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What changed in KITE REALTY GROUP TRUST's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of KITE REALTY GROUP TRUST's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+437 added−435 removedSource: 10-K (2024-02-20) vs 10-K (2023-02-21)

Top changes in KITE REALTY GROUP TRUST's 2023 10-K

437 paragraphs added · 435 removed · 319 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

51 edited+11 added−15 removed28 unchanged
Biggest changeSignificant 2022 Activities Operating Activities • The Company realized a net loss attributable to common shareholders of $12.6 million for the year ended December 31, 2022; • The Company generated Funds From Operations (“FFO”), as defined by NAREIT, of $431.2 million and FFO, as adjusted for merger and acquisition costs and the impact of prior period bad debt or the collection of accounts receivable previously written off, of $429.6 million; • Same Property Net Operating Income (“Same Property NOI”), which includes the results from the properties acquired in the Merger with RPAI, grew by 5.1% in 2022 compared to 2021 primarily due to improved occupancy driven by strong leasing activity throughout the year along with an increase in overage rent from certain tenants; 4 • In 2022, we executed new and renewal leases on 782 individual spaces representing approximately 4.9 million square feet of retail space, achieving a blended cash leasing spread of 12.6% for comparable leases.
Biggest changeSignificant 2023 Activities Operating Activities • The Company realized net income attributable to common shareholders of $47.5 million for the year ended December 31, 2023; • The Company generated Funds From Operations (“FFO”), as defined by NAREIT, of $453.3 million; • Same Property Net Operating Income (“Same Property NOI”) grew by 4.8% in 2023 compared to 2022 primarily due to contractual rent growth, higher base rent driven by positive new and renewal leasing spreads, lower bad debt expense, and an increase in overage rent from certain tenants; • In 2023, we executed new and renewal leases on 740 individual spaces representing approximately 4.9 million square feet of retail space, achieving a blended cash leasing spread of 14.3% on 552 comparable leases.
Overview Kite Realty Group Trust is a publicly held REIT that, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development and redevelopment of high-quality, open-air shopping centers and mixed-use assets that are primarily grocery-anchored and located in high-growth Sun Belt and select strategic gateway markets in the United States.
Overview Kite Realty Group Trust is a publicly held REIT that, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development, and redevelopment of high-quality, open-air shopping centers and mixed-use assets that are primarily grocery-anchored and located in high-growth Sun Belt markets and select strategic gateway markets in the United States.
Growth Strategy. Our growth strategy includes the selective deployment of financial resources to projects that are expected to generate investment returns that meet or exceed our internal benchmarks.
Our growth strategy includes the selective deployment of financial resources to projects that are expected to generate investment returns that meet or exceed our internal benchmarks.
We seek to implement our operating strategy by, among other things: • increasing rental rates upon the renewal of expiring leases or re-leasing space to new tenants while minimizing vacancy to the extent possible; • maximizing the occupancy of our operating portfolio; • minimizing tenant turnover; • maintaining leasing and property management strategies that maximize rent growth and cost recovery; • maintaining a diverse tenant mix that limits our exposure to the financial condition of any one tenant or category of retail tenants; • maintaining and improving the physical appearance, condition, layout and design of our properties and other improvements located on our properties to enhance our ability to attract customers; • implementing offensive and defensive strategies against e-commerce competition; • actively managing properties to minimize overhead and operating costs; • maintaining strong tenant and retailer relationships to avoid rent interruptions and reduce marketing, leasing and tenant improvement costs that result from re-leasing space to new tenants; and • taking advantage of under-utilized land or existing square footage, reconfiguring properties for more profitable use, and adding ancillary income sources to existing properties.
We seek to implement our operating strategy by, among other things: • increasing rental rates upon the renewal of expiring leases or re-leasing space to new tenants while minimizing vacancy to the extent possible; • maximizing the occupancy of our operating portfolio; • minimizing tenant turnover; • maintaining leasing and property management strategies that maximize rent growth and cost recovery; • maintaining a diverse tenant mix that limits our exposure to the financial condition of any one tenant or category of retail tenants; 5 • maintaining and improving the physical appearance, condition, layout and design of our properties and other improvements located on our properties to enhance our ability to attract customers; • implementing offensive and defensive strategies against e-commerce competition; • actively managing properties to minimize overhead and operating costs; • maintaining strong tenant and retailer relationships to avoid rent interruptions and reduce marketing, leasing and tenant improvement costs that result from re-leasing space to new tenants; and • taking advantage of under-utilized land or existing square footage, reconfiguring properties for more profitable use, and adding ancillary income sources to existing properties.
Some of our policies, such as those covering losses due to terrorism and floods, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses. Offices Our principal executive offices are located at 30 S. Meridian Street, Suite 1100, Indianapolis, IN 46204, and our telephone number is (317) 577-5600.
Some of our policies, such as those covering losses due to terrorism and floods, are insured subject to limitations involving large deductibles or co-payments and policy limits that may not be sufficient to cover losses. 8 Offices Our principal executive offices are located at 30 S. Meridian Street, Suite 1100, Indianapolis, IN 46204, and our telephone number is (317) 577-5600.
There can be no assurance that in the future we will be able to compete successfully with our competitors in our development, acquisition and leasing activities. Government Regulation We are subject to a variety of federal, state, and local environmental, health, safety and similar laws, including: Americans with Disabilities Act and Other Regulations.
There can be no assurance that in the future we will be able to compete successfully with our competitors in our development, acquisition and leasing activities. 7 Government Regulation We are subject to a variety of federal, state, and local environmental, health, safety and similar laws, including: Americans with Disabilities Act and Other Regulations.
We believe our properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, noncompliance with the ADA could result in orders requiring us to spend substantial sums to cure violations, pay attorneys’ fees or other amounts.
We believe our existing properties are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, noncompliance with the ADA could result in orders requiring us to spend substantial sums to cure violations, pay attorneys’ fees or other amounts.
The program’s efforts are community-focused and have included: • charitable grants to programs benefiting our communities; • Company-wide service projects focused on feeding those in need and supporting local farmers; • fundraising to support displaced workers; • contributions to healthcare workers and first responders; and • construction of a youth community center.
The program’s efforts are community-focused and have included: • charitable grants to programs benefiting our communities; • Company-wide service projects focused on feeding those in need and supporting local farmers; • fundraising to support displaced workers; 9 • contributions to healthcare workers and first responders; and • construction of a youth community center.
Our properties must comply with Title III of the Americans with Disabilities Act (the “ADA”) to the extent that such properties are public accommodations as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.
Our properties must comply with Title III of the Americans with Disabilities Act (the “ADA”) to the extent that such properties are public accommodations as defined by the ADA. The ADA may require removal of structural barriers to allow access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.
In evaluating opportunities for potential acquisition, development, redevelopment and disposition, we consider a number of factors, including: • the expected returns and related risks associated with the investments relative to our weighted cost of capital to make such investments; • the current and projected cash flow and market value of the property and the potential to increase cash flow and market value if the property were to be successfully re-leased or redeveloped; 7 • the price being offered for the property, the current and projected operating performance of the property, the tax consequences of the transaction, and other related factors; • opportunities for strengthening the tenant mix at our properties through the placement of anchor tenants such as grocers, value retailers, hardware stores, or sporting goods retailers, as well as further enhancing a diverse tenant mix that includes restaurants, specialty shops, and other essential retailers that provide staple goods to the community and offer a high level of convenience; • the geographic location and configuration of the property, including ease of access, availability of parking, visibility, and the demographics of the surrounding area; and • the level of success of existing properties in the same or nearby markets.
In evaluating opportunities for potential acquisition, development, redevelopment and disposition, we consider a number of factors, including: • the expected returns and related risks associated with the investments relative to our weighted cost of capital to make such investments; • the current and projected cash flows and market value of the property and the potential to increase cash flows and market value if the property were to be successfully re-leased or redeveloped; • the price being offered for the property, the current and projected operating performance of the property, the tax consequences of the transaction, and other related factors; • opportunities for strengthening the tenant mix at our properties through the placement of anchor tenants such as grocers, value retailers, hardware stores, or sporting goods retailers, as well as further enhancing a diverse tenant mix that includes restaurants, specialty shops, and other essential retailers that provide staple goods to the community and offer a high level of convenience; • the geographic location and configuration of the property, including ease of access, availability of parking, visibility, and the demographics of the surrounding area; and • the level of success of existing properties in the same or nearby markets.
Funding sources include the public equity and debt markets, our 2022 Revolving Facility with $1.1 billion of borrowing capacity as of December 31, 2022, secured debt, internally generated funds, proceeds from selling land and properties that no longer fit our strategy, and potential strategic joint ventures; and • Growth Strategy : Prudently use available cash flow, targeted asset recycling, equity and debt capital to selectively acquire additional retail properties and redevelop or renovate existing properties where we believe investment returns would meet or exceed internal benchmarks.
Funding sources include the public equity and debt markets, our Revolving Facility with $1.1 billion of borrowing capacity as of December 31, 2023, secured debt, internally generated funds, proceeds from selling land and properties that no longer fit our strategy, and potential strategic joint ventures; and • Growth Strategy : Prudently use available cash flow, targeted asset recycling, equity and debt capital to selectively acquire additional retail properties and redevelop or renovate existing properties where we believe investment returns would meet or exceed internal benchmarks.
We believe that the principal competitive factors in attracting tenants in our market areas are location, demographics, rental rates, the presence of anchor stores, competitor shopping centers in the same geographic area and the maintenance, appearance, access and traffic patterns of our properties.
We believe that the principal competitive factors in attracting tenants in our market areas are location, demographics, rental rates, the presence of anchor tenants, competitor shopping centers in the same geographic area and the maintenance, appearance, access and traffic patterns of our properties.
We intend to continue implementing our financing and capital strategies in a number of ways, which may include one or more of the following actions: • prudently managing our balance sheet, including maintaining sufficient availability under our 2022 Revolving Facility so that we have additional capacity to fund our development and redevelopment projects and pay down maturing debt if refinancing that debt is not desired or practical; • extending the scheduled maturity dates of and/or refinancing our near-term mortgage, construction and other indebtedness; • expanding our unencumbered asset pool; • raising additional capital through the issuance of common shares, preferred shares or other securities; • managing our exposure to interest rate increases on our variable-rate debt through the selective use of fixed rate hedging transactions; • issuing unsecured bonds in the public markets and securing property-specific long-term non-recourse financing; and • entering into joint venture arrangements in order to access less expensive capital and mitigate risk.
We intend to continue implementing our financing and capital strategies in a number of ways, which may include one or more of the following actions: • prudently managing our balance sheet, including maintaining sufficient availability under our Revolving Facility so that we have additional capacity to fund our development and redevelopment projects and pay down maturing debt if refinancing that debt is not desired or practical; • extending the scheduled maturity dates of and/or refinancing our near-term mortgage, construction and other indebtedness; • expanding our unencumbered asset pool; • raising additional capital through the issuance of common shares, preferred shares or other securities; • managing our exposure to interest rate increases on our variable-rate debt through the selective use of fixed rate hedging transactions; • issuing unsecured bonds in the public markets and securing property-specific long-term, non-recourse financing; and • entering into joint venture arrangements in order to access less expensive capital and mitigate risk. 6 Growth Strategy.
The Company has continued its partnership with One Tree Planted, a non-profit organization committed to reforestation, and has planted over 17,000 new trees through its Project Green reforestation effort. We continue to evaluate potential actions that might reduce our carbon footprint or otherwise mitigate our environmental impact.
The Company has continued its partnership with One Tree Planted, a non-profit organization committed to reforestation, and has planted over 35,000 new trees through its Project Green reforestation effort. We continue to evaluate potential actions that might reduce our carbon footprint or otherwise mitigate our environmental impact.
However, these lease provisions may not fully protect us in the event that a tenant becomes insolvent. Also, certain of our properties have contained asbestos-containing building materials (“ACBM”), and other properties may have contained such materials based on the date of its construction.
However, these lease provisions may not fully protect us in the event that a tenant becomes insolvent. Also, certain of our properties have contained asbestos-containing building materials (“ACBM”) and other properties may have contained such materials based on the date of their construction.
We utilize the following tools to recognize our employees, advance our talent pool and create a sustainable and long-term enterprise: (i) performance plans, (ii) talent recognition via our digital employee-to-employee Recognition Wall, (iii) Level Up award that recognizes employees who have made an extraordinary effort to help the Company achieve success, (iv) newly created FOCUSED award that acknowledges employees who have embodied our FOCUSED values (forward-thinking, optimistic, collaborative, urgent, sound, empowered, and dedicated) throughout the year, and (v) individual development planning, along with reward packages.
We use the following tools to recognize our employees, advance our talent pool and create a sustainable and long-term enterprise: (i) performance plans, (ii) talent recognition via our digital employee-to-employee Recognition Wall, (iii) Level Up award that recognizes employees who have made an extraordinary effort to help the Company achieve success, (iv) FOCUSED award that acknowledges employees who have embodied our FOCUSED values (forward-thinking, optimistic, collaborative, urgent, sound, empowered, and dedicated) throughout the year, and (v) individual development planning, along with reward packages.
Business Objectives and Strategies Our primary business objectives are to increase the cash flow and value of our properties, achieve sustainable long-term growth and maximize shareholder value primarily through the ownership, operation, acquisition, development and redevelopment of high-quality, open-air shopping centers and mixed-used assets that are primarily grocery-anchored and located in high-growth Sun Belt and select strategic gateway markets.
Business Objectives and Strategies Our primary business objectives are to (i) increase the cash flow and value of our properties, (ii) achieve sustainable long-term growth, and (iii) maximize shareholder value primarily through the ownership, operation, acquisition, development and redevelopment of high-quality, open-air shopping centers and mixed-used assets that are primarily grocery-anchored and located in high-growth Sun Belt markets and select strategic gateway markets.
We implement our growth strategy in a number of ways, including: • continually evaluating our operating properties for redevelopment and renovation opportunities that we believe will make them more attractive for leasing to new tenants, right-sizing of anchor spaces while increasing rental rates, and re-leasing spaces to existing tenants at increased rental rates; • completing our three active development and redevelopment projects at The Landing at Tradition, Carillon and The Corner; • evaluating the entitled land holdings to determine the optimal real estate use and capital allocation decisions; • disposing of select assets that no longer meet our long-term investment criteria and recycling the net proceeds into properties that provide attractive returns and rent growth potential in targeted markets or using the proceeds to repay debt, thereby reducing our leverage; and • selectively pursuing the acquisition of retail operating properties, portfolios and companies in markets with strong demographics.
We implement our growth strategy in a number of ways, including: • continually evaluating our operating properties for redevelopment and renovation opportunities that we believe will make them more attractive for leasing to new tenants, right-sizing of anchor spaces while increasing rental rates, and re-leasing spaces to existing tenants at increased rental rates; • completing our two active development and redevelopment projects at Carillon medical office building and The Corner – IN; • evaluating the entitled land holdings to determine the optimal real estate use and capital allocation decisions; • disposing of select assets that no longer meet our long-term investment criteria and recycling the net proceeds into properties that provide attractive returns and rent growth potential in targeted markets or using the proceeds to repay debt, thereby reducing our leverage; and • selectively pursuing the acquisition of retail operating properties, portfolios and companies in markets with strong demographics.
Therefore, our operating results depend materially on, among other things, the ability of our tenants to make required lease payments, the health and resilience of the U.S. retail sector, interest rate volatility, job growth, the real estate market and overall economic conditions.
Therefore, our operating results depend materially on, among other things, the ability of our tenants to make required lease payments, the health and resilience of the U.S. retail sector, interest rate volatility, stability in the banking sector, job growth, the real estate market, and overall economic conditions.
In general, these tenants have covenanted in their lease agreements with us to use these substances, if any, in compliance with all environmental laws and agreed to indemnify us for any damages we may suffer as a result of their use of such substances.
In general, these tenants have covenanted in their lease agreements with us to use these substances, if any, in compliance with all environmental laws and agreed to indemnify us for any damages we may suffer as a result of their use of such substances and any contamination they cause.
The excise tax is based on the number of full-time employees. We do not anticipate being subject to a penalty under the ACA; however, even in the event that we are, any such penalty would be less than $1.0 million, as we had 236 full-time employees as of December 31, 2022. Environmental Regulations.
The excise tax is based on the number of full-time employees. We do not anticipate being subject to a penalty under the ACA; however, even in the event that we are, any such penalty would be less than $1.0 million, as we had 229 full-time employees as of December 31, 2023. Environmental Regulations.
Our retail operating portfolio was 94.6% leased to a diversified retail tenant base, with no single retail tenant accounting for more than 2.5% of our total annualized base rent (“ABR”). In the aggregate, our largest 25 tenants accounted for 28.9% of our ABR. See Item 2. “Properties” for a list of our top 25 tenants by ABR.
Our retail operating portfolio was 93.9% leased to a diversified retail tenant base, with no single retail tenant accounting for more than 2.7% of our total annualized base rent (“ABR”). In the aggregate, our largest 25 tenants accounted for 28.6% of our ABR. See Item 2. “Properties” for a list of our top 25 tenants by ABR.
Some of these competitors may have greater capital resources than we do, although we do not believe that any single competitor or group of competitors is dominant in any of the markets in which we own properties. We face significant competition in our efforts to lease available space to prospective tenants at our operating, development and redevelopment properties.
Some of these competitors may have greater capital resources than we do, although we do not believe that any single competitor or group of competitors is dominant in any of the markets in which we own properties. We face significant competition in our efforts to lease available space to prospective tenants at our properties.
Human Capital As of December 31, 2022, we had 236 full-time employees. The majority of these employees were based at our Indianapolis, Indiana headquarters though we also maintain regional offices across the United States. We believe our employees are the most important part of our business.
Human Capital As of December 31, 2023, we had 229 full-time employees. The majority of these employees were based at our Indianapolis, Indiana headquarters though we also maintain regional offices across the United States. We believe our employees are the most important part of our business.
Among these factors are the construction costs or purchase price of properties to be developed or acquired, the estimated market value of our properties and the Company as a whole upon consummation of the financing, and the ability to generate durable cash flow to cover expected debt service.
Among these factors are (i) the construction costs or purchase price of properties to be developed or acquired, (ii) the estimated market value of our properties and the Company as a whole upon consummation of the financing, and (iii) the ability to generate durable cash flows to cover expected debt service.
We focus on leadership development at every level of the organization. We align employees’ goals with our overall strategic direction to create a clear link between individual efforts and the long-term success of the Company and provide effective feedback on employees’ performance towards goals to ensure their growth and development.
We align employees’ goals with our overall strategic direction to create a clear link between individual efforts and the long-term success of the Company and provide effective feedback on employees’ performance towards goals to ensure their growth and development.
Available Information Our website address is http://www.kiterealty.com . We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC.
We make available free of charge on our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after those reports are electronically filed with, or furnished to, the SEC.
We believe that certain of our properties represent attractive opportunities for profitable redevelopment, renovation, densification, and expansion. 5 We seek to implement our business objectives through the following strategies, each of which is further described in the sections that follow: • Operating Strategy : Maximize the internal growth in revenue from our operating properties by leasing and re-leasing to a strong and diverse group of retail tenants at increasing rental rates, when possible , and redeveloping or renovating certain properties to make them more attractive to existing and prospective tenants and consumers; • Financing and Capital Preservation Strategy : Maintain a strong balance sheet with flexibility to fund our operating and investment activities.
We seek to implement our business objectives through the following strategies, each of which is further described in the sections that follow: • Operating Strategy : Maximize the internal growth in revenue from our operating properties by leasing and re-leasing to a strong and diverse group of retail and mixed-use tenants at increasing rental rates, when possible , and redeveloping or renovating certain properties to make them more attractive to existing and prospective tenants and customers; • Financing and Capital Preservation Strategy : Maintain a strong balance sheet with flexibility to fund our operating and investment activities.
These current projects include: • installing LED lighting in parking lots (57% of our properties have installed such LED lighting as of December 31, 2022, with a goal of 80% of the portfolio by the end of 2026); • implementing smart meters and other initiatives aimed at water conservation, recycling and waste diversion (53 properties have implemented water efficiency measures and 129 properties have implemented waste efficiency measures, with a goal of 25% of the portfolio by the end of 2026); • installing electric vehicle (“EV”) charging stations (178 charging stations have been installed across 16 properties for a total of 9% of the portfolio, with a goal of 20% of the portfolio by the end of 2026); and • receiving IREM certifications (53 properties or 29% of the portfolio have received such certifications as of December 31, 2022, with a goal of 75% of the portfolio by the end of 2026).
These current projects include: • installing LED lighting in parking lots (72% of our properties have installed such LED lighting as of December 31, 2023, with a goal of 80% of the portfolio by the end of 2026); • implementing smart meters and other initiatives aimed at water conservation, recycling and waste diversion (16% of our properties have implemented water efficiency measures, with a goal of 25% of the portfolio by the end of 2026); • installing electric vehicle (“EV”) charging stations (240 charging stations have been installed across 24 properties for a total of 12% of the portfolio, with a goal of 20% of the portfolio by the end of 2026); and • receiving IREM certifications (76 properties or 42% of the portfolio have received such certifications as of December 31, 2023, with a goal of 75% of the portfolio by the end of 2026).
Competition The U.S. commercial real estate market continues to be highly competitive. We face competition from other REITs, including other retail REITs, and other owner-operators engaged in the ownership, leasing, acquisition, and development of shopping centers as well as from numerous local, regional and national real estate developers and owners in each of our markets.
We face competition from other REITs, including other retail REITs, and other owner-operators engaged in the ownership, leasing, acquisition, and development of shopping centers as well as from numerous local, regional and national real estate developers and owners in each of our markets.
