Table of Contents


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 June 30, 20202021
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission file number: 1-07533 
FEDERAL REALTY INVESTMENT TRUST
(Exact Name of Registrant as Specified in its Declaration of Trust) 
Maryland52-0782497
(State of Organization)(IRS Employer Identification No.)
1626 East Jefferson Street, Rockville, 909 Rose Avenue, Suite 200, North Bethesda, Maryland20852
(Address of Principal Executive Offices) (Zip Code)
(301) (301) 998-8100
(Registrant’s Telephone Number, Including Area Code)


Title of Each ClassTrading SymbolName of Each Exchange On Which Registered
Common Shares of Beneficial InterestFRTNew York Stock Exchange
$.01 par value per share, with associated Common Share Purchase Rights
Depositary Shares, each representing 1/1000 of a shareFRT-CNew York Stock Exchange
of 5.00% Series C Cumulative Redeemable Preferred Stock, $.01 par value per share
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒  Yes    ☐  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒  Yes    ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.:
Large Accelerated Filer☒Accelerated filer☐
Large AcceleratedNon-Accelerated Filer☒☐Accelerated filerSmaller reporting company☐
Non-Accelerated Filer☐Smaller reportingEmerging growth 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).     ☐  Yes    ☒  No
The number of registrant’s common shares outstanding on July 31, 202030, 2021 was 75,638,759.77,768,140.


Table of Contents
FEDERAL REALTY INVESTMENT TRUST
QUARTERLY REPORT ON FORM 10-Q
QUARTER ENDED JUNE 30, 20202021

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
3
Consolidated Balance Sheets as of June 30, 20202021 (unaudited) and December 31, 20192020
3
Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 20202021 and 20192020
4
Consolidated Statements of Shareholders' Equity (unaudited) for the three and six months ended June 30, 20202021 and 20192020
5
Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 20202021 and 20192020
7
Notes to Consolidated Financial Statements (unaudited)
8
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
1514
Item 3.Quantitative and Qualitative Disclosures about Market Risk
31
Item 4.Controls and Procedures
32
PART II. OTHER INFORMATION
33
Item 1.Legal Proceedings
33
Item 1A.Risk Factors
33
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
33
Item 3.Defaults Upon Senior Securities
3334
Item 4.Mine Safety Disclosures
3334
Item 5.Other Information
34
Item 6.Exhibits
34
SIGNATURES
36



2
Table of Contents

Federal Realty Investment Trust
Consolidated Balance Sheets
June 30, December 31,June 30,December 31,
2020 201920212020
(In thousands, except share and per share data) (In thousands, except share and per share data)
(Unaudited)  (Unaudited)
ASSETS   ASSETS
Real estate, at cost   Real estate, at cost
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 sale1,085
 1,729
Operating (including $2,184,537 and $1,703,202 of consolidated variable interest entities, respectively)Operating (including $2,184,537 and $1,703,202 of consolidated variable interest entities, respectively)$8,412,137 $7,771,981 
Construction-in-progress (including $24,679 and $44,896 of consolidated variable interest entities, respectively)Construction-in-progress (including $24,679 and $44,896 of consolidated variable interest entities, respectively)858,488 810,889 
8,545,897
 8,298,132
Less accumulated depreciation and amortization (including $317,925 and $296,165 of consolidated variable interest entities, respectively)(2,308,403) (2,215,413)
9,270,625 8,582,870 
Less accumulated depreciation and amortization (including $359,198 and $335,735 of consolidated variable interest entities, respectively)Less accumulated depreciation and amortization (including $359,198 and $335,735 of consolidated variable interest entities, respectively)(2,444,329)(2,357,692)
Net real estate6,237,494
 6,082,719
Net real estate6,826,296 6,225,178 
Cash and cash equivalents980,039
 127,432
Cash and cash equivalents304,268 798,329 
Accounts and notes receivable, net167,641
 152,572
Accounts and notes receivable, net153,293 159,780 
Mortgage notes receivable, net30,332
 30,429
Mortgage notes receivable, net9,534 39,892 
Investment in partnerships22,879
 28,604
Investment in partnerships11,560 22,128 
Operating lease right of use assets93,494
 93,774
Operating lease right of use assets92,457 92,248 
Finance lease right of use assets51,758
 52,402
Finance lease right of use assets50,474 51,116 
Prepaid expenses and other assets206,293
 227,060
Prepaid expenses and other assets230,994 218,953 
TOTAL ASSETS$7,789,930
 $6,794,992
TOTAL ASSETS$7,678,876 $7,607,624 
LIABILITIES AND SHAREHOLDERS’ EQUITY   LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities   Liabilities
Mortgages payable, net (including $475,757 and $469,184 of consolidated variable interest entities, respectively)$551,034
 $545,679
Mortgages payable, net (including $396,732 and $413,681 of consolidated variable interest entities, respectively)Mortgages payable, net (including $396,732 and $413,681 of consolidated variable interest entities, respectively)$466,026 $484,111 
Notes payable, net402,477
 3,781
Notes payable, net301,625 402,776 
Senior notes and debentures, net3,508,461
 2,807,134
Senior notes and debentures, net3,405,282 3,404,488 
Accounts payable and accrued expenses244,482
 255,503
Accounts payable and accrued expenses253,092 228,641 
Dividends payable81,915
 81,676
Dividends payable84,881 83,839 
Security deposits payable18,922
 21,701
Security deposits payable23,381 20,388 
Operating lease liabilities73,527
 73,628
Operating lease liabilities74,129 72,441 
Finance lease liabilities72,056
 72,062
Finance lease liabilities72,041 72,049 
Other liabilities and deferred credits146,372
 157,938
Other liabilities and deferred credits209,957 152,424 
Total liabilities5,099,246
 4,019,102
Total liabilities4,890,414 4,921,157 
Commitments and contingencies (Note 6)

 

Commitments and contingencies (Note 6)00
Redeemable noncontrolling interests159,583
 139,758
Redeemable noncontrolling interests212,623 137,720 
Shareholders’ equity   Shareholders’ equity
Preferred shares, authorized 15,000,000 shares, $.01 par:   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 outstanding150,000
 150,000
5.0% Series C Cumulative Redeemable Preferred Shares, (stated at liquidation preference $25,000 per share), 6,000 shares issued and outstanding150,000 150,000 
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding9,997
 9,997
5.417% Series 1 Cumulative Convertible Preferred Shares, (stated at liquidation preference $25 per share), 399,896 shares issued and outstanding9,997 9,997 
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 75,633,140 and 75,540,804 shares issued and outstanding, respectively760
 759
Common shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 77,760,588 and 76,727,394 shares issued and outstanding, respectivelyCommon shares of beneficial interest, $.01 par, 100,000,000 shares authorized, 77,760,588 and 76,727,394 shares issued and outstanding, respectively782 771 
Additional paid-in capital3,170,480
 3,166,522
Additional paid-in capital3,395,189 3,297,305 
Accumulated dividends in excess of net income(889,195) (791,124)Accumulated dividends in excess of net income(1,062,641)(988,272)
Accumulated other comprehensive loss(7,758) (813)Accumulated other comprehensive loss(3,238)(5,644)
Total shareholders’ equity of the Trust2,434,284
 2,535,341
Total shareholders’ equity of the Trust2,490,089 2,464,157 
Noncontrolling interests96,817
 100,791
Noncontrolling interests85,750 84,590 
Total shareholders’ equity2,531,101
 2,636,132
Total shareholders’ equity2,575,839 2,548,747 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$7,789,930
 $6,794,992
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$7,678,876 $7,607,624 
The accompanying notes are an integral part of these consolidated statements.

3
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Federal Realty Investment Trust
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,Three Months Ended June 30,Six Months Ended June 30,
2020 2019 2020 2019 2021202020212020
(In thousands, except per share data) (In thousands, except per share data)
REVENUE       REVENUE
Rental income$175,479
 $229,731
 $406,277
 $461,223
Rental income$230,795 $175,479 $447,930 $406,277 
Mortgage interest income748
 734
 1,507
 1,469
Mortgage interest income830 748 1,856 1,507 
Total revenue176,227
 230,465
 407,784
 462,692
Total revenue231,625 176,227 449,786 407,784 
EXPENSES       EXPENSES
Rental expenses36,417
 41,438
 80,729
 85,698
Rental expenses42,918 36,417 92,156 80,729 
Real estate taxes30,599
 25,166
 59,663
 52,853
Real estate taxes29,323 30,599 58,743 59,663 
General and administrative9,814
 11,422
 20,065
 20,987
General and administrative12,846 9,814 23,104 20,065 
Depreciation and amortization62,784
 59,057
 124,972
 118,679
Depreciation and amortization67,675 62,784 131,549 124,972 
Total operating expenses139,614
 137,083
 285,429
 278,217
Total operating expenses152,762 139,614 305,552 285,429 
       
Gain on sale of real estate, net of tax11,682
 16,197
 11,682
 16,197
Gain on sale of real estate and change in control of interest Gain on sale of real estate and change in control of interest0 11,682 17,428 11,682 
       
OPERATING INCOME48,295
 109,579
 134,037
 200,672
OPERATING INCOME78,863 48,295 161,662 134,037 
       
OTHER INCOME/(EXPENSE)       OTHER INCOME/(EXPENSE)
Other interest income509
 189
 817
 366
Other interest income250 509 613 817 
Interest expense(34,073) (27,482) (62,518) (55,515)Interest expense(31,177)(34,073)(63,262)(62,518)
(Loss) income from partnerships(3,872) 381
 (5,036) (1,053)
Income (loss) from partnershipsIncome (loss) from partnerships123 (3,872)(1,215)(5,036)
NET INCOME10,859
 82,667
 67,300
 144,470
NET INCOME48,059 10,859 97,798 67,300 
Net income attributable to noncontrolling interests(352) (1,765) (2,030) (3,424)Net income attributable to noncontrolling interests(1,855)(352)(3,358)(2,030)
NET INCOME ATTRIBUTABLE TO THE TRUST10,507
 80,902
 65,270
 141,046
NET INCOME ATTRIBUTABLE TO THE TRUST46,204 10,507 94,440 65,270 
Dividends on preferred shares(2,011) (2,011) (4,021) (4,021)Dividends on preferred shares(2,011)(2,011)(4,021)(4,021)
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS$8,496
 $78,891
 $61,249
 $137,025
NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS$44,193 $8,496 $90,419 $61,249 
       
EARNINGS PER COMMON SHARE, BASIC AND DILUTED:       
EARNINGS PER COMMON SHARE, BASIC:EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders Net income available for common shareholders$0.57 $0.11 $1.16 $0.81 
Weighted average number of common sharesWeighted average number of common shares77,474 75,394 77,160 75,377 
EARNINGS PER COMMON SHARE, DILUTED:EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders0.11
 1.05
 0.81
 1.83
 Net income available for common shareholders$0.57 $0.11 $1.16 $0.81 
Weighted average number of common shares75,394
 74,713
 75,377
 74,458
Weighted average number of common shares77,505 75,394 77,162 75,377 
       
COMPREHENSIVE INCOME$10,366
 $82,268
 $60,355
 $143,862
COMPREHENSIVE INCOME$47,002 $10,366 $100,435 $60,355 
       
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST$10,014
 $80,503
 $58,325
 $140,438
COMPREHENSIVE INCOME ATTRIBUTABLE TO THE TRUST$45,266 $10,014 $96,846 $58,325 

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

4
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Federal Realty Investment Trust
Consolidated Statements of Shareholders’ Equity
For the Three and Six Months Ended June 30, 2021
(Unaudited)
 Shareholders’ Equity of the Trust  
 Preferred SharesCommon SharesAdditional
Paid-in
Capital		Accumulated
Dividends in
Excess of Net
Income		Accumulated
Other
Comprehensive
Loss		Noncontrolling InterestsTotal Shareholders' Equity
 SharesAmountSharesAmount
 (In thousands, except share data)
BALANCE AT DECEMBER 31, 2020405,896 $159,997 76,727,394 $771 $3,297,305 $(988,272)$(5,644)$84,590 $2,548,747 
Net income, excluding $1,877 attributable to redeemable noncontrolling interests— — — — — 94,440 — 1,481 95,921 
Other comprehensive income - change in fair value of interest rate swaps, excluding $231 attributable to redeemable noncontrolling interest— — — — — — 2,406 — 2,406 
Dividends declared to common shareholders ($2.12 per share)— — — — — (164,788)— — (164,788)
Dividends declared to preferred shareholders— — — — — (4,021)— — (4,021)
Distributions declared to noncontrolling interests, excluding $1,735 attributable to redeemable noncontrolling interests— — — — — — — (1,727)(1,727)
Common shares issued, net— — 847,509 9 87,124 — — — 87,133 
Shares issued under dividend reinvestment plan— — 11,516 — 1,019 — — — 1,019 
Share-based compensation expense, net of forfeitures— — 152,185 2 7,505 — — — 7,507 
Shares withheld for employee taxes— — (27,500)— (2,813)— — — (2,813)
Redemption of OP units— — 49,484 0 5,049 — — (5,148)(99)
Contributions from noncontrolling interests, excluding $74,530 attributable to redeemable noncontrolling interests— — — — — — — 6,554 6,554 
BALANCE AT JUNE 30, 2021405,896 $159,997 77,760,588 $782 $3,395,189 $(1,062,641)$(3,238)$85,750 $2,575,839 
BALANCE AT MARCH 31, 2021405,896 $159,997 77,706,466 $781 $3,386,917 $(1,024,417)$(2,300)$83,982 $2,604,960 
Net income, excluding $1,069 attributable to redeemable noncontrolling interests— — — — — 46,204 — 786 46,990 
Other comprehensive loss - change in fair value of interest rate swaps, excluding $119 attributable to redeemable noncontrolling interest— — — — — — (938)— (938)
Dividends declared to common shareholders ($1.06 per share)— — — — — (82,417)— — (82,417)
Dividends declared to preferred shareholders— — — — — (2,011)— — (2,011)
Distributions declared to noncontrolling interests, excluding $1,039 attributable to redeemable noncontrolling interests— — — — — — — (943)(943)
Common shares issued, net— — 16 1 (82)— — — (81)
Shares issued under dividend reinvestment plan— — 5,236 — 474 — — — 474 
Share-based compensation expense, net of forfeitures— — 4,473 0 3,358 — — — 3,358 
Shares withheld for employee taxes— — (71)(8)— — — (8)
Redemption of OP units— 44,468 0 4,530 — — (4,629)(99)
Contributions from noncontrolling interests, excluding $74,530 attributable to redeemable noncontrolling interests— — — — — — — 6,554 6,554 
BALANCE AT JUNE 30, 2021405,896 $159,997 77,760,588 $782 $3,395,189 $(1,062,641)$(3,238)$85,750 $2,575,839 
5
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Federal Realty Investment Trust
Consolidated Statements of Shareholders’ Equity
For the Three and Six Months Ended June 30, 2020
(Unaudited)
 Shareholders’ Equity of the Trust  
 Preferred SharesCommon SharesAdditional
Paid-in
Capital		Accumulated
Dividends in
Excess of Net
Income		Accumulated
Other
Comprehensive
Loss		Noncontrolling InterestsTotal Shareholders' Equity
 SharesAmountSharesAmount
 (In thousands, except share data)
BALANCE AT DECEMBER 31, 2019405,896 $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— — — — — (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— — — — — — (6,945)— (6,945)
Dividends declared to common shareholders ($2.10 per share)— — — — — (158,810)— — (158,810)
Dividends declared to preferred shareholders— — — — — (4,021)— — (4,021)
Distributions declared to noncontrolling interests, excluding $847 attributable to redeemable noncontrolling interests— — — — — — — (1,677)(1,677)
Common shares issued, net— — 29 0 2 — — — 2 
Shares issued under dividend reinvestment plan— — 10,605 — 955 — — — 955 
Share-based compensation expense, net of forfeitures— — 114,092 1 7,028 — — — 7,029 
Shares withheld for employee taxes— — (32,390)— (3,997)— — — (3,997)
Redemption of OP units— — — — (30)— — (3,290)(3,320)
Contributions from noncontrolling interests, excluding $19,515 attributable to redeemable noncontrolling interests— — — — — — — 120 120 
BALANCE AT JUNE 30, 2020405,896 $159,997 75,633,140 $760 $3,170,480 $(889,195)$(7,758)$96,817 $2,531,101 
 Shareholders’ Equity of the Trust    
 Preferred Shares Common Shares 
Additional
Paid-in
Capital
 
