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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~June 30, 2021~~March 31, 2022


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

For the transition period from to

Commission file number: 1-07533 (Federal Realty Investment Trust)

Commission file number: 333-262016-01(Federal Realty OP LP)

FEDERAL REALTY INVESTMENT TRUST

FEDERAL REALTY OP LP

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

Maryland (Federal Realty Investment Trust)

87-3916363

Delaware (Federal Realty OP LP)

52-0782497

(State of Organization)

(IRS Employer Identification No.)

909 Rose Avenue, Suite 200, North Bethesda, Maryland 20852

(Address of Principal Executive Offices) (Zip Code)

(301) 998-8100

(Registrant’s Telephone Number, Including Area Code)

Federal Realty Investment Trust


Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Shares of Beneficial Interest	FRT	New York Stock Exchange
$.01 par value per share, with associated Common Share Purchase Rights

Depositary Shares, each representing 1/1000 of a share of	FRT-C	New York Stock Exchange
of 5.00% Series C Cumulative Redeemable Preferred Stock, $.01 par value per share

Federal Realty OP LP


Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
None	N/A	N/A

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Federal Realty Investment Trust ☒ Yes ☐ No Federal Realty OP LP ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Federal Realty Investment Trust ☒ Yes ☐ No Federal Realty OP LP ☒ Yes ☐ No

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

Federal Realty Investment Trust

Federal Realty OP LP

Large Accelerated Filer

☒

Accelerated filer

☐

Large Accelerated Filer

☒

Accelerated filer

☐

Non-Accelerated Filer

☐

Smaller reporting company

☐

Non-Accelerated Filer

☐

Smaller reporting company

☐

Emerging growth company

☐

~~If an emerging~~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.

☐

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

Federal Realty Investment Trust ☐ Yes ☐ No Federal Realty OP LP ☐ Yes ☐ No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Federal Realty Investment Trust ☐ Yes ☒ No Federal Realty OP LP ☐ Yes ☒ No

The number of registrant’s common shares outstanding on ~~July 30, 2021~~May 2, 2022 was ~~77,768,140.~~79,420,226.

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EXPLANATORY NOTE

This report combines the quarterly reports on Form 10-Q for the quarter ended March 31, 2022, of Federal Realty Investment Trust and Federal Realty OP, LP. Unless stated otherwise or the context otherwise requires, references to "Federal Realty Investment Trust," the "Parent Company" or the "Trust" mean Federal Realty Investment Trust; and references to "Federal Realty OP LP" or the "Operating Partnership" mean Federal Realty OP LP. The term "the Company," "we," "us," and "our" refer to the Parent Company and its business and operations conducted through its directly and indirectly owned subsidiaries, including the Operating Partnership. References to "shares" and "shareholders" refer to the shares and shareholders of the Parent Company and not the limited partnership interests for limited partners of the Operating Partnership.

The Parent Company is a real estate investment trust ("REIT") that owns 100% of the limited liability company interests of, is the sole member of, and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which is the sole general partner of the Operating Partnership. As of March 31, 2022, the Parent Company owned 100% of the outstanding partnership units (the "OP Units") in the Operating Partnership.

The Company believes combining the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report provides the following benefits:

•Enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view the businesses as a whole in the same manner as management views and operates the business;

•Eliminates duplicate disclosure and provides a more streamlined and readable presentation; and

•Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.

Management operates the Parent Company and the Operating Partnership as one business. Since the Operating Partnership is managed by the Parent Company, and the Parent Company conducts substantially all of its operations through the Operating Partnership, the management of the Parent Company consists of the same individuals as the management of the Operating Partnership.

We believe it is important to understand the few differences between the Parent Company and the Operating Partnership in the context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is a REIT, whose only material asset is its direct and indirect interest in the Operating Partnership. As a result, the Parent Company does not conduct business itself other than issuing public equity from time to time. The Parent Company is not expected to incur any material indebtedness. The Operating Partnership holds substantially all of our assets and retains the ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent Company, which are contributed to the Operating Partnership in exchange for OP Units, the Operating Partnership generates all capital required by the Company’s business. Sources of this capital include the Operating Partnership’s operations, its direct or indirect incurrence of indebtedness, and the issuance of partnership units.

Stockholders' equity, partner capital, and non-controlling interests are the primary areas of difference between the unaudited Condensed Consolidated Financial Statements of the Parent Company and those of the Operating Partnership. The Operating Partnership’s capital currently includes OP Units owned by the Parent, and may in the future include OP Units owned by third parties. OP Units owned by third parties, if any, are accounted for in capital in the Operating Partnership’s financial statements and in non-controlling interests in the Parent Company’s financial statements.

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

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

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FEDERAL REALTY INVESTMENT TRUST

FEDERAL REALTY OP LP

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED ~~JUNE 30, 2021~~MARCH 31, 2022

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PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3

Federal Realty Investment Trust
	Consolidated Balance Sheets (unaudited) as of ~~June 30, 2021 (unaudited)~~March 31, 2022 and December 31, ~~2020~~2021	3
		Consolidated Statements of Comprehensive Income (unaudited) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	4
		Consolidated Statements of Shareholders' Equity (unaudited) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	5
		Consolidated Statements of Cash Flows (unaudited) for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021	6

Federal Realty OP LP
	Consolidated Balance Sheets (unaudited) as of March 31, 2022 and ~~2020~~December 31, 2021	7
	Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2022 and 2021	8
	Consolidated Statements of Capital (unaudited) for the three months ended March 31, 2022 and 2021	9
	Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2022 and 2021	10

Federal Realty Investment Trust and Federal Realty OP LP
	Notes to Consolidated Financial Statements (unaudited)	811

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1417
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3130
	Item 4.	Controls and Procedures	3231

PART II. OTHER INFORMATION		3332
	Item 1.	Legal Proceedings	3332
	Item 1A.	Risk Factors	3332
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3332
	Item 3.	Defaults Upon Senior Securities	3432
	Item 4.	Mine Safety Disclosures	3432
	Item 5.	Other Information	3432
	Item 6.	Exhibits	3432

SIGNATURES		3634

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Federal Realty Investment Trust

Consolidated Balance Sheets


		June 30,		December 31,			March 31,		December 31,
		2021		2020			2022		2021
		(In thousands, except share and per share data)					(In thousands, except share and per share data)
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Real estate, at cost	Real estate, at cost					Real estate, at cost
Operating (including $2,184,537 and $1,703,202 of consolidated variable interest entities, respectively)		$	8,412,137	$	7,771,981
Construction-in-progress (including $24,679 and $44,896 of consolidated variable interest entities, respectively)		858,488		810,889
Operating (including $2,210,901 and $2,207,648 of consolidated variable interest entities, respectively)						Operating (including $2,210,901 and $2,207,648 of consolidated variable interest entities, respectively)	$	8,843,063	$	8,814,791
Construction-in-progress (including $21,677 and $18,752 of consolidated variable interest entities, respectively)						Construction-in-progress (including $21,677 and $18,752 of consolidated variable interest entities, respectively)	662,985		607,271

		9,270,625		8,582,870			9,506,048		9,422,062
Less accumulated depreciation and amortization (including $359,198 and $335,735 of consolidated variable interest entities, respectively)		(2,444,329)		(2,357,692)
Less accumulated depreciation and amortization (including $403,533 and $389,950 of consolidated variable interest entities, respectively)						Less accumulated depreciation and amortization (including $403,533 and $389,950 of consolidated variable interest entities, respectively)	(2,587,121)		(2,531,095)
Net real estate	Net real estate	6,826,296		6,225,178		Net real estate	6,918,927		6,890,967
Cash and cash equivalents	Cash and cash equivalents	304,268		798,329		Cash and cash equivalents	157,944		162,132
Accounts and notes receivable, net	Accounts and notes receivable, net	153,293		159,780		Accounts and notes receivable, net	183,479		169,007
Mortgage notes receivable, net	Mortgage notes receivable, net	9,534		39,892		Mortgage notes receivable, net	9,519		9,543
Investment in partnerships	Investment in partnerships	11,560		22,128		Investment in partnerships	13,183		13,027
Operating lease right of use assets	Operating lease right of use assets	92,457		92,248		Operating lease right of use assets	90,231		90,743
Finance lease right of use assets	Finance lease right of use assets	50,474		51,116		Finance lease right of use assets	49,511		49,832
Prepaid expenses and other assets	Prepaid expenses and other assets	230,994		218,953		Prepaid expenses and other assets	245,581		237,069

TOTAL ASSETS	TOTAL ASSETS	$	7,678,876	$	7,607,624	TOTAL ASSETS	$	7,668,375	$	7,622,320
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities	Liabilities					Liabilities
Mortgages payable, net (including $396,732 and $413,681 of consolidated variable interest entities, respectively)		$	466,026	$	484,111
Mortgages payable, net (including $334,640 and $335,301 of consolidated variable interest entities, respectively)						Mortgages payable, net (including $334,640 and $335,301 of consolidated variable interest entities, respectively)	$	339,236	$	339,993

Notes payable, net	Notes payable, net	301,625		402,776		Notes payable, net	301,540		301,466
Senior notes and debentures, net	Senior notes and debentures, net	3,405,282		3,404,488		Senior notes and debentures, net	3,406,491		3,406,088
Accounts payable and accrued expenses	Accounts payable and accrued expenses	253,092		228,641		Accounts payable and accrued expenses	233,773		235,168
Dividends payable	Dividends payable	84,881		83,839		Dividends payable	86,617		86,538
Security deposits payable	Security deposits payable	23,381		20,388		Security deposits payable	26,073		25,331
Operating lease liabilities	Operating lease liabilities	74,129		72,441		Operating lease liabilities	72,317		72,661
Finance lease liabilities	Finance lease liabilities	72,041		72,049		Finance lease liabilities	72,028		72,032
Other liabilities and deferred credits	Other liabilities and deferred credits	209,957		152,424		Other liabilities and deferred credits	201,680		206,187
Total liabilities	Total liabilities	4,890,414		4,921,157		Total liabilities	4,739,755		4,745,464
Commitments and contingencies (Note 6)		0		0
Commitments and contingencies (Note 5)						Commitments and contingencies (Note 5)	00		00
Redeemable noncontrolling interests	Redeemable noncontrolling interests	212,623		137,720		Redeemable noncontrolling interests	214,043		213,708
Shareholders’ equity	Shareholders’ equity					Shareholders’ equity
Preferred shares, authorized 15,000,000 shares, $.01 par:	Preferred shares, authorized 15,000,000 shares, $.01 par:					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	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		5.0% 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	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		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, 77,760,588 and 76,727,394 shares issued and outstanding, respectively		782		771
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 79,417,472 and 78,603,305 shares issued and outstanding, respectively						Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 79,417,472 and 78,603,305 shares issued and outstanding, respectively	799		790
Additional paid-in capital	Additional paid-in capital	3,395,189		3,297,305		Additional paid-in capital	3,572,591		3,488,794
Accumulated dividends in excess of net income	Accumulated dividends in excess of net income	(1,062,641)		(988,272)		Accumulated dividends in excess of net income	(1,101,154)		(1,066,932)
Accumulated other comprehensive loss		(3,238)		(5,644)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	1,525		(2,047)
Total shareholders’ equity of the Trust	Total shareholders’ equity of the Trust	2,490,089		2,464,157		Total shareholders’ equity of the Trust	2,633,758		2,580,602
Noncontrolling interests	Noncontrolling interests	85,750		84,590		Noncontrolling interests	80,819		82,546
Total shareholders’ equity	Total shareholders’ equity	2,575,839		2,548,747		Total shareholders’ equity	2,714,577		2,663,148
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	7,678,876	$	7,607,624	TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	7,668,375	$	7,622,320

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

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Federal Realty Investment Trust

Consolidated Statements of Comprehensive Income

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
		(In thousands, except per share data)										(In thousands, except per share data)
REVENUE	REVENUE									REVENUE
Rental income	Rental income	$	230,795	$	175,479	$	447,930	$	406,277	Rental income		$	256,507	$	217,135

Mortgage interest income	Mortgage interest income	830		748		1,856		1,507		Mortgage interest income		264		1,026
Total revenue	Total revenue	231,625		176,227		449,786		407,784		Total revenue		256,771		218,161
EXPENSES	EXPENSES									EXPENSES
Rental expenses	Rental expenses	42,918		36,417		92,156		80,729		Rental expenses		56,211		49,238
Real estate taxes	Real estate taxes	29,323		30,599		58,743		59,663		Real estate taxes		30,560		29,420
General and administrative	General and administrative	12,846		9,814		23,104		20,065		General and administrative		12,342		10,258
Depreciation and amortization	Depreciation and amortization	67,675		62,784		131,549		124,972		Depreciation and amortization		71,674		63,874
Total operating expenses	Total operating expenses	152,762		139,614		305,552		285,429		Total operating expenses		170,787		152,790

Gain on sale of real estate and change in control of interest	Gain on sale of real estate and change in control of interest	0		11,682		17,428		11,682		Gain on sale of real estate and change in control of interest		—		17,428

OPERATING INCOME	OPERATING INCOME	78,863		48,295		161,662		134,037		OPERATING INCOME		85,984		82,799

OTHER INCOME/(EXPENSE)	OTHER INCOME/(EXPENSE)									OTHER INCOME/(EXPENSE)
Other interest income	Other interest income	250		509		613		817		Other interest income		120		363
Interest expense	Interest expense	(31,177)		(34,073)		(63,262)		(62,518)		Interest expense		(31,573)		(32,085)

Income (loss) from partnerships	Income (loss) from partnerships	123		(3,872)		(1,215)		(5,036)		Income (loss) from partnerships		197		(1,338)

NET INCOME	NET INCOME	48,059		10,859		97,798		67,300		NET INCOME		54,728		49,739
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(1,855)		(352)		(3,358)		(2,030)		Net income attributable to noncontrolling interests		(2,744)		(1,503)
NET INCOME ATTRIBUTABLE TO THE TRUST	NET INCOME ATTRIBUTABLE TO THE TRUST	46,204		10,507		94,440		65,270		NET INCOME ATTRIBUTABLE TO THE TRUST		51,984		48,236
Dividends on preferred shares	Dividends on preferred shares	(2,011)		(2,011)		(4,021)		(4,021)		Dividends on preferred shares		(2,010)		(2,010)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	44,193	$	8,496	$	90,419	$	61,249	NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS		$	49,974	$	46,226

EARNINGS PER COMMON SHARE, BASIC:	EARNINGS PER COMMON SHARE, BASIC:									EARNINGS PER COMMON SHARE, BASIC:

Net income available for common shareholders	Net income available for common shareholders	$	0.57	$	0.11	$	1.16	$	0.81	Net income available for common shareholders		$	0.63	$	0.60
Weighted average number of common shares	Weighted average number of common shares	77,474		75,394		77,160		75,377		Weighted average number of common shares		78,446		76,842
EARNINGS PER COMMON SHARE, DILUTED:	EARNINGS PER COMMON SHARE, DILUTED:									EARNINGS PER COMMON SHARE, DILUTED:

Net income available for common shareholders	Net income available for common shareholders	$	0.57	$	0.11	$	1.16	$	0.81	Net income available for common shareholders		$	0.63	$	0.60
Weighted average number of common shares	Weighted average number of common shares	77,505		75,394		77,162		75,377		Weighted average number of common shares		78,543		76,842

COMPREHENSIVE INCOME	COMPREHENSIVE INCOME	$	47,002	$	10,366	$	100,435	$	60,355	COMPREHENSIVE INCOME		$	58,644	$	53,433

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST	COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST	$	45,266	$	10,014	$	96,846	$	58,325	COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST		$	55,556	$	51,580

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

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Federal Realty Investment Trust

Consolidated Statements of Shareholders’ Equity

For the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021

(Unaudited)

Shareholders’ Equity of the Trust
Preferred Shares Common Shares Additional
Paid-in
Capital Accumulated
Dividends in
Excess of Net
Income Accumulated
Other
Comprehensive
Loss Noncontrolling Interests Total Shareholders' Equity
Shares Amount Shares Amount
(In thousands, except share data)
BALANCE AT DECEMBER 31, 2020 405,896 $ 159,997 76,727,394 $ 771 $ 3,297,305 $ (988,272) $ (5,644) $ 84,590 $ 2,548,747
Net income, excluding $1,877 attributable to redeemable noncontrolling interests — — — — — 94,440 — 1,481 95,921
Other comprehensive income - change in fair value of interest rate swaps, excluding $231 attributable to redeemable noncontrolling interest — — — — — — 2,406 — 2,406
Dividends declared to common shareholders ($2.12 per share) — — — — — (164,788) — — (164,788)
Dividends declared to preferred shareholders — — — — — (4,021) — — (4,021)
Distributions declared to noncontrolling interests, excluding $1,735 attributable to redeemable noncontrolling interests — — — — — — — (1,727) (1,727)
Common shares issued, net — — 847,509 9 87,124 — — — 87,133
Shares issued under dividend reinvestment plan — — 11,516 — 1,019 — — — 1,019
Share-based compensation expense, net of forfeitures — — 152,185 2 7,505 — — — 7,507
Shares withheld for employee taxes — — (27,500) — (2,813) — — — (2,813)
Redemption of OP units — — 49,484 0 5,049 — — (5,148) (99)
Contributions from noncontrolling interests, excluding $74,530 attributable to redeemable noncontrolling interests — — — — — — — 6,554 6,554
BALANCE AT JUNE 30, 2021 405,896 $ 159,997 77,760,588 $ 782 $ 3,395,189 $ (1,062,641) $ (3,238) $ 85,750 $ 2,575,839