Some properties in our portfolio contain, may have contained or are adjacent to or near other properties that have contained or currently contain underground storage tanks for petroleum products or other hazardous or toxic substances.
Some properties in our portfolio contain, may have contained or are adjacent to or near other properties that have contained or currently contain underground storage tanks for petroleum products or other hazardous or toxic substances. These storage tanks may have released, or have the potential to release, such substances into the environment.
With environmental sustainability becoming a national priority, we have continued to demonstrate our strong commitment to be a responsible corporate citizen through resource reduction and employee training that has resulted in reductions of energy consumption, waste and improved maintenance cycles. Insurance We carry comprehensive liability, fire, extended coverage, and rental loss insurance that covers all properties in our portfolio.
With environmental sustainability becoming a national priority, we have continued to demonstrate our strong commitment to be a responsible corporate citizen through resource reduction and employee training that has resulted in reductions of energy consumption, waste and improved maintenance cycles.
As of December 31, 2022, we owned interests in 183 operating retail properties totaling approximately 28.8 million square feet and one office property with 0.3 million square feet. Of the 183 operating retail properties, 11 contain an office component. We also owned three development projects under construction as of this date.
As of December 31, 2023, we owned interests in 180 operating retail properties totaling approximately 28.1 million square feet and one office property with 0.3 million square feet. Of the 180 operating retail properties, 10 contain an office component. We also owned two development projects under construction as of this date and an additional two properties with future redevelopment opportunities.
We have achieved our targets of at least 30% diverse representation on our Board of Trustees and at least one female-chaired committee with the chairing of our Corporate Governance and Nominating Committee by a female trustee.
We have achieved our targets of at least 30% diverse representation on our Board of Trustees and at least one female-chaired committee with the chairing of our Corporate Governance and Nominating Committee by a female trustee. As of December 31, 2023, approximately 51% of our workforce was female and minorities represented approximately 21% of our team.
We invest in properties with well-located real estate and strong demographics, and we use our leasing and management strategies to improve the long-term value and economic returns of our properties.
We invest in properties with well-located real estate and strong demographics, and we use our leasing and management strategies to improve the long-term value and economic returns of our properties. We believe that certain of our properties represent attractive opportunities for profitable redevelopment, renovation, densification, and expansion.
These storage tanks may have released, or have the potential to release, such substances into the environment. 8 In addition, some of our properties have tenants that may use hazardous or toxic substances in the routine course of their businesses.
In addition, some of our properties have tenants that may use hazardous or toxic substances in the routine course of their businesses.
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.
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 operate or have owned or operated in the past.
We are proud to be an active citizen of the communities in which we operate. In furtherance of this commitment, we partner with and support local charitable organizations that we believe are contributing to the growth and development of the community and hosted dozens of free community events throughout our portfolio.
In furtherance of this commitment, we partner with and support local charitable organizations that we believe are contributing to the growth and development of the community and host dozens of free community events throughout our portfolio. Our Kite Cares initiative contributes to the welfare of local youth and those in need.
These sources may include the reinvestment of cash flows generated by operations, the sale of common or preferred shares through public offerings or private placements, the reinvestment of net proceeds from the disposition of assets, the incurrence of additional indebtedness through secured or unsecured borrowings, and entering into real estate joint ventures. 6 Our primary financing and capital strategy is to maintain a strong balance sheet and enhance our flexibility to fund operating and investment activities in the most cost-effective way.
These sources may include (i) the reinvestment of cash flows generated by operations, (ii) the reinvestment of net proceeds from the disposition of assets, (iii) the incurrence of additional indebtedness through secured or unsecured borrowings, (iv) entering into real estate joint ventures, and (v) the sale of common or preferred shares through public offerings or private placements.
As described above, we are highly committed to our employees, and our policies are designed to promote fairness, equal opportunities, diversity, well-being and professional development within the Company. Our corporate governance structure, led by our Board of Trustees, closely aligns our interests with those of our shareholders, as further described in our annual Proxy Statement.
As described above, we are highly committed to our employees, and our policies are designed to promote fairness, equal opportunities, diversity, well-being and professional development within the Company.
The ESG Task Force meets quarterly and focuses on setting, implementing, monitoring and communicating to our investors and other stakeholders our ESG strategy and related initiatives that are important and regularly report to the Board of Trustees. 10 In October 2022, the ESG Task Force issued the Company’s inaugural Corporate Responsibility Report for 2021, which is published on our website and provides a comprehensive overview of our ESG strategies and initiatives.
The ESG Task Force meets quarterly and focuses on setting, implementing, monitoring and communicating to our investors and other stakeholders our ESG strategy and related initiatives that are important and regularly reports to the Board of Trustees.
“Properties” for a list of our top tenants by gross leasable area (“GLA”) and ABR. Financing and Capital Strategy. We finance our acquisition, development, and redevelopment activities using the most advantageous sources of capital available to us at the time.
We finance our acquisition, development, redevelopment, leasing and re-leasing activities using the most advantageous sources of capital available to us at the time.
The Company also provides reimbursement for those seeking to further their education through degree or certification programs. Community Development We seek to foster a corporate culture where our many stakeholders, including our employees, engage in the topic of community development and collaborate to extend resources towards the advancement of this principle.
Community Development We seek to foster a corporate culture where our many stakeholders, including our employees, engage in the topic of community development and collaborate to extend resources towards the advancement of this principle. We are proud to be an active citizen of the communities in which we operate.
We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage, geographic locations of our assets and industry practice.
We capitalized Birch in accordance with the applicable regulatory requirements. We also carry comprehensive liability, fire, extended coverage, and rental loss insurance that covers all properties in our portfolio. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, cost of the coverage, geographic locations of our assets and industry practice.
We successfully executed our operating strategy in 2022 in a number of ways, as best evidenced by our strong growth in Same Property NOI. Additionally, our leasing process continues to perform at a high level as evidenced by the execution of 782 new and renewal leases representing approximately 4.9 million square feet during the year ended December 31, 2022.
Additionally, our leasing platform continues to perform at a high level as evidenced by the execution of 740 new and renewal leases representing approximately 4.9 million square feet during the year ended December 31, 2023. Our leased to occupied spread represents approximately $31.0 million of net operating income (“NOI”), the majority of which is expected to commence in 2024.
We derive our revenue primarily from the collection of contractual rents and reimbursement payments from tenants under existing lease agreements at each of our properties.
Following our merger with Retail Properties of America, Inc. (“RPAI”) in 2021, we became a top-five open-air shopping center REIT based upon market capitalization. We derive our revenue primarily from the collection of contractual rents and reimbursement payments from tenants under existing lease agreements at each of our properties.
As of December 31, 2022, approximately 48% of our workforce was female and minorities represented approximately 20% of our team. 9 Professional Development and Training We believe a commitment to our employees’ learning and development through training, educational opportunities and mentorship is critical to our ability to continue to innovate.
Professional Development and Training We believe a commitment to our employees’ learning and development through training, educational opportunities and mentorship is critical to our ability to continue to innovate. We focus on leadership development at every level of the organization.
These signings helped grow our retail leased percentage to 94.6% from 93.4% as of December 31, 2021; and • Our operating portfolio ABR per square foot was $20.02 as of December 31, 2022, an increase of $0.66 (or 3.4%) from the end of the prior year.
The blended cash leasing spread for comparable new and non-option renewal leases was 22.7%; and • Our operating retail portfolio ABR per square foot was $20.70 as of December 31, 2023, an increase of $0.68 (or 3.4%) from the end of the prior year.
We consider a number of factors when evaluating the amount and type of additional indebtedness we may elect to incur.
Our primary financing and capital strategy is to maintain a strong balance sheet and enhance our flexibility to fund operating and investment activities in the most cost-effective way. We consider a number of factors when evaluating the amount and type of additional indebtedness we may elect to incur.
Our leased to occupied spread represents approximately $33.0 million of net operating income (“NOI”), the majority of which is expected to commence in 2023. We have placed significant emphasis on maintaining a strong and diverse retail tenant mix, which has resulted in no tenant accounting for more than 2.5% of our ABR. See Item 2.
We have placed significant emphasis on maintaining a strong and diverse tenant mix, which has resulted in no tenant accounting for more than 2.7% of our ABR. See Item 2. “Properties” for a list of our top tenants by gross leasable area (“GLA”) and ABR. Financing and Capital Strategy.
We have $284.4 million of debt principal scheduled to mature through December 31, 2023, a debt service coverage ratio of 5.1x and approximately $115.8 million in cash on hand as of December 31, 2022. We have investment grade corporate credit ratings from all three major credit rating agencies; these ratings were unchanged in 2022.
We have $269.6 million of debt principal scheduled to mature through December 31, 2024, which we expect will be satisfied with proceeds from the Notes Due 2034, a net debt to EBITDA ratio of 5.1x and approximately $36.4 million in cash on hand as of December 31, 2023.
Removed
On October 22, 2021, we completed a merger with Retail Properties of America, Inc.
Added
Financing and Capital Activities • We ended the year with full borrowing capacity on our $1.1 billion unsecured revolving credit facility (the “Revolving Facility”); • We originated a 10-year $95.1 million mortgage payable at a fixed interest rate of 5.36% secured by the multifamily rental portion of the expansion project at One Loudoun Downtown – Pads G & H; • We repaid the $95.0 million principal balance of the 4.23% senior unsecured notes due 2023; • In January 2024, we completed a public offering of $350.0 million aggregate principal amount of 5.50% senior unsecured notes due 2034 (“Notes Due 2034”); 4 • We acquired Prestonwood Place (Dallas/Ft.
Removed
(“RPAI”) in accordance with the Agreement and Plan of Merger dated July 18, 2021 (the “Merger Agreement”), by and among Kite Realty Group Trust, its wholly owned subsidiary KRG Oak, LLC (“Merger Sub”) and RPAI, pursuant to which RPAI merged with and into Merger Sub (the “Merger”) in a stock-for-stock exchange valued at approximately $4.7 billion, including the assumption of approximately $1.8 billion of debt.
Added
Worth MSA) for a gross purchase price of $81.0 million; • We completed major development construction activities at The Landing at Tradition – Phase II (Port St.
Removed
We acquired 100 operating retail properties and five development projects through the Merger along with multiple parcels of entitled land for future value creation, creating a top five open-air shopping center REIT. See Note 3 to the accompanying consolidated financial statements for additional details.
Added
Lucie, FL MSA) and placed this project in service; • We received gross proceeds of $142.1 million from the sale of Kingwood Commons (Houston MSA), the undeveloped land and related parking garage at Pan Am Plaza (Indianapolis MSA), Reisterstown Road Plaza (Baltimore MSA), and Eastside (Dallas/Ft. Worth MSA); and • We declared cash dividends totaling $0.97 per share during 2023.
Removed
The Merger provided numerous positive benefits to the Company, including: • Enhancing the portfolio quality by bolstering our presence in existing strategic markets across the Sun Belt along with providing entry into other strategic markets such as Washington, D.C. and Seattle; • Providing multiple value creation opportunities including lease-up, completion and/or sale of development and redevelopment projects; • Improving the strength of our balance sheet by reducing leverage and increasing liquidity to over $1.0 billion; and • Further strengthening leasing relationships to provide more optionality to tenants due to the expanded size of the portfolio.
Added
We have investment grade corporate credit ratings from all three major credit rating agencies.
Removed
Excluding option renewals, the blended cash spreads for comparable new and non-option renewal leases was 18.1%.
Added
We successfully executed our operating strategy in 2023 in a number of ways, as best evidenced by our strong growth in Same Property NOI of 4.8%.
Removed
Financing and Capital Activities • We increased the capacity on our $850.0 million unsecured revolving credit facility to $1.1 billion (the “2022 Revolving Facility”) in July 2022, which was undrawn as of December 31, 2022; • We ended the year with approximately $1.2 billion of combined cash and borrowing capacity on our 2022 Revolving Facility; • We entered into a seven-year $300.0 million unsecured term loan to repay 2022 and 2023 debt maturities, including a $200.0 million unsecured term loan scheduled to mature in November 2023; • We used the $125.0 million short-term deposit that matured in April 2022 to repay borrowings on our unsecured revolving line of credit; • We acquired Pebble Marketplace (Las Vegas metropolitan statistical area (“MSA”)), the two-tenant building adjacent to MacArthur Crossing (Dallas/Ft.
Added
During 2023, we acquired one asset for a gross purchase price of $81.0 million and generated aggregate gross proceeds of $142.1 million from property dispositions. Competition The U.S. commercial real estate market continues to be highly competitive.
Removed
Worth MSA), and Palms Plaza (Miami MSA) for a total of $100.1 million; • We completed major redevelopment construction activities at Eddy Street Commons – Phase III (South Bend, IN MSA), Shoppes at Quarterfield (Baltimore MSA), the residential and commercial portions of the project at One Loudoun Downtown (Washington, D.C.
Added
However, we cannot predict the impact of new or changed laws or regulations on properties we currently own or operate or may acquire or operate in the future.
Removed
MSA), and Circle East (Baltimore MSA); • We received net proceeds of $75.7 million from the sale of Plaza Del Lago (Chicago MSA), a portion of Hamilton Crossing Centre (Indianapolis MSA) and the ground lease interest in Lowe’s at Lincoln Plaza (Worcester, MA MSA); and • We declared cash dividends totaling $0.87 per share during 2022.
Added
Insurance We have a wholly owned captive insurance company, Birch Property and Casualty, LLC (“Birch”), which insures the first layer of general liability insurance for our properties subject to certain limitations. Birch was formed as part of our overall risk management program and to stabilize insurance costs, manage exposure, and recoup expenses through the function of the captive program.
Removed
Impacts on Business from COVID-19 In 2020 and 2021, the COVID-19 pandemic had a significant adverse impact on many of our tenants and on our business.
Added
The Company also provides reimbursement for those seeking to further their education through degree or certification programs and in 2023, we implemented a learning management system to enhance our employees’ technical and professional development.
Removed
As the domestic economy recovered from many of the effects of COVID-19, retailers improved their operations to account for the pandemic, including using open-air centers as convenient shopping destinations and last-mile fulfillment through the use of in-store pickup, curbside pickup, and shipping from stores.
Added
In July 2023, the ESG Task Force issued the Company’s annual Corporate Responsibility Report, which is published on our website and provides a comprehensive overview of our ESG strategies and initiatives.
Removed
We expect the ongoing effects of COVID-19 to be dictated by, among other things, the severity of the ongoing outbreak of COVID-19, including possible resurgences and mutations, the success of efforts to contain it, the efficacy of vaccines, including against variants of COVID-19, public adoption rates of vaccines, and the impact of other actions taken in response to the pandemic.
Added
Our corporate governance structure, led by our Board of Trustees, closely aligns our interests with those of our shareholders, as further described in our annual Proxy Statement. 10 Available Information Our website address is http://www.kiterealty.com .
Removed
These uncertainties make it difficult to predict operating results for our business; therefore, there can be no assurances that we will not experience further declines in revenues, net income, FFO or other operating metrics, which could be material.
Removed
We successfully executed our growth strategy with the completion of our transformative Merger with RPAI in October 2021 and select strategic acquisitions in 2022.
Removed
The Merger created a top five open-air shopping center REIT based upon enterprise value, enhanced our portfolio quality with entry into strategic gateway markets and bolstered our presence in existing markets, lowered our cost of capital, enhanced our near-term organic growth through lease-up and select development opportunities, and strengthened our balance sheet with limited near-term debt maturities.
Removed
Our Kite Cares initiative contributes to the welfare of local youth and those in need.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

151 edited+35 added−24 removed64 unchanged
Biggest changeIf we fail to qualify as a REIT for U.S. federal income tax purposes and are unable to avail ourselves of certain savings provisions set forth in the Code, we will face serious tax consequences that would substantially reduce our cash available for distribution because: • we would be subject to U.S. federal income tax on our net income at regular corporate rates for the years we did not qualify for taxation as a REIT (and, for such years, would not be allowed a deduction for dividends paid to shareholders in computing our taxable income); • for tax years beginning after December 31, 2022, we would possibly be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the nondeductible one percent excise tax on certain stock repurchases; 23 • we could be subject to the federal alternative minimum tax and possibly increased state and local taxes for such periods; • unless we are entitled to relief under applicable statutory provisions, neither the Company nor any “successor” corporation, trust or association could elect to be taxed as a REIT until the fifth taxable year following the year during which we were disqualified; • if we were to re-elect REIT status, we would have to distribute all earnings and profits from non-REIT years before the end of the first new REIT taxable year; and • for the five years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, we would be subject to corporate level tax with respect to any built-in gain inherent in such asset at the time of re-election.
Biggest changeIf we fail to qualify as a REIT for U.S. federal income tax purposes and are unable to avail ourselves of certain savings provisions set forth in the Code, we will face serious tax consequences that would substantially reduce our cash available for distribution because: • we would be subject to U.S. federal income tax on our net income at regular corporate income tax rates for the years we did not qualify for taxation as a REIT (and, for such years, would not be allowed a deduction for dividends paid to shareholders in computing our taxable income); • we could be subject to certain taxes enacted by the Inflation Reduction Act of 2022 that are applicable to non-REIT corporations, including the nondeductible 1% excise tax on certain stock repurchases; • we could be subject to the federal alternative minimum tax and possibly increased state and local taxes for such periods; • unless we are entitled to relief under applicable statutory provisions, neither the Company nor any “successor” corporation, trust or association could elect to be taxed as a REIT until the fifth taxable year following the year during which we were disqualified; • if we were to re-elect REIT status, we would have to distribute all earnings and profits from non-REIT years before the end of the first new REIT taxable year; and • for the five years following re-election of REIT status, upon a taxable disposition of an asset owned as of such re-election, we would be subject to corporate level tax with respect to any built-in gain inherent in such asset at the time of re-election. 23 Even if we retain our REIT status, if RPAI loses its REIT status for a taxable year before the October 2021 merger, we will face serious tax consequences that would substantially reduce our cash available for distribution because: • unless we are entitled to relief under applicable statutory provisions, the Company, as the “successor” trust to RPAI, could not elect to be taxed as a REIT until the fifth taxable year following the year during which RPAI was disqualified; • the Company, as the successor by merger to RPAI, would be subject to any corporate income tax liabilities of RPAI, including penalties and interest; • assuming that we otherwise maintained our REIT qualification, we would be subject to tax on the built-in gain on each asset of RPAI existing at the time of the merger if we were to dispose of the RPAI asset for up to five years following the merger; and • assuming that we otherwise maintained our REIT qualification, we would succeed to any earnings and profits accumulated by RPAI for taxable periods that it did not qualify as a REIT, and we would have to pay a special dividend and/or employ applicable deficiency dividend procedures, including interest payments to the IRS, to eliminate such earnings and profits.
However, the stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses could be lower than the increase in inflation at any given time. Inflation may also limit our ability to recover all of our operating expenses.
However, the stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses could be lower than the increase in inflation at any given time. Inflation may also limit our ability to recover all our operating expenses.
If we are found to be in breach of a ground lease and that breach cannot be cured or we are unable to extend the lease terms or purchase the fee interest in the underlying land prior to expiration, as to which no assurance can be given, we could lose our interest in the improvements and the right to operate the property.
If we are found to be in breach of a ground lease and that breach cannot be cured or are unable to extend the lease terms or purchase the fee interest in the underlying land prior to expiration, as to which no assurance can be given, we could lose our interest in the improvements and the right to operate the property.
RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE Our organizational documents and Maryland law contain provisions that may delay, defer or prevent a change in control of the Company, even if such a change in control may be in the best interest of our shareholders, and as a result may depress the market price of our common shares.
RISKS RELATED TO OUR ORGANIZATION AND STRUCTURE Our organizational documents and Maryland law contain provisions that may delay, defer or prevent a change in control of the Company, even if such change in control may be in the best interest of our shareholders, and as a result, may depress the market price of our common shares.
Our organizational documents contain provisions that may have an anti-takeover effect and inhibit a change of control transaction, which could prevent our shareholders from being paid a premium for their common shares over the then-prevailing market prices. (1) There are ownership limits and restrictions on transferability in our declaration of trust.
Our organizational documents contain provisions that may have an anti-takeover effect and inhibit a change in control transaction, which could prevent our shareholders from being paid a premium for their common shares over the then-prevailing market prices. (1) There are ownership limits and restrictions on transferability in our declaration of trust.
The various ownership restrictions may discourage a tender offer or other change of control transaction or compel a shareholder who has acquired our common shares in excess of these ownership limitations to dispose of the additional shares.
The various ownership restrictions may discourage a tender offer or other change in control transaction or compel a shareholder who has acquired our common shares in excess of these ownership limitations to dispose of the additional shares.
The cash available for distribution to our shareholders may not be sufficient to pay distributions at expected levels, nor can we assure you of our ability to make distributions in the future, and we may use borrowed funds to make cash distributions and/or choose to make distributions in part payable in our common shares.
The cash available for distribution to our shareholders may not be sufficient to pay distributions at expected levels nor can we assure you of our ability to make distributions in the future; we may use borrowed funds to make cash distributions and/or choose to make distributions payable, in part, in our common shares.
To qualify as a REIT, we are required to distribute to our shareholders each year at least 90% of our “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains). In order to eliminate U.S. federal income tax, we are required to distribute annually 100% of our net taxable income, including capital gains.
To qualify as a REIT, we are required to distribute to our shareholders each year at least 90% of our “REIT taxable income” as determined before the deduction for dividends paid and excluding net capital gains. In order to eliminate U.S. federal income tax, we are required to distribute annually 100% of our net taxable income, including capital gains.
To the extent that we and our affiliates are required to pay U.S. federal, state and local taxes, we will have less cash available for distributions to our shareholders. REIT distribution requirements may increase our indebtedness. We may be required from time to time, under certain circumstances, to accrue income for tax purposes that has not yet been received.