Accumulated
Dividends in
Excess of Net
Income
 
Accumulated
Other
Comprehensive
Loss
 Noncontrolling Interests Total Shareholders' Equity
 Shares Amount Shares Amount     
 (In thousands, except share data)
BALANCE AT DECEMBER 31, 2019405,896
 $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—
 —
 —
 —
 —
 —
 (6,945) —
 (6,945)
Dividends declared to common shareholders ($2.10 per share)—
 —
 —
 —
 —
 (158,810) —
 —
 (158,810)
Dividends declared to preferred shareholders—
 —
 —
 —
 —
 (4,021) —
 —
 (4,021)
Distributions declared to noncontrolling interests—
 —
 —
 —
 —
 —
 —
 (1,677) (1,677)
Common shares issued, net—
 —
 29
 —
 2
 —
 —
 —
 2
Shares issued under dividend reinvestment plan—
 —
 10,605
 —
 955
 —
 —
 —
 955
Share-based compensation expense, net of forfeitures—
 —
 114,092
 1
 7,028
 —
 —
 —
 7,029
Shares withheld for employee taxes—
 —
 (32,390) —
 (3,997) —
 —
 —
 (3,997)
Redemption of OP units—
 —
 —
 —
 (30) —
 —
 (3,290) (3,320)
Contributions from noncontrolling interests—
 —
 —
 —
 —
 —
 —
 120
 120
BALANCE AT JUNE 30, 2020405,896
 $159,997
 75,633,140
 $760
 $3,170,480
 $(889,195) $(7,758) $96,817
 $2,531,101

BALANCE AT MARCH 31, 2020405,896
 $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—
 —
 —
 —
 —
 —
 (493) —
 (493)
Dividends declared to common shareholders ($1.05 per share)—
 —
 —
 —
 —
 (79,407) —
 —
 (79,407)
Dividends declared to preferred shareholders—
 —
 —
 —
 —
 (2,011) —
 —
 (2,011)
Distributions declared to noncontrolling interests—
 —
 —
 —
 —
 —
 —
 (894) (894)
Common shares issued, net—
 —
 16
 —
 —
 —
 —
 —
 —
Shares issued under dividend reinvestment plan—
 —
 6,771
 —
 509
 —
 —
 —
 509
Share-based compensation expense, net of forfeitures—
 —
 4,026
 —
 3,087
 —
 —
 —
 3,087
Shares withheld for employee taxes—
 —
 (177) —
 (15) —
 —
 —
 (15)
Redemption of OP units—
 —
 —
 —
 —
 —
 —
 —
 —
Contributions from noncontrolling interests—
 —
 —
 —
 —
 —
 —
 —
 —
BALANCE AT JUNE 30, 2020405,896
 $159,997
 75,633,140
 $760
 $3,170,480
 $(889,195) $(7,758) $96,817
 $2,531,101




Federal Realty Investment Trust
Consolidated Statements of Shareholders’ Equity
For the Three and Six Months Ended June 30, 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     
 (In thousands, except share data)
BALANCE AT DECEMBER 31, 2018405,896
 $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, 2019405,896
 $159,997
 74,950,197
 752
 $3,088,946
 $(841,505) $(1,024) $103,480
 $2,510,646

BALANCE AT MARCH 31, 2019405,896
 $159,997
 74,836,984
 $752
 $3,071,981
 $(843,947) $(625) $113,405
 $2,501,563
Net income, excluding $907 attributable to redeemable noncontrolling interests—
 —
 —
 —
 —
 80,902
 —
 858
 81,760
Other comprehensive loss - change in fair value of interest rate swaps—
 —
 —
 —
 —
 —
 (399) —
 (399)
Dividends declared to common shareholders ($1.02 per share)—
 —
 —
 —
 —
 (76,449) —
 —
 (76,449)
Dividends declared to preferred shareholders—
 —
 —
 —
 —
 (2,011) —
 —
 (2,011)
Distributions declared to noncontrolling interests—
 —
 —
 —
 —
 —
   (6,398) (6,398)
Common shares issued, net—
 —
 65,822
 —
 8,951
 —
 —
 —
 8,951
Shares issued under dividend reinvestment plan—
 —
 3,848
 —
 526
 —
 —
 —
 526
Share-based compensation expense, net of forfeitures—
 —
 1,551
 —
 3,131
 —
 —
 —
 3,131
Shares withheld for employee taxes—
 —
 (214) —
 (28) —
 —
 —
 (28)
Conversion and redemption of OP units—
 —
 42,206
 —
 4,385
 —
 —
 (4,385) —
BALANCE AT JUNE 30, 2019405,896
 $159,997
 74,950,197
 $752
 $3,088,946
 $(841,505) $(1,024) $103,480
 $2,510,646

BALANCE AT MARCH 31, 2020405,896 $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— — — — — — (493)— (493)
Dividends declared to common shareholders ($1.05 per share)— — — — — (79,407)— — (79,407)
Dividends declared to preferred shareholders— — — — — (2,011)— — (2,011)
Distributions declared to noncontrolling interests, excluding $93 attributable to redeemable noncontrolling interests— — — — — — — (894)(894)
Common shares issued, net— — 16 0 0 — — — 0 
Shares issued under dividend reinvestment plan— — 6,771 — 509 — — — 509 
Share-based compensation expense, net of forfeitures— — 4,026 0 3,087 — — — 3,087 
Shares withheld for employee taxes— — (177)— (15)— — — (15)
BALANCE AT JUNE 30, 2020405,896 $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.

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Federal Realty Investment Trust
Consolidated Statements of Cash Flows
 (Unaudited)
Six Months Ended June 30,
 20212020
 (In thousands)
OPERATING ACTIVITIES
Net income$97,798 $67,300 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization131,549 124,972 
Gain on sale of real estate and change in control of interest(17,428)(11,682)
Loss from partnerships1,215 5,036 
Other, net8,316 5,240 
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (increase) in accounts receivable, net4,696 (17,128)
Decrease in prepaid expenses and other assets11,370 15,887 
Increase in accounts payable and accrued expenses2,142 5,756 
Increase (decrease) in security deposits and other liabilities7,551 (13,999)
Net cash provided by operating activities247,209 181,382 
INVESTING ACTIVITIES
Acquisition of real estate(332,574)(9,409)
Capital expenditures - development and redevelopment(182,657)(213,181)
Capital expenditures - other(34,970)(30,388)
Costs associated with property sold under threat of condemnation, net0 (12,924)
Proceeds from sale of real estate19,896 17,015 
Investment in partnerships(2,657)(917)
Distribution from partnerships in excess of earnings1,131 849 
Leasing costs(9,265)(7,923)
Repayment (issuance) of mortgage and other notes receivable, net31,122 (320)
Net cash used in investing activities(509,974)(257,198)
FINANCING ACTIVITIES
Costs to amend revolving credit facility0 (638)
Issuance of senior notes, net of costs0 700,085 
Issuance of notes payable, net of costs0 398,732 
Repayment of mortgages, finance leases and notes payable(151,310)(3,264)
Issuance of common shares, net of costs87,286 97 
Dividends paid to common and preferred shareholders(166,847)(161,874)
Shares withheld for employee taxes(2,813)(3,997)
Contributions from noncontrolling interests104 0 
Distributions to and redemptions of noncontrolling interests(3,615)(5,702)
Net cash (used in) provided by financing activities(237,195)923,439 
(Decrease) increase in cash, cash equivalents and restricted cash(499,960)847,623 
Cash, cash equivalents, and restricted cash at beginning of year816,896 153,614 
Cash, cash equivalents, and restricted cash at end of period$316,936 $1,001,237 
 Six Months Ended June 30,
 2020 2019
 (In thousands)
OPERATING ACTIVITIES 
Net income$67,300
 $144,470
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization124,972
 118,679
Gain on sale of real estate, net of tax(11,682) (16,197)
Loss from partnerships5,036
 1,053
Other, net5,240
 2,138
Changes in assets and liabilities, net of effects of acquisitions and dispositions:   
Increase in accounts receivable, net(17,128) (5,325)
Decrease in prepaid expenses and other assets15,887
 7,800
Increase (decrease) in accounts payable and accrued expenses5,756
 (1,493)
Decrease in security deposits and other liabilities(13,999) (8,838)
Net cash provided by operating activities181,382
 242,287
INVESTING ACTIVITIES   
Acquisition of real estate(9,409) (25,176)
Capital expenditures - development and redevelopment(213,181) (133,570)
Capital expenditures - other(30,388) (36,669)
Costs associated with property sold under threat of condemnation, net(12,924) —
Proceeds from sale of real estate17,015
 93,025
Investment in partnerships(917) (907)
Distribution from partnerships in excess of earnings849
 1,301
Leasing costs(7,923) (11,473)
(Issuance) repayment of mortgage and other notes receivable, net(320) 101
Net cash used in investing activities(257,198) (113,368)
FINANCING ACTIVITIES   
Costs to amend revolving credit facility(638) —
Issuance of senior notes, net of costs700,085
 297,076
Issuance of notes payable, net of costs398,732
 —
Repayment of mortgages, finance leases and notes payable(3,264) (298,100)
Issuance of common shares, net of costs97
 68,461
Dividends paid to common and preferred shareholders(161,874) (154,965)
Shares withheld for employee taxes(3,997) (4,442)
Contributions from noncontrolling interests—
 161
Distributions to and redemptions of noncontrolling interests(5,702) (5,173)
Net cash provided by (used in) financing activities923,439
 (96,982)
Increase in cash, cash equivalents and restricted cash847,623
 31,937
Cash, cash equivalents, and restricted cash at beginning of year153,614
 108,332
Cash, cash equivalents, and restricted cash at end of period$1,001,237
 $140,269

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


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Federal Realty Investment Trust
Notes to Consolidated Financial Statements
June 30, 20202021
(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 where we believe retail demand exceeds supply, in strategically selected metropolitan markets in the Mid-Atlantic and Northeast regions of the United States, California, and South Florida. As of June 30, 2020,2021, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 104105 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, 2019,2020, 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 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 six months ended June 30, 20202021 are not necessarily indicative of the results that may be expected for the full year.
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 ReceivableImpacts of COVID-19 Pandemic
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,Since March 2020, we have entered into rent deferral agreements relatedbeen, and continue 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 isbe, impacted by numerous factors includingthe novel coronavirus ("COVID-19") pandemic. While we currently expect the impact to our assessmentproperties to be temporary in nature, the extent of the tenant’s credit worthiness, economic conditions, tenant sales productivity in that location, historical experiencefuture 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 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.certainty.
The actions taken by federal,Federal, state, and local governments have taken various actions since the onset of the pandemic to mitigate the spread of COVID-19, initially by ordering closuresCOVID-19. These actions range from closure of non-essentialnonessential businesses and ordering residents to generally stay at home and subsequentat the onset of the pandemic to phased re-openings have resulted in manyand capacity limitations and now to generally lifted restrictions as COVID-19 vaccination rates increase. These closures and restrictions, along with general concern over the spread of ourCOVID-19, required a significant number of tenants temporarilyto close their operations or even permanently closing their businesses, and for some, it hadto significantly limit the amount of business they were able to conduct,
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which impacted their ability to timely pay rent. As a result,rent as required under our leases and also caused many tenants to close their businesses permanently. While recent results are improving, we revised ourcontinued to see elevated levels of collectibility assumptions for many of our tenants most significantly impacted by COVID-19. Accordingly,related impacts and accordingly, during the three and six months ended June 30, 2020,2021, we recognized collectibility related adjustments of $55.2 million.$6.4 million and $21.2 million, respectively. This includes not only the impact of tenants recognized on a cash basis but also 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 primarilydirectly related to tenants changed to a cash basis of revenue recognition in the quarter ended June 30, 2020.COVID-19. As of June 30, 2020,2021, the revenue from approximately 32%35% of our tenants (based on total commercial leases) is being recognized on a cash basis.
For more information, see Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Outlook.
Mortgage Notes Receivable
On May 11, 2021, two of our outstanding mortgage notes receivable were repaid. Including interest, the net proceeds were $33.8 million. As a result of the transaction, our mortgage notes receivable, net of valuation allowance, decreased $30.3 million.
Forward Equity Sales
On February 24, 2021, we replaced our existing at-the-market (“ATM”) equity program with a new ATM equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $500.0 million. The new ATM equity program also allows shares to be sold through forward sales contracts. Our forward sales contracts currently meet all the conditions for equity classification; and therefore, we record common stock on the settlement date at the purchase price contemplated by the contract. Furthermore, we consider the potential dilution resulting from forward sales contracts in our earnings per share calculations. We use the treasury method to determine the dilution, if any, from the forward sales contracts during the period of time prior to settlement. 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.




