Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion should be read in conjunction with the consolidated interim financial statements and notes thereto appearing in Item 1 of this report and the more detailed information contained in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on February 10, 2022.

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

• risks that our tenants will not pay rent, may vacate early or may file for bankruptcy or that we may be unable to renew leases or re-let space at favorable rents as leases expire;

• risks that we may not be able to proceed with or obtain necessary approvals for any redevelopment or renovation project, and that completion of anticipated or ongoing property redevelopment or renovation projects that we do pursue may cost more, take more time to complete or fail to perform as expected;

• risks normally associated with the real estate industry, including risks that occupancy levels at our properties and the amount of rent that we receive from our properties may be lower than expected, that new acquisitions may fail to perform as expected, that competition for acquisitions could result in increased prices for acquisitions, that costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase, that environmental issues may develop at our properties and result in unanticipated costs, and, because real estate is illiquid, that we may not be able to sell properties when appropriate;

• risks that our growth will be limited if we cannot obtain additional capital;

• risks of financing on terms which are acceptable to us, our ability to meet existing financial covenants and the limitations imposed on our operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense;

• risks related to the Trust's status as a real estate investment trust, commonly referred to as a REIT, for federal income tax purposes, such as the existence of complex tax regulations relating to the Trust's status as a REIT, the effect of future changes in REIT requirements as a result of new legislation, and the adverse consequences of the failure to qualify as a REIT;

• risks related to natural disasters, climate change and public health crises (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or

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health authorities implement to address them, may precipitate or materially exacerbate one or more of the above-mentioned risks, and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.

Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this Quarterly Report on Form 10-Q. You should carefully review the risks and the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2021 and under Part II, Item 1A in this Quarterly Report on Form 10-Q, before making any investments in us.

Overview

Federal Realty Investment Trust (the "Parent Company" or the “Trust”) is an equity real estate investment trust (“REIT”). Federal Realty OP LP (the "Operating Partnership") is the entity through which the Trust conducts substantially all of its operations and owns substantially all of its assets. The Trust owns 100% of the limited liability company interests of, and 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. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership. We specialize in the ownership, management, and redevelopment of high quality retail and mixed-use properties. 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 comprising approximately 25.6 million square feet. In total, the real estate projects were 94.3% leased and 92.1% occupied at September 30, 2022.

Impacts of COVID-19 Pandemic and General Economic Conditions

Given the ongoing workforce shortages, global supply chain bottlenecks and shortages, and high inflation, we continue to monitor and address risks related to the COVID-19 pandemic and the general state of the economy. While improving, our cash flow and results of operations in the nine months ended September 30, 2022 continued to be negatively impacted largely due to vacancy levels remaining above historical levels. Although virtually all of our leases required the tenants to pay rent even while they were not operating, we entered into numerous agreements to abate, defer, and/or restructure tenant rent payments for varying periods of time, all with the objective of collecting as much cash as reasonably possible and maintaining occupancy to the maximum extent. We believe those actions positioned many of our tenants to be able to return to payment of contractual rent as soon as possible after the initial impacts from the pandemic have started to subside.

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.

We believe that the actions we have taken to improve our financial position and maximize our liquidity, as described further in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report on Form 10-K, will continue to mitigate the impact to our cash flow caused by tenants not timely paying contractual rent.

See further discussion of the impact of COVID-19 on our business throughout Item 2.

Critical Accounting Policies

There have been no significant changes to the critical accounting policies disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2021 Annual Report on Form 10-K.

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2022 Acquisitions, Dispositions, and Other Transacations

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."

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.

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.

Other Transactions

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 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.

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2022 Debt and Equity Transactions

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

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 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.

Recently Issued Accounting Pronouncements

See Note 2 to the consolidated financial statements.

Capitalized Costs

Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-construction costs, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved, are capitalized. We capitalized certain external and internal costs related to both development and redevelopment activities of $208 million and $8 million, respectively, for the nine months ended September 30, 2022, and $276 million and $7 million for the nine months ended September 30, 2021. We capitalized external and internal costs related to other property improvements of $76 million and $3 million, respectively, for the nine months ended September 30, 2022, and $44 million and $3 million for the nine months ended September 30, 2021. We capitalized external and internal costs related to leasing activities of $14 million and $3 million, respectively, for the nine months ended September 30, 2022, and $11 million and $2 million, respectively, for the nine months ended September 30, 2021. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $8 million, $2 million, and $3 million, respectively for the nine months ended September 30, 2022, and $7 million, $2 million, and $2 million, respectively, for the nine months ended September 30, 2021. Total capitalized costs were $312 million and $343 million for the nine months ended September 30, 2022 and 2021, respectively.

Outlook

Our long-term growth strategy is focused on growth in earnings, funds from operations, and cash flows primarily through a combination of the following:

• growth in our comparable property portfolio,

• growth in our portfolio from property redevelopments and expansions, and

• expansion of our portfolio through property acquisitions.

While the general economic effects of the COVID-19 pandemic, elevated levels of inflation, and rising interest rates are impacting us in the short-term, our long-term focus has not changed. See our 10-K filed on February 10, 2022, for discussion of our long-term strategies.

The COVID-19 global pandemic continues to negatively impact our business with the largest current impacts being lower occupancy, the timing and level of rent collections, and supply chain disruptions. At September 30, 2022, our commercial space

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is 92.1% occupied, which is below historical levels largely due to tenant failures as a result of the pandemic. This lower occupancy will adversely impact our results until we can release the space and the tenant commences paying rent, as well as limit future vacancies. We are, however, experiencing strong demand for our commercial space as evidenced by the 2.2 million square feet of comparable space leasing we've completed in the last twelve months, and the 2.2% spread between our leased rate of 94.3% and our occupied rate of 92.1%. Our percentage of contractual rents actually collected continued to increase since the low point in April 2020, including some tenants paying past due amounts. We continue to see impacts of overall supply chain disruptions affecting the broader economy, including significantly longer lead times, limited availability, and increased costs for certain construction and other materials that support our development and redevelopment activities. If disruptions continue to worsen, they could result in extended timeframes and/or increased costs for completion of our projects and tenant build-outs, which could delay the commencement of rent payments under new leases. Similarly, if our tenants experience significant disruptions in supply chains supporting their own products, or staffing issues due to labor shortages, their ability to pay rent may be adversely affected. We continue to monitor these macroeconomic developments and are working with our tenants and our vendors to limit the overall impact to our business.