	Shareholders’ Equity of the Trust
	Preferred Shares			Common Shares			Additional Paid-in Capital		Accumulated Dividends in Excess of Net Income		Accumulated Other Comprehensive Income (Loss)		Noncontrolling Interests		Total Shareholders' Equity
	Shares	Amount		Shares	Amount
	(In thousands, except share data)


























BALANCE AT DECEMBER 31, 2021	405,896	$	159,997	78,603,305	$	790	$	3,488,794	$	(1,066,932)	$	(2,047)	$	82,546	$	2,663,148

Net income, excluding $1,735 attributable to redeemable noncontrolling interests	—	—		—	—		—		51,984		—		1,009		52,993
Other comprehensive income - change in fair value of interest rate swaps, excluding $344 attributable to redeemable noncontrolling interests	—	—		—	—		—		—		3,572		—		3,572
Dividends declared to common shareholders ($1.07 per share)	—	—		—	—		—		(84,196)		—		—		(84,196)
Dividends declared to preferred shareholders	—	—		—	—		—		(2,010)		—		—		(2,010)
Distributions declared to noncontrolling interests, excluding $1,744 attributable to redeemable noncontrolling interests	—	—		—	—		—		—		—		(1,759)		(1,759)
Common shares issued, net	—	—		729,769	8		82,741		—		—		—		82,749


Shares issued under dividend reinvestment plan	—	—		3,770	—		502		—		—		—		502
Share-based compensation expense, net of forfeitures	—	—		108,891	1		4,178		—		—		—		4,179
Shares withheld for employee taxes	—	—		(38,270)	—		(4,601)		—		—		—		(4,601)
Conversion and redemption of downREIT OP units	—	—		10,007	—		977		—		—		(977)		—



BALANCE AT MARCH 31, 2022	405,896	$	159,997	79,417,472	$	799	$	3,572,591	$	(1,101,154)	$	1,525	$	80,819	$	2,714,577

BALANCE AT MARCH 31, 2021 405,896 $ 159,997 77,706,466 $ 781 $ 3,386,917 $ (1,024,417) $ (2,300) $ 83,982 $ 2,604,960
Net income, excluding $1,069 attributable to redeemable noncontrolling interests — — — — — 46,204 — 786 46,990
Other comprehensive loss - change in fair value of interest rate swaps, excluding $119 attributable to redeemable noncontrolling interest — — — — — — (938) — (938)
Dividends declared to common shareholders ($1.06 per share) — — — — — (82,417) — — (82,417)
Dividends declared to preferred shareholders — — — — — (2,011) — — (2,011)
Distributions declared to noncontrolling interests, excluding $1,039 attributable to redeemable noncontrolling interests — — — — — — — (943) (943)
Common shares issued, net — — 16 1 (82) — — — (81)
Shares issued under dividend reinvestment plan — — 5,236 — 474 — — — 474
Share-based compensation expense, net of forfeitures — — 4,473 0 3,358 — — — 3,358
Shares withheld for employee taxes — — (71) (8) — — — (8)
Redemption of OP units — 44,468 0 4,530 — — (4,629) (99)
Contributions from noncontrolling interests, excluding $74,530 attributable to redeemable noncontrolling interests — — — — — — — 6,554 6,554
BALANCE AT JUNE 30, 2021 405,896 $ 159,997 77,760,588 $ 782 $ 3,395,189 $ (1,062,641) $ (3,238) $ 85,750 $ 2,575,839

~~Table of Contents~~

~~Federal Realty Investment Trust~~

~~Consolidated Statements of Shareholders’ Equity~~

~~For the Three and Six Months Ended June 30, 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, 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 — — — — — (510) — — (510)
Net income, excluding $1,157 attributable to redeemable noncontrolling interests — — — — — 65,270 — 873 66,143
Other comprehensive loss - change in fair value of interest rate swaps — — — — — — (6,945) — (6,945)
Dividends declared to common shareholders ($2.10 per share) — — — — — (158,810) — — (158,810)
Dividends declared to preferred shareholders — — — — — (4,021) — — (4,021)
Distributions declared to noncontrolling interests, excluding $847 attributable to redeemable noncontrolling interests — — — — — — — (1,677) (1,677)
Common shares issued, net — — 29 0 2 — — — 2
Shares issued under dividend reinvestment plan — — 10,605 — 955 — — — 955
Share-based compensation expense, net of forfeitures — — 114,092 1 7,028 — — — 7,029
Shares withheld for employee taxes — — (32,390) — (3,997) — — — (3,997)
Redemption of OP units — — — — (30) — — (3,290) (3,320)
Contributions from noncontrolling interests, excluding $19,515 attributable to redeemable noncontrolling interests — — — — — — — 120 120
BALANCE AT JUNE 30, 2020 405,896 $ 159,997 75,633,140 $ 760 $ 3,170,480 $ (889,195) $ (7,758) $ 96,817 $ 2,531,101

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
Net income, excluding $142 attributable to redeemable noncontrolling interests — — — — — 10,507 — 210 10,717
Other comprehensive loss - change in fair value of interest rate swaps — — — — — — (493) — (493)
Dividends declared to common shareholders ($1.05 per share) — — — — — (79,407) — — (79,407)
Dividends declared to preferred shareholders — — — — — (2,011) — — (2,011)
Distributions declared to noncontrolling interests, excluding $93 attributable to redeemable noncontrolling interests — — — — — — — (894) (894)
Common shares issued, net — — 16 0 0 — — — 0
Shares issued under dividend reinvestment plan — — 6,771 — 509 — — — 509
Share-based compensation expense, net of forfeitures — — 4,026 0 3,087 — — — 3,087
Shares withheld for employee taxes — — (177) — (15) — — — (15)
BALANCE AT JUNE 30, 2020 405,896 $ 159,997 75,633,140 $ 760 $ 3,170,480 $ (889,195) $ (7,758) $ 96,817 $ 2,531,101
































BALANCE AT DECEMBER 31, 2020	405,896	$	159,997	76,727,394	$	771	$	3,297,305	$	(988,272)	$	(5,644)	$	84,590	$	2,548,747

Net income, excluding $808 attributable to redeemable noncontrolling interests	—	—		—	—		—		48,236		—		695		48,931
Other comprehensive income - change in fair value of interest rate swaps, excluding $350 attributable to redeemable noncontrolling interests	—	—		—	—		—		—		3,344		—		3,344
Dividends declared to common shareholders ($1.06 per share)	—	—		—	—		—		(82,371)		—		—		(82,371)
Dividends declared to preferred shareholders	—	—		—	—		—		(2,010)		—		—		(2,010)
Distributions declared to noncontrolling interests, excluding $696 attributable to redeemable noncontrolling interests	—	—		—	—		—		—		—		(784)		(784)
Common shares issued, net	—	—		847,493	8		87,206		—		—		—		87,214


Shares issued under dividend reinvestment plan	—	—		6,280	—		545		—		—		—		545
Share-based compensation expense, net of forfeitures	—	—		147,712	2		4,147		—		—		—		4,149
Shares withheld for employee taxes	—	—		(27,429)	—		(2,805)		—		—		—		(2,805)
Conversion and redemption of downREIT OP units	—	—		5,016	—		519		—				(519)		—



BALANCE AT MARCH 31, 2021	405,896	$	159,997	77,706,466	$	781	$	3,386,917	$	(1,024,417)	$	(2,300)	$	83,982	$	2,604,960

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

Table of Contents

Federal Realty Investment Trust

Consolidated Statements of Cash Flows

(Unaudited)


		Six Months Ended June 30,				Three Months Ended March 31,
		2021		2020				2022		2021
		(In thousands)				(In thousands)
OPERATING ACTIVITIES	OPERATING ACTIVITIES						OPERATING ACTIVITIES
Net income	Net income	$	97,798	$	67,300		Net income	$	54,728	$	49,739
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	131,549		124,972			Depreciation and amortization	71,674		63,874

Gain on sale of real estate and change in control of interest	Gain on sale of real estate and change in control of interest	(17,428)		(11,682)			Gain on sale of real estate and change in control of interest	—		(17,428)

Loss from partnerships		1,215		5,036
(Income) loss from partnerships							(Income) loss from partnerships	(197)		1,338
Other, net	Other, net	8,316		5,240			Other, net	(1,636)		1,245
Changes in assets and liabilities, net of effects of acquisitions and dispositions:	Changes in assets and liabilities, net of effects of acquisitions and dispositions:						Changes in assets and liabilities, net of effects of acquisitions and dispositions:

Decrease (increase) in accounts receivable, net		4,696		(17,128)
Decrease in prepaid expenses and other assets		11,370		15,887
Increase in accounts payable and accrued expenses		2,142		5,756
Increase (decrease) in security deposits and other liabilities		7,551		(13,999)
(Increase) decrease in accounts receivable, net							(Increase) decrease in accounts receivable, net	(11,257)		883
(Increase) decrease in prepaid expenses and other assets							(Increase) decrease in prepaid expenses and other assets	(4,577)		3,169
(Decrease) increase in accounts payable and accrued expenses							(Decrease) increase in accounts payable and accrued expenses	(5,419)		7,987
(Decrease) increase in security deposits and other liabilities							(Decrease) increase in security deposits and other liabilities	(247)		4,299
Net cash provided by operating activities	Net cash provided by operating activities	247,209		181,382			Net cash provided by operating activities	103,069		115,106
INVESTING ACTIVITIES	INVESTING ACTIVITIES						INVESTING ACTIVITIES
Acquisition of real estate	Acquisition of real estate	(332,574)		(9,409)			Acquisition of real estate	—		(5,694)
Capital expenditures - development and redevelopment	Capital expenditures - development and redevelopment	(182,657)		(213,181)			Capital expenditures - development and redevelopment	(66,610)		(68,527)
Capital expenditures - other	Capital expenditures - other	(34,970)		(30,388)			Capital expenditures - other	(18,409)		(15,189)
Costs associated with property sold under threat of condemnation, net		0		(12,924)

Proceeds from sale of real estate	Proceeds from sale of real estate	19,896		17,015			Proceeds from sale of real estate	874		19,896

Investment in partnerships	Investment in partnerships	(2,657)		(917)			Investment in partnerships	—		(2,657)
Distribution from partnerships in excess of earnings	Distribution from partnerships in excess of earnings	1,131		849			Distribution from partnerships in excess of earnings	517		285

Leasing costs	Leasing costs	(9,265)		(7,923)			Leasing costs	(4,577)		(2,955)
Repayment (issuance) of mortgage and other notes receivable, net		31,122		(320)
Repayment of mortgage and other notes receivable, net							Repayment of mortgage and other notes receivable, net	11		—
Net cash used in investing activities	Net cash used in investing activities	(509,974)		(257,198)			Net cash used in investing activities	(88,194)		(74,841)
FINANCING ACTIVITIES	FINANCING ACTIVITIES						FINANCING ACTIVITIES
Costs to amend revolving credit facility		0		(638)

Issuance of senior notes, net of costs		0		700,085

Issuance of notes payable, net of costs		0		398,732

Repayment of mortgages, finance leases and notes payable	Repayment of mortgages, finance leases and notes payable	(151,310)		(3,264)			Repayment of mortgages, finance leases and notes payable	(869)		(48,845)
Issuance of common shares, net of costs	Issuance of common shares, net of costs	87,286		97			Issuance of common shares, net of costs	82,819		87,329

Dividends paid to common and preferred shareholders	Dividends paid to common and preferred shareholders	(166,847)		(161,874)			Dividends paid to common and preferred shareholders	(85,684)		(82,913)
Shares withheld for employee taxes	Shares withheld for employee taxes	(2,813)		(3,997)			Shares withheld for employee taxes	(4,601)		(2,805)
Contributions from noncontrolling interests		104		0

Distributions to and redemptions of noncontrolling interests	Distributions to and redemptions of noncontrolling interests	(3,615)		(5,702)			Distributions to and redemptions of noncontrolling interests	(3,514)		(1,485)

Net cash (used in) provided by financing activities		(237,195)		923,439
(Decrease) increase in cash, cash equivalents and restricted cash		(499,960)		847,623
Net cash used in financing activities							Net cash used in financing activities	(11,849)		(48,719)
Increase (decrease) in cash, cash equivalents and restricted cash							Increase (decrease) in cash, cash equivalents and restricted cash	3,026		(8,454)
Cash, cash equivalents, and restricted cash at beginning of year	Cash, cash equivalents, and restricted cash at beginning of year	816,896		153,614			Cash, cash equivalents, and restricted cash at beginning of year	175,163		816,896
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	316,936	$	1,001,237		Cash, cash equivalents, and restricted cash at end of period	$	178,189	$	808,442

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

Table of Contents

Federal Realty OP LP

Consolidated Balance Sheets


	March 31,		December 31,
	2022		2021
	(In thousands, except unit data)
	(Unaudited)
ASSETS
Real estate, at cost
Operating (including $2,210,901 and $2,207,648 of consolidated variable interest entities, respectively)	$	8,843,063	$	8,814,791
Construction-in-progress (including $21,677 and $18,752 of consolidated variable interest entities, respectively)	662,985		607,271

	9,506,048		9,422,062
Less accumulated depreciation and amortization (including $403,533 and $389,950 of consolidated variable interest entities, respectively)	(2,587,121)		(2,531,095)
Net real estate	6,918,927		6,890,967
Cash and cash equivalents	157,944		162,132
Accounts and notes receivable, net	183,479		169,007
Mortgage notes receivable, net	9,519		9,543
Investment in partnerships	13,183		13,027
Operating lease right of use assets	90,231		90,743
Finance lease right of use assets	49,511		49,832
Prepaid expenses and other assets	245,581		237,069

TOTAL ASSETS	$	7,668,375	$	7,622,320
LIABILITIES AND CAPITAL
Liabilities
Mortgages payable, net (including $334,640 and $335,301 of consolidated variable interest entities, respectively)	$	339,236	$	339,993

Notes payable, net	301,540		301,466
Senior notes and debentures, net	3,406,491		3,406,088
Accounts payable and accrued expenses	233,773		235,168
Dividends payable	86,617		86,538
Security deposits payable	26,073		25,331
Operating lease liabilities	72,317		72,661
Finance lease liabilities	72,028		72,032
Other liabilities and deferred credits	201,680		206,187
Total liabilities	4,739,755		4,745,464
Commitments and contingencies (Note 5)
Redeemable noncontrolling interests	214,043		213,708
Partner capital



Preferred units, 405,896 units issued and outstanding	154,963		154,963
Common units, 79,417,472 and 78,603,305 units issued and outstanding at March 31, 2022 and December 31, 2021, respectively	2,477,270		2,427,686
Accumulated other comprehensive income (loss)	1,525		(2,047)
Total partner capital	2,633,758		2,580,602
Noncontrolling interests in consolidated partnerships	80,819		82,546
Total capital	2,714,577		2,663,148
TOTAL LIABILITIES AND CAPITAL	$	7,668,375	$	7,622,320

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

Table of Contents

Federal Realty OP LP

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended March 31,
			2022		2021
		(In thousands, except per unit data)
REVENUE
Rental income			$	256,507	$	217,135

Mortgage interest income			264		1,026
Total revenue			256,771		218,161
EXPENSES
Rental expenses			56,211		49,238
Real estate taxes			30,560		29,420
General and administrative			12,342		10,258
Depreciation and amortization			71,674		63,874
Total operating expenses			170,787		152,790


Gain on sale of real estate and change in control of interest			—		17,428

OPERATING INCOME			85,984		82,799

OTHER INCOME/(EXPENSE)
Other interest income			120		363
Interest expense			(31,573)		(32,085)


Income (loss) from partnerships			197		(1,338)


NET INCOME			54,728		49,739
Net income attributable to noncontrolling interests			(2,744)		(1,503)
NET INCOME ATTRIBUTABLE TO THE PARTNERSHIP			51,984		48,236
Distributions on preferred units			(2,010)		(2,010)
NET INCOME AVAILABLE FOR COMMON UNIT HOLDERS			$	49,974	$	46,226

EARNINGS PER COMMON UNIT, BASIC:




Net income available for common unit holders			$	0.63	$	0.60
Weighted average number of common units			78,446		76,842
EARNINGS PER COMMON UNIT, DILUTED:




Net income available for common unit holders			$	0.63	$	0.60
Weighted average number of common units			78,543		76,842

COMPREHENSIVE INCOME			$	58,644	$	53,433

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE PARTNERSHIP			$	55,556	$	51,580

