SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

~~FORM 10-Q~~

FORM 10-Q

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

(Address of Principal Executive Offices) (Zip Code)

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý☒Yes¨☐ No

Indicate by check mark whether the Registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ý☒Yes¨☐ No

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

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

The number of Registrant’s common shares outstanding on ~~October 27, 2017~~July 29, 2019 was ~~72,546,870.~~74,954,462.

FEDERAL REALTY INVESTMENT TRUST

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2019

Federal Realty Investment Trust

Consolidated Balance Sheets



	June 30,			December 31,
	2019			2018
	(In thousands, except share and per share data)
	(Unaudited)
ASSETS
Real estate, at cost
Operating (including $1,703,069 and $1,701,804 of consolidated variable interest entities, respectively)	$	7,293,212		$	7,307,622
Construction-in-progress (including $78,633 and $51,313 of consolidated variable interest entities, respectively)	575,229			495,274
Assets held for sale	5,938			16,576
	7,874,379			7,819,472
Less accumulated depreciation and amortization (including $312,416 and $292,374 of consolidated variable interest entities, respectively)	(2,148,010		)	(2,059,143		)
Net real estate	5,726,369			5,760,329
Cash and cash equivalents	105,903			64,087
Accounts and notes receivable, net	138,870			142,237
Mortgage notes receivable, net	30,429			30,429
Investment in partnerships	30,800			26,859
Operating lease right of use assets	94,828			—
Finance lease right of use assets	53,044			—
Prepaid expenses and other assets	203,498			265,703
TOTAL ASSETS	$	6,383,741		$	6,289,644
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $441,469 and $444,388 of consolidated variable interest entities, respectively)	$	450,883		$	474,379
Capital lease obligations	—			71,519
Notes payable, net	4,163			279,027
Senior notes and debentures, net	2,702,737			2,404,279
Accounts payable and accrued expenses	177,078			177,922
Dividends payable	78,808			78,207
Security deposits payable	20,588			17,875
Operating lease liabilities	74,536			—
Finance lease liabilities	72,068			—
Other liabilities and deferred credits	157,524			182,898
Total liabilities	3,738,385			3,686,106
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests	134,710			136,208
Shareholders’ equity
Preferred shares, authorized 15,000,000 shares, $.01 par:
5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 per share), 6,000 shares issued and outstanding	150,000			150,000
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding	9,997			9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 74,950,197 and 74,249,633 shares issued and outstanding, respectively	752			745
Additional paid-in capital	3,088,946			3,004,442
Accumulated dividends in excess of net income	(841,505		)	(818,877		)
Accumulated other comprehensive loss	(1,024		)	(416		)
Total shareholders’ equity of the Trust	2,407,166			2,345,891
Noncontrolling interests	103,480			121,439
Total shareholders’ equity	2,510,646			2,467,330
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,383,741		$	6,289,644

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

Federal Realty Investment Trust

Consolidated Statements of Comprehensive Income

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

Federal Realty Investment Trust

Consolidated Statements of ~~Comprehensive Income~~Shareholders’ Equity

For the Three and Six Months Ended June 30, 2019

Accumulated
Dividends in
Excess of Net

Accumulated
Other
Comprehensive

Federal Realty Investment Trust

Consolidated ~~Statement~~Statements of Shareholders’ Equity

For the ~~Nine~~Three and Six Months Ended ~~September~~June 30, ~~2017~~2018

Accumulated
Dividends in
Excess of Net

Accumulated
Other
Comprehensive

Accumulated
Dividends in
Excess of Net

Accumulated
Other
Comprehensive

Federal Realty Investment Trust

Consolidated Statements of Cash Flows

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

Federal Realty Investment Trust

Notes to Consolidated Financial Statements

~~September~~June 30, ~~2017~~2019

NOTE 1—BUSINESS AND ORGANIZATION

Federal Realty Investment Trust (the “Trust”) is an equity real estate investment trust (“REIT”) specializing in the ownership, management, and redevelopment of retail and mixed-use properties. Our properties are located primarily in densely populated and affluent communities in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As of ~~September~~June 30, ~~2017,~~2019, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 104 predominantly retail real estate projects.

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

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated balance sheet as of December 31, ~~2016,~~2018, which has been derived from audited financial statements, and unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Trust’s latest Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation for the periods presented have been included. The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 are not necessarily indicative of the results that may be expected for the full year. Certain 2018 amounts have been reclassified to conform to current period presentation, which includes the presentation of rental income on our Consolidated Statements of Comprehensive Income.

Principles of Consolidation

Our consolidated financial statements include the accounts of the Trust, its corporate subsidiaries, and all entities in which the Trust has a controlling interest or has been determined to be the primary beneficiary of a variable interest entity (“VIE”). The equity interests of other investors are reflected as noncontrolling interests or redeemable noncontrolling interests. All significant intercompany transactions and balances are eliminated in consolidation. We account for our interests in joint ventures, which we do not control, using the equity method of accounting. ~~Certain 2016 amounts have been reclassified to conform to current period presentation.~~

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

~~Revenue Recognition~~

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

~~Recently Issued Accounting Pronouncements~~

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers." ASU 2014-09 as amended and interpreted by ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20, supersedes nearly all existing revenue recognition guidance under GAAP and replaces it with a core revenue recognition principle, that an entity will recognize revenue when it transfers control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, and creates a five-step model for revenue recognition in accordance with this principle. While we are still completing the assessment of the impact of these

~~standards to our consolidated financial statements, we believe the majority of our revenue falls outside of the scope of this~~

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

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

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

Recently Adopted Accounting Pronouncements

Leases (Topic 842) and related updates:

ASU 2016-02,
February 2016,
Leases (Topic 842)

ASU 2018-10, July
2018, Codification
improvements to

Topic 842, Leases

ASU 2018-11, July
2018, Leases (Topic
842)

ASC 842 significantly changes the accounting for leases by requiring lessees to recognize assets and liabilities for leases greater than 12 months on their balance sheet. The larger changes to the lessor model include: a change in the definition of initial direct costs of leases (resulting in the upfront expensing of more leasing related costs), the requirement to make an upfront and ongoing assessment of whether collection of substantially all of the lease payments required for the term of each lease is probable (if not probable, lease revenue is effectively recognized when cash is collected), certain presentation changes, and the elimination of real estate specific guidance.

ASU 2018-10 and ASU 2019-01 provide narrow amendments that clarify how to apply certain aspects of the guidance in ASU 2016-02. ASU 2018-11 provides the option of an additional transition method, by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. It also provides lessors an option to not separate lease and non-lease components when certain criteria are met.

We have elected to apply the transition provisions of ASC Topic 842 at the beginning of the period of adoption (i.e., January 1, 2019), and therefore, did not retrospectively adjust prior periods presented. We have also elected to apply certain adoption related practical expedients for all leases that commenced prior to the effective date. These practical expedients include not reassessing whether any expired or existing contracts are or contain leases; not reassessing the lease classification for any expired or existing leases; and not reassessing initial direct costs for any existing leases. We have also elected the practical expedient allowing lessors to combine non-lease and lease components (primarily impacts common area maintenance recoveries).

From a lessee perspective, the primary impact of adoption on January 1, 2019 was to record a lease obligation liability and right of use asset for operating leases where we are the lessee. The most significant of these operating leases are ground leases at 14 properties. The operating lease right of use assets and related liabilities are shown separately on the face of our consolidated balance sheet. Additionally, amounts previously recorded as capital lease assets and included in real estate have been reclassified in the June 30, 2019 balance sheet as finance lease right of use assets and the related capital lease obligations have been reclassified in the June 30, 2019 balance sheet as finance lease liabilities. Income statement presentation is not impacted for our existing operating and finance leases.

From a lessor perspective, adoption of ASC 842 results in a charge to opening accumulated dividends in excess of net income of $7.1 million. This charge is attributable to the write off of certain direct leasing costs recorded as of December 31, 2018 under the previous lease accounting rules for leases which had not commenced and the write off of December 31, 2018 unreserved receivables (including straight-line receivables) for leases where we have determined that the collection of substantially all of the lease payments required for the term of the lease is not probable. Income statement presentation changes incorporated into our June 30, 2019 financial statements include: no longer recording a gross up of revenue and expense for costs (such as real estate taxes) paid directly by lessees on our behalf and recording collectability adjustments against revenue rather than as bad debt within rental expenses.

As a result of the change in the definition of initial direct costs of leases, capitalized leasing costs excluding external commissions decreased to $0.6 million and $1.0 million for the three and six months ended June 30, 2019, respectively, from$2.0 million and $3.6 million for the three and six months ended June 30, 2018, respectively.

The following table provides additional information on our operating and finance leases where we are ~~now accounting for forfeitures as they occur, and have recorded~~ the cumulative impact on the adoption date as a $0.1 million adjustment to additional paid in capital and retained earnings. The amount reclassified from "operating activities" to "financing activities" for shares withheld for employee taxes was $4.4 million.lessee:



	Three Months Ended			Six Months Ended
	June 30, 2019
	(In thousands)
LEASE COST:
Finance lease cost:			��
Amortization of right-of-use assets	$	321		$	642
Interest on lease liabilities	1,455			2,911
Operating lease cost	1,493			2,997
Variable lease cost	129			220
Total lease cost	$	3,398		$	6,770

OTHER INFORMATION:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for finance leases	$	1,433		$	2,893
Operating cash flows for operating leases	$	1,268		$	2,779
Financing cash flows for finance leases	$	16		$	41

				June 30,
				2019
Weighted-average remaining lease term - finance leases				18.6 years
Weighted-average remaining lease term - operating leases				53.7 years
Weighted-average discount rate - finance leases				8.0		%
Weighted-average discount rate - operating leases				4.5		%

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

Consolidated Statements of Cash Flows—Supplemental Disclosures

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



	Six Months Ended
	June 30,
	2019			2018
	(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	64,755		$	64,685
Interest capitalized	(9,240		)	(10,735		)
Interest expense	$	55,515		$	53,950
Cash paid for interest, net of amounts capitalized	$	53,588		$	52,997
Cash paid for income taxes	$	419		$	692
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
DownREIT operating partnership units redeemed for common shares	$	11,935		$	—
Shares issued under dividend reinvestment plan	$	897		$	955

See additional disclosures in the "Recently Adopted Accounting Pronouncements" section of this footnote relating to operating lease right of use assets and lease liabilities recorded in connection with our adoption of ASC Topic 842.

