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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒			QUARTERLY REPORT PURSUANT TO THE SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-07533 (Federal Realty Investment Trust)

Commission file number: 333-262016-01 (Federal Realty OP LP)

FEDERAL REALTY INVESTMENT TRUST

FEDERAL REALTY OP LP

(Exact Name of Registrant as Specified in its Charter)

Maryland (Federal Realty Investment Trust)												87-3916363
Delaware (Federal Realty OP LP)												52-0782497
(State of Organization)												(IRS Employer Identification No.)

909 Rose Avenue, Suite 200, North Bethesda, Maryland 20852

(Address of Principal Executive Offices) (Zip Code)

(301) 998-8100

(Registrant’s Telephone Number, Including Area Code)

Federal Realty Investment Trust

Title of Each Class			Trading Symbol			Name of Each Exchange On Which Registered
Common Shares of Beneficial Interest			FRT			New York Stock Exchange
$.01 par value per share, with associated Common Share Purchase Rights
Depositary Shares, each representing 1/1000 of a share of			FRT-C			New York Stock Exchange
5.00% Series C Cumulative Redeemable Preferred Stock, $.01 par value per share

Federal Realty OP LP

Title of Each Class			Trading Symbol			Name of Each Exchange On Which Registered
None			N/A			N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Federal Realty Investment Trust ☒ Yes ☐ No Federal Realty OP LP ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Federal Realty Investment Trust ☒ Yes ☐ No Federal Realty OP LP ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.:

Federal Realty Investment Trust															Federal Realty OP LP
Large Accelerated Filer			☒			Accelerated filer			☐						Large Accelerated Filer			☒			Accelerated filer			☐
Non-Accelerated Filer			☐			Smaller reporting company			☐						Non-Accelerated Filer			☐			Smaller reporting company			☐
						Emerging growth company			☐												Emerging growth company			☐

If an emerging growth company, indicate by checkmark if the registrant has elected not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Federal Realty Investment Trust ☐ Yes ☐ No Federal Realty OP LP ☐ Yes ☐ No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Federal Realty Investment Trust ☐ Yes ☒ No Federal Realty OP LP ☐ Yes ☒ No

The number of registrant’s common shares outstanding on August 1, 2022 was 80,908,184.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2022, of Federal Realty Investment Trust and Federal Realty OP, LP. Unless stated otherwise or the context otherwise requires, references to "Federal Realty Investment Trust," the "Parent Company" or the "Trust" mean Federal Realty Investment Trust; and references to "Federal Realty OP LP" or the "Operating Partnership" mean Federal Realty OP LP. The term "the Company," "we," "us," and "our" refer to the Parent Company and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership. References to "shares" and "shareholders" refer to the shares and shareholders of the Parent Company and not the limited partnership interests for limited partners of the Operating Partnership.

The Parent Company is a real estate investment trust ("REIT") that owns 100% of the limited liability company interests of, is the sole member of, and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which is the sole general partner of the Operating Partnership. As of June 30, 2022, the Parent Company owned 100% of the outstanding partnership units (the "OP Units") in the Operating Partnership.

The Company believes combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report provides the following benefits:

• Enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view the businesses as a whole in the same manner as management views and operates the business;

• Eliminates duplicate disclosure and provides a more streamlined and readable presentation; and

• Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

Management operates the Parent Company and the Operating Partnership as one business. Since the Operating Partnership is managed by the Parent Company, and the Parent Company conducts substantially all of its operations through the Operating Partnership, the management of the Parent Company consists of the same individuals as the management of the Operating Partnership.

We believe it is important to understand the few differences between the Parent Company and the Operating Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is a REIT, whose only material asset is its direct and indirect interest in the Operating Partnership. As a result, the Parent Company does not conduct business itself other than issuing public equity from time to time. The Parent Company is not expected to incur any material indebtedness. The Operating Partnership holds substantially all of our assets and retains the ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for OP Units, the Operating Partnership generates all capital required by the Company’s business. Sources of this capital include the Operating Partnership’s operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.

Stockholders' equity, partner capital, and non-controlling interests are the primary areas of difference between the unaudited Condensed Consolidated Financial Statements of the Parent Company and those of the Operating Partnership. The Operating Partnership’s capital currently includes OP Units owned by the Parent, and may in the future include OP Units owned by third parties. OP Units owned by third parties, if any, are accounted for in capital in the Operating Partnership’s financial statements and in non-controlling interests in the Parent Company’s financial statements.

The Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not have assets other than its investment in the Operating Partnership. Therefore, while stockholders’ equity and partners' capital differ as discussed above, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their respective financial statements.

In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this report that separately discuss the Parent Company and the Operating Partnership, including separate financial statements (but combined footnotes), separate controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections that combine disclosure for the Parent Company and the Operating Partnership, this report refers to actions or holdings as being actions or holdings of the Company.

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FEDERAL REALTY INVESTMENT TRUST

FEDERAL REALTY OP LP

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED JUNE 30, 2022

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PART I. FINANCIAL INFORMATION
Item 1.			Financial Statements			3
Federal Realty Investment Trust
			Consolidated Balance Sheets (unaudited) as of June 30, 2022 and December 31, 2021			3
			Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2022 and 2021			4
			Consolidated Statements of Shareholders' Equity (unaudited) for the three and six months ended June 30, 2022 and 2021			5
			Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2022 and 2021			7
Federal Realty OP LP
			Consolidated Balance Sheets (unaudited) as of June 30, 2022 and December 31, 2021			8
			Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2022 and 2021			9
			Consolidated Statements of Capital (unaudited) for the three and six months ended June 30, 2022 and 2021			10
			Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2022 and 2021			12
Federal Realty Investment Trust and Federal Realty OP LP
			Notes to Consolidated Financial Statements (unaudited)			13
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3.			Quantitative and Qualitative Disclosures about Market Risk			35
Item 4.			Controls and Procedures			36
PART II. OTHER INFORMATION						37
Item 1.			Legal Proceedings			37
Item 1A.			Risk Factors			37
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			37
Item 3.			Defaults Upon Senior Securities			37
Item 4.			Mine Safety Disclosures			37
Item 5.			Other Information			37
Item 6.			Exhibits			37
SIGNATURES						34

