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
2022 Annual Report
Form 10-K & Proxy Statement
Dear Fellow
Shareholders,
Resilient; (adjective), able to withstand or
recover quickly from difficult conditions.
No word in our vocabulary better describes
our company, our properties, and our people
better than resilient.
forgotten in the dominant “bricks and mortar
retail is dead” dialogue of 2016-2020, the global
pandemic and its aftermath have surely put that
novel notion to bed.
in
high
coastal
density
The pandemic was particularly hard on Federal
Realty. Because many of our properties are
located
states
(Massachusetts, Maryland, California, New York,
New Jersey,
etc.); mandated government
shutdowns were more restrictive and lasted
longer in our markets than in others. When those
restrictions were finally lifted, those consumers
(and retail tenants) responded enthusiastically
and led to a recovery from the pandemic in 2022
which was far stronger and faster than our most
aggressive expectations. We are inherently social
creatures, and if that reality was temporarily
as
and
such
qualities
Our high-quality properties are thriving and,
with a collection of the most relevant tenants of
enhanced
today
landscaping, outdoor seating areas and creative
“placemaking” that bring consumers back time
and again, our properties are an integral part of
the day-to-day life of the local communities.
Retail destinations where sustainability and
operating efficiency considerations are built in
and not an afterthought. In short, the post-
pandemic consumer demands more from the
shopping centers serving their communities.
Federal Realty delivers on that demand.
B e t h e s d a R o w | B e t h e s d a , M D
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 2022
55 consecutive years
of increased dividends.
$4.32*
2022
included in that very short list. Except that
now we’ve increased our common dividends
per share every year for 55 years! There’s no
special
than perhaps
“unicorn”. Our real estate is that good.
that other
title for
T h e H e a r t o f
t h e B u s i n e s s
for
tenants
and office
With over 100 real estate properties spread
out over 12 states and the District of
finding the right mix of retail,
Columbia,
restaurant,
our
26 million square feet of commercial space is
the heart of our business. We strive to find
those tenants that have the best chance of
honoring their contracts (leases) through their
full term. We strive to assure that when a
tenant inevitably does fail, those contracts are
strong and give us the best chance at financial
recovery and, importantly, that there are new
tenants excited to replace them. Diversity of
that contractual rental stream is always a
paramount consideration. It’s why we insist
on diversity geographically, by type of
shopping center and by tenant base. No one
tenant accounts for more than 2.8% of our
rental stream, and that tenant is A-rated TJX.
$0.12*
1967
*Annualized dividends per share
R e c o r d s B r o k e n
As one of the oldest real estate investment
trusts (REITs)
in the United States, Federal
Realty celebrated its 60th anniversary in 2022.
It’s fitting then that 2022 marked the first year
in that long history that total rental revenue
exceeded $1 billion and total
real estate
holdings, at
cost, exceeded $10 billion.
Decades of measured growth where the
acquisition and development of only the
highest quality real estate were pursued,
resulting in the widely acknowledged premier
open air shopping center portfolio in the
country. At $6.32 per diluted share1, our funds
from operations came within a penny of our
all-time record; a record that we expect to beat
in 2023.
We’re also proud to have long been referred to
as a Dividend Aristocrat, an honor bestowed
only on those companies that have increased
common dividends to shareholders for at
least 25 consecutive years. Today, the honor
is even greater as we are proud to be referred
to as a Dividend King, which requires a
50 year unbroken record of
increased
dividends for which we are the lone REIT
1 Refer to page 48 of our Form 10-K for information on funds from operations per diluted share.
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 2022
In addition to our commercial space, we also
own and operate over 3,000 high quality
residential apartments, all of which are an
integral component of our retail driven mixed-
used properties and larger shopping centers.
Incorporating apartments in our portfolio not
only creates material land value, but also adds
another element of revenue diversity to our
income stream,
further differentiating the
Federal Realty offering.
In 2022, our team executed nearly 500 retail
space leases (not to mention 60 additional
office leases and hundreds more residential
leases) for over 2 million square feet of space
at rents that were 6% higher than what the
previous lease called for (to the extent there
was a previous lease).
the
60 years in our long history were we able to
sign commitments for over 2 million square
feet—2021 and 2022. Our business is healthy
and our properties are in strong demand. Our
entire portfolio is now 94.5% leased; a strong
result that can still be improved upon.
In only 2 of
H e a d w i n d s a n d T a i l w i n d s
and
higher
interest
loans
The Federal Reserve’s actions to raise interest
rates and tame inflation are expected to
impact most businesses, including ours, as we
enter 2023 and beyond. As economic activity
affect
rates
falls
everything from car
to mortgage
payments, to deal underwriting, we would not
be surprised to see a slowdown in consumer
spending which very well may cause retailer
reticence and a residual
impact on deal
making. As of this writing, we haven’t seen
any such reticence but the concern is pretty
obvious. Our business remains more than
solid and if history is any indication (and we
believe it is), Federal Realty’s real estate will
outperform in times like these given the
superior demographics along with the very
strong diversification of our income stream.
To put a finer point on that, today’s troubled
tenants: Bed Bath & Beyond, Party City,
Tuesday Morning, Kirkland, (and even Regal
Cinemas of which we have no exposure), – all
of them combined comprise less than 1% of
our 2023 forecasted rental stream.
While higher interest rates will surely pressure
most companies’ earnings, including ours, to
some extent in 2023 and future years, this
business plan doesn’t need money to be
virtually free to thrive. We’ve been around for
60 years and have raised our dividend to
shareholders every single year since 1967.
Neither interest rates in the high teens in the
late 70’s and early 80’s, nor the great financial
crisis of 2008-2009, nor even a global
pandemic
in 2020-2021 interrupted our
to shareholders as expressed
commitment
through a common share dividend raise. We
believe we owe that to you.
R e f i n i n g t h e P o r t f o l i o
components
The continuous refinement of our portfolio
through buying, building and selling are
to long term value
critical
creation and one of the parts of our business
plan that we feel differentiates us. In 2022,
we were able to sell
three properties in
Maryland with limited upside for $134 million,
at a 5% capitalization rate. Those properties,
one a legacy residential community from
Federal’s earliest days, the second a Federal
developed residential building on excess land
that we controlled, and the third one of our
earliest small retail developments, gave us the
opportunity to reinvest those and additional
proceeds accretively (in other words, at a
return in excess of 5%) into retail properties
growth
that
prospects. Acquisitions in 2022 included,
Kingstowne Towne Center
in Kingstowne,
Virginia, The Shops at Pembroke Gardens in
Pembroke Pines, Florida, and a furthering of
desirable
our
Washington Street in Hoboken New Jersey. In
short,
those dispositions and acquisitions
make Federal Realty’s portfolio even stronger
going into 2023 than it was a year ago.
significantly
footprint
estate
better
have
real
on
The same can be said of our development
business which has focused on expanding the
footprint of our award-winning mixed-use
properties in San Jose California, Somerville
Massachusetts and North Bethesda, Maryland.
The “Big 3”, in addition to smaller projects in
Coconut
Darien,
Connecticut, are critical to our brand and our
long term growth. You only need to look at
the $650 million plus of construction in
process on our year-end balance sheet
to
identify a large source of future income.
Florida
Grove,
and
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 2022
Short term disruptions that come with the
development business are inevitable and
accordingly, we limit this part of our business
plan to 10% of our asset base. Yet,
it’s
that not only
precisely this differentiator
polishes our reputation as innovators and
leading-edge real estate professionals, but
also creates a knowledge base that filters
down to benefit every property in our
portfolio in one way or another. Each year
end, you should expect Federal Realty’s
portfolio to be better than it was the year
before.
I n C l o s i n g
In May of 2023,
I will be celebrating the
25th anniversary of my time at Federal Realty,
the last 20 years of which as your Chief
Executive. The cohesiveness and culture of
the team, the relationship with our Board of
Trustees and the consistent, unwavering
execution of our business plan over that time
has been one of our most overlooked, yet
in
you
invest
greatest strengths. You know what you’re
getting when
FRT. A
multifaceted real estate business plan that
includes the operation of some of the highest
in the
quality retail-focused destinations
country along with consistent,
industry-
leading re-development, development, and
acquisition components of the overall plan; all
under
the strength of a low leveraged,
conservatively managed balance sheet. That
long-term successful approach with unrivaled
consistency allows us to attract talent that’s
the best
levels
throughout the company. That applies to the
Board too. Our success is not dependent on
any one executive or team member. It takes a
village, and we’re proud of the community
we’ve created and nurtured over these many
years.
in the business at all
On behalf of the Board of Trustees and our
entire team, I thank you for your support and
look forward to serving you in the years
ahead.
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 2022
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, 2022
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
☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Federal Realty Investment Trust ☐
Federal Realty OP LP
☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).
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, 2022:
Federal Realty Investment Trust: $7.7 billion
Federal Realty OP LP: N/A
The number of Federal Realty Investment Trust's common shares outstanding on February 3, 2023 was 81,353,180.
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 2023 will be incorporated by reference into Part III hereof.
DOCUMENTS INCORPORATED BY REFERENCE
EXPLANATORY NOTE
This report combines the annual reports on Form 10-K for the year ended December 31, 2022, of Federal Realty Investment
Trust and Federal Realty OP LP. Unless stated otherwise or the context otherwise requires, references to "Federal Realty
Investment Trust," the "Parent Company" or the "Trust" mean Federal Realty Investment Trust; and references to "Federal
Realty OP LP" or the "Operating Partnership" mean Federal Realty OP LP. The term "the Company," "we," "us," and "our"
refer to the Parent Company and its business and operations conducted through its directly and indirectly owned subsidiaries,
including the Operating Partnership. References to "shares" and "shareholders" refer to the shares and shareholders of the
Parent Company and not the limited partnership interests for limited partners of the Operating Partnership.
The Parent Company is a real estate investment trust ("REIT") that owns 100% of the limited liability company interests of, is
the sole member of, and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which is the sole
general partner of the Operating Partnership. As of December 31, 2022, the Parent Company owned 100% of the outstanding
partnership units (the "OP Units") in the Operating Partnership.
The Company believes combining the annual reports on Form 10-K of the Parent Company and the Operating Partnership into
this single report provides the following benefits:
•
•
•
Enhances investors' understanding of the Parent Company and the Operating Partnership by enabling investors to view
the businesses as a whole in the same manner as management views and operates the business;
Eliminates duplicate disclosure and provides a more streamlined and readable presentation; and
Creates time and cost efficiencies through the preparation of one combined report instead of two separate reports.
Management operates the Parent Company and the Operating Partnership as one business. Since the Operating Partnership is
managed by the Parent Company, and the Parent Company conducts substantially all of its operations through the Operating
Partnership, the management of the Parent Company consists of the same individuals as the management of the Operating
Partnership.
We believe it is important to understand the few differences between the Parent Company and the Operating Partnership in the
context of how the Parent Company and the Operating Partnership operate as a consolidated company. The Parent Company is
a REIT, whose only material asset is its direct and indirect interest in the Operating Partnership. As a result, the Parent
Company does not conduct business itself other than issuing public equity from time to time. The Parent Company is not
expected to incur any material indebtedness. The Operating Partnership holds substantially all of our assets and retains the
ownership interests in the Company's joint ventures. Except for net proceeds from public equity issuances by the Parent
Company, which are contributed to the Operating Partnership in exchange for OP Units, the Operating Partnership generates all
capital required by the Company’s business. Sources of this capital include the Operating Partnership’s operations, its direct or
indirect incurrence of indebtedness, and the issuance of partnership units.
Stockholders' equity, partner capital, and non-controlling interests are the primary areas of difference between the unaudited
Condensed Consolidated Financial Statements of the Parent Company and those of the Operating Partnership. The Operating
Partnership’s capital currently includes OP Units owned by the Parent, and may in the future include OP Units owned by third
parties. OP Units owned by third parties, if any, are accounted for in capital in the Operating Partnership’s financial statements
and in non-controlling interests in the Parent Company’s financial statements.
The Parent Company consolidates the Operating Partnership for financial reporting purposes, and the Parent Company does not
have assets other than its investment in the Operating Partnership. Therefore, while stockholders’ equity and partners' capital
differ as discussed above, the assets and liabilities of the Parent Company and the Operating Partnership are the same on their
respective financial statements.
In order to highlight the differences between the Parent Company and the Operating Partnership, there are sections in this report
that separately discuss the Parent Company and the Operating Partnership, including separate financial statements (but
combined footnotes), separate controls and procedures sections, and separate Exhibit 31 and 32 certifications. In the sections
that combine disclosure for the Parent Company and the Operating Partnership, this report refers to actions or holdings as being
actions or holdings of the Company.
FEDERAL REALTY INVESTMENT TRUST
FEDERAL REALTY OP LP
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED DECEMBER 31, 2022
TABLE OF CONTENTS
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.
Business ........................................................................................................................................................... 3
Risk Factors ..................................................................................................................................................... 8
Unresolved Staff Comments............................................................................................................................ 18
Properties ......................................................................................................................................................... 19
Legal Proceedings............................................................................................................................................ 28
Mine Safety Disclosures .................................................................................................................................. 28
Market for Our Common Equity and Related Shareholder Matters and Issuer Purchases of Equity
Securities.......................................................................................................................................................... 29
Reserved .......................................................................................................................................................... 31
Management’s Discussion and Analysis of Financial Condition and Results of Operations.......................... 31
Quantitative and Qualitative Disclosures About Market Risk......................................................................... 49
Financial Statements and Supplementary Data ............................................................................................... 50
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure ......................... 50
Controls and Procedures .................................................................................................................................. 50
Other Information ............................................................................................................................................ 51
Trustees, Executive Officers and Corporate Governance................................................................................ 52
Executive Compensation ................................................................................................................................. 52
Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters ....... 52
Certain Relationships and Related Transactions, and Trustee Independence ................................................. 52
Principal Accountant Fees and Services.......................................................................................................... 52
Exhibits and Financial Statement Schedules ................................................................................................... 52
Form 10-K Summary
56
SIGNATURES ......................................................................................................................................................................... 57
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, or if the costs of capital we obtain are
significantly higher than historical levels;
risks associated with general economic conditions, including inflation and 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
Federal Realty Investment Trust (the "Parent Company" or the "Trust") is an equity real estate investment trust ("REIT").
Federal Realty OP LP (the "Operating Partnership") is the entity through which the Trust conducts substantially all of its
operations and owns substantially off of its assets. The Trust owns 100% of the limited liability company interest of, is sole
3
member of, and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which in turn, is the sole
general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us"
means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the
Operating Partnership.The Parent Company specializes 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 Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As
of December 31, 2022, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use
properties which are operated as 103 predominantly retail real estate projects comprising approximately 25.8 million square
feet. In total, the real estate projects were 94.5% leased and 92.8% occupied at December 31, 2022. 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 55 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
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
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
•
•
•
•
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.
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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. 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,
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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.
Human Capital
At February 3, 2023, we had 314 full-time employees and 8 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. We have also 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, 2018, 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.
General Economic Conditions and the COVID-19 Pandemic
The economy continues to face several challenges including higher levels of inflation, rising interest rates, global supply chain
bottlenecks and shortages, workforce shortages, a potential recession, and ongoing impacts of COVID-19. We continue to
monitor and address these risks; however, the extent of the future effects on our business, results of operations, cash flows, and
growth strategies is highly uncertain and will ultimately depend on future developments, none of which can be predicted with
any certainty.
6
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.
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 be held liable for property damage and for investigation and clean up costs incurred in
connection with the contamination, and we 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.
Energy and Emissions Regulations Affecting Our Properties
Some jurisdictions in which we own property have enacted or may enact legislation that requires use of only certain types of
energy sources, limits energy usage on site, or limits allowable emissions from buildings with fines or other costs being
imposed for exceeding those limits. This type of legislation typically includes an extended period of time from adoption to
implementation to allow property owners ample opportunity to make investments and take other actions to comply with the
legislation. Any investments we believe we will need to make to comply with laws that have been passed to date are being
included as part of our ordinary capital improvement planning process for our properties. We also address the potential effects
of these types of laws in our energy reduction and energy efficient efforts that are described in more detail in Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of Operations - Corporate Responsibility." These
types of laws have not had a material adverse effect on our financial condition or results of operations and management does
not believe they will have a material adverse effect in the future. We cannot, however, predict the impact of new or changed
laws or regulations on properties we currently own or may acquire in the future
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.
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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
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, 2022, our anchor tenant space is 96.9%
leased and 95.6% 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.
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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, 2022, 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;
elevated levels of inflation over an extended period of time;
increasing interest rates;
increased business restrictions due to health crises;
relocations of businesses;
changing demographics;
increased telecommuting and use of alternative work places;
infrastructure quality;
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;
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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, inflation, 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;
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
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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.
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, 2022, we held 20 predominantly retail real estate projects jointly with other
persons in addition to properties owned in a “downREIT” structure. Additionally, as of December 31, 2022, 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, 2022, we held the controlling interests in all of our existing
co-investments (except the hotel investment discussed above, the investment in the La Alameda shopping center acquired in
2017, the investment in the Chandler Festival and Chandler Gateway shopping centers acquired in 2022 (see Note 3 to the
consolidated financial statements), and our Escondido Promenade shopping center (as discussed in Note 3 to the consolidated
financial statements), 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
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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.
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, or disclosure frameworks 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, or disclosure frameworks, 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
12
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, 2022, we had approximately $4.3 billion of debt outstanding. Of that outstanding debt, approximately
$322.3 million was secured by all or a portion of 7 of our real estate projects. As of December 31, 2022, approximately 86.2%
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;
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, 2022, 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
13
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
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 $4.3 billion of debt outstanding as of December 31, 2022, approximately $655.1 million bears interest at a variable rate,
of which, $600.0 million is our unsecured term loan that bears interest at a variable rate of SOFR plus 85 basis points plus
0.10%, and $55.1 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 $1.25 billion revolving credit facility, on which no
balance was outstanding at December 31, 2022, that bears interest at SOFR plus 77.5 basis points, plus 0.10%. 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.
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
14
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.
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
15
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 happens, 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
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. 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:
16
•
•
•
•
•
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;
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, 2022, we owned or had a majority ownership interest in community and neighborhood shopping centers
and mixed-used properties which are operated as 103 predominantly retail real estate projects comprising approximately 25.8
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 2022 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, 2022, we had approximately 3,300 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 2.8% of our annualized base rent as of December 31, 2022. 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 103 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, 2022.
State
California (1)
Maryland
Virginia
Pennsylvania
Massachusetts
New Jersey
Florida
New York
Illinois
Arizona
Connecticut
Michigan
District of Columbia
Total
Number of
Projects
21
17
19
10
7
7
4
7
4
2
3
1
1
103
Gross Leasable
Area
(In square feet)
6,385,000
4,346,000
4,094,000
1,996,000
2,184,000
1,891,000
1,281,000
1,236,000
799,000
947,000
358,000
215,000
78,000
25,810,000
Percentage
of Gross
Leasable
Area
24.7 %
16.8 %
15.9 %
7.7 %
8.5 %
7.3 %
5.0 %
4.8 %
3.1 %
3.7 %
1.4 %
0.8 %
0.3 %
100.0 %
(1) Includes our 77.7% pro-rata share of Escondido Promenade, see Note 3 to the consolidated financial statements for
additional information.
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 2022,
represented approximately 9.7% of total rental income.
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The following table sets forth the schedule of lease expirations for our commercial leases in place as of December 31, 2022
for each of the 10 years beginning with 2023 and after 2032 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, 2022.
Year of Lease Expiration
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Thereafter
Total
Leased
Square
Footage
Expiring
1,600,000
3,288,000
3,392,000
2,221,000
2,987,000
2,549,000
1,707,000
985,000
1,042,000
2,081,000
2,090,000
23,942,000
Percentage of
Leased Square
Footage
Expiring
Annualized
Base Rent
Represented by
Expiring Leases
50,078,000
93,999,000
90,135,000
71,066,000
100,035,000
74,476,000
57,460,000
29,051,000
35,049,000
68,078,000
57,455,000
100 % $ 726,882,000
7 % $
14 %
14 %
9 %
12 %
11 %
7 %
4 %
4 %
9 %
9 %
Percentage of
Annualized
Base Rent
Represented by
Expiring Leases
7 %
13 %
12 %
10 %
14 %
10 %
8 %
4 %
5 %
9 %
8 %
100 %
During 2022, we signed leases for a total of 2,048,000 square feet of retail space including 1,985,000 square feet of comparable
space leases (leases for which there was a prior tenant) at an average rental increase of 6% on a cash basis. New leases for
comparable spaces were signed for 757,000 square feet at an average rental increase of 8% on a cash basis. Renewals for
comparable spaces were signed for 1,228,000 square feet at an average rental increase of 4% on a cash basis. Tenant
improvements and incentives for comparable spaces were $31.65 per square foot, of which, $75.12 per square foot was for new
leases and $4.86 per square foot was for renewals in 2022.
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.
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
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 2.0 million square feet of retail space each year and expect
the volume for 2023 will be in line with these historical averages. Although we expect overall positive increases in annual rent
for comparable spaces, changes in annual rent for any individual lease or combinations of individual leases reported in any
particular period may be positive or negative and we can provide no assurance that the annual rents on comparable space leases
will continue to increase at historical levels, if at all.
The leases signed in 2022 generally become effective over the following two years though some may not become effective until
2025 and beyond. Further, there is risk that some new tenants will not ultimately take possession of their space and that tenants
for both new and renewal leases may not pay all of their contractual rent due to operating, financing or other matters. However,
20
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, 2022. 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(4)
Chandler Festival
Chandler, AZ 85224(5)(6)
Chandler Gateway
Chandler, AZ 85226(5)(6)
Hilton Village
Scottsdale, AZ 85250(4)(7)
California
Azalea
South Gate, CA 90280(4)(6)
1977, 2019
2021
642,000
$18.14
89%
2000
2022
355,000
$17.24
95%
2001
2022
262,000
$11.10
100%
1982, 1989
2021/2022
305,000
33.87
90%
2014
2017
223,000
$28.48
100%
Bell Gardens
Bell Gardens, CA 90201(4)(6)(7)
1990, 2003,
2006
2017/2018
330,000
$23.58
98%
Colorado Blvd
Pasadena, CA 91103(7)
Crow Canyon Commons
San Ramon, CA 94583
1905-1988
1998
42,000
$60.04
1980, 1998,
2006
2005/2007
243,000
$29.55
100%
100%
East Bay Bridge
Emeryville & Oakland, CA 94608
1994-2001,
2011, 2012
2012
440,000
$19.71
100%
Escondido Promenade
Escondido, CA 92029(8)
Fourth Street
Berkeley, CA 94710(4)
Freedom Plaza
Los Angeles, CA 90002(4)(7)
Grossmont Center
La Mesa, CA 91942(4)
Hastings Ranch Plaza
Pasadena, CA 91107(7)
Hollywood Blvd
Hollywood, CA 90028
Kings Court
Los Gatos, CA 95032(7)(9)
La Alameda
Walnut Park, CA 90255(5)(6)(7)
Old Town Center
Los Gatos, CA 95030
1987
1996/2010
231,000
$29.37
99%
1948, 1975
2017
71,000
$32.59
81%
2020
2018
114,000
$30.71
97%
1961, 1963,
1982-1983,
2002
1958, 1984,
2006, 2007
2021
932,000
$14.17
98%
2017
273,000
$8.59
100%
1929, 1991
1999
181,000
$36.55
86%
1960
2008
1998
2017
81,000
245,000
$42.31
$27.08
100%
95%
1962, 1998
1997
98,000
$42.99
95%
22
Fry's Food & Drug
Floor & Décor
Marshalls
Nordstrom Last Chance
Best Buy
Ross Dress for Less
Nordstrom Rack
TJ Maxx
Ulta
Walmart
Hobby Lobby
Petco
CVS
Houston's
Marshalls
Ross Dress for Less
Ulta
Michaels
Food 4 Less
Marshalls
Ross Dress for Less
Bob's Discount Furniture
Banana Republic
True Food Kitchen
Sprouts
Total Wine & More
Rite Aid
Alamo Ace Hardware
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
Principal Tenant(s)
Target
24 Hour Fitness
Ross Dress for Less
Marshalls
Whole Foods
Nordstrom Rack
HomeGoods
Dick's Sporting Goods
Multiple Restaurants
Trader Joe's
Walmart
24 Hour Fitness
Crate & Barrel
Container Store
H&M
Best Buy
Splunk
Net App
Multiple Restaurants
Food 4 Less
CVS
adidas
Madewell
Patagonia
Multiple Restaurants
Target
Nordstrom Rack
Nike Factory
TJ Maxx
Stop & Shop
TJ Maxx
Burlington
Equinox
Walgreens
Property, City, State, Zip Code
Olivo at Mission Hills
Mission Hills, CA 91345(4)
Plaza Del Sol
South El Monte, CA 91733(4)
Plaza El Segundo / The Point
El Segundo, CA 90245 (6)
Year
Completed
2018
Year
Acquired
2017
Square
Feet(1) /
Apartment
Units
155,000
Average Base
Rent Per
Square
Foot(2)
$33.26
Percentage
Leased(3)
100%
2009
2017
48,000
2006-2007,
2016
2011/2013
501,000
$24.22
$48.03
96%
85%
San Antonio Center
Mountain View, CA 94040(7)(9)
Santana Row
San Jose, CA 95128(7)(11)
1958,
1964-1965,
1974-1975,
1995-1997
2002, 2009,
2016, 2020
2015/2019
213,000
$16.70
99%
1997
1,206,000
$56.56
99%
Santana Row Residential
San Jose, CA 95128
Sylmar Towne Center
Sylmar, CA 91342(4)
Third Street Promenade
Santa Monica, CA 90401
Westgate Center
San Jose, CA 95129
Connecticut
Bristol Plaza
Bristol, CT 06010
Darien Commons
Darien, CT 06820
Darien Commons Residential
Darien, CT 06820
Greenwich Avenue
Greenwich Avenue, CT 06830
District of Columbia
Friendship Center
Washington, DC 20015
Florida
CocoWalk
Coconut Grove, FL 33133(4)(12)
Del Mar Village
Boca Raton, FL 33433
The Shops at Pembroke Gardens
Pembroke Pines, FL 33027
Tower Shops
Davie, FL 33324
Illinois
Crossroads
Highland Park, IL 60035
Finley Square
Downers Grove, IL 60515
2003-2006,
2011, 2014
1973
1997/2012
662 units
N/A
2017
148,000
$17.57
1888-2000
1996-2000
207,000
$72.02
96%
93%
74%
1960-1966
2004
648,000
$19.68
91%
1959
1995
264,000
$14.24
82%
1920-2009
2013/2018
59,000
$42.94
2013/2018
59 units
N/A
89%
75%
2022
1968
1995
35,000
$96.19
100%
Saks Fifth Avenue
1998
2001
78,000
$33.73
100%
1990/1994,
1922-1973,
2018-2021
1982, 1994
& 2007
2015-2017
273,000
$45.17
100%
2008/2014
187,000
$23.44
97%
2007
2022
391,000
$30.66
92%
1989, 2017
2011/2014
430,000
$27.06
100%
1959
1993
168,000
$23.48
91%
1974
1995
281,000
$17.13
92%
Marshalls
DSW
Maggiano's
Cinepolis Theaters
Youfit Health Club
Multiple Restaurants
Winn Dixie
CVS
L.A. Fitness
DSW
Old Navy
Nike Factory
Barnes & Noble
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
23
Property, City, State, Zip Code
Garden Market
Western Springs, IL 60558
Riverpoint Center
Chicago, IL 60614
Maryland
Bethesda Row
Bethesda, MD 20814(7)
Bethesda Row Residential
Bethesda, MD 20814
Congressional Plaza
Rockville, MD 20852(4)
Congressional Plaza Residential
Rockville, MD 20852(4)
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
1958
Year
Acquired
1994
Square
Feet(1) /
Apartment
Units
139,000
Average Base
Rent Per
Square
Foot(2)
$13.92
Percentage
Leased(3)
96%
1989, 2012
2017
211,000
$21.21
93%
1945-1991
2001, 2008
1993-2006/
2008/2010
529,000
$56.39
95%
2008
1965
1993
1965
180 units
N/A
324,000
$41.60
2003, 2016
1965
194 units
N/A
1975
1970
1997
1989
38,000
$25.61
249,000
$38.25
96%
91%
98%
69%
93%
1966
1993
208,000
$31.11
95%
1963
1985
243,000
$20.44
99%
1956
1986
364,000
$23.71
99%
Montrose Crossing
Rockville, MD 20852
1960-1979,
1996, 2011
2011/2013
368,000
$33.72
100%
Perring Plaza
Baltimore, MD 21134
1963
1985
398,000
$19.04
71%
Pike & Rose
North Bethesda, MD 20852(11)
1963, 2014,
2018, 2020
1982/2007/
2012
667,000
$42.68
100%
Pike & Rose Residential
North Bethesda, MD 20852
Plaza Del Mercado
Silver Spring, MD 20906
Quince Orchard
Gaithersburg, MD 20877(7)
THE AVENUE at White Marsh
Baltimore, MD 21236(9)
2014, 2016,
2018
1982/2007
765 units
N/A
1969
2004
116,000
$33.15
97%
96%
1975
1993
270,000
$26.14
84%
1997
2007
315,000
$27.59
88%
Principal Tenant(s)
Mariano's Fresh Market
Walgreens
Jewel Osco
Marshalls
Old Navy
Giant Food
Apple
Equinox
Anthropologie
Multiple Restaurants
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
Ross Dress for Less
Petco
Giant Food
Marshalls
L.A. Fitness
HomeGoods
Giant Food
Marshalls
Home Depot Design Center
Old Navy
Burlington
Shoppers Food Warehouse
Home Depot
Micro Center
Porsche
Uniqlo
REI
H&M
L.L. Bean
Multiple Restaurants
Aldi
CVS
L.A. Fitness
Aldi
HomeGoods
L.A. Fitness
Staples
AMC
Ulta
Old Navy
Nike
The Shoppes at Nottingham Square
2005-2006
2007
Baltimore, MD 21236
White Marsh Other
Baltimore, MD 21236
White Marsh Plaza
Baltimore, MD 21236
1985
1987
2007
2007
33,000
56,000
$51.91
100%
$33.44
87%
80,000
$23.62
100%
Giant Food
24
Property, City, State, Zip Code
Wildwood
Bethesda, MD 20814
Massachusetts
Assembly Row/
Assembly Square Marketplace
Somerville, MA 02145(11)
Assembly Row Residential
Somerville, MA 02145
Campus Plaza
Bridgewater, MA 02324
Chelsea Commons
Chelsea, MA 02150(6)
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(7)
Brook 35
Sea Grit, NJ 08750(4)(6)(9)
Ellisburg
Cherry Hill, NJ 08034
Year
Completed
1958
Year
Acquired
1969
Square
Feet(1) /
Apartment
Units
88,000
Average Base
Rent Per
Square
Foot(2)
$103.94
Percentage
Leased(3)
100%
2005, 2014,
2018, 2021
2005-2011/
2013
1,178,000
$35.30
99%
2018, 2021
2005-2011
947 units
N/A
1970
2004
114,000
$16.83
94%
85%
1962,1969,
2008
2006-2008
222,000
$12.94
100%
1959
1993/2016/
2019
1960, 2008
2006
2004
1967
2006
1994
249,000
$18.14
92%
224,000
7 units
48,000
$50.56
N/A
$17.22
97%
100%
100%
149,000
$20.42
99%
1964
1973
215,000
$12.82
100%
1958
1989
407,000
$21.85
95%
1986, 2004
2014
98,000
$41.89
92%
1959
1992
260,000
$18.20
99%
Hoboken
Hoboken, NJ 07030(4)(6)(13)
1887-2006
2019/2020/
2022
171,000
129 units
Mercer Mall
Lawrenceville, NJ 08648(7)
1975
2003/2017
551,000
$57.04
N/A
$26.68
98%
100%
89%
The Grove at Shrewsbury
Shrewsbury, NJ 07702(4)(6)(9)
1988, 1993
& 2007
2014
193,000
$49.05
100%
Troy Hills
Parsippany-Troy, NJ 07054
New York
Fresh Meadows
Queens, NY 11365
1966
1980
211,000
$23.02
99%
1949
1997
408,000
$39.23
96%
Georgetowne Shopping Center
Brooklyn, NY 11234
1969, 2006,
2015
2019
147,000
$41.49
87%
Greenlawn Plaza
Greenlawn, NY 11743
1975, 2004
2006
103,000
$19.80
92%
25
Principal Tenant(s)
Balducci's
CVS
Multiple Restaurants
Trader Joe's
TJ Maxx
AMC
Nike
PUMA
Multiple Restaurants
Roche Bros.
