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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 September 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 October 31, 2022 was 81,209,479.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended September 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 September 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 SEPTEMBER 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 September 30, 2022 and December 31, 2021			3
			Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2022 and 2021			4
			Consolidated Statements of Shareholders' Equity (unaudited) for the three and nine months ended September 30, 2022 and 2021			5
			Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2022 and 2021			7
Federal Realty OP LP
			Consolidated Balance Sheets (unaudited) as of September 30, 2022 and December 31, 2021			8
			Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2022 and 2021			9
			Consolidated Statements of Capital (unaudited) for the three and nine months ended September 30, 2022 and 2021			10
			Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 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			20
Item 3.			Quantitative and Qualitative Disclosures about Market Risk			37
Item 4.			Controls and Procedures			38
PART II. OTHER INFORMATION						39
Item 1.			Legal Proceedings			39
Item 1A.			Risk Factors			39
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			39
Item 3.			Defaults Upon Senior Securities			39
Item 4.			Mine Safety Disclosures			39
Item 5.			Other Information			39
Item 6.			Exhibits			39
SIGNATURES						41

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Federal Realty Investment Trust

Consolidated Balance Sheets

			September 30,						December 31,
			2022						2021
			(In thousands, except share and per share data)
			(Unaudited)
ASSETS
Real estate, at cost
Operating (including $1,963,129 and $2,207,648 of consolidated variable interest entities, respectively)			$	9,323,359					$	8,814,791
Construction-in-progress (including $23,448 and $18,752 of consolidated variable interest entities, respectively)			681,641						607,271
			10,005,000						9,422,062
Less accumulated depreciation and amortization (including $349,553 and $389,950 of consolidated variable interest entities, respectively)			(2,660,799)						(2,531,095)
Net real estate			7,344,201						6,890,967
Cash and cash equivalents			146,214						162,132
Accounts and notes receivable, net			187,149						169,007
Mortgage notes receivable, net			9,475						9,543
Investment in partnerships			122,822						13,027
Operating lease right of use assets, net			95,187						90,743
Finance lease right of use assets, net			45,756						49,832
Prepaid expenses and other assets			266,203						237,069
TOTAL ASSETS			$	8,217,007					$	7,622,320
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $192,442 and $335,301 of consolidated variable interest entities, respectively)			$	321,299					$	339,993
Notes payable, net			568,302						301,466
Senior notes and debentures, net			3,407,298						3,406,088
Accounts payable and accrued expenses			245,610						235,168
Dividends payable			90,121						86,538
Security deposits payable			28,042						25,331
Operating lease liabilities			78,234						72,661
Finance lease liabilities			67,662						72,032
Other liabilities and deferred credits			242,800						206,187
Total liabilities			5,049,368						4,745,464
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests			185,759						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, 81,204,286 and 78,603,305 shares issued and outstanding, respectively			817						790
Additional paid-in capital			3,794,247						3,488,794
Accumulated dividends in excess of net income			(1,060,027)						(1,066,932)
Accumulated other comprehensive income (loss)			6,084						(2,047)
Total shareholders’ equity of the Trust			2,900,943						2,580,602
Noncontrolling interests			80,937						82,546
Total shareholders’ equity			2,981,880						2,663,148
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	8,217,007					$	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 September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
			(In thousands, except per share data)
REVENUE
Rental income			$	273,179					$	247,024					$	793,516					$	694,954
Mortgage interest income			272						260						805						2,116
Total revenue			273,451						247,284						794,321						697,070
EXPENSES
Rental expenses			58,809						49,318						166,189						141,474
Real estate taxes			32,803						29,529						94,628						88,272
General and administrative			13,100						12,253						39,046						35,357
Depreciation and amortization			77,109						70,611						223,244						202,160
Total operating expenses			181,821						161,711						523,107						467,263
Gain on deconsolidation of VIE			70,374						—						70,374						—
Gain on sale of real estate and change in control of interest			29,723						—						29,723						17,428
OPERATING INCOME			191,727						85,573						371,311						247,235
OTHER INCOME/(EXPENSE)
Other interest income			234						88						487						701
Interest expense			(35,060)						(32,249)						(98,707)						(95,511)
Income (loss) from partnerships			1,873						1,129						4,878						(86)
NET INCOME			158,774						54,541						277,969						152,339
Net income attributable to noncontrolling interests			(2,636)						(2,419)						(8,171)						(5,777)
NET INCOME ATTRIBUTABLE TO THE TRUST			156,138						52,122						269,798						146,562
Dividends on preferred shares			(2,008)						(2,010)						(6,026)						(6,031)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS			$	154,130					$	50,112					$	263,772					$	140,531
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders			$	1.90					$	0.64					$	3.31					$	1.81
Weighted average number of common shares			80,765						77,485						79,480						77,269
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders			$	1.89					$	0.64					$	3.31					$	1.81
Weighted average number of common shares			81,511						77,575						80,137						77,287
COMPREHENSIVE INCOME			$	161,569					$	55,095					$	286,902					$	155,530
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST			$	158,672					$	52,634					$	277,929					$	149,480