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Federal Realty Investment Trust

Consolidated Balance Sheets

			June 30,						December 31,
			2022						2021
			(In thousands, except share and per share data)
			(Unaudited)
ASSETS
Real estate, at cost
Operating (including $2,219,568 and $2,207,648 of consolidated variable interest entities, respectively)			$	9,076,274					$	8,814,791
Construction-in-progress (including $24,865 and $18,752 of consolidated variable interest entities, respectively)			630,287						607,271
			9,706,561						9,422,062
Less accumulated depreciation and amortization (including $418,633 and $389,950 of consolidated variable interest entities, respectively)			(2,648,474)						(2,531,095)
Net real estate			7,058,087						6,890,967
Cash and cash equivalents			176,559						162,132
Accounts and notes receivable, net			187,370						169,007
Mortgage notes receivable, net			9,499						9,543
Investment in partnerships			13,515						13,027
Operating lease right of use assets			89,613						90,743
Finance lease right of use assets			49,190						49,832
Prepaid expenses and other assets			226,608						237,069
TOTAL ASSETS			$	7,810,441					$	7,622,320
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $317,619 and $335,301 of consolidated variable interest entities, respectively)			$	321,975					$	339,993
Notes payable, net			301,480						301,466
Senior notes and debentures, net			3,406,895						3,406,088
Accounts payable and accrued expenses			226,660						235,168
Dividends payable			87,397						86,538
Security deposits payable			27,232						25,331
Operating lease liabilities			71,827						72,661
Finance lease liabilities			72,019						72,032
Other liabilities and deferred credits			209,217						206,187
Total liabilities			4,724,702						4,745,464
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests			209,312						213,708
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), 392,878 and 399,896 shares issued and outstanding, respectively			9,822						9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 80,896,804 and 78,603,305 shares issued and outstanding, respectively			813						790
Additional paid-in capital			3,758,161						3,488,794
Accumulated dividends in excess of net income			(1,126,463)						(1,066,932)
Accumulated other comprehensive income (loss)			3,550						(2,047)
Total shareholders’ equity of the Trust			2,795,883						2,580,602
Noncontrolling interests			80,544						82,546
Total shareholders’ equity			2,876,427						2,663,148
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	7,810,441					$	7,622,320

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

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Federal Realty Investment Trust

Consolidated Statements of Comprehensive Income

(Unaudited)

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
			(In thousands, except per share data)
REVENUE
Rental income			$	263,830					$	230,795					$	520,337					$	447,930
Mortgage interest income			269						830						533						1,856
Total revenue			264,099						231,625						520,870						449,786
EXPENSES
Rental expenses			51,169						42,918						107,380						92,156
Real estate taxes			31,265						29,323						61,825						58,743
General and administrative			13,604						12,846						25,946						23,104
Depreciation and amortization			74,461						67,675						146,135						131,549
Total operating expenses			170,499						152,762						341,286						305,552
Gain on sale of real estate and change in control of interest			—						—						—						17,428
OPERATING INCOME			93,600						78,863						179,584						161,662
OTHER INCOME/(EXPENSE)
Other interest income			133						250						253						613
Interest expense			(32,074)						(31,177)						(63,647)						(63,262)
Income (loss) from partnerships			2,808						123						3,005						(1,215)
NET INCOME			64,467						48,059						119,195						97,798
Net income attributable to noncontrolling interests			(2,791)						(1,855)						(5,535)						(3,358)
NET INCOME ATTRIBUTABLE TO THE TRUST			61,676						46,204						113,660						94,440
Dividends on preferred shares			(2,008)						(2,011)						(4,018)						(4,021)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS			$	59,668					$	44,193					$	109,642					$	90,419
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders			$	0.75					$	0.57					$	1.38					$	1.16
Weighted average number of common shares			79,202						77,474						78,826						77,160
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders			$	0.75					$	0.57					$	1.38					$	1.16
Weighted average number of common shares			79,202						77,505						78,855						77,162
COMPREHENSIVE INCOME			$	66,689					$	47,002					$	125,333					$	100,435
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST			$	63,701					$	45,266					$	119,257					$	96,846

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

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Federal Realty Investment Trust

Consolidated Statements of Shareholders’ Equity

For the Three and Six Months Ended June 30, 2022

(Unaudited)