2021, no forward sales contracts have settled.
Recently Adopted and Issued Accounting Pronouncements
StandardDescriptionEffect on the financial statements or significant matters
StandardDescriptionEffect on the financial statements or significant matters
Adopted on January 1, 2020:
Financial Instruments - Credit Losses (Topic 326) and related updates:

ASU 2016-13, June
  2016, Financial
  Instruments - Credit
  Losses (Topic 326)

ASU 2018-19,
  November 2018,
Codification
improvements to
  Topic 326,
  Financial
  Instruments - Credit
  Losses
This ASU changes the impairment model for most financial assets and certain other instruments, requiring the use of an "expected credit loss" model and adding more disclosure requirements.

ASU 2018-19 clarifies that impairment of of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases.
Upon adoption of this standard, we recorded expected losses of $0.5 million in opening accumulated dividends in excess of net income. During the six months ended June 30, 2020, we recorded additional expected losses of $0.4 million, 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.
ASU 2021-05, July 2021, Lessors - Certain Leases with Variable Lease Payments (Topic 842)
This ASU amends the lessor lease classification in ASC 842 for leases that include variable lease payments that are not based on an index or rate. Under the amended guidance, lessors will classify a lease with variable payments that do not depend on an index or rate as an operating lease if the lease would have been classified as a sales-type lease or a direct financing lease under the previous ASU 842 classification criteria, and sales-type or direct financing lease classification would result in a Day 1 loss.

This guidance is effective for annual periods beginning after December 15, 2021, and interim periods therein.		The adoption of this standard does not have an impact to our consolidated financial statements.

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Consolidated Statements of Cash Flows—Supplemental Disclosures
The following tables provide supplemental disclosures related to the Consolidated Statements of Cash Flows:
Six Months Ended
 June 30,
 20212020
 (In thousands)
SUPPLEMENTAL DISCLOSURES:
Total interest costs incurred$76,284 $73,942 
Interest capitalized(13,022)(11,424)
Interest expense$63,262 $62,518 
Cash paid for interest, net of amounts capitalized$60,782 $52,715 
Cash paid for income taxes$320 $428 
NON-CASH INVESTING AND FINANCING TRANSACTIONS:
DownREIT operating partnership units issued with acquisition$— $18,920 
Mortgage loans assumed with acquisition$0 $8,903 
DownREIT operating partnership units redeemed for common shares$5,121 $0 
Shares issued under dividend reinvestment plan$866 $860 
 Six Months Ended
 June 30,
 2020 2019
 (In thousands)
SUPPLEMENTAL DISCLOSURES:   
Total interest costs incurred$73,942
 $64,755
Interest capitalized(11,424) (9,240)
Interest expense$62,518
 $55,515
Cash paid for interest, net of amounts capitalized$52,715
 $53,588
Cash paid for income taxes$428
 $419
NON-CASH INVESTING AND FINANCING TRANSACTIONS:   
DownREIT operating partnership units issued with acquisition$18,920
 $—
Mortgage loans assumed with acquisition$8,903
 $—
DownREIT operating partnership units redeemed for common shares$—
 $11,935
Shares issued under dividend reinvestment plan$860
 $897
 June 30,December 31,
20212020
 (In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Cash and cash equivalents$304,268 $798,329 
Restricted cash (1)12,668 18,567 
Total cash, cash equivalents, and restricted cash$316,936 $816,896 
(1)Restricted cash balances are included in "prepaid expenses and other assets" on our consolidated balance sheets.

 June 30, December 31,
 2020 2019
 (In thousands)
RECONCILIATION OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:   
Cash and cash equivalents$980,039
 $127,432
Restricted cash (1)21,198
 26,182
Total cash, cash equivalents, and restricted cash$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 January 10, 2020,4, 2021, we acquired our partner's 20% interest in our joint venture arrangement related to the Pike & Rose hotel for $2.3 million, and repaid the $31.5 million mortgage loan encumbering the hotel. As a 49,000 square foot shopping centerresult of the transaction, we gained control of the hotel, and effective January 4, 2021, we have consolidated this asset. We also recognized a gain on acquisition of the controlling interest of $2.1 million related to the difference between the carrying value and fair value of the previously held equity interest.
On February 22, 2021, we acquired the fee interest at our Mount Vernon Plaza property in Fairfax,Alexandria, Virginia for $22.3$5.6 million. This property is adjacent to,As a result of this transaction, the "operating lease right of use assets" and will be operated as part of"operating lease liabilities" on our Fairfax Junctionconsolidated balance sheet decreased by $9.8 million. We now own the entire fee interest on this property. This purchase price was paid with a combination of cash
Property Acquisitions
During the six months ended June 30, 2021, we acquired the following properties:
Date AcquiredPropertyCity/StateGross Leasable Area (GLA)Joint Venture Interest (1)Gross Value
(in square feet)(in millions)
April 30, 2021ChesterbrookMcLean, Virginia90,00080 %$32.1 (2)
June 1, 2021Grossmont CenterLa Mesa, California933,00060 %$175.0 (3)
June 14, 2021Camelback ColonnadePhoenix, Arizona642,00098 %$162.5 (4)
June 14, 2021Hilton VillageScottsdale, Arizona93,00098 %$37.5 (5)
(1)These acquisitions were completed through newly formed joint ventures, for which we own the controlling interest listed above, and the issuance of 163,322 downREIT operating partnership units. therefore, these properties are consolidated in our financial statements.
(2)Approximately $0.5$1.9 million and $0.4$0.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $8.0 million of net assets acquired were allocated to other liabilities for "below market leases,leases." respectively.
On February 12, 2020, we acquired two buildings totaling 12,000 square feet in Hoboken, New Jersey for $14.3 million, including the assumption
10
Table of $8.9 million of mortgage debt. This acquisition is in addition to the 37 buildings previously acquired, and was completed through the joint venture that was formed in 2019, for which we own a 90% interest. Less than $0.1Contents
(3)Approximately $12.3 million and approximately $3.3$2.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $14.7 million of net assets acquired were allocated to other liabilities for "below market leases."
(4)Approximately $11.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and $28.3 million were allocated to other liabilities for "below market leases."
(5)The land is controlled under a long-term ground lease that expires on December 31, 2076, for which we have recorded a $10.4 million "operating lease right of use asset" (net of a $1.3 million above market liability) and an $11.6 million "operating lease liability." Approximately $2.7 million and $1.1 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively.respectively, and $3.6 million were allocated to other liabilities for "below market leases."
Property Disposition
On April 21, 2020,March 19, 2021, we sold a buildingportion of Graham Park Plaza in Pasadena, CaliforniaFalls Church, Virginia for $16.1$20.3 million, which resultedresulting in a gain on sale of $11.7$15.6 million.

NOTE 4—DEBT
In connection withOn February 5, 2021, we repaid the two buildings$16.2 million mortgage loan on Sylmar Towne Center, at par, prior to its original maturity date.
On April 16, 2021, we acquired in Hoboken, New Jersey on February 12, 2020, we assumed two mortgage loans with a net face amount of $8.9repaid $100.0 million and a fair value of $9.0 million. The mortgage loans bear interest at 4.00% and mature on July 27, 2027.
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 when we entered into aexisting $400.0 million unsecured term loan, amended the agreement on May 6, 2020 and issued $700.0the remaining $300.0 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 atto lower the current spread over LIBOR plusfrom 135 basis points to 80 basis points based on our current credit rating. Our net proceeds from this transaction after underwriting feesrating, and other costs were $398.7 million.extended the initial maturity date to April 16, 2024, along with two one-year extensions, at our option.
The $700.0 million of unsecured senior notes issued in MayIn June 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 1, 2030. The 3.95% senior notes were offered at 103.257%we provided notice for the early repayment of the principal amount with a yield to maturity of 2.944%, and have the same terms and are of the same series as the $300.0 million senior notes issuedPlaza Del Sol mortgage loan, at par, on December 9, 2013. The 3.50% senior notes were offered at 98.911% of the principal amount with a yield to maturity of 3.630%. Our net proceeds from these transactions after the net issuance premium, underwriting fees, and other costs were $700.1 million.September 1, 2021.
During the three and six months ended June 30, 2020, the maximum amount of2021, there were 0 borrowings outstanding underon our $1.0 billion revolving credit facility was $990.0 million, and the weighted average interest rate, before amortization of debt fees, was 1.4% and 1.5% for the three and six months ended June 30, 2020, respectively. During the three and six months ended June 30, 2020, the weighted average borrowings outstanding were $413.2 million and $278.5 million, respectively, with 0 outstanding balance at June 30, 2020.facility. 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 June 30, 2020,2021, we were in compliance with all default related debt covenants.

NOTE 5—FAIR VALUE OF FINANCIAL INSTRUMENTS
Except as disclosed below, the carrying amount of our financial instruments approximates their fair value. The fair value of our mortgages payable, notes payable and senior notes and debentures is sensitive to fluctuations in interest rates. Quoted market prices (Level 1) were used to estimate the fair value of our marketable senior notes and debentures and discounted cash flow analysis (Level 2) is generally used to estimate the fair value of our mortgages and notes payable. Considerable judgment is necessary to estimate the fair value of financial instruments. The estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized upon disposition of the financial instruments. A summary of the carrying amount and fair value of our mortgages payable, notes payable and senior notes and debentures is as follows:

 June 30, 2020 December 31, 2019
Carrying
Value
 Fair Value 
Carrying
Value
 Fair Value
(In thousands)
Mortgages and notes payable$953,511
 $947,030
 $549,460
 $562,049
Senior notes and debentures$3,508,461
 $3,754,061
 $2,807,134
 $3,001,216

 June 30, 2021December 31, 2020
Carrying
Value		Fair ValueCarrying
Value		Fair Value
(In thousands)
Mortgages and notes payable$767,651 $760,820 $886,887 $879,390 
Senior notes and debentures$3,405,282 $3,717,381 $3,404,488 $3,761,465 

As of June 30, 2020,2021, 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, 20202021 was a liability of $6.1$2.4 million and is included in "other liabilities and deferred credits" on our consolidated balance sheet. For the three and six months ended June 30, 2020,2021, the value of our interest rate swaps decreased $0.5$1.2 million and $6.2increased $2.3 million respectivelyfor the six months ended June 30, 2021 (including $0.2$0.3 million reclassified from other comprehensive loss to interest expense for both periods)the three months, and $0.5 million reclassified from other comprehensive income to interest expense for the six months ended June 30, 2021). A summary of our financial (liabilities) assetsliabilities that are measured at fair value on a recurring basis, by level within the fair value hierarchy is as follows:
 June 30, 2020 December 31, 2019
 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
 (In thousands)
Interest rate swaps$—
 $(6,059) $—
 $(6,059) $—
 $130
 $—
 $130
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June 30, 2021December 31, 2020
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
(In thousands)
Interest rate swaps$0 $(2,403)$0 $(2,403)$0 $(4,711)$0 $(4,711)
One of our equity method investees has 2 interest rate swaps which qualify for cash flow hedge accounting. For the three and six months ended June 30, 2020,2021, our share of the change in fair value of the related swaps included in "accumulated other comprehensive loss" was an increasea decrease of less than $0.1 million and a decrease of $0.3 million, respectively.
$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 744,617694,133 downREIT operating partnership units are outstanding which have a total fair value of approximately $63.4$81.3 million, which is calculated by multiplying the outstanding number of downREIT partnership units by our closing stock price on June 30, 2020.2021.

NOTE 7—SHAREHOLDERS’ EQUITY
The following table provides a summary of dividends declared and paid per share:

 Six Months Ended June 30,
 2020 2019
 Declared Paid Declared Paid
Common shares$2.100
 $2.100
 $2.040
 $2.040
5.417% Series 1 Cumulative Convertible Preferred shares$0.677
 $0.677
 $0.677
 $0.677
5.0% Series C Cumulative Redeemable Preferred shares (1)$0.625
 $0.625
 $0.625
 $0.625

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

 Six Months Ended June 30,
 20212020
 DeclaredPaidDeclaredPaid
Common shares$2.120 $2.120 $2.100 $2.100 
5.417% Series 1 Cumulative Convertible Preferred shares$0.677 $0.677 $0.677 $0.677 
5.0% Series C Cumulative Redeemable Preferred shares (1)$0.625 $0.625 $0.625 $0.625 
We have an at-the-market (“ATM”)(1)Amount represents dividends per depository share, each representing 1/1000th of a share.

On February 24, 2021, we replaced our existing ATM equity program with a new ATM equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $400.0$500.0 million. On May 7, 2021, we amended this ATM equity program, which resets the limit to $500.0 million. The new ATM equity program also allows shares to be sold through forward sales contracts. We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay amounts outstanding under our revolving credit facilityindebtedness and/or for general corporate purposes. As of
For the six months ended June 30, 2020,2021, we hadissued 847,471 common shares at a weighted average price per share of $104.19 for net cash proceeds of $87.1 million including paying $0.9 million in commissions and $0.3 million in additional offering expenses related to the sales of these common shares. We also entered into forward sales contracts for the three and six months ended June 30, 2021 for 1,194,733 and 1,526,051 shares, respectively, under our ATM equity program at a weighted average offering price of $117.47 and $115.30, respectively. The forward price that we will receive upon physical settlement of the agreements is subject to the adjustment for (i) commissions, (ii) a floating interest rate factor equal to a specified daily rate less a spread, (iii) the forward purchasers' stock borrowing costs and (iv) scheduled dividends during the term of the forward sale agreements. The open forward shares may be settled at any time on or before multiple required settlement dates ranging from
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March 2022 to June 2022. We have remaining capacity to issue up to $128.3$359.7 million in common shares under our ATM equity program.program as of June 30, 2021.

NOTE 8—SHARE-BASED COMPENSATION PLANS
A summary of share-based compensation expense included in net income is as follows:
Three Months EndedSix Months Ended
 June 30,June 30,
 2021202020212020
 (In thousands)
Grants of common shares, restricted stock units, and options$3,358 $3,087 $7,507 $7,029 
Capitalized share-based compensation(360)(310)(758)(642)
Share-based compensation expense$2,998 $2,777 $6,749 $6,387 
 Three Months Ended Six Months Ended
 June 30, June 30,
 2020 2019 2020 2019
 (In thousands)
Grants of common shares and options$3,087
 $3,131
 $7,029
 $6,992
Capitalized share-based compensation(310) (201) (642) (472)
Share-based compensation expense$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 liabilities1,457
 1,455
 2,913
 2,911
Operating lease cost1,552
 1,493
 3,111
 2,997
Variable lease cost70
 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 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 six months ended June 30, 20202021, we had 0.3 million and 2019,for the three and six months ended June 30, 2020, we had 0.2 million weighted average unvested shares outstanding, respectively, which are considered participating securities. Therefore, we have allocated our earnings for basic and diluted EPS between common shares and unvested shares; the portion of earnings allocated to the unvested shares is reflected as “earnings allocated to unvested shares” in the reconciliation below.
InThe following potentially issuable shares were excluded from the dilutivediluted EPS calculation dilutivebecause their impact is anti-dilutive:
•exercise of 682 stock options were calculated using the treasury stock method consistent with prior periods. There were 682 anti-dilutive stock options for both the three and six months ended June 30, 20202021 and 2019. The 2020,
•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
•the issuance of 0.9 million and 1.4 million shares issuable under forward sales agreements for the three and six months ended June 30, 2021, respectively.
Additionally, 10,441 unvested restricted stock units are excluded from the weighted average common shares used to compute diluted EPS.