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

Table of Contents

Federal Realty OP LP

Consolidated Statements of Capital

For the Three Months Ended March 31, 2022 and 2021

(Unaudited)


	Preferred Units		Common Units		Accumulated Other Comprehensive Income (Loss)		Total Partner Capital		Noncontrolling Interests in Consolidated Partnerships		Total Capital


BALANCE AT DECEMBER 31, 2021	$	154,963	$	2,427,686	$	(2,047)	$	2,580,602	$	82,546	$	2,663,148

Net income, excluding $1,735 attributable to redeemable noncontrolling interests	2,010		49,974		—		51,984		1,009		52,993
Other comprehensive income - change in fair value of interest rate swaps, excluding $344 attributable to redeemable noncontrolling interest	—		—		3,572		3,572		—		3,572
Distributions declared to common unit holders	—		(84,196)		—		(84,196)		—		(84,196)
Distributions declared to preferred unit holders	(2,010)		—		—		(2,010)		—		(2,010)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $1,744 attributable to redeemable noncontrolling interests	—		—		—		—		(1,759)		(1,759)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs	—		82,749		—		82,749		—		82,749


Common units issued under dividend reinvestment plan	—		502		—		502		—		502
Share-based compensation expense, net of forfeitures	—		4,179		—		4,179		—		4,179
Common units withheld for employee taxes	—		(4,601)		—		(4,601)		—		(4,601)
Conversion and redemption of downREIT OP units	—		977		—		977		(977)		—



BALANCE AT MARCH 31, 2022	$	154,963	$	2,477,270	$	1,525	$	2,633,758	$	80,819	$	2,714,577
































BALANCE AT DECEMBER 31, 2020	$	154,963	$	2,314,838	$	(5,644)	$	2,464,157	$	84,590	$	2,548,747

Net income, excluding $808 attributable to redeemable noncontrolling interests	2,010		46,226		—		48,236		695		48,931
Other comprehensive income - change in fair value of interest rate swaps, excluding $350 attributable to redeemable noncontrolling interests	—		—		3,344		3,344		—		3,344
Distributions declared to common unit holders	—		(82,371)		—		(82,371)		—		(82,371)
Distributions declared to preferred unit holders	(2,010)		—		—		(2,010)		—		(2,010)
Distributions declared to noncontrolling interests in consolidated partnerships, excluding $696 attributable to redeemable noncontrolling interests	—		—		—		—		(784)		(784)
Common units issued as a result of common stock issued by Parent Company, net of issuance costs	—		87,214		—		87,214		—		87,214


Common units issued under dividend reinvestment plan	—		545		—		545		—		545
Share-based compensation expense, net of forfeitures	—		4,149		—		4,149		—		4,149
Common units withheld for employee taxes	—		(2,805)		—		(2,805)		—		(2,805)
Conversion and redemption of downREIT OP units	—		519		—		519		(519)		—



BALANCE AT MARCH 31, 2021	$	154,963	$	2,368,315	$	(2,300)	$	2,520,978	$	83,982	$	2,604,960

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

Table of Contents

Federal Realty OP LP

Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
	2022		2021
	(In thousands)
OPERATING ACTIVITIES
Net income	$	54,728	$	49,739
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	71,674		63,874


Gain on sale of real estate and change in control of interest	—		(17,428)



(Income) loss from partnerships	(197)		1,338
Other, net	(1,636)		1,245
Changes in assets and liabilities, net of effects of acquisitions and dispositions:

(Increase) decrease in accounts receivable, net	(11,257)		883
(Increase) decrease in prepaid expenses and other assets	(4,577)		3,169
(Decrease) increase in accounts payable and accrued expenses	(5,419)		7,987
(Decrease) increase in security deposits and other liabilities	(247)		4,299
Net cash provided by operating activities	103,069		115,106
INVESTING ACTIVITIES
Acquisition of real estate	—		(5,694)
Capital expenditures - development and redevelopment	(66,610)		(68,527)
Capital expenditures - other	(18,409)		(15,189)

Proceeds from sale of real estate	874		19,896

Investment in partnerships	—		(2,657)
Distribution from partnerships in excess of earnings	517		285

Leasing costs	(4,577)		(2,955)
Repayment of mortgage and other notes receivable, net	11		—
Net cash used in investing activities	(88,194)		(74,841)
FINANCING ACTIVITIES





Repayment of mortgages, finance leases and notes payable	(869)		(48,845)
Issuance of common units, net of costs	82,819		87,329

Distributions to common and preferred unit holders	(85,684)		(82,913)
Shares withheld for employee taxes	(4,601)		(2,805)

Distributions to and redemptions of noncontrolling interests	(3,514)		(1,485)

Net cash used in financing activities	(11,849)		(48,719)
Increase (decrease) in cash, cash equivalents and restricted cash	3,026		(8,454)
Cash, cash equivalents, and restricted cash at beginning of year	175,163		816,896
Cash, cash equivalents, and restricted cash at end of period	$	178,189	$	808,442

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

Table of Contents

Federal Realty Investment Trust

Federal Realty OP LP

Notes to Consolidated Financial Statements

~~June 30, 2021~~March 31, 2022

(Unaudited)

NOTE 1—BUSINESS AND ORGANIZATION

Federal Realty Investment Trust (the "Parent Company" and the “Trust”) is an equity real estate investment trust (“REIT”) ~~specializing~~. Federal Realty OP LP (the "Operating Partnership") is the entity through which the Parent Company conducts substantially all of its operations and owns all of its assets. The Parent Company owns 100% of the limited liability company interests of, is sole member of and exercises exclusive control over Federal Realty GP LLC ("the General Partner"), which in turn, is the sole general partner of the Operating Partnership. The Parent Company specializes in the ownership, management, and redevelopment of retail and mixed-use ~~properties.~~properties through the Operating Partnership, and has no other substantial assets or liabilities other than through its investment in the Operating Partnership. Our properties are located primarily in communities where we believe retail demand exceeds supply, in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As of ~~June 30, 2021,~~March 31, 2022, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as ~~105~~104 predominantly retail real estate projects.

We operate in a manner intended to enable usthe Trust to qualify as a REIT for federal income tax purposes. A REIT that distributes at least 90% of its taxable income to its shareholders each year and meets certain other conditions is not taxed on that portion of its taxable income which is distributed to its shareholders. Therefore, federal income taxes on our taxable income have been and are generally expected to be immaterial. We are obligated to pay state taxes, generally consisting of franchise or gross receipts taxes in certain states. Such state taxes also have not been material.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

In January 2022, we completed a reorganization into an umbrella partnership real estate investment trust, or "UPREIT." For additional information on our UPREIT reorganization, please see our Current Reports on Form 8-K filed with the SEC on January 3, 2022 and January 5, 2022, as well our latest Annual Report on Form 10-K filed on February 10, 2022. Immediately following the reorganization, the Parent Company had the same consolidated assets and liabilities as Federal Realty Investment Trust immediately before the reorganization. The Parent Company exercises exclusive control over the General Partner and does not have assets or liabilities other than its investment in the Operating Partnership. As a result, the UPREIT reorganization represented a merger of entities under common control in accordance with accounting principles generally accepted in the United States ("GAAP"). Accordingly, the accompanying consolidated ~~balance sheet as of December 31, 2020, which has been derived from audited~~ financial statements ~~and~~including the notes thereto, are presented as if the UPREIT reorganization had occurred at the earliest period presented.

The accompanying unaudited interim consolidated financial statements of the Parent Company and Operating Partnership have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with ~~accounting principles generally accepted in the United States (GAAP)~~GAAP have been omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in our latest Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation for the periods presented have been included. The results of operations for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the full year. Certain 2021 amounts have been reclassified to conform to our current period presentation.

Principles of Consolidation

~~Our~~As discussed in the Explanatory Note, we have combined the quarterly reports on Form 10-Q of the Parent Company and the Operating Partnership into this single report. As a result, we present two sets of consolidated financial statements. Both sets of consolidated financial statements include the accounts of the ~~Trust,~~entity, its corporate subsidiaries, and all entities in which ~~the Trust~~it has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity (“VIE”). The Parent Company's consolidated financial statements include the accounts of the Operating Partnership and its subsidiaries as the Parent Company, through its ownership and control over the General Partner, exercises exclusive control over the Operating Partnership. The equity interests of other investors are reflected as noncontrolling interests or redeemable noncontrolling interests. All significant intercompany transactions and balances are eliminated in consolidation. We account for our interests in joint ventures which we do not control using the equity method of accounting.

Table of Contents

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, referred to as “GAAP,” requires management to make estimates and assumptions that in certain circumstances affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management’s best judgment, after considering past, current and expected events and economic conditions. Actual results could differ from these estimates.

Impacts of COVID-19 Pandemic

~~Since March 2020, we have been, and~~We continue to ~~be, impacted by~~monitor and address risks related to the ~~novel coronavirus ("COVID-19") pandemic. While~~COVID-19 pandemic, and while we currently expect the impact to our properties to be 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.

~~Federal, state,~~The overall economy is showing signs of recovery from the initial impacts of COVID-19; however, workforce shortages, global supply chain bottlenecks and local governments have taken various actions since the onset of the pandemic to mitigate the spread of COVID-19. These actions range from closure of nonessential businesses and ordering residents to generally stay at home at the onset of the pandemic to phased re-openings and capacity limitations and now to generally lifted restrictionsshortages, inflation, as well as COVID-19 ~~vaccination rates increase. These closures~~variants and ~~restrictions, along with general concern over~~ the ~~spread~~effectiveness of ~~COVID-19, required a significant number~~vaccines against variants are impacting the pace of ~~tenants to close their operations or to significantly limit the amount~~recovery. Our collection of ~~business they were able to conduct,~~

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~~which impacted their ability to timely pay rent as required under our leases and also caused many tenants to close their businesses permanently. While recent results are improving, we~~rents has continued to ~~see elevated levels of~~improve including collecting rents related to prior periods. As a result, our collectibility related ~~impacts and accordingly,~~adjustments were immaterial during the three ~~and six~~ months ended ~~June 30, 2021, we recognized~~March 31, 2022, as compared to collectibility related adjustments of ~~$6.4~~$14.8 million during the three months ended March 31, 2021, which reflected lower levels of cash collections and ~~$21.2 million, respectively. This includes not only the impact~~elevated levels of ~~tenants recognized on a cash basis but also changes in our collectibility assessments from probable to not probable, disputed rents, and any~~ rent abatements and disputes directly related to COVID-19. As of ~~June 30, 2021,~~March 31, 2022, the revenue from approximately ~~35%~~33% of our tenants (based on total commercial leases) is being recognized on a cash basis.

For more information, see Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Outlook.

~~Mortgage Notes Receivable~~

On May 11, 2021, two of our outstanding mortgage notes receivable were repaid. Including interest, the net proceeds were $33.8 million. As a result of the transaction, our mortgage notes receivable, net of valuation allowance, decreased $30.3 million.

~~Forward Equity Sales~~

On February 24, 2021, we replaced our existing at-the-market (“ATM”) equity program with a new ATM equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $500.0 million. The new ATM equity program also allows shares to be sold through forward sales contracts. Our forward sales contracts currently meet all the conditions for equity classification; and therefore, we record common stock on the settlement date at the purchase price contemplated by the contract. Furthermore, we consider the potential dilution resulting from forward sales contracts in our earnings per share calculations. We use the treasury method to determine the dilution, if any, from the forward sales contracts during the period of time prior to settlement. As of June 30, 2021, no forward sales contracts have settled.

Recently Issued Accounting Pronouncements

Standard

Description

Effect on the financial statements or significant matters

ASU 2020-04, March 2020, Reference Rate Reform (Topic 848)

This ASU provides companies with optional practical expedients to ease the accounting burden for contract modifications associated with transitioning away from LIBOR and other interbank offered rates that are expected to be discontinued as part of reference rate reform. For hedges, the guidance generally allows changes to the reference rate and other critical terms without having to de-designate the hedging relationship, as well as allows the shortcut method to continue to be applied. For contract modifications, changes in the reference rate or other critical terms will be treated as a continuation of the prior contract.

This guidance can be applied immediately, however, is generally only available through December 31, 2022.

We are still evaluating the impact of reference rate reform and whether we will apply any of these practical expedients.

~~ASU 2021-05, July 2021,~~ ~~Lessors - Certain Leases with Variable Lease Payments (Topic 842)~~

This ASU amends the lessor lease classification in ASC 842 for leases that include variable lease payments that are not based on an index or rate. Under the amended guidance, lessors will classify a lease with variable payments that do not depend on an index or rate as an operating lease if the lease would have been classified as a sales-type lease or a direct financing lease under the previous ASU 842 classification criteria, and sales-type or direct financing lease classification would result in a Day 1 loss.

~~This guidance is effective for annual periods beginning after December 15, 2021, and interim periods therein.~~

~~The adoption of this standard does not have an impact to our consolidated financial statements.~~

912

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Consolidated Statements of Cash Flows—Supplemental Disclosures

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


	Three Months Ended
	March 31,
	2022		2021
	(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	36,188	$	38,626
Interest capitalized	(4,615)		(6,541)
Interest expense	$	31,573	$	32,085
Cash paid for interest, net of amounts capitalized	$	30,436	$	29,973
Cash paid for income taxes	$	4	$	—
NON-CASH INVESTING AND FINANCING TRANSACTIONS:





DownREIT operating partnership units redeemed for common shares	$	977	$	519
Shares issued under dividend reinvestment plan	$	432	$	430

Six Months Ended
June 30,
2021 2020
(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred $ 76,284 $ 73,942
Interest capitalized (13,022) (11,424)
Interest expense $ 63,262 $ 62,518
Cash paid for interest, net of amounts capitalized $ 60,782 $ 52,715
Cash paid for income taxes $ 320 $ 428
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
DownREIT operating partnership units issued with acquisition $ — $ 18,920
Mortgage loans assumed with acquisition $ 0 $ 8,903
DownREIT operating partnership units redeemed for common shares $ 5,121 $ 0
Shares issued under dividend reinvestment plan $ 866 $ 860


		June 30,		December 31,				March 31,		December 31,
		2021		2020				2022		2021
		(In thousands)				(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:	RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:						RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents	Cash and cash equivalents	$	304,268	$	798,329		Cash and cash equivalents	$	157,944	$	162,132
Restricted cash (1)	Restricted cash (1)	12,668		18,567			Restricted cash (1)	20,245		13,031
Total cash, cash equivalents, and restricted cash	Total cash, cash equivalents, and restricted cash	$	316,936	$	816,896		Total cash, cash equivalents, and restricted cash	$	178,189	$	175,163

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

NOTE 3—~~REAL ESTATE~~

On January 4, 2021, we acquired our partner's 20% interest in our joint venture arrangement related to the Pike & Rose hotel for $2.3 million, and repaid the $31.5 million mortgage loan encumbering the hotel. As a result of the transaction, we gained control of the hotel, and effective January 4, 2021, we have consolidated this asset. We also recognized a gain on acquisition of the controlling interest of $2.1 million related to the difference between the carrying value and fair value of the previously held equity interest.

On February 22, 2021, we acquired the fee interest at our Mount Vernon Plaza property in Alexandria, Virginia for $5.6 million. As a result of this transaction, the "operating lease right of use assets" and "operating lease liabilities" on our consolidated balance sheet decreased by $9.8 million. We now own the entire fee interest on this property.

~~Property Acquisitions~~

~~During the six months ended June 30, 2021, we acquired the following properties:~~
Date Acquired Property City/State Gross Leasable Area (GLA) Joint Venture Interest (1) Gross Value
(in square feet) (in millions)
April 30, 2021 Chesterbrook McLean, Virginia 90,000 80 % $ 32.1 (2)
June 1, 2021 Grossmont Center La Mesa, California 933,000 60 % $ 175.0 (3)
June 14, 2021 Camelback Colonnade Phoenix, Arizona 642,000 98 % $ 162.5 (4)
June 14, 2021 Hilton Village Scottsdale, Arizona 93,000 98 % $ 37.5 (5)

~~(1)~~These acquisitions were completed through newly formed joint ventures, for which we own the controlling interest listed above, and therefore, these properties are consolidated in our financial statements.

~~(2)~~Approximately $1.9 million and $0.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $8.0 million of net assets acquired were allocated to other liabilities for "below market leases."

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~~(3)~~Approximately $12.3 million and $2.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $14.7 million of net assets acquired were allocated to other liabilities for "below market leases."

~~(4)Approximately $11.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and $28.3 million were allocated to other liabilities for "below market leases."~~

~~(5)~~The land is controlled under a long-term ground lease that expires on December 31, 2076, for which we have recorded a $10.4 million "operating lease right of use asset" (net of a $1.3 million above market liability) and an $11.6 million "operating lease liability." Approximately $2.7 million and $1.1 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $3.6 million were allocated to other liabilities for "below market leases."