			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, 2021			405,896						$	159,997					78,603,305						$	790					$	3,488,794					$	(1,066,932)					$	(2,047)					$	82,546					$	2,663,148
Net income, excluding $3,527 attributable to redeemable noncontrolling interests			—						—						—						—						—						113,660						—						2,008						115,668
Other comprehensive income - change in fair value of interest rate swaps, excluding $541 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						5,597						—						5,597
Dividends declared to common shareholders ($2.14 per share)			—						—						—						—						—						(169,173)						—						—						(169,173)
Dividends declared to preferred shareholders			—						—						—						—						—						(4,018)						—						—						(4,018)
Distributions declared to noncontrolling interests, excluding $4,138 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						(2,625)						(2,625)
Common shares issued, net			—						—						2,203,697						22						259,430						—						—						—						259,452
Shares issued under dividend reinvestment plan			—						—						8,000						—						1,011						—						—						—						1,011
Share-based compensation expense, net of forfeitures			—						—						104,105						1						7,678						—						—						—						7,679
Shares withheld for employee taxes			—						—						(38,576)						—						(4,638)						—						—						—						(4,638)
Conversion of preferred shares			(7,018)						(175)						1,675						—						175						—						—						—						—
Conversion of downREIT OP units			—						—						14,598						—						1,385						—						—						(1,385)						—
Adjustment to redeemable noncontrolling interests			—						—						—						—						4,326						—						—						—						4,326
BALANCE AT JUNE 30, 2022			398,878						$	159,822					80,896,804						$	813					$	3,758,161					$	(1,126,463)					$	3,550					$	80,544					$	2,876,427
BALANCE AT MARCH 31, 2022			405,896						$	159,997					79,417,472						$	799					$	3,572,591					$	(1,101,154)					$	1,525					$	80,819					$	2,714,577
Net income, excluding $1,792 attributable to redeemable noncontrolling interests			—						—						—						—						—						61,676						—						999						62,675
Other comprehensive income - change in fair value of interest rate swaps, excluding $197 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						2,025						—						2,025
Dividends declared to common shareholders ($1.07 per share)			—						—						—						—						—						(84,977)						—						—						(84,977)
Dividends declared to preferred shareholders			—						—						—						—						—						(2,008)						—						—						(2,008)
Distributions declared to noncontrolling interests, excluding $2,394 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						(866)						(866)
Common shares issued, net			—						—						1,473,928						14						176,689						—						—						—						176,703
Shares issued under dividend reinvestment plan			—						—						4,230						—						509						—						—						—						509
Share-based compensation expense, net of forfeitures			—						—						(4,786)						—						3,500						—						—						—						3,500
Shares withheld for employee taxes			—						—						(306)						—						(37)						—						—						—						(37)
Conversion of preferred shares			(7,018)						(175)						1,675						—						175						—						—						—						—
Conversion of downREIT OP units			—												4,591						—						408						—						—						(408)						—
Adjustment to redeemable noncontrolling interests			—						—						—						—						4,326						—						—						—						4,326
BALANCE AT JUNE 30, 2022			398,878						$	159,822					80,896,804						$	813					$	3,758,161					$	(1,126,463)					$	3,550					$	80,544					$	2,876,427

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Federal Realty Investment Trust

Consolidated Statements of Shareholders’ Equity

For the Three and Six Months Ended June 30, 2021

(Unaudited)

			Shareholders’ Equity of the Trust
			Preferred Shares												Common Shares												Additional Paid-in Capital						Accumulated Dividends in Excess of Net Income						Accumulated Other Comprehensive Loss						Noncontrolling Interests						Total Shareholders' Equity
			Shares						Amount						Shares						Amount
			(In thousands, except share data)
BALANCE AT DECEMBER 31, 2020			405,896						$	159,997					76,727,394						$	771					$	3,297,305					$	(988,272)					$	(5,644)					$	84,590					$	2,548,747
Net income, excluding $1,877 attributable to redeemable noncontrolling interests			—						—						—						—						—						94,440						—						1,481						95,921
Other comprehensive income - change in fair value of interest rate swaps, excluding $231 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						2,406						—						2,406
Dividends declared to common shareholders ($2.12 per share)			—						—						—						—						—						(164,788)						—						—						(164,788)
Dividends declared to preferred shareholders			—						—						—						—						—						(4,021)						—						—						(4,021)
Distributions declared to noncontrolling interests, excluding $1,735 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						(1,727)						(1,727)
Common shares issued, net			—						—						847,509						9						87,124						—						—						—						87,133
Shares issued under dividend reinvestment plan			—						—						11,516						—						1,019						—						—						—						1,019
Share-based compensation expense, net of forfeitures			—						—						152,185						2						7,505						—						—						—						7,507
Shares withheld for employee taxes			—						—						(27,500)						—						(2,813)						—						—						—						(2,813)
Conversion and redemption of downREIT OP units			—						—						49,484						—						5,049						—						—						(5,148)						(99)
Contributions from noncontrolling interests, excluding $74,530 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						6,554						6,554
BALANCE AT JUNE 30, 2021			405,896						$	159,997					77,760,588						$	782					$	3,395,189					$	(1,062,641)					$	(3,238)					$	85,750					$	2,575,839
BALANCE AT MARCH 31, 2021			405,896						$	159,997					77,706,466						$	781					$	3,386,917					$	(1,024,417)					$	(2,300)					$	83,982					$	2,604,960
Net income, excluding $1,069 attributable to redeemable noncontrolling interests			—						—						—						—						—						46,204						—						786						46,990
Other comprehensive loss - change in fair value of interest rate swaps, excluding $119 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						(938)						—						(938)
Dividends declared to common shareholders ($1.06 per share)			—						—						—						—						—						(82,417)						—						—						(82,417)
Dividends declared to preferred shareholders			—						—						—						—						—						(2,011)						—						—						(2,011)
Distributions declared to noncontrolling interests, excluding $1,039 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						(943)						(943)
Common shares issued, net			—						—						16						1						(82)						—						—						—						(81)
Shares issued under dividend reinvestment plan			—						—						5,236						—						474						—						—						—						474
Share-based compensation expense, net of forfeitures			—						—						4,473						—						3,358						—						—						—						3,358
Shares withheld for employee taxes			—						—						(71)						—						(8)						—						—						—						(8)
Conversion and redemption of downREIT OP units			—						—						44,468						—						4,530						—						—						(4,629)						(99)
Contributions from noncontrolling interests, excluding $74,530 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						6,554						6,554
BALANCE AT JUNE 30, 2021			405,896						$	159,997					77,760,588						$	782					$	3,395,189					$	(1,062,641)					$	(3,238)					$	85,750					$	2,575,839

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

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Federal Realty Investment Trust

Consolidated Statements of Cash Flows

(Unaudited)