EPS calculation as the market based performance criteria in the awards has not yet been achieved.
 Three Months Ended Six Months Ended
 June 30, June 30,
 2020 2019 2020 2019
 (In thousands, except per share data)
NUMERATOR       
Net income$10,859
 $82,667
 $67,300
 144,470
Less: Preferred share dividends(2,011) (2,011) (4,021) (4,021)
Less: Income from operations attributable to noncontrolling interests(352) (1,765) (2,030) (3,424)
Less: Earnings allocated to unvested shares(249) (226) (495) (439)
Net income available for common shareholders, basic and diluted$8,247
 $78,665
 $60,754
 $136,586
DENOMINATOR       
Weighted average common shares outstanding, basic and diluted75,394
 74,713
 75,377
 74,458
        
EARNINGS PER COMMON SHARE, BASIC AND DILUTED:       
Net income available for common shareholders$0.11
 $1.05
 $0.81
 $1.83
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Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
 (In thousands, except per share data)
NUMERATOR
Net income$48,059 $10,859 $97,798 67,300 
Less: Preferred share dividends(2,011)(2,011)(4,021)(4,021)
Less: Income from operations attributable to noncontrolling interests(1,855)(352)(3,358)(2,030)
Less: Earnings allocated to unvested shares(298)(249)(592)(495)
Net income available for common shareholders, basic and diluted$43,895 $8,247 $89,827 $60,754 
DENOMINATOR
Weighted average common shares outstanding, basic77,474 75,394 77,160 75,377 
Effect of dilutive securities:
Open forward contracts for share issuances31 0 2 0 
Weighted average common shares outstanding, diluted77,505 75,394 77,162 75,377 
EARNINGS PER COMMON SHARE, BASIC:
Net income available for common shareholders$0.57 $0.11 $1.16 $0.81 
EARNINGS PER COMMON SHARE, DILUTED:
Net income available for common shareholders$0.57 $0.11 $1.16 $0.81 



NOTE 10—SUBSEQUENT EVENTS
We provided notice for the early repayment of the Montrose Crossing and The AVENUE at White Marsh mortgage loans, at par, on October 12, 2021 and November 2, 2021, respectively.
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, 20192020 filed with the Securities and Exchange Commission (the “SEC”) on February 10, 2020.11, 2021.
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of Federal Realty Investment Trust (“we” “our” or “us”) and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:
•risks that our tenants will not pay rent, may vacate early or may file for bankruptcy or that we may be unable to renew leases or re-let space at favorable rents as leases expire;
•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;
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•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. 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, 20192020 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 where we believe retail demand exceeds supply, in strategically selected metropolitan markets in the Northeast and Mid-Atlantic regions of the United States, California, and South Florida. As of June 30, 2020,2021, we owned or had a majority interest in community and neighborhood shopping centers and mixed-use properties which are operated as 104105 predominantly retail real estate projects comprising approximately 24.025.3 million square feet. In total, the real estate projects were 93.0%92.7% leased and 90.8%89.6% occupied at June 30, 2020.2021.
Impacts of COVID-19 Pandemic
InWe continue to monitor and address risks related to the novel coronavirus disease ("COVID-19") pandemic. Since March 2020 when the World Health Organization declared the outbreak of novel coronavirus disease (“COVID-19”)characterized COVID-19 as a pandemic. Our Boardglobal pandemic, we have been and continue to be impacted by COVID-19 and the actions taken by federal, state, and local government to prevent its spread. These actions range from closure of Trustees, as part of its risk oversight function, is regularly coordinating with managementnonessential businesses and ordering residents to assessgenerally stay at home at the effectsonset of the pandemic onto phased re-openings and capacity limitations and now to generally lifted restrictions as COVID-19 vaccination rates increase. These closures and restrictions, along with general concern over the spread of COVID-19, required a significant number of tenants to close their operations or to significantly limit the amount of business they are able to conduct, which impacted their ability to timely pay rent as required under our leases and also caused many tenants to close their business permanently. While improving, our cash flow and results of operations in the six months ended June 30, 2021 continued to determine appropriate courses of action to maintain the health and safetybe materially adversely impacted, with vacancy levels remaining above historical levels. Although virtually all of our personnel,leases required the tenants to strengthenpay rent even while they were not operating, we entered into numerous agreements to abate, defer, and/or restructure tenant rent payments for varying periods of time, all with the objective of collecting as much cash as reasonably possible and maintaining occupancy to the maximum extent. We believe those actions will position many of our tenants to be able to return to payment of contractual rent as soon as possible after the impacts from the pandemic have subsided.
During the three and six months ended June 30, 2021, we recognized collectibility related adjustments of $6.4 million and $21.2 million, respectively. This includes not only the impact of tenants recognized on a cash basis but also changes in our collectibility assessments from probable to not probable, disputed rents, and any rent abatements directly related to COVID-19. As of June 30, 2021, the revenue from approximately 35% of our tenants (based on total commercial leases) is being recognized on a cash basis.
We believe that the actions we have taken to improve our financial position and maximize our liquidity, as described further in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 Annual Report on Form 10-K, will continue to adaptmitigate the impact to our business as appropriate. In response to the pandemic, we have taken a number of specific actions so far:cash flow caused by tenants not timely paying contractual rent.
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 extentSee further discussion of the effectsimpact of COVID-19 on our business resultsthroughout Item 2.

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Table 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.Contents

Business Continuity
We were able to transition all but a limited number of essential employeestransitioned our entire workforce to remote work in March 2020 with the exception of those employees who were critical to providing the necessary day-to-day property management functions required to keep our properties open and do not anticipate any adverse impact onoperating for essential businesses such as grocery stores and drug stores, and a few employees who were needed to carry out critical corporate functions. Although all of our ability tocorporate offices have reopened, many of our employees continue to operatework remotely as we transition to a hybrid work model. We have not laid off, furloughed, or terminated any employees nor have we modified the compensation of any of our business. Transitioningemployees as a result of COVID-19, and the transition to a largely remote workforce has not had any material adverse impactimpacts on our financial reporting systems, our internal controls, or disclosure controls and procedures. As government mandated closures
Critical Accounting Policies
There have been no significant changes to the critical accounting policies disclosed in “Management’s Discussion and restrictions are gradually lifted through phased re-openings, we are following local, stateAnalysis of Financial Condition and federal governments guidelines and limiting the numberResults of employees coming intoOperations” in our offices as well as implementing health and2020 Annual Report on Form 10-K.

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 Property2021 Acquisitions and Disposition
On January 10, 2020,4, 2021, we acquired our partner's 20% interest in our joint venture arrangement related to the Pike & Rose hotel for $2.3 million, and repaid the $31.5 million mortgage loan encumbering the hotel. As a 49,000 square foot shopping centerresult of the transaction, we gained control of the hotel, and effective January 4, 2021, we have consolidated the asset. We also recognized a gain on acquisition of the controlling interest of $2.1 million related to the difference between the carrying value and fair value of the previously held equity interest.
On February 22, 2021, we acquired the fee interest at our Mount Vernon Plaza property in Fairfax,Alexandria, Virginia for $22.3$5.6 million. This property is adjacent to,As a result of this transaction, the "operating lease right of use assets" and will be operated as part"operating lease liabilities" on our consolidated balance sheet decreased by $9.8 million. We now own the entire fee interest on this property.
On March 19, 2021, we sold a portion of Graham Park Plaza in Falls Church, Virginia for $20.3 million, resulting in a gain on sale of $15.6 million.
During the six months ended June 30, 2021, we acquired the following properties:
Date AcquiredPropertyCity/StateGross Leasable Area (GLA)Joint Venture Interest (1)Gross Value
(in square feet)(in millions)
April 30, 2021ChesterbrookMcLean, Virginia90,00080 %$32.1 (2)
June 1, 2021Grossmont CenterLa Mesa, California933,00060 %$175.0 (3)
June 14, 2021Camelback ColonnadePhoenix, Arizona642,00098 %$162.5 (4)
June 14, 2021Hilton VillageScottsdale, Arizona93,00098 %$37.5 (5)
(1)These acquisitions were completed through newly formed joint ventures, for which we own the controlling interest listed above, and therefore, these properties are consolidated in our Fairfax Junction property. This purchase price was paid with a combination of cash and the issuance of 163,322 downREIT operating partnership units. financial statements.
(2)Approximately $0.5$1.9 million and $0.4$0.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $8.0 million of net assets acquired were allocated to other liabilities for "below market leases,leases." respectively.
On February 12, 2020, we acquired two buildings totaling 12,000 square feet in Hoboken, New Jersey for $14.3 million, including the assumption of $8.9 million of mortgage debt. This acquisition is in addition to the 37 buildings previously acquired, and was completed through the joint venture that was formed in 2019, for which we own a 90% interest. Less than $0.1(3)Approximately $12.3 million and approximately $3.3$2.6 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively, and $14.7 million of net assets acquired were allocated to other liabilities for "below market leases."
(4)Approximately $11.6 million of net assets acquired were allocated to other assets for "acquired lease costs"and $28.3 million were allocated to other liabilities for "below market leases."
(5)The land is controlled under a long-term ground lease that expires on December 31, 2076, for which we have recorded a $10.4 million "operating lease right of use asset" (net of a $1.3 million above market liability) and an $11.6 million "operating lease liability." Approximately $2.7 million and $1.1 million of net assets acquired were allocated to other assets for "acquired lease costs" and "above market leases," respectively.respectively, and $3.6 million were allocated to other liabilities for "below market leases."
On April 21, 2020, we sold a building in Pasadena, California for $16.1 million, which resulted in a gain
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Table of $11.7 million.Contents
20202021 Debt and Equity Transactions
In connection withOn February 5, 2021, we repaid the two buildings$16.2 million mortgage loan on Sylmar Towne Center, at par, prior to its original maturity date.
On February 24, 2021, we acquired in Hoboken, New Jersey on February 12, 2020, we assumed two mortgage loansreplaced our existing at-the-market (“ATM”) equity program 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.
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 when we entered into a $400.0 million unsecured term loan on May 6, 2020 and issued $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 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 1, 2030. The 3.95% senior notes were offered at 103.257% of the principal amount with a yield to maturity of 2.944%, and have the same terms and are of the same series as the $300.0 million senior notes issued on December 9, 2013. The 3.50% senior notes were offered at 98.911% of the principal amount with a yield to maturity of 3.630%. Our net proceeds from these transactions after the net issuance premium, underwriting fees, and other costs were $700.1 million.
We have an at-the-market (“ATM”)new ATM equity program in which we may from time to time offer and sell common shares having an aggregate offering price of up to $400.0$500.0 million. On May 7, 2021, we amended this ATM equity program, which reset the limit to $500.0 million. The new ATM equity program also allows shares to be sold through forward sales contracts. We intend to use the net proceeds to fund potential acquisition opportunities, fund our development and redevelopment pipeline, repay amounts outstanding under our revolving credit facilityindebtedness and/or for general corporate purposes. As of
For the six months ended June 30, 2020,2021, we hadissued 847,471 common shares at a weighted average price per share of $104.19 for net cash proceeds of $87.1 million including paying $0.9 million in commissions and $0.3 million in additional offering expenses related to the sales of these common shares. We also entered into forward sales contracts for the three and six months ended June 30, 2021 for 1,194,733 and 1,526,051 shares, respectively, under our ATM equity program at a weighted average offering price of $117.47 and $115.30, respectively. The forward price that we will receive upon physical settlement of the agreements is subject to the adjustment for (i) commissions, (ii) a floating interest rate factor equal to a specified daily rate less a spread, (iii) the forward purchasers' stock borrowing costs and (iv) scheduled dividends during the term of the forward sale agreements. The open forward shares may be settled at any time on or before multiple required settlement dates ranging from March 2022 to June 2022. We have remaining capacity to issue up to $128.3$359.7 million in common shares under our ATM equity program.program as of June 30, 2021.
On April 16, 2021, we repaid $100.0 million of our existing $400.0 million term loan, amended the agreement on the remaining $300.0 million to lower the current spread over LIBOR from 135 basis points to 80 basis points based on our current credit rating, and extended the initial maturity date to April 16, 2024, along with two one-year extensions, at our option.
In June 2020, we provided notice for the early repayment of the Plaza Del Sol mortgage loan, at par, on September 1, 2021.
Recently Issued Accounting Pronouncements
See Note 2 to the consolidated financial statements.
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 $202$197 million and $5 million respectively, for the six months ended June 30, 2020,2021, and $142$202 million and $4$5 million respectively, for the six months ended June 30, 2019.2020. We capitalized external and internal costs related to other property improvements of $27$34 million and $2 million, respectively, for the six months ended June 30, 2020,2021, and $29$27 million and $2 million for the six months ended June 30, 2019.2020. We capitalized external and internal costs related to leasing activities of $7 million and $1 million, respectively, for the six months ended June 30, 2021, and $5 million and $1 million, respectively, for the six months ended June 30, 2020, and $10 million and $1 million, respectively, for the six months ended June 30, 2019.2020. The amount of capitalized internal costs for salaries and related benefits for development and redevelopment activities, other property improvements, and leasing activities were $5 million, $1$2 million, and $1 million,

respectively, for the six months ended June 30, 20202021 and $4$5 million, $1 million, and $1 million, respectively for the six months ended June 30, 2019.2020. Total capitalized costs were $242$246 million and $188$242 million for the six months ended June 30, 2021 and 2020, and 2019, respectively.
Recently Adopted Accounting Pronouncements
See Note 2 to the consolidated financial statements.
Outlook
Our long-term growth strategy is focused on growth in earnings, funds from operations, and cash flows primarily through a combination of the following:
•growth in our comparable property portfolio,
•growth in our portfolio from property 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, 2020,11, 2021, for discussion of our our long-term strategies.

