UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~September~~June 30, ~~2019~~2020



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

For the transition period from to

Commission file number: 1-07533

FEDERAL REALTY INVESTMENT TRUST

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



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

1626 East Jefferson Street, Rockville, Maryland 20852

(Address of Principal Executive Offices) (Zip Code)

(301) 998-8100

(Registrant’s Telephone Number, Including Area 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

Indicate by check mark whether the ~~Registrant~~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~~registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the ~~Registrant~~registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

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



Large Accelerated Filer	☒	Accelerated filer	☐

Non-Accelerated Filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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

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

The number of ~~Registrant’s~~registrant’s common shares outstanding on ~~October 25, 2019~~July 31, 2020 was ~~75,522,757.~~75,638,759.

FEDERAL REALTY INVESTMENT TRUST

QUARTERLY REPORT ON FORM 10-Q

QUARTER ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Consolidated Balance Sheets as of ~~September~~June 30, ~~2019~~2020 (unaudited) and December 31, ~~2018~~2019	3
		Consolidated Statements of Comprehensive Income (unaudited) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	4
		Consolidated Statements of Shareholders' Equity (unaudited) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	5
		Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	7
		Notes to Consolidated Financial Statements (unaudited)	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1415
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2931
	Item 4.	Controls and Procedures	2932

PART II. OTHER INFORMATION			3033
	Item 1.	Legal Proceedings	3033
	Item 1A.	Risk Factors	3033
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3033
	Item 3.	Defaults Upon Senior Securities	3033
	Item 4.	Mine Safety Disclosures	3133
	Item 5.	Other Information	3134
	Item 6.	Exhibits	3134

SIGNATURES			3336

Federal Realty Investment Trust

Consolidated Balance Sheets


	September 30,			December 31,			June 30,			December 31,
	2019			2018			2020			2019
	(In thousands, except share and per share data)						(In thousands, except share and per share data)
	(Unaudited)						(Unaudited)
ASSETS
Real estate, at cost
Operating (including $1,536,443 and $1,701,804 of consolidated variable interest entities, respectively)	$	7,302,912		$	7,307,622
Construction-in-progress (including $97,922 and $51,313 of consolidated variable interest entities, respectively)	691,989			495,274
Operating (including $1,754,540 and $1,676,866 of consolidated variable interest entities, respectively)							$	7,790,025		$	7,535,983
Construction-in-progress (including $93,067 and $102,583 of consolidated variable interest entities, respectively)							754,787			760,420
Assets held for sale	49,835			16,576			1,085			1,729
	8,044,736			7,819,472			8,545,897			8,298,132
Less accumulated depreciation and amortization (including $289,739 and $292,374 of consolidated variable interest entities, respectively)	(2,190,486		)	(2,059,143		)
Less accumulated depreciation and amortization (including $317,925 and $296,165 of consolidated variable interest entities, respectively)							(2,308,403		)	(2,215,413		)
Net real estate	5,854,250			5,760,329			6,237,494			6,082,719
Cash and cash equivalents	162,543			64,087			980,039			127,432
Accounts and notes receivable, net	143,855			142,237			167,641			152,572
Mortgage notes receivable, net	30,429			30,429			30,332			30,429
Investment in partnerships	30,017			26,859			22,879			28,604
Operating lease right of use assets	94,271			—			93,494			93,774
Finance lease right of use assets	52,723			—			51,758			52,402
Prepaid expenses and other assets	239,477			265,703			206,293			227,060
TOTAL ASSETS	$	6,607,565		$	6,289,644		$	7,789,930		$	6,794,992
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Mortgages payable, net (including $389,523 and $444,388 of consolidated variable interest entities, respectively)	$	466,600		$	474,379
Capital lease obligations	—			71,519
Mortgages payable, net (including $475,757 and $469,184 of consolidated variable interest entities, respectively)							$	551,034		$	545,679
Notes payable, net	3,889			279,027			402,477			3,781
Senior notes and debentures, net	2,806,422			2,404,279			3,508,461			2,807,134
Accounts payable and accrued expenses	221,781			177,922			244,482			255,503
Dividends payable	81,477			78,207			81,915			81,676
Security deposits payable	20,354			17,875			18,922			21,701
Operating lease liabilities	74,032			—			73,527			73,628
Finance lease liabilities	72,065			—			72,056			72,062
Other liabilities and deferred credits	165,542			182,898			146,372			157,938
Total liabilities	3,912,162			3,686,106			5,099,246			4,019,102
Commitments and contingencies (Note 6)
Redeemable noncontrolling interests	122,282			136,208			159,583			139,758
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			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			9,997			9,997
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 75,494,931 and 74,249,633 shares issued and outstanding, respectively	758			745
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 75,633,140 and 75,540,804 shares issued and outstanding, respectively							760			759
Additional paid-in capital	3,167,460			3,004,442			3,170,480			3,166,522
Accumulated dividends in excess of net income	(857,152		)	(818,877		)	(889,195		)	(791,124		)
Accumulated other comprehensive loss	(1,135		)	(416		)	(7,758		)	(813		)
Total shareholders’ equity of the Trust	2,469,928			2,345,891			2,434,284			2,535,341
Noncontrolling interests	103,193			121,439			96,817			100,791
Total shareholders’ equity	2,573,121			2,467,330			2,531,101			2,636,132
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	6,607,565		$	6,289,644		$	7,789,930		$	6,794,992

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

Federal Realty Investment Trust

Consolidated Statements of Comprehensive Income

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
	(In thousands, except per share data)												(In thousands, except per share data)
REVENUE
Rental income	$	233,212		$	228,960		$	694,435		$	677,776		$	175,479		$	229,731		$	406,277		$	461,223
Mortgage interest income	735			793			2,204			2,284			748			734			1,507			1,469
Total revenue	233,947			229,753			696,639			680,060			176,227			230,465			407,784			462,692
EXPENSES
Rental expenses	54,484			41,909			140,182			126,587			36,417			41,438			80,729			85,698
Real estate taxes	29,030			29,086			81,883			85,841			30,599			25,166			59,663			52,853
General and administrative	11,060			7,638			32,047			23,980			9,814			11,422			20,065			20,987
Depreciation and amortization	59,648			60,778			178,327			177,269			62,784			59,057			124,972			118,679
Total operating expenses	154,222			139,411			432,439			413,677			139,614			137,083			285,429			278,217

Gain on sale of real estate, net of tax	14,293			3,125			30,490			10,413			11,682			16,197			11,682			16,197

OPERATING INCOME	94,018			93,467			294,690			276,796			48,295			109,579			134,037			200,672

OTHER INCOME/(EXPENSE)
Other interest income	389			319			755			657			509			189			817			366
Interest expense	(27,052		)	(28,166		)	(82,567		)	(82,116		)	(34,073		)	(27,482		)	(62,518		)	(55,515		)
Loss from partnerships	(249		)	(1,440		)	(1,302		)	(2,693		)
(Loss) income from partnerships													(3,872		)	381			(5,036		)	(1,053		)
NET INCOME	67,106			64,180			211,576			192,644			10,859			82,667			67,300			144,470
Net income attributable to noncontrolling interests	(1,641		)	(1,622		)	(5,065		)	(5,244		)	(352		)	(1,765		)	(2,030		)	(3,424		)
NET INCOME ATTRIBUTABLE TO THE TRUST	65,465			62,558			206,511			187,400			10,507			80,902			65,270			141,046
Dividends on preferred shares	(2,010		)	(2,010		)	(6,031		)	(6,031		)	(2,011		)	(2,011		)	(4,021		)	(4,021		)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS	$	63,455		$	60,548		$	200,480		$	181,369		$	8,496		$	78,891		$	61,249		$	137,025
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders	0.84			0.82			2.68			2.47
Weighted average number of common shares	74,832			73,400			74,584			73,100
EARNINGS PER COMMON SHARE, DILUTED:

EARNINGS PER COMMON SHARE, BASIC AND DILUTED:
Net income available for common shareholders	$	0.84		$	0.82		$	2.68		$	2.47		0.11			1.05			0.81			1.83
Weighted average number of common shares	74,832			73,408			74,584			73,136			75,394			74,713			75,377			74,458

COMPREHENSIVE INCOME	$	66,995		$	63,895		$	210,857		$	192,749		$	10,366		$	82,268		$	60,355		$	143,862

COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST	$	65,354		$	62,273		$	205,792		$	187,505		$	10,014		$	80,503		$	58,325		$	140,438

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

Federal Realty Investment Trust

Consolidated Statements of Shareholders’ Equity

For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020

(Unaudited)


	Shareholders’ Equity of the Trust																									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			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						Accumulated Dividends in Excess of Net Income			Shares				Noncontrolling Interests			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)																									(In thousands, except share data)
BALANCE AT DECEMBER 31, 2018	405,896	$	159,997	74,249,633		$	745	Additional Paid-in Capital			$	3,004,442			$	Accumulated Other Comprehensive Loss	(818,877	)	$	(416	)		Total Shareholders' Equity		$	121,439		$	2,467,330
January 1, 2019 adoption of new accounting standard - See Note 2	—	—		—		—		—				(7,098		)		—			—				(7,098		)
Net income, excluding $2,604 attributable to redeemable noncontrolling interests	—	—		—		—		—				206,511				—			2,461				208,972
BALANCE AT DECEMBER 31, 2019																										405,896		$	159,997	75,540,804		$	759	$	3,166,522		$	(791,124	)	$	(813	)	$	100,791		$	2,636,132
January 1, 2020 adoption of new accounting standard - See Note 2																										—		—		—		—		—			(510		)	—			—			(510		)
Net income, excluding $1,157 attributable to redeemable noncontrolling interests																										—		—		—		—		—			65,270			—			873			66,143
Other comprehensive loss - change in fair value of interest rate swaps	—	—		—		—		—				—				(719		)	—				(719		)	—		—		—		—		—			—			(6,945		)	—			(6,945		)
Dividends declared to common shareholders ($3.09 per share)	—	—		—		—		—				(231,657		)		—			—				(231,657		)
Dividends declared to common shareholders ($2.10 per share)																										—		—		—		—		—			(158,810		)	—			—			(158,810		)
Dividends declared to preferred shareholders	—	—		—		—		—				(6,031		)		—			—				(6,031		)	—		—		—		—		—			(4,021		)	—			—			(4,021		)
Distributions declared to noncontrolling interests	—	—		—		—		—				—				—			(8,812		)		(8,812		)	—		—		—		—		—			—			—			(1,677		)	(1,677		)
Common shares issued, net	—	—		1,045,470		11		139,488				—				—			—				139,499			—		—		29		—		2			—			—			—			2
Shares issued under dividend reinvestment plan	—	—		12,006		—		1,567				—				—			—				1,567			—		—		10,605		—		955			—			—			—			955
Share-based compensation expense, net of forfeitures	—	—		110,804		1		10,142				—				—			—				10,143			—		—		114,092		1		7,028			—			—			—			7,029
Shares withheld for employee taxes	—	—		(34,234	)	—		(4,615		)		—				—			—				(4,615		)	—		—		(32,390	)	—		(3,997		)	—			—			—			(3,997		)
Conversion and redemption of OP units	—	—		111,252		1		11,933				—				—			(12,006		)		(72		)
Redemption of OP units																										—		—		—		—		(30		)	—			—			(3,290		)	(3,320		)
Contributions from noncontrolling interests	—	—		—		—		—				—				—			111				111			—		—		—		—		—			—			—			120			120
Adjustment to redeemable noncontrolling interests	—	—		—		—		4,503				—				—			—				4,503
BALANCE AT SEPTEMBER 30, 2019	405,896	$	159,997	75,494,931		$	758	$	3,167,460			$	(857,152	)		$	(1,135	)	$	103,193			$	2,573,121
BALANCE AT JUNE 30, 2020																										405,896		$	159,997	75,633,140		$	760	$	3,170,480		$	(889,195	)	$	(7,758	)	$	96,817		$	2,531,101


BALANCE AT JUNE 30, 2019	405,896	$	159,997	74,950,197		$	752	$	3,088,946		$	(841,505	)	$	(1,024	)	$	103,480		$	2,510,646
Net income, excluding $821 attributable to redeemable noncontrolling interests	—	—		—		—		—			65,465			—			820			66,285
BALANCE AT MARCH 31, 2020																							405,896	$	159,997	75,622,504		$	760	$	3,166,899		$	(818,284	)	$	(7,265	)	$	97,501		$	2,599,608
Net income, excluding $142 attributable to redeemable noncontrolling interests																							—	—		—		—		—			10,507			—			210			10,717
Other comprehensive loss - change in fair value of interest rate swaps	—	—		—		—		—			—			(111		)	—			(111		)	—	—		—		—		—			—			(493		)	—			(493		)
Dividends declared to common shareholders ($1.05 per share)	—	—		—		—		—			(79,102		)	—			—			(79,102		)	—	—		—		—		—			(79,407		)	—			—			(79,407		)
Dividends declared to preferred shareholders	—	—		—		—		—			(2,010		)	—			—			(2,010		)	—	—		—		—		—			(2,011		)	—			—			(2,011		)
Distributions declared to noncontrolling interests	—	—		—		—		—			—			—			(1,148		)	(1,148		)	—	—		—		—		—			—			—			(894		)	(894		)
Common shares issued, net	—	—		533,516		6		71,189			—			—			—			71,195			—	—		16		—		—			—			—			—			—
Shares issued under dividend reinvestment plan	—	—		3,885		—		513			—			—			—			513			—	—		6,771		—		509			—			—			—			509
Share-based compensation expense, net of forfeitures	—	—		8,667		—		3,151			—			—			—			3,151			—	—		4,026		—		3,087			—			—			—			3,087
Shares withheld for employee taxes	—	—		(1,334	)	—		(173		)	—			—			—			(173		)	—	—		(177	)	—		(15		)	—			—			—			(15		)
Redemption of OP units	—	—		—		—		(2		)	—			—			(70		)	(72		)	—	—		—		—		—			—			—			—			—
Contributions from noncontrolling interests	—	—		—		—		—			—			—			111			111			—	—		—		—		—			—			—			—			—
Adjustment to redeemable noncontrolling interests	—	—		—		—		3,836			—			—			—			3,836
BALANCE AT SEPTEMBER 30, 2019	405,896	$	159,997	75,494,931		758		$	3,167,460		$	(857,152	)	$	(1,135	)	$	103,193		$	2,573,121
BALANCE AT JUNE 30, 2020																							405,896	$	159,997	75,633,140		$	760	$	3,170,480		$	(889,195	)	$	(7,758	)	$	96,817		$	2,531,101