Burlington
Home Depot
Planet Fitness
CVS
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
RH Outlet
CVS
New York Sports Club
Sephora
Multiple Restaurants
Shop Rite
Nike
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
Property, City, State, Zip Code
Hauppauge
Hauppauge, NY 11788
Huntington
Huntington, NY 11746
Huntington Square
East Northport, NY 11731(7)
Melville Mall
Huntington, NY 11747(7)
Year
Completed
1963
Year
Acquired
1998
1962
1988/2007/
2015
Square
Feet(1) /
Apartment
Units
134,000
Average Base
Rent Per
Square
Foot(2)
$33.63
Percentage
Leased(3)
86%
116,000
$26.85
90%
1980, 2007
2010
75,000
$30.76
91%
1974
2006
253,000
$29.75
100%
Principal Tenant(s)
Shop Rite
Petsmart
Michaels
Ulta
Barnes & Noble
Uncle Giuseppe's Marketplace
Marshalls
Dick's Sporting Goods
Macy's Backstage
Public Lands
Acme Markets
TJ Maxx
Kohl's
L.A. Fitness
Five Below
Acme Markets
Michaels
L.A. Fitness
Giant Food
Movie Tavern
Giant Food
AutoZone
Redner's Warehouse Markets
Marshalls
Planet Fitness
Acme Markets
TJ Maxx
HomeGoods
Barnes & Noble
Lankenau Medical Center
Marshalls
Ulta
Skechers
Crunch Fitness
Giant Food
Rite Aid
Dollar Tree
Marshalls
Five Below
Giant Food
Old Navy
DSW
Lidl
HomeGoods
DSW
Staples
1953
1988
270,000
$14.82
88%
1955
1993
174,000
$37.51
2020
1957
1958
1966
1993
1980
1980
1985
87 units
N/A
156,000
$22.58
126,000
$19.01
223,000
$18.68
100%
94%
99%
96%
99%
1972
1980/2017
356,000
$23.57
97%
1959
1983
214,000
$21.57
80%
1969
2006
124,000
$10.08
93%
1953
1948
1984
1996
105,000
248,000
9 units
$22.37
$29.27
N/A
98%
97%
100%
1975-2001
2007
169,000
$20.35
100%
1963, 1972,
1990, &
2000
2006/2007/
2016
113,000
$28.80
98%
Harris Teeter
1958
1985
497,000
$27.77
96%
1960/1962
1967/1972
144,000
$37.94
99%
1967
2021
90,000
$26.67
1981, 1986,
2000
2019/2020
124,000
$24.92
76%
91%
1971
1983
132,000
$40.71
90%
Harris Teeter
Kroger
Anthropologie
Bed, Bath & Beyond
Old Navy
Ulta
Giant Food
CVS
Staples
Safeway
Starbucks
Aldi
CVS
Planet Fitness
Giant Food
26
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(7)
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
Barcroft Plaza
Falls Church, VA 22041
Barracks Road
Charlottesville, VA 22905
Birch & Broad
Falls Church, VA 22046
Chesterbrook
McLean, VA 22101(4)
Fairfax Junction
Fairfax, VA 22030(9)
Graham Park Plaza
Falls Church, VA 22042
Property, City, State, Zip Code
Idylwood Plaza
Falls Church, VA 22030
Kingstowne Towne Center
Kingstowne, VA 22315
Year
Completed
1991
Year
Acquired
1994
Square
Feet(1) /
Apartment
Units
73,000
Average Base
Rent Per
Square
Foot(2)
$48.07
Percentage
Leased(3)
88%
Principal Tenant(s)
Whole Foods
1996, 2001,
2006
2022
410,000
$26.99
98%
Mount Vernon/South Valley/
7770 Richmond Hwy
Alexandria, VA 22306(9)
1966,
1972,1987
& 2001
2003/2006
565,000
$19.90
97%
Old Keene Mill
Springfield, VA 22152
Pan Am
Fairfax, VA 22031
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(7)
1968
1976
91,000
$39.41
1979
1993
228,000
$25.71
95%
95%
1968
1997/2015
172,000
$49.74
100%
1960
1998
111,000
$27.55
87%
1977
1954
1940,
2006-2009
2021
1978
1995
101,000
$26.40
92%
48,000
$49.47
91%
Trader Joe's
266,000
$40.07
85%
Westpost (formerly known as Pentagon
Row)
Arlington, VA 22202
2001-2002
1998/2010
297,000
$33.49
99%
Willow Lawn
Richmond, VA 23230
1957
1983
463,000
$21.85
96%
Total — Commercial (10)
Total —Residential
_____________________
25,810,000
3,039 units
$30.36
94%
96%
Giant Food
Safeway
TJ Maxx
HomeGoods
Five Below
Ross Dress for Less
Shoppers Food Warehouse
TJ Maxx
Home Depot
Old Navy
Petsmart
Whole Foods
Walgreens
Planet Fitness
Safeway
Micro Center
CVS
Michaels
TJ Maxx
DSW
Ulta
L.A. Mart
Talbots
Total Wine & More
Safeway
Walgreens
Harris Teeter
CVS
AMC
Carlyle Grand Café
Harris Teeter
Target
TJ Maxx
DSW
Ulta
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) We own the controlling interest in this property.
(5) We own a noncontrolling interest in this property.
(6) All or a portion of this property is encumbered by a mortgage loan.
(7) All or a portion of this property is owned pursuant to a ground lease.
(8) We own a 77.7% TIC interest in this property. GLA disclosed represents our 77.7% share. See Note 3 to the consolidated financial statements for
additional information.
(9) 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.
(10) Aggregate information is calculated on a GLA weighted-average basis, excluding Chandler Festival, Chandler Gateway, and La Alameda,, which
are all unconsolidated properties at December 31, 2022.
(11) 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.
(12) This property includes interests in four nearby buildings.
(13) This property includes 40 buildings primarily along Washington Street and 14th Street in Hoboken, New Jersey.
27
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.
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.
2022 .......................................................................................................................
Fourth quarter................................................................................................. $
Third quarter................................................................................................... $
Second quarter................................................................................................ $
First quarter .................................................................................................... $
2021 .......................................................................................................................
Fourth quarter................................................................................................. $
Third quarter................................................................................................... $
Second quarter................................................................................................ $
First quarter .................................................................................................... $
On February 3, 2023, there were 2,157 holders of record of our common shares.
Price Per Share
High
Low
Dividends
Declared
Per Share
112.34
113.61
128.13
140.51
138.40
123.43
125.00
110.66
$
$
$
$
$
$
$
$
87.79
86.43
92.02
113.10
117.48
111.21
101.45
81.85
$
$
$
$
$
$
$
$
1.080
1.080
1.070
1.070
1.070
1.070
1.060
1.060
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 55 consecutive
years.
Our total annual dividends paid per common share for 2022 and 2021 were $4.29 per share and $4.25 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 2023 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,
2022
2021
3.518
0.772
—
4.290
$
$
3.358
0.680
0.212
4.250
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
29
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, 2017, and ending December 31, 2022,
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
$200
$175
$150
$125
$100
$75
$50
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
12/31/22
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, 2022, we did not issue any common shares
in connection with the redemption of downREIT operating partnership units. Any equity securities sold by us during 2022 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 2022, 5,871 restricted common shares were forfeited by former employees.
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.
30
ITEM 6. RESERVED
None.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This section generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions
of 2020 items and year-to-year comparisons between 2021 and 2020 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, 2021 filed with the Securities and Exchange Commission on
February 10, 2022.
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
Federal Realty Investment Trust (the "Parent Company" or the "Trust") is an equity real estate investment trust ("REIT").
Federal Realty OP LP (the "Operating Partnership") is the entity through which the Trust conducts substantially all of its
operations and owns substantially all of its assets. The Trust owns 100% of the limited liability company interest of, is sole
member of, and exercises exclusive control over Federal Realty GP LLC (the "General Partner"), which in turn, is the sole
general partner of the Operating Partnership. Unless stated otherwise or the context otherwise requires, "we," "our," and "us"
means the Trust and its business and operations conducted through its directly and indirectly owned subsidiaries, including the
Operating Partnership. The Parent Company specializes in the ownership, management, and redevelopment of high quality
retail and mixed-use properties located primarily in communities where we believe 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, 2022, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use
properties which are operated as 103 predominantly retail real estate projects comprising approximately 25.8 million square
feet. In total, the real estate projects were 94.5% leased and 92.8% occupied at December 31, 2022. We have paid quarterly
dividends to our shareholders continuously since our founding in 1962 and have increased our dividends per common share for
55 consecutive years.
Impacts of COVID-19 Pandemic and General Economic Conditions
Given the ongoing workforce shortages, global supply chain bottlenecks and shortages, and high inflation, we continue to
monitor and address risks related to the COVID-19 pandemic and the general state of the economy. While improving, our cash
flow and results of operations in the year ended December 31, 2022 continued to be negatively impacted largely due to 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 positioned many of our tenants to be able to return to payment of contractual rent as
soon as possible after the initial impacts from the pandemic started to subside.
During 2022, we have continued to see improvements in overall cash collections from tenants with collection rates nearing pre-
pandemic levels. We have also taken multiple steps over the past two years to strengthen our financial position, maximize
liquidity, and to provide maximum flexibility during these uncertain times, including maintaining levels of cash in excess of the
cash balances we have historically maintained. On October 5, 2022, we amended our revolving credit facility increasing the
borrowing capacity from $1.0 billion to $1.25 billion and extending the maturity date to April 5, 2027, plus two six-month
extensions at our option. Additionally, we have an option (subject to bank approval) to increase the credit facility through an
accordion feature to $1.75 billion. We also amended our unsecured term loan borrowing an additional $300.0 million. As of
December 31, 2022, there is no outstanding balance on our $1.25 billion revolving credit facility, and we have cash and cash
equivalents of $85.6 million.
Additional discussion of the impact of current economic conditions and the COVID-19 pandemic on our results and long-term
operations can be found throughout Item 7 and Item 1A. Risk Factors.
31
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 2021 Corporate Responsibility Report, which are provided only for informational purposes on our
website and not incorporated by reference 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 19 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 greenhouse gas (GHG) emissions reduction targets
in accordance with the Science-Based Targets initiative as well as energy reduction targets. To achieve these targets, we are
actively addressing energy efficiency projects on site such as upgrading to LED lighting, 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 14 MW with more projects actively in progress. We also installed 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 2021
Sustainability 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:
32
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 $10.7 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.
Our collection of rents has continued to improve, including collecting rents related to prior periods. As a result, our
collectibility related adjustments for the year ended December 31, 2022 resulted in an increase to rental income of $4.1 million,
as compared to a $24.0 million decrease to rental income during the year ended December 31, 2021, which reflected lower
levels of cash collections and elevated levels of rent abatements and disputes directly related to COVID-19. As of December 31,
2022 and 2021, the revenue from approximately 31% and 34% of our tenants (based on total commercial leases), respectively,
is being recognized on a cash basis. As of December 31, 2022 and 2021, our straight-line rent receivables balance was $126.6
million and $110.7 million, respectively, and is included in "accounts and notes receivable, net" on our consolidated balance
sheet.
As of December 31, 2022, we executed rent deferral agreements related to the COVID-19 pandemic representing approximately
$48 million of rent. We have subsequently collected approximately $35 million of those amounts previously deferred.
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.
During 2022, we acquired properties included in our consolidated financial statements with a total purchase price of
$443.1 million. $1.9 million, or less than 1% of the total purchase price was allocated to above market lease assets and $38.7
million, or 9% was allocated to below market lease liabilities. If the amounts allocated in 2022 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 $2.1 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).
33
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.
2022 Acquisitions, Dispositions, and Other Transactions
During the year ended December 31, 2022, we acquired the following properties:
Date Acquired
Property
City/State
Gross Leasable
Area (GLA)
Gross Value
(in square feet)
(in millions)
Kingstowne Towne Center
Kingstowne, Virginia
410,000 $
200.0 (1)
Hilton Village (office building)
The Shops at Pembroke Gardens Pembroke Pines, Florida
Scottsdale, Arizona
November 18, 2022 Hoboken (301 Washington St.)
Hoboken, New Jersey
212,000 $
391,000 $
N/A $
53.6 (2)
180.5 (3)
9.0 (4)
(1) Approximately $11.3 million and $0.3 million of net assets were allocated to other assets for "acquired lease costs" and
"above market leases," respectively, and $20.2 million of net assets acquired were allocated to other liabilities for "below
market leases."
(2) This building is adjacent to, and will be operated as part of our Hilton Village property. The land is controlled under a
long-term ground lease that expires on September 30, 2075, for which we have recorded a $6.5 million "operating lease
right of use asset" (net of a $0.8 million above market liability) and a $7.3 million "operating lease liability."
Approximately $8.9 million of net assets acquired were allocated to other assets for "acquired lease costs" and $0.1 million
of net assets acquired were allocated to other liabilities for "below market leases."
(3) Approximately $16.3 million and $1.6 million of net assets acquired were allocated to other assets for "acquired lease
costs" and "above market leases," respectively, and $18.4 million of net assets acquired were allocated to other liabilities
for "below market leases."
(4) This property, that we own a 90% ownership interest in, was acquired through our Hoboken joint venture, and is in the
beginning stages of redevelopment.
On October 6, 2022, we acquired a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers for a
combined price of $58.9 million. On the date of acquisition, the properties had combined mortgage debt of $76.1 million, of
which, our share is approximately $36.2 million. Approximately $8.0 million and $2.0 million of net assets acquired were
allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $17.1 million of net assets
acquired were allocated to other liabilities for "below market leases." Additional information on the properties is listed below:
34
April 20, 2022 &
July 27, 2022
July 18, 2022
July 27, 2022
Property
City/State
Chandler Festival
Chandler Gateway
Chandler, Arizona
Chandler, Arizona
Gross Leasable
Area (GLA)
Purchase Price
(our share)
(in square feet)
(in millions)
355,000 $
262,000 $
40.8
18.1
During the year ended December 31, 2022, we sold two residential properties (one included an adjacent retail pad), one retail
property, one parcel of land, and one portion of a property for sales prices totaling $136.2 million, resulting in net gains totaling
approximately $84.1 million.
Other Transactions
On July 13, 2022, we acquired the 21.8% redeemable noncontrolling interest in the partnership that owns our Plaza El Segundo
shopping center for $23.6 million, bringing our ownership interest to 100%.
On August 25, 2022, we entered into a tenancy in common ("TIC") agreement with our partner in the partnership that owned
Escondido Promenade. As a result, the Company owns a 77.7% TIC interest, and our former partner owns the remaining 22.3%
interest. While the Company controlled and consolidated Escondido Promenade under the previous partnership arrangement,
control is shared under the TIC agreement. The transaction is considered a transfer of our previous controlling partner interest
in exchange for a non-controlling TIC interest. Accordingly, we deconsolidated the entity and recorded our TIC interest at fair
value as an equity method investment. We recognized a $70.4 million "gain on deconsolidation of VIE" on our consolidated
statements of operations, which is the difference between the net carrying value of the deconsolidated entity and the fair value
of our TIC interest. As of August 25, 2022, the fair value of our investment in the entity was $110.0 million, and is included in
"investment in partnerships" on our consolidated balance sheet as of December 31, 2022. As a part of this transaction, we made
a $3.5 million loan to our co-owner, which is included in "accounts and notes receivable, net" on our consolidated balance sheet
at December 31, 2022. In addition, we entered into a purchase option agreement to acquire the TIC interest from our co-owner,
which was secured through an option payment of $1.5 million, and allows us to exercise our option at any time between
February 1, 2023 and March 15, 2023.
2022 Significant Debt and Equity Transactions
On February 14, 2022, 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. Our
ATM equity program also allows shares to be sold through forward sales contracts. We intend to use the net proceeds from
ATM equity program issuances to fund potential acquisition opportunities, fund our development and redevelopment pipeline,
repay indebtedness and/or for general corporate purposes.
During 2022, we settled the remaining forward sales agreements entered into during 2021 by issuing 2,203,655 common shares
for net proceeds of $259.4 million, and consequently, we have no outstanding open forward sales agreements as of
December 31, 2022. For the year ended December 31, 2022, we issued 430,473 common shares at a weighted average price per
share of $111.49 for net cash proceeds of $47.4 million including paying $0.5 million in commissions and $0.1 million in
additional offering expenses related to the sales of these common shares. As of December 31, 2022, we had the capacity to
issue up to $452.0 million in common shares under our ATM equity program.
On June 29, 2022, we repaid the $16.1 million mortgage loan on one of the buildings at our Hoboken property, at par.
On October 5, 2022, we amended our revolving credit facility, increasing the borrowing capacity from $1.0 billion to $1.25
billion, extending the maturity date to April 5, 2027, plus two six-month extension options, transitioning the interest rate
provisions from LIBOR to the secured overnight financing rate ("SOFR"), and adjusting the spread for SOFR based loans. Our
SOFR based loans bear interest at Daily Simple SOFR or Term SOFR as defined in the credit agreement plus 0.10% plus a
spread, based on our credit rating. The current spread is 77.5 basis points. In addition, we have an option (subject to bank
approval) to increase the credit facility through an accordion feature to $1.75 billion. On October 5, 2022, we also amended our
unsecured term loan and borrowed an additional $300.0 million, bringing the total outstanding to $600.0 million. The term loan
amendment also transitioned the interest rate provisions from LIBOR to SOFR. This SOFR based loan bears interest at Term
SOFR as defined in the agreement, plus 0.10%, plus an 85 basis point spread, based on our current credit rating. The net
proceeds from the term loan were used to repay the $267.0 million outstanding balance on the revolving credit facility and for
general corporate purposes.
35
2023 Acquisition
On January 31, 2023, we acquired the 180,000 square foot portion of Huntington Square shopping center that was not
previously owned, as well as the fee interest in the land underneath the portion of the shopping center which we control under a
long-term ground lease for $35.5 million.
Capitalized Costs
Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-
construction costs, real estate taxes, insurance, 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
$278 million and $11 million, respectively, for 2022 and $356 million and $10 million, respectively, for 2021. We capitalized
external and internal costs related to other property improvements of $111 million and $4 million, respectively, for 2022 and
$64 million and $4 million, respectively, for 2021. We capitalized external and internal costs related to leasing activities of $18
million and $4 million, respectively, for 2022 and $19 million and $3 million, respectively, for 2021. The amount of capitalized
internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and
leasing activities were $10 million, $3 million, and $4 million, respectively, for 2022 and $10 million, $3 million, and $3
million, respectively, for 2021. Total capitalized costs were $425 million for 2022 and $456 million for 2021, respectively.
Corporate Reorganization
In January 2022, we completed a reorganization into an umbrella partnership real estate investment trust, or "UPREIT." For
additional information on our UPREIT reorganization, please see our Current Reports on Form 8-K filed with the SEC on
January 3, 2022 and January 5, 2022, as well our 2021 Annual Report on Form 10-K filed on February 10, 2022. Immediately
following the reorganization, the Parent Company had the same consolidated assets and liabilities as Federal Realty Investment
Trust immediately before the reorganization. The Parent Company exercises exclusive control over the General Partner and
does not have assets or liabilities other than its investment in the Operating Partnership. As a result, the UPREIT reorganization
represented a merger of entities under common control in accordance with accounting principles generally accepted in the
United States ("GAAP"). Accordingly, the accompanying consolidated financial statements including the notes thereto, are
presented as if the UPREIT reorganization had occurred at the earliest period presented.
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 redevelopments and expansions, and
expansion of our portfolio through property acquisitions.
While the general economic effects of the elevated levels of inflation, rising interest rates, and the COVID-19 pandemic are
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. 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, 2022, no
single tenant accounted for more than 2.8% of annualized base rent.
The effects of the current economic conditions, the COVID-19 pandemic, and inflation continue to negatively impact our
business with the largest current impacts being lower occupancy, supply chain disruptions, and higher interest costs. At
December 31, 2022, our commercial space is 92.8% occupied, which is below historical levels largely due to tenant failures as a
result of the pandemic. This lower occupancy will adversely impact our results until we can release the space and then
commences paying rent, as well as limit future vacancies. We are, however, experiencing strong demand for our commercial
space as evidenced by the 2.0 million square feet of comparable space leasing we've completed in 2022, and the 1.7% spread
between our leased rate of 94.5% and our occupied rate of 92.8%. 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. We continue 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 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
36
tenants experience significant disruptions in supply chains supporting their own products, or staffing issues due to labor
shortages, their ability to pay rent may be adversely affected. We continue to monitor these macroeconomic developments and
are working with our tenants and our vendors to limit the overall impact to our business.
The duration and severity of the economic impact from the current economic environment and the COVID-19 pandemic will
depend on future developments, which are highly uncertain and cannot be predicted, however, 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. As of December 31, 2022, Phase III is substantially complete, with expected final costs between $475
million and $485 million.
Phase III at Pike & Rose includes a 212,000 square foot office building (which includes 7,000 square feet of ground
floor retail space and approximately 45,000 square feet is our new corporate headquarters). As of December 31, 2022,
Phase III is substantially complete, with final estimated costs between $130 million and $135 million.
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 157,000 square feet of the office space is pre-leased to two tenants. The building is
expected to cost between $185 million and $200 million, and begin delivering in late 2023.
The first phase of construction on Santana West includes an eight story 376,000 square foot office building, which is
expected to cost between $300 million and $315 million.
Throughout the portfolio, we currently have redevelopment projects underway with a projected total cost of
approximately $228 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, supply chain disruptions, broader economic conditions, and inflation.
The development of future phases of Assembly Row, Pike & Rose and Santana Row will be pursued opportunistically based
on, among other things, market conditions, tenant demand, and our evaluation of whether those phases will generate an
appropriate financial return.
We continue to review acquisition opportunities that complement our portfolio and provide long-term growth opportunities.
Initially, some of our acquisitions do not contribute significantly to earnings growth; however, we believe they provide long-
term re-leasing growth, redevelopment opportunities, and other strategic opportunities. Any growth from acquisitions is
contingent on our ability to find properties that meet our qualitative standards at prices that meet our financial hurdles. Changes
in interest rates may affect our success in achieving earnings growth through acquisitions by affecting both the price that must
be paid to acquire a property, as well as our ability to economically finance the property acquisition. Generally, our acquisitions
are initially financed by available cash and/or borrowings under our revolving credit facility which may be repaid later with
funds raised through the issuance of new equity or new long-term debt. We may also finance our acquisitions through the
issuance of common shares, preferred shares, or units in the Operating Partnership, as well as through assumed mortgages and
property sales.
At December 31, 2022, the leasable square feet in our properties was 94.5% leased and 92.8% 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, 2022 and the comparison of 2022 and 2021, all or a portion of 91 properties,
were considered comparable properties and seven were considered non-comparable properties. For the year ended
December 31, 2022, one property was moved from comparable properties to non-comparable properties, one property was
moved from non-comparable properties to comparable properties, three properties were removed from comparable properties,
as they were sold, and one property was removed from comparable properties, as it was deconsolidated, compared to the
designations as of December 31, 2021. While there is judgment surrounding changes in designations, we typically move non-
comparable properties to comparable properties once they have stabilized, which is typically considered 90% physical
37
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.
