UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

~~FORM 10-Q~~

FORM 10-Q



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

For the quarterly period ended ~~September 30, 2017~~March 31, 2020



¨☐	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

(Exact Name of Registrant as Specified in its Declaration of Trust)



Maryland		52-0782497
(State of Organization)		(IRS Employer Identification No.)

~~1626 East Jefferson Street, Rockville, Maryland~~	~~20852~~
~~(Address of Principal Executive Offices)~~	~~(Zip Code)~~

~~(301) 998-8100~~1626 East Jefferson Street, Rockville, Maryland20852

(Address of Principal Executive Offices) (Zip Code)

(301) 998-8100

(Registrant’s Telephone Number, Including Area Code)



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	FRT-C	New York Stock Exchange
of 5.00% Series C Cumulative Redeemable Preferred Stock, $.01 par value per share

Indicate by check mark whether the ~~Registrant~~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~~registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý☒Yes¨☐ No

Indicate by check mark whether the ~~Registrant~~registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). ý☒Yes¨☐ No

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



Large Accelerated Filer	ý☒	Accelerated filer	¨☐

Non-Accelerated Filer	o ~~(Do not check if a smaller reporting company)~~ ☐	Smaller reporting company	¨☐

		Emerging growth company	¨☐

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

Indicate by check mark whether the ~~Registrant~~registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨☐ Yes ý☒ No

The number of ~~Registrant’s~~registrant’s common shares outstanding on ~~October 27, 2017~~May 1, 2020 was ~~72,546,870.~~75,633,042.

FEDERAL REALTY INVESTMENT TRUST

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2020

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2020 (unaudited) and December 31, ~~2016~~2019	3
		Consolidated Statements of Comprehensive Income (unaudited) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	4
		Consolidated ~~Statement~~Statements of Shareholders' Equity (unaudited) for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and 2019	5
		Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	6
		Notes to Consolidated Financial Statements (unaudited)	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1513
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3125
	Item 4.	Controls and Procedures	3225

PART II. OTHER INFORMATION			3226
	Item 1.	Legal Proceedings	3226
	Item 1A.	Risk Factors	3226
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3326
	Item 3.	Defaults Upon Senior Securities	3326
	Item 4.	Mine Safety Disclosures	3327
	Item 5.	Other Information	3327
	Item 6.	Exhibits	3327

SIGNATURES			3429

Federal Realty Investment Trust

Consolidated Balance Sheets



	March 31,			December 31,
	2020			2019
	(In thousands, except share and per share data)
	(Unaudited)
ASSETS
Real estate, at cost
Operating (including $1,751,718 and $1,676,866 of consolidated variable interest entities, respectively)	$	7,774,485		$	7,535,983
Construction-in-progress (including $84,034 and $102,583 of consolidated variable interest entities, respectively)	671,486			760,420
Assets held for sale	5,796			1,729
	8,451,767			8,298,132
Less accumulated depreciation and amortization (including $306,861 and $296,165 of consolidated variable interest entities, respectively)	(2,258,994		)	(2,215,413		)
Net real estate	6,192,773			6,082,719
Cash and cash equivalents	994,688			127,432
Accounts and notes receivable, net	153,243			152,572
Mortgage notes receivable, net	30,332			30,429
Investment in partnerships	25,960			28,604
Operating lease right of use assets	94,147			93,774
Finance lease right of use assets	52,079			52,402
Prepaid expenses and other assets	216,692			227,060
TOTAL ASSETS	$	7,759,914		$	6,794,992
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $476,944 and $469,184 of consolidated variable interest entities, respectively)	$	552,813		$	545,679
Notes payable, net	993,752			3,781
Senior notes and debentures, net	2,807,848			2,807,134
Accounts payable and accrued expenses	245,968			255,503
Dividends payable	81,899			81,676
Security deposits payable	21,941			21,701
Operating lease liabilities	74,082			73,628
Finance lease liabilities	72,059			72,062
Other liabilities and deferred credits	150,410			157,938
Total liabilities	5,000,772			4,019,102
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests	159,534			139,758
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), 399,896 shares issued and outstanding	9,997			9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 75,622,504 and 75,540,804 shares issued and outstanding, respectively	760			759
Additional paid-in capital	3,166,899			3,166,522
Accumulated dividends in excess of net income	(818,284		)	(791,124		)
Accumulated other comprehensive loss	(7,265		)	(813		)
Total shareholders’ equity of the Trust	2,502,107			2,535,341
Noncontrolling interests	97,501			100,791
Total shareholders’ equity	2,599,608			2,636,132
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	7,759,914		$	6,794,992

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

Federal Realty Investment Trust

Consolidated Statements of Comprehensive Income

(Unaudited)

September 30, December 31,
2017 2016
(In thousands, except share and per share data)
(Unaudited)
ASSETS
Real estate, at cost
Operating (including $1,666,691 and $1,226,918 of consolidated variable interest entities, respectively) $ 6,758,728
$ 6,125,957
Construction-in-progress 769,882
599,260
Asset held for sale —
33,856
7,528,610
6,759,073
Less accumulated depreciation and amortization (including $236,391 and $209,239 of consolidated variable interest entities, respectively) (1,828,845 ) (1,729,234 )
Net real estate 5,699,765
5,029,839
Cash and cash equivalents 22,850
23,368
Accounts and notes receivable, net 200,878
116,749
Mortgage notes receivable, net 30,429
29,904
Investment in real estate partnerships 23,925
14,864
Prepaid expenses and other assets 243,290
208,555
TOTAL ASSETS $ 6,221,137
$ 5,423,279
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable (including $461,873 and $439,120 of consolidated variable interest entities, respectively) $ 493,240
$ 471,117
Capital lease obligations 71,565
71,590
Notes payable 320,718
279,151
Senior notes and debentures 2,377,939
1,976,594
Accounts payable and accrued expenses 206,441
201,756
Dividends payable 73,466
71,440
Security deposits payable 16,698
16,285
Other liabilities and deferred credits 175,464
115,817
Total liabilities 3,735,531
3,203,750
Commitments and contingencies (Note 6)

Redeemable noncontrolling interests 151,815
143,694
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 and 0 shares issued and outstanding, respectively 150,000
—
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding 9,997
9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 72,542,909 and 71,995,897 shares issued and outstanding, respectively 728
722
Additional paid-in capital 2,773,890
2,718,325
Accumulated dividends in excess of net income (724,919 ) (749,734 )
Accumulated other comprehensive loss (742 ) (2,577 )
Total shareholders’ equity of the Trust 2,208,954
1,976,733
Noncontrolling interests 124,837
99,102
Total shareholders’ equity 2,333,791
2,075,835
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 6,221,137
$ 5,423,279



	Three Months Ended March 31,
	2020			2019
	(In thousands, except per share data)
REVENUE
Rental income	$	230,798		$	231,492
Mortgage interest income	759			735
Total revenue	231,557			232,227
EXPENSES
Rental expenses	44,312			44,260
Real estate taxes	29,064			27,687
General and administrative	10,251			9,565
Depreciation and amortization	62,188			59,622
Total operating expenses	145,815			141,134

OPERATING INCOME	85,742			91,093

OTHER INCOME/(EXPENSE)
Other interest income	308			177
Interest expense	(28,445		)	(28,033		)
Loss from partnerships	(1,164		)	(1,434		)
NET INCOME	56,441			61,803
Net income attributable to noncontrolling interests	(1,678		)	(1,659		)
NET INCOME ATTRIBUTABLE TO THE TRUST	54,763			60,144
Dividends on preferred shares	(2,010		)	(2,010		)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	52,753		$	58,134
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders	0.70			0.78
Weighted average number of common shares	75,360			74,200
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders	$	0.70		$	0.78
Weighted average number of common shares	75,360			74,200

COMPREHENSIVE INCOME	$	49,989		$	61,594

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST	$	48,311		$	59,935

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

Federal Realty Investment Trust

Consolidated Statements of ~~Comprehensive Income~~

~~(Unaudited)~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(In thousands, except per share data)
REVENUE
Rental income $ 212,048
$ 197,469
$ 620,741
$ 585,712
Other property income 5,171
2,759
10,429
8,559
Mortgage interest income 734
929
2,221
3,211
Total revenue 217,953
201,157
633,391
597,482
EXPENSES
Rental expenses 41,250
38,588
119,487
118,385
Real estate taxes 27,492
24,973
79,104
71,164
General and administrative 9,103
8,232
26,013
25,278
Depreciation and amortization 55,611
48,903
159,656
145,137
Total operating expenses 133,456
120,696
384,260
359,964
OPERATING INCOME 84,497
80,461
249,131
237,518
Other interest income 79
105
253
285
Interest expense (26,287 ) (24,313 ) (73,952 ) (71,143 )
(Loss) income from real estate partnerships (182 ) —
(296 ) 41
INCOME FROM CONTINUING OPERATIONS 58,107
56,253
175,136
166,701
Gain on sale of real estate and change in control of interests, net 50,775
4,945
69,949
32,458
NET INCOME 108,882
61,198
245,085
199,159
Net income attributable to noncontrolling interests (2,105 ) (2,221 ) (5,827 ) (7,286 )
NET INCOME ATTRIBUTABLE TO THE TRUST 106,777
58,977
239,258
191,873
Dividends on preferred shares (177 ) (136 ) (448 ) (406 )
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS $ 106,600
$ 58,841
$ 238,810
$ 191,467
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders $ 1.47
$ 0.82
$ 3.31
$ 2.70
Weighted average number of common shares 72,091
71,319
71,983
70,626
EARNINGS PER COMMON SHARE, DILUTED:

Net income available for common shareholders $ 1.47
$ 0.82
$ 3.30
$ 2.70
Weighted average number of common shares 72,206
71,489
72,110
70,804

COMPREHENSIVE INCOME $ 109,240
$ 63,097
$ 246,920
$ 197,875

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST $ 107,135
$ 60,876
$ 241,093
$ 190,589

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

~~Federal Realty Investment Trust~~

~~Consolidated Statement of~~ Shareholders’ Equity

For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020

(Unaudited)

Shareholders’ Equity of the Trust
Preferred Shares Common Shares
Additional
Paid-in
Capital

Accumulated
Dividends in
Excess of Net
Income

Accumulated
Other
Comprehensive
Loss
Noncontrolling Interests Total Shareholders' Equity
Shares Amount Shares Amount
(In thousands, except share data)
BALANCE AT DECEMBER 31, 2016 399,896

$ 9,997
71,995,897
$ 722
$ 2,718,325
$ (749,734 ) $ (2,577 ) $ 99,102
$ 2,075,835
January 1, 2017 adoption of new accounting standard - See Note 2 —
—
—
—
83
(83 ) —
—
—
Net income, excluding $2,774 attributable to redeemable noncontrolling interests —
—
—
—
—
239,258
—
3,053
242,311
Other comprehensive income - change in fair value of interest rate swaps —
—
—
—
—
—
1,835
—
1,835
Dividends declared to common shareholders —
—
—
—
—
(213,954 ) —
—
(213,954 )
Dividends declared to preferred shareholders —
—
—
—
—
(406 ) —
—
(406 )
Distributions declared to noncontrolling interests —
—
—
—
—
—
—
(4,435 ) (4,435 )
Common shares issued, net —
—
325,451
4
42,690
—
—
—
42,694
Preferred shares issued, net 6,000
150,000
—
—
(5,027 ) —
—
—
144,973
Exercise of stock options —
—
112,334
1
8,213
—
—
—
8,214
Shares issued under dividend reinvestment plan —
—
13,521
—
1,809
—
—
—
1,809
Share-based compensation expense, net of forfeitures —
—
105,291
1
9,401
—
—
—
9,402
Shares withheld for employee taxes —
—
(29,615 ) —
(4,216 ) —
—
—
(4,216 )
Conversion and redemption of OP units —
—
20,030
—
2,569
—
—
(2,569 ) —
Contributions from noncontrolling interests —
—
—
—
—
—
—
35,264
35,264
Purchase of noncontrolling interest —
—
—
—
43
—
—
(5,578 ) (5,535 )
BALANCE AT SEPTEMBER 30, 2017 405,896
$ 159,997
72,542,909
$ 728
$ 2,773,890
$ (724,919 ) $ (742 ) $ 124,837
$ 2,333,791



	Shareholders’ Equity of the Trust
	Preferred Shares			Common Shares				Additional Paid-in Capital			Accumulated Dividends in Excess of Net Income			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders' Equity
	Shares	Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Dividends in Excess of Net Income			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders' Equity
	(In thousands, except share data)
BALANCE AT DECEMBER 31, 2019	405,896	$	159,997	75,540,804		$	759	$	3,166,522		$	(791,124	)	$	(813	)	$	100,791		$	2,636,132
January 1, 2020 adoption of new accounting standard - See Note 2	—	—		—		—		—			(510		)	—			—			(510		)
Net income, excluding $1,015 attributable to redeemable noncontrolling interests	—	—		—		—		—			54,763			—			663			55,426
Other comprehensive loss - change in fair value of interest rate swaps	—	—		—		—		—			—			(6,452		)	—			(6,452		)
Dividends declared to common shareholders ($1.05 per share)	—	—		—		—		—			(79,403		)	—			—			(79,403		)
Dividends declared to preferred shareholders	—	—		—		—		—			(2,010		)	—			—			(2,010		)
Distributions declared to noncontrolling interests	—	—		—		—		—			—			—			(783		)	(783		)
Common shares issued, net	—	—		13		—		2			—			—			—			2
Shares issued under dividend reinvestment plan	—	—		3,834		—		446			—			—			—			446
Share-based compensation expense, net of forfeitures	—	—		110,066		1		3,941			—			—			—			3,942
Shares withheld for employee taxes	—	—		(32,213	)	—		(3,982		)	—			—			—			(3,982		)
Redemption of OP units	—	—		—		—		(30		)	—			—			(3,290		)	(3,320		)
Contributions from noncontrolling interests	—	—		—		—		—			—			—			120			120
BALANCE AT MARCH 31, 2020	405,896	$	159,997	75,622,504		$	760	$	3,166,899		$	(818,284	)	$	(7,265	)	$	97,501		$	2,599,608



BALANCE AT DECEMBER 31, 2018	405,896	$	159,997	74,249,633		$	745	$	3,004,442		$	(818,877	)	$	(416	)	$	121,439		$	2,467,330
January 1, 2019 adoption of new accounting standard - See Note 2	—	—		—		—		—			(7,098		)	—			—			(7,098		)
Net income, excluding $876 attributable to redeemable noncontrolling interests	—	—		—		—		—			60,144			—			783			60,927
Other comprehensive loss - change in fair value of interest rate swaps	—	—		—		—		—			—			(209		)	—			(209		)
Dividends declared to common shareholders ($1.02 per share)	—	—		—		—		—			(76,106		)	—			—			(76,106		)
Dividends declared to preferred shareholders	—	—		—		—		—			(2,010		)	—			—			(2,010		)
Distributions declared to noncontrolling interests	—	—		—		—		—			—			—			(1,266		)	(1,266		)
Common shares issued, net	—	—		446,132		5		59,348			—			—			—			59,353
Shares issued under dividend reinvestment plan	—	—		4,273		—		528			—			—			—			528
Share-based compensation expense, net of forfeitures	—	—		100,586		1		3,860			—			—			—			3,861
Shares withheld for employee taxes	—	—		(32,686	)	—		(4,414		)	—			—			—			(4,414		)
Conversion and redemption of OP units	—	—		69,046		1		7,550			—			—			(7,551		)	—
Adjustment to redeemable noncontrolling interests	—	—		—		—		667			—			—			—			667
BALANCE AT MARCH 31, 2019	405,896	$	159,997	74,836,984		752		$	3,071,981		$	(843,947	)	$	(625	)	$	113,405		$	2,501,563