The actions taken by federal,Federal, state, and local governments have taken various actions to mitigate the spread of COVID-19, including initially by ordering closures of non-essential businesses and ordering residents to generally stay at home, and subsequent phased re-openings have resulted in
home. While many of ourthese restrictions have since been lifted, they required a significant number of tenants temporarilyto close their operations or even permanently closingto significantly limit the amount of business they were able to conduct in their businesses,stores. These closures and for some, it hasrestrictions, along with general concerns over the
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spread of COVID-19 have impacted theirthe tenants' ability to timely pay rent. Asrent as required under our leases and also caused many tenants to close their business permanently. While we are seeing signs 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. Theseconsiderable improvement in the past few months, these economic hardships have adversely impacted our business, and hadcontinue to have a negative effect on our financial results during the second quarter ended June 30, 2020.of 2021. With very few exceptions, our leases require tenants to continue to pay rent even while closed as a result of the pandemic, however,and while many tenants did not pay rents and other charges during the second quartera portion of 2020, andthe majority of our tenants have resumed paying all or a portion of their rent and/or other charges as their businesses were able to reopen. Our percentage of contractual rent actually collected has continued to increase since the low point in July 2020.April 2020, including some tenants paying past due amounts. As of June 30, 2020,2021, we have entered into agreements with approximately 20%32% of our tenants (based on total commercial leases) to defer rent payments to later periods, largely throughthroughout the remainder of 2021, although some extend beyond, and negotiations with other tenants are still ongoing. Our percentage of contractual rent actually collected has increased each month since April, including some tenants paying past due amounts. While thisincreasing monthly cash collection rates is a positive trend driven by government mandated restrictions graduallygenerally being lifted, we are expectingexpect 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. We are also experiencing a lower level of occupancy than in our past, largely due to the pandemic, which will adversely impact our results until we can release the space and the tenant commences paying rent as well as limit future vacancies caused by the pandemic. We are, however, experiencing strong demand for our commercial space as evidenced by the 1.1 million square feet of comparable space retail leasing we've completed in the first half of 2021, as well as our overall leased percentage at 92.7%, compared to our occupied percentage of only 89.6%.

The extent of suchthe impact from COVID-19 will depend on future developments, which are highly uncertain and cannot be predicted. Depending upon the duration of tenant closures, future operating restrictions, and the overall economic downturn resulting from COVID-19, we may find that even deferred rents are difficult to collect, and we may experience higher vacancy levels. While the duration and severity of the economic impact resulting from COVID-19 is unknown, we seek to position the Trust to continue to participate in the resulting economic recovery.

We continue to have several development projects in process albeit at a slower pace due to COVID-19 related restrictions, being delivered as follows:
•
In the 1st quarter of 2020, we delivered the fully leased eight story, 301,000 square foot office building at Santana Row.
The first phase of construction on the 12 acres of land that we control across from Santana RowWest includes an eight story 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 openings beginningexpected to begin in 2022.
•Phase III of Assembly Row 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 openwith spaces being delivered beginning in the second quarter of 2021. At June 30, 2021, 150,000 square feet of office space has been delivered and 13,000 square feet of retail space has opened.
At•Phase III at Pike & Rose we are continuing construction onincludes a 212,000 square foot office building (which includes 4,0007,000 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 will begin to open later in 2020.million. At June 30, 2021, approximately 159,000 square feet has been leased, of which approximately 45,000 square feet is our new corporate headquarters.
•Throughout the portfolio, we currently have redevelopment projects underway with a projected total cost of approximately $318$274 million that we expect to stabilize over the next several years.

The above includes our best estimates based on information currently known, however, the completion of construction, final costs, and the timing of leasing and openings will be dependent upon the duration of governmental restrictions and 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 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 assumed mortgages and property sales.
At June 30, 2020,2021, the leasable square feet in our properties was 93.0%92.7% leased and 90.8%89.6% 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,
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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 second quarter of 2020,2021, we signed leases for a total of 315,000577,000 square feet of retail space including 278,000558,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 11%8% on a cash basis. New leases for comparable spaces were signed for 123,000415,000 square feet at an average rental increase of 32%11% on a cash basis. Renewals for comparable spaces were signed for 155,000144,000 square feet at no average rental increase on a cash basis. Tenant improvements and incentives for comparable spaces were $30.94$51.35 per square foot, of which, $69.12$67.87 per square foot was for new leases and $0.69$3.74 per square foot was for renewals for the three months ended June 30, 2020.2021.
For the six months ended June 30, 2020,2021, we signed leases for a total of 806,0001,091,000 square feet of retail space including 744,0001,065,000 square feet of comparable space leases (leases for which there was a prior tenant) at an average rental increase of 7%8% on a cash basis. New leases for comparable spaces were signed for 274,000635,000 square feet at an average rental increase of 16%13% on a cash basis. Renewals for comparable spaces were signed for 470,000430,000 square feet at an average rental increase of 2%1% on a cash basis. Tenant improvements and incentives for comparable spaces were $31.21$42.20 per square foot, of which, $79.88$67.62 per square foot was for new leases and $2.86$4.70 per square foot was for renewals for the six months ended June 30, 2020.2021.
The rental increases associated with comparable spaces generally include all leases signed for retail space in arms-length transactions reflecting market leverage between landlords and tenants during the period. The comparison between average rent for expiring leases and new leases is determined by including minimumcontractual rent and percentage rent paid on the expiring lease and minimumannual market 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. As a result of accommodations made to certain tenants to help them to stay open during and after the COVID-19 pandemic, we have found it necessary to exercise more judgement in 2020 and 2021 than in prior years in order to appropriately reflect the comparability of spaces in the calculation. The change in rental income on comparable space leases is impacted by numerous factors including current market rates, location, individual tenant creditworthiness, use of space, market conditions when the expiring lease was signed, capital investment made in the space and the specific lease structure. 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.lease. Incentives include amounts paid to tenants as inducement to sign a lease that do not represent building improvements. Costs related
Historically, we have executed comparable space leases for 1.3 to redevelopments requires judgment1.9 million square feet of retail space each year. We expect some rental rates to continue to be negatively impacted by managementthe COVID-19 pandemic. Given the significant volume of leasing we've achieved during the first six months of 2021, we expect the overall volume in determining what reflects base building costs2021 to be at the high end, or potentially exceed, our historical averages given a larger amount of vacancy as a result of COVID-19. Although we expect overall positive increases in annual rent for comparable spaces, changes in annual rent for any individual lease or combinations of individual leases reported in any particular period may be positive or negative and thus, is not included inwe can provide no assurance that the "tenant improvements and incentives" amount.annual rents on comparable space leases will continue to increase at historical levels, if at all.
The leases signed in 20202021 generally become effective over the following two years though some may not become effective until 20232024 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, theseour historical increases in rental rates do provide information about the tenant/landlord relationship and the potential increase we may achieve in rental income over time.
Historically, we have executed comparable space leases for 1.3 to 1.9 million square feet of retail space each year, however, we expect that volume and potentially rental rate increases for 2020 to be negatively impacted by the 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 six months ended June 30, 2020,2021, all or a portion of 98 and 97 properties respectively, were considered comparable properties and eightsix properties were considered non-comparable properties. For the three months ended June 30, 2020,2021, one portion of a property was moved from non-comparable properties to comparable properties and two portions of properties were moved from acquisitions to comparable properties. For the six months ended June 30, 2021, two portions of properties were moved from non-comparable properties to comparable properties, one property wasand two portions of properties were moved from acquisitions to comparable properties, and one portion of a property was removed from comparablenon-comparable properties, as it was sold, compared to the designations for the three months ended March 31, 2020, which were 97 properties or portionas of properties considered comparable and eight considered non-comparable. For the six months ended June 30, 2020, two properties and two portions of properties were moved from 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 removed from comparable properties, as it was

sold, compared to the designations for the year ended December 31, 2019.2020. While there is judgment surrounding changes in designations, we typically move non-comparable properties to comparable properties once they have stabilized, which is typically considered 90% physical occupancy or when the growth expected from the redevelopment has been included in the comparable
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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 JUNE 30, 2021 AND 2020
   Change
 20212020Dollars%
 (Dollar amounts in thousands)
Rental income$230,795 $175,479 $55,316 31.5 %
Mortgage interest income830 748 82 11.0 %
Total property revenue231,625 176,227 55,398 31.4 %
Rental expenses42,918 36,417 6,501 17.9 %
Real estate taxes29,323 30,599 (1,276)(4.2)%
Total property expenses72,241 67,016 5,225 7.8 %
Property operating income (1)159,384 109,211 50,173 45.9 %
General and administrative expense(12,846)(9,814)(3,032)30.9 %
Depreciation and amortization(67,675)(62,784)(4,891)7.8 %
Gain on sale of real estate and change in control of interest— 11,682 (11,682)100.0 %
Operating income78,863 48,295 30,568 63.3 %
Other interest income250 509 (259)(50.9)%
Interest expense(31,177)(34,073)2,896 (8.5)%
Income (loss) from partnerships123 (3,872)3,995 (103.2)%
Total other, net(30,804)(37,436)6,632 (17.7)%
Net income48,059 10,859 37,200 342.6 %
Net income attributable to noncontrolling interests(1,855)(352)(1,503)427.0 %
Net income attributable to the Trust$46,204 $10,507 $35,697 339.7 %
(1)Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. The reconciliation of operating income to property operating income for the three months ended June 30, 2021 and 2020 AND 2019is as follows:
     Change
 2020 2019 Dollars %
 (Dollar amounts in thousands)
Rental income$175,479
 $229,731
 $(54,252) (23.6)%
Mortgage interest income748
 734
 14
 1.9 %
Total property revenue176,227
 230,465
 (54,238) (23.5)%
Rental expenses36,417
 41,438
 (5,021) (12.1)%
Real estate taxes30,599
 25,166
 5,433
 21.6 %
Total property expenses67,016
 66,604
 412
 0.6 %
Property operating income (1)109,211
 163,861
 (54,650) (33.4)%
General and administrative expense(9,814) (11,422) 1,608
 (14.1)%
Depreciation and amortization(62,784) (59,057) (3,727) 6.3 %
Gain on sale of real estate, net11,682
 16,197
 (4,515) (27.9)%
Operating income48,295
 109,579
 (61,284) (55.9)%
Other interest income509
 189
 320
 169.3 %
Interest expense(34,073) (27,482) (6,591) 24.0 %
(Loss) income from partnerships(3,872) 381
 (4,253) (1,116.3)%
Total other, net(37,436) (26,912) (10,524) 39.1 %
Net income10,859
 82,667
 (71,808) (86.9)%
Net income attributable to noncontrolling interests(352) (1,765) 1,413
 (80.1)%
Net income attributable to the Trust$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.

20212020
(in thousands)
Operating income$78,863 $48,295 
General and administrative12,846 9,814 
Depreciation and amortization67,675 62,784 
Gain on sale of real estate and change in control of interest— (11,682)
Property operating income$159,384 $109,211 
Property Revenues
Total property revenue decreased $54.2increased $55.4 million, or 23.5%31.4%, to $231.6 million in the three months ended June 30, 2021 compared to $176.2 million in the three months ended June 30, 20202020. The percentage occupied at our shopping centers was 89.6% at June 30, 2021 compared to $230.590.8% at June 30, 2020. The most significant driver of the increase in property revenues is the lifting of COVID-19 restrictions during the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 when COVID-19 government imposed closures and restrictions were at their height. Changes in the components of property revenue are discussed below.
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Rental Income
Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income increased $55.3 million, or 31.5%, to $230.8 million in the three months ended June 30, 2019.2021 compared to $175.5 million in the three months ended June 30, 2020 due primarily to the following:
•a $48.8 million decrease in collectibility related impacts including rent abatements across all properties primarily due to moving a large number of tenants from accrual basis to cash basis in the second quarter of 2020 and higher collection rates in the second quarter of 2021, as tenants begin to recover from the initial impacts of COVID-19,
•an increase of $4.1 million from non-comparable properties primarily driven by redevelopment related occupancy increases at two of our properties, the opening of Phase III at Assembly Row in 2021, and the opening of Freedom Plaza in 2020,
•an increase of $3.6 million from acquisitions (see Note 3 to the consolidated financial statements for additional information), and
•an increase of $1.9 million from comparable properties primarily related to higher net termination fees and legal fee income of $3.4 million, higher percentage rent, specialty leasing, and parking income of $2.4 million primarily due to the impacts of COVID-19 related closures and restrictions in 2020, partially offset by lower average occupancy of approximately $4.6 million,
partially offset by,
•a decrease of $3.3 million from 2020 property sales.
Property Expenses
Total property expenses increased $5.2 million, or 7.8%, to $72.2 million in the three months ended June 30, 2021 compared to $67.0 million in the three months ended June 30, 2020. Changes in the components of property expenses are discussed below.
Rental Expenses
Rental expenses increased $6.5 million, or 17.9%, to $42.9 million in the three months ended June 30, 2021 compared to $36.4 million in the three months ended June 30, 2020. This increase is primarily due to the following:
•an increase of $6.4 million from comparable properties due primarily to higher repairs and maintenance costs and utilities, as 2020 had lower costs as a result of COVID-19 impacts,
•an increase of $1.3 million from non-comparable properties driven by the opening of the Phase III office building at Pike & Rose in 2020, Phase III at Assembly Row in 2021, and one of our redevelopments in late 2020, and
•an increase of $0.7 million from acquisitions,
partially offset by,
•a decrease of $1.0 million from 2020 property sales.
As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income decreased to 18.6% in the three months ended June 30, 2021 from 20.8% in the three months ended June 30, 2020.
Real Estate Taxes
Real estate tax expense decreased $1.3 million, or 4.2%, to $29.3 million in the three months ended June 30, 2021 compared to $30.6 million in the three months ended June 30, 2020. This decrease is primarily due the following:
•a decrease of $1.1 million from comparable properties primarily due to a true-up of supplemental taxes at several of our California properties billed in 2020, and
•a decrease of $1.0 million from 2020 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 $0.4 million from acquisitions.
Property Operating Income
Property operating income increased $50.2 million, or 45.9%, to $159.4 million in the three months ended June 30, 2021 compared to $109.2 million in the three months ended June 30, 2020. This increase is primarily due to the lifting of COVID-19 restrictions, which resulted in lower collectibility related adjustments, higher percentage rent, specialty leasing, and parking
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income compared to 2020. Also contributing to the increase were higher lease termination fees and legal fee income, 2021 acquisitions, redevelopment related occupancy increases at one of our properties, and the opening of Phase III at Assembly Row in 2021, partially offset by lower average occupancy from comparable properties, and 2020 property sales.
Other Operating
General and Administrative
General and administrative expense increased $3.0 million, or 30.9%, to $12.8 million in the three months ended June 30, 2021
from $9.8 million in the three months ended June 30, 2020. This increase is due primarily to higher personnel related
costs.
Depreciation and Amortization
Depreciation and amortization expense increased $4.9 million, or 7.8%, to $67.7 million in the three months ended June 30, 2021 from $62.8 million in the three months ended June 30, 2020. This increase is due primarily to accelerated depreciation related to a vacating tenant, placing redevelopment properties into service, the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in January 2021, and the opening of Phase III at Assembly Row and Pike & Rose, partially offset by 2020 property sales.
Gain on Sale of Real Estate and Change in Control of Interest
The $11.7 million gain on sale of real estate, net for the three months ended June 30, 2020 is due primarily to the sale of a building in Pasadena, California.
Operating Income
Operating income increased $30.6 million, or 63.3%, to $78.9 million in the three months ended June 30, 2021 compared to $48.3 million in the three months ended June 30, 2020. This increase is primarily due to the lifting of COVID-19 restrictions, which resulted in lower collectibility related adjustments, higher percentage rent, specialty leasing, and parking income compared to 2020. Also contributing to the increases were higher termination fees and legal fee income, 2021 acquisitions, redevelopment related occupancy increases at one of our properties, and the opening of Phase III at Assembly Row in 2021, partially offset by lower average occupancy at comparable properties, the prior year gain related to the sale of a building in Pasadena, California, higher personnel related costs, and 2020 property sales.
Other
Interest Expense
Interest expense decreased $2.9 million, or 8.5%, to $31.2 million in the three months ended June 30, 2021 compared to $34.1 million in the three months ended June 30, 2020. This decrease is due primarily to the following:
•a decrease of $2.0 million from lower weighted average borrowings primarily from our revolving credit facility and the repayment of The Shops at Sunset Place mortgage loan in December 2020, partially offset by the May 2020 debt issuances in response to the COVID-19 pandemic, and
•an increase of $0.8 million in capitalized interest, primarily attributable to the development of Santana West and Phase III of Assembly Row.
Gross interest costs were $37.7 million and $39.8 million in the three months ended June 30, 2021 and June 30, 2020, respectively. Capitalized interest was $6.5 million and $5.7 million for the three months ended June 30, 2021 and June 30, 2020, respectively.
Income (loss) from partnerships
Income from partnerships increased $4.0 million, or 103.2%, to $0.1 million in the three months ended June 30, 2021 compared to a loss of $3.9 million in the three months ended June 30, 2020. This increase is due primarily to the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in January 2021 and improved operating results at our restaurant joint ventures and at our Assembly Row hotel joint venture, largely the result of the easing of COVID-19 closures and restrictions.
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RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2021 AND 2020
   Change
 20212020Dollars%
 (Dollar amounts in thousands)
Rental income$447,930 $406,277 $41,653 10.3 %
Mortgage interest income1,856 1,507 349 23.2 %
Total property revenue449,786 407,784 42,002 10.3 %
Rental expenses92,156 80,729 11,427 14.2 %
Real estate taxes58,743 59,663 (920)(1.5)%
Total property expenses150,899 140,392 10,507 7.5 %
Property operating income (1)298,887 267,392 31,495 11.8 %
General and administrative expense(23,104)(20,065)(3,039)15.1 %
Depreciation and amortization(131,549)(124,972)(6,577)5.3 %
Gain on sale of real estate and change in control of interest17,428 11,682 5,746 49.2 %
Operating income161,662 134,037 27,625 20.6 %
Other interest income613 817 (204)(25.0)%
Interest expense(63,262)(62,518)(744)1.2 %
Loss from partnerships(1,215)(5,036)3,821 (75.9)%
Total other, net(63,864)(66,737)2,873 (4.3)%
Net income97,798 67,300 30,498 45.3 %
Net income attributable to noncontrolling interests(3,358)(2,030)(1,328)65.4 %
Net income attributable to the Trust$94,440 $65,270 $29,170 44.7 %
(1)Property operating income is a non-GAAP measure that consists of rental income and mortgage interest income, less rental expenses and real estate taxes. This measure is used internally to evaluate the performance of property operations and we consider it to be a significant measure. Property operating income should not be considered an alternative measure of operating results or cash flow from operations as determined in accordance with GAAP. The reconciliation of operating income to property operating income for the six months ended June 30, 2021 and 2020 is as follows:
20212020
(in thousands)
Operating income$161,662 $134,037 
General and administrative23,104 20,065 
Depreciation and amortization131,549 124,972 
Gain on sale of real estate and change in control of interest(17,428)(11,682)
Property operating income$298,887 $267,392 