To the extent that we and our affiliates are required to pay U.S. federal, state and local taxes, we will have less cash available for distributions to our shareholders. REIT distribution requirements may increase our indebtedness. We may be required, from time to time and under certain circumstances, to accrue income for tax purposes that has not yet been received.
If the IRS were successful in treating our Operating Partnership as an association or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, would cease to qualify as a REIT.
If the IRS were successful in treating our Operating Partnership as an association or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, would cease to qualify as a REIT.
Our joint ventures and the value and performance of such investments may involve risks not present with respect to our wholly owned properties, including (i) shared decision-making authority, which may prevent us from taking actions that are in our best interest, (ii) restrictions on the ability to sell our interests in the joint ventures without the other partners’ consent, (iii) potential conflicts of interest or other disputes, including potential litigation or arbitration that would prevent management from focusing their time and effort on our business, (iv) potential losses or increased costs or expenses arising from actions taken in respect of the joint ventures, (v) actions by our partners that could jeopardize our REIT status, require us to pay taxes or subject the properties owned by the joint venture to liabilities greater than those contemplated by the terms of the joint venture agreements, and (vi) joint venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring us to buy the other partner’s interest, all of which could affect our business, financial condition, results of operations and cash flows.
Our joint ventures and the value and performance of such investments may involve risks not present with respect to our wholly owned properties, including (i) shared decision-making authority, which may prevent us from taking actions that are in our best interest, (ii) restrictions on the ability to sell our interests in the joint ventures without the other partner’s consent, (iii) potential conflicts of interest or other disputes, including potential litigation or arbitration that would prevent management from focusing their time and effort on our business, (iv) potential losses or increased costs or expenses arising from actions taken in respect of the joint ventures, (v) actions by our partners that could jeopardize our REIT status, require us to pay taxes or subject the properties owned by the joint venture to liabilities greater than those contemplated by the terms of the joint venture agreements, and (vi) joint venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring us to buy the other partner’s interest, all of which could affect our business, financial condition, results of operations and cash flows.
We may also borrow funds if necessary to satisfy the requirement that we distribute to shareholders at least 90% of our annual “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) or otherwise as is necessary or advisable to ensure that we maintain our qualification as a REIT for U.S. federal income tax purposes or otherwise avoid paying taxes that can be eliminated through distributions to our shareholders.
We may also borrow funds, if necessary, to satisfy the requirement that we distribute to shareholders at least 90% of our annual “REIT taxable income” (determined before the deduction for dividends paid and excluding net capital gains) or otherwise as is necessary to ensure we maintain our qualification as a REIT for U.S. federal income tax purposes or avoid paying taxes that can be eliminated through distributions to our shareholders.
Adverse economic or real estate trends in these states or the surrounding regions or any decrease in demand for retail 13 space resulting from the local regulatory environment, business climate or fiscal problems in these states could materially and adversely affect us and our profitability and may limit our ability to meet our financial obligations.
Adverse economic or real estate trends in these states or the surrounding regions or any decrease in demand for retail space resulting from the local regulatory environment, business climate or fiscal problems in these states could materially and adversely affect us and our profitability and may limit our ability to meet our financial obligations.
Finally, some state and local jurisdictions may tax some of our income even though as a REIT, we are not subject to U.S. federal income tax on that income because not all states 24 and localities treat REITs the same way they are treated for U.S. federal income tax purposes.
Finally, some state and local jurisdictions may tax some of our income even though, as a REIT, we are not subject to U.S. federal income tax on that income because not all states and localities treat REITs the same way they are treated for U.S. federal income tax purposes.
Additionally, the sale of properties resulting in significant tax gains could require higher distributions to our shareholders or payment of additional income taxes in order to maintain our REIT status. Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.
Additionally, the sale of properties resulting in significant tax gains could require higher distributions to our shareholders or payment of additional income taxes in order to maintain our REIT status. 24 Complying with REIT requirements may limit our ability to hedge effectively and cause us to incur tax liabilities.
If we are unable to lower our operating costs when revenues decline and/or are unable to pass cost increases onto our tenants, our financial performance could be materially and adversely affected. Our business, financial condition, performance, and value are subject to risks and conditions associated with real estate assets and the real estate industry.
If we are unable to lower our operating costs when revenues decline and/or pass cost increases to our tenants, our financial performance could be materially and adversely affected. Our business, financial condition, performance, and value are subject to risks and conditions associated with real estate assets and the real estate industry.
Increased regulation of data collection, use and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operations, limit our ability to grow our business, or otherwise harm us.
Increased regulation of data collection, use and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, enactment of new laws and regulations, increased enforcement activity, and changes in the interpretation of laws, could increase our cost of compliance and operations, limit our ability to grow our business, or otherwise harm us.
In order for us to qualify as a REIT, no more than 50% of the value of our outstanding shares may be owned, actually or constructively, by five or fewer individuals at any time during the last half of each taxable year.
In order for us to qualify as a REIT, no more than 50% of the value of our outstanding common shares may be owned, actually or constructively, by five or fewer individuals at any time during the last half of each taxable year.
We have separated the risks into three categories: (i) risks related to our operations; (ii) risks related to our organization and structure; and (iii) risks related to tax matters. 11 RISKS RELATED TO OUR OPERATIONS Inflation rates have increased and may continue to be elevated or increase further, which may adversely affect our financial condition and results of operations.
We have separated the risks into three categories: (i) risks related to our operations; (ii) risks related to our organization and structure; and (iii) risks related to tax matters. RISKS RELATED TO OUR OPERATIONS Inflation rates have increased and may continue to be elevated or increase further, which may adversely affect our financial condition and results of operations.
As a result, we would be unable to derive income from such property. Assuming we exercise all available options to extend the terms of our ground leases, our ground leases will expire between 2043 and 2115.
As a result, we would be unable to derive income from such property. Assuming we exercise all available options to extend the terms, our ground leases will expire between 2043 and 2115.
Any legislative action may prospectively or retroactively modify the Company’s tax treatment and, therefore, may adversely affect our taxation or the taxation of our shareholders. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 26
Any legislative action may prospectively or retroactively modify the Company’s tax treatment and, therefore, may adversely affect our taxation or the taxation of our shareholders. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition, tenants generally are required to indemnify and hold us harmless from liabilities resulting from injury to persons or damage to personal or real property on the premises due to activities conducted by them or their agents (including, without limitation, any environmental contamination) and, at the tenant’s expense, obtain and keep in full force during the term of the lease, liability and property damage insurance policies.
In addition, tenants generally are required to indemnify and hold us harmless from liabilities resulting from injury to persons or damage to personal or real property on the premises due to activities conducted by them (including, without limitation, any environmental contamination) and, at the tenant’s expense, obtain and keep in full force during the term of the lease liability and property damage insurance policies.
We cannot predict with certainty how changes in e-commerce will impact the demand for space or the revenue generated at our properties in the future.
We cannot predict 12 with certainty how changes in e-commerce will impact the demand for space or the revenue generated at our properties in the future.
Such bankruptcies could delay, reduce, or ultimately preclude collection of amounts owed to us, including both past and future rent. A tenant in bankruptcy may attempt to renegotiate their lease or request significant rent concessions. If a lease is assumed by a tenant in bankruptcy, all pre-bankruptcy balances due under the lease must be paid to us in full.
Such bankruptcies could delay, reduce, or ultimately preclude the collection of amounts owed to us, including both past and future rent. A tenant in bankruptcy may attempt to renegotiate their lease or request significant rent concessions. If a lease is assumed by a tenant in bankruptcy, all pre-bankruptcy amounts owed under the lease must be paid to us in full.
Certain entities that are defined as designated investment entities in our declaration of trust, which generally include pension funds, mutual funds, and certain investment management companies, are permitted to own up to 9.8% in value or number, whichever is more restrictive, of the outstanding shares of any class or series of shares so long as each beneficial owner of the 20 shares owned by such designated investment entity would satisfy the 7% ownership limit if those beneficial owners owned directly their proportionate share of the common shares owned by the designated investment entity.
Certain entities that are defined as designated investment entities in our declaration of trust, which generally includes pension funds, mutual funds, and certain investment management companies, are permitted to own up to 9.8% in value or number, whichever is more restrictive, of the outstanding shares of any class or series of shares so long as each beneficial owner of the shares owned by such designated investment entity would satisfy the 7% ownership limit if those beneficial owners owned directly their proportionate share of the common shares owned by the designated investment entity.
Cybersecurity incidents could compromise the confidential information of our employees, tenants, and vendors, disrupt the proper functioning of our networks, result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines, impede our ability to maintain the building systems that our tenants rely on for the efficient use of their leased space, require significant management attention to remedy any damages, result in reputational damage to ourselves or our tenants, or lead to potential litigation or regulatory investigation, increased oversight, or fines.
A cybersecurity incident could compromise the confidential information of our employees, tenants, and vendors, disrupt the proper functioning of our networks, result in misstated financial reports, violations of loan covenants and/or missed reporting deadlines, impede our ability to maintain the building systems that our tenants rely on for the efficient use of their leased space, require significant management attention to remedy any damages, result in reputational damage to ourselves or our tenants, or lead to potential litigation or regulatory investigation, increased oversight, or fines.
In addition, some of our distributions may include a return of capital. To the extent we decide to make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for U.S. federal income tax purposes to the extent of the holder’s adjusted tax basis in their common shares.
In addition, some of our distributions may include a return of capital. To the extent we choose to make distributions in excess of our current and accumulated earnings and profits, such distributions would generally be considered a return of capital for U.S. federal income tax purposes to the extent of the holder’s adjusted tax basis in their common shares.
In such event, or upon our repayment of principal on our outstanding debt, we could have taxable income without sufficient cash to enable us to meet the distribution requirements of a REIT. Accordingly, we could be required to borrow funds or liquidate investments on adverse terms in order to meet these distribution requirements.
In such event, or upon the repayment of principal on our outstanding debt, we could have taxable income without sufficient cash to enable us to meet the distribution requirements of a REIT. Accordingly, we could be required to borrow funds or liquidate investments on disadvantageous terms in order to meet these distribution requirements.
However, if a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages. Any unsecured claim we hold may be paid only to the extent that funds are available and in the same percentage as is paid to all other holders of unsecured claims.
However, if a lease is rejected by a tenant in bankruptcy, we would have only a general unsecured claim for damages that may be paid only to the extent that funds are available and in the same percentage as is paid to all other holders of unsecured claims.
As a result, it is likely that we would recover substantially less than the full value of any unsecured claim we hold from a tenant in bankruptcy, which would result in a reduction in our cash flow and could have a material adverse effect on us.
As a result, it is likely that we would recover substantially less than the full value of any unsecured claim we hold from a tenant in bankruptcy, which would result in a reduction in our cash flows and could have a material adverse effect on us.
If economic conditions deteriorate in any of our markets, we may have to seek less attractive, alternative sources of financing and adjust our business plan accordingly. We have a significant amount of indebtedness outstanding and rising interest rates could materially adversely affect us.
If economic conditions deteriorate in any of our markets, we may have to seek less attractive, alternative sources of financing and adjust our business plan accordingly. We have a significant amount of indebtedness outstanding and high interest rates could materially adversely affect us.
We believe that our Operating Partnership is organized and operated in a manner so as to be treated as a partnership and not an association or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. As a partnership, our Operating Partnership is not subject to U.S. federal income tax on its income.
We believe that our Operating Partnership has been organized and operated in a manner so as to be treated as a partnership and not as an association or a publicly traded partnership taxable as a corporation for U.S. federal income tax purposes. As a partnership, our Operating Partnership is not subject to U.S. federal income tax on its income.
Furthermore, certain of our senior unsecured term loans are priced, in part, on our credit rating. A downgrade of our credit rating could lead to a higher credit spread component within the applicable interest rate for these debt agreements and result in higher interest expense.
Furthermore, certain of our senior unsecured term loans are priced, in part, on our credit rating. A downgrade of our credit rating could lead to a higher credit spread component within the applicable interest rate for those debt agreements and result in higher interest expense.
The interpretation and application of cybersecurity and data protection laws and regulations are often uncertain and evolving; there can be no assurance that our security measures will be deemed adequate, appropriate or reasonable by a regulator or court.
The interpretation and application of cybersecurity and data protection laws and regulations are often uncertain and evolving. As a result, there can be no assurance that our security measures will be deemed adequate, appropriate, or reasonable by a regulator or court.
If at a later time there were not one excepted holder that would be attributed all of the shares owned by the excepted holders as a group, the excepted holder limit would not permit each excepted holder to own 21.5% of our common shares.
If at a later time there was not one excepted holder that would be attributed all of the shares owned by the excepted holders as a group, the excepted holder limit would not permit each excepted holder to own 21.5% of our common shares.
If the Merger were to fail to qualify as a reorganization, U.S. holders of shares of RPAI common stock generally would recognize gain or loss, as applicable, equal to the difference between (i) the sum of the fair market value of the Company’s common shares and cash in lieu of fractional common shares of the Company received by such holder in the Merger and (ii) such holder’s adjusted tax basis in their RPAI common stock.
If the merger fails to qualify as a reorganization, U.S. holders of shares of RPAI common stock generally would recognize gain or loss, as applicable, equal to the difference between (i) the sum of the fair market value of the Company’s common shares and cash in lieu of fractional common shares of the Company received by such holder in the merger and (ii) such holder’s adjusted tax basis in their RPAI common stock.
As of December 31, 2022, we had 10 properties in our portfolio that are either completely or partially on land that is owned by third parties and leased to us pursuant to ground leases.
As of December 31, 2023, we had 10 properties in our portfolio that are either completely or partially on land that is owned by third parties and leased to us pursuant to ground leases.
Our ability to dispose of properties on advantageous terms depends on factors beyond our control, and we cannot predict the various market conditions affecting real estate investments that will exist in the future.
Our ability to dispose of properties on advantageous terms depends upon many factors beyond our control, and we cannot predict the various market conditions affecting real estate investments that will exist in the future.
Over time, the occurrence of natural disasters, severe weather conditions and changing climatic conditions can delay new development and redevelopment projects, increase costs to repair or replace damaged properties and future insurance costs, and negatively impact the demand for leased space in the affected areas, or in extreme cases, affect our ability to operate the properties at all.
Over time, the occurrence of natural disasters, severe weather conditions and changing climatic conditions can delay new development and redevelopment projects, increase costs to repair or replace damaged properties and future operating and insurance costs, and negatively impact the demand for retail space in the affected areas, or in extreme cases, affect our ability to operate the properties at all.
Changes in our disposition strategy or in the marketplace may alter the hold period of an asset or group of assets, which may result in an impairment loss that could be material to our financial condition or operating performance.
Changes in our disposition strategy or in the marketplace may alter the holding period of an asset or group of assets, which may result in an impairment loss that could be material to our financial condition or operating performance.
The parties intended that the Merger will be treated as a reorganization within the meaning of Section 368(a) of the Code, and it was a condition to the Merger that we and RPAI received opinions from each party’s respective counsel to the effect that, for U.S. federal income tax purposes, the Merger constitutes a reorganization within the meaning of Section 368(a) of the Code.
The parties intended that the October 2021 merger with RPAI will be treated as a reorganization within the meaning of Section 368(a) of the Code, and it was a condition to the merger that we and RPAI received opinions from each party’s respective counsel to the effect that, for U.S. federal income tax purposes, the merger constitutes a reorganization within the meaning of Section 368(a) of the Code.
All distributions will be made at the discretion of our Board of Trustees and will depend upon our earnings, financial condition, maintenance of our REIT qualification and other factors as our Board of Trustees may deem relevant from time to time. We may not be able to make distributions in the future at current levels or at all.
All distributions will be made at the discretion of our Board of Trustees and depend upon our earnings, financial condition, maintenance of our REIT qualification and other factors as our Board of Trustees may deem relevant from time to time. We may be unable to make distributions in the future at current levels or at all.
We will also be subject to income taxes on gains from the sale of any properties owned by any taxable REIT subsidiary (“TRS”). 18 We could experience a decline in the fair value of our real estate assets and be subject to impairment charges, which could be material.
We will also be subject to income taxes on gains from the sale of any properties owned by any taxable REIT subsidiary (“TRS”). We could experience a decline in the fair value of our real estate assets and be subject to impairment charges.
In order to meet these tests, we may be required to forgo investments we might otherwise make or liquidate from our portfolio investments that otherwise would be considered attractive. In addition, we may be required to make distributions to our shareholders at disadvantageous times or when we do not have funds readily available.
In order to meet these tests, we may be required to forgo investments we might otherwise make or liquidate investments from our portfolio that otherwise would be considered attractive. In addition, we may be required to make distributions to our shareholders at disadvantageous times or when funds are not readily available.
The success of our tenants in operating their businesses continues to be impacted by many current economic challenges, which impact their cost of doing business, including, but not limited to, the ability of our tenants to rely on external sources to grow and operate their business, inflation, labor shortages, supply chain constraints, and increased energy prices and interest rates.
The success of our tenants in operating their businesses continues to be impacted by many current economic challenges, which impact their cost of doing business, including, but not limited to, their ability to rely on external sources to grow and operate their business, inflation, labor shortages, supply chain constraints, retail theft, violent crime, and increased energy prices and interest rates.
In addition, the REIT has to pay a 100% penalty tax on some payments that it receives or on some deductions taken by the TRS if the economic arrangements between the REIT, the REIT’s tenants, and the TRS are not comparable to similar arrangements between unrelated parties.
In addition, the REIT is required to pay a 100% penalty tax on some payments that it receives or on some deductions taken by the TRS if the economic arrangements between the REIT, the REIT’s tenants, and the TRS are not comparable to similar arrangements between unrelated parties.
Our competitors may have greater capital resources or be willing to offer lower rental rates or more favorable terms for tenants, such as substantial rent reductions or abatements, tenant allowances or other improvements, and early termination rights, which may pressure us to reduce our rental rates, undertake unexpected capital improvements or offer other terms less favorable to us, which could adversely affect our financial condition.
Our competitors may have greater capital resources than we do or be willing to offer lower rental rates or more favorable terms to tenants, such as substantial rent reductions or abatements, tenant allowances or other improvements, and/or early termination rights, which may pressure us to reduce our rental rates, undertake unexpected capital improvements or offer other terms less favorable to us, which could adversely affect our financial condition.
Additionally, if retailers or consumers perceive that shopping at other venues is more convenient, cost-effective or otherwise more attractive, our revenues and results of operations also may suffer. There can be no assurance that in the future we will be able to compete successfully with our competitors in our development, acquisition and leasing activities.
Additionally, if retailers or consumers perceive that shopping at other locations is more convenient, cost-effective or otherwise more attractive, our revenues and results of operations also may suffer. There can be no assurance that we will be able to compete successfully in our development, acquisition and leasing activities in the future.
If one or more of our key officers were to die, become disabled or otherwise leave the Company, we may not be able to replace this person with an executive of equal skill, ability, and industry expertise within a reasonable timeframe, which could negatively affect our operations and financial condition.
If one or more of our key officers were to die, become disabled or otherwise leave the Company, we may not be able to replace these individuals with an executive of equal skill, ability, and industry expertise within a reasonable timeframe, which could negatively affect our operations and financial condition.
Also, the failure of the Operating Partnership to qualify as a partnership would cause it to become subject to U.S. federal corporate income tax, which would reduce significantly the amount of cash available for distribution to its partners, including us. There is a risk that the tax laws applicable to REITs may change. The IRS, the U.S.
Also, the failure of the 25 Operating Partnership to qualify as a partnership would cause it to become subject to U.S. federal corporate income tax, which would reduce significantly the amount of cash available for distribution to its partners, including the Parent Company. There is a risk that the tax laws applicable to REITs may change. The IRS, the U.S.
Additional factors that may negatively impact our ability to operate successfully as a result of COVID-19, include, among others: • the inability of our tenants to meet their lease obligations to us in full, or at all, due to changes in their businesses or local or national economic conditions, including labor shortages, inflation, or reduced discretionary spending; • business continuity disruptions and delays in the supply of products or services to us or our tenants from vendors that are needed to operate efficiently, causing costs to rise sharply and inventory to fall; and • changes in consumer behavior in favor of e-commerce.
Factors that may negatively impact our ability to operate successfully as a result of a pandemic or other health crises, include, among others: • the inability of our tenants to meet their lease obligations to us in full, or at all, due to changes in their businesses or local or national economic conditions, including labor shortages, inflation, or reduced discretionary spending; • business continuity disruptions and delays in the supply of products or services to us or our tenants from vendors that are needed to operate efficiently, causing costs to rise sharply and inventory to fall; and • changes in consumer behavior in favor of e-commerce.
As a result, the effect of certain transactions on these unit holders may influence our decisions affecting property dispositions or refinancing transactions. Departure or loss of our key officers could have an adverse effect on us.
As a result, the effect of certain transactions on these unitholders may influence our decisions affecting property dispositions or refinancing transactions. Departure or loss of our key officers could have an adverse effect on us.
If we are unable to lower our operating costs when revenues decline and/or are unable to fully pass along cost increases to our tenants, our financial condition, operating results and cash flows could be adversely impacted.
If we are unable to lower our operating costs when revenues decline and/or pass cost increases to our tenants, our financial condition, operating results and cash flows could be materially and adversely impacted.
Currently, one of the excepted holders would be attributed all of the common shares owned by each other excepted holder and, accordingly, the excepted holders as a group would not be allowed to own in excess of 21.5% in value or number, whichever is more restrictive, of our common shares.
Currently, any single excepted holder would be attributed all the common shares owned by the other excepted holders and, accordingly, the excepted holders as a group would not be allowed to own in excess of 21.5% in value or number, whichever is more restrictive, of our common shares.