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

Federal Realty Investment Trust

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2020			2019
	(In thousands)						(In thousands)
OPERATING ACTIVITIES
Net income	$	245,085		$	199,159		$	56,441		$	61,803
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	159,656			145,137			62,188			59,622
Gain on sale of real estate and change in control of interests, net	(69,949		)	(32,458		)
Loss (income) from real estate partnerships	296			(41		)
Loss from partnerships							1,164			1,434
Other, net	(4,821		)	556			(110		)	2,230
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Increase in accounts receivable, net	(1,565		)	(3,604		)
Increase in prepaid expenses and other assets	(5,819		)	(25,769		)
Increase in accounts payable and accrued expenses	13,617			11,164
Increase (decrease) in security deposits and other liabilities	3,138			(736		)
Decrease (increase) in accounts receivable, net							3,012			(1,245		)
Decrease in prepaid expenses and other assets							8,618			1,168
Decrease in accounts payable and accrued expenses							(3,619		)	(6,815		)
Decrease in security deposits and other liabilities							(8,945		)	(13,278		)
Net cash provided by operating activities	339,638			293,408			118,749			104,919
INVESTING ACTIVITIES
Acquisition of real estate	(436,652		)	(135,151		)	(7,109		)	(25,176		)
Capital expenditures - development and redevelopment	(335,666		)	(263,606		)	(106,572		)	(63,380		)
Capital expenditures - other	(52,875		)	(40,326		)	(15,792		)	(14,061		)
Proceeds from sale of real estate and real estate partnership interests	127,538			—
Investment in real estate partnerships	(502		)	(3,494		)
Distribution from real estate partnership in excess of earnings	1,672			3,910
Costs associated with property sold under threat of condemnation							(17,412		)	—
Proceeds from sale of real estate							—			6,106
Investment in partnerships							(136		)	(300		)
Distribution from partnerships in excess of earnings							849			983
Leasing costs	(11,295		)	(11,471		)	(5,001		)	(8,259		)
(Issuance) repayment of mortgage and other notes receivable, net	(500		)	11,721			(659		)	50
Net cash used in investing activities	(708,280		)	(438,417		)	(151,832		)	(104,037		)
FINANCING ACTIVITIES
Net borrowings (repayment) under revolving credit facility, net of costs	41,500			(53,500		)
Issuance of senior notes, net of costs	399,454			241,787
Repayment of mortgages and capital leases	(54,844		)	(38,849		)
Net borrowings under revolving credit facility, including costs							990,000			20,000
Repayment of mortgages, finance leases and notes payable							(1,524		)	(21,718		)
Issuance of common shares, net of costs	51,189			300,040			19			59,427
Issuance of preferred shares, net of costs	145,456			—
Dividends paid to common and preferred shareholders	(210,845		)	(197,750		)	(80,898		)	(77,296		)
Shares withheld for employee taxes	(4,216		)	(4,436		)	(3,982		)	(4,414		)
Contributions from noncontrolling interests	13,312			302			—			106
Distributions to and redemptions of noncontrolling interests	(12,882		)	(22,350		)	(4,720		)	(3,107		)
Net cash provided by financing activities	368,124			225,244
(Decrease) increase in cash and cash equivalents	(518		)	80,235
Cash and cash equivalents at beginning of year	23,368			21,046
Cash and cash equivalents at end of period	$	22,850		$	101,281
Net cash provided by (used in) financing activities							898,895			(27,002		)
Increase (decrease) in cash, cash equivalents and restricted cash							865,812			(26,120		)
Cash, cash equivalents, and restricted cash at beginning of year							153,614			108,332
Cash, cash equivalents, and restricted cash at end of period							$	1,019,426		$	82,212

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

Federal Realty Investment Trust

Notes to Consolidated Financial Statements

~~September 30, 2017~~March 31, 2020

(Unaudited)

NOTE 1—BUSINESS AND ORGANIZATION

Federal Realty Investment Trust (the “Trust”) is an equity real estate investment trust (“REIT”) specializing in the ownership, management, and redevelopment of retail and mixed-use properties. Our properties are located primarily in densely populated and affluent communities in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As of ~~September 30, 2017,~~March 31, 2020, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 104 predominantly retail real estate projects.

We operate in a manner intended to enable us 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.

Impacts of COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of novel coronavirus disease (“COVID-19”) as a pandemic. While we currently expect the impact to our properties is temporary in nature, the extent of the future effects of COVID-19 on our business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated balance sheet as of December 31, ~~2016,~~2019, which has been derived from audited financial statements, and unaudited interim consolidated financial statements 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 accounting principles generally accepted in the United States (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 ~~the Trust’s~~our latest Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation for the periods presented have been included. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 are not necessarily indicative of the results that may be expected for the full year.

Principles of Consolidation

Our consolidated financial statements include the accounts of the Trust, its corporate subsidiaries, and all entities in which the Trust has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity (“VIE”). 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. ~~Certain 2016 amounts have been reclassified to conform to current period presentation.~~

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.

~~Revenue Recognition~~

We are currently under construction on 221 condominium units at our Assembly Row and Pike & Rose properties. Gains or losses on the sale of these condominium units are recognized in accordance with the provisions of ASC Topic 360-20, “Property, Plant and Equipment – Real Estate Sales.” We account for contracted condominium sales under the percentage-of-completion method, based on an evaluation of the criteria specified in ASC Topic 360-20 including: the legal commitment of the purchaser in the real estate contract, whether the construction of the project is beyond a preliminary phase, whether sufficient units have been contracted to ensure the project will not revert to a rental project, the ability to reasonably estimate the aggregate project sale proceeds and aggregate project costs, and the determination that the buyer has made an adequate initial and continuing cash investment under the contract. When the percentage-of-completion criteria have not been met, no profit is recognized. The application of this criteria can be complex and requires us to make assumptions.

Recently Adopted and Issued Accounting Pronouncements



Standard	Description	Effect on the financial statements or significant matters

Adopted on January 1, 2020:
Financial Instruments - Credit Losses (Topic 326) and related updates: ASU 2016-13, June 2016, Financial Instruments - Credit Losses (Topic 326) ASU 2018-19, November 2018, Codification improvements to Topic 326, Financial Instruments - Credit Losses	This ASU changes the impairment model for most financial assets and certain other instruments, requiring the use of an "expected credit loss" model and adding more disclosure requirements. ASU 2018-19 clarifies that impairment of of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases.	Upon adoption of this standard, we recorded expected losses of $0.5 million in opening accumulated dividends in excess of net income. During the three months ended March 31, 2020, we recorded additional expected losses of $0.4 million, which are included in rental expenses.

ASU 2018-15, August 2018, Intangibles - Goodwill and Other Internal Use Software: Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract	This ASU requires a customer in a cloud computing arrangement (i.e. hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement. Entities will expense costs during the preliminary project and post-implementation stages as they are incurred. The guidance can be applied prospectively to all implementation costs incurred after the date of adoption or retrospectively in accordance with ASC 250-10-45-5 through ASC 250-10-45-10.	The adoption of this standard does not have a significant impact to our consolidated financial statements.

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

In ~~May 2014,~~April 2020, the FASB issued ~~ASU 2014-09, "Revenue from Contracts~~interpretive guidance relating to the accounting for lease concessions provided as a result of COVID-19. In this guidance, entities can elect not to apply lease modification accounting with ~~Customers." ASU 2014-09~~respect to such lease concessions and instead, treat the concession as ~~amended and interpreted by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20, supersedes nearly all existing revenue recognition guidance under GAAP and replaces~~if it ~~with~~was a core revenue recognition principle, that an entity will recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, and creates a five-step model for revenue recognition in accordance with this principle. While we are still completing the assessmentpart of the ~~impact of these~~

~~standards~~existing contract. This guidance is only applicable to ~~our consolidated financial statements, we believe~~COVID-19 related lease concessions that do not result in a substantial increase in the ~~majority of our revenue falls outside~~rights of the ~~scope of this~~

~~guidance. However,~~lessor or the new guidance will affect the accounting method related to our gains on condominium sales. Currently, gains on contracted sales are recognized using the percentage-of-completion method, with the gain recognized once certain criteria have been met in advance of legal closing (see further discussion in Note 3 to the consolidated financial statements). Under the new guidance, condominium sale gains will be recognized as the condominium units are legally sold, which will typically be upon closing. We intend to implement the new revenue recognition guidance retrospectively with the cumulative effect recognized in retained earnings at the date of initial application.

In February 2017, the FASB issued ASU 2017-05, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets." ASU 2017-05 clarifies that ASC 610-20 applies to all nonfinancial assets (including real estate) for which the counterparty is not a customer and also clarifies that all businesses are derecognized using the deconsolidation guidance. Additionally, it defines an insubstance nonfinancial asset as a financial asset that is promised to a counterparty in a contract in which substantially allobligations of the fair value of the assets promised in the contract is concentrated in nonfinancial assets, which excludes cash or cash equivalents and liabilities. The new guidance is expected to impact the gain recognized when a real estate asset is sold to a non-customer and a noncontrolling interest is retained. Under the current guidance, a partial sale is recognized and carryover basis is used for the retained interest, however, the new guidance eliminates the use of carryover basis and generally requires a full gain to be recognized. ASU 2017-05 is effective for us in the first quarter of 2018, and welessee. We are currently ~~assessing~~

evaluating the impact of this ~~standard to our consolidated financial statements.~~

In May 2017, the FASB issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting." ASU 2017-09 clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance ~~an entity~~and whether we will not apply modification accounting if the awards' fair value, vesting conditions, and the classification of the award as equity or a liability are the same immediately before and after the change. ASU 2017-09 is effective for us in the first quarter of 2018, is applied prospectively to awards granted or modified after the adoption date, and is not expected to have a significant impact to our consolidated financial statements.

~~Recently Adopted Accounting Pronouncements~~

~~In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation." ASU 2016-09 simplifies the accounting for share-based payment transactions, including a~~make this policy election ~~option with respect to accounting~~ for ~~forfeitures either~~lease concessions such as ~~they occur or estimating forfeitures (as is currently required), as well as increasing~~rent deferrals for the amount an employer can withhold to cover income taxes on equity awards. Additionally, ASU 2016-09 requires the cash paid to a taxing authority when shares are withheld to pay employee taxes to be classified as a "financing activity" rather than an "operating activity," as was done previously on the Statement of Cash Flows. We adopted this standard effective January 1, 2017, and as a result, we are now accounting for forfeitures as they occur, and have recorded the cumulative impact on the adoption date as a $0.1 million adjustment to additional paid in capital and retained earnings. The amount reclassified from "operating activities" to "financing activities" for shares withheld for employee taxes was $4.4 million.

In January 2017, the FASB issued ASU 2017-01, "Clarifying the Definition of a Business." ASU 2017-01 changes the definition of a business to exclude acquisitions where substantially all of the fair value of the assets acquired are concentrated in a single identifiable asset or a group of similar identifiable assets. Given this change in definition, we believe most of our shopping center acquisitions will no longer be considered business combinations but rather asset acquisitions. While there are various differences between the accounting for an asset acquisition and a business combination, the largest impact will be that transaction costs are capitalized for asset acquisitions rather than expensed when they were considered business combinations. Based on acquisitions in the past several years, transaction costs for a single shopping center acquisition have typically ranged from $0.2 million to $2.4 million with significantly higher transaction costs expected for an acquisition of a larger portfolio. We adopted this standard effective January 1, 2017, and are applying the new guidance prospectively. Our acquisitions in the first nine months of 2017 (further discussed in Note 3 below) qualified as asset acquisitions and consequently, all transaction costs were capitalized.

quarter ended June 30, 2020.

Consolidated Statements of Cash Flows—Supplemental Disclosures

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



	Three Months Ended
	March 31,
	2020			2019
	(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	34,159		$	32,580
Interest capitalized	(5,714		)	(4,547		)
Interest expense	$	28,445		$	28,033
Cash paid for interest, net of amounts capitalized	$	29,405		$	32,485
Cash paid for income taxes	$	4		$	7
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
DownREIT operating partnership units issued with acquisition	$	18,920		$	—
Mortgage loans assumed with acquisition	$	8,903		$	—
DownREIT operating partnership units redeemed for common shares	$	—		$	7,551
Shares issued under dividend reinvestment plan	$	429		$	455

Nine Months Ended
September 30,
2017 2016
(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred $ 92,520
$ 83,803
Interest capitalized (18,568 ) (12,660 )
Interest expense $ 73,952
$ 71,143
Cash paid for interest, net of amounts capitalized $ 70,486
$ 66,921
Cash paid for income taxes $ 342
$ 300
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Mortgage loans refinanced $ 166,823
$ —
Mortgage loans assumed with acquisition $ 79,401
$ 34,385
DownREIT operating partnership units issued with acquisition of noncontrolling interest $ 5,918
$ —
DownREIT operating partnership units redeemed for common shares $ 2,569
$ 18,679
Shares issued under dividend reinvestment plan $ 1,528
$ 1,523



	March 31,		December 31,
	2020		2019
	(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents	$	994,688	$	127,432
Restricted cash (1)	24,738		26,182
Total cash, cash equivalents, and restricted cash	$	1,019,426	$	153,614


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

NOTE 3—REAL ESTATE

On ~~February 1, 2017,~~January 10, 2020, we acquired a ~~leasehold interest in Hastings Ranch Plaza, a 274,000~~49,000 square foot shopping center in ~~Pasadena, California~~Fairfax, Virginia for ~~$29.5~~$22.3 million. ~~The land~~This property is ~~subject~~adjacent to, and will be operated as part of our Fairfax Junction property. This purchase price was paid with a ~~long-term ground lease that expires on April 30, 2054.~~combination of cash and the issuance of 163,322 downREIT operating partnership units. Approximately $21.5 million of assets acquired were allocated to lease intangibles and included within other assets. Approximately $15.2 million of net assets acquired were allocated to lease liabilities and included in other liabilities.

On March 31, 2017, we acquired the fee interest in Riverpoint Center, a 211,000 square foot shopping center in the Lincoln Park neighborhood of Chicago, Illinois for $107.0 million. Approximately $1.0$0.5 million and ~~$12.3~~$0.4 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

~~We leased three parcels~~On February 12, 2020, we acquired two buildings totaling 12,000 square feet in Hoboken, New Jersey for $14.3 million, including the assumption of ~~land at our Assembly Row property to two ground lessees. During 2016, both lessees exercised purchase options under the related ground leases. The sale transaction related~~$8.9 million of mortgage debt. This acquisition is in addition to the purchase option on one of our ground leases was completed on April 4, 2017 for a sales price of $36.0 million. On June 28, 2017, the sale transactions related to the purchase options on our other two ground lease parcels were completed for a total sales price of $17.3 million. The net gain recognized in connection with these transactions was approximately $15.4 million.