38
YEAR ENDED DECEMBER 31, 2022 COMPARED TO YEAR ENDED DECEMBER 31, 2021
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
Gain on deconsolidation of VIE
Gain on sale of real estate and change in control of interest
Operating income
Other interest income
Interest expense
Income from partnerships
Total other, net
Net income
Net income attributable to noncontrolling interests
Net income attributable to the Trust
2022
2021
Dollars
%
(Dollar amounts in thousands)
$ 1,073,292
$
948,842
$
124,450
13.1 %
Change
1,086
1,074,378
228,958
127,824
356,782
717,596
(52,636)
(302,409)
70,374
93,483
526,408
1,072
2,382
951,224
198,121
118,496
316,617
634,607
(49,856)
(279,976)
—
89,950
394,725
809
(136,989)
(127,698)
(1,296)
(54.4)%
123,154
30,837
9,328
40,165
82,989
(2,780)
(22,433)
70,374
3,533
131,683
263
(9,291)
12.9 %
15.6 %
7.9 %
12.7 %
13.1 %
5.6 %
8.0 %
100.0 %
3.9 %
33.4 %
32.5 %
7.3 %
5,170
1,245
3,925
315.3 %
(130,747)
(125,644)
395,661
(10,170)
269,081
(7,583)
(5,103)
126,580
(2,587)
$
385,491
$
261,498
$
123,993
4.1 %
47.0 %
34.1 %
47.4 %
(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 to the
previous period and we consider it be a significant measure. We believe that property operating income is useful to investors
in measuring the operating performance of our property portfolio because the definition excludes various items included in
operating income that do not relate to, or are not indicative of, the operating performance of our properties, such as general
and administrative expenses and depreciation and amortization, and allows us to isolate disparities in operating income
caused by acquisitions, dispositions, and stabilization of properties. Property operating income may, therefore, provide a
more consistent metric for comparing the operating performance of our real estate between periods. 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 2022 and 2021 is as
follows:
Operating income
General and administrative
Depreciation and amortization
Gain on deconsolidation of VIE
Gain on sale of real estate and change in control of interest
Property operating income
Property Revenues
2022
2021
(in thousands)
$
526,408 $
394,725
52,636
302,409
(70,374)
(93,483)
49,856
279,976
—
(89,950)
$
717,596 $
634,607
Total property revenue increased $123.2 million, or 12.9%, to $1.1 billion in 2022 compared to $951.2 million in 2021. The
percentage occupied at our shopping centers was 92.8% at December 31, 2022 compared to 91.1% at December 31, 2021. The
most significant driver of the increase in property revenues is the ongoing recovery from the initial impacts of COVID-19
39
during 2022, as compared to 2021, when COVID-19 related restrictions were still in effect for a portion of the year. 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 $124.5 million, or 13.1%, to $1.1 billion in 2022 compared to $948.8
million in 2021 due primarily to the following:
•
•
•
•
an increase of $39.8 million from 2021 and 2022 acquisitions,
an increase of $36.3 million from comparable properties primarily related to higher percentage rent, parking
income, and specialty leasing of $10.7 million primarily the result of the gradual lifting of COVID-19 closures
and restrictions during 2021, higher rental rates of $9.9 million, higher average occupancy of approximately
$8.3 million, a $5.7 million increase in CAM recoveries on higher CAM costs, and a $3.2 million increase in
tenant recoveries, partially offset by lower net termination fees and legal fee income of $2.5 million,
an increase of $30.6 million from non-comparable properties primarily driven by the opening of Phase III at
Assembly Row in 2021, redevelopment related occupancy increases at CocoWalk, and the 2021 and 2022
openings at the Phase III office building at Pike & Rose, partially offset by redevelopment related occupancy
decreases at Huntington Shopping Center,
a $28.0 million decrease in collectibility related impacts across all properties primarily due to higher collection
rates and lower rent abatements in 2022 as tenants continue to recover from the initial impacts of COVID-19,
and
•
an increase of $4.2 million from improving demand at our Pike & Rose hotel,
partially offset by
•
a decrease of $11.4 million from property sales.
Mortgage Interest Income
Mortgage interest income decreased $1.3 million, or 54.4%, to $1.1 million in 2022 compared to $2.4 million in 2021 primarily
due to the repayment of $31.1 million of mortgage notes receivable in May 2021.
Property Expenses
Total property expenses increased $40.2 million, or 12.7%, to $356.8 million in 2022 compared to $316.6 million in 2021.
Changes in the components of property expenses are discussed below.
Rental Expenses
Rental expenses increased $30.8 million, or 15.6%, to $229.0 million in 2022 compared to $198.1 million in 2021. This
increase is primarily due to the following:
•
•
•
•
an increase of $12.2 million from comparable properties due primarily to higher repairs and maintenance costs,
utilities, and management fees, as 2021 had lower costs as a result of COVID-19 impacts, as well as inflationary
impacts in 2022 and higher insurance costs,
an increase of $7.7 million from 2021 and 2022 acquisitions,
an increase of $6.9 million from non-comparable properties due primarily to the 2021 openings of Phase III at
Assembly Row, the Phase III office building at Pike & Rose, and CocoWalk, as well as increased costs
associated with the redevelopment of Huntington Shopping Center, and
an increase of $5.3 million from higher operating costs at our Pike & Rose hotel largely due to lifting of
COVID-19 restrictions,
partially offset by
•
a decrease of $1.5 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 21.3% for the year ended December 31, 2022 from 20.9% for the year ended December 31, 2021.
Real Estate Taxes
Real estate tax expense increased $9.3 million, or 7.9% to $127.8 million in 2022 compared to $118.5 million in 2021 due
primarily to the following:
40
•
•
•
an increase of $5.6 million from 2021 and 2022 acquisitions,
an increase of $2.6 million from non-comparable properties due primarily to the opening of Phase III at
Assembly Row, and
an increase of $2.1 million from comparable properties primarily due to a true-up in 2021 of prior year
supplemental taxes at one of our properties and higher assessments,
partially offset by
•
a decrease of $0.8 million from our property sales.
Property Operating Income
Property operating income increased $83.0 million, or 13.1%, to $717.6 million in 2022 compared to $634.6 million in 2021.
This increase is primarily driven by the ongoing recovery from the initial impacts of COVID-19, which resulted in lower
collectibility related adjustments and higher percentage rent, specialty leasing, and parking income, compared to 2021 during
which COVID-19 related restrictions were gradually being lifted. Also contributing to the increase were property acquisitions,
higher occupancy and rental rates at comparable properties, and the opening of Phase III at Assembly Row in 2021, partially
offset by property sales.
Other Operating
General and Administrative Expense
General and administrative expense increased $2.8 million, or 5.6%, to $52.6 million in 2022 from $49.9 million in 2021. This
increase is due primarily to higher personnel related costs.
Depreciation and Amortization
Depreciation and amortization expense increased $22.4 million, or 8.0%, to $302.4 million in 2022 from $280.0 million in
2021. This increase is due primarily to property acquisitions, the openings of Phase III at Assembly Row, the Phase III office
building at Pike & Rose, and CocoWalk, partially offset by the net impact of accelerated depreciation related to 2021 and 2022
redevelopment activities and 2021 property sales.
Gain on Deconsolidation of VIE
The $70.4 million gain on deconsolidation of VIE for the year ended December 31, 2022 is the result of the deconsolidation of
Escondido Promenade in connection with the execution of the related August 25, 2022 TIC agreement (see Note 3 for
additional information).
Gain on Sale of Real Estate and Change in Control of Interest
The $93.5 million gain on sale of real estate for the year ended December 31, 2022 is due primarily to a net gain of $84.1
million from the sale of two residential properties (including an adjacent retail pad), one retail property, and one parcel of land
(see Note 3 for additional information), and a $9.3 million gain related to the reduction of our liability for estimated
condemnation and transaction costs associated with the sale under threat of condemnation in December 2019 at San Antonio
Center (see Note 7 for additional information).
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 joint venture (see Note 3 to the consolidated financial statements for additional information).
Operating Income
Operating income increased $131.7 million, or 33.4%, to $526.4 million in 2022 compared to $394.7 million in 2021. This
increase is primarily due to the gain on the deconsolidation of a VIE, and the ongoing recovery from the impacts of COVID-19
restrictions, which resulted in lower collectibility related adjustments and higher percentage rent, specialty leasing, and parking
income, compared to 2021 during which COVID-19 related restrictions were gradually being lifted. Also contributing to the
increase were property acquisitions, higher occupancy and rental rates at comparable properties, and the opening of Phase III at
Assembly Row in 2021, partially offset by property sales and higher personnel related costs.
41
Other
Interest Expense
Interest expense increased $9.3 million, or 7.3%, to $137.0 million in 2022 compared to $127.7 million in 2021. This increase
is due primarily to the following:
•
•
an increase of $5.6 million due to a higher overall weighted average borrowing rate, and
a decrease of $4.0 million in capitalized interest,
partially offset by
•
a decrease of $0.2 million due to lower weighted average borrowings.
Gross interest costs were $155.7 million and $150.3 million in 2022 and 2021, respectively. Capitalized interest was
$18.7 million and $22.6 million in 2022 and 2021, respectively.
Income from Partnerships
Income from partnerships increased $3.9 million or 315.3% to $5.2 million in 2022 compared to $1.2 million in 2021. This
increase is due primarily to improved operating results at our Assembly Row hotel joint venture and our restaurant joint
ventures, largely the result of the easing of COVID-19 closures and restrictions and the forgiveness of certain loans for some of
our restaurants joint ventures and at our Assembly Row hotel joint venture.
Net income attributable to noncontrolling interests
Net income attributable to noncontrolling interests increased $2.6 million, or 34.1%, to $10.2 million in 2022 compared to
$7.6 million in 2021. The increase is primarily due to 2021 acquisitions and higher income at our properties with third party
partners.
Discussions of year-to-year comparisons between 2021 and 2020 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, 2021 filed with the Securities and Exchange Commission on February 10, 2022.
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, the Trust is generally
required to make annual distributions to shareholders of at least 90% of our taxable income (cash dividends paid in 2022 were
approximately $349.0 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 $1.25
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 2022, we have continued to see improvements in overall cash collections from tenants with collection rates nearing pre-
pandemic levels. We have also taken multiple steps over the past two years to strengthen our financial position, maximize
liquidity, and to provide maximum flexibility during these uncertain times. On October 5, 2022, we amended our revolving
credit facility increasing the borrowing capacity from $1.0 billion to $1.25 billion and extending the maturity date to April 5,
2027, plus two six-month extensions at our option. Additionally, we have an option (subject to bank approval) to increase the
credit facility through an accordion feature to $1.75 billion. We also amended our unsecured term loan, borrowing an additional
$300.0 million.
As of December 31, 2022, there is no balance outstanding on our $1.25 billion unsecured revolving credit facility and we had
cash and cash equivalents of $85.6 million. For the year ended 2022, the weighted average amount of borrowings outstanding
on our revolving credit facility was $80.3 million, and the weighted average interest rate, before amortization of debt fees, was
3.2%. We also have the capacity to issue up to $452.0 million in common shares under the ATM program. We have $275.0
million of debt maturing in 2023.
Our overall capital requirements during 2023 will be impacted by the overall economic environment including impacts of
inflation, supply chain issues, and a potential recession, as well as acquisition opportunities and the level and general timing of
our redevelopment and development activities. We currently have development and redevelopment projects in various stages of
construction with remaining costs of $274 million. We expect to incur the majority of those costs in the next two years. We
expect overall capital costs to be at levels consistent with 2022 or slightly reduced as we complete current redevelopment
42
projects, prepare vacant space for new tenants, and complete the current phase and start on the next phase of our larger mixed
use development projects.
We believe cash flow from operations, the cash on our balance sheet, and our $1.25 billion revolving credit facility will allow
us to continue to operate our business in the short-term. Given our ability to access the capital markets, we also expect debt or
equity to be available to us, although newly issued debt would likely be at higher interest rates than we currently have
outstanding. 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. We expect these sources of liquidity
and opportunities for operating flexibility to allow us to meet our financial obligations over the long term. While we have seen
significant improvements from the initial negative impacts of the COVID-19 pandemic, it, along with the overall state of the
economy continues to affect our overall business, and we expect it will continue to negatively impact our business in the short
term. However, we intend to operate with and to maintain our long term commitment to a conservative capital structure that
will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to
investment-grade debt ratings.
Summary of Cash Flows
Net cash provided by operating activities ...................................................................................... $
Net cash used in investing activities...............................................................................................
Net cash provided by (used in) financing activities .......................................................................
Decrease 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,
2022
2021
(In thousands)
516,769
$
471,352
(785,998)
190,414
(78,815)
175,163
(660,118)
(452,967)
(641,733)
816,896
96,348
$
175,163
Net cash provided by operating activities increased $45.4 million to $516.8 million during 2022 from $471.4 million during
2021. The increase was primarily attributable to higher net income before non-cash items and gains on sale of real estate,
partially offset by the timing of collections of real estate tax reconciliation billings during 2021 and the timing of payments.
Net cash used in investing activities increased $125.9 million to $786.0 million during 2022 from $660.1 million during 2021.
The increase was primarily attributable to:
•
•
•
a $72.0 million increase in acquisition of real estate primarily due to 2022 property acquisitions (see Note 3 to
the consolidated financial statements for additional information), as compared to 2021 property acquisitions,
the $31.1 million payoff of two mortgage notes receivable in May 2021,
a $20.0 million increase in investment in partnerships, resulting from the 2022 acquisition of a 47.5% net
interest in an unconsolidated joint venture that owns two shopping centers (see Note 3 to the consolidated
financial statements for additional information), and
• $18.0 million for net costs paid in 2022 relating to the partial sale under threat of condemnation at San Antonio
Center in 2019,
partially offset by
•
a $23.8 million decrease in net capital expenditures.
Net cash used in financing activities decreased $643.4 million to $190.4 million provided during 2022 from $453.0 million used
during 2021. The decrease was primarily attributable to:
• $298.6 million in net proceeds from our unsecured term loan in October 2022,
•
a $258.2 million decrease in repayment of mortgages, finance leases, and notes payable primarily due to the
$16.1 million mortgage loan repayment on one of the buildings at our Hoboken property in June 2022, as
compared to the $140.9 million net repayments of four mortgage loans in 2021, the $100.0 million partial
repayment of our $400.0 term loan which was amended in April 2021, and the $31.5 million repayment of the
mortgage loan related to the Pike & Rose hotel in January 2021, and
• $134.3 million increase in net proceeds from the issuance of common shares under our ATM equity program for
net proceeds of $306.8 million and $172.7 million, respectively, during 2022 and 2021,
43
partially offset by,
•
•
a $27.6 million increase in distributions to and redemptions of noncontrolling interests primarily related to our
acquisition of the redeemable noncontrolling interest in the partnership that owns the Plaza El Segundo
shopping center for $23.6 million, and
an $11.6 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.
Cash Requirements
The following table provides a summary of material cash requirements comprising our fixed, noncancelable obligations as of
December 31, 2022:
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)(4)................................
Redevelopments/capital expenditure contracts ..........................................
Real estate commitments (5)
Total estimated cash requirements ............................................................. $
_____________________
Cash Requirements by Period
Total
Next Twelve
Months
(In thousands)
Greater than
Twelve Months
4,344,474
$
278,893
4,065,581
64,183
358,276
262,081
11,091
5,040,105
$
20,248
65,488
244,096
—
608,725
$
43,935
292,788
17,985
11,091
4,431,380
(1) The weighted average interest rate on our fixed and variable rate debt is 3.7% as of December 31, 2022.
(2) The weighted average interest rate on the fixed and variable rate debt related to our unconsolidated real estate
partnerships is 4.05% as of December 31, 2022.
(3) This includes minimum rental payments related to both finance and operating leases.
(4) Lease obligations in the next twelve months include the $55 million fixed purchase price option for Mercer Mall as
discussed in Note 7 to the consolidated financial statements.
(5) 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, 2022, our estimated liability upon exercise of the put option would range from
approximately $62 million to $65 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, 2022, a total of
644,554 downREIT operating partnership units are outstanding.
(c) 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, 2022, our estimated
maximum liability upon exercise of the put option would range from $6 million to $7 million.
(d) 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, 2022, our estimated maximum liability upon exercise of the put option would range from $8 million to $9
million.
(e) Effective June 14, 2026, the other member in Camelback 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
44
estimate of fair value as of December 31, 2022, our estimated maximum liability upon exercise of the put option would range
from $4 million to $5 million.
(f) Effective October 6, 2027, the other member in the partnership that owns equity method investments in Chandler
Festival and Chandler Gateway has the right to require us to purchase its 2.5% net ownership interest. Based on management's
current estimate of fair value as of December 31, 2022, our estimated maximum liability upon exercise of the put option would
range from $1 million and $2 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, 2022, our estimated maximum liability upon exercise of the put option would range from $68 million to $73
million.
(h) At December 31, 2022, we had letters of credit outstanding of approximately $6.7 million.
Off-Balance Sheet Arrangements
At December 31, 2022, we have four real estate related equity method investments with total debt outstanding of $154.1
million, of which our share is $63.8 million. Our investment in these ventures at December 31, 2022 was $34.0 million.
Other than the items disclosed in the Cash Requirements table, we have no off-balance sheet arrangements as of December 31,
2022 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.
45
Debt Financing Arrangements
The following is a summary of our total debt outstanding as of December 31, 2022:
Description of Debt
Mortgages payable
Secured fixed rate
Original
Debt
Issued
Principal Balance as
of December 31,
2022
(Dollars in thousands)
Stated Interest Rate
as of December 31,
2022
Maturity Date
Azalea ......................................................................
Bell Gardens ............................................................
Plaza El Segundo.....................................................
The Grove at Shrewsbury (East) .............................
Brook 35 ..................................................................
Hoboken (24 Buildings) (1).....................................
Various Hoboken (14 Buildings).............................
Chelsea.....................................................................
Subtotal............................................................
Net unamortized debt issuance costs and
premium......................................................
Total mortgages payable, net...........................
Acquired $
Acquired
125,000
43,600
11,500
56,450
Acquired
Acquired
Notes payable
Term Loan (3)(5) .....................................................
Revolving credit facility (3)(4)(5) ...........................
Various.....................................................................
Subtotal............................................................
Net unamortized debt issuance costs..........
Total notes payable, net...................................
600,000
1,250,000
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
40,000
11,835
125,000
43,600
11,500
55,060
30,876
4,446
322,317
(1,702)
320,615
600,000
—
2,957
602,957
(1,880)
601,077
275,000
600,000
400,000
29,200
475,000
40,000
400,000
400,000
550,000
250,000
3,419,200
(11,499)
3,407,701
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
5.36 %
SOFR + 0.85%
SOFR + 0.775%
April 16, 2024
April 5, 2027
Various (6) Various through 2059
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
Total debt, net
_____________________
$
4,329,393
(1)
(2)
(3)
(4)
(5)
(6)
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%.
Our revolving credit facility SOFR loans bear interest at Daily Simple SOFR or Term SOFR as defined in the credit
agreement and our term loan bears interest at Term SOFR, plus 0.10%, plus a spread, based on our current credit
rating.
The maximum amount drawn under our revolving credit facility during 2022 was $330.0 million and the weighted
average effective interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was
3.2%.
The Operating Partnership is the obligor under our revolving credit facility, term loan, and senior notes and
debentures.
The interest rates on these notes payable range from 3.00% to 11.31%.
46
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, 2022, we were in compliance with all financial and other
covenants related to our revolving credit facility, term loan, and senior notes. Additionally, we were in compliance with all of
the financial and other covenants that could trigger a loan default on our mortgage loans. If we were to breach any of these
financial and other covenants and did not cure the breach within an applicable cure period, our lenders could require us to repay
the debt immediately and, if the debt is secured, could immediately begin proceedings to take possession of the property
securing the loan. Many of our debt arrangements, including our public notes and our revolving credit facility, are cross-
defaulted, which means that the lenders under those debt arrangements can put us in default and require immediate repayment
of their debt if we breach and fail to cure a default under certain of our other debt obligations. As a result, any default under our
debt covenants could have an adverse effect on our financial condition, our results of operations, our ability to meet our
obligations and the market value of our shares. Our organizational documents do not limit the level or amount of debt that we
may incur.
The following is a summary of our scheduled principal repayments as of December 31, 2022:
2023
2024
2025
2026
2027
Thereafter
Unsecured
Secured
(In thousands)
$
275,755
$
Total
$
278,893
1,203,970
48,048
455,516
693,315
1,664,732
3,138
3,299
47,630
26,240
178,278
63,732
$
322,317
$ 4,344,474 (3)
1,200,671 (1)
418
429,276
515,037 (2)
1,601,000
$ 4,022,157
_____________________
(1)
(2)
(3)
Our $600.0 million term loan matures on April 16, 2024, plus two one-year extensions, at our option.
Our $1.25 billion revolving credit facility matures on April 5, 2027, plus two six-month extensions, at our option. As
of December 31, 2022, 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,
2022.
Interest Rate Hedging
We may use derivative instruments to manage exposure to variable interest rate risk. We generally enter into interest rate swaps
to manage our exposure to variable interest rate risk and treasury locks to manage the risk of interest rates rising prior to the
issuance of debt. We enter into derivative instruments that qualify as cash flow hedges and do not enter into derivative
instruments for speculative purposes.
Interest rate swaps associated with cash flow hedges are recorded at fair value on a recurring basis. Effectiveness of cash flow
hedges is assessed both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate
swaps associated with cash flow hedges is recorded in other comprehensive 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, 2022, 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 2022, 2021 and 2020.
REIT Qualification
47
We intend to maintain our qualification as a REIT under Section 856(c) of the Code. As a REIT, we generally will not be
subject to corporate federal income taxes on income we distribute to our shareholders as long as we satisfy certain technical
requirements of the Code, including the requirement to distribute at least 90% of our taxable income to our shareholders.
Funds From Operations
Funds from operations (“FFO”) is a supplemental non-GAAP financial measure of real estate companies’ operating
performance. The National Association of Real Estate Investment Trusts (“NAREIT”) defines FFO as follows: net income,
computed in accordance with U.S. GAAP, plus real estate related depreciation and amortization, and excluding 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:
Year Ended December 31,
2022
2021
2020
(In thousands, except per share data)
Net income.................................................................................................................... $ 395,661
Net income attributable to noncontrolling interests......................................................
(10,170)
Gain on deconsolidation of a VIE ................................................................................
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 (1) ................................................................................
Income attributable to operating partnership units .......................................................
(70,374)
(93,483)
—
266,741
27,268
515,643
(7,500)
2,810
Income attributable to unvested shares.........................................................................
(1,797)
Funds from operations available for common shareholders (2)............................ $ 509,156
80,603
Weighted average number of common shares, diluted (1)(2)(3)..................................
$ 269,081
$ 135,888
(7,583)
(4,182)
—
—
(89,892)
(91,922)
—
243,711
26,051
441,368
(8,042)
2,998
(1,581)
50,728
228,850
20,415
339,777
(8,042)
3,151
(1,037)
$ 434,743
$ 333,849
78,072
76,261
Funds from operations available for common shareholders, per diluted share (2) ...... $
_____________________
6.32
$
5.57
$
4.38
48
(1)
(2)
(3)
For the year ended December 31, 2022, dividends on our Series 1 preferred stock were not deducted in the calculation
of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average
common shares, diluted."
For the year ended December 31, 2020, FFO available for common shareholders includes an $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 downREIT operating
partnership units that were excluded from the computation of diluted EPS. Conversion of these operating partnership
units is dilutive in the computation of FFO per diluted common share but is anti-dilutive for the computation of diluted
EPS for 2021 and 2020.
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 2059) 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, 2022, we had $3.7 billion of fixed-rate debt outstanding, including $55.1 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, 2022 had been 1.0% higher, the fair value of those debt instruments on that
date would have decreased by approximately $164.6 million. If market interest rates used to calculate the fair value on our
fixed-rate debt instruments at December 31, 2022 had been 1.0% lower, the fair value of those debt instruments on that date
would have increased by approximately $184.6 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, 2022, we had $600.0 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 $6.0 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 $6.0 million with a corresponding increase in our net income and cash flows for the year.
While no amounts were outstanding at December 31, 2022, we have a $1.25 billion revolving credit facility that bears interest
at a variable rate. If we increase our outstanding balance on the revolving credit facility in the future, additional decreases to
future earnings and cash flows could occur.
49
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.
ITEM 9A. CONTROLS AND PROCEDURES
Management's Evaluations of Disclosure Controls and Procedures
The Trust and the Operating Partnership maintain 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 and the Operating Partnership'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 and the Operating Partnership’s Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of the design and operation of the Trust and the Operating Partnership’s
disclosure controls and procedures as of December 31, 2022. Based on that evaluation,
the Trust and the Operating
Partnership’s Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2022, the Trust and the
Operating Partnership’s disclosure controls and procedures were effective at a reasonable assurance level.
Management's Evaluations of Internal Control over Financial Reporting
The Trust and the Operating Partnership’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 and the Operating Partnership’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.
Because of its inherent
internal control over financial reporting may not prevent or detect misstatements.
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 and the Operating Partnership’s internal control over financial reporting as of
December 31, 2022. 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 and the Operating Partnership's internal control over financial reporting was effective as
of December 31, 2022.
Grant Thornton LLP, the independent registered public accounting firm that audited the Trust and the Operating Partnership's
consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on the Trust
and the Operating Partnership's internal control over financial reporting, which appears on page F-2 of this Annual Report on
Form 10-K.
50
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting during our fourth fiscal quarter of 2022 that materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
51
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 2023 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-40.
(3) Exhibits
(b) The following documents are filed as exhibits are filed as part of, or incorporated by reference info, this report:
52
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
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 (previously filed as
Exhibit 3.1 to the Trust's Annual Report on Form 10-K for the year ended December 31, 2021 and incorporated
herein by reference)
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)
53
Exhibit
No.
10.3
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
* 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)
* 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)
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)
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)
54
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
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 Amended and Restated 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)
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) ‡
55
Exhibit
No.
10.38
10.39
21.1
23.1
31.1
31.2
31.3
31.4
32.1
32.2
32.3
32.4
101
Description
Second Amended and Restated Credit Agreement, dated as of October 5, 2022, by and among the Partnership, as
borrower, each of the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent
(previously filed as Exhibit 10.1 to the Trust’s Current Report on Form 8-K filed on October 11, 2022 and
incorporated herein by reference)
Third Amendment to Term Loan Agreement, dated as of October 5, 2022, by and among the Partnership, as
borrower, each of the lenders party thereto and PNC Bank, National Association, as administrative agent
(previously filed as Exhibit 10.2 to the Trust’s Current Report on Form 8-K filed on October 11, 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, 2022, formatted
in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated
Statements of Comprehensive Income, (3) the Consolidated Statement of Shareholders’ Equity, (4) the
Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements that have been detail
tagged.
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 agree, 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.
‡ In this Exhibit Index, the term "Predecessor" refers to Federal Realty Investment Trust before the effectiveness of our
UPREIT conversion as described in our Current Reports on Form 8-K filed on January 3 and 5, 2022. Upon completion of the
UPREIT conversion, the Partnership became the successor to the Predecessor's right and obligations under this instrument.
ITEM 16. FORM 10-K SUMMARY
None.
56
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 8, 2023.