~~Property Disposition~~

~~On March 19, 2021, we sold a portion of Graham Park Plaza in Falls Church, Virginia for $20.3 million, resulting in a gain on sale of $15.6 million.~~

~~NOTE 4—~~DEBT

~~On February 5, 2021, we repaid the $16.2 million mortgage loan on Sylmar Towne Center, at par, prior to its original maturity date.~~

~~In June 2020, we provided notice for the early repayment of the Plaza Del Sol mortgage loan, at par, on September 1, 2021.~~

During the three ~~and six~~ months ended ~~June 30, 2021, there were 0~~March 31, 2022, the maximum amount of borrowings onoutstanding under our $1.0 billion revolving credit ~~facility.~~ facility was $38.0 million, the weighted average amount of borrowings outstanding was $3.8 million, and the weighted average interest rate, before amortization of debt fees, was 1.2%. At March 31, 2022, our revolving credit facility had no balance outstanding.

Effective April 1, 2022, as a result of the change in our credit rating, the spread over LIBOR on our revolving credit facility increased from 77.5 basis points to 82.5 basis, and the spread over LIBOR on our unsecured term loan increased from 80 basis points to 85 basis points.

Our revolving credit facility, term loan, and certain notes require us to comply with various financial covenants, including the maintenance of minimum shareholders' equity and debt coverage ratios and a maximum ratio of debt to net worth. As of ~~June 30, 2021,~~March 31, 2022, we were in compliance with all default related debt covenants.

NOTE 5—4—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:

June 30, 2021 December 31, 2020
Carrying
Value Fair Value Carrying
Value Fair Value
(In thousands)
Mortgages and notes payable $ 767,651 $ 760,820 $ 886,887 $ 879,390
Senior notes and debentures $ 3,405,282 $ 3,717,381 $ 3,404,488 $ 3,761,465

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	March 31, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Mortgages and notes payable	$	640,776	$	640,491	$	641,459	$	655,864
Senior notes and debentures	$	3,406,491	$	3,367,161	$	3,406,088	$	3,649,776

As of ~~June 30, 2021,~~March 31, 2022, we have 2 interest rate swap agreements with notional amounts of ~~$56.5~~$56.1 million that are measured at fair value on a recurring basis. The interest rate swap agreements fix the interest rate on ~~$56.5~~$56.1 million of mortgage payables at 3.67% through December 15, 2029. The fair values of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The fair value of our swaps at ~~June 30, 2021~~March 31, 2022 was ~~a liability~~an asset of ~~$2.4~~$1.9 million and is included in ~~"other liabilities~~"prepaid expenses and ~~deferred credits"~~other assets" on our consolidated balance sheet. For the three months ended ~~June 30, 2021,~~March 31, 2022, the value of our interest rate swaps ~~decreased $1.2~~increased $3.4 million ~~and increased $2.3 million for the six months ended June 30, 2021~~ (including ~~$0.3 million reclassified from other comprehensive loss to interest expense for the three months, and $0.5~~$0.2 million reclassified from other comprehensive income to interest ~~expense for the six months ended June 30, 2021)~~expense). A summary of our financial ~~liabilities~~assets (liabilities) that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:

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June 30, 2021 December 31, 2020
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
(In thousands)
Interest rate swaps $ 0 $ (2,403) $ 0 $ (2,403) $ 0 $ (4,711) $ 0 $ (4,711)


	March 31, 2022								December 31, 2021
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Interest rate swaps	$	—	$	1,930	$	—	$	1,930	$	—	$	(1,511)	$	—	$	(1,511)

One of our equity method investees has 2 interest rate swaps which qualify for cash flow hedge accounting. For the three ~~and six months~~ ended ~~June 30, 2021,~~March 31, 2022, our share of the change in fair value of the related swaps included in "accumulated other comprehensive ~~loss"~~income" was ~~a decrease~~an increase of ~~$0.1 million and $0.3 million, respectively.~~$0.5 million.

NOTE 6—5—COMMITMENTS AND CONTINGENCIES

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

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

Under the terms of certain partnership agreements, the partners have the right to exchange their operating partnership units for cash or common shares, at our option. A total of ~~694,133~~656,824 downREIT operating partnership units are outstanding which have a total fair value of approximately ~~$81.3~~$80.2 million, which is calculated by multiplying the outstanding number of downREIT partnership units by our closing stock price on ~~June 30, 2021.~~March 31, 2022.

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NOTE 7—6—SHAREHOLDERS’ EQUITY

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


		Six Months Ended June 30,								Three Months Ended March 31,
		2021				2020					2022				2021
		Declared		Paid		Declared		Paid					Declared		Paid		Declared		Paid
Common shares	Common shares	$	2.120	$	2.120	$	2.100	$	2.100			Common shares	$	1.070	$	1.070	$	1.060	$	1.060
5.417% Series 1 Cumulative Convertible Preferred shares	5.417% Series 1 Cumulative Convertible Preferred shares	$	0.677	$	0.677	$	0.677	$	0.677			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)	5.0% Series C Cumulative Redeemable Preferred shares (1)	$	0.625	$	0.625	$	0.625	$	0.625			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.

On February ~~24, 2021,~~14, 2022, we replaced our existing ATM equity program with a new ATM equity program inunder which we may from time to time offer and sell common shares having an aggregate offering price of up to $500.0 million. ~~On May 7, 2021, we amended this ATM equity program, which resets the limit to $500.0 million.~~ The ~~new~~ ATM equity program also allows shares to be sold through forward sales contracts. We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay indebtedness and/or for general corporate purposes.

For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, we ~~issued 847,471~~settled forward sales agreements by issuing 729,751 common shares ~~at a weighted average price per share of $104.19~~ for net ~~cash~~ proceeds of ~~$87.1 million including paying $0.9 million in commissions and $0.3 million in additional offering expenses related to the sales of these common shares.~~$82.7 million. We ~~also entered into~~have outstanding forward sales ~~contracts~~agreements covering 1,473,904 common shares for ~~the three and six months ended June 30, 2021 for 1,194,733 and 1,526,051~~potential net proceeds at March 31, 2022 of $178.4 million. The open forward shares ~~respectively, under our ATM equity program~~agreements may be settled at ~~a weighted average offering price of $117.47 and $115.30, respectively.~~any time on or before various required settlement dates ranging from August 2022 to December 2022. The forward price that we will receive upon physical settlement of the agreements is subject to the adjustment for (i) ~~commissions, (ii)~~ a floating interest rate factor equal to a specified daily rate less a spread, ~~(iii)~~(ii) the forward purchasers' stock borrowing costs and ~~(iv)~~(iii) scheduled dividends during the term of the forward sale agreements. ~~The open forward shares may be settled at any time on or before multiple required settlement dates ranging from~~

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~~March 2022 to June 2022.~~ We have the full remaining capacity to issue up to ~~$359.7~~$500.0 million in common shares under our ATM equity program as of ~~June 30, 2021.~~March 31, 2022.

NOTE 8—7—SHARE-BASED COMPENSATION PLANS

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


		Three Months Ended				Six Months Ended					Three Months Ended
		June 30,				June 30,					March 31,
		2021		2020		2021		2020				2022		2021
		(In thousands)										(In thousands)
Grants of common shares, restricted stock units, and options	Grants of common shares, restricted stock units, and options	$	3,358	$	3,087	$	7,507	$	7,029	Grants of common shares, restricted stock units, and options		$	4,179	$	4,149

Capitalized share-based compensation	Capitalized share-based compensation	(360)		(310)		(758)		(642)		Capitalized share-based compensation		(359)		(398)
Share-based compensation expense	Share-based compensation expense	$	2,998	$	2,777	$	6,749	$	6,387	Share-based compensation expense		$	3,820	$	3,751

NOTE 9—8—EARNINGS PER SHARE AND UNIT

We have calculated earnings per share (“EPS”) and earnings per unit ("EPU") under the two-class method. The two-class method is an earnings allocation methodology whereby EPS and EPU for each class of common stock and partnership units, respectively, and participating securities is calculated according to dividends or distributions declared and participation rights in undistributed earnings. For both the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, we had 0.3 million ~~and for the three and six months ended June 30, 2020, we had 0.2 million~~ weighted average unvested shares and units outstanding, ~~respectively,~~ which are considered participating securities. Therefore, we have allocated our earnings for basic and diluted EPS and EPU between common shares and units and unvested ~~shares;~~shares and units; the portion of earnings allocated to the unvested shares and units is reflected as “earnings allocated to unvested shares” or "earnings allocated to unvested units" in the ~~reconciliation~~reconciliations below.

The following potentially issuable shares were excluded from the diluted EPS ~~calculation~~and EPU calculations because their impact is anti-dilutive:

•~~exercise~~exercise of ~~682~~2,363 stock options for ~~both~~ the three ~~and six~~ months ended ~~June 30,~~March 31, 2021, ~~and 2020,~~

•conversions of downREIT operating partnership units and 5.417% Series 1 Cumulative Convertible Preferred Shares for ~~all periods presented,~~both the three months ended March 31, 2022 and 2021, and

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•the issuance of ~~0.9~~0.7 million and ~~1.4~~0.3 million shares and units issuable under common share forward sales agreements for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, respectively.

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

Federal Realty Investment Trust Earnings per Share


	Three Months Ended
	March 31,
		2022		2021
		(In thousands, except per share data)
NUMERATOR
Net income		$	54,728	49,739
Less: Preferred share dividends		(2,010)		(2,010)
Less: Income from operations attributable to noncontrolling interests		(2,744)		(1,503)
Less: Earnings allocated to unvested shares		(307)		(294)



Net income available for common shareholders, basic and diluted		$	49,667	$	45,932
DENOMINATOR
Weighted average common shares outstanding, basic		78,446		76,842
Effect of dilutive securities:

Open forward contracts for share issuances		97		—
Weighted average common shares outstanding, diluted		78,543		76,842

EARNINGS PER COMMON SHARE, BASIC AND DILUTED:
Net income available for common shareholders		$	0.63	$	0.60

Federal Realty OP LP Earnings per Unit


	Three Months Ended
	March 31,
		2022		2021
		(In thousands, except per unit data)
NUMERATOR
Net income		$	54,728	49,739
Less: Preferred unit distributions		(2,010)		(2,010)
Less: Income from operations attributable to noncontrolling interests		(2,744)		(1,503)
Less: Earnings allocated to unvested units		(307)		(294)



Net income available for common unit holders, basic and diluted		$	49,667	$	45,932
DENOMINATOR
Weighted average common units outstanding, basic		78,446		76,842
Effect of dilutive securities:

Common unit issuances relating to open common share forward contracts		97		—
Weighted average common units outstanding, diluted		78,543		76,842

EARNINGS PER COMMON UNIT, BASIC AND DILUTED:
Net income available for common unit holders		$	0.63	$	0.60

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Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(In thousands, except per share data)
NUMERATOR
Net income $ 48,059 $ 10,859 $ 97,798 67,300
Less: Preferred share dividends (2,011) (2,011) (4,021) (4,021)
Less: Income from operations attributable to noncontrolling interests (1,855) (352) (3,358) (2,030)
Less: Earnings allocated to unvested shares (298) (249) (592) (495)
Net income available for common shareholders, basic and diluted $ 43,895 $ 8,247 $ 89,827 $ 60,754
DENOMINATOR
Weighted average common shares outstanding, basic 77,474 75,394 77,160 75,377
Effect of dilutive securities:
Open forward contracts for share issuances 31 0 2 0
Weighted average common shares outstanding, diluted 77,505 75,394 77,162 75,377
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders $ 0.57 $ 0.11 $ 1.16 $ 0.81
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders $ 0.57 $ 0.11 $ 1.16 $ 0.81
NOTE 9—SUBSEQUENT EVENT

On April 20, 2022, we acquired the fee interest in a 227,000 square foot shopping center in Kingstowne, Virginia for $100.0 million.

~~NOTE 10—SUBSEQUENT EVENTS~~

~~We provided notice for the early repayment of the Montrose Crossing and The AVENUE at White Marsh mortgage loans, at par, on October 12, 2021 and November 2, 2021, respectively.~~

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, ~~2020~~2021 filed with the Securities and Exchange Commission (the “SEC”) on February ~~11, 2021.~~10, 2022.

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

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

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

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

•risk that we are investing a significant amount in ground-up development projects that may be dependent on third parties to deliver critical aspects of certain projects, requires spending a substantial amount upfront in infrastructure, and assumes receipt of public funding which has been committed but not entirely funded;

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

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

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

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

•risks related to natural disasters, climate change and public health crises (such as the outbreak and worldwide spread of COVID-19), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address them, may precipitate or materially exacerbate one or more of the above-mentioned risks, and may significantly disrupt or prevent us from operating our business in the ordinary course for an extended period.

Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this Quarterly Report on Form 10-Q. You should carefully review the risks and the risk factors included in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 and under Part II, Item 1A in this Quarterly Report on Form 10-Q, before making any investments in us.

Overview

~~We are~~Federal Realty Investment Trust (the "Parent Company" or the “Trust”) is an equity real estate investment trust (“REIT”) ~~specializing~~. Federal Realty OP LP (the "Operating Partnership") is the entity through which the Trust conducts substantially all of its operations and owns substantially all of its assets. The Trust owns 100% of the limited liability company interests of, and is sole member of and exercises exclusive control over Federal Realty GP LLC ("the General Partner"), which in turn, is the sole general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us" means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the

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Operating Partnership. We specialize in the ownership, management, and redevelopment of high quality retail and mixed-use properties located primarily in communities where we believe retail demand exceeds supply, in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida. As of ~~June 30, 2021,~~March 31, 2022, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as ~~105~~104 predominantly retail real estate projects comprising approximately ~~25.3~~24.9 million square feet. In total, the real estate projects were ~~92.7%~~93.7% leased and ~~89.6%~~91.2% occupied at ~~June 30, 2021.~~March 31, 2022.

Impacts of COVID-19 Pandemic

We continue to monitor and address risks related to the ~~novel coronavirus disease ("COVID-19") pandemic. Since March 2020 when the World Health Organization characterized~~ COVID-19 ~~as a global~~ pandemic, which we have been ~~and continue to be~~ impacted by since March 2020. While the overall economy is showing signs of recovery from the initial impacts of COVID-19, workforce shortages, global supply chain bottlenecks and shortages, inflation, as well as COVID-19 variants, and the ~~actions taken by federal, state,~~effectiveness of vaccines against variants are impacting the pace of recovery. Our results have continued to improve and ~~local government~~collectibility related impacts have continued to ~~prevent its spread.~~ ~~These actions range from closure of nonessential~~decrease as businesses have re-opened and ~~ordering residents to~~COVID-19 restrictions are generally ~~stay at home at~~lifted since the onset of the pandemic to phased re-openings and capacity limitations and now to generally lifted restrictions as COVID-19 vaccination rates increase. These closures and restrictions, along with general concern over the spread of COVID-19, required a significant number of tenants to close their operations or to significantly limit the amount of business they are able to conduct, which impacted their ability to timely pay rent as required under our leases and also caused many tenants to close their business permanently.pandemic. While improving, our cash flow and results of operations in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 continued to be ~~materially~~ adversely impacted, with vacancy levels remaining above historical levels. Although virtually all of our leases required the tenants to pay rent even while they were not operating, we entered into numerous agreements to abate, defer, and/or restructure tenant rent payments for varying periods of time, all with the objective of collecting as much cash as reasonably possible and maintaining occupancy to the maximum extent. We believe those actions ~~will position~~positioned many of our tenants to be able to return to payment of contractual rent as soon as possible after the initial impacts from the pandemic have ~~subsided.~~started to subside.

~~During~~Our collection of rents has continued to improve including collecting rents related to prior periods. As a result, our collectibility related adjustments were immaterial during the three ~~and six~~ months ended ~~June 30, 2021, we recognized~~March 31, 2022, as compared to collectibility related adjustments of ~~$6.4~~$14.8 million during the three months ended March 31, 2021, which reflected lower levels of cash collections and ~~$21.2 million, respectively. This includes not only the impact~~elevated levels of ~~tenants recognized on a cash basis but also changes in our collectibility assessments from probable to not probable, disputed rents, and any~~ rent abatements and disputes directly related to COVID-19. As of ~~June 30, 2021,~~March 31, 2022, the revenue from approximately ~~35%~~33% of our tenants (based on total commercial leases) is being recognized on a cash basis.

We believe that the actions we have taken to improve our financial position and maximize our liquidity, as described further in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2020~~2021 Annual Report on Form 10-K, will continue to mitigate the impact to our cash flow caused by tenants not timely paying contractual rent.

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

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~~Business Continuity~~

We transitioned our entire workforce to remote work in March 2020 with the exception of those employees who were critical to providing the necessary day-to-day property management functions required to keep our properties open and operating for essential businesses such as grocery stores and drug stores, and a few employees who were needed to carry out critical corporate functions. Although all of our corporate offices have reopened, many of our employees continue to work remotely as we transition to a hybrid work model. We have not laid off, furloughed, or terminated any employees nor have we modified the compensation of any of our employees as a result of COVID-19, and the transition to a largely remote workforce has not had any material adverse impacts on our financial reporting systems, our internal controls, or disclosure controls and procedures.