Property Revenues
Total property revenue increased $42.0 million, or 10.3%, to $449.8 million in the six months ended June 30, 2021 compared to $407.8 million in the six months ended June 30, 2020. The percentage occupied at our shopping centers was 89.6% at June 30, 2021 compared to 90.8% at June 30, 2020 compared to 93.3% at June 30, 2019.2020. The most significant driver of the decreaseincrease in property revenues is the impactthe lifting of COVID-19 restrictions during the 2021 as many of our tenantscompared to 2020 when COVID-19 government imposed closures and restrictions were forced to temporarily or in some cases permanently closeat their businesses resulting in changes in our collectibility estimates and in some cases rent abatement.height. Changes in the components of property revenue are discussed below.
Rental Income
Rental income consists primarily of minimum rent, cost reimbursements from tenants and percentage rent, and is net of collectibility related adjustments. Rental income decreased $54.3increased $41.7 million, or 23.6%10.3%, to $175.5$447.9 million in the threesix months ended June 30, 2021 compared to $406.3 million in the six months ended June 30, 2020 compared to $229.7 million in the three months ended June 30, 2019 due primarily to the following:
higher•a $37.1 million decrease in collectibility related adjustmentsimpacts including rent abatements across all properties, of $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 to moving a large number of tenants from accrual basis to cash basis in 2020, as well higher collection rates in 2021, as tenants begin to recover from the the initial impacts of COVID-19,

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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 $3.0 million, and
a decrease of $3.3 million from property sales,
partially offset by,
•an increase of $5.2 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 $2.9$11.3 million from non-comparable properties primarily driven by higher net termination fees, the opening of our new office building at Santana Row in early 2020, redevelopment related occupancy increases at one of our properties, the opening of Phase III at Assembly Row in 2021 and Pike & Rose in 2020, and the opening of Freedom Plaza in 2020, and
•an increase of $4.4 million from 2021 acquisitions (see Note 3 to the consolidated financial statements for additional information),
partially offset by,
•a decrease of $8.0 million from property sales, and
•a decrease of $3.4 million from comparable properties primarily due to lower average occupancy of approximately $11.3 million, partially offset by $1.0higher rental rates of $2.7 million, relatedhigher recoveries of $2.1 million primarily the result of higher snow removal expense, and higher percentage rent of $1.2 million driven by a larger number of tenants moving to lower parking income primarilypercentage rent deals due to the impacts from COVID-19 related closures.of COVID-19.
Property Expenses
Total property expenses increased $0.4$10.5 million, or 0.6%7.5%, to $67.0$150.9 million in the threesix months ended June 30, 20202021 compared to $66.6$140.4 million in the threesix months ended June 30, 2019.2020. Changes in the components of property expenses are discussed below.
Rental Expenses
Rental expenses decreased $5.0increased $11.4 million, or 12.1%14.2%, to $36.4$92.2 million in the threesix months ended June 30, 2021 compared to $80.7 million in the six months ended June 30, 2020 compared to $41.4 million in the three months ended June 30, 2019. This decrease isdue primarily due to the following:
a decrease•an increase of $5.2$11.9 million from comparable properties due primarily to lowerhigher snow removal expense, repairs and maintenance costs and utilities primarily driven by the impactas 2020 had lower costs as a result of COVID-19 impacts, demolition costs, and insurance costs,
a decrease•an increase of $0.3$2.0 million from property sales,non-comparable properties, due primarily to the opening of the Phase III office building at Pike & Rose in 2020, one of our redevelopments in late 2020, and our new office building at Santana Row, and
•an increase of $1.5 million from acquisitions,
partially offset by,
an increase•a decrease of $0.7$2.6 million from acquisitions of Hoboken during the second half of 2019 and early 2020 and Georgetowne Shopping Center in November 2019.our property sales.
As a result of the changes in rental income and rental expenses as discussed above, rental expenses as a percentage of rental income increased to 20.8%20.6% in the threesix months ended June 30, 20202021 from 18.0%19.9% in the threesix months ended June 30, 2019.2020.
Real Estate Taxes
Real estate tax expense increased $5.4decreased $0.9 million, or 21.6%1.5%, to $30.6$58.7 million in the threesix months ended June 30, 20202021 compared
to $25.2$59.7 million in the threesix months ended June 30, 2019.2020. This increase is primarily due to the following:
an increase•a decrease of $4.4$1.7 million from our property sales, and
•a decrease of $1.0 million from comparable properties primarily due to 2019 tax refunds from a multi-year appeal and reassessmenttrue-up of supplemental taxes at threeseveral of our California properties and higher current year assessments,billed in 2020,
partially offset by,
•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$1.3 million from non-comparable properties due primarily to the opening of our new office building at Santana Row in early 2020 and increases in assessments as a result of our redevelopment activities, and
partially offset by,
a decrease•an increase of $0.3$0.5 million from property sales.2021 acquisitions.
Property Operating Income
Property operating income decreased $54.7increased $31.5 million, or 33.4%11.8%, to $109.2$298.9 million in the threesix months ended June 30, 20202021 compared to $163.9$267.4 million in the threesix months ended June 30, 2019.2020. This decreaseincrease is primarily due to the impactlifting of COVID-19 restrictions during 2021, which resulted in higherlower collectibility related adjustments, lowerand higher percentage rent, and lower parking income, partially offset by property acquisitions andrent. Also contributing to the opening of our new office building at Santana Row in early 2020.
Other Operating
General and Administrative
General and administrative expense decreased $1.6 million, or 14.1%, to $9.8 million in the three months ended June 30, 2020 from $11.4 million in the three months ended June 30, 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 2019 acquisitions andincreases were the opening of our new office building at Santana Row in early 2020, partially offset byplacing redevelopment properties into service, the opening of Phase III at Assembly Row in 2021, and property sales.
Gain on Sale of Real Estate, Net
The $11.7 million gain on sale of real estate, net for the three months ended 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 Free
State Shopping Center and a land parcel at Northeast Shopping Center.
Operating Income
Operating income decreased $61.3 million, or 55.9%, to $48.3 million in the three months ended June 30, 2020 compared to $109.6 million in the three months ended June 30, 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,acquisitions, 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 following:
an increase of $5.7 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 $3.3 million due to higher weighted average borrowings primarily from the $400 million issuance of our 3.20% notes in 2019, and $106.9 million of mortgage loans associated with our Hoboken acquisitions, partially offset by the repayment of our $275.0 million term loan in June 2019,
partially offset by,
a decrease of $1.4 million due to a lower overall weighted average borrowing rate, and
an increase of $1.0 million in capitalized interest, primarily attributable to the development of Phase III of Assembly Row and Pike & Rose.
Gross interest costs were $39.8 million and $32.2 million in the three months ended June 30, 2020 and 2019, respectively. Capitalized interest was $5.7 million and $4.7 million for the three months ended June 30, 2020 and 2019, respectively.
(Loss) income from partnerships
Loss from partnerships increased $4.3 million to $3.9 million in the three months ended June 30, 2020 compared to income of $0.4 million in the three months ended June 30, 2019. This decrease is primarily due to our share of losses from our hotel investments at Assembly Row and Pike & Rose, largely the result of COVID-19 closures and restrictions.


RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2020 AND 2019
     Change
 2020 2019 Dollars %
 (Dollar amounts in thousands)
Rental income$406,277
 $461,223
 $(54,946) (11.9)%
Mortgage interest income1,507
 1,469
 38
 2.6 %
Total property revenue407,784
 462,692
 (54,908) (11.9)%
Rental expenses80,729
 85,698
 (4,969) (5.8)%
Real estate taxes59,663
 52,853
 6,810
 12.9 %
Total property expenses140,392
 138,551
 1,841
 1.3 %
Property operating income (1)267,392
 324,141
 (56,749) (17.5)%
General and administrative expense(20,065) (20,987) 922
 (4.4)%
Depreciation and amortization(124,972) (118,679) (6,293) 5.3 %
Gain on sale of real estate, net11,682
 16,197
 (4,515) (27.9)%
Operating income134,037
 200,672
 (66,635) (33.2)%
Other interest income817
 366
 451
 123.2 %
Interest expense(62,518) (55,515) (7,003) 12.6 %
Loss from partnerships(5,036) (1,053) (3,983) 378.3 %
Total other, net(66,737) (56,202) (10,535) 18.7 %
Net income67,300
 144,470
 (77,170) (53.4)%
Net income attributable to noncontrolling interests(2,030) (3,424) 1,394
 (40.7)%
Net income attributable to the Trust$65,270
 $141,046
 $(75,776) (53.7)%
(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 decreased $54.9 million, or 11.9%, to $407.8 million in the six months ended June 30, 2020 compared to $462.7 million in the six months ended June 30, 2019. The percentage occupied at our shopping centers was 90.8% at June 30, 2020 compared to 93.3% at June 30, 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, and is net of collectibility related adjustments. Rental income decreased $54.9 million, or 11.9%, to $406.3 million in the six months ended June 30, 2020 compared to $461.2 million in the six months ended June 30, 2019 due primarily to the following:
higher collectibility related adjustments across all properties of $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 lowerhigher snow removal expense partially offset by higher rental rates of approximately $8.1 million, and
a decrease of $6.9 million from property sales,
partially offset by,

an increase of $10.5 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 $5.8 million from nonat comparable properties, driven by the openingand property dispositions.
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Table of our new office building at Santana Row in early 2020,Contents
Property Expenses
Total property expenses increased $1.8 million, or 1.3%, to $140.4 million in the six months ended June 30, 2020 compared to $138.6 million in the six months ended June 30, 2019. Changes in the components of property expenses are discussed below.
Rental Expenses
Rental expenses decreased $5.0 million, or 5.8%, to $80.7 million in the six months ended June 30, 2020 compared to $85.7 million in the six months ended June 30, 2019 due primarily to the following:
a decrease of $6.5 million from comparable properties due to lower snow removal expense, and lower repairs and maintenance and utilities primarily driven by the impact of COVID-19.
a decrease of $0.8 million from our property sales,
partially offset by,
a increase of $1.5 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 $0.4 million from non-comparable properties due primarily to the opening of our new office building at Santana Row 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 19.9% in the six months ended June 30, 2020 from 18.6% in the six months ended June 30, 2019.
Real Estate Taxes
Real estate tax expense increased $6.8 million, or 12.9%, to $59.7 million in the six months ended June 30, 2020 compared
to $52.9 million in the six months ended June 30, 2019. This increase is primarily due to the following:
an increase of $4.8 million from comparable properties primarily due to a 2019 tax refunds from a multi-year appeal and reassessment at three of our properties, and 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 office building at Santana Row in early 2020,
partially offset by,
a decrease of $0.6 million from our property sales.
Property Operating Income
Property operating income decreased $56.7 million, or 17.5%, to $267.4 million in the six months ended June 30, 2020 compared to $324.1 million in the six months ended June 30, 2019. This decrease is primarily due to the impact of COVID-19, which resulted in 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 our new office building at Santana Row in early 2020.
Other Operating
General and Administrative
General and administrative expense decreased $0.9increased $3.0 million, or 4.4%15.1%, to $23.1 million in the six months ended June 30, 2021 from $20.1 million in the six months ended June 30, 2020 from $21.0 million in the six months ended June 30, 2019.2020. This decreaseincrease is due primarily to COVID-19 impacts including office closures and cancellations of all non-essential business travel and company events, and lowerhigher personnel related costs.
Depreciation and Amortization
Depreciation and amortization expense increased $6.3$6.6 million, or 5.3%, to $131.5 million in the six months ended June 30, 2021 from $125.0 million in the six months ended June 30, 2020 from $118.7 million in the six months ended June 30, 2019.2020. This increase is due primarily to property acquisitionsaccelerated depreciation from a vacating tenant, placing redevelopment properties into service, the acquisition of the previously unconsolidated Pike & Rose hotel joint venture in January 2021, and the opening of our newthe Phase III office building at Santana Row in early 2020,Pike & Rose, partially offset by 2020 property sales.

