F E D E R A L R E A L T Y I N V E S T M E N T T R U S T
2021 Annual Report
Form 10-K & Proxy Statement
Dear
Shareholders,
As I write this letter in early 2022 with the
Company’s strong 2021 comeback year under
our belt, I find myself thankful, energized
and even more optimistic
our
business prospects than I was before the
pandemic.
about
for
Thankful
the dedicated team of real
estate professionals that make up Federal’s
workforce. Thankful for their tenacious and
tireless pursuit of working with and rebuilding
our tenant base after the most disruptive
social and economic upheaval in most of our
lifetimes. Thankful
their predecessors
for
the past 60 years, carefully
who, over
amassed and curated what I believe to be the
highest quality portfolio of shopping centers
and mixed-use communities and one of the
strongest balance sheets in the industry. Real
estate that was ripe for
recovery and a
balance sheet that allowed for the time and
flexibility to work through it.
Energized by the sheer levels of demand that
resulted in 573 commercial
leases executed
for 2.9 million square feet of space in 2021
raising our portfolio’s leased percentage to
than 12
93.6%; 140 basis points higher
months earlier. Energized by the $440 million
worth of new properties we were able to
acquire and control in 2021 before prices shot
up dramatically later in the year and into
2022. Energized by the tough and pragmatic
approach to our property redevelopment and
expansion
continued
uninterrupted throughout the pandemic. And
mostly, energized by the fact that all of this
was done without laying off or furloughing
one employee while also maintaining our
incredible
increasing
dividends per share to our shareholders
throughout the pandemic.
program
54-year
record
that
of
the
need for
undeniable
Optimistic because of the renewed validation
of
consumer
socialization best seen through recovering
traffic counts and tenant sales at retailers and
restaurants. As important as online ordering is
as a convenient channel to the lifestyle of the
consumer, it is equally evident that it doesn’t
replace the in-person shopping or eating
experience consumers crave but rather lives
side by side to the benefit of everyone.
Optimistic because our properties have
always focused heavily on placemaking and
tenant merchandising with just
the right
tenant doing business in an environment
heavy on comfortable and expansive outdoor
seating areas and landscaping; two attributes
that feel even more important after two years
of restrictions. Optimistic about the surge in
popularity of the first ring suburbs of major
metropolitan markets where the vast majority
of our portfolio lies. Yup,
even more
optimistic about our business prospects than I
was before the pandemic.
The right product, in the right locations, run
by the right team, is how I see Federal Realty
in a post pandemic world. Is it any wonder
that
I’m feeling thankful, energized, and
optimistic?
F E D E R A L R E A L T Y | A N N U A L R E P O R T 2021
on
social
(ESG), which
And as we look to the future, what’s further
encouraging to me is the way that our team,
top to bottom, has embraced our role as good
corporate societal citizens and defenders of
the planet and its natural resources. Our latest
and
report
environmental,
governance principles
sits
prominently available on our website, does a
wonderful job of articulating not only what we
stand for, but what we’re doing about it. From
designing and building the most efficient and
sustainable
mixed-use
environments in the country, to continuous
investment and improvement in the long-term
efficient operation of those properties, to the
tolerance and understanding,
exercise of
diversity and fairness with respect
to our
fellow human beings with whom we both
work and serve
to the
forthright way we deal with inequities head
on, ESG isn’t just a catchphrase at Federal, but
a way of life.
customers,
retail
and
as
A d d i n g t o t h e P o r t f o l i o
t h r o u g h A c q u i s i t i o n s
of
and
covid
economic
There was a brief period of time between the
advent of
the pandemic in March 2020
through the beginning of 2021, when the
level
health
uncertainty was so high that it significantly
depressed commercial real estate values. We
had a decision to make with respect
to
acquisitions that we were pursuing prior to
the pandemic. Either table those negotiations
until a later time when the world was more
certain and risk losing them altogether or
press forward to close those deals at a
particularly vulnerable time for all. We decided
to persevere and to close and were successful
on all
fronts. Grossmont Center near San
Diego, Camelback Colonnade and Hilton
Scottsdale,
Village
in
and
respectively,
Twinbrooke
in Fairfax
Shopping Centers
County, Virginia have added nearly 1.9 million
square feet and nearly 140 acres to Federal’s
high-quality portfolio at favorable prices that
couldn’t possibly be duplicated today. That
initial investment, when coupled with the rent
growth and expansion opportunities that
these properties bring, afford us a unique
growth driver that we’re particularly excited
about.
Phoenix
and
Chesterbrook
and
Commercial real estate values have recovered
mightily since the middle of 2021 and in
many instances have surpassed pre-covid
values. In hindsight, moving forward seems
like the obvious choice. It was anything but in
the depths of the global shutdown in 2020.
The confidence to take that risk was only
made possible due to the flexibility afforded
by the strength of our balance sheet and the
confidence we had,
even in the most
uncertain of times, in the recovery of our very
high-quality shopping center portfolio located
in the first ring suburbs of our country’s
largest coastal cities.
A d d i n g t o t h e P o r t f o l i o
t h r o u g h R e d e v e l o p m e n t a n d
E x p a n s i o n
to
the
decisions
needed
important
be made
Similar
concerning
development
initiative that is a core part of our multi-
faceted
as with
plan
acquisitions, we chose to persevere and stay
on course. We’re very glad we did.
business
and,
our
completed
We’ve
mixed-use
redevelopment of CocoWalk, our $200 million
acquisition and complete renovation of one of
Miami’s most iconic retail properties. We’re
now fully leased and are already receiving
rave reviews from consumers and investors
alike. Just outside of Boston, our $475 million
Phase III mixed-use expansion at Assembly
Row is particularly encouraging, with its
residential lease up occurring at a pace and at
rents well in excess of our expectations and
even ahead of what we saw on its sister
building
for
Stay
expansion here. Right behind
additional
Assembly Phase III on the construction
timetable is the $270 million Santana Row
expansion; this phase is a 376,000 square
foot office building across the street at
Santana West. The lease up of that building
will be another significant source of growth in
the years to come. And later in 2022, we’re
excited to introduce our residential over retail
reimagining of Darien Commons, adjacent to
the
in Darien,
Connecticut.
pre-pandemic.
commuter
station
tuned
rail
F E D E R A L R E A L T Y | A N N U A L R E P O R T 2021
and
than
dozen
are more
a
expansion
other
There
redevelopment
projects
underway throughout the portfolio that, while
smaller in size and capital commitment, are
equally critical to the post pandemic appeal
and value creation of our community and
regional shopping destinations.
H e a d w i n d s a n d T a i l w i n d s
annual
inflation
increases
The specter of inflation and rising interest
rates haven’t been a major factor in our
business for nearly 20 years. All indications
suggest that is about to change and while
clearly runaway inflation and sky-high interest
rates are problematic to commercial
real
estate values and operating cash flows,
are often a positive.
modest
Reasonable
3-4%
annually) and predictable modest increases in
market interest rates are often a good thing
for our business, particularly in the strong
coastal markets where we operate.
Just as
reasonable increases in costs are often passed
on to consumers by retailers and restaurants
in the affluent suburbs where we operate, so
can rental rate increases and annual rent
bumps which are often easier to negotiate
during inflationary periods. It’s the rate and
duration of this inflationary period that is
uncertain at this point.
(say
Similarly,
labor shortages and supply chain
disruptions coming out of the pandemic have
been stubbornly persistent and widespread.
Hardly any industry is unaffected. As the
economy is weaned off the multi-trillion-dollar
government stimulus of the past two years,
and the new definition of back to work takes
shape, labor force changes and supply chain
disruptions
are bound to continue. We
continue to anticipate and proactively look
and act in ways to minimize disruption, but
the sooner some level of balance is restored,
the better. We’re
looking to 2023 for
improvement.
At the same time, the tailwinds helping our
business are undeniable. For a portfolio like
ours that reaches over 95% leased at the top
of cycles, we were as low as 91.5% in
September 2020. And while we’ve made great
progress in 2021, we’re still only 93.6% leased
at year end. Lots of room to grow and our
demand is stronger than ever.
And let’s not forget all that redevelopment
and expansion capital that has been spent
both immediately before and throughout the
pandemic that is not yet income producing.
Simply leasing up that highly desirable,
brand-new space from capital that has already
been spent will serve as a growth catalyst for
years to come. A clear tailwind.
I n C l o s i n g
If you’re sensing a common theme to the
decision making of the past two years, you’re
right. A strong desire to “stay the course”
through adversity always weighs heavily on
the calculations. Fundamental to our business
plan and mission is our understanding that
one of the very important reasons long-term
investors choose Federal Realty is their belief
that the highest quality real estate serves as a
sort of buffer from the natural cyclicality that
economic swings cause – even a once in a
lifetime global pandemic.
our
dividend
common
the past
So yes, we have maintained and even
increased
to
shareholders over the past two years when
we didn’t have to, thereby extending our REIT
leading record to 54 years. And yes, we
full workforce and team
maintained our
members over
two years when
furloughs and layoffs would have been easily
justifiable –and shortsighted. And yes, we
plowed forward in completing acquisitions
and developments that were underway when
most others closed up shop. We worked with
tenants, particularly smaller
retailers and
restaurants, by abating and deferring rent so
that our centers would be stronger and better
In short, we
merchandised post pandemic.
long-term
take our
shareholders very seriously by doing all we
can to offer a steady stream of growing cash
flows over
time. We do that by owning,
operating, and building what we believe to be
the best collection of retail centric shopping
centers and mixed-use communities in the
country. Our strong recovery in 2021 is
testament
to that quality and sets us up
beautifully for continued growth in 2022 and
beyond.
commitment
to our
F E D E R A L R E A L T Y | A N N U A L R E P O R T 2021
54 consecutive years
of increased dividends.
$0.12*
1967
*Annualized dividends per share
couldn’t be more proud of
I
Federal’s
performance throughout this unprecedented
time and it could not have been possible
without two final pieces. A strong balance
sheet with one of the lowest costs of debt and
equity capital in the business that allows the
Trust to navigate difficult times with a level of
flexibility unavailable to most
real estate
firms. And finally, a Board of Trustees that is
importantly,
seasoned and dedicated and,
$4.28*
2021
of
but
sight
loses
never
shares our enthusiasm for what we do for a
living,
the
shareholders that they represent or the clarity
and transparency that they deserve. On behalf
of the Board of Trustees and our entire team, I
thank you for your support of Federal to date
and look forward to being an important part
of your investment portfolio for many years to
thankful,
come.
energized, and optimistic about our future.
be more
couldn’t
I
Respectfully,
Donald C. Wood
Chief Executive Officer
F E D E R A L R E A L T Y | A N N U A L R E P O R T 2021
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒
☐
ANNUAL REPORT PURSUANT TO THE SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number: 1-07533 (Federal Realty Investment Trust)
Commission file number: 333-262016-01 (Federal Realty OP LP)
FEDERAL REALTY INVESTMENT TRUST
FEDERAL REALTY OP LP
(Exact Name of Registrant as Specified in its charter)
Maryland (Federal Realty Investment Trust)
Delaware (Federal Realty OP LP)
(State of Organization)
87-3916363
52-0782497
(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)
Securities registered pursuant to Section 12(b) of the Act:
Federal Realty Investment Trust
Title of Each Class
Common Shares of Beneficial Interest
$.01 par value per share, with associated Common Share
Purchase Rights
Depositary Shares, each representing 1/1000 of a share
of 5.00% Series C Cumulative Redeemable Preferred
Stock, $.01 par value per share
Trading Symbol
FRT
Name of Each Exchange On Which Registered
New York Stock Exchange
FRT-C
New York Stock Exchange
Title of Each Class
None
Trading Symbol
N/A
Name of Each Exchange On Which Registered
N/A
Federal Realty OP LP
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Federal Realty Investment Trust
Federal Realty OP LP
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
☒ Yes ☐ No
☒ Yes ☐ No
Federal Realty Investment Trust
Federal Realty OP LP
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.
☐ Yes ☒ No
☐ Yes ☒ No
Federal Realty Investment Trust
Federal Realty OP LP
☒ Yes ☐ No
☒ 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
Federal Realty OP LP
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:
☒ Yes ☐ No
☒ Yes ☐ No
Federal Realty Investment Trust
Large accelerated filer
Non-accelerated filer
Federal Realty OP LP
Large accelerated filer
Non-accelerated filer
☒
☐
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
Accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by checkmark if the registrant has elected not use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
Federal Realty Investment Trust ☒
Federal Realty OP LP
☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Federal Realty Investment Trust
Federal Realty OP LP
☐ Yes ☒ No
☐ Yes ☒ No
☐
☐
☐
☐
☐
☐
☐
The aggregate market value of the registrant's common shares held by non-affiliates of the registrant, based upon the closing sales price of the
registrant's common shares on June 30, 2021:
Federal Realty Investment Trust: $9.1 billion
Federal Realty OP LP: N/A
The number of Federal Realty Investment Trust's common shares outstanding on February 7, 2022 was 78,616,815.
FEDERAL REALTY INVESTMENT TRUST
FEDERAL REALTY OP LP
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED DECEMBER 31, 2021
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Federal Realty Investment Trust’s Proxy Statement to be filed with the Securities and Exchange Commission (the
"SEC") for its annual meeting of shareholders to be held in May 2022 will be incorporated by reference into Part III hereof.
EXPLANATORY NOTE
Through the fiscal year ended December 31, 2021, the business of the registrant was conducted by an entity known as Federal
Realty Investment Trust, a Maryland real estate investment trust (the “Predecessor”). On December 2, 2021, the Predecessor’s
Board of Trustees approved the reorganization of the Predecessor’s business into an umbrella partnership real estate investment
trust, or “UPREIT.” To effect the UPREIT reorganization, the Predecessor formed a wholly-owned subsidiary real estate
investment trust known as FRT Holdco REIT (“Holdco”), and Holdco formed its own wholly-owned subsidiary real estate
investment trust known as FRT Merger Sub REIT (“Merger Sub”). Holdco also formed a wholly-owned subsidiary limited
liability company known as Federal Realty GP LLC (the “General Partner”). Effective as of January 1, 2022, Merger Sub
merged with and into the Predecessor, with the Predecessor being the surviving entity and becoming a wholly-owned subsidiary
of Holdco (the “Merger”). At the effective time of the Merger, each outstanding capital share of the Predecessor was converted
into one equivalent capital share of Holdco. Effective as of January 5, 2022, the Predecessor converted into a Delaware limited
partnership known as Federal Realty OP LP, the entity we refer to herein as the “Partnership.” In connection with the UPREIT
reorganization, Holdco changed its name to Federal Realty Investment Trust, the entity we refer to herein as the “Parent
Company.” The Parent Company had the same consolidated assets and liabilities immediately following the Merger as the
Predecessor immediately before the Merger. The General Partner is the sole general partner of the Partnership, and the Parent
Company owns 100% of the limited liability company interests of, is the sole member of and exercises exclusive control over
the General Partner. Following the UPREIT reorganization described above, the Parent Company expects to conduct its
business through the Partnership and does not expect to have substantial assets or liabilities other than through its investment in
the Partnership.
As a result of the UPREIT reorganization, the Parent Company became the successor issuer to the Predecessor pursuant to Rule
12g-3(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and as a result, the Parent Company's common shares
and Series C depositary shares were deemed registered under Section 12(b) of the Exchange Act. This Annual Report on Form
10-K pertains to the business and results of operations of the Predecessor for its fiscal year ended December 31, 2021. The
Company and the Partnership have elected to co-file such Annual Report of the Predecessor to ensure continuity of information
to investors. 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.
Throughout this Annual Report, unless the context requires otherwise:
•
•
•
•
“Parent Company” refers to Federal Realty Investment Trust following the Merger;
“Partnership” refers to Federal Realty OP LP;
“we,” “us,” “our” or the “Trust” refer to the Parent Company and its business and operations conducted through its
directly or indirectly owned subsidiaries, including Federal Realty OP LP; and
References to “shares” and “shareholders” refer to the shares and shareholders of the Parent Company and not the
limited partnership interests or limited partners of the Partnership.
1
TABLE OF CONTENTS
Business ........................................................................................................................................................... 3
Risk Factors ..................................................................................................................................................... 7
Unresolved Staff Comments............................................................................................................................ 18
Properties ......................................................................................................................................................... 19
Legal Proceedings............................................................................................................................................ 27
Mine Safety Disclosures .................................................................................................................................. 28
Market for Our Common Equity and Related Shareholder Matters and Issuer Purchases of Equity
Securities.......................................................................................................................................................... 29
Selected Financial Data ................................................................................................................................... 31
Management’s Discussion and Analysis of Financial Condition and Results of Operations.......................... 31
Quantitative and Qualitative Disclosures About Market Risk......................................................................... 51
Financial Statements and Supplementary Data ............................................................................................... 51
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure ......................... 51
Controls and Procedures .................................................................................................................................. 52
Other Information ............................................................................................................................................ 52
Trustees, Executive Officers and Corporate Governance................................................................................ 53
Executive Compensation ................................................................................................................................. 53
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters ....... 53
Certain Relationships and Related Transactions, and Trustee Independence ................................................. 53
Principal Accountant Fees and Services.......................................................................................................... 53
Exhibits and Financial Statement Schedules ................................................................................................... 53
Form 10-K Summary
57
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES ......................................................................................................................................................................... 58
2
PART I
Forward-Looking Statements
Certain statements included in this Annual Report on Form 10-K are forward-looking statements. Those statements include
statements regarding the intent, belief or current expectations of Federal Realty Investment Trust and Federal Realty OP LP
(together, “we” “our” or “us”) 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 or to fill existing vacancy;
risks that we may not be able to proceed with or obtain necessary approvals for any development, redevelopment or
renovation project, and that completion of anticipated or ongoing property development, redevelopment, or renovation
projects that we do pursue may cost more, take more time to complete or fail to perform as expected;
risks normally associated with the real estate industry, including risks that occupancy levels at our properties and the
amount of rent that we receive from our properties may be lower than expected, that new acquisitions may fail to
perform as expected, that competition for acquisitions could result in increased prices for acquisitions, that costs
associated with the periodic maintenance and repair or renovation of space, insurance and other operations may
increase, that environmental issues may develop at our properties and result in unanticipated costs, and, because real
estate is illiquid, that we may not be able to sell properties when appropriate;
risks that our growth will be limited if we cannot obtain additional capital;
risks associated with general economic conditions, including local economic conditions in our geographic markets;
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 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
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.
In addition, we describe risks and uncertainties that could cause actual results and events to differ materially in “Risk
Factors” (Part I, Item 1A of this Annual Report on Form 10-K), “Quantitative and Qualitative Disclosures about Market
Risk” (Part II, Item 7A), and “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” (Part
II, Item 7).
ITEM 1. BUSINESS
General
We are an equity real estate investment trust (“REIT”) specializing in the ownership, management, and redevelopment of high
quality retail and mixed-use properties located primarily in 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 December 31, 2021, we owned or had a majority interest in community and neighborhood shopping
centers and mixed-use properties which are operated as 104 predominantly retail real estate projects comprising approximately
3
25.1 million square feet. In total, the real estate projects were 93.6% leased and 91.1% occupied at December 31, 2021. Our
revenue is primarily generated from lease agreements with tenants. We have paid quarterly dividends to our shareholders
continuously since our founding in 1962 and have increased our dividends per common share for 54 consecutive years.
We were founded in 1962 as a REIT under the laws of the District of Columbia and re-formed as a REIT in the state of
Maryland in 1999. In January of 2022, we consummated the UPREIT reorganization described in the Explanatory Note at the
beginning of this Annual Report. We operate in a manner intended to qualify as a REIT for tax purposes pursuant to provisions
of the Internal Revenue Code of 1986, as amended (the “Code”). Our principal executive offices are located at 909 Rose
Avenue, North Bethesda, Maryland 20852. Our telephone number is (301) 998-8100. Our website address is
www.federalrealty.com. The information contained on our website is not a part of this report and is not incorporated herein by
reference.
Business Objectives and Strategies
While the ongoing COVID-19 pandemic is impacting us in the short-term, our long-term focus has not changed.
Our primary business objective is to own, manage, acquire and redevelop a portfolio of high quality retail focused properties
that will:
•
•
•
•
provide increasing cash flow for distribution to shareholders;
generate higher internal growth than the shopping center industry over the long term;
provide potential for capital appreciation; and
protect investor capital.
Our portfolio includes, and we continue to acquire and redevelop, high quality retail in many formats ranging from regional,
community and neighborhood shopping centers that often are anchored by grocery stores to mixed-use properties that are
typically centered around a retail component but also include office, residential and/or hotel components.
Operating Strategies
While managing through the ongoing COVID-19 pandemic has resulted in short-term deviations, our long-term core operating
strategy has not changed. We continuously evaluate and assess our operating strategies to ensure they are effective and put us in
the best position to address changes in the market. We actively manage our properties to maximize rents and maintain
occupancy levels by attracting and retaining a strong and diverse base of tenants and replacing less relevant, weaker,
underperforming tenants with stronger ones. Our properties are generally located in some of the most densely populated and
affluent areas of the country. These strong demographics help our tenants generate higher sales, which has generally enabled us
to maintain higher occupancy rates, charge higher rental rates, and maintain steady rent growth, all of which increase the value
of our portfolio. Our operating strategies also include:
•
increasing rental rates through the renewal of expiring leases or the leasing of space to new tenants at higher rental
rates while limiting vacancy and down-time;
• maintaining a diversified tenant base, thereby limiting exposure to any one tenant’s financial or operating difficulties;
• monitoring the merchandising mix of our tenant base to achieve a balance of strong national and regional tenants with
local specialty tenants;
• minimizing overhead and operating costs;
• monitoring the physical appearance of our properties and the construction quality, condition and design of the
buildings and other improvements located on our properties to maximize our ability to attract customers and thereby
generate higher rents and occupancy rates;
• managing our properties to take into account their impact on climate change and their resilience in the face of climate
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change;
developing local and regional market expertise in order to capitalize on market and retailing trends;
leveraging the contacts and experience of our management team to build and maintain long-term relationships with
tenants;
providing exceptional customer service; and
creating an experience at many of our properties that is identifiable, unique and serves the surrounding communities to
help insulate these properties and the tenants at these properties from the impact of on-line retailing.
Investing Strategies
Our investment strategy is to deploy capital at risk-adjusted rates of return that exceed our long-term weighted average cost of
capital in projects that have potential for future income growth and increased value. Our investments primarily fall into one of
the following four categories:
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renovating, expanding, reconfiguring and/or retenanting our existing properties to take advantage of under-utilized
land or existing square footage to increase revenue;
renovating or expanding tenant spaces for tenants capable of producing higher sales, and therefore, paying higher
rents;
acquiring quality retail and mixed-use properties located in densely populated and/or affluent areas where barriers to
entry for further development are high, and that have possibilities for enhancing operating performance and creating
value through renovation, expansion, reconfiguration and/or retenanting; and
developing the retail portions of mixed-use properties and developing or otherwise investing in non-retail portions of
mixed-use properties we already own in order to capitalize on the overall value created in these properties.
Investment Criteria
When we evaluate potential redevelopment, retenanting, expansion, acquisition and development opportunities, we consider
such factors as:
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the expected returns in relation to our short and long-term cost of capital as well as the anticipated risk we will face in
achieving the expected returns;
the anticipated growth rate of operating income generated by the property;
the ability to increase the long-term value of the property through redevelopment and retenanting;
the tenant mix at the property, tenant sales performance and the creditworthiness of those tenants;
the geographic area in which the property is located, including the population density, household incomes, education
levels, as well as the population and income trends in that geographic area. This may from time to time include the
evaluation of new markets;
competitive conditions in the vicinity of the property, including gross leasable area (GLA) per capita, competition for
tenants and the ability of others to create competing properties through redevelopment, new construction or
renovation;
access to and visibility of the property from existing roadways and the potential for new, widened or realigned,
roadways within the property’s trade area, which may affect access and commuting and shopping patterns;
the level and success of our existing investments in the market area;
the current market value of the land, buildings and other improvements and the potential for increasing those market
values; and
the physical condition of the land, buildings and other improvements, including the structural and environmental
condition.
Financing Strategies
Our financing strategies are designed to enable us to maintain an investment grade balance sheet while retaining sufficient
flexibility to fund our operating and investing activities in the most cost-efficient way possible. As a result of the ongoing
COVID-19 pandemic and its impact on our cash flows, we have been maintaining levels of cash significantly in excess of the
cash balances we have historically maintained. Our financing strategies include:
• maintaining a prudent level of overall leverage and an appropriate pool of unencumbered properties that is sufficient to
support our unsecured borrowings;
• managing our exposure to variable-rate debt;
• maintaining sufficient levels of cash and available line of credit to fund operating and investing needs on a short-term
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basis;
taking advantage of market opportunities to refinance existing debt, reduce interest costs and manage our debt maturity
schedule so that a significant portion of our debt relative to our size does not mature in any one year;
selling properties that have limited growth potential or are not a strategic fit within our overall portfolio and
redeploying the proceeds to redevelop, renovate, retenant and/or expand our existing properties, acquire new properties
or reduce debt; and
utilizing the most advantageous long-term source of capital available to us to finance redevelopment and acquisition
opportunities, which may include:
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the sale of our equity or debt securities through public offerings, including our at-the-market ("ATM") equity
program in which we may from time to time offer and sell common shares including through forward sales
contracts, or private placements,
the incurrence of indebtedness through unsecured or secured borrowings,
the issuance of units in our operating partnership (generally issued in exchange for a tax deferred contribution
of property); these units typically receive the same distributions as our common shares and the holders of
these units have the right to exchange their units for cash or common shares at our option, or
the use of joint venture arrangements.
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Human Capital
At February 7, 2022, we had 310 full-time employees and 5 part-time employees. None of our employees are represented by a
collective bargaining unit. We believe that our relationship with our employees is good.
Diversity and Inclusion
We are an Equal Opportunity/Affirmative action employer, and strive to maintain a workplace that is free from discrimination
on the basis of race, color, religion, sex, sexual orientation, nationality, disability, or protected Veteran status.
Health, Safety, and Wellness
We are committed to the health, safety, and wellness of our employees, and foster an environment that allows our people to
succeed while balancing work and life. We provide our employees with access to health and wellness programs, which includes
benefits that support both physical and mental health. In response to the COVID-19 pandemic, we implemented significant
changes that were in the best interest of our employees and to comply with government regulations. This includes implementing
additional safety measures for our employees as we have transitioned to a hybrid work model.
Compensation and Benefits
We provide competitive pay and benefits including health, dental, vision, short and long-term disability, life insurance and a
401(k) retirement program, as well as a generous paid time off program that includes vacation, sick, and personal leave. In
addition to our equity awards program, we also offer a quarterly recognition program, as well as rewarding employees with spot
bonuses for stellar performance or going above and beyond the base requirements of their job description.
Talent Development
Employees have access to a variety of different training courses, books, book summaries and audio books, and an array of
source materials covering a myriad of different business and soft skills training subjects. Additionally, we provide
reimbursement for tuition and professional licensures.
Community Involvement
Giving back to the community is an integral part of who we are and what we do. We provide ample ways to give back through
programs at our properties or charitable endeavors and volunteer opportunities that also serve as team building exercises for our
employees.
Tax Status
We elected to be taxed as a REIT under the federal income tax laws when we filed our 1962 tax return. As a REIT, we are
generally not subject to federal income tax on taxable income that we distribute to our shareholders. Under the Code, REITs are
subject to numerous organizational and operational requirements, including the requirement to generally distribute at least 90%
of taxable income each year. We will be subject to federal income tax on our taxable income (including, for our taxable years
ending on or prior to December 31, 2017, any applicable alternative minimum tax) at regular corporate rates if we fail to qualify
as a REIT for tax purposes in any taxable year, or to the extent we distribute less than 100% of our taxable income. We will
also generally not qualify for treatment as a REIT for federal income tax purposes for four years following the year during
which qualification is lost. Even if we qualify as a REIT for federal income tax purposes, we may be subject to certain state and
local income and franchise taxes and to federal income and excise taxes on our undistributed taxable income.
We have elected to treat certain of our subsidiaries as taxable REIT subsidiaries, which we refer to as a TRS. In general, a TRS
may engage in any real estate business and certain non-real estate businesses, subject to certain limitations under the Code. A
TRS is subject to federal and state income taxes. Our TRS activities have not been material.
Impacts of COVID-19 Pandemic
In March 2020, the World Health Organization declared the outbreak of novel coronavirus disease ("COVID-19") as a
pandemic. While we currently expect the impact to our properties is temporary in nature, the extent of the future effects of
COVID-19 on our business, operating strategies, 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. Refer to Item 7 for further
discussion of the impacts of COVID-19 on our business.
Governmental Regulations Affecting Our Properties
We and our properties are subject to a variety of federal, state and local environmental, health, safety and similar laws. Please
see Item 1A. "Risk Factors - Risk Factors Related to our REIT Status and Other Laws and Regulations" for further discussion
of potential material effects of our compliance with government regulation, including environmental regulations and the rules
governing REITs.
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The application of these laws to a specific property that we own depends on a variety of property-specific circumstances,
including the current and former uses of the property, the building materials used at the property and the physical layout of the
property. Under certain environmental laws, we, as the owner or operator of properties currently or previously owned, may be
required to investigate and clean up certain hazardous or toxic substances, asbestos-containing materials, or petroleum product
releases at the property. We may also be held liable to a governmental entity or third parties for property damage and for
investigation and clean up costs incurred in connection with the contamination, whether or not we knew of, or were responsible
for, such contamination. In addition, some environmental laws create a lien on the contaminated site in favor of the government
for damages and costs it incurs in connection with the contamination. As the owner or operator of real estate, we also may be
liable under common law to third parties for damages and injuries resulting from environmental contamination emanating from
the real estate. Such costs or liabilities could exceed the value of the affected real estate. The presence of contamination or the
failure to remediate contamination may adversely affect our ability to sell or lease real estate or to borrow using the real estate
as collateral.
Neither existing environmental, health, safety and similar laws nor the costs of our compliance with these laws has had a
material adverse effect on our financial condition or results of operations, and management does not believe they will in the
future. In addition, we have not incurred, and do not expect to incur, any material costs or liabilities due to environmental
contamination at properties we currently own or have owned in the past. However, we cannot predict the impact of new or
changed laws or regulations on properties we currently own or may acquire in the future. We have no current plans for
substantial capital expenditures with respect to compliance with environmental, health, safety and similar laws and we carry
environmental insurance which covers a number of environmental risks for most of our properties.
Competition
Numerous commercial developers and real estate companies compete with us with respect to the leasing and the acquisition of
properties. Some of these competitors may possess greater capital resources than we do, although we do not believe that any
single competitor or group of competitors in any of the primary markets where our properties are located are dominant in that
market. This competition may:
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reduce the number of properties available for acquisition;
increase the cost of properties available for acquisition;
interfere with our ability to attract and retain tenants, leading to increased vacancy rates and/or reduced rents; and
adversely affect our ability to minimize expenses of operation.
Retailers at our properties also face increasing competition from online retailers, outlet stores, discount shopping clubs,
superstores, and other forms of sales and marketing of goods and services, such as direct mail. This competition could
contribute to lease defaults and insolvency of tenants.
Available Information
Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments
to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange
Act”) are available free of charge through the Investors section of our website at www.federalrealty.com as soon as reasonably
practicable after we electronically file the material with, or furnish the material to, the Securities and Exchange Commission, or
the SEC.
Our Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics applicable to our Chief Executive Officer
and senior financial officers, Whistleblower Policy, organizational documents and the charters of our audit committee,
compensation and human capital committee and nominating and corporate governance committee are all available in the
Corporate Governance section of the Investors section of our website.
Amendments to the Code of Ethics or Code of Business Conduct or waivers that apply to any of our executive officers or our
senior financial officers will be disclosed in the Corporate Governance section of our website as well.
ITEM 1A. RISK FACTORS
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995. Also, documents that
we “incorporate by reference” into this Annual Report on Form 10-K, including documents that we subsequently file with the
SEC will contain forward-looking statements. When we refer to forward-looking statements or information, sometimes we use
words such as “may,” “will,” “could,” “should,” “plans,” “intends,” “expects,” “believes,” “estimates,” “anticipates” and
“continues.” In particular, the below risk factors describe forward-looking information. The risk factors describe risks that may
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affect these statements but are not all-inclusive, particularly with respect to possible future events. Many things can happen that
can cause actual results to be different from those we describe. These factors include, but are not limited to the following:
Risk Factors Related to our Real Estate Investments and Operations
Revenue from our properties may be reduced or limited if the retail operations of our tenants are not successful.
Revenue from our properties depends primarily on the ability of our tenants to pay the full amount of rent and other charges due
under their leases on a timely basis. Some of our leases provide for the payment, in addition to base rent, of additional rent
above the base amount according to a specified percentage of the gross sales generated by the tenants and generally provide for
reimbursement of real estate taxes and expenses of operating the property. Economic, legal, and/or competitive conditions, as
well as COVID-19, may impact the success of our tenants’ retail operations and therefore the amount of rent and expense
reimbursements we receive from our tenants. Any reduction in our tenants' abilities to pay base rent, percentage rent, or other
charges on a timely basis, including the closing of stores prior to the end of the lease term or the filing by any of our tenants for
bankruptcy protection, will adversely affect our financial condition and results of operations. In the event of default by a tenant,
we may experience delays and unexpected costs in enforcing our rights as landlord under lease terms, which may also adversely
affect our financial condition and results of operations.
Our net income depends on the success and continued presence of our “anchor” tenants.
Our net income could be adversely affected in the event of a downturn in the business, or the bankruptcy or insolvency, of any
anchor store or anchor tenant. Anchor tenants generally occupy large amounts of square footage, pay a significant portion of the
total rents at a property and contribute to the success of other tenants by drawing significant numbers of customers to a
property. The closing of one or more anchor stores at a property could adversely affect that property and result in lease
terminations by, or reductions in rent from, other tenants whose leases may permit termination or rent reduction in those
circumstances or whose own operations may suffer as a result. Over the past several years, we have seen higher levels of anchor
turnover and closings in some markets, which has caused an oversupply of larger retail spaces. Therefore, tenant demand for
certain of our anchor spaces may decrease and as a result, we may see an increase in vacancy and/or a decrease in rents for
those spaces that could have a negative impact to our net income. As of December 31, 2021, our anchor tenant space is 96.8%
leased and 94.4% occupied.
A shift in retail shopping from brick and mortar stores to online shopping may have an adverse impact on our cash
flow, financial condition and results of operations.
Many retailers operating brick and mortar stores have made online sales a vital piece of their business. The shift to online
shopping may cause declines in brick and mortar sales generated by certain of our tenants and may cause certain of our tenants
to reduce the size or number of their retail locations in the future. This risk is partially mitigated by our strategy of maintaining
a diverse portfolio of retail properties. The trend of retailers utilizing brick and mortar locations for ‘showroom’ and on-line
sales distribution purposes (particularly at shopping centers in densely populated areas like ours) may further mitigate this risk.
However, there can be no assurance that our shopping centers will not be further impacted by the shift to online shopping. As a
result, our cash flow, financial condition, and results of operations could be adversely affected.
We have properties that are geographically concentrated, and adverse economic or real estate market declines in these
areas could have a material adverse effect on us.
As of December 31, 2021, our tenants operated in 12 states and the District of Columbia. Any adverse situation that
disproportionately affects the the markets where our properties are concentrated may have a magnified adverse effect on our
portfolio. Refer to “Properties” (Item 2 of this Annual Report on Form 10-K) for additional discussion of the geographic
concentration. Real estate markets are subject to economic downturns, as they have been in the past, and we cannot predict how
economic conditions will impact this market in both the short and long term.
Declines in the economy or a decline in the real estate market in these states could hurt our financial performance and the value
of our properties. Factors that may negatively affect economic conditions in these states include:
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business layoffs or downsizing;
industry slowdowns;
increased business restrictions due to health crises;
relocations of businesses;
changing demographics;
increased telecommuting and use of alternative work places;
infrastructure quality;
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any oversupply of, or reduced demand for, real estate;
concessions or reduced rental rates under new leases for properties where tenants defaulted; and
increased operating costs including insurance premiums and real estate taxes.
We may be unable to collect balances due from tenants that file for bankruptcy protection.
If a tenant or lease guarantor files for bankruptcy, we may not be able to collect all pre-petition amounts owed by that party. In
addition, a tenant that files for bankruptcy protection may terminate our lease in which event we would have a general
unsecured claim that would likely be for less than the full amount owed to us for the remainder of the lease term, which could
adversely affect our financial condition and results of operations.
We may experience difficulty or delay in renewing leases or re-leasing space.
We derive most of our revenue directly or indirectly from rent received from our tenants. We are subject to the risks that, upon
expiration or termination of leases, whether by their terms, as a result of a tenant bankruptcy, general economic conditions or
otherwise, leases for space in our properties may not be renewed, space may not be re-leased, or the terms of renewal or re-
lease, including the cost of required renovations or concessions to tenants, may be less favorable than current lease terms and
may include decreases in rental rates. As a result, our net income could be reduced.
Our development activities have inherent risks.
The ground-up development of improvements on real property, as opposed to the renovation and redevelopment of existing
improvements, presents substantial risks. We generally do not look to acquire raw land for future development; however, we do
intend to complete the development and construction of future phases of projects we already own. We may undertake
development of these and other projects on our own or bring in third parties if it is justifiable on a risk-adjusted return basis. We
may also choose to delay completion of a project if market conditions do not allow an appropriate return. If conditions arise and
we are not able or decide not to complete a project or if the expected cash flows of our project do not exceed the book value, an
impairment of the project may be required. If additional phases of any of our existing projects or if any new projects are not
successful, it may adversely affect our financial condition and results of operations.
In addition to the risks associated with real estate investment in general, as described elsewhere and the specific risks above, the
risks associated with our remaining development activities include:
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contractor changes may delay the completion of development projects and increase overall costs;
significant time lag between commencement and stabilization subjects us to greater risks due to fluctuations in the
general economy;
delivery of residential product into uncertain residential environments may result in lower rents or longer time periods
to reach economic stabilization;
substantial amount of our investment is related to infrastructure and the overall value of the project may be negatively
impacted if we do not complete subsequent phases;
failure or inability to obtain construction or permanent financing on favorable terms;
expenditure of money and time on projects that may never be completed;
difficulty securing key anchor or other tenants may impact occupancy rates and projected revenue;
inability to achieve projected rental rates or anticipated pace of lease-up;
higher than estimated construction or operating costs, including labor and material costs; and
possible delay in completion of a project because of a number of factors, including COVID-19, supply chain
disruptions and shortages, weather, labor disruptions, construction delays or delays in receipt of zoning or other
regulatory approvals, acts of terror or other acts of violence, or acts of God (such as fires, earthquakes or floods).
Redevelopments and acquisitions may fail to perform as expected.
Our investment strategy includes the redevelopment and acquisition of high quality, retail focused properties in densely
populated areas with high average household incomes and significant barriers to adding competitive retail supply. The
redevelopment and acquisition of properties entail risks that include the following, any of which could adversely affect our
results of operations and our ability to meet our obligations:
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our estimate of the costs to improve, reposition or redevelop a property may prove to be too low, or the time we
estimate to complete the improvement, repositioning or redevelopment may be too short. As a result, the property may
fail to achieve the returns we have projected, either temporarily or for a longer period;
we may not be able to identify suitable properties to acquire or may be unable to complete the acquisition of the
properties we identify;
we may not be able to integrate an acquisition into our existing operations successfully;
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properties we redevelop or acquire may fail to achieve the occupancy or rental rates we project, within the time frames
we project, at the time we make the decision to invest, which may result in the properties’ failure to achieve the returns
we projected;
our pre-acquisition evaluation of the physical condition of each new investment may not detect certain defects or
identify necessary repairs until after the property is acquired, which could significantly increase our total acquisition
costs or decrease cash flow from the property; and
our investigation of a property or building prior to our acquisition, and any representations we may receive from the
seller of such building or property, may fail to reveal various liabilities, which could reduce the cash flow from the
property or increase our acquisition cost.
Our performance and value are subject to general risks associated with the real estate industry.
Our economic performance and the value of our real estate assets, and consequently, the value of our investments, are subject to
the risk that if our properties do not generate revenues sufficient to meet our operating expenses, including debt service and
capital expenditures, our cash flow and ability to pay distributions to our shareholders will be adversely affected. As a real
estate company, we are susceptible to the following real estate industry risks:
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economic downturns in general, or in the areas where our properties are located;
adverse changes in local real estate market conditions, such as an oversupply or reduction in demand;
changes in tenant preferences that reduce the attractiveness of our properties to tenants;
zoning or regulatory restrictions;
decreases in market rental rates;
weather conditions that may increase or decrease energy costs and other weather-related expenses;
costs associated with the need to periodically repair, renovate and re-lease space; and
increases in the cost of adequate maintenance, insurance and other operating costs, including real estate taxes,
associated with one or more properties, which may occur even when circumstances such as market factors and
competition cause a reduction in revenues from one or more properties, although real estate taxes typically do not
increase upon a reduction in such revenues.
Each of these risks could result in decreases in market rental rates and increases in vacancy rates, which could adversely affect
our financial condition and results of operation.
Many real estate costs are fixed, even if income from our properties decreases.
Our financial results depend primarily on leasing space in our properties to tenants on terms favorable to us. Costs associated
with real estate investment, such as real estate taxes, insurance and maintenance costs, generally are not reduced even when a
property is not fully occupied, rental rates decrease, or other circumstances cause a reduction in income from the property. As a
result, cash flow from the operations of our properties may be reduced if a tenant does not pay its rent or we are unable to rent
our properties on favorable terms. Under those circumstances, we might not be able to enforce our rights as landlord without
delays and may incur substantial legal costs. Additionally, new properties that we may acquire or redevelop may not produce
any significant revenue immediately, and the cash flow from existing operations may be insufficient to pay the operating
expenses and debt service associated with such new properties until they are fully occupied.
Competition may limit our ability to purchase new properties and generate sufficient income from tenants.
Numerous commercial developers and real estate companies compete with us in seeking tenants for our existing properties and
properties for acquisition. This competition may:
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reduce properties available for acquisition;
increase the cost of properties available for acquisition;
reduce rents payable to us;
interfere with our ability to attract and retain tenants;
lead to increased vacancy rates at our properties; and
adversely affect our ability to minimize expenses of operation.
Retailers at our properties also face increasing competition from online retailers, outlet stores, discount shopping clubs and
other forms of sales and marketing of goods, such as direct mail. This competition could contribute to lease defaults and
insolvency of tenants. If we are unable to continue to attract appropriate retail tenants to our properties, or to purchase new
properties in our geographic markets, it could materially affect our ability to generate net income, service our debt and make
distributions to our shareholders.
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We may be unable to sell properties when appropriate because real estate investments are illiquid.
Real estate investments generally cannot be sold quickly. In addition, there are some limitations under federal income tax laws
applicable to real estate and to REITs in particular that may limit our ability to sell our assets. We may not be able to alter our
portfolio promptly in response to changes in economic or other conditions including being unable to sell a property at a return
we believe is appropriate due to the economic environment. Our inability to respond quickly to adverse changes in the
performance of our investments could have an adverse effect on our ability to meet our obligations and make distributions to
our shareholders.
We may have limited flexibility in dealing with our jointly owned investments.
Our organizational documents do not limit the amount of funds that we may invest in properties and assets owned jointly with
other persons or entities. As of December 31, 2021, we held 19 predominantly retail real estate projects jointly with other
persons in addition to properties owned in a “downREIT” structure. Additionally, as of December 31, 2021, we owned an
interest in the hotel component of Assembly Row. We may make additional joint investments in the future. Our existing and
future joint investments may subject us to special risks, including the possibility that our partners or co-investors might become
bankrupt, that those partners or co-investors might have economic or other business interests or goals which are unlike or
incompatible with our business interests or goals, that those partners or co-investors might be in a position to take action
contrary to our suggestions or instructions, or in opposition to our policies or objectives, and that disputes may develop with our
joint venture partners over decisions affecting the property or the joint venture, which may result in litigation or arbitration or
some other form of dispute resolution. Although as of December 31, 2021, we held the controlling interests in all of our existing
co-investments (except the hotel investment discussed above and the investment in the La Alameda shopping center acquired in
2017), we generally must obtain the consent of the co-investor or meet defined criteria to sell or to finance these properties.
Joint ownership gives a third party the opportunity to influence the return we can achieve on some of our investments and may
adversely affect our ability to make distributions to our shareholders. We may also be liable for the actions of our co-investors.
Our insurance coverage on our properties may be inadequate.
We currently carry comprehensive insurance on all of our properties, including insurance for liability, fire, flood, earthquake,
environmental matters, rental loss and acts of terrorism. All of these policies contain coverage limitations. We believe these
coverages are of the types and amounts customarily obtained for or by an owner of similar types of real property assets located
in the areas where our properties are located. We intend to obtain similar insurance coverage on subsequently acquired
properties.
The availability of insurance coverage may decrease and the prices for insurance may increase as a consequence of significant
losses incurred by the insurance industry and other factors outside our control. As a result, we may be unable to renew or
duplicate our current insurance coverage in adequate amounts or at reasonable prices. In addition, insurance companies may no
longer offer coverage against certain types of losses, such as losses due to terrorist acts, pandemics, and toxic mold, or, if
offered, the expense of obtaining these types of insurance may not be justified. We therefore may cease to have insurance
coverage against certain types of losses and/or there may be decreases in the limits of insurance available. If an uninsured loss
or a loss in excess of our insured limits occurs, we could lose all or a portion of the capital we have invested in a property, as
well as the anticipated future revenue from the property, but still remain obligated for any mortgage debt or other financial
obligations related to the property. We cannot guarantee that material losses in excess of insurance proceeds will not occur in
the future. If any of our properties were to experience a catastrophic loss, it could seriously disrupt our operations, delay
revenue and result in large expenses to repair or rebuild the property. Also, due to inflation, changes in codes and ordinances,
environmental considerations and other factors, it may not be feasible to use insurance proceeds to replace a building after it has
been damaged or destroyed. Further, we may be unable to collect insurance proceeds if our insurers are unable to pay or contest
a claim. Events such as these could adversely affect our results of operations and our ability to meet our obligations, including
distributions to our shareholders.
Natural disasters, climate change and health crises, including the COVID-19 pandemic, could have an adverse impact
on our cash flow and operating results.
Climate change may add to the unpredictability and frequency of natural disasters and severe weather conditions and create
additional uncertainty as to future trends and exposures. Certain of our operations are located in areas that are subject to natural
disasters and severe weather conditions such as hurricanes, earthquakes, droughts, snow storms, floods and fires. The impact of
climate change or the occurrence of natural disasters can delay new development projects, increase investment costs to repair or
replace damaged properties, increase operating costs, create additional investment costs to make improvements to existing
properties to comply with climate change regulations, increase future property insurance costs, and negatively impact the tenant
demand for space. If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not adequate to
cover business interruption or losses from these events, our earnings, liquidity or capital resources could be adversely affected.
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In addition, our business is subject to risks related to the effects of public health crises, epidemics and pandemics, including the
COVID-19 pandemic. Such events could:
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inhibit global, national and local economic activity;
drive inflation, adversely affect trading activity in securities markets, which could negatively impact the trading prices
of our common shares and debt securities and our ability to access the securities markets as a source of liquidity;
adversely affect our tenants’ financial condition by limiting foot traffic and staffing at their businesses, which could
affect their ability to pay rent and willingness to make new leasing commitments;
reduce our cash flow, which could impact our ability to pay dividends at the current rate and in the current format or at
all or to service our debt;
temporarily or permanently reduce the demand for retail or office space;
interfere with our business operations by requiring our personnel to work remotely;
increase the frequency of cyber-attacks;
disrupt supply chains that could be important in our development and redevelopment activities;
result in labor shortages;
interfere with potential purchases and sales of properties;
impact our ability to pay dividends at the current rate and in the current format or at all; and
have other direct and indirect effects that are difficult to predict.