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 Nine Months Ended September 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 JUNE 30, 2022			398,878						$	159,822					80,896,804						$	813					$	3,758,161					$	(1,126,463)					$	3,550					$	80,544					2,876,427
Net income, excluding $1,774 attributable to redeemable noncontrolling interests			—						—						—						—						—						156,138						—						862						157,000
Other comprehensive income - change in fair value of interest rate swaps, excluding $261 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						2,534						—						2,534
Dividends declared to common shareholders ($1.08 per share)			—						—						—						—						—						(87,694)						—						—						(87,694)
Dividends declared to preferred shareholders			—						—						—						—						—						(2,008)						—						—						(2,008)
Distributions declared to noncontrolling interests, excluding $1,974 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						(1,441)						(1,441)
Common shares issued, net			—						—						296,872						3						32,889						—						—						—						32,892
Exercise of stock options			—						—						366						—						35						—						—						—						35
Shares issued under dividend reinvestment plan			—						—						5,832						—						573						—						—						—						573
Share-based compensation expense, net of forfeitures			—						—						6,810						1						3,578						—						—						—						3,579
Shares withheld for employee taxes			—						—						(2,398)												(248)						—						—						—						(248)
Deconsolidation of VIE			—						—						—						—						—						—						—						972						972
Adjustment to redeemable noncontrolling interests			—						—						—						—						(741)						—						—						—						(741)
BALANCE AT SEPTEMBER 30, 2022			398,878						$	159,822					81,204,286						$	817					$	3,794,247					$	(1,060,027)					$	6,084					$	80,937					$	2,981,880
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 $5,301 attributable to redeemable noncontrolling interests			—						—						—						—						—						269,798						—						2,870						272,668
Other comprehensive income - change in fair value of interest rate swaps, excluding $802 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						8,131						—						8,131
Dividends declared to common shareholders ($3.22 per share)			—						—						—						—						—						(256,867)						—						—						(256,867)
Dividends declared to preferred shareholders			—						—						—						—						—						(6,026)						—						—						(6,026)
Distributions declared to noncontrolling interests, excluding $6,112 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						(4,066)						(4,066)
Common shares issued, net			—						—						2,500,569						25						292,319						—						—						—						292,344
Exercise of stock options			—						—						366						—						35						—						—						—						35
Shares issued under dividend reinvestment plan			—						—						13,832						—						1,584						—						—						—						1,584
Share-based compensation expense, net of forfeitures			—						—						110,915						2						11,256						—						—						—						11,258
Shares withheld for employee taxes			—						—						(40,974)						—						(4,886)						—						—						—						(4,886)
Conversion of preferred shares			(7,018)						(175)						1,675						—						175						—						—						—						—
Conversion of downREIT OP units			—						—						14,598						—						1,385						—						—						(1,385)						—
Deconsolidation of VIE			—						—						—						—						—						—						—						972						972
Adjustment to redeemable noncontrolling interests			—						—						—						—						3,585						—						—						—						3,585
BALANCE AT SEPTEMBER 30, 2022			398,878						$	159,822					81,204,286						$	817					$	3,794,247					$	(1,060,027)					$	6,084					$	80,937					$	2,981,880

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Federal Realty Investment Trust

Consolidated Statements of Shareholders’ Equity

For the Three and Nine Months Ended September 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 JUNE 30, 2021			405,896						$	159,997					77,760,588						$	782					$	3,395,189					$	(1,062,641)					$	(3,238)					$	85,750					$	2,575,839
Net income, excluding $1,595 attributable to redeemable noncontrolling interests			—						—						—						—						—						52,122						—						824						52,946
Other comprehensive income - change in fair value of interest rate swaps, excluding $42 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						512						—						512
Dividends declared to common shareholders ($1.07 per share)			—						—						—						—						—						(83,212)						—						—						(83,212)
Dividends declared to preferred shareholders			—						—						—						—						—						(2,010)						—						—						(2,010)
Distributions declared to noncontrolling interests, excluding $1,310 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						(1,555)						(1,555)
Common shares issued, net			—						—						19						—						(67)						—						—						—						(67)
Shares issued under dividend reinvestment plan			—						—						4,194						—						488						—						—						—						488
Share-based compensation expense, net of forfeitures			—						—						10,907						—						3,367						—						—						—						3,367
Shares withheld for employee taxes			—						—						(1,063)						—						(126)						—						—						—						(126)
BALANCE AT SEPTEMBER 30, 2021			405,896						$	159,997					77,774,645						$	782					$	3,398,851					$	(1,095,741)					$	(2,726)					$	85,019					$	2,546,182
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 $3,472 attributable to redeemable noncontrolling interests			—						—						—						—						—						146,562						—						2,305						148,867
Other comprehensive income - change in fair value of interest rate swaps, excluding $273 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						2,918						—						2,918
Dividends declared to common shareholders ($3.19 per share)			—						—						—						—						—						(248,000)						—						—						(248,000)
Dividends declared to preferred shareholders			—						—						—						—						—						(6,031)						—						—						(6,031)
Distributions declared to noncontrolling interests, excluding $3,045 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						(3,282)						(3,282)
Common shares issued, net			—						—						847,528						9						87,057						—						—						—						87,066
Shares issued under dividend reinvestment plan			—						—						15,710						—						1,507						—						—						—						1,507
Share-based compensation expense, net of forfeitures			—						—						163,092						2						10,872						—						—						—						10,874
Shares withheld for employee taxes			—						—						(28,563)						—						(2,939)						—						—						—						(2,939)
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 SEPTEMBER 30, 2021			405,896						$	159,997					77,774,645						$	782					$	3,398,851					$	(1,095,741)					$	(2,726)					$	85,019					$	2,546,182