~~On May 19, 2017, we~~37 buildings previously acquired, ~~the fee interest in a 71,000 square foot, mixed-use property located in Berkeley, California based on a gross value of $23.9 million. The acquisition~~and was completed through ~~a newly~~the joint venture that was formed ~~entity~~in 2019, for which we own a 90% ~~controlling~~ interest. ~~Approximately $0.8~~Less than $0.1 million and ~~$0.3~~approximately $3.3 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively. ~~Additionally, approximately $2.4 million was allocated to noncontrolling interests.~~

On August 2, 2017, we acquired an approximately 90% interest in a joint venture that owns six shopping centers in Los Angeles County, California based on a gross value of $357 million, including the assumption of $79.4 million of mortgage debt. Approximately $7.8 million of assets acquired were allocated to lease intangibles and included within other assets. Approximately $36.2 million of net assets acquired were allocated to lease liabilities and included in other liabilities. Additionally, approximately $30.6 million was allocated to noncontrolling interests. That joint venture also acquired a 24.5% interest in La Alameda, a shopping center in Walnut Park, California for $19.8 million. The property has $41.0 million of mortgage debt, of which the joint venture's share is approximately $10 million. Additional information on the properties is listed below:



~~Property~~	~~City/State~~	~~GLA~~
		~~(in square feet)~~
~~Azalea~~	~~South Gate, CA~~	~~222,000~~
~~Bell Gardens~~	~~Bell Gardens, CA~~	~~330,000~~
~~La Alameda~~	~~Walnut Park, CA~~	~~245,000~~
~~Olivo at Mission Hills (1)~~	~~Mission Hills, CA~~	~~155,000~~
~~Plaza Del Sol~~	~~South El Monte, CA~~	~~48,000~~
~~Plaza Pacoima~~	~~Pacoima, CA~~	~~204,000~~
~~Sylmar Towne Center~~	~~Sylmar, CA~~	~~148,000~~
		~~1,352,000~~

~~(1) Property is currently being redeveloped. GLA reflects approximate square footage once the property is open and operating.~~

The following unaudited pro forma financial data includes the incremental revenues, operating expenses (including approximately $2.8 million and $8.5 million of depreciation and amortization expense for the three and nine months ended September 30, 2017 and 2016, respectively), and interest expense/financing costs related to the properties acquired on August 2, 2017 as if they had occurred on January 1, 2016. The pro forma financial information is presented for informational purposes only and may not be indicative of what actual results of income would have been, nor does it represent the results of income for future periods.

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(in millions) (unaudited)

Total revenue $ 220.2
$ 207.3
$ 649.0
$ 616.0
Net income available for common shareholders 106.2
57.5
235.9
187.5

~~On August 25, 2017, we sold our property located at 150 Post Street in San Francisco, California for a sales price of $69.3 million, resulting in a gain of $45.2 million.~~

~~On September 25, 2017, we sold our North Lake Commons property in Lake Zurich, Illinois for a sales price of $15.6 million, resulting in a gain of $4.9 million.~~

For the three and nine months ended September 30, 2017 we recognized a $0.6 million and $3.9 million gain, respectively, net of $0.3 million and $2.0 million of income taxes, respectively, related to the sale of condominiums at our Assembly Row property based on the percentage-of-completion method. In connection with recording the gain, we recognized a receivable of $59.1 million as of September 30, 2017. The closing of the Assembly Row condominium sales is expected to commence in 2018.~~As of September 30, 2017, no gain has been recognized for contracted condominium sales at Pike & Rose, as not all of the criteria necessary for profit recognition have been met.~~

NOTE 4—DEBT

On June 5, 2017 we refinanced the $175.0 million mortgage loan on Plaza El Segundo at a face amount of $125.0 million and repaid the remaining $50.0 million at par. The new mortgage loan bears interest at 3.83% and matures on June 5, 2027.

On June 23, 2017, we issued $400.0 million aggregate principal amount of fixed rate senior unsecured notes in two separate series. We issued $300.0 million of 3.25% notes that mature on July 15, 2027, were offered at 99.083% of the principal amount, with a yield to maturity of 3.358%. Additionally, we issued $100.0 million of 4.50% notes due December 1, 2044. The 4.50% notes were offered at 105.760% of the principal amount, with a yield to maturity of 4.143%, and have the same terms and are of the same series as the senior notes first issued on November 14, 2014. Our net proceeds from the June note offering after net issuance premium, underwriting fees and other costs was approximately $399.5 million.

In connection with the ~~acquisition of six shopping centers~~two buildings we acquired in ~~Los Angeles County, California~~Hoboken, New Jersey on ~~August 2, 2017 (as further discussed in Note 3),~~February 12, 2020, we assumed two mortgage loans with a net face amount of ~~$79.4~~$8.9 million and a fair value of ~~$80.1~~$9.0 million. The mortgage loans ~~are secured by the individual properties with the following contractual terms:~~

Principal Stated Interest Rate Maturity Date
(in millions)
Sylmar Towne Center $ 17.5
5.39 % June 6, 2021
Plaza Del Sol 8.6
5.23 % December 1, 2021
Azalea 40.0
3.73 % November 1, 2025
Bell Gardens 13.3
4.06 % August 1, 2026

~~On August 31, 2017, we refinanced the $41.8 million mortgage loan, at par, on The Grove at Shrewsbury (East) at a face amount of $43.6 million. The new mortgage loan bears~~bear interest at ~~3.77%~~4.00% and ~~matures~~mature on ~~September 1,~~July 27, 2027.

~~During~~In March 2020, in order to strengthen our financial position and balance sheet, to maximize our liquidity, and to provide maximum financial flexibility to continue our business initiatives as the effects of COVID-19 continue to evolve, we borrowed $990.0 million under our revolving credit facility, representing a draw-down of almost the entirety of our $1.0 billion revolving credit facility, which has a maturity date of January 19, 2024. Consequently, during the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, the maximum amount of borrowings outstanding under our ~~$800.0 million~~ revolving credit facility was ~~$281.5~~$990.0 million, ~~and $344.0 million, respectively,~~ and the weighted average

interest rate, before amortization of debt fees, was ~~2.1% and 1.9%, respectively.~~1.7% . During the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, the weighted average borrowings outstanding ~~were $172.7 million and $173.0 million, respectively. At September 30, 2017, there~~ was ~~$41.5 million outstanding balance.~~$143.7 million. Our revolving credit facility ~~term loan~~ and certain notes require us to comply with various financial covenants, including the maintenance of minimum ~~shareholders’~~shareholders' equity and debt coverage ratios and a maximum ratio of debt to net worth. As of ~~September 30, 2017,~~March 31, 2020, 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:



	March 31, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Mortgages and notes payable	$	1,546,565	$	1,543,402	$	549,460	$	562,049
Senior notes and debentures	$	2,807,848	$	2,968,904	$	2,807,134	$	3,001,216

September 30, 2017 December 31, 2016
Carrying
Value
Fair Value
Carrying
Value
Fair Value
(In thousands)
Mortgages and notes payable $ 813,958
$ 826,012
$ 750,268
$ 760,260
Senior notes and debentures $ 2,377,939
$ 2,452,494
$ 1,976,594
$ 2,015,973

As of ~~September 30, 2017,~~March 31, 2020, we have ~~two~~2 interest rate swap agreements with a notional ~~amount~~amounts of ~~$275.0~~$56.5 million that are measured at fair value on a recurring basis. The interest rate swap agreements fix the ~~variable portion of our~~ ~~$275.0 million~~ ~~term loan at 1.72% through November 1, 2018. We assess effectiveness of our cash flow hedges both at inception and on an ongoing basis. The effective portion of changes in fair value of the~~ interest rate ~~swaps associated with our cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into interest expense as interest is incurred~~ on ~~the related variable rate debt. Within the next 12 months, we expect to reclassify an estimated $0.7~~$56.5 million ~~as an increase to interest expense. Our 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. When ineffectiveness exists, the ineffective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recognized in earnings in the period affected. Hedge ineffectiveness has not impacted earnings as of September 30, 2017, and we do not anticipate it will have a significant effect in the future.

mortgage payables at 3.67% through December 15, 2029. The fair values of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The fair value of our swaps at ~~September 30, 2017~~March 31, 2020 was a liability of ~~$0.7~~$5.6 million and is included in ~~"accounts payable~~"other liabilities and ~~accrued expenses"~~deferred credits" on our consolidated balance sheet. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, the ~~change in valuation on~~value of our interest rate swaps ~~resulted in a $0.4~~decreased $5.7 million ~~and $1.8~~(including less than $0.1 million ~~decrease in our derivative liability, respectively, (including $0.4 million and $1.5 million, respectively,~~ reclassified from other comprehensive loss to interest expense). ~~The change in valuation on our interest rate swaps is included in "accumulated other comprehensive loss."~~

A summary of our financial ~~liabilities~~(liabilities) assets that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:



	March 31, 2020										December 31, 2019
	Level 1		Level 2			Level 3		Total			Level 1		Level 2		Level 3		Total
	(In thousands)
Interest rate swaps	$	—	$	(5,555	)	$	—	$	(5,555	)	$	—	$	130	$	—	$	130

September 30, 2017 December 31, 2016
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
(In thousands)
Interest rate swaps $ —
$ 742
$ —
$ 742
$ —
$ 2,577
$ —
$ 2,577
One of our equity method investees has 2 interest rate swaps which qualify for cash flow hedge accounting. For the three months ended March 31, 2020, our share of the change in fair value of the related swaps included in "accumulated other comprehensive loss" was $0.8 million.

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 ~~the same number of our~~ common shares, at our option. A total of ~~787,962~~744,617 downREIT operating partnership units are outstanding which have a total fair value of ~~$97.9~~approximately $55.6 million, ~~based on~~which is calculated by multiplying the outstanding number of downREIT partnership units by our closing stock price on ~~September 30, 2017.~~March 31, 2020.

~~On January 12, 2017, we exercised our purchase option on non-controlling interests in San Antonio Center for $2.6 million of cash and 44,195 of downREIT operating partnership units.~~

NOTE 7—SHAREHOLDERS’ EQUITY

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



	Three Months Ended March 31,
	2020				2019
	Declared		Paid		Declared		Paid
Common shares	$	1.050	$	1.050	$	1.020	$	1.020
5.417% Series 1 Cumulative Convertible Preferred shares	$	0.339	$	0.339	$	0.339	$	0.339
5.0% Series C Cumulative Redeemable Preferred shares (1)	$	0.313	$	0.313	$	0.313	$	0.313


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

Nine Months Ended September 30,
2017 2016
Declared Paid Declared Paid
Common shares $ 2.960
$ 2.940
$ 2.860
$ 2.820
5.417% Series 1 Cumulative Convertible Preferred shares $ 1.016
$ 1.016
$ 1.016
$ 1.016

We have an ~~at the market~~at-the-market (“ATM”) equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $400.0 million. We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay amounts outstanding under our revolving credit facility and/or for general corporate purposes. For the three months ended September 30, 2017, we issued 226,739 common shares at a weighted average price per share of $131.00 for net cash proceeds of $29.3 million and paid $0.3 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. For the nine months ended September 30, 2017, we issued 325,397 common shares at a weighted average price per share of $133.09 for net cash proceeds of $42.7 million and paid $0.4 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. As of ~~September 30, 2017,~~March 31, 2020, we had the capacity to issue up to ~~$327.6~~$128.3 million in common shares under our ATM equity program.

option on or after September 29, 2022. Additionally, they are not convertible and holders of these shares generally have no voting rights, unless we fail to pay dividends for six or more quarters. The net proceeds after underwriting fees and other costs were approximately $145.0 million.

NOTE 8—~~COMPONENTS OF RENTAL INCOME~~

~~The principal components of rental income are as follows:~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In thousands)
Minimum rents
Retail and commercial $ 147,971
$ 137,009
$ 434,390
$ 409,027
Residential 13,837
12,886
40,781
36,476
Cost reimbursement 43,602
40,565
124,997
119,004
Percentage rents 2,304
2,315
7,524
7,866
Other 4,334
4,694
13,049
13,339
Total rental income $ 212,048
$ 197,469
$ 620,741
$ 585,712

~~Minimum rents include the following:~~

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In millions)
Straight-line rents $ 3.9
$ 1.5
$ 11.3
$ 6.2
Amortization of above market leases $ (1.6 ) $ (1.7 ) $ (4.4 ) $ (5.3 )
Amortization of below market leases $ 2.5
$ 2.2
$ 7.7
$ 6.5

~~NOTE 9—~~SHARE-BASED COMPENSATION PLANS

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



	Three Months Ended
	March 31,
	2020			2019
	(In thousands)
Grants of common shares and options	$	3,942		$	3,861
Capitalized share-based compensation	(332		)	(226		)
Share-based compensation expense	$	3,610		$	3,635

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In thousands)
Grants of common shares and options $ 2,945
$ 2,766
$ 9,402
$ 8,818
Capitalized share-based compensation (405 ) (375 ) (1,103 ) (1,002 )
Share-based compensation expense $ 2,540
$ 2,391
$ 8,299
$ 7,816

NOTE 9—OPERATING & FINANCE LEASES

The following table provides additional information on our operating and finance leases where we are the lessee:



	Three Months Ended
	March 31,
	2020			2019
	(In thousands)
LEASE COST:
Finance lease cost:
Amortization of right-of-use assets	$	321		$	321
Interest on lease liabilities	1,456			1,456
Operating lease cost	1,559			1,504
Variable lease cost	87			91
Total lease cost	$	3,423		$	3,372

OTHER INFORMATION:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for finance leases	$	1,433		$	1,460
Operating cash flows for operating leases	$	1,550		$	1,511
Financing cash flows for finance leases	$	11		$	10

	March 31,
	2020			2019
Weighted-average remaining lease term - finance leases	18.0 years			18.9 years
Weighted-average remaining lease term - operating leases	53.2 years			53.7 years
Weighted-average discount rate - finance leases	8.0		%	8.0		%
Weighted-average discount rate - operating leases	4.4		%	4.5		%

NOTE 10—EARNINGS PER SHARE

We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation methodology whereby EPS for each class of common stock and participating securities is calculated according to dividends declared and participation rights in undistributed earnings. For the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~,2019, we had 0.2 million weighted average unvested shares outstanding, which are considered participating securities. Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares; the portion of earnings allocated to the unvested shares is reflected as “earnings allocated to unvested shares” in the reconciliation below.

In the dilutive EPS calculation, dilutive stock options were calculated using the treasury stock method consistent with prior periods. There were 682 anti-dilutive stock options for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 and ~~no anti-~~

~~dilutive stock options for the thee and nine months ended September 30, 2016.~~2019. The conversions of downREIT operating partnership units and 5.417% Series 1 Cumulative Convertible Preferred Shares are anti-dilutive for all periods presented and accordingly, have been excluded from the weighted average common shares used to compute diluted EPS.

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
(In thousands, except per share data)
NUMERATOR
Income from continuing operations $ 58,107
$ 56,253
$ 175,136
$ 166,701
Less: Preferred share dividends (177 ) (136 ) (448 ) (406 )
Less: Income from continuing operations attributable to noncontrolling interests (2,105 ) (1,982 ) (5,537 ) (5,961 )
Less: Earnings allocated to unvested shares (317 ) (170 ) (785 ) (534 )
Income from continuing operations available for common shareholders 55,508
53,965
168,366
159,800
Gain on sale of real estate and change in control of interests, net 50,775
4,706
69,659
31,133
Net income available for common shareholders, basic and diluted $ 106,283
$ 58,671
$ 238,025
$ 190,933
DENOMINATOR
Weighted average common shares outstanding—basic 72,091
71,319
71,983
70,626
Stock options 115
170
127
178
Weighted average common shares outstanding—diluted 72,206
71,489
72,110
70,804

EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders $ 1.47
$ 0.82
$ 3.31
$ 2.70
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders $ 1.47
$ 0.82
$ 3.30
$ 2.70
Income from continuing operations attributable to the Trust $ 56,002
$ 54,271
$ 169,599
$ 160,740



	Three Months Ended
	March 31,
	2020			2019
	(In thousands, except per share data)
NUMERATOR
Net income	$	56,441		$	61,803
Less: Preferred share dividends	(2,010		)	(2,010		)
Less: Income from operations attributable to noncontrolling interests	(1,678		)	(1,659		)
Less: Earnings allocated to unvested shares	(247		)	(220		)
Net income available for common shareholders, basic and diluted	$	52,506		$	57,914
DENOMINATOR
Weighted average common shares outstanding, basic and diluted	75,360			74,200

EARNINGS PER COMMON SHARE, BASIC AND DILUTED:
Net income available for common shareholders	$	0.70		$	0.78

NOTE 11—SUBSEQUENT EVENT

On April 21, 2020, we sold a building in Pasadena, California for $16.1 million, which is included in "assets held for sale" on our consolidated balance sheet.

On May 6, 2020, we entered into a $400.0 million unsecured term loan that matures on May 6, 2021, with one twelve month extension at our option. The loan bears interest at LIBOR plus 135 basis points based on our current credit rating. The net proceeds were used to reduce amounts outstanding on our $1.0 billion revolving credit facility.