Critical Accounting Policies

There have been no significant changes to the critical accounting policies disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2020~~2021 Annual Report on Form 10-K.

~~2021 Acquisitions and Disposition~~2022 Acquisition

On January 4, 2021, we acquired our partner's 20% interest in our joint venture arrangement related to the Pike & Rose hotel for $2.3 million, and repaid the $31.5 million mortgage loan encumbering the hotel. As a result of the transaction, we gained control of the hotel, and effective January 4, 2021, we have consolidated the asset. We also recognized a gain on acquisition of the controlling interest of $2.1 million related to the difference between the carrying value and fair value of the previously held equity interest.

~~On February 22, 2021,~~April 20, 2022, we acquired the fee interest ~~at our Mount Vernon Plaza property~~ in ~~Alexandria,~~a 227,000 square foot shopping center in Kingstowne, Virginia for ~~$5.6~~$100.0 million. ~~As a result~~In July 2022, we expect to close on the second phase of this ~~transaction,~~acquisition for an additional purchase price of $100.0 million, subject to customary closing conditions. Once the ~~"operating lease right of use assets" and "operating lease liabilities" on our consolidated balance sheet decreased by $9.8 million. We now own~~remaining acquisition is complete, the ~~entire fee interest on this property.~~

~~On March 19, 2021, we sold a portion of Graham Park Plaza in Falls Church, Virginia for $20.3 million, resulting in a gain on sale of $15.6 million.~~

~~During the six months ended June 30, 2021, we acquired the following properties:~~

Date Acquired Property City/State Gross Leasable Area (GLA) Joint Venture Interest (1) Gross Value
(in square feet) (in millions)
April 30, 2021 Chesterbrook McLean, Virginia 90,000 80 % $ 32.1 (2)
June 1, 2021 Grossmont Center La Mesa, California 933,000 60 % $ 175.0 (3)
June 14, 2021 Camelback Colonnade Phoenix, Arizona 642,000 98 % $ 162.5 (4)
June 14, 2021 Hilton Village Scottsdale, Arizona 93,000 98 % $ 37.5 (5)

~~(4)Approximately $11.6 million of net assets acquired were allocated to other assets for "acquired lease costs"and $28.3 million were allocated to other liabilities for "below market leases."~~

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~~2021 Debt and~~2022 Equity Transactions

On February ~~5, 2021, we repaid the $16.2 million mortgage loan on Sylmar Towne Center, at par, prior to its original maturity date.~~

~~On February 24, 2021,~~14, 2022, we replaced our existing ~~at-the-market (“ATM”)~~ATM equity program with a new ATM equity program inunder which we may from time to time offer and sell common shares having an aggregate offering price of up to $500.0 million. ~~On May 7, 2021, we amended this ATM equity program, which reset the limit to $500.0 million.~~ The ~~new~~ ATM equity program also allows shares to be sold through forward sales contracts. We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay indebtedness and/or for general corporate purposes.

~~In June 2020, we provided notice for the early repayment of the Plaza Del Sol mortgage loan, at par, on September 1, 2021.~~March 31, 2022.

Recently Issued Accounting Pronouncements

See Note 2 to the consolidated financial statements.

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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 ~~$197~~$69 million and $5$3 million, respectively, for the three months ended March 31, 2022, and $82 million and $2 million for the ~~six~~three months ended ~~June 30, 2021, and $202 million and $5 million for the six months ended June 30, 2020.~~March 31, 2021. We capitalized external and internal costs related to other property improvements of ~~$34~~$22 million and $2$1 million, respectively, for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, and ~~$27~~$16 million and $2$1 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. We capitalized external and internal costs related to leasing activities of $7$4 million and $1 million, respectively, for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, and $5$2 million and $1 million, respectively, for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were ~~$5 million,~~ $2 ~~million, and $1 million, respectively, for the six months ended June 30, 2021 and $5~~ million, $1 million, and $1 million, respectively, for both the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2022 and 2021. Total capitalized costs were ~~$246~~$99 million and ~~$242~~$104 million for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Outlook

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

•growth in our comparable property portfolio,

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

•expansion of our portfolio through property acquisitions.

While the ongoing COVID-19 pandemic is impacting us in the short-term, our long-term focus has not changed. See our 10-K filed on February ~~11, 2021,~~10, 2022, for discussion of our long-term strategies.

~~Federal, state, and local governments have taken various actions~~The COVID-19 pandemic continues to mitigate the spread of COVID-19, including initially ordering closures of non-essential businesses and ordering residents to generally stay at home. While many of these restrictions have since been lifted, they required a significant number of tenants to close their operations or to significantly limit the amount of business they were able to conduct in their stores. These closures and restrictions, along with general concerns over the

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spread of COVID-19 have impacted the tenants' ability to timely pay rent as required under our leases and also caused many tenants to close their business permanently. While we are seeing signs of considerable improvement in the past few months, these economic hardships have adversely impactednegatively impact our business with the largest current impacts being lower occupancy, the timing and ~~continue~~level of rent collections, and supply chain disruptions. At March 31, 2022, our commercial space is 91.2% occupied, which is below historical levels largely due to ~~have a negative effect on our financial results during the second quarter of~~ ~~2021. With very few exceptions, our leases require tenants to continue to pay rent even while closed~~tenant failures as a result of the pandemic, and while many tenants did not pay rents and other charges during a portion of 2020, the majority of our tenants have resumed paying all or a portion of their rent and/or other charges as their businesses were able to reopen. Our percentage of contractual rent actually collected has continued to increase since the low point in April 2020, including some tenants paying past due amounts. As of ~~June 30, 2021~~, we have entered into agreements with approximately 32% of our tenants (based on total commercial leases) to defer rent payments to later periods, largely throughout the remainder of 2021, although some extend beyond, and negotiations with other tenants are still ongoing. While increasing monthly cash collection rates is a positive trend driven by government mandated restrictions generally being lifted, we expect that our rent collections will continue to be below our tenants’ contractual rent obligations and historical levels, which will continue to adversely impact our results of operations. We are also experiencing apandemic. This lower ~~level of~~ occupancy ~~than in our past, largely due to the pandemic, which~~ will adversely impact our results until we can release the space and the tenant commences paying rent, as well as limit future vacancies caused by the pandemic. We are, however, experiencing strong demand for our commercial space as evidenced by the 2.0~~1.1~~ million square feet of comparable space ~~retail~~ leasing we've completed in the ~~first half~~last twelve months, and the 2.5% spread between our leased rate of ~~2021, as well as~~93.7% and our occupied rate of 91.2%. Our percentage of contractual rents actually collected continued to increase since the low point in April 2020, including some tenants paying past due amounts. While increasing monthly cash collection rates is a positive, we expect our rent collections may continue to be below our tenants' contractual rent obligations and historical levels in 2022, which will continue to adversely impact our results of operations. We continue to see impacts of overall ~~leased percentage at 92.7%, compared~~supply chain disruptions affecting the broader economy, including significantly longer lead times, limited availability, and increased costs for certain construction and other materials that support our development and redevelopment activities. If disruptions continue to worsen, they could result in extended timeframes and/or increased costs for completion of our projects and tenant build-outs, which could delay the commencement of rent payments under new leases. Similarly, if our tenants experience significant disruptions in supply chains supporting their own products, or staffing issues due to labor shortages, their ability to pay rent may be adversely affected. We continue to monitor these macroeconomic developments and are working with our tenants and our vendors to limit the overall impact to our ~~occupied percentage of only 89.6%.~~business.

The ~~extent~~duration and severity of the economic impact from COVID-19 will depend on future developments, which are highly uncertain and cannot be predicted. Depending upon the duration of tenant closures, future operating restrictions, 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 vacancy levels. ~~While theduration and severity of the economic impact resulting from COVID-19 is unknown,~~fully predicted, however, we seek to position the ~~Trust~~Company to continue to participate in the resulting economic recovery.

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

•The first phase of construction on Santana West 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 $270 million with openings expected to begin in 2022.

•Phase III of Assembly Row includes 277,000 square feet of office space, 56,000 square feet of retail space, and 500 residential ~~units, and over 800 additional parking spaces.~~units. The expected costs for Phase III are between $465 million and $485 million, with spaces being delivered beginning in the second quarter of 2021. At ~~June 30, 2021, 150,000~~March 31, 2022, 236,000 square feet of office space has been delivered, all of the units in the residential building have been delivered, and ~~13,000~~33,000 square feet of retail space has opened.

•Phase III at Pike & Rose includes a 212,000 square foot office building (which includes 7,000 square feet of ground floor retail space) ~~and over 600 additional parking spaces.~~. The building is expected to cost between $128 million and $135 million. At ~~June 30, 2021,~~March 31, 2022, approximately ~~159,000~~162,000 square feet of office and retail has been ~~leased,~~delivered, of which approximately 45,000 square feet is our new corporate headquarters.

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

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

•Throughout the portfolio, we currently have redevelopment projects underway with a projected total cost of approximately ~~$274~~$218 million that we expect to stabilize over the next several years.

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

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

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

At ~~June 30, 2021,~~March 31, 2022, the leasable square feet in our properties was ~~92.7%~~93.7% leased and ~~89.6%~~91.2% 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,

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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 ~~second~~first quarter of ~~2021,~~2022, we signed leases for a total of ~~577,000~~460,000 square feet of retail space including ~~558,000~~444,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 8%7% on a cash basis. New leases for comparable spaces were signed for ~~415,000~~176,000 square feet at an average rental increase of ~~11%~~14% on a cash basis. Renewals for comparable spaces were signed for ~~144,000~~268,000 square feet at noa 2% average rental increase on a cash basis. Tenant improvements and incentives for comparable spaces were ~~$51.35~~$32.55 per square foot, of which, ~~$67.87~~$78.65 per square foot was for new leases and ~~$3.74~~$2.23 per square foot was for renewals for the three months ended ~~June 30, 2021.~~

For the six months ended June 30, 2021, we signed leases for a total of 1,091,000 square feet of retail space including 1,065,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 8% on a cash basis. New leases for comparable spaces were signed for 635,000 square feet at an average rental increase of 13% on a cash basis. Renewals for comparable spaces were signed for 430,000 square feet at an average rental increase of 1% on a cash basis. Tenant improvements and incentives for comparable spaces were $42.20 per square foot, of which, $67.62 per square foot was for new leases and $4.70 per square foot was for renewals for the six months ended June 30, 2021.March 31, 2022.

The rental increases associated with comparable spaces generally include all leases signed for retail space in arms-length transactions reflecting market leverage between landlords and tenants during the period. The comparison between ~~average~~the rent for expiring leases and new leases is determined by including contractual rent on the expiring lease, including percentage rent, and the comparable annual ~~market~~ rent and in some instances, projections of percentage rent, to be paid on the new lease. In atypical circumstances, management may exercise judgment as to how to most effectively reflect the comparability of spaces reported in this calculation. As a result of accommodations made to certain tenants to help them to stay open during and after the COVID-19 pandemic, we have found it necessary to exercise more judgement ~~in 2020 and 2021~~since the pandemic started than in prior years in order to appropriately reflect the comparability of ~~spaces~~rents in the calculation. The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. Rent abatement and short term rent restructuring agreements that are a result of COVID-19 impacts are not included in this calculation. Tenant improvements and incentives include the total dollars committed for the improvement (fit out) of a space as it relates to a specific lease. Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent building improvements. Costs related to tenant improvements require judgement by management in determining what are costs specific to the tenant and not deferred maintenance on the space.

Historically, we have executed comparable space leases for ~~1.3~~1.4 to ~~1.9~~2.0 million square feet of retail space each year. We expect the volume in 2022 will be in line with, or potentially exceed, our historical averages given a larger amount of vacancy as a

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result of COVID-19. We expect some rental rates to continue to be negatively impacted by the COVID-19 ~~pandemic. Given~~pandemic, which we started experiencing in the ~~significant volume~~second quarter of leasing we've achieved during the first six months of 2021, we expect the overall volume in 2021 to be at the high end, or potentially exceed, our historical averages given a larger amount of vacancy as a result of COVID-19.2020. Although we expect overall positive increases in annual rent for comparable spaces, changes in annual rent for any individual lease or combinations of individual leases reported in any particular period may be positive or negative and we can provide no assurance that the annual rents on comparable space leases will continue to increase at historical levels, if at all.

The leases signed in ~~2021~~2022 generally become effective over the following two years though some may not become effective until ~~2024~~2025 and beyond. Further, there is risk that some new tenants will not ultimately take possession of their space and that tenants for both new and renewal leases may not pay all of their contractual rent due to operating, financing or other matters. However, our historical increases in rental rates do provide information about the tenant/landlord relationship and the potential increase we may achieve in rental income over time.

Comparable Properties

Throughout this section, we have provided certain information on a “comparable property” basis. Information provided on a comparable property basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties that are currently under development or are being repositioned for significant redevelopment and investment. For the three ~~and six~~ months ended ~~June 30, 2021,~~March 31, 2022, all or a portion of 9895 properties were considered comparable properties and ~~six~~seven properties were considered non-comparable properties. For the three months ended ~~June 30, 2021,~~March 31, 2022, one ~~portion of a~~property was moved from comparable properties to non-comparable properties and one property was moved from non-comparable properties to comparable properties, and two portions of properties were moved from acquisitions to comparable properties. For the six months ended June 30, 2021, two portions of properties were moved from non-comparable properties to comparable properties, one property and two portions of properties were moved from acquisitions to comparable properties, and one portion of a property was removed from non-comparable properties, as it was sold, compared to the designations as of December 31, ~~2020.~~2021. While there is judgment surrounding changes in designations, we typically move non-comparable properties to comparable properties once they have stabilized, which is typically considered 90% physical occupancy or when the growth expected from the redevelopment has been included in the comparable

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periods. We typically remove properties from comparable properties when the repositioning of the asset has commenced and has or is expected to have a significant impact to property operating income within the calendar year. Acquisitions are moved to comparable properties once we have owned the property for the entirety of comparable periods and the property is not under development or being repositioned for significant redevelopment and investment.

RESULTS OF OPERATIONS - THREE MONTHS ENDED ~~JUNE 30,~~MARCH 31, 2022 AND 2021 ~~AND 2020~~


						Change									Change
		2021		2020		Dollars		%			2022		2021		Dollars		%
		(Dollar amounts in thousands)									(Dollar amounts in thousands)
Rental income	Rental income	$	230,795	$	175,479	$	55,316	31.5	%	Rental income	$	256,507	$	217,135	$	39,372	18.1	%

Mortgage interest income	Mortgage interest income	830		748		82		11.0	%	Mortgage interest income	264		1,026		(762)		(74.3)	%
Total property revenue	Total property revenue	231,625		176,227		55,398		31.4	%	Total property revenue	256,771		218,161		38,610		17.7	%
Rental expenses	Rental expenses	42,918		36,417		6,501		17.9	%	Rental expenses	56,211		49,238		6,973		14.2	%
Real estate taxes	Real estate taxes	29,323		30,599		(1,276)		(4.2)	%	Real estate taxes	30,560		29,420		1,140		3.9	%
Total property expenses	Total property expenses	72,241		67,016		5,225		7.8	%	Total property expenses	86,771		78,658		8,113		10.3	%
Property operating income (1)	Property operating income (1)	159,384		109,211		50,173		45.9	%	Property operating income (1)	170,000		139,503		30,497		21.9	%
General and administrative expense	General and administrative expense	(12,846)		(9,814)		(3,032)		30.9	%	General and administrative expense	(12,342)		(10,258)		(2,084)		20.3	%
Depreciation and amortization	Depreciation and amortization	(67,675)		(62,784)		(4,891)		7.8	%	Depreciation and amortization	(71,674)		(63,874)		(7,800)		12.2	%

Gain on sale of real estate and change in control of interest	Gain on sale of real estate and change in control of interest	—		11,682		(11,682)		100.0	%	Gain on sale of real estate and change in control of interest	—		17,428		(17,428)		(100.0)	%
Operating income	Operating income	78,863		48,295		30,568		63.3	%	Operating income	85,984		82,799		3,185		3.8	%
Other interest income	Other interest income	250		509		(259)		(50.9)	%	Other interest income	120		363		(243)		(66.9)	%
Interest expense	Interest expense	(31,177)		(34,073)		2,896		(8.5)	%	Interest expense	(31,573)		(32,085)		512		(1.6)	%
Income (loss) from partnerships	Income (loss) from partnerships	123		(3,872)		3,995		(103.2)	%	Income (loss) from partnerships	197		(1,338)		1,535		114.7	%

Total other, net	Total other, net	(30,804)		(37,436)		6,632		(17.7)	%	Total other, net	(31,256)		(33,060)		1,804		(5.5)	%

Net income	Net income	48,059		10,859		37,200		342.6	%	Net income	54,728		49,739		4,989		10.0	%
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(1,855)		(352)		(1,503)		427.0	%	Net income attributable to noncontrolling interests	(2,744)		(1,503)		(1,241)		82.6	%
Net income attributable to the Trust	Net income attributable to the Trust	$	46,204	$	10,507	$	35,697	339.7	%	Net income attributable to the Trust	$	51,984	$	48,236	$	3,748	7.8	%