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)

			Nine Months Ended September 30,
			2022						2021
			(In thousands)
OPERATING ACTIVITIES
Net income			$	277,969					$	152,339
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			223,244						202,160
Gain on deconsolidation of VIE			(70,374)						—
Gain on sale of real estate and change in control of interest			(29,723)						(17,428)
(Income) loss from partnerships			(4,878)						86
Straight-line rent			(14,414)						(4,114)
Share-based compensation expense			10,255						9,780
Other, net			(3,509)						(2,206)
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
(Increase) decrease in accounts receivable, net			(5,519)						4,857
Decrease (increase) in prepaid expenses and other assets			1,361						(6,004)
Increase in accounts payable and accrued expenses			13,948						15,505
Increase in security deposits and other liabilities			10,933						11,061
Net cash provided by operating activities			409,293						366,036
INVESTING ACTIVITIES
Acquisition of real estate			(429,990)						(366,466)
Capital expenditures - development and redevelopment			(213,881)						(282,833)
Capital expenditures - other			(70,004)						(48,693)
Costs associated with property sold under threat of condemnation			(2,915)						—
Proceeds from sale of real estate			66,682						19,896
Change in cash from deconsolidation of VIE			(4,192)						—
Investment in partnerships			(417)						(2,657)
Distribution from partnerships in excess of earnings			5,076						1,868
Leasing costs			(17,039)						(14,079)
(Issuance) repayment of mortgage and other notes receivable, net			(3,471)						31,122
Net cash used in investing activities			(670,151)						(661,842)
FINANCING ACTIVITIES
Net borrowings under revolving credit facility			267,000						—
Repayment of mortgages, finance leases and notes payable			(18,644)						(160,307)
Issuance of common shares, net of costs			292,671						87,279
Dividends paid to common and preferred shareholders			(258,009)						(250,849)
Shares withheld for employee taxes			(4,886)						(2,939)
Contributions from noncontrolling interests			—						104
Distributions to and redemptions of redeemable noncontrolling interests			(33,801)						(6,473)
Net cash provided by (used in) financing activities			244,331						(333,185)
Decrease in cash, cash equivalents and restricted cash			(16,527)						(628,991)
Cash, cash equivalents, and restricted cash at beginning of year			175,163						816,896
Cash, cash equivalents, and restricted cash at end of period			$	158,636					$	187,905