Such risks depend upon the nature and severity of the public health concern, as well as the extent and duration of government-
mandated orders and personal decisions to limit travel, economic activity and personal interaction, none of which can be
predicted with confidence. In particular, we cannot predict the impact of stay-at-home and other government orders instituted in
response to the COVID-19 pandemic, which vary by jurisdiction, or the pandemics' short and long term economic effects, each
of which could have a material adverse effect on our business.
An increased focus on metrics and reporting related to corporate responsibility, specifically related to environmental,
social and governance ("ESG") factors, may impose additional costs and expose us to new risks.
Investors and other stakeholders have become more focused on understanding how companies address a variety of ESG factors.
Many of those investors and shareholders look to ESG rating systems that have been developed by third party groups to allow
comparisons between companies on ESG factors as they evaluate investment decisions as well as to company disclosures.
Although we participate in many of these ratings systems and generally score relatively well in those in which we do
participate, we do not participate in, and would not necessarily score well in, all of the available ratings systems. Further, the
criteria used in these ratings systems change frequently, and we cannot guaranty that we will be able to score well as criteria
change. We supplement our participation in ratings systems with corporate disclosures of our ESG activities but many investors
and stakeholders may look for specific disclosures that we do not provide. Failure to participate in certain of the third party
ratings systems, failure to score well in those ratings systems or failure to provide certain ESG disclosures could result in
reputational harm when investors or others compare us against similar companies in our industry and could cause certain
investors to be unwilling to invest in our stock which could adversely impact our ability to raise capital.
For more information about the Trust's Corporate Responsibility initiatives, see Item 7. "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Corporate Responsibility."
Risk Factors Related to our Funding Strategies and Capital Structure
The amount of debt we have and the restrictions imposed by that debt could adversely affect our business and financial
condition.
As of December 31, 2021, we had approximately $4.1 billion of debt outstanding. Of that outstanding debt, approximately
$341.6 million was secured by all or a portion of 7 of our real estate projects. As of December 31, 2021, approximately 92.6%
of our debt is fixed rate or is fixed via interest rate swap agreements, which includes all of our property secured debt and our
unsecured senior notes. Our organizational documents do not limit the level or amount of debt that we may incur. The amount
of our debt outstanding from time to time could have important consequences to our shareholders. For example, it could:
•
require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing
funds available for operations, property acquisitions, redevelopments and other appropriate business opportunities that
may arise in the future;
limit our ability to make distributions on our outstanding common shares and preferred shares;
•
• make it difficult to satisfy our debt service requirements;
•
require us to dedicate increased amounts of our cash flow from operations to payments on debt upon refinancing or on
our variable rate, unhedged debt, if interest rates rise;
12
•
•
•
limit our flexibility in planning for, or reacting to, changes in our business and the factors that affect the profitability of
our business;
limit our ability to obtain any additional debt or equity financing we may need in the future for working capital, debt
refinancing, capital expenditures, acquisitions, redevelopments or other general corporate purposes or to obtain such
financing on favorable terms; and/or
limit our flexibility in conducting our business, which may place us at a disadvantage compared to competitors with
less debt or debt with less restrictive terms.
Our ability to make scheduled principal payments of, to pay interest on, or to refinance our indebtedness will depend primarily
on our future performance, which to a certain extent is subject to economic, financial, competitive and other factors beyond our
control. There can be no assurance that our business will continue to generate sufficient cash flow from operations in the future
to service our debt or meet our other cash needs. If we are unable to generate this cash flow from our business, we may be
required to refinance all or a portion of our existing debt, sell assets or obtain additional financing to meet our debt obligations
and other cash needs, including the payment of dividends required to maintain our status as a real estate investment trust. We
cannot assure you that any such refinancing, sale of assets or additional financing would be possible on terms that we would
find acceptable.
We are obligated to comply with financial and other covenants pursuant to our debt obligations that could restrict our
operating activities, and the failure to comply with such covenants could result in defaults that accelerate payment
under our debt agreements.
Our revolving credit facility, unsecured term loan, and certain series of notes include financial covenants that may limit our
operating activities in the future. We are also required to comply with additional covenants that include, among other things,
provisions:
•
•
•
•
•
•
relating to the maintenance of property securing a mortgage;
restricting our ability to pledge assets or create liens;
restricting our ability to incur additional debt;
restricting our ability to amend or modify existing leases at properties securing a mortgage;
restricting our ability to enter into transactions with affiliates; and
restricting our ability to consolidate, merge or sell all or substantially all of our assets.
As of December 31, 2021, we were in compliance with all of our default related financial covenants. If we were to breach any
of our default related debt covenants, including the covenants listed above, and did not cure the breach within any 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.
Adverse changes in our credit rating could affect our borrowing capacity and borrowing terms.
Our credit worthiness is rated by nationally recognized credit rating agencies. The credit ratings assigned are based on our
operating performance, liquidity and leverage ratios, financial condition and prospects, and other factors viewed by the credit
rating agencies as relevant to our industry and the economic outlook in general. Our credit rating can affect the amount of
capital we access, as well as the terms of certain existing and future financing we obtain. Since we depend on debt financing to
fund the growth of our business, an adverse change in our credit rating, including actual changes in outlook, or even the
initiation of review of our credit rating that could result in an adverse change, could have a material adverse effect on us.
Our ability to grow will be limited if we cannot obtain additional capital.
Our growth strategy is focused on the development and redevelopment of properties we already own and the acquisition of
additional properties. We believe that it will be difficult to fund our expected growth with cash from operating activities
because, in addition to other requirements, we are generally required to distribute to our shareholders at least 90% of our
taxable income each year to continue to qualify as a REIT for federal income tax purposes. As a result, we must rely primarily
upon the availability of debt or equity capital, which may or may not be available on favorable terms or at all. Debt could
include the sale of debt securities and mortgage loans from third parties. If economic conditions and conditions in the capital
markets are not favorable at the time we need to raise capital, we may need to obtain capital on less favorable terms.
Additionally, we cannot guarantee that additional financing, refinancing or other capital will be available in the amounts we
desire or on favorable terms. Our access to debt or equity capital depends on a number of factors, including the market’s
13
perception of our growth potential and risk profile, our ability to pay dividends, and our current and potential future earnings.
Depending on the outcome of these factors as well as the impact of the economic environment, we could experience delay or
difficulty in implementing our growth strategy on satisfactory terms, or be unable to implement this strategy.
Rising interest rates could adversely affect our cash flow and the market price of our outstanding debt and preferred
shares.
Of our $4.1 billion of debt outstanding as of December 31, 2021, approximately $356.5 million bears interest at a variable rate,
of which, $300.0 million is our unsecured term loan that bears interest at a variable rate of LIBOR plus 80 basis points and
$56.5 million in mortgages payable that bear interest at a variable rate of LIBOR plus 195 basis points and are effectively fixed
through two interest rate swap agreements. We also have a $1.0 billion revolving credit facility, on which no balance was
outstanding at December 31, 2021, that bears interest at LIBOR plus 77.5 basis points. We may borrow additional funds at
variable interest rates in the future. Increases in interest rates would increase the interest expense on our variable rate debt and
reduce our cash flow, which could adversely affect our ability to service our debt and meet our other obligations and also could
reduce the amount we are able to distribute to our shareholders. We may enter into additional hedging arrangements or other
transactions for all or a portion of our variable rate debt to limit our exposure to rising interest rates. However, the amounts we
are required to pay under variable rate debt to which hedging or similar arrangements relate may increase in the event of non-
performance by the counterparties to any such hedging arrangements. In addition, an increase in market interest rates may lead
purchasers of our debt securities and preferred shares to demand a higher annual yield, which could adversely affect the market
price of our outstanding debt securities and preferred shares and the cost and/or timing of refinancing or issuing additional debt
securities or preferred shares.
The phase-out of LIBOR could affect interest rates under our variable rate debt and interest rate swap arrangements.
LIBOR is used as a reference rate for our revolving credit facility, certain mortgage payables, and in our interest rate swap
arrangements. On July 27, 2017, the United Kingdom's Financial Conduct Authority announced it intends to stop compelling
banks to submit rates for the calculation of LIBOR after 2021. On November 30, 2020, the ICE Benchmark Administration
Limited announced its plan to extend the date that most U.S. LIBOR values would cease being computed and published from
December 31, 2021 to June 30, 2023. The Federal Reserve Board and the Federal Reserve Bank of New York organized the
Alternative Reference Rates Committee which identified the Secured Overnight Financing Rate ("SOFR") as its preferred
alternative to U.S. dollar LIBOR in derivatives and other financial contracts. At this time, we can not predict the effect of any
discontinuance, modification or other reforms to LIBOR, or if SOFR, or another alternative rate reference rate, attains market
traction as a LIBOR replacement. As LIBOR phases out and ceases to exist, we will need to agree upon a benchmark
replacement index with the bank, and as such the interest rate on our revolving credit facility and certain mortgage payables
may change. The new rate may not be as favorable as those in effect prior to any LIBOR phase-out. Furthermore, the transition
process may result in delays in funding, higher interest expense, additional expenses, and increased volatility in markets for
instruments that currently rely on LIBOR, all of which could negatively impact our cash flow.
Risk Factors Related to our REIT Status and Other Laws and Regulations
Environmental laws and regulations could reduce the value or profitability of our properties.
All real property and the operations conducted on real property are subject to federal, state and local laws, ordinances and
regulations relating to hazardous materials, environmental protection and human health and safety. Under various federal, state
and local laws, ordinances and regulations, we and our tenants may be responsible for the disposal or treatment of hazardous or
toxic substances released on or in properties we own or operate, as well as certain other potential costs relating to hazardous or
toxic substances (including governmental fines and injuries to persons and property). This liability may be imposed whether or
not we knew about, or were responsible for, the presence of hazardous or toxic substances. Further, the presence of
contamination on our properties or the failure to properly remediate contamination at any of our properties may adversely affect
our ability to sell or lease those properties or to borrow funds by using those properties as collateral. The costs or liabilities
could exceed the value of the affected real estate. We are not aware of any environmental condition with respect to any of our
properties that management believes would have a material adverse effect on our business, assets or results of operations taken
as a whole.
In addition, changes in government legislation and regulation on climate change could result in increased capital expenditures
to improve the energy efficiency of our existing properties and could also require us to spend more on our development or
redevelopment projects without a corresponding increase in revenues, which may adversely affect our financial condition,
results of operations and cash flows.
14
The Americans with Disabilities Act of 1990 could require us to take remedial steps with respect to existing or newly
acquired properties.
Our existing properties, as well as properties we may acquire, as commercial facilities, are required to comply with Title III of
the Americans with Disabilities Act of 1990. Investigation of a property may reveal non-compliance with this Act. The
requirements of this Act, or of other federal, state or local laws or regulations, also may change in the future and restrict further
renovations of our properties with respect to access for disabled persons. Future compliance with this Act may require
expensive changes to the properties.
The revenues generated by our tenants could be negatively affected by various federal, state and local laws to which they
are subject.
We and our tenants are subject to a wide range of federal, state and local laws and regulations, such as local licensing
requirements, consumer protection laws and state and local fire, life-safety and similar requirements that affect the use of the
properties. The leases typically require that each tenant comply with all laws and regulations. Failure to comply could result in
fines by governmental authorities, awards of damages to private litigants, or restrictions on the ability to conduct business on
such properties. Non-compliance of this sort could reduce our revenues from a tenant, could require us to pay penalties or fines
relating to any non-compliance, and could adversely affect our ability to sell or lease a property.
Failure to qualify as a REIT for federal income tax purposes would cause the Parent Company to be taxed as a
corporation, which would substantially reduce funds available for payment of distributions.
We believe that we are organized and qualified as a REIT for federal income tax purposes and currently intend to operate in a
manner that will allow us to continue to qualify as a REIT under the Code. However, we cannot assure you that we will remain
qualified as such in the future.
Qualification as a REIT involves the application of highly technical and complex Code provisions and applicable income tax
regulations that have been issued under the Code. Certain facts and circumstances not entirely within our control may affect our
ability to qualify as a REIT. For example, in order to qualify as a REIT, at least 95% of our gross income in any year must be
derived from qualifying rents and certain other income. Satisfying this requirement could be difficult, for example, if defaults
by tenants were to reduce the amount of income from qualifying rents. As a REIT, we must generally make annual distributions
to shareholders of at least 90% of our taxable income. In addition, new legislation, new regulations, new administrative
interpretations or new court decisions may significantly change the tax laws with respect to qualification as a REIT or the
federal income tax consequences of such qualification. Any modification in the tax treatment of REITs could have a significant
adverse impact to our net income.
If we fail to qualify as a REIT:
•
•
•
•
•
we would not be allowed a deduction for distributions to shareholders in computing taxable income;
we would be subject to federal income tax at regular corporate rates;
unless we are entitled to relief under specific statutory provisions, we could not elect to be taxed as a REIT for four
taxable years following the year during which we were disqualified;
we could be required to pay significant income taxes, which would substantially reduce the funds available for
investment or for distribution to our shareholders for each year in which we failed or were not permitted to qualify;
and
we would no longer be required by law to make any distributions to our shareholders.
To maintain our status as a REIT, we limit the amount of shares any one shareholder of the Parent Company can own.
The Code imposes certain limitations on the ownership of the stock of a REIT. For example, not more than 50% in value of our
outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code)
during the last half of any taxable year. To protect our REIT status, the Parent Company's declaration of trust prohibits any one
shareholder from owning (actually or constructively) more than 9.8% in value of the outstanding common shares or of any class
or series of outstanding preferred shares. The constructive ownership rules are complex. Shares of the Parent Company's capital
stock owned, actually or constructively, by a group of related individuals and/or entities may be treated as constructively owned
by one of those individuals or entities. As a result, the acquisition of less than 9.8% in value of the outstanding common shares
and/or a class or series of preferred shares (or the acquisition of an interest in an entity that owns common shares or preferred
shares) by an individual or entity could cause that individual or entity (or another) to own constructively more than 9.8% in
value of the outstanding capital stock. If that happened, either the transfer of ownership would be void or the shares would be
transferred to a charitable trust and then sold to someone who can own those shares without violating the 9.8% ownership limit.
The Board of Trustees may waive these restrictions on a case-by-case basis. In addition, the Board of Trustees and two-thirds of
our shareholders eligible to vote at a shareholder meeting may remove these restrictions if they determine it is no longer in our
15
best interests for the Parent Company to attempt to qualify, or to continue to qualify, as a REIT. The 9.8% ownership
restrictions may delay, defer or prevent a transaction or a change of our control that might involve a premium price for the
common shares or otherwise be in the shareholders’ best interest.
Legislative, administrative, regulatory or other actions affecting REITs, including positions taken by the IRS, could
have a material adverse effect on us and our investors.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process,
and by the Internal Revenue Service (“IRS”) and the U.S. Department of the Treasury (“Treasury”). Changes to the tax laws or
interpretations thereof by the IRS and the Treasury, with or without retroactive application, could materially and adversely
affect us and our investors. In particular, additional technical corrections legislation and implementing regulations may be
enacted or promulgated in response to the Tax Cuts and Job Acts of 2017 (the "Act"), and substantive legislative changes to the
Act are also possible. In response to the COVID-19 pandemic, multiple pieces of legislation have already been enacted,
including the 2020 CARES Act, and there have also been significant issuances of regulatory and other guidance, and further
legislative enactments and other IRS or Treasury action is possible. No prediction can be made as to the likelihood of passage
of new tax legislation or other provisions, or the direct or indirect effect on us and our shareholders. Accordingly, such new
legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our
ability to qualify to be taxed as a REIT and/or the U.S. federal income tax consequences to us and our investors of such
qualification.
Certain tax and anti-takeover provisions of the Parent Company's declaration of trust and bylaws, and certain
restrictions in the Partnership's limited partnership agreement, may inhibit a change of our control.
Certain provisions contained in the Parent Company's declaration of trust and bylaws and the Maryland General Corporation
Law, as applicable to Maryland REITs, may discourage a third party from making a tender offer or acquisition proposal to us. If
this were to happen, it could delay, deter or prevent a change in control or the removal of existing management. These
provisions also may delay or prevent the shareholders from receiving a premium for their common shares over then-prevailing
market prices. These provisions include:
•
•
•
•
•
•
the REIT ownership limit described above;
authorization of the issuance of our preferred shares with powers, preferences or rights to be determined by the Board
of Trustees;
special meetings of our shareholders may be called only by the chairman of the board, the chief executive officer, the
president, by one-third of the trustees or by shareholders possessing no less than 25% of all the votes entitled to be cast
at the meeting;
the Board of Trustees, without a shareholder vote, can classify or reclassify unissued shares of beneficial interest,
including the reclassification of common shares into preferred shares and vice-versa;
a two-thirds shareholder vote is required to approve some amendments to the declaration of trust; and
advance-notice requirements for proposals to be presented at shareholder meetings.
In addition, if we elect to be governed by it in the future, the Maryland Control Share Acquisition Law could delay or prevent a
change in control. Under Maryland law, unless a REIT elects not to be subject to this law, “control shares” acquired in a
“control share acquisition” have no voting rights except to the extent approved by shareholders by a vote of two-thirds of the
votes entitled to be cast on the matter, excluding shares owned by the acquirer and by officers or trustees who are employees of
the REIT. “Control shares” are voting shares that would entitle the acquirer to exercise voting power in electing trustees within
specified ranges of voting power. A “control share acquisition” means the acquisition of control shares, with some exceptions.
The Parent Company's bylaws state that the Maryland control share acquisition law will not apply to any acquisition by any
person of our common shares. This bylaw provision may be repealed, in whole or in part, at any time, whether before or after
an acquisition of control shares, by a vote of a majority of the shareholders entitled to vote, and, upon such repeal, may, to the
extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition.
In addition, certain provisions in the Partnership’s limited partnership agreement (the “Partnership Agreement”) may delay or
make more difficult unsolicited acquisitions of us or changes in our control. These provisions could discourage third parties
from making proposals involving an unsolicited acquisition of us or change of our control, although some shareholders might
consider such proposals, if made, desirable. These provisions also make it more difficult for third parties to alter the
management structure of the Partnership without the concurrence of our Board of Trustees. These provisions include, among
others:
•
•
•
redemption rights of limited partners and certain assignees of units of limited partnership interest ("OP Units");
transfer restrictions on OP Units and restrictions on admissions of partners;
a requirement that the General Partner may not be removed as the general partner of the Partnership without its
consent;
16
•
•
the ability of the General Partner to issue preferred partnership interests in the Partnership with terms that it may
determine, without the approval or consent of any Limited Partner; and
restrictions on the ability of the General Partner, the Partnership or the Parent Company to transfer its interests in the
Partnership or otherwise engage in certain extraordinary transactions, including, among others, certain mergers,
business combinations, sales of all or substantially all of their assets and recapitalizations.
We may be required to incur additional debt to qualify as a REIT.
As a REIT, we must generally make annual distributions to shareholders of at least 90% of our taxable income. We are subject
to income tax on amounts of undistributed taxable income and net capital gain. In addition, we would be subject to a 4% excise
tax if we fail to distribute sufficient income to meet a minimum distribution test based on our ordinary income, capital gain and
aggregate undistributed income from prior years. We intend to make distributions to shareholders to comply with the Code’s
distribution provisions and to avoid federal income and excise tax. We may need to borrow funds to meet our distribution
requirements because:
•
•
our income may not be matched by our related expenses at the time the income is considered received for purposes of
determining taxable income; and
non-deductible capital expenditures, creation of reserves, or debt service requirements may reduce available cash but
not taxable income.
In these circumstances, we might have to borrow funds on terms we might otherwise find unfavorable and we may have to
borrow funds even if our management believes the market conditions make borrowing financially unattractive. Current tax law
also allows us to pay a portion of our distributions in shares instead of cash.
General Risk Factors
The market value of our debt and equity securities is subject to various factors that may cause significant fluctuations or
volatility.
As with other publicly traded securities, the market price of our debt and equity securities depends on various factors, which
may change from time to time and/or may be unrelated to our financial condition, operating performance or prospects that may
cause significant fluctuations or volatility in such prices. These factors include, among others:
general economic and financial market conditions;
level and trend of interest rates;
our ability to access the capital markets to raise additional capital;
the issuance of additional equity or debt securities;
changes in our funds from operations (“FFO”) or earnings estimates;
changes in our credit or analyst ratings;
our financial condition and performance;
•
•
•
•
•
•
•
• market perception of our business compared to other REITs; and
• market perception of REITs, in general, compared to other investment alternatives.
We cannot assure you we will continue to pay dividends in the current composition or at historical rates.
Our ability to continue to pay dividends on our common shares at historical rates or to increase our common share dividend
rate, and our ability to pay preferred share dividends and service our debt securities, will depend on a number of factors,
including, among others, the following:
•
•
•
•
our financial condition and results of future operations;
the performance by our tenants under their contractual lease agreements;
the terms of our loan covenants; and
our ability to acquire, finance, develop or redevelop and lease additional properties at attractive rates.
If we do not maintain or increase, or if we change the composition of the dividend on our common shares, it could have an
adverse effect on the market price of our common shares and other securities. Any preferred shares we may offer in the future
may have a fixed dividend rate that would not increase with any increases in the dividend rate of our common shares.
Conversely, payment of dividends on our common shares may be subject to payment in full of the dividends on any preferred
shares and payment of interest on any debt securities we may offer.
17
The Parent Company is a holding company with no direct operations, and it will rely on funds received from the
Partnership to pay its obligations and make distributions to its shareholders.
The Parent Company is a holding company and expects to conduct substantially all of its operations through the Partnership.
The Parent Company will not have, apart from an interest in the Partnership, any independent operations. As a result, the Parent
Company will rely on distributions from the Partnership to make any distributions we declare on our common shares. The
Parent Company will also rely on distributions from the Partnership to meet its obligations, including any tax liability on
taxable income allocated to the Parent Company from the Partnership. Through its ownership and control of the General
Partner, the Parent Company exercises exclusive control over the Partnership, including the authority to cause the Partnership to
make distributions, subject to certain limited approval and voting rights of the Partnership’s Limited Partners as described in the
Partnership Agreement. In addition, because the Parent Company is a holding company, your claims as shareholders are
structurally subordinated to all existing and future liabilities and obligations to preferred equity holders of the Partnership and
its subsidiaries. Therefore, in the event of a bankruptcy, insolvency, liquidation or reorganization of the Partnership or its
subsidiaries, assets of the Partnership or the applicable subsidiary will be available to satisfy any claims of our shareholders
only after such liabilities and obligations have been satisfied in full.
We currently own 100% of the OP Units issued by the Partnership and are its sole Limited Partner. However, in connection
with our future acquisition activities or otherwise, we may issue additional OP Units to third parties and admit additional
Limited Partners. Such issuances would reduce the Parent Company’s percentage ownership in the Partnership.
Loss of our key management could adversely affect performance and the value of our common shares.
We are dependent on the efforts of our key management. Although we believe qualified replacements could be found for any
departures of key executives, the loss of their services could adversely affect our performance and the value of our common
shares.
We may adjust our business policies without shareholder approval.
We may modify our approach to investment, financing, borrowing, and other operating strategies without shareholder approval.
A change in the approach to any of these items could adversely affect our financial condition and results of operations, and the
market price of our securities.
Our current business plan focuses on our investment in high quality retail based properties that are typically neighborhood and
community shopping centers or mixed-use properties, principally through redevelopments and acquisitions. If this business plan
is not successful, it could have a material adverse effect on our financial condition and results of operations.
Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make,
including those in this Annual Report on Form 10-K. Except as may be required by law, we make no promise to update any of
the forward-looking statements as a result of new information, future events or otherwise. You should carefully review the
above risks and the risk factors.
We face risks relating to cyber attacks that could cause loss of confidential information and other business disruptions.
We rely extensively on information technology systems to process transactions and manage our business, and our business is at
risk from and may be impacted by cyber attacks. These could include attempts to gain unauthorized access to our data and
computer systems as well as attacks on third party's information technology systems that we rely on to provide important
information technology services relating to key business functions, such as payroll. Attacks can be both individual and/or
highly organized attempts by very sophisticated hacking organizations. We employ a number of measures to prevent, detect and
mitigate these threats, which include password encryption, multi-factor authentication, frequent password change events,
firewall detection systems, anti-virus software in-place, frequent backups, a redundant data system for core applications and
penetration testing; however, there is no guarantee such efforts will be successful in preventing a cyber attack. A cyber attack
could compromise the confidential information of our employees, tenants and vendors. A successful attack could disrupt and
otherwise adversely affect our business operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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ITEM 2. PROPERTIES
General
As of December 31, 2021, we owned or had a majority ownership interest in community and neighborhood shopping centers
and mixed-used properties which are operated as 104 predominantly retail real estate projects comprising approximately 25.1
million square feet. These properties are located primarily in densely populated and affluent communities in strategic
metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida. No single
commercial or residential property accounted for over 10% of our 2021 total revenue. We believe that our properties are
adequately covered by commercial general liability, fire, flood, earthquake, terrorism and business interruption insurance
provided by reputable companies, with commercially reasonable exclusions, deductibles and limits.
Tenant Diversification
As of December 31, 2021, we had approximately 3,100 commercial leases and 3,000 residential leases, with tenants ranging
from sole proprietors to major national and international retailers. No one tenant or affiliated group of tenants accounted for
more than 2.7% of our annualized base rent as of December 31, 2021. As a result of our tenant diversification, we believe our
exposure to any one bankruptcy filing has not been and will not be significant, however, multiple filings by a number of tenants
could have a significant impact.
Geographic Diversification
Our 104 real estate projects are located in 12 states and the District of Columbia. The following table shows the number of
projects, the gross leasable area (“GLA”) of commercial space and the percentage of total portfolio gross leasable area of
commercial space in each state as of December 31, 2021.
State
California
Maryland
Virginia
Pennsylvania
Massachusetts
New Jersey
New York
Florida
Illinois
Arizona
Connecticut
Michigan
District of Columbia
Total
Number of
Projects
21
20
18
10
7
7
7
3
4
2
3
1
1
104
Gross Leasable
Area
(In square feet)
6,452,000
4,488,000
3,693,000
2,090,000
2,067,000
1,892,000
1,331,000
862,000
799,000
736,000
358,000
215,000
119,000
25,102,000
Percentage
of Gross
Leasable
Area
25.7 %
17.9 %
14.7 %
8.3 %
8.3 %
7.5 %
5.3 %
3.4 %
3.2 %
2.9 %
1.4 %
0.9 %
0.5 %
100.0 %
Leases, Lease Terms and Lease Expirations
Our leases are classified as operating leases and typically are structured to require the monthly payment of minimum rents in
advance, subject to periodic increases during the term of the lease, percentage rents based on the level of sales achieved by
tenants, and reimbursement of a majority of on-site operating expenses and real estate taxes. These features in our leases
generally reduce our exposure to higher costs and allow us to participate in improved tenant sales.
Commercial property leases generally range from three to ten years; however, certain leases, primarily with anchor tenants, may
be longer. Many of our leases contain tenant options that enable the tenant to extend the term of the lease at expiration at pre-
established rental rates that often include fixed rent increases, consumer price index adjustments or other market rate
adjustments from the prior base rent. Leases on residential units are generally for a period of one year or less and, in 2021,
represented approximately 9.1% of total rental income.
19
The following table sets forth the schedule of lease expirations for our commercial leases in place as of December 31, 2021
for each of the 10 years beginning with 2022 and after 2031 in the aggregate assuming that none of the tenants exercise future
renewal options. Annualized base rents reflect in-place contractual rents as of December 31, 2021.
Year of Lease Expiration
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
Thereafter
Total
Leased
Square
Footage
Expiring
1,807,000
2,492,000
3,441,000
3,121,000
2,045,000
2,258,000
1,526,000
1,483,000
1,097,000
768,000
2,819,000
22,857,000
Percentage of
Leased Square
Footage
Expiring
Annualized
Base Rent
Represented by
Expiring Leases
50,983,000
8 % $
74,952,000
11 %
90,401,000
15 %
81,484,000
14 %
67,047,000
9 %
75,497,000
10 %
45,807,000
7 %
49,632,000
6 %
28,530,000
5 %
28,704,000
3 %
12 %
85,630,000
100 % $ 678,667,000
Percentage of
Annualized
Base Rent
Represented by
Expiring Leases
8 %
11 %
13 %
12 %
10 %
11 %
7 %
7 %
4 %
4 %
13 %
100 %
During 2021, we signed leases for a total of 2,193,000 square feet of retail space including 2,093,000 square feet of comparable
space leases (leases for which there was a prior tenant) at an average rental increase of 7% on a cash basis. New leases for
comparable spaces were signed for 1,144,000 square feet at an average rental increase of 10% on a cash basis. Renewals for
comparable spaces were signed for 949,000 square feet at an average rental increase of 3% on a cash basis. Tenant
improvements and incentives for comparable spaces were $37.57 per square foot, of which, $65.92 per square foot was for new
leases and $3.41 per square foot was for renewals in 2021.
During 2020, we signed leases for a total of 1,756,000 square feet of retail space including 1,666,000 square feet of comparable
space leases (leases for which there was a prior tenant) at an average rental increase of 3% on a cash basis. New leases for
comparable spaces were signed for 595,000 square feet at an average rental increase of 4% on a cash basis. Renewals for
comparable spaces were signed for 1,071,000 square feet at an average rental increase of 2% on a cash basis. Tenant
improvements and incentives for comparable spaces were $31.49 per square foot, of which, $84.12 per square foot was for new
leases and $2.25 per square foot was for renewals in 2020.
The rental increases associated with comparable spaces generally include all leases signed for retail space in arms-length
transactions reflecting market leverage between landlords and tenants during the period. The comparison between the rent for
expiring leases and new leases is determined by including contractual rent on the expiring lease, including percentage rent, and
the comparable annual rent and in some instances, projections of percentage rent, to be paid on the new lease. In atypical
circumstances, management may exercise judgment as to how to most effectively reflect the comparability of rents 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 than in prior years in order to
appropriately reflect the comparability of rents in the calculation. The change in rental income on comparable space leases is
impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market
conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. Rent
abatement and short term rent restructuring agreements that are a result of COVID-19 impacts are not included in this
calculation. Tenant improvements and incentives include the total dollars committed for the improvement (fit out) of a space as
it relates to a specific lease. Incentives include amounts paid to tenants as an inducement to sign a lease that do not represent
building improvements. Costs related to tenant improvements require judgement by management in determining what are costs
specific to the tenant and not deferred maintenance on the space.
Historically, we have executed comparable space leases for 1.4 to 1.9 million square feet of retail space each year. We expect
some rental rates to be negatively impacted by the COVID-19 pandemic, which we started experiencing in the second quarter of
2020. We expect the volume for 2022 will be in line with, or potentially exceed, our historical averages given a larger amount
of vacancy as a result of COVID-19. 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.
20
The leases signed in 2021 generally become effective over the following two years though some may not become effective until
2024 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.
21
Retail and Residential Properties
The following table sets forth information concerning all real estate projects in which we owned an equity interest, had a
leasehold interest, or otherwise controlled and are consolidated as of December 31, 2021. Except as otherwise noted, we are the
sole owner of our real estate projects. Principal tenants are the largest tenants in the project based on square feet leased or are
tenants important to a project’s success due to their ability to attract retail customers.
Year
Completed
Year
Acquired
Square
Feet(1) /
Apartment
Units
Average Base
Rent Per
Square
Foot(2)
Percentage
Leased(3)
Principal Tenant(s)
Property, City, State, Zip Code
Arizona
Camelback Colonnade
Phoenix, AZ 85016(5)
Hilton Village
Scottsdale, AZ 85250(4)(5)
California
Azalea
South Gate, CA 90280(5)(8)
1977, 2019
2021
643,000
17.52
90%
1982, 1989
2021
93,000
36.25
93%
2014
2017
223,000
$30.30
99%
Bell Gardens
Bell Gardens, CA 90201(4)(5)(8)
1990, 2003,
2006
2017/2018
330,000
$23.28
98%
Colorado Blvd
Pasadena, CA 91103(4)
Crow Canyon Commons
San Ramon, CA 94583
East Bay Bridge
Emeryville & Oakland, CA 94608
Escondido Promenade
Escondido, CA 92029(5)
Fourth Street
Berkeley, CA 94710(5)
Freedom Plaza
Los Angeles, CA 90002(4)(5)
Grossmont Center
La Mesa, CA 91942(5)
Hastings Ranch Plaza
Pasadena, CA 91107(4)
Hollywood Blvd
Hollywood, CA 90028
Kings Court
Los Gatos, CA 95032(4)(6)
La Alameda
Walnut Park, CA 90255(4)(7)(8)
Old Town Center
Los Gatos, CA 95030
Olivo at Mission Hills
Mission Hills, CA 91345(5)
Plaza Del Sol
South El Monte, CA 91733(5)
Plaza El Segundo / The Point
El Segundo, CA 90245(5)(8)
1905-1988
1998
42,000
$59.69
2005/2007
243,000
$28.28
88%
93%
2012
440,000
$19.43
99%
1980, 1998,
2006
1994-2001,
2011, 2012
1987
1996/2010
298,000
$28.79
96%
1948, 1975
2017
71,000
$32.66
78%
2020
2018
114,000
$30.17
93%
1961, 1963,
1982-1983,
2002
1958, 1984,
2006, 2007
2021
933,000
$14.19
99%
2017
273,000
$8.47
100%
1929, 1991
1999
181,000
$36.54
86%
1960
2008
1998
2017
81,000
245,000
$41.56
$26.84
100%
92%
1962, 1998
1997
97,000
$43.95
90%
2018
2017
155,000
$32.21
100%
2009
2017
48,000
2006-2007,
2016
2011/2013
500,000
$24.91
$45.15
96%
92%
22
Fry's Food & Drug
Floor & Décor
Marshalls
Nordstrom Last Chance
Best Buy
CVS
Houston's
Marshalls
Ross Dress for Less
Ulta
Michaels
Food4Less
Marshalls
Ross Dress for Less
Bob's Discount Furniture
Banana Republic
True Food Kitchen
Sprouts
Total Wine & More
Rite Aid
Pak-N-Save
Home Depot
Target
Nordstrom Rack
TJ Maxx
Dick's Sporting Goods
Ross Dress For Less
Bob's Discount Furniture
CB2
Ingram Book Group
Bellwether Coffee
Smart & Final
Nike
Blink Fitness
Ross Dress For Less
Target
Walmart
Macy's
CVS
Marshalls
HomeGoods
CVS
Sears
Target
Marshalls
L.A. Fitness
Lunardi's
CVS
Marshalls
Ross Dress For Less
CVS
Petco
Anthropologie
Sephora
Teleferic Barcelona
Target
24 Hour Fitness
Ross Dress for Less
Marshalls
Whole Foods
Nordstrom Rack
HomeGoods
Dick's Sporting Goods
Multiple Restaurants
Property, City, State, Zip Code
San Antonio Center
Mountain View, CA 94040(4)(6)
Santana Row
San Jose, CA 95128(4)(10)
Santana Row Residential
San Jose, CA 95128
Sylmar Towne Center
Sylmar, CA 91342(5)
Third Street Promenade
Santa Monica, CA 90401
Westgate Center
San Jose, CA 95129
Connecticut
Bristol Plaza
Bristol, CT 06010
Greenwich Avenue
Greenwich Avenue, CT 06830
Darien Commons
Darien, CT 06820
District of Columbia
Friendship Center
Washington, DC 20015
Florida
CocoWalk
Coconut Grove, FL 33133(5)(11)
Del Mar Village
Boca Raton, FL 33433
Tower Shops
Davie, FL 33324
Illinois
Crossroads
Highland Park, IL 60035
Finley Square
Downers Grove, IL 60515
Garden Market
Western Springs, IL 60558
Riverpoint Center
Chicago, IL 60614
Maryland
Bethesda Row
Bethesda, MD 20814(4)
Bethesda Row Residential
Bethesda, MD 20814
Year
Acquired
2015/2019
Square
Feet(1) /
Apartment
Units
212,000
Average Base
Rent Per
Square
Foot(2)
$16.52
Percentage
Leased(3)
98%
1997
1,208,000
$55.20
95%
Year
Completed
1958,
1964-1965,
1974-1975,
1995-1997
2002, 2009,
2016, 2020
2003-2006,
2011, 2014
1973
1997/2012
662 units
N/A
2017
148,000
$17.39
1888-2000
1996-2000
207,000
$83.92
95%
93%
81%
1960-1966
2004
648,000
$20.19
97%
1959
1995
264,000
$14.21
83%
1968
1995
1920-2009
2013/2018
35,000
59,000
2 units
$96.19
$42.92
N/A
100%
89%
100%
1998
2001
119,000
$33.73
66%
1990/1994,
1922-1973,
2018-2021
1982, 1994
& 2007
2015-2017
245,000
$43.92
99%
2008/2014
187,000
$20.92
95%
1989, 2017
2011/2014
430,000
$26.03
97%
1959
1993
168,000
$23.54
92%
1974
1995
281,000
$16.45
90%
1958
1994
139,000
$14.76
100%
1989, 2012
2017
211,000
$21.23
93%
1945-1991
2001, 2008
1993-2006/
2008/2010
529,000
$55.51
95%
2008
1993
180 units
N/A
96%
23
Principal Tenant(s)
Trader Joe's
Walmart
24 Hour Fitness
Crate & Barrel
H&M
Best Buy
Splunk
Net App
Multiple Restaurants
Food4Less
CVS
adidas
Madewell
Patagonia
Multiple Restaurants
Target
Nordstrom Rack
Nike Factory
TJ Maxx
Stop & Shop
TJ Maxx
Burlington
Saks Fifth Avenue
Equinox
Walgreens
Marshalls
DSW
Maggiano's
Cinepolis Theaters
Youfit Health Club
Multiple Restaurants
Winn Dixie
CVS
L.A. Fitness
Trader Joe's
TJ Maxx
Ross Dress for Less
Best Buy
Ulta
L.A. Fitness
Ulta
Binny's
Ferguson's Bath, Kitchen, &
Lighting Gallery
Bed, Bath & Beyond
Buy Buy Baby
Michaels
Portillo's
Mariano's Fresh Market
Walgreens
Jewel Osco
Marshalls
Old Navy
Giant Food
Apple
Equinox
Anthropologie
Multiple Restaurants
Property, City, State, Zip Code
Congressional Plaza
Rockville, MD 20852(5)
Congressional Plaza Residential
Rockville, MD 20852(5)
Courthouse Center
Rockville, MD 20852
Federal Plaza
Rockville, MD 20852
Gaithersburg Square
Gaithersburg, MD 20878
Governor Plaza
Glen Burnie, MD 21961
Laurel
Laurel, MD 20707
Year
Completed
1965
Year
Acquired
1965
Square
Feet(1) /
Apartment
Units
324,000
Average Base
Rent Per
Square
Foot(2)
$42.22
Percentage
Leased(3)
91%
2003, 2016
1965
194 units
N/A
1975
1970
1997
1989
38,000
$22.81
249,000
$37.11
98%
76%
93%
1966
1993
208,000
$31.41
96%
1963
1956
1985
1986
243,000
$20.92
364,000
$22.98
88%
94%
Montrose Crossing
Rockville, MD 20852
1960-1979,
1996, 2011
2011/2013
368,000
$34.34
100%
Perring Plaza
Baltimore, MD 21134
1963
1985
397,000
$15.76
88%
Pike & Rose
North Bethesda, MD 20852(10)
1963, 2014,
2018, 2020
1982/2007/
2012
622,000
$40.17
99%
Pike & Rose Residential
North Bethesda, MD 20852
Plaza Del Mercado
Silver Spring, MD 20906
Quince Orchard
Gaithersburg, MD 20877(4)
Rockville Town Square
Rockville, MD 20852(4)
Rollingwood Apartments
Silver Spring, MD 20910
THE AVENUE at White Marsh
Baltimore, MD 21236(6)
2014, 2016,
2018
1982/2007
765 units
N/A
1969
2004
116,000
$32.16
97%
95%
1975
1993
268,000
$25.48
92%
2006-2007
2006/2007
187,000
$28.87
79%
1960
1997
1971
2007
282 units
N/A
315,000
$27.13
The Shoppes at Nottingham Square
2005-2006
2007
32,000
Baltimore, MD 21236
Towson Residential (Flats @703)
Baltimore, MD 21236
White Marsh Other
Baltimore, MD 21236
White Marsh Plaza
Baltimore, MD 21236
Wildwood
Bethesda, MD 20814
2017
1985
1987
1958
2007
2007
2007
1969
4,000
105 units
56,000
$49.73
$82.83
N/A
$32.79
99%
88%
96%
100%
100%
100%
Principal Tenant(s)
The Fresh Market
Buy Buy Baby
Ulta
Barnes & Noble
Container Store
Trader Joe's
TJ Maxx
Micro Center
Ross Dress for Less
Marshalls
Ross Dress For Less
Ashley Furniture HomeStore
CVS
Aldi
Dick's Sporting Goods
Giant Food
Marshalls
L.A. Fitness
HomeGoods
Giant Food
Marshalls
Home Depot Design Center
Old Navy
Bob's Discount Furniture
Shoppers Food Warehouse
Home Depot
Micro Center
Burlington
Porsche
Uniqlo
REI
H&M
L.L. Bean
Multiple Restaurants
Aldi
CVS
L.A. Fitness
Aldi
HomeGoods
L.A. Fitness
Staples
Dawson's Market
CVS
Gold's Gym
Multiple Restaurants
AMC
Ulta
Old Navy
Barnes & Noble
80,000
$23.61
100%
Giant Food
88,000
$102.87
96%
Balducci's
CVS
Multiple Restaurants
24
Property, City, State, Zip Code
Massachusetts
Assembly Row/
Assembly Square Marketplace
Somerville, MA 02145(10)
Assembly Row Residential
Somerville, MA 02145(10)(13)
Campus Plaza
Bridgewater, MA 02324
Chelsea Commons
Chelsea, MA 02150(8)
Dedham Plaza
Dedham, MA 02026
Linden Square
Wellesley, MA 02481
North Dartmouth
North Dartmouth, MA 02747
Queen Anne Plaza
Norwell, MA 02061
Michigan
Gratiot Plaza
Roseville, MI 48066
New Jersey
Brick Plaza
Brick Township, NJ 08723(4)
Brook 35
Sea Grit, NJ 08750(5)(6)(8)
Ellisburg
Cherry Hill, NJ 08034
Hoboken
Hoboken, NJ 07030(5)(8)(12)
Mercer Mall
Lawrenceville, NJ 08648(4)
Year
Completed
Year
Acquired
2005, 2014,
2018, 2021
2005-2011/
2013
Square
Feet(1) /
Apartment
Units
Average Base
Rent Per
Square
Foot(2)
Percentage
Leased(3)
1,069,000
$35.11
97%
2018
2005-2011
947 units
N/A
1970
2004
114,000
$17.35
1962,1969,
2008
1959
2006-2008
222,000
$12.81
1993/2016/
2019
245,000
$16.75
1960, 2008
2006
2004
1967
2006
1994
220,000
7 units
48,000
$49.75
N/A
$17.22
149,000
$20.39
99%
76%
96%
93%
88%
94%
100%
100%
1964
1973
215,000
$12.81
100%
1958
1989
408,000
$21.96
93%
1986, 2004
2014
99,000
$40.24
92%
1959
1992
260,000
$18.38
1887-2006
2019/2020
171,000
129 units
1975
2003/2017
551,000
$55.87
N/A
$26.54
97%
98%
99%
89%
The Grove at Shrewsbury
Shrewsbury, NJ 07702(5)(6)(8)
1988, 1993
& 2007
2014
192,000
$48.68
99%
Troy Hills
Parsippany-Troy, NJ 07054
New York
Fresh Meadows
Queens, NY 11365
1966
1980
211,000
$23.14
100%
1949
1997
409,000
$37.29
95%
Georgetowne Shopping Center
Brooklyn, NY 11234
1969, 2006,
2015
2019
147,000
$39.50
88%
Greenlawn Plaza
Greenlawn, NY 11743
Hauppauge
Hauppauge, NY 11788
1975, 2004
2006
103,000
$18.39
89%
1963
1998
133,000
$34.99
71%
25
Principal Tenant(s)
Trader Joe's
TJ Maxx
AMC
LEGOLAND Discovery Center
PUMA
Multiple Restaurants
Roche Bros.
Burlington
Home Depot
Planet Fitness
Star Market
Planet Fitness
Roche Bros.