(1)Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we

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consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. The reconciliation of operating income to property operating income for the three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ is as follows:


		2021		2020			2022		2021
		(in thousands)					(in thousands)
Operating income	Operating income	$	78,863	$	48,295	Operating income	$	85,984	$	82,799
General and administrative	General and administrative	12,846		9,814		General and administrative	12,342		10,258
Depreciation and amortization	Depreciation and amortization	67,675		62,784		Depreciation and amortization	71,674		63,874

Gain on sale of real estate and change in control of interest	Gain on sale of real estate and change in control of interest	—		(11,682)		Gain on sale of real estate and change in control of interest	—		(17,428)
Property operating income	Property operating income	$	159,384	$	109,211	Property operating income	$	170,000	$	139,503

Property Revenues

Total property revenue increased ~~$55.4~~$38.6 million, or ~~31.4%~~17.7%, to ~~$231.6~~$256.8 million in the three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$176.2~~$218.2 million in the three months ended ~~June 30, 2020.~~March 31, 2021. The percentage occupied at our shopping centers was ~~89.6%~~91.2% and 89.5% at ~~June 30,~~March 31, 2022 and 2021, ~~compared to 90.8% at June 30, 2020.~~respectively. The most significant driver of the increase in property revenues is the ~~lifting of~~generally lifted COVID-19 restrictions during the three months ended ~~June 30, 2021~~March 31, 2022, as compared to the three months ended ~~June 30, 2020~~March 31, 2021, when COVID-19 government imposed closures and restrictions were ~~at their height. Changes~~still in ~~the components of property revenue are discussed below.~~

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~~Rental Income~~

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased $55.3 million, or 31.5%, to $230.8 million in the three months ended June 30, 2021 compared to $175.5 million in the three months ended June 30, 2020 due primarily to the following:

•a $48.8 million decrease in collectibility related impacts including rent abatements across all properties primarily due to moving a large number of tenants from accrual basis to cash basis in the second quarter of 2020 and higher collection rates in the second quarter of 2021, as tenants begin to recover from the initial impacts of COVID-19,

•an increase of $4.1 million from non-comparable properties primarily driven by redevelopment related occupancy increases at two of our properties, the opening of Phase III at Assembly Row in 2021, and the opening of Freedom Plaza in 2020,

•~~an increase of $3.6 million from acquisitions (see Note 3 to the consolidated financial statements for additional information), and~~

•an increase of $1.9 million from comparable properties primarily related to higher net termination fees and legal fee income of $3.4 million, higher percentage rent, specialty leasing, and parking income of $2.4 million primarily due to the impacts of COVID-19 related closures and restrictions in 2020, partially offset by lower average occupancy of approximately $4.6 million,

~~partially offset by,~~

•~~a decrease of $3.3 million from 2020 property sales.~~

~~Property Expenses~~

Total property expenses increased $5.2 million, or 7.8%, to $72.2 million in the three months ended June 30, 2021 compared to $67.0 million in the three months ended June 30, 2020. Changes in the components of property expenses are discussed below.

~~Rental Expenses~~

Rental expenses increased $6.5 million, or 17.9%, to $42.9 million in the three months ended June 30, 2021 compared to $36.4 million in the three months ended June 30, 2020. This increase is primarily due to the following:

•~~an increase of $6.4 million from comparable properties due primarily to higher repairs and maintenance costs and utilities, as 2020 had lower costs as a result of COVID-19 impacts,~~

•an increase of $1.3 million from non-comparable properties driven by the opening of the Phase III office building at Pike & Rose in 2020, Phase III at Assembly Row in 2021, and one of our redevelopments in late 2020, and

•~~an increase of $0.7 million from acquisitions,~~

~~partially offset by,~~

•~~a decrease of $1.0 million from 2020 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 decreased to 18.6% in the three months ended June 30, 2021 from 20.8% in the three months ended June 30, 2020.

~~Real Estate Taxes~~

Real estate tax expense decreased $1.3 million, or 4.2%, to $29.3 million in the three months ended June 30, 2021 compared to $30.6 million in the three months ended June 30, 2020. This decrease is primarily due the following:

•~~a decrease of $1.1 million from comparable properties primarily due to a true-up of supplemental taxes at several of our California properties billed in 2020, and~~

•~~a decrease of $1.0 million from 2020 property sales,~~

~~partially offset by,~~

•~~an increase of $0.5 million from non-comparable properties due primarily to increases in assessments as a result of our redevelopment activities, and~~

•~~an increase of $0.4 million from acquisitions.~~

~~Property Operating Income~~

Property operating income increased $50.2 million, or 45.9%, to $159.4 million in the three months ended June 30, 2021 compared to $109.2 million in the three months ended June 30, 2020. This increase is primarily due to the lifting of COVID-19 restrictions, which resulted in lower collectibility related adjustments, higher percentage rent, specialty leasing, and parking

~~Table of Contents~~

income compared to 2020. Also contributing to the increase were higher lease termination fees and legal fee income, 2021 acquisitions, redevelopment related occupancy increases at one of our properties, and the opening of Phase III at Assembly Row in 2021, partially offset by lower average occupancy from comparable properties, and 2020 property sales.

~~Other Operating~~

~~General and Administrative~~

~~General and administrative expense increased $3.0 million, or 30.9%, to $12.8 million in the three months ended June 30, 2021~~

~~from $9.8 million in the three months ended June 30, 2020. This increase is due primarily to higher personnel related~~

~~costs.~~

~~Depreciation and Amortization~~

Depreciation and amortization expense increased $4.9 million, or 7.8%, to $67.7 million in the three months ended June 30, 2021 from $62.8 million in the three months ended June 30, 2020. This increase is due primarily to accelerated depreciation related to a vacating tenant, placing redevelopment properties into service, the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in January 2021, and the opening of Phase III at Assembly Row and Pike & Rose, partially offset by 2020 property sales.

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

~~The $11.7 million gain on sale of real estate, net for the three months ended June 30, 2020 is due primarily to the sale of a building in Pasadena, California.~~

~~Operating Income~~

Operating income increased $30.6 million, or 63.3%, to $78.9 million in the three months ended June 30, 2021 compared to $48.3 million in the three months ended June 30, 2020. This increase is primarily due to the lifting of COVID-19 restrictions, which resulted in lower collectibility related adjustments, higher percentage rent, specialty leasing, and parking income compared to 2020. Also contributing to the increases were higher termination fees and legal fee income, 2021 acquisitions, redevelopment related occupancy increases at one of our properties, and the opening of Phase III at Assembly Row in 2021, partially offset by lower average occupancy at comparable properties, the prior year gain related to the sale of a building in Pasadena, California, higher personnel related costs, and 2020 property sales.

~~Other~~

~~Interest Expense~~

Interest expense decreased $2.9 million, or 8.5%, to $31.2 million in the three months ended June 30, 2021 compared to $34.1 million in the three months ended June 30, 2020. This decrease is due primarily to the following:

•a decrease of $2.0 million from lower weighted average borrowings primarily from our revolving credit facility and the repayment of The Shops at Sunset Place mortgage loan in December 2020, partially offset by the May 2020 debt issuances in response to the COVID-19 pandemic, and

•~~an increase of $0.8 million in capitalized interest, primarily attributable to the development of Santana West and Phase III of Assembly Row.~~

Gross interest costs were $37.7 million and $39.8 million in the three months ended June 30, 2021 and June 30, 2020, respectively. Capitalized interest was $6.5 million and $5.7 million for the three months ended June 30, 2021 and June 30, 2020, respectively.

~~Income (loss) from partnerships~~

Income from partnerships increased $4.0 million, or 103.2%, to $0.1 million in the three months ended June 30, 2021 compared to a loss of $3.9 million in the three months ended June 30, 2020. This increase is due primarily to the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in January 2021 and improved operating results at our restaurant joint ventures and at our Assembly Row hotel joint venture, largely the result of the easing of COVID-19 closures and restrictions.

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~~RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2021 AND 2020~~

Change
2021 2020 Dollars %
(Dollar amounts in thousands)
Rental income $ 447,930 $ 406,277 $ 41,653 10.3 %
Mortgage interest income 1,856 1,507 349 23.2 %
Total property revenue 449,786 407,784 42,002 10.3 %
Rental expenses 92,156 80,729 11,427 14.2 %
Real estate taxes 58,743 59,663 (920) (1.5) %
Total property expenses 150,899 140,392 10,507 7.5 %
Property operating income (1) 298,887 267,392 31,495 11.8 %
General and administrative expense (23,104) (20,065) (3,039) 15.1 %
Depreciation and amortization (131,549) (124,972) (6,577) 5.3 %
Gain on sale of real estate and change in control of interest 17,428 11,682 5,746 49.2 %
Operating income 161,662 134,037 27,625 20.6 %
Other interest income 613 817 (204) (25.0) %
Interest expense (63,262) (62,518) (744) 1.2 %
Loss from partnerships (1,215) (5,036) 3,821 (75.9) %
Total other, net (63,864) (66,737) 2,873 (4.3) %
Net income 97,798 67,300 30,498 45.3 %
Net income attributable to noncontrolling interests (3,358) (2,030) (1,328) 65.4 %
Net income attributable to the Trust $ 94,440 $ 65,270 $ 29,170 44.7 %

~~(1)~~Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. The reconciliation of operating income to property operating income for the six months ended June 30, 2021 and 2020 is as follows:

2021 2020
(in thousands)
Operating income $ 161,662 $ 134,037
General and administrative 23,104 20,065
Depreciation and amortization 131,549 124,972
Gain on sale of real estate and change in control of interest (17,428) (11,682)
Property operating income $ 298,887 $ 267,392

~~Property Revenues~~

Total property revenue increased $42.0 million, or 10.3%, to $449.8 million in the six months ended June 30, 2021 compared to $407.8 million in the six months ended June 30, 2020. The percentage occupied at our shopping centers was 89.6% at June 30, 2021 compared to 90.8% at June 30, 2020. The most significant driver of the increase in property revenues is the the lifting of COVID-19 restrictions during the 2021 as compared to 2020 when COVID-19 government imposed closures and restrictions were at their height.effect. Changes in the components of property revenue are discussed below.

Rental Income

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased ~~$41.7~~$39.4 million, or ~~10.3%~~18.1%, to ~~$447.9~~$256.5 million in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$406.3~~$217.1 million in the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 due primarily to the following:

•a ~~$37.1~~$14.9 million decrease in collectibility related impacts ~~including rent abatements~~ across all properties primarily due to ~~moving a large number of tenants from accrual basis to cash basis in 2020, as well~~ higher collection rates and lower rent abatements in ~~2021,~~the first quarter of 2022 as tenants ~~begin~~continue to recover from ~~the~~ the initial impacts of COVID-19,

~~Table~~•an increase of ~~Contents~~

$11.7 million from 2021 acquisitions,

•an increase of ~~$11.3~~$7.7 million from non-comparable properties primarily driven by ~~higher net termination fees, the opening of our new office building at Santana Row in early 2020, redevelopment related occupancy increases at one of our properties,~~ the opening of Phase III at Assembly Row in 2021, ~~and Pike & Rose in 2020,~~redevelopment related occupancy increases at CocoWalk, and the ~~opening of Freedom Plaza in 2020, and~~

•~~an increase of $4.4 million from~~ 2021 ~~acquisitions (see Note 3 to the consolidated financial statements for additional information),~~

~~partially offset by,~~

•~~a decrease of $8.0 million from property sales, and~~

•a decrease of $3.4 million from comparable properties primarily due to lower average occupancy of approximately $11.3 million, partially offset by higher rental rates of $2.7 million, higher recoveries of $2.1 million primarily the result of higher snow removal expense, and higher percentage rent of $1.2 million driven by a larger number of tenants moving to percentage rent deals due to the impacts of COVID-19.

~~Property Expenses~~

Total property expenses increased $10.5 million, or 7.5%, to $150.9 million in the six months ended June 30, 2021 compared to $140.4 million in the six months ended June 30, 2020. Changes in the components of property expenses are discussed below.

~~Rental Expenses~~

Rental expenses increased $11.4 million, or 14.2%, to $92.2 million in the six months ended June 30, 2021 compared to $80.7 million in the six months ended June 30, 2020 due primarily to the following:

•an increase of $11.9 million from comparable properties due to higher snow removal expense, repairs and maintenance costs and utilities as 2020 had lower costs as a result of COVID-19 impacts, demolition costs, and insurance costs,

•~~an increase of $2.0 million from non-comparable properties, due primarily to the opening of~~openings at the Phase III office building at Pike & Rose, ~~in 2020, one of our redevelopments in late 2020, and our new office building~~partially offset by redevelopment related occupancy decreases at ~~Santana Row,~~Huntington Shopping Center, and

•an increase of $6.8 million from comparable properties primarily related to higher percentage rent, specialty leasing, and parking income of $3.7 million primarily due to the impacts of COVID-19 related closures and restrictions in the first quarter of 2021, higher rental rates of $2.0 million, higher average occupancy of approximately $1.5 million, ~~from acquisitions,~~and a $1.0 million increase in CAM recoveries on higher CAM costs, partially offset by lower net termination fees and legal fee income of $1.4 million,

partially offset by

•a decrease of $2.6 million from ~~our~~2021 property sales.

Mortgage Interest Income

Mortgage interest income decreased $0.8 million, or 74.3%, to $0.3 million in the three months ended March 31, 2022 compared to $1.0 million in the three months ended March 31, 2021 primarily due to the repayment of $31.1 million of mortgage notes receivable in May 2021.

Property Expenses

Total property expenses increased $8.1 million, or 10.3%, to $86.8 million in the three months ended March 31, 2022 compared to $78.7 million in the three months ended March 31, 2021. Changes in the components of property expenses are discussed below.

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Rental Expenses

Rental expenses increased $7.0 million, or 14.2%, to $56.2 million in the three months ended March 31, 2022 compared to $49.2 million in the three months ended March 31, 2021. This increase is primarily due to the following:

•an increase of $2.5 million from comparable properties due primarily to higher repairs and maintenance costs, utilities, and management fees, as 2021 had lower costs as a result of COVID-19 impacts, and higher insurance costs, partially offset by lower snow removal costs,

•an increase of $2.2 million from non-comparable properties driven by the 2021 openings at Phase III at Assembly Row, the Phase III office building at Pike & Rose, and CocoWalk, and

•an increase of $1.7 million from 2021 acquisitions,

partially offset by,

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

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income ~~increased~~decreased to ~~20.6%~~21.9% in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from ~~19.9%~~22.7% in the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021.

Real Estate Taxes

Real estate tax expense ~~decreased $0.9~~increased $1.1 million, or ~~1.5%~~3.9%, to ~~$58.7~~$30.6 million in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$59.7~~$29.4 million in the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. This increase is primarily due to the following:

•~~a decrease of $1.7 million from our property sales, and~~

•~~a decrease of $1.0 million from comparable properties primarily due to a true-up of supplemental taxes at several of our California properties billed in 2020,~~

~~partially offset by,~~

•an increase of ~~$1.3~~$1.2 million from 2021 acquisitions, and

•an increase of $0.9 million from non-comparable properties due primarily to the ~~opening~~2021 openings of ~~our new office building~~Phase III at ~~Santana~~Assembly Row, ~~in early 2020~~ and ~~increases in assessments as~~ CocoWalk,

partially offset by,

•a ~~result~~decrease of ~~our redevelopment activities,~~$0.6 million from comparable properties primarily due to successful tax appeals, and

•~~an increase~~a decrease of ~~$0.5~~$0.3 million from 2021 ~~acquisitions.~~property sales.

Property Operating Income

Property operating income increased ~~$31.5~~$30.5 million, or ~~11.8%~~21.9%, to ~~$298.9~~$170.0 million in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$267.4~~$139.5 million in the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. This increase is primarily due to the lifting of COVID-19 restrictions, ~~during 2021,~~ which resulted in lower collectibility related adjustments, ~~and~~ higher percentage ~~rent.~~rent, specialty leasing, and parking income compared to the first quarter of 2021 which still had COVID-19 related restrictions. Also contributing to the ~~increases~~increase were ~~the opening of our new office building at Santana Row in early 2020, placing redevelopment properties into service,~~2021 acquisitions, the opening of Phase III at Assembly Row in 2021, higher occupancy and ~~property acquisitions, partially offset by lower average occupancy, higher snow removal expense~~rental rates at comparable properties, and redevelopment related occupancy increases at CocoWalk, partially offset by 2021 property ~~dispositions.~~

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sales, higher repairs and maintenance expense, and lower net termination fees and legal fee income.

Other Operating

General and Administrative

General and administrative expense increased ~~$3.0~~$2.1 million, or ~~15.1%~~20.3%, to ~~$23.1~~$12.3 million in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from ~~$20.1~~$10.3 million in the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. This increase is due primarily to higher personnel related costs.