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 8, 2023
/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/ THOMAS A. MCEACHIN
Thomas A. McEachin
/S/ ANTHONY P. NADER, III
Anthony P. Nader, III
/S/ GAIL P. STEINEL
Gail P. Steinel
Executive Vice President - Chief Financial
February 8, 2023
Officer and Treasurer (Principal
Financial and Accounting Officer)
Non -Executive Chairman
February 8, 2023
February 8, 2023
February 8, 2023
February 8, 2023
February 8, 2023
February 8, 2023
Trustee
Trustee
Trustee
Trustee
Trustee
57
[THIS PAGE INTENTIONALLY LEFT BLANK]
Item 8 and Item 15(a)(1) and (2)
Index to Consolidated Financial Statements and Schedules
Report of Independent Registered Public Accounting Firm ( PCAOB ID Number 248)
Federal Realty Investment Trust:
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021, and 2020
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2022, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021, and 2020
Federal Realty OP LP:
Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2022, 2021, and 2020
Consolidated Statements of Capital for the Years Ended December 31, 2022, 2021, and 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021, and 2020
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-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-40
F-48
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, 2022, 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, 2022, 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, 2022, and our report
dated February 8, 2023 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 8, 2023
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, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2022, 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, 2022, 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 8, 2023 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 8, 2023
F-4
Report of Independent Registered Public Accounting Firm
Trustees and Unitholders
Federal Realty OP LP
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Federal Realty OP LP (a Delaware limited partnership) and
subsidiaries (collectively, the “Operating Partnership”) as of December 31, 2022, 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 Operating Partnership maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2022, 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 Operating Partnership as of and for the year ended December 31,
2022, and our report dated February 8, 2023 expressed an unqualified opinion on those financial statements.
Basis for opinion
The Operating Partnership’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 Operating
Partnership’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 Operating Partnership 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 8, 2023
F-5
Report of Independent Registered Public Accounting Firm
Trustees and Unitholders
Federal Realty OP LP
Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Federal Realty OP LP (a Delaware limited partnership) and
subsidiaries (collectively, the "Operating Partnership") as of December 31, 2022 and 2021, the related consolidated statements
of comprehensive income, capital, and cash flows for each of the three years in the period ended December 31, 2022, 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
Operating Partnership as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 2022, 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 Operating Partnership’s internal control over financial reporting as of December 31, 2022, 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 8, 2023 expressed an unqualified opinion.
Basis for opinion
These financial statements are the responsibility of the Operating Partnership’s management. Our responsibility is to express an
opinion on the Operating Partnership’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 Operating Partnership 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 Operating Partnership must determine whether substantially all the
rents due under a lease arrangement are collectible. If the Operating Partnership 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 Operating Partnership 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:
F-6
• We assessed the design and tested the operating effectiveness of internal controls relating to the collectibility
assessment process.
• 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 Operating Partnership’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 Operating Partnership's auditor since 2022.
New York, New York
February 8, 2023
F-7
Federal Realty Investment Trust
Consolidated Balance Sheets
ASSETS
Real estate, at cost
Operating (including $1,997,583 and $2,207,648 of consolidated variable interest
entities, respectively)
Construction-in-progress (including $8,477 and $18,752 of consolidated variable
interest entities, respectively)
Less accumulated depreciation and amortization (including $362,921 and $389,950 of
consolidated variable interest entities, respectively)
Net real estate
Cash and cash equivalents
Accounts and notes receivable, net
Mortgage notes receivable, net
Investment in partnerships
Operating lease right of use assets, net
Finance lease right of use assets, net
Prepaid expenses and other assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $191,827 and $335,301 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, $0.01 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), 392,878 and 399,896 shares issued and outstanding,
respectively
Common shares of beneficial interest, $0.01 par, 100,000,000 shares authorized,
81,342,959 and 78,603,305 shares issued and outstanding, respectively
Additional paid-in capital
Accumulated dividends in excess of net income
Accumulated other comprehensive income (loss)
Total shareholders’ equity of the Trust
Noncontrolling interests
Total shareholders’ equity
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
December 31,
2022
2021
(In thousands, except share and
per share data)
$ 9,441,945
$ 8,814,791
662,554
10,104,499
607,271
9,422,062
(2,715,817)
7,388,682
85,558
197,648
9,456
145,205
94,569
45,467
267,406
$ 8,233,991
(2,531,095)
6,890,967
162,132
169,007
9,543
13,027
90,743
49,832
237,069
$ 7,622,320
$
320,615
601,077
3,407,701
190,340
90,263
28,508
77,743
67,660
237,699
5,021,606
$
339,993
301,466
3,406,088
235,168
86,538
25,331
72,661
72,032
206,187
4,745,464
178,370
213,708
150,000
150,000
9,822
9,997
818
3,821,801
(1,034,186)
5,757
2,954,012
80,003
3,034,015
$ 8,233,991
790
3,488,794
(1,066,932)
(2,047)
2,580,602
82,546
2,663,148
$ 7,622,320
The accompanying notes are an integral part of these consolidated statements.
F-8
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 deconsolidation of VIE
Gain on sale of real estate and change in control of interest, net of tax
Year Ended December 31,
2022
2021
2020
(In thousands, except per share data)
$
$ 1,073,292
1,086
1,074,378
948,842
2,382
951,224
$
832,171
3,323
835,494
228,958
127,824
52,636
302,409
711,827
—
70,374
93,483
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
OPERATING INCOME
526,408
394,725
289,524
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
1,072
(136,989)
—
5,170
395,661
(10,170)
385,491
(8,034)
377,457
4.71
79,854
4.71
80,508
395,661
8,569
404,230
(10,935)
393,295
$
$
$
$
$
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
$
$
$
$
$
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,
2022
2021
2020
(In thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$ 395,661
$ 269,081
$ 135,888
Depreciation and amortization
Impairment charge
Gain on deconsolidation of VIE
Gain on sale of real estate and change in control of interest, net of tax
Early extinguishment of debt
(Income) loss from partnerships
Straight-line rent
Share-based compensation expense
Other, net
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
(Increase) decrease 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
Change in cash from deconsolidation of VIE
Investment in partnerships
Distribution from partnerships in excess of earnings
Leasing costs
(Issuance) repayment of mortgage and other notes receivable, net
Net cash used in investing activities
FINANCING ACTIVITIES
Costs to amend revolving credit facility
Issuance of senior notes, net of costs
Redemption and retirement of senior notes
Issuance of notes payable, net of costs
Repayment of mortgages, finance leases, and notes payable
Issuance of common shares, net of costs
Dividends paid to common and preferred shareholders
Shares withheld for employee taxes
Contributions from noncontrolling interests
Distributions to and redemptions of noncontrolling interests
Net cash provided by (used in) financing activities
(Decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents, and restricted cash at end of year
$
302,409
—
(70,374)
(93,483)
—
(5,170)
(18,326)
13,704
(4,812)
(12,071)
(1,219)
77
10,373
516,769
(438,494)
(309,046)
(107,655)
(18,031)
133,717
(4,192)
(23,155)
6,864
(22,541)
(3,465)
(785,998)
(6,375)
—
—
298,568
(19,443)
307,275
(347,284)
(4,900)
—
(37,427)
190,414
(78,815)
175,163
96,348
279,976
—
—
(89,950)
—
(1,245)
(9,397)
13,009
(3,223)
1,214
(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
(4,492)
11,924
(1,290)
(6,032)
(3,260)
5,621
(1,799)
369,929
(9,589)
(433,872)
(68,064)
(12,924)
183,461
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(3,348)
1,301
(15,080)
(10,268)
(368,383)
—
(638)
— 1,094,283
— (510,360)
398,722
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(70,237)
(277,643)
99,177
172,981
(324,596)
(335,656)
(4,052)
(2,998)
—
133
(20,563)
(9,784)
661,736
(452,967)
663,282
(641,733)
153,614
816,896
$ 816,896
$ 175,163
The accompanying notes are an integral part of these consolidated statements.
F-11
Federal Realty OP LP
Consolidated Balance Sheets
ASSETS
Real estate, at cost
Operating (including $1,997,583 and $2,207,648 of consolidated variable interest
entities, respectively)
Construction-in-progress (including $8,477 and $18,752 of consolidated variable
interest entities, respectively)
Less accumulated depreciation and amortization (including $362,921 and $389,950 of
consolidated variable interest entities, respectively)
Net real estate
Cash and cash equivalents
Accounts and notes receivable, net
Mortgage notes receivable, net
Investment in partnerships
Operating lease right of use assets, net
Finance lease right of use assets, net
Prepaid expenses and other assets
TOTAL ASSETS
LIABILITIES AND CAPITAL
Liabilities
Mortgages payable, net (including $191,827 and $335,301 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
Partner capital
Preferred units, 398,878 and 405,896 units issued and outstanding, respectively
Common units, 81,342,959 and 78,603,305 units issued and outstanding, respectively
Accumulated other comprehensive income (loss)
Total partner capital
Noncontrolling interests in consolidated partnerships
Total capital
TOTAL LIABILITIES AND CAPITAL
December 31,
2022
2021
(In thousands, except unit data)
$ 9,441,945
$ 8,814,791
662,554
10,104,499
607,271
9,422,062
(2,715,817)
7,388,682
85,558
197,648
9,456
145,205
94,569
45,467
267,406
$ 8,233,991
(2,531,095)
6,890,967
162,132
169,007
9,543
13,027
90,743
49,832
237,069
$ 7,622,320
$
320,615
601,077
3,407,701
190,340
90,263
28,508
77,743
67,660
237,699
5,021,606
$
339,993
301,466
3,406,088
235,168
86,538
25,331
72,661
72,032
206,187
4,745,464
178,370
213,708
154,788
2,793,467
5,757
2,954,012
80,003
3,034,015
$ 8,233,991
154,963
2,427,686
(2,047)
2,580,602
82,546
2,663,148
$ 7,622,320
The accompanying notes are an integral part of these consolidated statements.
F-12
Federal Realty OP LP
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 deconsolidation of VIE
Gain on sale of real estate and change in control of interest, net of tax
Year Ended December 31,
2022
2021
2020
(In thousands, except per unit data)
$
$ 1,073,292
1,086
1,074,378
$
948,842
2,382
951,224
832,171
3,323
835,494
228,958
127,824
52,636
302,409
711,827
—
70,374
93,483
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
OPERATING INCOME
526,408
394,725
289,524
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 PARTNERSHIP
Dividends on preferred units
NET INCOME AVAILABLE FOR COMMON UNIT HOLDERS
EARNINGS PER COMMON UNIT, BASIC
Net income available for common unit holders
Weighted average number of common units
EARNINGS PER COMMON UNIT, DILUTED
Net income available for common unit holders
Weighted average number of common units
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 PARTNERSHIP
1,072
(136,989)
—
5,170
395,661
(10,170)
385,491
(8,034)
377,457
4.71
79,854
4.71
80,508
395,661
8,569
404,230
(10,935)
393,295
$
$
$
$
$
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
$
$
$
$
$
The accompanying notes are an integral part of these consolidated statements.
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T
Federal Realty OP LP
Consolidated Statements of Cash Flows
Year Ended December 31,
2022
2021
(In thousands)
2020
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$ 395,661
$ 269,081
$ 135,888
Depreciation and amortization
Impairment charge
Gain on deconsolidation of VIE
Gain on sale of real estate and change in control of interest, net of tax
Early extinguishment of debt
(Income) loss from partnerships
Straight-line rent
Share-based compensation expense
Other, net
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
(Increase) decrease 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
Change in cash from deconsolidation of VIE
Investment in partnerships
Distribution from partnerships in excess of earnings
Leasing costs
(Issuance) repayment of mortgage and other notes receivable, net
Net cash used in investing activities
FINANCING ACTIVITIES
Costs to amend revolving credit facility
Issuance of senior notes, net of costs
Redemption and retirement of senior notes
Issuance of notes payable, net of costs
Repayment of mortgages, finance leases, and notes payable
Issuance of common units, net of costs
Dividends paid to common and preferred unit holders
Shares withheld for employee taxes
Contributions from noncontrolling interests
Distributions to and redemptions of noncontrolling interests
Net cash provided by (used in) financing activities
(Decrease) increase in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of year
Cash, cash equivalents, and restricted cash at end of year
302,409
—
(70,374)
(93,483)
—
(5,170)
(18,326)
13,704
(4,812)
(12,071)
(1,219)
77
10,373
516,769
(438,494)
(309,046)
(107,655)
(18,031)
133,717
(4,192)
(23,155)
6,864
(22,541)
(3,465)
(785,998)
(6,375)
—
—
298,568
(19,443)
307,275
(347,284)
(4,900)
—
(37,427)
190,414
(78,815)
175,163
96,348
$
279,976
—
—
(89,950)
—
(1,245)
(9,397)
13,009
(3,223)
1,214
(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
(4,492)
11,924
(1,290)
(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)
—
(638)
— 1,094,283
— (510,360)
398,722
—
(70,237)
(277,643)
99,177
172,981
(324,596)
(335,656)
(4,052)
(2,998)
—
133
(20,563)
(9,784)
661,736
(452,967)
663,282
(641,733)
153,614
816,896
$ 816,896
$ 175,163
The accompanying notes are an integral part of these consolidated statements.
F-15
Federal Realty Investment Trust
Federal Realty OP LP
Notes to Consolidated Financial Statements
December 31, 2022, 2021 and 2020
NOTE 1—BUSINESS AND ORGANIZATION
Federal Realty Investment Trust (the “Parent Company” and "Trust") is an equity real estate investment trust (“REIT”). Federal
Realty OP LP (the "Operating Partnership") is the entity through which the Parent Company conducts substantially all of its
operating and owns all of its assets. The Parent Company owns 100% of the limited liability company interests of, is sole
member of, and exercises control over Federal Realty GP LLC (the "General Partner"), which in turn, is the sole general partner
of the Operating Partnership. The Parent Company specializes in the ownership, management, and redevelopment of retail and
mixed-use properties through the Operating Partnership. 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, 2022, we owned or had a majority interest in community and
neighborhood shopping centers and mixed-use properties which are operated as 103 predominantly retail real estate projects.
We operate in a manner intended to enable the Trust to qualify as a REIT for federal income tax purposes. A REIT that
distributes at least 90% of its taxable income to its shareholders each year and meets certain other conditions is not taxed on that
portion of its taxable income which is distributed to its shareholders.
Impacts of COVID-19 Pandemic and General Economic Conditions
Given the ongoing workforce shortages, global supply chain bottlenecks and shortages, higher levels of inflation, and rising
interest rates, we continue to monitor and address risks related to the global COVID-19 pandemic and the state of the economy.
The extent of the future effects of COVID-19 and potentially worsening economic conditions on our business, results of
operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, none of
which can be predicted with any certainty.
NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
In January 2022, we completed a reorganization into an umbrella partnership real estate investment trust, or "UPREIT." For
additional information on our UPREIT reorganization, please see our Current Reports on Form 8-K filed with the SEC on
January 3, 2022 and January 5, 2022, as well our 2021 Annual Report on Form 10-K filed on February 10, 2022. Immediately
following the reorganization, the Parent Company had the same consolidated assets and liabilities as Federal Realty Investment
Trust immediately before the reorganization. The Parent Company exercises exclusive control over the General Partner and
does not have assets or liabilities other than its investment in the Operating Partnership. As a result, the UPREIT reorganization
represented a merger of entities under common control in accordance with accounting principles generally accepted in the
United States ("GAAP"). Accordingly, the accompanying consolidated financial statements including the notes thereto, are
presented as if the UPREIT reorganization had occurred at the earliest period presented. Certain 2021, 2020, and 2019 amounts
have been reclassified to conform to current period presentation.
Principles of Consolidation
As discussed in the Explanatory Note, we have combined the Annual Reports on Form 10-K of the Parent Company and the
Operating Partnership into this single report. As a result, we present two sets of consolidated financial statements. Both sets of
consolidated financial statements include the accounts of the entity, its corporate subsidiaries, and all entities in which it has a
controlling interest or has been determined to the primary beneficiary of a variable interest entity (“VIE”). The Parent
Company's consolidated financial statements include the accounts of the Operating Partnership and its subsidiaries as the
Parent, and through its ownership and control over the General Partner, exercises exclusive control over the Operating
Partnership. The equity interests of other investors are reflected as noncontrolling interests or redeemable noncontrolling
interests. All significant intercompany transactions and balances are eliminated in consolidation. We account for our interests in
joint ventures, which we do not control, using the equity method of accounting.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America, referred to as “GAAP,” requires management to make estimates and assumptions that in certain circumstances affect
the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These
F-16
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.
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, 2022, we executed rent deferral
agreements related to the COVID-19 pandemic representing approximately $48 million of rent. We have subsequently collected
approximately $35 million of those amounts previously deferred. As of December 31, 2022, we have entered into rent
abatement agreements related to the COVID-19 pandemic totaling $4 million, $26 million, and $48 million of rents due in
2022, 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.
Our collection of rents has continued to improve from the initial impacts of COVID-19, including collecting rents related to
prior periods. As a result, our collectibility related adjustments for the year ended December 31, 2022 resulted in an increase to
rental income of $4.1 million, as compared to a $24.0 million and $106.6 million decrease to rental income during the years
ended December 31, 2021 and 2020, respectively, which reflected lower levels of cash collections and elevated levels of rent
abatements and disputes directly related to COVID-19. This includes changes in our collectibility assessments from probable to
not probable, disputed rents, and any rent abatements directly related to COVID-19. As of December 31, 2022 and 2021, the
revenue from approximately 31% and 34% of our tenants (based on total commercial leases), respectively, is being recognized
on a cash basis. As of December 31, 2022 and 2021, our straight-line rent receivables balance was $126.6 million and $110.7
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 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
F-17
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
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 2022, 2021 and 2020, real estate
depreciation expense was $265.7 million, $245.1 million and $227.9 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 acquired and current liabilities assumed, 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.
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.
F-18
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, 2022, we had $113.2
million in excess of the FDIC insured limit.
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, 2022, 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, 2022, 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 2022, 2021 and 2020.
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
F-19
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
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.
At December 31, 2022, 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.
Our equity method investments in the Assembly Row hotel joint venture, the La Alameda shopping center, the Chandler
Festival and Chandler Gateway shopping centers, and our mortgage notes receivable are considered variable interests in a VIE
(see Note 3 to the consolidated financial statements for additional information on the Chandler Festival and Chandler Gateway
shopping centers). As we do not control the activities that most significantly impact the economic performance of our equity
method joint ventures or the borrower entities related to our mortgage notes receivable, we are not the primary beneficiary and
do not consolidate. As of December 31, 2022 and 2021, our investment in the equity method joint ventures and maximum
exposure to loss was $34.0 million and $8.9 million, respectively. As of December 31, 2022 and 2021, our investment in
mortgage notes receivable and maximum exposure to loss was $9.5 million for both periods. We also own a 77.7% tenancy in
common ("TIC") interest in Escondido Promenade which is recorded as an equity method investment and included in
investments in partnerships" on our December 31, 2022 consolidated balance sheets. Our TIC interest in Escondido Promenade
is not considered a variable interest in a variable interest entity. See Note 3 to the consolidated financial statements for
additional information.
In addition, we have 19 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 $1.6 billion and $1.8 billion as of
December 31, 2022 and 2021, respectively, and mortgages related to VIEs included in our consolidated balance sheets were
approximately $191.8 million and $335.3 million, as of December 31, 2022 and 2021, 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-20
The following table provides a rollforward of the redeemable noncontrolling interests:
Year Ended
December 31,
2022
2021
(In thousands)
Beginning balance.............................................................................................................................. $
213,708
$
137,720
Net income.....................................................................................................................................
Contributions .................................................................................................................................
Other comprehensive income - change in value of interest rate swaps .........................................
Distributions & redemptions..........................................................................................................
Change in redemption value ..........................................................................................................
6,613
2,111
765
(32,445)
(12,382)
4,296
74,530
320
(5,268)
2,110
Ending balance ................................................................................................................................... $
178,370
$
213,708
On July 13, 2022, we acquired the 21.8% redeemable noncontrolling interest in the partnership that owns our Plaza El Segundo
shopping center for $23.6 million, bringing our ownership interest to 100%.
Leases
We have ground leases at 11 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 corresponds to the remaining term of the lease, our
credit spread, and an 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 do not record 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.
With few exceptions, we are no longer subject to U.S. federal, state, and local tax examinations by tax authorities for years
before 2018. As of December 31, 2022 and 2021, 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.
F-21
Forward Equity Sales
Our at-the-market (“ATM”) equity program 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 forward sales transactions.
F-22
Recent Accounting Pronouncements
Standard
Description
Adopted on January 1, 2022:
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
ASU 2021-05, July 2021,
Lessors - Certain Leases with
Variable Lease Payments
(Topic 842)
Issued in 2022:
ASU 2022-03, June 2022,
Fair Value Measurement of
Equity Securities Subject to
Contractual Sale Restrictions
(Topic 820)
Issued in 2020:
Reference Rate Reform (Topic
848) and related update:
ASU 2020-04, March 2020,
Reference Rate Reform
(Topic 848)
ASU 2022-06, December
2022, Deferral of the Sunset
Date
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.
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 clarifies that contractual sale restrictions
are not considered in measuring the fair value of
equity securities, and requires specific disclosures for
all entities with equity securities subject to a
contractual sale restriction including (1) the fair
value of such equity securities reflected in the
balance sheet, (2) the nature and remaining duration
of the corresponding restrictions, and (3) any
circumstances that could cause a lapse in the
restrictions. In addition, the ASU prohibits an entity
from recognizing a contractual sale as a separate unit
of account.
This guidance is effective in fiscal years beginning
after December 15, 2023, and interim periods within
those fiscal years, with early adoption permitted.
This ASU provides companies with optional practical
expedients to ease the accounting burden for contract
modifications associated with transitioning away from
LIBOR and other interbank offered rates that are
expected to be discontinued as part of reference rate
reform. For hedges, the guidance generally allows
changes to the reference rate and other critical terms
without having to de-designate the hedging relationship,
as well as allows the shortcut method to continue to be
applied. For contract modifications, changes in the
reference rate or other critical terms will be treated as a
continuation of the prior contract.
ASU 2022-06 extended the period for which this
guidance can be immediately applied through December
31, 2024.
Effect on the financial statements or
significant matters
The adoption of this standard did not have an
impact to our consolidated financial
statements.
The adoption of this standard did not have an
impact to our consolidated financial
statements.
We are assessing the impact of this ASU on
OP units issued as consideration in future
acquisitions.
We expect to apply some of the practical
expedients, as we are in the process of
transitioning the $55.1 million mortgage loan
on Hoboken and the $38.2 million mortgage
loan related to the unconsolidated Assembly
Row hotel (of which our share is $19.1
million) from LIBOR to alternative interest
rates. We do not expect a significant impact to
our financial results, financial position, or cash
flows from this transition.
F-23
Consolidated Statements of Cash Flows—Supplemental Disclosures
The following table provides supplemental disclosures related to the Consolidated Statements of Cash Flows:
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
Shares issued under dividend reinvestment plan
5.417% Series 1 Cumulative Convertible Preferred Shares redeemed for
common shares
Year Ended December 31,
2022
2021
2020
(In thousands)
155,659
(18,670)
136,989
130,912
624
$
$
$
$
150,324
(22,626)
127,698
123,585
386
$
$
$
$
159,718
(23,429)
136,289
130,248
580
— $
— $
1,385
1,718
175
$
$
$
— $
— $
7,545
1,727
$
$
18,920
8,903
—
1,734
— $
—
$
$
$
$
$
$
$
$
$
(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.
December 31,
2022
2021
(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents ....................................................................................................... $
Restricted cash (1) ...................................................................................................................
Total cash, cash equivalents, and restricted cash..................................................................... $
85,558
10,790
96,348
$
$
162,132
13,031
175,163
(1) Restricted cash balances are included in "prepaid expenses and other assets" on our consolidated balance sheets.
NOTE 3—REAL ESTATE
2022 Property Acquisitions
During the year ended December 31, 2022, we acquired the following properties:
Date Acquired
Property
City/State
Gross Leasable
Area (GLA)
Purchase
Price
(in square feet)
(in millions)
Kingstowne Towne Center
Kingstowne, Virginia
410,000 $
200.0 (1)
Hilton Village (office building)
The Shops at Pembroke Gardens Pembroke Pines, Florida
Scottsdale, Arizona
November 18, 2022 Hoboken (301 Washington St.)
Hoboken, New Jersey
212,000 $
391,000 $
N/A $
53.6 (2)
180.5 (3)
9.0 (4)
(1) Approximately $11.3 million and $0.3 million of net assets were allocated to other assets for "acquired lease costs" and
"above market leases," respectively, and $20.2 million of net assets acquired were allocated to other liabilities for "below
market leases."
(2) This building is adjacent to, and will be operated as part of our Hilton Village property. The land is controlled under a
long-term ground lease that expires on September 30, 2075, for which we have recorded a $6.5 million "operating lease
right of use asset" (net of a $0.8 million above market liability) and a $7.3 million "operating lease liability."
Approximately $8.9 million of net assets acquired were allocated to other assets for "acquired lease costs" and $0.1 million
of net assets acquired were allocated to other liabilities for "below market leases."
F-24
April 20, 2022 &
July 27, 2022
July 18, 2022
July 27, 2022
(3) Approximately $16.3 million and $1.6 million of net assets acquired were allocated to other assets for "acquired lease
costs" and "above market leases," respectively, and $18.4 million of net assets acquired were allocated to other liabilities
for "below market leases."
(4) This property, that we own a 90% ownership interest in, was acquired through our Hoboken joint venture, and is in the
beginning stages of redevelopment.
On October 6, 2022, we acquired a 47.5% net interest in an unconsolidated joint venture that owns two shopping centers for a
combined price of $58.9 million. On the date of acquisition, the properties had combined mortgage debt of $76.1 million, of
which, our share is approximately $36.2 million. Approximately $8.0 million and $2.0 million of net assets acquired were
allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $17.1 million of net assets
acquired were allocated to other liabilities for "below market leases." Additional information on the properties is listed below:
Property
City/State
Chandler Festival
Chandler Gateway
Chandler, Arizona
Chandler, Arizona
2022 Property Dispositions
Gross Leasable
Area (GLA)
Purchase Price
(our share)
(in square feet)
(in millions)
355,000 $
262,000 $
40.8
18.1
During the year ended December 31, 2022, we sold two residential properties (one included an adjacent retail pad), one retail
property, one parcel of land, and one portion of a property for sales prices totaling $136.2 million, resulting in net gains totaling
approximately $84.1 million.
Other Transaction
On August 25, 2022, we entered into a tenancy in common ("TIC") agreement with our partner in the partnership that owned
Escondido Promenade. As a result, the Company owns a 77.7% TIC interest, and our former partner owns the remaining 22.3%
interest. While the Company controlled and consolidated Escondido Promenade under the previous partnership arrangement,
control is shared under the TIC agreement. The transaction is considered a transfer of our previous controlling partner interest
in exchange for a non-controlling TIC interest. Accordingly, we deconsolidated the entity and recorded our TIC interest at fair
value as an equity method investment. We recognized a $70.4 million "gain on deconsolidation of VIE" on our consolidated
statements of operations, which is the difference between the net carrying value of the deconsolidated entity and the fair value
of our TIC interest. As of August 25, 2022, the fair value of our investment in the entity was $110.0 million, and is included in
"investment in partnerships" on our consolidated balance sheet as of December 31, 2022. As a part of this transaction, we made
a $3.5 million loan to our co-owner, which is included in "accounts and notes receivable, net" on our consolidated balance sheet
at December 31, 2022. In addition, we entered into a purchase option agreement to acquire the TIC interest from our co-owner,
which was secured through an option payment of $1.5 million, and allows us to exercise our option at any time between
February 1, 2023 and March 15, 2023.
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.
F-25
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."
(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.