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



	June 30,		December 31,
	2019		2018
	(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents	$	105,903	$	64,087
Restricted cash (1)	34,366		44,245
Total cash, cash equivalents, and restricted cash	$	140,269	$	108,332


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

NOTE 3—REAL ESTATE

On February 1, 2017, we acquired a leasehold interest in Hastings Ranch Plaza, a 274,000 square foot shopping center in Pasadena, California for $29.5 million. The land is subject to a long-term ground lease that expires on April 30, 2054. Approximately $21.5 million of assets acquired were allocated to lease intangibles and included within other assets. Approximately $15.2 million of net assets acquired were allocated to lease liabilities and included in other liabilities.

~~On March 31, 2017,~~8, 2019, we acquired the fee interest in ~~Riverpoint Center,~~Fairfax Junction, a ~~211,000~~75,000 square foot shopping center in ~~the Lincoln Park neighborhood of Chicago, Illinois~~Fairfax, Virginia for ~~$107.0~~$22.5 million. Approximately ~~$1.0~~$0.6 million and ~~$12.3~~$0.4 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

We leased three parcels of land at our Assembly Row property to two ground lessees. During 2016, both lessees exercised purchase options under the related ground leases. The sale transaction related to the purchase option on one of our ground leases was completed on April 4, 2017On May 28, 2019, we sold Free State Shopping Center in Bowie, Maryland for a sales price of $36.0 million. On June 28, 2017, the sale transactions related to the purchase options on our other two ground lease parcels were completed for a total sales price of $17.3 million. The net gain recognized in connection with these transactions was approximately $15.4 million.

On May 19, 2017, we acquired the fee interest in a 71,000 square foot, mixed-use property located in Berkeley, California based on a gross value of $23.9 million. The acquisition was completed through a newly formed entity for which we own a 90% controlling interest. Approximately $0.8$72.0 million, and $0.3 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively. Additionally, approximately $2.4 million was allocated to noncontrolling interests.

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



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

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

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

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

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

~~On August 25, 2017,~~May 29, 2019, we sold ~~our property located~~a land parcel at ~~150 Post Street~~Northeast Shopping Center in ~~San Francisco, California~~Philadelphia, Pennsylvania for a$7.7 million. These sales ~~price of $69.3 million, resulting~~resulted in a gain of ~~$45.2~~$15.2 million.

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

~~For~~During the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2019, we ~~recognized a $0.6 million and $3.9 million gain, respectively, net of $0.3 million and $2.0 million of income taxes, respectively, related to~~closed on the sale of ~~condominiums~~27 condominium units at our Assembly Row property based on the percentage-of-completion method. In connection with recording the gain, we recognized a receivable of $59.1 million as of September 30, 2017. The closing of the Assembly Row condominium sales is expected to commence in 2018.~~As of September 30, 2017, no gain has been recognized for contracted condominium sales at~~and Pike & Rose properties (combined), received proceeds net of closing costs of $13.1 million, and recognized a gain of $0.7 million, net of $0.2 million of income taxes. The cost basis for the remaining condominium units as ~~not all~~ of ~~the criteria necessary~~June 30, 2019 is $5.9 million, and is included in "assets held for ~~profit recognition have been met.~~sale" on our consolidated balance sheets.

NOTE 4—DEBT

On ~~June 5, 2017~~January 31, 2019, we ~~refinanced~~repaid the ~~$175.0~~$20.3 million mortgage loan on ~~Plaza El Segundo~~Rollingwood Apartments, at ~~a face amount of $125.0 million and repaid the remaining $50.0 million at par. The new mortgage loan bears interest at 3.83% and matures on June 5, 2027.~~par, prior to its original

maturity date.

On June ~~23, 2017,~~7, 2019, we issued ~~$400.0~~$300.0 million ~~aggregate principal amount~~ of fixed rate senior unsecured notes ~~in two separate series. We issued $300.0 million of 3.25% notes~~ that mature on ~~July~~June 15, ~~2027,~~2029 and bear interest at 3.20%. The notes were offered at ~~99.083%~~99.838% of the principal amount with a yield to maturity of ~~3.358%~~3.219%. ~~Additionally, we issued $100.0 million of 4.50% notes due December 1, 2044.~~ The 4.50% notes were offered at 105.760% of the principal amount, with a yield to maturity of 4.143%, and have the same terms and are of the same series as the senior notes first issued on November 14, 2014. Our net proceeds from ~~the June~~this note offering after ~~net~~ issuance ~~premium,~~discounts, underwriting fees, and other costs ~~was approximately $399.5 million.~~

~~In connection with the acquisition of six shopping centers in Los Angeles County, California on August 2, 2017 (as further discussed in Note 3), we assumed mortgage loans with a face amount of $79.4~~were $297.0 million, ~~and a fair value of $80.1 million. The mortgage loans are secured by the individual properties with the following contractual terms:~~

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

~~On August 31, 2017, we refinanced the $41.8~~which were primarily used to repay our $275.0 million ~~mortgage~~unsecured term loan, at par, on ~~The Grove at Shrewsbury (East) at a face amount of $43.6 million. The new mortgage loan bears interest at 3.77% and matures on September 1, 2027.~~June 7, 2019.

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, the maximum amount of borrowings outstanding under our $800.0 million revolving credit facility was ~~$281.5~~$81.0 million and ~~$344.0~~$116.5 million, respectively, and the weighted average interest rate, before amortization of debt fees, was ~~2.1% and 1.9%, respectively.~~3.2% for both periods. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, the weighted average borrowings outstanding were ~~$172.7~~$27.1 million and ~~$173.0~~$45.1 million, respectively. At ~~September~~June 30, ~~2017, there was $41.5 million outstanding balance.~~2019, our revolving credit facility had no balance outstanding. Our revolving credit facility ~~term loan~~ and certain notes require us to comply with various financial covenants, including the maintenance of minimum ~~shareholders’~~shareholders' equity and debt coverage ratios and a maximum ratio of debt to net worth. As of ~~September~~June 30, ~~2017,~~2019, we were in compliance with all default related debt covenants.

NOTE 5—FAIR VALUE OF FINANCIAL INSTRUMENTS

Except as disclosed below, the carrying amount of our financial instruments approximates their fair value. The fair value of our mortgages payable, notes payable and senior notes and debentures is sensitive to fluctuations in interest rates. Quoted market prices (Level 1) were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis (Level 2) is generally used to estimate the fair value of our mortgages and notes payable. Considerable judgment is necessary to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. A summary of the carrying amount and fair value of our mortgages payable, notes payable and senior notes and debentures is as follows:



	June 30, 2019				December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Mortgages and notes payable	$	455,046	$	460,416	$	753,406	$	751,361
Senior notes and debentures	$	2,702,737	$	2,830,445	$	2,404,279	$	2,371,392

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

AsOne of ~~September 30, 2017, we have~~ our equity method investees has two interest rate ~~swap agreements with a notional amount of~~ ~~$275.0 million~~ ~~that are measured at fair value on a recurring basis. The interest rate swap agreements fix the variable portion of our~~ ~~$275.0 million~~ ~~term loan at 1.72% through November 1, 2018. We assess effectiveness of our~~swaps which qualify for cash flow ~~hedges both at inception~~hedge accounting. For the three and ~~on an ongoing basis. The effective portion~~six months ended June 30, 2019, our share of ~~changes~~the change in fair value of the ~~interest rate~~related swaps associated with our cash flow hedges is recorded in accumulated other comprehensive loss and is subsequently reclassified into interest expense as interest is incurred on the related variable rate debt. Within the next 12 months, we expect to reclassify an estimated $0.7 million as an increase to interest expense. Our cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. In addition, we evaluate the default risk of the counterparty by monitoring the credit-worthiness of the counterparty. When ineffectiveness exists, the ineffective portion of changes in fair value of the interest rate swaps associated with our cash flow hedges is recognized in earnings in the period affected. Hedge ineffectiveness has not impacted earnings as of September 30, 2017, and we do not anticipate it will have a significant effect in the future.

The fair values of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The fair value of our swaps at September 30, 2017 was a liability of $0.7 million and is included in "accounts payable and accrued expenses" on our consolidated balance sheet. For the three and nine months ended September 30, 2017, the change in valuation on our interest rate swaps resulted in a $0.4 million and $1.8 million decrease in our derivative liability, respectively, (including $0.4 million and $1.5 million, respectively, reclassified from other comprehensive loss to interest expense). The change in valuation on our interest rate swaps is included in "accumulated other comprehensive ~~loss."~~loss" was $0.4 million, and $0.6 million, respectively.

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

September 30, 2017 December 31, 2016
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
(In thousands)
Interest rate swaps $ —
$ 742
$ —
$ 742
$ —
$ 2,577
$ —
$ 2,577

NOTE 6—COMMITMENTS AND CONTINGENCIES

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

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

Under the terms of certain partnership agreements, the partners have the right to exchange their operating partnership units for cash or ~~the same number of our~~ common shares, at our option. A total of ~~787,962~~627,171 downREIT operating partnership units are outstanding which have a total fair value of ~~$97.9~~approximately $80.8 million, ~~based on~~which is calculated by multiplying the outstanding number of downREIT partnership units by our closing stock price on ~~September~~June 30, ~~2017.~~2019.

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

NOTE 7—SHAREHOLDERS’ EQUITY

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



	Six Months Ended June 30,
	2019				2018
	Declared		Paid		Declared		Paid
Common shares	$	2.040	$	2.040	$	2.000	$	2.000
5.417% Series 1 Cumulative Convertible Preferred shares	$	0.677	$	0.677	$	0.677	$	0.677
5.0% Series C Cumulative Redeemable Preferred shares (1)	$	0.625	$	0.625	$	0.625	$	0.681


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

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

We have an ~~at the market~~at-the-market (“ATM”) equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $400.0 million. We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay amounts outstanding under our revolving credit facility and/or for general corporate purposes. For the ~~three~~six months ended ~~September~~June 30, ~~2017,~~2019, we ~~issued 226,739~~sold 511,938 common shares at a weighted average price per share of ~~$131.00~~$134.96 for net cash proceeds of ~~$29.3~~$68.3 million and paid $0.3 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. For the nine months ended September 30, 2017, we issued 325,397 common shares at a weighted average price per share of $133.09 for net cash proceeds of $42.7 million and paid $0.4$0.7 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. As of ~~September~~June 30, ~~2017,~~2019, we had the capacity to issue up to ~~$327.6~~$203.4 million in common shares under our ATM equity program.