			Six Months Ended June 30,
			2022						2021
			(In thousands)
OPERATING ACTIVITIES
Net income			$	119,195					$	97,798
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			146,135						131,549
Gain on sale of real estate and change in control of interest			—						(17,428)
(Income) loss from partnerships			(3,005)						1,215
Other, net			(5,261)						8,316
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
(Increase) decrease in accounts receivable, net			(10,252)						4,696
Decrease in prepaid expenses and other assets			18,115						11,370
(Decrease) increase in accounts payable and accrued expenses			(5,578)						2,142
Increase in security deposits and other liabilities			1,172						7,551
Net cash provided by operating activities			260,521						247,209
INVESTING ACTIVITIES
Acquisition of real estate			(100,022)						(332,574)
Capital expenditures - development and redevelopment			(150,524)						(182,657)
Capital expenditures - other			(44,024)						(34,970)
Proceeds from sale of real estate			874						19,896
Investment in partnerships			(417)						(2,657)
Distribution from partnerships in excess of earnings			3,665						1,131
Leasing costs			(9,629)						(9,265)
Repayment of mortgage and other notes receivable, net			18						31,122
Net cash used in investing activities			(300,059)						(509,974)
FINANCING ACTIVITIES
Repayment of mortgages, finance leases and notes payable			(17,798)						(151,310)
Issuance of common shares, net of costs			259,597						87,286
Dividends paid to common and preferred shareholders			(171,450)						(166,847)
Shares withheld for employee taxes			(4,638)						(2,813)
Contributions from noncontrolling interests			—						104
Distributions to and redemptions of noncontrolling interests			(6,779)						(3,615)
Net cash provided by (used in) financing activities			58,932						(237,195)
Increase (decrease) in cash, cash equivalents and restricted cash			19,394						(499,960)
Cash, cash equivalents, and restricted cash at beginning of year			175,163						816,896
Cash, cash equivalents, and restricted cash at end of period			$	194,557					$	316,936

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

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Federal Realty OP LP

Consolidated Balance Sheets

			June 30,						December 31,
			2022						2021
			(In thousands, except unit data)
			(Unaudited)
ASSETS
Real estate, at cost
Operating (including $2,219,568 and $2,207,648 of consolidated variable interest entities, respectively)			$	9,076,274					$	8,814,791
Construction-in-progress (including $24,865 and $18,752 of consolidated variable interest entities, respectively)			630,287						607,271
			9,706,561						9,422,062
Less accumulated depreciation and amortization (including $418,633 and $389,950 of consolidated variable interest entities, respectively)			(2,648,474)						(2,531,095)
Net real estate			7,058,087						6,890,967
Cash and cash equivalents			176,559						162,132
Accounts and notes receivable, net			187,370						169,007
Mortgage notes receivable, net			9,499						9,543
Investment in partnerships			13,515						13,027
Operating lease right of use assets			89,613						90,743
Finance lease right of use assets			49,190						49,832
Prepaid expenses and other assets			226,608						237,069
TOTAL ASSETS			$	7,810,441					$	7,622,320
LIABILITIES AND CAPITAL
Liabilities
Mortgages payable, net (including $317,619 and $335,301 of consolidated variable interest entities, respectively)			$	321,975					$	339,993
Notes payable, net			301,480						301,466
Senior notes and debentures, net			3,406,895						3,406,088
Accounts payable and accrued expenses			226,660						235,168
Dividends payable			87,397						86,538
Security deposits payable			27,232						25,331
Operating lease liabilities			71,827						72,661
Finance lease liabilities			72,019						72,032
Other liabilities and deferred credits			209,217						206,187
Total liabilities			4,724,702						4,745,464
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests			209,312						213,708
Partner capital
Preferred units, 398,878 and 405,896 units issued and outstanding, respectively			154,788						154,963
Common units, 80,896,804 and 78,603,305 units issued and outstanding, respectively			2,637,545						2,427,686
Accumulated other comprehensive income (loss)			3,550						(2,047)
Total partner capital			2,795,883						2,580,602
Noncontrolling interests in consolidated partnerships			80,544						82,546
Total capital			2,876,427						2,663,148
TOTAL LIABILITIES AND CAPITAL			$	7,810,441					$	7,622,320

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

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Federal Realty OP LP

Consolidated Statements of Comprehensive Income

(Unaudited)

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
			(In thousands, except per unit data)
REVENUE
Rental income			$	263,830					$	230,795					$	520,337					$	447,930
Mortgage interest income			269						830						533						1,856
Total revenue			264,099						231,625						520,870						449,786
EXPENSES
Rental expenses			51,169						42,918						107,380						92,156
Real estate taxes			31,265						29,323						61,825						58,743
General and administrative			13,604						12,846						25,946						23,104
Depreciation and amortization			74,461						67,675						146,135						131,549
Total operating expenses			170,499						152,762						341,286						305,552
Gain on sale of real estate and change in control of interest			—						—						—						17,428
OPERATING INCOME			93,600						78,863						179,584						161,662
OTHER INCOME/(EXPENSE)
Other interest income			133						250						253						613
Interest expense			(32,074)						(31,177)						(63,647)						(63,262)
Income (loss) from partnerships			2,808						123						3,005						(1,215)
NET INCOME			64,467						48,059						119,195						97,798
Net income attributable to noncontrolling interests			(2,791)						(1,855)						(5,535)						(3,358)
NET INCOME ATTRIBUTABLE TO THE PARTNERSHIP			61,676						46,204						113,660						94,440
Distributions on preferred units			(2,008)						(2,011)						(4,018)						(4,021)
NET INCOME AVAILABLE FOR COMMON UNIT HOLDERS			$	59,668					$	44,193					$	109,642					$	90,419
EARNINGS PER COMMON UNIT, BASIC:
Net income available for common unit holders			$	0.75					$	0.57					$	1.38					$	1.16
Weighted average number of common units			79,202						77,474						78,826						77,160
EARNINGS PER COMMON UNIT, DILUTED:
Net income available for common unit holders			$	0.75					$	0.57					$	1.38					$	1.16
Weighted average number of common units			79,202						77,505						78,855						77,162
COMPREHENSIVE INCOME			$	66,689					$	47,002					$	125,333					$	100,435
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE PARTNERSHIP			$	63,701					$	45,266					$	119,257					$	96,846