Depreciation and Amortization

Depreciation and amortization expense increased ~~$6.6~~$7.8 million, or ~~5.3%~~12.2%, to ~~$131.5~~$71.7 million in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from ~~$125.0~~$63.9 million in the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. This increase is due primarily to ~~accelerated depreciation from a vacating tenant, placing redevelopment properties into service, the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in January~~ 2021 ~~and~~acquisitions, the opening of ~~the~~ Phase III ~~office building~~ at ~~Pike & Rose,~~Assembly Row, partially offset by ~~2020~~2021 property sales.

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

The $17.4 million gain on sale of real estate ~~net~~and change in control of ~~tax~~interest for the ~~six~~three months ended ~~June 30,~~March 31, 2021 is due primarily to a $15.6 million gain related to the sale of a portion of Graham Park Plaza in Falls Church, Virginia and a $2.1 million gain relating to the acquisition of the previously unconsolidated Pike & Rose hotel joint ~~venture (see Note 3 for additional disclosure).~~venture.

~~The $11.7 million gain on sale~~

Table of ~~real estate, net of tax for the six months ended June 30, 2020 is due to the sale of a building in Pasadena, California.~~Contents

Operating Income

Operating income increased ~~$27.6~~$3.2 million, or ~~20.6%~~3.8%, to ~~$161.7~~$86.0 million in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 compared to ~~$134.0~~$82.8 million in the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. This increase is primarily due to the lifting of COVID-19 restrictions, which resulted in lower collectibility related adjustments, ~~and~~ higher percentage rent, specialty leasing, and parking income compared to ~~2020.~~the first quarter of 2021 which still had COVID-19 related restrictions. Also contributing to the ~~increases~~increase were ~~a higher net gain on the sale of real estate, the opening of our new office building at Santana Row in early 2020, placing redevelopment properties into service,~~2021 acquisitions, the opening of Phase III at Assembly Row in 2021, higher occupancy and ~~property acquisitions,~~rental rates at comparable properties, and redevelopment related occupancy increases at CocoWalk, partially offset by ~~lower average occupancy, higher snow removal expense at comparable properties, property dispositions, and higher personnel~~the gains related ~~costs.~~

~~Other~~

~~Interest Expense~~

Interest expense increased $0.7 million, or 1.2%, to $63.3 million in the six months ended June 30, 2021 compared to $62.5 million in the six months ended June 30, 2020. This increase is due primarily to the ~~following:~~

•~~an increase~~sale of $5.0 million due to higher weighted average borrowings primarily from the May 2020 debt issuances in response to the COVID-19 pandemic, partially offset by no borrowings on our revolving credit facility in 2021,a portion of Graham Park Plaza and ~~the repayment of The Shops at Sunset Place mortgage loan in December 2020,~~

~~partially offset by,~~

•~~a decrease of $2.7 million due to a lower overall weighted average borrowing rate, and~~

•~~an increase of $1.6 million in capitalized interest, primarily attributable to the development of Phase III of Assembly Row and Santana West.~~

Gross interest costs were $76.3 million and $73.9 million in the six months ended June 30, 2021 and June 30, 2020, respectively. Capitalized interest was $13.0 million and $11.4 million for the six months ended June 30, 2021 and June 30, 2020, respectively.

~~Loss from partnerships~~

Loss from partnerships decreased $3.8 million, or 75.9%, to $1.2 million in the six months ended June 30, 2021 compared to $5.0 million in the six months ended June 30, 2020. This decrease is due primarily to the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in ~~January~~ 2021, higher personnel related costs, 2021 property sales, higher repairs and maintenance expense, and lower net termination fees and legal fee income.

Other

Interest Expense

Interest expense decreased $0.5 million, or 1.6%, to $31.6 million in the three months ended March 31, 2022 compared to $32.1 million in the three months ended March 31, 2021. This decrease is due primarily to the following:

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

•a decrease of $0.4 million due to a lower overall weighted average borrowing rate,

partially offset by,

•a decrease of $1.9 million in capitalized interest.

Gross interest costs were $36.2 million and $38.6 million in the three months ended March 31, 2022 and 2021, respectively. Capitalized interest was $4.6 million and $6.5 million for the three months ended March 31, 2022 and 2021, respectively.

Income (loss) from partnerships

Income from partnerships increased $1.5 million, or 114.7%, to $0.2 million in the three months ended March 31, 2022 compared to a loss of $1.3 million in the three months ended March 31, 2021. This increase is due primarily to improved operating results at our restaurant joint ventures and at our Assembly Row hotel joint venture, largely the result of the easing of COVID-19 closures and restrictions.

Net income attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $1.2 million, or 82.6%, to $2.7 million in the three months ended March 31, 2022 compared to $1.5 million in the three months ended March 31, 2021. The increase is primarily due to 2021 acquisitions.

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Liquidity and Capital Resources

Due to the nature of our business and strategy, we typically generate significant amounts of cash from operations which is largely paid to our common and preferred shareholders in the form of dividends because as a REIT, ~~we are~~the Trust is generally required to make annual distributions to shareholders of at least 90% of our taxable income (cash dividends paid in the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 were approximately ~~$167.2~~$86.1 million). Remaining cash flow from operations after dividend payments is used to fund recurring and non-recurring capital projects (such as tenant improvements and redevelopments), and regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities). We maintain a $1.0 billion revolving credit facility to fund short term cash flow needs and also look to the public and private debt and equity markets, joint venture relationships, and property dispositions to fund capital expenditures on a long-term basis.

~~Although~~During the first quarter of 2022, we ~~are seeing~~have continued to see improvements in overall cash ~~collections during 2021, we are still experiencing lower levels of cash from operations due to lower rent~~ collections from tenants ~~and lower occupancy, both a result of the COVID-19 pandemic (see further discussion under the "Outlook" section of this Item 2). While the overall economic impacts of the pandemic are unknown, we~~with collection rates nearing pre-pandemic levels. We have also taken multiple steps over the past two years to strengthen our financial position, maximize liquidity, and to provide maximum flexibility during these uncertain times, including maintaining levels of cash ~~significantly~~ in excess of the cash balances we have historically maintained.

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, there were no borrowings on our $1.0 billion unsecured revolving credit facility, and as of ~~June 30, 2021,~~March 31, 2022, we had cash and cash equivalents of ~~$304.3~~$157.9 million. We also had outstanding forward equity sales agreements for net proceeds of ~~$172.4~~$178.4 million as of ~~June 30, 2021,~~March 31, 2022, and the capacity to issue up to ~~$359.7~~$500.0 million in common shares ~~both~~ under our ATM equity program.

On April 16, 2021, we repaid $100.0 million of our existing $400.0 million term loan, amended the agreement on the remaining $300.0 million to lower the current spread over LIBOR from 135 basis points to 80 basis points based on our current credit rating, and extended the initial maturity date to April 16, 2024, along with two one-year extensions, at our option. Subsequently, over the next 12 months, Additionally, we have ~~$124.2 million of secured~~no debt maturing ~~which we intend to pay off prior to~~until the ~~maturity date, at par.~~second quarter of 2023.

Our overall capital requirements for the remainder of ~~2021~~2022 will ~~continue to~~ be impacted by the extent and duration of COVID-19 related closures and restrictions, impacts on our cash collections, and overall economic impacts that might ~~occur.~~occur including supply chain issues. Cash requirements will also be impacted by acquisition opportunities and the level and general timing of our redevelopment and development activities. While the amount of future expenditures will depend on numerous factors, we expect to continue to see ~~higher~~elevated levels of ~~capital investments in our properties under development and redevelopment,~~investment as we continue to invest in our overall portfolio to better position our properties for a post-COVID environment, costs to prepare vacant space for new tenants, and investments to complete the current phase and start the next phase of ~~these~~our larger mixed-use development projects ~~and are not expecting COVID-19 related halts~~although at a slightly reduced level from 2021, largely due to deliveries in ~~construction activities similar to those experienced in 2020. With respect to other capital investments related to~~2021 of our ~~existing properties, we expect to incur levels more consistent with prior years with an overall increase compared to 2020.~~third phase of Assembly Row.

We believe ~~that~~cash flow from operations, the cash on our balance sheet, ~~together with rents we collect, as well as~~and our $1.0 billion revolving credit facility will allow us to continue to operate our business through the remainder of the COVID-19 pandemic. Given our ~~recent~~past ability to access the capital markets, we also expect debt or equity to be available to us. We also have the ability to delay the timing of certain development and redevelopment projects as well as limit future acquisitions, ~~as well as limit future acquisitions,~~ reduce our operating expenditures, or re-evaluate our dividend policy.

While we have seen significant improvements from the initial negative impacts of the COVID-19 pandemic, it has continued to affect our overall business, ~~during the quarter ended June 30, 2021,~~ and we expect it will continue to negatively impact our business in the short term. WeHowever, we intend to operate with and to maintain our long term commitment to a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-grade debt ratings.

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Summary of Cash Flows


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	247,209	$	181,382	Net cash provided by operating activities	$	103,069	$	115,106
Net cash used in investing activities	Net cash used in investing activities	(509,974)		(257,198)		Net cash used in investing activities	(88,194)		(74,841)
Net cash (used in) provided by financing activities		(237,195)		923,439
(Decrease) increase in cash, cash equivalents and restricted cash		(499,960)		847,623
Net cash used in financing activities						Net cash used in financing activities	(11,849)		(48,719)
Increase (decrease) in cash, cash equivalents and restricted cash						Increase (decrease) in cash, cash equivalents and restricted cash	3,026		(8,454)
Cash, cash equivalents, and restricted cash at beginning of year	Cash, cash equivalents, and restricted cash at beginning of year	816,896		153,614		Cash, cash equivalents, and restricted cash at beginning of year	175,163		816,896
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	316,936	$	1,001,237	Cash, cash equivalents, and restricted cash at end of period	$	178,189	$	808,442

Net cash provided by operating activities ~~increased $65.8~~decreased $12.0 million to ~~$247.2~~$103.1 million during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from ~~$181.4~~$115.1 million during the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The ~~increase~~decrease was primarily attributable to collections of year end real estate tax reconciliation billings during the three months ended March 31, 2021 and the timing of payments, partially offset by higher net income before non-cash items, ~~and timing~~as COVID-19 related restrictions were largely still in place for the quarter ended March 31, 2021.

Table of ~~cash receipts including higher accounts receivable and lower prepaid rent balances in 2020 as a result of the COVID-19 pandemic.~~Contents

Net cash used in investing activities increased ~~$252.8~~$13.4 million to ~~$510.0~~$88.2 million during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from ~~$257.2~~$74.8 million during the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The increase was primarily attributable to:

•~~a $323.2~~$19.9 million ~~increase in acquisition~~ of ~~real estate primarily due to~~net proceeds from the ~~June 2021 acquisitions of three shopping centers in California and Arizona and the April 2021 acquisition~~sale of a ~~shopping center~~portion of Graham Park Plaza in Falls Church, Virginia ~~(see Note 3 to the consolidated financial statements for additional information),~~in March 2021,

partially offset by,

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

•a ~~$25.9~~$5.7 million decrease in ~~capital expenditures~~acquisitions of real estate due to ~~timing~~the February 2021 acquisition of ~~payments, and~~

•~~$12.9 million for net costs paid~~the fee interest at our Mount Vernon Plaza property in ~~2020 relating to the partial sale under threat of condemnation at San Antonio Center in 2019.~~Alexandria, Virginia.

Net cash ~~provided by~~used in financing activities decreased ~~$1.2 billion~~$36.9 million to ~~$237.2~~$11.8 million ~~used~~ during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 from ~~$923.4~~$48.7 million ~~provided~~ in the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. The decrease was primarily attributable to:

•~~$700.1~~a $48.0 million ~~in net proceeds from the issuance of $400.0 million of 3.50% unsecured senior notes and the $300.0 million reopening of our 3.95% unsecured senior notes in May 2020,~~

•~~$398.7 million in net proceeds from our $400.0 million unsecured term loan issued in May 2020, and~~

•~~a $148.0 million increase~~decrease in repayment of mortgages, finance leases, and notes payable primarily due to ~~the $100.0 million repayment of our $400.0 term loan which was amended in April 2021,~~ the $31.5 million repayment of the mortgage loan related to the Pike & Rose hotel in January 2021 and the $16.2 million repayment of the mortgage loan on Sylmar Towne Center in February 2021,

partially offset by

•~~$87.1~~a $4.5 million decrease in net proceeds from the issuance of common shares under our ATM program for net proceeds of $82.7 million and $87.2 million, respectively, during the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022 and 2021,

•a $2.8 million increase in dividends paid to common and preferred shareholders due to an increase in the number of outstanding shares, as well as an increase to the common share dividend rate, and

•a $2.0 million increase in distributions to and redemptions of noncontrolling interests primarily related to our 2021 property acquisitions.

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Debt Financing Arrangements

The following is a summary of our total debt outstanding as of ~~June 30, 2021:~~March 31, 2022:


Description of Debt	Description of Debt	Original Debt Issued	Principal Balance as of June 30, 2021		Stated Interest Rate as of June 30, 2021		Maturity Date		Description of Debt	Original Debt Issued	Principal Balance as of March 31, 2022		Stated Interest Rate as of March 31, 2022		Maturity Date
		(Dollar amounts in thousands)								(Dollars in thousands)
Mortgages payable	Mortgages payable								Mortgages payable
Secured fixed rate	Secured fixed rate								Secured fixed rate

Plaza Del Sol		Acquired	$	7,943	5.23	%	December 1, 2021	(6)
The AVENUE at White Marsh		52,705	52,705		3.35	%	January 1, 2022	(7)
Montrose Crossing		80,000	64,618		4.20	%	January 10, 2022	(8)

Azalea	Azalea	Acquired	40,000		3.73	%	November 1, 2025		Azalea	Acquired	$	40,000	3.73	%	November 1, 2025
Bell Gardens	Bell Gardens	Acquired	12,269		4.06	%	August 1, 2026		Bell Gardens	Acquired	12,056		4.06	%	August 1, 2026
Plaza El Segundo	Plaza El Segundo	125,000	125,000		3.83	%	June 5, 2027		Plaza El Segundo	125,000	125,000		3.83	%	June 5, 2027
The Grove at Shrewsbury (East)	The Grove at Shrewsbury (East)	43,600	43,600		3.77	%	September 1, 2027		The Grove at Shrewsbury (East)	43,600	43,600		3.77	%	September 1, 2027
Brook 35	Brook 35	11,500	11,500		4.65	%	July 1, 2029		Brook 35	11,500	11,500		4.65	%	July 1, 2029
Hoboken (24 Buildings) (1)	Hoboken (24 Buildings) (1)	56,450	56,450		LIBOR + 1.95%		December 15, 2029		Hoboken (24 Buildings) (1)	56,450	56,102		LIBOR + 1.95%		December 15, 2029
Various Hoboken (14 Buildings) (2)	Various Hoboken (14 Buildings) (2)	Acquired	32,263		Various		Various through 2029		Various Hoboken (14 Buildings) (2)	Acquired	31,586		Various		Various through 2029
Chelsea	Chelsea	Acquired	5,044		5.36	%	January 15, 2031		Chelsea	Acquired	4,751		5.36	%	January 15, 2031
Hoboken (1 Building) (3)	Hoboken (1 Building) (3)	Acquired	16,398		3.75	%	July 1, 2042		Hoboken (1 Building) (3)	Acquired	16,148		3.75	%	July 1, 2042
Subtotal	Subtotal		467,790						Subtotal		340,743
Net unamortized debt issuance costs and premium	Net unamortized debt issuance costs and premium		(1,764)						Net unamortized debt issuance costs and premium		(1,507)
Total mortgages payable, net	Total mortgages payable, net		466,026						Total mortgages payable, net		339,236

Notes payable	Notes payable								Notes payable
Term loan (4)		300,000	300,000		LIBOR + 0.80%		April 16, 2024
Revolving credit facility (5)		1,000,000	—		LIBOR + 0.775%		January 19, 2024
Revolving credit facility (4) (6)									Revolving credit facility (4) (6)	1,000,000	—		LIBOR + 0.775%		January 19, 2024
Term loan (5) (6)									Term loan (5) (6)	400,000	300,000		LIBOR + 0.80%		April 16, 2024
Various	Various	7,239	3,043		11.31%		Various through 2028		Various	7,239	2,584		11.31%		Various through 2028

Subtotal	Subtotal		303,043						Subtotal		302,584
Net unamortized debt issuance costs	Net unamortized debt issuance costs		(1,418)						Net unamortized debt issuance costs		(1,044)
Total notes payable, net	Total notes payable, net		301,625						Total notes payable, net		301,540

Senior notes and debentures(6)	Senior notes and debentures(6)								Senior notes and debentures(6)
Unsecured fixed rate	Unsecured fixed rate								Unsecured fixed rate

2.75% notes	2.75% notes	275,000	275,000		2.75	%	June 1, 2023		2.75% notes	275,000	275,000		2.75	%	June 1, 2023
3.95% notes	3.95% notes	600,000	600,000		3.95	%	January 15, 2024		3.95% notes	600,000	600,000		3.95	%	January 15, 2024
1.25% notes	1.25% notes	400,000	400,000		1.25	%	February 15, 2026		1.25% notes	400,000	400,000		1.25	%	February 15, 2026
7.48% debentures	7.48% debentures	50,000	29,200		7.48	%	August 15, 2026		7.48% debentures	50,000	29,200		7.48	%	August 15, 2026
3.25% notes	3.25% notes	475,000	475,000		3.25	%	July 15, 2027		3.25% notes	475,000	475,000		3.25	%	July 15, 2027
6.82% medium term notes	6.82% medium term notes	40,000	40,000		6.82	%	August 1, 2027		6.82% medium term notes	40,000	40,000		6.82	%	August 1, 2027
3.20% notes	3.20% notes	400,000	400,000		3.20	%	June 15, 2029		3.20% notes	400,000	400,000		3.20	%	June 15, 2029
3.50% notes	3.50% notes	400,000	400,000		3.50	%	June 1, 2030		3.50% notes	400,000	400,000		3.50	%	June 1, 2030
4.50% notes	4.50% notes	550,000	550,000		4.50	%	December 1, 2044		4.50% notes	550,000	550,000		4.50	%	December 1, 2044
3.625% notes	3.625% notes	250,000	250,000		3.625	%	August 1, 2046		3.625% notes	250,000	250,000		3.625	%	August 1, 2046
Subtotal	Subtotal		3,419,200						Subtotal		3,419,200
Net unamortized debt issuance costs and premium	Net unamortized debt issuance costs and premium		(13,918)						Net unamortized debt issuance costs and premium		(12,709)
Total senior notes and debentures, net	Total senior notes and debentures, net		3,405,282						Total senior notes and debentures, net		3,406,491

Total debt, net	Total debt, net		$	4,172,933					Total debt, net		$	4,047,267

_____________________

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

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

3)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)OnThe maximum amount drawn under our revolving credit facility during the three months ended March 31, 2022 was $38.0 million and the weighted average interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was 1.2%. Effective April ~~16, 2021, we repaid $100.0 million of~~1, 2022, the ~~term loan, amended the agreement on the remaining $300.0 million to lower the current~~ spread over LIBOR ~~from 135~~increased to 82.5 basis points ~~to 80 basis points based on~~as a result of the change in our ~~current~~ credit ~~rating, and extended the initial maturity date to April 16, 2024, along with two one-year extensions, at our option.~~rating.