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

NOTE 8—~~COMPONENTS OF RENTAL INCOME~~

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

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

~~Minimum rents include the following:~~

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

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

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



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands)
Grants of common shares and options	$	3,131		$	3,274		$	6,992		$	7,144
Capitalized share-based compensation	(201		)	(488		)	(472		)	(926		)
Share-based compensation expense	$	2,930		$	2,786		$	6,520		$	6,218

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

NOTE ~~10—~~9—EARNINGS PER SHARE

We have calculated earnings per share (“EPS”) under the two-class method. The two-class method is an earnings allocation methodology whereby EPS for each class of common stock and participating securities is calculated according to dividends declared and participation rights in undistributed earnings. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 and~~ ~~2016~~,2019, we had 0.2 million weighted average unvested shares outstanding and for the three and six months ended June 30, 2018 we had 0.3 million weighted average unvested shares outstanding, which are considered participating securities. Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares; the portion of earnings allocated to the unvested shares is reflected as “earnings allocated to unvested shares” in the reconciliation below.

In the dilutive EPS calculation, dilutive stock options were calculated using the treasury stock method consistent with prior periods. There were 682 anti-dilutive stock options for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019 and ~~no anti-~~

~~dilutive stock options for the thee and nine months ended September 30, 2016.~~2018. The conversions of downREIT operating partnership units and 5.417% Series 1 Cumulative Convertible Preferred Shares are anti-dilutive for all periods presented and accordingly, have been excluded from the weighted average common shares used to compute diluted EPS.



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(In thousands, except per share data)
NUMERATOR
Net income	$	82,667		$	65,533		$	144,470		$	128,464
Less: Preferred share dividends	(2,011		)	(2,011		)	(4,021		)	(4,021		)
Less: Income from operations attributable to noncontrolling interests	(1,765		)	(1,938		)	(3,424		)	(3,622		)
Less: Earnings allocated to unvested shares	(226		)	(255		)	(439		)	(508		)
Net income available for common shareholders, basic and diluted	$	78,665		$	61,329		$	136,586		$	120,313
DENOMINATOR
Weighted average common shares outstanding—basic	74,713			72,990			74,458			72,948
Stock options	—			35			—			49
Weighted average common shares outstanding—diluted	74,713			73,025			74,458			72,997

EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders	$	1.05		$	0.84		$	1.83		$	1.65
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders	$	1.05		$	0.84		$	1.83		$	1.65

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

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

NOTE 10—SUBSEQUENT EVENT

On July 25, 2019, we amended our revolving credit facility to increase our borrowing capacity to $1.0 billion and extend the maturity date to January 19, 2024, subject to two six-month extensions at our option. Under the amended facility, the spread over LIBOR is 77.5 basis points based on our current credit rating. In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.5 billion.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

The following discussion should be read in conjunction with the consolidated interim financial statements and notes thereto appearing in Item 1 of this report and the more detailed information contained in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 filed with the Securities and Exchange Commission (the “SEC”) on February 13, ~~2017~~2019.

This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. When we refer to

forward-looking statements or information, sometimes we use words such as “may,” “will,” “could,” “should,” “plans,” “intends,” “expects,” “believes,” “estimates,” “anticipates” and “continues.” Forward-looking statements are not historical facts or guarantees of future performance and involve certain known and unknown risks, uncertainties, and other factors, many of which are outside our control, that could cause actual results to differ materially from those we describe.

Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this Quarterly Report on Form 10-Q. Except as may be required by law, we make no promise to update any of the forward-looking statements as a result of new information, future events or otherwise. You should carefully review the risks and the risk factors included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2018 and under Part II, Item 1A in this Quarterly Report on Form 10-Q, before making any investments in us.

Overview

We are an equity real estate investment trust (“REIT”) specializing in the ownership, management, and redevelopment of high quality retail and mixed-use properties located primarily in densely populated and affluent communities in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida. As of ~~September~~June 30, ~~2017,~~2019, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 104 predominantly retail real estate projects comprising approximately ~~24.1~~23.9 million square feet. In total, the real estate projects were ~~94.9%~~94.1% leased and ~~93.8%~~93.3% occupied at ~~September~~June 30, ~~2017.~~2019.

~~2017 Significant~~2019 Property ~~Acquisitions &~~Acquisition and Dispositions

On ~~April 4, 2017~~ ~~and~~ ~~June~~May 28, ~~2017, the sale transactions at our~~ ~~Assembly Row property~~2019, we sold Free State Shopping Center in ~~Somerville, Massachusetts~~ ~~related to the purchase options on our Partners HealthCare and AvalonBay ground lease parcels, respectively, closed.~~ ~~The total~~Bowie, Maryland for a sales price ~~was $53.3~~of $72.0 million, ~~which~~and on May 29, 2019, we sold a land parcel at Northeast Shopping Center in Philadelphia, Pennsylvania for $7.7 million. These sales resulted in a gain of ~~$15.4 million.~~

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

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



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

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

~~On August 25, 2017, we sold our property at 150 Post Street in San Francisco, California for a sales price of $69.3 million, resulting in a gain of $45.2~~$15.2 million.

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

~~For~~During the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2019, we ~~recognized a $0.6 million and $3.9 million gain, respectively, net of $0.3 million and $2.0 million of income taxes, respectively, related to~~closed on the sale of ~~condominiums~~27 condominium units at our Assembly Row property based on the percentage-of-completion method. In connection with recording the gain, we recognized a receivable of $59.1 million. The closing of the Assembly Row condominium sales is expected to commence in 2018.~~As of September 30, 2017, no gain has been recognized for contracted condominium sales at~~and Pike & Rose properties (combined), received proceeds net of closing costs of $13.1 million, and recognized a gain of $0.7 million, net of $0.2 million of income taxes. The cost basis for the remaining condominium units as ~~not all~~ of ~~the criteria necessary~~June 30, 2019 is $5.9 million, and is included in "assets held for ~~profit recognition have been met.~~sale" on our consolidated balance sheets.

~~2017 Significant~~2019 Debt and Equity Transactions

On June ~~23, 2017,~~7, 2019, we issued ~~$400.0~~$300.0 million ~~aggregate principal amount~~ of fixed rate senior unsecured notes ~~in two separate series. We issued $300.0 million of 3.25% notes~~ that mature on ~~July~~June 15, ~~2027,~~2029 and bear interest at 3.20%. The notes were offered at ~~99.083%~~99.838% of the principal amount with a yield to maturity of ~~3.358%~~3.219%. ~~Additionally, we issued $100.0 million of 4.50% notes due December 1, 2044.~~ The 4.50% notes were offered at 105.760% of the principal amount, with a yield to maturity of 4.143%, and have the same terms and are of the same series as our senior notes first issued on November 14, 2014. Our net proceeds from ~~the June~~this note offering after ~~net~~ issuance ~~premium,~~discounts, underwriting fees, and other costs ~~was approximately $399.5 million.~~were $297.0 million, which were primarily used to repay our $275.0 million unsecured term loan on June 7, 2019.

In connection with the acquisition of six shopping centers in Los Angeles County, California on August 2, 2017 (as further discussed above), we assumed mortgage loans with a face amount of $79.4 million and a fair value of $80.1 million. The mortgage loans are secured by the individual properties with the following contractual terms:

On ~~August 31, 2017,~~July 25, 2019, we ~~refinanced~~amended our revolving credit facility to increase our borrowing capacity to $1.0 billion and extend the ~~$41.8 million mortgage loan,~~maturity date to January 19, 2024, subject to two six-month extensions at ~~par,~~our option. Under the amended facility, the spread over LIBOR is 77.5 basis points based on ~~The Grove at Shrewsbury (East) at a face amount of $43.6 million. The new mortgage loan bears interest at 3.77% and matures on September 1, 2027.~~our current credit rating. In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.5 billion.

~~2017, we issued 325,397 common shares at a weighted average price per share of $133.09 for net cash proceeds of $42.7 million and paid $0.4~~$0.7 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. As of ~~September~~June 30, ~~2017,~~2019, we had the capacity to issue up to ~~$327.6~~$203.4 million in common shares under our ATM equity program.

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

Capitalized Costs

Certain external and internal costs directly related to the development, redevelopment and leasing of real estate, including pre-construction costs, real estate taxes, insurance, construction costs and salaries and related costs of personnel directly involved, are capitalized. We capitalized certain external and internal costs related to both development and redevelopment activities of ~~$320~~$142 million and $6$4 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, and ~~$289~~$137 million and $7$5 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. We capitalized external and internal costs related to other property improvements of ~~$47~~$29 million and $2 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, and ~~$39~~$28 million and $2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. We capitalized external and internal costs related to leasing activities of $6$10 million and $5$1 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, and $7$9 million and $4$3 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $6$4 million, $2$1 million, and ~~$5 million, for the nine months ended September 30, 2017, and $6 million, $2 million, and $4~~$1 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2019 and $4 million, $1 million, and $3 million, respectively for the six months ended June 30, 2018. Total capitalized costs were ~~$386~~$188 million and ~~$348~~$184 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

~~Recently Issued and~~ Recently Adopted Accounting Pronouncements

See Note 2 to the consolidated financial statements.

Outlook

We seek growth in earnings, funds from operations, and cash flows primarily through a combination of the following:

growth in our ~~same-center~~comparable property portfolio,

growth in our portfolio from property development and redevelopments, and

expansion of our portfolio through property acquisitions.

Our ~~same-center~~comparable property growth is primarily driven by increases in rental rates on new leases and lease renewals, changes in portfolio occupancy, and the redevelopment of those assets. Over the long-term, the infill nature and strong demographics of our properties provide a strategic advantage allowing us to maintain relatively high occupancy and generally increase rental rates. We continue to see relatively strong levels of interest from prospective tenants for our retail spaces; however, the time it takes to complete new lease deals is longer, as tenants have become more selective and more deliberate in their decision-making process.We have also experienced extended periods of time for some government agencies to process permits and inspections further delaying rent commencement on newly leased spaces. Additionally, we have seen an overall decrease in the number of tenants available to fill anchor spaces, and have seen ~~in 2017,~~ an uptick in the number of retail tenants ~~closing early~~vacating prior to the end of their lease term and/or filing for bankruptcy. We believe the locations and nature of our centers and diverse tenant base partially mitigates any potential negative changes in the economic environment. However, any significant reduction in our tenants' abilities to pay base rent, percentage rent or other charges will adversely affect our financial condition and results of operations. We seek to maintain a mix of strong national, regional, and local retailers. At ~~September~~June 30, ~~2017,~~2019, no single tenant accounted for more than ~~2.9%~~2.6% of annualized base rent.

Our properties are located primarily in densely populated and/or affluent areas with high barriers to entry which allow us to take advantage of redevelopment opportunities that enhance our operating performance through renovation, expansion, reconfiguration, and/or retenanting. We evaluate our properties on an ongoing basis to identify these types of opportunities. We currently have redevelopment projects underway with a projected total cost of approximately ~~$242~~$325 million that we expect to stabilize in the next several years.