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

Federal Realty Investment Trust

Consolidated Statements of Shareholders’ Equity

For the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2018~~2019

(Unaudited)



	Shareholders’ Equity of the Trust
	Preferred Shares			Common Shares				Additional Paid-in Capital			Accumulated Dividends in Excess of Net Income			Accumulated Other Comprehensive Income			Noncontrolling Interests			Total Shareholders' Equity
	Shares	Amount		Shares		Amount		Additional Paid-in Capital			Accumulated Dividends in Excess of Net Income			Accumulated Other Comprehensive Income			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	—	—		—		—		—			(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

Shareholders’ Equity of the Trust
Preferred Shares Common Shares
Additional
Paid-in
Capital

Accumulated
Dividends in
Excess of Net
Income

Accumulated
Other
Comprehensive
Income (Loss)
Noncontrolling Interests Total Shareholders' Equity
Shares Amount Shares Amount
(In thousands, except share data)
BALANCE AT DECEMBER 31, 2017 405,896
$ 159,997
73,090,877
$ 733
$ 2,855,321
$ (749,367 ) $ 22
$ 124,808
$ 2,391,514
January 1, 2018 adoption of new accounting standard —
—
—
—
—
(6,028 ) —
—
(6,028 )
Net income, excluding $2,920 attributable to redeemable noncontrolling interests —
—
—
—
—
187,400
—
2,324
189,724
Other comprehensive income - change in fair value of interest rate swaps —
—
—
—
—
—
105
—
105
Dividends declared to common shareholders ($3.02 per share) —
—
—
—
—
(221,623 ) —
—
(221,623 )
Dividends declared to preferred shareholders —
—
—
—
—
(6,031 ) —
—
(6,031 )
Distributions declared to noncontrolling interests —
—
—
—
—
—
—
(4,010 ) (4,010 )
Common shares issued, net —
—
612,727
6
77,365
—
—
—
77,371
Exercise of stock options —
—
93,593
1
4,040
—
—
—
4,041
Shares issued under dividend reinvestment plan —
—
13,750
—
1,647
—
—
—
1,647
Share-based compensation expense, net of forfeitures —
—
55,773
1
9,637
—
—
—
9,638
Shares withheld for employee taxes —
—
(8,189 ) —
(927 ) —
—
—
(927 )
Conversion and redemption of OP units —
—
749
—
(528 ) —
—
(5,378 ) (5,906 )
Contributions from noncontrolling interests —
—
—
—
—
—
—
3,924
3,924
BALANCE AT SEPTEMBER 30, 2018 405,896
$ 159,997
73,859,280
$ 741
$ 2,946,555
$ (795,649 ) $ 127
$ 121,668
$ 2,433,439


BALANCE AT JUNE 30, 2018	405,896	$	159,997	73,434,943		$	737	$	2,884,771		$	(780,973	)	$	412		$	122,648		2,387,592
Net income, excluding $922 attributable to redeemable noncontrolling interests	—	—		—		—		—			62,558			—			700			63,258
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	—	—		—		—		—			—			(285		)	—			(285		)	—	—		—		—		—			—			(399		)	—			(399		)
Dividends declared to common shareholders ($1.02 per share)	—	—		—		—		—			(75,224		)	—			—			(75,224		)	—	—		—		—		—			(76,449		)	—			—			(76,449		)
Dividends declared to preferred shareholders	—	—		—		—		—			(2,010		)	—			—			(2,010		)	—	—		—		—		—			(2,011		)	—			—			(2,011		)
Distributions declared to noncontrolling interests	—	—		—		—		—			—			—			(1,243		)	(1,243		)	—	—		—		—		—			—						(6,398		)	(6,398		)
Common shares issued, net	—	—		464,113		4		59,047			—			—			—			59,051			—	—		65,822		—		8,951			—			—			—			8,951
Exercise of stock options	—	—		—		—		—			—			—			—			—
Shares issued under dividend reinvestment plan	—	—		4,458		—		561			—			—			—			561			—	—		3,848		—		526			—			—			—			526
Share-based compensation expense, net of forfeitures	—	—		(43,801	)	—		2,494			—			—			—			2,494			—	—		1,551		—		3,131			—			—			—			3,131
Shares withheld for employee taxes	—	—		(1,182	)	—		(150		)	—			—			—			(150		)	—	—		(214	)	—		(28		)	—			—			—			(28		)
Conversion and redemption of OP units	—	—		749		—		(168		)	—			—			(1,352		)	(1,520		)	—	—		42,206		—		4,385			—			—			(4,385		)	—
Contributions from noncontrolling interests	—	—		—		—		—			—			—			915			915
BALANCE AT SEPTEMBER 30, 2018	405,896	$	159,997	73,859,280		$	741	$	2,946,555		$	(795,649	)	$	127		$	121,668		$	2,433,439
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

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

Federal Realty Investment Trust

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,						Six Months Ended June 30,
	2019			2018			2020			2019
	(In thousands)						(In thousands)
OPERATING ACTIVITIES
Net income	$	211,576		$	192,644		$	67,300		$	144,470
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	178,327			177,269			124,972			118,679
Gain on sale of real estate, net of tax	(30,490		)	(10,413		)	(11,682		)	(16,197		)
Loss from partnerships	1,302			2,693			5,036			1,053
Other, net	(457		)	3,251			5,240			2,138
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Proceeds from new market tax credit transaction, net of deferred costs	—			12,353
Increase in accounts receivable, net	(8,867		)	(4,514		)	(17,128		)	(5,325		)
Increase in prepaid expenses and other assets	(12,836		)	(11,682		)
Increase in accounts payable and accrued expenses	6,262			2,896
(Decrease) increase in security deposits and other liabilities	(511		)	219
Decrease in prepaid expenses and other assets							15,887			7,800
Increase (decrease) in accounts payable and accrued expenses							5,756			(1,493		)
Decrease in security deposits and other liabilities							(13,999		)	(8,838		)
Net cash provided by operating activities	344,306			364,716			181,382			242,287
INVESTING ACTIVITIES
Acquisition of real estate	(45,122		)	(3,624		)	(9,409		)	(25,176		)
Capital expenditures - development and redevelopment	(226,232		)	(217,437		)	(213,181		)	(133,570		)
Capital expenditures - other	(53,890		)	(50,744		)	(30,388		)	(36,669		)
Costs associated with property sold under threat of condemnation, net							(12,924		)	—
Proceeds from sale of real estate	115,781			142,711			17,015			93,025
Proceeds from partnership formation	—			37,998
Investment in partnerships	(980		)	(616		)	(917		)	(907		)
Distribution from partnerships in excess of earnings	1,798			237			849			1,301
Leasing costs	(18,751		)	(19,938		)	(7,923		)	(11,473		)
Repayment (issuance) of mortgage and other notes receivable, net	130			(360		)
(Issuance) repayment of mortgage and other notes receivable, net							(320		)	101
Net cash used in investing activities	(227,266		)	(111,773		)	(257,198		)	(113,368		)
FINANCING ACTIVITIES
Repayments under revolving credit facility, including costs	(4,012		)	(14,500		)
Costs to amend revolving credit facility							(638		)	—
Issuance of senior notes, net of costs	400,106			—			700,085			297,076
Issuance of notes payable, net of costs							398,732			—
Repayment of mortgages, finance leases and notes payable	(299,485		)	(15,137		)	(3,264		)	(298,100		)
Issuance of common shares, net of costs	139,729			81,628			97			68,461
Dividends paid to common and preferred shareholders	(232,985		)	(224,311		)	(161,874		)	(154,965		)
Shares withheld for employee taxes	(4,615		)	(927		)	(3,997		)	(4,442		)
Contributions from noncontrolling interests	272			2,753			—			161
Distributions to and redemptions of noncontrolling interests	(17,466		)	(12,848		)	(5,702		)	(5,173		)
Net cash used in financing activities	(18,456		)	(183,342		)
Net cash provided by (used in) financing activities							923,439			(96,982		)
Increase in cash, cash equivalents and restricted cash	98,584			69,601			847,623			31,937
Cash, cash equivalents, and restricted cash at beginning of year	108,332			25,200			153,614			108,332
Cash, cash equivalents, and restricted cash at end of period	$	206,916		$	94,801		$	1,001,237		$	140,269

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

Federal Realty Investment Trust

Notes to Consolidated Financial Statements

~~September~~June 30, ~~2019~~2020

(Unaudited)

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, ~~2019,~~2020, 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.

Impacts of COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of novel coronavirus disease (“COVID-19”) as a pandemic. While we currently expect the impact to our properties is temporary in nature, the extent of the future effects of COVID-19 on our business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated balance sheet as of December 31, ~~2018,~~2019, 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~~our latest Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation for the periods presented have been included. The results of operations for the threeand ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 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.

Use of Estimates

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

Revenue Recognition and Accounts Receivable

Our leases with our tenants are classified as operating leases. When collection of substantially all lease payments during the lease term is considered probable, the lease qualifies for accrual accounting. Lease payments are recognized on a straight-line basis from the point in time when the tenant controls the space through the term of the related lease. Variable lease payments relating to percentage rent are recognized at the end of the lease year or earlier if we have determined the required sales level is achieved. Real estate tax and other cost reimbursements are recognized on an accrual basis over the periods in which the related

expenditures are incurred. For a tenant to terminate its lease agreement prior to the end of the agreed term, we may require that they pay a fee to cancel the lease agreement. Lease termination fees are generally recognized on the termination date if the tenant has relinquished control of the space. When a lease is terminated early but the tenant continues to control the space under a modified lease agreement, the lease termination fee is generally recognized evenly over the remaining term of the modified lease agreement. Lease concessions (unrelated to the COVID-19 pandemic) are evaluated to determine whether the concession represents a modification of the original lease contract. Modifications generally result in a reassessment of the lease term and lease classification, and remeasurement of lease payments received. Remeasured lease payments are recognized on a straight-line basis over the remaining term of the modified lease contract.

In April 2020, the Financial Accounting Standards Board ("FASB") issued interpretive guidance relating to the accounting for lease concessions provided as a result of the COVID-19 pandemic that allows entities to treat the concession as if it was a part of the existing contract instead of applying lease modification accounting. This guidance is only applicable to the COVID-19 pandemic related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. We have elected this option relating to qualifying rent deferral and rent abatement agreements. For qualifying lease modifications with rent deferrals, this results in no change to our revenue recognition but an increase in the lease receivable balance until the deferred rent has been repaid. For qualifying lease modifications that include rent abatement concessions, this results in a direct reduction of rental income in the current period. As of June 30, 2020, we have entered into rent deferral agreements related to the COVID-19 pandemic representing approximately $16 million of rent otherwise owed during the months of April through June 2020, and are currently in negotiations with other tenants.

When collection of substantially all lease payments during the lease term is not considered probable, total lease revenue is limited to the lesser of revenue recognized under accrual accounting or cash received. Determining the probability of collection of substantially all lease payments during a lease term requires significant judgment. This determination is impacted by numerous factors including our assessment of the tenant’s credit worthiness, economic conditions, tenant sales productivity in that location, historical experience with the tenant and tenants operating in the same industry, future prospects for the tenant and the industry in which it operates, and the length of the lease term. If leases currently classified as probable are subsequently reclassified as not probable, any outstanding lease receivables (including straight-line rent receivables) would be written-off with a corresponding decrease in rental income.

The actions taken by federal, state and local governments to mitigate the spread of COVID-19, initially by ordering closures of non-essential businesses and ordering residents to generally stay at home, and subsequent phased re-openings have resulted in many of our tenants temporarily or even permanently closing their businesses, and for some, it had impacted their ability to pay rent. As a result, we revised our collectibility assumptions for many of our tenants most significantly impacted by COVID-19. Accordingly, during the three months ended June 30, 2020, we recognized collectibility related adjustments of $55.2 million. This includes changes in our collectibility assessments from probable to not probable, disputed rents, and any rent abatements, as well as the write-off of $9.4 million of straight-line rent receivables primarily related to tenants changed to a cash basis of revenue recognition in the quarter ended June 30, 2020. As of June 30, 2020, the revenue from approximately 32% of our tenants (based on total commercial leases) is being recognized on a cash basis. As of June 30, 2020 and December 31, 2019, our straight-line rent receivables balance was $100.7 million and $100.3 million, respectively, and is included in "accounts and notes receivable, net" on our consolidated balance sheet.

Recently Adopted and Issued Accounting Pronouncements



Standard	Description	Effect on the financial statements or significant matters

Adopted on January 1, ~~2019:~~2020:
~~Leases~~Financial Instruments - Credit Losses (Topic ~~842)~~326) and related updates: ASU 2016-02, February2016-13, June 2016, ~~Leases~~Financial Instruments - Credit Losses (Topic ~~842)~~326) ASU ~~2018-10, July~~ 2018-19, November 2018, Codification improvements to Topic 842, Leases ASU 2018-11, July 2018, Leases (Topic 842)326, Financial ~~ASU 2019-01, March~~Instruments - Credit ~~2019, Leases (Topic~~ ~~842), Codification~~ ~~Improvements~~Losses	~~ASC 842 significantly~~This ASU changes the ~~accounting~~impairment model for ~~leases by requiring lessees to recognize~~most financial assets and ~~liabilities for leases greater than 12 months on their balance sheet. The larger changes to~~certain other instruments, requiring the ~~lessor~~use of an "expected credit loss" model ~~include: a change in the definition of initial direct costs of leases (resulting in the upfront expensing of~~and adding 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. disclosure requirements. ASU ~~2018-10 and ASU 2019-01 provide narrow amendments~~2018-19 clarifies that ~~clarify how to apply certain aspects~~impairment of ~~the guidance~~of receivables arising from operating leases should be accounted for 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.accordance with Topic 842, Leases.	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 September 30, 2019 balance sheet as finance lease right of use assets and the related capital lease obligations have been reclassified in the September 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,~~Upon adoption of ~~ASC 842 results~~this standard, we recorded expected losses of $0.5 million in ~~a charge to~~ opening accumulated dividends in excess of net ~~income of $7.1 million. This charge is attributable to~~income. During 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 September 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 $0.7 million and $1.7 million for the three and ninesix months ended ~~September~~June 30, ~~2019, respectively, from $1.7~~2020, we recorded additional expected losses of $0.4 million, ~~and $5.3 million for the three and nine months ended September 30, 2018, respectively.~~ which are included in rental expenses.

