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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2023

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 to 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 ☐ Federal Realty OP LP ☐

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 Federal Realty Investment Trust's common shares outstanding on July 28, 2023 was 81,523,260.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended June 30, 2023, of Federal Realty Investment Trust and Federal Realty OP, LP. Unless stated otherwise or the context otherwise requires, references to "Federal Realty Investment Trust," the "Parent Company" or the "Trust" mean Federal Realty Investment Trust; and references to "Federal Realty OP LP" or the "Operating Partnership" mean Federal Realty OP LP. The term "the Company," "we," "us," and "our" refer to the Parent Company and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership. References to "shares" and "shareholders" refer to the shares and shareholders of the Parent Company and not the limited partnership interests for limited partners of the Operating Partnership.

The Parent Company is a real estate investment trust ("REIT") that owns 100% of the limited liability company interests of, is the sole member of, and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which is the sole general partner of the Operating Partnership. As of June 30, 2023, 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 Company, and may in the future include OP Units owned by third parties. OP Units owned by third parties, if any, are accounted for in capital in the Operating Partnership’s financial statements and in non-controlling interests in the Parent Company’s financial statements.

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

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

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FEDERAL REALTY INVESTMENT TRUST

FEDERAL REALTY OP LP

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED JUNE 30, 2023

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PART I. FINANCIAL INFORMATION
Item 1.			Financial Statements			3
Federal Realty Investment Trust
			Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022			3
			Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2023 and 2022			4
			Consolidated Statements of Shareholders' Equity (unaudited) for the three and six months ended June 30, 2023 and 2022			5
			Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2023 and 2022			7
Federal Realty OP LP
			Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022			8
			Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2023 and 2022			9
			Consolidated Statements of Capital (unaudited) for the three and six months ended June 30, 2023 and 2022			10
			Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2023 and 2022			12
Federal Realty Investment Trust and Federal Realty OP LP
			Notes to Consolidated Financial Statements (unaudited)			13
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3.			Quantitative and Qualitative Disclosures about Market Risk			34
Item 4.			Controls and Procedures			35
PART II. OTHER INFORMATION						36
Item 1.			Legal Proceedings			36
Item 1A.			Risk Factors			36
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 3.			Defaults Upon Senior Securities			36
Item 4.			Mine Safety Disclosures			36
Item 5.			Other Information			36
Item 6.			Exhibits			36
SIGNATURES						41

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Federal Realty Investment Trust

Consolidated Balance Sheets

			June 30,						December 31,
			2023						2022
			(In thousands, except share and per share data)
			(Unaudited)
ASSETS
Real estate, at cost
Operating (including $2,008,167 and $1,997,583 of consolidated variable interest entities, respectively)			$	9,732,833					$	9,441,945
Construction-in-progress (including $11,441 and $8,477 of consolidated variable interest entities, respectively)			667,554						662,554
			10,400,387						10,104,499
Less accumulated depreciation and amortization (including $388,881 and $362,921 of consolidated variable interest entities, respectively)			(2,839,550)						(2,715,817)
Net real estate			7,560,837						7,388,682
Cash and cash equivalents			98,064						85,558
Accounts and notes receivable, net			195,689						197,648
Mortgage notes receivable, net			9,222						9,456
Investment in partnerships			34,942						145,205
Operating lease right of use assets, net			88,215						94,569
Finance lease right of use assets, net			44,891						45,467
Prepaid expenses and other assets			247,016						267,406
TOTAL ASSETS			$	8,278,876					$	8,233,991
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $190,562 and $191,827 of consolidated variable interest entities, respectively)			$	319,208					$	320,615
Notes payable, net			633,095						601,077
Senior notes and debentures, net			3,479,333						3,407,701
Accounts payable and accrued expenses			187,027						190,340
Dividends payable			90,441						90,263
Security deposits payable			29,292						28,508
Operating lease liabilities			76,928						77,743
Finance lease liabilities			67,655						67,660
Other liabilities and deferred credits			237,317						237,699
Total liabilities			5,120,296						5,021,606
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests			178,149						178,370
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 shares issued and outstanding			9,822						9,822
Common shares of beneficial interest, $.01 par, 200,000,000 and 100,000,000 shares authorized, respectively, 81,515,511 and 81,342,959 shares issued and outstanding, respectively			820						818
Additional paid-in capital			3,832,983						3,821,801
Accumulated dividends in excess of net income			(1,098,432)						(1,034,186)
Accumulated other comprehensive income			5,496						5,757
Total shareholders’ equity of the Trust			2,900,689						2,954,012
Noncontrolling interests			79,742						80,003
Total shareholders’ equity			2,980,431						3,034,015
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	8,278,876					$	8,233,991