We continue our ongoing redevelopment efforts at Santana Row and are ~~proceeding with~~under construction on an eight story ~~284,000~~301,000 square foot office building which will include ~~29,000~~an additional 18,000 square feet of retail space and 1,300 parking spaces. The ~~building~~project is expected to cost between ~~$205~~$210 million and ~~$215~~$220 million, to be delivered in 2020, and ~~to deliver in 2019.~~the office portion is 100% leased. After current phases, we have approximately 4 acres remaining for further redevelopment and entitlements in place for an additional 395 residential units and 321,000 square feet of commercial space.

Additionally, we control 12 acres of land ~~adjacent~~across from Santana Row, which has approximately 1 million square feet of commercial space entitlements. We are proceeding with the first phase of construction on this land, which includes an eight story 360,000 square foot office building, with over 1,700 parking spaces. The building is expected to ~~Santana Row.~~cost between $250 and $270 million, with deliveries beginning in 2021.

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

~~Construction of~~ Phase II of Assembly Row ~~which will include~~includes approximately 161,000 square feet of retail space, 447 residential units, and a 158 room boutique hotel ~~and 447 residential units is underway. The hotel will be owned~~(owned and operated by a joint venture in which we are a ~~partner. Approximately 36,000~~partner). Total expected costs range from $290 million

to $305 million and delivery is expected to continue through 2019. As of June 30, 2019, approximately 130,000 square feet of retail space inand the 158 room hotel have opened, and all of the residential units have been completed. Phase II has opened in 2017, and in September, the first tenants moved into the new residential building. Total expected costs range from $280 million to $295 million and delivery is expected through 2017 and 2018. Phase II will also ~~include~~includes 122 for-sale condominium units ~~with~~of which 115 units have closed as of June 30, 2019. The remaining 7 units are expected to close in 2019. The condominium units have an expected total cost of ~~$74 million to $79~~$81 million.

Additionally, ~~as part~~we commenced construction on Phase III of ~~the second phase, we entered into a ground lease agreement with Partners HealthCare to bring 741,500~~Assembly Row, which will include 277,000 square feet of office space (of which, 150,000 square feet is pre-leased), 56,000 square feet of retail space, 500 residential units, and over 800 additional parking spaces. The expected costs for Phase III are between $465 million and $485 million and is projected to ~~Assembly Row. The ground lease agreement included a purchase option, which was exercised and the related sale closed on April 4, 2017.~~open beginning in 2022.

~~Construction of~~ Phase II of Pike & Rose ~~is also underway. Phase II will include~~includes approximately 216,000 square feet of retail space, 272 residential units, and a 177 room boutique hotel (owned and ~~272 residential units. Approximately 102,000~~operated by a joint venture in which we are a partner). As of June 30, 2019, approximately 196,000 square feet of retail space ~~in Phase II has~~and the 177 room hotel have opened, ~~in 2017,~~ and ~~in August,~~all of the ~~first tenants moved into the new~~ residential ~~building.~~units have been completed. Total expected costs range from $200 million to $207 million and remaining delivery is expected to continue through ~~2017 and 2018. The hotel will be owned and operated by a joint venture in which~~2019. As of June 30, 2019, we ~~are a partner. Phase II will also include~~closed on the sale of 88 of the 99 for-sale condominium units ~~with~~in Phase II. The condominium units have an expected total cost of ~~$53~~$62 million.

Additionally, at Pike & Rose, we have commenced construction on a 212,000 square foot office building (which includes 4,000 square feet of ground floor retail space), and will include over 600 additional parking spaces. The building is expected to cost between $128 million and $135 million and is projected to ~~$58 million.~~open beginning in 2021.

Including costs incurred in the first ~~nine~~six months of ~~2017,~~2019, we expect to invest between ~~$270~~$175 million and ~~$300~~$200 million at Assembly Row and Pike & Rose in ~~2017.~~2019.

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

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

At ~~September~~June 30, ~~2017,~~2019, the leasable square feet in our properties was ~~94.9%~~94.1% leased and ~~93.8%~~93.3% occupied. The leased rate is higher than the occupied rate due to leased spaces that are being redeveloped or improved or that are awaiting permits and, therefore, are not yet ready to be occupied. Our occupancy and leased rates are subject to variability over time due to factors including acquisitions, the timing of the start and stabilization of our redevelopment projects, lease expirations and tenant closings and bankruptcies.

Lease Rollovers

For the ~~third~~second quarter of ~~2017,~~2019, we signed leases for a total of ~~424,000~~383,000 square feet of retail space including ~~400,000~~379,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of ~~14%~~7% on a cash ~~basis and 27% on a straight-line~~ basis. New leases for comparable spaces were signed for ~~165,000~~136,000 square feet at an average rental increase of ~~23%~~17% on a cash ~~basis and 36% on a straight-line~~ basis. Renewals for comparable spaces were signed for ~~234,000~~243,000 square feet at an average rental increase of 8%3% on a cash ~~basis and 20% on a straight-line~~ basis. Tenant improvements and incentives for comparable spaces were ~~$51.81~~$33.12 per square foot, of which, $88.78 per square foot was for new leases and ~~$7.89~~$2.00 per square foot was for renewals for the three months ended ~~September~~June 30, ~~2017.~~2019.

For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, we signed leases for a total of ~~1,448,000~~688,000 square feet of retail space including ~~1,321,000~~626,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of

~~13%~~ 8% on a cash ~~basis and 26% on a straight-line~~ basis. New leases for comparable spaces were signed for ~~615,000~~264,000 square feet at an average rental increase of ~~19%~~17% on a cash ~~basis and 33% on a straight-line~~ basis. Renewals for comparable spaces were signed for ~~706,000~~362,000 square feet at an average rental increase of 9%2% on a cash ~~basis and 21% on a straight-line~~ basis. Tenant improvements and incentives for comparable spaces were ~~$62.57~~$41.75 per square foot, of which, $96.56 per square foot was for new leases and ~~$14.33~~$1.77 per square foot was for renewals for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2019.

The rental increases associated with comparable spaces generally include all leases signed for retail space in arms-length transactions reflecting market leverage between landlords and tenants during the period. The comparison between average rent for expiring leases and new leases is determined by including minimum rent and percentage rent paid on the expiring lease and minimum rent and in some instances, projections of first lease year percentage rent, to be paid on the new lease. In atypical circumstances, management may exercise judgment as to how to most effectively reflect the comparability of spaces reported in this calculation. The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. Tenant improvements and incentives include the total dollars committed for the improvement (fit out) of a space as it relates to a specific lease and, except for redevelopments, may also include base building costs (i.e. expansion, escalators or new entrances) which are required to make the space leasable. Incentives include amounts paid to tenants as inducement to sign a lease that do not represent building improvements.

The leases signed in ~~2017~~2019 generally become effective over the following two years though some may not become effective until ~~2020~~2022 and beyond. Further, there is risk that some new tenants will not ultimately take possession of their space and that tenants for both new and renewal leases may not pay all of their contractual rent due to operating, financing or other matters. However, these increases do provide information about the tenant/landlord relationship and the potential increase we may achieve in rental income over time.

Historically, we have executed comparable space leases for 1.2 to ~~1.5~~1.7 million square feet of retail space each year, and expect that volume for ~~2017~~2019 will be in line with ~~or slightly above,~~ our historical averages with overall positive increases in rental income. However, changes in rental income associated with individual signed leases on comparable spaces may be positive or negative, and we can provide no assurance that the rents on new leases will continue to increase at the above disclosed levels, if at all.

~~Same-Center~~Comparable Properties

Throughout this section, we have provided certain information on a ~~“same-center”~~“comparable property” basis. Information provided on a ~~same-center~~comparable property basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties that are currently under development or are being repositioned for ~~which~~ significant redevelopment ~~or expansion occurred during either of the periods being compared.~~and investment. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2019, all or a portion of ~~83 and 78~~97 properties ~~respectively,~~ were considered ~~same-center~~comparable properties and ~~16 and 15~~eight properties ~~respectively,~~ were considered ~~redevelopment or expansion.~~non-comparable properties. For the ~~nine~~three and six months ended ~~September~~June 30, ~~2017,~~2019, eight properties were moved from acquisitions to comparable properties, one property ~~and~~was moved from acquisitions to non-comparable properties, one portion of a property ~~were~~was moved from ~~redevelopment~~non-comparable to ~~same-center~~comparable properties, and ~~two properties were~~one property was removed from ~~same-center~~comparable properties, as ~~they were~~it was sold, ~~in the third quarter of 2017,~~ compared to the designations ~~as of~~for the year ended December 31, ~~2016.~~ 2018, which were 90 properties or portions of properties considered comparable and eight considered non-comparable.While there is judgment surrounding changes in designations, we typically move ~~redevelopment~~non-comparable properties to ~~same-center~~comparable properties once they have stabilized, which is typically considered ~~95%~~90% physical occupancy or when the growth expected from the redevelopment has been included in the comparable periods. We typically remove properties from ~~same center~~comparable properties when the ~~redevelopment~~repositioning of the asset has commenced and has or is expected to have a significant impact to property operating income within the calendar year. Acquisitions are moved to ~~same-center~~comparable properties once we have owned the property for the entirety of comparable periods and the property is not under development or being repositioned for significant redevelopment ~~or expansion.~~and investment.