Gain on Sale of Real Estate Netand Change in Control of Interest
The $17.4 million gain on sale of real estate, net of tax for the six months ended June 30, 2021 is due primarily to a $15.6 million gain related to the sale of a portion of Graham Park Plaza in Falls Church, Virginia and a $2.1 million gain relating to the acquisition of the previously unconsolidated Pike & Rose hotel joint venture (see Note 3 for additional disclosure).
The $11.7 million gain on sale of real estate, net of tax for the six months ended June 30, 2020 is due to the sale of a building in Pasadena, California.
The $16.2Operating Income
Operating income increased $27.6 million, gain on sale of real estate, net foror 20.6%, to $161.7 million in the six months ended June 30, 2019 is due to the sale of Free State Shopping Center, a land parcel at Northeast Shopping Center, and condominium sales.
Operating Income
Operating income decreased $66.6 million, or 33.2%,2021 compared to $134.0 million in the six months ended June 30, 2020 compared to $200.7 million in the six months ended June 30, 2019.2020. This decreaseincrease is primarily due to the impactslifting of COVID-19 restrictions, which resulted in higherlower collectibility related adjustments lowerand higher percentage rent and lower parking income, as well as lowercompared to 2020. Also contributing to the increases were a higher net gain on the sale of real estate, and the impact of property sales, partially offset by the opening of our new office building at Santana Row in early 2020, placing redevelopment properties into service, the opening of Phase III at Assembly Row in 2021, and property acquisitions, partially offset by lower average occupancy, higher snow removal expense at comparable properties, property dispositions, and lower rental expenses, largely due to the impact of COVID-19.higher personnel related costs.
Other
Interest Expense
Interest expense increased $7.0$0.7 million, or 12.6%1.2%, to $63.3 million in the six months ended June 30, 2021 compared to $62.5 million in the six months ended June 30, 2020 compared to $55.5 million in the six months ended June 30, 2019.2020. This increase is due primarily to the following:
•an increase of $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$5.0 million due to higher weighted average borrowings primarily from the $400.0 million issuance of our 3.20% notesMay 2020 debt issuances in 2019, and $106.9 million of mortgage loans associated with our Hoboken acquisitions,response to the COVID-19 pandemic, partially offset by no borrowings on our revolving credit facility in 2021, and the repayment of our $275.0 million termThe Shops at Sunset Place mortgage loan in June 2019,December 2020,
partially offset by,
•a decrease of $2.5$2.7 million due to a lower overall weighted average borrowing rate, and
•an increase of $2.2$1.6 million in capitalized interest, primarily attributable to the development of Phase III of Assembly Row and Pike & Rose.Santana West.
Gross interest costs were $73.9$76.3 million and $64.8$73.9 million in the six months ended June 30, 20202021 and 2019,June 30, 2020, respectively. Capitalized interest was $11.4$13.0 million and $9.2$11.4 million for the six months ended June 30, 20202021 and 2019,June 30, 2020, respectively.
Loss from partnerships
Loss from partnerships increased $4.0decreased $3.8 million, or 75.9%, to $1.2 million in the six months ended June 30, 2021 compared to $5.0 million in the six months ended June 30, 2020 compared2020. This decrease is due primarily to $1.1 million in the six months ended June 30, 2019. This increase is primarily due to our shareacquisition of losses from our hotel investments at Assembly Row andthe previously unconsolidated Pike & Rose hotel joint venture in January 2021 and improved operating results at our restaurant joint ventures and at our Assembly Row hotel joint venture, largely the result of the easing of COVID-19 closures and restrictions.

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Liquidity and Capital Resources

Due to the nature of our business and strategy, we typically generate significant amounts of cash from operations which is largely paid to our common and preferred shareholders in the form of dividends because as a REIT, we are generally required to make annual distributions to shareholders of at least 90% of our taxable income.income (cash dividends paid in the six months ended June 30, 2021 were approximately $167.2 million). Remaining cash flow from operations after dividend payments is used to fund recurring and non-recurring capital projects (such as tenant improvements and redevelopments), and regular debt service requirements (including debt service relating to additional or replacement debt, as well as scheduled debt maturities). We maintain a $1.0 billion revolving credit facility to fund short term cash flow needs and also look to the public and private debt and equity markets, joint venture relationships, and property dispositions to fund capital expenditures on a long-term basis.


WeAlthough we are currentlyseeing improvements in cash collections during 2021, we are still experiencing lower levels of cash from operations due to lower rent collections from tenants impacted byand lower occupancy, both a result of 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 to provide maximum flexibility during these uncertain times. In March 2020,times, including maintaining levels of cash significantly in excess of the cash balances we borrowed $990.0 million under our revolving credit facility, representing a draw-down of almosthave historically maintained.

During the entirety of our $1.0 billion credit facility. In May 2020, we entered into a $400.0 million unsecured term loan and 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 ofsix months ended June 30, 2020,2021, there iswere no outstanding balanceborrowings on our $1.0 billion unsecured revolving credit facility, and as of June 30, 2021, we havehad cash and cash equivalents of $980.0$304.3 million.

For the six months ended June 30, 2020, our weighted average borrowing rate on the revolving credit facility, before amortization We also had outstanding forward sales agreements for net proceeds of debt fees, was 1.5%. As$172.4 million as of June 30, 2020, we had2021, and the capacity to issue up to $128.3$359.7 million in common shares both under our ATM equity program.
OverOn April 16, 2021, we repaid $100.0 million of our existing $400.0 million term loan, amended the agreement on the remaining $300.0 million to lower the current spread over LIBOR from 135 basis points to 80 basis points based on our current credit rating, and extended the initial maturity date to April 16, 2024, along with two one-year extensions, at our option. Subsequently, over the next 12 months, we have $330.3$124.2 million of secured debt maturing, excluding our $400.0 million term loan, which may be extended for an additional twelve monthswe intend to pay off prior to the maturity date, at our option. Additionally, ourpar.
Our overall capital requirements for the remainder of 20202021 will depend uponcontinue to be impacted by the natureextent and duration of government mandatedCOVID-19 related closures, impacts on our cash collections, and restrictionsoverall economic impacts that might occur. Cash requirements will also be impacted by acquisition opportunities and the overall economic impact of COVD-19, as well aslevel and general timing of our redevelopment and development activities. DuringWhile the second quarter 2020,amount of future expenditures will depend on numerous factors, 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 duringcapital investments in our properties under development and redevelopment, as we continue to invest in the remaindercurrent phase of the year, absent further requirementsthese projects and are not expecting COVID-19 related halts in construction activities similar to halt construction activities.those experienced in 2020. With respect to other capital investments related to our existing properties, we expect to incur levels more consistent with prior years with an overall increase compared to 2020.
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 inthrough the near-term.remainder of the COVID-19 pandemic. Given our recent ability to access the capital markets, we also expect debt or equity to be available to us. We may also furtherhave the ability to delay the timing of certain development and redevelopment projects as well as limit future acquisitions, 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

While we have seen improvements from the initial negative impacts of COVID-19 and may access one or more of these programs to supplement our liquidity if we qualify for them. 

While the COVID-19 pandemic, it has negatively impactedcontinued to affect our overall business during the quarter ended June 30, 20202021, and we expect it will continue to negatively impact our business in the short term, weterm. 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.

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Summary of Cash Flows
 Six Months Ended June 30,
 20212020
 (In thousands)
Net cash provided by operating activities$247,209 $181,382 
Net cash used in investing activities(509,974)(257,198)
Net cash (used in) provided by financing activities(237,195)923,439 
(Decrease) increase in cash, cash equivalents and restricted cash(499,960)847,623 
Cash, cash equivalents, and restricted cash at beginning of year816,896 153,614 
Cash, cash equivalents, and restricted cash at end of period$316,936 $1,001,237 
 Six Months Ended June 30,
 2020 2019
 (In thousands)
Cash provided by operating activities$181,382
 $242,287
Cash used in investing activities(257,198) (113,368)
Cash provided by (used in) financing activities923,439
 (96,982)
Increase in cash, cash equivalents and restricted cash847,623
 31,937
Cash, cash equivalents and restricted cash, beginning of year153,614
 108,332
Cash, cash equivalents and restricted cash, end of period$1,001,237
 $140,269

Net cash provided by operating activities decreased $60.9increased $65.8 million to $247.2 million during the six months ended June 30, 2021 from $181.4 million during the six months ended June 30, 2020. The increase was primarily attributable to higher net income before non-cash items and timing of cash receipts including higher accounts receivable and lower prepaid rent balances in 2020 from $242.3as a result of the COVID-19 pandemic.
Net cash used in investing activities increased $252.8 million to $510.0 million during the six months ended June 30, 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 second quarter 2020 as a result of the COVID-19 pandemic, partially offset by the timing of interest payments on our senior notes and lower prepaid expenses.
Net cash used in investing activities increased $143.8 million to2021 from $257.2 million during the six months ended June 30, 2020 from $113.4 million during the six months ended June 30, 2019.2020. The increase was primarily attributable to:
•a $76.0$323.2 million increase in acquisition of real estate primarily due to the June 2021 acquisitions of three shopping centers in California and Arizona and the April 2021 acquisition of a shopping center in Virginia (see Note 3 to the consolidated financial statements for additional information),
partially offset by,
•the $31.1 million payoff of two mortgage notes receivable in May 2021,
•a $25.9 million decrease in proceeds from the sale of real estate resulting from 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 in 2019,
a $73.3 million increase in capital expenditures as we continuedue to invest in Pike & Rose, Assembly Row, Santana Rowtiming of payments, and other 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 2020.2019.
Net cash provided by financing activities increased $1,020.4decreased $1.2 billion to $237.2 million to $923.4 millionused during the six months ended June 30, 20202021 from $97.0$923.4 million usedprovided in the six months ended June 30, 2019.2020. The increasedecrease was primarily attributable to:
a $403.0 increase due to•$700.1 million in 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 notes in June 2019,
•$398.7 million in net proceeds from our $400.0 million unsecured term loan issued in May 2020, and
•a $294.8$148.0 million decreaseincrease in repayment of mortgages, finance leases, and notes payable primarily due to the $100.0 million repayment of our $275.0 million unsecured$400.0 term loan which was amended in June 2019April 2021, the $31.5 million repayment of the mortgage loan related to the Pike & Rose hotel in January 2021, and the $20.3$16.2 million repayment of the mortgage loan on Rollingwood ApartmentsSylmar Towne Center in January 2019,February 2021,
partially offset by
a $68.4•$87.1 million decrease in net proceeds from the issuance of common shares under our ATM program during the six months ended June 30, 2019.2021.

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Debt Financing Arrangements
The following is a summary of our total debt outstanding as of June 30, 2020:2021:
Description of Debt
Original
Debt
Issued
 Principal Balance as of June 30, 2020 Stated Interest Rate as of June 30, 2020 Maturity DateDescription of DebtOriginal
Debt
Issued		Principal Balance as of June 30, 2021Stated Interest Rate as of
June 30, 2021		Maturity Date
(Dollar amounts in thousands)     (Dollar amounts in thousands)  
Mortgages payable      Mortgages payable
Secured fixed rate      Secured fixed rate
The Shops at Sunset PlaceAcquired
 $60,995
 5.62% September 1, 2020
29th PlaceAcquired
 3,754
 5.91% January 31, 2021
Sylmar Towne CenterAcquired
 16,436
 5.39% June 6, 2021
Plaza Del SolAcquired
 8,136
 5.23% December 1, 2021Plaza Del SolAcquired$7,943 5.23 %December 1, 2021(6)
The AVENUE at White Marsh52,705
 52,705
 3.35% January 1, 2022The AVENUE at White Marsh52,705 52,705 3.35 %January 1, 2022(7)
Montrose Crossing80,000
 66,554
 4.20% January 10, 2022Montrose Crossing80,000 64,618 4.20 %January 10, 2022(8)
AzaleaAcquired
 40,000
 3.73% November 1, 2025AzaleaAcquired40,000 3.73 %November 1, 2025
Bell GardensAcquired
 12,544
 4.06% August 1, 2026Bell GardensAcquired12,269 4.06 %August 1, 2026
Plaza El Segundo125,000
 125,000
 3.83% June 5, 2027Plaza El Segundo125,000 125,000 3.83 %June 5, 2027
The Grove at Shrewsbury (East)43,600
 43,600
 3.77% September 1, 2027The Grove at Shrewsbury (East)43,600 43,600 3.77 %September 1, 2027
Brook 3511,500
 11,500
 4.65% July 1, 2029Brook 3511,500 11,500 4.65 %July 1, 2029
Hoboken (24 Buildings) (1)Acquired
 56,450
 LIBOR + 1.95%
 December 15, 2029Hoboken (24 Buildings) (1)56,45056,450 LIBOR + 1.95%December 15, 2029
Various Hoboken (14 Buildings) (2)Acquired
 33,130
 Various
 Various through 2029Various Hoboken (14 Buildings) (2)Acquired32,263 VariousVarious through 2029
ChelseaAcquired
 5,418
 5.36% January 15, 2031ChelseaAcquired5,044 5.36 %January 15, 2031
Hoboken (1 Building) (3)Acquired
 16,719
 3.75% July 1, 2042Hoboken (1 Building) (3)Acquired16,398 3.75 %July 1, 2042
Subtotal  552,941
   Subtotal467,790 
Net unamortized premium and debt issuance costs (1,907)   
Net unamortized debt issuance costs and premiumNet unamortized debt issuance costs and premium(1,764)
Total mortgages payable, net  551,034
   Total mortgages payable, net466,026 
Notes payable      Notes payable
Term Loan400,000
 400,000
 LIBOR + 1.35%
 May 6, 2021
Revolving credit facility (4)1,000,000
 —
 LIBOR + 0.775%
 January 19, 2024
Term loan (4)Term loan (4)300,000 300,000 LIBOR + 0.80%April 16, 2024
Revolving credit facility (5)Revolving credit facility (5)1,000,000 — LIBOR + 0.775%January 19, 2024
Various7,239
 3,609
 11.31%
 Various through 2028Various7,239 3,043 11.31%Various through 2028
Subtotal  403,609
   Subtotal303,043 
Net unamortized debt issuance costs  (1,132)   Net unamortized debt issuance costs(1,418)
Total notes payable, net  402,477
   Total notes payable, net301,625 
      