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, 2022
December 31, 2021
Cost
Accumulated
Amortization
Cost
Accumulated
Amortization
$
$
$
$
45,737
34,604
80,341
$
$
(267,910) $
(11,127)
(279,037) $
(in thousands)
(33,892) $
(5,847)
(39,739) $
91,989
3,208
95,197
$
$
46,951
34,604
81,555
$
$
(230,059) $
(10,347)
(240,406) $
(33,617)
(5,019)
(38,636)
78,327
2,654
80,981
F-26
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,
2022
2021
(in thousands)
2020
$
$
$
$
(3,437) $
14,543
11,106
$
828
(554)
274
$
$
(3,150) $
11,897
8,747
$
828
(538)
290
$
$
(4,060)
8,406
4,346
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, 2022
3.0 years
36.6 years
17.6 years
19.1 years
The amortization for acquired leases during the next five years and thereafter, assuming no early lease terminations, is as
follows:
Year ending December 31,
2023
2024
2025
2026
2027
Thereafter
Acquired Lease
Assets
Acquired Lease
Liabilities
(In thousands)
$
$
3,869
3,347
2,277
2,005
1,717
27,387
40,602
$
$
15,555
15,005
11,507
11,074
10,601
120,098
183,840
F-27
NOTE 5—DEBT
The following is a summary of our total debt outstanding as of December 31, 2022 and 2021:
Description of Debt
Mortgages payable
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)
Subtotal
Net unamortized debt issuance costs and
premium
Total mortgages payable, net
Notes payable
Term Loan (3)(5)
Revolving credit facility (3)(4)(5)
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
Stated Interest
Rate as of
December 31, 2022
Stated Maturity Date
as of
December 31, 2022
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 %
$
Principal Balance as of
December 31,
2022
2021
(Dollars in thousands)
$
40,000
11,835
125,000
43,600
11,500
55,060
30,876
4,446
—
322,317
40,000
12,127
125,000
43,600
11,500
56,450
31,817
4,851
16,234
341,579
(1,702)
320,615
(1,586)
339,993
300,000
SOFR + 0.85%
— SOFR + 0.775%
April 16, 2024
April 5, 2027
Various (6) Various through 2059
600,000
—
2,957
602,957
(1,880)
601,077
275,000
600,000
400,000
29,200
475,000
40,000
400,000
400,000
550,000
250,000
3,419,200
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
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
_____________________
(11,499)
3,407,701
(13,112)
3,406,088
$ 4,329,393
$ 4,047,547
(1)
(2)
(3)
(4)
(5)
(6)
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%.
Our revolving credit facility SOFR loans bear interest at Daily Simple SOFR or Term SOFR as defined in the credit
agreement and our term loan bears interest at Term SOFR, plus 0.10%, plus a spread, based on our current credit
rating.
The maximum amount drawn under our revolving credit facility during the year ended December 31, 2022 was $330.0
million and the weighted average interest rate on borrowings under our revolving credit facility, before amortization of
debt fees, was 3.2%.
The Operating Partnership is the obligor under our revolving credit facility, term loan, and senior notes and
debentures.
The interest rates on these notes payable range from 3.00% to 11.31%.
F-28
On June 29, 2022, we repaid the $16.1 million mortgage loan on one of the buildings at our Hoboken property, at par.
On October 5, 2022, we amended our revolving credit facility, increasing the borrowing capacity from $1.0 billion to $1.25
billion, extending the maturity date to April 5, 2027, plus two six-month extension options, transitioning the interest rate
provisions from LIBOR to the secured overnight financing rate ("SOFR"), and adjusting the spread for SOFR based loans. Our
SOFR based loans bear interest at Daily Simple SOFR or Term SOFR as defined in the credit agreement plus 0.10% plus a
spread, based on our credit rating. The current spread is 77.5 basis points. In addition, we have an option (subject to bank
approval) to increase the credit facility through an accordion feature to $1.75 billion.
During 2022, 2021 and 2020, the maximum amount of borrowings outstanding under our revolving credit facility was $330.0
million, $150.0 million and $990.0 million, respectively. The weighted average amount of borrowings outstanding was $80.3
million, $19.6 million and $138.5 million, respectively, and the weighted average interest rate, before amortization of debt fees,
was 3.2%, 0.9% and 1.5%, respectively. The revolving credit facility requires an annual facility fee which is $1.9 million under
the amended credit agreement. At December 31, 2022 and December 31, 2021, our revolving credit facility had no balance
outstanding.
On October 5, 2022, we also amended our unsecured term loan and borrowed an additional $300.0 million, bringing the total
outstanding to $600.0 million. The term loan amendment also transitioned the interest rate provisions from LIBOR to SOFR.
This SOFR based loan bears interest at Term SOFR as defined in the agreement, plus 0.10%, plus a 85 basis point spread, based
on our current credit rating. The net proceeds from the term loan after underwriting fees and other costs were $298.5 million,
and were used to repay the $267.0 million outstanding balance on the revolving credit facility and for general corporate
purposes.
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, 2022, 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, 2022 are
as follows:
Year ending December 31,
2023
2024
2025
2026
2027
Thereafter
Mortgages
Payable
Notes
Payable
Senior Notes and
Debentures
Total
Principal
(In thousands)
$
3,138
3,299
47,630
26,240
178,278
63,732
$
755
$
275,000
$
278,893
600,671 (1)
600,000
1,203,970
418
76
37 (2)
1,000
—
429,200
515,000
48,048
455,516
693,315
1,600,000
1,664,732
$
322,317
$
602,957
$
3,419,200
$
4,344,474
(3)
_____________________
(1) Our $600.0 million term loan matures on April 16, 2024 plus two one-year extensions, at our option.
(2) Our $1.25 billion revolving credit facility matures on April 5, 2027 plus two six-month extensions, at our option. As of
December 31, 2022, 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,
2022.
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.
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
F-29
3.
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
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, 2022
December 31, 2021
Carrying
Value
Fair Value
Carrying
Value
Fair Value
(In thousands)
Mortgages and notes payable....................................................... $
921,692
Senior notes and debentures......................................................... $ 3,407,701
$
895,654
$
641,459
$
655,864
$ 3,048,456
$ 3,406,088
$ 3,649,776
As of December 31, 2022, we have two interest rate swap agreements with notional amounts of $55.1 million that are measured
at fair value on a recurring basis. The interest rate swap agreements fix the interest rate on $55.1 million of mortgage payables
at 3.67% through December 15, 2029. The fair values of the interest rate swap agreements are based on the estimated amounts
we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models
and interest rate related observable inputs. The fair value of our swaps at December 31, 2022 was an asset of $6.1 million and is
included in "prepaid expenses and other assets" on our consolidated balance sheet. During 2022, the value of our interest rate
swaps increased $7.7 million (including less than $0.1 million reclassified from other comprehensive income as an increase to
interest expense). A summary of our financial assets (liabilities) that are measured at fair value on a recurring basis, by level
within the fair value hierarchy is as follows:
December 31, 2022
December 31, 2021
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
(In thousands)
Interest rate swaps .................... $
— $ 6,144
$
— $ 6,144
$
— $ (1,511) $
— $
(1,511)
One of our equity method investees has two interest rate swaps which qualify as cash flow hedges. At December 31, 2022 and
December 31, 2021, our share of the change in fair value of the related swaps included in "accumulated other comprehensive
income (loss)" was an increase of $0.9 million and $0.7 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
F-30
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
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.
At December 31, 2022 and 2021, our reserves for general liability costs were $3.3 million and $5.2 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 2022 and 2021, we made payments from these reserves of
$2.3 million and $1.5 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.
On July 13, 2022, we acquired the 21.8% redeemable noncontrolling interest in the partnership that owns our Plaza El Segundo
shopping center for $23.6 million, bringing our ownership interest to 100%.
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 indemnified the condemning
authority for all costs incurred related to the condemnation proceedings including any payments required to tenants at the
property and recorded a corresponding liability for our estimate of these costs. During 2022, we recorded a net reduction to our
liability for condemnation and transaction costs to reflect the impact of a recent tenant settlement agreement and our current
estimate of remaining costs. As a result, for the year ended December 31, 2022, we have recognized a gain of $9.3 million,
which is included in our consolidated statements of operations. Additionally, during 2022, we incurred $18.0 million of
payments to tenants, and consequently, at December 31, 2022, we have a liability of $5.0 million to reflect our estimate of the
remaining consideration.
At December 31, 2022, we had letters of credit outstanding of approximately $6.7 million.
As of December 31, 2022 in connection with capital improvement, development, and redevelopment projects, we have
contractual obligations of approximately $262.1 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, 2022:
Year ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total future minimum operating lease payments
Less amount representing interest
Operating lease liabilities
(In thousands)
$
$
5,775
5,949
5,815
5,451
5,037
198,973
227,000
(149,257)
77,743
Future minimum lease payments and their present value for properties under finance leases as of December 31, 2022, are as
follows:
F-31
Year ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total future minimum finance lease payments
Less amount representing interest
Finance lease liabilities
(In thousands)
$
$
59,713
713
713
713
748
68,676
131,276
(63,616)
67,660
A master lease for Mercer Mall includes a fixed purchase price option for $55 million in 2023. During 2022, we exercised our
option to purchase the fee interest, which is expected to close in the second half of 2023.
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, 2022, our estimated maximum liability upon exercise of the put option would range
from approximately $62 million to $65 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.
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, 2022, 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, 2022, our estimated maximum liability upon exercise of the put option would range from $8 million to $9
million.
Effective June 14, 2026, the other member in Camelback 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, 2022, our estimated maximum liability upon exercise of the put option would range from $4 million
to $5 million.
Effective October 6, 2027, the other member in the partnership that owns equity method investments in Chandler Festival and
Chandler Gateway has the right to require us to purchase its 2.5% net ownership interest. Based on management's current
estimate of fair value as of December 31, 2022, our estimated maximum liability upon exercise of the put option would range
from $1 million and $2 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,
2022, 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 644,554 downREIT operating partnership units are
outstanding which have a total fair value of $65.1 million, based on our closing stock price on December 31, 2022.
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 2022, 2021 and 2020, 19,502 shares, 19,758 shares, and 24,491 shares, respectively, were
issued under the Plan.
As of December 31, 2022, 2021, and 2020, 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
F-32
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.
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, 2022, we had 392,878 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, and 399,896
shares at December 31, 2021 and 2020. 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. On June 15, 2022, one of
our Series 1 Preferred shareholders converted 7,018 preferred shares to 1,675 common shares. 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 14, 2022, 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. Our
ATM equity program also allows shares to be sold through forward sales contracts. We intend to use the net proceeds from
ATM equity program issuances 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, 2022, we issued 430,473 common shares at a weighted average price per share of $111.49 for
net cash proceeds of $47.4 million including paying $0.5 million in commissions and $0.1 million in additional offering
expenses related to the sales of these common shares. 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 and paid $0.9 million in
commissions and $0.4 million in additional offering expenses related to the sales of these common shares. As of December 31,
2022, we have the remaining capacity to issue up to $452.0 million in common shares under our ATM equity program.
During 2021, we entered into forward sales contracts 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 these forward sales agreements by issuing
796,300 common shares for net proceeds of $85.7 million and during 2022, we settled the remaining forward sales contracts by
issuing 2,203,655 common shares for net proceeds of $259.4 million. We have no outstanding forward sales agreements as of
December 31, 2022.
NOTE 9—DIVIDENDS
The following table provides a summary of dividends declared and paid per share:
Year Ended December 31,
2022
2021
2020
Declared
Common shares...................................................................... $ 4.300
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
$ 4.290
$ 4.260
$ 4.250
$ 4.220
$ 4.210
$ 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.
F-33
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,
2022
2021
2020
$
$
$
$
$
$
3.518
0.772
—
4.290
1.110
0.244
1.354
1.025
0.225
1.250
$
$
$
$
$
$
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
On November 3, 2022, the Trustees declared a quarterly cash dividend of $1.08 per common share, payable January 17, 2023 to
common shareholders of record on January 3, 2023.
NOTE 10— LEASES
At December 31, 2022, our 103 predominantly retail shopping center and mixed-use properties are located in 12 states and the
District of Columbia. There are approximately 3,300 commercial leases and 3,000 residential leases. Our commercial tenants
range from sole proprietorships to national retailers and corporations. At December 31, 2022, no one tenant or corporate group
of tenants accounted for more than 2.8% 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, 2022, 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,
2023
2024
2025
2026
2027
Thereafter
(In thousands)
$
701,133
649,472
564,446
490,884
416,736
1,644,716
$ 4,467,387
F-34
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
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
Total rental expenses
2022
Year Ended December 31,
2021
(In thousands)
2020
$
$
$
$
$
1,251 $
5,743
6,138
309
13,441 $
1,284
5,828
5,687
246
13,045
5,642 $
5,644 $
50 $
5,723
5,288
51
$
$
$
$
$
1,284
5,826
5,946
353
13,409
5,736
5,498
46
December 31,
2022
13.9 years
53.3 years
8.1 %
4.8 %
2021
16.3 years
52.8 years
8.0 %
4.5 %
$
6,476
$
10,341
Year Ended December 31,
2022
2021
2020
$
$
90,343
34,226
27,416
19,693
16,380
7,814
5,092
27,994
228,958
(In thousands)
78,028
$
27,808
24,919
18,341
14,406
7,481
4,571
22,567
198,121
$
$
$
66,845
25,065
23,752
16,691
12,439
6,432
4,595
15,101
170,920
NOTE 12—SHARE-BASED COMPENSATION PLANS
A summary of share-based compensation expense included in net income is as follows:
Year Ended December 31,
2022
2021
2020
(In thousands)
Grants of common shares, restricted stock units, and options
Capitalized share-based compensation
Share-based compensation expense
$
$
15,018
(1,314)
13,704
$
$
14,434
(1,425)
13,009
$
$
13,243
(1,319)
11,924
F-35
As of December 31, 2022, 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 2022 and 2020.
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 2022:
Shares
Under
Option
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual Term
Aggregate
Intrinsic
Value
(In years)
(In thousands)
Outstanding at December 31, 2021
Granted
Exercised
Forfeited or expired
Outstanding at December 31, 2022
Exercisable at December 31, 2022
3,658
—
(366)
(1,463)
1,829
366
$
$
$
95.77
—
95.77
95.77
95.77
95.77
The following table provides a summary of restricted share activity for 2022:
Unvested at December 31, 2021
Granted
Vested
Forfeited
Unvested at December 31, 2022
8.1 $
8.1 $
10
2
Shares
Weighted-Average
Grant-Date Fair
Value
288,996
116,266
(119,646)
(5,871)
279,745
$
$
112.29
125.34
118.81
120.62
114.75
The weighted-average grant-date fair value of stock awarded in 2022, 2021 and 2020 was $125.34, $97.46 and $124.55,
respectively. The total vesting-date fair value of shares vested during the year ended December 31, 2022, 2021 and 2020, was
$14.3 million, $11.0 million and $12.4 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
F-36
award. The weighted-average grant-date fair value of the restricted stock units awarded in 2021 was $97.01. The following
table provides a summary of restricted stock unit activity for 2022:
Unvested at December 31, 2021
Granted
Vested
Forfeited
Unvested at December 31, 2022
Shares
Weighted-Average
Grant-Date Fair
Value
10,441
—
—
—
10,441
$
$
97.01
—
—
—
97.01
As of December 31, 2022, there was $19.2 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 4.5 years with a weighted-average period of 2.1 years.
Subsequent to December 31, 2022, common shares were awarded under various compensation plans as follows:
Date
January 3, 2023
February 7, 2023
Award
5,942 Shares
135,314 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 $20,500 for 2022, and 19,500 for
2021 and 2020. 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, 2022, 2021 and 2020 was approximately $869,000, $816,000 and $813,000,
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, 2022 and 2021, we are liable to participants for
approximately $18.0 million and $21.0 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-37
NOTE 14—EARNINGS PER SHARE AND UNIT
We have calculated earnings per share (“EPS”) and earnings per unit ("EPU") under the two-class method. The two-class
method is an earnings allocation methodology whereby EPS and EPU for each class of common stock and partnership units,
respectively, and participating securities is calculated according to dividends or distributions declared and participation rights in
undistributed earnings. For 2022 and 2021 we had 0.3 million weighted average unvested shares and units outstanding, and for
2020 we had 0.2 million which are considered participating securities. Therefore, we have allocated our earnings for basic and
diluted EPS and EPU between common shares and units and unvested shares and units; the portion of earnings allocated to the
unvested shares and units is reflected as “earnings allocated to unvested shares” or "earnings allocated to unvested units" in the
reconciliation below.
The following potentially issuable shares were excluded from the diluted EPS and EPU calculations because their impact is
anti-dilutive:
•
•
•
•
exercise of 682 stock options in 2020,
conversions of downREIT operating partnership units for 2021 and 2020,
and 5.417% Series 1 Cumulative Convertible Preferred Shares and units for 2022, 2021, and 2020, and
the issuance of $1.8 million shares and units issuable under forward sales agreements in 2021.
Additionally, 10,441 unvested restricted stock units are excluded from the diluted EPS and EPU calculations as the market
based performance criteria in the award has not yet been achieved.
Federal Realty Investment Trust Earnings per Share
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
Add: Income attributable to downREIT operating partnership units
Net income available for common shareholders, diluted
DENOMINATOR
Weighted average common shares outstanding—basic
Effect of dilutive securities:
Open forward contracts for share issuances
DownREIT operating partnership units
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
Year Ended December 31,
2022
2021
2020
(In thousands, except per share data)
$ 395,661
$ 269,081
$ 135,888
(8,034)
(10,170)
(1,328)
(8,042)
(7,583)
(1,211)
(8,042)
(4,182)
(992)
376,129
252,245
122,672
2,810
—
—
$ 378,939
$ 252,245
$ 122,672
79,854
77,336
75,515
—
654
32
—
—
—
80,508
77,368
75,515
$
$
4.71
4.71
$
$
3.26
3.26
$
$
1.62
1.62
F-38
Federal Realty OP LP Trust Earnings per Unit
NUMERATOR
Net income
Less: Preferred unit distributions
Less: Income from operations attributable to noncontrolling interests
Less: Earnings allocated to unvested units
Net income available for common unit holders, basic
Add: Income attributable to downREIT operating partnership units
Net income available for common unit holders, diluted
DENOMINATOR
Weighted average common units outstanding—basic
Effect of dilutive securities:
Common unit issuances relating to open common forward contracts
DownREIT operating partnership units
Weighted average common units outstanding—diluted
EARNINGS PER COMMON UNIT, BASIC
Net income available for common unit holders
EARNINGS PER COMMON UNIT, DILUTED
Net income available for common unit holders
NOTE 15—SUBSEQUENT EVENT
Year Ended December 31,
2022
2021
2020
(In thousands, except per unit data)
$ 395,661
$ 269,081
$ 135,888
(8,034)
(10,170)
(1,328)
(8,042)
(7,583)
(1,211)
(8,042)
(4,182)
(992)
376,129
252,245
122,672
2,810
—
—
$ 378,939
$ 252,245
$ 122,672
79,854
77,336
75,515
—
654
80,508
32
—
77,368
—
—
75,515
$
$
4.71
4.71
$
$
3.26
3.26
$
$
1.62
1.62
On January 31, 2023, we acquired the 180,000 square foot portion of Huntington Square shopping center that was not
previously owned, as well as the fee interest in the land underneath the portion of the shopping center which we control under a
long-term ground lease for $35.5 million.
F-39
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FEDERAL REALTY INVESTMENT TRUST AND FEDERAL REALTY OP LP
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
Three Years Ended December 31, 2022
Reconciliation of Total Cost
(in thousands)
Balance, December 31, 2019 .................................................................................................................................... $ 8,298,132
Additions during period
Acquisitions ....................................................................................................................................................
Improvements .................................................................................................................................................
Deductions during period.....................................................................................................................................
Impairment of property
Dispositions and retirements of property
Balance, December 31, 2020 ....................................................................................................................................
Additions during period
Acquisitions ....................................................................................................................................................
Improvements .................................................................................................................................................
Deduction during period—dispositions and retirements of property
Balance, December 31, 2021 ....................................................................................................................................
Additions during period
Acquisitions ....................................................................................................................................................
Improvements .................................................................................................................................................
Deduction during period—dispositions and retirements of property...................................................................
39,440
473,679
(68,484)
(159,897)
8,582,870
519,350
424,521
(104,679)
9,422,062
445,319
399,623
Dispositions and retirements of property
Deconsolidation of VIE
(107,682)
(54,823)
Balance, December 31, 2022 (1) .............................................................................................................................. $ 10,104,499
_____________________
(1) For Federal tax purposes, the aggregate cost basis is approximately $9.0 billion as of December 31, 2022.
F-46
FEDERAL REALTY INVESTMENT TRUST AND FEDERAL REALTY OP LP
SCHEDULE III
SUMMARY OF REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
Three Years Ended December 31, 2022
Reconciliation of Accumulated Depreciation and Amortization
(In thousands)
Balance, December 31, 2019 .................................................................................................................................... $ 2,215,413
229,199
Additions during period—depreciation and amortization expense......................................................................
Deductions during period.....................................................................................................................................
Impairment of property
Dispositions and retirements of property
Balance, December 31, 2020 ....................................................................................................................................
Additions during period—depreciation and amortization expense......................................................................
Deductions during period -dispositions and retirements of property...................................................................
Balance, December 31, 2021
Additions during period—depreciation and amortization expense......................................................................
Deductions during period.....................................................................................................................................
Dispositions and retirements of property........................................................................................................
Deconsolidation of VIE ..................................................................................................................................
(59,066)
(23,089)
Balance, December 31, 2022 .................................................................................................................................... $ 2,715,817
(11,631)
(75,289)
2,357,692
246,338
(72,935)
2,531,095
266,877
F-47
FEDERAL REALTY INVESTMENT TRUST AND FEDERAL REALTY OP LP
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE
Year Ended December 31, 2022
(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)
$ 4,956
58,750
(2)
4,500
4,500
4,990
(3)
600
—
Principal
Amount
of Loans
Subject to
delinquent
Principal
or Interest
—
$
—
—
$63,740
$ 10,175
$ 9,456
$
—
_____________________
(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 $10.1 million as of December 31, 2022.
(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, 2022 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, 2022 is estimated.
F-48
FEDERAL REALTY INVESTMENT TRUST AND FEDERAL REALTY OP LP
SCHEDULE IV
MORTGAGE LOANS ON REAL ESTATE - CONTINUED
Three Years Ended December 31, 2022
Reconciliation of Carrying Amount
(In thousands)
Balance, December 31, 2019 .................................................................................................................................... $
January 1, 2020 adoption of new accounting standard - See Note 2
Additions during period:
Acquisition of loan, 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 ....................................................................................................................................
Deductions during period:
Valuation adjustments.....................................................................................................................................
Collection and satisfaction of loans ................................................................................................................
Balance, December 31, 2022 .................................................................................................................................... $
(30,339)
(610)
9,543
(44)
(43)
9,456
F-49
Letter to Our Shareholders
March 24, 2023
To our Shareholders:
On behalf of the Board of Trustees and the entire Federal team, you are invited to join us at our 2023 Annual
Meeting of Shareholders to be held virtually beginning at 9:00 a.m. eastern time on May 3, 2023. This proxy
statement includes important information about how you can join and ask questions at the meeting and about the
matters that will be voted on at the meeting.
Federal’s operating performance in 2022 was marked by continued strong demand for our real estate assets as
evidenced by record levels of new and renewal
leases for comparable spaces and significant occupancy
improvements. Shoppers and diners returned to our real estate after the enforced isolation of COVID-19
lockdowns reinforcing our belief that well-located real estate that is truly part of the local community and more
than just a place to transact business will succeed over the long-term. The return of the consumer and overall
strong demand for our assets resulted in us delivering a record level of top line revenue and strong bottom line
earnings despite the inflationary pressures that started hitting in the second half of the year. We also made
significant progress during 2022 in our efforts to reduce our Scope 1 and Scope 2 greenhouse gas emissions and
to improve the resilience of our assets to the physical and transition risks associated with climate change. All
parts of our business are working together to position us to be able to deliver strong results for years to come.
Our strong performance would not have been possible without the extraordinary efforts of our Board and each
and every one of our employees. We are extremely proud of the work this team has accomplished.
Thank you for your continued support of Federal and we look forward to your participation in this year’s annual
meeting.
David W. Faeder
Non-Executive Chairman of the Board
Donald C. Wood
Chief Executive Officer
Notice of Annual Meeting of Shareholders
ANNUAL MEETING PROPOSALS
Proposal 1
Election of 7 trustees for 1 year terms
Proposal 2
Non-binding advisory vote on 2022 executive
compensation
Proposal 3
Non-binding advisory vote on frequency of
future votes on executive compensation
Proposal 4
Non-binding advisory vote to amend our
declaration of trust to increase number of
authorized common shares
Proposal 5
Ratification of Grant Thornton, LLC as our
independent registered public accounting firm
Board Voting
Recommendation
Where to find more
information
FOR each nominee
Page 10
FOR
FOR
FOR
FOR
Page 18
Page 40
Page 40
Page 41
Other business will be transacted as may properly come before the 2023 annual meeting of shareholders
(“Annual Meeting”).
2023 ANNUAL MEETING INFORMATION
Date and Time
Location
Wednesday, May 3, 2023
9:00 a.m., Eastern Time
Virtual Meeting
https://web.lumiagm.com/202329683
Record Date
March 13, 2023
Only holders of record of our common shares of beneficial interest, $.01 par value per share at the close of
business on the record date are entitled to receive notice of, and to vote at, the annual meeting. References to
“Common Shares”, “Shares”, “common shares” and “shares” in this proxy statement refer to our common shares
of beneficial interest, $.01 par value per share.
Proxy Voting:
Whether or not you plan to attend the meeting and vote your shares at the meeting, we urge you to vote your
shares as instructed in the proxy statement. If you received a copy of the proxy card by mail, you may sign, date
and mail the proxy card in the postage-paid envelope provided. If your shares are held by a broker, bank or other
nominee, please follow the instructions you receive from your broker, bank or other nominee to have your shares
voted. Any proxy may be revoked at any time prior to its exercise at the annual meeting.
By Order of the Board of Trustees,
Important Notice Regarding Internet Availability of Proxy Materials
Dawn M. Becker
Executive Vice President-General
Counsel And Secretary
March 24, 2023
The proxy statement and annual report to shareholders, including our
annual report on Form 10-K for the year ended December 31, 2022,
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
COMPANY INFORMATION
Highlights of 2022 Company Performance
Corporate Values
Our Board
Environmental, Social and Governance Snapshot
GOVERNING THE COMPANY
Governance Documents
Governance Policies and Procedures
Board Leadership
Board and Committee Meetings
Board Committees
Board’s Role in Risk Oversight
Board and Committee Evaluation Process
Succession Planning
Communications with the Board
Compensation Committee Interlocks and Insider
Participation
Related Party Transactions
Trustee Independence
PROPOSAL 1: ELECTION OF TRUSTEES
Vote Required and Majority Voting Standard
Nominee Characteristics and Selection
Nominee Diversity and Tenure
Our Nominees
Trustee Compensation
PROPOSAL 2: APPROVING OUR
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND
ANALYSIS
Introduction
2022 Business Highlights supporting
Compensation Decisions
Program Philosophy and Objectives
Executive Compensation Practices
Components of Compensation
Compensation Setting Process
Annual Compensation Decision Making
Role of the Compensation Committee
Role of Management
Role of Independent Compensation Consultant
2022 Compensation Decisions
Setting 2022 Target Compensation
Individual Elements of 2022 Pay
2022 NEO Performance Summary
Other Compensation Practices and Policies
Consideration of Say on Pay Vote
No Hedging or Pledging of our Shares
Severance and Change-in-Control
Arrangements
Clawback Policy
Share Ownership Guidelines
Risk Assessment of Compensation Programs
Equity Grant Practices
Tax Deductibility of Executive Compensation
Health and Welfare Benefits
Compensation Committee Report
COMPENSATION TABLES AND
NARRATIVES
Summary Compensation Table
Grants of Plan Based Awards Table
Outstanding Equity Awards at Fiscal Year End Table
Options Exercised and Stock Vested in 2022
Non-Qualified Deferred Compensation
Potential Payments on Termination of Employment
and Change-in-Control
CEO Pay Ratio
Pay Versus Performance Disclosure
Equity Compensation Plan Information
PROPOSAL 3: APPROVING FREQUENCY
OF SAY ON PAY VOTE
PROPOSAL 4: DECLARATION OF TRUST
AMENDMENT TO INCREASE AUTHORIZED
COMMON SHARES
PROPOSAL 5: 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 2024 Annual Meeting
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34
36
37
39
40
40
41
42
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44
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46
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47
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48
48
APPENDIX A
Appendix A – Reconciliation of Non-GAAP Financial
Measures
A-1
A-1
1
1
2
2
3
4
4
5
5
5
5
7
8
9
9
9
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Company Information
Following is basic information about the Company and highlights information contained elsewhere in the proxy
statement. This summary does not contain all of the information that you should consider, and you should read
the entire proxy statement carefully before voting. References to “we,” “us,” “our,” “Federal” and the “Company” in
this proxy statement refer to Federal Realty Investment Trust and its subsidiaries.