RESULTS OF OPERATIONS - THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2019 AND ~~2016~~

2018


							Change											Change
	2017			2016			Dollars			%		2019			2018			Dollars			%
	(Dollar amounts in thousands)											(Dollar amounts in thousands)
Rental income	$	212,048		$	197,469		$	14,579		7.4	%	$	229,731		$	224,168		$	5,563		2.5	%
Other property income	5,171			2,759			2,412			87.4	%
Mortgage interest income	734			929			(195		)	(21.0	)%	734			734			—			—	%
Total property revenue	217,953			201,157			16,796			8.3	%	230,465			224,902			5,563			2.5	%
Rental expenses	41,250			38,588			2,662			6.9	%	41,438			39,905			1,533			3.8	%
Real estate taxes	27,492			24,973			2,519			10.1	%	25,166			28,307			(3,141		)	(11.1	)%
Total property expenses	68,742			63,561			5,181			8.2	%	66,604			68,212			(1,608		)	(2.4	)%
Property operating income (1)	149,211			137,596			11,615			8.4	%	163,861			156,690			7,171			4.6	%
General and administrative expense	(9,103		)	(8,232		)	(871		)	10.6	%	(11,422		)	(8,413		)	(3,009		)	35.8	%
Depreciation and amortization	(55,611		)	(48,903		)	(6,708		)	13.7	%	(59,057		)	(58,381		)	(676		)	1.2	%
Operating Income	84,497			80,461			4,036			5.0	%
Gain on sale of real estate, net												16,197			3,972			12,225			307.8	%
Operating income												109,579			93,868			15,711			16.7	%
Other interest income	79			105			(26		)	(24.8	)%	189			159			30			18.9	%
Interest expense	(26,287		)	(24,313		)	(1,974		)	8.1	%	(27,482		)	(27,766		)	284			(1.0	)%
Loss from real estate partnerships	(182		)	—			(182		)	(100.0	)%
Income (loss) from partnerships												381			(728		)	1,109			152.3	%
Total other, net	(26,390		)	(24,208		)	(2,182		)	9.0	%	(26,912		)	(28,335		)	1,423			(5.0	)%
Income from continuing operations	58,107			56,253			1,854			3.3	%
Gain on sale of real estate, net	50,775			4,945			45,830			926.8	%
Net income	108,882			61,198			47,684			77.9	%	82,667			65,533			17,134			26.1	%
Net income attributable to noncontrolling interests	(2,105		)	(2,221		)	116			(5.2	)%	(1,765		)	(1,938		)	173			(8.9	)%
Net income attributable to the Trust	$	106,777		$	58,977		$	47,800		81.0	%	$	80,902		$	63,595		$	17,307		27.2	%

Total property revenue increased ~~$16.8~~$5.6 million, or ~~8.3%~~2.5%, to ~~$218.0~~$230.5 million in the three months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$201.2~~$224.9 million in the three months ended ~~September~~June 30, ~~2016.~~2018. The percentage occupied at our shopping centers was ~~93.8%~~93.3% at ~~September~~June 30, ~~2017~~2019 compared to ~~93.1%~~93.7% at ~~September~~June 30, ~~2016.~~2018. Changes in the components of property revenue are discussed below.

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent. Rental income increased ~~$14.6~~$5.6 million, or ~~7.4%~~2.5%, to ~~$212.0~~$229.7 million in the three months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$197.5~~$224.2 million in the three months ended ~~September~~June 30, ~~2016~~2018 due primarily to the following:

partially offset by,

Property ~~Income~~Expenses

~~Other~~Total property ~~income increased $2.4~~expenses decreased $1.6 million, or ~~87.4%~~2.4%, to ~~$5.2~~$66.6 million in the three months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$2.8~~$68.2 million in the three months ended ~~September~~June 30, 2016. Included in other property income are items which, although recurring, inherently tend to fluctuate more than rental income from period to period, such as lease termination fees. This increase is primarily related to higher lease termination fees.

~~Mortgage Interest Income~~

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

~~Property Expenses~~

~~Total property expenses increased $5.2 million, or 8.2%, to $68.7 million in the three months ended September 30, 2017 compared to $63.6 million in the three months ended September 30, 2016.~~2018. Changes in the components of property expenses are discussed below.

Rental expenses increased ~~$2.7~~$1.5 million, or ~~6.9%~~3.8%, to ~~$41.3~~$41.4 million in the three months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$38.6~~$39.9 million in the three months ended ~~September~~June 30, ~~2016.~~2018. This increase is due primarily to an increase of $1.4 million from comparable properties due primarily to higher repairs and maintenance costs partially offset by a $0.9 million decrease due to the ~~following:~~new lease accounting standard requirement to record collectibility adjustments as a reduction to revenue rather than rental expense effective at adoption on January 1, 2019.

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

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income ~~plus other property income decreased~~increased to ~~19.0%~~18.0% in the three months ended ~~September~~June 30, ~~2017~~2019 from ~~19.3%~~17.8% in the three months ended ~~September~~June 30, ~~2016~~.2018.

Real estate tax expense ~~increased $2.5~~decreased $3.1 million, or ~~10.1%~~11.1%, to ~~$27.5~~$25.2 million in the three months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$25.0~~$28.3 million in the three months ended ~~September~~June 30, ~~2016~~2018. This decrease is primarily due to the following:

Property Operating Income

Property operating income increased ~~$11.6~~$7.2 million, or ~~8.4%~~4.6%, to ~~$149.2~~$163.9 million in the three months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$137.6~~$156.7 million in the three months ended ~~September~~June 30, ~~2016.~~2018. This increase is due primarily ~~due~~ to growth in earnings at same-center and redevelopment properties, our acquisition of six shopping centers in Los Angeles County, California in August 2017 and Riverpoint Center in March 2017, and Assembly Row and Pike & Rose.

~~Other Operating Expenses~~

~~General and Administrative~~

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

~~Depreciation and Amortization~~

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

~~redevelopment properties (largely the new office building at Santana Row), same-center~~comparable properties and Assembly Row and Pike & ~~Rose.~~Rose, partially offset by property sales.

Other Operating ~~Income~~

~~Operating income~~General and Administrative

General and administrative expense increased ~~$4.0~~$3.0 million, or ~~5.0%~~35.8%, to ~~$84.5~~$11.4 million in the three months ended ~~September~~June 30, ~~2017 compared to $80.5~~2019 from $8.4 million in the three months ended ~~September~~June 30, ~~2016. This increase is primarily due to growth in earnings at same-center and redevelopment properties, 2017 acquisitions, and earnings growth at Assembly Row and Pike & Rose.~~

~~Interest Expense~~

~~Interest expense increased $2.0 million, or 8.1%, to $26.3 million in the three months ended September 30, 2017 compared to $24.3 million in the three months ended September 30, 2016.~~2018. This increase is due primarily to higher leasing related costs as certain costs can no longer be capitalized as a result of the ~~following:~~

~~partially offset by~~

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

Gain on Sale of Real Estate, Net

The ~~$50.8~~$16.2 million gain on sale of real estate, net for the three months ended ~~September~~June 30, ~~2017~~2019 is ~~primarily~~ due ~~to the following:~~

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

~~The $4.9 million~~ gain for the three months ended ~~September~~June 30, ~~2016~~2018 is related to condominium unit sales that closed at our Assembly Row and Pike and Rose properties.

Operating income increased $15.7 million, or 16.7%, to $109.6 million in the three months ended June 30, 2019 compared to $93.9 million in the three months ended June 30, 2018. This increase is due primarily to the ~~reversal~~net gains on the sales of Free State Shopping Center and a land parcel at Northeast Shopping Center, growth in earnings at our comparable properties, and the ~~unused portion~~opening of Phase II of Assembly Row and Pike & Rose, partially offset by higher leasing and personnel related costs.

Interest expense decreased $0.3 million, or 1.0%, to $27.5 million in the ~~warranty reserve for condominium units at Santana Row, as~~three months ended June 30, 2019 compared to $27.8 million in the ~~statutorily mandated latent construction defect period~~three months ended ~~in third quarter 2016.~~June 30, 2018. This decrease is due primarily to a decrease of $0.9 million due to lower weighted average borrowings, partially offset by an increase of $0.7 million due to a higher overall weighted average borrowing rate.

Gross interest costs were $32.2 million and $32.4 million in the three months ended June 30, 2019 and 2018, respectively. Capitalized interest was $4.7 million and $4.6 million for the three months ended June 30, 2019 and 2018, respectively.

Income (loss) from Partnerships

Income (loss) from partnerships increased $1.1 million, or 152.3%, to $0.4 million in the three months ended June 30, 2019 compared to a loss of $0.7 million in the three months ended June 30, 2018. This increase is due primarily to our share of earnings related to the hotel joint ventures at Assembly Row and Pike & Rose, which opened in August 2018 and March 2018, respectively.

RESULTS OF OPERATIONS - ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2017~~2019 AND ~~2016~~2018

Total property revenue increased ~~$35.9~~$12.4 million, or ~~6.0%~~2.8%, to ~~$633.4~~$462.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$597.5~~$450.3 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. The percentage occupied at our shopping centers was ~~93.8%~~93.3% at ~~September~~June 30, ~~2017~~2019 compared to ~~93.1%~~93.7% at ~~September~~June 30, ~~2016.~~2018. Changes in the components of property revenue are discussed below.

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent. Rental income increased ~~$35.0~~$12.4 million, or ~~6.0%~~2.8%, to ~~$620.7~~$461.2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$585.7~~$448.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018 due primarily to the following:

approximately $1.2 million, ~~primarily the net result of higher~~partially offset by a $4.1 million decrease in real estate tax ~~assessments partially offset by~~recoveries primarily due to lower ~~snow removal expense, partially offset by lower average occupancy~~multi-year tax reassessments for three of ~~approximately $0.9 million,~~

~~Other Property Income~~partially offset by

~~Mortgage Interest Income~~

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

Total property expenses ~~increased $9.0~~decreased $2.9 million, or ~~4.8%~~2.0%, to ~~$198.6~~$138.6 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$189.5~~$141.4 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. Changes in the components of property expenses are discussed below.

Rental expenses increased ~~$1.1~~$1.0 million, or ~~0.9%~~1.2%, to ~~$119.5~~$85.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$118.4~~$84.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. This increase is due primarily ~~due~~ to the following:

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income ~~plus other property income~~ decreased to ~~18.9%~~18.6% in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 from ~~19.9% in~~18.9% the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018.

Real estate tax expense ~~increased $7.9~~decreased $3.9 million, or ~~11.2%~~6.9%, to ~~$79.1~~$52.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$71.2~~$56.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018 due primarily to:

Property Operating Income

Property operating income increased ~~$26.9~~$15.3 million, or ~~6.6%~~4.9%, to ~~$434.8~~$324.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$407.9~~$308.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. This increase is due primarily ~~due~~ to growth in earnings at ~~redevelopment and same-center~~comparable properties, ~~2017 acquisitions, Assembly Row and Pike & Rose (primarily the lease-up of residential units at Pike & Rose, higher lease termination fees, and~~ the opening of ~~the second phase of retail~~Phase II at Pike & Rose), and the acquisition of the six previously unconsolidated Clarion joint venture properties in January 2016. The increases are partially offset by lower mortgage interest income related to a note receivable that was repaid in 2016.

~~Other Operating Expenses~~

~~General~~ ~~and Administrative~~

General and administrative expense increased $0.7 million, or 2.9%, to $26.0 million in the nine months ended September 30, 2017 from $25.3 million in the nine months ended September 30, 2016. The increase is primarily due to higher personnel costs.

~~Depreciation and Amortization~~

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

General and Administrative

General and administrative expense increased $4.6 million, or 28.4%, to $21.0 million in the six months ended June 30, 2019 from $16.3 million in the six months ended June 30, 2018. This increase is due primarily to higher leasing related costs as certain costs can no longer be capitalized as a result of the new lease accounting standard (see Note 2 for additional disclosure) and higher personnel costs.