ASU 2018-15, August 2018, Intangibles - Goodwill and Other Internal Use Software: Customers Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract	This ASU requires a customer in a cloud computing arrangement (i.e. hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets. Capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement. Entities will expense costs during the preliminary project and post-implementation stages as they are incurred. The guidance can be applied prospectively to all implementation costs incurred after the date of adoption or retrospectively in accordance with ASC 250-10-45-5 through ASC 250-10-45-10.	The adoption of this standard does not have a significant impact to our consolidated financial statements.

Issued in 2020:
ASU 2020-04, March 2020, Reference Rate Reform (Topic 848)	This ASU provides companies with optional practical expedients to ease the accounting burden for contract modifications associated with transitioning away from LIBOR and other interbank offered rates that are expected to be discontinued as part of reference rate reform. For hedges, the guidance generally allows changes to the reference rate and other critical terms without having to de-designate the hedging relationship, as well as allows the shortcut method to continue to be applied. For contract modifications, changes in the reference rate or other critical terms will be treated as a continuation of the prior contract. This guidance can be applied immediately, however, is generally only available through December 31, 2022.	We are still evaluating the impact of reference rate reform and whether we will apply any of these practical expedients.

~~The following table provides additional information on our operating and finance leases where we are the lessee:~~

Three Months Ended Nine Months Ended
September 30, 2019
(In thousands)
LEASE COST:
Finance lease cost:

     Amortization of right-of-use assets $ 321
$ 963
     Interest on lease liabilities 1,455
4,366
Operating lease cost 1,524
4,521
Variable lease cost 131
351
Total lease cost $ 3,431
$ 10,201

OTHER INFORMATION:
Cash paid for amounts included in the measurement of lease liabilities
     Operating cash flows for finance leases $ 1,432
$ 4,325
     Operating cash flows for operating leases $ 1,500
$ 4,279
     Financing cash flows for finance leases $ 2
$ 43

September 30,
2019
Weighted-average remaining lease term - finance leases 18.4 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 %

Consolidated Statements of Cash Flows—Supplemental Disclosures

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


	Nine Months Ended						Six Months Ended
	September 30,						June 30,
	2019			2018			2020			2019
	(In thousands)						(In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred	$	97,074		$	96,903		$	73,942		$	64,755
Interest capitalized	(14,507		)	(14,787		)	(11,424		)	(9,240		)
Interest expense	$	82,567		$	82,116		$	62,518		$	55,515
Cash paid for interest, net of amounts capitalized	$	82,118		$	85,614		$	52,715		$	53,588
Cash paid for income taxes	$	450		$	699		$	428		$	419
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
DownREIT operating partnership units issued with acquisition							$	18,920		$	—
Mortgage loans assumed with acquisition	$	16,951		$	—		$	8,903		$	—
DownREIT operating partnership units redeemed for common shares	$	11,935		$	101		$	—		$	11,935
Shares issued under dividend reinvestment plan	$	1,337		$	1,431		$	860		$	897

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.


	September 30,		December 31,		June 30,		December 31,
	2019		2018		2020		2019
	(In thousands)				(In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents	$	162,543	$	64,087	$	980,039	$	127,432
Restricted cash (1)	44,373		44,245		21,198		26,182
Total cash, cash equivalents, and restricted cash	$	206,916	$	108,332	$	1,001,237	$	153,614


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

NOTE 3—REAL ESTATE

On ~~February 8, 2019,~~January 10, 2020, we acquired ~~the fee interest in Fairfax Junction,~~ a ~~75,000~~49,000 square foot shopping center in Fairfax, Virginia for ~~$22.5~~$22.3 million. This property is adjacent to, and will be operated as part of our Fairfax Junction property. This purchase price was paid with a combination of cash and the issuance of 163,322 downREIT operating partnership units. Approximately ~~$0.6~~$0.5 million and $0.4 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

On ~~September 13, 2019,~~February 12, 2020, we acquired ~~a 6,000~~two buildings totaling 12,000 square ~~foot retail building adjacent to San Antonio Center in Mountain View, California for $6.5 million.~~

~~On September 18, 2019, we acquired a 42,000 square foot retail building~~feet in Hoboken, New Jersey for ~~$30.9~~$14.3 million, including the assumption of ~~$17.0~~$8.9 million of mortgage debt. ~~The~~This acquisition is in addition to the 37 buildings previously acquired, and was completed through ~~a newly~~the joint venture that was formed ~~joint venture,~~in 2019, for which we own a 90% interest. ~~Approximately $0.7~~Less than $0.1 million and ~~$4.7~~approximately $3.3 million of net assets acquired were allocated to other assets for "above market leases," and other liabilities for "below market leases," respectively.

~~During the three months ended September 30, 2019,~~On April 21, 2020, we sold ~~one property~~a building in Pasadena, California for ~~a sales price of $18.0~~$16.1 million, which resulted in a gain of ~~$14.1~~$11.7 million. ~~During the nine months ended September 30, 2019, we sold two properties and one parcel of land for a net sales price of $97.7 million, which resulted in a net gain of $29.3 million.~~

During the nine months ended September 30, 2019, we closed on the sale of 41 condominium units at our Assembly Row and Pike & Rose properties (combined), received proceeds net of closing costs of $18.8 million, and recognized a gain of $1.8 million, net of income taxes. The cost basis for the remaining condominium units as of September 30, 2019 is $1.7 million, and is included in "assets held for sale" on our consolidated balance sheet.

NOTE 4—DEBT

In connection with the two buildings we acquired in Hoboken, New Jersey on February 12, 2020, we assumed two mortgage loans with a net face amount of $8.9 million and a fair value of $9.0 million. The mortgage loans bear interest at 4.00% and mature on July 27, 2027.

~~On January 31, 2019,~~In March 2020, in order to strengthen our financial position and balance sheet, to maximize our liquidity, and to provide maximum financial flexibility to continue our business initiatives as the effects of COVID-19 continue to evolve, we borrowed $990.0 million under our revolving credit facility, representing a draw-down of almost the entirety of our $1.0 billion revolving credit facility. This amount was subsequently repaid ~~the $20.3~~when we entered into a $400.0 million ~~mortgage~~unsecured term loan on ~~Rollingwood Apartments, at par, prior to its original~~

~~maturity date.~~

~~On June 7, 2019, we~~May 6, 2020 and issued ~~$300.0~~$700.0 million of fixed rate unsecured senior notes on May 11, 2020.

The unsecured term loan matures on May 6, 2021, plus one twelve month extension at our option, and bears interest at LIBOR plus 135 basis points based on our current credit rating. Our net proceeds from this transaction after underwriting fees and other costs were $398.7 million.

The $700.0 million of unsecured senior notes ~~that mature~~issued in May 2020 comprise a $300.0 million reopening of our 3.95% senior notes maturing on January 15, 2024 and a $400.0 million issuance of 3.50% senior notes maturing on June ~~15, 2029 and bear interest at 3.20%.~~1, 2030. The 3.95% senior notes were offered at ~~99.838%~~103.257% of the principal amount with a yield to maturity of ~~3.219%. On August 21, 2019, we issued an additional $100.0 million~~ ~~senior~~ ~~notes~~2.944%, and have the same terms and are of the same series ~~and with~~as the ~~same terms~~.$300.0 million senior notes issued on December 9, 2013. The ~~August~~3.50% senior notes were offered at ~~103.813%~~98.911% of the principal amount with a yield to maturity of ~~2.744%~~3.630%. ~~The combined~~Our net proceeds from ~~the note offerings~~these transactions after athe net issuance premium, underwriting fees, and other costs were ~~$399.9 million, which were primarily used to repay our $275.0 million unsecured term loan, at par, on June 7, 2019 and for general corporate purposes.~~

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, plus 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.

~~In connection with our Hoboken, New Jersey acquisition on September 18, 2019, we assumed a mortgage loan with a face amount of $17.0 million and a fair value of $17.5~~ $700.1 million. ~~The mortgage loan bears interest at 3.75% and matures on July 1, 2042.~~

During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the maximum amount of borrowings outstanding under our revolving credit facility was ~~$47.0~~$990.0 million, ~~and $116.5 million, respectively,~~ and the weighted average interest rate, before amortization of debt fees, was ~~3.0%~~1.4% and ~~3.2%,~~1.5% for the three and six months ended June 30, 2020, respectively. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the weighted average borrowings outstanding were ~~$14.0~~$413.2 million and ~~$34.7~~$278.5 million, ~~respectively. At September~~respectively, with 0 outstanding balance at June 30, ~~2019, our~~2020. Our revolving credit facility, ~~had 0 balance outstanding. Our revolving credit facility~~term loan, and certain notes require us to comply with various financial covenants, including the maintenance of minimum shareholders' equity and debt coverage ratios and a maximum ratio of debt to net worth. As of ~~September~~June 30, ~~2019,~~2020, 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:


	September 30, 2019				December 31, 2018				June 30, 2020				December 31, 2019
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
	(In thousands)
Mortgages and notes payable	$	470,489	$	482,345	$	753,406	$	751,361	$	953,511	$	947,030	$	549,460	$	562,049
Senior notes and debentures	$	2,806,422	$	3,022,615	$	2,404,279	$	2,371,392	$	3,508,461	$	3,754,061	$	2,807,134	$	3,001,216

As of June 30, 2020, we have 2 interest rate swap agreements with notional amounts of $56.5 million that are measured at fair value on a recurring basis. The interest rate swap agreements fix the interest rate on $56.5 million of mortgage payables at 3.67% through December 15, 2029. The fair values of the interest rate swap agreements are based on the estimated amounts we would receive or pay to terminate the contracts at the reporting date and are determined using interest rate pricing models and interest rate related observable inputs. The fair value of our swaps at June 30, 2020 was a liability of $6.1 million and is included in "other liabilities and deferred credits" on our consolidated balance sheet. For the three and six months ended June 30, 2020, the value of our interest rate swaps decreased $0.5 million and $6.2 million, respectively (including $0.2 million reclassified from other comprehensive loss to interest expense for both periods). A summary of our financial (liabilities) assets that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:



	June 30, 2020										December 31, 2019
	Level 1		Level 2			Level 3		Total			Level 1		Level 2		Level 3		Total
	(In thousands)
Interest rate swaps	$	—	$	(6,059	)	$	—	$	(6,059	)	$	—	$	130	$	—	$	130

One of our equity method investees has 2 interest rate swaps which qualify for cash flow hedge accounting. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, our share of the change in fair value of the related swaps included in "accumulated other comprehensive loss" was an increase of less than $0.1 million and ~~$0.7~~a decrease of $0.8 million, respectively.

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 common shares, at our option. A total of ~~626,619~~744,617 downREIT operating partnership units are outstanding which have a total fair value of approximately ~~$85.3~~$63.4 million, which is calculated by multiplying the outstanding number of downREIT partnership units by our closing stock price on ~~September~~June 30, ~~2019.~~

On August 2, 2019, we acquired the 10.1% redeemable noncontrolling interest in the partnership that owns our Montrose Crossing Shopping Center for $10.0 million, bringing our ownership interest to 100%.2020.

NOTE 7—SHAREHOLDERS’ EQUITY

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


	Nine Months Ended September 30,								Six Months Ended June 30,
	2019				2018				2020				2019
	Declared		Paid		Declared		Paid		Declared		Paid		Declared		Paid
Common shares	$	3.090	$	3.060	$	3.020	$	3.000	$	2.100	$	2.100	$	2.040	$	2.040
5.417% Series 1 Cumulative Convertible Preferred shares	$	1.016	$	1.016	$	1.016	$	1.016	$	0.677	$	0.677	$	0.677	$	0.677
5.0% Series C Cumulative Redeemable Preferred shares (1)	$	0.938	$	0.938	$	0.938	$	0.993	$	0.625	$	0.625	$	0.625	$	0.625


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

We have an 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 months ended September 30, 2019, we sold~~ ~~557,761~~ ~~common shares (of which, 24,261 settled on October 1, 2019) at a weighted average price per share of $134.48 for net cash proceeds of~~ ~~$74.5 million~~ and paid $0.5 million in commissions and less than $0.1 million in additional offering expenses related to the sales of these common shares. For the nine months ended September 30, 2019, we sold 1,069,699 common shares at a weighted average price per share of $134.71 for net cash proceeds of $142.8 million and paid $1.2 million in commissions and $0.1 million in additional offering expenses related to the sales of these common shares. As of ~~September~~June 30, ~~2019,~~2020, we had the capacity to issue up to $128.3 million in common shares under our ATM equity program.