Federal Realty Investment Trust is an S&P 500 company headquartered in North Bethesda, Maryland that owns,
operates and redevelops high-quality retail based real estate located primarily in major coastal markets.
Company Information
Our Properties*
Our Employees*
Established in 1962
Member of the S&P 500
103 Properties
≈25.9M SF of commercial space
≈3,000 residential units
319 employees
6 primary offices
Average tenure exceeds 8 years
* Information as of December 31, 2022.
➢ HIGHLIGHTS OF 2022 COMPANY PERFORMANCE
Key business and financial achievements for 2022, in addition to net income per diluted share of $4.71 (growth of
44% over 2021), included:
FFO Per Share
Growth
FFO per diluted share* of $6.32 representing growth of 13.5% over 2021
driven by improved occupancy, increasing rents, strategic acquisitions, new
projects coming on line, and strong balance sheet management
Record Leasing
Activity
Signed 475 new and renewal comparable space leases covering ≈ 2 million
square feet of space and more than $74 million of year 1 revenue
Significant
Occupancy
Improvement
Achieved commercial occupancy of 92.8%, an increase of more than 3.3%
over the lowest level of occupancy experienced in more than 15 years
resulting from high level of COVID related tenant failures
Productive
Capital Recycling
Raised $136M through sale of non-strategic, slow growing assets and
invested $526M into more productive, higher yielding, faster growing
operating assets with potential for additional value creation
55th Year of
Dividend
Increases
Raised the dividend on our common shares for the 55th consecutive year, a
record in the REIT industry, representing a compound annual growth rate of
7% over that 55-year period
Sustainability
Achieved ≈ 22% decrease in Scope 1 and 2 GHG emissions through 2021
versus 2019 baseline in alignment with our 2030 GHG reduction target set
in accordance with the Science-Based Target initiative
* FFO per diluted share (“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.
Federal Realty
2023 Proxy Statement 1
➢ CORPORATE VALUES
Our four core values drive the behaviors, actions and decisions we make towards achieving our business
objectives and promote a unified approach to our individual jobs. We strive to achieve Excellence in all that we
do as we operate, develop and redevelop properties to serve the needs of the local communities. Innovation is
key to introducing new ways of conducting our business to continue to meet
the evolving economic,
environmental and social challenges the real estate industry must address both in the short- and long-term. We
hold ourselves Accountable for our work and our results and always act with the highest level of Integrity in our
dealings with our shareholders, our employees, our tenants, our business partners and our community partners.
Living these values underpins our ability to successfully deliver results for all stakeholders.
➢ OUR BOARD
We have seven (7) trustees serving on our Board, all of whom are independent except for Don Wood who serves
as our CEO. Each of these individuals has been nominated for election at the 2023 annual shareholder meeting.
Name and Principal Occupation
David W. Faeder±
Managing Partner Fountain Square Properties/
Managing Member Kensington Senior Living
Elizabeth I. Holland
Chief Executive Officer/Abbell Credit Corporation
and Abbell Associates, LLC
Nicole Y. Lamb-Hale
Vice President and Chief Legal Officer/Cummins
Inc.
Thomas A. McEachin
Former Group Chief Financial Officer/Covidien
Surgical Solutions
Anthony P. Nader, III
Managing Director/SWaN & Legend Venture
Partners
Gail P. Steinel
Owner/Executive Advisors
Donald C. Wood
Chief Executive Officer/Federal Realty Investment
Trust
Age
66
Trustee
Since
2003
Independent
Yes
AC
✓$
Committee Memberships
CC
NC
✓
57
2017
Yes
✓
56
2020
Yes
70
2022
Yes
59
2020
Yes
66
62
2006
2003
Yes
No
✓$
C$
C
✓
✓
✓
✓
✓
C
Legend:
AC-Audit Committee; CC-Compensation and Human Capital Management Committee; NC-Nominating and
Corporate Governance Committee
± Indicates Chairman of the Board
C Indicates Committee Chair
$ Indicates Audit Committee Financial Expert
Federal Realty
2023 Proxy Statement 2
➢ ENVIRONMENTAL, SOCIAL AND GOVERNANCE SNAPSHOT
Our environmental, social and governance (“ESG”) initiatives are directly tied to supporting our business objective
of using our real estate to create long-term value for all of our constituencies, including our shareholders. We
have focused our efforts around the five areas that we believe are most impactful to supporting our business
objectives.
✓ Science Based Target to reduce Scope 1&2 GHG emissions by 46% by
2030 (2019 baseline)
Advance
Decarbonization*
✓ ≈22% Scope 1&2 GHG emissions reduction from 2019 through 2021
✓ 5 million square feet of LEED certified buildings constructed and in
service
Minimize the carbon
footprint of our Company
and our assets
✓ 60% of electric consumption in 2021 provided by green sources
✓ 89% properties fully or partially upgraded with energy efficient LED
lighting in landlord controlled areas
✓ 14 MW solar power generating capacity in solar arrays at 25 properties
Strengthen
Resiliency*
Invest in and manage our
assets to protect value
from increasing frequency
and severity of weather
related events and other
hazards of climate change
Connect
Communities*
Use our real estate to
contribute to social and
economic prosperity of the
community and advance
social equity
✓ Climate change scenario analysis using RCP 8.5 showing minimal
financial risk over short-, medium- and long-term
✓ Management of water usage through technology and landscaping choices
✓ Focus on increasing waste diverted to recycling
✓ Physical risk exposures incorporated into property level capital planning
and investment decisions
✓ $425 million invested in partnership with Primestor Development in
historically underrepresented communities
✓ Local cultural programming and events at properties
✓ Support local philanthropic initiatives and tenants
✓ Feature work of local artists in art installations at our properties
✓ Significant contributions to tax base of communities
Empower Teams*
Create a work environment
that is diverse, engaging
and helps employees grow
personally and
professionally
✓ Competitive pay and benefits
✓ Average tenure in excess of 8 years
✓ Pay equity analysis shows no pay anomalies based on race or gender
✓ Women represented 53% of our workforce and 75% of all promotions
✓ Minorities represented 47% of all new hires and 24% of all promotions
✓ Comprehensive health and wellness programs through our Be Well with
Federal program
Federal Realty
2023 Proxy Statement 3
Govern Responsibly*
Establish foundation to run
the Company ethically with
appropriate fiscal and
decision making controls to
manage risk
✓ Annual election of all trustees
✓ Independent Non-Executive Chairman
✓ Majority voting and proxy access for trustee elections
✓ Prohibition on hedging and pledging our shares combined with clawback
policy and equity hold requirements
* All information provided is as of December 31, 2022 unless otherwise indicated.
More information about our ESG program can be found in our 2021 Environmental Social and Governance Report
which is available under the ESG tab on our website and can be accessed by using this link 2021 ESG Report by
Federal 1962 - Issuu/. The report provides additional, detailed information in alignment with the frameworks established
by the Global Reporting Initiative, Task Force for Climate Related Financial Disclosures and Sustainability Accounting
Standards Board.
Some of the areas where we have been recognized for our ESG efforts include the following:
Governing the Company
➢ GOVERNANCE DOCUMENTS
The Board is responsible for providing governance and oversight of the strategy, operations and management of
the Company and has delegated to our senior management the authority to manage the day-to-day operations of
the Company. The Board has adopted the following policies:
▪
▪
▪
Corporate Governance Guidelines
Code of Business Conduct
Code of Ethics for our Senior Financial Officers
These documents are reviewed periodically and revised when needed to reflect changing regulatory and
governmental requirements and best practices. Complete copies of these 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.
Federal Realty
2023 Proxy Statement 4
➢ GOVERNANCE POLICIES AND PROCEDURES
Our commitment to good governance is an integral part of our business. Highlights of our corporate governance
practices include:
✓ Annual election of Trustees
✓ Independent non-executive
chairman since 2003
✓ Board oversight of ESG, cyber
security, data protection and
human resources
✓ Annual Board and Trustee
✓ Majority voting in uncontested
evaluations
elections
✓ Proxy access for all
shareholders
✓ Prohibition on Trustees and
✓ Shareholder approval required
✓ Robust stock ownership
management hedging and
pledging our shares
to classify our Board
guidelines in place for Trustees
and senior management
➢ BOARD LEADERSHIP
Our Board has been led by an independent, Non-Executive Chairman for the past 20 years. Mr. Faeder has filled
that role since May 2021. The Board determined and continues to believe that separating the roles of Board
chairman and CEO is the most effective way to govern the Company. The separation allows our Chairman to
focus on Board administration, to facilitate communication among Trustees and to serve as a liaison to our CEO
while allowing our chief executive to focus on the day-to-day management and implementation of long-term
strategy of the Company.
➢ BOARD AND COMMITTEE MEETINGS
The Board met six (6) times in 2022 and each trustee attended at least
75% of the meetings of the Board and the committees on which that
trustee serves. Our practice is for all trustees to attend all meetings of
each of the Board’s standing committees to ensure 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. At each quarterly meeting, the
Trustees met in executive session with all Trustees and then with just
non-management Trustees, all of whom are independent. All Trustees
are also expected to attend our annual shareholder meeting and all
then-serving Trustees attended the annual shareholder meeting.
➢ BOARD COMMITTEES
100%
Attendance at the annual
shareholder meeting
96%
Attendance by Trustees of total Board
meetings and meetings of
Committees on which they serve
The Board has three standing committees – the Audit Committee,
the Compensation and Human Capital
Management Committee (“Compensation Committee”) and the Nominating and Corporate Governance
Committee (“NCGC”). Each committee operates under a written charter that
is available in the Investors/
Corporate Governance section of our website at www.federalrealty.com. Each committee consists entirely of
independent, non-employee trustees.
Federal Realty
2023 Proxy Statement 5
AUDIT COMMITTEE
Members
Gail P. Steinel (Chair)*
David W. Faeder*
Elizabeth I. Holland
Anthony P. Nader, III*
The Audit Committee’s responsibilities include:
✓ Select and oversee our independent auditor
✓ Oversee our financial reporting including reviewing results with
management and independent auditors
✓ Oversee internal audit function
✓ Oversee adequacy and integrity of financial statements, financial
reporting and disclosures
Number of Meetings in 2022: 4
* Audit committee financial expert as
defined by the SEC.
✓ Oversee financial risks and risks related to cybersecurity, data security
and information protection
✓ Review and approve any related party transactions requiring disclosure
COMPENSATION COMMITTEE
Members
Elizabeth I. Holland (Chair)
Nicole Y. Lamb-Hale
Thomas A. McEachin*
Gail P. Steinel
Number of Meetings in 2022: 2
* Joined the Committee on October 1,
2022.
Additional 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 41.
The Compensation Committee’s responsibilities include:
✓ Evaluate performance of our CEO and recommend annual
compensation and benefits for our CEO
✓ Review and approve compensation and benefits for our senior officers,
including our NEOs
✓ Administer certain other benefit plans of the Company
✓ Review and approve employment related agreements for senior
officers, including our NEOs
✓ Administer and make equity awards under our long-term plan
✓ Oversee key strategies and human resource policies and practices for
all employees
The Compensation Committee report is included at page 30 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.
Federal Realty
2023 Proxy Statement 6
NOMINATING COMMITTEE
Members
Anthony P. Nader, III (Chair)*
David W. Faeder
Nicole Y. Lamb-Hale
Thomas A. McEachin**
Number of Meetings in 2022: 2
* Committee chair as of October 1, 2022
**Joined the committee on October 1,
2022.
The Nominating Committee’s responsibilities include:
✓ Identify and recommend individuals to stand for election to the Board
✓ Develop and oversee corporate governance policies and procedures
✓ Oversee annual trustee evaluation process
✓ Recommend members of the Board to serve on its committees and in
leadership roles
✓ Oversee corporate responsibility and ESG efforts and monitor priorities
and progress on goals
➢ BOARD’S ROLE IN RISK OVERSIGHT
The full Board has overall responsibility for risk oversight which it accomplishes directly and through its
committees. The Board’s committees are primarily responsible for certain matters relating to the risks inherent in
the committees’ respective areas of oversight as set forth in the committee charters. One of the primary ways the
Board and its committees discharge their risk oversight responsibilities is through regular reporting from
management which identifies key risks to enable the Board and management
to identify and implement
appropriate measures to manage and mitigate those risks. The chart below provides more detail on how the
Board oversees risk management for the Company. The Board believes that this structure and division of
responsibility is the most effective way to monitor and manage the Company’s risk.
Federal Realty
2023 Proxy Statement 7
BOARD OF TRUSTEES
Audit Committee
Integrity of financial reporting and
controls over financial reporting
Performance and independence of
our independent auditors
Performance of our internal audit
function
Cyber security and data privacy
risks
•
•
•
•
Compensation and Human Capital
Management Committee
Nominating and Corporate
Governance Committee
•
•
•
•
Ability to attract, retain and motivate
talent needed to achieve business
objectives
Use of our compensation plans to
align interests of our executives with
our shareholders
Influence of incentive compensation
programs on excessive risk taking
Succession planning
•
•
•
•
Composition, leadership,
independence and operation of
Board and committees
Conducting annual evaluations of
Board and Trustees
Compliance with our corporate
governance documents and
applicable laws and regulations
ESG risks and issues that could
affect Company performance or
reputation and progress made on
ESG goals
Regular reporting on material risks
including:
Presentation for approval by the Board of significant transactions and other
matters including:
COMPANY MANAGEMENT
•
•
•
•
•
•
•
•
•
Market Conditions
Tenant credit risk
Leasing activity/occupancy levels
Status of development projects
Compliance with financial covenants
Access to debt and equity capital
Capital needs of the Company
Existing and potential legal claims
ESG risks and progress on goals
•
•
•
•
•
Acquisition/disposition of properties above a specified dollar value
Development/redevelopment projects above a specified dollar value
Capital market activities including debt and equity issuances
Appointment of executive officers and consideration of all other officers
Transactions with related parties and conflicts of interest
➢ BOARD AND COMMITTEE EVALUATION PROCESS
Our Board and each standing committee conducts an annual evaluation that covers overall effectiveness of the
Board and the committee as well as the effectiveness of each individual trustee. The NCGC leads the process for
the evaluation of the overall Board and each individual trustee and each committee chair leads the evaluation
process for his or her committee. Results of the evaluations are taken into account in determining trustees to
stand for election at the next annual meeting and in determining committee assignments and leadership roles.
Federal Realty
2023 Proxy Statement 8
COMMITTEE ASSESSMENTS
TRUSTEE EVALUATIONS
Annual assessment by each committee of its
effectiveness using a committee specific list of topics to
guide an in-depth discussion of performance.
Each Trustee completes a confidential questionnaire
evaluating the performance of each other trustee with the
results provided to the chair of the NCGC.
Topics include:
▪ Skills and expertise of committee members
▪ Adherence to committee charter
▪ Committee specific topics
▪
Information provided by and access to
management
Topics include:
▪ Preparedness for meetings and understanding
company business
▪ Overall contributions to Board and Committees
▪ Skill set
▪ Effectiveness in leadership roles (if applicable)
CONTINUAL FEEDBACK
The Board and the committees provide ongoing feedback
on Board and Trustee performance throughout the year
outside the formal evaluation process through executive
session discussions.
One-on-One Discussions
The chair of NCGC discusses the individual assessments
and overall Board effectiveness with each trustee. The
Board chairman conducts the same process for the
NCGC chair.
Results Summary and Action Taken
Results of the assessments are provided to and
discussed by the full Board. Identified issues are
addressed with changes incorporated into Board policies
and governance as needed.
➢ SUCCESSION PLANNING
The Board is responsible for ensuring that we have a high performing management team in place. The Board
regularly conducts a detailed review of management development and succession planning activities to ensure
that top management positions, including the CEO role, can be filled without significant interruption both in an
emergency situation as well as on a longer-term basis.
➢ COMMUNICATIONS WITH THE BOARD
Shareholders and other interested parties may communicate with the Board or any Trustee by sending the
communication to the intended recipient at c/o Corporate Secretary, 909 Rose Avenue, Suite 200, North
Bethesda, Maryland 20852. 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.
➢ COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee currently consists of Ms. Holland, Ms. Lamb-Hale, Mr. McEachin and Ms. Steinel.
From January 1 through September 30, 2022, Mr. Ordan, a former trustee, 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.
Federal Realty
2023 Proxy Statement 9
➢ RELATED PARTY TRANSACTIONS
Our Trustees and employees are required to deal with the Company on an arms-length basis in any related party
transaction. Transactions between us and any of our Trustees or corporate officers must be approved in advance
by the Audit Committee. 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.
➢ 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 three of the Company’s small shop tenants. The Board determined
that Mr. Nader’s passive investment in three small shop tenants did not constitute a material relationship with the
Company and would not interfere with Mr. Nader’s ability to exercise independent judgment.
Proposal 1: Election of Trustees
On recommendation of the NCGC, our Board has nominated seven (7) candidates for election as trustees at the
2023 annual meeting of shareholders. All of the nominees are incumbent trustees and all nominees other than
Mr. McEachin were elected by our shareholders in May 2022. Mr. McEachin was appointed to the Board in
the vacancy created by the resignation of Mark S. Ordan. More detailed biographical
October 2022 to fill
information on each nominee can be found beginning on page 14.
At the 2023 Annual Meeting, each trustee will be elected to hold office for a one-year term expiring at the 2024
annual meeting of shareholders and until his or her successor is elected and qualified.
➢ VOTE REQUIRED AND MAJORITY VOTING STANDARD
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. In an uncontested election such as this one, our Bylaws require that a nominee receive a
majority of votes cast in order to be elected. Accordingly, any nominee who does not receive a majority of votes
Federal Realty
2023 Proxy Statement 10
cast will be required to resign from the Board within ninety (90) days. Broker non-votes and abstentions, if any,
will not be treated as votes cast and as a result, will have no effect on the outcome of the vote for this proposal.
Over the past 5 years, each nominee who has previously stood for election has received 93% or more of the
votes cast at each shareholder meeting at which that nominee stood for election.
Prior to 2023, any nominee who did not receive a majority of the votes cast was required to submit a resignation
but the Board had the ability to choose not to accept that resignation. The Board modified this policy to now
require resignation with no ability for the Board to override that resignation. The Board believed this change was
appropriate in order to ensure that shareholders had the ultimate say in electing their representatives.
Our Board recommends a vote FOR each of the seven nominees
➢ NOMINEE CHARACTERISTICS AND SELECTION
The NCGC has primary responsibility for identifying and recommending individuals to be added to the Board and
to stand for election by shareholders. Individuals identified must have the highest personal and professional
integrity, demonstrated exceptional 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.
The chart below highlights some of the key qualifications and experience that our Board believes are relevant to
the effective oversight of the Company and the execution of our long-term strategy and were considered as
relevant for each nominee. The absence of a mark for an attribute for any nominee does not necessarily mean
that the nominee does not possess that attribute; it means only that when the Board considered that nominee in
the overall context of the composition of our Board, that attribute was not a key factor in the determination to
Federal Realty
2023 Proxy Statement 11
nominate that individual. Further information on each nominee’s qualifications and relevant experience is provided
in the individual biographical descriptions below starting on page 14.
Faeder
Holland
Lamb-Hale McEachin
Nader
Steinel
Wood
NOMINEE QUALIFICATIONS AND EXPERIENCE
Qualification/Experience
Strategic Planning and Leadership
CEO/Executive Management
REIT/Public Company Executive
Public Company Board Service
Financial Expertise/Literacy
Real Estate Investing/Finance
Retail Industry
Risk Management
Human Capital Management
Corporate Governance
Sustainability
Race/Ethnicity
Black or African American
White
Gender
Female
Male
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
DEMOGRAPHICS
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
Š
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. Mr. McEachin who was appointed to the Board
in 2022 was identified by a trustee. If the Board is not able to identify qualified candidates in the foregoing 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
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 that the shareholder(s) and the nominee(s) satisfy
the requirements set forth in our Bylaws. For further information regarding submission of a trustee nominee using
the Company’s proxy access Bylaw provision or otherwise, see the “Shareholder Proposals for the 2024 Annual
Meeting” section starting at page 48.
Federal Realty
2023 Proxy Statement 12
➢ NOMINEE DIVERSITY AND TENURE
The Board believes that a mix of skills, qualifications, ages, tenure and diversity are important considerations in
identifying nominees so that the Board as a whole has the different viewpoints needed to provide appropriate
oversight of the Company’s business. Among the many items the Board takes into account, the Board specifically
considers the gender and race/ethnicity of prospective nominees in order to ensure diverse representation on the
Board.
AGE
3
1
3
TENURE
GENDER & ETHNIC DIVERSITY
50s
60s
70s
3
3
1
< 5 years
5-10 years
> 10 years
3
2
Females
43%
Ethnic
Minority
29%
Average age of independent trustees
62.3 years
Average tenure of independent trustees
8.3 years
Committees chaired by women
67%
➢ OUR NOMINEES
The following biographical descriptions set forth certain information with respect to each nominee for election at
the 2023 Annual Meeting as well as the specific experience, qualifications, attributes and skills that led to our
Board’s conclusion that each nominee should serve as a trustee of our Company.
Federal Realty
2023 Proxy Statement 13
DAVID W. FAEDER
Age: 66
Trustee Since: 2003
Non-Executive Chairman
Managing Partner Fountain
Square Properties and
Managing Member
Kensington Senior Living
ELIZABETH I. HOLLAND
Age: 57
Trustee Since: 2017
Chief Executive Officer
Abbell Credit Corporation
and Abbell Associates, LLC
Mr. Faeder has been the managing partner of
Fountain Square Properties since 2003 and
managing member 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
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.
investment
into
his
real
public
investment
Skills and Qualifications
Mr. Faeder has deep levels of experience in
leadership,
and
estate
development as well as finance and accounting
acquired from his time as a private investor and
as a public company real estate CFO coupled
with
accounting
company
background. This experience provides valuable
perspective
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.
investment
and
our
on
Ms. Holland is the Chief Executive Officer of
Abbell Credit Corporation and Abbell Associates,
LLC, a private retail 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
at Brown Brothers Harriman &
manager
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
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
Iowa, a
on the boards of 1000 Friends of
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.
organization
since
that
for
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.
Other Public Company Directorships:
Arlington Asset Investment Corp.
Other Public Company Directorships:
VICI Properties, Inc.
Committees:
Audit Committee
Nominating Committee
Committees:
Audit Committee
Compensation Committee (Chair)
Federal Realty
2023 Proxy Statement 14
NICOLE Y. LAMB-HALE
Age: 56
Trustee Since: 2020
Vice President and Chief
Legal Officer Cummins
Inc.
THOMAS A. McEACHIN
Age: 70
Trustee Since: 2022
Retired Vice President
and Group Chief Financial
Officer Covidien Surgical
Solutions
a
global
Ms. Lamb-Hale is the Vice President and Chief
Legal Officer of Cummins Inc., a position she has
held since 2021, overseeing all
legal affairs and
related risk management. Prior to that, she was a
Managing Director at Kroll, a global governance,
risk and transparency consultant (2016-2021), a
Senior Vice President at Albright Stonebridge
Group
strategy
(2013-2016),
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 Delta
Parent Holdings, Inc. as well as the boards of
various non-profit groups including the American
for
Leadership
International Private Enterprise.
the Center
Initiative
and
capacities
at United
Mr. McEachin has served as Vice President and
(2008-2012) at
Group Chief Financial Officer
Covidien Surgical Solutions, a division of Covidien
plc, a global health care products company and
manufacturer of medical devices and supplies.
From 1997 to 2008, Mr. McEachin served in various
Technologies
finance
Corporation, a global leader in the aerospace and
building industries, and its subsidiaries, including as
chief Investor Relations officer, Vice President and
Controller of Pratt & Whitney, and Vice President
and Chief Financial Officer of UTC Power. Prior to
that, he held several executive positions with Digital
Equipment Corporation, a vendor of computer
systems,
software, and
peripherals, from 1986 to 1997. Mr. McEachin was
with Xerox Corporation, a global corporation that
sells print and digital document products and
services, from 1975 to 1986, serving as Controller
the procurement organization. Mr. McEachin
of
the
formerly served as a trustee and officer of
Wadsworth Atheneum (Hartford, CT),
the oldest
public art institution in the United States, serving on
their executive, finance and investment committees.
He also is a past board member of the Connecticut
Science Center and chair of the audit committee.
Mr. McEachin holds a B.S.
from New York
University and an MBA from Stanford University
including computers,
Skills and Qualifications
Ms. Lamb-Hale’s 30 years of experience,
spanning the private and public sectors, in law,
executive level risk management and 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.
Committees:
Compensation Committee
Nominating Committee
Skills and Qualifications
Mr. McEachin’s history as a CFO plus his
extensive finance and executive management
experience and in-depth knowledge as a CFO of
reporting, compliance, accounting and
financial
controls
governance matters
corporate
and
provides the company with important skills.
Other Public Company Directorships:
Pediatrix Medical Group, Inc.
Surgalign Holdings, Inc.
Committees:
Compensation Committee
Nominating Committee
Federal Realty
2023 Proxy Statement 15
ANTHONY P. NADER, III
Age: 59
Trustee Since: 2020
Managing Director of
SWaN & Legend Venture
Partners
GAIL P. STEINEL
Age: 66
Trustee Since: 2006
Owner of Executive
Advisors
in
growth-oriented
co-founded
in
Mr. Nader is a Managing Director of SWaN &
Legend Venture Partners, an investment firm that
2006, making
Mr. Nader
investments
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.
Other Public Company Directorships:
Arlington Asset Investment Corp.
Committees:
Audit Committee
Nominating Committee (Chair)
Federal Realty
2023 Proxy Statement 16
to
seminars/speeches
Ms. Steinel
is the owner of Executive Advisors
(2007-present), a business that provides consulting
services to chief executives and senior officers and
leadership
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
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
economic
tackles
development problems
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.
and
caused by
fundamental
experience
social
Skills and Qualifications
Ms. Steinel’s history as a CPA combined with her
more than 35 years of experience in auditing,
leadership, leadership development and financial
systems provides us with valuable insights on
leadership,
risk
leadership
management and systems operations.
development,
Prior Public Company Directorships:
MTS Systems Corporation
Committees:
Audit Committee (Chair)
Compensation Committee
DONALD C. WOOD
Age: 62
Trustee Since: 2003
Chief Executive Officer of Federal Realty Investment Trust
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 is a CPA and 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 25 years of experience with Federal, including his responsibilities as chief executive officer
and as a REIT CFO, provide the Board with familiarity and details on all aspects of the operations and
financial condition of the Company.