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

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Federal Realty OP LP

Consolidated Statements of Capital

For the Three and Six Months Ended June 30, 2022

(Unaudited)

						Preferred Units						Common Units												Accumulated Other Comprehensive Income (Loss)						Total Partner Capital						Noncontrolling Interests in Consolidated Partnerships						Total Capital
BALANCE AT DECEMBER 31, 2021						$	154,963					$	2,427,686											$	(2,047)					$	2,580,602					$	82,546					$	2,663,148
Net income, excluding $3,527 attributable to redeemable noncontrolling interests						4,018						109,642												—						113,660						2,008						115,668
Other comprehensive income - change in fair value of interest rate swaps, excluding $541 attributable to redeemable noncontrolling interest						—						—												5,597						5,597						—						5,597
Distributions declared to common unit holders						—						(169,173)												—						(169,173)						—						(169,173)
Distributions declared to preferred unit holders						(4,018)						—												—						(4,018)						—						(4,018)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $4,138 attributable to redeemable noncontrolling interests						—						—												—						—						(2,625)						(2,625)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						259,452												—						259,452						—						259,452
Common units issued under dividend reinvestment plan						—						1,011												—						1,011						—						1,011
Share-based compensation expense, net of forfeitures						—						7,679												—						7,679						—						7,679
Common units withheld for employee taxes						—						(4,638)												—						(4,638)						—						(4,638)
Conversion of preferred units						(175)						175												—						—						—						—
Conversion of downREIT OP units						—						1,385												—						1,385						(1,385)						—
Adjustment to redeemable noncontrolling interests						—						4,326												—						4,326						—						4,326
BALANCE AT JUNE 30, 2022						$	154,788					$	2,637,545											$	3,550					$	2,795,883					$	80,544					$	2,876,427
BALANCE AT MARCH 31, 2022						$	154,963					$	2,477,270											$	1,525					$	2,633,758					$	80,819					$	2,714,577
Net income, excluding $1,792 attributable to redeemable noncontrolling interests						2,008						59,668												—						61,676						999						62,675
Other comprehensive income - change in fair value of interest rate swaps, excluding $197 attributable to redeemable noncontrolling interest						—						—												2,025						2,025						—						2,025
Distributions declared to common unit holders						—						(84,977)												—						(84,977)						—						(84,977)
Distributions declared to preferred unit holders						(2,008)						—												—						(2,008)						—						(2,008)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $2,394 attributable to redeemable noncontrolling interests						—						—												—						—						(866)						(866)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						176,703												—						176,703						—						176,703
Common units issued under dividend reinvestment plan						—						509												—						509						—						509
Share-based compensation expense, net of forfeitures						—						3,500												—						3,500						—						3,500
Common units withheld for employee taxes						—						(37)												—						(37)						—						(37)
Conversion of preferred units						(175)						175												—						—						—						—
Conversion of downREIT OP units						—						408												—						408						(408)						—
Adjustment to redeemable noncontrolling interests						—						4,326												—						4,326						—						4,326
BALANCE AT JUNE 30, 2022						$	154,788					$	2,637,545											$	3,550					$	2,795,883					$	80,544					$	2,876,427

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Federal Realty OP LP

Consolidated Statements of Capital

For the Three and Six Months Ended June 30, 2021

(Unaudited)

						Preferred Units						Common Units												Accumulated Other Comprehensive Income (Loss)						Total Partner Capital						Noncontrolling Interests in Consolidated Partnerships						Total Capital
BALANCE AT DECEMBER 31, 2020						$	154,963					$	2,314,838											$	(5,644)					$	2,464,157					$	84,590					$	2,548,747
Net income, excluding $1,877 attributable to redeemable noncontrolling interests						4,021						90,419												—						94,440						1,481						95,921
Other comprehensive income - change in fair value of interest rate swaps, excluding $231 attributable to redeemable noncontrolling interests						—						—												2,406						2,406						—						2,406
Distributions declared to common unit holders						—						(164,788)												—						(164,788)						—						(164,788)
Distributions declared to preferred unit holders						(4,021)						—												—						(4,021)						—						(4,021)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $1,735 attributable to redeemable noncontrolling interests						—						—												—						—						(1,727)						(1,727)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						87,133												—						87,133						—						87,133
Common units issued under dividend reinvestment plan						—						1,019												—						1,019						—						1,019
Share-based compensation expense, net of forfeitures						—						7,507												—						7,507						—						7,507
Common units withheld for employee taxes						—						(2,813)												—						(2,813)						—						(2,813)
Conversion and redemption of downREIT OP units						—						5,049												—						5,049						(5,148)						(99)
Contributions from noncontrolling interests, excluding $74,530 attributable to redeemable noncontrolling interests						—																		—						—						6,554						$	6,554
BALANCE AT JUNE 30, 2021						$	154,963					$	2,338,364											$	(3,238)					$	2,490,089					$	85,750					$	2,575,839
BALANCE AT MARCH 31, 2021						$	154,963					$	2,368,315											$	(2,300)					$	2,520,978					$	83,982					$	2,604,960
Net income, excluding $1,069 attributable to redeemable noncontrolling interests						2,011						44,193												—						46,204						786						46,990
Other comprehensive loss - change in fair value of interest rate swaps, excluding $119 attributable to redeemable noncontrolling interests						—						—												(938)						(938)						—						(938)
Distributions declared to common unit holders						—						(82,417)												—						(82,417)						—						(82,417)
Distributions declared to preferred unit holders						(2,011)						—												—						(2,011)						—						(2,011)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $1,039 attributable to redeemable noncontrolling interests						—						—												—						—						(943)						(943)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						(81)												—						(81)						—						(81)
Common units issued under dividend reinvestment plan						—						474												—						474						—						474
Share-based compensation expense, net of forfeitures						—						3,358												—						3,358						—						3,358
Common units withheld for employee taxes						—						(8)												—						(8)						—						(8)
Conversion and redemption of downREIT OP units						—						4,530												—						4,530						(4,629)						(99)
Contributions from noncontrolling interests, excluding $74,530 attributable to redeemable noncontrolling interests						—						—												—						—						6,554						$	6,554
BALANCE AT JUNE 30, 2021						$	154,963					$	2,338,364											$	(3,238)					$	2,490,089					$	85,750					$	2,575,839