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

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Federal Realty Investment Trust

Consolidated Statements of Comprehensive Income

(Unaudited)

			Three Months Ended June 30,												Six Months Ended June 30,
			2023						2022						2023						2022
			(In thousands, except per share data)
REVENUE
Rental income			$	280,388					$	263,830					$	553,186					$	520,337
Mortgage interest income			291						269						552						533
Total revenue			280,679						264,099						553,738						520,870
EXPENSES
Rental expenses			55,610						51,169						110,815						107,380
Real estate taxes			32,381						31,265						64,947						61,825
General and administrative			11,913						13,604						24,458						25,946
Depreciation and amortization			78,974						74,461						157,611						146,135
Total operating expenses			178,878						170,499						357,831						341,286
Gain on sale of real estate			—						—						1,702						—
OPERATING INCOME			101,801						93,600						197,609						179,584
OTHER INCOME/(EXPENSE)
Other interest income			2,422						133						3,054						253
Interest expense			(42,884)						(32,074)						(82,109)						(63,647)
Income from partnerships			1,665						2,808						2,181						3,005
NET INCOME			63,004						64,467						120,735						119,195
Net income attributable to noncontrolling interests			(2,505)						(2,791)						(4,901)						(5,535)
NET INCOME ATTRIBUTABLE TO THE TRUST			60,499						61,676						115,834						113,660
Dividends on preferred shares			(2,008)						(2,008)						(4,016)						(4,018)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS			$	58,491					$	59,668					$	111,818					$	109,642
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders			$	0.72					$	0.75					$	1.37					$	1.38
Weighted average number of common shares			81,214						79,202						81,178						78,826
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders			$	0.72					$	0.75					$	1.37					$	1.38
Weighted average number of common shares			81,214						79,202						81,178						78,855
COMPREHENSIVE INCOME			$	64,066					$	66,689					$	120,461					$	125,333
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST			$	61,449					$	63,701					$	115,573					$	119,257

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

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Federal Realty Investment Trust

Consolidated Statements of Shareholders’ Equity

For the Three and Six Months Ended June 30, 2023

(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 MARCH 31, 2023			398,878						$	159,822					81,511,204						$	820					$	3,828,930					$	(1,068,892)					$	4,546					$	79,015					$	3,004,241
Net income, excluding $1,551 attributable to redeemable noncontrolling interests			—						—						—						—						—						60,499						—						954						61,453
Other comprehensive income - change in fair value of interest rate swaps, excluding $112 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						950						—						950
Dividends declared to common shareholders ($1.08 per share)			—						—						—						—						—						(88,031)						—						—						(88,031)
Dividends declared to preferred shareholders			—						—						—						—						—						(2,008)						—						—						(2,008)
Distributions declared to noncontrolling interests, excluding $1,867 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						—						(1,154)						(1,154)
Common shares issued, net			—						—						32						—						(59)						—						—						—						(59)
Shares issued under dividend reinvestment plan			—						—						4,967						—						482						—						—						—						482
Share-based compensation expense, net of forfeitures			—						—						—						—						3,696						—						—						—						3,696
Shares withheld for employee taxes			—						—						(692)						—						(66)						—						—						—						(66)
Contributions from noncontrolling interests			—						—						—						—						—						—						—						927						927
BALANCE AT JUNE 30, 2023			398,878						$	159,822					81,515,511						$	820					$	3,832,983					$	(1,098,432)					$	5,496					$	79,742					$	2,980,431
BALANCE AT DECEMBER 31, 2022			398,878						$	159,822					81,342,959						$	818					$	3,821,801					$	(1,034,186)					$	5,757					$	80,003					$	3,034,015
Net income, excluding $3,219 attributable to redeemable noncontrolling interests			—						—						—						—						—						115,834						—						1,682						117,516
Other comprehensive loss - change in fair value of interest rate swaps, excluding $13 attributable to redeemable noncontrolling interests			—						—						—						—						—						—						(261)						—						(261)
Dividends declared to common shareholders ($2.16 per share)			—						—						—						—						—						(176,064)						—						—						(176,064)
Dividends declared to preferred shareholders			—						—						—						—						—						(4,016)						—						—						(4,016)
Distributions declared to noncontrolling interests, excluding $3,427 attributable to redeemable noncontrolling interests			—						—						—						—						—												—						(2,202)						(2,202)
Common shares issued, net			—						—						57,096						1						6,191						—						—						—						6,192
Shares issued under dividend reinvestment plan			—						—						9,631						—						905						—						—						—						905
Share-based compensation expense, net of forfeitures			—						—						141,234						1						8,129						—						—						—						8,130
Shares withheld for employee taxes			—						—						(42,932)						—						(4,711)						—						—						—						(4,711)
Conversion of downREIT OP units			—						—						7,523						—						668						—						—						(668)						—
Contributions from noncontrolling interests			—						—						—						—						—						—						—						927						927
BALANCE AT JUNE 30, 2023			398,878						$	159,822					81,515,511						$	820					$	3,832,983					$	(1,098,432)					$	5,496					$	79,742					$	2,980,431