NOTE 8—SHARE-BASED COMPENSATION PLANS

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


	Three Months Ended					Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,					September 30,						June 30,						June 30,
	2019			2018		2019			2018			2020			2019			2020			2019
	(In thousands)											(In thousands)
Grants of common shares and options	$	3,151		$	2,494	$	10,143		$	9,638		$	3,087		$	3,131		$	7,029		$	6,992
Capitalized share-based compensation	(274		)	157		(746		)	(769		)	(310		)	(201		)	(642		)	(472		)
Share-based compensation expense	$	2,877		$	2,651	$	9,397		$	8,869		$	2,777		$	2,930		$	6,387		$	6,520

NOTE 9—OPERATING & FINANCE LEASES

The following table provides additional information on our operating and finance leases where we are the lessee:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020			2019
	(In thousands)
LEASE COST:
Finance lease cost:
Amortization of right-of-use assets	$	321	$	321	$	642		$	642
Interest on lease liabilities	1,457		1,455		2,913			2,911
Operating lease cost	1,552		1,493		3,111			2,997
Variable lease cost	70		129		157			220
Total lease cost	$	3,400	$	3,398	$	6,823		$	6,770

OTHER INFORMATION:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for finance leases	$	1,439	$	1,433	$	2,872		$	2,893
Operating cash flows for operating leases	$	1,261	$	1,268	$	2,811		$	2,779
Financing cash flows for finance leases	$	11	$	16	$	22		$	41

					June 30,
					2020			2019
Weighted-average remaining lease term - finance leases					17.7 years			18.6 years
Weighted-average remaining lease term - operating leases					53.2 years			53.7 years
Weighted-average discount rate - finance leases					8.0		%	8.0		%
Weighted-average discount rate - operating leases					4.4		%	4.5		%

NOTE 9—10—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, ~~2019~~2020 and ~~2018,~~2019, we had 0.2 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, ~~2019~~2020 and ~~2018.~~2019. 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						Nine Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
	(In thousands, except per share data)												(In thousands, except per share data)
NUMERATOR
Net income	$	67,106		$	64,180		$	211,576		$	192,644		$	10,859		$	82,667		$	67,300		144,470
Less: Preferred share dividends	(2,010		)	(2,010		)	(6,031		)	(6,031		)	(2,011		)	(2,011		)	(4,021		)	(4,021		)
Less: Income from operations attributable to noncontrolling interests	(1,641		)	(1,622		)	(5,065		)	(5,244		)	(352		)	(1,765		)	(2,030		)	(3,424		)
Less: Earnings allocated to unvested shares	(232		)	(211		)	(671		)	(719		)	(249		)	(226		)	(495		)	(439		)
Net income available for common shareholders, basic and diluted	$	63,223		$	60,337		$	199,809		$	180,650		$	8,247		$	78,665		$	60,754		$	136,586
DENOMINATOR
Weighted average common shares outstanding—basic	74,832			73,400			74,584			73,100
Stock options	—			8			—			36
Weighted average common shares outstanding—diluted	74,832			73,408			74,584			73,136
Weighted average common shares outstanding, basic and diluted													75,394			74,713			75,377			74,458

EARNINGS PER COMMON SHARE, BASIC:
EARNINGS PER COMMON SHARE, BASIC AND DILUTED:
Net income available for common shareholders	$	0.84		$	0.82		$	2.68		$	2.47		$	0.11		$	1.05		$	0.81		$	1.83
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders	$	0.84		$	0.82		$	2.68		$	2.47

~~NOTE 10—SUBSEQUENT EVENT~~

~~On October 11, 2019, we sold a shopping center in Pacoima, California for $51.3 million, which is included in "assets held for sale" on our consolidated balance sheet at September 30, 2019.~~

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, ~~2018~~2019 filed with the Securities and Exchange Commission (the “SEC”) on February ~~13, 2019~~.10, 2020.

~~This~~Certain statements included in this Quarterly Report on Form 10-Q ~~contains~~are forward-looking statements. Those statements ~~within~~include statements regarding the ~~meaning~~intent, belief or current expectations of ~~Section 27A~~Federal Realty Investment Trust (“we” “our” or “us”) and members of our management team, as well as the ~~Securities Act~~assumptions on which such statements are based, and generally are identified by the use 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,~~“seeks,” ~~“should,~~“anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” ~~“expects,” “believes,” “estimates,” “anticipates”~~“should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and ~~“continues.” Forward-looking~~we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The following are some of the risks and uncertainties, although not ~~historical facts or guarantees of future performance~~all risks and ~~involve certain known and unknown risks,~~ uncertainties, ~~and other factors, many of which are outside our control,~~ that could cause our actual results to differ materially from those presented in our forward-looking statements:

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

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

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

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

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

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

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

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

Given these uncertainties, readers are cautioned not to place undue reliance on any forward-looking statements that we make, including those in this Quarterly Report on Form 10-Q. ~~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, ~~2018~~2019 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, ~~2019,~~2020, 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 ~~23.9~~24.0 million square feet. In total, the real estate projects were ~~94.2%~~93.0% leased and ~~92.8%~~90.8% occupied at ~~September~~June 30, ~~2019.~~2020.

Impacts of COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of novel coronavirus disease (“COVID-19”) as a pandemic. Our Board of Trustees, as part of its risk oversight function, is regularly coordinating with management to assess the effects of the pandemic on our business and to determine appropriate courses of action to maintain the health and safety of our personnel, to strengthen our financial position and to adapt our business as appropriate. In response to the pandemic, we have taken a number of specific actions so far:

On March 16, 2020, we transitioned our work force to work remotely, canceled all non-essential business travel and have canceled company events, or are holding them remotely. As of June 30, 2020, we have re-opened most of our offices with limited capacity following federal, state and local guidelines for phased re-openings.

•

During May 2020, we entered into multiple financing transactions to both strengthen our financial position and maximize our liquidity. On May 6, 2020, we entered into a $400.0 million term loan that bears interest at LIBOR plus 135 basis points and matures on May 6, 2021, plus one twelve month extension option at our option. On May 11, 2020, we issued $400.0 million of 3.50% senior notes maturing on June 1, 2030 with a yield to maturity of 3.630% and reopened our 3.95% senior notes maturing on January 15, 2024 for an additional $300.0 million with a yield to maturity of 2.944%. We also repaid the $990.0 million outstanding balance on our revolving credit facility and amended how certain covenants are calculated to provide us more operating flexibility. As of June 30, 2020, there is no outstanding balance on our $1.0 billion revolving credit facility and we have cash and cash equivalents of $980.0 million.

Construction activity has resumed at all of our projects, including Assembly Row and Santana West, where activities were paused as a result of government restrictions. Overall, we are experiencing a slower pace of construction as well as elevated costs as we observe COVID-19 safety protocols at all sites.


•	Launched The Pick-Up, a curbside, contactless exchange which creates a singular, reliable, centralized service that retailers and restaurants of all sizes can take advantage of, particularly well-suited for small businesses.

The extent of the effects of COVID-19 on our business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty. See Item 1A. Risk Factors. However, we believe the actions we are taking will help minimize interruptions to our operations and will put us in the best position to participate in the resulting economic recovery. Management and our Board of Trustees will continue to actively monitor the effects of the pandemic, including governmental directives in the jurisdictions in which we operate and the recommendations of public health authorities, and will, as needed, take further measures to adapt our business in the best interests of our shareholders and personnel.

Business Continuity

We were able to transition all but a limited number of essential employees to remote work and do not anticipate any adverse impact on our ability to continue to operate our business. Transitioning to a largely remote workforce has not had any material adverse impact on our financial reporting systems, our internal controls or disclosure controls and procedures. As government mandated closures and restrictions are gradually lifted through phased re-openings, we are following local, state and federal governments guidelines and limiting the number of employees coming into our offices as well as implementing health and

~~2019~~safety guidelines. In addition, we are following the proper guidelines to ensure that property employees are visiting properties only as necessary to ensure that the properties with businesses that are open and operating are able to conduct business and serve their communities. At this time, we have not laid off, furloughed, or terminated any employee in response to COVID-19, nor have we modified the compensation of any employee. The Compensation Committee of our Board of Trustees may reevaluate the performance goals and other aspects of the compensation arrangements of our executive officers later in 2020 as more information about the effects of COVID-19 become known.

2020 Property ~~Acquisition~~Acquisitions and ~~Dispositions~~Disposition

~~During the three months ended September 30, 2019,~~On April 21, 2020, we sold ~~one property~~a building in Pasadena, California for ~~a sales price of $18.0~~$16.1 million, which resulted in a gain of ~~$14.1 million. During the nine months ended September 30, 2019, we sold two properties and one land parcel for a net sales price of $97.7 million, which resulted in a net gain of $29.3~~$11.7 million.

~~2019~~2020 Debt and Equity Transactions

~~On June 7, 2019, we~~May 6, 2020 and issued ~~$300.0~~$700.0 million of fixed rate unsecured senior notes on May 11, 2020.

The $700.0 million of unsecured senior notes ~~that mature~~issued in May 2020 comprise a $300.0 million reopening of our 3.95% senior notes maturing on January 15, 2024 and a $400.0 million issuance of 3.50% senior notes maturing on June ~~15, 2029 and bear interest at 3.20%.~~1, 2030. The 3.95% senior notes were offered at ~~99.838%~~103.257% of the principal amount with a yield to maturity of ~~3.219%.~~ ~~On August 21, 2019, we issued an additional $100.0 million~~ ~~senior~~ ~~notes~~2.944%, and have the same terms and are of the same series ~~and with~~as the ~~same terms~~.$300.0 million senior notes issued on December 9, 2013. The ~~August~~3.50% senior notes were offered at ~~103.813%~~98.911% of the principal amount with a yield to maturity of ~~2.744%~~3.630%. ~~The combined~~Our net proceeds from these transactions after the ~~note offerings after~~ net issuance premium, underwriting fees, and other costs were ~~$399.9 million, which were primarily used to repay our $275.0 million unsecured term loan, at par, on June 7, 2019 and for general corporate purposes.~~ $700.1 million.

In connection with our Hoboken, New Jersey acquisition on September 18, 2019, we assumed a mortgage loan with a face amount of $17.0 million and a fair value of $17.5 million. The mortgage loan bears interest at 3.75% and matures on July 1, 2042.

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 ~~$266~~$202 million and $6$5 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, and ~~$203~~$142 million and $6$4 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. We capitalized external and internal costs related to other property improvements of ~~$49~~$27 million and $2 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, and ~~$43~~$29 million and $2 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. We capitalized external and internal costs related to leasing activities of ~~$17~~$5 million and $2$1 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, and ~~$16~~$10 million and $5$1 million, respectively, for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $6$5 million, $2$1 million, and $2$1 million,

respectively, for the six months ended June 30, 2020 and $4 million, $1 million, and $1 million, respectively for the ~~nine~~six months ended ~~September~~June 30, ~~2019 and $6 million, $2 million, and $4 million, respectively for the nine months ended September 30, 2018.~~2019. Total capitalized costs were ~~$342~~$242 million and ~~$275~~$188 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Recently Adopted Accounting Pronouncements

See Note 2 to the consolidated financial statements.

Outlook

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

growth in our comparable property portfolio,

growth in our portfolio from property ~~development~~developments and redevelopments, and

expansion of our portfolio through property acquisitions.

While the ongoing COVID-19 pandemic is impacting us in the short-term, our long-term focus has not changed. See our 10-K filed on February 13, 2020, for discussion of our our long-term strategies.

many of our tenants temporarily or even permanently closing their businesses, and for some, it has impacted their ability to pay rent. As of July 31, 2020, approximately 11% of our tenants (based on occupied square footage) were closed as a result of governmental orders compared to 51% at March 31, 2020. These economic hardships have adversely impacted our business, and had a negative effect on our financial results during the quarter ended June 30, 2020. With very few exceptions, our leases require tenants to continue to pay rent even while closed as a result of the pandemic, however, many tenants did not pay rents and other charges during the second quarter of 2020 and in July 2020. As of June 30, 2020, we have entered into agreements with approximately 20% of our tenants (based on total commercial leases) to defer rent payments to later periods, largely through 2021, although some extend beyond, and negotiations with other tenants are still ongoing. Our ~~comparable property growth~~percentage of contractual rent actually collected has increased each month since April, including some tenants paying past due amounts. While this is ~~primarily~~a positive trend driven by ~~increases in rental rates~~government mandated restrictions gradually being lifted, we are expecting that our rent collections will continue to be below our tenants’ contractual rent obligations and historical levels, which will continue to adversely impact our results of operations. The extent of such impact will depend on ~~new leases~~future developments, which are highly uncertain and ~~lease renewals, changes in portfolio occupancy,~~cannot be predicted. Depending upon the duration of tenant closures, operating restrictions, and the ~~redevelopment~~overall economic downturn resulting from COVID-19, we may find that even deferred rents are difficult to collect, and we may experience higher vacancy levels. While theduration and severity of ~~those assets. Over~~ the ~~long-term,~~economic impact resulting from COVID-19 is unknown, we seek to position the ~~infill nature and strong demographics of our properties provide a strategic advantage allowing us~~Trust to ~~maintain relatively high occupancy and generally increase rental rates.~~ participate in the resulting economic recovery.

We continue to ~~see relatively strong levels of interest from prospective tenants for our retail spaces; however, the time it takes~~have several development projects in process, albeit at a slower pace due to ~~complete new lease deals is longer,~~COVID-19 related restrictions, being delivered 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 an uptick in the number of retail tenants 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 30, 2019, no single tenant accounted for more than 2.6% of annualized base rent.follows:


•	In the 1^st quarter of 2020, we delivered the fully leased eight story, 301,000 square foot office building at Santana Row.

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 $352 million that we expect to stabilize in the next several years.

We continue our ongoing redevelopment efforts at Santana Row and are under construction on an eight story 301,000 square foot office building which will include an additional 18,000 square feet of retail space and 1,300 parking spaces. The project is expected to cost between $210 million and $220 million, to be delivered in 2020, and 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 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~~the 12 acres of land ~~which~~that we control across from Santana Row includes an eight story ~~360,000~~376,000 square foot office building, with over 1,700 parking spaces. The building is expected to cost between $250 million and $270 million with ~~deliveries~~openings beginning in ~~2021.~~2022.

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

to $305 million and delivery is expected to be substantially complete in 2019. As of September 30, 2019, approximately 132,000 square feet of retail space and the 158 room hotel have opened, and all of the residential units have been completed. Phase II also includes 122 for-sale condominium units, which have all closed as of September 30, 2019. The condominium units had a total cost of $81 million.

~~Additionally, we commenced construction on~~ Phase III of Assembly Row ~~which will include~~includes 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 open beginning in ~~2022.~~2021.

Phase II of Pike & Rose includes approximately 216,000 square feet of retail space, 272 residential units, and a 177 room boutique hotel (owned and operated by a joint venture in which we are a partner). As of September 30, 2019, approximately 196,000 square feet of retail space and the 177 room hotel have opened, and all of the residential units have been completed. Total expected costs range from $200 million to $207 million and remaining delivery is expected to be substantially complete in 2019. As of September 30, 2019, we closed on the sale of 95 of the 99 for-sale condominium units in Phase II. The condominium units have an expected total cost of $62 million.