CVS
Stop & Shop
Big Y Foods
TJ Maxx
HomeGoods
Kroger
Bed, Bath & Beyond
Best Buy
DSW
Trader Joe's
AMC
HomeGoods
Ulta
Burlington
Banana Republic
Gap
Williams-Sonoma
Whole Foods
Buy Buy Baby
CVS
New York Sports Club
Sephora
Multiple Restaurants
Shop Rite
Ferguson Bath, Kitchen, &
Lighting
Ross Dress for Less
Nordstrom Rack
REI
Tesla
Lululemon
Anthropologie
Pottery Barn
Williams-Sonoma
Target
L.A. Fitness
Michaels
Island of Gold
AMC
Kohl's
Michaels
Foodway
Five Below
IHOP
Greenlawn Farms
Tuesday Morning
Planet Fitness
Shop Rite
Property, City, State, Zip Code
Huntington
Huntington, NY 11746
Huntington Square
East Northport, NY 11731(4)
Melville Mall
Huntington, NY 11747(4)
Pennsylvania
Andorra
Philadelphia, PA 19128
Bala Cynwyd
Bala Cynwyd, PA 19004
Bala Cynwyd Residential
Bala Cynwyd, PA 19004
Flourtown
Flourtown, PA 19031
Lancaster
Lancaster, PA 17601(4)
Langhorne Square
Levittown, PA 19056
Lawrence Park
Broomall, PA 19008
Northeast
Philadelphia, PA 19114
Town Center of New Britain
New Britain, PA 18901
Willow Grove
Willow Grove, PA 19090
Wynnewood
Wynnewood, PA 19096
Virginia
29th Place
Charlottesville, VA 22091(8)
Barcoft Plaza
Falls Church, VA 22041
Barracks Road
Charlottesville, VA 22905
Birch & Broad (formerly known as Falls
Plaza)
Falls Church, VA 22046
Chesterbrook
McLean, VA 22101(5)
Fairfax Junction
Fairfax, VA 22030(6)
Graham Park Plaza
Falls Church, VA 22042
Principal Tenant(s)
Petsmart
Michaels
Ulta
Barnes & Noble
Uncle Giuseppe's Marketplace
Marshalls
Dick's Sporting Goods
Field & Stream
Macy's Backstage
Acme Markets
TJ Maxx
Kohl's
L.A. Fitness
Five Below
Acme Markets
Michaels
L.A. Fitness
Giant Food
Movie Tavern
Redner's Warehouse Markets
Marshalls
Planet Fitness
Acme Markets
TJ Maxx
HomeGoods
Barnes & Noble
Lankenau Medical Center
Marshalls
Ulta
Skechers
Crunch Fitness
Year
Completed
1962
Year
Acquired
1988/2007/
2015
Square
Feet(1) /
Apartment
Units
212,000
Average Base
Rent Per
Square
Foot(2)
$17.12
Percentage
Leased(3)
84%
1980, 2007
2010
74,000
$30.05
81%
1974
2006
253,000
$28.70
100%
1953
1988
270,000
$15.01
87%
1955
1993
174,000
$36.79
87 units
N/A
156,000
$23.45
95%
97%
98%
2020
1957
1958
1966
1993
1980
1980
1985
126,000
$20.08
96%
Giant Food
223,000
$18.45
99%
1972
1980/2017
358,000
$22.88
96%
1959
1983
227,000
$19.76
82%
1969
2006
124,000
$10.04
1953
1948
1984
1996
183,000
249,000
9 units
$22.06
$29.12
N/A
89%
58%
96%
78%
Giant Food
Rite Aid
Dollar Tree
Marshalls
Five Below
Giant Food
Bed, Bath & Beyond
Old Navy
DSW
1975-2001
2007
168,000
$19.38
99%
Lidl
HomeGoods
DSW
Staples
1963, 1972,
1990, &
2000
2006/2007/
2016
113,000
$27.93
94%
Harris Teeter
1958
1985
498,000
$27.61
97%
1960/1962
1967/1972
144,000
$36.07
96%
1967
2021
90,000
$26.79
85%
1981, 1986,
2000
2019/2020
124,000
$25.50
97%
Harris Teeter
Kroger
Anthropologie
Nike
Bed, Bath & Beyond
Old Navy
Giant Food
CVS
Staples
Safeway
Walgreens
Starbucks
Aldi
CVS
Planet Fitness
1971
1983
132,000
$39.71
87%
Giant Food
26
Property, City, State, Zip Code
Idylwood Plaza
Falls Church, VA 22030
Mount Vernon/South Valley/
7770 Richmond Hwy
Alexandria, VA 22306(6)
Old Keene Mill
Springfield, VA 22152
Pan Am
Fairfax, VA 22031
Pentagon Row
Arlington, VA 22202
Pike 7 Plaza
Vienna, VA 22180
Tower Shopping Center
Springfield, VA 22150
Twinbrooke Shopping Centre
Fairfax, VA 22032
Tyson's Station
Falls Church, VA 22043
Village at Shirlington
Arlington, VA 22206(4)
Willow Lawn
Richmond, VA 23230
Total — Commercial (9)
Total —Residential (13)
_____________________
Year
Completed
1991
Year
Acquired
1994
Square
Feet(1) /
Apartment
Units
73,000
Average Base
Rent Per
Square
Foot(2)
$52.50
Percentage
Leased(3)
100%
Principal Tenant(s)
Whole Foods
2003/2006
565,000
$19.37
97%
1966,
1972,1987
& 2001
1968
1976
91,000
$35.05
1979
1993
228,000
$26.18
95%
94%
2001-2002
1998/2010
297,000
$35.63
99%
1968
1997/2015
172,000
$48.37
97%
1960
1998
111,000
$27.20
87%
1977
1954
1940,
2006-2009
2021
1978
1995
106,000
$24.26
89%
50,000
$47.70
88%
Trader Joe's
267,000
$40.62
83%
1957
1983
464,000
$21.11
96%
25,102,000
2,869 units
$29.69
94%
97%
Shoppers Food Warehouse
TJ Maxx
Home Depot
Bed, Bath & Beyond
Results Fitness
Whole Foods
Walgreens
Planet Fitness
Safeway
Micro Center
CVS
Michaels
Harris Teeter
TJ Maxx
DSW
Ulta
TJ Maxx
DSW
Crunch Fitness
Staples
L.A. Mart
Talbots
Total Wine & More
Safeway
Walgreens
Harris Teeter
CVS
AMC
Carlyle Grand Café
Kroger
Old Navy
Ross Dress For Less
Gold's Gym
Dick's Sporting Goods
(1) Represents the GLA of the commercial portion of the property. Some of our properties include office space which is included in this square footage.
(2) Average base rent per square foot is calculated as the aggregate, annualized in-place contractual (defined as cash basis excluding rent abatements)
minimum rent for all occupied spaces divided by the aggregate GLA of all occupied spaces. Average base rent is for commercial spaces only.
(3) Percentage leased is expressed as a percentage of rentable commercial square feet occupied or subject to a lease. Residential percentage leased is
expressed as a percentage of units occupied or subject to a lease.
(4) All or a portion of this property is owned pursuant to a ground lease.
(5) We own the controlling interest in this property.
(6) We own all or a portion of this property in a “downREIT” partnership, of which a wholly owned subsidiary of the Trust is the sole general partner,
with third party partners holding operating partnership units.
(7) We own a noncontrolling interest in this property.
(8) All or a portion of this property is encumbered by a mortgage loan.
(9) Aggregate information is calculated on a GLA weighted-average basis, excluding our La Alameda property, which is unconsolidated.
(10) Portion of property is currently under development. See further discussion in Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
(11) This property includes interests in four buildings in addition to our initial acquisition.
(12) This property includes 39 buildings primarily along Washington Street and 14th Street in Hoboken, New Jersey.
(13) The new 500 unit residential building at Assembly Row was delivered in the second half of 2021 and is currently in the process of being leased-up
for the first time. Consequently, these units are excluded from our total residential units and percentage leased statistics. If these units were included,
our total residential units would be 3,369 and our percentage leased would be 91%.
ITEM 3. LEGAL PROCEEDINGS
We are involved from time-to-time in various legal and regulatory proceedings that arise in the ordinary course of our business,
including, but not limited to, commercial disputes, environmental matters, and litigation in connection with transactions such as
acquisitions and divestitures. We believe that our current proceedings will not have a material adverse effect on our financial
condition, liquidity or results of operations. See Note 7 to the Consolidated Financial Statements for further discussions.
27
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
28
PART II
ITEM 5. MARKET FOR OUR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our common shares trade on the New York Stock Exchange under the symbol “FRT.” Listed below are the high and low sales
prices of our common shares as reported on the New York Stock Exchange and the dividends declared for each of the periods
indicated.
2021 .......................................................................................................................
Fourth quarter................................................................................................. $
Third quarter................................................................................................... $
Second quarter................................................................................................ $
First quarter .................................................................................................... $
2020 .......................................................................................................................
Fourth quarter................................................................................................. $
Third quarter................................................................................................... $
Second quarter................................................................................................ $
First quarter .................................................................................................... $
On February 7, 2022, there were 2,271 holders of record of our common shares.
Price Per Share
High
Low
Dividends
Declared
Per Share
138.40
123.43
125.00
110.66
97.00
90.09
105.49
131.56
$
$
$
$
$
$
$
$
117.48
111.21
101.45
81.85
67.01
70.69
64.11
65.55
$
$
$
$
$
$
$
$
1.070
1.070
1.060
1.060
1.060
1.060
1.050
1.050
Our ongoing operations generally will not be subject to federal income taxes as long as we maintain our REIT status and
distribute to shareholders at least 100% of our taxable income. Under the Code, REITs are subject to numerous organizational
and operational requirements, including the requirement to generally distribute at least 90% of taxable income.
Future distributions will be at the discretion of our Board of Trustees and will depend on our actual net income available for
common shareholders, financial condition, capital requirements, the annual distribution requirements under the REIT provisions
of the Code and such other factors as the Board of Trustees deems relevant. We have paid quarterly dividends to our
shareholders continuously since our founding in 1962 and have increased our regular annual dividend rate for 54 consecutive
years. The impact of COVID-19 on our cash flow may impact our ability to pay dividends at the current rate, at an increased
rate, and in the current format or at all.
Our total annual dividends paid per common share for 2021 and 2020 were $4.25 per share and $4.21 per share, respectively.
The annual dividend amounts are different from dividends as calculated for federal income tax purposes. Distributions to the
extent of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to a
shareholder as ordinary dividend income. Distributions in excess of current and accumulated earnings and profits will be treated
as a nontaxable reduction of the shareholder’s basis in such shareholder’s shares, to the extent thereof, and thereafter as taxable
capital gain. Distributions that are treated as a reduction of the shareholder’s basis in its shares will have the effect of increasing
the amount of gain, or reducing the amount of loss, recognized upon the sale of the shareholder’s shares. No assurances can be
given regarding what portion, if any, of distributions in 2022 or subsequent years will constitute a return of capital for federal
income tax purposes. During a year in which a REIT earns a net long-term capital gain, the REIT can elect under
Section 857(b)(3) of the Code to designate a portion of dividends paid to shareholders as capital gain dividends. If this election
is made, then the capital gain dividends are generally taxable to the shareholder as long-term capital gains.
The following table reflects the income tax status of distributions per share paid to common shareholders:
Ordinary dividend ........................................................................................................................... $
Capital gain .....................................................................................................................................
Return of capital..............................................................................................................................
$
Year Ended
December 31,
2021
2020
3.358
0.680
0.212
4.250
$
$
3.452
—
0.758
4.210
29
Distributions on our 5.417% Series 1 Cumulative Convertible Preferred Shares were paid at the rate of $1.354 per share per
annum commencing on the issuance date of March 8, 2007. Distributions on our 5.0% Series C Cumulative Redeemable
Preferred Shares were paid at the rate of $1.250 per depositary share per annum, commencing on the issuance date of
September 29, 2017. We do not believe that the preferential rights available to the holders of interest in our preferred shares or
the financial covenants contained in our debt agreements had or will have an adverse effect on our ability to pay dividends in
the normal course of business to our common shareholders or to distribute amounts necessary to maintain our qualification as a
REIT.
Total Stockholder Return Performance
The following performance graph compares the cumulative total shareholder return on Federal Realty's common shares with the
S&P 500 Index and the index of equity real estate investment trusts prepared by the National Association of Real Estate
Investment Trusts ("NAREIT") for the five fiscal years commencing December 31, 2016, and ending December 31, 2021,
assuming an investment of $100 and the reinvestment of all dividends into additional common shares during the holding period.
Equity real estate investment trusts are defined as those that derive more than 75% of their income from equity investments in
real estate assets. The FTSE NAREIT Equity REIT Total Return Index includes all tax qualified real estate investment trusts
listed on the NYSE, NYSE MKT, or the NASDAQ National Market. Stock performance for the past five years is not
necessarily indicative of future results.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
$250
$225
$200
$175
$150
$125
$100
$75
$50
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
Federal Realty
Investment Trust
S&P 500
FTSE NAREIT Equity
Total REIT Index
Recent Sales of Unregistered Shares
Under the terms of various operating 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 an equivalent number
of our common shares, at our option. During the three months ended December 31, 2021, we issued 27,302 common shares in
connection with the redemption of operating partnership units. Any equity securities sold by us during 2021 that were not
registered have been previously reported in a Quarterly Report on Form 10-Q.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
During 2021, 2,193 restricted common shares were forfeited by former employees.
30
From time to time, we could be deemed to have repurchased shares as a result of shares withheld for tax purposes upon a stock
compensation related vesting event.
ITEM 6. SELECTED FINANCIAL DATA
None.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This section generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions
of 2019 items and year-to-year comparisons between 2020 and 2019 that are not included in this Form 10-K can be found in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the Securities and Exchange Commission on
February 11, 2021.
Forward-Looking Statements
Certain statements in this section or elsewhere in this report may be deemed “forward-looking statements”. See “Item 1A. Risk
Factors” in this report for important information regarding these forward-looking statements and certain risk and uncertainties
that may affect us. The following discussion should be read in conjunction with the consolidated financial statements and notes
thereto appearing in “Item 8. Financial Statements and Supplementary Data” of this report.
Overview
We are an equity real estate investment trust ("REIT") specializing in the ownership, management, and redevelopment of high
quality retail and mixed-use properties located primarily in densely populated and affluent communities in strategically selected
metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida. As of
December 31, 2021, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use
properties which are operated as 104 predominantly retail real estate projects comprising approximately 25.1 million square
feet. In total, the real estate projects were 93.6% leased and 91.1% occupied at December 31, 2021. We have paid quarterly
dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for
54 consecutive years.
Summary Financial Information
The following table includes select financial information that is helpful in understanding the trends in financial condition and
the results of operations discussed throughout this Item 7. and “Item 8. Financial Statements and Supplementary Data.”
31
Operating Data:
Rental income
Property operating income (1)
Gain on sale of real estate and change in control of interest, net of tax
Operating income
Net income available for common shareholders
Net cash provided by operating activities
Net cash used in investing activities
Net cash (used in) provided by financing activities
Earnings per common share, diluted:
Net income available to common shareholders
Dividends declared per common share
Other Data:
Funds from operations available to common shareholders (2)
Funds from operations available for common shareholders, per diluted share (2)
EBITDAre (3)
Ratio of EBITDAre to combined fixed charges and preferred share dividends
(3)(4)
Balance Sheet Data:
Real estate, at cost
Total assets
Total debt
Total shareholders’ equity
Number of common shares outstanding
Year Ended December 31,
2021
2020
2019
(In thousands, except per share data and ratios)
$
$
$
$
$
$
948,842 $
832,171 $
932,738
634,607 $
545,332 $
637,030
89,950 $
98,117 $
116,393
394,725 $
289,524 $
470,911
253,456 $
123,664 $
345,824
471,352 $
369,929 $
461,919
$ (660,118) $ (368,383) $ (316,532)
$ (452,967) $
661,736 $ (100,105)
$
$
$
$
$
3.26 $
4.26 $
1.62 $
4.22 $
4.61
4.14
434,743 $
5.57 $
333,849 $
4.38 $
465,819
6.17
589,792 $
501,813 $
599,567
3.6x
2.7x
4.2x
As of December 31,
2021
2020
2019
(In thousands)
$ 9,422,062
$ 7,622,320
$ 4,047,547
$ 2,663,148
78,603
$ 8,582,870
$ 7,607,624
$ 4,291,375
$ 2,548,747
76,727
$ 8,298,132
$ 6,794,992
$ 3,356,594
$ 2,636,132
75,541
(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 2021, 2020, and 2019 is as follows:
Operating income
General and administrative
Depreciation and amortization
Impairment charge
2021
2020
(in thousands)
2019
$
394,725 $
289,524 $
470,911
49,856
279,976
—
41,680
255,027
57,218
42,754
239,758
—
Gain on sale of real estate and change in control of interest, net of tax
(89,950)
(98,117)
(116,393)
Property operating income
$
634,607 $
545,332 $
637,030
(2) Funds from operations "FFO" is a supplemental non-GAAP measure. See "Liquidity and Capital Resources" in this Item 7.
for further discussion.
(3) EBITDA for Real Estate ("EBITDAre") is a non-GAAP measure that NAREIT defines as: net income computed in
accordance with GAAP plus net interest expense, income tax expense, depreciation and amortization, gain or loss on sale
of real estate, impairments of real estate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated
32
affiliates. We calculate EBITDAre consistent with the NAREIT definition. As EBITDA is a widely known and understood
measure of performance, management believes EBITDAre represents an additional non-GAAP performance measure,
independent of a company's capital structure that will provide investors with a uniform basis to measure the enterprise
value of a company. EBITDAre also approximates a key performance measure in our debt covenants, but it should not be
considered an alternative measure of operating results or cash flow from operations as determined in accordance with
GAAP.
The reconciliation of net income to EBITDAre for the periods presented is as follows:
Net income
Interest expense
Other interest income
Early extinguishment of debt
Provision (benefit) for income tax
Depreciation and amortization
Gain on sale of real estate and change in control of interest
Impairment charge
Adjustments of EBITDAre of unconsolidated affiliates
EBITDAre
2021
2020
2019
269,081
127,698
(809)
—
118
279,976
(89,950)
—
3,678
589,792
(In thousands)
135,888
$
136,289
(1,894)
11,179
(194)
255,027
(98,117)
57,218
6,417
501,813
$
$
$
360,542
109,623
(1,266)
—
772
239,758
(116,779)
—
6,917
599,567
$
$
(4) Fixed charges consist of interest on borrowed funds (including capitalized interest), amortization of debt discount/
premiums and debt costs, costs related to the early extinguishment of debt, and the portion of rent expense representing an
interest factor. Excluding the $11.2 million early extinguishment of debt charge from fixed charges in 2020, the ratio of
EBITDAre to combined fixed charges and preferred share dividends is 2.9x. Excluding the $11.9 million charge related to
the buyout of the Kmart lease at Assembly Square Marketplace in 2019, our ratio of EBITDAre to combined fixed charges
and preferred share dividends remained 4.2x.
Impacts of COVID-19 Pandemic
We continue to monitor and address risks related to the COVID-19 pandemic. Since March 2020 when the World Health
Organization characterized COVID-19 as a global pandemic, we have been and continue to be impacted by COVID-19 and the
actions taken by federal, state, and local government to prevent its spread. These actions included the closure of nonessential
businesses and ordering residents to generally stay at home at the onset of the pandemic, phased reopenings and capacity
limitations, and now generally lifted restrictions. 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 are impacting the pace of recovery. 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. While improving, our cash flow and results of operations in the year ended
December 31, 2021 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 many of our tenants to be able to return to payment of contractual rent as soon as possible after the impacts from
the pandemic have subsided.
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 Annual Report on
Form 10-K, will continue to mitigate the impact to our cash flow caused by tenants not timely paying contractual rent.
Throughout 2021, we continued to maintain levels of cash significantly in excess of the cash balances we have historically
maintained which has adversely impacted our financial results; however, we believe that such action was prudent to position us
with what we expect to be sufficient liquidity to allow us to continue fully operating as our operating revenues begin to return to
more typical levels. As of December 31, 2021, there is no outstanding balance on our $1.0 billion revolving credit facility, and
we have cash and cash equivalents of $162.1 million.
33
Additional discussion of the impact of COVID-19 on our results and long-term operations can be found throughout Item 7 and
Item 1A. Risk Factors.
Corporate Responsibility
We actively endeavor to operate and develop our properties in a sustainable, responsible, and effective manner with the
objective being to drive long-term growth and aid in value creation for our shareholders, tenants, employees, and local
communities. We have aligned our program and efforts with the United Nations Sustainable Development Goals, as described
in our ESG Policy and our 2020 Corporate Responsibility Report, which are provided only for informational purposes on our
website and not incorporated herein.
Our development activities have been heavily focused on owning, developing and operating properties that are certified under
the U.S. Green Building Council’s® (“USGBC”) Leadership in Energy and Environmental Design™ (LEED®) rating system
which serves as a third-party verification that a building or community was designed and built to mitigate its environmental
footprint. We currently have 18 LEED certified buildings and our Pike & Rose project has achieved LEED for Neighborhood
Development Stage 3 Gold certification. The COVID-19 pandemic has also increased our focus on owning, developing and
operating healthier buildings. To that end, our new corporate headquarters space at our 909 Rose Avenue building has earned a
Fitwel certification developed by the U.S. Centers for Disease Control and Prevention (CDC) together with the General
Services Administration (GSA). This certification assesses a building’s impact on seven distinct categories related to overall
health and well-being.
We are also committed to implementing sustainable business practices at our operating properties that focus on energy
efficiency, water conservation and waste minimization and have established energy and greenhouse gas (GHG) emissions
reduction targets. To achieve these targets, we are actively addressing energy efficiency projects on site such as upgrading to
LED lighting; and to address emissions we are procuring green energy, reducing electric consumption, and increasing our
onsite solar generation capacity. We have installed on-site solar systems at 25 of our properties with a capacity of over 13 MW
with more projects actively in progress. Our current capacity placed us in the top 5 among real estate companies for onsite
capacity in the most recent Solar Energy Industry Association’s annual Solar Means Business Report. We are also actively
installing electric vehicle car charging stations in numerous properties throughout our portfolio. We currently have over 300
charging stations in operation with more under construction.
We also understand that we face risks presented by climate change and are working to evaluate our risk exposure. In our 2020
Corporate Responsibility Report, we provided a disclosure pursuant to the Task Force on Climate Related Financial Disclosure
and we intend to provide that disclosure annually.
We are also highly committed to our employees and fostering a work environment that promotes growth, development and
personal well-being. Our four core values are accountability, excellence, innovation and integrity and we seek to attract and
retain talented professionals who embrace those values. All of our efforts with respect to corporate responsibility are overseen
by our Board of Trustees.
Critical Accounting Policies and 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 and current events and economic conditions.
In addition, information relied upon by management in preparing such estimates includes internally generated financial and
operating information, external market information, when available, and when necessary, information obtained from
consultations with third party experts. Actual results could differ from these estimates. A discussion of possible risks which
may affect these estimates is included in “Item 1A. Risk Factors” of this report. Management considers an accounting estimate
to be critical if changes in the estimate could have a material impact on our consolidated results of operations or financial
condition.
Our significant accounting policies are more fully described in Note 2 to the consolidated financial statements; however, the
most critical accounting policies, which are most important to the portrayal of our financial condition and results of operations,
and involve the use of complex estimates and significant assumptions as to future uncertainties and, therefore, may result in
actual amounts that differ from estimates, are as follows:
34
Collectibility of Lease Income
Our leases with our tenants are classified as operating leases. When collection of substantially all lease payments during the
lease term is considered probable, the lease qualifies for accrual accounting. When collection of substantially all lease payments
during the lease term is not considered probable, total lease revenue is limited to the lesser of revenue recognized under accrual
accounting or cash received. Determining the probability of collection of substantially all lease payments during a lease term
requires significant judgment. This determination is impacted by numerous factors including our assessment of the tenant’s
credit worthiness, economic conditions, tenant sales productivity in that location, historical experience with the tenant and
tenants operating in the same industry, future prospects for the tenant and the industry in which it operates, and the length of the
lease term. If leases currently classified as probable are subsequently reclassified as not probable, any outstanding lease
receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income. For
example, in the event that our collectibility determinations were not accurate and we were required to write off additional
receivables equaling 1% of rental income, our rental income and net income would decrease by $9.5 million. If leases currently
classified as not probable are subsequently changed to probable, any lease receivables (including straight-line rent receivables)
are re-instated with a corresponding increase to rental income.
Since March 2020, federal, state, and local governments have taken various actions to mitigate the spread of COVID-19. These
actions included the closure of nonessential businesses and ordering residents to generally stay at home at the onset of the
pandemic, phased re-openings and capacity limitations, and now generally lifted restrictions. 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 are impacting the recovery. Closures and restrictions, along with the 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 were 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. As a result, we revised our collectibility assumptions for
many of our tenants most significantly impacted by COVID-19. Accordingly, during the years ended December 31, 2021 and
2020, we recognized collectibility related adjustments of $24.0 million and $106.6 million, respectively. This includes changes
in our collectibility assessments from probable to not probable, disputed rents, and any rent abatements directly related to
COVID-19, as well as the write-off of $0.7 million and $12.7 million, respectively of straight-line rent receivables related to
tenants changed to a cash basis of revenue recognition during the years ended December 31, 2021 and 2020. As of
December 31, 2021 and 2020, the revenue from approximately 34% and 35% of our tenants (based on total commercial leases),
respectively, is being recognized on a cash basis. As of December 31, 2021 and 2020, our straight-line rent receivables balance
was $110.7 million and $103.3 million, respectively, and is included in "accounts and notes receivable, net" on our consolidated
balance sheet.
Other revenue recognition policies
When we enter into a transaction to sell a property or a portion of a property, we evaluate the recognition of the sale under ASC
610-20, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets." In accordance with ASC 610-20,
we apply the guidance in ASC 606, "Revenue from Contracts with Customers," to determine whether and when control
transfers and how to measure the associated gain or loss. We determine the transaction price based on the consideration we
expect to receive. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal
of a gain recognized will not occur. We analyze the risk of a significant gain reversal and if necessary limit the amount of
variable consideration recognized in order to mitigate this risk. The estimation of variable consideration requires us to make
assumptions and apply significant judgment. The existence and amount of variable consideration can vary significantly among
transactions. Historically, our property sales have had variable consideration of less than 1% of total expected consideration;
however, we had one transaction in 2019 where the variable consideration was approximately $45.5 million.
Real Estate Acquisitions
Upon acquisition of operating real estate properties, we estimate the fair value of assets and liabilities acquired including land,
building, improvements, leasing costs, intangibles such as acquired leases, assumed debt, and current assets and liabilities, if
any. Based on these estimates, we allocate the purchase price to the applicable assets and liabilities. We utilize methods similar
to those used by independent appraisers in estimating the fair value of acquired assets and liabilities. The value allocated to
acquired leases is amortized over the related lease term and reflected as rental income in the statement of operations. We
consider qualitative and quantitative factors in evaluating the likelihood of a tenant exercising a below market renewal option
and include such renewal options in the calculation of in-place lease value when we consider these to be bargain renewal
options. If the value of below market lease intangibles includes renewal option periods, we include such renewal periods in the
amortization period utilized. If a tenant vacates its space prior to contractual termination of its lease, the unamortized balance of
any acquired lease value is written off to rental income.
35
During 2021, we acquired properties with a total purchase price of $440.9 million. $4.6 million, or 1% of the total purchase
price was allocated to above market lease assets and $57.3 million, or 13% was allocated to below market lease liabilities. If the
amounts allocated in 2021 to below market lease liabilities and building assets were each reduced by 5% of the total purchase
price, annual below market lease liability amortization increasing rental income would decrease by approximately $2.5 million
(using the weighted average life of below market liabilities at each respective acquired property) and annual depreciation
expense would decrease by approximately $0.6 million (using a depreciable life of 35 years).
Long-Lived Assets and Impairment
There are estimates and assumptions made by management in preparing the consolidated financial statements for which the
actual results will be determined over long periods of time. This includes the recoverability of long-lived assets, including our
properties that have been acquired or redeveloped and our investment in certain joint ventures. Management’s evaluation of
impairment includes review for possible indicators of impairment as well as, in certain circumstances, undiscounted and
discounted cash flow analysis. Since most of our investments in real estate are wholly-owned or controlled assets which are
held for use, a property with impairment indicators is first tested for impairment by comparing the undiscounted cash flows,
taking into account the anticipated hold period, including residual value, to the current net book value of the property. If the
undiscounted cash flows are less than the net book value, the property is written down to expected fair value.
The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows
including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for
space by tenants and rental rates over long periods. Because our properties typically have a long life, the assumptions used to
estimate the future recoverability of book value requires significant management judgment. We are also required to estimate the
anticipated hold period. A change in the expected holding period from a long term hold to a short term would cause a
significant change in the undiscounted cash flows and could result in an impairment charge. Actual results could be
significantly different from the estimates. These estimates have a direct impact on net income, because recording an impairment
charge results in a negative adjustment to net income.
Recently Adopted and Recently Issued Accounting Pronouncements
See Note 2 to the consolidated financial statements.
2021 Acquisitions and Dispositions
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.
During the year ended December 31, 2021, we acquired the following properties:
Date Acquired
Property
City/State
April 30, 2021
Chesterbrook (1)
McLean, Virginia
June 1, 2021
June 14, 2021
June 14, 2021
Grossmont Center (1)
La Mesa, California
Camelback Colonnade (1)
Phoenix, Arizona
Hilton Village (1)
Scottsdale, Arizona
September 2, 2021
Twinbrooke Shopping Centre Fairfax, Virginia
Gross
Leasable Area
(GLA)
(in square feet)
90,000
933,000
642,000
93,000
106,000
Ownership
%
Gross Value
(in millions)
80 % $
60 % $
98 % $
98 % $
100 % $
32.1 (2)
175.0 (3)
162.5 (4)
37.5 (5)
33.8 (6)
(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."
36
(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."
(6) Approximately $1.2 million and $0.3 million of net assets acquired were allocated to other assets for "acquired lease costs"
and "above market leases," respectively, and $2.7 million of net assets acquired were allocated to other liabilities for
"below market leases."
During the year ended December 31, 2021, we sold two properties and a portion of three properties for a total sales price of
$141.6 million, which resulted in a net gain of $88.3 million.
2021 Significant Debt and Equity Transactions
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. 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.
For the year ended December 31, 2021, we issued 847,471 common shares at a weighted average price per share of $104.19 for
net cash proceeds of $87.0 million including paying $0.9 million in commissions and $0.4 million in additional offering
expenses related to the sales of these common shares.
We also entered into forward sales contracts for the year ended December 31, 2021 for 2,999,955 common shares under our
ATM equity program at a weighted average offering price of $120.22. During 2021, we settled a portion of the forward sales
agreements entered into during the year by issuing 796,300 common shares for net proceeds of $85.7 million.
The forward price that we will receive upon physical settlement of the remaining forward sale 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) the forward
purchasers' stock borrowing costs and (iv) scheduled dividends during the term of the forward sale agreements. The remaining
open forward shares may be settled at any time on or before multiple required settlement dates ranging from June 2022 to
December 2022. As of December 31, 2021, we had the capacity to issue up to $175.0 million in common shares 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.
In 2021, we repaid the following mortgage loans, at par, prior to their original maturity date:
Property
Sylmar Towne Center
Plaza Del Sol
Montrose Crossing
The AVENUE at White Marsh
Capitalized Costs
Repayment Date
Principal
(in millions)
February 5, 2021
$
September 1, 2021 $
October 12, 2021
$
November 2, 2021 $
16.2
7.9
64.1
52.7
Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-
construction costs, real estate taxes, insurance, and construction costs and salaries and related costs of personnel directly
involved, are capitalized. We capitalized external and internal costs related to both development and redevelopment activities of
$356 million and $10 million, respectively, for 2021 and $404 million and $9 million, respectively, for 2020. We capitalized
external and internal costs related to other property improvements of $64 million and $4 million, respectively, for 2021 and $64
million and $3 million, respectively, for 2020. We capitalized external and internal costs related to leasing activities of $19
million and $3 million, respectively, for 2021 and $11 million and $2 million, respectively, for 2020. The amount of capitalized
37
internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and
leasing activities were $10 million, $3 million, and $3 million, respectively, for 2021 and $9 million, $3 million, and $2 million,
respectively, for 2020. Total capitalized costs were $456 million for 2021 and $494 million for 2020, respectively.
Corporate Reorganization
In January of 2022, we completed the UPREIT reorganization described in the Explanatory Note at the beginning of this
Annual Report. Prior to the UPREIT Reorganization, our business was conducted through the Predecessor. This Annual Report
pertains to the business and results of operations of the Predecessor for its fiscal year ended December 31, 2021. As a result of
the UPREIT reorganization, the Parent Company became the successor issuer to the Predecessor under the Exchange Act. The
Parent Company and the Partnership have elected to co-file this Annual Report of the Predecessor to ensure continuity of
information to investors. 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.
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 development and redevelopments, 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. Our
comparable property growth is primarily driven by increases in rental rates on new leases and lease renewals, changes in
portfolio occupancy, and the redevelopment of those assets. Over the long-term, the infill nature and strong demographics of
our properties provide a strategic advantage allowing us to maintain relatively high occupancy and generally increase rental
rates. However, our occupancy levels and ability to increase rental rates will be adversely impacted in the short-term as a result
of COVID-19. We believe the locations and nature of our centers and diverse tenant base partially mitigates any potential
negative changes in the economic environment. However, any significant reduction in our tenants' abilities to pay base rent,
percentage rent or other charges, will adversely affect our financial condition and results of operations. We seek to maintain a
mix of strong national, regional, and local retailers. At December 31, 2021, no single tenant accounted for more than 2.7% of
annualized base rent.
Federal, state, and local governments have taken various actions 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
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, these economic hardships
have adversely impacted our business, and continue to have a negative effect on our financial results during 2021. With very
few exceptions, our leases require tenants to continue to pay rent even while closed 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
December 31, 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 through 2022, although some extend beyond. While increasing monthly
cash collection rates is a positive trend driven by government mandated restrictions gradually being lifted and improved outlook
by some tenants, we expect that our rent collections will continue to be below our tenants' contractual rent obligations and
historical levels into 2022, which will continue to adversely impact our results of operations. We are also experiencing a 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 2.1 million square feet of comparable space retail
leasing we've completed in 2021, as well as our overall leased percentage at 93.6%, compared to our occupied percentage of
only 91.1%. We have begun to see impacts of overall supply chain disruptions affecting the broader economy, including
significantly longer lead times, limited availability, and increased costs for certain construction and other materials that support
our leasing, 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
38
monitor these macroeconomic developments and are working with our tenants and our vendors to limit the overall impact to our
business.
The extent of such 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 the duration and severity of the economic impact resulting from COVID-19 is unknown, we seek to position the
Trust to continue to participate in the resulting economic recovery.
We continue to have several development projects in process being delivered as follows:
•
•
•
•
•
Phase III of Assembly Row includes 277,000 square feet of office space, 56,000 square feet of retail space, and 500
residential units. The expected costs for Phase III are between $465 million and $485 million with spaces being
delivered beginning in the second quarter of 2021. At December 31, 2021, 162,000 square feet of office space has
been delivered, all of the units in the residential building have been delivered, and 23,000 square feet of retail space
has opened.
Phase III at Pike & Rose includes a 212,000 square foot office building (which includes 7,000 square feet of ground
floor retail space). The building is expected to cost between $128 million and $135 million. At December 31, 2021,
approximately 162,000 square feet of office and retail space has been delivered, of which approximately 45,000 square
feet is our new corporate headquarters.
Phase IV at Pike & Rose is a 276,000 square foot office building (which includes 10,000 square feet of ground floor
retail space). Approximately 105,000 square feet of the office space is pre-leased to a single tenant. The building is
expected to cost between $185 million and $200 million, and begin delivering in late 2023.
The first phase of construction on Santana West includes an eight story 376,000 square foot office building, which is
expected to cost between $250 million and $270 million.
Throughout the portfolio, we currently have redevelopment projects underway with a projected total cost of
approximately $313 million that we expect to stabilize over the next several years.
The above includes our best estimates based on information currently known, however, the completion of construction, final
costs, and the timing of leasing and openings may be further impacted by the current environment including the duration and
severity of the economic impacts of COVID-19 and supply chain disruptions affecting the broader economy.
The development of future phases of Assembly Row, Pike & Rose and Santana Row will be pursued opportunistically based
on, among other things, market conditions, tenant demand, and our evaluation of whether those phases will generate an
appropriate financial return.
We continue to review acquisition opportunities that complement our portfolio and provide long-term growth opportunities.
Initially, some of our acquisitions do not contribute significantly to earnings growth; however, we believe they provide long-
term re-leasing growth, redevelopment opportunities, and other strategic opportunities. Any growth from acquisitions is
contingent on our ability to find properties that meet our qualitative standards at prices that meet our financial hurdles. Changes
in interest rates may affect our success in achieving earnings growth through acquisitions by affecting both the price that must
be paid to acquire a property, as well as our ability to economically finance the property acquisition. Generally, our acquisitions
are initially financed by available cash and/or borrowings under our revolving credit facility which may be repaid later with
funds raised through the issuance of new equity or new long-term debt. We may also finance our acquisitions through the
issuance of common shares, preferred shares, or units in our operating partnership (see "Corporate Reorganization" discussion
in this Item 7), as well as through assumed mortgages and property sales.
At December 31, 2021, the leasable square feet in our properties was 93.6% leased and 91.1% occupied. The leased rate is
higher than the occupied rate due to leased spaces that are being redeveloped or improved or that are awaiting permits and,
therefore, are not yet ready to be occupied. Our occupancy and leased rates are subject to variability over time due to factors
including acquisitions, the timing of the start and stabilization of our redevelopment projects, lease expirations and tenant
closings and bankruptcies.
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 year ended December 31, 2021 and the comparison of 2021 and 2020, all or a portion of 95 properties
were considered comparable properties and seven were considered non-comparable properties. For the year ended
December 31, 2021, two portions of properties were moved from non-comparable properties to comparable properties, one
39
property and two portions of properties were moved from acquisitions to comparable properties, one property was moved from
comparable properties to non-comparable properties, two properties and one portion of a property were removed from
comparable properties as they were sold, and two portions of properties were removed from non-comparable properties, as they
were sold, compared to the designations as of December 31, 2020. While there is judgment surrounding changes in
designations, we typically move non-comparable properties to comparable properties once they have stabilized, which is
typically considered 90% physical occupancy or when the growth expected from the redevelopment has been included in the
comparable periods. We typically remove properties from comparable properties when the repositioning of the asset has
commenced and has or is expected to have a significant impact to property operating income within the calendar year.
Acquisitions are moved to comparable properties once we have owned the property for the entirety of comparable periods and
the property is not under development or being repositioned for significant redevelopment and investment. Comparable
property information replaces our previous same center designations.
40
YEAR ENDED DECEMBER 31, 2021 COMPARED TO YEAR ENDED DECEMBER 31, 2020
Rental income
Mortgage interest income
Total property revenue
Rental expenses
Real estate taxes
Total property expenses
Property operating income (1)
General and administrative expense
Depreciation and amortization
Impairment charge
Gain on sale of real estate and change in control of interest
Operating income
Other interest income
Interest expense
Early extinguishment of debt
Income (loss) from partnerships
Total other, net
Net income
Net income attributable to noncontrolling interests
Net income attributable to the Trust
2021
2020
Dollars
%
(Dollar amounts in thousands)
$
948,842
$
832,171
$
116,671
14.0 %
Change
2,382
951,224
198,121
118,496
316,617
634,607
(49,856)
(279,976)
—
89,950
394,725
809
3,323
835,494
170,920
119,242
290,162
545,332
(41,680)
(255,027)
(57,218)
98,117
289,524
1,894
(941)
(28.3)%
115,730
27,201
(746)
26,455
89,275
(8,176)
(24,949)
13.9 %
15.9 %
(0.6)%
9.1 %
16.4 %
19.6 %
9.8 %
57,218
100.0 %
(8,167)
105,201
(8.3)%
36.3 %
(1,085)
(57.3)%
(127,698)
(136,289)
—
1,245
(11,179)
(8,062)
(125,644)
(153,636)
269,081
(7,583)
135,888
(4,182)
8,591
11,179
9,307
27,992
133,193
(3,401)
$
261,498
$
131,706
$
129,792
(6.3)%
100.0 %
115.4 %
(18.2)%
98.0 %
81.3 %
98.5 %
(1) Property operating income is a non-GAAP measure. See "Summary Financial Information" in this Item 7 for further
discussion.
Property Revenues
Total property revenue increased $115.7 million, or 13.9%, to $951.2 million in 2021 compared to $835.5 million in 2020. The
percentage occupied at our shopping centers was 91.1% at December 31, 2021 compared to 90.2% at December 31, 2020. The
most significant driver of the increase in property revenues is the generally lifted COVID-19 restrictions during 2021, as
compared to 2020 when COVID-19 government imposed closures and restrictions were generally still in 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 $116.7 million, or 14.0%, to $948.8 million in 2021 compared to
$832.2 million in 2020 due primarily to the following:
•
•
•
an $82.6 million decrease in collectibility related impacts including rent abatements across all properties,
primarily due to higher collection rates in 2021 as tenants begin to recover from the initial impacts of
COVID-19, and moving a large number of tenants from accrual basis to cash basis in 2020,
an increase of $32.2 million primarily from 2021 acquisitions (see Note 3 to the consolidated financial
statements for additional information), and
an increase of $25.4 million from non-comparable properties driven by the opening of Phase III at Assembly
Row in 2021 and our Phase III office building at Pike & Rose in 2020, redevelopment related occupancy
increases at CocoWalk, the opening of our new office building at Santana Row in early 2020, higher net
termination fees, and the opening of Freedom Plaza in 2020,
partially offset by
41
•
•
a decrease of $17.1 million from property sales, and
a decrease of $6.1 million at comparable properties due primarily to lower average occupancy of approximately
$14.1 million, lower net termination fees and legal fee income of $5.1 million, and a $2.1 million decrease in
recoveries primarily related to real estate tax recoveries, partially offset by higher percentage rent, specialty
leasing, and parking income of $7.2 million, primarily due to the impact of COVID-19 related closures and
restrictions in 2020, and higher rental rates of $6.7 million.
Mortgage Interest Income
Mortgage interest income decreased $0.9 million, or 28.3%, to $2.4 million in 2021 compared to $3.3 million in 2020 primarily
due to the payoff of two mortgage notes receivable in May 2021 (see Note 2 to the consolidated financial statements for
additional information).
Property Expenses
Total property expenses increased $26.5 million, or 9.1%, to $316.6 million in 2021 compared to $290.2 million in 2020.
Changes in the components of property expenses are discussed below.
Rental Expenses
Rental expenses increased $27.2 million, or 15.9%, to $198.1 million in 2021 compared to $170.9 million in 2020. This
increase is primarily due to the following:
•
•
•
an increase of $19.3 million from comparable properties due to higher repairs and maintenance costs,
demolition costs, and utilities, as 2020 had lower costs as a result of COVID-19 impacts, higher snow removal
costs, and higher insurance costs,
an increase of $8.8 million primarily from 2021 acquisitions, and
an increase of $6.1 million from non-comparable properties driven by the opening of Phase III at Assembly
Row in 2021, the Phase III office building at Pike & Rose in 2020, the CocoWalk redevelopment in late 2020,
and the opening of our new office building at Santana Row in early 2020,
partially offset by
•
a decrease of $5.0 million from our property sales.
As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental
income increased to 20.9% for the year ended December 31, 2021 from 20.5% for the year ended December 31, 2020.
Real Estate Taxes
Real estate tax expense decreased $0.7 million, or 0.6% to $118.5 million in 2021 compared to $119.2 million in 2020 due
primarily to the following:
•
•
a decrease of $3.5 million from our property sales, and
a decrease of $3.3 million from comparable properties primarily due to a true-up of supplemental taxes at
several of our California properties billed in 2020 and prior year tax refunds recorded in 2021,
partially offset by
•
•
an increase of $3.1 million from 2021 acquisitions, and
an increase of $2.9 million from non-comparable properties due primarily to the opening of Phase III at
Assembly Row in 2021, the opening of our new office building at Santana Row in early 2020, increases in
assessments as a result of our redevelopment activities, and the Phase III office building at Pike & Rose in 2020.
Property Operating Income
Property operating income increased $89.3 million, or 16.4%, to $634.6 million in 2021 compared to $545.3 million in 2020.
This increase is primarily due to the lifting of COVID-19 restrictions during 2021, which resulted in lower collectibility related
adjustments and higher specialty leasing, percentage rent, and parking income. Also contributing to the increases were property
acquisitions, placing redevelopment properties into service, the opening of Phase III at Assembly Row in 2021, and the opening
of our new office building at Santana Row in early 2020, partially offset by lower average occupancy, property dispositions,
higher repairs and maintenance and utilities expense, and higher snow removal expense.
42
Other Operating
General and Administrative Expense
General and administrative expense increased $8.2 million, or 19.6%, to $49.9 million in 2021 from $41.7 million in 2020. This
increase is due primarily to higher personnel related costs.
Depreciation and Amortization
Depreciation and amortization expense increased $24.9 million, or 9.8%, to $280.0 million in 2021 from $255.0 million in
2020. This increase is due primarily to 2021 property acquisitions, accelerated depreciation related to the demolition of one of
our buildings in the early stages of redevelopment, the opening of Phase III of Assembly Row and the Pike & Rose, placing
redevelopment properties into service, and the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in
January 2021, partially offset by 2020 property sales and the lower write-off of lease related assets for vacating tenants.
Impairment Charge
The $57.2 million impairment charge for the year ended December 31, 2020 relates to The Shops at Sunset Place. See Note 3 to
the consolidated financial statements for further discussion.
Gain on Sale of Real Estate and Change in Control of Interest
The $90.0 million gain on sale of real estate for the year ended December 31, 2021 is due to the sale of two properties and
portions of three properties, as well as the $2.1 million gain relating to the acquisition of the previously unconsolidated Pike &
Rose hotel join venture (see Note 3 to the consolidated financial statements for additional information).
The $98.1 million gain on sale of real estate, net of tax for the year ended December 31, 2020 is due to the sale of three
properties and one building.
Operating Income
Operating income increased $105.2 million, or 36.3%, to $394.7 million in 2021 compared to $289.5 million in 2020. This
increase is primarily due to the lifting of COVID-19 restrictions, which resulted in lower collectibility related adjustments and
higher specialty leasing, percentage rent, and parking income compared to 2020. Also contributing to the increases were the
prior year impairment charge related to The Shops at Sunset Place, property acquisitions, placing redevelopment properties into
service, the opening of Phase III at Assembly Row in 2021, and the opening of our new office building at Santana Row in early
2020, partially offset by lower average occupancy, higher personnel related costs, property dispositions, higher repairs and
maintenance and utilities expense, a lower gain on sales of real estate, and higher snow removal expense.
Other
Interest Expense
Interest expense decreased $8.6 million, or 6.3%, to $127.7 million in 2021 compared to $136.3 million in 2020. This decrease
is due primarily to the following:
•
•
a decrease of $6.2 million due to a lower overall weighted average borrowing rate, and
a decrease of $3.2 million due to lower weighted average borrowings,
partially offset by
•
a decrease of $0.8 million in capitalized interest.
Gross interest costs were $150.3 million and $159.7 million in 2021 and 2020, respectively. Capitalized interest was
$22.6 million and $23.4 million in 2021 and 2020, respectively.
Early Extinguishment of Debt
The $11.2 million early extinguishment of debt charge for the year ended December 31, 2020 relates to the make-whole
premium paid as part of the early redemption of our $250 million 3.00% senior notes on December 31, 2020 and the related
write-off of the unamortized discount and debt fees.
43
Income (loss) from Partnerships
Income (loss) from partnerships increased $9.3 million or 115.4% to $1.2 million of income in 2021 compared to a loss of $8.1
million in 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.
Net income attributable to noncontrolling interests
Net income attributable to noncontrolling interests increased $3.4 million, or 81.3%, to $7.6 million in 2021 compared to
$4.2 million in 2020. The increase is primarily due to The Shops at Sunset Place prior year impairment charge and 2021
acquisitions.
Discussions of year-to-year comparisons between 2020 and 2019 can be found in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2020 filed with the Securities and Exchange Commission on February 11, 2021.
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 generally required to
make annual distributions to shareholders of at least 90% of our taxable income (cash dividends paid in 2021 were
approximately $337.4 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.
During 2021, we have continued to see improvements in overall cash collections from tenants as compared to 2020, although
not yet at pre-COVID-19 levels (see further discussion under the "Outlook" section of this Item 2). While the overall economic
impacts of the pandemic are unknown, we have taken multiple steps to strengthen our financial position, maximize liquidity,
and to provide maximum flexibility during these uncertain times, including maintaining levels of cash in excess of the cash
balances we have historically maintained.
As of December 31, 2021, there is no balance outstanding on our $1.0 billion unsecured revolving credit facility and we had
cash and cash equivalents of $162.1 million. We also had outstanding forward sales agreements for net proceeds of $264.0
million as of December 31, 2021, and the capacity to issue up to $175.0 million in common shares under the ATM program.
We have no debt maturing until June 2023.
For the year ended 2021, the weighted average amount of borrowings outstanding on our revolving credit facility was $19.6
million, and the weighted average interest rate, before amortization of debt fees, was 0.9%.
Our overall capital requirements during 2022 will 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 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
elevated levels of investment as we continue to invest in our overall portfolio to better position our properties for a post-COVID
environment, costs to prepare vacant space for new tenants, and investments to complete the current phase and start on the next
phase of our larger mixed-use development projects although at a slightly reduced level from 2021, largely due to deliveries in
2021 of our third phase of Assembly Row.
We believe that the cash on our balance sheet together with rents we collect, as well as 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 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, reduce our operating expenditures, or re-evaluate
our dividend policy.
While we have seen improvements from the initial negative impacts of the COVID-19 pandemic, it has continued to affect our
overall business during the year ended December 31, 2021, and we expect it will continue to negatively impact our business in
the short term, we intend to operate with and to maintain our long term commitment to a conservative capital structure that will
44
allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-
grade debt ratings.
Summary of Cash Flows
Net cash provided by operating activities ...................................................................................... $
Net cash used in investing activities...............................................................................................
Net cash (used in) provided by financing activities .......................................................................
(Decrease) increase in cash and cash equivalents ..........................................................................
Cash, cash equivalents, and restricted cash, beginning of year......................................................