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Federal Realty Investment Trust

Consolidated Statements of Shareholders’ Equity

For the Three and Six Months Ended June 30, 2022

(Unaudited)

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

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

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Federal Realty Investment Trust

Consolidated Statements of Cash Flows

(Unaudited)

			Six Months Ended June 30,
			2023						2022
			(In thousands)
OPERATING ACTIVITIES
Net income			$	120,735					$	119,195
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			157,611						146,135
Gain on sale of real estate			(1,702)						—
Income from partnerships			(2,181)						(3,005)
Straight-line rent			(5,021)						(9,832)
Share-based compensation expense			7,445						7,020
Other, net			(2,611)						(2,449)
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (increase) in accounts receivable, net			3,018						(10,252)
Decrease in prepaid expenses and other assets			13,505						18,115
Decrease in accounts payable and accrued expenses			(1,431)						(5,578)
Increase in security deposits and other liabilities			2,908						1,172
Net cash provided by operating activities			292,276						260,521
INVESTING ACTIVITIES
Acquisition of real estate			(59,568)						(100,022)
Capital expenditures - development and redevelopment			(104,666)						(150,524)
Capital expenditures - other			(50,913)						(44,024)
Proceeds from sale of real estate			12,626						874
Investment in partnerships			—						(417)
Distribution from partnerships in excess of earnings			7,569						3,665
Leasing costs			(9,247)						(9,629)
Repayment of mortgage and other notes receivable, net			—						18
Net cash used in investing activities			(204,199)						(300,059)
FINANCING ACTIVITIES
Net borrowings under revolving credit facility			31,500						—
Issuance of senior notes, net of costs			345,685						—
Repayment of senior notes			(275,000)						—
Repayment of mortgages, finance leases and notes payable			(1,636)						(17,798)
Issuance of common shares, net of costs			6,246						259,597
Dividends paid to common and preferred shareholders			(179,043)						(171,450)
Shares withheld for employee taxes			(4,711)						(4,638)
Contributions from noncontrolling interests			927						—
Distributions to and redemptions of redeemable noncontrolling interests			(5,637)						(6,779)
Net cash (used in) provided by financing activities			(81,669)						58,932
Increase in cash, cash equivalents and restricted cash			6,408						19,394
Cash, cash equivalents, and restricted cash at beginning of year			96,348						175,163
Cash, cash equivalents, and restricted cash at end of period			$	102,756					$	194,557