Tenants may delay or cancel lease commencements, decline to extend or renew leases upon expiration, reduce the size of their lease, close stores or declare bankruptcy, which could result in the termination of the tenant’s 12 lease with us and the related loss of rental income.
Tenants may delay or cancel lease commencements, decline to extend or renew leases upon expiration, reduce the size of their lease, close certain locations or declare bankruptcy, which could result in the termination of the tenant’s lease with us and the related loss of rental income.
These disruptions could impact the overall amount of debt and equity capital available, our ability to access new capital on acceptable terms, lower loan to value ratios, and cause a tightening of lender underwriting standards and terms and higher interest rate spreads.
Disruptions in the financial markets could impact the overall amount of debt and equity capital available, our ability to access new capital on acceptable terms, lower loan to value ratios, and cause a tightening of lender underwriting standards and terms and higher interest rate spreads.
Because we may generally issue such debt securities in the future without obtaining the consent of our shareholders, our shareholders will bear the risk of future offerings reducing the market prices of our equity securities. RISKS RELATED TO TAX MATTERS If the Merger did not qualify as a reorganization, there may be adverse tax consequences.
Because we may generally issue such debt securities in the future without obtaining the consent of our shareholders, our shareholders will bear the risk of future offerings reducing the market prices of our equity securities. 22 RISKS RELATED TO TAX MATTERS If the October 2021 merger with RPAI did not qualify as a reorganization, there may be adverse tax consequences.
To the extent the carrying value of the asset exceeds the estimated undiscounted cash flows, an impairment loss is recognized equal to the excess of the carrying value over the estimated fair value (which is highly subjective and involves a significant degree of management judgment regarding various inputs).
To the extent the carrying value of the asset exceeds the estimated future undiscounted property cash flows, an impairment loss is recognized equal to the excess of the carrying value over the estimated fair value, which is highly subjective and involves a significant degree of management judgment regarding various assumptions.
In some cases, it may take extended periods of time or increased costs to re-lease a space. The inability to re-lease space at attractive rents, particularly if it involves a substantial tenant or a non-owned anchor tenant in multiple locations, could have a material adverse effect on us.
In some cases, it may take extended periods of time or increased costs for renovations or concessions to re-lease a space. The inability to re-lease space at attractive rents, particularly if it involves a significant tenant or a non-owned anchor tenant in multiple locations, could have a material adverse effect on us.
Given the continued increase in extreme climate-related events, we have experienced a significant increase in insurance rates for property insurance in 2022 and may continue to do so in the future. The rates for casualty insurance have also increased significantly in 2022 due to an increase in litigation.
Given the continued increase in extreme climate-related events, we have continued to experience a significant increase in insurance rates for property insurance since 2022 and may continue to do so in the future. The rates for casualty insurance have also continued to increase significantly due to an increase in litigation.
These tax opinions represent the legal judgment of counsel rendering the opinion and are not binding on the Internal Revenue Service (the “IRS”) or the courts.
These tax opinions represent the legal judgment of counsel rendering the opinion and are not binding on the Internal Revenue Service (the “IRS”) or any court.
Our substantial debt could materially and adversely affect our business in other ways, including by, among other things: (i) requiring us to use a substantial portion of our cash flows from operations to service our indebtedness, which would reduce the available cash to fund general corporate purposes and distributions, (ii) limiting our ability to obtain additional financing to fund our working capital needs, capital expenditures, acquisitions, other debt service requirements or other purposes, (iii) increasing our costs of incurring additional debt and our exposure to variable interest rates, (iv) making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions, and (v) placing us at a competitive disadvantage compared to other real estate investors that have less debt.
Our substantial debt could materially and adversely affect our business in other ways, including by, among other things, (i) requiring us to use a substantial portion of our cash flow to service our indebtedness, reducing the cash available to fund general corporate purposes and distributions, (ii) limiting our ability to obtain additional financing to fund our working capital needs, capital expenditures, acquisitions, other debt service requirements or other purposes, (iii) increasing our costs of incurring additional debt and our exposure to variable interest rates, (iv) increasing our vulnerability to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions, and (v) placing us at a competitive disadvantage compared to other real estate investors that have less debt.
Our primary business is the ownership, operation, acquisition, development and redevelopment of high-quality, open-air shopping centers and mixed-use assets.
Our primary business is the ownership, operation, acquisition, and re/development of high-quality, open-air shopping centers and mixed-use and lifestyle assets.
In connection with the ownership, operation and management of real properties, we are potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property, liens on contaminated sites, and restrictions on operations.
In connection with the ownership, operation and management of real properties, we are potentially liable for removal or remediation costs at properties impacted by contamination, as well as certain other related costs including governmental fines and injuries to persons, property or natural resources, liens on contaminated sites, and restrictions on operations.
These provisions could allow the lending institutions and noteholders to accelerate the amount due under the loans and private placement notes. If payment is accelerated, our liquid assets may not be sufficient to repay such debt in full.
These provisions could allow our lenders and noteholders to accelerate the amount due under the loans and notes. If payment is accelerated, our liquid assets may not be sufficient to repay such debt in full.
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 general economic outlook.
Our creditworthiness 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 general economic outlook.
Under current Maryland law, our trustees and officers will not have any liability to us or our shareholders for money damages, except for liability resulting from (a) actual receipt of an improper benefit or profit in money, property or services or (b) active or deliberate dishonesty established in a judgment or other final adjudication to be material to the cause of action.
Under current Maryland law, our trustees and officers will not have any liability to us or our shareholders for money damages, except for liability resulting from (i) the actual receipt of an improper benefit or profit in money, property or services or (ii) active or deliberate dishonesty by the trustee or officer that was established in a judgment or other final adjudication to be material to the cause of action.
If we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been. Finally, although we do not currently intend to do so, in order to maintain our REIT qualification, we may make distributions that are in part payable in our common shares.
If we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution in the future. Finally, although we do not currently intend to do so, in order to maintain our REIT qualification, we may make distributions that are payable, in part, in our common shares.
New development and redevelopment projects are subject to a number of risks, including the following: • expenditure of capital and time on projects that may not be pursued or completed; • inability to obtain necessary zoning or regulatory approvals; • higher than estimated construction or operating costs, including labor and material costs; • inability to complete construction on schedule; • significant time lag between commencement and stabilization resulting in delayed returns and greater risks due to fluctuations in the general economy, shifts in demographics and competition; • decrease in customer traffic during the development period causing a decrease in tenant sales; • inability to secure key anchor or other tenants or complete the lease-up at anticipated absorption rates or at all; • occupancy and rental rates at a newly completed project may not meet expectations; • investment returns from developments may be less than expected; and • suspension of development projects after construction has begun due to changes in economic conditions or other factors that may result in the write-off of costs, payment of additional costs or increases in overall costs if the project is restarted.
New development and redevelopment projects are subject to a number of risks, including the following: • expenditure of capital and time on projects that may not be pursued or completed; • failure or inability to obtain construction or permanent financing on favorable terms or at all; • inability to secure necessary zoning or regulatory approvals; • higher than estimated construction or operating costs, including labor and material costs, including as a result of inflation; • inability to complete construction on schedule due to a number of factors, including labor and supply chain disruptions and shortages, inclement weather, or natural disasters such as fires, earthquakes or floods; • significant time lag between commencement and stabilization resulting in delayed returns and greater risks due to fluctuations in the general economy, shifts in demographics and competition; • decrease in customer traffic during the development period causing a decrease in tenant sales; • inability to secure key anchor or other tenants or complete the lease-up at anticipated absorption rates or at all; • occupancy and rental rates at a newly completed project may not meet expectations; • investment returns from developments may be less than expected; and • suspension of development projects after construction has begun due to changes in economic conditions or other factors that may result in the write-off of costs, payment of additional costs or increases in overall costs if the project is restarted.
If a transaction intended to qualify as a Code Section 1031 tax-deferred exchange (a “1031 Exchange”) is later determined to be taxable, we may face adverse consequences . From time to time, we may dispose of properties in transactions that are intended to qualify as 1031 Exchanges.
If a transaction intended to qualify as a Code Section 1031 tax-deferred exchange is later determined to be taxable, we may face adverse consequences . From time to time, we may dispose of properties in transactions that are intended to qualify as “like-kind exchanges” under Section 1031 of the Code (a “1031 Exchange”).
Certain of our officers own limited partner units in our Operating Partnership. These individuals may have personal interests that conflict with the interests of our shareholders with respect to business decisions affecting us and our Operating Partnership, such as interests in the timing and pricing of property dispositions or refinancing transactions in order to obtain favorable tax treatment.
These individuals may have personal interests that conflict with the interests of our shareholders with respect to business decisions affecting us and our Operating Partnership, such as interests in the timing and pricing of property dispositions or refinancing transactions to obtain favorable tax treatment.
In certain cases, our ability to exercise the extension option is subject to the condition that we are not in default at the time we exercise such option, and we can provide no assurances that we will be able to exercise the extension options.
In certain cases, our ability to exercise the extension option is subject to the condition that we are not in default under the terms of the ground leases at the time we exercise such option, and we can provide no assurances that we will be able to exercise the extension options at such times.
Accordingly, in the event that actions taken in good faith by any of our trustees or officers impede our performance, our shareholders’ ability to recover damages from such trustees or officers will be limited.
Accordingly, if actions taken in good faith by any of our trustees or officers impede our performance, our shareholders’ ability to recover damages from such trustees or officers will be 21 limited.
Additionally, certain costs of our business, such as insurance, real estate taxes and corporate expenses, are relatively inflexible and generally do not decrease in the event that a property is not fully occupied, rental rates decrease, a tenant fails to pay rent, or other circumstances cause our revenues to decrease.
Additionally, certain costs of our business, such as insurance, real estate taxes, utilities, and corporate expenses, are relatively inflexible and 11 generally do not decrease if a property is not fully occupied, rental rates decline, a tenant fails to pay rent, or other circumstances cause our revenues to decrease.
Federal Reserve sharply raised short-term interest rates in 2022 to curtail the high inflation levels, which has caused our borrowing costs to rise. The U.S. Federal Reserve may continue to raise interest rates, which could result in adverse impacts on the U.S. economy, including slowing economic growth and potentially a recession.
Federal Reserve sharply raised short-term interest rates in 2022 and 2023 to curtail the high inflation levels, which has caused our borrowing costs to rise. The U.S. Federal Reserve may continue to raise interest rates, which could adversely impact the U.S. economy, including slowing economic growth and potentially causing a recession.
Changing weather patterns and climatic conditions, primarily as a result of climate change, may affect the predictability and frequency of natural disasters in some parts of the world and create additional uncertainty as to future trends and exposures, including certain areas in which our portfolio is concentrated such as Texas, Florida, Maryland, New York, and North Carolina.
Changing weather patterns and climatic conditions, primarily as a result of climate change, may affect the predictability and frequency of natural disasters and severe weather conditions in some parts of the world and create additional uncertainty as to future trends and exposures, including certain areas in which our portfolio is concentrated such as the states of Texas, Florida, and North Carolina and the MSAs of New York, Atlanta, Seattle, Chicago, and Washington, D.C.
Indemnities in our lease agreements may not fully protect us in the event that a tenant responsible for environmental 19 non-compliance or contamination becomes insolvent.
Indemnities in our lease agreements may not fully protect us if a tenant responsible for environmental non-compliance or contamination becomes insolvent.
The impact of any of these potential adverse consequences could have a material adverse effect on us. We could be adversely affected by the financial and other covenants and provisions contained in our credit facility, term loan agreements and note purchase agreements.
The impact of any of these potential adverse consequences could have a material adverse effect on us. We could be adversely affected by the financial and other covenants and provisions contained in our financing agreements.
When we pursue acquisitions, we may face competition from other real estate investors, which could (i) limit our ability to acquire properties, (ii) increase the purchase price we are required to pay, thus reducing the return to our shareholders, and (iii) cause us to agree to material restrictions or limitations in the acquisition agreements.
When we pursue acquisitions, we may face competition from other real estate investors, some of which may have substantial capital and willingness to accept more risk than we do, which could (i) limit our ability to acquire properties, (ii) increase the purchase price we are required to pay, thus reducing the return to our shareholders, and (iii) cause us to agree to material restrictions or limitations in the acquisition agreements.
As of December 31, 2022, we owned interests in Delray Marketplace and a residential building at One Loudoun Downtown through consolidated joint ventures and interests in the following through unconsolidated joint ventures: a three-property retail portfolio consisting of Livingston Shopping Center, Plaza Volente and Tamiami Crossing, the hotel component at Eddy Street Commons, the multifamily component at Glendale Town Center, and the development project at The Corner, and in the future, we may seek to co-invest with third parties through other joint ventures.
As of December 31, 2023, we owned interests in Delray Marketplace and a residential building at One Loudoun Downtown through consolidated joint ventures and interests in the following through unconsolidated joint ventures: a three-property retail portfolio consisting of Livingston Shopping Center, Plaza Volente and Tamiami Crossing; the hotel component at Eddy Street Commons; the multifamily component at Glendale Town Center; and the development project at The Corner – IN.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOperating Properties The following table summarizes the geographic diversity of the Company’s retail operating properties by region and state, ranked by ABR, as of December 31, 2022 (GLA and ABR in thousands) : Region/State Number of Properties (1) Owned GLA/NRA (2) Total Weighted Retail ABR (3) % of Weighted Retail ABR (3) South Texas 45 7,620 $ 148,879 25.7 % Florida 30 3,580 62,804 10.9 % Maryland 9 1,784 39,074 6.8 % North Carolina 8 1,536 31,443 5.4 % Virginia 7 1,135 29,566 5.1 % Georgia 10 1,707 26,235 4.5 % Tennessee 3 580 8,317 1.4 % Oklahoma 3 505 7,951 1.4 % South Carolina 2 258 3,126 0.5 % Total South 117 18,705 357,395 61.7 % West Washington 10 1,683 30,979 5.4 % Nevada 5 839 27,794 4.8 % California 3 655 16,416 2.8 % Arizona 5 725 15,116 2.6 % Utah 2 388 8,026 1.4 % Total West 25 4,290 98,331 17.0 % Midwest Indiana 15 1,624 29,290 5.1 % Illinois 8 1,163 24,360 4.2 % Michigan 1 308 7,150 1.2 % Missouri 1 453 4,197 0.7 % Ohio 1 236 1,912 0.3 % Total Midwest 26 3,784 66,909 11.5 % Northeast New York 8 1,083 34,553 6.0 % New Jersey 4 340 11,681 2.0 % Massachusetts 1 272 4,873 0.8 % Connecticut 1 206 3,639 0.6 % Pennsylvania 1 136 1,982 0.4 % Total Northeast 15 2,037 56,728 9.8 % Total 183 28,816 $ 579,363 100.0 % (1) Number of properties represents consolidated and unconsolidated retail properties.
Biggest changeOperating Properties The following table summarizes the geographic diversity of the Company’s retail operating properties by region and state, ranked by ABR, as of December 31, 2023 (GLA and ABR in thousands) : Region/State Number of Properties (1) Owned GLA/NRA (2) Total Weighted Retail ABR (3) % of Weighted Retail ABR (3) South Texas 44 7,492 $ 153,000 26.4 % Florida 30 3,510 66,619 11.5 % Maryland 8 1,412 34,363 5.9 % North Carolina 8 1,535 32,856 5.7 % Virginia 7 1,130 31,252 5.4 % Georgia 10 1,707 26,335 4.5 % Tennessee 3 580 8,698 1.5 % Oklahoma 3 505 8,300 1.4 % South Carolina 2 262 3,551 0.6 % Total South 115 18,133 364,974 62.9 % West Washington 10 1,661 30,606 5.3 % Nevada 5 845 28,184 4.9 % Arizona 5 726 15,829 2.7 % California 2 530 12,417 2.1 % Utah 2 388 8,062 1.4 % Total West 24 4,150 95,098 16.4 % Midwest Indiana 15 1,636 30,753 5.3 % Illinois 8 1,163 24,736 4.3 % Michigan 1 308 6,542 1.1 % Missouri 1 453 4,048 0.7 % Ohio 1 236 2,152 0.4 % Total Midwest 26 3,796 68,231 11.8 % Northeast New York 8 1,083 30,873 5.3 % New Jersey 4 340 11,256 1.9 % Massachusetts 1 264 4,167 0.7 % Connecticut 1 206 3,645 0.6 % Pennsylvania 1 136 1,982 0.4 % Total Northeast 15 2,029 51,923 8.9 % Total 180 28,108 $ 580,226 100.0 % (1) Number of properties represents consolidated and unconsolidated retail properties.
The following table summarizes the top 25 tenants at the Company’s retail properties based on minimum rents in place as of December 31, 2022 (GLA and dollars in thousands) : Tenant Primary DBA/ Number of Stores Number of Stores (1) Total Leased GLA/NRA (2) ABR (3) % of Weighted ABR (4) The TJX Companies, Inc. T.J.
The following table summarizes the top 25 tenants at the Company’s retail properties based on minimum rents in place as of December 31, 2023 (GLA and dollars in thousands) : Tenant Primary DBA/ Number of Stores Number of Stores (1) Total Leased GLA/NRA (2) ABR (3) % of Weighted ABR (4) The TJX Companies, Inc. T.J.
This column also excludes ground leases. (2) Expiring GLA excludes the square footage of structures located on land owned by the Company and ground-leased to tenants. (3) ABR represents the monthly contractual rent as of December 31, 2022 for each applicable tenant multiplied by 12. Excludes tenant reimbursements and ground lease revenue.
This column also excludes ground leases. (2) Expiring GLA excludes the square footage of structures located on land owned by the Company and ground-leased to tenants. (3) ABR represents the monthly contractual rent as of December 31, 2023 for each applicable tenant multiplied by 12. Excludes tenant reimbursements and ground lease revenue.
(2) Owned GLA/NRS represents gross leasable area owned by the Company and excludes the square footage of development and redevelopment projects.
(2) Owned GLA/NRA represents gross leasable area owned by the Company and excludes the square footage of development and redevelopment projects.
(4) The Company does not have any equity requirements related to this development. Total project costs are at KRG’s share and are net of KRG’s share of a $13.5 million TIF. 28 Tenant Diversification No individual retail tenant accounted for more than 2.5% of the portfolio’s ABR for the year ended December 31, 2022.
(4) The Company does not have any equity requirements related to this development. Total project costs are at KRG’s share and are net of KRG’s share of a $13.5 million TIF. 29 Tenant Diversification No individual retail tenant accounted for more than 2.7% of the portfolio’s ABR for the year ended December 31, 2023.
(2) Total project costs and KRG equity requirement represent costs to KRG post-merger and exclude any costs spent to date prior to the merger. (3) Estimated remaining NOI to come online excludes in-place NOI and NOI related to tenants that have signed leases but have not yet commenced paying rent.
(2) Total project costs and KRG equity requirement for Carillon MOB represent costs to KRG post-merger and exclude any costs spent to date prior to the merger with RPAI. (3) Estimated remaining NOI to come online excludes in-place NOI and NOI related to tenants that have signed leases but have not yet commenced paying rent.
(3) Total weighted retail ABR and percent of weighted retail ABR includes ground lease rent and represents the Company’s share of the ABR at consolidated and unconsolidated properties. 27 Development and Redevelopment Projects In addition to our operating properties, as of December 31, 2022, we owned an interest in three development projects currently under construction.
(3) Total weighted retail ABR and percent of weighted retail ABR includes ground lease rent and represents the Company’s share of the ABR at consolidated and unconsolidated properties. 28 Development and Redevelopment Projects In addition to our operating properties, as of December 31, 2023, we owned an interest in two development projects currently under construction.
(4) Percent of weighted ABR includes ground lease rent and represents the Company’s share of the ABR at consolidated and unconsolidated properties. 29 Lease Expirations In 2023, leases representing 9.3% of total retail ABR are scheduled to expire.
(4) Percent of weighted ABR includes ground lease rent and represents the Company’s share of the ABR at consolidated and unconsolidated properties. 30 Lease Expirations In 2024, leases representing 8.3% of total retail ABR are scheduled to expire.
The following table summarizes scheduled lease expirations for retail tenants and tenants open for business at in-process development projects as of December 31, 2022, assuming none of the tenants exercise renewal options (dollars in thousands, except per square foot data) : Expiring GLA – Retail (2) Expiring ABR per Sq. Ft.
The following table summarizes the scheduled lease expirations for retail tenants as of December 31, 2023, assuming none of the tenants exercise renewal options (dollars in thousands, except per square foot data) : Expiring Retail GLA (2) Expiring ABR per Sq. Ft.
Comparable new and renewal leases are defined as those for which the space was occupied by a tenant within the last 12 months.
The blended cash spreads for comparable new and non-option renewal leases were 22.7%. Comparable new and renewal leases are defined as those for which the space was occupied by a tenant within the last 12 months.
Lease Activity – New and Renewal During 2022, the Company executed new and renewal leases on 782 individual spaces totaling 4.9 million square feet (12.6% cash leasing spread on 532 comparable leases).
Lease Activity – New and Renewal During 2023, the Company executed new and renewal leases on 740 individual spaces totaling 4.9 million square feet (14.3% cash leasing spread on 552 comparable leases).
ITEM 2. PROPERTIES As of December 31, 2022, we owned interests in a portfolio of 183 operating retail properties totaling approximately 28.8 million square feet and one office property with 0.3 million square feet in 24 states. Of the 183 operating retail properties, 11 contain an office component. We also own interests in three development projects under construction.
ITEM 2. PROPERTIES As of December 31, 2023, we owned interests in a portfolio of 180 operating retail properties totaling approximately 28.1 million square feet and one office property with 0.3 million square feet in 24 states. Of the 180 operating retail properties, 10 contain an office component.