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

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Federal Realty OP LP

Consolidated Statements of Cash Flows

(Unaudited)

			Six Months Ended June 30,
			2022						2021
			(In thousands)
OPERATING ACTIVITIES
Net income			$	119,195					$	97,798
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			146,135						131,549
Gain on sale of real estate and change in control of interest			—						(17,428)
(Income) loss from partnerships			(3,005)						1,215
Other, net			(5,261)						8,316
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
(Increase) decrease in accounts receivable, net			(10,252)						4,696
Decrease in prepaid expenses and other assets			18,115						11,370
(Decrease) increase in accounts payable and accrued expenses			(5,578)						2,142
Increase in security deposits and other liabilities			1,172						7,551
Net cash provided by operating activities			260,521						247,209
INVESTING ACTIVITIES
Acquisition of real estate			(100,022)						(332,574)
Capital expenditures - development and redevelopment			(150,524)						(182,657)
Capital expenditures - other			(44,024)						(34,970)
Proceeds from sale of real estate			874						19,896
Investment in partnerships			(417)						(2,657)
Distribution from partnerships in excess of earnings			3,665						1,131
Leasing costs			(9,629)						(9,265)
Repayment of mortgage and other notes receivable, net			18						31,122
Net cash used in investing activities			(300,059)						(509,974)
FINANCING ACTIVITIES
Repayment of mortgages, finance leases and notes payable			(17,798)						(151,310)
Issuance of common units, net of costs			259,597						87,286
Distributions to common and preferred unit holders			(171,450)						(166,847)
Shares withheld for employee taxes			(4,638)						(2,813)
Contributions from noncontrolling interests			—						104
Distributions to and redemptions of noncontrolling interests			(6,779)						(3,615)
Net cash provided by (used in) financing activities			58,932						(237,195)
Increase (decrease) in cash, cash equivalents and restricted cash			19,394						(499,960)
Cash, cash equivalents, and restricted cash at beginning of year			175,163						816,896
Cash, cash equivalents, and restricted cash at end of period			$	194,557					$	316,936

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

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Federal Realty Investment Trust

Federal Realty OP LP

Notes to Consolidated Financial Statements

June 30, 2022

(Unaudited)

NOTE 1—BUSINESS AND ORGANIZATION

Federal Realty Investment Trust (the "Parent Company" and the “Trust”) is an equity real estate investment trust (“REIT”). Federal Realty OP LP (the "Operating Partnership") is the entity through which the Parent Company conducts substantially all of its operations and owns all of its assets. The Parent Company owns 100% of the limited liability company interests of, is sole member of and exercises exclusive control over Federal Realty GP LLC ("the General Partner"), which in turn, is the sole general partner of the Operating Partnership. The Parent Company specializes in the ownership, management, and redevelopment of retail and mixed-use properties through the Operating Partnership, and has no other substantial assets or liabilities other than through its investment in the Operating Partnership. Our properties are located primarily in communities where we believe retail demand exceeds supply, in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As of June 30, 2022, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 105 predominantly retail real estate projects.

We operate in a manner intended to enable the Trust 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.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

In January 2022, we completed a reorganization into an umbrella partnership real estate investment trust, or "UPREIT." For additional information on our UPREIT reorganization, please see our Current Reports on Form 8-K filed with the SEC on January 3, 2022 and January 5, 2022, as well our latest Annual Report on Form 10-K filed on February 10, 2022. Immediately following the reorganization, the Parent Company had the same consolidated assets and liabilities as Federal Realty Investment Trust immediately before the reorganization. The Parent Company exercises exclusive control over the General Partner and does not have assets or liabilities other than its investment in the Operating Partnership. As a result, the UPREIT reorganization represented a merger of entities under common control in accordance with accounting principles generally accepted in the United States ("GAAP"). Accordingly, the accompanying consolidated financial statements including the notes thereto, are presented as if the UPREIT reorganization had occurred at the earliest period presented.

The accompanying unaudited interim consolidated financial statements of the Parent Company and Operating Partnership have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in our latest Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation for the periods presented have been included. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the full year. Certain 2021 amounts have been reclassified to conform to our current period presentation.

Principles of Consolidation

As discussed in the Explanatory Note, we have combined the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report. As a result, we present two sets of consolidated financial statements. Both sets of consolidated financial statements include the accounts of the entity, its corporate subsidiaries, and all entities in which it has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity (“VIE”). The Parent Company's consolidated financial statements include the accounts of the Operating Partnership and its subsidiaries as the Parent Company, through its ownership and control over the General Partner, exercises exclusive control over the Operating Partnership. 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.

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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.

Impacts of COVID-19 Pandemic and General Economic Conditions

Given ongoing workforce shortages, global supply chain bottlenecks and shortages, and higher levels of inflation, we continue to monitor and address risks related to the COVID-19 pandemic and the state of the economy. The extent of the future effects of COVID-19 and potentially worsening economic conditions on our business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty.

Our collection of rents has continued to improve including collecting rents related to prior periods. As a result, our collectibility related adjustments resulted in an increase to rental income of $1.9 million and $2.0 million, respectively, during the three and six months ended June 30, 2022, as compared to a decrease to rental income during the three and six months ended June 30, 2021 of $6.4 million and $21.2 million, respectively, which reflected lower levels of cash collections and elevated levels of rent abatements and disputes directly related to COVID-19. As of June 30, 2022, the revenue from approximately 33% of our tenants (based on total commercial leases) is being recognized on a cash basis.