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

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Federal Realty OP LP

Consolidated Balance Sheets

			September 30,						December 31,
			2022						2021
			(In thousands, except unit data)
			(Unaudited)
ASSETS
Real estate, at cost
Operating (including $1,963,129 and $2,207,648 of consolidated variable interest entities, respectively)			$	9,323,359					$	8,814,791
Construction-in-progress (including $23,448 and $18,752 of consolidated variable interest entities, respectively)			681,641						607,271
			10,005,000						9,422,062
Less accumulated depreciation and amortization (including $349,553 and $389,950 of consolidated variable interest entities, respectively)			(2,660,799)						(2,531,095)
Net real estate			7,344,201						6,890,967
Cash and cash equivalents			146,214						162,132
Accounts and notes receivable, net			187,149						169,007
Mortgage notes receivable, net			9,475						9,543
Investment in partnerships			122,822						13,027
Operating lease right of use assets, net			95,187						90,743
Finance lease right of use assets, net			45,756						49,832
Prepaid expenses and other assets			266,203						237,069
TOTAL ASSETS			$	8,217,007					$	7,622,320
LIABILITIES AND CAPITAL
Liabilities
Mortgages payable, net (including $192,442 and $335,301 of consolidated variable interest entities, respectively)			$	321,299					$	339,993
Notes payable, net			568,302						301,466
Senior notes and debentures, net			3,407,298						3,406,088
Accounts payable and accrued expenses			245,610						235,168
Dividends payable			90,121						86,538
Security deposits payable			28,042						25,331
Operating lease liabilities			78,234						72,661
Finance lease liabilities			67,662						72,032
Other liabilities and deferred credits			242,800						206,187
Total liabilities			5,049,368						4,745,464
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests			185,759						213,708
Partner capital
Preferred units, 398,878 and 405,896 units issued and outstanding, respectively			154,788						154,963
Common units, 81,204,286 and 78,603,305 units issued and outstanding, respectively			2,740,071						2,427,686
Accumulated other comprehensive income (loss)			6,084						(2,047)
Total partner capital			2,900,943						2,580,602
Noncontrolling interests in consolidated partnerships			80,937						82,546
Total capital			2,981,880						2,663,148
TOTAL LIABILITIES AND CAPITAL			$	8,217,007					$	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 September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
			(In thousands, except per unit data)
REVENUE
Rental income			$	273,179					$	247,024					$	793,516					$	694,954
Mortgage interest income			272						260						805						2,116
Total revenue			273,451						247,284						794,321						697,070
EXPENSES
Rental expenses			58,809						49,318						166,189						141,474
Real estate taxes			32,803						29,529						94,628						88,272
General and administrative			13,100						12,253						39,046						35,357
Depreciation and amortization			77,109						70,611						223,244						202,160
Total operating expenses			181,821						161,711						523,107						467,263
Gain on deconsolidation of VIE			70,374						—						70,374						—
Gain on sale of real estate and change in control of interest			29,723						—						29,723						17,428
OPERATING INCOME			191,727						85,573						371,311						247,235
OTHER INCOME/(EXPENSE)
Other interest income			234						88						487						701
Interest expense			(35,060)						(32,249)						(98,707)						(95,511)
Income (loss) from partnerships			1,873						1,129						4,878						(86)
NET INCOME			158,774						54,541						277,969						152,339
Net income attributable to noncontrolling interests			(2,636)						(2,419)						(8,171)						(5,777)
NET INCOME ATTRIBUTABLE TO THE PARTNERSHIP			156,138						52,122						269,798						146,562
Distributions on preferred units			(2,008)						(2,010)						(6,026)						(6,031)
NET INCOME AVAILABLE FOR COMMON UNIT HOLDERS			$	154,130					$	50,112					$	263,772					$	140,531
EARNINGS PER COMMON UNIT, BASIC:
Net income available for common unit holders			$	1.90					$	0.64					$	3.31					$	1.81
Weighted average number of common units			80,765						77,485						79,480						77,269
EARNINGS PER COMMON UNIT, DILUTED:
Net income available for common unit holders			$	1.89					$	0.64					$	3.31					$	1.81
Weighted average number of common units			81,511						77,575						80,137						77,287
COMPREHENSIVE INCOME			$	161,569					$	55,095					$	286,902					$	155,530
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE PARTNERSHIP			$	158,672					$	52,634					$	277,929					$	149,480

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 Nine Months Ended September 30, 2022

(Unaudited)

						Preferred Units						Common Units												Accumulated Other Comprehensive Income (Loss)						Total Partner Capital						Noncontrolling Interests in Consolidated Partnerships						Total Capital
BALANCE AT JUNE 30, 2022						$	154,788					$	2,637,545											$	3,550					$	2,795,883					$	80,544					$	2,876,427
Net income, excluding $1,774 attributable to redeemable noncontrolling interests						2,008						154,130												—						156,138						862						157,000
Other comprehensive income - change in fair value of interest rate swaps, excluding $261 attributable to redeemable noncontrolling interests						—						—												2,534						2,534						—						2,534
Distributions declared to common unit holders						—						(87,694)												—						(87,694)						—						(87,694)
Distributions declared to preferred unit holders						(2,008)						—												—						(2,008)						—						(2,008)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $1,974 attributable to redeemable noncontrolling interests						—						—												—						—						(1,441)						(1,441)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						32,892												—						32,892						—						32,892
Exercise of stock options						—						35												—						35						—						35
Common units issued under dividend reinvestment plan						—						573												—						573						—						573
Share-based compensation expense, net of forfeitures						—						3,579												—						3,579						—						3,579
Common units withheld for employee taxes						—						(248)												—						(248)						—						(248)
Deconsolidation of VIE						—						—												—						—						972						972
Adjustment to redeemable noncontrolling interests						—						(741)												—						(741)						—						(741)
BALANCE AT SEPTEMBER 30, 2022						154,788						2,740,071												6,084						2,900,943						80,937						2,981,880
BALANCE AT DECEMBER 31, 2021						$	154,963					$	2,427,686											$	(2,047)					$	2,580,602					$	82,546					$	2,663,148
Net income, excluding $5,301 attributable to redeemable noncontrolling interests						6,026						263,772												—						269,798						2,870						272,668
Other comprehensive income - change in fair value of interest rate swaps, excluding $802 attributable to redeemable noncontrolling interest						—						—												8,131						8,131						—						8,131
Distributions declared to common unit holders						—						(256,867)												—						(256,867)						—						(256,867)
Distributions declared to preferred unit holders						(6,026)						—												—						(6,026)						—						(6,026)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $6,112 attributable to redeemable noncontrolling interests						—						—												—						—						(4,066)						(4,066)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						292,344												—						292,344						—						292,344
Exercise of stock options						—						35												—						35						—						35
Common units issued under dividend reinvestment plan						—						1,584												—						1,584						—						1,584
Share-based compensation expense, net of forfeitures						—						11,258												—						11,258						—						11,258
Common units withheld for employee taxes						—						(4,886)												—						(4,886)						—						(4,886)
Conversion of preferred units						(175)						175												—						—						—						—
Conversion of downREIT OP units						—						1,385												—						1,385						(1,385)						—
Deconsolidation of VIE						—						—												—						—						972						972
Adjustment to redeemable noncontrolling interests						—						3,585												—						3,585						—						3,585
BALANCE AT SEPTEMBER 30, 2022						$	154,788					$	2,740,071											$	6,084					$	2,900,943					$	80,937					$	2,981,880