New leases were signed on 252 individual spaces for 1.1 million square feet of GLA (37.8% cash leasing spread on 95 comparable leases), while renewal leases were signed on 530 individual spaces for 3.7 million square feet of GLA (8.6% cash leasing spread on 437 comparable leases).
New leases were signed on 218 individual spaces for 1.1 million square feet of GLA (41.3% cash leasing spread on 107 comparable leases), while non-option renewal leases were signed on 310 individual spaces for 1.2 million square feet of GLA (13.0% cash leasing spread on 233 comparable leases) and option renewals were signed on 212 individual spaces for 2.6 million square feet of GLA (8.1% cash leasing spread).
The following table sets forth information with respect to the Company’s active development projects as of December 31, 2022 (dollars in thousands) : Project Metropolitan Statistical Area (MSA) KRG Ownership % Projected Completion Date (1) Total Commercial GLA Total Multifamily Units Total Project Costs – at KRG's Share (2) KRG Equity Requirement (2) KRG Remaining Spend Estimated Stabilized NOI to KRG Estimated Remaining NOI to Come Online (3) Active Projects The Landing at Tradition – Phase II Port St.
The following table sets forth information with respect to the Company’s active development projects as of December 31, 2023 (dollars in thousands) : Project MSA KRG Ownership % Projected Completion Date (1) Total Commercial GLA Total Multifamily Units Total Project Costs – at KRG's Share (2) KRG Equity Requirement (2) KRG Remaining Spend Estimated Stabilized NOI to KRG Estimated Remaining NOI to Come Online (3) Active Projects Carillon MOB Washington, D.C./Baltimore 100% Q4 2024 126,000 — $ 59,700 $ 59,700 $ 30,100 $3.5M–$4.0M $1.0M–$1.5M The Corner – IN (4) Indianapolis, IN 50% Q4 2024 24,000 285 31,900 — — $1.7M–$1.9M $1.7M–$1.9M Total 150,000 285 $ 91,600 $ 59,700 $ 30,100 $5.2M–$5.9M $2.7M–$3.4M (1) Projected completion date represents the earlier of one year after completion of project construction or substantial occupancy of the property.
Maxx (18), Marshalls (12), HomeGoods (11), Homesense (2), T.J. Maxx & HomeGoods combined (2) 45 1,323 $ 14,469 2.5 % Best Buy Co., Inc. Best Buy (15), Pacific Sales (1) 16 633 11,204 1.9 % Ross Stores, Inc. Ross Dress for Less (31), dd’s DISCOUNTS (1) 32 908 10,648 1.8 % PetSmart, Inc. 32 657 10,525 1.8 % Gap Inc.
Maxx (18), Marshalls (12), HomeGoods (11), Homesense (3), T.J. Maxx & HomeGoods combined (2), Sierra (1) 47 1,378 $ 15,422 2.7 % Best Buy Co., Inc. Best Buy (15), Pacific Sales (1) 16 633 11,294 1.9 % Ross Stores, Inc.
See “Schedule III – Consolidated Real Estate and Accumulated Depreciation” for a list of encumbrances on our properties.
We also own interests in two development projects under construction as of December 31, 2023 and an additional two properties with future redevelopment opportunities. See “Schedule III – Consolidated Real Estate and Accumulated Depreciation” for a list of encumbrances on our properties.
(3) ABR represents the monthly contractual rent for December 31, 2022 for each applicable tenant multiplied by 12 and does not include tenant reimbursements. ABR represents 100% of the ABR at consolidated properties and the Company’s share of the ABR at unconsolidated properties.
(2) Total leased GLA/NRA excludes the square footage of structures located on land owned by the Company and ground-leased to tenants. (3) ABR represents the monthly contractual rent for December 31, 2023 for each applicable tenant multiplied by 12 and does not include tenant reimbursements.
Kroger (6), Harris Teeter (2), QFC (1), Smith’s (1) 10 355 5,753 1.0 % Total Wine & More 14 332 5,688 1.0 % BJ’s Wholesale Club, Inc. 3 115 5,464 1.0 % Petco Health And Wellness Company, Inc. 22 299 5,461 0.9 % Ulta Beauty, Inc. 25 259 5,388 0.9 % Albertsons Companies, Inc.
Kroger (6), Harris Teeter (2), QFC (1), Smith’s (1) 10 355 5,844 1.0 % Lowe’s Companies, Inc. 6 — 5,838 1.0 % BJ’s Wholesale Club, Inc. 3 115 5,514 1.0 % Ulta Beauty, Inc. 25 259 5,465 0.9 % Five Below, Inc. 30 271 5,301 0.9 % Burlington Stores, Inc. 11 515 5,298 0.9 % Albertsons Companies, Inc.
Removed
Lucie, FL 100% Q3 2023 39,900 — $ 11,200 $ 11,200 $ 4,600 $1.1M–$1.2M $0.3M–$0.5M Carillon MOB Washington, D.C./Baltimore 100% Q4 2024 126,000 — 59,700 59,700 39,600 $3.5M–$4.0M $2.2M–$2.7M The Corner – IN (4) Indianapolis, IN 50% Q4 2024 24,000 285 31,900 — — $1.7M–$1.9M $1.7M–$1.9M Total 189,900 285 $ 102,800 $ 70,900 $ 44,200 $6.3M–$7.1M $4.2M–$5.1M (1) Projected completion date represents the earlier of one year after completion of project construction or substantial occupancy of the property.
Added
Ross Dress for Less (31), dd’s DISCOUNTS (1) 32 908 10,833 1.9 % PetSmart, Inc. 32 657 10,666 1.8 % Michaels Stores, Inc. Michaels 28 631 8,279 1.4 % Gap Inc. Old Navy (25), The Gap (3), Athleta (3), Banana Republic (2) 33 448 8,216 1.4 % Dick’s Sporting Goods, Inc.
Removed
Old Navy (25), The Gap (3), Banana Republic (3), Athleta (3) 34 455 8,348 1.4 % Bed Bath & Beyond Inc. Bed Bath & Beyond (14), buybuy BABY (9) 23 613 8,277 1.4 % Dick’s Sporting Goods, Inc. Dick’s Sporting Goods (12), Golf Galaxy (1) 13 652 8,265 1.4 % Michaels Stores, Inc.
Added
Dick’s Sporting Goods (12), Golf Galaxy (1) 13 625 7,893 1.4 % Publix Super Markets, Inc. 14 672 6,935 1.2 % Total Wine & More 15 355 6,151 1.1 % Nordstrom, Inc. Nordstrom Rack 10 307 5,882 1.0 % The Kroger Co.
Removed
Michaels 28 631 8,250 1.4 % Publix Super Markets, Inc. 14 669 6,884 1.2 % Lowe’s Companies, Inc. 6 — 5,838 1.0 % The Kroger Co.
Added
Safeway (3), Jewel-Osco (2), Tom Thumb (2) 7 345 5,100 0.9 % Petco Health And Wellness Company, Inc. 19 266 4,990 0.9 % Kohl’s Corporation 7 265 4,865 0.8 % The Container Store Group, Inc. 7 152 4,592 0.8 % DSW Designer Shoe Warehouse 16 314 4,568 0.8 % Office Depot, Inc.
Removed
Safeway (3), Jewel-Osco (2), Tom Thumb (2) 7 395 5,040 0.9 % Five Below, Inc. 29 258 4,945 0.9 % Fitness International, LLC 6 242 4,884 0.9 % Burlington Stores, Inc. 9 473 4,881 0.8 % Kohl’s Corporation 7 361 4,865 0.8 % Nordstrom, Inc. 8 259 4,494 0.8 % Ahold U.S.A. Inc.
Added
Office Depot (11), OfficeMax (3) 14 308 4,432 0.8 % Trader Joe’s 10 120 4,187 0.7 % Mattress Firm Group Inc. Mattress Firm (24), Sleepy’s (5) 29 144 4,174 0.7 % Barnes & Noble, Inc. 8 192 4,113 0.7 % Total Top Tenants 442 10,235 $ 165,852 28.6 % (1) Number of stores represents stores at consolidated and unconsolidated properties.
Removed
Stop & Shop (3), Giant Foods (1) 4 239 4,493 0.8 % DSW Designer Shoe Warehouse 16 314 4,482 0.8 % Walgreens Boots Alliance, Inc. 8 133 4,453 0.8 % Office Depot, Inc.
Added
ABR represents 100% of the ABR at consolidated properties and the Company’s share of the ABR at unconsolidated properties including ground lease rent.
Removed
Office Depot (11), OfficeMax (3) 14 308 4,380 0.8 % Total Top Tenants 425 10,883 $ 167,379 28.9 % (1) Number of stores represents stores at consolidated and unconsolidated properties. (2) Total leased GLA/NRA excludes the square footage of structures located on land owned by the Company and ground-leased to tenants.
Added
(3) Number of Expiring Leases (1) Shop Tenants Anchor Tenants Expiring ABR (Pro rata) Expiring Ground Lease ABR (Pro rata) % of Total ABR (Pro rata) Shop Tenants Anchor Tenants Total 2024 485 1,167,418 898,001 $ 47,440 $ 582 8.3 % $ 31.45 $ 12.96 $ 23.41 2025 498 1,157,045 2,439,120 66,465 4,748 12.3 % 31.15 12.81 18.71 2026 484 1,070,288 2,203,523 64,144 4,456 11.8 % 31.17 14.33 19.84 2027 527 1,197,417 2,361,375 71,216 5,979 13.3 % 32.04 14.08 20.12 2028 557 1,215,924 2,814,481 84,191 6,651 15.6 % 35.02 14.80 20.90 2029 388 872,995 2,488,383 65,910 2,967 11.9 % 34.39 15.11 20.12 2030 166 472,579 737,328 24,657 1,566 4.5 % 30.35 14.22 20.52 2031 152 413,549 614,162 23,544 2,331 4.5 % 33.14 16.19 23.01 2032 169 415,594 1,003,118 28,095 328 4.9 % 32.57 14.95 20.11 2033 191 501,328 709,077 28,287 3,778 5.5 % 34.15 15.81 23.41 Beyond 178 326,476 1,318,471 37,164 5,727 7.4 % 38.88 18.56 22.59 3,795 8,810,613 17,587,039 $ 541,113 $ 39,113 100.0 % $ 32.74 $ 14.67 $ 20.70 (1) Lease expirations table reflects rents in place as of December 31, 2023 and does not include option periods; 2024 expirations include 51 month-to-month retail tenants.
Removed
(3) Number of Expiring Leases (1) Shop Tenants Anchor Tenants Expiring ABR (Pro rata) % of Total ABR (Pro rata) Shop Tenants Anchor Tenants Total 2023 492 1,146,406 1,008,007 $ 50,308 9.3 % $ 30.13 $ 15.73 $ 23.38 2024 613 1,449,645 2,526,203 78,042 14.4 % 31.81 13.47 20.41 2025 483 1,158,554 2,483,431 67,122 12.4 % 30.96 12.89 18.69 2026 454 1,030,060 2,388,356 65,349 12.1 % 30.86 14.38 19.42 2027 512 1,188,641 2,502,486 71,206 13.2 % 31.13 13.83 19.42 2028 349 823,943 2,504,354 61,876 11.4 % 32.95 13.88 18.60 2029 186 457,296 1,184,686 34,359 6.4 % 32.86 16.43 20.98 2030 137 417,559 584,298 20,861 3.9 % 29.46 15.00 20.97 2031 128 346,289 619,508 20,991 3.9 % 32.11 16.11 21.81 2032 162 403,952 1,079,063 27,866 5.2 % 31.03 14.73 19.20 Beyond 170 400,146 1,567,163 42,245 7.8 % 34.58 18.16 21.49 3,686 8,822,491 18,447,555 $ 540,225 100.0 % $ 31.43 $ 14.55 $ 20.05 (1) Lease expirations table reflects rents in place as of December 31, 2022 and does not include option periods; 2023 expirations include 44 month-to-month retail tenants.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeManagement believes that such matters will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows taken as a whole. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 30 PART II
Biggest changeManagement believes that such matters will not have a material adverse impact on our consolidated financial condition, results of operations or cash flows taken as a whole. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 31 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+55 added−2 removed8 unchanged
Biggest changeIn February 2022, the Company’s Board of Trustees extended the program until February 2023 and in April 2022, increased the size of the program from $150.0 million to $300.0 million. In February 2023, the Company’s Board of Trustees extended the program for an additional year.
Biggest changeIn April 2022, the Company’s Board of Trustees increased the size of the program from $150.0 million to $300.0 million and in February 2024, extended the program for an additional year. The program may be suspended or terminated at any time by the Company and will terminate on February 28, 2025, if not terminated or extended prior to that date.
The graph assumes that the value of the investment in our common shares and each index was $100 at December 31, 2017 and that all cash distributions were reinvested. The shareholder return shown on the graph below is not indicative of future performance.
The graph assumes that the value of the investment in our common shares and each index was $100 at December 31, 2018 and that all cash distributions were reinvested. The shareholder return shown on the graph below is not indicative of future performance.
The following graph compares the cumulative total shareholder return of our common shares for the period from December 31, 2017 to December 31, 2022, to the S&P 500 Index and the published NAREIT All Equity REIT Index over the same period.
The following graph compares the cumulative total shareholder return of our common shares for the period from December 31, 2018 to December 31, 2023, to the S&P 500 Index and the published NAREIT All Equity REIT Index over the same period.
Under certain circumstances, we could be required to make distributions in excess of cash available for distributions in order to meet such requirements. For the taxable year ended December 31, 2022, approximately 86.1% of our distributions to shareholders constituted taxable ordinary income dividends and approximately 13.9% constituted taxable capital gains dividends.
Under certain circumstances, we could be required to make distributions in excess of cash available for distributions in order to meet such requirements. For the taxable year ended December 31, 2023, approximately 90.6% of our distributions to shareholders constituted taxable ordinary income dividends and approximately 9.4% constituted taxable capital gains dividends.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common shares trade on the New York Stock Exchange (the “NYSE”) under the symbol “KRG.” On February 15, 2023, the closing price of our common shares on the NYSE was $22.60.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common shares trade on the New York Stock Exchange (the “NYSE”) under the symbol “KRG.” On February 14, 2024, the closing price of our common shares on the NYSE was $21.18.
Holders On February 15, 2023, there were 10,029 registered holders of record of our common shares, which does not include beneficial or non-registered holders that held their shares through various brokerage firms.
Holders On February 14, 2024, there were 9,468 registered holders of record of our common shares, which does not include beneficial or non-registered holders that held their shares through various brokerage firms.
Issuer Repurchases; Unregistered Sales of Securities During the three months ended December 31, 2022, certain of our employees surrendered common shares owned by them to satisfy their statutory minimum U.S. federal and state tax obligations associated with the vesting of restricted common shares of beneficial interest issued under our 2013 Equity Incentive Plan, as amended and restated as of May 11, 2022.
Issuer Repurchases; Unregistered Sales of Securities From time to time, certain of our employees surrender common shares owned by them to satisfy their statutory minimum U.S. federal and state tax obligations associated with the vesting of restricted common shares of beneficial interest issued under the Company’s 2013 Equity Incentive Plan, as amended and restated as of May 11, 2022, which are repurchased by the Company.
Performance Graph Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act or the Exchange Act that might incorporate SEC filings, in whole or in part, the following performance graph will not be incorporated by reference into any such filings.
Issuances Under Equity Compensation Plans For information regarding the securities authorized for issuance under our equity compensation plans, see Item 12 of this Annual Report on Form 10-K. 32 Performance Graph Notwithstanding anything to the contrary set forth in any of our filings under the Securities Act or the Exchange Act that might incorporate SEC filings, in whole or in part, the following performance graph will not be incorporated by reference into any such filings.
The actual returns shown on the graph above are as follows: 12/17 6/18 12/18 6/19 12/19 6/20 12/20 6/21 12/21 6/22 12/22 Kite Realty Group Trust $ 100.00 $ 90.43 $ 77.54 $ 88.64 $ 118.71 $ 72.31 $ 94.79 $ 142.06 $ 143.05 $ 115.61 $ 144.19 S&P 500 $ 100.00 $ 102.65 $ 95.62 $ 113.34 $ 125.72 $ 121.85 $ 148.85 $ 171.56 $ 191.58 $ 153.34 $ 156.89 FTSE NAREIT Equity REITs $ 100.00 $ 101.02 $ 95.38 $ 112.34 $ 120.17 $ 97.69 $ 110.56 $ 134.83 $ 158.36 $ 126.37 $ 119.78 ITEM 6. [RESERVED] 32
The actual returns shown on the graph above are as follows: 12/18 6/19 12/19 6/20 12/20 6/21 12/21 6/22 12/22 6/23 12/23 Kite Realty Group Trust $ 100.00 $ 114.32 $ 153.10 $ 93.25 $ 122.25 $ 183.22 $ 184.49 $ 149.10 $ 185.96 $ 201.98 $ 211.36 S&P 500 $ 100.00 $ 118.54 $ 131.49 $ 127.44 $ 155.68 $ 179.42 $ 200.37 $ 160.38 $ 164.08 $ 191.80 $ 207.21 FTSE NAREIT Equity REITs $ 100.00 $ 117.78 $ 126.00 $ 102.43 $ 115.92 $ 141.37 $ 166.04 $ 132.50 $ 125.58 $ 132.32 $ 142.83 ITEM 6. [RESERVED] 33 ITEM 7.
Removed
The following table summarizes the number of shares repurchased during the three months ended December 31, 2022: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (1) October 1, 2022 to October 31, 2022 — $ — N/A $ 300,000,000 November 1, 2022 to November 30, 2022 18,521 $ 21.11 N/A $ 300,000,000 December 1, 2022 to December 31, 2022 — $ — N/A $ 300,000,000 Total 18,521 $ 21.11 31 (1) Represents amounts outstanding under the Company’s authorized Share Repurchase Program announced in February 2021.
Added
There were no shares of common stock surrendered or repurchased during the three months ended December 31, 2023. As of December 31, 2023, $300.0 million remained available for repurchases under the Company’s authorized Share Repurchase Program, which was announced in February 2021.
Removed
The program may be suspended or terminated at any time by the Company and will terminate on February 28, 2024, if not terminated or extended prior to that date. Issuances Under Equity Compensation Plans For information regarding the securities authorized for issuance under our equity compensation plans, see Item 12 of this Annual Report on Form 10-K.
Added
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the accompanying audited consolidated financial statements and related notes thereto and Item 1A. “Risk Factors ” appearing elsewhere in this Annual Report on Form 10-K.
Added
In this discussion, unless the context suggests otherwise, references to “our Company,” “we,” “us,” and “our” mean Kite Realty Group Trust and its direct and indirect subsidiaries, including Kite Realty Group, L.P.
Added
Overview In the following overview, we discuss, among other things, the status of our business and properties, the effect that current U.S. economic conditions is having on our retail tenants and us, and the current state of the financial markets and how it impacts our financing strategy.
Added
Our Business and Properties Kite Realty Group Trust is a publicly held REIT that, through its majority-owned subsidiary, Kite Realty Group, L.P., owns interests in various operating subsidiaries and joint ventures engaged in the ownership, operation, acquisition, development, and redevelopment of high-quality, open-air shopping centers and mixed-use assets that are primarily grocery-anchored and located in high-growth Sun Belt markets and select strategic gateway markets in the United States.
Added
Following our merger with RPAI in 2021, we became a top-five open-air shopping center REIT based upon market capitalization. We derive our revenue primarily from the collection of contractual rents and reimbursement payments from tenants under existing lease agreements at each of our properties.
Added
Therefore, our operating results depend materially on, among other things, the ability of our tenants to make required lease payments, the health and resilience of the U.S. retail sector, interest rate volatility, stability in the banking sector, job growth, the real estate market, and overall economic conditions.
Added
As of December 31, 2023, we owned interests in 180 operating retail properties totaling approximately 28.1 million square feet and one office property with 0.3 million square feet. Of the 180 operating retail properties, 10 contain an office component. We also owned two development projects under construction as of this date and an additional two properties with future redevelopment opportunities.
Added
Inflation We believe inflationary concerns could negatively impact consumer confidence and spending and our tenants’ sales and overall health. This could, in turn, continue to put downward pricing pressure on rents that we are able to charge to new or renewing tenants, such that future rent spreads and, in some cases, our percentage rents, could be adversely impacted.
Added
Many of our leases contain provisions designed to mitigate the adverse impact of inflation, including stated rent increases and requirements for tenants to pay a share of operating expenses, including common area maintenance, real estate taxes, insurance or other operating expenses related to the maintenance of our properties, with escalation clauses in certain leases.
Added
In 2023, we have made significant improvements converting leases to higher fixed rent bumps and including CPI protection. However, the stated rent increases or limits on such tenant’s obligation to pay its share of operating expenses could be lower than the increase in inflation at any given time.
Added
Inflation may also increase labor or other general and administrative expenses that cannot be easily reduced. Portfolio Update In 2023, demand for open-air retail real estate was strong due to the limited availability of desirable retail space and limited new construction over the previous 15 years.
Added
As a result, we experienced our highest quarterly new leasing activity in the Company’s history in the fourth quarter with over 380,000 square feet of new leasing volume. Open-air centers are thriving for a variety of reasons including their ability to function as last mile fulfillment centers and their convenient and affordable nature for retailers and consumers.
Added
This includes conveniently located and easily accessible parking fields, lower operating costs as compared to other retail formats, and essential anchors that drive daily trips.
Added
In addition, the Company’s property types are particularly suited for retailers’ current and evolving needs, including curbside pick-up and buying online and picking up in store (“BOPIS”), which we believe will benefit from tenant demand for additional space.
Added
The strength of the Company’s real estate is further evidenced by our continued strong cash leasing spreads and ABR for the retail portfolio of $20.70 per square foot.