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

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Federal Realty OP LP

Consolidated Balance Sheets

			June 30,						December 31,
			2023						2022
			(In thousands, except unit data)
			(Unaudited)
ASSETS
Real estate, at cost
Operating (including $2,008,167 and $1,997,583 of consolidated variable interest entities, respectively)			$	9,732,833					$	9,441,945
Construction-in-progress (including $11,441 and $8,477 of consolidated variable interest entities, respectively)			667,554						662,554
			10,400,387						10,104,499
Less accumulated depreciation and amortization (including $388,881 and $362,921 of consolidated variable interest entities, respectively)			(2,839,550)						(2,715,817)
Net real estate			7,560,837						7,388,682
Cash and cash equivalents			98,064						85,558
Accounts and notes receivable, net			195,689						197,648
Mortgage notes receivable, net			9,222						9,456
Investment in partnerships			34,942						145,205
Operating lease right of use assets, net			88,215						94,569
Finance lease right of use assets, net			44,891						45,467
Prepaid expenses and other assets			247,016						267,406
TOTAL ASSETS			$	8,278,876					$	8,233,991
LIABILITIES AND CAPITAL
Liabilities
Mortgages payable, net (including $190,562 and $191,827 of consolidated variable interest entities, respectively)			$	319,208					$	320,615
Notes payable, net			633,095						601,077
Senior notes and debentures, net			3,479,333						3,407,701
Accounts payable and accrued expenses			187,027						190,340
Dividends payable			90,441						90,263
Security deposits payable			29,292						28,508
Operating lease liabilities			76,928						77,743
Finance lease liabilities			67,655						67,660
Other liabilities and deferred credits			237,317						237,699
Total liabilities			5,120,296						5,021,606
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests			178,149						178,370
Partner capital
Preferred units, 398,878 units issued and outstanding			154,788						154,788
Common units, 81,515,511 and 81,342,959 units issued and outstanding, respectively			2,740,405						2,793,467
Accumulated other comprehensive income			5,496						5,757
Total partner capital			2,900,689						2,954,012
Noncontrolling interests in consolidated partnerships			79,742						80,003
Total capital			2,980,431						3,034,015
TOTAL LIABILITIES AND CAPITAL			$	8,278,876					$	8,233,991

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

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Federal Realty OP LP

Consolidated Statements of Comprehensive Income

(Unaudited)

			Three Months Ended June 30,												Six Months Ended June 30,
			2023						2022						2023						2022
			(In thousands, except per unit data)
REVENUE
Rental income			$	280,388					$	263,830					$	553,186					$	520,337
Mortgage interest income			291						269						552						533
Total revenue			280,679						264,099						553,738						520,870
EXPENSES
Rental expenses			55,610						51,169						110,815						107,380
Real estate taxes			32,381						31,265						64,947						61,825
General and administrative			11,913						13,604						24,458						25,946
Depreciation and amortization			78,974						74,461						157,611						146,135
Total operating expenses			178,878						170,499						357,831						341,286
Gain on sale of real estate			—						—						1,702						—
OPERATING INCOME			101,801						93,600						197,609						179,584
OTHER INCOME/(EXPENSE)
Other interest income			2,422						133						3,054						253
Interest expense			(42,884)						(32,074)						(82,109)						(63,647)
Income from partnerships			1,665						2,808						2,181						3,005
NET INCOME			63,004						64,467						120,735						119,195
Net income attributable to noncontrolling interests			(2,505)						(2,791)						(4,901)						(5,535)
NET INCOME ATTRIBUTABLE TO THE PARTNERSHIP			60,499						61,676						115,834						113,660
Distributions on preferred units			(2,008)						(2,008)						(4,016)						(4,018)
NET INCOME AVAILABLE FOR COMMON UNIT HOLDERS			$	58,491					$	59,668					$	111,818					$	109,642
EARNINGS PER COMMON UNIT, BASIC:
Net income available for common unit holders			$	0.72					$	0.75					$	1.37					$	1.38
Weighted average number of common units			81,214						79,202						81,178						78,826
EARNINGS PER COMMON UNIT, DILUTED:
Net income available for common unit holders			$	0.72					$	0.75					$	1.37					$	1.38
Weighted average number of common units			81,214						79,202						81,178						78,855
COMPREHENSIVE INCOME			$	64,066					$	66,689					$	120,461					$	125,333
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE PARTNERSHIP			$	61,449					$	63,701					$	115,573					$	119,257

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

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Federal Realty OP LP

Consolidated Statements of Capital

For the Three and Six Months Ended June 30, 2023

(Unaudited)