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, ~~2016~~2019 filed with the Securities and Exchange Commission (the “SEC”) on February ~~13, 2017~~10, 2020.

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. When we refer to forward-looking statements or information, sometimes we use words such as “may,” “will,” “could,” “should,” “plans,” “intends,” “expects,” “believes,” “estimates,” “anticipates” and “continues.” Forward-looking statements are not historical facts or guarantees of future performance and involve certain known and unknown risks, uncertainties, and other factors, many of which are outside our control, that could cause actual results to differ materially from those we describe.

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. Except as may be required by law, we make no promise to update any of the forward-looking statements as a result of new information, future events or otherwise. 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, ~~2016~~2019 and under Part II, Item 1A in this Quarterly Report on Form 10-Q, before making any investments in us.

Overview

We are an equity real estate investment trust (“REIT”) specializing in the ownership, management, and redevelopment of high quality retail and mixed-use properties located primarily in densely populated and affluent communities in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida. As of ~~September 30, 2017,~~March 31, 2020, 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 24.1 million square feet. In total, the real estate projects were ~~94.9%~~93.6% leased and ~~93.8%~~91.5% occupied at ~~September 30, 2017.~~March 31, 2020.

~~2017 Significant~~

Impacts of COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of novel coronavirus disease (“COVID-19”) as a pandemic. Our Board of Trustees, as part of its risk oversight function, is regularly coordinating with management to assess the effects of the pandemic on our business and to determine appropriate courses of action to maintain the health and safety of our personnel, to strengthen our financial position and to adapt our business as appropriate. In response to the pandemic, we have taken a number of specific actions so far:

On March 16, 2020, we transitioned our work force to work remotely, canceled all non-essential business travel and have canceled company events, or are holding them remotely.

In March 2020, to strengthen our financial position and maximize our liquidity, we borrowed $990.0 million under our revolving credit facility representing a draw-down of almost the entirety of our $1.0 billion revolving credit facility. As of March 31, 2020, the outstanding balance under our revolving credit facility was $990.0 million, and our outstanding cash and cash equivalent balance was $994.7 million.

We have paused construction activity at many of our construction projects including, without limitation, ongoing construction at Assembly Row, Santana Row, and other redevelopments and smaller projects. Construction activities continue at Pike & Rose and other redevelopments and smaller projects although at a slower pace as we observe COVID-19 safety protocols at all sites.

The extent of the effects of COVID-19 on our business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty. See Item 1A. Risk Factors. However, we believe the actions we are taking will help minimize interruptions to our operations and will put us in the best position to participate in the recovery when the time comes. Management and our Board of Trustees will continue to actively monitor the effects of the pandemic, including governmental directives in the jurisdictions in which we operate and the recommendations of public health authorities, and will, as needed, take further measures to adapt our business in the best interests of our shareholders and personnel.

Business Continuity

We were able to transition all but a limited number of essential employees to remote work and do not anticipate any adverse impact on our ability to continue to operate our business. Transitioning to a largely remote workforce has not had any material adverse impact on our financial reporting systems, our internal controls or disclosure controls and procedures. Currently, we have a limited number of employees coming into offices as needed and have property employees visiting properties only as necessary to ensure that the properties with essential businesses that are open and operating are able to conduct business and serve their communities. At this time, we have not laid off, furloughed, or terminated any employee in response to COVID-19, nor have we modified the compensation of any employee. The Compensation Committee of our Board of Trustees may reevaluate the performance goals and other aspects of the compensation arrangements of our executive officers later in 2020 as more information about the effects of COVID-19 become known.

2020 Property Acquisitions ~~& Dispositions~~and Disposition

On ~~April 4, 2017~~ ~~and~~ ~~June 28, 2017~~,February 12, 2020, we acquired two buildings totaling 12,000 square feet in Hoboken, New Jersey for $14.3 million, including the ~~sale transactions at our~~ ~~Assembly Row property~~assumption of $8.9 million of mortgage debt. This acquisition is in ~~Somerville, Massachusetts~~ ~~related~~addition to the ~~purchase options on our Partners HealthCare~~37 buildings previously acquired, and ~~AvalonBay ground lease parcels, respectively, closed.~~ ~~The total sales price was $53.3 million, which resulted in a gain of $15.4 million.~~

~~On May 19, 2017, we acquired the fee interest in a 71,000 square foot, mixed-use property located in Berkeley, California based on a gross value of $23.9 million. The acquisition~~ was completed through ~~a newly~~the joint venture that was formed ~~entity~~in 2019, for which we own a 90% ~~controlling~~ interest. ~~Approximately $0.8~~Less than $0.1 million and ~~$0.3~~approximately $3.3 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively. ~~Additionally, approximately $2.4 million was allocated to noncontrolling interests.~~

On ~~August 2, 2017,~~April 21, 2020, we ~~acquired an approximately 90% interest~~sold a building in ~~a joint venture that owns six shopping centers in Los Angeles County,~~Pasadena, California ~~based on a gross value of $357~~for $16.1 million, including the assumption of $79.4 million of mortgage debt. Approximately $7.8 million of assets acquired were allocated to lease intangibles and included within other assets. Approximately $36.2 million of net assets acquired were allocated to lease liabilities andwhich is included in other liabilities. Additionally, approximately $30.6 million was allocated to noncontrolling interests. That joint venture also acquired a 24.5% interest in La Alameda, a shopping center in Walnut Park, California"assets held for ~~$19.8 million. The property has $41 million of mortgage debt, of which the joint venture's share is approximately $10 million. Additional information~~sale" on ~~the properties is listed below:~~our consolidated balance sheet.



~~Property~~	~~City/State~~	~~GLA~~
		~~(in square feet)~~
~~Azalea~~	~~South Gate, CA~~	~~222,000~~
~~Bell Gardens~~	~~Bell Gardens, CA~~	~~330,000~~
~~La Alameda~~	~~Walnut Park, CA~~	~~245,000~~
~~Olivo at Mission Hills (1)~~	~~Mission Hills, CA~~	~~155,000~~
~~Plaza Del Sol~~	~~South El Monte, CA~~	~~48,000~~
~~Plaza Pacoima~~	~~Pacoima, CA~~	~~204,000~~
~~Sylmar Towne Center~~	~~Sylmar, CA~~	~~148,000~~
		~~1,352,000~~

~~(1) Property is currently being redeveloped. GLA reflects approximate square footage once the property is open and operating.~~

~~On August 25, 2017, we sold our property at 150 Post Street in San Francisco, California for a sales price of $69.3 million, resulting in a gain of $45.2 million.~~

~~On September 25, 2017, we sold our North Lake Commons property in Lake Zurich, Illinois for a sales price of $15.6 million, resulting in a gain of $4.9 million.~~

For the three and nine months ended September 30, 2017 we recognized a $0.6 million and $3.9 million gain, respectively, net of $0.3 million and $2.0 million of income taxes, respectively, related to the sale of condominiums at our Assembly Row property based on the percentage-of-completion method. In connection with recording the gain, we recognized a receivable of $59.1 million. The closing of the Assembly Row condominium sales is expected to commence in 2018.~~As of September 30, 2017, no gain has been recognized for contracted condominium sales at Pike & Rose, as not all of the criteria necessary for profit recognition have been met.~~

~~2017 Significant~~2020 Debt and Equity Transactions

On June 23, 2017, we issued $400.0 million aggregate principal amount of fixed rate senior unsecured notes in two separate series. We issued $300.0 million of 3.25% notes that mature on July 15, 2027, were offered at 99.083% of the principal amount, with a yield to maturity of 3.358%. Additionally, we issued $100.0 million of 4.50% notes due December 1, 2044. The 4.50% notes were offered at 105.760% of the principal amount, with a yield to maturity of 4.143%, and have the same terms and are of the same series as our senior notes first issued on November 14, 2014. Our net proceeds from the June note offering after net issuance premium, underwriting fees and other costs was approximately $399.5 million.

In connection with the ~~acquisition of six shopping centers~~two buildings we acquired in ~~Los Angeles County, California~~Hoboken, New Jersey on ~~August 2, 2017 (as further discussed above),~~February 12, 2020, we assumed two mortgage loans with a net face amount of ~~$79.4~~$8.9 million and a fair value of ~~$80.1~~$9.0 million. The mortgage loans ~~are secured by~~bears interest at 4.00% and mature on July 27, 2027.

In March 2020, in order to strengthen our financial position and balance sheet, to maximize our liquidity, and to provide maximum financial flexibility to continue our business initiatives as the ~~individual properties with~~effects of COVID-19 continue to evolve, we borrowed

$990.0 million under our revolving credit facility, representing a draw-down of almost the ~~following contractual terms:~~

On ~~August 31, 2017,~~May 6, 2020, we ~~refinanced the $41.8~~entered into a $400.0 million ~~mortgage~~unsecured term loan that matures on May 6, 2021, with one twelve month extension at ~~par, on~~our option. The ~~Grove at Shrewsbury (East) at a face amount of $43.6 million. The new mortgage~~ loan bears interest at ~~3.77% and matures~~LIBOR plus 135 basis points, based on ~~September 1, 2027.~~our current credit rating. The net proceeds were used to reduce amounts outstanding on our $1.0 billion revolving credit facility.

We have an ~~at the market~~at-the-market (“ATM”) equity program in which we may from time to time offer and sell common shares having an

aggregate offering price of up to $400.0 million. We intend to use the net proceeds to fund potential acquisition opportunities,

fund our development and redevelopment pipeline, repay amounts outstanding under our revolving credit facility and/or for

general corporate purposes. For the three months ended September 30, 2017, we issued 226,739 common shares at a weighted average price per share of $131.00 for net cash proceeds of $29.3 million and paid $0.3 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. For the nine months ended September 30,

2017, we issued 325,397 common shares at a weighted average price per share of $133.09 for net cash proceeds of $42.7 million and paid $0.4 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. As of ~~September 30, 2017,~~March 31, 2020, we had the capacity to issue up to ~~$327.6~~$128.3 million in common shares under our ATM equity program.

On September 29, 2017, we issued 6,000,000 Depository Shares, each representing 1/1000th interest in a 5.0% Series C Cumulative Redeemable Preferred Share, par value $0.01 per share, ("Series C Preferred Shares") at the liquidation preference of $25.00 per depository share (or $25,000 per Series C Preferred share) in an underwritten public offering. The Series C Preferred Shares accrue dividends at a rate of 5.0% of the $25,000 liquidation preference per year and are redeemable at our option on or after September 29, 2022. Additionally, they are not convertible and holders of these shares generally have no voting rights, unless we fail to pay dividends for six or more quarters. The net proceeds after underwriting fees and other costs were approximately $145.0 million.

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 ~~$320~~$114 million and $6$3 million, respectively, for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, and ~~$289~~$58 million and $7$2 million, respectively, for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. We capitalized external and internal costs related to other property improvements of ~~$47~~$13 million and $2$1 million, respectively, for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, and ~~$39~~$6 million and $2$1 million for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. We capitalized external and internal costs related to leasing activities of $6$3 million and $5$1 million, respectively, for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, and $7$8 million and $4less than $1 million, respectively, for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $6$3 million, $2$1 million, and ~~$5 million, for the nine months ended September 30, 2017, and $6 million, $2 million, and $4~~$1 million, respectively, for the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2020 and $2 million, $1 million, and less than $1 million, respectively for the three months ended March 31, 2019. Total capitalized costs were ~~$386~~$134 million and ~~$348~~$76 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively.

~~Recently Issued and~~ Recently Adopted Accounting Pronouncements

See Note 2 to the consolidated financial statements.

Outlook

~~We seek~~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 ~~same-center~~comparable property portfolio,

growth in our portfolio from property development and redevelopments, and

expansion of our portfolio through property acquisitions.

~~Our same-center growth~~

While the COVID-19 pandemic is ~~primarily driven by increases~~impacting us in ~~rental rates~~the short-term, our long-term focus has not changed. See our 10-K filed on ~~new leases and lease renewals, changes in portfolio occupancy, and the redevelopment of those assets. Over the long-term, the infill nature and strong demographics~~February 13, 2020, for discussion of our ~~properties provide~~our long-term strategies.

The actions taken by federal, state and local governments to mitigate the spread of COVID-19 by ordering closure of non-essential businesses and ordering residents to generally stay at home have resulted in many of our tenants temporarily or even permanently closing their businesses, and/or expressing concerns about their ability to pay rent. These economic hardships have adversely impacted our business, and we expect them to have a ~~strategic advantage allowing us~~negative effect on our financial results. We expect such negative effects to ~~maintain relatively high occupancy and increase rental rates. We~~be considerably higher during the quarter ending June 30, 2020 than they were during the quarter ended March 31, 2020. As of April 30, 2020, approximately 11.3 million square feet of our tenants were closed as a result of governmental orders. With very few exceptions, our leases require tenants to continue to ~~see strong levels~~pay rent even while closed as a result of ~~interest from prospective tenants~~the pandemic. Most rents for ~~our retail spaces; however,~~March 2020 were paid prior to the time ~~it takes~~the closures were announced; however, many tenants did not pay rents and other charges due in April. We are currently working with many of our smaller tenants to ~~complete new lease deals is longer, as tenants have become more selective and more deliberate in their decision-making process.We have also experienced extended periods~~defer payment of ~~time~~rent for some ~~government agencies~~or all of April, May, and June to ~~process permits~~later in 2020, and ~~inspections further delaying~~in many cases into 2021. We are expecting that our rent ~~commencement on newly leased spaces. Additionally, we have seen an overall decrease in the number of tenants available~~collections will continue to ~~fill anchor spaces,~~be significantly below our tenants’ contractual rent obligations for so long as governmental orders require non-essential businesses to remain closed and have seen in 2017, an uptick in the number of retail tenants closing early and/or filing for bankruptcy. We believe the locations of our centers and diverse tenant base partially mitigates any potential negative changes in the economic environment. However, any significant reduction in our tenants' abilitiesresidents to ~~pay base rent, percentage rent or other charges~~stay at home, which will adversely ~~affect~~impact our ~~financial condition and~~ results of operations. WeThe extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted. Depending upon the duration of tenant closures and the overall economic downturn resulting from COVID-19, we may find that even deferred rents are difficult to collect, and we may experience higher vacancies. While the duration and severity of the economic impact resulting from COVID-19 is unknown, we seek to ~~maintain~~position the Trust to participate in any resulting economic recovery.

While construction has slowed or stopped due to governmental mandates as a ~~mix~~result of ~~strong national, regional,~~COVID-19, we continue to have several development projects in process, or being delivered as follows:


•	In the 1^st quarter of 2020, we delivered the fully leased eight story, 301,000 square foot office building at Santana Row.

The first phase of construction on the 12 acres of land that we control across from Santana Row includes an eight story 376,000 square foot office building, with over 1,700 parking spaces. The building is expected to cost between $250 million and ~~local retailers.~~ $270 million with openings beginning in 2022.

Phase III of Assembly Row includes 277,000 square feet of office space (of which, 150,000 square feet is pre-leased), 56,000 square feet of retail space, 500 residential units, and over 800 additional parking spaces. The expected costs for Phase III are between $465 million and $485 million and is projected to open beginning in 2021.

At ~~September 30, 2017, no single tenant accounted for more than 2.9%~~Pike & Rose, we are continuing construction on a 212,000 square foot office building (which includes 4,000 square feet of ~~annualized base rent.~~ground floor retail space), and will include over 600 additional parking spaces. The building is expected to cost between $128 million and $135 million and is projected to open beginning in 2020.

Our properties are located primarily in densely populated and/or affluent areas with high barriers to entry which allow us to take advantage of redevelopment opportunities that enhance our operating performance through renovation, expansion, reconfiguration, and/or retenanting. We evaluate our properties on an ongoing basis to identify these types of opportunities. WeThroughout the portfolio, we currently have redevelopment projects underway with a projected total cost of approximately ~~$242~~$315 million that we expect to stabilize inover the next several years.

