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Financial report summary
?Risks
- Inflation and related volatility in the economy could negatively impact our results of operations and our tenants.
- Actual or perceived threats associated with epidemics, pandemics or other public health crises have had, and could have in the future, a material adverse effect on our and our tenants’ businesses, financial condition, results of operations, cash flow, liquidity, and ability to access the capital markets and satisfy debt service obligations.
- E-commerce may have an adverse impact on our tenants and our business.
- Retail real estate is a competitive business.
- We depend on leasing space to tenants on economically favorable terms and on collecting rent from tenants who ultimately may not be able to pay.
- We may be unable to renew leases or relet space as leases expire on terms comparable to prior leases or at all.
- Bankruptcy or insolvency of tenants may decrease our revenues, net income and available cash.
- A significant number of our properties are located in the New York metropolitan area and are affected by the economic cycles there.
- Some of our properties depend on anchor or major tenants and decisions made by these tenants, or adverse developments in the businesses of these tenants, could materially and adversely affect our business, results of operations and financial condition.
- Development and redevelopment activities have inherent risks, which could adversely impact our cash flow, financial condition and results of operations.
- We face significant competition for acquisitions of properties, which may reduce the number of acquisition opportunities available to us and increase the costs of these acquisitions.
- Our operating results at acquired properties may not meet our financial expectations.
- It may be difficult to dispose of real estate quickly, which may limit our flexibility.
- Many real estate costs are fixed, even if income from our properties decreases.
- A number of properties in our portfolio are subject to ground or building leases; if we are found to be in breach of a ground or building lease or are unable to renew a ground or building lease, we could be materially and adversely affected.
- Our assets may be subject to impairment charges.
- Risks related to our outstanding debt.
- Covenants in our existing financing agreements may restrict our operating, financing, redevelopment, development, acquisition and other activities.
- Defaults on secured indebtedness may result in foreclosure.
- We may not be able to obtain capital to make investments.
- Risks related to our properties in Puerto Rico.
- Natural disasters could have a concentrated impact on us.
- Some of our potential losses may not be covered by insurance.
- Terrorist acts and shooting incidents could harm the demand for, and the value of, our properties.
- Our business and operations would suffer in the event of system failures.
- We face risks associated with security and cyber security breaches.
- We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability to lease and/or sell real estate.
- Increased scrutiny and changing expectations from investors, customers, employees, and others regarding our environmental, social and governance practices and reporting could cause us to incur additional costs, devote additional resources and expose us to additional risks, which could adversely impact our reputation, customer acquisition and retention, access to capital and employee retention.
- Compliance or failure to comply with the Americans with Disabilities Act, safety regulations or other requirements could result in substantial costs.
- We may fail to qualify or remain qualified as a REIT and may be required to pay income taxes at corporate rates.
- REIT distribution requirements could adversely affect our liquidity and our ability to execute our business plan.
- Risks related to Section 1031 Exchanges.
- We face possible adverse changes in tax law.
- Our Declaration of Trust sets limits on the ownership of our shares.
- Our Declaration of Trust limits the removal of members of the Board of Trustees.
- Maryland law contains provisions that may reduce the likelihood of certain takeover transactions.
- We may issue additional shares in a manner that could adversely affect the likelihood of certain takeover transactions.
- The market prices and trading volume of our equity securities may be volatile.
- We cannot guarantee the timing, amount, or payment of dividends on our common shares.
- Your percentage of ownership in our Company may be diluted in the future.
- Inflation and related volatility in the economy could negatively impact the value of our publicly-traded equity securities.
Management Discussion
- We derive substantially all of our revenue from rents received from tenants under existing leases on each of our properties. This revenue includes fixed base rents, recoveries of expenses that we have incurred and that we pass through to the individual tenants and percentage rents that are based on specified percentages of tenants’ revenue, in each case as provided in the respective leases.
- Our primary cash expenditures consist of property operating and capital costs, general and administrative expenses, and interest and debt expense. Property operating expenses include: real estate taxes, repairs and maintenance, management expenses, insurance and utilities; general and administrative expenses include: payroll, professional fees, information technology, office expenses and other administrative expenses; and interest and debt expense primarily consists of interest on our mortgage debt and line of credit. In addition, we incur substantial non-cash charges for depreciation and amortization on our properties. We also capitalize certain expenses, such as taxes, interest and salaries related to properties under development or redevelopment until the property is ready for its intended use.
- Our consolidated results of operations often are not comparable from period to period due to the impact of property acquisitions, dispositions, developments, redevelopments and changes in accounting policies. The results of operations of any acquired properties are included in our financial statements as of the date of acquisition. Our results of operations are affected by national, regional and local economic conditions, as well as macroeconomic conditions, which are at times subject to volatility and uncertainty. In recent years, inflation levels were elevated resulting in increased costs for certain goods and services. Inflation began to decrease in the second quarter of 2023 but still remains at elevated levels compared to the years preceding 2021. Most of our leases require tenants to pay their share of operating expenses, including common area maintenance, real estate taxes and insurance, thereby reducing our exposure to increases in costs and operating expenses resulting from inflation, although some larger tenants have capped the amount of these operating expenses they are responsible for under their lease. In response to the rising rate of inflation, the Federal Reserve raised benchmark interest rates, resulting in an increase in the cost of borrowing, which could remain at elevated levels in the near-term and long-term. As of March 31, 2024, approximately 88% of our outstanding debt is fixed rate, with the remaining 12% indexed to SOFR, plus an applicable margin per the respective loan agreements. We occasionally utilize interest rate derivative agreements to hedge the effect of rising interest rates on our variable rate debt. As of March 31, 2024, we were counterparty to one interest rate swap agreement and one interest rate cap agreement, both of which qualify for, and are designated as, hedging instruments. We are actively managing our business to respond to the economic and social impact from events such as those described above. See “Risk Factors” in Part I, Item 1A, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.