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Federal Realty OP LP

Consolidated Statements of Capital

For the Three and Nine Months Ended September 30, 2021

(Unaudited)

						Preferred Units						Common Units												Accumulated Other Comprehensive Income (Loss)						Total Partner Capital						Noncontrolling Interests in Consolidated Partnerships						Total Capital
BALANCE AT JUNE 30, 2021						$	154,963					$	2,338,364											$	(3,238)					$	2,490,089					$	85,750					$	2,575,839
Net income, excluding $1,595 attributable to redeemable noncontrolling interests						2,010						50,112												—						52,122						824						52,946
Other comprehensive income - change in fair value of interest rate swaps, excluding $42 attributable to redeemable noncontrolling interests						—						—												512						512						—						512
Distributions declared to common unit holders						—						(83,212)												—						(83,212)						—						(83,212)
Distributions declared to preferred unit holders						(2,010)						—												—						(2,010)						—						(2,010)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $1,310 attributable to redeemable noncontrolling interests						—						—												—						—						(1,555)						(1,555)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						(67)												—						(67)						—						(67)
Common units issued under dividend reinvestment plan						—						488												—						488						—						488
Share-based compensation expense, net of forfeitures						—						3,367												—						3,367						—						3,367
Common units withheld for employee taxes						—						(126)												—						(126)						—						(126)
BALANCE AT SEPTEMBER 30, 2021						$	154,963					$	2,308,926											$	(2,726)					$	2,461,163					$	85,019					$	2,546,182
BALANCE AT DECEMBER 31, 2020						$	154,963					$	2,314,838											$	(5,644)					$	2,464,157					$	84,590					$	2,548,747
Net income, excluding $3,472 attributable to redeemable noncontrolling interests						6,031						140,531												—						146,562						2,305						148,867
Other comprehensive income - change in fair value of interest rate swaps, excluding $273 attributable to redeemable noncontrolling interests						—						—												2,918						2,918						—						2,918
Distributions declared to common unit holders						—						(248,000)												—						(248,000)						—						(248,000)
Distributions declared to preferred unit holders						(6,031)						—												—						(6,031)						—						(6,031)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $3,045 attributable to redeemable noncontrolling interests						—						—												—						—						(3,282)						(3,282)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						87,066												—						87,066						—						87,066
Common units issued under dividend reinvestment plan						—						1,507												—						1,507						—						1,507
Share-based compensation expense, net of forfeitures						—						10,874												—						10,874						—						10,874
Common units withheld for employee taxes						—						(2,939)												—						(2,939)						—						(2,939)
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 SEPTEMBER 30, 2021						$	154,963					$	2,308,926											$	(2,726)					$	2,461,163					$	85,019					$	2,546,182

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)