~~We continue~~The above includes our ~~ongoing redevelopment efforts at Santana Row~~best estimates based on information currently known, however, the completion of construction, final costs, and ~~are proceeding with an eight story 284,000 square foot office building which will include 29,000 square feet~~the timing of retail space and 1,300 parking spaces. The building is expected to cost between $205 million and $215 million and to deliver in 2019. After current phases, we have approximately 4 acres remaining for further redevelopment and entitlements in place for an additional 395 residential units and 321,000 square feet of commercial space. Additionally, we control 12 acres of land adjacent to Santana Row.

We continue to invest in our long-term multi-phased mixed-use development projects at Assembly Row in Somerville, Massachusetts and Pike & Rose in North Bethesda, Maryland which we expect to be involved in over the coming years.

~~Construction of Phase II of Assembly Row which will include 161,000 square feet of retail space, a 158 room boutique hotel and 447 residential units is underway. The hotel~~openings will be ~~owned~~dependent upon the duration of governmental restrictions and ~~operated by a joint venture in which we are a partner. Approximately 36,000 square feet of retail space in Phase II has opened in 2017,~~the duration and in September, the first tenants moved into the new residential building. Total expected costs range from $280 million to $295 million and delivery is expected through 2017 and 2018. Phase II will also include 122 for-sale condominium units with an expected total cost of $74 million to $79 million. Additionally, as partseverity of the ~~second phase, we entered into a ground lease agreement with Partners HealthCare to bring 741,500 square feet~~economic impacts of ~~office space to Assembly Row. The ground lease agreement included a purchase option, which was exercised and the related sale closed on April 4, 2017.~~

Construction of Phase II of Pike & Rose is also underway. Phase II will include approximately 216,000 square feet of retail space, a 177 room boutique hotel and 272 residential units. Approximately 102,000 square feet of retail space in Phase II has opened in 2017, and in August, the first tenants moved into the new residential building. Total expected costs range from $200 million to $207 million and delivery is expected through 2017 and 2018. The hotel will be owned and operated by a joint venture in which we are a partner. Phase II will also include 99 for-sale condominium units with an expected cost of $53 million to $58 million.

~~Including costs incurred in the first nine months of 2017, we expect to invest between $270 million and $300 million at Assembly Row and Pike & Rose in 2017.~~COVID-19.

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 in our primary markets 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 downREIT units as well as through new or assumed mortgages and property sales.

At ~~September 30, 2017,~~March 31, 2020, the leasable square feet in our properties was ~~94.9%~~93.6% leased and ~~93.8%~~91.5% 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 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~~first quarter of ~~2017,~~2020, we signed leases for a total of ~~424,000~~491,000 square feet of retail space including ~~400,000~~466,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of ~~14%~~5% on a cash ~~basis and 27% on a straight-line~~ basis. New leases for comparable spaces were signed for ~~165,000 square feet at an average rental increase of 23% on a cash basis and 36% on a straight-line basis. Renewals for comparable spaces were signed for 234,000~~151,000 square feet at an average rental increase of 8% on a cash ~~basis and 20%~~basis. Renewals for comparable spaces were signed for 315,000 square feet at an average rental increase of 3% on a ~~straight-line~~cash basis. Tenant improvements and incentives for comparable spaces were ~~$51.81~~$31.37 per square foot, of which, $88.61 per square foot was for new leases and ~~$7.89~~$3.93 per square foot was for renewals for the three months ended ~~September 30, 2017.~~

For the nine months ended September 30, 2017, we signed leases for a total of 1,448,000 square feet of retail space including 1,321,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of

13% on a cash basis and 26% on a straight-line basis. New leases for comparable spaces were signed for 615,000 square feet at an average rental increase of 19% on a cash basis and 33% on a straight-line basis. Renewals for comparable spaces were signed for 706,000 square feet at an average rental increase of 9% on a cash basis and 21% on a straight-line basis. Tenant improvements and incentives for comparable spaces were $62.57 per square foot for new leases and $14.33 per square foot for renewals for the nine months ended September 30, 2017.March 31, 2020.

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 average rent for expiring leases and new leases is determined by including minimum rent and percentage rent paid on the expiring lease and minimum rent and in some instances, projections of first lease year 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. 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. Tenant improvements and incentives include the total dollars committed for the improvement (fit out) of a space as it relates to a specific lease and, except for redevelopments, may also include base building costs (i.e. expansion, escalators or new entrances) which are required to make the space leasable. Incentives include amounts paid to tenants as inducement to sign a lease that do not represent building improvements. Costs related to redevelopments requires judgment by management in determining what reflects base building costs and thus, is not included in the "tenant improvements and incentives" amount.

The leases signed in ~~2017~~2020 generally become effective over the following two years though some may not become effective until ~~2020~~2023 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, these increases do provide information about the tenant/landlord relationship and the potential increase we may achieve in rental income over time.

Historically, we have executed comparable space leases for ~~1.2~~1.3 to ~~1.5~~1.9 million square feet of retail space each year, ~~and~~however, we expect that volume and potentially rental rate increases for ~~2017 will~~2020 to be in line with, or slightly above, our historical averages with overall positive increases in rental income. However, changes in rental income associated with individual signed leases on comparable spaces may be positive or negative, and we can provide no assurance thatnegatively impacted by the ~~rents on new leases will continue to increase at the above disclosed levels, if at all.~~COVID-19 pandemic.

~~Same-Center~~Comparable Properties

Throughout this section, we have provided certain information on a ~~“same-center”~~“comparable property” basis. Information provided on a ~~same-center~~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 ~~which~~ significant redevelopment ~~or expansion occurred during either of the periods being compared.~~and investment. For the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020, all or a portion of ~~83 and 78~~97 properties ~~respectively,~~ were considered ~~same-center~~comparable properties and ~~16 and 15~~eight properties ~~respectively,~~ were considered ~~redevelopment or expansion.~~non-comparable properties. For the ~~nine~~three months ended ~~September 30, 2017, one property~~March 31, 2020, two properties and ~~one portion~~two portions of ~~a property~~properties were moved from ~~redevelopment~~non-comparable properties to ~~same-center~~comparable properties, one property was moved from comparable properties to non-comparable properties, and ~~two~~one property was moved from acquisitions to non-comparable properties, ~~were removed from same-center as they were sold in the third quarter of 2017,~~ compared to the designations ~~as of~~for the year ended December 31, ~~2016.~~2019. While there is judgment surrounding changes in designations, we typically move ~~redevelopment~~non-comparable properties to ~~same-center~~comparable properties once they have stabilized, which is typically considered ~~95%~~90% physical occupancy or when the growth expected from the redevelopment has been included in the comparable periods. We typically remove properties from ~~same center~~comparable properties when the ~~redevelopment~~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 ~~same-center~~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 ~~or expansion.~~and investment.

RESULTS OF OPERATIONS - THREE MONTHS ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2020 AND ~~2016~~

2019


							Change											Change
	2017			2016			Dollars			%		2020			2019			Dollars			%
	(Dollar amounts in thousands)											(Dollar amounts in thousands)
Rental income	$	212,048		$	197,469		$	14,579		7.4	%	$	230,798		$	231,492		$	(694	)	(0.3	)%
Other property income	5,171			2,759			2,412			87.4	%
Mortgage interest income	734			929			(195		)	(21.0	)%	759			735			24			3.3	%
Total property revenue	217,953			201,157			16,796			8.3	%	231,557			232,227			(670		)	(0.3	)%
Rental expenses	41,250			38,588			2,662			6.9	%	44,312			44,260			52			0.1	%
Real estate taxes	27,492			24,973			2,519			10.1	%	29,064			27,687			1,377			5.0	%
Total property expenses	68,742			63,561			5,181			8.2	%	73,376			71,947			1,429			2.0	%
Property operating income (1)	149,211			137,596			11,615			8.4	%	158,181			160,280			(2,099		)	(1.3	)%
General and administrative expense	(9,103		)	(8,232		)	(871		)	10.6	%	(10,251		)	(9,565		)	(686		)	7.2	%
Depreciation and amortization	(55,611		)	(48,903		)	(6,708		)	13.7	%	(62,188		)	(59,622		)	(2,566		)	4.3	%
Operating Income	84,497			80,461			4,036			5.0	%
Operating income												85,742			91,093			(5,351		)	(5.9	)%
Other interest income	79			105			(26		)	(24.8	)%	308			177			131			74.0	%
Interest expense	(26,287		)	(24,313		)	(1,974		)	8.1	%	(28,445		)	(28,033		)	(412		)	1.5	%
Loss from real estate partnerships	(182		)	—			(182		)	(100.0	)%
Loss from partnerships												(1,164		)	(1,434		)	270			(18.8	)%
Total other, net	(26,390		)	(24,208		)	(2,182		)	9.0	%	(29,301		)	(29,290		)	(11		)	—	%
Income from continuing operations	58,107			56,253			1,854			3.3	%
Gain on sale of real estate, net	50,775			4,945			45,830			926.8	%
Net income	108,882			61,198			47,684			77.9	%	56,441			61,803			(5,362		)	(8.7	)%
Net income attributable to noncontrolling interests	(2,105		)	(2,221		)	116			(5.2	)%	(1,678		)	(1,659		)	(19		)	1.1	%
Net income attributable to the Trust	$	106,777		$	58,977		$	47,800		81.0	%	$	54,763		$	60,144		$	(5,381	)	(8.9	)%

(1)

Property operating income is a non-GAAP measure that consists of rental ~~income, other property~~ 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.

Property Revenues

Total property revenue ~~increased $16.8~~decreased $0.7 million, or ~~8.3%~~0.3%, to ~~$218.0~~$231.6 million in the three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$201.2~~$232.2 million in the three months ended ~~September 30, 2016.~~March 31, 2019. The percentage occupied at our shopping centers was ~~93.8%~~91.5% at ~~September 30, 2017~~March 31, 2020 compared to ~~93.1%~~93.0% at ~~September 30, 2016.~~March 31, 2019. 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. Rental income ~~increased $14.6~~decreased $0.7 million, or ~~7.4%~~0.3%, to ~~$212.0~~$230.8 million in the three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$197.5~~$231.5 million in the three months ended ~~September 30, 2016~~March 31, 2019 due primarily to the following:

~~an increase~~a decrease of ~~$7.4~~$4.6 million from ~~acquisitions,~~comparable properties due primarily ~~related~~ to higher to collectibility adjustments of $2.7 million which is primarily the ~~six shopping centers acquired in Los Angeles County, California, Riverpoint Center,~~result of COVID-19 impacts, lower lease termination fees of $2.7 million, lower recoveries of $2.0 million primarily the result of lower snow removal expense, and ~~Hastings Ranch Plaza,~~lower average occupancy of approximately $1.9 million, partially offset by higher rental rates of approximately $4.6 million and,

a decrease of $3.6 million from our 2019 property sales,

partially offset by,

an increase of ~~$3.7~~$5.0 million ~~at redevelopment~~from acquisitions of Hoboken during the second half of 2019 and early 2020, Georgetowne Shopping Center in November 2019, and Fairfax Junction in February 2019 and January 2020 and,

an increase of $2.4 million from non-comparable properties due primarily to the ~~opening~~openings of our new office building at Santana Row in ~~late 2016,~~early 2020 and Phase II at Assembly Row and Pike & Rose, and the ~~lease-up~~opening of ~~two~~one of our retail redevelopments, partially offset by ~~lower~~redevelopment related occupancy decreases at ~~two of our retail properties in Florida in the beginning stages of redevelopment,~~

~~an increase of $2.8 million at same-center properties due primarily to higher rental rates of approximately $2.3 million, and~~

an increase of $0.9 million from Assembly Row and Pike & Rose due primarily to the lease-up of residential units at Pike & Rose and the opening of the second phase of retail at both properties during 2017, partially offset by lower income from ground lease parcels which were sold in 2017.

~~Other Property Income~~

~~Other property income increased $2.4 million or 87.4% to $5.2 million in the~~ three months ended September 30, 2017 compared to $2.8 million in the three months ended September 30, 2016. Included in other property income are items which, although recurring, inherently tend to fluctuate more than rental income from period to period, such as lease termination fees. This increase is primarily related to higher lease termination fees.

~~Mortgage Interest Income~~

Mortgage interest income decreased $0.2 million, or 21.0%, to $0.7 million in the three months ended September 30, 2017 compared to $0.9 million in the three months ended September 30, 2016. This decrease is related to a mortgage note receivable that was repaid in September 2016.properties.

Property Expenses

Total property expenses increased ~~$5.2~~$1.4 million, or ~~8.2%~~2.0%, to ~~$68.7~~$73.4 million in the three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$63.6~~$71.9 million in the three months ended ~~September 30, 2016.~~March 31, 2019. Changes in the components of property expenses are discussed below.

Rental Expenses

Rental expenses ~~increased $2.7~~were $44.3 million ~~or 6.9%, to $41.3 million in~~for both the three months ended ~~September 30, 2017 compared to $38.6 million in~~March 31, 2020 and 2019, with the ~~three months ended September 30, 2016. This~~minimal increase ~~is primarily due to~~driven by the following:

an increase of ~~$1.5~~$0.9 million from acquisitions ~~primarily related to six shopping centers acquired~~of Hoboken during the second half of 2019 and early 2020, Georgetowne Shopping Center in ~~Los Angeles County, California, Hastings Ranch Plaza,~~November 2019, and ~~Riverpoint Center,~~

~~an increase of $0.8 million from Assembly Row~~Fairfax Junction in February 2019 and ~~Pike & Rose primarily related to Phase II of both properties,~~January 2020, and

an increase of $0.5 million from ~~redevelopment and same-center properties primarily due to higher bad debt expense.~~

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income plus other property income decreased to 19.0% in the three months ended September 30, 2017 from 19.3% in the three months ended ~~September 30, 2016~~.

~~Real Estate Taxes~~

Real estate tax expense increased $2.5 million, or 10.1%, to $27.5 million in the three months ended September 30, 2017 compared to $25.0 million in the three months ended September 30, 2016 due primarily to

~~an increase of $1.5 million from acquisitions, primarily related to our acquisition of six shopping centers in Los Angeles County, California, Riverpoint Center, and Hastings Ranch Plaza, and~~

~~an increase of $1.2 million at redevelopment and same-center~~non-comparable properties due primarily ~~to higher assessments and our new office building at Santana Row.~~

~~Property Operating Income~~

Property operating income increased $11.6 million, or 8.4%, to $149.2 million in the three months ended September 30, 2017 compared to $137.6 million in the three months ended September 30, 2016. This increase is primarily due to growth in earnings at same-center and redevelopment properties, our acquisition of six shopping centers in Los Angeles County, California in August 2017 and Riverpoint Center in March 2017, and Assembly Row and Pike & Rose.

~~Other Operating Expenses~~

~~General and Administrative~~

~~General and administrative expense increased~~ ~~$0.9 million, or~~ ~~10.6%, to~~ ~~$9.1 million~~ ~~in the three months ended September 30, 2017 from $8.2 million in the three months ended September 30, 2016. This increase is primarily due to higher personnel costs.~~

~~Depreciation and Amortization~~

Depreciation and amortization expense increased $6.7 million, or 13.7%, to $55.6 million in the three months ended September 30, 2017 from $48.9 million in the three months ended September 30, 2016. This increase is primarily due to 2017 acquisitions (primarily the acquisition of six shopping centers in Los Angeles County, California and Riverpoint Center),

~~redevelopment properties (largely the new office building at Santana Row), same-center properties, and Assembly Row and Pike & Rose.~~

~~Operating Income~~

Operating income increased $4.0 million, or 5.0%, to $84.5 million in the three months ended September 30, 2017 compared to $80.5 million in the three months ended September 30, 2016. This increase is primarily due to growth in earnings at same-center and redevelopment properties, 2017 acquisitions, and earnings growth at Assembly Row and Pike & Rose.