The duration and severity of the economic impact from COVID-19 and the current economic environment will depend on future developments, which are highly uncertain and cannot be fully predicted, however, we seek to position the Company to continue to participate in the resulting economic recovery.

We continue to have several development projects in process being delivered as follows:

• Phase III of Assembly Row includes 277,000 square feet of office space, 56,000 square feet of retail space, and 500 residential units. The expected costs for Phase III are between $475 million and $485 million, with spaces being delivered beginning in the second quarter of 2021. At September 30, 2022, 257,000 square feet of office space has been delivered, all of the units in the residential building have been delivered, and 33,000 square feet of retail space has opened.

• Phase III at Pike & Rose includes a 212,000 square foot office building (which includes 7,000 square feet of ground floor retail space). The building is expected to cost between $130 million and $135 million. At September 30, 2022, approximately 203,000 square feet of office and retail has been delivered, of which approximately 45,000 square feet is our new corporate headquarters.

• Phase IV at Pike & Rose is a 276,000 square foot office building (which includes 10,000 square feet of ground floor retail space). Approximately 105,000 square feet of the office space is pre-leased to a single tenant. The building is expected to cost between $185 million and $200 million, and begin delivering in late 2023.

• The first phase of construction on Santana West includes an eight story 376,000 square foot office building, which is expected to cost between $300 million and $315 million.

• Throughout the portfolio, we currently have redevelopment projects underway with a projected total cost of approximately $231 million that we expect to stabilize over the next several years.

The above includes our best estimates based on information currently known, however, the completion of construction, final costs, and the timing of leasing and openings may be further impacted by the current environment including the duration and severity of the economic impacts of COVID-19, supply chain disruptions, broader economic conditions, and inflation.

The development of future phases of Assembly Row, Pike & Rose and Santana Row will be pursued opportunistically based on, among other things, market conditions, tenant demand, and our evaluation of whether those phases will generate an appropriate financial return.

We continue to review acquisition opportunities that complement our portfolio and provide long-term growth opportunities. Initially, some of our acquisitions do not contribute significantly to earnings growth; however, we believe they provide long-term re-leasing growth, redevelopment opportunities, and other strategic opportunities. Any growth from acquisitions is contingent on our ability to find properties that meet our qualitative standards at prices that meet our financial hurdles. Changes in interest rates may affect our success in achieving earnings growth through acquisitions by affecting both the price that must be paid to acquire a property, as well as our ability to economically finance the property acquisition. Generally, our acquisitions are initially financed by available cash and/or borrowings under our revolving credit facility which may be repaid later with funds raised through the issuance of new equity or new long-term debt. We may also finance our acquisitions through the issuance of common shares, preferred shares, or units in the Operating Partnership, as well as through assumed mortgages and property sales.

At September 30, 2022, the leasable square feet in our properties was 94.3% leased and 92.1% occupied. The leased rate is higher than the occupied rate due to leased spaces that are being redeveloped or improved or that are awaiting permits and, therefore, are not yet ready to be occupied. Our occupancy and leased rates are subject to variability over time due to factors

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including acquisitions, the timing of the start and stabilization of our redevelopment projects, lease expirations and tenant closings and bankruptcies.

Lease Rollovers

For the third quarter of 2022, we signed leases for a total of 585,000 square feet of retail space including 563,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 3% on a cash basis. New leases for comparable spaces were signed for 215,000 square feet, with no average rental increase on a cash basis. Renewals for comparable spaces were signed for 348,000 square feet at a 5% average rental increase on a cash basis. Tenant improvements and incentives for comparable spaces were $25.88 per square foot, of which, $62.30 per square foot was for new leases and $3.31 per square foot was for renewals for the three months ended September 30, 2022.

For the nine months ended September 30, 2022, we signed leases for a total of 1,622,000 square feet of retail space including 1,569,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 5% on a cash basis. New leases for comparable spaces were signed for 610,000 square feet at an average rental increase of 6% on a cash basis. Renewals for comparable spaces were signed for 959,000 square feet at a 3% average rental increase on a cash basis. Tenant improvements and incentives for comparable spaces were $31.75 per square foot, of which, $75.29 per square foot was for new leases and $4.04 per square foot was for renewals for the nine months ended September 30, 2022.

The rental increases associated with comparable spaces generally include all leases signed for retail space in arms-length transactions reflecting market leverage between landlords and tenants during the period. The comparison between the rent for expiring leases and new leases is determined by including contractual rent on the expiring lease, including percentage rent, and the comparable annual rent and in some instances, projections of percentage rent, to be paid on the new lease. In atypical circumstances, management may exercise judgment as to how to most effectively reflect the comparability of spaces reported in this calculation. As a result of accommodations made to certain tenants to help them to stay open during and after the COVID-19 pandemic, we have found it necessary to exercise more judgement since the pandemic started than in prior years in order to appropriately reflect the comparability of rents in the calculation. The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. Rent abatement and short term rent restructuring agreements that are a result of COVID-19 impacts are not included in this calculation. Tenant improvements and incentives include the total dollars committed for the improvement (fit out) of a space as it relates to a specific lease. Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent building improvements. Costs related to tenant improvements require judgement by management in determining what are costs specific to the tenant and not deferred maintenance on the space.