Prior Public Company Directorships:
Quality Care Properties
Post Properties
➢ TRUSTEE COMPENSATION
As of December 31, 2022, 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 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
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
Federal Realty
2023 Proxy Statement 17
Board. As of December 31, 2022, 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 2020 and
2022 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 2022 was as follows:
Name
David W. Faeder
Elizabeth I. Holland
Nicole Y. Lamb-Hale
Thomas A. McEachin(2)
Anthony P. Nader, III(3)
Mark S. Ordan(4)
Gail P. Steinel
Total
Annual Retainer
Paid in Cash
Paid in Shares(1)
Committee
Chair Fees
135,000 $
80,000 $
80,000 $
20,164 $
80,000 $
149,589 $
90,000 $
120,000 $
120,000 $
30,247 $
120,000 $
- $
80,000 $
120,000 $
- $
15,000 $
- $
- $
3,781 $
11,219 $
25,000 $
Total
225,000
215,000
200,000
50,411
203,781
160,808
225,000
624,753 $
600,247 $
55,000 $
1,280,000
$
$
$
$
$
$
$
$
(1) Shares were issued on January 3, 2023 with the number of shares received by each Trustee determined by dividing the
amount to be paid in shares by $101.04, the closing price of our shares on the NYSE on December 30, 2022.
(2) Prorated for partial year of service. Mr. McEachin joined the Board on October 1, 2022.
(3) Committee chair fee is pro-rated for partial year of service as chair of the NCGC beginning October 1, 2022.
(4) Prorated for partial year of service as a trustee and as chair of the NCGC ending September 30, 2022.
Proposal 2: Approving our Executive Compensation
We are seeking an advisory vote to approve our executive compensation for 2022. We have always held our “Say
on Pay” vote annually and are asking our shareholders for input this year as to the frequency with which to hold
that vote in the future. See Proposal 3: Approving Frequency of Say on Pay Vote starting on page 40. Although
this “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.
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.
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 2022, 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
Federal Realty
2023 Proxy Statement 18
Compensation Discussion and Analysis
CD&A TABLE OF CONTENTS
Page #
Named Executive Officers (“NEO”)
Introduction
2022 Business Highlights supporting
Compensation Decisions
Program Philosophy and Objectives
Executive Compensation Practices
Components of Compensation
Compensation Setting Process
Annual Compensation Decision Making
Role of the Compensation Committee
Role of Management
Role of Independent Compensation
Consultant
2022 Compensation Decisions
Setting 2022 Target Compensation
Individual Elements of 2022 Pay
Base Pay
Annual Bonus Program
Long-Term Incentive Program
2022 NEO Performance Summary
Other Compensation Practices and
Policies
Consideration of Say on Pay Vote
No Hedging or Pledging of Our Shares
Severance and Change-in-Control
Agreements
Clawback Policy
Share Ownership Guidelines
Risk Assessment of Compensation
Programs
Equity Grant Practices
Tax Deductibility of Executive Compensation
Health and Welfare Benefits
Compensation Committee Report
20
20
20
21
21
21
21
22
22
22
22
22
23
23
23
24
26
28
28
28
28
28
28
29
29
29
29
30
DONALD C. WOOD
Chief Executive Officer
Age: 62
Joined Federal: 1998
In position since: 2003
JEFFREY S. BERKES
President and Chief Operating Officer
Age: 59
Joined Federal: 2000
In position since: 2021
DANIEL GUGLIELMONE
EVP-Chief Financial Officer and Treasurer
Age: 56
Joined Federal: 2016
In position since: 2016
DAWN M. BECKER
EVP-General Counsel and Secretary
Joined Federal: 1997
Age: 59
In position since: 2002
Federal Realty
2023 Proxy Statement 19
INTRODUCTION
➢ 2022 BUSINESS HIGHLIGHTS SUPPORTING COMPENSATION DECISIONS
Business accomplishments for the year ended December 31, 2022 that were considered in compensation
decisions included the following:
FFO Per Share
Growth
FFO per diluted share* of $6.32 representing growth of 13.5% over 2021
driven by improved occupancy, increasing rents, strategic acquisitions, new
projects coming on line, and strong balance sheet management
Record Leasing
Activity
Signed 475 new and renewal comparable space leases covering ≈ 2 million
square feet of space and more than $74 million of year 1 revenue
Significant
Occupancy
Improvement
Achieved commercial occupancy of 92.8%, an increase of more than 3.3%
over the lowest level of occupancy experienced in more than 15 years
resulting from high level of COVID related tenant failures
Productive
Capital Recycling
Raised $136M through sale of non-strategic, slow growing assets and
invested $526M into more productive, higher yielding, faster growing
operating assets with potential for additional value creation
55th Year of
Dividend
Increases
Raised the dividend on our common shares for the 55th consecutive year, a
record in the REIT industry, representing a compound annual growth rate of
7% over that 55-year period
Sustainability**
Achieved ≈ 22% decrease in Scope 1 and 2 GHG emissions through 2021
versus 2019 baseline in alignment with our 2030 GHG reduction target set in
accordance with the Science-Based Target initiative
*
FFO per diluted share (“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.
** See pages 3 - 4 for more information on sustainability initiatives and achievements.
➢ PROGRAM PHILOSOPHY AND OBJECTIVES
Our executive compensation philosophy and practices reflect a commitment to paying for performance – both
short-term and long-term. Our programs are designed to attract,
retain, motivate and reward talented,
experienced executives to successfully manage our business, execute our strategy and drive shareholder value.
We have three key objectives within this philosophy:
• Establish a strong link between pay and performance
• Align the financial interest of our NEOs with our shareholders, particularly over the longer term
• Reinforce business strategies and objectives and drive sustained shareholder value
Federal Realty
2023 Proxy Statement 20
➢ EXECUTIVE COMPENSATION PRACTICES
The following table summarizes key governance elements related to our compensation programs:
What We Do
What We Don’t Do
Have employment agreements with our NEOs
with required fixed compensation increases
Grant options below fair market value or
reprice options
Permit hedging or pledging of our shares
Provide perquisites that are not made
available to all of our employees
Maintain a pay mix that is heavily
performance-based
Align compensation with company and
individual performance
Seek annual shareholder advisory approval of
executive compensation
Maintain strong stock ownership guidelines of
7x base salary for our CEO and 2.5x base
salary plus annual bonus for our other NEOs
Maintain incentive compensation clawback
policy
Conduct annual compensation risk
assessment
➢ COMPONENTS OF COMPENSATION
The following table sets out the three components of our compensation plan as well as key information about
each component.
Pay Component
Base Pay
See p. 23 for more
information
Time Metric
1 year
Individual performance
Annual
Performance Bonus
See p. 23 for more
information
1 year FFO per share
Individual performance
m
r
e
T
-
t
r
o
h
S
/
l
a
u
n
n
A
See p. 24 for more
information
m Equity Incentive
r
e
T
-
g
n
o
L
3 years Relative total shareholder
return (34%)
FFO multiple premium (33%)
Return on invested capital
(33%)
COMPENSATION SETTING PROCESS
➢ ANNUAL COMPENSATION DECISION MAKING
Purpose
To provide fair and
competitive compensation for
individual performance and
level of responsibility of
position held
To provide performance
based annual cash awards to
motivate and reward
employees for achieving our
short-term business
objectives
To provide performance-
based equity compensation
in the form of restricted
shares to drive longer-term
business objectives
Impact
Attract and retain talent
Drive near-term
corporate and individual
performance goals
Drive medium-term
performance goals and
retain talent
d
e
x
F
i
k
s
i
r
t
A
l
/
e
b
a
i
r
a
V
Our Compensation Committee develops and executes our executive compensation program on behalf of the
Board, including creating compensation programs and policies, setting target compensation levels for our NEOs,
setting performance metrics for incentive compensation plans, establishing expectations for individual NEO
performance and determining payouts of incentive compensation for completed performance periods.
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2023 Proxy Statement 21
In setting NEO compensation, the Compensation Committee considers competitive market data for similar jobs
and job levels in the market, Company performance measured against financial metrics and targets established
by the Compensation Committee, general business climate and each individual’s experience, knowledge, skills
and personal contributions.
➢ ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee approves all
payouts under our incentive compensation programs.
performance by all of our independent Trustees.
final compensation arrangements for our NEOs including final
It also oversees an annual evaluation of our CEO’s
➢ ROLE OF MANAGEMENT
Our CEO makes recommendations to the Compensation Committee regarding compensation for our NEOs (other
than himself)
taking into account Company performance, each executive’s personal contributions to the
Company’s accomplishments and relevant market data.
➢ ROLE OF INDEPENDENT COMPENSATION CONSULTANT
The Compensation Committee retained Semler Brossy Consulting Group (“SBCG”)
to provide market
compensation information for each of our NEOs for 2022. SBCG provided independent advice to the
Compensation Committee and did not provide any services to management. The Compensation Committee
reviewed the independence of SBCG and determined that there were no conflicts that would compromise SBCG’s
independence.
2022 COMPENSATION DECISIONS
➢ SETTING 2022 TARGET COMPENSATION
The Compensation Committee determined target compensation for each NEO by considering numerous individual
factors for each NEO, including job responsibilities and skill sets, performance in their position, importance to
achieving our corporate objectives, retention risk, ability to replace the role, previously issued equity awards and
tenure with the Company. The Compensation Committee then considered the market data and report provided by
SBCG to ensure that the total target compensation was competitive for the market.
Based on the market data provided by SBCG which showed that the target compensation of our NEOs was
generally positioned between the 25th and 50th percentiles of the data sets, the Compensation Committee elected
to increase the target compensation for each of our NEOs. The Compensation Committee did not set target
compensation to meet any particular benchmark level, however, it did use the median of the market data provided
by SBCG to help guide its 2022 decisions. After taking into the account the factors identified above, including the
value of previously issued but unvested equity awards and the need to provide competitive compensation to
motivate and retain our talent, the Compensation Committee set 2022 target compensation for our NEOs as
shown below. Each of these targets is within +/-10% of the median target compensation as compared to the
market data provided by SBCG for that NEO’s position.
Don Wood
Jeff Berkes
Dan Guglielmone
Dawn Becker
Base Pay
$ 1,000,000
650,000
$
575,000
$
575,000
$
Target Annual Bonus
Amount
% of Base
Target Long-
Term Incentive
Total
2022 Target
150% $ 1,500,000
650,000
100% $
575,000
100% $
575,000
100% $
$ 6,000,000
$ 1,000,000
$ 1,000,000
$ 1,000,000
$ 8,500,000
$ 2,300,000
$ 2,150,000
$ 2,150,000
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2023 Proxy Statement 22
These target pay packages are heavily weighted to components that are paid based on both company and
individual performance which creates significant alignment between our NEOs and shareholders.
CEO Pay
Mix
Average
Other NEOs
Pay Mix
Base Pay
Annual Bonus
12%
18%
Long-Term
70%
88% Performance-Based At Risk
Base Pay
27%
Annual Bonus
27%
Long-Term
46%
73% Performance-Based At Risk
➢ INDIVIDUAL ELEMENTS OF 2022 PAY
Base Pay
The base pay levels established for each of our NEOs represent a modest portion of each individual’s total
compensation package and the Compensation Committee believes them to be competitive and appropriate based
on the market data provided by SBCG. Each NEO received a base pay increase in 2022 with this being the first
increase for Mr. Wood since 2016 and the first increase for each of Mr. Guglielmone and Ms. Becker since 2019.
The base pay increase for Mr. Berkes was part of the continued adjustment of his overall compensation package
to market levels for his position which he was promoted into in 2021.
Annual Bonus Program
Our bonus plan is an annual cash incentive program designed to reward achievement for the current year based
on achieving a level of FFO per share that the Committee has determined is necessary for the Company to
achieve its business objectives for the year. The Compensation Committee has determined that FFO per share is
the appropriate measure to use for our annual bonus program because it is a key annual metric used by
investors, the Board and management to evaluate the Company’s annual performance and it reflects the full
range of decision making and execution for the Company for the year. The Compensation Committee sets the
required performance level for FFO per 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 based on budgets reviewed by the
entire Board. Approximately 95% of our employees participate in this annual bonus plan.
Performance Goal
Payout as Percentage of Target
FFO per share
Performance Levels
Threshold
Target
Stretch
Actual
75%
$5.80
100%
$5.92
125%
$6.06
$6.32
Final Payout
125.0%
the threshold,
When set in February 2022, the achievement levels of FFO per share represented approximately 4%, 6.25% and
nearly 9% year-over-year growth at
target and stretch levels, respectively, with threshold
performance exceeding prior year actual results. These growth levels were consistent with pre-pandemic
expectations and reflected all known and anticipated operating conditions at
the time. The significant
outperformance from expectations was driven primarily by our team’s achievement of a record level of top line
revenue. This record revenue was largely attributable to better than expected increases in occupancy and rental
rates, fewer tenant failures, lower levels of bad debt and higher supplemental rent payments made by tenants
based on the strength of their sales.
Each NEO had a maximum potential bonus opportunity established as a percentage of base pay combined with
the performance level achieved by the Company. Our NEOs are entitled to receive 25% of the final bonus amount
solely based on Company performance. The remaining 75% is earned based on the Compensation Committee’s
assessment of each individual’s performance and whether that NEO achieved the objectives set out by the
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2023 Proxy Statement 23
Company within that NEO’s area of responsibility. Based on a review of each individual’s performance and the
considerations outlined in detail on pages 26-27, the Compensation Committee elected to award each of our
NEOs the full amount of the individual performance portion of his/her bonus potential.
NEO
Mr. Wood
Mr. Berkes
Mr. Guglielmone
Ms . Becker
Target
(% Base Pay)
Target
($)
Actual
Maximum
Payout
Actual Earned
Company
Performance
Individual
Performance
Total
Paid
150%
100%
100%
100%
$ 1,500,000 $ 1,875,000 $ 468,750
812,500 $ 203,125
$
718,750 $ 179,688
$
718,750 $ 179,688
$
650,000 $
575,000 $
575,000 $
$ 1,406,250
609,375
$
539,063
$
539,063
$
$ 1,875,000
812,500
$
718,750
$
718,750
$
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
2022 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 medium and longer-term business objectives that generate value through share price appreciation,
dividend growth and prudent capital allocation decisions. Performance for purposes of our long-term incentive
program is measured against the following preset metrics.
Plan Metric
Relative Total Shareholder Return
(34% weighting)
FFO Multiple Premium
(33% weighting)
Return on Invested Capital
(33% weighting)
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2023 Proxy Statement 24
Description
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”) which is comprised of publicly traded companies that
own and operate open air shopping centers. The Compensation
Committee believes that
the BBRESHOP provides an appropriate
basis to compare our performance against similarly situated
companies.
Compares the 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. The FFO multiples are provided by
a third party investment bank and it 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 and incentivizes sound, long-
term investment decisions focused on generating strong future
shareholder returns. The metric encompasses all aspects of capital
allocation decisions. Required performance levels are established to
reflect changing market expectations as we acquire, sell and develop
assets.
The required performance levels for each of these metrics and the actual performance achieved for the 3-year
performance period from 2020 through 2022 is set forth below.
Performance Goal
Weighting
Threshold
Target
Payout as Percentage of Target
Relative Total TSR
FFO Multiple Premium
Return on Invested Capital
34%
33%
33%
Performance Targets
50%
5% < Index
100%
Index
Stretch
150%
5% > Index
5% Premium 15% Premium 20% Premium
6.00%
6.25%
6.50%
Payout Factor
Unweighted Weighted
0%
150%
150%
0.0%
49.5%
49.5%
Final Payout
99.0%
The Compensation 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 and chose not to exercise that discretion for any
of our NEOs in 2022. See the discussions on pages 26-27 for the factors considered by the Compensation
Committee in determining the final long-term incentive awards payable to our NEOs for the 2020 through 2022
performance period.
The equity awards under our long-term incentive program are paid in the form of restricted shares that are issued
after completion of the 3-year performance period and then vest equally over an additional period of 3 years from
the date they are earned and issued. As a result, each NEO is required to hold all of their earned shares for 1
year after they have been earned, two-thirds of their earned shares for 2 years after they are earned and one-third
of their earned shares for 3 years after they are earned.
Performance Period
Award Earned
Shares Vest
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Shares 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 shares on the NYSE on the date the awards are made.
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 2020-2022 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 2022 for the 3-year performance period ending December 31, 2021.
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2023 Proxy Statement 25
2022 NEO PERFORMANCE SUMMARY
Listed below are the individual performance achievements for each of our NEOs that
Committee considered to be instrumental
compensation he or she was eligible to receive for 2022.
the Compensation
in its determination to award each of our NEO’s the full amount of
Donald C. Wood
Chief Executive Officer
2022 Compensation (in 000s)
Base Pay
Annual Bonus
Long-Term Equity
Total
Total as % of Target
$1,000
$1,875
$5,940
$8,815
104%
Key Responsibilities
Mr. Wood is responsible for setting and overseeing the Company’s strategic
direction and priorities, delivering both short- and long-term financial results,
setting the culture for the Company and setting direction for all aspects of
corporate responsibility.
2022 Achievements
✓ Led the Company’s efforts to execute on our long-term strategy and
objectives
✓ Led our overall efforts that drove record level top line revenue
✓ Led our strong leasing activity and significant increase in portfolio
occupancy
✓ Led our diversity, equity and inclusion initiatives
✓ Led continued advancement of overall strategy and objectives on
environmental, social and governance initiatives
✓ Led decisions on capital recycling intended to create significant future
value for our shareholders
✓ Led establishment of ESG initiatives as high level corporate priorities to
support our overall business objectives
Key Responsibilities
Mr. Berkes has overall responsibility for the performance of the Company’s
operating assets, development and redevelopment projects as well as
overall responsibility for property acquisitions and dispositions.
Jeffrey S. Berkes
President and Chief
Operating Officer
2022 Achievements
✓ Oversaw Company-wide efforts that led to delivery of record level of top
line revenue
✓ Led the Company’s capital recycling efforts with the sale of non-core,
slower growing properties totaling $136 million and investment of
$526 million into new operating assets with better growth and value
creation prospects
✓ Oversaw historically strong year of comparable space lease signings
that will deliver $74 million of new revenue in the first year of the lease
terms
✓ Oversaw leasing and construction efforts that resulted in year over year
gain of 1.1 million square feet of portfolio occupancy
2022 Compensation (in 000s)
Base Pay
Annual Bonus
Long-Term Equity
Total
Total as % of Target
$ 650
$ 813
$ 990
$2,453
107%
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2023 Proxy Statement 26
Daniel Guglielmone
Executive Vice President
Chief Financial Officer
2022 Compensation (in 000s)
Base Pay
Annual Bonus
Long-Term Equity
Total
Total as % of Target
$ 575
$ 719
$ 990
$2,284
106%
Dawn M. Becker
Executive Vice President
General Counsel
2022 Compensation (in 000s)
Base Pay
Annual Bonus
Long-Term Equity
Total
Total as % of Target
$ 575
$ 719
$ 990
$2,284
106%
Key Responsibilities
Mr. Guglielmone has overall responsibility for all Company related financial
activity including forecasting, reporting and capital allocation, in addition to
management of investor relations activities and East Coast property
transactions.
2022 Achievements
✓ Co-led the Company’s capital recycling efforts with the sale of
non-core, slower growing properties totaling $136 million and
investment of $526 million into new operating assets with better growth
and value creation prospects
✓ Improved our overall liquidity by increasing borrowing capacity by
$550 million through a restructure of both our line of credit and bank
term loan
✓ Strengthened our balance sheet with the issuance of $346 million of
equity under our ATM program including through strategic use of
forward contracts and other timely sales
✓ Led financial efforts enabling the Company to increase our annual
dividend rate to common shareholders for the 55th consecutive year
Key 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.
2022 Achievements
✓ Led the Company’s environmental, social and governance efforts,
including achievement of our initial GHG reduction target, and
establishment of more stringent, science-based targets for reduction of
Scope 1 and 2 GHG emissions
✓ Led the Company’s progress to date on reducing Scope 1 and 2 GHG
emissions
✓ Led the Company’s corporate sustainability reporting in line with the
Global Reporting Initiative, Task Force on Climate-Related Financial
Disclosures and Sustainability Accounting Standards Board
✓ Oversaw employee efforts that resulted in continued strong employee
engagement results and advancement of DE&I initiatives
✓ Led continued technology system improvements and reporting to drive
Company-wide efficiency and data availability and improved cyber
security readiness
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2023 Proxy Statement 27
OTHER COMPENSATION PRACTICES AND POLICIES
➢ CONSIDERATION OF SAY ON PAY VOTE
The Company conducts an annual “say on pay” vote to approve executive compensation. At the 2022 annual
meeting of shareholders, approximately 94% of the shares voted were in support of the compensation paid to our
NEOs. Although the vote is advisory and non-binding on the Board, the Compensation Committee regularly
considers the results of this vote in evaluating the Company’s compensation programs, including for 2022
compensation. In light of the feedback from our shareholders and the Committee’s evaluation, the Compensation
Committee concluded that
the Company provides executive competitive programs that effectively attract,
motivate, reward and retain executives in a manner aligned with our shareholder interests and made no material
changes to our executive compensation programs for 2022.
➢ NO HEDGING OR PLEDGING OF OUR SHARES
The Company prohibits all officers and Trustees 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.
➢ SEVERANCE AND CHANGE-IN-CONTROL ARRANGEMENTS
We do not have employment agreements in place with any of our NEOs or any other employee which provides
the Compensation 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 Employment and Change-in-Control” section below. We believe that the payments provided for in
these agreements are consistent with market and important as part of the total compensation packages available
for our NEOs.
➢ CLAWBACK POLICY
We have a clawback policy that provides for the return from an NEO of performance based compensation if that
NEO has engaged in fraud or grossly negligent misconduct that results in us having to issue a restatement of
results to correct material non-compliance with reporting requirements and the performance
financial
compensation paid to that NEO is more than it would have been based on the restated financial results. We will
revise our clawback policy to comply with Rule 10D-1 under the Securities Exchange Act of 1934 adopted by the
SEC in October 2022 once final rules are adopted by the NYSE.
➢ SHARE OWNERSHIP GUIDELINES
We maintain guidelines requiring each of our NEOs as well as other executive vice presidents to maintain a
specific level of ownership of our shares as shown below. These guidelines are intended to link the interests of
our NEOs and other vice presidents with the interests of our shareholders. Each individual subject to these
guidelines has five years to achieve the required level of ownership after becoming subject to the guidelines.
Compliance with our ownership guidelines gets measured and reviewed by the Board at the end of each fiscal
year and the ownership level of each of our NEOs as of December 31, 2022 is shown below based on the closing
price of our shares on December 30, 2022.
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2023 Proxy Statement 28
Our NEOs were in compliance with our equity ownership requirements as of December 31, 2022.
Wood
Berkes
Guglielmone
Becker
Ownership Target:
2½x Base Pay + Bonus
Ownership Target:
7x Base Pay
4.6x
3.7x
11.6x
➢ RISK ASSESSMENT OF COMPENSATION PROGRAMS
31.7x
The Compensation Committee completed its last annual review of our compensation programs and policies from
a risk perspective in February 2023. The Compensation Committee does not believe that our programs
encourage unnecessary or excessive risk or are likely to have a material adverse effect on the Company. Our
compensation programs use both short- and long-term incentives with different metrics driven by corporate
performance, and have differing performance requirements. Further, we have in place policies to mitigate risk
including robust stock ownership requirements and vesting periods on equity awards made as part of our
compensation programs.
➢ EQUITY GRANT PRACTICES
We do not have a practice or policy of timing our equity grants relative to the release of material non-public
information. All of our options have an exercise price equal to the closing price of our shares on the date of grant
and our 2020 Performance Incentive Plan expressly prohibits any repricing of options. The Compensation
in his capacity as a Trustee, authority to make equity awards to
Committee has delegated to our CEO,
non-executive officers, subject to various limitations set forth in the delegation.
➢ 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. Although the Compensation Committee considers the impact of Section 162(m) in structuring
compensation programs; the primary focus is on creating programs and compensation packages that address the
needs and objectives of the Company regardless of the impact of Section 162(m). As a result, the Compensation
Committee has made and may continue to make awards and to structure programs that are non-deductible under
Section 162(m).
➢ HEALTH AND WELFARE BENEFITS
We provide health and welfare perquisites 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. Since 2005, we have agreed to
provide to Mr. Wood, his spouse and one of his children 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 children 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.
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2023 Proxy Statement 29
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
Thomas A. McEachin (as of October 1, 2022)
Gail P. Steinel
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2023 Proxy Statement 30
Compensation Tables and Narratives
➣ 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, 2022, 2021 and 2020. All amounts are calculated in accordance with current
SEC rules.
Name and Principal Position
Donald C. Wood (PEO)
Chief Executive Officer
Jeffrey S. Berkes
President & Chief Operating Officer
Daniel Guglielmone (PFO)
Executive Vice President-
Chief Financial Officer & Treasurer
Dawn M. Becker
Executive Vice President-
General Counsel & Secretary
Non-Equity
Incentive
All Other
Year
2022
2021
2020
2022
2021
2022
2021
2020
2022
2021
2020
Salary(1)
Bonus(2)
Stock Awards(3)
Plan Compensation(4)
Compensation(5)
Total
$
$
$
$
$
$
$
$
$
$
$
1,000,000
950,000
950,000
650,000
575,000
575,000
500,000
500,000
575,000
475,000
475,000
$
$
$
$
$
$
$
$
$
$
$
-
-
-
-
75,000
-
75,000
-
-
75,000
-
$
$
$
$
$
$
$
$
$
$
$
6,474,391
5,213,719
5,830,493
1,205,703
3,131,027
890,996
1,900,046
968,270
727,570
680,159
758,275
$
$
$
$
$
$
$
$
$
$
$
1,406,250
1,335,938
534,375
609,375
539,063
718,750
468,750
281,250
539,063
333,984
200,391
$
$
$
$
$
$
$
$
$
$
$
35,391
21,260
166,928
15,613
14,486
11,736
11,427
236,818
14,521
13,638
86,359
$
$
$
$
$
$
$
$
$
$
$
8,916,031
7,520,917
7,481,796
2,480,691
4,334,576
2,196,482
2,955,223
1,986,338
1,856,154
1,577,781
1,520,025
(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 our 2022 proxy statement.
(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 BBRESHOP 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 $7,625 for
each of our NEOs; and (b) payments for various life, long-term disability and other medical related insurance of $27,766
for Mr. Wood, $7,988 for Mr. Berkes, $3,966 for Mr. Guglielmone and $6,896 for Ms. Becker.
Federal Realty
2023 Proxy Statement 31
➣ GRANTS OF PLAN BASED AWARDS TABLE
The following equity awards were made in 2022 to our NEOs.
Name
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
Grant
Date
2/9/2022 (3)
2/9/2022 (4)
2/9/2022 (3)
2/9/2022 (4)
2/9/2022 (4)
2/9/2022 (3)
2/9/2022 (4)
All Other Stock Awards:
Number of Shares of
Stock or Units(1)
4,225
46,960
1,705
7,827
7,044
1,056
4,696
Grant Date
Fair Value(2)
$
534,420
$ 5,939,970
$
$
$
$
$
215,665
990,037
890,996
133,573
593,997
(1) 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.
(2) Represents the grant date fair value of share awards as computed in accordance with FASB ASC Topic 718.
(3)
Issued under our annual bonus plan for the 1-year performance period ending December 31, 2021. These shares vest
equally over 3 years.
Issued under our long-term incentive program for the 3-year performance period ending December 31, 2021. These
shares vest equally over 3 years.
(4)
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2023 Proxy Statement 32
➣ 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,
2022:
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)
4,225 (1) $
46,960 (1) $
1,488 (2) $
34,805 (2) $
1,182 (3) $
14,089 (3) $
1,705 (1) $
7,827 (1) $
822 (2) $
6,961 (2) $
435 (3) $
2,818 (3) $
7,450 (4) $
8,354 (5) $
7,044 (1) $
6,265 (2) $
2,536 (3) $
895 (7) $
6,855 (8) $
1,056 (1) $
4,696 (1) $
558 (2) $
4,177 (2) $
295 (3) $
1,691 (3) $
426,894
4,744,838
150,348
3,516,697
119,429
1,423,553
172,273
790,840
83,055
703,339
43,952
284,731
752,748
844,088
711,726
633,016
256,237
90,431
692,629
106,698
474,484
56,380
422,044
29,807
170,859
5,221 (6) $
527,530
(1) One-third of these shares vested on February 12, 2023 and the remaining shares will vest equally on February 12 of each
of 2024 and 2025.