As of June 30, 2022, we executed rent deferral agreements related to the COVID-19 pandemic representing approximately $47 million of rent. We have subsequently collected approximately $32 million of those amounts previously deferred.

For more information, see Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Outlook.

Recently Issued Accounting Pronouncements

Standard						Description						Effect on the financial statements or significant matters
ASU 2020-04, March 2020, Reference Rate Reform (Topic 848)						This ASU provides companies with optional practical expedients to ease the accounting burden for contract modifications associated with transitioning away from LIBOR and other interbank offered rates that are expected to be discontinued as part of reference rate reform. For hedges, the guidance generally allows changes to the reference rate and other critical terms without having to de-designate the hedging relationship, as well as allows the shortcut method to continue to be applied. For contract modifications, changes in the reference rate or other critical terms will be treated as a continuation of the prior contract. This guidance can be applied immediately, however, is generally only available through December 31, 2022.						We are still evaluating the impact of reference rate reform and whether we will apply any of these practical expedients.

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Consolidated Statements of Cash Flows—Supplemental Disclosures

The following tables provide supplemental disclosures related to the Consolidated Statements of Cash Flows:

			Six Months Ended
			June 30,
			2022						2021
			(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred			$	72,824					$	76,284
Interest capitalized			(9,177)						(13,022)
Interest expense			$	63,647					$	63,262
Cash paid for interest, net of amounts capitalized			$	61,973					$	60,782
Cash paid for income taxes			$	607					$	320
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
DownREIT operating partnership units redeemed for common shares			$	1,385					$	5,121
Shares issued under dividend reinvestment plan			$	866					$	866
5.417% Series 1 Cumulative Convertible Preferred Shares redeemed for common shares			$	175					$	—

			June 30,						December 31,
			2022						2021
			(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents			$	176,559					$	162,132
Restricted cash (1)			17,998						13,031
Total cash, cash equivalents, and restricted cash			$	194,557					$	175,163

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

NOTE 3—REAL ESTATE

On April 20, 2022, we acquired the fee interest in Kingstowne Towne Center, a 227,000 square foot shopping center located in Kingstowne, Virginia for $100.0 million. Approximately $4.3 million and $0.1 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $10.5 million of net assets acquired were allocated to other liabilities for "below market leases."

NOTE 4—DEBT

On June 29, 2022, we repaid the $16.1 million mortgage loan on one of the buildings at our Hoboken property, at par.

During both the three and six months ended June 30, 2022, the maximum amount of borrowings outstanding under our $1.0 billion revolving credit facility was $114.0 million. The weighted average amount of borrowings outstanding was $57.7 million and $30.9 million, respectively, and the weighted average interest rate, before amortization of debt fees, was 2.0% and 1.9%, respectively, for the three and six months ended June 30, 2022. At June 30, 2022, our revolving credit facility had no balance outstanding.

Effective April 1, 2022, as a result of the change in our credit rating, the spread over LIBOR on our revolving credit facility increased from 77.5 basis points to 82.5 basis, and the spread over LIBOR on our unsecured term loan increased from 80 basis points to 85 basis points.

Our revolving credit facility, term loan, and certain notes require us to comply with various financial covenants, including the maintenance of minimum shareholders' equity and debt coverage ratios and a maximum ratio of debt to net worth. As of June 30, 2022, we were in compliance with all default related debt covenants.

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NOTE 5—FAIR VALUE OF FINANCIAL INSTRUMENTS

Except as disclosed below, the carrying amount of our financial instruments approximates their fair value. The fair value of our mortgages payable, notes payable and senior notes and debentures is sensitive to fluctuations in interest rates. Quoted market prices (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:

			June 30, 2022												December 31, 2021
Carrying Value						Fair Value						Carrying Value						Fair Value
(In thousands)
Mortgages and notes payable, net			$	623,455					$	614,197					$	641,459					$	655,864
Senior notes and debentures, net			$	3,406,895					$	3,177,631					$	3,406,088					$	3,649,776

As of June 30, 2022, we have two interest rate swap agreements with notional amounts of $55.8 million that are measured at fair value on a recurring basis. The interest rate swap agreements fix the interest rate on $55.8 million of mortgage payables 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 June 30, 2022 was an asset of $3.9 million and is included in "prepaid expenses and other assets" on our consolidated balance sheets. For the three and six months ended June 30, 2022, the value of our interest rate swaps increased $2.0 million and $5.4 million, respectively (including $0.1 million and $0.3 million, respectively, reclassified from other comprehensive income to interest expense). A summary of our financial assets (liabilities) that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:

			June 30, 2022																								December 31, 2021
			Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3						Total
			(In thousands)
Interest rate swaps			$	—					$	3,896					$	—					$	3,896					$	—					$	(1,511)					$	—					$	(1,511)

One of our equity method investees has two interest rate swaps which qualify for cash flow hedge accounting. For the three and six months ended June 30, 2022, our share of the change in fair value of the related swaps included in "accumulated other comprehensive income" was an increase of $0.2 million and $0.7 million, respectively.

NOTE 6—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. 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.

Under the terms of certain partnership agreements, the partners have the right to exchange their operating partnership units for cash or common shares, at our option. A total of 652,233 downREIT operating partnership units are outstanding which have a total fair value of approximately $62.4 million, which is calculated by multiplying the outstanding number of downREIT partnership units by our closing stock price on June 30, 2022.

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NOTE 7—SHAREHOLDERS’ EQUITY

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

			Six Months Ended June 30,
			2022												2021
			Declared						Paid						Declared						Paid
Common shares			$	2.140					$	2.140					$	2.120					$	2.120
5.417% Series 1 Cumulative Convertible Preferred shares			$	0.677					$	0.677					$	0.677					$	0.677
5.0% Series C Cumulative Redeemable Preferred shares (1)			$	0.625					$	0.625					$	0.625					$	0.625

(1)Amount represents dividends per depository share, each representing 1/1000th of a share.