						Preferred Units						Common Units												Accumulated Other Comprehensive Income (Loss)						Total Partner Capital						Noncontrolling Interests in Consolidated Partnerships						Total Capital
			(In thousands, except unit data)
BALANCE AT MARCH 31, 2023						$	154,788					$	2,765,892											$	4,546					$	2,925,226					$	79,015					$	3,004,241
Net income, excluding $1,551 attributable to redeemable noncontrolling interests						2,008						58,491												—						60,499						954						61,453
Other comprehensive income - change in fair value of interest rate swaps, excluding $112 attributable to redeemable noncontrolling interests						—						—												950						950						—						950
Distributions declared to common unit holders						—						(88,031)												—						(88,031)						—						(88,031)
Distributions declared to preferred unit holders						(2,008)						—												—						(2,008)						—						(2,008)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $1,867 attributable to redeemable noncontrolling interests						—						—												—						—						(1,154)						(1,154)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						(59)												—						(59)						—						(59)
Common units issued under dividend reinvestment plan						—						482												—						482						—						482
Share-based compensation expense, net of forfeitures						—						3,696												—						3,696						—						3,696
Common units withheld for employee taxes						—						(66)												—						(66)						—						(66)
Contributions from noncontrolling interests						—						—												—						—						927						927
BALANCE AT JUNE 30, 2023						$	154,788					$	2,740,405											$	5,496					$	2,900,689					$	79,742					$	2,980,431
BALANCE AT DECEMBER 31, 2022						$	154,788					$	2,793,467											$	5,757					$	2,954,012					$	80,003					$	3,034,015
Net income, excluding $3,219 attributable to redeemable noncontrolling interests						4,016						111,818												—						115,834						1,682						117,516
Other comprehensive loss - change in fair value of interest rate swaps, excluding $13 attributable to redeemable noncontrolling interest						—						—												(261)						(261)						—						(261)
Distributions declared to common unit holders						—						(176,064)												—						(176,064)						—						(176,064)
Distributions declared to preferred unit holders						(4,016)						—												—						(4,016)						—						(4,016)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $3,427 attributable to redeemable noncontrolling interests						—						—												—						—						(2,202)						(2,202)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs						—						6,192												—						6,192						—						6,192
Common units issued under dividend reinvestment plan						—						905												—						905						—						905
Share-based compensation expense, net of forfeitures						—						8,130												—						8,130						—						8,130
Common units withheld for employee taxes						—						(4,711)												—						(4,711)						—						(4,711)
Conversion of downREIT OP units						—						668												—						668						(668)						—
Contributions from noncontrolling interests						—						—												—						—						927						927
BALANCE AT JUNE 30, 2023						$	154,788					$	2,740,405											$	5,496					$	2,900,689					$	79,742					$	2,980,431

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Federal Realty OP LP

Consolidated Statements of Capital

For the Three and Six Months Ended June 30, 2022

(Unaudited)

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

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

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Federal Realty OP LP

Consolidated Statements of Cash Flows

(Unaudited)

			Six Months Ended June 30,
			2023						2022
			(In thousands)
OPERATING ACTIVITIES
Net income			$	120,735					$	119,195
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			157,611						146,135
Gain on sale of real estate			(1,702)						—
Income from partnerships			(2,181)						(3,005)
Straight-line rent			(5,021)						(9,832)
Share-based compensation expense			7,445						7,020
Other, net			(2,611)						(2,449)
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (increase) in accounts receivable, net			3,018						(10,252)
Decrease in prepaid expenses and other assets			13,505						18,115
Decrease in accounts payable and accrued expenses			(1,431)						(5,578)
Increase in security deposits and other liabilities			2,908						1,172
Net cash provided by operating activities			292,276						260,521
INVESTING ACTIVITIES
Acquisition of real estate			(59,568)						(100,022)
Capital expenditures - development and redevelopment			(104,666)						(150,524)
Capital expenditures - other			(50,913)						(44,024)
Proceeds from sale of real estate			12,626						874
Investment in partnerships			—						(417)
Distribution from partnerships in excess of earnings			7,569						3,665
Leasing costs			(9,247)						(9,629)
Repayment of mortgage and other notes receivable, net			—						18
Net cash used in investing activities			(204,199)						(300,059)
FINANCING ACTIVITIES
Net borrowings under revolving credit facility			31,500						—
Issuance of senior notes, net of costs			345,685						—
Repayment of senior notes			(275,000)						—
Repayment of mortgages, finance leases and notes payable			(1,636)						(17,798)
Issuance of common units, net of costs			6,246						259,597
Distributions to common and preferred unit holders			(179,043)						(171,450)
Shares withheld for employee taxes			(4,711)						(4,638)
Contributions from noncontrolling interests			927						—
Distributions to and redemptions of redeemable noncontrolling interests			(5,637)						(6,779)
Net cash (used in) provided by financing activities			(81,669)						58,932
Increase in cash, cash equivalents and restricted cash			6,408						19,394
Cash, cash equivalents, and restricted cash at beginning of year			96,348						175,163
Cash, cash equivalents, and restricted cash at end of period			$	102,756					$	194,557