~~Additionally, at~~At Pike & Rose, we ~~have commenced~~are continuing 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~~will begin to open ~~beginning~~later in ~~2021.~~2020.

~~Including costs incurred in~~Throughout the ~~first nine months~~portfolio, we currently have redevelopment projects underway with a projected total cost of ~~2019,~~approximately $318 million that we expect to ~~invest between $230 million~~stabilize over the next several years.

The above includes our best estimates based on information currently known, however, the completion of construction, final costs, and ~~$250 million at Assembly Row, Pike & Rose,~~the timing of openings will be dependent upon the duration of governmental restrictions and ~~Santana Row in 2019.~~the duration and severity of the economic impacts of COVID-19.

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, ~~2019,~~2020, the leasable square feet in our properties was ~~94.2%~~93.0% leased and ~~92.8%~~90.8% occupied. The leased rate is higher than the occupied rate due to leased spaces that are being redeveloped or improved or that are awaiting permits and, therefore, are not yet ready to be occupied. Our occupancy and leased rates are subject to variability over time due to factors including acquisitions, the timing of the start and stabilization of our redevelopment projects, lease expirations and tenant closings and bankruptcies.

Lease Rollovers

For the ~~third~~second quarter of ~~2019,~~2020, we signed leases for a total of ~~491,000~~315,000 square feet of retail space including ~~469,000~~278,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 11% on a cash basis. New leases for comparable spaces were signed for 123,000 square feet at an average rental increase of 32% on a cash basis. Renewals for comparable spaces were signed for 155,000 square feet at no average rental increase on a cash basis. Tenant improvements and incentives for comparable spaces were $30.94 per square foot, of which, $69.12 per square foot was for new leases and $0.69 per square foot was for renewals for the three months ended June 30, 2020.

For the six months ended June 30, 2020, we signed leases for a total of 806,000 square feet of retail space including 744,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 7% on a cash basis. New leases for comparable spaces were signed for ~~317,000~~274,000 square feet at an average rental increase of 6%16% on a cash basis. Renewals for comparable spaces were signed for ~~152,000~~470,000 square feet at an average rental increase of 9%2% on a cash basis. Tenant improvements and incentives for comparable spaces were ~~$46.20~~$31.21 per square foot, of which, ~~$66.79~~$79.88 per square foot was for new leases and ~~$3.18~~$2.86 per square foot was for renewals for the ~~three~~six months ended ~~September~~June 30, ~~2019.~~

For the nine months ended September 30, 2019, we signed leases for a total of 1,180,000 square feet of retail space including 1,095,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 8% on a cash basis. New leases for comparable spaces were signed for 581,000 square feet at an average rental increase of 12% on a cash basis. Renewals for comparable spaces were signed for 514,000 square feet at an average rental increase of 4% on a cash basis. Tenant improvements and incentives for comparable spaces were $43.66 per square foot, of which, $80.32 per square foot was for new leases and $2.18 per square foot was for renewals for the nine months ended September 30, 2019.

2020.

The rental increases associated with comparable spaces generally include all leases signed for retail space in arms-length transactions reflecting market leverage between landlords and tenants during the period. The comparison between 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. Costs related to redevelopments requires judgment by management in determining what reflects base building costs and thus, is not included in the "tenant improvements and incentives" amount.

The leases signed in ~~2019~~2020 generally become effective over the following two years though some may not become effective until ~~2022~~2023 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~~1.3 to ~~1.7~~1.9 million square feet of retail space each year, ~~and~~however, we expect that volume and potentially rental rate increases for ~~2019 will~~2020 to be in line with 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 thatnegatively impacted by the ~~rents on new leases will continue to increase at the above disclosed levels, if at all.~~COVID-19 pandemic.

Comparable Properties

Throughout this section, we have provided certain information on a “comparable property” basis. Information provided on a comparable property basis includes the results of properties that we owned and operated for the entirety of both periods being compared except for properties that are currently under development or are being repositioned for significant redevelopment and investment. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, all or a portion of 9698 and 97 properties, respectively, were considered comparable properties and ~~nine and~~ eight properties ~~respectively,~~ were considered non-comparable properties. For the three months ended ~~September~~June 30, ~~2019,~~2020, one property was moved from acquisitions to ~~non-comparable~~comparable properties and one portion of a property was removed from comparable properties, as it was sold, compared to the designations for the three months ended ~~June 30, 2019,~~March 31, 2020, which were 97 properties or ~~portions~~portion of properties considered comparable and eight considered non-comparable. For the ~~nine~~six months ended ~~September~~June 30, ~~2019, eight~~2020, two properties and two portions of properties were moved from ~~acquisitions~~non-comparable properties to comparable properties, one property was moved from comparable properties to non-comparable properties, one property was moved from acquisitions to non-comparable properties, and one portion of a property was ~~moved from non-comparable properties to comparable properties, and two properties were~~ removed from comparable properties, as ~~they were~~ it was

sold, compared to the designations for the year ended December 31, ~~2018, which were 90 properties or portions of properties considered comparable and eight considered non-comparable.~~2019. While there is judgment surrounding changes in designations, we typically move non-comparable properties to comparable properties once they have stabilized, which is typically considered 90% physical occupancy or when the growth expected from the redevelopment has been included in the comparable periods. We typically remove properties from comparable properties when the repositioning of the asset has commenced and has or is expected to have a significant impact to property operating income within the calendar year. Acquisitions are moved to comparable properties once we have owned the property for the entirety of comparable periods and the property is not under development or being repositioned for significant redevelopment and investment.

RESULTS OF OPERATIONS - THREE MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020 AND ~~2018~~2019


							Change											Change
	2019			2018			Dollars			%		2020			2019			Dollars			%
	(Dollar amounts in thousands)											(Dollar amounts in thousands)
Rental income	$	233,212		$	228,960		$	4,252		1.9	%	$	175,479		$	229,731		$	(54,252	)	(23.6	)%
Mortgage interest income	735			793			(58		)	(7.3	)%	748			734			14			1.9	%
Total property revenue	233,947			229,753			4,194			1.8	%	176,227			230,465			(54,238		)	(23.5	)%
Rental expenses	54,484			41,909			12,575			30.0	%	36,417			41,438			(5,021		)	(12.1	)%
Real estate taxes	29,030			29,086			(56		)	(0.2	)%	30,599			25,166			5,433			21.6	%
Total property expenses	83,514			70,995			12,519			17.6	%	67,016			66,604			412			0.6	%
Property operating income (1)	150,433			158,758			(8,325		)	(5.2	)%	109,211			163,861			(54,650		)	(33.4	)%
General and administrative expense	(11,060		)	(7,638		)	(3,422		)	44.8	%	(9,814		)	(11,422		)	1,608			(14.1	)%
Depreciation and amortization	(59,648		)	(60,778		)	1,130			(1.9	)%	(62,784		)	(59,057		)	(3,727		)	6.3	%
Gain on sale of real estate, net	14,293			3,125			11,168			357.4	%	11,682			16,197			(4,515		)	(27.9	)%
Operating income	94,018			93,467			551			0.6	%	48,295			109,579			(61,284		)	(55.9	)%
Other interest income	389			319			70			21.9	%	509			189			320			169.3	%
Interest expense	(27,052		)	(28,166		)	1,114			(4.0	)%	(34,073		)	(27,482		)	(6,591		)	24.0	%
Loss from partnerships	(249		)	(1,440		)	1,191			(82.7	)%
(Loss) income from partnerships												(3,872		)	381			(4,253		)	(1,116.3	)%
Total other, net	(26,912		)	(29,287		)	2,375			(8.1	)%	(37,436		)	(26,912		)	(10,524		)	39.1	%
Net income	67,106			64,180			2,926			4.6	%	10,859			82,667			(71,808		)	(86.9	)%
Net income attributable to noncontrolling interests	(1,641		)	(1,622		)	(19		)	1.2	%	(352		)	(1,765		)	1,413			(80.1	)%
Net income attributable to the Trust	$	65,465		$	62,558		$	2,907		4.6	%	$	10,507		$	80,902		$	(70,395	)	(87.0	)%

(1)

Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP.

Property Revenues

Total property revenue ~~increased $4.2~~decreased $54.2 million, or ~~1.8%~~23.5%, to ~~$233.9~~$176.2 million in the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$229.8~~$230.5 million in the three months ended ~~September~~June 30, ~~2018.~~2019. The percentage occupied at our shopping centers was ~~92.8%~~90.8% at ~~September~~June 30, ~~2019~~2020 compared to ~~93.7%~~93.3% at ~~September~~June 30, ~~2018.~~2019. The most significant driver of the decrease in property revenues is the impact of COVID-19, as many of our tenants were forced to temporarily or in some cases permanently close their businesses resulting in changes in our collectibility estimates and in some cases rent abatement. Changes in the components of property revenue are discussed below.

Rental Income

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage ~~rent.~~rent, and is net of collectibility related adjustments. Rental income ~~increased $4.3~~decreased $54.3 million, or ~~1.9%~~23.6%, to ~~$233.2~~$175.5 million in the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$229.0~~$229.7 million in the three months ended ~~September~~June 30, ~~2018~~2019 due primarily to the following:

~~an increase~~higher collectibility related adjustments across all properties of ~~$3.9~~$54.2 million primarily the result of COVID-19 impacts. This includes the write-off of $9.4 million of straight-line rent receivables primarily related to tenants who were changed to a cash basis of revenue recognition during the quarter ended June 30, 2020,

a decrease of $5.0 million from comparable properties primarily related to lower average occupancy of approximately $3.7 million, $2.2 million of lower parking income and percentage rent primarily due ~~primarily~~ to the

impacts from COVID-19 related closures, and $1.0 million of lower legal and lease termination fees, partially offset by higher rental rates of approximately ~~$3.1~~$3.0 million, and ~~higher average occupancy~~

a decrease of ~~approximately $1.1~~$3.3 million from property sales,

partially offset by,

an increase of ~~$2.1~~$5.2 million from ~~non-comparable properties due primarily to~~acquisitions of Hoboken during the ~~retail openings~~second half of 2019 and ~~residential lease-up at Phase II at Assembly Row~~early 2020, Georgetowne Shopping Center in November 2019, and ~~Pike & Rose and and the lease-up of one of our other redevelopments, partially offset by redevelopment related occupancy decreases at one Virginia property,~~Fairfax Junction in January 2020, and

an increase of ~~$0.6~~$2.9 million from non-comparable properties primarily driven by the ~~acquisition~~opening of ~~Fairfax Junction~~our new office building at Santana Row in ~~February 2019,~~

early 2020, partially offset by

~~a decrease of $2.3~~ $1.0 million related to lower parking income primarily due to the impacts from ~~our 2018 and 2019 property sales.~~COVID-19 related closures.

Property Expenses

Total property expenses increased ~~$12.5~~$0.4 million, or ~~17.6%~~0.6%, to ~~$83.5~~$67.0 million in the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$71.0~~$66.6 million in the three months ended ~~September~~June 30, ~~2018.~~2019. Changes in the components of property expenses are discussed below.

Rental Expenses

Rental expenses ~~increased $12.6~~decreased $5.0 million, or ~~30.0%~~12.1%, to ~~$54.5~~$36.4 million in the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$41.9~~$41.4 million in the three months ended ~~September~~June 30, ~~2018.~~2019. This ~~increase~~decrease is primarily due to the following:

a decrease of $5.2 million from comparable properties due primarily to lower repairs and maintenance costs and utilities primarily driven by the ~~following:~~impact of COVID-19, and

~~an $11.9~~a decrease of $0.3 million ~~charge in 2019 related to the buyout of a lease at Assembly Square Marketplace, and~~from property sales,

partially offset by,

an increase of $0.7 million from ~~comparable properties due primarily to higher repairs~~acquisitions of Hoboken during the second half of 2019 and maintenance costs partially offset by a $1.2 million decrease due to the new lease accounting standard requirement to record collectibility adjustments as a reduction to revenue rather than rental expense effective at adoption on January 1,early 2020 and Georgetowne Shopping Center in November 2019.

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income increased to ~~23.4%~~20.8% in the three months ended ~~September~~June 30, ~~2019~~2020 from ~~18.3%~~18.0% in the three months ended ~~September~~June 30, ~~2018.~~2019.

Real Estate Taxes

Real estate tax expense increased $5.4 million, or 21.6%, to $30.6 million in the three months ended June 30, 2020 compared

to $25.2 million in the three months ended June 30, 2019. This increase is primarily due to the following:

an increase of $4.4 million from comparable properties primarily due to 2019 tax refunds from a multi-year appeal and reassessment at three of our properties, and higher current year assessments,

an increase of $0.8 million from acquisitions of Hoboken during the second half of 2019 and early 2020 and Georgetowne Shopping Center in November 2019, and

an increase of $0.5 million from non-comparable properties due primarily to the opening of our new office building at Santana Row in early 2020,

partially offset by,

a decrease of $0.3 million from property sales.

Property Operating Income

Property operating income decreased ~~$8.3~~$54.7 million, or ~~5.2%~~33.4%, to ~~$150.4~~$109.2 million in the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$158.8~~$163.9 million in the three months ended ~~September~~June 30, ~~2018.~~2019. This decrease is primarily due ~~primarily~~ to the ~~charge~~impact of COVID-19, which resulted in higher collectibility related ~~to the buyout of a lease at Assembly Square Marketplace~~adjustments, lower percentage rent, and ~~property sales,~~lower parking income, partially offset by ~~growth in earnings at comparable properties, Assembly Row~~property acquisitions and ~~Pike & Rose, and one~~the opening of our ~~retail redevelopments.~~new office building at Santana Row in early 2020.

Other Operating

General and Administrative

General and administrative expense ~~increased $3.4~~decreased $1.6 million, or ~~44.8%~~14.1%, to ~~$11.1~~$9.8 million in the three months ended ~~September~~June 30, ~~2019~~2020 from ~~$7.6~~$11.4 million in the three months ended ~~September~~June 30, ~~2018.~~2019. This decrease is due primarily to COVID-19 impacts including office closures and cancellations of all non-essential business travel and company events, as well as lower personnel related costs.