Historically, we have executed comparable space leases for 1.4 to 2.0 million square feet of retail space each year. We expect the volume in 2022 will be in line with, or potentially exceed, our historical averages given a larger amount of vacancy as a result of COVID-19. We expect some rental rates to continue to be negatively impacted by the COVID-19 pandemic, which we started experiencing in the second quarter of 2020. Although we expect overall positive increases in annual rent for comparable spaces, changes in annual rent for any individual lease or combinations of individual leases reported in any particular period may be positive or negative and we can provide no assurance that the annual rents on comparable space leases will continue to increase at historical levels, if at all.

The leases signed in 2022 generally become effective over the following two years though some may not become effective until 2025 and beyond. Further, there is risk that some new tenants will not ultimately take possession of their space and that tenants for both new and renewal leases may not pay all of their contractual rent due to operating, financing or other matters. However, our historical increases in rental rates do provide information about the tenant/landlord relationship and the potential increase we may achieve in rental income over time.

Comparable Properties

Throughout this section, we have provided certain information on a “comparable property” basis. Information provided on a comparable property basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties that are currently under development or are being repositioned for significant redevelopment and investment. For the three and nine months ended September 30, 2022, all or a portion of 96 and 92 properties, respectively, were considered comparable properties and seven properties were considered non-comparable properties. For the three months ended September 30, 2022, one property was moved from comparable properties to non-comparable properties, one property was moved from non-comparable properties to comparable properties, three properties and one portion of a property were moved from acquisitions to comparable properties, two properties were removed from comparable properties, as they were sold, and one property was removed from comparable properties, as it was deconsolidated; all compared to the designations as of December 31, 2021. For the nine months ended September 30, 2022, one property was moved from comparable properties to

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non-comparable properties, one property was moved from non-comparable properties to comparable properties, two properties were removed from comparable properties, as they were sold, and one property was removed from comparable properties, as it was deconsolidated, compared to the designations as of December 31, 2021. While there is judgment surrounding changes in designations, we typically move non-comparable properties to comparable properties once they have stabilized, which is typically considered 90% physical occupancy or when the growth expected from the redevelopment has been included in the comparable periods. We typically remove properties from comparable properties when the repositioning of the asset has commenced and has or is expected to have a significant impact to property operating income within the calendar year. Acquisitions are moved to comparable properties once we have owned the property for the entirety of comparable periods and the property is not under development or being repositioned for significant redevelopment and investment.

RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

															Change
			2022						2021						Dollars						%
			(Dollar amounts in thousands)
Rental income			$	273,179					$	247,024					$	26,155					10.6		%
Mortgage interest income			272						260						12						4.6		%
Total property revenue			273,451						247,284						26,167						10.6		%
Rental expenses			58,809						49,318						9,491						19.2		%
Real estate taxes			32,803						29,529						3,274						11.1		%
Total property expenses			91,612						78,847						12,765						16.2		%
Property operating income (1)			181,839						168,437						13,402						8.0		%
General and administrative expense			(13,100)						(12,253)						(847)						6.9		%
Depreciation and amortization			(77,109)						(70,611)						(6,498)						9.2		%
Gain on deconsolidation of VIE			70,374						—						70,374						100.0		%
Gain on sale of real estate and change in control of interest			29,723						—						29,723						100.0		%
Operating income			191,727						85,573						106,154						124.1		%
Other interest income			234						88						146						165.9		%
Interest expense			(35,060)						(32,249)						(2,811)						8.7		%
Income from partnerships			1,873						1,129						744						65.9		%
Total other, net			(32,953)						(31,032)						(1,921)						6.2		%
Net income			158,774						54,541						104,233						191.1		%
Net income attributable to noncontrolling interests			(2,636)						(2,419)						(217)						9.0		%
Net income attributable to the Trust			$	156,138					$	52,122					$	104,016					199.6		%

(1)Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. The reconciliation of operating income to property operating income for the three months ended September 30, 2022 and 2021 is as follows:

			2022						2021
			(in thousands)
Operating income			$	191,727					$	85,573
General and administrative			13,100						12,253
Depreciation and amortization			77,109						70,611
Gain on deconsolidation of VIE			(70,374)						—
Gain on sale of real estate and change in control of interest			(29,723)						—
Property operating income			$	181,839					$	168,437

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Property Revenues

Total property revenue increased $26.2 million, or 10.6%, to $273.5 million in the three months ended September 30, 2022 compared to $247.3 million in the three months ended September 30, 2021. The percentage occupied at our shopping centers was 92.1% and 90.2% at September 30, 2022 and 2021, respectively. The most significant driver of the increase in property revenues is the ongoing recovery from the initial impacts of COVID-19 during the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, which had higher COVID-19 related rent abatements. Changes in the components of property revenue are discussed below.

Rental Income

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased $26.2 million, or 10.6%, to $273.2 million in the three months ended September 30, 2022 compared to $247.0 million in the three months ended September 30, 2021 due primarily to the following:

• an increase of $11.9 million from comparable properties primarily related to a $5.0 million increase in CAM, real estate tax and other recoveries on higher costs, higher rental rates of $3.7 million, higher average occupancy of approximately $2.2 million, and a $1.9 million increase in percentage rent primarily the result of higher tenant sales,

• an increase of $8.3 million from non-comparable properties primarily driven by the opening of Phase III at Assembly Row in 2021, redevelopment related occupancy increases at CocoWalk, and the 2021 openings at the Phase III office building at Pike & Rose,

• an increase of $7.6 million from 2022 acquisitions (see Note 3 to the consolidated financial statements for additional information), and

• a $1.6 million decrease in collectibility related impacts across all properties primarily due to lower rent abatements in the third quarter of 2022 as tenants continue to recover from the initial impacts of COVID-19,

partially offset by

• a decrease of $2.9 million from 2021 property sales.

Property Expenses

Total property expenses increased $12.8 million, or 16.2%, to $91.6 million in the three months ended September 30, 2022 compared to $78.8 million in the three months ended September 30, 2021. Changes in the components of property expenses are discussed below.