~~Other~~

~~Interest Expense~~

Interest expense increased $2.0 million, or 8.1%, to $26.3 million in the three months ended September 30, 2017 compared to $24.3 million in the three months ended September 30, 2016. This increase is due primarily to the following:

an increase of $6.0 million due to higher borrowings primarily attributable to the $300 million 3.25% senior notes and the reopening of $100 million on the 4.50% senior notes, both issued in June 2017 and higher weighted average borrowings on our revolving credit facility,

~~partially offset by~~

~~an increase of $2.2 million in capitalized interest, and~~

~~a decrease of $1.8 million due to a lower overall weighted average borrowing rate.~~

Gross interest costs were $33.2 million and $29.0 million in the three months ended September 30, 2017 and 2016, respectively. Capitalized interest was $6.9 million and $4.7 million in the three months ended September 30, 2017 and 2016, respectively.

~~Gain on Sale of Real Estate, Net~~

~~The $50.8 million gain on sale of real estate, net for the three months ended September 30, 2017 is primarily due to the following:~~

~~$45.2 million gain related to the sale of our 150 Post Street property in August 2017,~~

~~$4.9 million gain related to the sale of our North Lake Commons property in September 2017, and~~

~~$0.6 million net percentage-of-completion gain, related to condominiums under binding contract at our Assembly Row property.~~

The $4.9 million gain for the three months ended September 30, 2016 is due to the reversal of the unused portion of the warranty reserve for condominium units at Santana Row, as the statutorily mandated latent construction defect period ended in third quarter 2016.

~~RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016~~

Change
2017 2016 Dollars %
(Dollar amounts in thousands)
Rental income $ 620,741
$ 585,712
$ 35,029
6.0 %
Other property income 10,429
8,559
1,870
21.8 %
Mortgage interest income 2,221
3,211
(990 ) (30.8 )%
Total property revenue 633,391
597,482
35,909
6.0 %
Rental expenses 119,487
118,385
1,102
0.9 %
Real estate taxes 79,104
71,164
7,940
11.2 %
Total property expenses 198,591
189,549
9,042
4.8 %
Property operating income (1) 434,800
407,933
26,867
6.6 %
General and administrative expense (26,013 ) (25,278 ) (735 ) 2.9 %
Depreciation and amortization (159,656 ) (145,137 ) (14,519 ) 10.0 %
Operating Income 249,131
237,518
11,613
4.9 %
Other interest income 253
285
(32 ) (11.2 )%
Interest expense (73,952 ) (71,143 ) (2,809 ) 3.9 %
(Loss) income from real estate partnerships (296 ) 41
(337 ) (822.0 )%
Total other, net (73,995 ) (70,817 ) (3,178 ) 4.5 %
Income from continuing operations 175,136
166,701
8,435
5.1 %
Gain on sale of real estate and change in control of interests, net 69,949
32,458
37,491
115.5 %
Net income 245,085
199,159
45,926
23.1 %
Net income attributable to noncontrolling interests (5,827 ) (7,286 ) 1,459
(20.0 )%
Net income attributable to the Trust $ 239,258
$ 191,873
$ 47,385
24.7 %

~~(1)~~

Property operating income is a non-GAAP measure that consists of rental income, other property 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.

~~Property Revenues~~

Total property revenue increased $35.9 million, or 6.0%, to $633.4 million in the nine months ended September 30, 2017 compared to $597.5 million in the nine months ended September 30, 2016. The percentage occupied at our shopping centers was 93.8% at September 30, 2017 compared to 93.1% at September 30, 2016. 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. Rental income increased $35.0 million, or 6.0%, to $620.7 million in the nine months ended September 30, 2017 compared to $585.7 million in the nine months ended September 30, 2016 due primarily to the following:

~~an increase of $13.1 million at redevelopment properties due~~ to the opening of our new office building at Santana Row in ~~late 2016, the lease-up~~early 2020,

which were offset by,

a decrease of three of our retail redevelopments, and the lease-up of the new residential building at Congressional Plaza throughout 2016, partially offset by lower occupancy at two of our retail properties in Florida in the beginning stages of redevelopment,

~~an increase of $11.2~~$1.2 million from ~~acquisitions, primarily related to the six shopping centers acquired in Los Angeles County, California, Riverpoint Center, and Hastings Ranch Plaza.~~

~~an increase of $4.1 million at same-center~~comparable properties due primarily to ~~higher rental rates of approximately $4.5 million and higher recoveries of $0.7 million primarily the net result of higher real estate tax assessments partially offset by~~ lower snow removal expense partially offset by ~~lower average occupancy of approximately $0.9 million,~~

~~an increase of $4.0 million from Assembly Row~~higher repairs and ~~Pike & Rose due primarily to the lease-up of residential units~~maintenance costs and ~~the opening of the second phase of retail at Pike & Rose during third quarter 2017,~~higher non-recoverable operating expenses, and

~~an increase of $2.4 million from the acquisition of six previously unconsolidated Clarion joint venture properties in January 2016.~~

~~Other Property Income~~

Other property income increased $1.9 million, or 21.8%, to $10.4 million in the nine months ended September 30, 2017 compared to $8.6 million in the nine months ended September 30, 2016. Included in other property income are items which, although recurring, inherently tend to fluctuate more than rental income from period to period, such as lease termination fees. This increase is primarily related to higher lease termination fees.

~~Mortgage Interest Income~~

Mortgage interest income decreased $1.0 million, or 30.8%, to $2.2 million in the nine months ended September 30, 2017 compared to $3.2 million in the nine months ended September 30, 2016. This decrease is related to a mortgage note receivable that was repaid in 2016.

~~Property Expenses~~

Total property expenses increased $9.0 million, or 4.8%, to $198.6 million in the nine months ended September 30, 2017 compared to $189.5 million in the nine months ended September 30, 2016. Changes in the components of property expenses are discussed below.

~~Rental Expenses~~

Rental expenses increased $1.1 million, or 0.9%, to $119.5 million in the nine months ended September 30, 2017 compared to $118.4 million in the nine months ended September 30, 2016. This increase is primarily due to the following:

~~an increase of $2.4 million from acquisitions, primarily related to our acquisition of six shopping centers in Los Angeles County, California, Hastings Ranch Plaza, and Riverpoint Center, and~~

~~an increase of $0.4 million from Assembly Row and Pike & Rose,~~

~~partially offset by~~

a decrease of ~~$1.6~~$0.5 million ~~at same-center and redevelopment properties primarily due to lower snow removal costs.~~from our 2019 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 ~~plus other property income decreased~~increased to ~~18.9%~~19.2% in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 from ~~19.9%~~19.1% in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019.

Real Estate Taxes

Real estate tax expense increased ~~$7.9~~$1.4 million, or ~~11.2%~~5.0%, to ~~$79.1~~$29.1 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared

to ~~$71.2~~$27.7 million in the ~~nine~~three months ended ~~September 30, 2016~~March 31, 2019. This increase is primarily due ~~primarily to:~~to the following:

an increase of ~~$3.4~~$0.8 million ~~at same-center~~from acquisitions of Hoboken during the second half of 2019 and early 2020, Georgetowne Shopping Center in November 2019, and Fairfax Junction in February 2019 and January 2020,

an increase of $0.4 million from comparable properties due primarily to higher assessments, and

an increase of ~~$2.3~~$0.4 million from ~~acquisitions,~~non-comparable properties due primarily ~~related~~ to ~~Riverpoint Center, six shopping centers in Los Angeles County, California, and Hastings Ranch Plaza,~~

~~an increase~~the opening of ~~$1.5 million from redevelopment properties, primarily related to~~ our new office building at Santana Row ~~and~~in early 2020,

~~an increase~~partially offset by,

a decrease of ~~$0.5~~$0.3 million from ~~Assembly Row and Pike & Rose.~~our 2019 property sales.

Property Operating Income

Property operating income ~~increased $26.9~~decreased $2.1 million, or ~~6.6%~~1.3%, to ~~$434.8~~$158.2 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$407.9~~$160.3 million in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. This ~~increase~~decrease is due primarily ~~due~~ to ~~growth in earnings at redevelopment and same-center properties, 2017 acquisitions, Assembly Row and Pike & Rose (primarily~~higher collectibility

adjustments largely the ~~lease-up~~result of ~~residential units at Pike & Rose, higher~~COVID-19 impacts, lower lease termination ~~fees,~~fee income, and property sales, partially offset by 2019 acquisitions and the opening of ~~the second phase of retail~~our new office building at ~~Pike & Rose), and the acquisition of the six previously unconsolidated Clarion joint venture properties~~Santana Row in ~~January 2016. The increases are partially offset by lower mortgage interest income related to a note receivable that was repaid in 2016.~~

early 2020.

Other Operating ~~Expenses~~

General and Administrative

General and administrative expense increased $0.7 million, or ~~2.9%~~7.2%, to ~~$26.0~~$10.3 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 from ~~$25.3~~$9.6 million in the ~~nine~~three months ended ~~September 30, 2016. The~~March 31, 2019. This increase is due primarily ~~due~~ to higher personnel related costs.

Depreciation and Amortization

Depreciation and amortization expense increased ~~$14.5~~$2.6 million, or ~~10.0%~~4.3%, to ~~$159.7~~$62.2 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 from ~~$145.1~~$59.6 million in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. This increase is due primarily ~~due~~ to ~~redevelopment properties (largely~~2019 acquisitions and the opening of our new office building at Santana ~~Row), 2017 acquisitions, Assembly~~ Row ~~and Pike & Rose, and same-center properties.~~in early 2020, partially offset by 2019 property sales.

Operating Income

Operating income ~~increased $11.6~~decreased $5.4 million, or ~~4.9%~~5.9%, to ~~$249.1~~$85.7 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$237.5~~$91.1 million in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. This ~~increase~~decrease is due primarily ~~due~~ to ~~growth in earnings at redevelopment~~higher collectibility adjustments largely the result of COVID-19 impacts, lower lease termination fee income, and ~~same-center properties, Assembly Row and Pike & Rose, our 2017 acquisitions, and the acquisition of the six previously unconsolidated Clarion joint venture properties in January 2016,~~property sales, partially offset by ~~lower mortgage interest income related to a note receivable that was repaid in 2016.~~2019 acquisitions.

Other

Interest Expense

Interest expense increased ~~$2.8~~$0.4 million, or ~~3.9%~~1.5%, to ~~$74.0~~$28.4 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$71.1~~$28.0 million in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. This increase is due primarily to the following:

an increase of ~~$10.8~~$1.6 million due to higher weighted average borrowings primarily ~~attributable to~~from the ~~$300~~$400 million ~~3.25% senior~~issuance of our 3.20% notes in 2019 and $106.9 million of mortgage loans associated with our Hoboken acquisitions, partially offset by the ~~reopening~~repayment of ~~$100~~our $275.0 million ~~on the 4.5% senior notes, both issued~~term loan in June ~~2017, the 3.625% senior notes issued in July 2016,~~2019, and

an increase of $0.6 million from higher ~~weighted average~~ borrowings on our revolving credit facility in response to the COVID-19 pandemic (see further discussion in Note 4 to our consolidated financial statements),

partially offset by,

an increase of ~~$5.9~~$1.2 million in capitalized interest, primarily attributable to the development of Phase III of Assembly Row and Pike & Rose, and

a decrease of ~~$2.1~~$0.6 million due to a lower overall weighted average borrowing rate.

Gross interest costs were ~~$92.5~~$34.2 million and ~~$83.8~~$32.6 million in the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively. Capitalized interest was ~~$18.6~~$5.7 million and ~~$12.7~~$4.5 million infor the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively.

~~Gain on Sale of Real Estate and Change in Control of Interests, Net~~

~~The $69.9 million gain on sale of real estate and change in control of interests, net for the nine months ended September 30, 2017 is primarily due to the following:~~

~~$45.2 million gain related to the sale of our 150 Post Street property in August 2017,~~

~~$15.4 million gain related to the sale of three ground lease parcels at our Assembly Row property in Somerville, Massachusetts,~~

~~$4.9 million gain related to the sale of our North Lake Commons property in September 2017, and~~

~~$3.9 million net percentage-of-completion gain, related to condominiums under binding contract at our Assembly Row property.~~

~~The $32.5 million gain on sale of real estate and change in control of interests, net for the nine months ended September 30, 2016 is primarily due to the following:~~

$25.7 million gain related to our obtaining control of six properties when we acquired Clarion’s 70% interest in the partnership that owned those properties. The properties were previously accounted for under the equity method of accounting. We consolidated these assets effective January 13, 2016, and consequently recognized a gain on obtaining the controlling interest,

$4.9 million gain related to the reversal of the unused portion of the warranty reserve for condominium units at Santana Row, as the statutorily mandated latent construction defect period ended in third quarter 2016, and

~~$1.8 million gain related to the sale of a building in Coconut Grove, Florida. Our share of the gain, net of noncontrolling interests, was $0.7 million.~~

Liquidity and Capital Resources

Due to the nature of our business and strategy, we typically generate significant amounts of cash from ~~operations. The cash generated from~~ operations which is largely paid to our common and preferred shareholders in the form of ~~dividends. As~~dividends because as a REIT, we ~~must~~are generally required to make annual distributions to shareholders of at least 90% of our taxable income.

~~Our short-term liquidity requirements consist primarily of normal~~ Remaining cash flow from operations after dividend payments is used to fund recurring ~~operating expenses, obligations under our~~and non-recurring capital projects (such as tenant improvements and ~~operating leases,~~redevelopments), and regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities)~~, recurring~~. We maintain a $1.0 billion revolving credit facility 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 ~~non-recurring expenditures (such~~on a long-term basis.

While the COVID-19 impacts are unknown, we currently expect a short term decrease in cash from operations as ~~tenant improvements~~our tenants are impacted by the pandemic and, ~~redevelopments)~~while contractually obligated, some have not paid rent during April 2020 (see further discussion under the "Outlook" section of this Item 2). In order to strengthen our financial position and ~~dividends~~balance sheet, to maximize liquidity, and to provide maximum flexibility as the effects of the COVID-19 pandemic continue to evolve, in March 2020, we borrowed $990.0 million under our revolving credit facility, representing a draw-down of almost the entirety of our $1.0 billion credit facility.

At March 31, 2020, we had cash and cash equivalents of $994.7 million and $990.0 million outstanding on our revolving credit facility. During the three months ended March 31, 2020, our weighted average borrowing rate on the revolving credit facility, before amortization of debt fees, was 1.7%. As of March 31, 2020, we had the capacity to issue up to $128.3 million in common ~~and preferred shareholders. Our long-term~~shares under our ATM equity program.

Over the next 12 months, we have $314.2 million of debt maturing. Additionally, our overall capital requirements ~~consist primarily~~for the remainder of ~~maturities~~2020 will depend upon the duration of government mandated closures and the overall economic impact of COVD-19, as well as general timing of our redevelopment and development activities. Given those impacts, we currently expect to see lower levels of capital investments in our properties under ~~our long-term debt agreements,~~ development and redevelopment ~~costs~~compared to the quarter ended March 31, 2020 and ~~potential acquisitions.~~recent years.

We ~~intend~~believe that the cash on our balance sheet together with rents we collect will allow us to continue to operate ~~with~~our business in the near-term. Given our past ability to access the capital markets, we also expect debt or equity to be available to us. We may also further 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. We continue to monitor governmental financial assistance programs being made available to address impacts of COVID-19 and may access one or more of these programs to supplement our liquidity if we qualify for them.

While the COVID-19 pandemic will negatively impact our business in the short term, we 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. In the short and long term, we may seek to obtain funds through the issuance of additional equity, unsecured and/or secured debt financings, joint venture relationships relating to existing properties or new acquisitions, and property dispositions that are consistent with this conservative structure.