Cash, cash equivalents, and restricted cash, end of year................................................................ $
Year Ended December 31,
2021
2020
(In thousands)
471,352
$
369,929
(660,118)
(452,967)
(641,733)
816,896
(368,383)
661,736
663,282
153,614
175,163
$
816,896
Net cash provided by operating activities increased $101.4 million to $471.4 million during 2021 from $369.9 million during
2020. The increase was primarily attributable to higher net income before non-cash items and the timing of cash receipts
including higher accounts receivable and lower prepaid rent balances in 2020 as a result of the COVID-19 pandemic.
Net cash used in investing activities increased $291.7 million to $660.1 million during 2021 from $368.4 million during 2020.
The increase was primarily attributable to:
•
•
a $356.9 million increase in acquisition of real estate primarily due to 2021 property acquisitions (see Note 3 to
the consolidated financial statements for additional information), and
a $45.6 million decrease in proceeds from sales of real estate, resulting from the sale of two properties and a
portion of three properties in 2021, as compared to the sale of three properties, one building, and the two
remaining condominium units at our Pike & Rose property in 2020,
partially offset by
•
•
•
a $54.5 million decrease in net capital expenditures and leasing costs,
a $41.4 million increase in net repayments and acquisitions of mortgages and other notes receivable primarily
due to the $31.1 million payoff of two mortgage notes receivable in May 2021, as compared to the $9.6 million
acquisition of two mortgage notes receivable in September 2020, and
$12.9 million paid in 2020 relating to the partial sale under threat of condemnation at San Antonio Center in
2019.
Net cash provided by financing activities decreased $1.1 billion to $453.0 million used during 2021 from $661.7 million
provided during 2020. The decrease was primarily attributable to:
•
a $1.1 billion decrease due to net proceeds of $700.1 million 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, and
$394.2 million in net proceeds from our $400.0 million of 1.25% unsecured senior notes in October 2020,
• $398.7 million in net proceeds from our unsecured term loan in May 2020,
•
a $207.4 million increase in repayment of mortgages, finance leases, and notes payable primarily due to the
$140.9 million net repayments of four mortgage loans in 2021 (see Note 5 to the consolidated financial
statements for more information), the $100.0 million repayment of our $400.0 million term loan which was
amended in April 2021, and the $31.5 million repayment of the mortgage loan encumbering the Pike & Rose
hotel in January 2021, partially offset by the $60.6 million payoff of the mortgage loan on The Shops at Sunset
Place in December 2020 and the $3.6 million payoff of the mortgage loan on 29th Place, both in December
2020, and
•
an $11.1 million increase in dividends paid to shareholders due to an increase in the common share dividend
rate and an increase in the number of common shares outstanding,
partially offset by,
•
$510.4 million from the December 2020 redemptions of our $250.0 million 2.55% unsecured senior notes and
our $250.0 million 3.00% unsecured senior notes, with a make-whole premium of $10.4 million,
45
•
•
$73.8 million increase in net proceeds from the issuance of 1.6 million common shares under our ATM program
for net proceeds of $172.7 million (see Note 8 to our consolidated financial statements for additional details on
these transactions), as compared to 1.1 million common shares for net proceeds of $98.8 million in 2020, and
a $10.8 million decrease in distributions to and redemptions of noncontrolling interests primarily due to the
2020 acquisition of one of our partner's interests in the partnership that owns our Plaza El Segundo property for
$7.3 million.
Cash Requirements
The following table provides a summary of material cash requirements comprising our fixed, noncancelable obligations as of
December 31, 2021:
Fixed and variable rate debt (principal only) (1)........................................ $
Fixed and variable rate debt - our share of unconsolidated real estate
partnerships (principal only)(2)..................................................................
Lease obligations (minimum rental payments) (3)....................................
Redevelopments/capital expenditure contracts ..........................................
Real estate commitments (4)
Total estimated cash requirements ............................................................. $
_____________________
Cash Requirements by Period
Total
Next Twelve
Months
(In thousands)
Greater than
Twelve Months
4,063,414
$
4,095
4,059,319
28,560
352,162
319,171
98,691
4,861,998
$
418
11,001
267,490
—
283,004
$
28,142
341,161
51,681
98,691
4,578,994
(1) The weighted average interest rate on our fixed and variable rate debt is 3.3% as of December 31, 2021.
(2) The weighted average interest rate on the fixed and variable rate debt related to our unconsolidated real estate
partnerships is 4.24% as of December 31, 2021.
(3) This includes minimum rental payments related to both finance and operating leases.
(4) This includes the liability related to the sale under threat of condemnation at San Antonio Center as further discussed
in Note 7 to the consolidated financial statements.
In addition to the amounts set forth in the table above and other liquidity requirements previously discussed, the following
potential commitments exist:
(a) Under the terms of the Congressional Plaza partnership agreement, a minority partner has the right to require us and
the other minority partner to purchase its 26.63% interest in Congressional Plaza at the interest’s then-current fair market value.
If the other minority partner defaults in their obligation, we must purchase the full interest. Based on management’s current
estimate of fair market value as of December 31, 2021, our estimated liability upon exercise of the put option would range from
approximately $67 million to $71 million.
(b) Under the terms of various other partnership agreements, the partners have the right to exchange their operating
partnership units for cash or the same number of our common shares, at our option. As of December 31, 2021, a total of
666,831 downREIT operating partnership units are outstanding.
(c) Two of the members in Plaza El Segundo have the right to require us to purchase their 10.0% and 11.8% ownership
interests at the interests' then-current fair market value. If the members fail to exercise their put options, we have the right to
purchase each of their interests on or after December 30, 2026 at fair market value. Based on management’s current estimate of
fair market value as of December 31, 2021, our estimated maximum liability upon exercise of the put option would range from
approximately $25 million to $28 million.
(d) The other member in The Grove at Shrewsbury and Brook 35 has the right to require us to purchase all of its
approximately 4.1% interest in The Grove at Shrewsbury and approximately 6.5% interest in Brook 35 at the interests' then-
current fair market value. Based on management's current estimate of fair market value as of December 31, 2021, our estimated
maximum liability upon exercise of the put option would range from $6 million to $7 million.
(e) Effective September 18, 2023, the other member in Hoboken has the right to require us to purchase all of its 10%
ownership interest at the interest's then-current fair market value. Based on management's current estimate of fair market value
as of December 31, 2021, our estimated maximum liability upon exercise of the put option would range from $9 million to $10
million.
46
(f) Effective June 14, 2026, the other member in Cambelback Colonnade and Hilton Village has the right to require us to
purchase all of its 2.0% ownership interest at the interest's then-current fair market value. Based on management's current
estimate of fair value as of December 31, 2021, our estimated maximum liability upon exercise of the put option would range
from $4 million to $5 million.
(g) Effective June 1, 2029, the other member in Grossmont Center has the right to require us to purchase all of its 40.0%
ownership interest at the interest's then-current fair market value. Based on management's current estimate of fair value as of
December 31, 2021, our estimated maximum liability upon exercise of the put option would range from $68 million to $73
million.
(h) At December 31, 2021, we had letters of credit outstanding of approximately $4.8 million.
Off-Balance Sheet Arrangements
At December 31, 2021, we have two real estate related equity method investments with total debt outstanding of $79.8 million,
of which our share is $28.6 million. Our investment in these ventures at December 31, 2021 was $8.9 million.
Other than the items disclosed in the Cash Requirements table, we have no off-balance sheet arrangements as of December 31,
2021 that are reasonably likely to have a current or future material effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, cash requirements, or capital resources.
47
Debt Financing Arrangements
The following is a summary of our total debt outstanding as of December 31, 2021:
Description of Debt
Mortgages payable
Secured fixed rate
Original
Debt
Issued
Principal Balance as
of December 31,
2021
(Dollars in thousands)
Stated Interest Rate
as of December 31,
2021
Maturity Date
Azalea ......................................................................
Bell Gardens ............................................................
Plaza El Segundo .....................................................
The Grove at Shrewsbury (East) .............................
Brook 35 ..................................................................
Hoboken (24 Buildings) (1).....................................
Various Hoboken (14 Buildings).............................
Chelsea.....................................................................
Hoboken (1 Building) (3) ........................................
Subtotal............................................................
Net unamortized debt issuance costs and
premium......................................................
Total mortgages payable, net...........................
Acquired $
Acquired
125,000
43,600
11,500
56,450
Acquired
Acquired
Acquired
40,000
12,127
125,000
43,600
11,500
56,450
31,817
4,851
16,234
341,579
(1,586)
339,993
3.73 %
4.06 %
3.83 %
3.77 %
4.65 %
LIBOR + 1.95%
November 1, 2025
August 1, 2026
June 5, 2027
September 1, 2027
July 1, 2029
December 15, 2029
Various (2) Various through 2029
January 15, 2031
July 1, 2042
5.36 %
3.75 %
Notes payable
Revolving credit facility (4) ....................................
Term Loan ...............................................................
Various.....................................................................
Subtotal............................................................
Net unamortized debt issuance costs ..........
Total notes payable, net ...................................
1,000,000
400,000
7,239
Senior notes and debentures
Unsecured fixed rate
2.75% notes .............................................................
3.95% notes .............................................................
1.25% notes .............................................................
7.48% debentures.....................................................
3.25% notes .............................................................
6.82% medium term notes .......................................
3.20% notes .............................................................
3.50% notes .............................................................
4.50% notes .............................................................
3.625% notes ...........................................................
Subtotal............................................................
Net unamortized debt issuance costs and
premium......................................................
Total senior notes and debentures, net.............
275,000
600,000
400,000
50,000
475,000
40,000
400,000
400,000
550,000
250,000
— LIBOR + 0.775%
LIBOR + 0.80%
January 19, 2024
April 16, 2024
11.31 % Various through 2028
300,000
2,635
302,635
(1,169)
301,466
2.75 %
3.95 %
1.25 %
7.48 %
3.25 %
6.82 %
3.20 %
3.50 %
4.50 %
3.625 %
June 1, 2023
January 15, 2024
February 15, 2026
August 15, 2026
July 15, 2027
August 1, 2027
June 15, 2029
June 1, 2030
December 1, 2044
August 1, 2046
275,000
600,000
400,000
29,200
475,000
40,000
400,000
400,000
550,000
250,000
3,419,200
(13,112)
3,406,088
Total debt, net
_____________________
$
4,047,547
1)
2)
3)
4)
On November 26, 2019, we entered into two interest rate swap agreements that fix the interest rate on the mortgage
loan at 3.67%.
The interest rates on these mortgages range from 3.91% to 5.00%.
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.
The maximum amount drawn under our revolving credit facility during 2021 was $150.0 million and the weighted
average effective interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was
0.9%.
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 December 31, 2021, we were in compliance with all of the 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
48
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 December 31, 2021:
2022
2023
2024
2025
2026
Thereafter
Unsecured
Secured
(In thousands)
$
744
$
275,758
900,659 (1) (2)
383
429,254
2,115,037
3,351
3,549
3,688
48,033
26,657
256,301
Total
$
4,095
279,307
904,347
48,416
455,911
2,371,338
$ 3,721,835
$
341,579
$ 4,063,414 (3)
_____________________
1)
2)
3)
Our $300.0 million term loan matures on April 16, 2024, plus two one-year extensions, at our option.
Our $1.0 billion revolving credit facility matures on January 19, 2024, plus two six-month extensions at our option. As
of December 31, 2021, there was no outstanding balance under this credit facility.
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 December 31,
2021.
Interest Rate Hedging
We may use derivative instruments to manage exposure to variable interest rate risk. We generally enter into interest rate swaps
to manage our exposure to variable interest rate risk and treasury locks to manage the risk of interest rates rising prior to the
issuance of debt. We enter into derivative instruments that qualify as cash flow hedges and do not enter into derivative
instruments for speculative purposes.
Interest rate swaps associated with cash flow hedges are recorded at fair value on a recurring basis. Effectiveness of cash flow
hedges is assessed both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate
swaps associated with cash flow hedges is recorded in other comprehensive income (loss) which is included in "accumulated
other comprehensive 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, the default risk of the counterparty is evaluated 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 December 31, 2021, we have two interest rate swap agreements that effectively fix the interest 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
agreements that effectively fix their debt at 5.206%. All swaps were designated and qualify as cash flow hedges. Hedge
ineffectiveness has not impacted our earnings in 2021, 2020 and 2019.
REIT Qualification
We intend to maintain our qualification as a REIT under Section 856(c) of the Code. As a REIT, we generally will not be
subject to corporate federal income taxes on income we distribute to our shareholders as long as we satisfy certain technical
requirements of the Code, including the requirement to distribute at least 90% of our taxable income to our shareholders.
49
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.
The reconciliation of net income to FFO available for common shareholders is as follows:
Net income.................................................................................................................... $ 269,081
Net income attributable to noncontrolling interests......................................................
(7,583)
$ 135,888
$ 360,542
(4,182)
(6,676)
Gain on sale of real estate and change in control of interests, net................................
(89,892)
(91,922)
(116,393)
Year Ended December 31,
2021
2020
2019
(In thousands, except per share data)
Impairment charge, net ................................................................................................
Depreciation and amortization of real estate assets......................................................
Amortization of initial direct costs of leases ................................................................
Funds from operations...........................................................................................
Dividends on preferred shares (1) ................................................................................
Income attributable to operating partnership units .......................................................
—
243,711
26,051
441,368
(8,042)
2,998
Income attributable to unvested shares.........................................................................
(1,581)
Funds from operations available for common shareholders (2)............................ $ 434,743
78,072
Weighted average number of common shares, diluted (1)(2)(3)..................................
50,728
228,850
20,415
339,777
(8,042)
3,151
(1,037)
—
215,139
19,359
471,971
(7,500)
2,703
(1,355)
$ 333,849
$ 465,819
76,261
75,514
Funds from operations available for common shareholders, per diluted share (2) ...... $
_____________________
5.57
$
4.38
$
6.17
(1)
(2)
For the year ended December 31, 2019, 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."
For the year ended December 31, 2020, FFO available for common shareholders includes a $11.2 million charge
related to early extinguishment of debt. If this charge was excluded, our FFO available for common shareholders for
2020 would have been $345.0 million, and FFO available for common shareholders, per diluted share would have been
$4.52. For the year ended December 31, 2019, FFO available for common shareholders includes an $11.9 million
charge relating to the buyout of a lease at Assembly Square Marketplace. If this charge was excluded, our FFO
50
available for common shareholders for 2019 would have been $477.7 million, and FFO available for common
shareholders, per diluted share would have been $6.33.
(3)
The weighted average common shares used to compute FFO per diluted common share includes 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 common share but is anti-dilutive for the computation of diluted EPS
for the periods presented.
ITEM 7A. 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
interest rate environment could have on the overall level of economic activity or the action that our management might take to
reduce our exposure to the change. This analysis assumes no change in our financial structure.
Fixed Interest Rate Debt
The majority of our outstanding debt obligations (maturing at various times through 2046) 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 December 31, 2021, we had $3.7 billion of fixed-rate debt outstanding, including $56.5 million in mortgage
payables that are 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 December 31, 2021 had been 1.0% higher, the fair value of those debt instruments on that
date would have decreased by approximately $256.6 million. If market interest rates used to calculate the fair value on our
fixed-rate debt instruments at December 31, 2021 had been 1.0% lower, the fair value of those debt instruments on that date
would have increased by approximately $291.7 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 December 31, 2021, 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 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements and supplementary data are included as a separate section of this Annual Report on Form
10-K commencing on page F-1 and are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
51
ITEM 9A. CONTROLS AND PROCEDURES
Management's Evaluation of Disclosure Controls and Procedures
The Trust maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) that are designed to provide reasonable assurance that information
required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and
communicated to the Trust’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to
allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no
matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of
disclosure controls and procedures are met.
Our management, with the participation of the Trust’s Chief Executive Officer and Chief Financial Officer, evaluated the
effectiveness of the design and operation of the Trust’s disclosure controls and procedures as of December 31, 2021. Based on
that evaluation, the Trust’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2021, the
Trust’s disclosure controls and procedures were effective at a reasonable assurance level.
Management's Evaluation of Internal Control over Financial Reporting
The Trust’s management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act as a process
designed by, or under the supervision of, the Trust’s principal executive and principal financial officers and effected by our
Board of Trustees, management and other personnel, to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles in the United States of America (GAAP) and includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and
disposition of our assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made
only in accordance with authorization of management and our Trustees; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of any of our assets in circumstances that could have a material adverse effect on our financial statements.
internal control over financial reporting may not prevent or detect misstatements.
Because of its inherent
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
limitations,
We assessed the effectiveness of the Trust’s internal control over financial reporting as of December 31, 2021. In making this
assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal Control-Integrated Framework (2013). Based on that assessment and criteria, management concluded that the
Trust's internal control over financial reporting was effective as of December 31, 2021.
Grant Thornton LLP, the independent registered public accounting firm that audited the Trust's consolidated financial
statements included in this Annual Report on Form 10-K, has issued an attestation report on the Trust's internal control over
financial reporting, which appears on page F-2 of this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting during our fourth fiscal quarter of 2021 that materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
52
PART III
Certain information required in Part III is omitted from this Report but is incorporated herein by reference from our Proxy
Statement for the 2022 Annual Meeting of Shareholders (as amended or supplemented, the “Proxy Statement”).
ITEM 10. TRUSTEES, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The tables and narrative in the Proxy Statement identifying our Trustees and Board committees under the caption “Election of
Trustees” and “Corporate Governance”, the sections of the Proxy Statement entitled “Executive Officers” and “Section 16(a)
Beneficial Ownership Reporting Compliance” and other information included in the Proxy Statement required by this Item 10
are incorporated herein by reference.
We have adopted a Code of Ethics, which is applicable to our Chief Executive Officer and senior financial officers. The Code
of Ethics is available in the Corporate Governance section of the Investors section of our website at www.federalrealty.com.
ITEM 11. EXECUTIVE COMPENSATION
The sections of the Proxy Statement entitled “Summary Compensation Table,” “Compensation Committee Interlocks and
Insider Participation,” “Compensation Committee Report,” “Trustee Compensation” and “Compensation Discussion and
Analysis” and other information included in the Proxy Statement required by this Item 11 are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
The sections of the Proxy Statement entitled “Share Ownership” and “Equity Compensation Plan Information” and other
information included in the Proxy Statement required by this Item 12 are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND TRUSTEE INDEPENDENCE
The sections of the Proxy Statement entitled “Certain Relationship and Related Transactions” and “Independence of Trustees”
and other information included in the Proxy Statement required by this Item 13 are incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The sections of the Proxy Statement entitled “Ratification of Independent Registered Public Accounting Firm” and
“Relationship with Independent Registered Public Accounting Firm” and other information included in the Proxy Statement
required by this Item 14 are incorporated herein by reference.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
PART IV
(a)(1) Financial Statements
Our consolidated financial statements and notes thereto, together with Reports of Independent Registered Public
Accounting Firm are included as a separate section of this Annual Report on Form 10-K commencing on page F-1.
(2) Financial Statement Schedules
Our financial statement schedules are included in a separate section of this Annual Report on Form 10-K commencing
on page F-32.
(3) Exhibits
(b) The following documents are filed as exhibits are filed as part of, or incorporated by reference info, this report:
53
Exhibit
No.
Description
EXHIBIT INDEX
2.1
3.1
3.2
3.3
3.4
3.5
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
10.1
10.2
10.3
Merger Agreement and Plan of Reorganization, dated December 2, 2021, by and among the Predecessor, the Parent
Company, and Merger Sub (previously filed as Exhibit 2.1 to the Predecessor's Current Report on Form 8-K filed
on December 2, 2021 and incorporated herein by reference)
Amended and Restated Declaration of Trust of the Parent Company dated January 1, 2022, as amended by the
Articles of Amendment of Amended and Restated Declaration of Trust dated January 1, 2022 (filed herewith)
Amended and Restated Bylaws of the Parent Company dated January 1, 2022 (previously filed as Exhibit 3.3 to
our Current Report on Form 8-K filed on January 3, 2022 and incorporated herein by reference)
Articles of Merger, dated December 8, 2021, by and among Merger Sub and the Predecessor (previously filed as
Exhibit 3.4 to the Parent Company's Current Report on Form 8-K filed on January 3, 2022 and incorporated herein
by reference)
Certificate of Limited Partnership of Federal Realty OP LP (previously filed as Exhibit 3.1 to our Current Report
on Form 8-K filed on January 5, 2022 and incorporated herein by reference)
Agreement of Limited Partnership of Federal Realty OP LP, dated as of January 5, 2022, by and between Federal
Realty GP LLC and the Parent Company (Previously filed as Exhibit 3.2 to our Current Report on Form 8-K filed
on January 5, 2022 and incorporated herein by reference)
Specimen Common Share certificate (previously filed as Exhibit 4(i) to the Predecessor’s Annual Report on
Form 10-K for the year ended December 31, 1999 and incorporated herein by reference)
** Indenture dated December 1, 1993 related to the Partnership’s 7.48% Debentures due August 15, 2026; and
6.82% Medium Term Notes due August 1, 2027; (previously filed as Exhibit 4(a) to the Predecessor’s Registration
Statement on Form S-3, and amended on Form S-3, filed on December 13, 1993 and incorporated herein by
reference)***
** Indenture dated September 1, 1998 related to the Partnership’s 2.75% Notes due 2023; 3.95% Notes due 2024;
4.50% Notes due 2044; 2.55% Notes due 2021; 3.625% Notes due 2046; 3.25% Notes due 2027; 3.20% Notes due
2029; 3.50% Notes due 2030; 1.25% Notes due 2026 (previously filed as Exhibit 4(a) to the Predecessor’s
Registration Statement on Form S-3 filed on September 17, 1998 and incorporated herein by reference)***
**First Supplemental Indenture, dated as of January 5, 2022, by and between Federal Realty OP LP and U.S. Bank
National Association, with respect to the Partnership's Indenture dated December 1, 1993 related to the
Partnership's 7.48% Debentures due August 15, 2026 and 6.82% Medium Term Notes due August 1, 2027
(previously filed as Exhibit 4.1 to our Current Report on Form 8-K filed on January 5, 2022 and incorporated
herein by reference)
**First Supplemental Indenture, dated as of January 5, 2022, by and between Federal Realty OP LP and U.S. Bank
National Association, with respect to the Partnership's Indenture dated September 1, 1998 related to the
Partnership's 2.75% Notes due 2023; 3.95% Notes due 2024; 4.50% Notes due 2044; 2.55% Notes due 2021;
3.625% Notes due 2046; 3.25% Notes due 2027; 3.20% Notes due 2029; 3.50% Notes due 2030; 1.25% Notes due
2026 (previously filed as Exhibit 4.2 to our Current Report on Form 8-K filed on January 5, 2022 and incorporated
herein by reference)
Deposit Agreement, dated as of September 29, 2017, by and among Federal Realty Investment Trust, American
Stock Transfer and Trust Company, LLC, as Depositary, and all holders from time to time of Receipt (previously
filed as Exhibit 4.1 to the Predecessor's Registration Statement on Form 8-A, filed on September 29, 2017 and
incorporated herein by reference)
Specimen certificate relating to the 5.000% Series C Cumulative Redeemable Preferred Shares of Beneficial
Interest (previously filed as Exhibit 4.3 to the Predecessor's Registration Statement on Form 8-A, filed on
September 29, 2017 and incorporated herein by reference)
Description of Securities (previously filed as Exhibit 4.8 to the Predecessor's Annual Report on Form 10-K for the
year ended December 31, 2019 and incorporated here by reference)
* Severance Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 22, 1999
(previously filed as a portion of Exhibit 10 to the Predecessor's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999 (the "1999 1Q Form 10-Q") and incorporated herein by reference)
* Executive Agreement between Federal Realty Investment Trust and Donald C. Wood dated February 22, 1999
(previously filed as a portion of Exhibit 10 to the Predecessor's 1999 1Q Form 10-Q and incorporated herein by
reference)
* Amendment to Executive Agreement between Federal Realty Investment Trust and Donald C. Wood dated
February 16, 2005 (previously filed as Exhibit 10.12 to the Predecessor’s Annual Report on Form 10-K for the year
ended December 31, 2004 (the “2004 Form 10-K”) and incorporated herein by reference)
54
Exhibit
No.
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
Description
* Health Coverage Continuation Agreement between Federal Realty Investment Trust and Donald C. Wood dated
February 16, 2005 (previously filed as Exhibit 10.26 to the Predecessor's 2004 Form 10-K and incorporated herein
by reference)
* Severance Agreement between Federal Realty Investment Trust and Dawn M. Becker dated April 19, 2000
(previously filed as Exhibit 10.26 to the Predecessor’s 2005 2Q Form 10-Q and incorporated herein by reference)
* Amendment to Severance Agreement between Federal Realty Investment Trust and Dawn M. Becker dated
February 16, 2005 (previously filed as Exhibit 10.27 to the Predecessor's 2004 Form 10-K and incorporated herein
by reference)
Form of Restricted Share Award Agreement for long term vesting and retention awards for shares issued out of the
2010 Plan (previously filed as Exhibit 10.35 to the Predecessor's Annual Report on Form 10-K for the year ended
December 31, 2010 (the "2010 Form 10-K") and incorporated herein by reference)
* Amendment to Severance Agreement between Federal Realty Investment Trust and Donald C. Wood dated
January 1, 2009 (previously filed as Exhibit 10.26 to the Predecessor’s Annual Report on Form 10-K for the year
ended December 31, 2008 (“the 2008 Form 10-K”) and incorporated herein by reference)
* Second Amendment to Executive Agreement between Federal Realty Investment Trust and Donald C. Wood
dated January 1, 2009 (previously filed as Exhibit 10.27 to the Predecessor’s 2008 Form 10-K and incorporated
herein by reference)
* Amendment to Health Coverage Continuation Agreement between Federal Realty Investment Trust and Donald
C. Wood dated January 1, 2009 (previously filed as Exhibit 10.28 to the Predecessor’s 2008 Form 10-K and
incorporated herein by reference)
* Second Amendment to Severance Agreement between Federal Realty Investment Trust and Dawn M. Becker
dated January 1, 2009 (previously filed as Exhibit 10.30 to the Predecessor’s 2008 Form 10-K and incorporated
herein by reference)
2010 Performance Incentive Plan (previously filed as Appendix A to the Predecessor’s Definitive Proxy Statement
for the 2010 Annual Meeting of Shareholders and incorporated herein by reference)
Amendment to 2010 Performance Incentive Plan (“the 2010 Plan”) (previously filed as Appendix A to the
Predecessor’s Proxy Statement for the 2010 Annual Meeting of Shareholders and incorporated herein by reference)
Form of Restricted Share Award Agreement for awards made under Federal Realty Investment Trust’s Long-Term
Incentive Award Program and the Trust’s Annual Incentive Bonus Program and basic awards with annual vesting
for shares issued out of the 2010 Plan (previously filed as Exhibit 10.34 to the Predecessor’s 2010 Form 10-K and
incorporated herein by reference)
Form of Option Award Agreement for awards made under Federal Realty Investment Trust’s Long-Term Incentive
Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.38 to the Predecessor’s 2010
Form 10-K and incorporated herein by reference)
Form of Option Award Agreement for front loaded awards made under Federal Realty Investment Trust’s Long-
Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as Exhibit 10.39 to the
Predecessor’s 2010 Form 10-K and incorporated herein by reference)
Form of Option Award Agreement for basic options awarded out of the 2010 Plan (previously filed as Exhibit
10.40 to the Predecessor’s 2010 Form 10-K and incorporated herein by reference)
Credit Agreement dated as of July 7, 2011, by and among the Predecessor, as Borrower, the financial institutions
party thereto and their permitted assignees under Section 12.6., as Lenders, Wells Fargo Bank, National
Association, as Administrative Agent, PNC Bank, National Association, as Syndication Agent, Wells Fargo
Securities, LLC, as a Lead Arranger and Book Manager, and PNC Capital Markets LLC, as a Lead Arranger and
Book Manager (previously filed as Exhibit 10.1 to the Trust’s Current Report on Form 8-K, filed on July 11, 2011
and incorporated herein by reference)***
Revised Form of Restricted Share Award Agreement for front loaded awards made under Federal Realty
Investment Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan (previously filed as
Exhibit 10.35 to the Predecessor's Annual Report on Form 10-K for the year ended December 31, 2012 (the "2012
Form 10-K") and incorporated herein by reference)
Revised Form of Restricted Share Award Agreement for long-term vesting and retention awards made under
Federal Realty Investment Trust’s Long-Term Incentive Award Program for shares issued out of the 2010 Plan
(previously filed as Exhibit 10.36 to the Predecessor's 2012 Form 10-K and incorporated herein by reference)
Revised Form of Performance Share Award Agreement for shares awarded out of the 2010 Plan (previously filed
as Exhibit 10.37 to the Predecessor's 2012 Form 10-K and incorporated herein by reference)
55
Exhibit
No.
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
Description
Revised Form of Restricted Share Award Agreement for awards made under Federal Realty Investment Trust’s
Long-Term Incentive Award Program and the Trust’s Annual Incentive Bonus Program and basic awards with
annual vesting for shares issued out of the 2010 Plan (previously filed as Exhibit 10.38 to the Predecessor's 2012
Form 10-K and incorporated herein by reference)
First Amendment to the Credit Agreement, dated as of April 22, 2013, by and among the Predecessor, each of the
Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (previously filed as
Exhibit 10.1 to the Predecessor's Current Report on Form 8-K, filed on April 26, 2013 and incorporated herein by
reference)***
First Amendment to the Credit Agreement, dated as of April 22, 2013, by and among the Predecessor, each of the
Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (previously filed as
Exhibit 10.1 to the Predecessor's Current Report on Form 8-K, filed on April 26, 2013 and incorporated herein by
reference)***
Second Amendment to Credit Agreement, dated as of April 20, 2016, by and among the Predecessor, each of the
Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit
10.1 to the Predecessor's Current Report on Form 8-K, filed on April 26, 2016 and incorporated herein by
reference)***
Severance Agreement between Federal Realty Investment Trust and Daniel Guglielmone dated August 15, 2016
(previously filed as Exhibit 10.36 to the Predecessor's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2016 and incorporated herein by reference)
Amended and Restated Credit Agreement, dated as of July 25, 2019, by and among the Predecessor, each of the
Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit
10.1 to the Predecessor's Current Report on Form 8-K, filed on July 29, 2019 and incorporated herein by
reference)***
2020 Performance Incentive Plan (previously filed as Appendix B to the Predecessor’s Definitive Proxy Statement
for the 2020 Annual Meeting of Shareholders and incorporated herein by reference)
Term Loan Agreement dated as of May 6, 2020, by and among the Predecessor, as Borrower, the financial
institutions party thereto and their permitted assignees under Section 12.6., as Lenders, PNC Bank, National
Association, as Administrative Agent, Regions Bank, Truist Bank, and U.S. Bank National Bank Association as
Co-Syndication Agents, PNC Capital Markets, LLC, Regions Capital Markets, Suntrust Robinson Humphrey, Inc.,
and U.S. Bank National Association, as Joint Lead Arrangers and Book Managers (previously filed as Exhibit 10.1
to the Predecessor's Current Report on Form 8-K, filed on May 6, 2020 and incorporated herein by reference)***
First Amendment to the Credit Agreement, dated as of May 6, 2020, by and among the Predecessor, each of the
Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (previously filed as
Exhibit 10.2 to the Predecessor's Current Report on Form 8-K, filed on May 6, 2020, and incorporated herein by
reference)***
Form of Restricted Share Award Agreement for awards made under Federal Realty Investment Trust’s Long-Term
Incentive Award Program and the Trust’s Annual Incentive Bonus Program and basic awards with annual vesting
for shares issued out of the 2020 Plan (previously filed as Exhibit 10.32 to the Predecessor's Annual Report on
Form 10-K, filed on February 11, 2021, and incorporated herein by reference)
Form of Option Award Agreement for awards made under Federal Realty Investment Trust’s Long-Term Incentive
Award Program for shares issued out of the 2020 Plan (previously filed as Exhibit 10.33 to the Predecessor's
Annual Report on Form 10-K, filed on February 11, 2021, and incorporated herein by reference)
Form of Restricted Share Award Agreement for long-term vesting and retention awards made under Federal Realty
Investment Trust’s Long-Term Incentive Award Program for shares issued out of the 2020 Plan (previously filed as
Exhibit 10.34 to the Predecessor's Annual Report on Form 10-K, filed on February 11, 2021, and incorporated
herein by reference)
Form of Performance Share Award Agreement for shares awarded out of the 2020 Plan (previously filed as Exhibit
10.35 to the Predecessor's Annual Report on From 10-K, filed on February 11, 2021, and incorporated herein by
reference)
Form of Option Award Agreement for basic options awarded out of the 2020 Plan (previously filed as Exhibit
10.36 to the Predecessor's Annual Report on Form 10-K, filed on February 11, 2021, and incorporated herein by
reference)
Form of Performance Award Agreement for Jeffrey S. Berkes, dated February 10, 2021 (previously filed as Exhibit
10.1 to the Predecessor’s Current Report on Form 8-K, filed on February 12, 2021, and incorporated herein by
reference)
Amended and Restated Severance Agreement between Federal Realty Investment Trust and Jeffery S. Berkes,
dated February 10, 2021 (previously filed as Exhibit 10.2 to the Predecessor's Current Report on Form 8-K, filed
on February 12, 2021 and incorporated herein by reference)
56
Exhibit
No.
10.38
10.39
10.40
10.41
21.1
23.1
31.1
31.2
31.3
31.4
32.1
32.2
32.3
32.4
101
Description
First Amendment to Term Loan Agreement, dated as of April 16, 2021, by and among the Predecessor, as
borrower, the Lenders, New Lenders, Departing Lenders (as each such term is defined therein) and PNC Bank,
National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Predecessor's Current Report
on From 8-K, filed on April 19, 2021, and incorporated herein by reference)***
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)
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 party thereto and Wells Fargo Bank, National Association,
as administrative agent (previously filed as Exhibit 10.2 to the Trust’s Current Report on Form 8-K filed on
January 3, 2022 and incorporated herein by reference)***
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 (previously filed as Exhibit 10.3 to the Trust’s Current Report on Form 8-K filed on January 3, 2022 and
incorporated herein by reference)***
Subsidiaries of Federal Realty Investment Trust and Federal Realty OP LP (filed herewith)
Consent of Grant Thornton LLP (filed herewith)
Rule 13a-14(a) Certification of Chief Executive Officer - Federal Realty Investment Trust (filed herewith)
Rule 13a-14(a) Certification of Chief Financial Officer - Federal Realty Investment Trust (filed herewith)
Rule 13a-14(a) Certification of Chief Executive Officer - Federal Realty OP LP (filed herewith)
Rule 13a-14(a) Certification of Chief Financial Officer - Federal Realty OP LP (filed herewith)
Section 1350 Certification of Chief Executive Officer - Federal Realty Investment Trust (filed herewith)
Section 1350 Certification of Chief Financial Officer - Federal Realty Investment Trust (filed herewith)
Section 1350 Certification of Chief Executive Officer - Federal Realty OP LP (filed herewith)
Section 1350 Certification of Chief Financial Officer - Federal Realty OP LP (filed herewith)
The following materials from this Annual Report on Form 10-K for the year ended December 31, 2021, 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.
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
104
_____________________
* Management contract or compensatory plan required to be filed as an exhibit pursuant to Item 15(b) of Form 10-K.
** Pursuant to Regulation S-K Item 601(b)(4)(iii), the Trust and the Partnership by this filing agrees, upon request, to furnish to
the Securities and Exchange Commission a copy of other instruments defining the rights of holders of long-term debt of the
Trust and the Partnership.
***Upon completion of the UPREIT reorganization described in the Explanatory Note at the beginning of this Annual Report,
the Partnership became the successor to Federal Realty Investment Trust's rights and obligations under this instrument.
ITEM 16. FORM 10-K SUMMARY
None.
57
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized this February 10, 2022.
Federal Realty Investment Trust
Federal Realty OP LP
By:
/S/ DONALD C. WOOD
Donald C. Wood
Chief Executive Officer and Trustee
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the
following persons on behalf of the Registrant and in the capacity and on the dates indicated. Each person whose signature
appears below hereby constitutes and appoints each of Donald C. Wood and Dawn M. Becker as his or her attorney-in-fact and
agent, with full power of substitution and resubstitution for him or her in any and all capacities, to sign any or all amendments
to this Report and to file same, with exhibits thereto and other documents in connection therewith, granting unto such attorney-
in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary in connection
with such matters and hereby ratifying and confirming all that such attorney-in-fact and agent or his or her substitutes may do
or cause to be done by virtue hereof.
Signature
Title
Date
/S/ DONALD C. WOOD
Donald C. Wood
Chief Executive Officer and Trustee
(Principal Executive Officer)
February 10, 2022
/S/ DANIEL GUGLIELMONE
Daniel Guglielmone
/S/ DAVID W. FAEDER
David W. Faeder
/S/ ELIZABETH I. HOLLAND
Elizabeth I. Holland
/S/ NICOLE Y. LAMB-HALE
Nicole Y. Lamb-Hale
/S/ ANTHONY P. NADER, III
Anthony P. Nader, III
/S/ MARK S. ORDAN
Mark S. Ordan
/S/ GAIL P. STEINEL
Gail P. Steinel
Executive Vice President - Chief Financial
February 10, 2022
Officer and Treasurer (Principal
Financial and Accounting Officer)
Non -Executive Chairman
February 10, 2022
February 10, 2022
February 10, 2022
February 10, 2022
February 10, 2022
February 10, 2022
Trustee
Trustee
Trustee
Trustee
Trustee
58
Item 8 and Item 15(a)(1) and (2)
Index to Consolidated Financial Statements and Schedules
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm ( PCAOB ID Number 248) ............................................
Report of Independent Registered Public Accounting Firm ( PCAOB ID Number 248) ............................................
Consolidated Balance Sheets........................................................................................................................................
Consolidated Statements of Comprehensive Income ...................................................................................................
Consolidated Statement of Shareholders’ Equity.........................................................................................................
Consolidated Statements of Cash Flows ......................................................................................................................
Notes to Consolidated Financial Statements ................................................................................................................
Financial Statement Schedules
Schedule III—Summary of Real Estate and Accumulated Depreciation.....................................................................
Schedule IV—Mortgage Loans on Real Estate............................................................................................................
Page No.
F-2
F-3
F-5
F-6
F-7
F-8
F-9
F-32
F-40
All other schedules have been omitted either because the information is not applicable, not material, or is disclosed in our
consolidated financial statements and related notes.
F-1
Report of Independent Registered Public Accounting Firm
Trustees and Shareholders
Federal Realty Investment Trust
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Federal Realty Investment Trust (a Maryland real estate
investment trust) and subsidiaries (collectively, the "Trust") as of December 31, 2021, based on criteria established in the 2013
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
("COSO"). In our opinion, the Trust maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2021, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the consolidated financial statements of the Trust as of and for the year ended December 31, 2021, and our report
dated February 10, 2022 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Trust’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management's Evaluation of
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Trust’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ GRANT THORNTON LLP
New York, New York
February 10, 2022
F-2
Report of Independent Registered Public Accounting Firm
Trustees and Shareholders
Federal Realty Investment Trust
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Federal Realty Investment Trust (a Maryland real estate
investment trust) and subsidiaries (collectively, the "Trust") as of December 31, 2021 and 2020, the related consolidated
statements of comprehensive income, changes in shareholders’ equity, and cash flows for each of the three years in the period
ended December 31, 2021, and the related notes and financial statement schedules included under Item 15(a)(2) (collectively
referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Trust as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the
United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(“PCAOB”), the Trust’s internal control over financial reporting as of December 31, 2021, based on criteria established in the
2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”), and our report dated February 10, 2022 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Trust’s management. Our responsibility is to express an opinion on the
Trust’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Trust in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical audit matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the
accounts or disclosures to which it relates.
Lease Collectibility Assessment
In order to recognize rental revenue on an accrual basis, the Trust must determine whether substantially all the rents due under a
lease arrangement are collectible. If the Trust reaches the conclusion that substantially all of the rents are not collectible for a
specific lease, then rental revenue under that arrangement can only be recognized when cash payment from the tenant is
received.
Significant judgment is exercised by the Trust when making a collectibility assessment and includes the following
considerations which require challenging and subjective auditor judgment in the execution of our audit procedures:
•
•
•
Creditworthiness of the tenant
Current economic conditions
Historical experience with the tenant and other tenants operating in the same industry
Our audit procedures related to the collectibility assessment included the following:
• We assessed the design and tested the operating effectiveness of internal controls relating to the collectibility
assessment process.
F-3
• We evaluated management’s accounting policies related to this assessment.
• We verified the completeness of the population of tenants that management evaluated.
• We researched recent publicly available information such as bankruptcy filings, industry journals, and periodicals, and
for any of the Trust’s tenants identified in our research, we evaluated whether such information was considered in
management’s collectibility assessment.
For a selection of tenant receivables where collectibility was deemed as probable, we inspected and evaluated
management’s documentation supporting the collectibility assessment.
•
• We recalculated the aging for a selection of tenant receivable balances using supporting documentation.
•
For a selection of leases, we evaluated the collectibility assessment conclusion reached by management and performed
the following procedures for each selection:
◦
◦
◦
Verified that management’s accounting policies related to the collectibility assessment were followed.
Obtained from management documentation such as tenant collection history and any direct correspondence
and evaluated management’s considerations supporting the collectibility assessment conclusion reached.
Researched publicly available information to independently verify the completeness and accuracy of
management’s information used to make the collectibility assessment.
/s/ GRANT THORNTON LLP
We have served as the Trust’s auditor since 2002.
New York, New York
February 10, 2022
F-4
Federal Realty Investment Trust
Consolidated Balance Sheets
ASSETS
Real estate, at cost
Operating (including $2,207,648 and $1,703,202 of consolidated variable interest
entities, respectively)
Construction-in-progress (including $18,752 and $44,896 of consolidated variable
interest entities, respectively)
Less accumulated depreciation and amortization (including $389,950 and $335,735 of
consolidated variable interest entities, respectively)
Net real estate
Cash and cash equivalents
Accounts and notes receivable
Mortgage notes receivable, net
Investment in partnerships
Operating lease right of use assets
Finance lease right of use assets
Prepaid expenses and other assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $335,301 and $413,681 of consolidated variable
interest entities, respectively)
Notes payable, net
Senior notes and debentures, net
Accounts payable and accrued expenses
Dividends payable
Security deposits payable
Operating lease liabilities
Finance lease liabilities
Other liabilities and deferred credits
Total liabilities
Commitments and contingencies (Note 7)
Redeemable noncontrolling interests
Shareholders’ equity
Preferred shares, authorized 15,000,000 shares, $.01 par:
5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation
preference $25,000 per share), 6,000 shares issued and outstanding
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation
preference $25 per share), 399,896 shares issued and outstanding
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized,
78,603,305 and 76,727,394 shares issued and outstanding, respectively
Additional paid-in capital
Accumulated dividends in excess of net income
Accumulated other comprehensive loss
Total shareholders’ equity of the Trust
Noncontrolling interests
Total shareholders’ equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
December 31,
2021
2020
(In thousands, except share and
per share data)
$ 8,814,791
$ 7,771,981
607,271
9,422,062
810,889
8,582,870
(2,531,095)
6,890,967
162,132
169,007
9,543
13,027
90,743
49,832
237,069
$ 7,622,320
(2,357,692)
6,225,178
798,329
159,780
39,892
22,128
92,248
51,116
218,953
$ 7,607,624
$
339,993
301,466
3,406,088
235,168
86,538
25,331
72,661
72,032
206,187
4,745,464
$
484,111
402,776
3,404,488
228,641
83,839
20,388
72,441
72,049
152,424
4,921,157
213,708
137,720
150,000
150,000
9,997
9,997
790
3,488,794
(1,066,932)
(2,047)
2,580,602
82,546
2,663,148
$ 7,622,320
771
3,297,305
(988,272)
(5,644)
2,464,157
84,590
2,548,747
$ 7,607,624
The accompanying notes are an integral part of these consolidated statements.
F-5
Federal Realty Investment Trust
Consolidated Statements of Comprehensive Income
REVENUE
Rental income
Mortgage interest income
Total revenue
EXPENSES
Rental expenses
Real estate taxes
General and administrative
Depreciation and amortization
Total operating expenses
Impairment charge
Gain on sale of real estate and change in control of interest, net of tax
Year Ended December 31,
2021
2020
2019
(In thousands, except per share data)
$
$
948,842
2,382
951,224
$
832,171
3,323
835,494
932,738
3,050
935,788
198,121
118,496
49,856
279,976
646,449
—
89,950
170,920
119,242
41,680
255,027
586,869
(57,218)
98,117
187,831
110,927
42,754
239,758
581,270
—
116,393
OPERATING INCOME
394,725
289,524
470,911
OTHER INCOME/(EXPENSE)
Other interest income
Interest expense
Early extinguishment of debt
Income (loss) from partnerships
NET INCOME
Net income attributable to noncontrolling interests
NET INCOME ATTRIBUTABLE TO THE TRUST
Dividends on preferred shares
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS
EARNINGS PER COMMON SHARE, BASIC
Net income available for common shareholders
Weighted average number of common shares
EARNINGS PER COMMON SHARE, DILUTED
Net income available for common shareholders
Weighted average number of common shares
NET INCOME
Other comprehensive income (loss) - change in value of interest rate swaps
COMPREHENSIVE INCOME
Comprehensive income attributable to noncontrolling interests
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST
809
(127,698)
—
1,245
269,081
(7,583)
261,498
(8,042)
253,456
3.26
77,336
3.26
77,368
269,081
3,917
272,998
(7,903)
265,095
$
$
$
$
$
1,894
(136,289)
(11,179)
(8,062)
135,888
(4,182)
131,706
(8,042)
123,664
1.62
75,515
1.62
75,515
135,888
(5,302)
130,586
(3,711)
126,875
$
$
$
$
$
1,266
(109,623)
—
(2,012)
360,542
(6,676)
353,866
(8,042)
345,824
4.61
74,766
4.61
74,766
360,542
(397)
360,145
(6,676)
353,469
$
$
$
$
$
The accompanying notes are an integral part of these consolidated statements.
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T
Federal Realty Investment Trust
Consolidated Statements of Cash Flows
Year Ended December 31,
2021
2020
2019
(In thousands)
OPERATING ACTIVITIES
Net income ................................................................................................................. $ 269,081
Adjustments to reconcile net income to net cash provided by operating activities:
$ 135,888
$ 360,542
Depreciation and amortization ............................................................................
Impairment charge ..............................................................................................
Gain on sale of real estate and change in control of interest, net of tax..............
Early extinguishment of debt ..............................................................................
(Income) loss from partnerships .........................................................................
Other, net.............................................................................................................
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (increase) in accounts receivable, net..................................................
Increase in prepaid expenses and other assets ....................................................
Increase in accounts payable and accrued expenses ...........................................
Increase (decrease) in security deposits and other liabilities ..............................
Net cash provided by operating activities ..................................................................
INVESTING ACTIVITIES
Acquisition of real estate............................................................................................
Capital expenditures - development and redevelopment ...........................................
Capital expenditures - other .......................................................................................
Costs associated with property sold under threat of condemnation, net ....................
Proceeds from sale of real estate ................................................................................
Investment in partnerships .........................................................................................
Distribution from partnerships in excess of earnings.................................................
Leasing costs ..............................................................................................................
Repayment (issuance) of mortgage and other notes receivable, net ..........................
Net cash used in investing activities ..........................................................................