Rental Expenses

Rental expenses increased $9.5 million, or 19.2%, to $58.8 million in the three months ended September 30, 2022 compared to $49.3 million in the three months ended September 30, 2021. This increase is primarily due to the following:

• an increase of $5.0 million from comparable properties due primarily to higher repairs and maintenance costs and utilities, as 2021 had lower costs as a result of COVID-19 impacts as well as inflationary impacts in 2022,

• an increase of $2.4 million from non-comparable properties driven by the opening of Phase III at Assembly Row in 2021, and increased costs associated with the redevelopment of Huntington Shopping Center,

• an increase of $1.3 million from higher operating costs at our Pike & Rose hotel, and

• an increase of $1.2 million from 2022 acquisitions.

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income increased to 21.5% in the three months ended September 30, 2022 from 20.0% in the three months ended September 30, 2021.

Real Estate Taxes

Real estate tax expense increased $3.3 million, or 11.1%, to $32.8 million in the three months ended September 30, 2022 compared to $29.5 million in the three months ended September 30, 2021. This increase is primarily due to the following:

• an increase of $1.8 million from comparable properties due primarily to a true-up recorded in 2021 for prior year supplemental taxes at one of our properties and higher assessments,

• an increase of $0.9 million from 2022 acquisitions, and

• an increase of $0.9 million from non-comparable properties due primarily to the 2021 opening of Phase III at Assembly Row,

partially offset by

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• a decrease of $0.3 million from 2021 property sales.

Property Operating Income

Property operating income increased $13.4 million, or 8.0%, to $181.8 million in the three months ended September 30, 2022 compared to $168.4 million in the three months ended September 30, 2021. This increase is primarily driven by higher occupancy and rental rates at comparable properties, property acquisitions, the opening of Phase III at Assembly Row in 2021, higher percentage rent, and lower collectibility related adjustments, partially offset by 2021 property sales.

Other Operating

General and Administrative

General and administrative expense increased $0.8 million, or 6.9%, to $13.1 million in the three months ended September 30, 2022 from $12.3 million in the three months ended September 30, 2021. This increase is due primarily to higher personnel related costs.

Depreciation and Amortization

Depreciation and amortization expense increased $6.5 million, or 9.2%, to $77.1 million in the three months ended September 30, 2022 from $70.6 million in the three months ended September 30, 2021. This increase is due primarily to property acquisitions and the opening of Phase III at Assembly Row, partially offset by 2021 property sales.

Gain on Deconsolidation of VIE

The $70.4 million gain on deconsolidation of VIE for the three months ended September 30, 2022 is the result of the deconsolidation of Escondido Promenade in connection with the execution of the related August 25, 2022 TIC agreement (see Note 3 for additional information).

Gain on Sale of Real Estate and Change in Control of Interest

The $29.7 million gain on sale of real estate for the three months ended September 30, 2022 is due primarily to a net gain of $20.4 million related to the sales of one residential property (including an adjacent retail pad) and one retail property (see Note 3 for additional information), and a $9.3 million gain related to the reduction of our liability for estimated condemnation and transaction costs associated with the sale under threat of condemnation in December 2019 at San Antonio Center (see Note 6 for additional information).

Operating Income

Operating income increased $106.2 million, or 124.1%, to $191.7 million in the three months ended September 30, 2022 compared to $85.6 million in the three months ended September 30, 2021. This increase is primarily due to the gain on the deconsolidation of a VIE, gain on the sale of real estate, higher occupancy and rental rates at comparable properties, property acquisitions, the opening of Phase III at Assembly Row in 2021, higher percentage rent, and lower collectibility related adjustments, partially offset by 2021 property sales and higher personnel related costs.

Other

Interest Expense

Interest expense increased $2.8 million, or 8.7%, to $35.1 million in the three months ended September 30, 2022 compared to $32.2 million in the three months ended September 30, 2021. This increase is due primarily to the followings:

• an increase of $1.6 million due to a higher overall weighted average borrowing rate,

• an increase of $0.8 million due to higher weighted average borrowings, and

• a decrease of $0.4 million in capitalized interest.

Gross interest costs were $39.8 million and $37.4 million in the three months ended September 30, 2022 and 2021, respectively. Capitalized interest was $4.7 million and $5.2 million for the three months ended September 30, 2022 and 2021, respectively.

Income from Partnerships

Income from partnerships increased $0.7 million, or 65.9%, to $1.9 million in the three months ended September 30, 2022 compared to $1.1 million in the three months ended September 30, 2021. This increase is due primarily to improved operations and the forgiveness of certain loans at our restaurant joint ventures.

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RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

															Change
			2022						2021						Dollars						%
			(Dollar amounts in thousands)
Rental income			$	793,516					$	694,954					$	98,562					14.2		%
Mortgage interest income			805						2,116						(1,311)						(62.0)		%
Total property revenue			794,321						697,070						97,251						14.0		%
Rental expenses			166,189						141,474						24,715						17.5		%
Real estate taxes			94,628						88,272						6,356						7.2		%
Total property expenses			260,817						229,746						31,071						13.5		%
Property operating income (1)			533,504						467,324						66,180						14.2		%
General and administrative expense			(39,046)						(35,357)						(3,689)						10.4		%
Depreciation and amortization			(223,244)						(202,160)						(21,084)						10.4		%
Gain on deconsolidation of VIE			70,374						—						70,374						100.0		%
Gain on sale of real estate and change in control of interest			29,723						17,428						12,295						70.5		%
Operating income			371,311						247,235						124,076						50.2		%
Other interest income			487						701						(214)						(30.5)		%
Interest expense			(98,707)						(95,511)						(3,196)						3.3		%
Income (loss) from partnerships			4,878						(86)						4,964						5,772.1		%
Total other, net			(93,342)						(94,896)						1,554						(1.6)		%
Net income			277,969						152,339						125,630						82.5		%
Net income attributable to noncontrolling interests			(8,171)						(5,777)						(2,394)						41.4		%
Net income attributable to the Trust			$	269,798					$	146,562					$	123,236					84.1		%

(1)Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. The reconciliation of operating income to property operating income for the nine months ended September 30, 2022 and 2021 is as follows:

			2022						2021
			(in thousands)
Operating income			$	371,311					$	247,235
General and administrative			39,046						35,357
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)
Property operating income			$	533,504					$	467,324

Property Revenues

Total property revenue increased $97.3 million, or 14.0%, to $794.3 million in the nine months ended September 30, 2022 compared to $697.1 million in the nine months ended September 30, 2021. The percentage occupied at our shopping centers was 92.1% and 90.2% at September 30, 2022 and 2021, respectively. The most significant driver of the increase in property revenues is the ongoing recovery from the initial impacts of COVID-19 during the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, when COVID-19 related restrictions were still in effect for a portion of the period. Changes in the components of property revenue are discussed below.