5)~~During~~Effective April 1, 2022, the ~~six months ended June 30, 2021, there were no borrowings on~~spread over LIBOR increased to 85 basis points as a result of the change in our ~~$1.0 billion revolving~~ credit ~~facility.~~rating.

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6)~~We have submitted a prepayment notice for this mortgage~~The Operating Partnership is the obligor under our revolving credit facility, term loan, ~~to be repaid, at par, on September 1, 2021.~~

7)~~We have submitted a prepayment notice for this mortgage loan to be repaid, at par, on November 2, 2021.~~

8)~~We have submitted a prepayment notice for this mortgage loan to be repaid, at par, on October 12, 2021.~~and senior notes and debentures.

Our revolving credit facility, unsecured term loan, and other debt agreements include financial and other covenants that may limit our operating activities in the future. As of ~~June 30, 2021,~~March 31, 2022, we were in compliance with all financial and other covenants related to our revolving credit facility, term loan, and senior notes. Additionally, we were in compliance with all of the financial and other covenants that could trigger a loan default on our mortgage loans. If we were to breach any of these financial and other covenants and did not cure the breach within an applicable cure period, our lenders could require us to repay the debt immediately and, if the debt is secured, could immediately begin proceedings to take possession of the property securing the loan. Many of our debt arrangements, including our public notes and our revolving credit facility, are cross-defaulted, which means that the lenders under those debt arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a default under certain of our other debt obligations. As a result, any default under our debt covenants could have an adverse effect on our financial condition, our results of operations, our ability to meet our obligations and the market value of our shares. Our organizational documents do not limit the level or amount of debt that we may incur.

The following is a summary of our scheduled principal repayments as of ~~June 30, 2021:~~March 31, 2022:


		Unsecured			Secured			Total					Unsecured			Secured		Total
		(In thousands)								(In thousands)
2021		$	449		$	9,856		$	10,305
2022	2022	751			119,706		(1)	120,457				2022	$	693		$	2,515	$	3,208
2023	2023	275,765			3,549			279,314				2023	275,758			3,549		279,307
2024	2024	900,656		(2)(3)	3,688			904,344				2024	900,659		(1)(2)	3,688		904,347
2025	2025	333			48,033			48,366				2025	383			48,033		48,416
2026												2026	429,254			26,657		455,911
Thereafter	Thereafter	2,544,289			282,958			2,827,247				Thereafter	2,115,037			256,301		2,371,338
		$	3,722,243		$	467,790		$	4,190,033		(3)		$	3,721,784		$	340,743	$	4,062,527	(3)

__________________

1) ~~We have submitted prepayment notices to repay two mortgage loans, at par, in 2021,~~ ~~as compared to their stated maturity date, as referenced on page 28. These mortgage loans comprise $116.3 million of the scheduled principal repayments in 2022.~~

2) Our $300.0 million term loan ~~initially~~ matures on April 16, 2024, ~~along with~~plus two one-year extensions at our option.

3)2) Our $1.0 billion revolving credit facility matures on January 19, 2024, plus two six-month extensions at our option. As of ~~June 30, 2021,~~March 31, 2022, there was no outstanding balance under this credit facility.

4)3) The total debt maturities differ from the total reported on the consolidated balance sheet due to the unamortized net debt issuance costs and premium/discount on mortgage loans, notes payable, and senior notes as of ~~June 30, 2021.~~March 31, 2022.

Interest Rate Hedging

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

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

As of ~~June 30, 2021,~~March 31, 2022, we have two interest rate swap agreements that effectively fix the rate on a mortgage payable associated with our Hoboken portfolio at 3.67%. Our Assembly Row hotel joint venture is also a party to two interest rate swap

~~Table of Contents~~

agreements that effectively fix their debt at 5.206%. All swaps were designated and qualify as cash flow hedges. Hedge ineffectiveness has not impacted earnings as of ~~June 30, 2021.~~March 31, 2022.

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REIT Qualification

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

Funds From Operations

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

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

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

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

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

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

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


		Three Months Ended				Six Months Ended					Three Months Ended
		June 30,				June 30,					March 31,
		2021		2020		2021		2020			2022		2021
		(In thousands, except per share data)									(In thousands, except per share data)
Net income	Net income	$	48,059	$	10,859	$	97,798	$	67,300	Net income	$	54,728	$	49,739
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(1,855)		(352)		(3,358)		(2,030)		Net income attributable to noncontrolling interests	(2,744)		(1,503)
Gain on sale of real estate and change in control of interest	Gain on sale of real estate and change in control of interest	—		(11,682)		(17,428)		(11,682)		Gain on sale of real estate and change in control of interest	—		(17,428)

Depreciation and amortization of real estate assets	Depreciation and amortization of real estate assets	56,431		56,608		113,534		112,654		Depreciation and amortization of real estate assets	62,977		57,103
Amortization of initial direct costs of leases	Amortization of initial direct costs of leases	9,181		4,809		13,925		9,709		Amortization of initial direct costs of leases	5,793		4,744

Funds from operations	Funds from operations	111,816		60,242		204,471		175,951		Funds from operations	120,754		92,655
Dividends on preferred shares (1)	Dividends on preferred shares (1)	(2,011)		(2,011)		(4,021)		(4,021)		Dividends on preferred shares (1)	(1,875)		(2,010)
Income attributable to operating partnership units (2)		740		—		1,525		1,572
Income attributable to downREIT operating partnership units										Income attributable to downREIT operating partnership units	706		785
Income attributable to unvested shares	Income attributable to unvested shares	(398)		(249)		(721)		(541)		Income attributable to unvested shares	(436)		(325)
Funds from operations available for common shareholders	Funds from operations available for common shareholders	$	110,147	$	57,982	$	201,254	$	172,961	Funds from operations available for common shareholders	$	119,149	$	91,105

Weighted average number of common shares, diluted ~~(3)~~(2)	Weighted average number of common shares, diluted ~~(3)~~(2)	78,203		75,394		77,881		76,126		Weighted average number of common shares, diluted ~~(3)~~(2)	79,299		77,582

Funds from operations available for common shareholders, per diluted share ~~(3)~~(2)	Funds from operations available for common shareholders, per diluted share ~~(3)~~(2)	$	1.41	$	0.77	$	2.58	$	2.27	Funds from operations available for common shareholders, per diluted share ~~(3)~~(2)	$	1.50	$	1.17

_____________________

(1)For the three ~~and six~~ months ended ~~June 30, 2021 and 2020,~~March 31, 2022, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."

(2)For the three months ended June 30, 2020, income attributable to operating partnership units is not added back in the calculation of FFO available to common shareholders, as the related shares are not dilutive and are not included in "weighted average common shares, diluted" for this period.

~~(3)~~The weighted average common shares ~~for the three months ended June 30, 2021 and 2020, and the six months ended June 30, 2020~~ used to compute FFO per diluted common share includes downREIT operating partnership units that were excluded from the computation of diluted EPS. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted share but is anti-dilutive for the computation of dilutive EPS for these periods.

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.

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

~~Table of Contents~~

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.

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Fixed Interest Rate Debt

The majority of our outstanding debt obligations (maturing at various times through 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 ~~June 30, 2021,~~March 31, 2022, we had ~~$3.9~~$3.7 billion of fixed-rate debt outstanding, including ~~$56.5~~$56.1 million of mortgage payables for which the rate is effectively fixed by two interest rate swap agreements. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at ~~June 30, 2021~~March 31, 2022 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately ~~$273.9~~$222.4 million. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at ~~June 30, 2021~~March 31, 2022 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately ~~$305.0~~$249.1 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 ~~June 30, 2021,~~March 31, 2022, we had $300.0 million of variable rate debt outstanding (the principal balance on our unsecured term loan). 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 approximately $3.0 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 $3.0 million with a corresponding increase in our net income and cash flows for the year.

ITEM 4. CONTROLS AND PROCEDURES

Controls and Procedures (Federal Realty Investment Trust)

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~~the Trust's disclosure controls and procedures as of ~~June 30, 2021.~~March 31, 2022. Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that ~~our~~the Trust's disclosure controls and procedures were effective as of ~~June 30, 2021~~March 31, 2022 to provide reasonable assurance that information required to be disclosed in ~~our~~the Trust's 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~~the Trust's internal control over financial reporting during the quarterly period covered by this report that materially affected, or is reasonably likely to materially affect, the Trust's internal control over financial reporting.

Controls and Procedures (Federal Realty OP LP)

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 the Operating Partnership's disclosure controls and procedures as of March 31, 2022. Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that the Operating Partnership's disclosure controls and procedures were effective as of March 31, 2022 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 Operating Partnership’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 the Operating Partnership's internal control over financial reporting during the quarterly period covered by this report that materially affected, or is reasonably likely to materially affect, the Operating Partnership's internal control over financial reporting.

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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, ~~2020.~~2021.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in our Annual Report to our Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC on February ~~11, 2021. These factors include, but are not limited to, the following:~~

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

•~~risks normally associated with the real estate industry, including risks that:~~

◦~~occupancy levels at our properties and the amount of rent that we receive from our properties may be lower than expected,~~

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

◦~~competition for acquisitions could result in increased prices for acquisitions,~~

◦~~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 in our geographic markets;~~

•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; and

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

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 ~~June 30, 2021,~~March 31, 2022, we redeemed ~~44,468~~10,007 downREIT operating partnership units for common ~~shares and 1,000 downREIT operating partnership units for cash.~~shares.

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

~~Table of Contents~~

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.

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EXHIBIT INDEX

Exhibit No.						Description

~~10.1~~2.1						~~First Amendment to the Term Loan~~Merger Agreement and Plan of Reorganization dated ~~as of April 16,~~December 2, 2021, by and among the Operating Partnership (f.k.a. Federal Realty Investment Trust, the "Predecessor"), the Parent Company (f.k.a. FRT Holdco REIT), and FRT Merger Sub REIT (previously filed as ~~Borrower,~~Exhibit 2.1 to our Current Report on Form 8-K filed on December 2, 2021 and incorporated herein by reference)

10.1						Omnibus Assignment, Assumption and Amendment entered into between the Predecessor and the Parent Company (previously filed as Exhibit 10.1 to our Current Report on Form 8-K, filed on January 3, 2022 and incorporated herein by reference)

10.2						Second Amendment to Amended and Restated Credit Agreement and Consent, dated as of January 1, 2022, by and among the Predecessor, as borrower, each of the ~~Lenders~~lenders party thereto and Wells Fargo Bank, National Association, as administrative agent (previously filed as Exhibit 10.2 to our Current Report on Form 8-K filed on January 3, 2022 and incorporated herein by reference)

10.3						Second Amendment to Term Loan Agreement and Consent, dated as of January 1, 2022, by and among the Predecessor, as borrower, each of the lenders party thereto and PNC Bank, National Association, as ~~Administrative Agent,~~administrative agent (previously filed as Exhibit ~~10.1~~10.3 to ~~the Trust's~~our Current Report on Form ~~8K (File No. 1-07533),~~8-K filed on ~~April 19, 2021~~January 3, 2022 and incorporated ~~here~~herein by reference)

31.1						Rule 13a-14(a) Certification of Chief Executive Officer - Federal Realty Investment Trust (filed herewith)

31.2						Rule 13a-14(a) Certification of ~~Principal~~Chief Financial Officer - Federal Realty Investment Trust (filed herewith)

31.3						Rule 13a-14(a) Certification of Chief Executive Officer - Federal Realty OP LP (filed herewith)

31.4						Rule 13a-14(a) Certification of Chief Financial Officer - Federal Realty OP LP (filed herewith)

32.1						Section 1350 Certification of Chief Executive Officer - Federal Realty Investment Trust (filed herewith)

32.2						Section 1350 Certification of ~~Principal~~Chief Financial Officer - Federal Realty Investment Trust (filed herewith)

32.3						Section 1350 Certification of Chief Executive Officer - Federal Realty OP LP (filed herewith)

32.4						Section 1350 Certification of Chief Financial Officer - Federal Realty OP LP (filed herewith)

101						The following materials from Federal Realty Investment Trust’s Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2021,~~March 31, 2022, 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)

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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
						FEDERAL REALTY OP LP

~~August 4, 2021~~May 5, 2022						/s/ Donald C. Wood
						Donald C. Wood,
						Chief Executive Officer and Trustee
						(Principal Executive Officer)


						FEDERAL REALTY INVESTMENT TRUST
						FEDERAL REALTY OP LP

~~August 4, 2021~~May 5, 2022						/s/ Daniel Guglielmone
						Daniel Guglielmone,
						Executive Vice President
						Chief Financial Officer and Treasurer
						(Principal Financial and Accounting Officer)

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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
Net income, excluding $142 attributable to redeemable noncontrolling interests	—	—		—	—		—		10,507		—		210		10,717
Other comprehensive loss - change in fair value of interest rate swaps	—	—		—	—		—		—		(493)		—		(493)
Dividends declared to common shareholders ($1.05 per share)	—	—		—	—		—		(79,407)		—		—		(79,407)
Dividends declared to preferred shareholders	—	—		—	—		—		(2,011)		—		—		(2,011)
Distributions declared to noncontrolling interests, excluding $93 attributable to redeemable noncontrolling interests	—	—		—	—		—		—		—		(894)		(894)
Common shares issued, net	—	—		16	0		0		—		—		—		0


Shares issued under dividend reinvestment plan	—	—		6,771	—		509		—		—		—		509
Share-based compensation expense, net of forfeitures	—	—		4,026	0		3,087		—		—		—		3,087
Shares withheld for employee taxes	—	—		(177)	—		(15)		—		—		—		(15)




BALANCE AT JUNE 30, 2020	405,896	$	159,997	75,633,140	$	760	$	3,170,480	$	(889,195)	$	(7,758)	$	96,817	$	2,531,101


Date Acquired	Property	City/State	Gross Leasable Area (GLA)	Joint Venture Interest (1)		Gross Value
			(in square feet)			(in millions)
April 30, 2021	Chesterbrook	McLean, Virginia	90,000	80	%	$	32.1	(2)
June 1, 2021	Grossmont Center	La Mesa, California	933,000	60	%	$	175.0	(3)
June 14, 2021	Camelback Colonnade	Phoenix, Arizona	642,000	98	%	$	162.5	(4)
June 14, 2021	Hilton Village	Scottsdale, Arizona	93,000	98	%	$	37.5	(5)


	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Mortgages and notes payable	$	767,651	$	760,820	$	886,887	$	879,390
Senior notes and debentures	$	3,405,282	$	3,717,381	$	3,404,488	$	3,761,465