			Nine Months Ended September 30,
			2022						2021
			(In thousands)
OPERATING ACTIVITIES
Net income			$	277,969					$	152,339
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			223,244						202,160
Gain on deconsolidation of VIE			(70,374)						—
Gain on sale of real estate and change in control of interest			(29,723)						(17,428)
(Income) loss from partnerships			(4,878)						86
Straight-line rent			(14,414)						(4,114)
Share-based compensation expense			10,255						9,780
Other, net			(3,509)						(2,206)
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
(Increase) decrease in accounts receivable, net			(5,519)						4,857
Decrease (increase) in prepaid expenses and other assets			1,361						(6,004)
Increase in accounts payable and accrued expenses			13,948						15,505
Increase in security deposits and other liabilities			10,933						11,061
Net cash provided by operating activities			409,293						366,036
INVESTING ACTIVITIES
Acquisition of real estate			(429,990)						(366,466)
Capital expenditures - development and redevelopment			(213,881)						(282,833)
Capital expenditures - other			(70,004)						(48,693)
Costs associated with property sold under threat of condemnation			(2,915)						—
Proceeds from sale of real estate			66,682						19,896
Change in cash from deconsolidation of VIE			(4,192)						—
Investment in partnerships			(417)						(2,657)
Distribution from partnerships in excess of earnings			5,076						1,868
Leasing costs			(17,039)						(14,079)
(Issuance) repayment of mortgage and other notes receivable, net			(3,471)						31,122
Net cash used in investing activities			(670,151)						(661,842)
FINANCING ACTIVITIES
Net borrowings under revolving credit facility			267,000						—
Repayment of mortgages, finance leases and notes payable			(18,644)						(160,307)
Issuance of common units, net of costs			292,671						87,279
Distributions to common and preferred unit holders			(258,009)						(250,849)
Shares withheld for employee taxes			(4,886)						(2,939)
Contributions from noncontrolling interests			—						104
Distributions to and redemptions of redeemable noncontrolling interests			(33,801)						(6,473)
Net cash provided by (used in) financing activities			244,331						(333,185)
Decrease in cash, cash equivalents and restricted cash			(16,527)						(628,991)
Cash, cash equivalents, and restricted cash at beginning of year			175,163						816,896
Cash, cash equivalents, and restricted cash at end of period			$	158,636					$	187,905

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

September 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 September 30, 2022, 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 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 nine months ended September 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, higher levels of inflation, and rising interest rates, we continue to monitor and address risks related to the global 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 $0.9 million and $2.9 million, respectively, during the three and nine months ended September 30, 2022, as compared to a decrease to rental income during the three and nine months ended September 30, 2021 of $0.6 million and $21.8 million, respectively, which reflected lower levels of cash collections and elevated levels of rent abatements and disputes directly related to COVID-19. As of September 30, 2022, the revenue from approximately 31% of our tenants (based on total commercial leases) is being recognized on a cash basis.

As of September 30, 2022, we executed rent deferral agreements related to the COVID-19 pandemic representing approximately $47 million of rent. We have subsequently collected approximately $33 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 expect to apply some of the practical expedients, as we are in the process of transitioning the $55.4 million mortgage loan at Hoboken and the $39.2 million mortgage loan related to the unconsolidated Assembly Row hotel (of which our share is $19.6 million) from LIBOR to alternative interest rates. We do not expect a significant impact to our financial results, financial position, or cash flows from this transition.
ASU 2022-03, June 2022, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (Topic 820)						This ASU clarifies that contractual sale restrictions are not considered in measuring the fair value of equity securities, and requires specific disclosures for all entities with equity securities subject to a contractual sale restriction including (1) the fair value of such equity securities reflected in the balance sheet, (2) the nature and remaining duration of the corresponding restrictions, and (3) any circumstances that could cause a lapse in the restrictions. In addition, the ASU prohibits an entity from recognizing a contractual sale as a separate unit of account. This guidance is effective in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted.						We are assessing the impact of this ASU on OP units issued as consideration in future acquisitions.

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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:

			Nine Months Ended
			September 30,
			2022						2021
			(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred			$	112,596					$	113,691
Interest capitalized			(13,889)						(18,180)
Interest expense			$	98,707					$	95,511
Cash paid for interest, net of amounts capitalized			$	94,712					$	91,887
Cash paid for income taxes			$	616					$	326
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
DownREIT operating partnership units redeemed for common shares			$	1,385					$	5,121
Shares issued under dividend reinvestment plan			$	1,292					$	1,294
5.417% Series 1 Cumulative Convertible Preferred Shares redeemed for common shares			$	175					$	—

			September 30,						December 31,
			2022						2021
			(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents			$	146,214					$	162,132
Restricted cash (1)			12,422						13,031
Total cash, cash equivalents, and restricted cash			$	158,636					$	175,163

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

NOTE 3—REAL ESTATE

Property Acquisitions

During the nine months ended September 30, 2022, we acquired the following properties:

Date Acquired						Property						City/State						Gross Leasable Area (GLA)						Gross Value
																		(in square feet)						(in millions)
April 20, 2022 & July 27, 2022						Kingstowne Towne Center						Kingstowne, Virginia						410,000						$	200.0		(1)
July 18, 2022						Hilton Village (office building)						Scottsdale, Arizona						214,000						$	53.6		(2)
July 27, 2022						The Shops at Pembroke Gardens						Pembroke Pines, Florida						392,000						$	180.5		(3)

(1) Approximately $11.3 million and $0.3 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $20.2 million of net assets acquired were allocated to other liabilities for "below market leases."

(2) 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, for which we have recorded a $6.5 million "operating lease right of use asset" (net of a $0.8 million above market liability) and a $7.3 million "operating lease liability." Approximately $8.9 million of net assets acquired were allocated to other assets for "acquired lease costs" and $0.1 million of net assets acquired were allocated to other liabilities for "below market leases."

(3) Approximately $16.3 million and $1.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $18.4 million of net assets acquired were allocated to other liabilities for "below market leases."