Rental Income

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased $98.6 million, or 14.2%, to $793.5 million in the nine months ended September 30, 2022 compared to $695.0 million in the nine months ended September 30, 2021 due primarily to the following:

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• an increase of $29.5 million from 2021 and 2022 acquisitions,

• an increase of $26.1 million from comparable properties primarily related to higher percentage rent, specialty leasing, and parking income of $8.4 million primarily the result of the gradual lifting of COVID-19 closures and restrictions during the nine months ended September 30, 2021, higher rental rates of $6.9 million, higher average occupancy of approximately $5.9 million, a $3.9 million increase in CAM recoveries on higher CAM costs, and a $2.6 million increase in tenant recoveries, partially offset by lower net termination fees and legal fee income of $1.8 million,

• a $24.7 million decrease in collectibility related impacts across all properties primarily due to higher collection rates and lower rent abatements in the nine months ended September 30, 2022 as tenants continue to recover from the initial impacts of COVID-19,

• an increase of $23.1 million from non-comparable properties driven by the opening of Phase III at Assembly Row in 2021, redevelopment related occupancy increases at CocoWalk, and the 2021 openings at the Phase III office building at Pike & Rose, partially offset by redevelopment related occupancy decreases at Huntington Shopping Center, and

• an increase of $3.3 million from improved operating results at our Pike & Rose hotel,

partially offset by

• a decrease of $7.6 million from 2021 property sales.

Mortgage Interest Income

Mortgage interest income decreased $1.3 million, or 62.0%, to $0.8 million in the nine months ended September 30, 2022 compared to $2.1 million in the nine months ended September 30, 2021 primarily due to the repayment of $31.1 million of mortgage notes receivable in May 2021.

Property Expenses

Total property expenses increased $31.1 million, or 13.5%, to $260.8 million in the nine months ended September 30, 2022 compared to $229.7 million in the nine months ended September 30, 2021. Changes in the components of property expenses are discussed below.

Rental Expenses

Rental expenses increased $24.7 million, or 17.5%, to $166.2 million in the nine months ended September 30, 2022 compared to $141.5 million in the nine months ended September 30, 2021 due primarily to the following:

• an increase of $9.2 million from comparable properties due primarily to higher repairs and maintenance costs, utilities, and management fees, as 2021 had lower costs as a result of COVID-19 impacts as well as inflationary impacts in 2022, and higher insurance costs, partially offset by lower snow removal costs,

• an increase of $5.8 million from non-comparable properties due primarily to the 2021 openings of Phase III at Assembly Row, the Phase III office building at Pike & Rose, and CocoWalk, as well as increased costs associated with the redevelopment of Huntington Shopping Center,

• an increase of $5.2 million from 2021 and 2022 acquisitions, and

• an increase of $4.3 million from higher operating costs at our Pike & Rose hotel largely due to lifting of COVID-19 restrictions,

partially offset by,

• a decrease of $0.5 million from our 2021 property sales.

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income increased to 20.9% in the nine months ended September 30, 2022 from 20.4% in the nine months ended September 30, 2021.

Real Estate Taxes

Real estate tax expense increased $6.4 million, or 7.2%, to $94.6 million in the nine months ended September 30, 2022 compared to $88.3 million in the nine months ended September 30, 2021. This increase is primarily due to the following:

• an increase of $3.2 million from 2021 and 2022 acquisitions,

• an increase of $2.3 million from non-comparable properties due primarily to the opening of Phase III at Assembly Row, and

• an increase of $1.4 million from comparable properties due primarily to a true-up in 2021 of prior year supplemental taxes at one of our properties and higher assessments

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partially offset by,

• a decrease of $0.5 million from 2021 property sales.

Property Operating Income

Property operating income increased $66.2 million, or 14.2%, to $533.5 million in the nine months ended September 30, 2022 compared to $467.3 million in the nine months ended September 30, 2021. This increase is primarily driven by the ongoing recovery from the initial impacts of COVID-19, which resulted in lower collectibility related adjustments and higher percentage rent, specialty leasing, and parking income, compared to the nine months ended September 30, 2021 during which COVID-19 related restrictions were gradually being lifted. Also contributing to the increase were property acquisitions, higher occupancy and rental rates at comparable properties, the opening of Phase III at Assembly Row in 2021, partially offset by our 2021 property sales.

Other Operating

General and Administrative

General and administrative expense increased $3.7 million, or 10.4%, to $39.0 million in the nine months ended September 30, 2022 from $35.4 million in the nine months ended September 30, 2021. This increase is due primarily to higher personnel related costs.

Depreciation and Amortization

Depreciation and amortization expense increased $21.1 million, or 10.4%, to $223.2 million in the nine months ended September 30, 2022 from $202.2 million in the nine months ended September 30, 2021. This increase is due primarily to property acquisitions, the opening of Phase III at Assembly Row, the opening of the Phase III office building at Pike & Rose, accelerated depreciation as a result of redevelopment activities at Huntington Shopping Center, partially offset by the lower write-off of lease related assets for vacating tenants and 2021 property sales.

Gain on Deconsolidation of VIE

The $70.4 million gain on deconsolidation of VIE for the nine months ended September 30, 2022 is the result of the deconsolidation of Escondido Promenade in connection with the execution of the related August 25, 2022 TIC agreement (see Note 3 for additional information).