On February 14, 2022, we replaced our existing ATM equity program with a new ATM equity program under which we may from time to time offer and sell common shares having an aggregate offering price of up to $500.0 million. The ATM equity program also allows shares to be sold through forward sales contracts. We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay indebtedness and/or for general corporate purposes.

For the three and six months ended June 30, 2022, we settled forward sales agreements by issuing 1,473,904 and 2,203,655 common shares, respectively, for net proceeds of $176.7 million and $259.4 million, respectively. We have no outstanding forward sales agreements as of June 30, 2022. We have the full remaining capacity to issue up to $500.0 million in common shares under our ATM equity program as of June 30, 2022.

On June 15, 2022, one of our 5.417% Series 1 Cumulative Convertible Preferred shareholders converted 7,018 preferred shares to 1,675 common shares.

NOTE 8—SHARE-BASED COMPENSATION PLANS

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

			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2022						2021						2022						2021
			(In thousands)
Grants of common shares, restricted stock units, and options			$	3,500					$	3,358					$	7,679					$	7,507
Capitalized share-based compensation			(300)						(360)						(659)						(758)
Share-based compensation expense			$	3,200					$	2,998					$	7,020					$	6,749

NOTE 9—EARNINGS PER SHARE AND UNIT

We have calculated earnings per share (“EPS”) and earnings per unit ("EPU") under the two-class method. The two-class method is an earnings allocation methodology whereby EPS and EPU for each class of common stock and partnership units, respectively, and participating securities is calculated according to dividends or distributions declared and participation rights in undistributed earnings. For both the three and six months ended June 30, 2022 and 2021, we had 0.3 million weighted average unvested shares and units outstanding, which are considered participating securities. Therefore, we have allocated our earnings for basic and diluted EPS and EPU between common shares and units and unvested shares and units; the portion of earnings allocated to the unvested shares and units is reflected as “earnings allocated to unvested shares” or "earnings allocated to unvested units" in the reconciliations below.

The following potentially issuable shares were excluded from the diluted EPS and EPU calculations because their impact is anti-dilutive:

• exercise of 682 stock options for the three and six months ended June 30, 2021,

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• conversions of downREIT operating partnership units and 5.417% Series 1 Cumulative Convertible Preferred Shares for both the three and six months ended June 30, 2022 and 2021, and

• the issuance of 1.5 million and 0.7 million shares and units issuable under common share forward sales agreements for the three and six months ended June 30, 2022, respectively, and 0.9 million and 1.4 million, respectively, for the three and six months ended June 30, 2021.

Additionally, 10,441 unvested restricted stock units are excluded from the diluted EPS and EPU calculations as the market based performance criteria in the awards has not yet been achieved.

Federal Realty Investment Trust Earnings per Share

			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2022						2021						2022						2021
			(In thousands, except per share data)
NUMERATOR
Net income			$	64,467					$	48,059					$	119,195					97,798
Less: Preferred share dividends			(2,008)						(2,011)						(4,018)						(4,021)
Less: Income from operations attributable to noncontrolling interests			(2,791)						(1,855)						(5,535)						(3,358)
Less: Earnings allocated to unvested shares			(300)						(298)						(607)						(592)
Net income available for common shareholders, basic and diluted			$	59,368					$	43,895					$	109,035					$	89,827
DENOMINATOR
Weighted average common shares outstanding, basic			79,202						77,474						78,826						77,160
Effect of dilutive securities:
Open forward contracts for share issuances			—						31						29						2
Weighted average common shares outstanding, diluted			79,202						77,505						78,855						77,162
EARNINGS PER COMMON SHARE, BASIC AND DILUTED:
Net income available for common shareholders			$	0.75					$	0.57					$	1.38					$	1.16

Federal Realty OP LP Earnings per Unit

			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2022						2021						2022						2021
			(In thousands, except per unit data)
NUMERATOR
Net income			$	64,467					$	48,059					$	119,195					97,798
Less: Preferred unit distributions			(2,008)						(2,011)						(4,018)						(4,021)
Less: Income from operations attributable to noncontrolling interests			(2,791)						(1,855)						(5,535)						(3,358)
Less: Earnings allocated to unvested units			(300)						(298)						(607)						(592)
Net income available for common unit holders, basic and diluted			$	59,368					$	43,895					$	109,035					$	89,827
DENOMINATOR
Weighted average common units outstanding, basic			79,202						77,474						78,826						77,160
Effect of dilutive securities:
Common unit issuances relating to open common share forward contracts			—						31						29						2
Weighted average common units outstanding, diluted			79,202						77,505						78,855						77,162
EARNINGS PER COMMON UNIT, BASIC AND DILUTED:
Net income available for common unit holders			$	0.75					$	0.57					$	1.38					$	1.16

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NOTE 10—SUBSEQUENT EVENT

On July 13, 2022, we acquired the 21.8% redeemable noncontrolling interest in the partnership that owns our Plaza El Segundo Shopping Center for $23.6 million, bringing our ownership interest to 100%.

On July 18, 2022, we acquired a 214,000 square foot office building in Scottsdale, Arizona for $53.6 million. This building is adjacent to, and will be operated as part of our Hilton Village property. The land is controlled under a long-term ground lease that expires on September 30, 2075.

On July 27, 2022, we acquired a 182,000 square foot shopping center in Kingstowne, Virginia for $100.0 million. The shopping center is adjacent to, and will be operated as part of our Kingstowne Towne Center property.

Additionally, on July 27, 2022, we acquired the fee interest in The Shops at Pembroke, a 392,000 square foot shopping center located in Pembroke Pines, Florida for $180.5 million.