Added
The Company has continued to improve its asset quality and through the October 2021 merger with RPAI acquired a refined portfolio of high-quality, open-air shopping centers and mixed-use assets. 34 In evaluating potential acquisition, development, and redevelopment opportunities, we look for strong sub-markets where average household income, educational attainment, population density, traffic counts and daytime workforce populations are above the broader market average.
Added
We also focus on locations that are benefiting from current population migratory patterns, namely major cities in business-friendly states with no or relatively low income taxes, and mild or temperate climates. In our largest sub-markets, household incomes are significantly higher and state income taxes are relatively lower than the medians for the broader markets.
Added
In addition to targeting sub-markets with strong consumer demographics, we focus on having the most desirable tenant mix at each shopping center. We have aggressively targeted and executed leases with prominent grocers including Publix, Lidl, Aldi, Whole Foods, Trader Joe’s, Sprouts Farmers Market, and The Fresh Market, expanding retailers such as T.J.
Added
Maxx, HomeGoods, Ross Dress for Less, Burlington, Old Navy, J.Crew Factory, Dick’s Sporting Goods, and pOpshelf, service and restaurant retailers and other retailers such as Ulta Beauty, REI, Five Below and Total Wine & More. Additionally, we have identified cost-efficient ways to relocate, re-tenant and renegotiate leases at several of our properties, which allows us to attract more suitable tenants.
Added
Capital and Financing Activities In 2023, we maintained a conservative balance sheet and improved our liquidity to fund future growth. We ended 2023 with approximately $1.1 billion of combined cash and borrowing capacity on the Revolving Facility.
Added
In addition, as of December 31, 2023, we had $269.6 million of debt principal scheduled to mature through December 31, 2024, which we expect will be satisfied with proceeds from the Notes Due 2034 that were issued in January 2024.
Added
The three investment grade credit ratings we maintain provide us with access to the unsecured public bond market, which we may continue to use in the future to finance acquisitions, repay maturing debt and fix interest rates.
Added
Results of Operations As of December 31, 2023, we owned interests in 180 operating retail properties, one office property, two development projects currently under construction, and two additional properties with future redevelopment opportunities.
Added
The following table sets forth the total operating properties and development projects we owned as of December 31, 2023, 2022 and 2021: Number of Properties 2023 2022 2021 Operating retail properties (1) 180 183 180 Office properties 1 1 1 Active development and redevelopment projects 2 3 8 Future development and redevelopment opportunities 2 1 1 (1) Included within operating retail properties are 10, 11, and 11 properties that contain an office component as of December 31, 2023, 2022 and 2021, respectively.
Added
The comparability of results of operations for the year ended December 31, 2023 is affected by our development, redevelopment, and operating property acquisition and disposition activities between 2021 through 2023.
Added
Therefore, we believe it is most useful to review the comparisons of our results of operations for these years (as set forth below under “Comparison of Operating Results for the Years Ended December 31, 2023 and 2022”) in conjunction with the discussion of our activities during those periods, which is set forth below.
Added
Acquisitions In addition to the 100 properties acquired in the October 2021 merger with RPAI, the following operating properties were acquired during the years ended December 31, 2023, 2022 and 2021: Property Name MSA Acquisition Date GLA Nora Plaza outparcel Indianapolis, IN December 22, 2021 23,722 Pebble Marketplace Las Vegas, NV February 16, 2022 85,796 MacArthur Crossing two-tenant building Dallas, TX April 13, 2022 56,077 Palms Plaza Miami, FL July 15, 2022 68,976 Prestonwood Place Dallas, TX September 22, 2023 155,975 35 Dispositions The following operating and other properties were sold during the years ended December 31, 2023, 2022 and 2021: Property Name MSA Disposition Date GLA Westside Market Dallas, TX October 26, 2021 93,377 Plaza Del Lago (1) Chicago, IL June 16, 2022 100,016 Lincoln Plaza – Lowe’s (2) Worcester, MA October 27, 2022 — Kingwood Commons Houston, TX May 8, 2023 158,172 Pan Am Plaza & Garage Indianapolis, IN June 8, 2023 — Reisterstown Road Plaza Baltimore, MD September 11, 2023 376,683 Eastside Dallas, TX October 24, 2023 43,640 (1) Plaza Del Lago also contains 8,800 square feet of residential space comprised of 18 multifamily rental units.
Added
(2) We sold the ground lease interest in one tenant at an existing multi-tenant operating retail property. The total number of properties in our portfolio was not affected by this transaction.
Added
Development and Redevelopment Projects The following properties were under active development or redevelopment during portions of the years ended December 31, 2023, 2022 and 2021 and removed from our operating portfolio during such period: Project Name MSA Transition to Development or Redevelopment (1) Transition to Operating Portfolio GLA Active Projects Carillon MOB (2) Washington, D.C.
Added
October 2021 Pending 126,000 The Corner – IN (2) Indianapolis, IN December 2015 Pending 24,000 Future Opportunities Hamilton Crossing Centre (2)(3) Indianapolis, IN June 2014 Pending 92,283 Edwards Multiplex – Ontario (2) Los Angeles, CA March 2023 Pending 124,614 Completed Projects Glendale Town Center Indianapolis, IN March 2019 December 2021 199,021 Eddy Street Commons – Phase III South Bend, IN September 2020 March 2022 18,600 Shoppes at Quarterfield Baltimore, MD October 2021 June 2022 58,000 One Loudoun Downtown – Pads G&H Residential Washington, D.C.
Added
October 2021 June 2022 — Circle East Baltimore, MD October 2021 September 2022 82,000 One Loudoun Downtown – Pads G&H Commercial Washington, D.C. October 2021 December 2022 67,000 The Landing at Tradition – Phase II Port St.
Added
Lucie, FL September 2021 June 2023 39,900 (1) Transition date represents the date the property was transferred from our operating portfolio into redevelopment status. For legacy RPAI projects, the transition date represents the later of the date of the closing of the merger (October 2021) and the date the project was transferred into redevelopment status.
Added
(2) This property has been identified as a redevelopment property and is not included in the operating portfolio or the same property pool. The redevelopment projects at Hamilton Crossing Centre and The Corner – IN will include the creation of a mixed-use development. (3) Approximately half of the Hamilton Crossing site was sold in January 2022 to Republic Airways Inc.
Added
In addition to the sale, the Company entered into a development and construction management agreement for the development of a corporate campus for Republic Airways.
Added
Phase I of the corporate campus was completed in 2023. 36 Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 The following table reflects changes in the components of our consolidated statements of operations for the years ended December 31, 2023 and 2022 (in thousands) : Year Ended December 31, 2023 2022 Change Revenue: Rental income $ 810,146 $ 782,349 $ 27,797 Other property-related revenue 8,492 11,108 (2,616) Fee income 4,366 8,539 (4,173) Total revenue 823,004 801,996 21,008 Expenses: Property operating 107,958 107,217 741 Real estate taxes 102,426 104,589 (2,163) General, administrative and other 56,142 54,860 1,282 Merger and acquisition costs — 925 (925) Depreciation and amortization 426,361 469,805 (43,444) Impairment charges 477 — 477 Total expenses 693,364 737,396 (44,032) Gain on sales of operating properties, net 22,601 27,069 (4,468) Operating income 152,241 91,669 60,572 Other (expense) income: Interest expense (105,349) (104,276) (1,073) Income tax expense of taxable REIT subsidiary (533) (43) (490) Equity in earnings of unconsolidated subsidiaries 33 256 (223) Other income, net 1,991 240 1,751 Net income (loss) 48,383 (12,154) 60,537 Net income attributable to noncontrolling interests (885) (482) (403) Net income (loss) attributable to common shareholders $ 47,498 $ (12,636) $ 60,134 Property operating expense to total revenue ratio 13.1 % 13.4 % Rental income (including tenant reimbursements) increased $27.8 million, or 3.6%, due to the following (in thousands) : Net change Year Ended December 31, 2022 to 2023 Properties or components of properties sold during 2022 or 2023 $ (7,830) Properties under redevelopment or acquired during 2022 and/or 2023 12,134 Properties fully operational during 2022 and 2023 and other 23,493 Total $ 27,797 The net increase of $23.5 million in rental income for properties that were fully operational during 2022 and 2023 is primarily due to (i) increases in base minimum rent of $14.7 million due to contractual rent changes and tenant reimbursements of $2.9 million due to higher recoverable common area maintenance expenses, (ii) a decrease in bad debt expense of $2.1 million, and (iii) increases in lease termination income of $1.6 million, overage rent of $1.2 million due to improved tenant performance, and $1.0 million in ancillary income.
Added
The occupancy of the fully operational properties increased from 91.8% for 2022 to 92.0% for 2023. We continued to experience strong leasing volumes in 2023 and generate higher base rent on new leases and renewals.
Added
The average base rents for new comparable leases signed in 2023 was $27.53 per square foot compared to average expiring base rents of $19.48 per square foot in that period. The average base rents for renewals signed in 2023 was $18.10 per square foot 37 compared to average expiring base rents of $16.74 per square foot in that period.
Added
For the entire portfolio, the spread between leased and occupied square footage is approximately 280 basis points and represents approximately $31.0 million of NOI, the majority of which is expected to come online in 2024.
Added
In addition, the ABR per square foot of our operating retail portfolio continued to improve, as it increased to $20.70 per square foot as of December 31, 2023 from $20.02 per square foot as of December 31, 2022. Other property-related revenue primarily consists of parking revenues, gains on the sale of land and other miscellaneous activity.
Added
This revenue decreased by $2.6 million primarily as a result of lower gains on sales of undepreciated assets of $2.8 million recognized during the year ended December 31, 2023 and a decrease in parking revenue of $1.3 million due to the sale of Pan Am Plaza Garage in June 2023, partially offset by an increase in miscellaneous income of $1.5 million.
Added
We recorded fee income of $4.4 million and $8.5 million during the years ended December 31, 2023 and 2022, respectively, from property management and development services provided to third parties and unconsolidated joint ventures.
Added
The decrease in fee income is primarily due to a decrease in development fees earned related to the development of a corporate campus for Republic Airways at Hamilton Crossing Centre.
Added
Property operating expenses increased $0.7 million, or 0.7%, due to the following (in thousands) : Net change Year Ended December 31, 2022 to 2023 Properties or components of properties sold during 2022 or 2023 $ (2,227) Properties under redevelopment or acquired during 2022 and/or 2023 1,236 Properties fully operational during 2022 and 2023 and other 1,732 Total $ 741 The net increase of $1.7 million in property operating expenses for properties that were fully operational during 2022 and 2023 is primarily due to increases of (i) $3.3 million in non-recoverable operating expenses, the majority of which relates to vacancies caused by retailer bankruptcies, (ii) $0.4 million in landscaping and repairs and maintenance expenses, and (iii) $0.2 million in security expenses, partially offset by a $3.0 million decrease in insurance expense.
Added
As a percentage of revenue, property operating expenses decreased from 13.4% to 13.1% primarily due to an increase in revenue in 2023.
Added
Real estate taxes decreased $2.2 million, or 2.1%, due to the following (in thousands) : Net change Year Ended December 31, 2022 to 2023 Properties or components of properties sold during 2022 or 2023 $ (1,854) Properties under redevelopment or acquired during 2022 and/or 2023 2,001 Properties fully operational during 2022 and 2023 and other (2,310) Total $ (2,163) The net decrease of $2.3 million in real estate taxes for properties that were fully operational during 2022 and 2023 is primarily due to a decrease in real estate tax assessments at certain properties in the portfolio in 2023, most notably for certain of our Texas and Illinois properties.
Added
The majority of real estate tax expense is recoverable from tenants and such recovery is reflected within rental income. General, administrative and other expenses increased $1.3 million, or 2.3%, primarily due to an increase in transportation expenses and consulting fees, partially offset by a decrease in legal expenses and payroll costs due to lower head count.
Added
The Company did not incur any significant merger and acquisition costs related to the October 2021 merger with RPAI during the year ended December 31, 2023.
Added
The Company incurred $0.9 million of merger and acquisition costs during the year ended December 31, 2022, primarily consisting of professional fees and technology costs. 38 Depreciation and amortization expense decreased $43.4 million, or 9.2%, due to the following (in thousands) : Net change Year Ended December 31, 2022 to 2023 Properties or components of properties sold during 2022 or 2023 $ (9,444) Properties under redevelopment or acquired during 2022 and/or 2023 6,218 Properties fully operational during 2022 and 2023 and other (40,218) Total $ (43,444) The net increase of $6.2 million in depreciation and amortization at properties under redevelopment or acquired during 2022 and 2023 is primarily due to the reclassification of Edwards Multiplex – Ontario into redevelopment in March 2023 along with the acquisitions of Palms Plaza in July 2022 and Prestonwood Place in September 2023.
Added
The net decrease of $40.2 million in depreciation and amortization at properties that were fully operational during 2022 and 2023 is primarily due to certain assets with shorter useful lives acquired in the October 2021 merger with RPAI that became fully depreciated during the prior year.
Added
Based on the results of our evaluations for impairment, we recorded a $0.5 million impairment charge during the year ended December 31, 2023 related to Eastside, a retail operating property in the Dallas MSA that qualified for held-for-sale accounting treatment as of September 30, 2023 and was sold on October 24, 2023.
Added
No impairment charges were recorded during the year ended December 31, 2022.
Added
We recorded a net gain on sales of operating properties of $22.6 million for the year ended December 31, 2023 on the sale of Kingwood Commons, the undeveloped land and related parking garage at Pan Am Plaza, Reisterstown Road Plaza, and Eastside compared to a net gain of $27.1 million on the sale of Plaza Del Lago, a portion of Hamilton Crossing Centre and the ground lease interest in Lowe’s at Lincoln Plaza for the year ended December 31, 2022.
Added
Interest expense increased $1.1 million, or 1.0%, primarily due to higher interest costs related to our variable rate debt, including borrowings on the Revolving Facility that were used to repay mortgages payable at maturity, partially offset by favorable interest rate swaps.
Added
Management’s discussion of the financial condition, changes in financial condition and results of operations for the year ended December 31, 2022, with comparison to the year ended December 31, 2021, was included in

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

85 edited+11 added−68 removed34 unchanged
Biggest changeOur calculations of FFO and reconciliation to net income and FFO, as adjusted, for the years ended December 31, 2022, 2021 and 2020 (unaudited) are as follows (in thousands) : Year Ended December 31, 2022 2021 2020 Net loss $ (12,154) $ (81,722) $ (16,123) Less: net income attributable to noncontrolling interests in properties (623) (514) (528) Less: gain on sales of operating properties, net (27,069) (31,209) (4,733) Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests 471,086 201,834 130,091 FFO of the Operating Partnership (1) 431,240 88,389 108,707 Less: Limited Partners’ interests in FFO (5,395) (1,945) (2,826) FFO attributable to common shareholders (1) $ 425,845 $ 86,444 $ 105,881 FFO of the Operating Partnership (1) $ 431,240 $ 88,389 $ 108,707 Add: merger and acquisition costs 925 86,522 — Add: severance charges — — 3,253 Less: prior period collection impact (2,556) (3,707) — FFO, as adjusted, of the Operating Partnership $ 429,609 $ 171,204 $ 111,960 (1) “FFO of the Operating Partnership” measures 100% of the operating performance of the Operating Partnership’s real estate properties.
Biggest changeFrom time to time, the Company may report or provide guidance with respect to “FFO, as adjusted,” which removes the impact of certain non-recurring and non-operating transactions or other items the Company does not consider to be representative of its core operating results including, without limitation, (i) gains or losses associated with the early extinguishment of debt, (ii) gains or losses associated with litigation involving the Company that is not in the normal course of business, (iii) merger and acquisition costs, (iv) the impact on earnings from employee severance, (v) the excess of redemption value over carrying value of preferred stock redemption, and (vi) in 2022 and 2021, the impact of prior period bad debt or the collection of accounts receivable previously written off (“prior period collection impact”) due to the recovery from the COVID-19 pandemic, which are not otherwise adjusted in the Company’s calculation of FFO. 41 Our calculations of FFO and reconciliation to net income and FFO, as adjusted, for the years ended December 31, 2023, 2022 and 2021 (unaudited) are as follows (dollars in thousands) : Year Ended December 31, 2023 2022 2021 Net income (loss) $ 48,383 $ (12,154) $ (81,722) Less: net income attributable to noncontrolling interests in properties (257) (623) (514) Less: gain on sales of operating properties, net (22,601) (27,069) (31,209) Add: impairment charges 477 — — Add: depreciation and amortization of consolidated and unconsolidated entities, net of noncontrolling interests 427,335 471,086 201,834 FFO of the Operating Partnership (1) 453,337 431,240 88,389 Less: Limited Partners’ interests in FFO (6,447) (5,395) (1,945) FFO attributable to common shareholders (1) $ 446,890 $ 425,845 $ 86,444 FFO per share of the Operating Partnership – diluted $ 2.03 $ 1.94 $ 0.78 FFO of the Operating Partnership (1) $ 453,337 $ 431,240 $ 88,389 Add: merger and acquisition costs — 925 86,522 Less: prior period collection impact — (2,556) (3,707) FFO, as adjusted, of the Operating Partnership $ 453,337 $ 429,609 $ 171,204 FFO, as adjusted, per share of the Operating Partnership – diluted $ 2.03 $ 1.93 $ 1.50 (1) “FFO of the Operating Partnership” measures 100% of the operating performance of the Operating Partnership’s real estate properties.
For informational purposes, we also provide Adjusted EBITDA, which we define as EBITDA less (i) EBITDA from unconsolidated entities, (ii) gains on sales of operating properties or impairment charges, (iii) merger and acquisition costs, (iv) other income and expense, (v) noncontrolling interest EBITDA, and (vi) other non-recurring activity or items impacting comparability from period to period.
For informational purposes, we also provide Adjusted EBITDA, which we define as EBITDA less (i) Adjusted EBITDA from unconsolidated entities, (ii) gains on sales of operating properties or impairment charges, (iii) merger and acquisition costs, (iv) other income and expense, (v) noncontrolling interest Adjusted EBITDA, and (vi) other non-recurring activity or items impacting comparability from period to period.
We consider a number of factors when evaluating our level of indebtedness and when making decisions regarding additional borrowings or equity offerings, including the interest or dividend rate, the maturity date and the Company’s debt maturity ladder, the impact of financial metrics such as overall Company leverage levels and coverage ratios, and the Company’s ability to generate cash flow to cover debt service.
We consider a number of factors when evaluating our level of indebtedness and making decisions regarding additional borrowings or equity offerings, including the interest or dividend rate, the maturity date and the Company’s debt maturity ladder, the impact of financial metrics such as overall Company leverage levels and coverage ratios, and the Company’s ability to generate cash flow to cover debt service.
In the future, we will continue to monitor the capital markets and may consider raising additional capital through the issuance of our common shares, preferred shares or other securities. We may also raise capital by disposing of properties, land parcels or other assets that are no longer core components of our growth strategy.
In the future, we will continue to monitor the capital markets and may consider raising additional capital through the issuance of our common or preferred shares or other securities. We may also raise capital by disposing of properties, land parcels or other assets that are no longer core components of our growth strategy.
(2) Partner share of consolidated joint venture debt is calculated based upon the partner’s pro rata ownership of the joint venture, multiplied by the related secured debt balance. 41 Liquidity and Capital Resources Overview Our primary finance and capital strategy is to maintain a strong balance sheet with sufficient flexibility to fund our operating and investment activities in a cost-effective manner.
(2) Partner share of consolidated joint venture debt is calculated based upon the partner’s pro rata ownership of the joint venture, multiplied by the related secured debt balance. Liquidity and Capital Resources Overview Our primary finance and capital strategy is to maintain a strong balance sheet with sufficient flexibility to fund our operating and investment activities in a cost-effective manner.
Our computation of NOI and Same Property NOI may differ from the methodology used by other REITs and, therefore, may not be comparable to such other REITs. 38 When evaluating the properties that are included in the same property pool, we have established specific criteria for determining the inclusion of properties acquired or those recently under development.
Our computation of NOI and Same Property NOI may differ from the methodology used by other REITs and, therefore, may not be comparable to such other REITs. When evaluating the properties that are included in the same property pool, we have established specific criteria for determining the inclusion of properties acquired or those recently under development.
The Company intends to fund any future repurchases under the Share Purchase Program with cash on hand or availability under the 2022 Revolving Facility, subject to any applicable restrictions. The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements and other factors.
The Company intends to fund any future repurchases under the Share Purchase Program with cash on hand or availability under the Revolving Facility, subject to any applicable restrictions. The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements, and other factors.
Examples of situations considered to be impairment indicators for both operating properties and development projects include, but are not limited to: • a substantial decline in or continued low occupancy rate or cash flow; • expected significant declines in occupancy in the near future; • continued difficulty in leasing space; • a significant concentration of financially troubled tenants; • a reduction in the anticipated holding period; • a cost accumulation or delay in project completion date significantly above and beyond the original development or redevelopment estimate; • a significant decrease in the market price not in line with general market trends; and 48 • any other quantitative or qualitative events or factors deemed significant by the Company’s management or Board of Trustees.
Examples of situations considered to be impairment indicators for both operating properties and development projects include, but are not limited to: • a substantial decline in or continued low occupancy rate or cash flow; • expected significant declines in occupancy in the near future; • continued difficulty in leasing space; • a significant concentration of financially troubled tenants; 49 • a reduction in the anticipated holding period; • a cost accumulation or delay in the project completion date significantly above and beyond the original development or redevelopment estimate; • a significant decrease in the market price not in line with general market trends; and • any other quantitative or qualitative events or factors deemed significant by the Company’s management or Board of Trustees.
Based on these estimates, we record the estimated fair value to the applicable assets and liabilities. In making 47 estimates of fair value, a number of sources are used, including information obtained as a result of pre-acquisition due diligence, marketing and leasing activities.