Gain on Sale of Real Estate and Change in Control of Interest

The $29.7 million gain on sale of real estate for the nine months ended September 30, 2022 is due primarily to a net gain of $20.4 million related to the sales of one residential property (including an adjacent retail pad) and one retail property (see Note 3 for additional information), and a $9.3 million gain related to the reduction of our liability for estimated condemnation and transaction costs associated with the sale under threat of condemnation in December 2019 at San Antonio Center (see Note 6 for additional information).

The $17.4 million gain on sale of real estate for the nine months ended September 30, 2021 is due primarily to a $15.6 million gain related to the sale of a portion of Graham Park Plaza in Falls Church, Virginia, a $2.1 million gain relating to the acquisition of the previously unconsolidated Pike & Rose hotel joint venture.

Operating Income

Operating income increased $124.1 million, or 50.2%, to $371.3 million in the nine months ended September 30, 2022 compared to $247.2 million in the nine months ended September 30, 2021. This increase is primarily due to the gain on the deconsolidation of a VIE, and the ongoing recovery from the initial impacts of COVID-19 restrictions, which resulted in lower collectibility related adjustments and higher percentage rent, specialty leasing, and parking income compared to the nine months ended September 30, 2021 during which COVID-19 related restrictions were gradually being lifted. Also contributing to the increase were property acquisitions, higher occupancy and rental rates at comparable properties, a higher net gain on the sale of real estate, and the opening of Phase III at Assembly Row in 2021, partially offset by our 2021 property sales and higher personnel related costs.

Interest Expense

Interest expense increased $3.2 million, or 3.3%, to $98.7 million in the nine months ended September 30, 2022 compared to $95.5 million in the nine months ended September 30, 2021. This increase is due primarily to the following:

• a decrease of $4.3 million in capitalized interest, and

• an increase of $0.9 million due to a higher overall weighted average borrowing rate,

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partially offset by,

• a decrease of $2.0 million due to lower weighted average borrowings.

Gross interest costs were $112.6 million and $113.7 million in the nine months ended September 30, 2022 and 2021, respectively. Capitalized interest was $13.9 million and $18.2 million for the nine months ended September 30, 2022 and 2021, respectively.

Income (Loss) from Partnerships

Income from partnerships increased $5.0 million, to $4.9 million in the nine months ended September 30, 2022 compared to a loss of $0.1 million in the nine months ended September 30, 2021. This increase is due primarily to improved operating results at our restaurant joint ventures and at our Assembly Row hotel joint venture, largely the result of the easing of COVID-19 closures and restrictions and the forgiveness of certain loans for some of our restaurants joint ventures and at our Assembly Row hotel joint venture.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests increased $2.4 million, or 41.4%, to $8.2 million in the nine months ended September 30, 2022 compared to $5.8 million in the nine months ended September 30, 2021. The increase is primarily due to 2021 acquisitions and higher income at our properties with third party partners.

Liquidity and Capital Resources

Due to the nature of our business and strategy, we typically generate significant amounts of cash from operations which is largely paid to our common and preferred shareholders in the form of dividends because as a REIT, the Trust is generally required to make annual distributions to shareholders of at least 90% of our taxable income (cash dividends paid in the nine months ended September 30, 2022 were approximately $259.3 million). Remaining cash flow from operations after dividend payments is used to fund recurring and non-recurring capital projects (such as tenant improvements and redevelopments), and regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities). We maintain a $1.0 billion revolving credit facility, which was increased to $1.25 billion effective October 5, 2022 as discussed below, to fund short term cash flow needs and also look to the public and private debt and equity markets, joint venture relationships, and property dispositions to fund capital expenditures on a long-term basis.

During the first nine months of 2022, we have continued to see improvements in overall cash collections from tenants with collection rates nearing pre-pandemic levels. We have also taken multiple steps over the past two years to strengthen our financial position, maximize liquidity, and to provide maximum flexibility during these uncertain times, including maintaining levels of cash in excess of the cash balances we have historically maintained. On October 5, 2022, we amended our revolving credit facility increasing the borrowing capacity from $1.0 billion to $1.25 billion and extending the maturity date to April 5, 2027, plus two six-month extensions at our option. Additionally, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.75 billion. We also amended our unsecured term loan borrowing an additional $300.0 million.

As of September 30, 2022, we had cash and cash equivalents of $146.2 million and $267.0 million outstanding on our $1.0 billion unsecured revolving credit facility. For the nine months ended September 30, 2022, the weighted average amount of borrowings outstanding on our revolving credit facility was $97.8 million, and the weighted average interest rate, before amortization of debt fees, was 3.1%. We also have the capacity to issue up to $466.7 million in common shares under our ATM equity program, and we have no debt maturing until the second quarter of 2023.

Our overall capital requirements for the remainder of 2022 will be impacted by the ongoing recovery from COVID related impacts, and overall economic impacts that might occur including supply chain issues and inflation. Cash requirements will also be impacted by acquisition opportunities and the level and general timing of our redevelopment and development activities. While the amount of future expenditures will depend on numerous factors, we expect to continue to see elevated levels of investment as we continue to invest in our overall portfolio to better position our properties for a post-COVID environment, costs to prepare vacant space for new tenants, and investments to complete the current phase and start the next phase of our larger mixed-use development projects although at a slightly reduced level from 2021, largely due to deliveries in 2021 of our third phase of Assembly Row.

We believe cash flow from operations, the cash on our balance sheet, and our amended $1.25 billion revolving credit facility will allow us to continue to operate our business in the short-term. Given our ability to access the capital markets, we also expect debt or equity to be available to us, although newly issued debt would likely be at higher interest rates than we currently

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have outstanding. We also have the ability to delay the timing of certain development and redevelopment projects as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy. While we have seen significant improvements from the initial negative impacts of the COVID-19 pandemic, it along with the overall state of the economy continues to affect our overall business, and we expect it will continue to negatively impact our business in the short term. However, we intend to operate with and to maintain our long term commitment to a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-grade debt ratings.