Depreciation and Amortization

Depreciation and amortization expense increased $3.7 million, or 6.3%, to $62.8 million in the three months ended June 30, 2020 from $59.1 million in the three months ended June 30, 2019. This increase is due primarily to ~~higher leasing related costs as certain costs can no longer be capitalized as a result~~2019 acquisitions and the opening of ~~the~~our new ~~lease accounting standard (see Note 2 for additional disclosure) and higher personnel related costs.~~office building at Santana Row in early 2020, partially offset by property sales.

Gain on Sale of Real Estate, Net

The ~~$14.3~~$11.7 million gain on sale of real estate, net for the three months ended ~~September~~June 30, 2020 is due primarily to the sale of a building in Pasadena, California.

The $16.2 million gain on sale of real estate, net for the three months ended June 30, 2019 is due primarily to the sale of ~~one property.~~Free

~~The $3.1 million net gain for the three months ended September 30, 2018 is due to the sale of~~State Shopping Center and a ~~residential building in August 2018.~~land parcel at Northeast Shopping Center.

Operating Income

Operating income ~~increased $0.6~~decreased $61.3 million, or ~~0.6%~~55.9%, to ~~$94.0~~$48.3 million in the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$93.5~~$109.6 million in the three months ended ~~September~~June 30, ~~2018.~~2019. This decrease is primarily due to the impacts of COVID-19, which resulted in higher collectibility related adjustments, lower percentage rent, and lower parking income, as well as a lower net gain on the sale of real estate compared to prior year, partially offset by lower rental expenses and general and administrative expenses due to the impact COVID-19, the opening of our new office building at Santana Row in early 2020, and property acquisitions.

Other

Interest Expense

Interest expense increased $6.6 million, or 24.0%, to $34.1 million in the three months ended June 30, 2020 compared to $27.5 million in the three months ended June 30, 2019. This increase is due primarily to the ~~net gain on~~following:

an increase of $5.7 million from higher borrowings in response to the ~~sale~~COVID-19 pandemic (see further discussion in "Impacts of ~~one property~~the COVID-19 Pandemic" earlier in Item 2 of this document), and ~~growth~~

an increase of $3.3 million due to higher weighted average borrowings primarily from the $400 million issuance of our 3.20% notes in ~~earnings at~~2019, and $106.9 million of mortgage loans associated with our ~~comparable properties,~~Hoboken acquisitions, partially offset by the ~~charge related~~repayment of our $275.0 million term loan in June 2019,

partially offset by,

a decrease of $1.4 million due to ~~the buyout of~~ a ~~lease at Assembly Square Marketplace, higher leasing~~lower overall weighted average borrowing rate, and ~~personnel related costs, and property sales.~~

~~Other~~

~~Interest Expense~~

Interest expense decreased $1.1 million, or 4.0%, to $27.1 million in the three months ended September 30, 2019 compared to $28.2 million in the three months ended September 30, 2018. This decrease is due primarily to an increase of ~~$1.2~~$1.0 million in capitalized interest, primarily attributable to the development of Phase III of Assembly Row and Pike & ~~Rose, and Santana Row.~~Rose.

Gross interest costs were ~~$32.3~~$39.8 million and $32.2 million in the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Capitalized interest was ~~$5.3~~$5.7 million and ~~$4.1~~$4.7 million for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

~~Loss~~(Loss) income from ~~Partnerships~~partnerships

Loss from partnerships ~~decreased $1.2~~increased $4.3 million ~~or 82.7%,~~ to ~~$0.2~~$3.9 million in the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~a loss~~income of ~~$1.4~~$0.4 million in the three months ended ~~September~~June 30, ~~2018.~~2019. This decrease is primarily due ~~primarily~~ to ~~improved~~

~~operating results~~our share of losses from our hotel investments at ~~our~~ Assembly Row and Pike & Rose, ~~hotel joint ventures, which opened in August 2018~~largely the result of COVID-19 closures and ~~March 2018, respectively.~~restrictions.

RESULTS OF OPERATIONS - ~~NINE~~SIX MONTHS ENDED ~~SEPTEMBER~~JUNE 30, ~~2019~~2020 AND ~~2018~~2019


							Change											Change
	2019			2018			Dollars			%		2020			2019			Dollars			%
	(Dollar amounts in thousands)											(Dollar amounts in thousands)
Rental income	$	694,435		$	677,776		$	16,659		2.5	%	$	406,277		$	461,223		$	(54,946	)	(11.9	)%
Mortgage interest income	2,204			2,284			(80		)	(3.5	)%	1,507			1,469			38			2.6	%
Total property revenue	696,639			680,060			16,579			2.4	%	407,784			462,692			(54,908		)	(11.9	)%
Rental expenses	140,182			126,587			13,595			10.7	%	80,729			85,698			(4,969		)	(5.8	)%
Real estate taxes	81,883			85,841			(3,958		)	(4.6	)%	59,663			52,853			6,810			12.9	%
Total property expenses	222,065			212,428			9,637			4.5	%	140,392			138,551			1,841			1.3	%
Property operating income (1)	474,574			467,632			6,942			1.5	%	267,392			324,141			(56,749		)	(17.5	)%
General and administrative expense	(32,047		)	(23,980		)	(8,067		)	33.6	%	(20,065		)	(20,987		)	922			(4.4	)%
Depreciation and amortization	(178,327		)	(177,269		)	(1,058		)	0.6	%	(124,972		)	(118,679		)	(6,293		)	5.3	%
Gain on sale of real estate, net	30,490			10,413			20,077			192.8	%	11,682			16,197			(4,515		)	(27.9	)%
Operating income	294,690			276,796			17,894			6.5	%	134,037			200,672			(66,635		)	(33.2	)%
Other interest income	755			657			98			14.9	%	817			366			451			123.2	%
Interest expense	(82,567		)	(82,116		)	(451		)	0.5	%	(62,518		)	(55,515		)	(7,003		)	12.6	%
Loss from partnerships	(1,302		)	(2,693		)	1,391			(51.7	)%	(5,036		)	(1,053		)	(3,983		)	378.3	%
Total other, net	(83,114		)	(84,152		)	1,038			(1.2	)%	(66,737		)	(56,202		)	(10,535		)	18.7	%
Net income	211,576			192,644			18,932			9.8	%	67,300			144,470			(77,170		)	(53.4	)%
Net income attributable to noncontrolling interests	(5,065		)	(5,244		)	179			(3.4	)%	(2,030		)	(3,424		)	1,394			(40.7	)%
Net income attributable to the Trust	$	206,511		$	187,400		$	19,111		10.2	%	$	65,270		$	141,046		$	(75,776	)	(53.7	)%

(1)

Property Revenues

Total property revenue ~~increased $16.6~~decreased $54.9 million, or ~~2.4%~~11.9%, to ~~$696.6~~$407.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$680.1~~$462.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The percentage occupied at our shopping centers was ~~92.8%~~90.8% at ~~September~~June 30, ~~2019~~2020 compared to ~~93.7%~~93.3% at ~~September~~June 30, ~~2018.~~2019. The most significant driver of the decrease in property revenue is the impact of COVID-19, as some of our tenants were forced to temporarily or in some cases permanently close their businesses resulting in changes in our collectibility estimates and in some cases rent abatement. Changes in the components of property revenue are discussed below.

Rental Income

Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage ~~rent.~~rent, and is net of collectibility related adjustments. Rental income ~~increased $16.7~~decreased $54.9 million, or ~~2.5%~~11.9%, to ~~$694.4~~$406.3 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$677.8~~$461.2 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019 due primarily to the following:

~~an increase~~higher collectibility related adjustments across all properties of ~~$10.0~~$56.4 million primarily the result of COVID-19 impacts. This includes the write-off of $9.4 million of straight-line rent receivables primarily related to tenants who were changed to a cash basis of revenue recognition during the quarter ended June 30, 2020,

a decrease of $7.9 million from comparable properties due primarily to lower average occupancy of approximately $6.4 million, lower lease termination fees and legal fees of $3.8 million, lower parking income and percentage rent of $2.4 million primarily due to the impacts from COVID-19 related closures, and lower recoveries of $1.8 million primarily the result of lower snow removal expense, partially offset by higher rental rates of approximately ~~$8.8~~$8.1 million, ~~higher lease termination fees~~ and ~~legal fee income~~

a decrease of ~~$5.3~~$6.9 million ~~and higher average occupancy of approximately $2.3 million,~~ from property sales,

partially offset by, a $4.4 million decrease in real estate tax recoveries primarily due to the requirements of the new lease accounting standard and lower multi-year tax reassessments for two of our properties, and $1.9 million related to collectibility adjustments, which are now being presented as a reduction of rental income rather than rental expense (see Note 2 for additional disclosure),

an increase of ~~$9.2~~$10.5 million from ~~non-comparable properties due primarily to~~acquisitions of Hoboken during the ~~opening~~second half of ~~Phase II at Assembly Row~~2019 and ~~Pike & Rose~~early 2020, Georgetowne Shopping Center in November 2019, and ~~the lease-up of one of our other redevelopments, partially offset by redevelopment related occupancy decreases at one Virginia property and two of our Florida properties,~~Fairfax Junction in January 2020, and

an increase of ~~$1.3~~$5.8 million from non comparable properties driven by the ~~acquisition~~opening of ~~Fairfax Junction~~our new office building at Santana Row in ~~February 2019,~~

~~partially offset by~~

~~a decrease of $4.6 million from property sales.~~early 2020,

Property Expenses

Total property expenses increased ~~$9.6~~$1.8 million, or ~~4.5%~~1.3%, to ~~$222.1~~$140.4 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$212.4~~$138.6 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. Changes in the components of property expenses are discussed below.

Rental Expenses

Rental expenses ~~increased $13.6~~decreased $5.0 million, or ~~10.7%~~5.8%, to ~~$140.2~~$80.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$126.6~~$85.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018. This increase is~~2019 due primarily to the following:

~~an $11.9 million charge in 2019 related to the buyout~~a decrease of ~~a lease at Assembly Square Marketplace,~~

~~an increase of $1.2~~$6.5 million from comparable properties due ~~primarily~~ to ~~higher~~lower snow removal expense, and lower repairs and maintenance ~~costs~~ and utilities primarily driven by the impact of COVID-19.

a decrease of $0.8 million from our property sales,

partially offset by,

a ~~$3.0~~increase of $1.5 million ~~decrease due to~~from acquisitions of Hoboken during the ~~new lease accounting standard requirement to record collectibility adjustments as a reduction to revenue rather than rental expense effective at adoption on~~second half of 2019 and early 2020, Georgetowne Shopping Center in November 2019, and Fairfax Junction in January ~~1, 2019,~~2020, and

an increase of ~~$0.6~~$0.4 million from non-comparable properties due primarily to the opening of ~~Phase II~~our new office building at ~~Assembly~~Santana Row ~~and Pike & Rose, partially offset by lower expenses at two of our Florida properties, and~~

~~an increase of $0.4 million from acquisitions,~~

~~partially offset by~~

~~a decrease of $0.9 million from property sales.~~in early 2020.

As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income increased to ~~20.2%~~19.9% in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 from ~~18.7%~~18.6% in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019.

Real Estate Taxes

Real estate tax expense ~~decreased $4.0~~increased $6.8 million, or ~~4.6%~~12.9%, to ~~$81.9~~$59.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared

to ~~$85.8~~$52.9 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018~~2019. This increase is primarily due ~~primarily to:~~to the following:

~~a decrease~~an increase of ~~$4.1~~$4.8 million from comparable properties primarily due ~~primarily~~ to a 2019 tax ~~refund~~refunds from a multi-year appeal and reassessment ~~for~~at three of our properties, and ~~$4.0~~higher current year assessments,

an increase of $1.7 million from acquisitions of Hoboken during the second half of 2019 and early 2020, Georgetowne Shopping Center in November 2019, and Fairfax Junction in January 2020, and

an increase of $0.9 million from non-comparable properties due primarily to the opening of our new lease accounting standard requirement, which no longer permits the gross up of real estate tax revenue and expense for real estate taxes that our tenants pay directly to the taxing authority (see Note 2 for additional disclosure), office building at Santana Row in early 2020,

partially offset by, ~~higher assessments, and~~

a decrease of $0.6 million from our property ~~sales,~~

~~partially offset by~~

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

~~an increase of $0.2 million from acquisitions.~~sales.

Property Operating Income

Property operating income ~~increased $6.9~~decreased $56.7 million, or ~~1.5%~~17.5%, to ~~$474.6~~$267.4 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$467.6~~$324.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. This ~~increase~~decrease is primarily due ~~primarily~~ to ~~growth~~the impact of COVID-19, which resulted in ~~earnings at comparable properties,~~higher collectibility related adjustments, lower percentage rent, and lower parking income, in addition to property sales, and lower lease termination fee income, partially offset by property acquisitions and the opening of ~~Phase II~~our new office building at ~~Assembly~~Santana Row ~~and Pike & Rose, and our acquisition of Fairfax Junction~~ in ~~February 2019, partially offset by the charge related to the buyout of a lease at Assembly Square Marketplace, and property sales.~~early 2020.

Other Operating

General and Administrative

General and administrative expense ~~increased $8.1~~decreased $0.9 million, or ~~33.6%~~4.4%, to ~~$32.0~~$20.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 from ~~$24.0~~$21.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. This decrease is due primarily to COVID-19 impacts including office closures and cancellations of all non-essential business travel and company events, and lower personnel related costs.

Depreciation and Amortization

Depreciation and amortization expense increased $6.3 million, or 5.3%, to $125.0 million in the six months ended June 30, 2020 from $118.7 million in the six months ended June 30, 2019. This increase is due primarily to ~~higher leasing related~~property acquisitions and the opening of our new office building at Santana Row in early 2020, partially offset by property sales.

~~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 ~~$30.5~~$11.7 million gain on sale of real estate, net for the ~~nine~~six months ended ~~September~~June 30, 2020 is due to the sale of a building in Pasadena, California.