Property Dispositions

During the three and nine months ended September 30, 2022, we sold one residential property (including an adjacent retail pad) and one retail property for sales prices totaling $66.8 million, resulting in net gains totaling approximately $20.4 million.

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Other Transaction

On August 25, 2022, we entered into a tenancy in common ("TIC") agreement with our partner in the partnership that owned Escondido Promenade. As a result, the Company owns a 77.7% TIC interest, and our former partner owns the remaining 22.3% interest. While the Company controlled and consolidated Escondido Promenade under the previous partnership arrangement, control is shared under the TIC agreement. The transaction is considered a transfer of our previous controlling partner interest in exchange for a non-controlling TIC interest. Accordingly, we deconsolidated the entity and recorded our TIC interest at fair value as an equity method investment. We recognized a $70.4 million "gain on deconsolidation of VIE" on our consolidated statements of operations, which is the difference between the net carrying value of the deconsolidated entity and the fair value of our TIC interest. As of August 25, 2022, the fair value of our investment in the entity was $110.0 million, and is included in "investment in partnerships" on our consolidated balance sheet as of September 30, 2022. As a part of this transaction, we made a $3.5 million loan to our co-owner, which is included in "accounts and notes receivable, net" on our consolidated balance sheet at September 30, 2022. In addition, we entered into a purchase option agreement to acquire the TIC interest from our co-owner, which was secured through an option payment of $1.5 million, and allows us to exercise our option at any time between February 1, 2023 and March 15, 2023.

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 nine months ended September 30, 2022, the maximum amount of borrowings outstanding under our $1.0 billion revolving credit facility was $330.0 million. The weighted average amount of borrowings outstanding was $229.5 million and $97.8 million, respectively, and the weighted average interest rate, before amortization of debt fees, was 3.4% and 3.1%, respectively, for the three and nine months ended September 30, 2022. At September 30, 2022, our revolving credit facility had $267.0 million 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 September 30, 2022, we were in compliance with all default related debt covenants.

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:

			September 30, 2022												December 31, 2021
Carrying Value						Fair Value						Carrying Value						Fair Value
(In thousands)
Mortgages and notes payable, net			$	889,601					$	867,018					$	641,459					$	655,864
Senior notes and debentures, net			$	3,407,298					$	3,043,034					$	3,406,088					$	3,649,776

As of September 30, 2022, we have two interest rate swap agreements with notional amounts of $55.4 million that are measured at fair value on a recurring basis. The interest rate swap agreements fix the interest rate on $55.4 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 September 30, 2022 was an asset of $6.5 million and is included in "prepaid expenses and other assets" on our consolidated balance sheets. For the three and nine months ended September 30, 2022, the value of our interest rate swaps increased $2.6 million and $8.0 million, respectively (including less than $0.1 million reclassified from other comprehensive income as a decrease to interest expense for the three months ended and $0.3 million for the nine months ended reclassified from other comprehensive income as an increase to interest expense,

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respectively). 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:

			September 30, 2022																								December 31, 2021
			Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3						Total
			(In thousands)
Interest rate swaps			$	—					$	6,508					$	—					$	6,508					$	—					$	(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 nine months ended September 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 $0.9 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.

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 December 11, 2019, we received proceeds related to the sale under the threat of condemnation at San Antonio Center as discussed in our Annual Report on Form 10-K for the year ended December 31, 2019. We indemnified the condemning authority for all costs incurred related to the condemnation proceedings including any payments required to tenants at the property and recorded a corresponding liability for our estimate of these costs. During September 2022, we recorded a net reduction to our liability for condemnation and transaction costs to reflect the impact of a recent tenant settlement agreement and our current estimate of remaining costs, and accordingly, for the three and nine months ended September 30, 2022, we have recognized a gain of $9.3 million, which is included in our consolidated statements of operations. Additionally, during the nine months ended September 30, 2022, we incurred $2.9 million of payments to tenants, and consequently, at September 30, 2022, we have a liability of $20.1 million to reflect our estimate of the remaining consideration.

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 $58.8 million, which is calculated by multiplying the outstanding number of downREIT partnership units by our closing stock price on September 30, 2022.

NOTE 7—SHAREHOLDERS’ EQUITY

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

			Nine Months Ended September 30,
			2022												2021
			Declared						Paid						Declared						Paid
Common shares			$	3.220					$	3.210					$	3.190					$	3.180
5.417% Series 1 Cumulative Convertible Preferred shares			$	1.016					$	1.016					$	1.016					$	1.016
5.0% Series C Cumulative Redeemable Preferred shares (1)			$	0.938					$	0.938					$	0.938					$	0.938

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

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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 nine months ended September 30, 2022, we issued 296,843 common shares at a weighted average price per share of $112.11 for net cash proceeds of $32.9 million including paying $0.3 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. We have the remaining capacity to issue up to $466.7 million in common shares under our ATM equity program as of September 30, 2022.