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

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Federal Realty Investment Trust

Federal Realty OP LP

Notes to Consolidated Financial Statements

June 30, 2023

(Unaudited)

NOTE 1—BUSINESS AND ORGANIZATION

Federal Realty Investment Trust (the "Parent Company" and the “Trust”) is an equity real estate investment trust (“REIT”). Federal Realty OP LP (the "Operating Partnership") is the entity through which the Parent Company conducts substantially all of its operations and owns all of its assets. The Parent Company owns 100% of the limited liability company interests of, is sole member of and exercises exclusive control over Federal Realty GP LLC ("the General Partner"), which in turn, is the sole general partner of the Operating Partnership. The Parent Company specializes in the ownership, management, and redevelopment of retail and mixed-use properties through the Operating Partnership, and has no other substantial assets or liabilities other than through its investment in the Operating Partnership. Our properties are located primarily in communities where we believe retail demand exceeds supply, in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As of June 30, 2023, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 102 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

The accompanying unaudited interim consolidated financial statements of the Parent Company and Operating Partnership have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in our latest Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation for the periods presented have been included. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results that may be expected for the full year.

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. 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.

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.

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Recently Issued Accounting Pronouncements

Standard						Description						Effect on the financial statements or significant matters
ASU 2023-01, March 2023, Leases (Topic 842) Common Control Arrangements						This ASU requires all lessees in a lease with a lessor under common control to (1) amortize leasehold improvements over their useful life to the common control group, as long as the lessee controls the use of the underlying asset through a lease and (2) account for the leasehold improvements as a transfer of assets between entities under common control through an adjustment to equity when the lessee no longer controls the use of the underlying asset. The guidance may be applied prospectively to new and existing leasehold improvements, with the remaining balance of existing leasehold improvements amortized over their remaining useful life to the common control group or retrospectively, through a cumulative-effect adjustment to opening retained earnings. The guidance is effective in fiscal years beginning after December 15, 2023, and interim periods withing those fiscal years. Early adoption is permitted.						We do not expect this ASU to have an impact on our consolidated financial statements.
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. ASU 2022-06 extended the period for which this guidance can be immediately applied through December 24, 2024.						During the three months ended June 30, 2023, the LIBOR based mortgage loan related to our unconsolidated Assembly Row hotel investment was refinanced. The resulting new mortgage loan and related swaps are SOFR based. The $54.3 million mortgage loan at Hoboken and related interest rate swaps were transitioned from LIBOR to SOFR effective July 1, 2023. Consequently, we applied the related practical expedients to the hedging relationship for the Hoboken loan and continue to apply hedge accounting. The critical terms of the loan and interest rate swaps continue to match subsequent to the transition from LIBOR to SOFR and the transition did not have a significant impact to our financial results, financial position, or cash flows.

Consolidated Statements of Cash Flows—Supplemental Disclosures

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

			Six Months Ended
			June 30,
			2023						2022
			(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred			$	93,256					$	72,824
Interest capitalized			(11,147)						(9,177)
Interest expense			$	82,109					$	63,647
Cash paid for interest, net of amounts capitalized			$	75,389					$	61,973
Cash paid for income taxes			$	779					$	607
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Shares issued under dividend reinvestment plan			$	851					$	866
DownREIT operating partnership units redeemed for common shares			$	668					$	1,385
5.417% Series 1 Cumulative Convertible Preferred Shares redeemed for common shares			$	—					$	175