Summary of Cash Flows

			Nine Months Ended September 30,
			2022						2021
			(In thousands)
Net cash provided by operating activities			$	409,293					$	366,036
Net cash used in investing activities			(670,151)						(661,842)
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

Net cash provided by operating activities increased $43.3 million to $409.3 million during the nine months ended September 30, 2022 from $366.0 million during the nine months ended September 30, 2021. The increase was primarily attributable to higher net income before adjusting for non-cash items and gains on sales of real estate, partially offset by collections of real estate tax reconciliation billings during the nine months ended September 30, 2021 and the timing of payments.

Net cash used in investing activities increased $8.3 million to $670.2 million during the nine months ended September 30, 2022 from $661.8 million during the nine months ended September 30, 2021. The increase was primarily attributable to:

• a $63.5 million increase in acquisitions of real estate primarily due to 2022 acquisitions (see Note 3 to the consolidated financial statements for additional information), as compared to 2021 property acquisitions, and

• the $31.1 million payoff of two mortgage notes receivable in May 2021,

partially offset by,

• a $47.6 million decrease in capital expenditures, and

• a $46.8 million increase from net proceeds from the sale of real estate primarily due to $66.7 million of net proceeds from the sale of one residential property (including an adjacent retail pad) and one retail property, as compared to $19.9 million of net proceeds from the sale of a portion of a retail property in March 2021.

Net cash used in financing activities decreased $577.5 million to $244.3 million provided during the nine months ended September 30, 2022 from $333.2 million used in the nine months ended September 30, 2021. The decrease was primarily attributable to:

• $267.0 million of borrowings on our revolving credit facility,

• a $205.4 million increase in net proceeds from the issuance of common shares under our ATM equity program for net proceeds of $292.3 million and $87.1 million, respectively, during the nine months ended September 30, 2022 and 2021, and

• a $141.7 million decrease in repayment of mortgages, finance leases, and notes payable primarily due to the $16.1 million mortgage loan repayment on one of the buildings at our Hoboken property in June 2022, as compared to the $100.0 million partial repayment of our $400.0 term loan which was amended in April 2021, the $31.5 million repayment of the mortgage loan related to the Pike & Rose hotel in January 2021, the $16.2 million repayment of the mortgage loan on Sylmar Towne Center in February 2021, and the $7.9 million repayment of the mortgage loan on Plaza Del Sol in September 2021,

partially offset by

• a $27.3 million increase in distributions to and redemptions of noncontrolling interests primarily related to our acquisition of the redeemable noncontrolling interest in the partnership that owns the Plaza El Segundo shopping center for $23.6 million, and

• a $7.2 million increase in dividends paid to common and preferred shareholders due to an increase in the number of outstanding shares, as well as an increase to the common share dividend rate.

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Debt Financing Arrangements

The following is a summary of our total debt outstanding as of September 30, 2022:

Description of Debt			Original Debt Issued						Principal Balance as of September 30, 2022						Stated Interest Rate as of September 30, 2022						Maturity Date
			(Dollars in thousands)
Mortgages payable
Secured fixed rate
Azalea			Acquired						$	40,000					3.73		%				November 1, 2025
Bell Gardens			Acquired						11,910						4.06		%				August 1, 2026
Plaza El Segundo			125,000						125,000						3.83		%				June 5, 2027
The Grove at Shrewsbury (East)			43,600						43,600						3.77		%				September 1, 2027
Brook 35			11,500						11,500						4.65		%				July 1, 2029
Hoboken (24 Buildings) (1)			56,450						55,407						LIBOR + 1.95%						December 15, 2029
Various Hoboken (14 Buildings) (2)			Acquired						31,119						Various						Various through 2029
Chelsea			Acquired						4,549						5.36		%				January 15, 2031
Subtotal									323,085
Net unamortized debt issuance costs and premium									(1,786)
Total mortgages payable, net									321,299
Notes payable
Revolving credit facility (3) (4) (5)			1,000,000						267,000						LIBOR + 0.825%						January 19, 2024
Term loan (5) (6)			400,000						300,000						LIBOR + 0.85%						April 16, 2024
Various			7,239						2,097						11.31%						Various through 2028
Subtotal									569,097
Net unamortized debt issuance costs									(795)
Total notes payable, net									568,302
Senior notes and debentures (5)
Unsecured fixed rate
2.75% notes			275,000						275,000						2.75		%				June 1, 2023
3.95% notes			600,000						600,000						3.95		%				January 15, 2024
1.25% notes			400,000						400,000						1.25		%				February 15, 2026
7.48% debentures			50,000						29,200						7.48		%				August 15, 2026
3.25% notes			475,000						475,000						3.25		%				July 15, 2027
6.82% medium term notes			40,000						40,000						6.82		%				August 1, 2027
3.20% notes			400,000						400,000						3.20		%				June 15, 2029
3.50% notes			400,000						400,000						3.50		%				June 1, 2030
4.50% notes			550,000						550,000						4.50		%				December 1, 2044
3.625% notes			250,000						250,000						3.625		%				August 1, 2046
Subtotal									3,419,200
Net unamortized debt issuance costs and premium									(11,902)
Total senior notes and debentures, net									3,407,298
Total debt, net									$	4,296,899

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(1)On November 26, 2019, we entered into two interest rate swap agreements that fix the interest rate on this mortgage loan at 3.67%.

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

(3)The maximum amount drawn under our revolving credit facility during the nine months ended September 30, 2022 was $330.0 million and the weighted average interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was 3.1%.

(4)On October 5, 2022, we amended our revolving credit facility increasing the borrowing capacity to $1.25 billion and extending the maturity date to April 5, 2027. Additionally, we transitioned the interest rate provisions from LIBOR to SOFR.

(5)The Operating Partnership is the obligor under our revolving credit facility, term loan, and senior notes and debentures.