Gain on Sale of Real Estate, Net

The $16.2 million gain on sale of real estate, net for the six months ended June 30, 2019 is due primarily to the sale of Free State Shopping Center and a land parcel at Northeast Shopping Center.

The $7.3 million net gain for the six months ended June 30, 2018 is related to condominium unit sales that closed at our Assembly Row and Pike and Rose properties.

Operating income increased ~~$11.6~~$17.3 million, or ~~4.9%~~9.5%, to ~~$249.1~~$200.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$237.5~~$183.3 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. This increase is due primarily ~~due~~ to growth in earnings at ~~redevelopment~~our comparable properties, the net gains on the sales of Free State Shopping Center and ~~same-center properties,~~a land parcel at Northeast Shopping Center, and the opening of Phase II of Assembly Row and Pike & Rose, ~~our 2017 acquisitions, and the acquisition of the six previously unconsolidated Clarion joint venture properties in January 2016,~~ partially offset by ~~lower mortgage interest income~~higher leasing and personnel related ~~to a note receivable that was repaid in 2016.~~costs.

Interest expense increased ~~$2.8~~$1.6 million, or ~~3.9%~~2.9%, to ~~$74.0~~$55.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$71.1~~$54.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. This increase is due primarily to the following:

Gross interest costs were ~~$92.5~~$64.8 million and ~~$83.8~~$64.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively. Capitalized interest was ~~$18.6~~$9.2 million and ~~$12.7~~$10.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016,~~2018, respectively.

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

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

Liquidity and Capital Resources

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

Our short-term liquidity requirements consist primarily of normal recurring operating expenses, obligations under our capital and operating leases, regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities), recurring expenditures, non-recurring expenditures (such as tenant improvements and redevelopments) and dividends to common and preferred shareholders. Our long-term capital requirements consist primarily of maturities under our long-term debt agreements, development and redevelopment costs and potential acquisitions.

We intend to operate with and maintain a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-grade debt ratings. In the short and long term, we may seek to obtain funds through the issuance of additional equity, unsecured and/or secured debt financings, joint venture relationships relating to existing properties or new acquisitions, and property dispositions that are consistent with this conservative structure.

At ~~September~~June 30, ~~2017,~~2019, we had cash and cash equivalents of ~~$22.9~~$105.9 million and ~~$41.5 million~~no outstanding balance on our $800.0 million unsecured revolving credit facility. For the six months ended June 30, 2019, the maximum amount of borrowings outstanding under our revolving credit facility ~~which matures on April 20, 2020,~~was $116.5 million, the weighted average amount of borrowings outstanding was $45.1 million and the weighted average interest rate, before amortization of debt fees, was 3.2%. On July 25, 2019, we amended our revolving credit facility to increase our borrowing capacity to $1.0 billion, lower our spread over LIBOR from 82.5 basis points to 77.5 basis points, and extend the maturity date to January 19, 2024, subject to two six-month extensions at our option. In addition, we have an option (subject to bank approval) to increase the credit facility through an accordion feature to $1.5 billion. ~~Our~~

On June 7, 2019, we issued $300.0 million of fixed rate senior unsecured notes that mature on June 15, 2029 and bear interest at 3.20%. The net proceeds of $297.0 million were primarily used to repay our $275.0 million unsecured term loan, which ~~matures on~~was to mature in November ~~21, 2018, subject to a one-year extension at~~2019, resulting in no remaining debt maturing in 2019. During the six months ended June 30, 2019, we raised $68.3 million, after fees and other costs, under our ~~option, also has an option (subject to bank approval) to increase the term loan through an accordion feature to $350.0 million. As~~ATM equity program, which as of ~~September~~June 30, ~~2017, we~~2019, had the capacity to issue up to ~~$327.6~~$203.4 million in common ~~shares under our ATM equity program.~~

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

d, our ATM program, our revolving credit facility and our general ability to access the capital markets will be sufficient to finance our operations and fund our debt service requirements ~~(including maturities)~~ and capital expenditures.

Our overall capital requirements for the remainder of ~~2017~~2019 will depend upon acquisition opportunities, the level of improvements and redevelopments on existing properties and the timing and cost of development of Assembly Row, Pike & Rose and future phases of Santana Row. While the amount of future expenditures will depend on numerous factors, we expect to ~~continue to~~ see higher levels of capital investments in our properties under development and redevelopment ~~which is~~compared to 2018, as we invest in the ~~result of construction on Phase II at both Assembly Row and Pike & Rose, the construction of our~~ next phase of ~~Santana Row, and our redevelopment pipeline.~~these projects. With respect to other capital investments related to our existing properties, we expect to incur levels consistent with prior years. Our capital investments will be funded on a short-term basis with cash flow from operations, cash on hand and/or our revolving credit facility, and on a long-term basis, with long-term debt or equity including shares issued under our ATM equity program. If necessary, we may access the debt or equity capital markets to finance significant acquisitions. Given our past ability to access the capital markets, we expect debt or equity to be available to us. Although there is no intent at this time, if market conditions deteriorate, we may delay the timing of certain development and redevelopment projects as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy.

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

Summary of Cash Flows

Net cash used in investing activities increased ~~$269.9~~$34.7 million to ~~$708.3~~$113.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 from ~~$438.4~~$78.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. The increase was primarily attributable to:

~~an $84.4~~partially offset by

~~partially offset by~~

Net cash ~~provided by~~used in financing activities ~~increased $142.9~~decreased $3.7 million to ~~$368.1~~$97.0 million during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 from ~~$225.2~~$100.7 million during the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2018. The ~~increase~~decrease was primarily attributable to:

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

~~partially offset by~~

Debt Financing Arrangements

The following is a summary of our total debt outstanding as of ~~September~~June 30, ~~2017:~~2019:

Our revolving credit facility ~~term loan~~ and other debt agreements include financial and other covenants that may limit our operating activities in the future. As of ~~September~~June 30, ~~2017,~~2019, we were in compliance with all financial and other covenants related to our revolving credit facility ~~term loan~~ and senior notes. Additionally, as of ~~September~~June 30, ~~2017,~~2019, we were in compliance with all of the financial and other covenants that could trigger loan default on our mortgage loans. If we were to breach any of these financial and other covenants and did not cure the breach within an applicable cure period, our lenders could require us to repay the debt immediately and, if the debt is secured, could immediately begin proceedings to take possession of the property securing the loan. Many of our debt arrangements, including our public notes ~~term loan~~ and our revolving credit facility, are cross-defaulted, which

means that the lenders under those debt arrangements can put us in default and require immediate repayment of their debt if we breach and fail to cure a default under certain of our other debt obligations. As a result, any default under our debt covenants could have an adverse effect on our financial condition, our results of operations, our ability to meet our obligations and the market value of our shares. Our organizational documents do not limit the level or amount of debt that we may incur.

The following is a summary of our scheduled principal repayments as of ~~September~~June 30, ~~2017:~~2019:

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

Interest Rate Hedging

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

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

As of ~~September~~June 30, ~~2017, we are~~2019, our Assembly Row hotel joint venture is party to two interest rate swap agreements that effectively ~~fixed the rate on the term loan~~fix their debt at ~~2.62%~~5.206%. Both swaps were designated and ~~qualified as~~qualify for cash flow ~~hedges and were recorded at fair value.~~hedge accounting. Hedge ineffectiveness has not impacted earnings as of ~~September~~June 30, ~~2017, and we do not anticipate it will have a significant effect in the future.~~

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

Funds From Operations

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

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

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

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

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

Fixed Interest Rate Debt

The majority of our outstanding debt obligations (maturing at various times through ~~2046 or, with respect to capital lease obligations, through 2106)~~2046) have fixed interest rates which limit the risk of fluctuating interest rates. However, interest rate fluctuations may affect the fair value of our fixed rate debt instruments. At ~~September~~June 30, ~~2017,~~2019, we had $3.2 billion of fixed-rate debt ~~outstanding, including our~~ ~~$275.0 million~~ ~~term loan as the rate is effectively fixed by~~ ~~two~~ ~~interest rate swap agreements; we also had $71.6 million of capital lease obligations.~~outstanding. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at ~~September~~June 30, ~~2017~~2019 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately ~~$226.1~~$237.5 million. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at ~~September~~June 30, ~~2017~~2019 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately ~~$260.8~~$272.1 million.

Variable Interest Rate Debt

Generally, we believe that our primary interest rate risk is due to fluctuations in interest rates on our outstanding variable rate debt. At ~~September~~June 30, ~~2017, we had $41.5 million of~~2019, our only variable rate debt ~~outstanding on~~was our revolving credit ~~facility. Based upon this amount of variable rate debt and the specific terms, if market interest rates increased 1.0%, our annual interest expense would increase by approximately $0.4 million~~ ~~with a corresponding decrease in our net income and cash flows for the year. Conversely, if market interest rates decreased 1.0%, our annual interest expense would decrease by approximately$0.4 million with a corresponding increase in our net income and cash flows for the year.~~facility, which had no outstanding balance.

ITEM 4. CONTROLS AND PROCEDURES

Periodic Evaluation and Conclusion of Disclosure Controls and Procedures

An evaluation has been performed, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of ~~September~~June 30, ~~2017.~~2019. Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of ~~September~~June 30, ~~2017~~2019 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and (ii) accumulated and communicated to the Trust’s management including its principal executive and principal financial officer as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

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

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no material developments in any of our legal proceedings since the disclosure contained in our Annual Report to Form 10-K for the fiscal year ended December 31, ~~2016.~~2018.

ITEM 1A. RISK FACTORS

There have been no material changes to the risk factors previously disclosed in our Annual Report for the year ended December 31, ~~2016~~2018 filed with the SEC on February 13, ~~2017~~.2019. These factors include, but are not limited to, the following:

amount upfront in infrastructure, and assumes receipt of public funding which has been committed but not entirely funded;

~~None.~~Under the terms of various partnership agreements of certain of our affiliated limited partnerships, the interest of limited partners in those limited partnerships may be redeemed, subject to certain conditions, for cash or common shares, at our option. During the three months ended June 30, 2019, we issued 42,206 common shares in connection with redemptions of downREIT operating partnership units.

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

ITEM 4. MINE SAFETY DISCLOSURES

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

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



		~~FEDERAL REALTY INVESTMENT TRUST~~

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



		~~FEDERAL REALTY INVESTMENT TRUST~~

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

35Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto authorized.