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			June 30,						December 31,
			2023						2022
			(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents			$	98,064					$	85,558
Restricted cash (1)			4,692						10,790
Total cash, cash equivalents, and restricted cash			$	102,756					$	96,348

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

NOTE 3—REAL ESTATE

On January 31, 2023, we acquired the 168,000 square foot portion of Huntington Square shopping center that was not previously owned, as well as the fee interest in the land underneath the portion of the shopping center which we controlled under a long-term ground lease for $35.5 million. As a result of this transaction, we now own the entire fee interest in this 243,000 square foot property and the "operating lease right of use assets, net" on our consolidated balance sheet decreased by $5.3 million. Approximately $4.1 million and $1.3 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively.

On May 26, 2023, we exercised our option and acquired the 22.3% tenancy in common ("TIC") interest from our co-owner at Escondido Promenade for $30.5 million, bringing our ownership interest to 100%. As a result of the transaction, we gained control of this property, and effective May 26, 2023, we have consolidated this property. Approximately $1.8 million and $0.2 million of net assets associated with the 22.3% interest acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $1.1 million of net assets associated with the 22.3% interest acquired were allocated to other liabilities for "below market leases."

During the six months ended June 30, 2023, we sold one retail property for $13.2 million, resulting in a gain on sale of $1.6 million.

NOTE 4—DEBT

On April 12, 2023, we issued $350.0 million of fixed rate senior unsecured notes that mature on May 1, 2028 and bear interest at 5.375%. The notes were offered at 99.590% of the principal amount with a yield to maturity of 5.468%. The net proceeds, after issuance discount, underwriting fees, and other costs were $345.7 million.

On June 1, 2023, we repaid our $275.0 million 2.75% senior unsecured notes at maturity.

During the three and six months ended June 30, 2023, the maximum amount of borrowings outstanding under our $1.25 billion revolving credit facility was $77.5 million and $80.5 million, respectively. The weighted average amount of borrowings outstanding was $18.0 million and $33.7 million, respectively, and the weighted average interest rate, before amortization of debt fees, was 5.8% and 5.5%, respectively, for the three and six months ended June 30, 2023. At June 30, 2023, our revolving credit facility had $31.5 million outstanding.

Our revolving credit facility, term loan, and certain notes require us to comply with various financial covenants, including the maintenance of minimum shareholders' equity and debt coverage ratios and a maximum ratio of debt to net worth. As of June 30, 2023, 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:

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			June 30, 2023												December 31, 2022
Carrying Value						Fair Value						Carrying Value						Fair Value
(In thousands)
Mortgages and notes payable, net			$	952,303					$	924,891					$	921,692					$	895,654
Senior notes and debentures, net			$	3,479,333					$	3,103,590					$	3,407,701					$	3,048,456

As of June 30, 2023, we have two interest rate swap agreements with notional amounts of $54.3 million that are measured at fair value on a recurring basis. The interest rate swap agreements fix the interest rate on $54.3 million of mortgage payables at 3.67% through December 15, 2029. The fair values of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The fair value of our swaps at June 30, 2023 was an asset of $6.0 million and is included in "prepaid expenses and other assets" on our consolidated balance sheets. For the three and six months ended June 30, 2023, the value of our interest rate swaps increased $1.1 million and decreased $0.1 million, respectively (including $0.4 million and $0.8 million, respectively, reclassified from other comprehensive income as a decrease to interest expense). A summary of our financial assets that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:

			June 30, 2023																								December 31, 2022
			Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3						Total
			(In thousands)
Interest rate swaps			$	—					$	6,015					$	—					$	6,015					$	—					$	6,144					$	—					$	6,144

One of our equity method investees has two interest rate swaps which qualify for cash flow hedge accounting. For the three and six months ended June 30, 2023, our share of the change in fair value of the related swaps included in "accumulated other comprehensive income" was a decrease of less than $0.1 million and $0.1 million, respectively.

NOTE 6—COMMITMENTS AND CONTINGENCIES

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

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

Under the terms of certain partnership agreements, the partners have the right to exchange their operating partnership units for cash or common shares, at our option. A total of 637,031 downREIT operating partnership units are outstanding which have a total fair value of approximately $61.6 million, which is calculated by multiplying the outstanding number of downREIT partnership units by our closing stock price on June 30, 2023.