Based on these estimates, we record the estimated fair value to the applicable assets and liabilities. In making estimates of fair value, a number of sources are used, including information obtained as a result of pre-acquisition due diligence, marketing and leasing activities.
Any below-market renewal options are also considered in the in-place lease values. The capitalized above-market and below-market lease values are amortized as a reduction of or addition to rental income over the term of the lease.
Any below-market renewal options are also considered in the in-place lease values. The capitalized above-market and below-market lease values are amortized as a reduction of, or addition to, rental income over the term of the leases.
We believe we currently have sufficient financing in place to fund these projects and expect to do so primarily through free cash flow or borrowings on the 2022 Revolving Facility.
We believe we currently have sufficient financing in place to fund these projects and expect to do so primarily through free cash flow or borrowings on the Revolving Facility.
Although we estimate uncollectible receivables and provide for them through charges against income, actual experience may differ from those estimates. We recognize the sale of real estate when control transfers to the buyer. As part of our ongoing business strategy, we will, from time to time, sell properties, land parcels and outlots, some of which are ground-leased to tenants. 49
Although we estimate uncollectible receivables and provide for them through charges against income, actual experience may differ from those estimates. We recognize the sale of real estate when control transfers to the buyer. As part of our ongoing business strategy, we will, from time to time, sell properties, land parcels and outlots, some of which are ground-leased to tenants. 50
FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flows from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions.
FFO (a) should not be considered as an alternative to net income (calculated in accordance with GAAP) for the purpose of measuring our financial performance, (b) is not an alternative to cash flow from operating activities (calculated in accordance with GAAP) as a measure of our liquidity, and (c) is not indicative of funds available to satisfy our cash needs, including our ability to make distributions.
Our Principal Capital Resources For a discussion of cash generated from operations, see “Cash Flows” beginning on page 45. In addition to cash generated from operations, our other principal capital resources are discussed below. Over the last several years, we have made substantial progress in enhancing our liquidity position and reducing our leverage and borrowing costs.
Our Principal Capital Resources For a discussion of cash generated from operations, see “Cash Flows” beginning on page 46. In addition to cash generated from operations, our other principal capital resources are discussed below. Over the last several years, we have made substantial progress in enhancing our liquidity position and reducing our leverage and borrowing costs.
“FFO attributable to common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership. 40 Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA) We define EBITDA, a non-GAAP financial measure, as net income before interest expense, income tax expense of the TRS, and depreciation and amortization.
“FFO attributable to common shareholders” reflects a reduction for the redeemable noncontrolling weighted average diluted interest in the Operating Partnership. Earnings before Interest, Tax, Depreciation, and Amortization (“EBITDA”) We define EBITDA, a non-GAAP financial measure, as net income before interest expense, income tax expense of the TRS, and depreciation and amortization.
The evaluation of impairment is subject to certain management assumptions, including projected net operating income, anticipated hold period, expected capital expenditures and the capitalization rate used to estimate the property’s residual value. Impairment losses are recorded as the excess of the carrying value over the estimated fair value of the asset.
The evaluation of impairment is subject to certain management assumptions, including projected net operating income, anticipated holding period, expected capital expenditures and the capitalization rate used to estimate the property’s residual value. Impairment losses are recorded as the excess of the carrying value over the estimated fair value of the asset.
We are obligated under 12 ground leases for approximately 98 acres of land as of December 31, 2022. Most of these ground leases require fixed annual rent payments and the expiration dates of the remaining initial terms of these ground leases range from 2025 to 2092.
We are obligated under 12 ground leases for approximately 98 acres of land as of December 31, 2023. Most of these ground leases require fixed annual rent payments and the expiration dates of the remaining initial terms of these ground leases range from 2025 to 2092.
We believe we have sufficient liquidity to pay any dividend from cash on hand and borrowings on the 2022 Revolving Facility. Other short-term liquidity needs include expenditures for tenant improvements, external leasing commissions and recurring capital expenditures.
We believe we have sufficient liquidity to pay any dividend from available cash on hand and borrowings on the Revolving Facility. Other short-term liquidity needs include expenditures for tenant improvements, external leasing commissions and recurring capital expenditures.
We currently anticipate incurring approximately $100 million of additional major tenant improvement costs related to leasing activity for space that is currently vacant at a number of our operating properties over the next 12 to 18 months. We believe we have the ability to fund these costs through cash flows from operations or borrowings on the 2022 Revolving Facility.
We currently anticipate incurring approximately $100 million of additional major tenant improvement costs related to leasing activity for space that is currently vacant at a number of our operating properties over the next 12 to 24 months. We believe we have the ability to fund these costs through cash flows from operations or borrowings on the Revolving Facility.
While we attempt to limit our exposure at any point in time, occasionally such cash and investments may temporarily be in excess of the Federal Deposit Insurance Corporation (“FDIC”) and the Securities Investor Protection Corporation (“SIPC”) insurance limits. We also maintain certain compensating balances in several financial institutions in support of borrowings from those institutions.
While we attempt to limit our exposure at any point in time, occasionally such cash and investments may temporarily exceed the Federal Deposit Insurance Corporation (“FDIC”) and the Securities Investor Protection Corporation (“SIPC”) insurance limits. We also maintain certain compensating balances in several financial institutions in support of borrowings from those institutions.
The value of in-place leases is amortized to expense over the remaining initial terms of the respective leases; and • the fair value of any assumed financing that is determined to be above- or below-market terms.
The value of in-place leases is amortized to depreciation and amortization expense over the remaining initial terms of the respective leases; and • the fair value of any assumed financing that is determined to be above- or below-market terms.
The Operating Partnership intends to use the net proceeds, if any, to repay borrowings under its 2022 Revolving Facility and other indebtedness and for working capital and other general corporate purposes.
The Operating Partnership intends to use the net proceeds, if any, to repay borrowings under the Revolving Facility and other indebtedness and for working capital and other general corporate purposes.
(3) Includes non-cash activity across the portfolio as well as NOI from properties not included in the same property pool, including properties sold during both periods.
(4) Includes non-cash activity across the portfolio as well as NOI from properties not included in the same property pool, including properties sold during both periods.
We were in compliance with all applicable financial covenants under the 2022 Revolving Facility, unsecured term loans and senior unsecured notes as of December 31, 2022.
We were in compliance with all applicable financial covenants under the Revolving Facility, unsecured term loans and senior unsecured notes as of December 31, 2023.
Such compensating balances were not material to the consolidated balance sheets.
Such compensating balances were not material to the accompanying consolidated balance sheets.
We may from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to repurchase our senior unsecured notes maturing at various dates through September 2030 in open market transactions, by tender offer or otherwise, as market conditions warrant. Commitments under Ground Leases.
We may from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to repurchase our senior unsecured notes maturing at various dates through March 2034 in open market transactions, by tender offer or otherwise, as market conditions warrant. Commitments under Ground Leases.
As of December 31, 2022, $820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 2.7 years. (2) Variable rate debt includes the portion of fixed rate debt that has been hedged by interest rate swaps.
As of December 31, 2023, $820.0 million in variable rate debt is hedged to a fixed rate for a weighted average of 1.7 years. (2) Variable rate debt includes the portion of fixed rate debt that has been hedged by interest rate swaps.
If we had experienced a 10% reduction in development and redevelopment activities, without a corresponding decrease in indirect project costs, we would have recorded additional expense of $0.2 million for the year ended December 31, 2022. 44 Impact of Changes in Credit Ratings on Our Liquidity We have received investment grade corporate credit ratings from three nationally recognized credit rating agencies.
If we had experienced a 10% reduction in development and redevelopment activities, without a corresponding decrease in indirect project costs, we would have recorded additional expense of $0.4 million for the year ended December 31, 2023. Impact of Changes in Credit Ratings on Our Liquidity We have received investment grade corporate credit ratings from three nationally recognized credit rating agencies.
As of December 31, 2022, $155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 2.7 years. Mortgage indebtedness is collateralized by certain real estate properties and leases and is generally repaid in monthly installments of interest and principal with maturities over various terms through 2032.
As of December 31, 2023, $155.0 million in fixed rate debt is hedged to a floating rate for a weighted average of 1.7 years. Mortgage indebtedness is collateralized by certain real estate properties and leases and is generally repaid in monthly installments of principal and interest with maturities over various terms through 2033.
Credit rating reductions by one or more rating agencies could also adversely affect our access to funding sources, the cost and other terms of obtaining funding, as well as our overall financial condition, operating results and cash flow. Cash Flows As of December 31, 2022, we had cash, cash equivalents and restricted cash of $122.0 million.
Credit rating reductions by one or more rating agencies could also adversely affect our access to funding sources, the cost and other terms of obtaining funding, as well as our overall financial condition, operating results and cash flow. Cash Flows As of December 31, 2023, we had cash, cash equivalents and restricted cash of $41.4 million.
We continue to focus on a balanced approach to growth and staggering debt maturities in order to retain our financial flexibility. As of December 31, 2022, we had approximately $1.1 billion available under the 2022 Revolving Facility for future borrowings. We also had $115.8 million in cash and cash equivalents as of December 31, 2022.
We continue to focus on a balanced approach to growth and staggering debt maturities in order to retain our financial flexibility. As of December 31, 2023, we had approximately $1.1 billion available under the Revolving Facility for future borrowings. We also had $36.4 million in cash and cash equivalents as of December 31, 2023.
The variable interest rate on mortgage indebtedness is based on the Bloomberg Short Term Bank Yield Index (“BSBY”) plus 160 basis points. As of December 31, 2022, the one-month BSBY interest rate was 4.36%. Fixed interest rates on mortgages payable range from 3.75% to 5.73%.
The variable interest rate on mortgage indebtedness is based on the Bloomberg Short Term Bank Yield Index (“BSBY”) plus 215 basis points as of December 31, 2023. As of December 31, 2023, the one-month BSBY interest rate was 5.44%. Fixed interest rates on mortgages payable range from 3.75% to 5.73%.
During the year ended December 31, 2022, we incurred $35.6 million for recurring capital expenditures on operating properties and $63.9 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of December 31, 2022 (excluding development and redevelopment properties).
During the year ended December 31, 2023, we incurred $26.9 million for recurring capital expenditures on operating properties and $92.3 million for tenant improvements and external leasing commissions, which includes costs to re-lease anchor space at our operating properties related to tenants open and operating as of December 31, 2023 (excluding development and redevelopment properties).
To date, no tenant relationship has been developed that is considered to have a current intangible value. Valuation of Investment Properties Management reviews operational and development projects, land parcels and intangible assets for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.
To date, we have not developed a tenant relationship that we consider to have a current intangible value. Valuation of Investment Properties Management reviews our operating and development projects, land parcels and intangible assets for impairment on a property-by-property basis whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.
The sale price may differ from our carrying value at the time of sale. Our Principal Liquidity Needs Short-Term Liquidity Needs Near-Term Debt Maturities . As of December 31, 2022, we had $189.4 million of secured debt, excluding scheduled monthly principal payments, and $95.0 million of unsecured debt scheduled to mature in 2023.
The sale price may differ from our carrying value at the time of sale. Our Principal Liquidity Needs Short-Term Liquidity Needs Near-Term Debt Maturities . As of December 31, 2023, we had no secured debt, excluding scheduled monthly principal payments, and $269.6 million of unsecured debt scheduled to mature in 2024.
Operating properties will be classified as held for sale only when those properties are available for immediate sale in their present condition and for which management believes it is probable that a sale of the property will be completed within one year, among other factors.
The Company classifies an operating property as held for sale only when the property is available for immediate sale in its present condition and for which management believes it is probable that a sale of the property will be completed within one year, among other factors.
We believe we have sufficient liquidity to repay these obligations from cash on hand and borrowings on the 2022 Revolving Facility. Other Short-Term Liquidity Needs.
We believe we have sufficient liquidity to repay these obligations with proceeds from the Notes Due 2034, available cash on hand, and borrowings on the Revolving Facility. Other Short-Term Liquidity Needs.
In order to reduce the volatility related to interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not use derivative financial instruments for trading or speculative purposes.
Other Matters Financial Instruments We are exposed to capital market risk, such as changes in interest rates. In order to reduce the volatility related to interest rate risk, we may enter into interest rate hedging arrangements from time to time. We do not use derivative financial instruments for trading or speculative purposes.
We also provide repayment and completion guaranties on loans totaling $66.2 million associated with the development of The Corner mixed-use project in the Indianapolis MSA. As of December 31, 2022, the outstanding balance of the loans was $30.6 million, of which our share was $15.3 million.
As of December 31, 2023, the outstanding loan balance was $32.7 million, of which our share was $11.4 million. 47 We also provide repayment and completion guaranties on loans totaling $66.2 million associated with the development of The Corner mixed-use project in the Indianapolis MSA.
Capital Expenditures on Consolidated Properties The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the year ended December 31, 2022 (in thousands) : Year Ended December 31, 2022 Active development and redevelopment projects $ 45,250 Redevelopment opportunities 363 Recurring operating capital expenditures (primarily tenant improvements) and other 112,927 Total $ 158,540 We capitalize certain indirect costs such as interest, payroll, and other general and administrative costs related to these development activities.
Capital Expenditures on Consolidated Properties The following table summarizes cash capital expenditures for our development and redevelopment projects and other capital expenditures for the year ended December 31, 2023 (in thousands) : Year Ended December 31, 2023 Active development and redevelopment projects $ 28,083 Recurring operating capital expenditures (primarily tenant improvements) and other 114,495 Total $ 142,578 We capitalize certain indirect costs such as interest, payroll, and other general and administrative costs related to these development activities.
As of December 31, 2022, we had approximately $115.8 million in cash on hand, $6.2 million in restricted cash and escrow deposits, $1.1 billion of remaining availability under the 2022 Revolving Facility, and $284.4 million of debt maturities due in 2023.
As of December 31, 2023, we had approximately $36.4 million in cash and cash equivalents on hand, $5.0 million in restricted cash and escrow deposits, $1.1 billion of remaining availability under the Revolving Facility, and $269.6 million of debt maturities due in 2024.
We anticipate incurring the majority of the remaining costs for these projects over the next 24 months and believe we have the ability to fund these projects through cash flows from operations or borrowings on the 2022 Revolving Facility.
As of December 31, 2023, we have incurred $29.6 million of these costs. We anticipate incurring the majority of the remaining costs for these projects over the next 12 months and believe we have the ability to fund these projects through cash flows from operations or borrowings on the Revolving Facility.
These ratings did not change in 2022. In the future, these ratings could change based upon, among other things, the impact that prevailing economic conditions may have on our results of operations and financial condition.
These ratings did not change in 2023. We received a positive credit rating outlook from one of the rating agencies in 2023. In the future, these ratings could change based upon, among other things, the impact that prevailing economic conditions may have on our results of operations and financial condition.
Should a tenant vacate, terminate its lease, or otherwise notify us of its intent to do so, the unamortized portion of the lease intangibles would be charged or credited to income; • the value of having a lease in place at the acquisition date. We use independent and internal sources for our estimates to determine the respective in-place lease values.
Should a tenant vacate, terminate its lease, or otherwise notify us of its intent to do so, the unamortized portion of the lease intangibles would be charged or credited to income as applicable; • the value of having a lease in place at the acquisition date.
We believe such presentation eliminates disparities in net income due to the acquisition or disposition of properties during the particular periods presented, and thus provides a more consistent metric for the comparison of our properties. Same Property NOI includes the results of properties that have been owned for the entire current and prior year reporting periods.
We believe such presentation eliminates disparities in net income due to the acquisition or disposition of properties during the particular periods presented, and thus provides a more consistent metric for the comparison of our properties.
Upon acquisition of real estate operating properties, including those assets acquired in the Merger with RPAI, we estimate the fair value of acquired identifiable tangible assets and identified intangible assets and liabilities, assumed debt, and any noncontrolling interest in the acquiree at the date of acquisition, based on evaluation of information and estimates available at that date.
Upon acquisition of real estate operating properties, we estimate the fair value of acquired identifiable tangible assets (consisting of land, buildings and improvements) and identified intangible assets and liabilities (consisting of above-market and below-market leases and in-place leases), assumed debt, and any noncontrolling interest in the acquiree at the date of acquisition based on an evaluation of information and estimates available at the acquisition date.
These receivables are reduced for credit loss, which is recognized as a reduction to rental income. We regularly evaluate the collectibility of these lease-related receivables by analyzing past due account balances and consider such facts as the credit quality of our customer, historical write-off experience, tenant credit-worthiness and current economic trends when evaluating the collectibility of rental income.
We regularly evaluate the collectibility of these lease-related receivables by analyzing past due account balances and consider such factors as the credit quality of the tenant, historical write-off experience, tenant creditworthiness and current economic trends when evaluating the collectibility of rental income.
While we believe that the nature of the properties in which we typically invest—primarily neighborhood and community shopping centers—provides a relatively stable revenue flow, an economic downturn and/or the ongoing effects of COVID-19, among other events, could adversely affect the ability of some of our tenants to meet their lease obligations.
While we believe that the nature of the properties in which we typically invest—primarily neighborhood and community shopping centers—provides a relatively stable revenue flow, an economic downturn, instability 43 in the banking sector, tenant bankruptcies, inflation, labor shortages, supply chain constraints, and/or increasing energy prices and interest rates, among other events, could adversely affect the ability of some of our tenants to meet their lease obligations.
(2) Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent; calculated as a weighted average based on the timing of cash rent commencement and expiration during the period.
(2) Decrease in leased and economic occupancy percentages is primarily attributable to the Bed Bath & Beyond Inc. bankruptcy. (3) Excludes leases that are signed but for which tenants have not yet commenced the payment of cash rent; calculated as a weighted average based on the timing of cash rent commencement and expiration during the period.
In April 2022, our Board of Trustees authorized a $150.0 million increase to the size of the Share Repurchase Program, authorizing share repurchases up to an aggregate of $300.0 million. As of December 31, 2022, the Company has not repurchased any shares under the Share Repurchase Program.
In April 2022, our Board of Trustees authorized a $150.0 million increase to the size of the share repurchase program, authorizing share repurchases up to an aggregate of $300.0 million of its common shares (the “Share Repurchase Program”).
Our estimates of value are made using methods similar to those used by independent appraisers. Factors we consider in our analysis include an estimate of costs to execute similar leases, including tenant improvements, leasing commissions and foregone costs and rent received during the estimated lease-up period as if the space was vacant.
Factors we consider in our analysis include an estimate of costs to execute similar leases, including tenant improvements, leasing commissions and foregone costs related to the reimbursement of property operating expenses, and fair market rent received during the estimated lease-up period as if the space was vacant.
The Operating Partnership may also use the net proceeds for acquisitions of operating properties and the development or redevelopment of properties, although there are currently no understandings, commitments or agreements to do so.
The Operating Partnership may also use the net proceeds for acquisitions of operating properties and the development or redevelopment of properties, although there are currently no understandings, commitments or agreements to do so. As of December 31, 2023, the Company has not sold any common shares under the ATM Program.
On November 30, 2021, the Company and the Operating Partnership amended the Equity Distribution Agreement to reflect their filing of a shelf registration statement on November 16, 2021 with the SEC. As of December 31, 2022, the Company has not sold any common shares under the ATM Program.
On November 30, 2021, the Company and the Operating Partnership amended the Equity Distribution Agreement to reflect their filing of a shelf registration statement on November 16, 2021 with the SEC.
Our portion of the repayment guaranty is limited to $5.9 million and the guaranty’s term is through July 1, 2024, the maturity date of the construction loan. As of December 31, 2022, the outstanding loan balance was $33.5 million, of which our share was $11.7 million.
Our portion of the repayment guaranty is limited to $5.9 million and the guaranty’s term is through July 1, 2024, the maturity date of the construction loan.
We would have to satisfy these needs through additional borrowings, sales of common or preferred shares, issuance of Operating Partnership units, cash generated through property dispositions and/or participation in joint venture arrangements. We cannot be certain that we would have access to these sources of capital on satisfactory terms, if at all, to fund our long-term liquidity requirements.
It is unlikely that we would have sufficient funds on hand to meet these long-term capital requirements; therefore, we would have to satisfy these needs through additional borrowings, sales of common or preferred shares, issuance of Operating Partnership units, cash generated through property dispositions and/or participation in joint venture arrangements.
An acquired property is included in the same property pool when there is a full quarter of operations in both years subsequent to the acquisition date.
An acquired property is included in the same property pool when there is a full quarter of operations in both years subsequent to the acquisition date. Development and redevelopment properties are included in the same property pool four full quarters after the properties have been transferred to the operating portfolio.
On November 16, 2021, the Company filed with the SEC a shelf registration statement on Form S-3, which is effective for a term of three years, relating to the offer and sale, from time to time, of an indeterminate amount of equity and debt securities. 42 Equity securities may be offered and sold by the Parent Company, and the net proceeds of any such offerings would be contributed to the Operating Partnership in exchange for additional General Partner Units.
On November 16, 2021, the Company filed with the SEC a shelf registration statement on Form S-3, which is effective for a term of three years, relating to the offer and sale, from time to time, of an indeterminate amount of equity and debt securities.
We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the compilation of our financial condition and results of operations and, in some cases, require management’s most difficult, subjective, and complex judgments.
We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the compilation of our financial condition and results of operations and, in some cases, require management’s most difficult, subjective or complex judgments. 48 Acquisition of Investment Properties Real estate assets are recognized on our consolidated balance sheets at historical cost, less accumulated depreciation and amortization.
Cash used in investing activities was $45.1 million for the year ended December 31, 2022 and $91.0 million for the same period of 2021.
Cash used in financing activities was $393.5 million for the year ended December 31, 2023 and $312.5 million for the same period of 2022.