279,976
—
(89,950)
—
(1,245)
389
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(5,607)
6,782
10,712
471,352
(366,466)
(368,786)
(71,728)
—
137,868
(3,115)
2,970
(21,990)
31,129
(660,118)
255,027
57,218
(98,117)
11,179
8,062
6,142
(6,032)
(3,260)
5,621
(1,799)
369,929
(9,589)
(433,872)
(68,064)
(12,924)
183,461
(3,348)
1,301
(15,080)
(10,268)
(368,383)
239,758
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(116,393)
—
2,012
169
(16,128)
(10,253)
2,327
(115)
461,919
(204,516)
(327,074)
(82,836)
—
321,997
(1,052)
2,765
(25,459)
(357)
(316,532)
FINANCING ACTIVITIES
Costs to amend revolving credit facility ....................................................................
—
(638)
Issuance of senior notes, net of costs .........................................................................
— 1,094,283
Redemption and retirement of senior notes................................................................
— (510,360)
Issuance of notes payable, net of costs.......................................................................
398,722
—
Repayment of mortgages, finance leases, and notes payable.....................................
(70,237)
(277,643)
Issuance of common shares, net of costs....................................................................
99,177
172,981
Dividends paid to common and preferred shareholders.............................................
(324,596)
(335,656)
Shares withheld for employee taxes...........................................................................
(4,052)
(2,998)
Contributions from noncontrolling interests ..............................................................
—
133
Distributions to and redemptions of noncontrolling interests ....................................
(20,563)
(9,784)
661,736
(452,967)
Net cash (used in) provided by financing activities ...................................................
(Decrease) increase in cash, cash equivalents, and restricted cash ...................................
663,282
(641,733)
153,614
816,896
Cash, cash equivalents, and restricted cash at beginning of year......................................
$ 816,896
Cash, cash equivalents, and restricted cash at end of year ................................................ $ 175,163
(4,012)
399,913
—
—
(301,029)
143,027
(313,649)
(4,626)
404
(20,133)
(100,105)
45,282
108,332
$ 153,614
The accompanying notes are an integral part of these consolidated statements.
F-8
Federal Realty Investment Trust
Notes to Consolidated Financial Statements
December 31, 2021, 2020 and 2019
NOTE 1—BUSINESS AND ORGANIZATION
Federal Realty Investment Trust (the “Trust”) is an equity real estate investment trust (“REIT”) specializing in the ownership,
management, and redevelopment of retail and mixed-use properties. Our properties are located primarily in 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 December 31, 2021, we owned or had a majority interest in
community and neighborhood shopping centers and mixed-use properties which are operated as 104 predominantly retail real
estate projects.
We operate in a manner intended to enable us to qualify as a REIT for federal income tax purposes. A REIT that distributes at
least 90% of its taxable income to its shareholders each year and meets certain other conditions is not taxed on that portion of its
taxable income which is distributed to its shareholders.
See Note 15 for a discussion of the UPREIT reorganization we completed in January of 2022.
Impacts of COVID-19 Pandemic
In March 2020, the World Health Organization declared the outbreak of the novel coronavirus disease ("COVID-19") as a
pandemic. While we continue to expect the impact to our properties will 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.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
Our consolidated financial statements include the accounts of the Trust, its corporate subsidiaries, and all entities in which the
Trust has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity (“VIE”). The
equity interests of other investors are reflected as noncontrolling interests or redeemable noncontrolling interests. All significant
intercompany transactions and balances are eliminated in consolidation. We account for our interests in joint ventures, which
we do not control, using the equity method of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America, referred to as “GAAP,” requires management to make estimates and assumptions that in certain circumstances affect
the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These
estimates are prepared using management’s best judgment, after considering past, current and expected events and economic
conditions. Actual results could differ from these estimates.
Revenue Recognition and Accounts Receivable
Our leases with our tenants are classified as operating leases. When collection of substantially all lease payments during the
lease term is considered probable, the lease qualifies for accrual accounting. Lease payments are recognized on a straight-line
basis from the point in time when the tenant controls the space through the term of the related lease. Variable lease payments
relating to percentage rent are recognized at the end of the lease year or earlier if we have determined the required sales level is
achieved. Real estate tax and other cost reimbursements are recognized on an accrual basis over the periods in which the related
expenditures are incurred. Many of our leases contain tenant options that enable the tenant to extend the term of the lease at
expiration at pre-established rental rates that often include fixed rent increases, consumer price index adjustments or other
market rate adjustments from the prior base rent. For a tenant to terminate its lease agreement prior to the end of the agreed
term, we may require that they pay a fee to cancel the lease agreement. Lease termination fees are generally recognized on the
termination date if the tenant has relinquished control of the space. When a lease is terminated early but the tenant continues to
control the space under a modified lease agreement, the lease termination fee is generally recognized evenly over the remaining
term of the modified lease agreement. Lease concessions (unrelated to the COVID-19 pandemic) are evaluated to determine
whether the concession represents a modification of the original lease contract. Modifications generally result in a reassessment
of the lease term and lease classification, and remeasurement of lease payments received. Remeasured lease payments are
recognized on a straight-line basis over the remaining term of the modified lease contract.
F-9
In April 2020, the Financial Accounting Standards Board ("FASB") issued interpretive guidance relating to the accounting for
lease concessions provided as a result of the COVID-19 pandemic that allows entities to treat the concession as if it was a part
of the existing contract instead of applying lease modification accounting. This guidance is only applicable to the COVID-19
pandemic related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the
lessee. We have elected this option relating to qualifying rent deferral and rent abatement agreements. For qualifying lease
modifications with rent deferrals, this results in no change to our revenue recognition but an increase in the lease receivable
balance until the deferred rent has been repaid. For qualifying lease modifications that include rent abatement concessions, this
results in a direct reduction of rental income in the current period. As of December 31, 2021, we executed rent deferral
agreements related to the COVID-19 pandemic representing approximately $46 million of rent. We have subsequently collected
approximately $27 million of those amounts previously deferred. As of December 31, 2021, we have entered into rent
abatement agreements related to the COVID-19 pandemic totaling $26 million and $48 million of rents due in 2021 and 2020,
respectively.
When collection of substantially all lease payments during the lease term is not considered probable, total lease revenue is
limited to the lesser of revenue recognized under accrual accounting or cash received. Determining the probability of collection
of substantially all lease payments during a lease term requires significant judgment. This determination is impacted by
numerous factors including our assessment of the tenant’s credit worthiness, economic conditions, tenant sales productivity in
that location, historical experience with the tenant and tenants operating in the same industry, future prospects for the tenant and
the industry in which it operates, and the length of the lease term. If leases currently classified as probable are subsequently
reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off
with a corresponding decrease in rental income. If leases currently classified as not probable are subsequently changed to
probable, any lease receivables (including straight-line rent receivables) are re-instated with a corresponding increase to rental
income.
Since March 2020, federal, state, and local governments have taken various actions to mitigate the spread of COVID-19. These
actions included the closure of nonessential businesses and ordering residents to generally stay at home at the onset of the
pandemic, phased re-openings and capacity limitations, and now generally lifted restrictions. 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 are impacting the recovery. Closures and restrictions, along with the 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 were 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. As a result, we revised our collectibility assumptions for
many of our tenants most significantly impacted by COVID-19. Accordingly, during the years ended December 31, 2021 and
2020, we recognized collectibility related adjustments of $24.0 million and $106.6 million, respectively. This includes changes
in our collectibility assessments from probable to not probable, disputed rents, and any rent abatements directly related to
COVID-19, as well as the write-off of $0.7 million and $12.7 million, respectively of straight-line rent receivables related to
tenants changed to a cash basis of revenue recognition during the years ended December 31, 2021 and 2020. As of
December 31, 2021 and 2020, the revenue from approximately 34% and 35% of our tenants (based on total commercial leases),
respectively, is being recognized on a cash basis. As of December 31, 2021 and 2020, our straight-line rent receivables balance
was $110.7 million and $103.3 million, respectively, and is included in "accounts and notes receivable, net" on our consolidated
balance sheet.
Other revenue recognition policies
Sales of real estate are recognized generally upon the transfer of control, which usually occurs when the real estate is legally
sold. When we enter into a transaction to sell a property or a portion of a property, we evaluate the recognition of the sale under
ASC 610-20, "Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets." In accordance with ASC
610-20, we apply the guidance in ASC 606, "Revenue from Contracts with Customers," to determine whether and when control
transfers and how to measure the associated gain or loss. We determine the transaction price based on the consideration we
expect to receive. Variable consideration is included in the transaction price to the extent it is probable that a significant reversal
of a gain recognized will not occur. We analyze the risk of a significant gain reversal and if necessary limit the amount of
variable consideration recognized in order to mitigate this risk. The estimation of variable consideration requires us to make
assumptions and apply significant judgment.
Real Estate
Land, buildings and improvements are recorded at cost. Depreciation is computed using the straight-line method. Estimated
useful lives range generally from 35 years to a maximum of 50 years on buildings and major improvements. Minor
improvements, furniture and equipment are capitalized and depreciated over useful lives ranging from 2 to 20 years.
Maintenance and repairs that do not improve or extend the useful lives of the related assets are charged to operations as
F-10
incurred. Tenant improvements are capitalized and depreciated over the life of the related lease or their estimated useful life,
whichever is shorter. If a tenant vacates its space prior to contractual termination of its lease, the undepreciated balance of any
tenant improvements are written off if they are replaced or have no future value. In 2021, 2020 and 2019, real estate
depreciation expense was $245.1 million, $227.9 million and $215.4 million, respectively, including amounts from real estate
sold.
Our methodology of allocating the cost of acquisitions to assets acquired and liabilities assumed is based on estimated fair
values, replacement cost and/or appraised values. When we acquire operating real estate properties, the purchase price is
allocated to land, building, improvements, leasing costs, intangibles such as acquired leases, assumed debt, if any, and to
current assets and liabilities acquired, if any. The value allocated to acquired leases is amortized over the related lease term and
reflected as rental income in the consolidated statements of comprehensive income. We consider qualitative and quantitative
factors in evaluating the likelihood of a tenant exercising a below market renewal option and include such renewal options in
the calculation of acquired lease value when we consider these to be bargain renewal options. If the value of below market lease
intangibles includes renewal option periods, we include such renewal periods in the amortization period utilized. If a tenant
vacates its space prior to contractual termination of its lease, the unamortized balance of any acquired lease value is written off
to rental income.
Transaction costs related to asset acquisitions, such as broker fees, transfer taxes, legal, accounting, valuation, and other
professional and consulting fees, are capitalized as part of the acquisition cost. The acquisition of an operating shopping center
typically qualifies as an asset acquisition.
Prior to the adoption of ASU 2016-02, "Leases," when applicable, as lessee, we classified our leases of land and building as
operating or capital leases. We were required to use judgment and make estimates in determining the lease term, the estimated
economic life of the property and the interest rate to be used in determining whether or not the lease meets the qualification of a
capital lease. Subsequently, capital leases are now considered "finance leases."
We capitalize certain costs related to the development and redevelopment of real estate including pre-construction costs, real
estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved, are capitalized.
Additionally, we capitalize interest costs related to development and redevelopment activities. Capitalization of these costs
begin when the activities and related expenditures commence and cease when the project is substantially complete and ready for
its intended use at which time the project is placed in service and depreciation commences. Additionally, we make estimates as
to the probability of certain development and redevelopment projects being completed. If we determine the development or
redevelopment is no longer probable of completion, we expense all capitalized costs which are not recoverable.
Long-Lived Assets and Impairment
There are estimates and assumptions made by management in preparing the consolidated financial statements for which the
actual results will be determined over long periods of time. This includes the recoverability of long-lived assets, including our
properties that have been acquired or redeveloped and our investment in certain joint ventures. Management’s evaluation of
impairment includes review for possible indicators of impairment as well as, in certain circumstances, undiscounted and
discounted cash flow analysis. Since most of our investments in real estate are wholly-owned or controlled assets which are
held for use, a property with impairment indicators is first tested for impairment by comparing the undiscounted cash flows,
including residual value, to the current net book value of the property. If the undiscounted cash flows are less than the net book
value, the property is written down to expected fair value.
The calculation of both discounted and undiscounted cash flows requires management to make estimates of future cash flows
including revenues, operating expenses, required maintenance and development expenditures, market conditions, demand for
space by tenants and rental rates over long periods. Because our properties typically have a long life, the assumptions used to
estimate the future recoverability of book value requires significant management judgment. Actual results could be significantly
different from the estimates. These estimates have a direct impact on net income, because recording an impairment charge
results in a negative adjustment to net income.
Cash and Cash Equivalents
We define cash and cash equivalents as cash on hand, demand deposits with financial institutions and short term liquid
investments with an initial maturity, when purchased, under three months. Cash balances in individual banks may exceed the
federally insured limit by the Federal Deposit Insurance Corporation (the “FDIC”). At December 31, 2021, we had $167.3
million in excess of the FDIC insured limit.
F-11
Prepaid Expenses and Other Assets
Prepaid expenses and other assets consist primarily of lease costs, prepaid property taxes and acquired above market leases.
Capitalized lease costs are incremental direct costs incurred which were essential to originate a successful leasing arrangement
and would not have been incurred had the leasing transaction not taken place. These costs include third party commissions
related to obtaining a lease. Capitalized lease costs are amortized over the initial life of the related lease which generally ranges
from three to ten years. We view these lease costs as part of the up-front initial investment we made in order to generate a long-
term cash inflow and therefore, we classify cash outflows related to leasing costs as an investing activity in our consolidated
statements of cash flows. If a tenant vacates its space prior to the contractual termination of its lease, the unamortized balance of
any previously capitalized lease costs are written off. See the "Leases" section in this note for further discussion regarding the
change in accounting for lease costs.
Debt Issuance Costs
Costs related to the issuance of debt instruments are deferred and are amortized as interest expense over the estimated life of the
related issue using the straight-line method which approximates the effective interest method. If a debt instrument is paid off
prior to its original maturity date, the unamortized balance of debt issuance costs are written off to interest expense or, if
significant, included in “early extinguishment of debt.” Debt issuance costs related to our revolving credit facility are classified
as an asset and are included in "prepaid expenses and other assets" in our consolidated balance sheets. All other debt issuance
costs are presented as a direct deduction from the carrying amount of the debt liability.
Derivative Instruments
We may use derivative instruments to manage exposure to variable interest rate risk. We generally enter into interest rate swaps
to manage our exposure to variable interest rate risk and treasury locks to manage the risk of interest rates rising prior to the
issuance of debt. We enter into derivative instruments that qualify as cash flow hedges and do not enter into derivative
instruments for speculative purposes.
Interest rate swaps associated with cash flow hedges are recorded at fair value on a recurring basis. Effectiveness of cash flow
hedges is assessed both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate
swaps associated with cash flow hedges is recorded in other comprehensive income (loss) which is included in accumulated
other comprehensive income (loss) on the balance sheet and statement of shareholders' equity. Cash flow hedges become
ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts,
settlement dates, reset dates, calculation period and LIBOR rate. In addition, the default risk of the counterparty is evaluated 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.
At December 31, 2021, we have two interest rate swap agreements that effectively fix the interest rate on a mortgage payable
associated with our Hoboken property at 3.67%. Both swaps were designated and qualify for cash flow hedge accounting. As of
December 31, 2021, our Assembly Row hotel joint venture is a party to two interest rate swap agreements that effectively fix
the interest rate on the joint venture's mortgage debt at 5.206%. Both swaps were designated and qualify as cash flow hedges.
Hedge ineffectiveness has not impacted earnings in 2021, 2020 and 2019.
Mortgage Notes Receivable
We have invested in certain mortgage loans that, because of their nature, qualify as loan receivables. At the time of investment,
we did not intend for the arrangement to be anything other than a financing and did not contemplate a real estate investment.
We evaluate each investment to determine whether the loan arrangement qualifies as a loan, joint venture or real estate
investment and the appropriate accounting thereon. Such determination affects our balance sheet classification of these
investments and the recognition of interest income derived therefrom.
Mortgage notes receivable are recorded at cost, net of any valuation adjustments. Effective January 1, 2020, (upon the adoption
of ASU 2016-13, "Financial Instruments - Credit Losses," as amended and interpreted), we account for mortgage notes
receivable using the "expected credit loss" model, and accordingly impairment losses are estimated and recorded for the entire
life of the loan. Prior to the implementation of ASC 326, we recognized impairment losses as incurred. Interest income is
accrued as earned. Mortgage notes receivable are considered past due based on the contractual terms of the note agreement. On
a quarterly basis, we evaluate the collectability of each mortgage note receivable and update our expected credit loss model
based on various factors which may include payment history, expected fair value of the collateral securing the loan, internal and
external credit information and/or economic trends. A loan is considered impaired when it is probable that we will be unable to
collect all amounts due under the existing contractual terms. When a loan is considered impaired, the amount of the loss accrual
F-12
is calculated by comparing the carrying amount of the mortgage note receivable to the present value of expected future cash
flows. As our loans are collateralized by mortgages, these loans have risk characteristics similar to the risks in owning
commercial real estate.
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. At December 31, 2021, we had three mortgage notes receivable with an aggregate carrying amount, net of valuation
adjustments of $9.5 million, and a weighted average interest rate of 10.9%.
Share Based Compensation
We grant share based compensation awards to employees and trustees typically in the form of restricted common shares,
common shares, and options. We measure share based compensation expense based on the grant date fair value of the award
and recognize the expense ratably over the requisite service period, which is typically the vesting period. See Note 12 for
further discussion regarding our share based compensation plans and policies.
Variable Interest Entities
Certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated
financial support from other parties or in which equity investors do not have the characteristics of a controlling financial interest
qualify as VIEs. VIEs are required to be consolidated by their primary beneficiary. The primary beneficiary of a VIE has both
the power to direct the activities that most significantly impact economic performance of the VIE and the obligation to absorb
losses or the right to receive benefits that could potentially be significant to the VIE.
On January 4, 2021, we acquired our partner's interest in the Pike & Rose hotel joint venture, which was previously considered
a variable interest in a VIE. See Note 3 for additional details of this transaction. Our equity method investments in the
Assembly Row hotel joint venture and the La Alameda shopping center and our mortgage notes receivable are considered
variable interests in a VIE. As we do not control the activities that most significantly impact the economic performance of the
joint ventures related to the Assembly Row hotel, the La Alameda shopping center, or the borrower entities related to our
mortgage notes receivable, we are not the primary beneficiary and do not consolidate. As of December 31, 2021 and 2020, our
investment in the Assembly Row hotel and La Alameda shopping center joint ventures and maximum exposure to loss was $8.9
million and $9.9 million, respectively, and $8.8 million for our Pike & Rose hotel joint venture as of December 31, 2020. As of
December 31, 2021 and 2020, our investment in mortgage notes receivable and maximum exposure to loss was $9.5 million
and $39.9 million, respectively.
In addition, we have 21 entities that meet the criteria of a VIE in which we hold a variable interest. For each of these entities,
we control the significant operating decisions and consequently have the power to direct the activities that most significantly
impact the economic performance of the entities. As we also have the obligation to absorb the majority of the losses and/or the
right to receive a majority of the benefits for each of these entities, all are consolidated in our financial statements. Net real
estate assets related to VIEs included in our consolidated balance sheets were approximately $1.8 billion and $1.4 billion as of
December 31, 2021 and 2020, respectively, and mortgages related to VIEs included in our consolidated balance sheets were
approximately $335.3 million and $413.7 million, as of December 31, 2021 and 2020, respectively.
Redeemable Noncontrolling Interests
We have certain noncontrolling interests that are redeemable for cash upon the occurrence of an event that is not solely in our
control and therefore are classified outside of permanent equity. We adjust the carrying amounts of these noncontrolling
interests that are currently redeemable to redemption value at the balance sheet date. Adjustments to the carrying amount to
reflect changes in redemption value are recorded as adjustments to additional paid-in capital in shareholders' equity. These
amounts are classified within the mezzanine section of the consolidated balance sheets.
F-13
The following table provides a rollforward of the redeemable noncontrolling interests:
Year Ended
December 31,
2021
2020
(In thousands)
Beginning balance.............................................................................................................................. $
137,720
$
139,758
Contributions .................................................................................................................................
Net income.....................................................................................................................................
Other comprehensive income (loss) - change in value of interest rate swaps ...............................
Distributions & redemptions..........................................................................................................
Change in redemption value ..........................................................................................................
74,530
4,296
320
(5,268)
2,110
19,335
2,228
(471)
(1,197)
(21,933)
Ending balance ................................................................................................................................... $
213,708
$
137,720
Leases
We adopted ASC 842 effective January 1, 2019 under the modified retrospective approach and elected the optional transition
method to apply the provisions of ASC 842 as of the adoption date, rather than the earliest period presented. We elected to
apply certain adoption related practical expedients for all leases that commenced prior to the election date. These practical
expedients included not reassessing whether any expired or existing contracts were or contained leases; not reassessing the lease
classification for any expired or existing leases; and not reassessing initial direct costs for any existing leases. We also elected
the practical expedient for lessors to combine our lease and non-lease components (primarily impacts common area
maintenance recoveries).
Lessor
We recorded a charge to the opening accumulated dividends in excess of net income of $7.1 million in 2019 as a result of the
adoption of ASC 842. This charge was attributable to the write off certain direct leasing costs recorded under the previous lease
accounting rules for leases which had not commenced as well as the write off of unreserved receivables (including straight-line
receivables) for leases where we had determined the collection of substantially all the lease payments required for the term is
not probable.
Lessee
We have ground leases at 12 properties which are accounted for as operating leases. The operating lease right of use ("ROU")
assets and related liabilities are shown separately on the face of our consolidated balance sheet and reflect the present value of
the minimum lease payments. A key input in the calculation is the discount rate. As the rate implied in the lease agreements is
not readily determinable, we utilize our incremental borrowing rate that correspond to the remaining term of the lease, our
credit spread, and and adjustment to reflect the collateralized payment terms present in the lease. Our operating lease
agreements may include options to extend the lease term or terminate it early. We include options to extend or terminate leases
in the ROU operating lease asset and liability when it is reasonably certain we will exercise these options. Operating lease
expense is recognized on a straight-line basis over the non-cancellable lease term and is included in rental expenses in our
consolidated statements of operations. We elected to apply the short-term lease exemption within ASC 842, and as such we
have not recorded an ROU asset or lease liability for leases with terms of less than 12 months.
Income Taxes
We operate in a manner intended to enable us to qualify as a REIT for federal income tax purposes. A REIT that distributes at
least 90% of its taxable income to its shareholders each year and meets certain other conditions is not taxed on that portion of its
taxable income which is distributed to its shareholders. Therefore, federal income taxes on our taxable income have been and
are generally expected to be immaterial. We are obligated to pay state taxes, generally consisting of franchise or gross receipts
taxes in certain states. Such state taxes also have not been material.
We have elected to treat certain of our subsidiaries as taxable REIT subsidiaries, which we refer to as a TRS. In general, a TRS
may engage in any real estate business and certain non-real estate businesses, subject to certain limitations under the Internal
Revenue Code of 1986, as amended (the “Code”). A TRS is subject to federal and state income taxes. Our TRS activities have
not been material.
F-14
With few exceptions, we are no longer subject to U.S. federal, state, and local tax examinations by tax authorities for years
before 2017. As of December 31, 2021 and 2020, we had no material unrecognized tax benefits. While we currently have no
material unrecognized tax benefits, as a policy, we recognize penalties and interest accrued related to unrecognized tax benefits
as income tax expense.
Segment Information
Our primary business is the ownership, management, and redevelopment of retail and mixed-use properties. We review
operating and financial information for each property on an individual basis and therefore, each property represents an
individual operating segment. We evaluate financial performance using property operating income, which consists of rental
income, and mortgage interest income, less rental expenses and real estate taxes. No individual commercial or residential
property constitutes more than 10% of our revenues or property operating income and we have no operations outside of the
United States of America. Therefore, we have aggregated our properties into one reportable segment as the properties share
similar long-term economic characteristics and have other similarities including the fact that they are operated using consistent
business strategies, are typically located in major metropolitan areas, and have similar tenant mixes.
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. See Note 8 to the consolidated financial statements for details of our 2021 forward
sales transactions.
F-15
Recent Accounting Pronouncements
Issued in 2021:
ASU 2021-05, July 2021,
Lessors - Certain Leases with
Variable Lease Payments
(Topic 842)
Issued in 2020:
ASU 2020-04, March 2020,
Reference Rate Reform (Topic
848)
ASU 2020-06, August 2020,
Debt - Debt with Conversion
and Other Options (Subtopic
470-20) and Derivatives and
Hedging - Contracts in Entity's
Own Equity (Subtopic 815-40):
Accounting for Convertible
Instruments and Contracts in
an Entity's Own Equity
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.
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.
This ASU simplifies the accounting for convertible
instruments by removing the requirements to separately
present certain conversion features in equity,
simplifying the settlement assessment that entities are
required to perform to determine whether a contract
qualifies for equity classification, and generally
requiring the use of the if-converted method for all
convertible instruments in the diluted EPS calculation
and include the effect of potential share settlement (if
the effect is more dilutive). The guidance is effective for
annual period beginning after December 15, 2021, and
interim periods therein.
The adoption of this standard does not have an
impact to our consolidated financial
statements.
We are still evaluating the impact of reference
rate reform and whether we will apply any of
these practical expedients.
The adoption of this standard does not have an
impact to our consolidated financial
statements.
Consolidated Statements of Cash Flows—Supplemental Disclosures
The following table provides supplemental disclosures related to the Consolidated Statements of Cash Flows:
F-16
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred
Interest capitalized
Interest expense
Cash paid for interest, net of amounts capitalized
Cash paid for income taxes
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
DownREIT operating partnership units issued with acquisition
Mortgage loans assumed with acquisition (1)
DownREIT operating partnership units redeemed for common shares
Settlement of partner loan receivable via dilution of partner interests
Shares issued under dividend reinvestment plan
Year Ended December 31,
2021
2020
2019
(In thousands)
$
$
$
$
$
$
$
$
$
150,324
(22,626)
127,698
123,585
386
$
$
$
$
— $
— $
7,545
$
— $
159,718
(23,429)
136,289
130,248
580
18,920
8,903
$
$
$
$
$
$
— $
— $
1,727
$
1,734
$
130,110
(20,487)
109,623
106,180
483
—
98,041
14,105
5,379
1,784
(1) See our Annual Report on Form 10-K for the year ended December 31, 2020 for additional disclosures relating to the
mortgages entered into and assumed as a result of the Hoboken acquisition.
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents ....................................................................................................... $
Restricted cash (1) ...................................................................................................................
Total cash, cash equivalents, and restricted cash..................................................................... $
162,132
13,031
175,163
$
$
798,329
18,567
816,896
(1) Restricted cash balances are included in "prepaid expenses and other assets" on our consolidated balance sheets.
December 31,
2021
2020
(In thousands)
NOTE 3—REAL ESTATE
2021 Property Acquisitions
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.
During the year ended December 31, 2021, we acquired the following properties:
Date Acquired
Property
City/State
April 30, 2021
Chesterbrook (1)
McLean, Virginia
June 1, 2021
June 14, 2021
June 14, 2021
Grossmont Center (1)
La Mesa, California
Camelback Colonnade (1)
Phoenix, Arizona
Hilton Village (1)
Scottsdale, Arizona
September 2, 2021
Twinbrooke Shopping Centre Fairfax, Virginia
Gross
Leasable Area
(GLA)
(in square feet)
90,000
933,000
642,000
93,000
106,000
Ownership
%
Gross Value
(in millions)
80 % $
60 % $
98 % $
98 % $
100 % $
32.1 (2)
175.0 (3)
162.5 (4)
37.5 (5)
33.8 (6)
(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.
F-17
(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."
(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."
(6) Approximately $1.2 million and $0.3 million of net assets acquired were allocated to other assets for "acquired lease costs"
and "above market leases," respectively, and $2.7 million of net assets acquired were allocated to other liabilities for
"below market leases."
2021 Property Dispositions
During the year ended December 31, 2021, we sold two properties and a portion of three properties for a total sales price of
$141.6 million, which resulted in a net gain of $88.3 million.
2020 Property Acquisitions
Date Acquired
Property
City/State
January 10, 2020
February 12, 2020
Fairfax Junction
Hoboken (2 mixed-use buildings)
Fairfax, Virginia
Hoboken, New Jersey
Gross
Leasable
Area (GLA)
(in square feet)
49,000
12,000
Purchase Price
(in millions)
$
$
22.3 (1)
14.3 (2)
(1) This property is adjacent to, and is operated as part of the property acquired in 2019. The purchase price was paid with a
combination of cash and the issuance of 163,322 downREIT operating partnership units. Approximately $0.5 million and
$0.4 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below
market leases," respectively.
(2) The purchase price includes the assumption of $8.9 million of mortgage debt, and is in addition to the 37 buildings
previously acquired in 2019, and was completed through the same joint venture. Less than $0.1 million and approximately
$3.3 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below
market leases," respectively.
2020 Impairment
On September 1, 2020, the $60.6 million non-recourse mortgage loan on The Shops at Sunset Place matured. The mortgage was
not repaid, and thus the lender declared the loan in default. We evaluated our long-term plans for the property, taking into
account current market conditions and prospective development and redevelopment returns, as well as the impact of COVID-19
on the revenue prospects for the property, and concluded we did not expect to move forward with the planned redevelopment or
repay the mortgage balance, and thus, did not expect to be long term holders of the asset. Given these expectations, we recorded
an impairment charge of $57.2 million during the third quarter of 2020.
The fair value estimate used to determine the impairment charge was determined by market comparable data and discounted
cash flow analyses. The cash flows utilized in such analyses are comprised of unobservable inputs which include forecasted
rental revenue and expenses based upon market conditions and future expectations. The capitalization rates and discount rates
utilized in such analyses are based upon unobservable rates that we believe to be within a reasonable range of current market
rates for the property. Based on these inputs, we have determined that the $57 million estimated valuation of the property is
classified within Level 3 of the fair value hierarchy.
On December 31, 2020, we sold The Shops at Sunset Place for $65.5 million and repaid the mortgage loan. The resulting gain
of $9.2 million is included in the cumulative 2020 gain of $98.1 million noted in the 2020 Property Dispositions section below.
F-18
2020 Property Dispositions
During the year ended December 31, 2020, we sold three properties (including The Shops at Sunset Place discussed above) and
one building for a total sales price of $186.1 million, which resulted in a net gain of $98.1 million.
During the year ended December 31, 2020, we closed on the sale of the remaining two condominium units at our Pike & Rose
property, receiving proceeds net of closing costs of $2.1 million.
NOTE 4—ACQUIRED LEASES
Acquired lease assets comprise of above market leases where we are the lessor and below market leases where we are the
lessee. Acquired lease liabilities comprise of below market leases where we are the lessor and above market leases where we
are the lessee. As a lessor, acquired above market leases are included in prepaid expenses and other assets, and acquired below
market leases are included in other liabilities and deferred credits. In accordance with our adoption of ASC Topic 842, acquired
below market leases and acquired above market leases where we are the lessee are included in right of use assets. The following
is a summary of our acquired lease assets and liabilities:
Above market leases, lessor
Below market leases, lessee
Total
Below market leases, lessor
Above market leases, lessee
Total
December 31, 2021
December 31, 2020
Cost
Accumulated
Amortization
Cost
Accumulated
Amortization
$
$
$
$
46,951
34,604
81,555
$
$
(230,059) $
(10,347)
(240,406) $
(in thousands)
(33,617) $
(5,019)
(38,636) $
78,327
2,654
80,981
$
$
43,560
34,604
78,164
$
$
(174,582) $
(9,084)
(183,666) $
(31,661)
(4,190)
(35,851)
68,286
2,116
70,402
The value allocated to acquired leases where we are the lessor is amortized over the related lease term and reflected as
additional rental income for below market leases or a reduction of rental income for above market leases in the consolidated
statements of comprehensive income. The related amortization of acquired leases where we are the lessee is reflected as
additional rental expense for below market leases or a reduction of rental expenses for above market leases in the consolidated
statements of comprehensive income. The following is a summary of acquired lease amortization:
Amortization of above market leases, lessor
Amortization of below market leases, lessor
Net increase in rental income
Amortization of below market leases, lessee
Amortization of above market leases, lessee
Net increase in rental expense
Year Ended December 31,
2021
2020
(in thousands)
2019
$
$
$
$
(3,150) $
11,897
8,747
$
828
(538)
290
$
$
(4,060) $
8,406
4,346
$
828
(525)
303
$
$
(3,239)
9,623
6,384
828
(525)
303
The following is a summary of the remaining weighted average amortization period for our acquired lease assets and acquired
lease liabilities:
Above market leases, lessor
Below market leases, lessee
Below market leases, lessor
Above market leases, lessee
December 31, 2021
3.2 years
37.6 years
18.1 years
17.6 years
The amortization for acquired leases during the next five years and thereafter, assuming no early lease terminations, is as
follows:
F-19
Year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Acquired Lease
Assets
Acquired Lease
Liabilities
(In thousands)
$
$
3,674
3,446
3,139
2,126
1,931
28,603
42,919
$
$
13,541
12,962
12,450
8,984
8,622
102,866
159,425
F-20
NOTE 5—DEBT
The following is a summary of our total debt outstanding as of December 31, 2021 and 2020:
Description of Debt
Mortgages payable
Sylmar Towne Center
Plaza Del Sol
THE AVENUE at White Marsh
Montrose Crossing
Azalea
Bell Gardens
Plaza El Segundo
The Grove at Shrewsbury (East)
Brook 35
Hoboken (24 Buildings) (1)
Various Hoboken (14 Buildings)
Chelsea
Hoboken (1 Building) (3)
Subtotal
Net unamortized debt issuance costs and
premium
Total mortgages payable, net
Notes payable
Revolving credit facility
Term loan
Various
Subtotal
Net unamortized debt issuance costs
Total notes payable, net
Senior notes and debentures
2.75% notes
3.95% notes
1.25% notes
7.48% debentures
3.25% notes
6.82% medium term notes
3.20% notes
3.50% notes
4.50% notes
3.625% notes
Subtotal
Principal Balance as of
December 31,
2021
2020
Stated Interest
Rate as of
December 31, 2021
Stated Maturity Date
as of
December 31, 2021
$
(Dollars in thousands)
— $
—
—
—
40,000
12,127
125,000
43,600
11,500
56,450
31,817
4,851
16,234
341,579
16,236
8,041
52,705
65,596
40,000
12,408
125,000
43,600
11,500
56,450
32,705
5,234
16,560
486,035
(1,586)
339,993
(1,924)
484,111
5.39 %
5.23 %
3.35 %
4.20 %
3.73 %
4.06 %
3.83 %
3.77 %
4.65 %
LIBOR + 1.95%
June 6, 2021
December 1, 2021
January 1, 2022
January 10, 2022
November 1, 2025
August 1, 2026
June 5, 2027
September 1, 2027
July 1, 2029
December 15, 2029
Various (2) Various through 2029
January 15, 2031
July 1, 2042
5.36 %
3.75 %
—
300,000
2,635
302,635
(1,169)
301,466
275,000
600,000
400,000
29,200
475,000
40,000
400,000
400,000
550,000
250,000
3,419,200
— LIBOR + 0.775%
LIBOR + 0.80%
January 19, 2024
April 16, 2024
11.31 % Various through 2028
400,000
3,270
403,270
(494)
402,776
275,000
600,000
400,000
29,200
475,000
40,000
400,000
400,000
550,000
250,000
3,419,200
2.75 %
3.95 %
1.25 %
7.48 %
3.25 %
6.82 %
3.20 %
3.50 %
4.50 %
3.625 %
June 1, 2023
January 15, 2024
February 15, 2026
August 15, 2026
July 15, 2027
August 1, 2027
June 15, 2029
June 1, 2030
December 1, 2044
August 1, 2046
Net unamortized debt issuance costs and
premium
Total senior notes and debentures
Total debt
_____________________
(13,112)
3,406,088
(14,712)
3,404,488
$ 4,047,547
$ 4,291,375
1)
2)
3)
On November 26, 2019, we entered into two interest rate swap agreements that fix the interest rate on the mortgage
loan at 3.67%.
The interest rates on these mortgages range from 3.91% to 5.00%.
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.
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.
F-21
In 2021, we repaid the following mortgage loans, at par, prior to their original maturity date:
Property
Sylmar Towne Center
Plaza Del Sol
Montrose Crossing
The AVENUE at White Marsh
Repayment Date
Principal
(in millions)
February 5, 2021
$
September 1, 2021 $
October 12, 2021
$
November 2, 2021 $
16.2
7.9
64.1
52.7
During 2021, 2020 and 2019, the maximum amount of borrowings outstanding under our revolving credit facility was $150.0
million, $990.0 million and $116.5 million, respectively. The weighted average amount of borrowings outstanding was $19.6
million, $138.5 million and $26.8 million, respectively, and the weighted average interest rate, before amortization of debt fees,
was 0.9%, 1.5% and 3.2%, respectively. The revolving credit facility requires an annual facility fee of $1.0 million. At
December 31, 2021 and December 31, 2020, our revolving credit facility had no balance outstanding.
Our revolving credit facility, term loan, and certain notes require us to comply with various financial covenants, including the
maintenance of minimum shareholders’ equity and debt coverage ratios and a maximum ratio of debt to net worth. As of
December 31, 2021, we were in compliance with all default related debt covenants.
Scheduled principal payments on mortgages payable, notes payable, senior notes and debentures as of December 31, 2021 are
as follows:
Year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Mortgages
Payable
Notes
Payable
Senior Notes and
Debentures
Total
Principal
$
$
3,351
3,549
3,688
48,033
26,657
256,301
341,579
(In thousands)
$
744
758
300,659 (1)(2)
383
54
37
$
— $
275,000
600,000
—
429,200
2,115,000
4,095
279,307
904,347
48,416
455,911
2,371,338
$
302,635
$
3,419,200
$
4,063,414
(3)
_____________________
(1) Our $300.0 million term loan matures on April 16, 2024 plus two one-year extensions, at our option.
(2) Our $1.0 billion revolving credit facility matures on January 19, 2024, plus two six-month extensions at our option. As
of December 31, 2021, there was no balance outstanding under this credit facility.
(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 December 31,
2021.
NOTE 6—FAIR VALUE OF FINANCIAL INSTRUMENTS
A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an
orderly transaction. The hierarchy for inputs used in measuring fair value are as follows:
1.
2.
3.
Level 1 Inputs—quoted prices in active markets for identical assets or liabilities
Level 2 Inputs—observable inputs other than quoted prices in active markets for identical assets and liabilities
Level 3 Inputs—prices or valuation techniques that require inputs that are both significant to the fair value
measurement and unobservable
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for
disclosure purposes, the level within which the fair value measurement is categorized is based on the lowest level input that is
significant to the fair value measurement.
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
F-22
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:
December 31, 2021
December 31, 2020
Carrying
Value
Fair Value
Carrying
Value
Fair Value
(In thousands)
Mortgages and notes payable....................................................... $
641,459
Senior notes and debentures......................................................... $ 3,406,088
$
655,864
$
886,887
$
879,390
$ 3,649,776
$ 3,404,488
$ 3,761,465
As of December 31, 2021, we have two interest rate swap agreements with notional amounts of $56.5 million that are measured
at fair value on a recurring basis. The interest rate swap agreements fix the interest rate on $56.5 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 December 31, 2021 was a liability of $1.5 million and
is included in "other liabilities and deferred credits" on our consolidated balance sheet. During 2021, the value of our interest
rate swaps increased $3.2 million (including $0.9 million reclassified from other comprehensive income to interest expense). A
summary of our financial liabilities that are measured at fair value on a recurring basis, by level within the fair value hierarchy
is as follows:
December 31, 2021
December 31, 2020
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
(In thousands)
Interest rate swaps .................... $
— $ (1,511) $
— $ (1,511) $
— $ (4,711) $
— $
(4,711)
One of our equity method investees has two interest rate swaps which qualify as cash flow hedges. At December 31, 2021 and
December 31, 2020, our share of the change in fair value of the related swaps included in "accumulated other comprehensive
loss" was an increase of $0.7 million and a decrease of $0.5 million, respectively.
NOTE 7—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.
We are self-insured for general liability costs up to predetermined retained amounts per claim, and we believe that we maintain
adequate accruals to cover our retained liability. We currently do not maintain third party stop-loss insurance policies to cover
liability costs in excess of predetermined retained amounts. Our accrual for self-insurance liability is determined by
management and is based on claims filed and an estimate of claims incurred but not yet reported. Management considers a
number of factors, including third-party actuarial analysis, previous experience in our portfolio, and future increases in costs of
claims, when making these determinations. If our liability costs exceed these accruals, it will reduce our net income.
We reserve for estimated losses, if any, associated with warranties given to a buyer at the time real estate is sold or other
potential liabilities relating to that sale, taking any insurance policies into account. These warranties may extend up to ten years
and require significant judgment. If changes in facts and circumstances indicate that warranty reserves are understated, we will
F-23
accrue additional reserves at such time a liability has been incurred and the costs can be reasonably estimated. Warranty
reserves are released once the legal liability period has expired or all related work has been substantially completed.
On December 11, 2019, we received proceeds related to the sale under the threat of condemnation at San Antonio Center as
discussed in our Annual Report on Form 10-K for the year ended December 31, 2019. We have indemnified the condemning
authority for all costs incurred related to the condemnation proceedings including any payments required to tenants at the
property and expect the process will take several years to complete. During 2021, we did not incur any payments, and
consequently, at December 31, 2021, our liability remains $32.6 million to reflect our estimate of the remaining consideration.
At December 31, 2021 and 2020, our reserves for general liability costs were $5.2 million and $4.6 million, respectively, and
are included in “accounts payable and accrued expenses” in our consolidated balance sheets. Any potential losses which exceed
our estimates would result in a decrease in our net income. During 2021 and 2020, we made payments from these reserves of
$1.5 million and $0.8 million, respectively. Although we consider the reserve to be adequate, there can be no assurance that the
reserve will prove to be adequate over-time to cover losses due to the difference between the assumptions used to estimate the
reserve and actual losses.
At December 31, 2021, we had letters of credit outstanding of approximately $4.8 million.
As of December 31, 2021 in connection with capital improvement, development, and redevelopment projects, the Trust has
contractual obligations of approximately $319.2 million.
We are obligated under operating lease agreements on several shopping centers and one office lease requiring minimum annual
payments as follows, as of December 31, 2021:
Year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Total future minimum operating lease payments
Less amount representing interest
Operating lease liabilities
(In thousands)
$
$
5,191
5,278
5,455
5,326
4,831
177,395
203,476
(130,815)
72,661
Future minimum lease payments and their present value for properties under finance leases as of December 31, 2021, are as
follows:
Year ending December 31,
2022
2023
2024
2025
2026
Thereafter
Total future minimum finance lease payments
Less amount representing interest
Finance lease liabilities
F-24
(In thousands)
$
$
5,810
60,013
1,013
1,013
1,013
79,824
148,686
(76,654)
72,032
A master lease for Mercer Mall includes a fixed purchase price option for $55 million in 2023. If we fail to exercise our
purchase option, the owner of Mercer Mall has a put option which would require us to purchase Mercer Mall for $60 million in
2025.
Under the terms of the Congressional Plaza partnership agreement, a minority partner has the right to require us and the other
minority partner to purchase its 26.63% interest in Congressional Plaza at the interest’s then-current fair market value. If the
other minority partner defaults in their obligation, we must purchase the full interest. Based on management’s current estimate
of fair market value as of December 31, 2021, our estimated maximum liability upon exercise of the put option would range
from approximately $67 million to $71 million.
A master lease for Melville Mall, as amended on October 14, 2021, includes a fixed price put option at any time prior to June
30, 2025, requiring us to purchase Melville Mall for approximately $3.6 million. Additionally, we have the right to purchase
Melville Mall in 2026 for approximately $3.6 million. The consideration is net of a contract amendment fee to be paid by the
landlord.
Two of the members in Plaza El Segundo have the right to require us to purchase their 10.0% and 11.8% ownership interests at
the interests' then-current fair market value. If the members fail to exercise their put options, we have the right to purchase each
of their interests on or after December 30, 2026 at fair market value. Based on management’s current estimate of fair market
value as of December 31, 2021, our estimated maximum liability upon exercise of the put option would range from
approximately $25 million to $28 million.
The other member in The Grove at Shrewsbury and Brook 35 has the right to require us to purchase all of its approximately
4.1% interest in The Grove at Shrewsbury and approximately 6.5% interest in Brook 35 at the interests' then-current fair market
value. Based on management's current estimate of fair market value as of December 31, 2021, our estimated maximum liability
upon exercise of the put option would range from $6 million to $7 million.
Effective September 18, 2023, the other member in Hoboken has the right to require us to purchase all of its 10.0% ownership
interest at the interest's then-current fair market value. Based on management's current estimate of fair market value as of
December 31, 2021, our estimated maximum liability upon exercise of the put option would range from $9 million to $10
million.
Effective June 14, 2026, the other member in Cambelback Colonnade and Hilton Village has the right to require us to purchase
all of its 2.0% ownership interest at the interest's then-current fair market value. Based on management's current estimate of fair
value as of December 31, 2021, our estimated maximum liability upon exercise of the put option would range from $4 million
to $5 million.
Effective June 1, 2029, the other member in Grossmont Center has the right to require us to purchase all of its 40.0% ownership
interest at the interest's then-current fair market value. Based on management's current estimate of fair value as of December 31,
2021, our estimated maximum liability upon exercise of the put option would range from $68 million to $73 million.
Under the terms of certain partnership agreements, the partners have the right to exchange their operating partnership units for
cash or the same number of our common shares, at our option. A total of 666,831 downREIT operating partnership units are
outstanding which have a total fair value of $90.9 million, based on our closing stock price on December 31, 2021.
NOTE 8—SHAREHOLDERS’ EQUITY
We have a Dividend Reinvestment Plan (the “Plan”), whereby shareholders may use their dividends and optional cash
payments to purchase shares. In 2021, 2020 and 2019, 19,758 shares, 24,491 shares, and 15,909 shares, respectively, were
issued under the Plan.
As of December 31, 2021, 2020, and 2019, we had 6,000,000 Depositary Shares outstanding, each representing 1/1000th
interest of 5.0% Series C Cumulative Redeemable Preferred Share, par value $0.01 per share ("Series C Preferred Shares"), at
the liquidation preference of $25.00 per depositary share (or $25,000 per Series C Preferred share). The Series C Preferred
Shares accrue dividends at a rate of 5.0% of the $25,000 liquidation preference per year and are redeemable at our option on or
after September 29, 2022. Additionally, they are not convertible and holders of these shares generally have no voting rights,
unless we fail to pay dividends for six or more quarters.
As of December 31, 2021, 2020, and 2019, we had 399,896 shares of 5.417% Series 1 Cumulative Convertible Preferred Shares
(“Series 1 Preferred Shares”) outstanding that have a liquidation preference of $25 per share and par value $0.01 per share. The
Series 1 Preferred Shares accrue dividends at a rate of 5.417% per year and are convertible at any time by the holders to our
common shares at a conversion rate of $104.69 per share. The Series 1 Preferred Shares are also convertible under certain
circumstances at our election. The holders of the Series 1 Preferred Shares have no voting rights.
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. On
F-25
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 year ended December 31, 2021, we issued 847,471 common shares at a weighted average price per share of $104.19 for
net cash proceeds of $87.0 million including paying $0.9 million in commissions and $0.4 million in additional offering
expenses related to the sales of these common shares. For the year ended December 31, 2020, we issued 1,080,804 common
shares at a weighted average price per share of $92.51 for net cash proceeds of $98.8 million and paid $1.0 million in
commissions and $0.1 million in additional offering expenses related to the sales of these common shares.