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NOTE 7—SHAREHOLDERS’ EQUITY

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

			Six Months Ended June 30,
			2023												2022
			Declared						Paid						Declared						Paid
Common shares			$	2.160					$	2.160					$	2.140					$	2.140
5.417% Series 1 Cumulative Convertible Preferred shares			$	0.677					$	0.677					$	0.677					$	0.677
5.0% Series C Cumulative Redeemable Preferred shares (1)			$	0.625					$	0.625					$	0.625					$	0.625

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

We have an at-the-market ("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.

No common shares were sold under the ATM equity program in the three months ended June 30, 2023. For the six months ended June 30, 2023, we issued 57,034 common shares at a weighted average price per share of $111.64 for net cash proceeds of $6.2 million including paying $0.1 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 $445.6 million in common shares under our ATM equity program as of June 30, 2023.

Effective May 4, 2023, our Declaration of Trust was amended to increase the number of authorized common shares of beneficial interest to 200,000,000.

NOTE 8—SHARE-BASED COMPENSATION PLANS

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

			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2023						2022						2023						2022
			(In thousands)
Grants of common shares, restricted stock units, and options			$	3,696					$	3,500					$	8,130					$	7,679
Capitalized share-based compensation			(348)						(300)						(685)						(659)
Share-based compensation expense			$	3,348					$	3,200					$	7,445					$	7,020

NOTE 9—EARNINGS PER SHARE AND UNIT

We have calculated earnings per share (“EPS”) and earnings per unit ("EPU") under the two-class method. The two-class method is an earnings allocation methodology whereby EPS and EPU for each class of common stock and partnership units, respectively, and participating securities is calculated according to dividends or distributions declared and participation rights in undistributed earnings. For both the three and six months ended June 30, 2023 and 2022, 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 1,829 stock options for the three and six months ended June 30, 2023,

• conversions of downREIT operating partnership units for both the three and six months ended June 30, 2023 and 2022,

• conversions of 5.417% Series 1 Cumulative Convertible Preferred Shares and units for both the three and six months ended June 30, 2023 and 2022, and

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

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

Federal Realty Investment Trust Earnings per Share

			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2023						2022						2023						2022
			(In thousands, except per share data)
NUMERATOR
Net income			$	63,004					$	64,467					$	120,735					$	119,195
Less: Preferred share dividends			(2,008)						(2,008)						(4,016)						(4,018)
Less: Income from operations attributable to noncontrolling interests			(2,505)						(2,791)						(4,901)						(5,535)
Less: Earnings allocated to unvested shares			(324)						(300)						(651)						(607)
Net income available for common shareholders, basic and diluted			$	58,167					$	59,368					$	111,167					$	109,035
DENOMINATOR
Weighted average common shares outstanding, basic			81,214						79,202						81,178						78,826
Effect of dilutive securities:
Open forward contracts for share issuances			—						—						—						29
Weighted average common shares outstanding, diluted			81,214						79,202						81,178						78,855
EARNINGS PER COMMON SHARE, BASIC AND DILUTED:
Net income available for common shareholders			$	0.72					$	0.75					$	1.37					$	1.38

Federal Realty OP LP Earnings per Unit

			Three Months Ended												Six Months Ended
			June 30,												June 30,
			2023						2022						2023						2022
			(In thousands, except per unit data)
NUMERATOR
Net income			$	63,004					$	64,467					$	120,735					$	119,195
Less: Preferred unit distributions			(2,008)						(2,008)						(4,016)						(4,018)
Less: Income from operations attributable to noncontrolling interests			(2,505)						(2,791)						(4,901)						(5,535)
Less: Earnings allocated to unvested units			(324)						(300)						(651)						(607)
Net income available for common unit holders, basic and diluted			$	58,167					$	59,368					$	111,167					$	109,035
DENOMINATOR
Weighted average common units outstanding, basic			81,214						79,202						81,178						78,826
Effect of dilutive securities:
Common unit issuances relating to open common share forward contracts			—						—						—						29
Weighted average common units outstanding, diluted			81,214						79,202						81,178						78,855
EARNINGS PER COMMON UNIT, BASIC AND DILUTED:
Net income available for common unit holders			$	0.72					$	0.75					$	1.37					$	1.38

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