Share Repurchase Program In February 2021, our Board of Trustees approved a share repurchase program, authorizing share repurchases up to an aggregate of $150.0 million (the “Share Repurchase Program”).
Share Repurchase Program In February 2021, our Board of Trustees approved a share repurchase program under which the Company may repurchase, from time to time, up to an aggregate of $150.0 million of its common shares.
NOI and Same Property NOI should not, however, be considered as alternatives to net income (calculated in accordance with GAAP) as indicators of our financial performance.
Same Property NOI includes the results of properties that have been owned for the entire current and prior year reporting periods. 39 NOI and Same Property NOI should not, however, be considered as alternatives to net income (calculated in accordance with GAAP) as indicators of our financial performance.
Our share of estimated future costs for under construction and future developments and redevelopments is further discussed beginning on page 43 in the “Short- and Long-Term Liquidity Needs” section. 46 Outstanding Indebtedness The following table provides details on our outstanding consolidated indebtedness as of December 31, 2022 and 2021, adjusted for hedges (in thousands) : December 31, 2022 December 31, 2021 Senior unsecured notes $ 1,749,635 $ 1,749,635 Senior exchangeable notes – fixed rate 175,000 175,000 Unsecured revolving line of credit — 55,000 Unsecured term loans 820,000 720,000 Mortgages payable – fixed rate 205,328 363,577 Mortgages payable – variable rate 28,293 29,013 Debt discounts, premiums and issuance costs, net 32,043 58,583 Total mortgage and other indebtedness, net $ 3,010,299 $ 3,150,808 Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of December 31, 2022, is summarized below (dollars in thousands) : Amount Outstanding Ratio Weighted Average Interest Rate Weighted Average Years to Maturity Fixed rate debt (1) $ 2,794,963 94 % 3.96 % 4.3 Variable rate debt (2) 183,293 6 % 8.08 % 3.2 Debt discounts, premiums and issuance costs, net 32,043 N/A N/A N/A Total $ 3,010,299 100 % 4.21 % 4.2 (1) Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps.
Outstanding Indebtedness The following table provides details on our outstanding consolidated indebtedness as of December 31, 2023 and 2022 (in thousands) : December 31, 2023 December 31, 2022 Senior unsecured notes $ 1,654,635 $ 1,749,635 Senior exchangeable notes – fixed rate 175,000 175,000 Unsecured revolving line of credit — — Unsecured term loans 820,000 820,000 Mortgages payable – fixed rate 136,306 205,328 Mortgages payable – variable rate 17,000 28,293 Debt discounts, premiums and issuance costs, net 26,261 32,043 Mortgage and other indebtedness, net $ 2,829,202 $ 3,010,299 Consolidated indebtedness, including weighted average interest rates and weighted average maturities as of December 31, 2023, considering the impact of interest rate swaps, is summarized below (dollars in thousands) : Amount Outstanding Ratio Weighted Average Interest Rate Weighted Average Years to Maturity Fixed rate debt (1) $ 2,630,941 94 % 3.98 % 3.6 Variable rate debt (2) 172,000 6 % 9.15 % 2.7 Debt discounts, premiums and issuance costs, net 26,261 N/A N/A N/A Mortgage and other indebtedness, net $ 2,829,202 100 % 4.30 % 3.6 (1) Fixed rate debt includes the portion of variable rate debt that has been hedged by interest rate swaps.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2021 , which is incorporated by reference in this Annual Report on Form 10-K.
Management’s discussion of the cash flows for the year ended December 31, 2021, with comparison to the year ended December 31, 2022, was included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022.
For informational purposes, we also provide Annualized Adjusted EBITDA, adjusted as described above. We believe this supplemental information provides a meaningful measure of our operating performance. We believe presenting EBITDA and the related measures in this manner allows investors and other interested parties to form a more meaningful assessment of our operating results.
For informational purposes, we also provide Annualized Adjusted EBITDA, adjusted as described above. We believe this supplemental information provides a meaningful measure of our operating performance.
Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2021 Our cash flow activities are summarized as follows (in thousands) : Year Ended December 31, 2022 2021 Change Net cash provided by operating activities $ 379,283 $ 100,351 $ 278,932 Net cash used in investing activities (45,149) (91,033) 45,884 Net cash (used in) provided by financing activities (312,527) 44,459 (356,986) Increase in cash, cash equivalents and restricted cash 21,607 53,777 (32,170) Cash, cash equivalents and restricted cash, beginning of year 100,363 46,586 Cash, cash equivalents and restricted cash, end of year $ 121,970 $ 100,363 Cash provided by operating activities was $379.3 million for the year ended December 31, 2022 and $100.4 million for the same period of 2021.
Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 Our cash flow activities are summarized as follows (in thousands) : Year Ended December 31, 2023 2022 Change Net cash provided by operating activities $ 394,648 $ 379,283 $ 15,365 Net cash used in investing activities (81,731) (45,149) (36,582) Net cash used in financing activities (393,457) (312,527) (80,930) (Decrease) increase in cash, cash equivalents and restricted cash (80,540) 21,607 (102,147) Cash, cash equivalents and restricted cash, beginning of year 121,970 100,363 Cash, cash equivalents and restricted cash, end of year $ 41,430 $ 121,970 46 Cash provided by operating activities was $394.6 million for the year ended December 31, 2023 and $379.3 million for the same period of 2022.
Operating properties classified as held for sale are carried at the lower of cost or fair value less estimated costs to sell. Depreciation and amortization are suspended during the held-for-sale period. Revenue Recognition As a lessor of real estate assets, the Company retains substantially all of the risks and benefits of ownership and accounts for its leases as operating leases.
An operating property classified as held for sale is carried at the lower of cost or fair value less estimated costs to sell. Depreciation and amortization are suspended during the held-for-sale period.
Highlights of significant cash sources and uses in financing activities are as follows: • We entered into a seven-year $300.0 million unsecured term loan and borrowed $155.0 million on our unsecured revolving line of credit in 2022; • In 2022, we repaid (i) a $200.0 million unsecured term loan that was scheduled to mature in 2023, (ii) $210.0 million of borrowings on our unsecured revolving line of credit, with no amount outstanding as of December 31, 2022, and (iii) mortgages payable totaling $155.2 million along with $3.8 million of scheduled principal payments using proceeds from the $300.0 million unsecured term loan, $125.0 million short-term deposit and property sales; • We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $182.2 million in 2022 compared to distributions of $60.0 million in 2021; and • In 2021, we issued $175.0 million of exchangeable senior notes in a private placement offering to proactively fund a portion of our 2022 debt maturities and other borrowings.
Highlights of significant cash sources and uses in financing activities are as follows: • We borrowed $274.0 million on the Revolving Facility and received proceeds of $95.1 million from the origination of a mortgage payable in 2023 compared to borrowings of $155.0 million on the Revolving Facility and entering into a seven-year $300.0 million unsecured term loan in 2022; • We repaid (i) $274.0 million of borrowings on the Revolving Facility, (ii) $175.4 million of mortgages payable, and (iii) the $95.0 million principal balance of the 4.23% senior unsecured notes in 2023 compared to repayments of (i) $210.0 million of borrowings on the Revolving Facility, (ii) a $200.0 million unsecured term loan that was scheduled to mature in 2023, and (iii) $159.0 million of mortgages payable in 2022; and • We made distributions to common shareholders and holders of common partnership interests in the Operating Partnership of $213.5 million in 2023 compared to distributions of $182.2 million in 2022.
Contractual minimum base rent, percentage rent, and expense reimbursements from tenants for common area maintenance costs, insurance and real estate taxes are our principal sources of revenue. Base minimum rents are recognized on a straight-line basis over the terms of the respective leases.
Revenue Recognition As a lessor of real estate assets, the Company retains substantially all of the risks and benefits of ownership and accounts for its leases as operating leases. Contractual minimum base rent, percentage rent, and expense reimbursements from tenants for common area maintenance costs, insurance and real estate taxes are our principal sources of revenue.
Highlights of significant cash sources and uses in investing activities are as follows: • We received the proceeds from a $125.0 million short-term deposit that matured in April 2022; • We acquired Pebble Marketplace, the two-tenant building adjacent to MacArthur Crossing and Palms Plaza in 2022 for $100.1 million compared to the acquisition of a multi-tenant retail outparcel at Nora Plaza in 2021 and acquisition deposits for $10.4 million; • We received net proceeds of $80.4 million from the sale of Plaza Del Lago, a portion of Hamilton Crossing Centre and other land parcels in 2022 compared to net proceeds of $80.7 million from the sale of Westside Market, 17 ground leases and other land parcels in 2021; and • Capital expenditures increased by $101.2 million driven by the construction activity at our development projects and anchor leasing activity, partially offset by a change in construction payables of $6.3 million in 2022. 45 Cash used in financing activities was $312.5 million for the year ended December 31, 2022 compared to cash provided by financing activities of $44.5 million for the same period of 2021.
Highlights of significant cash sources and uses in investing activities are as follows: • We received net proceeds of $140.9 million from the sale of Kingwood Commons, the undeveloped land and related parking garage at Pan Am Plaza, Reisterstown Road Plaza, Eastside, and other land parcels in 2023 compared to net proceeds of $80.4 million from the sale of Plaza Del Lago, a portion of Hamilton Crossing Centre and other land parcels in 2022; • We acquired Prestonwood Place in 2023 for $78.3 million compared to the acquisitions of Pebble Marketplace, the two-tenant building adjacent to MacArthur Crossing and Palms Plaza in 2022 for $100.1 million; • We received the proceeds from a $125.0 million short-term deposit that matured on April 7, 2022 during the year ended December 31, 2022; and • Capital expenditures decreased by $16.0 million primarily related to the timing of capital projects along with a change in construction payables of $2.1 million in 2023.
Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest and principal payments on our debt of approximately $120 million and $3.0 million, respectively, in 2023, expected dividend payments to our common shareholders and Common Unit holders, and recurring capital expenditures.
Our short-term liquidity needs consist primarily of funds necessary to pay operating expenses associated with our operating properties, scheduled interest and principal payments on our debt of approximately $125 million and $5.1 million, respectively, in 2024, expected dividend payments to our common shareholders and common unitholders, and recurring capital expenditures. 44 In February 2024, our Board of Trustees declared a cash distribution of $0.25 per common share and Common Unit for the first quarter of 2024, which is expected to be paid on April 12, 2024 to common shareholders and common unitholders of record as of April 5, 2024.
In February 2022, the Company extended its Share Repurchase Program for an additional year, and in February 2023, extended the program for another year so it will now terminate on February 28, 2024, if not terminated or extended prior to that date.
In February 2024, the Company extended the Share Repurchase Program for an additional year to February 28, 2025, if not terminated or extended prior to that date. As of December 31, 2023, the Company has not repurchased any shares under the Share Repurchase Program.
The following table presents Same Property NOI and a reconciliation to net loss attributable to common shareholders for the years ended December 31, 2022 and 2021 (unaudited) (dollars in thousands) : Year Ended December 31, 2022 2021 Change Number of properties in same property pool for the period (1) 177 177 Leased percentage at period end 94.7 % 93.5 % Economic occupancy percentage (2) 91.2 % 90.1 % Same Property NOI $ 531,440 $ 505,731 5.1 % Reconciliation of Same Property NOI to most directly comparable GAAP measure: Net operating income – same properties $ 531,440 $ 505,731 Prior period collection impact – same properties 3,665 12,414 Net operating income – non-same activity (3) 46,546 (251,154) Total property NOI 581,651 266,991 117.9 % Other income, net 8,992 1,491 General, administrative and other (54,860) (33,984) Merger and acquisition costs (925) (86,522) Depreciation and amortization (469,805) (200,460) Interest expense (104,276) (60,447) Gain on sales of operating properties, net 27,069 31,209 Net (income) loss attributable to noncontrolling interests (482) 916 Net loss attributable to common shareholders $ (12,636) $ (80,806) (1) Same Property NOI excludes (i) Glendale Town Center, Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in December 2021, June 2022 and September 2022, respectively, (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H, (iii) three active development and redevelopment projects, (iv) Arcadia Village, Pebble Marketplace and Palms Plaza, which were each acquired subsequent to January 1, 2021, and (v) office properties.
The following table presents Same Property NOI and a reconciliation to net income (loss) attributable to common shareholders for the years ended December 31, 2023 and 2022 (unaudited) (dollars in thousands) : Year Ended December 31, 2023 2022 Change Number of properties in same property pool for the period (1) 175 175 Leased percentage at period end (2) 94.0 % 95.4 % Economic occupancy percentage at period end (2) 91.2 % 92.5 % Economic occupancy percentage (3) 92.0 % 91.8 % Same Property NOI $ 555,396 $ 530,021 4.8 % Reconciliation of Same Property NOI to most directly comparable GAAP measure: Net operating income – same properties $ 555,396 $ 530,021 Net operating income – non-same activity (4) 52,858 51,630 Total property NOI 608,254 581,651 4.6 % Other income, net 5,857 8,992 General, administrative and other (56,142) (54,860) Merger and acquisition costs — (925) Impairment charges (477) — Depreciation and amortization (426,361) (469,805) Interest expense (105,349) (104,276) Gain on sales of operating properties, net 22,601 27,069 Net income attributable to noncontrolling interests (885) (482) Net income (loss) attributable to common shareholders $ 47,498 $ (12,636) 40 (1) Same Property NOI excludes the following: (i) properties acquired or placed in service during 2022 and 2023; (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H, (iii) Shoppes at Quarterfield, Circle East and The Landing at Tradition – Phase II, which were reclassified from active redevelopment into our operating portfolio in June 2022, September 2022 and June 2023, respectively, (iv) our active development and redevelopment projects at Carillon medical office building and The Corner – IN, (v) Hamilton Crossing Centre and Edwards Multiplex – Ontario, which were reclassified from our operating portfolio into redevelopment in June 2014 and March 2023, respectively; (vi) properties sold or classified as held for sale during 2022 and 2023; and (vii) office properties.
We may selectively pursue the acquisition, development and redevelopment of other properties, which would require additional capital. It is unlikely that we would have sufficient funds on hand to meet these long-term capital requirements.
We may selectively pursue the acquisition, development and redevelopment of other properties, which would require additional capital.
NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses, including merger and acquisition costs.
We define NOI as income from our real estate, including lease termination fees received from tenants, less our property operating expenses. NOI excludes amortization of capitalized tenant improvement costs and leasing commissions and certain corporate level expenses, including merger and acquisition costs.
Certain lease agreements contain provisions that grant additional rents based on a tenant’s sales volume (contingent overage rent). Overage rent is recognized when tenants achieve the specified sales targets as defined in their lease agreements. If we determine that collectibility is probable, we recognize income from rentals based on the methodology described above.
Base minimum rents are recognized on a straight-line basis over the terms of the respective leases. Certain lease agreements contain provisions that provide for additional rents based on a tenant’s sales volume (contingent overage rent). Overage rent is recognized when tenants achieve the specified sales targets as defined in their lease agreements.
We evaluate all future opportunities against pre-established criteria including, but not limited to, location, demographics, expected return, tenant credit quality, tenant relationships, and the amount of existing retail space. Our ability to access the capital markets will depend on a number of factors, including general capital market conditions. Potential Debt Repurchases.
We cannot be certain that we would have access to these sources of capital on satisfactory terms, if at all, to fund our long-term liquidity requirements. We evaluate all future opportunities against pre-established criteria including, but not limited to, location, demographics, expected return, tenant credit quality, tenant relationships, and the amount of existing retail space.
For the year ended December 31, 2022, the same property pool excludes (i) Glendale Town Center, Shoppes at Quarterfield and Circle East, which were reclassified from active redevelopment into our operating portfolio in December 2021, June 2022 and September 2022, respectively, (ii) the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H, (iii) three active development and redevelopment projects, (iv) Arcadia Village, Pebble Marketplace and Palms Plaza, which were each acquired subsequent to January 1, 2021, and (v) office properties.
For the year ended December 31, 2023, the same property pool excludes the following: • properties acquired or placed in service during 2022 and 2023; • the multifamily rental units and commercial portion at One Loudoun Downtown – Pads G & H; • Shoppes at Quarterfield, Circle East and The Landing at Tradition – Phase II, which were reclassified from active redevelopment into our operating portfolio in June 2022, September 2022 and June 2023, respectively; • our active development and redevelopment projects at Carillon medical office building and The Corner – IN; • Hamilton Crossing Centre and Edwards Multiplex – Ontario, which were reclassified from our operating portfolio into redevelopment in June 2014 and March 2023, respectively; • properties sold or classified as held for sale during 2022 and 2023; and • office properties.
The following table presents a reconciliation of our EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA to net income (the most directly comparable GAAP measure) and a calculation of Net Debt to Adjusted EBITDA (in thousands) : Three Months Ended December 31, 2022 Net loss $ (1,052) Depreciation and amortization 112,709 Interest expense 26,827 Income tax expense of taxable REIT subsidiary 302 EBITDA 138,786 Unconsolidated EBITDA 957 Merger and acquisition costs (81) Loss on sales of operating properties, net 57 Other income and expense, net (759) Noncontrolling interests (84) Adjusted EBITDA 138,876 Annualized Adjusted EBITDA (1) $ 555,502 Company share of Net Debt: Mortgage and other indebtedness, net $ 3,010,299 Plus: Company share of unconsolidated joint venture debt 41,015 Less: Partner share of consolidated joint venture debt (2) (566) Less: cash, cash equivalents, and restricted cash (124,015) Less: debt discounts, premiums and issuance costs, net (32,043) Company share of Net Debt $ 2,894,690 Net Debt to Adjusted EBITDA 5.2x (1) Represents Adjusted EBITDA for the three months ended December 31, 2022 (as shown in the table above) multiplied by four.
We believe presenting EBITDA and the related measures in this manner allows investors and other interested parties to form a more meaningful assessment of our operating results. 42 The following table presents a reconciliation of our EBITDA, Adjusted EBITDA and Annualized Adjusted EBITDA to net income (the most directly comparable GAAP measure) and a calculation of Net Debt to Adjusted EBITDA (in thousands) : Three Months Ended December 31, 2023 Net income $ 8,164 Depreciation and amortization 102,898 Interest expense 27,235 Income tax expense of taxable REIT subsidiary 449 EBITDA 138,746 Unconsolidated Adjusted EBITDA 828 Gain on sales of operating properties, net (133) Other income and expense, net (540) Noncontrolling interests (189) Adjusted EBITDA 138,712 Annualized Adjusted EBITDA (1) $ 554,849 Company share of Net Debt: Mortgage and other indebtedness, net $ 2,829,202 Plus: Company share of unconsolidated joint venture debt 55,911 Less: Partner share of consolidated joint venture debt (2) (9,849) Less: cash, cash equivalents, and restricted cash (43,986) Less: debt discounts, premiums and issuance costs, net (26,261) Company share of Net Debt $ 2,805,017 Net Debt to Adjusted EBITDA 5.1x (1) Represents Adjusted EBITDA for the three months ended December 31, 2023 (as shown in the table above) multiplied by four.
If we determine that collectibility is not probable, we recognize income only to the extent that cash has been received from the tenant. We have accounts receivable due from tenants and are subject to the risk of tenant defaults and bankruptcies that may affect the collection of outstanding receivables.
We have accounts receivable due from tenants and are subject to the risk of tenant defaults and bankruptcies, which may affect the collection of outstanding receivables. These receivables are reduced for credit loss, which is recognized as a reduction to rental income.
Our Same Property NOI increased 5.1% in 2022 compared to 2021 primarily due to improved occupancy driven by continued strong leasing activity and an increase in overage rent. 39 Funds From Operations Funds from Operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of our operating performance.
Funds From Operations Funds from Operations (“FFO”) is a widely used performance measure for real estate companies and is provided here as a supplemental measure of our operating performance.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeReflecting the effects of these hedge agreements, our fixed and variable rate debt would have been $2.8 billion (94%) and $183.3 million (6%), respectively, of our total consolidated indebtedness at December 31, 2022. As of December 31, 2022, we had $256.5 million of fixed rate debt scheduled to mature in 2023.
Biggest changeReflecting the effects of these hedge agreements, our fixed and variable rate debt would have been $2.6 billion (94%) and $172.0 million (6%), respectively, of our total consolidated indebtedness as of December 31, 2023. As of December 31, 2023, we had $269.6 million of fixed rate debt scheduled to mature in 2024.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our future income, cash flows and fair values relevant to financial instruments depend upon prevailing interest rates. We are exposed to interest rate changes primarily through our 2022 Revolving Facility and unsecured term loans and other property-specific variable-rate mortgages.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our future income, cash flows and fair values relevant to financial instruments depend upon prevailing interest rates. We are exposed to interest rate changes primarily through our Revolving Facility and unsecured term loans and other property-specific variable-rate mortgages.
As of December 31, 2022, we had $3.0 billion of outstanding consolidated indebtedness (inclusive of net unamortized debt discounts, premiums and issuance costs of $32.0 million). In addition, we were party to various consolidated interest rate hedge agreements totaling $975.0 million with maturities over various terms through 2026.
As of December 31, 2023, we had $2.8 billion of outstanding consolidated indebtedness (inclusive of net unamortized debt discounts, premiums and issuance costs of $26.3 million). In addition, we were party to various consolidated interest rate hedge agreements totaling $975.0 million with maturities over various terms through 2026.
A 100-basis point change in interest rates on this debt as of December 31, 2022 would change our annual cash flow by $2.6 million. A 100-basis point change in interest rates on our unhedged variable rate debt as of December 31, 2022 would change our annual cash flow by $1.8 million.
A 100-basis point change in interest rates on this debt as of December 31, 2023 would change our annual cash flow by $2.7 million. A 100-basis point change in interest rates on our unhedged variable rate debt as of December 31, 2023 would change our annual cash flow by $1.7 million.

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