We also entered into forward sales contracts for the year ended December 31, 2021 for 2,999,955 common shares under our
ATM equity program at a weighted average offering price of $120.22. During 2021, we settled a portion of the forward sales
agreements entered into during the year by issuing 796,300 common shares for net proceeds of $85.7 million.
The forward price that we will receive upon physical settlement of the remaining forward sale 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) the forward
purchasers' stock borrowing costs and (iv) scheduled dividends during the term of the forward sale agreements. The remaining
open forward shares may be settled at any time on or before multiple required settlement dates ranging from June 2022 to
December 2022. As of December 31, 2021, we had the capacity to issue up to $175.0 million in common shares under our
ATM equity program.
NOTE 9—DIVIDENDS
The following table provides a summary of dividends declared and paid per share:
Year Ended December 31,
2021
2020
2019
Declared
Common shares...................................................................... $ 4.260
5.417% Series 1 Cumulative Convertible Preferred shares ... $ 1.354
5.0% Series C Cumulative Redeemable Preferred shares (1) $ 1.250
Paid
Declared
Paid
Declared
Paid
$ 4.250
$ 4.220
$ 4.210
$ 4.140
$ 4.110
$ 1.354
$ 1.354
$ 1.354
$ 1.354
$ 1.354
$ 1.250
$ 1.250
$ 1.250
$ 1.250
$ 1.250
(1) Amount represents dividends per depositary share, each representing 1/1000th of a share.
A summary of the income tax status of dividends per share paid is as follows:
Common shares
Ordinary dividend
Capital gain
Return of capital
5.417% Series 1 Cumulative Convertible Preferred shares
Ordinary dividend
Capital gain
5.0% Series C Cumulative Redeemable Preferred shares
Ordinary dividend
Capital gain
Year Ended December 31,
2021
2020
2019
$
$
$
$
$
$
3.358
0.680
0.212
4.250
1.124
0.230
1.354
1.038
0.212
1.250
$
$
$
$
$
$
3.452
—
0.758
4.210
1.354
—
1.354
1.250
—
1.250
$
$
$
$
$
4.110
—
—
4.110
1.354
—
1.354
1.250
—
1.250
On November 4, 2021, the Trustees declared a quarterly cash dividend of $1.07 per common share, payable January 18, 2022 to
common shareholders of record on January 3, 2022.
F-26
NOTE 10— LEASES
At December 31, 2021, our 104 predominantly retail shopping center and mixed-use properties are located in 12 states and the
District of Columbia. There are approximately 3,100 commercial leases and 3,000 residential leases. Our commercial tenants
range from sole proprietorships to national retailers and corporations. At December 31, 2021, no one tenant or corporate group
of tenants accounted for more than 2.7% of annualized base rent.
Our leases with commercial property and residential tenants are classified as operating leases. Commercial property leases
generally range from three to ten years (certain leases with anchor tenants may be longer), and in addition to minimum rents,
may provide for percentage rents based on the tenant’s level of sales achieved and cost recoveries for the tenant’s share of
certain operating costs. Leases on apartments are generally for a period of 1 year or less.
As of December 31, 2021, future minimum rentals from noncancelable commercial operating leases (excluding both tenant
reimbursements of operating expenses and percentage rent based on tenants' sales) are as follows:
Year ending December 31,
2022
2023
2024
2025
2026
Thereafter
(In thousands)
$
634,134
596,004
531,652
447,549
376,692
1,675,278
$ 4,261,309
The following table provides additional information on our operating and finance leases where we are the lessee:
LEASE COST:
Finance lease cost:
Amortization of right-of-use assets
Interest on lease liabilities
Operating lease cost
Variable lease cost
Total lease cost
OTHER INFORMATION:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for finance leases
Operating cash flows for operating leases
Financing cash flows for finance leases
Weighted-average remaining term - finance leases
Weighted-average remaining term - operating leases
Weighted-average discount rate - finance leases
Weighted-average discount rate - operating leases
ROU assets obtained in exchange for operating lease liabilities
2021
Year Ended December 31,
2020
(In thousands)
2019
$
$
$
$
$
1,284 $
5,828
5,687
246
13,045 $
1,284
5,826
5,946
353
13,409
5,723 $
5,288 $
51 $
5,736
5,498
46
$
$
$
$
$
1,284
5,824
6,063
487
13,658
5,759
5,561
47
December 31,
2021
16.3 years
52.8 years
8.0 %
4.5 %
$
10,341
$
2020
17.3 years
53.4 years
8.0 %
4.4 %
855
F-27
NOTE 11—COMPONENTS OF RENTAL EXPENSES
The principal components of rental expenses are as follows:
Repairs and maintenance
Utilities
Management fees and costs
Payroll
Insurance
Marketing
Ground rent
Other operating (1)
Total rental expenses
_____________________
Year Ended December 31,
2021
2020
2019
$
$
78,028
27,808
24,919
18,341
14,406
7,481
4,571
22,567
198,121
(In thousands)
66,845
$
25,065
23,752
16,691
12,439
6,432
4,595
15,101
170,920
$
$
$
73,179
27,729
24,930
16,485
9,036
7,427
4,803
24,242
187,831
(1) Other operating for the year ended December 31, 2019 includes an $11.9 million charge relating to the buyout of a
lease at Assembly Square Marketplace.
NOTE 12—SHARE-BASED COMPENSATION PLANS
A summary of share-based compensation expense included in net income is as follows:
Grants of common shares and options
Capitalized share-based compensation
Share-based compensation expense
Year Ended December 31,
2021
2020
2019
(In thousands)
$
$
14,434
(1,425)
13,009
$
$
13,243
(1,319)
11,924
$
$
13,330
(1,054)
12,276
As of December 31, 2021, we have grants outstanding under two share-based compensation plans. In May 2020, our
shareholders approved the 2020 Performance Incentive Plan ("the 2020 Plan"), which authorized the grant of share options,
common shares, and other share-based awards for up to 1,750,000 common shares of beneficial interest. Our 2010 Long Term
Incentive Plan, as amended (the "2010 Plan”), which expired in May 2020, authorized the grant of share options, common
shares and other share-based awards for up to 2,450,000 common shares of beneficial interest.
Option awards under the plans are required to have an exercise price at least equal to the closing trading price of our common
shares on the date of grant. Options and restricted share awards under the plan generally vest over three to seven years and
option awards typically have a ten-year contractual term. We pay dividends on unvested shares. Certain options and share
awards provide for accelerated vesting if there is a change in control. Additionally, the vesting on certain option and share
awards can accelerate in part or in full upon termination without cause.
The fair value of each option award is estimated on the date of grant using the Black-Scholes model. Expected volatilities, term,
dividend yields, employee exercises and estimated forfeitures are primarily based on historical data. The risk-free interest rate is
based on the U.S. Treasury yield curve in effect at the time of grant. The fair value of each share award is determined based on
the closing trading price of our common shares on the grant date. No options were granted in 2020 and 2019.
F-28
The following table provides a summary of the assumptions used to value options granted in 2021:
Volatility
Expected dividend yield
Expected term (in years)
Risk free interest rate
Year Ended
December 31,
2021
29.3 %
4.1 %
7.5
0.9 %
The weighted-average grant-date fair value of options granted in 2021 was $16.40 per share. The following table provides a
summary of option activity for 2021:
Shares
Under
Option
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual Term
Aggregate
Intrinsic
Value
(In years)
(In thousands)
Outstanding at December 31, 2020
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2021
Exercisable at December 31, 2021
$
682
3,658
—
(682)
3,658
$
— $
The following table provides a summary of restricted share activity for 2021:
Unvested at December 31, 2020
Granted
Vested
Forfeited
Unvested at December 31, 2021
152.34
95.77
—
152.34
95.77
—
9.1 $
— $
148
—
Shares
Weighted-Average
Grant-Date Fair
Value
233,178
166,746
(108,735)
(2,193)
288,996
$
$
127.32
97.46
121.77
112.05
112.29
The weighted-average grant-date fair value of stock awarded in 2021, 2020 and 2019 was $97.46, $124.55 and $133.30,
respectively. The total vesting-date fair value of shares vested during the year ended December 31, 2021, 2020 and 2019, was
$11.0 million, $12.4 million and $13.0 million, respectively.
On February 10, 2021, 10,441 restricted stock units were awarded to an officer that vest at the end of four years. The final
awards earned are based on meeting certain market based performance criteria, and may vary from 0% to 200% of the original
award. The weighted-average grant-date fair value of stock awarded in 2021 was $97.01. The following table provides a
summary of restricted stock unit activity for 2021:
Unvested at December 31, 2020
Granted
Vested
Forfeited
Unvested at December 31, 2021
Shares
Weighted-Average
Grant-Date Fair
Value
— $
10,441
—
—
10,441
$
—
97.01
—
—
97.01
As of December 31, 2021, there was $20.0 million of total unrecognized compensation cost related to unvested share-based
compensation arrangements (i.e. options and unvested shares) granted under our plans. This cost is expected to be recognized
over the next 4.6 years with a weighted-average period of 2.3 years.
Subsequent to December 31, 2021, common shares were awarded under various compensation plans as follows:
F-29
Date
January 3, 2022
February 9, 2022
Award
5,135 Shares
103,463 Restricted Shares
Vesting Term
Beneficiary
Immediate
3-5 years
Trustees
Officers and key employees
NOTE 13—SAVINGS AND RETIREMENT PLANS
We have a savings and retirement plan in accordance with the provisions of Section 401(k) of the Code. Generally, employees
can elect, at their discretion, to contribute a portion of their compensation up to a maximum of $19,500 for 2021 and 2020, and
19,000 for 2019. Under the plan, we contribute 50% of each employee’s elective deferrals up to 5% of eligible earnings. In
addition, we may make discretionary contributions within the limits of deductibility set forth by the Code. Our full-time
employees are immediately eligible to become plan participants. Employees are eligible to receive matching contributions
immediately on their participation; however, these matching payments will not vest until their third anniversary of employment.
Our expense for the years ended December 31, 2021, 2020 and 2019 was approximately $816,000, $813,000 and $764,000,
respectively.
A non-qualified deferred compensation plan for our officers and certain other employees was established in 1994 that allows
the participants to defer a portion of their income. As of December 31, 2021 and 2020, we are liable to participants for
approximately $21.0 million and $18.0 million, respectively, under this plan. Although this is an unfunded plan, we have
purchased certain investments to match this obligation. Our obligation under this plan and the related investments are both
included in the accompanying consolidated financial statements.
F-30
NOTE 14—EARNINGS PER SHARE
We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation
methodology whereby EPS for each class of common stock and participating securities is calculated according to dividends
declared and participation rights in undistributed earnings. For 2021 we had 0.3 million, and for 2020 and 2019 we had 0.2
million weighted average unvested shares outstanding, respectively, which are considered participating securities. Therefore,
we have allocated our earnings for basic and diluted EPS between common shares and unvested shares; the portion of earnings
allocated to the unvested shares is reflected as “earnings allocated to unvested shares” in the reconciliation below.
The following potentially issuable shares were excluded from the diluted EPS calculation because their impact is anti-dilutive:
•
•
•
exercise of 682 stock options in 2020 and 2019, respectively,
conversions of downREIT operating partnership units and 5.417% Series 1 Cumulative Convertible Preferred Shares
for 2021, 2020, and 2019, respectively, and
the issuance of 1.8 million shares issuable under forward sales agreements in 2021.
Additionally, 10,441 unvested restricted stock units are excluded from the diluted EPS calculation as the market based
performance criteria in the award has not yet been achieved.
NUMERATOR
Net income
Less: Preferred share dividends
Less: Income from operations attributable to noncontrolling interests
Less: Earnings allocated to unvested shares
Net income available for common shareholders, basic and diluted
DENOMINATOR
Weighted average common shares outstanding—basic
Effect of dilutive securities:
Open forward contracts for share issuances
Weighted average common shares outstanding—diluted
EARNINGS PER COMMON SHARE, BASIC
Net income available for common shareholders
EARNINGS PER COMMON SHARE, DILUTED
Net income available for common shareholders
NOTE 15—SUBSEQUENT EVENTS
Year Ended December 31,
2021
2020
2019
(In thousands, except per share data)
$ 269,081
$ 135,888
$ 360,542
(8,042)
(7,583)
(1,211)
(8,042)
(4,182)
(992)
(8,042)
(6,676)
(1,007)
$ 252,245
$ 122,672
$ 344,817
77,336
75,515
74,766
32
—
—
77,368
75,515
74,766
$
$
3.26
3.26
$
$
1.62
1.62
$
$
4.61
4.61
In January of 2022, we completed the UPREIT reorganization described in the Explanatory Note at the beginning of this
Annual Report. Prior to the UPREIT Reorganization, our business was conducted through the Predecessor. This Annual Report
pertains to the business and results of operations of the Predecessor for its fiscal year ended December 31, 2021. As a result of
the UPREIT reorganization, the Parent Company became the successor issuer to the Predecessor under the Exchange Act. The
Parent Company and the Partnership have elected to co-file this Annual Report of the Predecessor to ensure continuity of
information to investors. 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.
F-31
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(
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
Three Years Ended December 31, 2021
Reconciliation of Total Cost
(in thousands)
Balance, December 31, 2018 .................................................................................................................................... $ 7,819,472
(71,859)
January 1, 2019 adoption of new accounting standard - See Note 2 ...................................................................
Additions during period
Acquisitions ....................................................................................................................................................
Improvements .................................................................................................................................................
Deduction during period—dispositions and retirements of property...................................................................
Balance, December 31, 2019 ....................................................................................................................................
309,921
441,703
(201,105)
8,298,132
Additions during period
Acquisitions ....................................................................................................................................................
Improvements .................................................................................................................................................
Deductions during period.....................................................................................................................................
Impairment of property...................................................................................................................................
Dispositions and retirements of property........................................................................................................
Balance, December 31, 2020 ....................................................................................................................................
39,440
473,679
(68,484)
(159,897)
8,582,870
Additions during period
Acquisitions ....................................................................................................................................................
Improvements .................................................................................................................................................
Deduction during period—dispositions and retirements of property...................................................................
519,350
424,521
(104,679)
Balance, December 31, 2021 (1) .............................................................................................................................. $ 9,422,062
_____________________
(1) For Federal tax purposes, the aggregate cost basis is approximately $8.4 billion as of December 31, 2021.
F-38
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
Three Years Ended December 31, 2021
Reconciliation of Accumulated Depreciation and Amortization
(In thousands)
Balance, December 31, 2018 .................................................................................................................................... $ 2,059,143
(18,173)
215,382
(40,939)
2,215,413
229,199
January 1, 2019 adoption of new accounting standard - See Note 2 ...................................................................
Additions during period—depreciation and amortization expense
Deductions during period—dispositions and retirements of property .................................................................
Balance, December 31, 2019 ....................................................................................................................................
Additions during period—depreciation and amortization expense......................................................................
Deductions during period.....................................................................................................................................
Impairment of property...................................................................................................................................
Dispositions and retirements of property........................................................................................................
(11,631)
(75,289)
2,357,692
246,338
(72,935)
Balance, December 31, 2021 .................................................................................................................................... $ 2,531,095
Additions during period—depreciation and amortization expense......................................................................
Deductions during period -dispositions and retirements of property...................................................................
Balance, December 31, 2020
F-39
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
Year Ended December 31, 2021
(Dollars in thousands)
Column A
Column B
Column C
Column D
Column E
Column F
Column G
Column H
Interest Rate Maturity Date
11.5%
February
2026
10.75%
February
2026
7.0%
October 2031
Description of Lien
Second mortgage
on a retail
shopping center in
Rockville, MD
Second mortgage
on a retail
shopping center in
Rockville, MD
Second mortgage
on a retail
shopping center in
Baltimore, MD
Periodic Payment
Terms
Interest only
monthly;
balloon
payment due
at maturity
Interest only
monthly;
balloon
payment due
at maturity
Principal and
interest monthly;
balloon payment
due at maturity
Prior
Liens
$58,750
Face Amount
of Mortgages
(2) $ 5,075
Carrying
Amount
of Mortgages(1)
$ 5,075
58,750
(2)
4,500
4,433
4,990
(3)
600
35
Principal
Amount
of Loans
Subject to
delinquent
Principal
or Interest
—
$
—
—
$63,740
$ 10,175
$ 9,543
$
—
_____________________
(1) The amounts are net of any expected losses in accordance with ASU 2016-13. See note 2 to the consolidated financial statements. For
Federal tax purposes, the aggregate tax basis is approximately $10.2 million as of December 31, 2021.
(2) These mortgages are both subordinate to a first mortgage of $58.8 million in total. We do not hold the first mortgage loan on this
property. Accordingly, the amount of the prior lien at December 31, 2021 is estimated.
(3) This mortgage is subordinate to a first mortgage of $5.0 million. We do not hold the first mortgage loan on this property. Accordingly,
the amount of the prior lien at December 31, 2021 is estimated.
F-40
FEDERAL REALTY INVESTMENT TRUST
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE - CONTINUED
Three Years Ended December 31, 2021
Reconciliation of Carrying Amount
(In thousands)
Balance, December 31, 2018 and 2019 .................................................................................................................... $
January 1, 2020 adoption of new accounting standard - See Note 2
Additions during period:
Acquisition of loans, net of valuation adjustments.........................................................................................
Issuance of loans.............................................................................................................................................
Balance, December 31, 2020 ....................................................................................................................................
Additions during period:
30,429
(790)
9,560
693
39,892
Issuance of loans.............................................................................................................................................
600
Deductions during period:
Collection and satisfaction of loans ................................................................................................................
Valuation adjustments.....................................................................................................................................
Balance, December 31, 2021 .................................................................................................................................... $
(30,339)
(610)
9,543
F-41
Letter from our Chairman and our CEO
March 25, 2022
Dear Shareholders:
On behalf of the Board of Trustees and the entire Federal team, we’d like you to join us at our 2022 Annual
Meeting of Shareholders. We will hold our meeting virtually so that more shareholders are able to participate. This
proxy statement includes important information for how you can join and ask questions at the meeting and about
the matters that will be voted on at the meeting.
In looking back on 2021, we began the year with the hope that the most challenging year in our nearly 60-year
history was behind us but with little clarity on how quickly our business would rebound from the COVID-inflicted
challenges of 2020. We were pleased as industry conditions improved faster than we had anticipated and we
were able to end the year collecting about 97% of our contractual rents for the fourth quarter, up significantly from
what we were collecting as the governmental lockdowns designed to stop the spread of the virus were felt by
many of our retail tenants early in 2020. There were challenges we worked through in 2021 and continue to work
through today as our business and the broader economy continue to recover from the pandemic but one thing
that remained consistent through these difficult years has been our focus on long-term growth and positioning the
company for future success. Our prudent balance sheet management allowed us to take advantage of the
economic disruption in the economy and acquire 5 new properties having a gross value of $440 million. Each of
these properties has future growth opportunities and was priced more attractively than if we were to acquire them
today. We also continued to deliver on our development pipeline in 2021, placing more than $486 million of
investment into service that will generate additional revenue and create additional long-term value over the next
several years.
These accomplishments were only possible through the considerable efforts of our Board and each and every
one of our employees. Their ability to address the continuing challenges of the pandemic while also delivering
results to position the company for future growth has been extraordinary. We are extremely proud of the work this
team has accomplished.
We look forward to your participation in the meeting and want to thank you for your continued support of Federal.
Sincerely,
David W. Faeder
Non-Executive Chairman of the Board
Donald C. Wood
Chief Executive Officer
Notice of Annual Meeting of Shareholders
ANNUAL MEETING PROPOSALS
Board Recommends
LOGISTICS
Proposal 1
Election of our seven nominees to serve as trustees
for a term of one year
Proposal 2
Approval on an advisory basis of our 2021 executive
compensation
Proposal 3
Ratification of the appointment of Grant Thornton,
LLP as our registered public accountants for fiscal
year 2022
FOR (see p. 11)
FOR (see p. 19)
FOR (see p. 39)
Other business will be transacted as may properly come before
the 2022 annual meeting of shareholders (“Annual Meeting”).
Beneficial Owners
If you own shares registered in the name of a broker, bank or
other nominee, please follow the instructions they provide on
how to vote your shares.
Proxy Voting
Please submit your proxy or voting instructions as soon as
possible to instruct how your shares are to be voted at the
Annual Meeting, even if you plan to attend the meeting. If you
later vote at the Annual Meeting, your previously submitted proxy
or voting instructions will not be used.
On behalf of the Board of Trustees
Dawn M. Becker
Executive Vice President-General Counsel
And Secretary
Date and Time
Wednesday, May 4, 2022
9:00 a.m. Eastern Time
Record Date
Monday, March 14, 2022
Our Annual Meeting will be virtual. To
participate, vote or submit questions during
the meeting via live webcast, please visit:
https://web.lumiagm.com/202329683
See page 43 for additional information on
how to attend the virtual Annual Meeting.
Mailing Date
This proxy statement was first mailed to
shareholders on or about March 25, 2022.
HOW TO VOTE
Shareholders of Record
By Internet
www.voteproxy.com
By Telephone
1-800-776-9437
By Mail
Complete your proxy card and cast your
vote by pre-paid mail
Important Notice Regarding Internet Availability of Proxy Materials
The proxy statement and annual report to shareholders, including our annual report on Form 10-K for the year ended
December 31, 2021, are available at www.federalrealty.com. References in this proxy statement to our website are
provided for your convenience only and the content on our website does not constitute part of this proxy statement.
Table of Contents
WHO WE ARE
Company Reorganization
Operating Performance Highlights
Environmental and Social Responsibility Highlights and
Commitment
GOVERNING THE COMPANY
Corporate Governance Policies and Procedures
Board Leadership
Trustee Independence
Board Meetings
Overseeing Risk Management
Board Committees
Board and Committee Assessments
Compensation Committee Interlocks and Insider
Participation
Communications with the Board
Related Party Transactions
PROPOSAL 1: ELECTION OF OUR
TRUSTEES
Trustee Characteristics and Selection
Board Diversity and Tenure
Qualifications and Experience of Nominees
Additional Board Service
Our Nominees
Trustee Compensation
PROPOSAL 2: APPROVING OUR
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
2021 Summary Information
Compensation Plan Overview
2021 Compensation Decisions
Compensation Policies and Procedures
Compensation Committee Report
1
1
2
3
5
5
6
7
7
8
9
10
10
11
11
11
12
12
13
14
14
18
19
19
20
20
22
30
32
EXECUTIVE COMPENSATION
Summary Compensation Table
Grants of Plan-Based Awards Table
Outstanding Equity Awards at Fiscal Year-End Table
Options Exercised and Stock Vested in 2021
Non-Qualified Deferred Compensation
Potential Payments on Termination of Employment and
Change-in-Control
CEO Pay Ratio
Equity Compensation Plan Information
PROPOSAL 3: RATIFICATION OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Audit Committee Report
BENEFICIAL OWNERSHIP
Ownership of Principal Shareholders
Ownership of Trustees and Executive Officers
INFORMATION ABOUT THE ANNUAL
MEETING
Notice of Electronic Availability of Proxy Materials
Why You Are Receiving These Materials
Accessing Materials
How to Vote
How to Participate in the Annual Meeting
Eliminating Duplicative Proxy Materials
Solicitation of Proxies
Shareholder Proposals for the 2023 Annual Meeting
APPENDIX
Appendix A – Reconciliation of Non-GAAP Financial
Measures
33
33
34
35
36
36
36
38
39
39
40
41
41
42
43
43
43
43
43
44
45
45
45
A-1
A-1
Who We Are
Federal Realty Investment Trust is an S&P 500 company that owns, operates and redevelops high-quality retail
based real estate located primarily in major coastal markets and headquartered in North Bethesda, Maryland.
Company Information
Established in 1962
Member of the S&P 500
[1] As of 12/31/2021
Company Reorganization
Our Properties[1]
104 properties
25 million SF of commercial space
3,369 residential units
Our Employees[1]
310 employees
6 primary offices
Average tenure of 8.7 years
Through the end of 2021, we conducted our business through Federal Realty Investment Trust, a Maryland real
estate investment trust (“Old FRT”). Effective as of January 1, 2022, Old FRT completed a holding company
merger for the purpose of converting Old FRT into an umbrella partnership real estate investment trust or
“UPREIT”. On January 5, 2022, Old FRT converted to a Delaware limited partnership and changed its name to
Federal Realty OP LP to complete that conversion. The holding company created for the merger, FRT Holdco
REIT, is now the parent company of Old FRT and pursuant to a name change effectuated immediately following
the merger, is now known as Federal Realty Investment Trust (“New FRT”). The business, management and
trustees of New FRT, and the rights and limitations of the holders of New FRT’s shares of beneficial interest,
immediately following the merger were identical to the business, management and trustees of Old FRT, and the
rights and limitations of holders of Old FRT’s shares of beneficial interest, immediately prior to the merger. The
consolidated assets and liabilities of New FRT immediately following the merger and partnership conversion were
the same as the consolidated assets and liabilities of Old FRT immediately prior to the merger and partnership
conversion.
New FRT, as the successor to Old FRT, is filing this proxy statement on behalf of itself and Old FRT for 2021 and
on behalf of itself for 2022. All references in this proxy statement to “we”, “our”, the “Company”, “Federal” or
“Federal Realty” refer to New FRT for itself and as successor to Old FRT, as applicable. More detailed information
regarding the holding company merger and partnership conversion of Old FRT can be found in our Form 8-K12B
filed with the Securities and Exchange Commission (“SEC”) on January 3, 2022 and our Form 8-K filed with the
SEC on January 5, 2022.
1
Operating Performance Highlights
2021 was characterized by improved operating performance and continued focus and investment on avenues for
future growth. COVID-driven governmental shutdowns in 2020 had a significant adverse impact on our ability to
collect full rents from our tenants given their inability to operate their businesses and generate revenue. Although
2021 was still
impacted by governmental restrictions and the emergence of new strains of COVID, the vast
majority of our tenants experienced significant rebounds in their businesses which in turn drove our improved
operating performance. Tenant optimism in a post-COVID recovery was also evident in the record volume of
leases we signed during the year. We also continued to focus on making smart investments that are expected to
lead to future growth. We acquired 5 new properties during 2021, each with potential for significant future value
creation, placed significant portions of our development pipeline into service and began our next phase of
development at Pike & Rose with a lease in hand for approximately 40% of the building. Following are a few of
our 2021 operating performance highlights.
Strong Earnings Growth
Record Leasing Activity
Value-Add Acquisitions
>25%
573 deals/2.9M square feet
$440 million
Growth of both net income available
for common shareholders and FFO
per share* compared to 2020
New and renewal leases signed in 2021
Acquired 5 new assets with significant
value add potential through re-leasing,
renovation and redevelopment
Execution on Development Pipeline
Common Share Dividend
$486 million
$193 million
300,000 square feet
54 years
Active major
development projects
placed into service
New major
development
starts
Executed leases for major
development projects
Consecutive years of common share
dividend increases, the longest record in the
REIT industry
* FFO per share is a non-GAAP financial measure that we consider significant in our business. See Appendix A
for a reconciliation of FFO per share to net income.
2
Environmental and Social Responsibility Highlights and Commitment
the “About Us-Sustainability”
in our 2020 Corporate Responsibility Report which is
Our corporate responsibility initiatives are set forth in detail
available under
tab on our website which can be accessed by using this link
https://issuu.com/federalrealty/docs/2020_corporate_responsibility_brochure. This report provides information in
alignment with the frameworks established by the Global Reporting Initiative, Task Force for Climate-Related Financial
Disclosures and Sustainability Accounting Standards Board as well as detailed information on the demographic
make-up of our workforce by classification level. We are planning to provide later this year a new sustainability report
for 2021 covering substantially the same topics and providing substantially the same information as is included in the
2020 report. Some of the highlights of our commitment to and progress on environmental and social responsibility
topics include the following.
Diversity and
Inclusion
(as of 12/31/2021)
Women
64%
65%
55%
Ethnic/Racial
Minorities
47%
30%
Women in Leadership
20%
43%
33%
Overall
2021 New
Hires
2021
Promotions
Overall
2021 New
Hires
2021
Promotions
Signatory for CEO Action for Diversity
and Inclusion
Board
Executive Leadership
CEO Participating in NAREIT Dividends
Through Diversity, Equity & Inclusion
CEO Council
Employees
(as of 12/31/2021)
96%
Employees proud to work at
Federal – 2021 engagement
survey
15%
Of all employees were
promoted in 2021
Pay Equity
Philanthropic Support
Third party study found equal
pay for equal work
throughout the Company
Environment
(as of 12/31/2021)
Scope 1 and 2
GHG Emissions
30% Reduction Target
Electric Consumption
Landlord Controlled
15% Reduction Target
Decrease landlord
controlled emissions
between 2019 and
2025
Decrease landlord
controlled electric
consumption between
2019 and 2025
$1.2 billion
Invested in LEED certified
buildings currently in service
13.1MW
Solar power generating
capacity in solar arrays at
25% of our properties
274
EV charging stations installed
avoiding more than 3,000 metric
tons of GHG emissions
3
Corporate responsibility is an area of focus for our Board of Trustees (“Board”), our management team and the
entirety of our Company. It starts with our Board who is fully responsible for overseeing the Company’s approach
to matters of environmental and social responsibility. To ensure that all of these matters get the level of attention
necessary, the Board has delegated certain responsibilities to its standing committees. The specific
responsibilities of each committee for environmental and social matters are described in more detail in the
“Overall Risk Management” and “Board Committees” sections below.
For management, primary responsibility for overseeing and driving our environmental and social initiatives has
been assigned to our Executive Vice President, General Counsel who is one of our named executive officers. She
is supported in those efforts by our Head of Sustainability and a cross-functional ESG council made up of senior
members of various functional areas throughout the Company including asset management, development, tenant
coordination, transactions, human resources, legal, accounting, marketing and investor relations. This group
meets on a regular basis to guide and report on our Company’s ESG initiatives.
We have two primary areas of focus throughout our Company – people, including our employees, vendors,
suppliers, contractors, consultants and the communities in which we own our properties and do business, and
planet which considers the impact our business and our properties have on the environment. We have aligned all
of our efforts with respect to both people and planet with the ten United Nations Sustainable Development Goals
that we believe are most relevant to our business.
Our focus on people starts with our employees and our core values of Excellence, Integrity, Accountability and
Innovation. At the end of 2021, we had 310 employees who had been with the Company nearly 9 years, on
average, and who reflected the diversity of the communities where we do business. We use our annual
engagement surveys to gather feedback from our employees to help us ensure that we are creating an
environment where our employees can grow and thrive personally and professionally. Our 2021 efforts were
primarily focused on advancement opportunities for our current team and diversification of our candidate pool for
hiring new positions throughout the Company. These efforts resulted in nearly 15% of our total workforce being
promoted in 2021 into a job with increased responsibilities and compensation. Our use of anonymized resumes,
focus on non-traditional sources to identify job candidates and a requirement to consider one or more diverse
candidates for all positions of director and above resulted in one of the most diverse groups of new hires in our
history with 64% of our total hires during 2021 being women and 47% of those new hires being members of ethnic
or racial minority groups.
We have a long-standing commitment to being good environmental stewards as it relates to our properties. As
long-term owners of real estate, ensuring properties are resilient in all senses of the word is critical. For more than
a decade, we have focused our ground-up development efforts on investing in buildings that achieve a level of
certification under the Leadership in Energy and Environmental Design (LEED) guidelines demonstrating our
commitment to making investment decisions that take into account our building’s long-term environmental impact.
That investment has totaled approximately $1.2 billion in LEED certified buildings already placed in service with
another $1 billion invested and estimated to be invested over the next few years in buildings targeted to achieve
LEED Gold certification or better. We have also made a commitment to renewable energy with our investment in
on-site solar photovoltaic systems at nearly 25% of our properties. Our focus on decreasing energy usage and
using renewable energy are the foundation for our goal to reduce our landlord controlled electric consumption and
our Scope 1 and Scope 2 greenhouse gas emissions by 15% and 30%, respectively by 2025.
Our properties also serve as the intersection between people and planet as we design and operate our properties
to serve the needs of the local community and reflect the values of that community. Providing places for the
community to gather and socialize helps add to the positive impacts our properties have on the local communities.
4
Governing the Company
The Board is responsible for providing governance and oversight of the strategy, operations and management of
the Company with its primary objective being to represent the interests of our shareholders. The Board oversees
our senior management to whom it has delegated the authority to manage the day-to-day operations of the
Company. The Board has adopted Corporate Governance Guidelines, committee charters, a Code of Business
Conduct and a Code of Ethics for our Senior Financial Officers that, together with our Declaration of Trust and
Bylaws, form the governance framework for the Board and its committees.
The Board regularly reviews the Corporate Governance Guidelines and other corporate governance documents
and from time to time revises them when it believes it
the Company and our
shareholders to do so given changing regulatory and governmental requirements and best practices. The
following sections provide an overview of our corporate governance structure.
is in the best
interests of
Complete copies of our Corporate Governance Guidelines, committee charters, Code of Business Conduct, Code
of Ethics for Senior Financial Officers and other governance documents are available in the Investor/Corporate
Governance section of our website at www.federalrealty.com. Printed copies of these documents are available
upon written request to our Investor Relations department at 909 Rose Avenue, Suite 200, North Bethesda,
Maryland 20852.
Corporate Governance Policies and Procedures
Some of the key governance policies and practices that govern the Company include the following:
Policy
Annual election of all trustees
Explanation
All of our trustees are elected annually.
No shareholder rights plan
The Company does not have a “poison pill”.
Proxy access right
Independent Board
Shareholders satisfying the requirements can include their own
qualified trustee nominee in our proxy materials.
All of our trustees are independent other than our chief executive
officer.
100% independent Board committees
Each of the Board’s committees is comprised entirely of trustees
who are independent.
Active Board oversight of strategy, risk
management and environmental, social
and governance (“ESG”) initiatives
Independent Non-Executive Chairman
Annual Board, committee and individual
trustee assessment process
Our Board provides robust oversight of our strategy, enterprise
risk management and ESG initiatives, among other topics.
Since 2003, we have had an independent Non-Executive
Chairman leading the Board.
Each of our Board committees and the Board as a whole conduct
an annual assessment of its performance. In addition, the chair of
the Nominating and Corporate Governance Committee
(“Nominating Committee”) conducts a confidential assessment of
each individual trustee intended to ensure that each trustee is
performing to an acceptable level and to inform decisions on who
to nominate for election at the next annual meeting. A similar
assessment is performed by our Non-Executive Chairman on the
performance of the chair of our Nominating Committee.
5
Active oversight of other board service by
Trustees and management
Commitment to Board refreshment
Active shareholder engagement
Robust Code of Business Conduct
Clawback policy
Equity ownership requirements
Our Corporate Governance Guidelines require each Trustee and
member of management to obtain approval from the Nominating
Committee before accepting a position on any other public,
private or non-profit board. Before approving any such additional
board service, the Nominating Committee holistically evaluates
the impact such additional board service would have on the
individual’s ability to carry out his or her fiduciary and other
obligations to the Company and advises the rest of the Board on
the request and ultimate decision.
The Board continually evaluates the skill sets and perspectives
needed to effectively carry out its oversight function. Four of our
current six non-management trustees have served on the Board
for 5 years or less.
We actively engage with our shareholders to understand their
perspectives with our Non-Executive Chairman and other
members of the Board participating if requested.
Our Code of Business Conduct applies to all trustees and
employees and reinforces our culture of compliance, ethical
conduct and accountability. We also have in place an additional
code of ethics for our senior officers who most directly impact our
financial reporting.
We have adopted a policy applicable to our named executive
officers that provides for recovery of certain cash bonuses and
equity compensation in the event of a financial restatement under
certain circumstances.
Our chief executive officer is required to hold shares with a value
equal to at least 7 times his base salary and each of our other
named executive officers is required to hold shares with a value
equal to at least 2 1⁄ 2 times his or her base salary and annual
bonus. Each trustee is required to hold shares having a value at
least equal to 5 times the cash portion of the annual retainer.
Named executive officers and trustees have a period of 5 years to
meet these requirements.
Prohibition on hedging and pledging
Shares
Our trustees and all employees are prohibited from entering into
hedging transactions or pledging any of their shares.
Board Leadership
Our Board has been led by an independent Non-Executive Chairman since 2003. Mr. Faeder assumed that role
after the 2021 annual shareholder meeting when our prior non-executive chairman retired from the Board. With
this structure, our chief executive officer is able to develop and oversee the implementation of our business
strategy and to lead and manage the day-to-day operations of the Company while Mr. Faeder focuses on Board
oversight and governance and acts as a liaison with management. In addition, Mr. Faeder provides input on
issues for Board consideration by helping to set and approve agendas for meetings and ensures that sufficient
time is allotted for robust discussion of all issues. The Board believes that this structure provides the optimal
leadership model to most effectively oversee and manage the Company in execution of its business strategy and
objectives.
6
Trustee Independence
The Board has adopted a standard designed to assist the Board in assessing trustee independence. This
standard, included in our Corporate Governance Guidelines, states that a Trustee’s position as a director, officer
or owner of a company with which we do business does not constitute a material relationship impacting
independence so long as payments made by that company do not account for more than five percent (5%) of our
gross revenues or more than ten percent (10%) of the gross revenues of that company. The Board performs an
annual review of independence of all trustees and nominees. In order to make a determination that an individual
is independent, the Board has to affirmatively conclude that the individual does not have any direct or indirect
material relationship with the Company. This independence determination takes into account the requirements of
our Corporate Governance Guidelines and any additional requirements imposed by law, regulation or the New
York Stock Exchange (“NYSE”) listing standards and is only made after a thorough review of all relationships that
exist between the Company and a trustee.
Based on this review process, the Nominating Committee recommended, and the Board concluded, that all of our
Trustees, other than Mr. Wood, our chief executive officer, are independent under all applicable standards for
service on the Board and each of its committees. In making this determination, the Board considered certain
indirect passive investments Mr. Nader has in two of the Company’s tenants and Mr. Wood’s previous service on
the board of a company of which Mr. Ordan served as chief executive officer. The Board determined that neither
of
these situations constituted a material relationship with the Company that would interfere with either
Mr. Nader’s or Mr. Ordan’s ability to exercise independent judgment.
Board Meetings
The Board met 5 times in 2021. In addition, our practice is for all trustees to attend all meetings of each of the
Board’s standing committees. This practice ensures that each Trustee is fully informed on all issues facing the
Company and has the opportunity to participate in discussions surrounding those issues. Only trustees who are
members of the specific committee are entitled to vote on matters presented to that committee. In addition, at
each quarterly meeting, the Trustees meet in executive session with all Trustees and then with just independent
Trustees. All Trustees are also expected to attend our annual shareholder meeting.
100%
Trustee Attendance
•
•
•
All 2021 Board meetings
All 2021 Board Committee meetings
2021 Annual Shareholder Meeting
7
Overseeing Risk Management
The full Board oversees the Company’s corporate-level risk management and management is responsible for the
day-to-day management of risk. To assist in its oversight role, the Board’s committees are primarily responsible
for certain matters relating to the risks inherent in the committees’ respective areas of oversight, with each
committee regularly reporting and making recommendations to the full Board. Risk oversight responsibilities for
our Board and its committees are delegated as set forth below.
BOARD OF TRUSTEES
Audit Committee
Review with management the
identification and management of
overall Company risk
Review with management Company
financial risks and steps to monitor
and mitigate those risks
Review with management cyber
security protections and risks
around data protection
Compensation and Human Capital
Management Committee
Nominating and Corporate Governance
Committee
Review compensation programs to
ensure they do not incentivize
excessive risk taking
Review policies and succession
planning to ensure appropriate tools
in place to recruit and retain talent
needed to achieve business
objectives
Develop governance principles and
code of conduct to set expectations
for ethical behavior
Review relationships between
trustees and the Company to
ensure independence
Review all ESG trends, risks and
issues that could affect the
Company's performance or
reputation
Day-to-day management of risk overseen primarily through the offices of the General Counsel and Chief Financial Officer
COMPANY MANAGEMENT
Our Board receives regular updates and recommendations from the committees about these activities, and
reviews additional risks not specifically within the purview of any committee and risks of a more strategic nature,
including operational risks, industry related risks and risks related to the environment, health, safety and security.
The Board believes that this structure and division of responsibility is the most effective way to monitor and
manage the Company’s risk.
8
Board Committees
The Board has three standing committees – the Audit Committee,
the Compensation and Human Capital
Management Committee (“Compensation Committee”) and the Nominating Committee. Each committee operates
is available in the Investors/Corporate Governance section of our website at
under a written charter that
www.federalrealty.com. Each committee consists entirely of independent, non-employee trustees.
Audit Committee
Membership
Number of Meetings in 2021: 5
Gail P. Steinel, Chair (Financial Expert)
David W. Faeder (Financial Expert)
Elizabeth I. Holland (effective August 3, 2021)
Anthony P. Nader, III (Financial Expert)
Primary Responsibilities
•
Selects and oversees our independent auditor
• Oversees our financial reporting, including
reviewing results with management and our
independent auditor
• Oversees internal audit function
• Oversees adequacy and integrity of our financial
statements and our financial reporting and
disclosure
• Oversees financial risks and risks relating to
cybersecurity, data security and information
protection
Reviews and approves any related party
transactions requiring disclosure
•
More information on the Audit Committee is included in the Audit Committee Report and “Proposal 3:
Ratification of Independent Registered Public Accounting Firm” beginning on page 39.
Compensation and Human Capital Management Committee
Number of Meetings in 2021: 4
Membership
Elizabeth I. Holland, Chair (effective August 3, 2021)
Nicole Y. Lamb-Hale
Mark S. Ordan (effective August 3, 2021)
Gail P. Steinel
Primary Responsibilities
•
•
•
Evaluates performance of our CEO and
recommends annual salary, bonus, equity-based
incentives and other benefits for our CEO
Reviews and approves annual salary, bonus,
equity-based incentives and other benefits for our
other senior officers
Administers certain other benefit plans of the
Company
•
•
Reviews and approves all severance and other
agreements with our CEO and other senior
officers
Administers and makes equity awards under our
long-term incentive plan
• Oversees our key strategies and human
resources policies and practices for all
employees
The Compensation Committee Report is included at page 32 of this proxy statement and more detail on the
work of the Compensation Committee is included in the “Compensation Discussion and Analysis” beginning
on page 19.
9
Nominating and Corporate Governance Committee
Number of Meetings in 2021: 3
Membership
Mark S. Ordan, Chair (effective August 3, 2021)
David W. Faeder (effective August 3, 2021)
Nicole Y. Lamb-Hale
Anthony P. Nader, III
Primary Responsibilities
•
•
Identifies and recommends individuals to stand for
election to the Board
Develops and oversees all corporate governance
policies and procedures
• Oversees annual trustee evaluation process
•
Recommends members of the Board to serve on
its committees
• Oversees corporate responsibility and ESG
efforts and monitors priorities and progress on
goals
Board and Committee Assessments
Board Assessment
The Board annually assesses its
overall performance through the
specific, in-depth annual
committee and trustee evaluations.
Committee Assessments
Each committee conducts an
annual assessment of its
performance and the
performance of its members in
accordance with its committee
charter. The review process is
led by the chair of the
committee.
Individual Trustee
Assessments
Each trustee completes a
confidential assessment of each
other trustee and has a
one-on-one interview with the
chair of the Nominating
Committee to review those
individual assessments and
receive feedback on his or her
assessment by other trustees. The
Non-Executive Chairman
completes the same process with
respect to the chair of the
Nominating Committee.
Results are communicated to all
trustees.
The results of the individual trustee assessments are taken into account in determining which trustees should
stand for election at
the next annual shareholder meeting and in determining committee assignments and
leadership roles.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Ms. Holland, Ms. Lamb-Hale, Mr. Ordan and Ms. Steinel.
Prior to August 3, 2021, Mr. Faeder also served on the Compensation Committee. There are no Compensation
Committee interlocks and no member of the Compensation Committee serves, or has in the past served, as an
employee or officer of the Company.
10
Communications with the Board
Any shareholder or other interested party may communicate with the Board or any Trustee by sending the
communication to our corporate offices at 909 Rose Avenue, Suite 200, North Bethesda, Maryland 20852 in care
of our Secretary. All communications should identify the party to whom it is being sent. Any communication which
indicates it
is for the Board of Trustees or fails to identify a particular Trustee will be deemed to be a
communication intended for our Non-Executive Chairman of the Board. Our Secretary will promptly forward to the
appropriate Trustee all communications received for the Board or any individual Trustee which relate to our
business, operations, financial condition, management, employees or similar matters. Our Secretary will not
forward to any Trustee any advertising, solicitation or similar materials.
Related Party Transactions
Our Code of Business Conduct requires that our Trustees and all of our employees deal with the Company on an
arms-length basis in any related party transaction. All transactions between us and any of our Trustees, our
named executive officers or other vice presidents, or entity in which any of them has an ownership interest, must
be approved in advance by the Audit Committee pursuant to our written Code of Business Conduct and Audit
Committee charter. Audit Committee approval is not required for us to enter into a lease with an entity in which
any of our Trustees is a director, employee or owner so long as the lease is entered into in the ordinary course of
business and is negotiated at arms-length and on market terms.
We have no related party transactions with any of our Trustees that are required to be disclosed. None of our
named executive officers has any indebtedness to the Company or any relationship with the Company other than
as an employee and shareholder. Employment and change-in-control arrangements between the Company and
the named executive officers are described in the “Potential Payments on Termination of Employment and
Change-in-Control” section below.
Proposal 1: Election of our Trustees
Our Board has seven trustees, all of whom have been nominated to stand for election at the 2022 annual
shareholder meeting. All nominees are currently trustees of the Company having previously been elected by our
shareholders in May 2021. Our Board has determined that each nominee for election as a trustee at the annual
meeting is an independent trustee, except for Mr. Wood who serves as our Chief Executive Officer. Each trustee
is elected to hold office until our next annual meeting and until his or her successor is elected and qualified.
You are entitled to cast one vote per share for each of the seven nominees. Proxies may not be voted for more
than seven individuals. An “abstention” or “broker non-vote” will have no effect on the outcome of the vote for this
proposal. Our Bylaws require that a nominee receive a majority of votes cast in order to be elected. Any nominee
who does not receive a majority of votes cast will be required to submit a resignation to the Nominating
Committee which would then make a recommendation to the Board as to whether to accept the resignation. The
decision by the Board on any resignation would be publicly disclosed, along with the rationale for the decision,
within 90 days after the election. We believe this process is a best practice and provides accountability to our
shareholders. Over the past 5 years, each of these nominees has received, more than 93% of the votes cast at
each shareholder meeting at which he or she stood for election.
Our Board recommends a vote FOR each of the seven nominees
11
Trustee Characteristics and Selection
integrity, demonstrated exceptional
The Nominating Committee has primary responsibility for identifying and recommending individuals to be added to
the Board and stand for election by shareholders. Individuals identified should have the highest personal and
professional
intelligence and judgment, have proven leadership skills, be
committed to our success, have the requisite skills necessary to advance our long-term strategy, and have the
ability to work effectively with our Chief Executive Officer and other members of the Board. In addition, the
committee assesses the contribution that a particular candidate’s skills and expertise will make with respect to
guiding our strategy and management when considered as a whole with the skills and expertise of other trustees.