For the nine months ended September 30, 2022, we settled forward sales agreements by issuing 2,203,655 common shares for net proceeds of $259.4 million. We have no outstanding forward sales agreements as of September 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												Nine Months Ended
			September 30,												September 30,
			2022						2021						2022						2021
			(In thousands)
Grants of common shares, restricted stock units, and options			$	3,579					$	3,367					$	11,258					$	10,874
Capitalized share-based compensation			(344)						(336)						(1,003)						(1,094)
Share-based compensation expense			$	3,235					$	3,031					$	10,255					$	9,780

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 nine months ended September 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 nine months ended September 30, 2021,

• conversions of downREIT operating partnership units for the three and nine months ended September 30, 2021,

• conversions of 5.417% Series 1 Cumulative Convertible Preferred Shares and units for the nine months ended September 30, 2022, and the three and nine months ended September 30, 2021, and

• the issuance of 1.8 million shares and units issuable under common share forward sales agreements for the nine months ended September 30, 2022, and 0.9 million and 1.7 million, respectively, for the three and nine months ended September 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.

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Federal Realty Investment Trust Earnings per Share

			Three Months Ended												Nine Months Ended
			September 30,												September 30,
			2022						2021						2022						2021
			(In thousands, except per share data)
NUMERATOR
Net income			$	158,774					$	54,541					$	277,969					152,339
Less: Preferred share dividends			(2,008)						(2,010)						(6,026)						(6,031)
Less: Income from operations attributable to noncontrolling interests			(2,636)						(2,419)						(8,171)						(5,777)
Less: Earnings allocated to unvested shares			(535)						(309)						(935)						(901)
Net income available for common shareholders, basic and diluted			$	153,595					$	49,803					$	262,837					$	139,630
DENOMINATOR
Weighted average common shares outstanding, basic			80,765						77,485						79,480						77,269
Effect of dilutive securities:
Open forward contracts for share issuances			—						90						1						18
DownREIT operating partnership units			652						—						656						—
5.417% Series 1 Cumulative Convertible Preferred Shares			94						—						—						—
Weighted average common shares outstanding, diluted			81,511						77,575						80,137						77,287
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders			$	1.90					$	0.64					$	3.31					$	1.81
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders			$	1.89					$	0.64					$	3.31					$	1.81

Federal Realty OP LP Earnings per Unit

			Three Months Ended												Nine Months Ended
			September 30,												September 30,
			2022						2021						2022						2021
			(In thousands, except per unit data)
NUMERATOR
Net income			$	158,774					$	54,541					$	277,969					152,339
Less: Preferred unit distributions			(2,008)						(2,010)						(6,026)						(6,031)
Less: Income from operations attributable to noncontrolling interests			(2,636)						(2,419)						(8,171)						(5,777)
Less: Earnings allocated to unvested units			(535)						(309)						(935)						(901)
Net income available for common unit holders, basic and diluted			$	153,595					$	49,803					$	262,837					$	139,630
DENOMINATOR
Weighted average common units outstanding, basic			80,765						77,485						79,480						77,269
Effect of dilutive securities:
Common unit issuances relating to open common share forward contracts			—						90						1						18
DownREIT operating partnership units			652						—						656						—
5.417% Series 1 Cumulative Convertible Preferred Units			94						—						—						—
Weighted average common units outstanding, diluted			81,511						77,575						80,137						77,287
EARNINGS PER COMMON UNIT, BASIC:
Net income available for common unit holders			$	1.90					$	0.64					$	3.31					$	1.81
EARNINGS PER COMMON UNIT, DILUTED:
Net income available for common unit holders			$	1.89					$	0.64					$	3.31					$	1.81

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NOTE 10—SUBSEQUENT EVENTS

On October 5, 2022, we amended our revolving credit facility, increasing the borrowing capacity from $1.0 billion to $1.25 billion, extending the maturity date to April 5, 2027, plus two six-month extension options, transitioning the interest rate provisions from LIBOR to the secured overnight financing rate ("SOFR"), and adjusting the spread for SOFR based loans. Our SOFR based loans bear interest at Daily Simple SOFR or Term SOFR as defined in the credit agreement plus 0.10% plus a spread, based on our credit rating. The current spread is 77.5 basis points. In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.75 billion. On October 5, 2022, we also amended our unsecured term loan and borrowed an additional $300.0 million, bringing the total outstanding to $600.0 million. The term loan amendment also transitioned the interest rate provisions from LIBOR to SOFR, with the basis point spread over SOFR remaining at 85 basis points, based on our current credit rating. The net proceeds from the term loan were used to repay the $267.0 million outstanding balance on the revolving credit facility and for general corporate purposes.

On October 6, 2022, we acquired a 47.5% interest in an unconsolidated joint venture that owns two shopping centers totaling 617,000 square feet in Chandler, Arizona for $58.9 million. The properties have combined mortgage debt of $76.1 million, of which our share is approximately $36.2 million.