3,319				8,457				6,166				3,319				14,623				17,942				10,580				1967		12/23/1994		(1)
QUINCE ORCHARD (Maryland)						3,197				7,949				30,386				2,928				38,604				41,532				22,770				1975		4/22/1993		(1)
RIVERPOINT CENTER (Illinois)						15,422				104,572				1,930				15,422				106,502				121,924				9,487				1989, 2012		3/31/2017		(1)
ROCKVILLE TOWN SQUARE (Maryland)						—				8,092				39,639				—				47,731				47,731				20,001				2005 - 2007		2006 - 2007		(1)
ROLLINGWOOD APTS. (Maryland)						552				2,246				8,575				774				10,599				11,373				9,940				1960		1/15/1971		(1)

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2019 (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
SAM'S PARK & SHOP (District of Columbia)						4,840				6,319				3,022				4,840				9,341				14,181				5,912				1930		12/1/1995		(1)
SAN ANTONIO CENTER (California)						26,400				18,462				1,141				26,400				19,603				46,003				3,752				1958, 1964-1965, 1974-1975, 1995-1997		1/9/2015, 9/13/19		(1)
SANTANA ROW (California)						66,682				7,502				976,080				53,217				997,047				1,050,264				221,350				1999-2006, 2009, 2011, 2014, 2016-2019		3/5/97, 7/13/12, 9/6/12, 4/30/13 & 9/23/13		(1)
SAUGUS PLAZA (Massachusetts)						4,383				8,291				4,501				4,383				12,792				17,175				7,557				1976		10/1/1996		(1)
SYLMAR TOWNE CENTER (California)		16,854				18,522				24,636				679				18,522				25,315				43,837				2,205				1973		8/2/2017		(1)
THE AVENUE AT WHITE MARSH (Maryland)		52,597				20,682				72,432				29,311				20,685				101,740				122,425				38,923				1997		3/8/2007		(1)
THE GROVE AT SHREWSBURY (New Jersey)		42,874				18,016				103,115				5,419				18,021				108,529				126,550				20,825				1988/1993/2007		1/1/2014 & 10/6/14		(1)
THE SHOPPES AT NOTTINGHAM SQUARE (Maryland)						4,441				12,849				735				4,441				13,584				18,025				5,889				2005 - 2006		3/8/2007		(1)
THE SHOPS AT SUNSET PLACE (Florida)		62,426				64,499				50,853				8,944				64,499				59,797				124,296				10,136				1999		10/1/2015		(1)
THIRD STREET PROMENADE (California)						22,645				12,709				45,863				25,125				56,092				81,217				36,201				1888-2000		1996-2000		(1)
TOWER SHOPPNG CENTER (Virginia)						7,170				10,518				4,797				7,280				15,205				22,485				9,921				1953-1960		8/24/1998		(1)
TOWER SHOPS (Florida)						29,940				43,390				24,855				29,962				68,223				98,185				21,085				1989		1/19/11 & 6/13/14		(1)
TOWN CENTER OF NEW BRITAIN (Pennsylvania)						1,282				12,285				2,888				1,535				14,920				16,455				5,931				1969		6/29/2006		(1)
TOWSON RESIDENTIAL (FLATS @703) (Maryland)						2,328				—				20,042				2,328				20,042				22,370				1,454				2016-2017		3/8/2007		(1)
TROY HILLS (New Jersey)						3,126				5,193				32,655				5,865				35,109				40,974				23,135				1966		7/23/1980		(1)
TYSON'S STATION (Virginia)						388				453				4,170				493				4,518				5,011				3,939				1954		1/17/1978		(1)
VILLAGE AT SHIRLINGTON (Virginia)						9,761				14,808				38,771				4,234				59,106				63,340				30,187				1940, 2006-2009		12/21/1995		(1)
WESTGATE CENTER (California)						6,319				107,284				43,870				6,319				151,154				157,473				61,106				1960-1966		3/31/2004		(1)
WHITE MARSH PLAZA (Maryland)						3,478				21,413				1,028				3,478				22,441				25,919				9,736				1987		3/8/2007		(1)

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2019 (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
WHITE MARSH OTHER (Maryland)						29,725				1,843				146				29,754				1,960				31,714				913				1985		3/8/2007		(1)
WILDWOOD (Maryland)						9,111				1,061				15,905				9,111				16,966				26,077				9,208				1958		5/5/1969		(1)
WILLOW GROVE (Pennsylvania)						1,499				6,643				22,061				1,499				28,704				30,203				27,812				1953		11/20/1984		(1)
WILLOW LAWN (Virginia)						3,192				7,723				91,838				7,790				94,963				102,753				62,087				1957		12/5/1983		(1)
WYNNEWOOD (Pennsylvania)						8,055				13,759				21,272				8,055				35,031				43,086				25,668				1948		10/29/1996		(1)
TOTALS		$	545,679			$	1,449,865			$	2,526,772			$	4,321,495			$	1,414,814			$	6,883,318			$	8,298,132			$	2,215,413

(1)	Depreciation of building and improvements is calculated based on useful lives ranging from the life of the lease to 50 years.

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED Three Years Ended December 31, 2019 Reconciliation of Total Cost (in thousands)
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	7,819,472
January 1, 2019 adoption of new accounting standard - See Note 2	(71,859		)
Additions during period
Acquisitions	309,921
Improvements	441,703
Deduction during period—dispositions and retirements of property	(201,105		)
Balance, December 31, 2019 (1)	$	8,298,132

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(1)	For Federal tax purposes, the aggregate cost basis is approximately $7.4 billion as of December 31, 2019.

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE III SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED Three Years Ended December 31, 2019 Reconciliation of Accumulated Depreciation and Amortization (in thousands)
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
January 1, 2019 adoption of new accounting standard - See Note 2	(18,173		)
Additions during period—depreciation and amortization expense	215,382
Deductions during period—dispositions and retirements of property	(40,939		)
Balance, December 31, 2019	$	2,215,413

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE Year Ended December 31, 2019 (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					$	—

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(1)	For Federal tax purposes, the aggregate tax basis is approximately $30.4 million as of December 31, 2019.

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

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FEDERAL REALTY INVESTMENT TRUST SCHEDULE IV MORTGAGE LOANS ON REAL ESTATE - CONTINUED Three Years Ended December 31, 2019 Reconciliation of Carrying Amount (in thousands)
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
Balance, December 31, 2019	$	30,429

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