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

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



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

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



Large Accelerated Filer	ý☒	Accelerated filer	¨☐

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

		Emerging growth company	¨☐

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



PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2019 (unaudited) and December 31, ~~2016~~2018	3
		Consolidated Statements of Comprehensive Income (unaudited) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018	4
		Consolidated ~~Statement~~Statements of Shareholders' Equity (unaudited) for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2019 and 2018	5
		Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018	67
		Notes to Consolidated Financial Statements (unaudited)	78
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1513
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3128
	Item 4.	Controls and Procedures	3228

PART II. OTHER INFORMATION			3229
	Item 1.	Legal Proceedings	3229
	Item 1A.	Risk Factors	3229
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3329
	Item 3.	Defaults Upon Senior Securities	3329
	Item 4.	Mine Safety Disclosures	3330
	Item 5.	Other Information	3330
	Item 6.	Exhibits	3330

SIGNATURES			3432



	September 30,			December 31,
	2017			2016
	(In thousands, except share and per share data)
	(Unaudited)
ASSETS
Real estate, at cost
Operating (including $1,666,691 and $1,226,918 of consolidated variable interest entities, respectively)	$	6,758,728		$	6,125,957
Construction-in-progress	769,882			599,260
Asset held for sale	—			33,856
	7,528,610			6,759,073
Less accumulated depreciation and amortization (including $236,391 and $209,239 of consolidated variable interest entities, respectively)	(1,828,845		)	(1,729,234		)
Net real estate	5,699,765			5,029,839
Cash and cash equivalents	22,850			23,368
Accounts and notes receivable, net	200,878			116,749
Mortgage notes receivable, net	30,429			29,904
Investment in real estate partnerships	23,925			14,864
Prepaid expenses and other assets	243,290			208,555
TOTAL ASSETS	$	6,221,137		$	5,423,279
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable (including $461,873 and $439,120 of consolidated variable interest entities, respectively)	$	493,240		$	471,117
Capital lease obligations	71,565			71,590
Notes payable	320,718			279,151
Senior notes and debentures	2,377,939			1,976,594
Accounts payable and accrued expenses	206,441			201,756
Dividends payable	73,466			71,440
Security deposits payable	16,698			16,285
Other liabilities and deferred credits	175,464			115,817
Total liabilities	3,735,531			3,203,750
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests	151,815			143,694
Shareholders’ equity
Preferred shares, authorized 15,000,000 shares, $.01 par:
5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 per share), 6,000 and 0 shares issued and outstanding, respectively	150,000			—
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding	9,997			9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 72,542,909 and 71,995,897 shares issued and outstanding, respectively	728			722
Additional paid-in capital	2,773,890			2,718,325
Accumulated dividends in excess of net income	(724,919		)	(749,734		)
Accumulated other comprehensive loss	(742		)	(2,577		)
Total shareholders’ equity of the Trust	2,208,954			1,976,733
Noncontrolling interests	124,837			99,102
Total shareholders’ equity	2,333,791			2,075,835
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,221,137		$	5,423,279



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



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



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(In thousands, except per share data)
REVENUE
Rental income	$	229,731		$	224,168		$	461,223		$	448,816
Mortgage interest income	734			734			1,469			1,491
Total revenue	230,465			224,902			462,692			450,307
EXPENSES
Rental expenses	41,438			39,905			85,698			84,678
Real estate taxes	25,166			28,307			52,853			56,755
General and administrative	11,422			8,413			20,987			16,342
Depreciation and amortization	59,057			58,381			118,679			116,491
Total operating expenses	137,083			135,006			278,217			274,266

Gain on sale of real estate, net of tax	16,197			3,972			16,197			7,288

OPERATING INCOME	109,579			93,868			200,672			183,329

OTHER INCOME/(EXPENSE)
Other interest income	189			159			366			338
Interest expense	(27,482		)	(27,766		)	(55,515		)	(53,950		)
Income (loss) from partnerships	381			(728		)	(1,053		)	(1,253		)
NET INCOME	82,667			65,533			144,470			128,464
Net income attributable to noncontrolling interests	(1,765		)	(1,938		)	(3,424		)	(3,622		)
NET INCOME ATTRIBUTABLE TO THE TRUST	80,902			63,595			141,046			124,842
Dividends on preferred shares	(2,011		)	(2,011		)	(4,021		)	(4,021		)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	78,891		$	61,584		$	137,025		$	120,821
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders	1.05			0.84			1.83			1.65
Weighted average number of common shares	74,713			72,990			74,458			72,948
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders	$	1.05		$	0.84		$	1.83		$	1.65
Weighted average number of common shares	74,713			73,025			74,458			72,997

COMPREHENSIVE INCOME	$	82,268		$	65,456		$	143,862		$	128,854

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST	$	80,503		$	63,518		$	140,438		$	125,232



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(In thousands, except per share data)
REVENUE
Rental income	$	212,048		$	197,469		$	620,741		$	585,712
Other property income	5,171			2,759			10,429			8,559
Mortgage interest income	734			929			2,221			3,211
Total revenue	217,953			201,157			633,391			597,482
EXPENSES
Rental expenses	41,250			38,588			119,487			118,385
Real estate taxes	27,492			24,973			79,104			71,164
General and administrative	9,103			8,232			26,013			25,278
Depreciation and amortization	55,611			48,903			159,656			145,137
Total operating expenses	133,456			120,696			384,260			359,964
OPERATING INCOME	84,497			80,461			249,131			237,518
Other interest income	79			105			253			285
Interest expense	(26,287		)	(24,313		)	(73,952		)	(71,143		)
(Loss) income from real estate partnerships	(182		)	—			(296		)	41
INCOME FROM CONTINUING OPERATIONS	58,107			56,253			175,136			166,701
Gain on sale of real estate and change in control of interests, net	50,775			4,945			69,949			32,458
NET INCOME	108,882			61,198			245,085			199,159
Net income attributable to noncontrolling interests	(2,105		)	(2,221		)	(5,827		)	(7,286		)
NET INCOME ATTRIBUTABLE TO THE TRUST	106,777			58,977			239,258			191,873
Dividends on preferred shares	(177		)	(136		)	(448		)	(406		)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	106,600		$	58,841		$	238,810		$	191,467
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders	$	1.47		$	0.82		$	3.31		$	2.70
Weighted average number of common shares	72,091			71,319			71,983			70,626
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders	$	1.47		$	0.82		$	3.30		$	2.70
Weighted average number of common shares	72,206			71,489			72,110			70,804

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

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



	Shareholders’ Equity of the Trust
	Preferred Shares			Common Shares				Additional Paid-in Capital			Accumulated Dividends in Excess of Net Income			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders' Equity
	Shares	Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Dividends in Excess of Net Income			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Shareholders' Equity
	(In thousands, except share data)
BALANCE AT DECEMBER 31, 2018	405,896	$	159,997	74,249,633		$	745	$	3,004,442		$	(818,877	)	$	(416	)	$	121,439		$	2,467,330
January 1, 2019 adoption of new accounting standard - See Note 2	—	—		—		—		—			(7,098		)	—			—			(7,098		)
Net income, excluding $1,783 attributable to redeemable noncontrolling interests	—	—		—		—		—			141,046			—			1,641			142,687
Other comprehensive loss - change in fair value of interest rate swaps	—	—		—		—		—						(608		)	—			(608		)
Dividends declared to common shareholders ($2.04 per share)	—	—		—		—		—			(152,555		)	—			—			(152,555		)
Dividends declared to preferred shareholders	—	—		—		—		—			(4,021		)	—			—			(4,021		)
Distributions declared to noncontrolling interests	—	—		—		—		—			—			—			(7,664		)	(7,664		)
Common shares issued, net	—	—		511,954		5		68,299			—			—			—			68,304
Shares issued under dividend reinvestment plan	—	—		8,121		—		1,054			—			—			—			1,054
Share-based compensation expense, net of forfeitures	—	—		102,137		1		6,991			—			—			—			6,992
Shares withheld for employee taxes	—	—		(32,900	)	—		(4,442		)	—			—			—			(4,442		)
Conversion and redemption of OP units	—	—		111,252		1		11,935			—			—			(11,936		)	—
Adjustment to redeemable noncontrolling interests	—	—		—		—		667			—			—			—			667
BALANCE AT JUNE 30, 2019	405,896	$	159,997	74,950,197		$	752	$	3,088,946		$	(841,505	)	$	(1,024	)	$	103,480		$	2,510,646



BALANCE AT MARCH 31, 2019	405,896	$	159,997	74,836,984		$	752	$	3,071,981		$	(843,947	)	$	(625	)	$	113,405		2,501,563
Net income, excluding $907 attributable to redeemable noncontrolling interests	—	—		—		—		—			80,902			—			858			81,760
Other comprehensive loss - change in fair value of interest rate swaps	—	—		—		—		—			—			(399		)	—			(399		)
Dividends declared to common shareholders ($1.02 per share)	—	—		—		—		—			(76,449		)	—			—			(76,449		)
Dividends declared to preferred shareholders	—	—		—		—		—			(2,011		)	—			—			(2,011		)
Distributions declared to noncontrolling interests	—	—		—		—		—			—			—			(6,398		)	(6,398		)
Common shares issued, net	—	—		65,822		—		8,951			—			—			—			8,951
Shares issued under dividend reinvestment plan	—	—		3,848		—		526			—			—			—			526
Share-based compensation expense, net of forfeitures	—	—		1,551		—		3,131			—			—			—			3,131
Shares withheld for employee taxes	—	—		(214	)	—		(28		)	—			—			—			(28		)
Conversion and redemption of OP units	—	—		42,206		—		4,385			—			—			(4,385		)	—
BALANCE AT JUNE 30, 2019	405,896	$	159,997	74,950,197		$	752	$	3,088,946		$	(841,505	)	$	(1,024	)	$	103,480		$	2,510,646



BALANCE AT MARCH 31, 2018	405,896	$	159,997	73,216,520		$	735	$	2,859,717		$	(769,311	)	$	489		$	121,483		2,373,110
Net income, excluding $983 attributable to redeemable noncontrolling interests	—	—		—		—		—			63,595			—			955			64,550
Other comprehensive loss - change in fair value of interest rate swaps	—	—		—		—		—			—			(77		)	—			(77		)
Dividends declared to common shareholders ($1.00 per share)	—	—		—		—		—			(73,246		)	—			—			(73,246		)
Dividends declared to preferred shareholders	—	—		—		—		—			(2,011		)	—			—			(2,011		)
Distributions declared to noncontrolling interests	—	—		—		—		—			—			—			(1,419		)	(1,419		)
Common shares issued, net	—	—		148,584		2		18,314			—			—			—			18,316
Exercise of stock options	—	—		63,593				2,779			—			—			—			2,779
Shares issued under dividend reinvestment plan	—	—		4,852		—		539			—			—			—			539
Share-based compensation expense, net of forfeitures	—	—		1,606		—		3,274			—			—			—			3,274
Shares withheld for employee taxes	—	—		(212	)	—		(24		)	—			—			—			(24		)
Redemption of OP units	—	—		—		—		172			—			—			(1,380		)	(1,208		)
Contributions from noncontrolling interests	—	—		—		—		—			—			—			3,009			3,009
BALANCE AT JUNE 30, 2018	405,896	$	159,997	73,434,943		$	737	$	2,884,771		$	(780,973	)	$	412		$	122,648		$	2,387,592