Senior notes and debentures      Senior notes and debentures
Unsecured fixed rate      Unsecured fixed rate
2.55% notes250,000
 250,000
 2.55% January 15, 2021
3.00% notes250,000
 250,000
 3.00% August 1, 2022
2.75% notes275,000
 275,000
 2.75% June 1, 20232.75% notes275,000 275,000 2.75 %June 1, 2023
3.95% notes600,000
 600,000
 3.95% January 15, 20243.95% notes600,000 600,000 3.95 %January 15, 2024
1.25% notes1.25% notes400,000 400,000 1.25 %February 15, 2026
7.48% debentures50,000
 29,200
 7.48% August 15, 20267.48% debentures50,000 29,200 7.48 %August 15, 2026
3.25% notes475,000
 475,000
 3.25% July 15, 20273.25% notes475,000 475,000 3.25 %July 15, 2027
6.82% medium term notes40,000
 40,000
 6.82% August 1, 20276.82% medium term notes40,000 40,000 6.82 %August 1, 2027
3.20% notes400,000
 400,000
 3.20% June 15, 20293.20% notes400,000 400,000 3.20 %June 15, 2029
3.50% notes400,000
 400,000
 3.50% June 1, 20303.50% notes400,000 400,000 3.50 %June 1, 2030
4.50% notes550,000
 550,000
 4.50% December 1, 20444.50% notes550,000 550,000 4.50 %December 1, 2044
3.625% notes250,000
 250,000
 3.625% August 1, 20463.625% notes250,000 250,000 3.625 %August 1, 2046
Subtotal  3,519,200
   Subtotal3,419,200 
Net unamortized discount and debt issuance costs (10,739)   
Net unamortized debt issuance costs and premiumNet unamortized debt issuance costs and premium(13,918)
Total senior notes and debentures, net  3,508,461
   Total senior notes and debentures, net3,405,282 
      
Total debt, net  $4,461,972
   Total debt, net$4,172,933 
_____________________
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.

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%
4)The maximum amount drawn under our revolving credit facility during the six months ended June 30, 2020 was $990.0 million, and the weighted average interest rate on borrowings under our revolving credit facility, before amortization of debt fees, was 1.5%.
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.
4)On April 16, 2021, we repaid $100.0 million of the term loan, amended the agreement on the remaining $300.0 million to lower the current spread over LIBOR from 135 basis points to 80 basis points based on our current credit rating, and extended the initial maturity date to April 16, 2024, along with two one-year extensions, at our option.
5)During the six months ended June 30, 2021, there were no borrowings on our $1.0 billion revolving credit facility.
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6)We have submitted a prepayment notice for this mortgage loan to be repaid, at par, on September 1, 2021.
7)We have submitted a prepayment notice for this mortgage loan to be repaid, at par, on November 2, 2021.
8)We have submitted a prepayment notice for this mortgage loan to be repaid, at par, on October 12, 2021.
Our revolving credit facility and other debt agreements include financial and other covenants that may limit our operating activities in the future. As of June 30, 2020,2021, we were in compliance with all financial and other covenants related to our revolving credit facility, term loan, and senior notes. Additionally, as of June 30, 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 June 30, 2020:2021:
 
UnsecuredSecuredTotal
 (In thousands) 
2021$449 $9,856 $10,305 
2022751 119,706 (1)120,457   
2023275,765 3,549 279,314   
2024900,656 (2)(3)3,688 904,344   
2025333 48,033 48,366   
Thereafter2,544,289 282,958 2,827,247   
$3,722,243   $467,790 $4,190,033 (3)
 Unsecured Secured Total 
 (In thousands) 
2020$379
 $63,251
 $63,630
 
2021650,680
(1)31,756
 682,436
  
2022250,756
 119,706
 370,462
  
2023275,775
 3,549
 279,324
  
2024600,665
(2)3,688
 604,353
  
Thereafter2,144,554
 330,991
 2,475,545
  
 $3,922,809
  $552,941
 $4,475,750
(3)
__________________
__________________1)    We have submitted prepayment notices to repay two mortgage loans, at par, in 2021, as compared to their stated maturity date, as referenced on page 28. These mortgage loans comprise $116.3 million of the scheduled principal repayments in 2022.
1)Our $400.0 million term loan matures on May 6,
2)    Our $300.0 million term loan initially matures on April 16, 2024, along with two one-year extensions, at our option.
3)    Our $1.0 billion revolving credit facility matures on January 19, 2024, plus two six-month extensions at our option. As of June 30, 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.
4)    The total debt maturities differ from the total reported on the consolidated balance sheet due to the unamortized net debt issuance costs and premium/discount on mortgage loans, notes payable, and senior notes as of June 30, 2021.
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 June 30, 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.
Interest rate swaps associated with cash flow hedges are recorded at fair value on a recurring basis. Effectiveness of cash flow hedges is assessed both at inception and on an ongoing basis. The effective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recorded in other comprehensive loss which is included in "accumulated other comprehensive loss" on the balance sheet and statement of shareholders' equity. Cash flow hedges become ineffective if critical terms of the hedging instrument and the debt instrument do not perfectly match such as notional amounts, settlement dates, reset dates, calculation period and LIBOR rate. In addition, we evaluate the default risk of the counterparty by monitoring the credit-worthiness of the counterparty which includes reviewing debt ratings and financial performance. If a cash flow hedge is deemed ineffective, the ineffective portion of changes in fair value of the interest rate swaps associated with cash flow hedges is recognized in earnings in the period affected.
As of June 30, 2020,2021, 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
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agreements that effectively fix their debt at 5.206%. All swaps were designated and qualify as cash flow hedges. Hedge ineffectiveness has not impacted earnings as of June 30, 2020.

2021.
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.

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

Three Months Ended Six Months Ended Three Months EndedSix Months Ended
June 30, June 30,June 30,June 30,
2020 2019 2020 2019 2021202020212020
(In thousands, except per share data) (In thousands, except per share data)
Net income$10,859
 $82,667
 $67,300
 $144,470
Net income$48,059 $10,859 $97,798 $67,300 
Net income attributable to noncontrolling interests(352) (1,765) (2,030) (3,424)Net income attributable to noncontrolling interests(1,855)(352)(3,358)(2,030)
Gain on sale of real estate, net(11,682) (16,197) (11,682) (16,197)
Gain on sale of real estate and change in control of interestGain on sale of real estate and change in control of interest— (11,682)(17,428)(11,682)
Depreciation and amortization of real estate assets56,608
 53,323
 112,654
 106,812
Depreciation and amortization of real estate assets56,431 56,608 113,534 112,654 
Amortization of initial direct costs of leases4,809
 4,537
 9,709
 9,287
Amortization of initial direct costs of leases9,181 4,809 13,925 9,709 
Funds from operations60,242
 122,565
 175,951
 240,948
Funds from operations111,816 60,242 204,471 175,951 
Dividends on preferred shares (1)(2,011) (1,875) (4,021) (3,750)Dividends on preferred shares (1)(2,011)(2,011)(4,021)(4,021)
Income attributable to operating partnership units (2)—
 661
 1,572
 1,390
Income attributable to operating partnership units (2)740 — 1,525 1,572 
Income attributable to unvested shares(249) (346) (541) (690)Income attributable to unvested shares(398)(249)(721)(541)
Funds from operations available for common shareholders$57,982
 $121,005
 $172,961
 $237,898
Funds from operations available for common shareholders$110,147 $57,982 $201,254 $172,961 
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$0.77
 $1.60
 $2.27
 $3.16
Weighted average number of common shares, diluted (1)(3)Weighted average number of common shares, diluted (1)(3)78,203 75,394 77,881 76,126 
Funds from operations available for common shareholders, per diluted share (3)Funds from operations available for common shareholders, per diluted share (3)$1.41 $0.77 $2.58 $2.27 
_____________________
(1)For the three and six months ended June 30, 2019, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."
(2)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 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.
(1)For the three and six months ended June 30, 2021 and 2020, dividends on our Series 1 preferred stock were not deducted in the calculation of FFO available to common shareholders, as the related shares were dilutive and included in "weighted average common shares, diluted."
(2)For the 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)The weighted average common shares for the three months ended June 30, 2021 and 2020, and the six months ended June 30, 2020 used to compute FFO per diluted common share includes operating partnership units that were excluded from the computation of diluted EPS. Conversion of these operating partnership units is dilutive in the computation of FFO per diluted share but is anti-dilutive for the computation of dilutive EPS for these periods.

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
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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 June 30, 2020,2021, we had $4.1$3.9 billion of fixed-rate debt 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 June 30, 20202021 had been 1.0% higher, the fair value of those debt instruments on that date would have decreased by approximately $278.5$273.9 million. If market interest rates used to calculate the fair value on our fixed-rate debt instruments at June 30, 20202021 had been 1.0% lower, the fair value of those debt instruments on that date would have increased by approximately $317.5$305.0 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 June 30, 2020,2021, we had $400.0$300.0 million of variable rate debt outstanding (the principal balance on our unsecured term loan). Based upon this amount of variable rate debt and the specific terms, if market interest rates increased 1.0%, our annual interest expense would increase approximately $4.0$3.0 million with a corresponding decrease in our net income and cash flows for the year. Conversely, if market interest rates decreased 1.0%, our annual interest expense would decrease by approximately $4.0$3.0 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 June 30, 2020.2021. 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 June 30, 20202021 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.


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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, 2019.2020.
ITEM 1A.    RISK FACTORS
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 businessThere have been no material changes to the extent practical under the circumstances, some level of risk and uncertainty will always be present. . “Item 1A. Risk Factors” offactors previously disclosed in our Annual Report to our Form 10-K for the year ended December 31, 20192020 filed with the SEC on February 10, 2020 describes some11, 2021. These factors include, but are not limited to, the following:
•risks that our tenants will not pay rent, may vacate early or may file for bankruptcy or that we may be unable to renew leases or re-let space at favorable rents as leases expire;
•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,
◦new acquisitions may fail to perform as expected,
◦competition for acquisitions could result in increased prices for acquisitions,
◦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 in our geographic markets;
•risks of financing on terms which are acceptable to us, our ability to meet existing financial covenants and the limitations imposed on our operations by those covenants, and the possibility of increases in interest rates that would result in increased interest expense;
•risks related to our status as a real estate investment trust, commonly referred to as a REIT, for federal income tax purposes, such as the existence of complex tax regulations relating to our status as a REIT, the effect of future changes in REIT requirements as a result of new legislation, and the adverse consequences of the failure to qualify as a REIT; and
•risks and uncertainties associated with our business. These risks and uncertainties have the potentialrelated 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 any material changes to the risk factors disclosed in our 2019 Annual Report.

Naturalnatural disasters, climate change and public health crises including(such as the COVID-19 pandemic, could have an adverse impact on our cash flowoutbreak and operating results.
Climate changeworldwide 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 add toprecipitate or materially exacerbate one or more of the unpredictabilityabove-mentioned risks, and frequency of natural disasters and severe weather conditions and create additional uncertainty as to future trends and exposures. Certain of our operations are located in areas that are subject to natural disasters and severe weather conditions such as hurricanes, earthquakes, droughts, snow storms, floods and fires. The impact of climate changemay significantly disrupt or the occurrence of natural disasters can delay new development projects, increase investment costs to repair or replace damaged properties, increaseprevent us from operating costs, create additional investment costs to make improvements to existing properties to comply with climate change regulations, increase future property insurance costs, and negatively impact the tenant demand for space. If insurance is unavailable to us or is unavailable on acceptable terms, or if our insurance is not adequate to cover business interruption or losses from these events, our earnings, liquidity or capital resources could be adversely affected.
In addition, our business is subject to risks related toin the effects of public health crises, epidemics and pandemics, including the COVID-19 pandemic. Such events could inhibit global, national and local economic activity; adversely affect trading activity in securities markets, which could negatively impact the trading prices of our common shares and debt securities and our ability to access the securities markets as a source of liquidity; adversely affect our tenants’ financial condition by limiting foot traffic and staffing at their businesses, which could affect their ability to pay rent and willingness to make new leasing commitments; reduce our cash flow, which could impact our ability to pay dividends or to service our debt; temporarily or permanently reduce the demandordinary course 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 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 business.an extended period.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.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 June 30, 2021, we redeemed 44,468 downREIT operating partnership units for common shares and 1,000 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
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compensation related vesting event.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.


ITEM 5.OTHER INFORMATION
ITEM 5.OTHER INFORMATION
None.

ITEM 6.EXHIBITS
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.


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EXHIBIT INDEX
EXHIBIT INDEXExhibit No.Description
Exhibit No.Description
First Amendment to the Term Loan Agreement, dated as of April 16, 2021, by and among the Trust, as Borrower, 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 8K (File No. 1-07533), filed on April 19, 2021 and incorporated here by reference)
Rule 13a-14(a) Certification of Chief Executive Officer (filed herewith)
Rule 13a-14(a) Certification of Principal Financial Officer (filed herewith)
Section 1350 Certification of Chief Executive Officer (filed herewith)
Section 1350 Certification of Principal Financial Officer (filed herewith)
101The following materials from Federal Realty Investment Trust’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020,2021, formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets, (2) the Consolidated Statements of Comprehensive Income, (3) the Consolidated Statement of Shareholders’ Equity, (4) the Consolidated Statements of Cash Flows, and (5) Notes to Consolidated Financial Statements that have been detail tagged.
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)


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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
August 4, 2021/s/    Donald C. Wood        
Donald C. Wood,
Chief Executive Officer and Trustee
(Principal Executive Officer)
FEDERAL REALTY INVESTMENT TRUST
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
August 5, 20204, 2021/s/    Daniel Guglielmone    
Daniel Guglielmone,
Executive Vice President
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)


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