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(6)On October 5, 2022, we amended our unsecured term loan and borrowed an additional $300.0 million. We also transitioned the interest rate provisions from LIBOR to SOFR.

Our revolving credit facility, unsecured term loan, and other debt agreements include financial and other covenants that may limit our operating activities in the future. As of September 30, 2022, we were in compliance with all financial and other covenants related to our revolving credit facility, term loan, and senior notes. Additionally, we were in compliance with all of the financial and other covenants that could trigger a loan default on our mortgage loans. If we were to breach any of these financial and other covenants and did not cure the breach within an applicable cure period, our lenders could require us to repay the debt immediately and, if the debt is secured, could immediately begin proceedings to take possession of the property securing the loan. Many of our debt arrangements, including our public notes and our revolving credit facility, are cross-defaulted, which means that the lenders under those debt arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a default under certain of our other debt obligations. As a result, any default under our debt covenants could have an adverse effect on our financial condition, our results of operations, our ability to meet our obligations and the market value of our shares. Our organizational documents do not limit the level or amount of debt that we may incur.

The following is a summary of our scheduled principal repayments as of September 30, 2022:

			Unsecured						Secured												Total
			(In thousands)
2022			$	206					$	735											$	941
2023			275,758						3,171												278,929
2024			1,167,659			(1)(2)			3,299												1,170,958
2025			383						47,630												48,013
2026			429,254						26,240												455,494
Thereafter			2,115,037						242,010												2,357,047
			$	3,988,297					$	323,085											$	4,311,382		(3)

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(1)Our $300.0 million term loan matures on April 16, 2024, plus two one-year extensions at our option. On October 5, 2022, we borrowed an additional $300.0 million increasing our term loan to $600.0 million.

(2)Our $1.0 billion revolving credit facility matures on January 19, 2024, plus two six-month extensions at our option. As of September 30, 2022, there was $267.0 million outstanding under this credit facility. On October 5, 2022, we amended our revolving credit facility increasing the borrowing capacity to $1.25 billion and extending the maturity date to April 5, 2027, plus two six-month extensions at our option.

(3)The total debt maturities differ from the total reported on the consolidated balance sheets due to the unamortized net debt issuance costs and premium/discount on mortgage loans, notes payable, and senior notes as of September 30, 2022.

Interest Rate Hedging

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

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

As of September 30, 2022, we have two interest rate swap agreements that effectively fix the rate on a mortgage payable associated with our Hoboken portfolio at 3.67%. Our Assembly Row hotel joint venture is also a party to two interest rate swap

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agreements that effectively fix their debt at 5.206%. All swaps were designated and qualify as cash flow hedges. Hedge ineffectiveness has not impacted earnings as of September 30, 2022.

REIT Qualification

We intend to maintain the Trust's qualification as a REIT under Section 856(c) of the Code. As a REIT, we generally will not be subject to corporate federal income taxes on income we distribute to our shareholders as long as we satisfy certain technical requirements of the Code, including the requirement to distribute at least 90% of our taxable income to our shareholders.

Funds From Operations

Funds from operations (“FFO”) is a supplemental non-GAAP financial measure of real estate companies’ operating performance. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as follows: net income, computed in accordance with U.S. GAAP, plus real estate related depreciation and amortization and excluding gains and losses on the sale of real estate or changes in control, net of tax, and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. We compute FFO in accordance with the NAREIT definition, and we have historically reported our FFO available for common shareholders in addition to our net income and net cash provided by operating activities. It should be noted that FFO:

• does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income);

• should not be considered an alternative to net income as an indication of our performance; and

• is not necessarily indicative of cash flow as a measure of liquidity or ability to fund cash needs, including the payment of dividends.

We consider FFO available for common shareholders a meaningful, additional measure of operating performance primarily because it excludes the assumption that the value of the real estate assets diminishes predictably over time, as implied by the historical cost convention of GAAP and the recording of depreciation. We use FFO primarily as one of several means of assessing our operating performance in comparison with other REITs. Comparison of our presentation of FFO to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs.

An increase or decrease in FFO available for common shareholders does not necessarily result in an increase or decrease in aggregate distributions because our Board of Trustees is not required to increase distributions on a quarterly basis. However, we must distribute at least 90% of our annual taxable income to remain qualified as a REIT. Therefore, a significant increase in FFO will generally require an increase in distributions to shareholders although not necessarily on a proportionate basis.

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The reconciliation of net income to FFO available for common shareholders is as follows:

			Three Months Ended												Nine Months Ended
			September 30,												September 30,
			2022						2021						2022						2021
			(In thousands, except per share data)
Net income			$	158,774					$	54,541					$	277,969					$	152,339
Net income attributable to noncontrolling interests			(2,636)						(2,419)						(8,171)						(5,777)
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)
Depreciation and amortization of real estate assets			67,455						61,236						196,159						174,770
Amortization of initial direct costs of leases			7,454						6,202						19,129						20,127
Funds from operations			130,950						119,560						384,989						324,031
Dividends on preferred shares (1)			(1,875)						(1,875)						(5,625)						(6,031)
Income attributable to downREIT operating partnership units			704						742						2,111						2,267
Income attributable to unvested shares			(449)						(438)						(1,353)						(1,156)
Funds from operations available for common shareholders			$	129,330					$	117,989					$	380,122					$	319,111
Weighted average number of common shares, diluted (1)(2)			81,511						78,365						80,232						77,997
Funds from operations available for common shareholders, per diluted share (2)			$	1.59					$	1.51					$	4.74					$	4.09

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(1)For the three and nine months ended September 30, 2022 and the three months ended September 30, 2021, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."

(2)The weighted average common shares used to compute FFO per diluted common share for all periods presented includes downREIT operating partnership units that were excluded from the computation of diluted EPS for three and nine months ended September 30, 2021. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted share for all periods presented but is anti-dilutive for the computation of dilutive EPS for the three and nine months ended September 30, 2021.