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 ~~two properties~~Free State Shopping Center, a land parcel at Northeast Shopping Center, and ~~one land parcel.~~

~~The $10.4 million net gain for the nine months ended September 30, 2018 is related to~~ condominium ~~unit sales that closed at our Assembly Row and Pike and Rose properties, and the sale of a residential building in August 2018.~~sales.

Operating Income

Operating income ~~increased $17.9~~decreased $66.6 million, or ~~6.5%~~33.2%, to ~~$294.7~~$134.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$276.8~~$200.7 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. This ~~increase~~decrease is primarily due ~~primarily~~ to the impacts of COVID-19, which resulted in higher collectibility related adjustments, lower percentage rent, and lower parking income, as well as lower net gain on the sale of ~~two properties and one land parcel, growth in earnings at our comparable properties,~~real estate and the ~~opening~~impact of ~~Phase II of Assembly Row and Pike & Rose,~~property sales, partially offset by the ~~charge related~~opening of our new office building at Santana Row in early 2020, property acquisitions, and lower rental expenses, largely due to the ~~buyout~~impact of ~~a lease at Assembly Square Marketplace, higher leasing and personnel related costs, and property sales.~~COVID-19.

Other

Interest Expense

Interest expense increased ~~$0.5~~$7.0 million, or ~~0.5%~~12.6%, to ~~$82.6~~$62.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$82.1~~$55.5 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. This increase is due primarily to the following:

an increase of ~~$1.6~~$6.3 million from higher borrowings in response to the COVID-19 pandemic (see further discussion in "Impacts of the COVID-19 Pandemic" earlier in Item 2 of this document), and

an increase of $5.4 million due to a higher ~~overall~~ weighted average ~~borrowing rate~~borrowings primarily from the $400.0 million issuance of our 3.20% notes in 2019, and

~~a decrease~~ $106.9 million of ~~$0.3~~mortgage loans associated with our Hoboken acquisitions, partially offset by the repayment of our $275.0 million term loan in ~~capitalized interest,~~June 2019,

partially offset by,

a decrease of ~~$1.5~~$2.5 million due to a lower overall weighted average ~~borrowings.~~borrowing rate, and

an increase of $2.2 million in capitalized interest, primarily attributable to the development of Phase III of Assembly Row and Pike & Rose.

Gross interest costs were ~~$97.1~~$73.9 million and ~~$96.9~~$64.8 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Capitalized interest was ~~$14.5~~$11.4 million and ~~$14.8~~$9.2 million infor the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018,~~2019, respectively.

Loss from ~~Partnerships~~partnerships

Loss from partnerships ~~decreased $1.4~~increased $4.0 million ~~or 51.7% ,~~ to ~~$1.3~~$5.0 million in the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$2.7~~$1.1 million in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. This ~~decrease~~increase is primarily due ~~primarily~~ to ~~improved operating results~~our share of losses from our hotel investments at ~~our~~ Assembly Row and Pike & Rose, ~~hotel joint ventures, which opened in August 2018~~largely the result of COVID-19 closures and ~~March 2018, respectively.~~restrictions.

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 which is largely paid to our common and preferred shareholders in the form of ~~dividends. As~~dividends because as a REIT, we ~~must~~are generally required to make annual distributions to shareholders of at least 90% of our taxable income.

~~Our short-term liquidity requirements consist primarily of normal~~ Remaining cash flow from operations after dividend payments is used to fund recurring ~~operating expenses, obligations under our~~and non-recurring capital projects (such as tenant improvements and ~~operating leases,~~redevelopments), and regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities)~~, recurring~~. We maintain a $1.0 billion revolving credit facility to fund short term cash flow needs and also look to the public and private debt and equity markets, joint venture relationships, and property dispositions to fund capital expenditures ~~non-recurring expenditures (such as tenant improvements~~on a long-term basis.

We are currently experiencing lower levels of cash from operations due to lower rent collections from tenants impacted by the COVID-19 pandemic (see further discussion under the "Outlook" section of this Item 2). While the overall economic impacts of the pandemic are unknown, we have taken multiple steps during the last several months to strengthen our financial position, maximize liquidity, and ~~redevelopments)~~to provide maximum flexibility during these uncertain times. In March 2020, we borrowed $990.0 million under our revolving credit facility, representing a draw-down of almost the entirety of our $1.0 billion credit facility. In May 2020, we entered into a $400.0 million unsecured term loan and ~~dividends~~issued $700.0 million of fixed rate unsecured senior notes for combined net proceeds of $1.1 billion. We subsequently repaid the outstanding balance on our revolving credit facility and amended how certain covenants are calculated to provide us more operating flexibility. As of June 30, 2020, there is no outstanding balance on our $1.0 billion unsecured revolving credit facility and we have cash and cash equivalents of $980.0 million.

For the six months ended June 30, 2020, our weighted average borrowing rate on the revolving credit facility, before amortization of debt fees, was 1.5%. As of June 30, 2020, we had the capacity to issue up to $128.3 million in common ~~and preferred shareholders. Our long-term~~shares under our ATM equity program.

Over the next 12 months, we have $330.3 million of debt maturing, excluding our $400.0 million term loan, which may be extended for an additional twelve months at our option. Additionally, our overall capital requirements ~~consist primarily~~for the remainder of ~~maturities under~~2020 will depend upon the nature of government mandated closures and restrictions and the overall economic impact of COVD-19, as well as general timing of our ~~long-term~~redevelopment and development activities. During the second quarter 2020, we experienced lower levels of capital investment as the result of COVID-19 related closures. However, we were able to restart all construction related activities during the quarter and consequently expect to see higher levels of investment during the remainder of the year, absent further requirements to halt construction activities.

We believe that the cash on our balance sheet together with rents we collect as well as our $1.0 billion revolving credit facility will allow us to continue to operate our business in the near-term. Given our recent ability to access the capital markets, we also expect debt ~~agreements,~~or equity to be available to us. We may also further delay the timing of certain development and redevelopment ~~costs~~projects as well as limit future acquisitions, reduce our operating expenditures, or re-evaluate our dividend policy. We continue to monitor governmental financial assistance programs being made available to address impacts of COVID-19 and ~~potential acquisitions.~~may access one or more of these programs to supplement our liquidity if we qualify for them.

~~We intend~~

While the COVID-19 pandemic has negatively impacted our business during the quarter ended June 30, 2020 and, we expect it will continue to ~~operate with and~~negatively impact our business in the short term, we maintain our long term commitment to a conservative capital structure that will allow us to maintain strong debt service coverage and fixed-charge coverage ratios as part of our commitment to investment-grade debt ratings. 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 30, 2019, we had cash and cash equivalents of $162.5 million and no outstanding balance on our revolving credit facility. For the nine months ended September 30, 2019, the maximum amount of borrowings outstanding under our revolving credit facility was $116.5 million, the weighted average amount of borrowings outstanding was $34.7 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 from $800.0 million 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, plus 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.

~~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%.~~ ~~On August 21, 2019, we issued an additional $100.0 million~~ ~~senior~~ ~~notes of the same series and with the same terms. The combined net proceeds of~~ $399.9 million were primarily used to repay our $275.0 million unsecured term loan, which was to mature in November 2019, resulting in no remaining debt maturing in 2019. During the nine months ended September 30, 2019, we raised $142.8 million, after fees and other costs, under our ATM equity program, which as of September 30, 2019, had the capacity to issue up to $128.3 million in common shares. We currently believe that cash flows from operations, cash on hand, 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 and capital expenditures.

Our overall capital requirements for the remainder of 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 Santana Row. While the amount of future expenditures will depend on numerous factors, we expect to see higher levels of capital investments in our properties under development and redevelopment compared to 2018, as we invest in the next phase of 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:~~

~~restrictions in our debt instruments or preferred shares may limit us from incurring debt or issuing equity at all, or on acceptable terms under then-prevailing market conditions; and~~

~~we may be unable to service additional or replacement debt due to increases in interest rates or a decline in our operating performance.~~

Summary of Cash Flows


	Nine Months Ended September 30,						Six Months Ended June 30,
	2019			2018			2020			2019
	(In thousands)						(In thousands)
Cash provided by operating activities	$	344,306		$	364,716		$	181,382		$	242,287
Cash used in investing activities	(227,266		)	(111,773		)	(257,198		)	(113,368		)
Cash used in financing activities	(18,456		)	(183,342		)
Cash provided by (used in) financing activities							923,439			(96,982		)
Increase in cash, cash equivalents and restricted cash	98,584			69,601			847,623			31,937
Cash, cash equivalents and restricted cash, beginning of year	108,332			25,200			153,614			108,332
Cash, cash equivalents and restricted cash, end of period	$	206,916		$	94,801		$	1,001,237		$	140,269

Net cash provided by operating activities decreased ~~$20.4~~$60.9 million to ~~$344.3~~$181.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 from ~~$364.7~~$242.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The decrease was primarily attributable to lower net income before non-cash items and higher accounts receivable balances as we experienced lower rent collection rates in the ~~$14.5 million lease buyout payment at Assembly Square Marketplace in August 2019, $12.4 million in net proceeds from~~second quarter 2020 as a result of the ~~Jordan Downs Plaza new market tax credit transaction in June 2018, and~~COVID-19 pandemic, partially offset by the timing of ~~cash receipts.~~interest payments on our senior notes and lower prepaid expenses.

Net cash used in investing activities increased ~~$115.5~~$143.8 million to ~~$227.3~~$257.2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 from ~~$111.8~~$113.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The increase was primarily attributable to:

a ~~$41.5 million increase in acquisition of real estate, primarily due to the acquisitions of Fairfax Junction in February 2019 and a retail building in Hoboken, New Jersey in September 2019,~~

~~$38.0 million in proceeds from our Assembly Row hotel joint venture formation in August 2018,~~

~~a $26.9~~$76.0 million decrease in proceeds from ~~sales~~the sale of real estate resulting from ~~a decrease in~~ the sale of a building in Pasadena, California in April 2020, as compared to the sales of our Free State Shopping Center, a land parcel at our Northeast Shopping Center, and condominiums at our Assembly Row and Pike & Rose properties ~~partially offset by the sale of two properties~~ in 2019, ~~and~~

~~an $11.9~~a $73.3 million increase in capital expenditures as we continue to invest in Pike & Rose, Assembly Row, Santana Row and other ~~redevelopments.~~redevelopments, and

$12.9 million for net costs paid in 2020 relating to the partial sale under threat of condemnation at San Antonio Center in 2019,

partially offset by

a $15.8 million decrease in acquisition of real estate, primarily due to the February 2019 acquisition of Fairfax Junction, partially offset by the acquisition of two buildings in Hoboken, New Jersey in February 2020.

Net cash ~~used in~~provided by financing activities ~~decreased $164.9~~increased $1,020.4 million to ~~$18.5~~$923.4 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 from ~~$183.3~~$97.0 million ~~during~~used in the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The ~~decrease~~increase was primarily attributable to:

~~$400.1~~a $403.0 increase due to net proceeds of $700.1 million from the issuance of $400.0 million of 3.50% unsecured senior notes and the $300.0 million reopening of our 3.95% unsecured senior notes in May 2020 as compared to $297.1 million in net proceeds from the issuance of $300.0 million of 3.20% unsecured senior ~~unsecured~~ notes in June 2019, ~~and an additional $100.0~~

$398.7 million ~~of the same series in August 2019,~~

~~a $58.1 million increase~~ in net proceeds from ~~the issuance of 1.0 million common shares under~~ our ~~ATM program at a weighted average price of $134.68 during the nine months ended September 30, 2019, as compared to 0.6 million common shares at a weighted average price of $127.86~~unsecured term loan in ~~2018,~~May 2020, and

~~$14.5 million of repayments on our revolving credit facility in 2018, partially offset by $4.0 million of costs related to the July 2019 amendment,~~

~~partially offset by~~

a ~~$284.3~~$294.8 million ~~increase~~decrease in repayment of mortgages, finance leases, and notes payable primarily due to the ~~payoff~~repayment of our $275.0 million unsecured term loan in June 2019 and the $20.3 million ~~payoff~~repayment of the mortgage loan on Rollingwood Apartments in January 2019, ~~as compared to~~

partially offset by

a $68.4 million decrease in net proceeds from the ~~$10.5 million payoff of the mortgage loan on the Grove at Shrewsbury (West) in March 2018, and~~

~~an $8.7 million increase in dividends paid to shareholders due to an increase in the common share dividend rate and an increase in the number~~issuance of common shares ~~outstanding.~~

under our ATM program during the six months ended June 30, 2019.

Debt Financing Arrangements

The following is a summary of our total debt outstanding as of ~~September~~June 30, ~~2019:~~2020:


Description of Debt	Original Debt Issued	Principal Balance as of September 30, 2019			Stated Interest Rate as of September 30, 2019		Maturity Date	Original Debt Issued	Principal Balance as of June 30, 2020			Stated Interest Rate as of June 30, 2020		Maturity Date
	(Dollar amounts in thousands)							(Dollar amounts in thousands)
Mortgages payable
Secured fixed rate
The Shops at Sunset Place	Acquired	$	62,761		5.62	%	September 1, 2020	Acquired	$	60,995		5.62	%	September 1, 2020
29th Place	Acquired	3,939			5.91	%	January 31, 2021	Acquired	3,754			5.91	%	January 31, 2021
Sylmar Towne Center	Acquired	16,727			5.39	%	June 6, 2021	Acquired	16,436			5.39	%	June 6, 2021
Plaza Del Sol	Acquired	8,275			5.23	%	December 1, 2021	Acquired	8,136			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	67,954			4.20	%	January 10, 2022	80,000	66,554			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	12,743			4.06	%	August 1, 2026	Acquired	12,544			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
Hoboken (24 Buildings) (1)								Acquired	56,450			LIBOR + 1.95%		December 15, 2029
Various Hoboken (14 Buildings) (2)								Acquired	33,130			Various		Various through 2029
Chelsea	Acquired	5,684			5.36	%	January 15, 2031	Acquired	5,418			5.36	%	January 15, 2031
Hoboken (1)	Acquired	16,951			3.75	%	July 1, 2042
Hoboken (1 Building) (3)								Acquired	16,719			3.75	%	July 1, 2042
Subtotal		467,839							552,941
Net unamortized premium and debt issuance costs		(1,239		)				Net unamortized premium and debt issuance costs	(1,907		)
Total mortgages payable, net		466,600							551,034
Notes payable
Revolving credit facility (2)	1,000,000	—			LIBOR + 0.775%		January 19, 2024
Term Loan								400,000	400,000			LIBOR + 1.35%		May 6, 2021
Revolving credit facility (4)								1,000,000	—			LIBOR + 0.775%		January 19, 2024
Various	7,239	3,953			11.31%		Various through 2028	7,239	3,609			11.31%		Various through 2028
Subtotal		3,953							403,609
Net unamortized debt issuance costs		(64		)					(1,132		)
Total notes payable, net		3,889							402,477

Senior notes and debentures
Unsecured fixed rate
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	600,000	600,000			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	475,000	475,000			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	400,000	400,000			3.20	%	June 15, 2029	400,000	400,000			3.20	%	June 15, 2029
3.50% notes								400,000	400,000			3.50	%	June 1, 2030
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		2,819,200							3,519,200
Net unamortized discount and debt issuance costs		(12,778		)				Net unamortized discount and debt issuance costs	(10,739		)
Total senior notes and debentures, net		2,806,422							3,508,461

Total debt, net		$	3,276,911						$	4,461,972

_____________________


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


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


3)	This mortgage loan has a fixed interest rate, however, the rate resets every five years until maturity. The current interest rate is fixed until July 1, 2022, and the loan is prepayable at par anytime after this date.