To identify, recruit and evaluate qualified candidates for the Board, the Board first looks to individuals known to
current Board members through business and other relationships. If the Board is not able to identify qualified
candidates in that way, the services of a professional search firm would be used. In addition, any shareholder, or
a group of up to 20 shareholders, that has continuously owned for 3 years at least 3% of the Company’s
outstanding common shares of beneficial interest can nominate and include in the Company’s annual meeting
proxy materials up to the greater of two trustees or 20% of the number of trustees serving on the Board, provided
forth in our Bylaws. For further
that
information regarding submission of a trustee nominee using the Company’s proxy access Bylaw provision or
otherwise, see the “Shareholder Proposals for the 2023 Annual Meeting” section starting at page 45.
the shareholder(s) and the nominee(s) satisfy the requirements set
Board Diversity and Tenure
A critical consideration for the Board is ensuring that there is diversity on the Board that can bring different
viewpoints to discussions that reflect their diverse backgrounds and experiences. Although the Board does not
have a formal diversity policy, the Board believes that having representation of a diversity of skills, ages, tenure,
gender and ethnicity are all factors that have to be considered, consistent with the goal of creating a Board that
best serves the needs of the Company and our shareholders.
Gender
Race and Ethnicity
Women Committee Chairs
Board Refreshment
43%
Women
Board Tenure
14%
Racially
Diverse
67%
Committees Chaired by
Women
2/3rd
Non-management trustees
joined Board in last 5 years
Average
Tenure Non-Management
7.8 years
2
2
2 years or less
3-5 years
3
> 5 years (includes our chief executive officer)
12
Qualifications and Experience of Nominees
In considering each trustee nominee, the Board evaluated such person’s background, qualifications, attributes
and skills to serve as a trustee. The Board considered the nomination criteria discussed above, as well as the
years of experience many trustees have had working together on the Board and the deep knowledge of the
Company they have developed as a result of such service, all of which are critically important in our business
given the long-term nature of many of our decisions. The Board also evaluated each of the director’s contributions
to the Board and his or her role in the operation of the Board as a whole using, among other things, the results of
the annual assessments. We believe our trustee nominees bring a well-rounded variety of experiences,
qualifications, attributes and skills, and represent a mix of deep knowledge of
the Company and fresh
perspectives. The table below summarizes some of the experience, qualifications, attributes and skills of our
trustee nominees.
l
i
e
n
e
S
t
d
o
o
W
r
e
d
e
a
F
d
n
a
l
l
o
H
l
e
a
H
-
b
m
a
L
r
e
d
a
N
n
a
d
r
O
Skill
Public Company Board Service
Experience with operation of corporate boards
REIT/Public Company Executive
Leadership experience on wide range of
relevant topics
Financial Expertise/Literacy
Expertise to oversee financial performance and
reporting and internal controls
Real Estate Investing/Finance
Expertise to oversee capital investment
Retail Industry
Understanding issues facing primary revenue
stream
Human Capital Management
Experience for overseeing compensation,
succession and recruitment and retention of
employees
Corporate Responsibility Oversight
Provides accountability and value creation
through ESG efforts and otherwise
Risk Management Oversight
Identification and management of risk that could
adversely impact the Company
Board Diversity
Women
Race/Ethnicity
This high-level summary is not intended to be an exhaustive list of each of our trustee’s skills or contributions to
the Board but we do expect each trustee nominee to be knowledgeable in these areas. Further information on
each trustee, including some of their specific experiences, qualifications, attributes and skills, is set forth in the
biographies on pages 14 to 17 below.
13
Additional Board Service
Over the past year, requests were approved for Ms. Lamb-Hale to serve on the board of Kroll Midco Corporation
and for Mr. Ordan to serve on the board of The Carlyle Group, Inc. The primary factors considered by the
Nominating Committee with respect to Ms. Lamb-Hale’s request included her familiarity with Kroll given her prior
employment with that company, her current role as general counsel of Cummins, Inc. and the experience and
insights she could gain from serving on the board of another company. After weighing those factors,
the
Nominating Committee concluded that Ms. Lamb-Hale’s service on the Kroll board would not adversely impact her
service on our Board and approved her request. The year-end evaluation of Ms. Lamb-Hale confirmed that her
service on the Kroll board had not impacted her performance as a trustee on our Board.
With respect to Mr. Ordan’s request to serve on the board of The Carlyle Group effective as of April 1, 2022, the
request was handled by our Non-Executive Chairman of the Board and presented to the entire Board to avoid any
conflict with Mr. Ordan in his role as chair of the Nominating Committee. In considering the request, the Board
took into account the considerable broad perspective he would bring to our Board as a Carlyle board member
given that company’s strong reputation and breadth of investing expertise, his unique background as both a
former REIT CEO and a retailer CEO, as well as his invaluable past performance on our Board. After carefully
considering these items, the Board unanimously approved Mr. Ordan’s request to serve on the board of The
Carlyle Group, concluding that such service would not adversely impact his service on our Board, and
acknowledging that the Board would have the opportunity to reevaluate that conclusion as part of the end-of-year
2022 trustee evaluations which would form the basis for nomination to our Board in 2023.
Our Nominees
Provided below is information about our Board’s nominees, including their age, the year in which each trustee first
became a trustee of our Company, their business experience for at least the past five years, the names of
publicly-held companies (other than our Company) where they currently serve as a director, and additional
information about the specific experience, qualifications, skills, or attributes that led to our Board’s conclusion that
each nominee should serve as a trustee of our Company.
DAVID W. FAEDER
Managing Partner, Fountain Square Properties
Managing Member, Kensington Senior Living
Committees:
Audit
•
Nominating
•
Age: 65
Trustee Since: 2003
Independent; Non-Executive Chairman
Other Public Company Boards:
•
Arlington Asset Investment Corp.
Background
Mr. Faeder has been the managing partner of Fountain Square Properties since 2003 and of Kensington Senior Living since
2011, both of which are focused on the ownership, operation and development of senior housing. Prior to that, he held
various positions at Sunrise Senior Living from 1993 to 2003. Those positions included Vice Chairman, President and
Executive Vice President-Chief Financial Officer. Mr. Faeder began his career in public accounting before moving into
investment banking immediately prior to joining Sunrise. Mr. Faeder received a BS in Business Administration from Old
Dominion University and an MBA from the Colgate Darden Graduate School of Business at the University of Virginia.
Mr. Faeder has been designated by the Board as an audit committee financial expert in accordance with the SEC definition.
Skills and Qualifications
Mr. Faeder has deep levels of experience in leadership, real estate investment and development as well as finance and
accounting acquired from his time as a private investor and as a public company CFO coupled with his public company and
accounting background. This experience provides valuable perspective on our investment decisions, alignment of our
capital structure to support those investments and on our financial reporting. His experience in senior living also provides
valuable insights for a growing area that could be a source of additional value creation at a number of our properties.
14
ELIZABETH I. HOLLAND
Chief Executive Officer, Abbell Credit Corporation
and Abbell Associates, LLC
Age: 56
Trustee Since: 2017
Independent
Committees:
•
•
Compensation (Chair)
Audit
Other Public Company Boards:
VICI Properties, Inc.
•
Background
Ms. Holland is the Chief Executive Officer of Abbell Credit Corporation and Abbell Associates, LLC, a private real estate
company. She has held that position since 1997. Prior to that, she served as a senior staff attorney on the Congressional
Bankruptcy Review Commission (1996-1997), as a business reorganization attorney at Skadden, Arps, Slate, Meagher &
Flom (1993-1996) and as a fixed income portfolio manager at Brown Brothers Harriman & Company from (1989-1990).
From 2016-2017, Ms. Holland served as the Chairman of the Board of Trustees for ICSC (f/k/a International Council of
Shopping Centers) and has served as a trustee for that organization since 2004. Ms. Holland earned a BA from Hamilton
College and a JD from Brooklyn Law School. In addition to her public board service, Ms. Holland serves on the boards of
1000 Friends of Iowa, a non-profit organization focused on responsible land use, and Primo Center for Women & Children
whose mission is to provide family shelter and permanent supportive housing and other supportive services to homeless
families in Chicago.
Skills and Qualifications
Ms. Holland brings valuable insights into retailers and the retail industry in general from her time in leadership positions with
ICSC and her own investing experience in retail real estate as well as a wealth of business and leadership experience from
running a private real estate company. Those perspectives are invaluable for a retail based real estate company.
NICOLE Y. LAMB-HALE
Vice President and General Counsel,
Cummins, Inc.
Committees:
•
•
Compensation
Nominating
Age: 55
Trustee Since: 2020
Independent
Background
Ms. Lamb-Hale is the Vice President and General Counsel of Cummins, Inc., a position she has held since 2021. Prior to
that, she was a Managing Director at Kroll, a division of Duff & Phelps (2016-2021), a Senior Vice President at Albright
Stonebridge Group (2013-2016), a global strategy consultancy, and served as the Assistant Secretary of Commerce for
Manufacturing and Services in the International Trade Administration of the U.S. Department of Commerce (2010-2013)
and as the Deputy General Counsel for the U.S. Department of Commerce (2009-2010). Ms. Lamb-Hale is a licensed
attorney who began her career at law firms (1991-2009) where she practiced in the areas of business restructuring and
public finance. Ms. Lamb-Hale earned an AB in Political Science from the University of Michigan and a JD from Harvard
Law School. In addition to her service on Federal’s Board, Ms. Lamb-Hale serves on the board of Kroll Midco Corporation
as well as the boards of various non-profit groups including the American Leadership Initiative, The Holton Arms School,
Shiloh Baptist Church of Washington, D.C. and the Center for International Private Enterprise.
Skills and Qualifications
Ms. Lamb-Hale’s 30 years of experience, spanning the private and public sectors, in law, risk mitigation and restructuring,
coupled with her leadership skills gained from her varied executive roles, provides the company with diverse and valuable
insights as it develops and implements its current and long-term business strategies.
15
ANTHONY P. NADER, III
Managing Director of SWaN & Legend Venture
Partners
Committees:
Audit
•
Nominating
•
Age: 58
Trustee Since: 2020
Independent
Other Public Company Boards:
•
Arlington Asset Investment Corp.
Background
Mr. Nader is a Managing Director of SWaN & Legend Venture Partners, an investment firm that Mr. Nader co-founded in
2006, with investments in growth-oriented companies. Mr. Nader also serves as Vice Chairman of Asurion, a privately held
company with over 19,000 employees that provides technology protection to approximately 300 million customers
worldwide. In 2008, Mr. Nader successfully merged his prior company, National Electronics Warranty (“NEW”) with Asurion.
Mr. Nader joined NEW in 1990 as Chief Operating Officer, was named President in 1999 and Chief Executive Officer in
2006, a position he held until 2013. Under his leadership, NEW grew to be the largest global provider of extended service
plans for the consumer electronics and appliance industry. Mr. Nader earned a BSBA in Finance from John Carroll
University and an MBA from Weatherhead School of Management at Case Western Reserve University. Mr. Nader also
serves as the Chairman of the Inova Health System Board of Trustees. Mr. Nader has been designated by the Board as an
audit committee financial expert in accordance with the SEC definition.
Skills and Qualifications
Mr. Nader provides our Board with more than 30 years of business and leadership experience as well as a deep investment
background in both real estate and growth-oriented companies including retailers. This background complements others on
our Board and adds to our depth of financial and investing expertise that is so critical to the success of the Company.
MARK S. ORDAN
Chief Executive Officer, Mednax, Inc.
Committees:
•
•
Nominating (Chair)
Compensation
Age: 63
Trustee Since: 2019
Independent
Other Public Company Boards:
• Mednax, Inc.
•
The Carlyle Group, Inc. (as of 4/1/2022)
Background
Mr. Ordan currently serves as Chief Executive Officer of Mednax, Inc., a position he has held since 2020. Mednax is a
physician-led health care organization that partners with hospitals, health systems and health care facilities to offer clinical
services spanning the women’s and children’s continuum of care. Prior to joining Mednax, Mr. Ordan held chairman and
Chief Executive Officer roles with Quality Care Properties, Inc. (2016-2018), Washington Prime Group (2015-2016), Sunrise
Senior Living (2008-2013), The Mills Corporation (2006-2007), Balducci’s (2003-2006), High Noon Always (1999-2003),
Chartwell Health Management (1996-1999) and Fresh Fields Market (1989-1996). He began his career in investment
banking at Goldman Sachs in 1983. Mr. Ordan earned a BA from Vassar College and an MBA from Harvard Business
School. Mr. Ordan currently serves on the board of the United States Chamber of Commerce (since 2012) and previously,
Mr. Ordan served on the public company boards of VEREIT, Inc. (2015-2020), Forest City Realty Trust (2018), Quality Care
Properties (2016-2018) and Washington Prime Group (2014-2017).
Skills and Qualifications
Mr. Ordan provides our Board with many years of leadership and governance experience from his years of serving as CEO
of multiple companies and as CEO and a director of other publicly traded REITs, including retail REITs. His role on the
Board is critical because it provides the unique combination of the perspectives of a public company retail landlord with the
perspectives of retail tenants, given his experience of having founded and operated multiple retail concepts. In addition,
Mr. Ordan is physically located in the Washington, DC area where our corporate headquarters is located which gives him
unique knowledge of many of our properties and the markets in which they are located and makes him proximate to us in
order to fulfill his obligations as a trustee.
16
GAIL P. STEINEL
Owner of Executive Advisors
Age: 65
Trustee Since: 2006
Independent
Committees:
•
•
Audit (Chair)
Compensation
Background
Ms. Steinel is the owner of Executive Advisors (2007-present), a business that provides consulting services to chief
executives and senior officers and leadership seminars/speeches to various organizations. Prior to creating her own
consulting firm, Ms. Steinel was the Executive Vice President of Global Commercial Services of Bearing Point (2002-2007)
and a global managing partner for Arthur Andersen’s Business Consulting Practice (1984-2002) after beginning her career
as an auditor at Arthur Andersen (1977-1984). Ms. Steinel received a BA in Accounting from Rutgers University.
Ms. Steinel’s public company board service experience includes MTS Systems Corporation (2009-2020). In addition,
Ms. Steinel serves on the boards of Invesque, Inc., a Toronto stock exchange company that invests in a highly diversified
portfolio of properties across the health care spectrum throughout the US and Canada, DAI, an international development
company that tackles fundamental social and economic development problems caused by inefficient markets, ineffective
governance, and instability, and the Center for Hope & Safety, a nonprofit that assists women and children suffering from
domestic violence. Ms. Steinel has been designated by the Board as an audit committee financial expert in accordance with
the SEC definition.
Skills and Qualifications
Ms. Steinel has over 35 years of experience in auditing, leadership, leadership development and financial systems that
provides us with valuable insights on leadership, leadership development, risk management and systems operations.
DONALD C. WOOD
Chief Executive Officer, Federal Realty Investment Trust
Age: 61
Trustee Since: 2003
Background
Mr. Wood currently serves as our Chief Executive Officer, a role he has held since 2003. Before assuming that role, he
served as our President (2001-2003) and held the titles of Chief Operating Officer and Chief Financial Officer at various
points from 1998-2003. Prior to joining Federal, Mr. Wood served as the Chief Financial Officer for Caesers World, Inc.
(1996-1998), the Assistant/Deputy Controller of ITT Corporation (1990-1996), the VP of Finance for Trump Taj Mahal
Associates (1989-1990) and as an audit manager with Arthur Andersen (1982-1989). Mr. Wood received a BS in Business
Administration from Montclair State College. Mr. Wood previously served as a director of public companies Quality Care
Properties (2016-2018) and Post Properties (2011-2016). In addition to his public company board service, Mr. Wood served
as Chairman of the Board of Trustees of the National Association of Real Estate Investment Trusts (2011-2012) and
previously served on the Board of Governors of ICSC (f/k/a International Council of Shopping Centers).
Skills and Qualifications
Mr. Wood’s 24 years of experience with Federal and his responsibilities as chief executive officer provide the Board with
familiarity and details on all aspects of operating the company.
17
Trustee Compensation
As of December 31, 2021, our standard arrangement
included the following:
for compensation for our non-management
trustees
Trustee Compensation Element
Amount Payment Form
Board Service
Annual Retainer
Annual Retainer for Non-Executive Chairman
Committee Chairs
Audit Committee
Compensation Committee
Nominating Committee
$
$
$
$
$
200,000 40% cash; 60% equity
225,000 60% cash; 40% equity
25,000 Cash
15,000 Cash
15,000 Cash
In 2021, the annual retainer for the Non-Executive Chairman was decreased from $275,000 to $225,000 and
payment of the retainer for the Non-Executive Chairman was adjusted to 60% cash and 40% equity. No other
changes were made to non-management Trustee compensation in 2021 and no further changes have been made
for 2022. All amounts are prorated for any partial years of service and shares issued are fully vested on the grant
date.
Our non-management Trustees are required to maintain ownership of our shares having a value equal to at least
5 times the amount of their annual cash retainer. This requirement must be met within 5 years after joining the
Board. As of December 31, 2021, all of our Trustees who have been on the Board for 5 or more years were in full
compliance with this ownership requirement. We expect our newest Trustees who joined the Board in 2019 and
2020 to be in compliance with this equity ownership requirement within the 5-year time frame.
The actual compensation awarded to our Trustees for service in 2021 was as follows:
Name
Jon E. Bortz(3)
David W. Faeder(4)
Elizabeth I. Holland
Nicole Y. Lamb-Hale
Anthony P. Nader, III
Mark S. Ordan
Gail P. Steinel
Joseph S. Vassalluzzo(3)
Total
Annual Retainer
Paid in Cash
Paid in Shares(1)
Committee
Chair Fees(2)
68,493 $
116,315 $
80,000 $
80,000 $
80,000 $
80,000 $
80,000 $
94,178 $
- $
100,192 $
120,000 $
120,000 $
120,000 $
120,000 $
120,000 $
- $
- $
8,836 $
15,000 $
- $
- $
6,164 $
25,000 $
- $
Total
68,493
225,343
215,000
200,000
200,000
206,164
225,000
94,178
678,986 $
700,192 $
55,000 $
1,434,178
$
$
$
$
$
$
$
$
$
(1) Shares were issued on January 3, 2022 with the number of shares received by each Trustee determined by dividing the
amount to be paid in shares by $136.32, the closing price of our shares on the NYSE on December 31, 2021.
(2) Prorated for partial year of service. Mr. Faeder served as Compensation Committee Chair until Ms. Holland became Chair
on August 3, 2021. Ms. Holland served as the Nominating and Corporate Governance Chair until Mr. Ordan became Chair
on August 3, 2021.
(3) Pro-rated for partial year of service ending May 4, 2021.
(4) Prorated for partial year of service as a trustee and as the non-executive chairman effective May 5, 2021.
18
Proposal 2: Approving our Executive Compensation
We are seeking an advisory vote to approve our executive compensation for 2021. At our 2017 annual
meeting of shareholders, a majority of shareholders voted to have a “Say on Pay” vote each year. As a result,
we will conduct an advisory vote on executive compensation annually at least until the next shareholder
advisory vote on the frequency of such votes.
Although the “Say on Pay” vote is advisory and is not binding on our Board, our Compensation Committee will
take into consideration the outcome of the vote when making future executive compensation decisions.
Our Board has designed our current executive compensation program to appropriately link compensation
realized by our named executive officers to our performance and properly align the interests of our named
executive officers with those of our shareholders. The details of this compensation for 2021, and the reasons
we awarded it, are described in the “Compensation Discussion and Analysis,” starting below.
Our Board recommends a vote FOR the compensation of our NEOs
The text of the resolution if Proposal 2 is passed is:
RESOLVED, that the shareholders of the Company hereby approve, on an advisory basis, the compensation
of our NEOs as described in the CD&A and the Executive Compensation section that follows as required by
Item 402 of Regulation S-K.
The affirmative vote of a majority of votes cast at the Annual Meeting, in person or by proxy, is required to
approve this proposal. An “abstention” or “broker non-vote” will have no effect on the outcome of the vote for
this proposal.
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (CD&A) discusses the compensation objectives and principles
the following named executive officers
underlying our executive compensation decisions for 2021 for
(collectively, our “named executive officers” or “NEOs”).
Donald C. Wood
Chief Executive
Officer
Jeffrey S. Berkes
President and Chief
Operating Officer
Daniel Guglielmone
Executive Vice
President-Chief Financial
Officer and Treasurer
Dawn M. Becker
Executive Vice President-
General Counsel and
Secretary
19
2021 SUMMARY INFORMATION
Business Highlights
All executive compensation decisions are considered in the context of our financial and operational performance
for the year. Performance in 2021 was marked primarily by a quicker than anticipated recovery by retail and other
tenants from the impacts of COVID, continued focus on smart capital allocation with investments that position the
Company for long-term growth and sound execution of our basic business fundamentals of leasing and property
operations. Following are some of our performance highlights for 2021 that were considered in determining
compensation for our NEOs for 2021.
FFO per Share of $5.57*
$440M New Acquisitions
$486M Projects Placed in Service
Significantly exceeded
expectations with faster than
expected retailer recovery from
COVID and collection of larger
amount of past due rents than
anticipated
Acquired 5 new assets, 2 in a new
market. Each asset has significant
long-term value creation
opportunities and was acquired at
favorable, COVID impacted pricing.
Major projects, primarily Cocowalk
and new buildings at Assembly
Row placed into service and
delivering additional revenue to
drive growth over the next several
years
*
FFO per share is a non-GAAP financial measure. See Appendix A for a reconciliation of FFO per share to net
income.
Record Leasing Activity
Signed 593 new and renewal leases
for nearly 2.9 million square feet of
space
Increased Dividend for 54th Year
Increased dividend rate on our
common shares for the 54th
consecutive year, the longest such
record in the REIT industry
Executive Leadership
In February 2021, Jeffrey S. Berkes was promoted to the position of President and Chief Operating Officer. The
Committee approved a new compensation package for Mr. Berkes commensurate with his new responsibilities. A
more detailed discussion of that compensation package can be found on page 28.
Pay Decision Summary
The Committee did not change the targeted level of compensation for any of our NEOs for 2021 with the
exception of Mr. Berkes whose compensation was changed in connection his promotion. In addition, a share
grant was made to Mr. Guglielmone as described in more detail below. Based on our 2021 performance, our
annual bonus plan paid out at 125% of target and our long-term incentive plan paid out at 99% of target.
COMPENSATION PLAN OVERVIEW
Compensation Objectives
Our executive compensation program is structured with 3 primary objectives:
Align with Shareholders
Incentivize Performance
Provide Competitive Pay
Align executive compensation
with the interests of our
shareholders
Link executive compensation to
achieving short- and long-term
business objectives
Establish competitive market
compensation to compete and
retain top level talent critical to
our business
20
Primary Compensation Elements
The following diagram outlines the key elements of our compensation program and the objective of each element.
Pay Element
Salary
(Fixed)
Annual
Bonus
(At Risk)
Long-
Term
Incentive
(At Risk)
TOTAL
PAY
Pay Objective and Description
Salary: Provide Competitive Pay
Paid in cash; amount set based on experience,
responsibilities, skill, performance and market conditions
Annual Bonus: Align with Shareholders, Incentivize
Performance, Provide Competitive Pay
Incentivizes annual performance goal that supports long-
term value
Paid in cash; executive can elect to take up to 25% in
shares that vest over 3 years
FFO per Share is a meaningful annual earnings metric
for REITs
Long-Term Incentive: Align with Shareholders, Incentivize
Performance, Provide Competitive Pay
Paid in shares that vest over 3 years; ability for executive
to take up to 50% in options that vest over 5 years
Measured over 3-year performance period
Relative Total TSR: Comparative returns for shopping
center REITs generated over performance period
FFO Multiple Premium: Reflects investor sentiment for
ability to deliver future value
Return on Invested Capital: Reflects effectiveness of
capital allocation decisions
FFO per Share
Relative TSR
(34%)
FFO Multiple
Premium (33%)
Return on
Invested Capital
(33%)
Pay for Performance
Our executive compensation program rewards successful annual performance and encourages long-term value
creation for our shareholders with the heaviest weighting towards performance based compensation. Both short-
and long-term incentive compensation is subject to achieving objective, at-risk performance hurdles across
multiple metrics with short-term performance measured over a 1-year period and long-term performance
measured over a 3-year period. The charts below show the mix of 2021 fixed pay (base salary) and at-risk pay
incentives (annual bonus and long-term incentive) at target levels of compensation for our CEO and the average
of the target level compensation for our three other NEOs.
Our CEO
13%
Base Salary
Average of Other NEOs
19%
Annual Cash Bonus
29%
Base Salary
68%
Long-Term
Equity Award
87%
At-Risk
Performance
Based Pay
47%
Long-Term
Equity Award
71%
At-Risk
Performance
Based Pay
21
24%
Annual Cash Bonus
Setting Compensation
Annual compensation for our NEOs is paid in both cash and restricted shares with a significant portion at risk and
contingent on achieving either annual or long-term performance goals. The total potential compensation for our
NEOs is established based on the scope of his/her individual responsibilities and contributions to our performance
taking into account competitive market compensation paid for similar positions. Our Compensation Committee
determines appropriate levels of total compensation for each NEO by applying their individual understanding,
experiences and judgments in the national marketplace of senior level real estate positions and related industry
pay in both public and private companies that may compete for our executives while also considering the relative
importance of various positions at the Company given our business plan and organization compared with the
business plans of our major competitors. The Compensation Committee also consults compensation surveys
prepared for the National Association of Real Estate Investment Trusts (“NAREIT Survey”) to confirm its
assessment of appropriate market compensation for our NEOs, reviewing the information reported for each
position by the 112 real estate investment trusts (“REITs”) that participated in the latest survey as well as by the
approximately 24 retail focused REITs that participated in that survey. In addition, in finalizing decisions for 2021
with respect
the Compensation
Committee discussed market compensation and various matters with our independent compensation consultant,
Semler Brossy Consulting Group (“SBCG”). SBCG provides services solely to the Compensation Committee,
does not provide any services directly to management and was determined by the Compensation Committee to
be independent with no conflicts of interest.
to annual bonus payouts and payouts under our long-term incentive plan,
Using the three components of compensation, their knowledge and experience in the marketplace, the NAREIT
Survey information and the discussions with SBCG, the Compensation Committee establishes an individual
compensation package for each NEO setting the target level of potential compensation for each NEO.
Say on Pay Vote
At the 2021 annual meeting of shareholders, 90% of the votes cast favored our “Say on Pay” proposal. The
together with recommendations of SBCG, and elected to keep in place
Committee considered this result
unchanged the basic structure and elements of our executive compensation program.
2021 COMPENSATION DECISIONS
Below is a description of the individual elements of pay and the design used to determine compensation for 2021,
followed by a more detailed review of performance and pay decisions for each of our NEOs.
Base Pay
No changes were made in 2021 to base pays for either Mr. Wood, Mr. Guglielmone or Ms. Becker. Mr. Berkes’
base pay was increased to $575,000, an increase of approximately 9.5%, in connection with his promotion to
President and Chief Operating Officer.
22
Annual Bonus Program
Our bonus plan is an annual cash incentive program designed to reward achievement for the current year
measured against a pre-determined hurdle. The process to determine the annual bonus that actually gets paid to
each of our NEOs consists of three steps:
STEP 1
What We Do
How We Do It
2021 Decision
Establish bonus potential for
each NEO
Determine target bonus for each
NEO as a percentage of base pay
with target percentage determined
as part of NEO’s total
compensation package
The Committee did not make any
changes to the target bonus
percentage for any of our NEOs for
2021, leaving the bonus potential
for each NEO unchanged from the
prior year
The Compensation Committee determines for each NEO an appropriate annual bonus target set as a percentage
of base pay. The total potential bonus for each NEO is considered in the context of ensuring that each NEO’s
overall compensation potential is within market for the position, has a significant component based on company
performance and provides appropriate incentive for the NEO to drive Company performance. The Committee did
not adjust the target bonus percentage for any of our NEOs in 2021. The following table sets forth the bonus
potential for each NEO and the original date on which his or her bonus target was established.
2021
Target
Bonus Payout Potential
Base Pay
Percentage
Threshold (75%)
Target (100%)
Stretch (125%)
Target%
$
$
$
$
950,000
575,000
500,000
475,000
150% $
1,068,750
100% $
75% $
75% $
431,250
281,250
267,188
$
$
$
$
1,425,000
575,000
375,000
356,250
$
$
$
$
1,781,250
No change since 2010
718,750
468,750
445,313
No change since 2019
No change since 2016
No change since 2003
NEO
Mr. Wood
Mr. Berkes
Mr. Guglielmone
Ms. Becker
STEP 2
What We Do
How We Do It
2021 Decision
Determine level of available
funding for bonus payouts
Based on FFO per diluted share
achieved by the Company for the
year measured against previously
established hurdles. See
additional discussion below
Bonus pool funding established at
125% of target based on achieving
FFO per diluted share for 2021 of
$5.57. See additional discussion
below
The Compensation Committee has determined that FFO per diluted share is the appropriate measure to use for
our annual bonus program. It is a key annual metric used by investors, the Board and management use it to
evaluate the Company’s performance for the year and it reflects the full range of decision making and execution
for the Company for the year. The Committee sets the required performance level for FFO per diluted share at the
beginning of each year with levels reflecting performance that ranges from acceptable at the threshold level to
exceptional at the stretch level.
The FFO per diluted share achievement levels for our 2021 annual bonus program were established by the
Compensation Committee early in the year based on our budget for the year which was heavily impacted by our
23
view of the continuing impact of COVID-19 on our tenants’ ability to pay rent due under their leases. To try to
capture this higher than normal level of uncertainty around expected performance for 2021, the Committee set our
target bonus payout slightly higher than our initial budget for the year and established a range of $0.25 per share
from threshold payout to stretch payout, a range that was nearly 45% wider than either our 5 or 10-year historical
average. Following are the achievement levels set by the Compensation Committee and our actual level of FFO
per share achieved.
Threshold
FFO per Share
Payout as % of Target
$
$
4.55
75%
Target
4.68
100%
$
Stretch
$
4.80
125%
Actual
5.57
125%
See Appendix A for a reconciliation of FFO per share to net income.
Our actual FFO per share exceeded our bonus target by approximately 19% driven primarily by the businesses of
our retail tenants rebounding more quickly and with more strength than we contemplated in our budget. We were
able to collect significantly more rent tenants owed for the prior year of 2020 than we had anticipated, fewer
tenants closed their doors than expected which led to increased revenue and we experienced significantly lower
levels of credit
the time our bonus target was established. Significant
outperformance during 2021 as compared to initial expectations for the year was a consistent theme amongst
other public company retail landlords with 7 similarly situated retail landlords having also exceeded their initial
expectations provided to investors by 19% on average.
loss than we had planned for at
STEP 3
What We Do
How We Do It
2021 Decision
Determine final bonus
payment to each NEO based
on available funding
determined by Company
performance
25% of total potential earned based
on company performance;
remaining 75% earned based on
Committee evaluation of NEO
performance
Based on the individual
achievements of each NEO in 2021
outlined in more detail below, the
Committee awarded each NEO
100% of his or her bonus potential
for the year
With the bonus pool having been funded based on Company performance, the final step is to determine how
much of that potential bonus each of our NEOs will actually be paid. Each NEO is entitled to 25% of his or her
bonus potential based on Company performance. The remaining 75% of the bonus potential is earned based on
the Committee’s assessment of each individual’s performance and whether that NEO achieved the objectives set
out by the Company within that NEO’s area of responsibility. The Committee elected to award each of our NEOs
100% of the individual performance portion of their bonus potential. The detailed considerations supporting that
decision are set forth on pages 27-30. The table below summarizes the final bonus payouts to each of our NEOs.
Earned Based on
NEO
Mr. Wood
Mr. Berkes
Mr. Guglielmone
Ms. Becker
Bonus
Potential
Company
Performance (25%)
Individual
Performance (75%)
Total Earned
$ 1,781,250
$
$
$
718,750
468,750
445,313
$
$
$
$
445,313
179,688
117,188
111,328
$
$
$
$
1,335,938
$ 1,781,250
539,063
351,563
333,984
$
$
$
718,750
468,750
445,313
24
Our NEOs have the option to receive up to 25% of the final bonus payout in the form of shares that vest equally
over three years with accelerated vesting on death, disability, change in control and termination without cause. In
consideration of the extended payment period for this portion of the bonus already earned, the employee receives
shares valued at 120% of the portion of the annual bonus he/she elects to receive in shares. This option is made
available to all participants in our annual bonus plan at the level of Director and above. The cash portion of the
2021 annual bonus is reflected in the “Non-Equity Incentive Plan Compensation” column in the Summary
Compensation Table in this proxy statement. The portion of the annual bonus paid in shares will be included in
the “Stock Awards” column in the Summary Compensation Table and the Grants of Plan-Based Awards Table in
next year’s proxy statement.
Long-Term Incentive Program
The largest portion of compensation for each of our NEOs comes from our equity based long-term incentive
program that aligns the interests of our NEOs with shareholders by incentivizing our NEOs to identify and
accomplish longer-term business objectives that generate value through share price appreciation and dividend
growth. Our program measures performance over the prior 3-year period with shares awarded at the end of the
3-year performance period based on actual results. Performance for purposes of our long-term incentive program
is measured against the following preset metrics.
Plan Metric
Weighting
Description
Relative Total Shareholder
Return
34%
FFO Multiple Premium
33%
Return on Invested Capital
33%
•
•
•
•
•
•
•
•
•
•
Compares our total shareholder return, taking into account
share price appreciation and assuming reinvestment of
dividends, against the total return achieved by the
Bloomberg REIT Shopping Center index (“BBRESHOP”)
BBRESHOP is comprised of publicly traded companies that
own and operate open air shopping centers
BBRESHOP provides an appropriate basis to compare our
performance against similarly situated companies
Compares FFO multiple at which the Company is trading at
the end of the performance period against the average FFO
multiple at which all other public shopping center
companies (other than the Company) are trading at that
time
FFO multiples are provided by a third party investment bank
Serves as a measure of investor expectations of our long-
term growth potential and confidence in our management
team versus other publicly traded open air shopping center
companies
Reflects how effectively we have allocated our
shareholders’ capital during the 3-year performance period
Incentivizes sound, long-term investment decisions focused
on generating strong future shareholder returns
Encompasses the revenue and investment impact from all
capital decisions
Required performance levels established in advance to
reflect changing market expectations as we acquire, sell
and develop assets
25
The required performance levels for each of these metrics and the actual performance achieved for the 3-year
performance period from 2019 through 2021 is set forth below.
Performance Level
Payout as Percent of Target
Weighting
Relative Total Return
FFO Multiple Premium
Return on Invested Capital
34%
33%
33%
Treshold
50%
Index - 5%
Target
100%
Index
Stretch
150%
Actual
Payout
Index + 5%
-5.83%
At least +5%
At least +15%
At least +20%
47.10%
6.25%
6.50%
6.75%
6.76%
0%
150%
150%
Based on these levels of performance, each of our NEOs is eligible for total payout under the plan at 99% of his/
her target long-term incentive award. The Committee has the right to increase or decrease each NEO’s award
under our long-term incentive program by up to 20% to reflect individual performance. The Committee elected to
exercise that right with respect to the award for Mr. Wood as discussed in more detail on page 27. The amount
each NEO is eligible to receive under our long-term incentive program and the amount actually awarded are set
forth below.
NEO
Mr. Wood
Mr. Berkes
Mr. Guglielmone
Ms. Becker
Long-Term Equity Potential
Amount
Amount
Threshold
Target
Stretch
Earned
Awarded
$ 2,500,000
$ 5,000,000
$ 7,500,000
$ 4,950,000
$ 5,940,000
$
$
$
500,000
$ 1,000,000
$ 1,500,000
450,000
300,000
$
$
900,000
$ 1,350,000
600,000
$
900,000
$
$
$
990,000
891,000
594,000
$
$
$
990,000
891,000
594,000
See the discussions on pages 27-30 for the factors considered by the Compensation Committee in determining
the final long-term incentive awards payable to our NEOs for the 2019 through 2021 performance period.
The equity awards under our long-term incentive program are paid in the form of restricted shares that are issued
upon completion of a 3-year performance period and then vest over an additional period of 3 years from the date
they are issued. The actual number of shares awarded to each of our NEOs is determined by dividing the amount
of the award by the closing price of our stock on the NYSE on the date the awards are made. All participants in
our long-term incentive program, including our NEOs, have the ability to take up to half of his/her award in the
form of options that vest over 5 years. For 2021, all of our NEOs elected to take the entirety of his/her award in
the form of restricted shares.
There is no amount included in the Summary Compensation Table or Grants of Plan-Based Awards Table in this
proxy statement for long-term incentive awards earned for the 2019-2021 performance period. Those amounts
will be included in next year’s proxy statement. The long-term incentive awards included in the Summary
Compensation Table and the Grants of Plan-Based Awards Table for our NEOs in this proxy statement relate to
awards made in February 2021 for the 3-year performance period ending December 31, 2020.
26
2021 Compensation Decisions
Below is a summary of the 2021 earned and awarded compensation for our NEOs and the accomplishments
considered by the Committee when determining 2021 compensation.
Donald C. Wood
Chief Executive Officer
Age: 61
Joined: 1998
Responsibilities
Mr. Wood has overall responsibility for the
development and execution of our long-term
strategic priorities to generate value for our
shareholders
2021 Compensation (in 000s)
Base Pay:
Annual Bonus:
Long-Term Equity:
Total:
$ 950
$1,781
$5,940
$8,671
2021 Compensation Decisions and Rationale
The Committee’s practice for the last decade has been to consider and implement any necessary market
adjustments to Mr. Wood’s target compensation package every 5 years. With the last adjustment having
occurred in 2016, a market adjustment was scheduled to be considered for 2021 compensation. The
Committee decided, however, that it would not be appropriate to make any market compensation adjustments
in 2021 given the continuing COVID-related business uncertainties and elected to defer consideration of
market pay adjustments until 2022. As a result, Mr. Wood’s target compensation was not changed for 2021,
remaining at the level established in 2016.
Based on the performance of the Company and Mr. Wood’s performance in 2021, and after considering market
data provided by SBCG, the Committee elected to award Mr. Wood his full annual bonus opportunity and to
increase Mr. Wood’s long-term incentive award by 20% for individual performance as permitted under the
provisions of the long-term incentive program. The Committee believed the adjustment was warranted given
Mr. Wood’s leadership of the Company, the fact that no market adjustments had been made to his
compensation since 2016 and that our compensation consultant indicated that the total award was still well
within market for a person with Mr. Wood’s experience and in light of Company performance. Given that 87%
of Mr. Wood’s target compensation is tied to our performance over a 1 and 3-year period, Mr. Wood’s pay
remains highly correlated to our performance.
2021 Key Achievements
✓ Led the Company’s efforts to execute on our long-term strategy and objectives
✓ Led succession planning with the promotion of Mr. Berkes to President and Chief Operating
Officer
✓ Led our overall efforts to maximize our post-COVID rent collections
✓ Led our record level of leasing activity to drive portfolio occupancy
✓ Led our diversity, equity and inclusion initiatives, including by taking a leadership role in the
Diversity Council of the National Association of Real Estate Investment Trusts
✓ Led continued advancement of overall strategy and objectives on environmental, social and
governance initiatives
✓ Led capital allocation decisions in acquisitions and developments intended to create significant
future value for our shareholders
27
Jeffrey S. Berkes
President and Chief
Operating Officer
Age: 58
Joined: 2000
Responsibilities
Mr. Berkes has overall responsibility for the
operation of the Company’s operating assets and
development projects as well as overall
responsibility for new property acquisitions
2021 Compensation (in 000s)
Base Pay:
Annual Bonus:
Long-Term Equity:
Total:
$ 575
$ 719
$ 990
$2,284
Other:
$1M restricted share award
$1M performance share award
$75,000 cash bonus
2021 Compensation Decisions and Rationale
The Committee retained SBCG to assist with developing Mr. Berkes’ 2021 target compensation package to
reflect his new position and increased responsibilities as President and Chief Operating Officer. The new
compensation package included an increase in base pay from $525,000 to $575,000 as well as two new equity
awards described below. No change was made to Mr. Berkes’ target bonus percentage or to his long-term
equity target. Included in the new package was a restricted share award of $1 million that will vest equally over
5 years provided Mr. Berkes remains employed by the Company and a performance award with the opportunity
to earn 10,441 restricted share units at target level performance (valued at the time of award at $1 million) in
the event the Company’s relative total shareholder return for the period from January 1, 2021 through
December 31, 2024 is at least equal to the total shareholder return for the BBRESHOP. Mr. Berkes could earn
as few as 5,221 share units if our total shareholder return is more than 5% below the BBRESHOP during the
performance period or as many as 20,882 share units if our total shareholder return exceeds the BBRESHOP
by at least 10%. Final results will be interpolated between the performance levels. At the end of the
performance period, Mr. Berkes will also be entitled to receive dividend equivalent units on each restricted
share unit that is earned. The Committee, in consultation with SBCG, determined that these awards, combined
with the basic compensation package, were within appropriate market ranges of compensation for a company
president with Mr. Berkes’ years of experience and expertise in the real estate industry and with the Company
and created an appropriate balance between time-based vesting and performance based awards to provide
additional retention value.
As part of the final 2021 compensation decisions, based on Mr. Berkes’ performance, the Committee awarded
Mr. Berkes his full bonus and full long-term equity award and, as part of a special bonus allocation that the
Company awarded to every employee in the Company other than Mr. Wood, the Committee awarded
Mr. Berkes a one-time cash bonus of $75,000 in recognition of the extraordinary efforts to manage the
Company through the worst of the financial impacts from COVID.
2021 Key Achievements
✓ Led the Company’s investment efforts that resulted in acquisition of 5 new properties with a total
value of $440 million
✓ Oversaw development efforts that resulted in delivery of more than $486 million of major
development projects placed into service and commencement of one new ground-up
development project and numerous smaller projects
✓ Oversaw redevelopment efforts to improve operating properties to better position them for long-
term growth
✓ Oversaw record level of portfolio leasing
✓ Oversaw efforts that resulted in significantly higher portfolio occupancy at the end of 2021 versus
2020
✓ Oversaw significantly improved rent collections ending 2021 at nearly 97%
28
Daniel Guglielmone
Executive Vice President-
Chief Financial Officer and
Treasurer
Age: 54
Joined: 2016
Responsibilities
Mr. Guglielmone has overall
responsibility for all Company
related financial activity including
forecasting, reporting and capital
allocation, in addition to investor
relations and East Coast
acquisitions
2021 Compensation (in 000s)
Base Pay:
Annual Bonus:
Long-Term Equity:
Total:
$ 500
$ 469
$ 891
$1,860
Other:
$1M restricted share award
$75,000 cash bonus
2021 Compensation Decisions and Rationale
2021 marked completion of 5 full years of service by Mr. Guglielmone as the Company’s Chief Financial Officer.
The Committee anticipated reviewing Mr. Guglielmone’s target compensation in 2021; however, given the
continuing COVID-related business uncertainties, the Committee determined that consideration of market pay
adjustments would be delayed until at least 2022. In August 2021, the Committee did award to Mr. Guglielmone
a restricted share award having a value of $1 million that will vest equally over five years subject to his continued
service at the Company. The Committee has not previously made off-cycle awards to its executive officers;
however, after reviewing market compensation information for other chief financial officers provided by SBCG
which showed that Mr. Guglielmone’s compensation at the target level and even at a maximum performance
level was significantly below market compensation for chief financial officers at other retail REITs and other
similarly sized REITs, the Committee believed it was important to start the process of bringing Mr. Guglielmone’s
compensation closer to market levels. Few changes had been made to Mr. Guglielmone’s compensation
package since he joined the Company in 2016 resulting in his target compensation growing less than 1% per
year on average and his maximum compensation potential growing at approximately 2% per year on average as
compared to inflation over that same 5-year period growing at approximately 2.5% per year and other similarly
situated chief financial officers having annual compensation grow at more than 3% on average. Given the gap
between Mr. Guglielmone’s compensation and market compensation levels, the Committee used this award as a
first step to bridging the gap and the value of this award will be taken into account as part of the changes
expected to be made to Mr. Guglielmone’s compensation package in 2022.
Based on the Committee’s evaluation of Mr. Guglielmone’s performance in 2021, the Committee awarded
Mr. Guglielmone his full bonus and full long-term equity award and, as part of a special bonus allocation that the
Company awarded to every employee in the Company other than Mr. Wood, the Committee awarded
Mr. Guglielmone a one-time cash bonus of $75,000 in recognition of the extraordinary efforts to manage the
Company through the worst of the financial impacts from COVID.
2021 Key Achievements
✓ Co-Led the Company’s investment efforts that resulted in acquisition of 5 new properties with a
total value of $440 million
✓ Led efforts to proactively manage our balance sheet resulting in improved year over year credit
metrics and attractive overall cost of capital
✓ Oversaw execution of strategically selected property sales to raise approximately $140 million of
attractively priced capital
✓ Led opportunistic equity raises through use of forward contracts under our at-the-market equity
program
✓ Led investor outreach and communications
✓ Led financial efforts enabling the Company to increase our annual dividend rate to common
shareholders for the 54th consecutive year, a record in the REIT industry
29
Dawn M. Becker
Executive Vice President-
General Counsel and
Secretary
Age: 58
Joined: 1997
Responsibilities
Ms. Becker has overall responsibility
for all legal functions within the
Company and heads all of our ESG
efforts in addition to overseeing our
Human Resources, Information
Technology and other administrative
functions
2021 Compensation (in 000s)
Base Pay:
Annual Bonus:
Long-Term Equity:
Total:
$ 475
$ 445
$ 594
$1,514
Other:
$75,000 cash bonus
2021 Compensation Decisions and Rationale
No changes were made to Ms. Becker’s target compensation for 2021 given the continuing COVID-related
business uncertainties. As part of the Committee’s final 2021 compensation decisions, the Committee awarded
Ms. Becker her full bonus and full long-term equity award and, as part of a special bonus allocation that the
Company awarded to every employee in the Company other than Mr. Wood, the Committee awarded Ms. Becker
a one-time cash bonus of $75,000 in recognition of the extraordinary efforts to manage the Company through the
worst of the financial impacts from COVID.
2021 Key Achievements
✓ Led the Company’s environmental, social and governance efforts that included establishing
energy and greenhouse gas reduction targets
✓ Led the Company’s corporate sustainability reporting in line with the Global Reporting Initiative
(GRI), Task Force on Climate-Related Financial Disclosures (TCFD) and Sustainability
Accounting Standards Board (SASB) frameworks
✓ Led the restructuring of the Company that resulted in us converting to an umbrella limited
partnership structure to further enhance future acquisition opportunities
✓ Oversaw our diversity, equity and inclusion initiatives that led to 64% of all new hires in 2021
being female and 47% being ethnic or racial minorities
✓ Oversaw continued technology system improvements to drive Company-wide efficiency
improvements and enhance overall cyber security
COMPENSATION POLICIES AND PRACTICES
Compensation Risk Assessment
Based on its review completed in February 2022,
the Committee does not believe that our compensation
programs encourage unnecessary or excessive risk taking that is reasonably likely to have a material adverse
effect on the Company. Incentive compensation for 94% of our employees is provided under our annual bonus
plan and/or long-term equity program. The performance metrics under those programs have been established by
the Committee and reflect important short-term and longer-term corporate objectives and the Board has in place
sufficient controls to ensure that decisions which could have a material adverse impact on the Company cannot
be made without Board approval. Our remaining employees earn some or all of their compensation determined by
completing leasing transactions or closing acquisitions. Because these employees cannot complete any of those
leasing or acquisition deals without first obtaining approvals from either the Board and/or one or more members of
senior management whose incentive compensation is tied to corporate performance, this transactionally based
compensation does not expose the Company to unnecessary or excessive risk taking. We also have in place the
clawback policy described below that allows us to recoup compensation paid to our NEOs on the basis of
inaccurate financial statements where that NEO engaged in fraud or grossly negligent misconduct.