(2) One-half of these shares vested on February 12, 2023 and the remaining shares will vest on February 12, 2024.
(3) These shares vested on February 12, 2023.
(4) One-half of these shares vested on February 12, 2023 and the remaining shares will vest on February 12, 2024.
(5) One-fourth of these shares vested on February 12, 2023. The remaining shares will vest equally on February 12 of each
of 2024 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 on August 15, 2023.
(8) These shares will vest equally on August 3 of each of 2023 through 2026.
(9) The value of shares is calculated based on $101.04, the closing price of our shares on the NYSE on December 30, 2022.
Federal Realty
2023 Proxy Statement 33
➣ OPTIONS EXERCISED AND STOCK VESTED IN 2022
The following table includes information with respect to shares held by our NEOs that vested in 2022. None of our
NEOs holds any options or exercised any options during 2022.
Name
Donald C. Wood
Jeffrey S. Berkes
Daniel Guglielmone
Dawn M. Becker
Stock Awards
Number of Shares
Acquired on Vesting
Value Realized
on Vesting(1)
47,161
15,277
10,513
6,157
$ 5,670,167
$ 1,836,754
$ 1,228,897
$ 740,256
(1) The amounts in this column were 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 48 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. 2022 activity for
the NEOs who participate 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 $
269,531 $
57,500 $
- $
- $
- $
(2,126,341) $
(52,677) $
(456,259) $
- $
- $
- $
8,949,810
382,048
2,060,810
(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 2022.
➣ 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 partial 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
Federal Realty
2023 Proxy Statement 34
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.
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, 2022.
Name
Type of Compensation
For Cause
Termination(1)
Termination
Without Cause(1)
Change-in-
Control
Termination(1) (5)
Termination on
Death(1)
Termination on
Disability(1)
Donald C. Wood
Cash Benefits (multiple)
6 months
1.5x
3.0x
Cash Benefits (amount)
$ 500,000
$ 4,171,875
$ 8,343,750
$
N/A
-
N/A
$ 1,375,745
Medical Benefits(2)
Accelerated Equity(3)
Other Benefits(4)
Excise Tax Gross-Up
$
$
$
16,918
$ 1,617,377
$ 1,693,508
$ 1,345,000
$ 1,633,836
-
-
N/A
$10,381,759
$10,381,759
$10,381,759
$10,381,759
$
60,250
N/A
$
$
167,165
$
-
$
-
N/A
-
N/A
Total
$ 516,918
$16,231,261
$20,586,182
$11,726,759
$13,391,340
Jeffrey S. Berkes
Cash Benefits (multiple)
N/A
1.0x
2.0x
Cash Benefits (amount)
Medical Benefits(2)
Accelerated Equity(3)
Other Benefits(4)
Excise Tax Gross-Up
Total
Daniel GuglielmoneCash Benefits (multiple)
Cash Benefits (amount)
Medical Benefits(2)
Accelerated Equity(3)
Other Benefits(4)
Excise Tax Gross-Up
Total
$
$
$
$
$
$
$
$
$
$
-
-
-
-
N/A
-
1 month
47,917
3,160
-
-
N/A
$ 1,368,750
$ 2,737,500
$
25,844
$
51,687
N/A
718,750
-
$
$
N/A
$
$
718,750
25,844
$ 3,675,027
$ 3,675,027
$ 3,675,027
$ 3,675,027
$
$
-
N/A
$
-
N/A
$
-
N/A
-
N/A
$ 5,069,621
$ 6,464,214
$ 4,393,777
$ 4,419,621
N/A
-
-
2.0x
$ 2,087,500
$
75,837
$
$
N/A
-
-
N/A
$
$
549,169
37,919
$
$
$ 2,384,039
$ 2,384,039
$ 2,384,039
$ 2,384,039
$
-
N/A
$
90,375
$
N/A
$
-
N/A
-
N/A
51,077
$ 2,384,039
$ 4,637,751
$ 2,384,039
$ 2,971,127
Dawn M. Becker
Cash Benefits (multiple)
6 months
1.0x
2.0x
Cash Benefits (amount)
$ 287,500
$ 1,020,313
$ 2,040,625
N/A
-
-
N/A
$
$
508,981
16,318
$
$
Medical Benefits(2)
Accelerated Equity(3)
Other Benefits(4)
Excise Tax Gross-Up
$
$
$
8,159
$
12,238
$
32,635
-
-
N/A
$ 1,260,272
$ 1,260,272
$ 1,260,272
$ 1,260,272
$
60,250
N/A
$
$
90,375
$
-
$
-
N/A
-
N/A
Total
$ 295,659
$ 2,353,073
$ 3,423,907
$ 1,260,272
$ 1,785,570
(1) Bonus years used in the calculation for termination without cause and change-in-control are 2021, 2020 and 2019, the last
three completed fiscal years. The cash payments on termination with cause are 1 month of base pay for every year of
service above 5 years, capped at 6 months of base pay. 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 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;
Federal Realty
2023 Proxy Statement 35
(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) 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, 2022. For the performance-based restricted share units issued to
Mr. Berkes, the amount includes the value of the number of units, if any, 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 units.
(4) Amounts 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, 2022, excluding our CEO, which included 318 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 64 employees who started with us in
2022. No other adjustments were made.
The actual total annual compensation of our Chief Executive Officer and median paid employee for 2022 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 2022 was $8,916,031 and the total annual compensation paid to our median paid employee in
2022 was $132,186 resulting in a ratio of 67:1.
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.
Federal Realty
2023 Proxy Statement 36
➣ PAY VERSUS PERFORMANCE DISCLOSURE
Value of Initial Fixed $100
Investment Based On:
Summary
Compenstion
Table Total for
PEO(1)
Compensation
Actually Paid to
PEO(1)
Average
Summary
Compenstion
Table Total for
non-PEO NEOs(2)
Average
Compensation
Actually Paid to
non-PEO NEOs(2)
$8,916,031
$ 6,570,796
$2,177,775
$1,669,484
$7,520,917
$15,446,709
$2,955,860
$3,999,185
$7,481,796
$ 1,832,214
$1,753,182
$ 859,320
Total
Shareholder
Return
$ 89.10
$115.21
$ 69.44
Peer Group
Total
Shareholder
Return(3)
Net
Income
(in 000s)
FFO per
Diluted
Share(4)
$104.09
$395,661 $6.32
$119.96
$269,081 $5.57
$ 73.36
$135,888 $4.38
Year
2022
2021
2020
(1) Mr. Wood was our principal executive officer for all years shown. Following are the adjustments made during each year to
arrive at compensation actually paid to our principal executive officer during each year.
Adjustments
2022
PEO
2021
2020
Amounts reported under “Stock Awards” in SCT
$ (6,474,391) $
(5,213,719) $
(5,830,493)
Change Fair Value of Awards Granted in Year and Unvested as of Year-End
$
5,171,732
$
7,421,261
Change in Fair Value from Prior Year-End to Current Year-End of Awards Granted
Prior to Year that were Outstanding and Unvested as of Year-End
$ (1,546,034) $
4,544,000
Change in Fair Value from Prior Year-End to Vesting Date of Awards Granted Prior
to Year that Vested During Year
Increase based on Dividends or Other Earnings Paid During Year prior to Vesting
Date of Award
Total Adjustments
$
$
66,969
436,488
$
$
765,243
409,008
$ (2,345,236) $
7,925,792
$
$
$
$
$
3,899,517
(3,866,637)
(223,600)
371,631
(5,649,582)
(2) For 2020, our other NEOs included Mr. Guglielmone and Ms. Becker. For 2021 and 2022, our other NEOs included
Mr. Berkes, Mr. Guglielmone and Ms. Becker. Following are the adjustments made during each year to arrive at the
average compensation actually paid to our other NEOs during each year.
Adjustments
Amounts reported under “Stock Awards” in SCT
Change Fair Value of Awards Granted in Year and Unvested as of Year-End
Change in Fair Value from Prior Year-End to Current Year-End of Awards Granted
Prior to Year that were Outstanding and Unvested as of Year-End
Change in Fair Value from Prior Year-End to Vesting Date of Awards Granted
Prior to Year that Vested During Year
Increase based on Dividends or Other Earnings Paid During Year prior to Vesting
Date of Award
Total Adjustments
Average of Other NEOs
2022
2021
2020
(941,423) $
(1,903,744) $
(863,272)
752,007
$
1,669,647
(433,020) $
1,024,717
5,263
108,881
$
$
149,658
103,048
(508,292) $
1,043,325
$
$
$
$
$
577,369
(616,362)
(51,710)
60,114
(893,862)
$
$
$
$
$
$
(3) Peer group is the Bloomberg REIT Shopping Center Index (“BBRESHOP Index”).
(4) The Company has identified FFO per diluted share as the most important additional financial metric used to link pay and
performance. Our annual bonus program pays out based on our absolute level of FFO per diluted share achieved for the
year and one-third of our long-term incentive plan pays out based on a metric tied to FFO per diluted share. FFO per
diluted share is a non-GAAP financial measure of a real estate company’s operating performance and is defined by the
National Association of Real Estate Investment Trusts. We consider FFO per diluted share a meaningful measure of
the value of real estate assets diminishes
operating performance primarily because it avoids the assumption that
predictably over time and is a primary way of evaluating our operating performance as compared to other real estate
investment trusts. A reconciliation of FFO per diluted share to net income is included as Appendix A.
Federal Realty
2023 Proxy Statement 37
Relationship to Compensation Actually Paid
The following charts show the relationship of the compensation actually paid to our CEO and the average
compensation actually paid to our other NEOs to the total shareholder return for the Company and for the
BBRESHOP Index.
CEO Compensa(cid:2)on Actually Paid v. TSR
Avg NEO Compensa(cid:2)on Actually Paid v. TSR
$14,500
$12,000
$9,500
$7,000
$4,500
$2,000
40%
$4,000
10%
-20%
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
-50%
$500
30%
20%
10%
0%
-10%
-20%
-30%
-40%
2020
2021
2022
2020
2021
2022
CEO CAP
FRT TSR
BBRESHOP TSR
Avg. NEO CAP
FRT TSR
BBRESHOP TSR
*
Compensation actually paid is shown in thousands.
The following charts show the relationship of the compensation actually paid to our CEO and the average
compensation actually paid to our other NEOs as compared to our GAAP reported net income and our FFO per
diluted share.
CEO Compensa(cid:2)on Actually Paid v. Company
Performance
Avg. NEO Compensa(cid:2)on Actually Paid v. Company
Performance
$45,000,000
$37,500,000
$30,000,000
$22,500,000
$15,000,000
$7,500,000
$-
$6.50
$45,000,000
$6.00
$5.50
$5.00
$4.50
$4.00
$37,500,000
$30,000,000
$22,500,000
$15,000,000
$7,500,000
$-
$6.50
$6.00
$5.50
$5.00
$4.50
$4.00
2020
2021
2022
2020
2021
2022
CEO CAP
Net Income
FFO/share
Avg. NEO CAP
Net Income
FFO/share
*
Net income is shown in ten thousands.
One of our primary compensation objectives is to align the financial interests of our NEOs with our shareholders.
The high correlation shown above between the compensation actually paid to our CEO and other NEOs and the
total shareholder return for us and the BBRESHOP Index reflect our success in achieving that objective. This is a
direct result of the high percentage of our NEO’s compensation that is paid in the form of Company shares and
our equity retention policies which directly align the interests of our NEOs with the interests of our shareholders.
There is a less direct correlation between the compensation of our NEOs and our net income because no portion
of our compensation program is linked directly to net
income. There is also little correlation between the
compensation of our NEOs and FFO per diluted share because FFO per diluted share metric is directly used only
for our annual bonus plan which is a relatively modest portion of our NEO’s total compensation package and is a
component of the calculation that determines only a third of our NEO’s awards under our long-term incentive plan.
Federal Realty
2023 Proxy Statement 38
Other Important Financial Performance Measures for Executive Compensation
Following is a list of the most important financial and non-financial measures used to link executive compensation
and company performance.
• Return on invested capital
• Relative TSR compared to BBRESHOP
• Relative FFO multiple premium
•
Individual performance including consideration of
investment activity and advancement of ESG objectives
things such as leasing and occupancy activity,
Please see the Compensation Discussion and Analysis on pages 19 to 29 for more information on these
measures and how they are taken into account in determining compensation for each of our NEOs.
➣ EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain information on our only active equity compensation plan as of December 31,
2022.
Plan Category
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
Total
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(Column A)
Weighted average
exercise price of
outstanding
options, warrants
and rights
Number of securities
remaining available
for future issuance
(excluding securities
reflected in Column A)
1,829
-
1,829
$95.77
-
$95.77
1,455,029
-
1,455,029
Federal Realty
2023 Proxy Statement 39
Proposal 3: Approving Frequency of Say on Pay Vote
You are being asked to vote, on an advisory, non-binding basis, how frequently we should conduct a non-binding
shareholder advisory vote on the compensation of our NEOs. You can choose to hold that vote every one, two or
three years or you can abstain from voting on this proposal. At our 2017 annual meeting, approximately 85% of
the votes cast voted in favor of holding the say on pay vote annually. The Board recommends that shareholders
again vote in favor of holding the say on pay vote annually. An “abstention” or broker “non-vote” will have no
effect on the outcome of the vote on this proposal.
Our Board recommends a vote FOR an annual say on pay vote
The frequency for holding an advisory vote on the compensation of our NEOs requires the affirmative vote of a
majority of votes cast at the Annual Meeting, in person or by proxy. If no frequency option receives the foregoing
vote, then we will consider the option that receives the highest number of votes cast to be the frequency
recommended by shareholders. Please note that when casting a vote on this proposal, you will not be voting to
approve or disapprove the Board of Trustees’ recommendation and even though this vote is not binding on the
Compensation Committee, the Board and the Compensation Committee value the opinions of our shareholders
and will review the results of this vote and take them into consideration in determining how often to conduct the
shareholder vote on the compensation of our named executive officers.
Proposal 4: Declaration of Trust Amendment to Increase
Authorized Common Shares
You are being asked to vote, on an advisory, non-binding basis, on amending our Declaration of Trust to increase
the Company’s number of authorized Common Shares from 100 million to 200 million. As permitted under
Maryland law, Section 6.1 of our Declaration of Trust allows our Board, without any action by our shareholders, to
amend the Declaration of Trust to increase the aggregate number of Common Shares the Company has the
authority to issue. Given the importance of the Company’s capital structure to the value of our shareholders’
investment, the Board believes it is appropriate to solicit feedback from our shareholders in connection with such
an amendment.
As of March 13, 2023, 81,511,030 of our Common Shares were issued and outstanding. In addition, an aggregate
of approximately 2.85 million Common Shares are: (a) subject to outstanding equity awards, which include
restricted shares, restricted share units, performance shares and options; and (b) reserved for future issuance in
connection with the 2020 Performance Incentive Plan, the 2007 Employee Share Purchase Plan, the Dividend
Reinvestment and Share Purchase Plan, conversion of our 5.417% Series 1 Cumulative Convertible Preferred
Shares of Beneficial Interest, redemptions of downREIT units and our current at-the-market offering program.
Our Board has determined that it is advisable and in the best interests of the Company and our shareholders to
amend our Declaration of Trust in order to have available on a timely basis additional authorized but unissued
Common Shares in an amount adequate to provide for our future needs, which may include possible equity
financings, opportunities for expanding our business through acquisitions, development or other investments,
management incentives and employee benefit plans, stock dividends or stock splits, and for other general
corporate purposes. The increase in our authorized Common Shares will become effective upon the filing of the
Articles of Amendment to our Declaration of Trust with, and acceptance for record by, the Maryland State
Department of Assessments and Taxation. To maintain our status as a real estate investment trust, we are
least 90% of our taxable income as dividends to our shareholders and
required to distribute annually at
Federal Realty
2023 Proxy Statement 40
historically, our policy has been to distribute 100% of our taxable income. Without the ability to retain a significant
amount of working capital generated by our operations, we have to access both the debt and equity capital
markets on a regular basis to fund the investment activities that are critical to increasing the value of the
Company over time. If we do not increase the number of authorized common shares, we may limit our ability to
make the investments needed to create long-term value. The authorized number of Common Shares under our
Declaration of Trust has not been changed since 1999.
The Company’s issuance of Common Shares may dilute the equity ownership position of current holders of
Common Shares and may be made without shareholder approval, unless otherwise required by applicable law or
the NYSE.
The issuance of additional Common Shares could have a takeover defense effect, although this is not the intent
of our Board in proposing the amendment. For instance, shares of our authorized but unissued Common Shares
could be issued in one or more transactions that could have the effect of delaying, deferring or preventing a
change in control of our Company. As of the date of this Proxy Statement, we are not aware of any attempt or
plan to obtain control of us.
The holders of Common Shares of beneficial interest have no preemptive rights, and our Board has no plans to
grant such rights with respect to any such shares.
Our Board unanimously recommends a vote FOR the non-binding,
advisory approval of an amendment
to increase the number of
authorized Common Shares
Although this vote is not binding on the Board, the Board values the opinions of our shareholders and will consider
the results of this vote. In the event our shareholders do not approve this amendment to increase our authorized
Common Shares,
in its
discretion, proceed with the amendment as proposed if it determines that it is necessary or appropriate to do so.
the Board may delay effecting the amendment, effect a different amendment, or,
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.
Proposal 5: Ratification of Independent Registered Public
Accounting Firm
Shareholders are being asked to ratify in a non-binding vote the selection of Grant Thornton, LLP (“GT”) as our
independent registered public accounting firm for the fiscal year ending December 31, 2023. Shareholder
ratification of GT is not required by our governance documents; however, the Board is soliciting shareholder views
on this matter. 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.
Federal Realty
2023 Proxy Statement 41
The following table sets forth the fees for services rendered by GT for the years ended December 31, 2022 and
2021:
Audit Fees(1)
Audit-Related Fees(2)
Tax Fees(3)
All Other Fees
Total Fees
2022
930,131 $
70,925 $
- $
- $
2021
974,141
64,050
248,005
-
$
$
$
$
$ 1,001,056 $ 1,286,196
(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.
(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) The amount shown for 2021 relates 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 2023
➢ 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 rules of
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 2022, the Audit Committee met four times and each meeting included an executive
session with our independent registered public accounting firm and no members of management present.
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 of our
internal audit firm in performance of their financial functions. Specifically, management 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 in 2022 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.
Federal Realty
2023 Proxy Statement 42
During 2022, as part of its oversight function, the Audit Committee:
• Met with management and GT and discussed the Company’s December 31, 2022 audited financial
statements;
•
•
•
•
•
Selected a new partner at GT to oversee the audit of the Company’s financial statements beginning
with fiscal year 2023, consistent with the legal requirement to change audit partners at least every
5 years. The new GT audit partner has extensive experience auditing real estate investment trusts
and has never been part of the GT team auditing the Company;
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;
•
•
Approved management’s request to remove tax compliance and preparation from the scope of
services provided by GT; and
As part of the Committee’s quarterly review of internal controls, the Committee discussed with
focus of
management cybersecurity threats, cybersecurity training and ongoing areas of
management in protecting against cyber breaches. During those quarterly reviews in 2022, the
Committee was advised that there were no breaches and that cybersecurity insurance had been
procured.
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, 2022 for filing with the SEC.
Submitted by the Audit Committee:
Gail P. Steinel, Chairperson
David W. Faeder
Elizabeth I. Holland
Anthony P. Nader, III
Federal Realty
2023 Proxy Statement 43
Beneficial Ownership
➢ OWNERSHIP OF PRINCIPAL SHAREHOLDERS
Name and Address of Beneficial Owner
The Vanguard Group, Inc.(2)
100 Vanguard Blvd.
Malvern, PA 19355
State Street Corporation(3)
State Street Financial Center, One Lincoln Street
Boston, MA 02111
BlackRock, Inc.(4)
55 East 52nd Street
New York, NY 10055
Norges Bank (The Central Bank of Norway)(5)
Bankplassen 2, PO Box 1179 Sentrum
NO 0107 Oslo Norway
Capital Research Global Investors(6)
333 South Hope Street, 55th Floor
Los Angeles, CA 90071
JPMorgan Chase & Co.(7)
383 Madison Avenue
New York, NY 10179
Amount and Nature of
Beneficial Ownership
12,802,837
Percentage of Our
Outstanding Shares(1)
15.7%
10,198,880
12.5%
7,606,970
7,212,626
5,956,420
4,377,501
9.3%
8.9%
7.3%
5.4%
(1)
(2)
(3)
(4)
(5)
(6)
(7)
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 81,511,030, the total number of shares outstanding on March 13,
2023.
Information based on a Schedule 13G/A filed with the SEC on February 9, 2023 by The Vanguard Group which states
that The Vanguard Group, an investment advisor, has shared voting power over 159,514 shares, sole dispositive power
over 12,419,458 shares and shared dispositive power over 383,379 shares.
Information based on a Schedule 13G/A filed with the SEC on February 9, 2023 by State Street Corporation which
states that State Street Corporation, a parent holding company, has shared voting power over 8,985,419 shares and
shared dispositive power over 10,198,486 shares.
Information based on a Schedule 13G filed with the SEC on January 24, 2023 by BlackRock, Inc., which states that
BlackRock, Inc., a parent holding company, has sole voting power over 7,004,857 shares and sole dispositive power
over 7,606,970 shares.
Information based on a Schedule 13G/A filed with the SEC on February 14, 2023 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/A filed with the SEC on February 13, 2023 by Capital Research Global Investors
which states that Capital Research Global Investors, an investment advisor, has sole voting and sole dispositive power
over 5,956,420 shares.
Information based on a Schedule 13G/A filed with the SEC on January 20, 2023 by JPMorgan Chase & Co. which states
that JPMorgan Chase & Co., a parent holding company, has sole voting power over 3,009,114, sole dispositive power
over 4,375,184 shares and shared dispositive power over 716 shares.
Federal Realty
2023 Proxy Statement 44
➢ OWNERSHIP OF TRUSTEES AND EXECUTIVE OFFICERS
The table below reflects beneficial ownership of our Trustees and NEOs as of March 13, 2023 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
Thomas A. McEachin
Anthony P. Nader, III
Gail P. Steinel
Donald C. Wood(3)
Unvested
Restricted
Shares
Total Shares
Beneficially
Owned
Percentage of
Outstanding
Shares
Owned(2)
Common
142,782
38,893
24,769
26,208
6,152
2,538
299
2,538
14,442
17,156
31,447
0
24,574
0
0
0
0
0
406,912
111,353
159,938
70,340
24,769
50,782
6,152
2,538
299
2,538
14,442
518,265
*
*
*
*
*
*
*
*
*
*
Trustees, trustee nominees and executive officers as a
group (10 individuals)
665,533
184,530
850,063
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 81,511,030, the total number of shares outstanding on March 13, 2023.
Includes 53,879 shares owned by Stacey Wood Revocable Trust, 198,819 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.
Information about the Annual Meeting
➢ NOTICE OF ELECTRONIC AVAILABILITY OF PROXY MATERIALS
We are furnishing proxy materials including this proxy statement and our 2022 Annual Report to Shareholders,
including our Annual Report on Form 10-K for the year ended December 31, 2022 (“Annual Report”), to each
shareholder by providing access to such documents on the Internet. On or about March 24, 2023, 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 13, 2023, the record date
established by our Board of Trustees for our Annual Meeting. Everyone who owned our shares as of this date,
Federal Realty
2023 Proxy Statement 45
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 81,511,030 shares outstanding on March 13, 2023. 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 & 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 & Trust, LLC, you are a
registered shareholder. If you are a registered shareholder and fail to give any instructions on your proxy card on
any proposal, the proxies identified on the proxy card will vote in the manner recommended by the Board of
Trustees for each proposal. Registered shareholders 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
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, 2, 3 or 4, that organization will inform the
inspector of election that it does not have the authority to vote on the matter with respect to your shares. This is
generally referred to as a “broker non-vote”. Broker non-votes will have no effect on the outcome of these 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 5, your bank,
brokerage firm, broker-dealer or nominee will generally be able to vote on Proposal 5 as he, she or it determines.
Federal Realty
2023 Proxy Statement 46
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. 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 “federal2023” 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 26, 2023.
You will receive a confirmation of your registration by email from American Stock Transfer & 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 their 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 Proxy Voting Site 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.
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 3, 2023, 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.
Federal Realty
2023 Proxy Statement 47
➢ 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 2024 ANNUAL MEETING
This solicitation is made by the Company on behalf of the Board. Proposals of shareholders intended to be
presented at the 2024 Annual Meeting of Shareholders or 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, 2023 and no earlier than October 26, 2023,
unless the date of the 2024 Annual Meeting of Shareholders is changed by more than 30 days from the date of
the 2023 Annual Meeting of Shareholders, in which case such proposal or nomination must be received within a
reasonable time before we begin to print and mail our proxy materials. All shareholder proposals and nominations
must comply with the requirements set forth in our Bylaws and applicable state and federal laws. Shareholder
proposals must comply with Rule 14a-8 under the Exchange Act in order to be included in the Company’s proxy
statement and proxy card for the 2024 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.
In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules,
shareholders who intend to solicit proxies in support of nominees other than the Company’s nominees to the
Board of Trustees must satisfy the requirements of Rule 14a-19 under the Exchange Act, including by providing
notice and the information required thereunder no later than March 4, 2024 (except that, if the date of the meeting
has changed by more than 30 days from the previous year, then such notice must be provided by the later of 60
calendar days prior to the date of the annual meeting or the 10th day following the day on which we first publicly
announce the date of the annual meeting).
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.
Federal Realty
2023 Proxy Statement 48
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. 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 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.
income), should not be considered an alternative to net
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,
2022, 2021 and 2020 is as follows:
Net income
Net income attributable to noncontrolling interests
Gain on deconsolidation of VIE
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(1)
Income attributable to operating partnership units
Income attributable to unvested shares
2022
2020
2021
(in thousands, except per share data)
$ 395,661 $ 269,081 $ 135,888
$ (10,170) $ (7,583) $ (4,182)
$ (70,374) $
-
$ (93,483) $(89,892) $(91,922)
- $ 50,728
$
$ 266,741 $ 243,711 $ 228,850
$ 27,268 $ 26,051 $ 20,415
- $
- $
$ 515,643 $ 441,368 $ 339,777
$ (7,500) $ (8,042) $ (8,042)
$
3,151
$ (1,797) $ (1,581) $ (1,037)
2,810 $
2,998 $
Funds from operations available for common shareholders(2)
$ 509,156 $ 434,743 $ 333,849
Weighted average number of common shares, diluted(1)(2)(3)
80,603
78,072
76,621
Funds from operations available for common shareholders, per diluted share(2)
$
6.32 $
5.57 $
4.38
(1)
For the year ended December 31, 2022, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO
available to common shareholders, as the related shares were dilutive and included in “weighted average common shares, diluted.”
(2) For the 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 downREIT operating partnership
units that were excluded from the computation of diluted EPS. Conversion of these operating partnership units is dilutive in the
computation of FFO per diluted common share but is anti-dilutive for the computation of diluted EPS for 2021 and 2020.
(3)
Federal Realty
2023 Proxy Statement 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 3,
2023.
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 2022
Corporate
Headquarters
909 Rose Avenue
Suite 200
North Bethesda, MD 20852
301.998.8100
Regional Offices
B O S T O N
455 Grand Union Boulevard
Suite 600
Somerville MA 02145
617.684.1500
L O S A N G E L E S
830 Pacific Coast Highway
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
703.776.9675