At September 30, 2017, we had cash and cash equivalents of $22.9 million and $41.5 million outstanding on our $800.0 million unsecured revolving credit facility which matures on April 20, 2020, subject to two six-month extensions at our option. In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.5 billion. Our $275.0 million unsecured term loan, which matures on November 21, 2018, subject to a one-year extension at our option, also has an option (subject to bank approval) to increase the term loan through an accordion feature to $350.0 million. As of September 30, 2017, we had the capacity to issue up to $327.6 million in common shares under our ATM equity program.

For the nine months ended September 30, 2017, the maximum amount of borrowings outstanding under our revolving credit facility was $344.0 million, the weighted average amount of borrowings outstanding was $173.0 million and the weighted average interest rate, before amortization of debt fees, was 1.9%. On June 23, 2017, we issued $300.0 million of 3.25% senior unsecured notes that mature on July 15, 2027, and $100.0 million of 4.50% notes that mature on December 1, 2044 for net proceeds (after net issuance premium, underwriting fees and other costs) of approximately $399.5 million. On September 29, 2017, we issued 6,000,000 Depository Shares, each representing a 1/1000th interest in a 5.0% Series C Cumulative Redeemable Preferred Share ("Series C Preferred Shares") for net proceeds (after underwriting fees and other costs) of approximately $145.0 million. For the remainder of 2017, we have no further debt maturing. We currently believe that cash flows from operations, cash on hand, our ATM program, our revolving credit facility and our general ability to access the capital markets will be sufficient to finance our operations and fund our debt service requirements (including maturities) and capital expenditures.

Our overall capital requirements for the remainder of 2017 will depend upon acquisition opportunities, the level of improvements and redevelopments on existing properties and the timing and cost of development of Assembly Row, Pike & Rose and future phases of Santana Row. While the amount of future expenditures will depend on numerous factors, we expect to continue to see higher levels of capital investments in our properties under development and redevelopment which is the result of construction on Phase II at both Assembly Row and Pike & Rose, the construction of our next phase of Santana Row, and our redevelopment pipeline. With respect to other capital investments related to our existing properties, we expect to incur levels consistent with prior years. Our capital investments will be funded on a short-term basis with cash flow from operations, cash on hand and/or our revolving credit facility, and on a long-term basis, with long-term debt or equity including shares issued under our ATM equity program. If necessary, we may access the debt or equity capital markets to finance significant acquisitions. Given our past ability to access the capital markets, we expect debt or equity to be available to us. Although there is no intent at this time, if market conditions deteriorate, we may 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.

~~In addition to conditions in the capital markets which could affect our ability to access those markets, the following factors could affect our ability to meet our liquidity requirements:~~

~~restrictions in our debt instruments or preferred shares may limit us from incurring debt or issuing equity at all, or on acceptable terms under then-prevailing market conditions; and~~

~~we may be unable to service additional or replacement debt due to increases in interest rates or a decline in our operating performance.~~

Summary of Cash Flows

Nine Months Ended September 30,
2017 2016
(In thousands)
Cash provided by operating activities $ 339,638
$ 293,408
Cash used in investing activities (708,280 ) (438,417 )
Cash provided by financing activities 368,124
225,244
(Decrease) increase in cash and cash equivalents (518 ) 80,235
Cash and cash equivalents, beginning of year 23,368
21,046
Cash and cash equivalents, end of period $ 22,850
$ 101,281



	Three Months Ended March 31,
	2020			2019
	(In thousands)
Cash provided by operating activities	$	118,749		$	104,919
Cash used in investing activities	(151,832		)	(104,037		)
Cash provided by (used in) financing activities	898,895			(27,002		)
Increase (decrease) in cash, cash equivalents and restricted cash	865,812			(26,120		)
Cash, cash equivalents and restricted cash, beginning of year	153,614			108,332
Cash, cash equivalents and restricted cash, end of period	$	1,019,426		$	82,212

Net cash provided by operating activities increased ~~$46.2~~$13.8 million to ~~$339.6~~$118.7 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 from ~~$293.4~~$104.9 million during the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. The increase was primarily attributable to ~~higher~~lower prepaid expenses and timing of cash receipts, partially offset by lower net income before ~~certain~~ non-cash ~~items, lower escrow balances, and higher prepaid rent.~~items.

Net cash used in investing activities increased ~~$269.9~~$47.8 million to ~~$708.3~~$151.8 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 from ~~$438.4~~$104.0 million during the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. The increase was primarily attributable to:

a ~~$301.5 million increase in acquisitions of real estate, primarily due to the August 2017 acquisition of six shopping centers in Los Angeles County, California,~~

~~an $84.4~~$44.9 million increase in capital expenditures as we continue to invest in Pike & Rose, Assembly Row, Santana Row and other ~~current~~ redevelopments,

$17.4 million for costs paid in 2020 relating to the partial sale under threat of condemnation at San Antonio Center in 2019, and

~~a $12.2~~$6.1 million ~~decrease~~ in ~~repayments~~proceeds in 2019 from the sale of ~~mortgage notes receivable due to the payoff of an $11.7 million note receivable in September 2016,~~condominiums at our Assembly Row and Pike & Rose properties,

partially offset by

~~$127.5~~an $18.1 million decrease in ~~proceeds~~acquisition of real estate, primarily ~~from~~due to the ~~sale~~February 2019 acquisition of ~~our property at 150 Post Street, three land parcels at Assembly Row, and North Lake Commons~~Fairfax Junction, partially offset by the acquisition of two buildings in ~~2017.~~Hoboken, New Jersey in February 2020.

Net cash provided by financing activities increased ~~$142.9~~$925.9 million to ~~$368.1~~$898.9 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 from ~~$225.2~~$27.0 million ~~during~~used in the ~~nine~~three months ended ~~September 30, 2016.~~March 31, 2019. The increase was primarily attributable to:

~~$399.5~~a $970.0 million net proceeds from the June 2017 issuance of $300.0 million of 3.25% senior unsecured notes that mature on July 15, 2027 and $100.0 million of 4.50% notes that mature on December 1, 2044, compared to $241.8 millionincrease in ~~net proceeds from the issuance of 3.625% senior notes in July 2016,~~

~~$145.5 million in net proceeds from the September 29, 2017 issuance of 6,000 Series C Preferred Shares,~~

~~$41.5 million of~~ borrowings on our revolving credit facility ~~in 2017 as compared~~ to ~~$53.5 million of repayments in 2016,~~

~~a $13.0 million increase in contributions from noncontrolling interests primarily due to contributions to fund~~provide maximum flexibility and liquidity during the ~~$50.0 million partial repayment of the Plaza El Segundo mortgage loan,~~COVID-19 pandemic, and

a ~~$9.5~~$20.2 million decrease in ~~distributions to~~repayment of mortgages, finance leases, and ~~redemptions of noncontrolling interests~~notes payable primarily due to the ~~2016 acquisition~~payoff of the ~~10% noncontrolling interest of a partnership which owns a project~~mortgage loan on Rollingwood Apartments in ~~Southern California,~~January 2019,

partially offset by

a ~~$248.9~~$59.4 million decrease in net proceeds from the issuance of common shares ~~primarily due to our March 2016 issuance of 1.0 million common shares at $149.43 per share in an underwritten public offering, and 1.0 million common shares~~ under our ATM ~~equity~~ program ~~at a weighted average price of $155.48~~ during the ~~nine~~three months ended ~~September 30, 2016, compared to 0.3 million common shares at a weighted average share price of $133.09 in 2017,~~

a $16.0 million increase in repayment of mortgages and capital leases primarily due to the $50.0 million pay down of the Plaza El Segundo mortgage loan on June 5, 2017, as compared to the payoff of $34.4 million of mortgage loans on April 1, 2016, and

~~a $13.1 million increase in dividends paid to shareholders due to an increase in the dividend rate and an increased number of shares outstanding.~~March 31, 2019.

Debt Financing Arrangements

The following is a summary of our total debt outstanding as of ~~September 30, 2017:~~March 31, 2020:


Description of Debt	Original Debt Issued	Principal Balance as of September 30, 2017			Stated Interest Rate as of September 30, 2017		Maturity Date	Original Debt Issued	Principal Balance as of March 31, 2020			Stated Interest Rate as of March 31, 2020		Maturity Date
	(Dollar amounts in thousands)							(Dollar amounts in thousands)
Mortgages payable
Secured fixed rate
The Grove at Shrewsbury (West)	Acquired	$	10,608		6.38	%	March 1, 2018
Rollingwood Apartments	24,050	20,939			5.54	%	May 1, 2019
The Shops at Sunset Place	Acquired	67,124			5.62	%	September 1, 2020	Acquired	$	61,585		5.62	%	September 1, 2020
29th Place	Acquired	4,395			5.91	%	January 31, 2021	Acquired	3,816			5.91	%	January 31, 2021
Sylmar Towne Center	Acquired	17,448			5.39	%	June 6, 2021	Acquired	16,532			5.39	%	June 6, 2021
Plaza Del Sol	Acquired	8,621			5.23	%	December 1, 2021	Acquired	8,183			5.23	%	December 1, 2021
The AVENUE at White Marsh	52,705	52,705			3.35	%	January 1, 2022	52,705	52,705			3.35	%	January 1, 2022
Montrose Crossing	80,000	71,478			4.20	%	January 10, 2022	80,000	67,025			4.20	%	January 10, 2022
Azalea	Acquired	40,000			3.73	%	November 1, 2025	Acquired	40,000			3.73	%	November 1, 2025
Bell Gardens	Acquired	13,245			4.06	%	August 1, 2026	Acquired	12,611			4.06	%	August 1, 2026
Plaza El Segundo	125,000	125,000			3.83	%	June 5, 2027	125,000	125,000			3.83	%	June 5, 2027
The Grove at Shrewsbury (East)	43,600	43,600			3.77	%	September 1, 2027	43,600	43,600			3.77	%	September 1, 2027
Brook 35	11,500	11,500			4.65	%	July 1, 2029	11,500	11,500			4.65	%	July 1, 2029
Hoboken (24 Buildings) (1)								Acquired	56,450			LIBOR + 1.95%		December 15, 2029
Various Hoboken (14 Buildings) (2)								Acquired	33,342			Various		Various through 2029
Chelsea	Acquired	6,346			5.36	%	January 15, 2031	Acquired	5,508			5.36	%	January 15, 2031
Hoboken (1 Building) (3)								Acquired	16,796			3.75	%	July 1, 2042
Subtotal		493,009							554,653
Net unamortized premium and debt issuance costs		231						Net unamortized premium and debt issuance costs	(1,840		)
Total mortgages payable		493,240
Total mortgages payable, net									552,813
Notes payable
Unsecured fixed rate
Term loan (1)	275,000	275,000			LIBOR + 0.90%		November 21, 2018
Revolving credit facility (4)								1,000,000	990,000			LIBOR + 0.775%		January 19, 2024
Various	7,239	4,908			11.31%		Various through 2028	7,239	3,812			11.31%		Various through 2028
Unsecured variable rate
Revolving credit facility (2)	800,000	41,500			LIBOR + 0.825%		April 20, 2020
Subtotal		321,408							993,812
Net unamortized debt issuance costs		(690		)					(60		)
Total notes payable		320,718
Total notes payable, net									993,752

Senior notes and debentures
Unsecured fixed rate
5.90% notes	150,000	150,000			5.90	%	April 1, 2020
2.55% notes	250,000	250,000			2.55	%	January 15, 2021	250,000	250,000			2.55	%	January 15, 2021
3.00% notes	250,000	250,000			3.00	%	August 1, 2022	250,000	250,000			3.00	%	August 1, 2022
2.75% notes	275,000	275,000			2.75	%	June 1, 2023	275,000	275,000			2.75	%	June 1, 2023
3.95% notes	300,000	300,000			3.95	%	January 15, 2024	300,000	300,000			3.95	%	January 15, 2024
7.48% debentures	50,000	29,200			7.48	%	August 15, 2026	50,000	29,200			7.48	%	August 15, 2026
3.25% notes	300,000	300,000			3.25	%	July 15, 2027	475,000	475,000			3.25	%	July 15, 2027
6.82% medium term notes	40,000	40,000			6.82	%	August 1, 2027	40,000	40,000			6.82	%	August 1, 2027
3.20% notes								400,000	400,000			3.20	%	June 15, 2029
4.50% notes	550,000	550,000			4.50	%	December 1, 2044	550,000	550,000			4.50	%	December 1, 2044
3.625% notes	250,000	250,000			3.625	%	August 1, 2046	250,000	250,000			3.625	%	August 1, 2046
Subtotal		2,394,200							2,819,200
Net unamortized discount and debt issuance costs		(16,261		)				Net unamortized discount and debt issuance costs	(11,352		)
Total senior notes and debentures		2,377,939
Capital lease obligations
Various		71,565			Various		Various through 2106
Total debt and capital lease obligations		$	3,263,462
Total senior notes and debentures, net									2,807,848

Total debt, net									$	4,354,413

_____________________


1)	WeOn November 26, 2019, we entered into two interest rate swap agreements that fix the ~~LIBOR portion of the~~ interest rate on ~~the term~~this mortgage loan at ~~1.72%. The spread on the term loan is 90 basis points resulting in a fixed rate of 2.62%~~3.67%.


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


3)	This mortgage loan has a fixed interest rate, however, the rate resets every five years until maturity. The current interest rate is fixed until July 1, 2022, and the loan is prepayable at par anytime after this date.


4)	The maximum amount drawn under our revolving credit facility during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 was ~~$344.0~~$990.0 million, and the weighted average interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was ~~1.9%~~1.7%.

Our revolving credit facility ~~term loan~~ and other debt agreements include financial and other covenants that may limit our operating activities in the future. As of ~~September 30, 2017,~~March 31, 2020, we were in compliance with all financial and other covenants related to our revolving credit facility ~~term loan~~ and senior notes. Additionally, as of ~~September 30, 2017,~~March 31, 2020, we were in compliance with all of the financial and other covenants that could trigger 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 ~~term loan~~ 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, 2017:~~March 31, 2020:


	Unsecured			Secured		Capital Lease		Total			Unsecured			Secured		Total
	(In thousands)										(In thousands)
2017	$	123		$	1,425	$	13	$	1,561
2018	275,513		(1)	16,251		37		291,801
2019	567			25,820		42		26,429
2020	192,129		(2)	65,539		46		257,714			$	582		$	64,963	$	65,545
2021	250,700			30,541		51		281,292			250,680			31,756		282,436
2022											250,756			119,706		370,462
2023											275,775			3,549		279,324
2024											1,290,665		(1)	3,688		1,294,353
Thereafter	1,996,576			353,433		71,376		2,421,385			1,744,554			330,991		2,075,545
	$	2,715,608		$	493,009	$	71,565	$	3,280,182	(3)	$	3,813,012		$	554,653	$	4,367,665	(2)

~~_____________________~~__________________


1)	Our ~~$275.0 million unsecured term loan~~$1.0 billion revolving credit facility matures on ~~November 21, 2018, subject to a one-year extension~~January 19, 2024 plus two six-month extensions at our option. As of March 31, 2020, there was $990.0 million outstanding under this credit facility.


2)	~~Our $800.0 million revolving credit facility matures on April 20, 2020, subject to two six-month extensions at our option.~~ ~~As of September 30, 2017, there was $41.5 million~~ ~~outstanding under this credit facility.~~


3)	The total debt maturities ~~differs~~differ from the total reported on the consolidated balance sheet due to the unamortized net premium/~~(discount)~~discount and debt issuance costs on mortgage loans, notes payable, and senior notes as of ~~September 30, 2017.~~March 31, 2020.

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.

~~The interest~~Interest rate swaps associated with ~~our~~ cash flow hedges are recorded at fair value on a recurring basis. ~~We assess effectiveness~~Effectiveness of ~~our~~ 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 ~~our~~ cash flow hedges is recorded in other comprehensive ~~income/~~loss which is included in accumulated other comprehensive loss on ~~our consolidated~~the balance sheet and ~~our consolidated~~ statement of shareholders' equity. ~~Our cash~~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. ~~However, management does not anticipate non-performance by the counterparty.~~ If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with ~~our~~ cash flow hedges is recognized in earnings in the period affected.