30
Equity Ownership Requirements
The Committee believes that ownership in the Company aligns our executives with our shareholders and keeps
their focus on achieving the long-term objectives of the Company. To facilitate that objective, we have adopted
equity ownership guidelines that require all of our executive vice presidents and above to maintain a specified
minimum level of common share ownership in the Company. Each individual has five years to achieve the
required level of ownership after becoming subject to the ownership requirement. The minimum ownership
requirements currently in place are 7 times base salary for our CEO, 2.5 times base salary plus annual bonus for
each of our other NEOs and 2.0 times base salary plus annual bonus for our other executive vice presidents.
Each of our NEOS and all of our other executive vice presidents were in compliance with our equity ownership
requirements as of December 31, 2021.
Anti-Hedging/Pledging Policy
All officers and non-employee Trustees are prohibited from engaging in short sales of our securities, establishing
margin accounts, pledging our securities as collateral for a loan, buying or selling puts or calls on our securities or
otherwise engaging in hedging transactions (such as zero-cost dollars, exchange funds, and forward sale
contracts) involving our securities.
Termination and Change-in-Control Arrangements
We do not have employment agreements in place with a any of our NEOs or any other employee which provides
the Committee with maximum flexibility to modify compensation as warranted based on market conditions and
Company considerations. We do, however, have in place with each of our NEOs a severance agreement that
provides for certain payments and benefits to be provided to the NEO if he/she is terminated from employment
under the conditions set forth in those agreements. The circumstances in which payments may be made and the
potential amounts of those payments are described in more detail in the “Potential Payments on Termination of
the payments provided for in these
Employment and Change-in-Control” section below. We believe that
agreements are reasonable and appropriate as part of the total compensation packages available for our NEOs.
Other Benefits
We provide other health and welfare benefits to our NEOs on the same basis as we provide those benefits to all
employees. These benefits are competitive with those offered by companies with whom we compete for talent
and provide another tool that allows us to attract and retain talented executives.
In addition to those benefits, we provide to Mr. Wood, his spouse and one of his dependents continuation of
health coverage after Mr. Wood’s termination upon death, disability, retirement, change in control or otherwise
(other than a termination with cause or resignation). This coverage will continue as to Mr. Wood and his spouse
until their death, or with respect
to his spouse until divorce, if earlier, and coverage continues for one of
Mr. Wood’s dependents until death. We are required to provide coverage of at least the same level as provided to
Mr. Wood and his family at the time of his termination and such coverage will be secondary to certain other
coverages that may be available to Mr. Wood and his family. This agreement has been in place since 2005.
Timing of Equity Grants
Equity awards to our employees under our annual bonus plan and long-term incentive plan described above are
made at the Compensation Committee’s meeting that occurs in February of each calendar year. Based on our
meeting schedule the past several years, these awards are made before we release financial results for the prior
fiscal year. We have no policy that times the granting of equity awards relative to the release of material
non-public information. Equity awards to new hires are generally made on the first day on which the employee
31
starts work and equity awards to employees who are promoted generally are made on the day on which the
promotion has been fully approved. All of our options are awarded at the closing price of our shares on the NYSE
on the date the award is made. The Compensation Committee has never re-priced options, granted options with
an exercise price that is less than the closing price on the NYSE on the date of the grant, or granted options
which are priced on a date other than the grant date. Equity awards for Vice Presidents and above for the 3-year
performance period ending on December 31, 2021 were made at the Compensation Committee’s meeting on
February 9, 2022 based on the closing price of our shares on the NYSE on that date.
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code generally limits deductibility of compensation paid to our NEOs to
$1 million. An exception was previously made for qualified performance-based compensation, among other
things. The Tax Cuts and Jobs Act of 2017 modified Section 162(m) to, among other things, modify who is subject
to the $1 million deduction limit and to eliminate the exception for performance based pay from the $1 million
deduction limit starting with tax years ending after December 31, 2017.
The Compensation Committee considered the impact of Section 162(m) in structuring compensation programs;
however, the primary focus has always been on creating programs that addressed the needs and objectives of
the Company regardless of the impact of Section 162(m). As a result, the Compensation Committee made
awards and structured programs that were non-deductible under Section 162(m). Because our awards and
the changes to
compensation programs were not necessarily designed to comply with Section 162(m),
Section 162(m) have not had a material impact on us.
Clawback Policy
Our Board has adopted a policy that allows us to recover from our NEOs performance based compensation paid
to that NEO, including compensation paid under our annual bonus plan and our long-term equity program, in the
event that:
Š
the Company issues a restatement of financial results to correct material non-compliance with reporting
requirements;
the NEO engaged in fraud or grossly negligent misconduct that contributed to the need for the financial
restatement; and
some or all of the performance based compensation received prior to the restatement would not have
been paid based on the restated financial result
Š
Š
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board has reviewed and discussed the CD&A required by Item 402(b) of
Regulation S-K with management and, based on such review and discussion, the Compensation Committee
recommended to the Board that the CD&A be included in this Proxy Statement.
Submitted by:
Elizabeth I. Holland, Chairperson
Nicole Y. Lamb-Hale
Mark S. Ordan
Gail P. Steinel
32
Executive Compensation
Summary Compensation Table
The table below summarizes the total compensation earned by or paid to the individuals who were NEOs for the
fiscal years ended December 31, 2021, 2020 and 2019. All amounts are calculated in accordance with current
SEC rules.
Name and Principal Position
Year
Salary(1)
Bonus(2) Stock Awards(3) Plan Compensation(4) Compensation(5)
Total
Non-Equity Incentive
All Other
Donald C. Wood, Chief Executive Officer (PEO)
2021 $
950,000 $
2020 $
950,000 $
2019 $
950,000 $
- $
- $
- $
5,213,719 $
1,335,938 $
21,260 $
7,520,917
5,830,493 $
534,375 $
166,928 $
7,481,796
5,534,437 $
1,128,125 $
18,296 $
7,630,858
Jeffrey S. Berkes, President and Chief Operating Officer
2021 $
575,000 $
75,000 $
3,131,027 $
539,063 $
14,486 $
4,334,576
Daniel Guglielmone, Executive Vice President-Chief
Financial Officer and Treasurer (PFO)
Dawn M. Becker, Executive Vice President-General
Counsel and Secretary
2021 $
500,000 $
75,000 $
1,900,046 $
468,750 $
11,427 $
2,955,223
2020 $
500,000 $
2019 $
500,000 $
- $
- $
968,270 $
900,012 $
281,250 $
236,818 $
1,986,338
395,833 $
9,728 $
1,805,573
2021 $
475,000 $
75,000 $
680,159 $
333,984 $
13,638 $
1,577,781
2020 $
475,000 $
2019 $
475,000 $
- $
- $
758,275 $
726,587 $
200,391 $
86,359 $
1,520,025
282,031 $
13,265 $
1,496,883
(1) Amounts shown in the Salary column include all amounts deferred at the election of the NEOs into our non-qualified
deferred compensation plan.
(2) Amounts represent a one-time cash bonus described for each of these NEOs in more detail
in the Compensation
Discussion and Analysis.
(3) Amounts shown in this column reflect the aggregate grant date fair value of the awards calculated in accordance with
FASB ASC Topic 718 that were issued in the year shown. With the exception of the performance based restricted share
units issued to Mr. Berkes in 2021, all other awards in this column were valued based on the closing price of our shares
on the grant date. The performance-based restricted share units issued to Mr. Berkes in February 2021 are tied to our
total shareholder return versus the total shareholder return for the Bloomberg REIT Shopping Center Index over the
performance period. These restricted share units were valued based on our data and that of the index using a Monte
Carlo simulation method. The key assumptions used in the valuation were: (a) stock price volatility of 38.0% for the
Company and 38.8% for the index; (b) risk-free interest rate of 0.31%; and (c) no dividend yield assumption given that the
award includes dividend equivalent rights that are earned only if the underlying shares are earned. Based on the
performance goals and these assumptions, the award was valued at $97.01 per share.
(4) Amounts shown in this column represent the cash amount paid under our annual bonus plan and include amounts
deferred by our NEOs into our non-qualified deferred compensation plan.
(5) The amounts shown in this column for the most recent fiscal year include: (a) contributions to our 401(k) plan of $7,250 for
each of our NEOs; (b) a 5-year cash service award of $300 for Mr. Guglielmone; and (c) payments for group term life
insurance, long-term disability insurance and supplemental life insurance of $14,010 for Mr. Wood, $7,236 for Mr. Berkes,
$3,877 for Mr. Guglielmone and $6,388 for Ms. Becker.
33
Grants of Plan Based Awards Table
The following equity awards were made in 2021 to our NEOs.
Name
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
Estimated Future Payouts Under Equity
Incentive Plan Awards
Threshold (#)
Target (#) Maximum (#)
All Other Stock Awards:
Number of Shares of
Stock or Units
Grant Date
Fair Value
Grant
Date
2/10/2021 (1)(6)(7)
2/10/2021 (2)(6)(7)
2/10/2021 (1)(6)(7)
2/10/2021 (2)(6)(7)
2/10/2021 (3)(6)(7)
2/10/2021 (4)(7)(8)
5,220
10,441
20,882
2/10/2021 (2)(6)(7)
8/3/2021 (5)(6)(7)
2/10/2021 (1)(6)(7)
2/10/2021 (2)(6)(7)
2,232
52,208
1,233
10,442
10,442
9,398
8,569
837
6,265
$
213,759
$ 4,999,960
$
118,084
$ 1,000,030
$ 1,000,030
$ 1,012,881
$
900,046
$ 1,000,000
$
$
80,159
599,999
(1)
(2)
(3)
Issued under our annual bonus plan for the 1-year performance period ending December 31, 2020. These shares vest
equally over 3 years.
Issued under our long-term incentive program for the 3-year performance period ending December 31, 2020. These
shares vest equally over 3 years.
Issued in connection with Mr. Berkes’ promotion to President and Chief Operating Officer. The shares vest equally over 5
years.
(4) The amounts shown represent the range of shares that may be earned under this award for the time period from 2021
through 2024 for performance based on the relative total shareholder return of the Company compared to the relative
total shareholder return of the BBRESHOP. The number of units shown were calculated based the grant date closing
price of our shares of $95.77. The actual number of units earned will be determined at the end of the performance period
subject to linear interpolation if performance falls between the specified levels of performance. Any earned award,
together with dividend equivalents on the earned awards, will vest after December 31, 2024 with any earned award being
paid in shares and any earned dividend equivalents on the earned awards being paid in cash.
(5) These shares will vest equally over 5 years.
(6) Dividends are paid on these shares issued at the same rate and time as paid to all other holders of our shares as
declared by our Board from time to time.
(7) Represents the grant date fair value of share awards as computed in accordance with FASB ASC Topic 718.
(8) These restricted stock units were valued based on our data and that of the index using a Monte Carlo simulation method.
The key assumptions used in the valuation were: (a) stock price volatility of 38.0% for the Company and 38.8% for the
index; (b) risk-free interest rate of 0.31%; and (c) no dividend yield assumption given that the award includes dividend
equivalent rights that are earned only if the underlying shares are earned. Based on the performance goals and these
assumptions, the award was valued at $97.01 The fair value reflected is based on a target level payout.
34
Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth information about outstanding equity awards held by our NEOs as of December 31,
2021:
Name
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
Stock Awards
Number of Shares or
Units of Stock That
Have Not Vested
Market Value of Shares or
Units of Stock That Have
Not Vested(9)
Equity incentive plan awards:
number of unearned shares,
units or other rights that
have not vested
Equity incentive plan
awards: market or payout
value of unearned shares,
units or other rights that
have not vested(9)
2,232 (1) $
52,208 (1) $
2,364 (2) $
28,177 (2) $
1,327 (3) $
12,417 (3) $
1,233 (1) $
10,442 (1) $
871 (2) $
5,635 (2) $
332 (3) $
1,987 (3) $
11,175 (4) $
10,442 (5) $
9,398 (1) $
5,072 (2) $
2,235 (3) $
1,790 (7) $
8,569 (8) $
837 (1) $
6,265 (1) $
591 (2) $
3,381 (2) $
314 (3) $
1,490 (3) $
304,266
7,116,995
322,260
3,841,089
180,897
1,692,685
168,083
1,423,453
118,735
768,163
45,258
270,868
1,523,376
1,423,453
1,281,135
691,415
304,675
244,013
1,168,126
114,100
854,045
80,565
460,898
42,804
203,117
5,221 (6) $
711,727
(1) One-third of these shares vested on February 12, 2022 and the remaining shares will vest equally on February 12 of each
of 2023 and 2024.
(2) One-half of these shares vested on February 12, 2022 and the remaining shares will vest on February 12, 2023.
(3) These shares vested on February 12, 2022.
(4) One-third of these shares vested on February 12, 2022. The remaining shares will vest equally on February 12 of each of
2023 and 2024.
(5) One-fifth of these shares vested on February 12, 2022. The remaining shares will vest equally on February 12 of each of
2023 through 2026.
(6) The number of shares represent the threshold payout level. The final number of shares earned cannot be determined until
after December 31, 2024, the end of the performance period.
(7) These shares will vest equally on August 15 of each of 2022 and 2023.
(8) These shares will vest equally on August 3 of each of 2022 through 2026.
(9) The value of shares is calculated based on $136.32, the closing price of our shares on the NYSE on December 31, 2021.
35
Options Exercised and Stock Vested in 2021
The following table includes information with respect to shares held by our NEOs that vested in 2021.
Name
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
Stock Awards
Number of Shares
Value Realized
Acquired on Vesting
on Vesting(1)
44,465
11,670
8,024
5,475
$4,550,103.45
1,194,191
$
836,911
$
560,257
$
(1) The amounts in this column have been calculated using the closing price of a share on the date the shares vested.
Non-Qualified Deferred Compensation
We maintain a non-qualified deferred compensation plan that is open to participation by 44 members of our
management team, including our NEOs. Each participant can elect to defer up to 100% of his or her base salary
and cash payment under our annual bonus plan with deferral elections made in December of each year for
amounts to be earned in the following year. A number of widely available investment options are made available
to each plan participant who then decides how to allocate amounts deferred among those investment options.
The amount earned by plan participants on their deferrals is calculated by our third party plan administrator as if
the amounts deferred had actually been invested in the investment options selected by each participant. We do
not make any contributions to the deferred compensation plan for any individual nor do we guaranty any rate of
return on amounts deferred. Amounts deferred into the plan, including amounts earned on the deferrals, are
generally payable to the participant shortly after he or she retires or is otherwise no longer employed by us;
however, there are a few other alternatives where amounts may be paid to a participant sooner. All of our NEOs
other than Mr. Guglielmone participate in our deferred compensation plan. 2021 activity for the participants in our
plan is described below.
Name
Donald C. Wood
Jeffrey S. Berkes
Dawn M. Becker
Executive
Contributions in
Last Fiscal Year(1)
Registrant
Contributions in
Last Fiscal Year
Aggregate
Earnings in
Last Fiscal Year
Aggregate
Withdrawals/
Distributions
Aggregate
Balance at Last
Fiscal Year-End
$
$
$
250,000 $
147,656 $
47,500 $
- $
- $
- $
1,446,933 $
17,537 $
233,206 $
- $
- $
- $
10,826,150
165,193
2,459,569
(1) All amounts in this column are included in either the “Salary” or “Non-Equity Incentive Plan Compensation” column of the
Summary Compensation Table for 2021.
Potential Payments on Termination of Employment and Change-in-Control
We have entered into severance agreements with each of our NEOs that require us to make certain payments
and provide certain benefits to them in the event of a termination of employment or change in control of the
Company. Regardless of the reason for an NEO’s termination of employment, he or she will be entitled to receive
upon termination a distribution of any amounts in our non-qualified deferred compensation plan as described in
the “Non-Qualified Deferred Compensation” section above. No NEO is entitled to receive a new award under the
annual bonus plan or our long-term incentive plan for the year in which the termination occurs. The agreements
with each of our NEOs contain provisions restricting the executive from engaging in competing behavior and
soliciting and/or hiring our employees for a period of time after termination. The payments that will be made to an
NEO on termination vary depending on the reason for termination and may be conditioned on the signing of a
release in favor of the Company.
36
The amount of compensation payable to each of our NEOs under various termination scenarios is reflected below
assuming that the separation of service was effective on December 31, 2021.
Salary and
Cash Bonus
(Multiple)
Cash
Medical
Payment(1) Benefits(2)
Acclerated
Equity(3)
Other
Excise Tax
Benefits(4) Gross-Up
Total
Termination without Cause or
For Good Reason
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
Change in Control(5)
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
Termination for Cause
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
Death
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
Disability
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
1.5x $ 4,096,875 $ 2,385,861 $ 13,458,192 $ 60,250
1.0x $ 1,129,167 $
N/A $
$
1.0x $ 896,875 $
23,957 $ 6,192,983 $
$ 3,689,364 $
11,386 $ 1,755,529 $ 60,250
-
-
-
-
N/A $ 20,001,178
N/A $ 7,346,107
N/A $ 3,689,364
N/A $ 2,724,040
3.0x $ 8,193,750 $ 2,457,446 $ 13,458,192 $ 167,165 $
$
2.0x $ 2,258,333 $
47,914 $ 6,192,983 $
71,146 $ 3,689,364 $ 90,375 $
2.0x $ 1,890,625 $
30,361 $ 1,755,529 $ 90,375 $
2.0x $ 1,793,750 $
-
-
-
-
-
$ 24,276,553
$ 8,499,230
$ 5,741,510
$ 3,670,015
N/A $ 475,000 $
$
N/A $
N/A $
$
N/A $ 237,500 $
-
-
15,908 $
$
-
$
-
7,590 $
-
-
-
-
$
$
$
$
-
N/A $
N/A $ 718,750 $
$
N/A $
$
N/A $
$ 2,028,000 $ 13,458,192 $
$ 6,192,983 $
$ 3,689,364 $
$ 1,755,529 $
-
-
-
-
-
N/A $ 1,286,525 $ 2,371,815 $ 13,458,192 $
23,957 $ 6,192,983 $
N/A $ 718,750 $
35,573 $ 3,689,364 $
N/A $ 430,080 $
15,181 $ 1,755,529 $
N/A $ 361,777 $
-
-
-
-
-
-
-
-
-
-
-
-
N/A $
N/A $
N/A $
N/A $
490,908
-
-
245,090
N/A $ 15,486,192
N/A $ 6,911,733
N/A $ 3,689,364
N/A $ 1,755,529
N/A $ 17,116,532
N/A $ 6,935,690
N/A $ 4,155,017
N/A $ 2,132,487
(1) Bonus years used in the calculation for termination without cause and change-in-control are 2020, 2019 and 2018, the
last three completed fiscal years. The cash payments on termination with cause are 6 months of base pay only. The cash
payment on death and disability for Mr. Berkes is a pro-rated bonus for the year in which the event occurs. The cash
payments on disability for Mr. Wood, Mr. Guglielmone and Ms. Becker represent 1 year of base salary less amounts
received from disability insurance maintained by the Company, grossed up for taxes on non-tax exempt payments.
(2) Amounts in this column represent our estimate of the COBRA equivalent rates for health care benefits and current life and
long-term disability premiums for Mr. Wood, Mr. Guglielmone and Ms. Becker. The period of time for which these benefits
are provided varies as follows: (a) termination without cause – 9 months for Mr. Wood and Ms. Becker; 1 year for
Mr. Berkes; (b) change-in-control – 3 years for Mr. Wood and 2 years for each other NEO; (c) termination for cause –
6 months; and (d) disability – 1 year. The amounts paid to Mr. Berkes are reduced by the amounts he pays for these
benefits at the time of the event. All amounts shown in this column for Mr. Wood also include the estimated costs
(calculated in accordance with GAAP) of satisfying the obligations under his Health Continuation Coverage Agreement.
(3) All unvested shares held by our NEOs will vest in the event of termination without cause, change-in-control, death or
disability. Values were calculated by multiplying the number of unvested shares that vest under each termination event
using the closing price of the Company’s shares on December 31, 2021. For Mr. Berkes, the amount includes the value of
37
the number of shares that would have been earned based on performance through the date of termination, prorated for
the portion of the performance period that had lapsed, plus dividend equivalent rights on those shares.
(4) Amounts in this column are estimated costs for an administrative assistant and outplacement assistance for a period of 6
months in the event of a termination without cause and for a period of 12 months for Mr. Wood and 9 months for
Mr. Guglielmone and Ms. Becker in the event of a change-in-control. The amount also includes the cost of providing a
company vehicle to Mr. Wood for three years in the event of a change-in-control should he choose to use that benefit.
(5) Change-in-control is deemed to have occurred when a person acquires a 20% interest in us, or our current Trustees, or
those subsequently approved by our current Trustees, constitute less than 50% of our Board. Upon a change-in-control,
each NEO is entitled to receive payments and benefits in the following circumstance: (a) the NEO is terminated from
employment by the Company (other than for cause) or leaves for good reason within 2 years after the change-in-control;
(b) Mr. Wood or Ms. Becker voluntarily leaves employment within the 30-day window following the 1-year anniversary of
the change-in-control; or (c) Mr. Berkes is terminated from employment by the Company (other than for cause) or he
leaves the Company as a result of a constructive termination within the 6-month period prior to or within 2 years after the
change-in-control.
CEO Pay Ratio
Our compensation and benefit programs are substantially similar throughout the Company and are designed to
reward all employees who contribute to our success with a total compensation package that is competitive in the
marketplace for each employee’s position and performance. We are required to calculate and disclose the
compensation of our median paid employee as well as the ratio of the total annual compensation paid to our CEO
to the annual compensation of our median paid employee. The determination of our median paid employee was
used taking our total employee population as of December 31, 2021, excluding our CEO, which included 309 full-
time and part-time employees ranging from executive vice presidents to maintenance technicians. For the
determination, we used annual base pay plus annual bonus at target levels plus overtime actually paid, the
combination of which we believe most closely approximates the total annual direct compensation of our
employees. For purposes of the calculation, base pay was annualized for the 45 employees who started with us in
2021. No other adjustments were made.
The actual total annual compensation of our Chief Executive Officer and median paid employee for 2021 was
calculated in accordance with the requirements of the Summary Compensation Table included in this proxy
statement. Based on this methodology, we have determined that the total annual compensation paid to our Chief
Executive Officer in 2021 was $7,520,917 and the total annual compensation paid to our median paid employee in
2021 was $125,770 resulting in a ratio of 60:1.
We calculated our pay ratio in accordance with SEC rules; however, those rules allow companies discretion in
methodologies used to identify the median paid employee and the compensation used to determine the median
paid employee. As a result, this ratio is unique to our Company. Other companies may make their determinations
differently so that the ratio may not be comparable across companies. We believe our ratio is a reasonable
estimate. Our ratio is very heavily influenced by what employees/services we choose to provide through
employees as opposed to through third parties who are not taken into account in the calculation of the pay ratio.
38
Equity Compensation Plan Information
The following table sets forth certain information on our only active equity compensation plan as of December 31,
2021.
Number of securities to be
issued upon exercise of Weighted average exercise
Number of securities remaining
available for future issuance
outstanding options, warrants price of outstanding options, (excluding securities reflected in
Plan Category
and rights (Column A)
warrants and rights
Column A)
Equity compensation
plans approved by
security holders
Equity compensation
plans not approved by
security holders
Total
3,658
-
3,658
$95.77
-
$95.77
1,571,295
-
1,571,295
Proposal 3: Ratification of Independent Registered Public
Accounting Firm
registered public accounting firm for
Shareholders are being asked to ratify in a non-binding vote the selection of Grant Thornton, LLP (“GT”) as our
independent
the fiscal year ending December 31, 2022. Although
shareholder ratification of GT is not required by our governance documents, the Board is submitting the selection
of GT to shareholders to solicit shareholder views on our selection of GT as our independent registered public
accounting firm. GT has served in this role since 2002 and the Board believes it is in the best interests of the
Company and our shareholders for GT to continue in this role. If the selection of GT is not ratified, the Audit
Committee may (but will not be required to) reconsider whether to retain GT. Even if the selection of GT is ratified,
the Audit Committee may change the appointment of GT at any time if it determines such a change would be in
the best interests of the Company and our shareholders. A representative of GT will be present at the Annual
Meeting and will have the opportunity to make a statement if they so desire and answer appropriate questions
from shareholders.
The Audit Committee reviews and approves in advance all audit and permissible non-audit services provided by
GT to the Company as required by and in accordance with the rules and regulations of the SEC and the
Sarbanes-Oxley Act of 2002.
The following table sets forth the fees for services rendered by GT for the years ended December 31, 2021 and
2020:
Audit Fees(1)
Audit-Related Fees(2)
Tax Fees(3)
All Other Fees
Total Fees
2021
974,141 $
64,050 $
248,005 $
2020
821,862
48,825
300,120
- $
-
$
$
$
$
$ 1,286,196 $ 1,170,807
(1) Audit fees include all fees and expenses for services in connection with: (a) the audit of our financial statements included
in our annual reports on Form 10-K; (b) Sarbanes-Oxley Section 404 relating to our annual audit; (c) the review of the
financial statements included in our quarterly reports on Form 10-Q; and (d) consents and comfort letters issued in
connection with debt offerings and common share offerings.
39
(2) Audit-related fees primarily include the audit of our employee benefit plan, which are paid by the plan and not the
Company, and certain property level audits.
(3) All of the amount shown for 2021 and $264,600 of the amount shown for 2020 relate solely to tax compliance and
preparation, including the preparation of original and amended tax returns and refund claims and tax payment planning.
The affirmative vote of a majority of votes cast at the Annual Meeting, in person or by proxy, is required to
approve this proposal. An “abstention” or “broker non-vote” will have no effect on the outcome of the vote for this
proposal.
Our Board recommends a vote FOR the ratification of the appointment
of GT as our independent registered public accounting firm for fiscal
year 2022
Audit Committee Report
The following Report of the Audit Committee does not constitute soliciting material and should not be deemed filed
or incorporated by reference into any other filing by us under the Securities Act of 1933 or the Securities Exchange
Act of 1934, except to the extent the Company specifically incorporates this Report by reference therein.
The Audit Committee is made up entirely of trustees who meet all independence requirements under the SEC and
NYSE and have the requisite financial competence to serve on the Audit Committee. The Audit Committee meets at
least quarterly and operates pursuant to a written charter that is reviewed at least every three years. That charter
can be accessed under the Investors/Corporate Governance section of our website at www.federalrealty.com. In
2021, the Audit Committee met five times and each of the four quarterly meetings included an executive session
with our independent registered public accounting firm and no members of management present.
firm,
in performance of
The Audit Committee is directly responsible for the appointment, retention and oversight of GT, the independent
registered public accounting firm retained to audit our financial statements, and also oversees management,
including the internal audit
is
responsible for the financial reporting process, including the system of internal controls, for the preparation of
consolidated financial statements in accordance with generally accepted accounting principles in the United
States and for reporting on internal control over financial reporting. Management uses Pricewaterhouse Coopers,
LLC (“PwC”) to provide its internal audit function, including oversight of the ongoing testing of the effectiveness of
our internal controls. The Audit Committee met regularly with PwC and one meeting included an executive
session with PwC with no members of GT or management present. GT is responsible for auditing the
consolidated financial statements of the Company and expressing an opinion on the financial statements and the
effectiveness of internal control over financial reporting.
functions. Specifically, management
financial
their
During 2021, as part of its oversight function, the Audit Committee:
• Met with management and GT and discussed the Company’s December 31, 2021 audited financial
statements;
•
•
•
•
Discussed with GT the matters required to be discussed by the applicable requirements of the Public
Company Accounting Oversight Board (“PCAOB”) and the SEC;
Reviewed and discussed with management and GT, individually and collectively, all annual and
quarterly financial statements and operating results prior to their issuance;
Received the written disclosures and the letter from GT required by applicable requirements of the
PCAOB regarding GT’s communications with the audit committee concerning independence, and has
discussed with GT regarding its independence;
Discussed with GT matters required to be discussed pursuant to applicable audit standards, including
the reasonableness of judgments and the clarity and completeness of financial disclosures;
• Monitored the non-audit services provided by GT to ensure that performance of such services did not
adversely impact GT’s independence; and
40
•
the Committee’s quarterly review of
As part of
the Committee discussed with
management cybersecurity threats, cybersecurity training and ongoing areas of focus of management
in protecting against cyber breaches. During those quarterly reviews in 2021, the Committee was
advised that there were no breaches and that cybersecurity insurance had been procured.
internal controls,
Based on the Audit Committee’s reviews and discussions with GT, PwC and management, the Audit Committee
recommended to the Board of Trustees that the Board approve the inclusion of our audited financial statements in
our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 for filing with the SEC.
Submitted by the Audit Committee:
Gail P. Steinel, Chairperson
David W. Faeder
Elizabeth I. Holland (joined August 3, 2021)
Anthony P. Nader, III
Beneficial Ownership
Ownership of Principal Shareholders
Based on our records and the information reported in filings with the SEC, the following were beneficial owners of
more than 5% of our common shares of beneficial interest as of March 14, 2022:
Name and Address of Beneficial Owner
The Vanguard Group, Inc.(2)
100 Vanguard Blvd.
Malvern, PA 19355
BlackRock, Inc.(3)
55 East 52nd Street
New York, NY 10055
State Street Corporation(4)
State Street Financial Center, One Lincoln Street
Boston, MA 02111
Norges Bank (The Central Bank of Norway)(5)
Bankplassen 2, PO Box 1179 Sentrum
NO 0107 Oslo Norway
JPMorgan Chase & Co.(6)
383 Madison Avenue
New York, NY 10179
Capital Research Global Investors(7)
333 South Hope Street, 55th Floor
Los Angeles, CA 90071
Amount and Nature of
Beneficial Ownership Outstanding Shares(1)
Percentage of Our
11,900,087
15.1%
7,559,988
7,465,999
7,212,626
4,203,063
4,039,858
9.6%
9.5%
9.2%
5.3%
5.1%
(1)
The percentage of outstanding shares is calculated by taking the number of shares stated in the Schedule 13G or
13G/A, as applicable, filed with the SEC divided by 78,687,588, the total number of shares outstanding on March 14,
2022.
41
(2)
(3)
(4)
(5)
(6)
(7)
Information based on a Schedule 13G/A filed with the SEC on February 10, 2022 by The Vanguard Group which states
that The Vanguard Group, an investment advisor, has shared voting power over 174,149 shares, sole dispositive power
over 11,533,371 shares and shared dispositive power over 366,716 shares.
Information based on a Schedule 13G/A filed with the SEC on February 1, 2022 by BlackRock, Inc., which states that
BlackRock, Inc., a parent holding company, has sole voting power over 6,582,275 shares and sole dispositive power
over 7,559,988 shares.
Information based on a Schedule 13G/A filed with the SEC on February 11, 2022 by State Street Corporation, which
states that State Street Corporation, a parent holding company, has shared voting power over 6,679,706 shares and
shared dispositive power over 7,465,605 shares.
Information based on a Schedule 13G/A filed with the SEC on February 8, 2022 by Norges Bank (The Central Bank of
Norway) which states that Norges Bank (The Central Bank of Norway) has sole voting power and sole dispositive power
over 7,212,626 shares.
Information based on a Schedule 13G filed with the SEC on January 21, 2022 by JPMorgan Chase & Co. which states
that JPMorgan Chase & Co., a parent holding company, has sole voting power over 3,219,988 shares, sole dispositive
power over 4,201,194 shares and shared dispositive power over 714 shares.
Information based on a Schedule 13G/A filed with the SEC on February 11, 2022 by Capital Research Global Investors
which states that Capital Research Global Investors, an investment advisor, has sole voting and sole dispositive power
over 4,039,858 shares.
Ownership of Trustees and Executive Officers
The table below reflects beneficial ownership of our Trustees and NEOs as of March 14, 2022 determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended. Unless noted in the footnotes
following the table, each Trustee and NEO has sole voting and investment power as to all shares listed.
Name and Address of Beneficial Owner(1)
Dawn M. Becker
Jeffrey S. Berkes
David W. Faeder
Daniel Guglielmone
Elizabeth I. Holland
Nicole Y. Lamb-Hale
Anthony P. Nader, III
Mark S. Ordan
Gail P. Steinel
Donald C. Wood(3)
Percentage of
Unvested Total Shares Outstanding
Restricted Beneficially
Owned
Shares
Owned(2)
Shares
Common
136,511
29,479
13,313
22,864
4,964
1,350
1,350
3,102
13,254
12,473
36,372
0
26,204
0
0
0
0
0
391,089
102,749
148,984
65,851
13,313
49,068
4,964
1,350
1,350
3,102
13,254
493,838
*
*
*
*
*
*
*
*
*
*
Trustees, trustee nominees and executive officers as a
group (10 individuals)
617,276
177,798
795,074
1%
*
(1)
(2)
(3)
Less than 1%
The address for each of the named individuals is 909 Rose Avenue, Suite 200, North Bethesda, Maryland 20852.
The percentage of outstanding shares owned is calculated by taking the number of shares reflected in the column titled
“Total Shares Beneficially Owned” divided by 78,687,588, the total number of shares outstanding on March 14, 2022.
Includes 53,879 shares owned by Stacey Wood Revocable Trust, 183,568 shares owned by Donald C. Wood Revocable
Trust, 20,000 shares owned by Great Falls Trust, 46,500 shares owned by Wood Descendants Trust and 60,000 shares
owned by IJKR II, LLC.
42
Information about the Annual Meeting
Notice of Electronic Availability of Proxy Materials
We are furnishing proxy materials including this proxy statement and our 2021 Annual Report to Shareholders,
including our Annual Report on Form 10-K for the year ended December 31, 2021 (“Annual Report”), to each
shareholder by providing access to such documents on the Internet. On or about March 25, 2022, we mailed to
our shareholders a “Notice of Internet Availability of Proxy Materials” (“Notice”) containing instructions on how to
access and review this proxy statement and our Annual Report and how to submit your vote on the Internet or by
telephone. You cannot vote by marking the Notice and returning it. If you received the Notice, you will not
automatically receive a printed copy of our proxy materials or Annual Report unless you follow the instructions for
requesting these materials included in the Notice. This section does not apply if you previously requested to
receive these materials by mail. Questions regarding the Notice or voting should be directed to our Investor
Relations Department at (800) 937-5449 or by email at IR@federalrealty.com.
Why You are Receiving These Materials
You are receiving these materials because you owned our shares as of March 14, 2022, the record date
established by our Board of Trustees for our Annual Meeting. Everyone who owned our shares as of this date,
whether directly as a registered shareholder or indirectly through a bank, broker or other nominee, is entitled to
vote at the Annual Meeting. We had 78,687,588 shares outstanding on March 14, 2022. Each share outstanding
on the record date is entitled to one vote. A majority of the shares entitled to vote at the Annual Meeting must be
present in person or by proxy for us to proceed with the Annual Meeting.
Accessing Materials
Shareholders can access this Proxy Statement, our Annual Report and our other filings with the SEC on the
Investors page of our website at www.federalrealty.com. A copy of our Annual Report, including the financial
statements and financial statement schedules (“Form 10-K”) is being provided to shareholders along with this
Proxy Statement. The Form 10-K includes certain exhibits, which we will provide to you only upon request
addressed to Investor Relations at 909 Rose Avenue, Suite 200, North Bethesda, Maryland 20852. The request
must be accompanied by payment of a fee to cover our reasonable expenses for copying and mailing the
Form 10-K.
In the future, if you wish to receive paper copies of our proxy materials, without charge, and are a registered
shareholder, you may do so by written request addressed to American Stock Transfer and Trust, LLC. For those
of you holding shares indirectly in “street name”, you must write your bank, brokerage firm, broker-dealer or
nominee, to obtain paper copies. Any election you make on how to receive your proxy materials will remain in
effect for all future annual meetings until you revoke it.
How to Vote
If you own your shares directly with our transfer agent, American Stock Transfer and Trust, LLC, you are a
registered shareholder and can vote either in person at the Annual Meeting or by proxy without attending the
Annual Meeting through one of the following methods:
By Internet
www.voteproxy.com, available 24/7
By Telephone
Call 1-800-776-9437, available 24/7
By Mail
Mark, sign and date your proxy card
43
If you vote by internet or telephone, you will need the control number on your Notice, proxy card or voting
instruction form. Votes must be submitted by the conclusion of the Annual Meeting to be counted for the meeting.
You may revoke your proxy at any time before it is voted at the Annual Meeting by notifying the secretary in
writing, submitting a proxy dated later than your original proxy, or attending and voting at the Annual Meeting.
If you hold your shares indirectly in an account at a bank, brokerage firm, broker-dealer or nominee, you are a
beneficial owner of shares held in “street name”. You will receive all proxy materials directly from your bank,
brokerage firm, broker-dealer or nominee and you must either direct them as to how to vote your shares or obtain
from them a proxy to vote at the Annual Meeting. Please refer to the notice of internet availability of proxy
materials or the voter instruction form used by your bank, brokerage firm, broker-dealer or nominee for specific
instructions on methods of voting. If you fail to give your bank, brokerage firm, broker-dealer or nominee specific
instructions on how to vote your shares with respect to Proposals 1 or 2, your vote will NOT be counted for those
matters. It is important for every shareholder’s vote to be counted on these matters so we encourage you to
provide your bank, brokerage firm, broker-dealer or nominee with voting instructions. If you fail to give your bank,
brokerage firm, broker-dealer or nominee specific instructions on how to vote your shares on Proposal 3, your
bank, brokerage firm, broker-dealer or nominee will generally be able to vote on Proposal 3 as he, she or it
determines.
You are urged to vote either by telephone (1-800-PROXIES or 1-800-776-9437) or on the Internet
(www.voteproxy.com) by following the instructions on your Notice. For those of you who have elected email
delivery, please follow the instructions for voting provided in the email. If you elect to receive your proxy materials
by mail, please make sure to complete, sign, date and return your proxy card promptly to make certain your
shares will be voted at the Annual Meeting.
If you do not vote your shares, your shares will not be counted and we may not be able to hold the Annual
Meeting. We encourage you to vote by proxy using one of the methods described above even if you plan to
attend the Annual Meeting so that we will know as soon as possible whether enough votes will be present.
How to Participate in the Annual Meeting
You will be able to join our Annual Meeting as either a shareholder or a guest. All registered shareholders and
shareholders that own in “street name” will be able to ask questions and vote their shares at the meeting by
following the instructions below. Guests will be permitted to join the meeting but will not be permitted to ask
questions.
You can access the Annual Meeting by joining through this link: https://web.lumiagm.com/202329683. If you are a
registered shareholder owning shares directly in your name and you would like to be able to ask a question or
vote at the Annual Meeting, you should click on “I have a control number”, enter the control number found on your
proxy card or Notice you previously received, and enter the password “federal2022” to enter the meeting. The
password is case sensitive. If you hold your shares in “street name” through a bank, brokerage firm, broker-dealer
or nominee and you would like to be able to ask a question or vote at the Annual Meeting, you must first obtain a
legal proxy from your bank, brokerage firm, broker-dealer or nominee and then submit a request for registration to
American Stock Transfer & Trust Company, LLC: (1) by email to proxy@astfinancial.com; (2) by facsimile to
718-765-8730; or (3) by mail
to American Stock Transfer & Trust Company, LLC, Attn: Proxy Tabulation
Department, 6201 15th Avenue, Brooklyn, NY 11219. Requests for registration must be labeled as “Legal Proxy”
and must be received by American Stock Transfer & Trust Company, LLC no later than 5:00 p.m. local time on
April 29, 2022. You will receive a confirmation of your registration by email from American Stock Transfer and &
Trust Company, LLC after they receive your registration materials. The email will also include a control number so
that you can ask a question or vote at the Annual Meeting by clicking on “I have a control number”. Shareholders
who hold shares in “street name” will not be able to vote your shares or ask questions without first completing this
registration process. Once you are in the meeting, you can vote your shares by clicking on the Shareholder
Central link on the screen to submit your ballot. You may also continue to vote using the instructions provided in
the Proxy Materials until the Annual Meeting concludes.
44
If you do not want to vote your shares during the meeting or ask a question, you can join the meeting as a guest
using the same link above. You will not need to have your control number or to complete a registration in order to
participate as a guest. We will have technicians ready to assist you with any technical difficulties you may have
accessing the Annual Meeting webcast. Electronic check in begins at 8:30 a.m. local time on May 4, 2022, the
day of the Annual Meeting, so that we may address any technical difficulties before the Annual Meeting webcast
begins. If you encounter any difficulties accessing the Annual Meeting webcast during the check-in or meeting
time, please go to https://go.lumiglobal.com/faq or call 718-931-8300, ext. 6449.
Eliminating Duplicative Proxy Materials
We have adopted a procedure approved by the SEC called “householding” under which multiple shareholders
who share an address and do not participate in electronic delivery will receive only one copy of the annual proxy
materials or Notice unless we receive contrary instructions from one or more of the shareholders. If you would like
to opt out of householding and continue to receive multiple copies of the proxy materials or Notice at the same
address, or if you have previously opted out of householding and would now like to participate, you can do so by
notifying us in writing, by telephone or by email at: Investor Relations, 909 Rose Avenue, Suite 200, North
Bethesda, Maryland 20852, (800) 937-5449, IR@federalrealty.com.
Solicitation of Proxies
We will bear the cost of soliciting proxies from beneficial owners of our shares. Our trustees, officers and
employees, acting without special compensation, and other agents may solicit proxies by telephone, internet, or
otherwise. Copies of solicitation materials will be furnished to brokerage firms, fiduciaries, and other custodians
who hold our shares of record for beneficial owners for forwarding to such beneficial owners. We may also
reimburse persons representing beneficial owners of our shares for their reasonable expenses incurred in
forwarding such materials.
Beneficial owners of our shares who authorize their proxies through the internet should be aware that they may
incur costs to access the internet, such as usage charges from telephone companies or internet service providers
and these costs must be borne by the shareholder.
Shareholder Proposals for the 2023 Annual Meeting
This solicitation is made by the Company on behalf of the Board. Proposals of shareholders intended to be
presented at the 2023 Annual Meeting of Shareholders, including nominations for persons for election to the
Board of Trustees, must be delivered to us at 909 Rose Avenue, Suite 200, North Bethesda, Maryland 20852,
Attention: Corporate Secretary and received by us no later than November 25, 2022 to be considered for inclusion
in our proxy statement and form of proxy relating to such meeting. All proposals must comply with the
requirements set forth in our Bylaws and the federal securities laws, including Rule 14a-8, in order to be included
in the Company’s proxy statement and proxy card for the 2023 Annual Meeting of Shareholders. Pursuant to our
proxy access Bylaw provision, a shareholder, or a group of up to 20 shareholders, that has continuously owned
for three years at least 3% of the Company’s outstanding common shares, may nominate and include in the
Company’s annual meeting proxy materials up to the greater of two trustees or 20% of the number of trustees
serving on the Board, if the shareholder(s) and the nominee(s) meet the requirements specified in Article II,
Section 13 of our Bylaws. Our Bylaws are available by written request made to the General Counsel & Secretary,
909 Rose Avenue, Suite 200, North Bethesda, Maryland 20852.
45
If you want to present a proposal for the 2023 Annual Meeting but do not wish to have it included in the proxy
statement and proxy card, you must provide written notice to us no later than November 25, 2022 at the same
address as set forth above.
For the Trustees,
Dawn M. Becker
Executive Vice President—General
Counsel and Secretary
Federal Realty Investment Trust
909 Rose Avenue, Suite 200
North Bethesda, Maryland 20852
YOUR PROXY IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE SUBMIT
IT TODAY.
46
Appendix A
Reconciliation of Non-GAAP Financial Measures
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. 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. 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 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.
The reconciliation of net income to FFO available for common shareholders for the years ended December 31,
2021 and 2020 is as follows:
Net income
Net income attributable to noncontrolling interests
Gain on sale of real estate and change in control of interests, net
Impairment charge, net
Depreciation and amortization of real estate assets
Amortization of initial direct costs of leases
Funds from operations
Dividends on preferred shares
Income attributable to operating partnership units
Income attributable to unvested shares
2021
2020
(in thousands, except per
share data)
$ 269,081 $
$
(7,583) $
$ (89,892) $
$
- $
$ 243,711 $
26,051 $
$
$ 441,368 $
(8,042) $
$
2,998 $
$
(1,581) $
$
135,888
(4,182)
(91,922)
50,728
228,850
20,415
339,777
(8,042)
3,151
(1,037)
Funds from operations available for common shareholders(1)
$ 434,743 $
333,849
Weighted average number of common shares, diluted(1)(2)
78,072
76,261
Funds from operations available for common shareholders, per diluted
share(1)
$
5.57 $
4.38
(1) For the year ended December 31, 2020, FFO available for common shareholders includes a $11.2 million charge related
to early extinguishment of debt. If this charge was excluded, our FFO available for common shareholders for 2020 would
have been $345.0 million, and FFO available for common shareholders, per diluted share would have been $4.52.
The weighted average common shares used to compute FFO per diluted common share includes 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 common share but is anti-dilutive for the computation of diluted EPS for the periods presented.
(2)
A-1
Corporate
Information
C O R P O R A T E O F F I C E
A N N U A L M E E T I N G
909 Rose Avenue, Suite 200
North Bethesda, MD 20852
301.998.8100
Federal Realty Investment Trust will hold its Annual
Shareholder Meeting virtually at 9:00 a.m. on May 4,
2022.
C O R P O R A T E C O U N S E L
C O R P O R A T E G O V E R N A N C E
Pillsbury Winthrop Shaw Pittman LLP
Washington, DC
I N D E P E N D E N T R E G I S T E R E D
P U B L I C A C C O U N T I N G F I R M
Grant Thornton LLP
New York, NY
T R A N S F E R A G E N T A N D R E G I S T R A R
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, NY 11219
718.921.8124
800.937.5449
www.astfinancial.com
C O M M O N S T O C K L I S T I N G
New York Stock Exchange
Symbol: FRT
M E M B E R S H I P S
International Council of Shopping Centers
National Association of Real Estate Investment Trusts
Urban Land Institute
The Trust’s Corporate Governance Guidelines and the
charters for the Audit Committee, the Compensation
and Human Capital Management Committee and the
Nominating and Corporate Governance Committee are
available in the Investors section of our website at
www.federalrealty.com.
A U T O M A T I C C A S H I N V E S T M E N T
A N D D I R E C T D E P O S I T
Federal Realty offers automatic cash investment, the
option to automatically withdraw funds from a
checking/savings or other bank account to purchase
additional shares of FRT on the 1st and 15th of each
month. Federal Realty also offers shareholders the
option to directly deposit their dividends. To sign up
for automatic cash investment or direct deposit, please
call 800.937.5449 or visit www.astfinancial.com.
I N T E R N E T |
W W W . F E D E R A L R E A L T Y . C O M
Visitors to the site can search for and download
Securities and Exchange Commission filings, review
Federal Realty’s Dividend Reinvestment Plan, obtain
current stock quotes, read recent press releases, and
see a listing of our properties and the properties’
respective websites. Printed materials and email news
alerts can also be requested.
I N V E S T O R R E L A T I O N S C O N T A C T
You may communicate directly with Federal Realty’s
Investor Relations department via telephone at
800.658.8980 or by email at IR@federalrealty.com.
F E D E R A L R E A L T Y | A N N U A L R E P O R T 2021
Corporate
Headquarters
909 Rose Avenue
Suite 200
North Bethesda, MD 20852
Regional Offices
B O S T O N
450 Artisan Way
Suite 320
Somerville, MA 02145
617.684.1500
L O S A N G E L E S
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Suite 204
El Segundo, CA 90245
310.414.5280
P H I L A D E L P H I A
50 E Wynnewood Road
Suite 200
Wynnewood, PA 19096
610.896.5870
S A N J O S E
356 Santana Row
Suite 1005
San Jose, CA 95128
408.551.4600
T Y S O N S
7930 Jones Branch Drive
Suite 350
McLean, VA 22102