Standard	Description	Effect on the financial statements or significant matters

Adopted on January 1, 2019:
Leases (Topic 842) and related updates: ASU 2016-02, February 2016, Leases (Topic 842) ASU 2018-10, July 2018, Codification improvements to Topic 842, Leases ASU 2018-11, July 2018, Leases (Topic 842) ASU 2019-01, March 2019, Leases (Topic 842), Codification Improvements	ASC 842 significantly changes the accounting for leases by requiring lessees to recognize assets and liabilities for leases greater than 12 months on their balance sheet. The larger changes to the lessor model include: a change in the definition of initial direct costs of leases (resulting in the upfront expensing of more leasing related costs), the requirement to make an upfront and ongoing assessment of whether collection of substantially all of the lease payments required for the term of each lease is probable (if not probable, lease revenue is effectively recognized when cash is collected), certain presentation changes, and the elimination of real estate specific guidance. ASU 2018-10 and ASU 2019-01 provide narrow amendments that clarify how to apply certain aspects of the guidance in ASU 2016-02. ASU 2018-11 provides the option of an additional transition method, by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. It also provides lessors an option to not separate lease and non-lease components when certain criteria are met.	We have elected to apply the transition provisions of ASC Topic 842 at the beginning of the period of adoption (i.e., January 1, 2019), and therefore, did not retrospectively adjust prior periods presented. We have also elected to apply certain adoption related practical expedients for all leases that commenced prior to the effective date. These practical expedients include not reassessing whether any expired or existing contracts are or contain leases; not reassessing the lease classification for any expired or existing leases; and not reassessing initial direct costs for any existing leases. We have also elected the practical expedient allowing lessors to combine non-lease and lease components (primarily impacts common area maintenance recoveries). From a lessee perspective, the primary impact of adoption on January 1, 2019 was to record a lease obligation liability and right of use asset for operating leases where we are the lessee. The most significant of these operating leases are ground leases at 14 properties. The operating lease right of use assets and related liabilities are shown separately on the face of our consolidated balance sheet. Additionally, amounts previously recorded as capital lease assets and included in real estate have been reclassified in the June 30, 2019 balance sheet as finance lease right of use assets and the related capital lease obligations have been reclassified in the June 30, 2019 balance sheet as finance lease liabilities. Income statement presentation is not impacted for our existing operating and finance leases. From a lessor perspective, adoption of ASC 842 results in a charge to opening accumulated dividends in excess of net income of $7.1 million. This charge is attributable to the write off of certain direct leasing costs recorded as of December 31, 2018 under the previous lease accounting rules for leases which had not commenced and the write off of December 31, 2018 unreserved receivables (including straight-line receivables) for leases where we have determined that the collection of substantially all of the lease payments required for the term of the lease is not probable. Income statement presentation changes incorporated into our June 30, 2019 financial statements include: no longer recording a gross up of revenue and expense for costs (such as real estate taxes) paid directly by lessees on our behalf and recording collectability adjustments against revenue rather than as bad debt within rental expenses. As a result of the change in the definition of initial direct costs of leases, capitalized leasing costs excluding external commissions decreased to $0.6 million and $1.0 million for the three and six months ended June 30, 2019, respectively, from$2.0 million and $3.6 million for the three and six months ended June 30, 2018, respectively.



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



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



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



	September 30, 2017								December 31, 2016
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Interest rate swaps	$	—	$	742	$	—	$	742	$	—	$	2,577	$	—	$	2,577


Description of Debt	Original Debt Issued	Principal Balance as of September 30, 2017			Stated Interest Rate as of September 30, 2017		Maturity Date	Original Debt Issued	Principal Balance as of June 30, 2019			Stated Interest Rate as of June 30, 2019		Maturity Date
	(Dollar amounts in thousands)							(Dollar amounts in thousands)
Mortgages payable
Secured fixed rate
The Grove at Shrewsbury (West)	Acquired	$	10,608		6.38	%	March 1, 2018
Rollingwood Apartments	24,050	20,939			5.54	%	May 1, 2019
The Shops at Sunset Place	Acquired	67,124			5.62	%	September 1, 2020	Acquired	$	63,326		5.62	%	September 1, 2020
29th Place	Acquired	4,395			5.91	%	January 31, 2021	Acquired	3,999			5.91	%	January 31, 2021
Sylmar Towne Center	Acquired	17,448			5.39	%	June 6, 2021	Acquired	16,819			5.39	%	June 6, 2021
Plaza Del Sol	Acquired	8,621			5.23	%	December 1, 2021	Acquired	8,321			5.23	%	December 1, 2021
The AVENUE at White Marsh	52,705	52,705			3.35	%	January 1, 2022	52,705	52,705			3.35	%	January 1, 2022
Montrose Crossing	80,000	71,478			4.20	%	January 10, 2022	80,000	68,411			4.20	%	January 10, 2022
Azalea	Acquired	40,000			3.73	%	November 1, 2025	Acquired	40,000			3.73	%	November 1, 2025
Bell Gardens	Acquired	13,245			4.06	%	August 1, 2026	Acquired	12,808			4.06	%	August 1, 2026
Plaza El Segundo	125,000	125,000			3.83	%	June 5, 2027	125,000	125,000			3.83	%	June 5, 2027
The Grove at Shrewsbury (East)	43,600	43,600			3.77	%	September 1, 2027	43,600	43,600			3.77	%	September 1, 2027
Brook 35	11,500	11,500			4.65	%	July 1, 2029	11,500	11,500			4.65	%	July 1, 2029
Chelsea	Acquired	6,346			5.36	%	January 15, 2031	Acquired	5,770			5.36	%	January 15, 2031
Subtotal		493,009							452,259
Net unamortized premium and debt issuance costs		231							(1,376		)
Total mortgages payable		493,240
Total mortgages payable, net									450,883
Notes payable
Unsecured fixed rate
Term loan (1)	275,000	275,000			LIBOR + 0.90%		November 21, 2018
Revolving credit facility (1)								800,000	—			LIBOR + 0.825%		April 20, 2020
Various	7,239	4,908			11.31%		Various through 2028	7,239	4,229			11.31%		Various through 2028
Unsecured variable rate
Revolving credit facility (2)	800,000	41,500			LIBOR + 0.825%		April 20, 2020
Subtotal		321,408							4,229
Net unamortized debt issuance costs		(690		)					(66		)
Total notes payable		320,718
Total notes payable, net									4,163

Senior notes and debentures
Unsecured fixed rate
5.90% notes	150,000	150,000			5.90	%	April 1, 2020
2.55% notes	250,000	250,000			2.55	%	January 15, 2021	250,000	250,000			2.55	%	January 15, 2021
3.00% notes	250,000	250,000			3.00	%	August 1, 2022	250,000	250,000			3.00	%	August 1, 2022
2.75% notes	275,000	275,000			2.75	%	June 1, 2023	275,000	275,000			2.75	%	June 1, 2023
3.95% notes	300,000	300,000			3.95	%	January 15, 2024	300,000	300,000			3.95	%	January 15, 2024
7.48% debentures	50,000	29,200			7.48	%	August 15, 2026	50,000	29,200			7.48	%	August 15, 2026
3.25% notes	300,000	300,000			3.25	%	July 15, 2027	475,000	475,000			3.25	%	July 15, 2027
6.82% medium term notes	40,000	40,000			6.82	%	August 1, 2027	40,000	40,000			6.82	%	August 1, 2027
3.20% notes								300,000	300,000			3.20	%	June 15, 2029
4.50% notes	550,000	550,000			4.50	%	December 1, 2044	550,000	550,000			4.50	%	December 1, 2044
3.625% notes	250,000	250,000			3.625	%	August 1, 2046	250,000	250,000			3.625	%	August 1, 2046
Subtotal		2,394,200							2,719,200
Net unamortized discount and debt issuance costs		(16,261		)					(16,463		)
Total senior notes and debentures		2,377,939
Capital lease obligations
Various		71,565			Various		Various through 2106
Total debt and capital lease obligations		$	3,263,462
Total senior notes and debentures, net									2,702,737

Total debt, net									$	3,157,783


1)	We entered into two interest rate swap agreements that fix the LIBOR portion of the interest rate on the term loan at 1.72%. The spread on the term loan is 90 basis points resulting in a fixed rate of 2.62%.


	Unsecured			Secured		Capital Lease		Total			Unsecured		Secured		Total
	(In thousands)										(In thousands)
2017	$	123		$	1,425	$	13	$	1,561
2018	275,513		(1)	16,251		37		291,801
2019	567			25,820		42		26,429			$	388	$	2,746	$	3,134
2020	192,129		(2)	65,539		46		257,714			613		65,539		66,152
2021	250,700			30,541		51		281,292			250,682		30,541		281,223
2022											250,758		117,018		367,776
2023											275,787		730		276,517
Thereafter	1,996,576			353,433		71,376		2,421,385			1,945,201		235,685		2,180,886
	$	2,715,608		$	493,009	$	71,565	$	3,280,182	(3)	$	2,723,429	$	452,259	$	3,175,688	(1)


1)	~~Our $275.0 million unsecured term loan matures on November 21, 2018, subject to a one-year extension at our option.~~


3)	The total debt maturities ~~differs~~differ from the total reported on the consolidated balance sheet due to the unamortized net premium/~~(discount)~~discount and debt issuance costs on mortgage loans, notes payable, and senior notes as of ~~September~~June 30, ~~2017.~~2019.


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



EXHIBIT INDEX

Exhibit No.		Description

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

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

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

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

101		The following materials from Federal Realty Investment Trust’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~June 30, ~~2017,~~2019, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Comprehensive Income, (3) the Consolidated Statement of Shareholders’ Equity, (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements that have been detail tagged.



		FEDERAL REALTY INVESTMENT TRUST

August 1, 2019		/s/ Donald C. Wood
		Donald C. Wood,
		President, Chief Executive Officer and Trustee
		(Principal Financial and Executive Officer)



		FEDERAL REALTY INVESTMENT TRUST

August 1, 2019		/s/ Daniel Guglielmone
		Daniel Guglielmone,
		Executive Vice President
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)