As of ~~September 30, 2017,~~March 31, 2020, we ~~are party to~~ have two interest rate swap agreements that effectively ~~fixed~~fix the rate on ~~the term loan~~a mortgage payable associated with our Hoboken portfolio at ~~2.62%~~3.67%. ~~Both~~Our Assembly Row hotel joint venture is also a party to two interest rate swap agreements that effectively fix their debt at 5.206%. All swaps were designated and ~~qualified~~qualify as cash flow ~~hedges and were recorded at fair value.~~hedges. Hedge ineffectiveness has not impacted earnings as of ~~September 30, 2017, and we do not anticipate it will have a significant effect in the future.~~

March 31, 2020.

REIT Qualification

We intend to maintain our 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 ~~extraordinary items,~~ 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.~~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 unless necessary for us to maintain REIT status.~~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.

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


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020			2019
	(In thousands, except per share data)												(In thousands, except per share data)
Net income	$	108,882		$	61,198		$	245,085		$	199,159		$	56,441		$	61,803
Net income attributable to noncontrolling interests	(2,105		)	(2,221		)	(5,827		)	(7,286		)	(1,678		)	(1,659		)
Gain on sale of real estate and change in control of interests, net	(50,775		)	(4,706		)	(69,659		)	(31,133		)
Depreciation and amortization of real estate assets	48,796			42,779			139,112			126,806			56,046			53,489
Amortization of initial direct costs of leases	4,780			4,260			14,530			12,729			4,900			4,750
Funds from operations	109,578			101,310			323,241			300,275			115,709			118,383
Dividends on preferred shares (1)	(41		)	(136		)	(41		)	(406		)
Dividends on preferred shares													(1,875		)	(1,875		)
Income attributable to operating partnership units	788			750			2,355			2,397			790			729
Income attributable to unvested shares	(357		)	(263		)	(1,064		)	(826		)	(356		)	(344		)
Funds from operations available for common shareholders	$	109,968		$	101,661		$	324,491		301,440			$	114,268		$	116,893
Weighted average number of common shares, diluted (1)(2)	73,089			72,254			73,001			71,642
Weighted average number of common shares, diluted (1)													76,208			75,010

Funds from operations available for common shareholders, per diluted share	$	1.50		$	1.41		$	4.45		$	4.21		$	1.50		$	1.56

_____________________


(1)	For the three and nine months ended September 30, 2017, dividends on our Series 1 preferred stock are not deducted in the calculation of FFO available to common shareholders, as the related shares are dilutive and included in "weighted average common shares, diluted."

~~(2)~~

The weighted average common shares used to compute FFO per diluted common share includes operating partnership units and our Series 1 preferred shares that were excluded from the computation of diluted EPS. Conversion of these operating partnership units and preferred shares is dilutive in the computation of FFO per diluted common share but is anti-dilutive for the computation of diluted EPS for the periods presented.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our use of financial instruments, such as debt instruments, subjects us to market risk which may affect our future earnings and cash flows, as well as the fair value of our assets. Market risk generally refers to the risk of loss from changes in interest rates and market prices. We manage our market risk by attempting to match anticipated inflow of cash from our operating, investing and financing activities with anticipated outflow of cash to fund debt payments, dividends to common and preferred shareholders, investments, capital expenditures and other cash requirements.

We may enter into certain types of derivative financial instruments to further reduce interest rate risk. We use interest rate protection and swap agreements, for example, to convert some of our variable rate debt to a fixed-rate basis or to hedge anticipated financing transactions. We use derivatives for hedging purposes rather than speculation and do not enter into financial instruments for trading purposes. ~~As of September 30, 2017, we were party to~~ ~~two~~ ~~interest rate swap agreements that effectively fixed the rate on the term loan at 2.62%.~~

Interest Rate Risk

The following discusses the effect of hypothetical changes in market rates of interest on interest expense for our variable rate debt and on the fair value of our total outstanding debt, including our fixed-rate debt. Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our debt. Quoted market prices were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis 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. This analysis does not purport to take into account all of the factors that may affect our debt, such as the effect that a changing interest rate environment could have on the overall level of economic activity or the action that our management might take to reduce our exposure to the change. This analysis assumes no change in our financial structure.

Fixed Interest Rate Debt

The majority of our outstanding debt obligations (maturing at various times through ~~2046 or, with respect to capital lease obligations, through 2106)~~2046) have fixed interest rates which limit the risk of fluctuating interest rates. However, interest rate fluctuations may affect the fair value of our fixed rate debt instruments. At ~~September 30, 2017,~~March 31, 2020, we had ~~$3.2~~$3.4 billion of fixed-rate debt ~~outstanding, including our~~ ~~$275.0 million~~ ~~term loan as the rate is effectively fixed by~~ ~~two~~ ~~interest rate swap agreements; we also had $71.6 million of capital lease obligations.~~outstanding. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at ~~September 30, 2017~~March 31, 2020 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately ~~$226.1~~$243.1 million. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at ~~September 30, 2017~~March 31, 2020 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately ~~$260.8~~$279.0 million.

Variable Interest Rate Debt

Generally, we believe that our primary interest rate risk is due to fluctuations in interest rates on our outstanding variable rate debt. At ~~September 30, 2017,~~March 31, 2020, we had ~~$41.5~~$990.0 million of variable rate debt outstanding on our revolving credit facility. Based upon this amount of variable rate debt and the specific terms, if market interest rates increased 1.0%, our annual interest expense would increase by approximately ~~$0.4~~$9.9 million with a corresponding decrease in our net income and cash flows for the year. Conversely, if market interest rates decreased 1.0%, our annual interest expense would decrease by approximately~~$0.4~~ $9.9 million with a corresponding increase in our net income and cash flows for the year.

ITEM 4. CONTROLS AND PROCEDURES

Periodic Evaluation and Conclusion of Disclosure Controls and Procedures

An evaluation has been performed, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September 30, 2017.~~March 31, 2020. Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of ~~September 30, 2017~~March 31, 2020 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and (ii) accumulated and communicated to the Trust’s management including its principal executive and principal financial officer as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the quarterly period covered by this report that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material developments in any of our legal proceedings since the disclosure contained in our Annual Report to Form 10-K for the fiscal year ended December 31, ~~2016.~~2019.

ITEM 1A. RISK FACTORS

~~There~~This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. When we refer to forward-looking statements or information, sometimes we use words such as “may,” “will,” “could,” “should,” “plans,” “intends,” “expects,” “believes,” “estimates,” “anticipates” and “continues.” While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. . “Item 1A. Risk Factors” of our Annual Report to our Form 10-K for the year ended December 31, 2019 filed with the SEC on February 10, 2020 describes some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our business, results of operations, financial condition, cash flows, projected results and future prospects. Except for the risk factor discussed below, we do not believe that there have been noany material changes to the risk factors ~~previously~~ disclosed in our 2019 Annual ~~Report for~~Report.

Natural disasters, climate change and public health crises, including the ~~year ended~~ ~~December 31, 2016~~ ~~filed with the SEC~~COVID-19 pandemic, could have an adverse impact on ~~February 13, 2017. These factors include, but are not limited~~our cash flow and operating results.

Climate change may add to the ~~following:~~

~~risks~~unpredictability and frequency of natural disasters and severe weather conditions and create additional uncertainty as to future trends and exposures. Certain of our operations are located in areas that ~~our tenants will not pay rent, may vacate early~~are subject to natural disasters and severe weather conditions such as hurricanes, earthquakes, droughts, snow storms, floods and fires. The impact of climate change 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~~the occurrence 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;~~

~~risk that we are investing a significant amount in ground-up~~natural disasters can delay new development projects, ~~that may~~increase investment costs to repair or replace damaged properties, increase operating costs, create additional investment costs to make improvements to existing properties to comply with climate change regulations, increase future property insurance costs, and negatively impact the tenant demand for space. If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from these events, our earnings, liquidity or capital resources could be ~~dependent on third parties~~adversely affected.

In addition, our business is subject to ~~deliver critical aspects of certain projects, requires spending a substantial~~

~~amount upfront in infrastructure, and assumes receipt~~risks related to the effects of public ~~funding which has been committed but not entirely funded;~~

~~risks normally associated with~~health crises, epidemics and pandemics, including the ~~real estate industry, including risks that:~~

~~occupancy levels at our properties~~COVID-19 pandemic. Such events could inhibit global, national and ~~the amount of rent that we receive from our properties may be lower than expected,~~

~~new acquisitions may fail to perform as expected,~~

~~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,~~

~~environmental issues may develop at our properties and result in unanticipated costs, and~~

~~because real estate is illiquid, we may not be able to sell properties when appropriate;~~

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

~~risks associated with general economic conditions, including~~ local economic ~~conditions~~activity; adversely affect trading activity in securities markets, which could negatively impact the trading prices of our ~~geographic markets;~~

~~risks of financing, such as~~common shares and debt securities and our ability to ~~consummate additional financings or obtain replacement financing on terms~~access the securities markets as a source of liquidity; adversely affect our tenants’ financial condition by limiting foot traffic and staffing at their businesses, which ~~are acceptable~~could affect their ability to ~~us,~~pay rent and willingness to make new leasing commitments; reduce our cash flow, which could impact our ability to ~~meet existing financial covenants~~pay dividends or to service our debt; temporarily or permanently reduce the demand for retail or office space; interfere with our business operations by requiring our personnel to work remotely; increase the frequency of cyber-attacks; disrupt supply chains that could be important in our development and redevelopment activities; interfere with potential purchases and sales of properties; and have other direct and indirect effects that are difficult to predict. Such risks depend upon the ~~limitations imposed~~nature and severity of the public health concern, as well as the extent and duration of government-mandated orders and personal decisions to limit travel, economic activity and personal interaction, none of which can be predicted with confidence. In particular, we cannot predict the duration of stay-at-home and other government orders instituted in response to the COVID-19 pandemic, which vary by jurisdiction, or the pandemics' short and long term economic effects, each of which could have a material adverse effect on our ~~operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense; and~~business.

risks related to our 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 our 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.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~None.~~Under the terms of various partnership agreements of certain of our affiliated limited partnerships, the interest of limited partners in those limited partnerships may be redeemed, subject to certain conditions, for cash or common shares, at our option. During the three months ended March 31, 2020, we redeemed 28,289 downREIT operating partnership units for cash.

From time to time, we could be deemed to have repurchased shares as a result of shares withheld for tax purposes upon a stock compensation related vesting event.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

None.


ITEM 6.	EXHIBITS

A list of exhibits to this Quarterly Report on Form 10-Q is set forth on the Exhibit Index immediately preceding such exhibits and is incorporated herein by reference.



EXHIBIT INDEX

Exhibit No.		Description

3.2		Amended and Restated Bylaws of Federal Realty Investment Trust dated February 12, 2003, as amended October 29, 2003, May 5, 2004, February 17, 2006, May 6, 2009, November 2, 2016, February 5, 2019, and April 2, 2020

31.1		Rule 13a-14(a) Certification of Chief Executive Officer (filed herewith)

31.2		Rule 13a-14(a) Certification of Principal Financial Officer (filed herewith)

32.1		Section 1350 Certification of Chief Executive Officer (filed herewith)

32.2		Section 1350 Certification of Principal Financial Officer (filed herewith)

101		The following materials from Federal Realty Investment Trust’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Comprehensive Income, (3) the Consolidated Statement of Shareholders’ Equity, (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements that have been detail tagged.

104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto authorized.



		FEDERAL REALTY INVESTMENT TRUST

~~November 1, 2017~~May 6, 2020		/s/ Donald C. Wood
		Donald C. Wood,
		President, Chief Executive Officer and Trustee
		(Principal Financial and Executive Officer)



		FEDERAL REALTY INVESTMENT TRUST

~~November 1, 2017~~May 6, 2020		/s/ Daniel Guglielmone
		Daniel Guglielmone,
		Executive Vice President
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)



~~EXHIBIT INDEX~~

~~Exhibit No.~~		~~Description~~

~~31.1~~		~~Rule 13a-14(a) Certification of Chief Executive Officer (filed herewith)~~

~~31.2~~		~~Rule 13a-14(a) Certification of Principal Financial Officer (filed herewith)~~

~~32.1~~		~~Section 1350 Certification of Chief Executive Officer (filed herewith)~~

~~32.2~~		~~Section 1350 Certification of Principal Financial Officer (filed herewith)~~

~~101~~		The following materials from Federal Realty Investment Trust’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Comprehensive Income, (3) the Consolidated Statement of Shareholders’ Equity, (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements that have been detail tagged.



	September 30,			December 31,
	2017			2016
	(In thousands, except share and per share data)
	(Unaudited)
ASSETS
Real estate, at cost
Operating (including $1,666,691 and $1,226,918 of consolidated variable interest entities, respectively)	$	6,758,728		$	6,125,957
Construction-in-progress	769,882			599,260
Asset held for sale	—			33,856
	7,528,610			6,759,073
Less accumulated depreciation and amortization (including $236,391 and $209,239 of consolidated variable interest entities, respectively)	(1,828,845		)	(1,729,234		)
Net real estate	5,699,765			5,029,839
Cash and cash equivalents	22,850			23,368
Accounts and notes receivable, net	200,878			116,749
Mortgage notes receivable, net	30,429			29,904
Investment in real estate partnerships	23,925			14,864
Prepaid expenses and other assets	243,290			208,555
TOTAL ASSETS	$	6,221,137		$	5,423,279
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable (including $461,873 and $439,120 of consolidated variable interest entities, respectively)	$	493,240		$	471,117
Capital lease obligations	71,565			71,590
Notes payable	320,718			279,151
Senior notes and debentures	2,377,939			1,976,594
Accounts payable and accrued expenses	206,441			201,756
Dividends payable	73,466			71,440
Security deposits payable	16,698			16,285
Other liabilities and deferred credits	175,464			115,817
Total liabilities	3,735,531			3,203,750
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests	151,815			143,694
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 and 0 shares issued and outstanding, respectively	150,000			—
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding	9,997			9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 72,542,909 and 71,995,897 shares issued and outstanding, respectively	728			722
Additional paid-in capital	2,773,890			2,718,325
Accumulated dividends in excess of net income	(724,919		)	(749,734		)
Accumulated other comprehensive loss	(742		)	(2,577		)
Total shareholders’ equity of the Trust	2,208,954			1,976,733
Noncontrolling interests	124,837			99,102
Total shareholders’ equity	2,333,791			2,075,835
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,221,137		$	5,423,279



	Nine Months Ended
	September 30,
	2017			2016
	(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	92,520		$	83,803
Interest capitalized	(18,568		)	(12,660		)
Interest expense	$	73,952		$	71,143
Cash paid for interest, net of amounts capitalized	$	70,486		$	66,921
Cash paid for income taxes	$	342		$	300
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Mortgage loans refinanced	$	166,823		$	—
Mortgage loans assumed with acquisition	$	79,401		$	34,385
DownREIT operating partnership units issued with acquisition of noncontrolling interest	$	5,918		$	—
DownREIT operating partnership units redeemed for common shares	$	2,569		$	18,679
Shares issued under dividend reinvestment plan	$	1,528		$	1,523



	Principal		Stated Interest Rate		Maturity Date
	(in millions)
Sylmar Towne Center	$	17.5	5.39	%	June 6, 2021
Plaza Del Sol	8.6		5.23	%	December 1, 2021
Azalea	40.0		3.73	%	November 1, 2025
Bell Gardens	13.3		4.06	%	August 1, 2026



	September 30, 2017				December 31, 2016
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Mortgages and notes payable	$	813,958	$	826,012	$	750,268	$	760,260
Senior notes and debentures	$	2,377,939	$	2,452,494	$	1,976,594	$	2,015,973