2)4)

The maximum amount drawn under our revolving credit facility during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 was ~~$116.5~~$990.0 million, and the weighted average interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was ~~3.2%~~1.5%. ~~Our revolving credit facility matures on January 19, 2024, and has two six month extensions at our option.~~

Our revolving credit facility and other debt agreements include financial and other covenants that may limit our operating activities in the future. As of ~~September~~June 30, ~~2019,~~2020, 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, ~~2019,~~2020, 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 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, ~~2019:~~2020:


	Unsecured		Secured		Total			Unsecured			Secured		Total
	(In thousands)							(In thousands)
2019	$	112	$	1,452	$	1,564
2020	613		65,853		66,466			$	379		$	63,251	$	63,630
2021	250,682		30,868		281,550			650,680		(1)	31,756		682,436
2022	250,758		117,358		368,116			250,756			119,706		370,462
2023	275,787		1,083		276,870			275,775			3,549		279,324
2024								600,665		(2)	3,688		604,353
Thereafter	2,045,201		251,225		2,296,426			2,144,554			330,991		2,475,545
	$	2,823,153	$	467,839	$	3,290,992	(1)	$	3,922,809		$	552,941	$	4,475,750	(3)

__________________


1)	Our $400.0 million term loan matures on May 6, 2021 plus one twelve month extension, at our option.


2)	Our $1.0 billion revolving credit facility matures on January 19, 2024 plus two six-month extensions at our option. As of June 30, 2020, there was no outstanding balance under this credit facility.


3)	The total debt maturities differ from the total reported on the consolidated balance sheet due to the unamortized net premium/discount and debt issuance costs on mortgage loans, notes payable, and senior notes as of ~~September~~June 30, ~~2019.~~2020.

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~~Interest rate swaps associated with ~~our~~ cash flow hedges are recorded at fair value on a recurring basis. ~~We assess effectiveness~~Effectiveness of ~~our~~ cash flow hedges is assessed both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with ~~our~~ cash flow hedges is recorded in other comprehensive ~~income/~~loss which is included in ~~accumulated~~"accumulated other comprehensive ~~loss~~loss" on ~~our consolidated~~the balance sheet and ~~our consolidated~~ statement of shareholders' equity. ~~Our cash~~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, ~~2019,~~2020, we have two interest rate swap agreements that effectively fix the rate on a mortgage payable associated with our Hoboken portfolio at 3.67%. Our Assembly Row hotel joint venture is also a party to two interest rate swap agreements that effectively fix their debt at 5.206%. ~~Both~~All swaps were designated and qualify ~~for~~as cash flow ~~hedge accounting.~~hedges. Hedge ineffectiveness has not impacted earnings as of ~~September~~June 30, ~~2019.~~2020.

REIT Qualification

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

Funds From Operations

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

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

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

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

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

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

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


													Three Months Ended						Six Months Ended
	Three Months Ended September 30,						Nine Months Ended September 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
	(In thousands, except per share data)												(In thousands, except per share data)
Net income	$	67,106		$	64,180		$	211,576		$	192,644		$	10,859		$	82,667		$	67,300		$	144,470
Net income attributable to noncontrolling interests	(1,641		)	(1,622		)	(5,065		)	(5,244		)	(352		)	(1,765		)	(2,030		)	(3,424		)
Gain on sale of real estate, net	(14,293		)	(3,125		)	(30,490		)	(10,413		)	(11,682		)	(16,197		)	(11,682		)	(16,197		)
Depreciation and amortization of real estate assets	53,441			54,132			160,253			157,494			56,608			53,323			112,654			106,812
Amortization of initial direct costs of leases	4,878			5,232			14,165			14,534			4,809			4,537			9,709			9,287
Funds from operations	109,491			118,797			350,439			349,015			60,242			122,565			175,951			240,948
Dividends on preferred shares	(1,875		)	(1,875		)	(5,625		)	(5,625		)
Income attributable to operating partnership units	658			765			2,048			2,299
Dividends on preferred shares (1)													(2,011		)	(1,875		)	(4,021		)	(3,750		)
Income attributable to operating partnership units (2)													—			661			1,572			1,390
Income attributable to unvested shares	(314		)	(353		)	(1,004		)	(1,139		)	(249		)	(346		)	(541		)	(690		)
Funds from operations available for common shareholders (1)	$	107,960		$	117,334		$	345,858		344,550
Weighted average number of common shares, diluted (2)	75,554			74,254			75,342			73,992
Funds from operations available for common shareholders													$	57,982		$	121,005		$	172,961		$	237,898
Weighted average number of common shares, diluted (1)(2)(3)													75,394			75,456			76,126			75,235

Funds from operations available for common shareholders, per diluted share (1)	$	1.43		$	1.58		$	4.59		$	4.66
Funds from operations available for common shareholders, per diluted share													$	0.77		$	1.60		$	2.27		$	3.16

_____________________

(1)

Funds from operations available for common shareholders includes an $11.9 million charge relating to the buyout of a lease at Assembly Square Marketplace. If this charge was excluded, funds from operations available for common shareholders, per diluted share would have been $1.59 and $4.75 forFor the three and ~~nine~~six months ended ~~September~~June 30, 2019,~~, respectively.~~

dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."


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

(3)

For the six months ended June 30, 2020 and the three and six months ended June 30, 2019, the weighted average common shares used to compute FFO per diluted common share includes operating partnership units ~~and our Series 1 preferred shares~~ that were excluded from the computation of diluted EPS. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted share but is anti-dilutive for the computation of dilutive EPS for these periods.

~~operating partnership units and preferred shares is dilutive in the computation of FFO per diluted common share but is anti-dilutive for the computation of diluted EPS for the periods presented.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

We may enter into certain types of derivative financial instruments to further reduce interest rate risk. We use interest rate protection and swap agreements, for example, to convert some of our variable rate debt to a fixed-rate basis or to hedge anticipated financing transactions. We use derivatives for hedging purposes rather than speculation and do not enter into financial instruments for trading purposes.

Interest Rate Risk

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

Fixed Interest Rate Debt

The majority of our outstanding debt obligations (maturing at various times through 2046) have fixed interest rates which limit the risk of fluctuating interest rates. However, interest rate fluctuations may affect the fair value of our fixed rate debt instruments. At ~~September~~June 30, ~~2019,~~2020, we had ~~$3.3 million~~$4.1 billion of fixed-rate debt ~~outstanding.~~outstanding, including $56.5 million of mortgage payables for which the rate is effectively fixed by two interest rate swap agreements. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at ~~September~~June 30, ~~2019~~2020 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately ~~$254.8~~$278.5 million. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at ~~September~~June 30, ~~2019~~2020 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately ~~$293.7~~$317.5 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, ~~2019, our only~~2020, we had $400.0 million of variable rate debt ~~was~~outstanding (the principal balance on our ~~revolving credit facility, which had no outstanding balance.~~unsecured term loan). Based upon this amount of variable rate debt and the specific terms, if market interest rates increased 1.0%, our annual interest expense would increase approximately $4.0 million with a corresponding decrease in our net income and cash flows for the year. Conversely, if market interest rates decreased 1.0%, our annual interest expense would decrease by approximately $4.0 million with a corresponding increase in our net income and cash flows for the year.

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, ~~2019.~~2020. 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, ~~2019~~2020 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, ~~2018.~~2019.

ITEM 1A. RISK FACTORS

~~There~~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.” While we attempt to identify, manage and mitigate risks and uncertainties associated with our business to the extent practical under the circumstances, some level of risk and uncertainty will always be present. . “Item 1A. Risk Factors” of our Annual Report to our Form 10-K for the year ended December 31, 2019 filed with the SEC on February 10, 2020 describes some of the risks and uncertainties associated with our business. These risks and uncertainties have the potential to materially affect our business, results of operations, financial condition, cash flows, projected results and future prospects. Except for the risk factor discussed below, we do not believe that there have been noany material changes to the risk factors ~~previously~~ disclosed in our 2019 Annual ~~Report for~~Report.

Natural disasters, climate change and public health crises, including the ~~year ended December 31, 2018 filed with the SEC~~COVID-19 pandemic, could have an adverse impact on ~~February 13, 2019. These factors include, but are not limited~~our cash flow and operating results.

Climate change may add to the ~~following:~~

~~risks~~unpredictability and frequency of natural disasters and severe weather conditions and create additional uncertainty as to future trends and exposures. Certain of our operations are located in areas that ~~our tenants will not pay rent, may vacate early~~are subject to natural disasters and severe weather conditions such as hurricanes, earthquakes, droughts, snow storms, floods and fires. The impact of climate change or ~~may file for bankruptcy or that we may be unable to renew leases or re-let space at favorable rents as leases expire;~~

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

~~risk that we are investing a significant amount in ground-up~~natural disasters can delay new development projects, ~~that may~~increase investment costs to repair or replace damaged properties, increase operating costs, create additional investment costs to make improvements to existing properties to comply with climate change regulations, increase future property insurance costs, and negatively impact the tenant demand for space. If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not ~~perform as planned, may~~adequate to cover business interruption or losses from these events, our earnings, liquidity or capital resources could be ~~dependent on third parties~~adversely affected.

In addition, our business is subject to ~~deliver critical aspects of certain projects, requires spending a substantial amount upfront in infrastructure, and assumes receipt~~risks related to the effects of public ~~funding which has been committed but not entirely funded;~~

~~risks normally associated with~~health crises, epidemics and pandemics, including the ~~real estate industry, including risks that:~~

~~occupancy levels at our properties~~COVID-19 pandemic. Such events could inhibit global, national and ~~the amount of rent that we receive from our properties may be lower than expected,~~

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

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

~~that costs associated with the periodic maintenance and repair or renovation of space, insurance and other operations may increase,~~

~~environmental issues may develop at our properties and result in unanticipated costs, and~~

~~because real estate is illiquid, we may not be able to sell properties when appropriate;~~

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

~~risks associated with general economic conditions, including~~ local economic ~~conditions~~activity; adversely affect trading activity in securities markets, which could negatively impact the trading prices of our ~~geographic markets;~~

~~risks of financing, such as~~common shares and debt securities and our ability to ~~consummate additional financings or obtain replacement financing on terms~~access the securities markets as a source of liquidity; adversely affect our tenants’ financial condition by limiting foot traffic and staffing at their businesses, which ~~are acceptable~~could affect their ability to ~~us,~~pay rent and willingness to make new leasing commitments; reduce our cash flow, which could impact our ability to ~~meet existing financial covenants~~pay dividends or to service our debt; temporarily or permanently reduce the demand for retail or office space; interfere with our business operations by requiring our personnel to work remotely; increase the frequency of cyber-attacks; disrupt supply chains that could be important in our development and redevelopment activities; interfere with potential purchases and sales of properties; and have other direct and indirect effects that are difficult to predict. Such risks depend upon the ~~limitations imposed~~nature and severity of the public health concern, as well as the extent and duration of government-mandated orders and personal decisions to limit travel, economic activity and personal interaction, none of which can be predicted with confidence. In particular, we cannot predict the duration of stay-at-home and other government orders instituted in response to the COVID-19 pandemic, which vary by jurisdiction, or the pandemics' short and long term economic effects, each of which could have a material adverse effect on our ~~operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense; and~~


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

Under the terms of various partnership agreements of certain of our affiliated limited partnerships, the interest of limited partners in those limited partnerships may be redeemed, subject to certain conditions, for cash or common shares, at our option. During the three months ended September 30, 2019, we redeemed 552 downREIT operating partnership units for cash.

~~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.~~None.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

None.


ITEM 6.	EXHIBITS

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



EXHIBIT INDEX

Exhibit No.		Description

~~10.1~~		Amended and Restated Credit Agreement, dated as of July 25, 2019, by and among Federal Realty Investment Trust, each of the Lenders party thereto, and PNC Bank, National Association, as Administrative Agent (previously filed as Exhibit 10.1 to the Trust's Current Report on Form 8-K (File No. 1-07533), filed on July 29, 2019 and incorporated herin by reference)

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, ~~2019,~~2020, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Comprehensive Income, (3) the Consolidated Statement of Shareholders’ Equity, (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements that have been detail tagged.

104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

SIGNATURES

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



		FEDERAL REALTY INVESTMENT TRUST

~~October 30, 2019~~August 5, 2020		/s/ Donald C. Wood
		Donald C. Wood,
		President, Chief Executive Officer and Trustee
		(Principal Financial and Executive Officer)



		FEDERAL REALTY INVESTMENT TRUST

~~October 30, 2019~~August 5, 2020		/s/ Daniel Guglielmone
		Daniel Guglielmone,
		Executive Vice President
		Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)

3336